JUDGES IN FAMILY COURT CAN DESIGNATE COUNSEL FEE AWARD AS NON-DISCHARGEABLE IN BANKRUPTCY
Docket No. A-0138-20
Decided July 7, 2021
Submitted by New Jersey Family Lawyer, Jeffrey Hark.
In a recent published decision the Appellate Division affirmed an attorney fee award in a post-judgment divorce action as non-dischargeable in bankruptcy proceedings.
In Bisbing, the parties divorced in April 2014. One year later, plaintiff sought to relocate the children to Utah. Through this case’s progeny, the Supreme Court directed a remand to determine if the relocation was in the children’s best interests under the new standard. And subsequently, to determine counsel fees in defendant’s favor. On remand, Judge Gaus held a plenary hearing and concluded the relocation was not in the children’s best interests. He entered an order and a nearly two-hundred-page comprehensive opinion on June 25, 2019. Defendant was awarded $425,000 in counsel fees. Plaintiff did not appeal that order.
In October 2019, defendant moved to enforce the counsel fee award, but the motion was dismissed without prejudice. During that time, plaintiff filed two Chapter 13 bankruptcy petitions in the United States Bankruptcy Court for the District of New Jersey, which were later dismissed in March 2020. Thereafter, the court reinstated defendant’s October 2019 motion and ruled on June 1, 2020, that the counsel fee award was non-dischargeable in bankruptcy under 11 U.S.C. § 523(a)(15) (Section 15). Again, plaintiff did not appeal.
Defendant then filed another motion seeking to have the fees deemed non-dischargeable under Section 5, and plaintiff simultaneously moved for reconsideration of the June 1, 2020 order. The court entered an order the next month, finding the fee award non-dischargeable under Section 5. Plaintiff appealed that order.
The Appellate Division found that the trial court appropriately found that the attorney fee award of $425,000 was funds that could have been used by defendant for child support and means of living instead of fighting over the return of the child during an improper relocation effort on plaintiff performed in bad faith. Because the bankruptcy code provides for alimony, maintenance, or support in the family division or as a result of divorce to be non-dischargeable debt. As such, the court appropriately applied the counsel fee award as a substitute for support in this instance.
Counsel fee awards in family court are solely left to the trial court’s discretion. Challenging a counsel fee award in family court is very difficult, if not impossible in most cases. Adding another layer to this, family judges have the power to make the counsel fee award non-dischargeable in federal bankruptcy proceedings as long as they appropriately perform the legal analysis mentioned above of comparing the counsel fee award to the substitution of what-could-be support, alimony or maintenance.
If you have any questions about divorce, counsel fees or any other issues, contact the experienced attorneys at Hark & Hark today.
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