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Levin v. Greco

September 16, 2009

JOEL LEVIN, PLAINTIFF / APPELLANT,
v.
CARLOS M. GRECO, DEFENDANT / APPELLEE.



The opinion of the court was delivered by: Joan B. Gottschall United States District Judge

MEMORANDUM OPINION AND ORDER

Debtor and appellee Carlos M. Greco filed for Chapter 7 bankruptcy in February, 2008. Plaintiff and appellant Joel Levin is one of Greco's creditors. Levin filed an adversary proceeding objecting to discharge of his debt, arguing that it is excepted from discharge under 11 U.S.C. § 523(a)(5), the domestic support exception. The bankruptcy court denied Levin's claim, Levin v. Greco (In re Greco), 397 B.R. 102 (Bankr. N.D. Ill. 2008), and Levin now appeals.

Greco was previously party to a divorce proceeding in Illinois state court, and during that proceeding Levin was appointed to serve as a "child representative" for Greco's children. A child representative is an attorney appointed to advocate for the best interests of the child after reviewing the facts and circumstances of the child's situation. 750 Ill. Comp. Stat. 5/506(a)(3). A child representative plays a more active role than a guardian ad litem under Illinois law; a guardian ad litem prepares a report and will possibly be called as a witness regarding what is in the best interest of the child. § 506(a)(2). The child representative is not a direct source of evidence, but rather is an advocate: the representative "shall have the same authority and obligation to participate in the litigation as does an attorney for a party"; "shall possess all the powers of investigation as does a guardian ad litem"; must "have received training in child advocacy or shall possess such experience as determined to be equivalent to such training by the chief judge of the circuit where the child representative has been appointed"; shall maintain confidentiality to the extent permitted by law; and "shall offer evidence-based legal arguments." § 506(a)(3). The child representative also helps to facilitate settlement. Id.

The divorce action settled, and Greco agreed to pay Levin $8,927.25 for Levin's services, which was incorporated into the settlement agreement and court order. Greco's spouse was ordered to pay a separate amount to Levin. When Greco filed for bankruptcy, he owed Levin $8,365. Levin commenced the underlying adversary proceeding, and moved for default judgment after Greco failed to respond. The bankruptcy court denied Levin's motion, finding that Levin was not eligible for the domestic support exception to discharge. Levin appealed. Greco has not responded to Levin's appellate brief.

A district court reviews bankruptcy decisions under Rule 8013 of the Federal Rules of Bankruptcy Procedure; questions of fact are reviewed under a clearly erroneous standard, while questions of law and mixed questions of law and fact are reviewed de novo. Fed. R. Bankr. P. 8013; Mungo v. Taylor, 355 F.3d 969, 974 (7th Cir. 2004). The question on appeal turns on a strictly legal issue: whether a child representative in Illinois state court proceedings qualifies for the domestic support exception to discharge under the Bankruptcy Act.

"The principal purpose of the Bankruptcy Code is to grant a 'fresh start' to the honest but unfortunate debtor." Marrama v. Citizens Bank of Mass., 549 U.S. 365, 367 (2007) (quotations and citations omitted). Exceptions to discharge are generally construed strictly against a creditor and liberally in favor of the debtor. Goldberg Secs., Inc. v. Scarlata (In re Scarlata), 979 F.2d 521, 524 (7th Cir. 1992). However, section 523(a)(5) excepts debts related to domestic support obligations, and provides an exception to the rule favoring debtors:

Bankruptcy law has... a longstanding... policy of protecting a debtor's spouse and children when the debtor's support is required.... This policy is manifest in the Bankruptcy Code's § 523(a)(5); this section declares non-dischargeable a marital obligation that was incurred by the debtor for alimony, maintenance or support of the debtor's spouse, former spouse or child. This exception therefore expresses Congress' determination to protect former spouses in matters of alimony, maintenance, and support despite the Bankruptcy Code's general policy of providing a debtor with a fresh start. Because of this Congressional determination, a § 523(a)(5) exception from discharge is construed more liberally than other § 523 exceptions.

In re Crosswhite, 148 F.3d 879, 881--82 (7th Cir. 1998) (citations omitted). Section 523(a)(5) provides that a debt "for a domestic support obligation" is not dischargable. The term domestic support obligation is separately defined as a debt that is:

(A) owed to or recoverable by-

(i) a spouse, former spouse, or child of the debtor or such child's parent, legal guardian, or responsible relative; or

(ii) a governmental unit;

(B) in the nature of alimony, maintenance, or support (including assistance provided by a governmental unit) of such spouse, former spouse, or child of the debtor or such child's parent, without regard to whether such debt is expressly so designated;

(C) established or subject to establishment before, on, or after the date of the order for relief in a case under this title, by ...


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