Litigation

Attorneys' Fees Filed in a Timely Manner

If an application for attorneys' fees is not filed in a timely manner by proper motion within the 30-day period after entry of the final judgment as required by Florida law, the request for attorneys' fees will be denied without exception. Lyn v. Lyn, Case No. 2D03-4393, Court of Appeal of Florida, Second District, July 23, 2004.

On Dec. 5, 2002, the parties were divorced by final judgment after settling their matrimonial issues. On Dec. 26, the wife filed a notice of hearing, scheduling the issue of attorneys' fees. A hearing was scheduled on April 8, 2003. On April 4, 2003, the husband filed a motion to strike the request for attorneys' fees because the wife failed to file her written motion for attorneys' fee within 30 days of the entry of final judgment. The husband's motion was granted, and the appellate court affirmed. It held that it would not make an exception to the bright line, 30-day rule in order to establish predictability and consistency in post-judgment requests for attorneys' fees. The court noted that the oversight in this case was the result of the failure of the wife's attorney to acknowledge the procedural requirement. It further noted it would not make an exception, even though the procedural requirement was enacted less than 1 year ago by the legislature.

Dischargeability of Support Obligation

A spouse's agreement to pay off the second mortgage in a settlement agreement may not be discharged in bankruptcy where the undertaking of the responsibility of the second mortgage is determined to be in the nature of support. In re Trump, Nos. 03-23148-7, 03-6134, United States Bankruptcy Court, D. Kansas, May 14, 2004.

The parties were divorced on Feb. 3, 1999. The settlement provided, inter alia, that the husband would make payments on the second mortgage in the sum of $632 per month until he refinanced the second mortgage, and the wife and the marital residence were released from the second mortgage obligations. After the second mortgage was paid off, the husband was to contribute $100 per month for the benefit of the children's college education. In 2002, the husband suffered a reduction in income that caused him to default on the second mortgage payments. Because of the husband's default, the wife refinanced and paid off the second mortgage note. On July 29, 2003, the husband filed for bankruptcy protection. Subsequently, the wife filed a complaint to determine the dischargeability of the husband's obligations to the wife under the divorce settlement. The wife argued that the husband's obligation to make payments on the second mortgage were not dischargeable in his bankruptcy claim. The court agreed. It held that under the parties' settlement agreement, the husband's undertaking of the responsibility of the second mortgage was in the nature of support and therefore not dischargeable under the bankruptcy law. It considered that the responsibility of paying the second mortgage, even though the payments were due to a third party, amounted to support because the purpose of the payments was to allow the wife and children to remain in the marital residence. The court noted that not every obligation arising out of the division of marital property is in the nature of support, and it is the role of the court to determine the actual purpose of the payment. The court further held that the wife's refinancing of the second mortgage did not bar a finding of nondischargeability because the settlement agreement created a legally enforceable obligation of the husband to make payments on the second mortgage.

Attorneys' Fees

Legislation enacted after a client and a domestic relations attorney entered into a contract securing the payment of the attorneys' fees by a mortgage against the client's primary residence may not invalidate the contract, even if the contract is contrary to the purpose of the legislation. Schantz v. O'Sullivan, No. 94288, Supreme Court of New York, Appellate Division, Third Department, July 29, 2004.

Two mortgages on O'Sullivan's primary residence were given to O'Sullivan's matrimonial attorney in 1988 and 1991 to secure payment for the attorneys' fees for services provided during O'Sullivan's matrimonial action, which was settled in 1994. In 1993, after the mortgages were signed, the New York legislature enacted 22 NYCRR 1400.5(b), which prohibited the foreclosure of a mortgage on a client's primary residence taken by an attorney in the course of a domestic relations matter. The New York legislature enacted further legislation in 2002 that prohibited such foreclosures, including foreclosures that were the result of agreements made prior to the legislation. Schantz moved for a declaration that the 2002 statute was unconstitutional as it applied to the specific facts of this case and O'Sullivan moved for an order to prevent the sale of her home. The trial court held that the 2002 legislation was constitutional and blocked the sale of O'Sullivan's home. The appellate court reversed only with respect to contracts entered into prior to the enactment of the legislation. It held that because the parties entered into the contract prior to any legislation, it was a substantial impairment on private contract rights to permit a prohibition on the foreclosure of O'Sullivan's home. The court noted that a contract of this nature entered into after the effective date of the legislation would be a violation of the matrimonial attorney rules and the legislation.

Attorneys' Fees Filed in a Timely Manner

If an application for attorneys' fees is not filed in a timely manner by proper motion within the 30-day period after entry of the final judgment as required by Florida law, the request for attorneys' fees will be denied without exception. Lyn v. Lyn, Case No. 2D03-4393, Court of Appeal of Florida, Second District, July 23, 2004.

On Dec. 5, 2002, the parties were divorced by final judgment after settling their matrimonial issues. On Dec. 26, the wife filed a notice of hearing, scheduling the issue of attorneys' fees. A hearing was scheduled on April 8, 2003. On April 4, 2003, the husband filed a motion to strike the request for attorneys' fees because the wife failed to file her written motion for attorneys' fee within 30 days of the entry of final judgment. The husband's motion was granted, and the appellate court affirmed. It held that it would not make an exception to the bright line, 30-day rule in order to establish predictability and consistency in post-judgment requests for attorneys' fees. The court noted that the oversight in this case was the result of the failure of the wife's attorney to acknowledge the procedural requirement. It further noted it would not make an exception, even though the procedural requirement was enacted less than 1 year ago by the legislature.

Dischargeability of Support Obligation

A spouse's agreement to pay off the second mortgage in a settlement agreement may not be discharged in bankruptcy where the undertaking of the responsibility of the second mortgage is determined to be in the nature of support. In re Trump, Nos. 03-23148-7, 03-6134, United States Bankruptcy Court, D. Kansas, May 14, 2004.

The parties were divorced on Feb. 3, 1999. The settlement provided, inter alia, that the husband would make payments on the second mortgage in the sum of $632 per month until he refinanced the second mortgage, and the wife and the marital residence were released from the second mortgage obligations. After the second mortgage was paid off, the husband was to contribute $100 per month for the benefit of the children's college education. In 2002, the husband suffered a reduction in income that caused him to default on the second mortgage payments. Because of the husband's default, the wife refinanced and paid off the second mortgage note. On July 29, 2003, the husband filed for bankruptcy protection. Subsequently, the wife filed a complaint to determine the dischargeability of the husband's obligations to the wife under the divorce settlement. The wife argued that the husband's obligation to make payments on the second mortgage were not dischargeable in his bankruptcy claim. The court agreed. It held that under the parties' settlement agreement, the husband's undertaking of the responsibility of the second mortgage was in the nature of support and therefore not dischargeable under the bankruptcy law. It considered that the responsibility of paying the second mortgage, even though the payments were due to a third party, amounted to support because the purpose of the payments was to allow the wife and children to remain in the marital residence. The court noted that not every obligation arising out of the division of marital property is in the nature of support, and it is the role of the court to determine the actual purpose of the payment. The court further held that the wife's refinancing of the second mortgage did not bar a finding of nondischargeability because the settlement agreement created a legally enforceable obligation of the husband to make payments on the second mortgage.