Decisions of Interest

In the divorce settlement, child support was agreed upon, and many of the couple's assets were distributed through the settlement, although dollar amounts were not assigned to them by the court. The only asset given such an estimated value was that of the marital home's equity. The wife was to keep the home, refinancing it in her own name and paying the husband his share of the equity, which was approximately $22,000. After the divorce, but before the refinance of the home was accomplished, the husband filed for Chapter 7 bankruptcy protection. The wife therefore paid the money to the husband's Bankruptcy Trustee after the home was refinanced. The husband's divorce attorney firm, which had not been fully paid for its services, sought to have a charging lien placed on this fund, which would have put the firm's interests above those of the other creditors to the bankruptcy estate.

The bankruptcy court noted that, under New York Judiciary Law ' 475, there can be no charging lien placed on the proceeds of a property interest that the client already had before his lawyer expended time and energy either in preserving that interest or selling it to convert it to cash. The court looked at the divorce settlement's terms and found that they did not show that the fund in question was a “new” fund that could be subject to a charging lien. And the fact that the attorney seeking the charging lien had worked hard for his fee was immaterial. The bankruptcy court found that while “the firm surely earned its fee ' the dispute here is not entirely between the Debtor and the firm. It is also between the firm and the Debtor's other creditors, as represented by the Trustee. Thus, 'equity' is not the touchstone for decision. Rather, bankruptcy jurisprudence requires that unsecured creditors (which now will include the firm) enjoy a distribution from estate property that is not subject to a valid and enforceable lien.” Because the fund represented only the debtor husband's interest in the marital residence, now turned into cash, the law firm's motion for a charging lien must be denied, the court concluded.

Native American Parent Never Had Custody

The U.S. Supreme Court has determined that a South Carolina court misinterpreted federal law intended to preserve Native American families and their culture when it took a child from her would-be adoptive parents and returned her to a father who had voluntarily declined to take a role in her life. Adoptive Couple v. Baby Girl, 2013 U.S. LEXIS 4916 (U.S. 6/25/13).

The child's birth father is a member of the Cherokee Nation, but her mother is not. Once the child was conceived, these expectant parents broke up. When he learned that he was going to have a child, the father conditioned his support on the mother's marrying him, which she refused to do. After the child's birth, the mother sent the father a text message asking if he wanted to support the child or give up his parental rights. He texted back that he would relinquish his rights. He did not offer any support to the child or try to see her. However, after the mother gave the child up for adoption to a South Carolina couple, the father sought to get her back, invoking the Federal Indian Child Welfare Act (ICWA). The case was tried and appealed to the Supreme Court of South Carolina, which held that
“[w]here an Indian child's best interests are at stake, our inquiry into that child's best interests must also account for his or her status as an Indian, and therefore, we must also inquire into whether the placement is in the best interests of the Indian child. See 25 U.S.C. ' 1902 ('The Congress hereby declares that it is the policy of this Nation to protect the best interests of Indian children and to promote the stability and security of Indian tribes and families by the establishment of minimum Federal standards for the removal of Indian children from their families and the placement of such children in foster or adoptive homes which will reflect the unique values of Indian culture, and by providing for assistance to Indian tribes in the operation of child and family service programs.').” Even though the child had been living with her would-be adoptive parents for more than two years at the time of the state high court's decision and they would have been allowed to keep her had only South Carolina law been applied, the South Carolina Supreme Court concluded that because of the ICWA she must be returned to her biological father.

The U.S. Supreme Court's reason for overturning the South Carolina decision, as stated by Justice Samuel Alito, writing for the court, was as follows: “Contrary to the State Supreme Court's ruling, we hold that' 25 U.S.C. ' 1912(f) ' which bars involuntary termination of a parent's rights in the absence of a heightened showing that serious harm to the Indian child is likely to result from the parent's 'continued custody' of the child ' does not apply when, as here, the relevant parent never had custody of the child. We further hold that ' 1912(d) ' which conditions involuntary termination of parental rights with respect to an Indian child on a showing that remedial efforts have been made to prevent the 'breakup of the Indian family' ' is inapplicable when, as here, the parent abandoned the Indian child before birth and never had custody of the child. Finally, we clarify that ' 1912(a), which provides placement preferences for the adoption of Indian children, does not bar a non-Indian family like Adoptive Couple from adopting an Indian child when no other eligible candidates have sought to adopt the child Therefore, her non-Indian biological mother had full authority to give her up for adoption.” The case has been remanded to South Carolina, where both sides vow to continue fighting for custody.

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Unpaid Law Firm Is Just Another Bankruptcy Creditor

In a case of first impression, the U.S. Bankruptcy Court for the Western District of New York has declared that a debtor husband's divorce attorney's charging lien does not have superior rights to the Chapter 7 bankruptcy estate, because even though the divorce occurred prior to the filing of the bankruptcy petition, the divorce-related fund in issue that arrived post-petition was not a new source of funds for the debtor. In re Steven Joseph DeWolfe, 2013 Bankr. LEXIS 2500 (6/19/13).

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In the divorce settlement, child support was agreed upon, and many of the couple's assets were distributed through the settlement, although dollar amounts were not assigned to them by the court. The only asset given such an estimated value was that of the marital home's equity. The wife was to keep the home, refinancing it in her own name and paying the husband his share of the equity, which was approximately $22,000. After the divorce, but before the refinance of the home was accomplished, the husband filed for Chapter 7 bankruptcy protection. The wife therefore paid the money to the husband's Bankruptcy Trustee after the home was refinanced. The husband's divorce attorney firm, which had not been fully paid for its services, sought to have a charging lien placed on this fund, which would have put the firm's interests above those of the other creditors to the bankruptcy estate.

The bankruptcy court noted that, under New York Judiciary Law ' 475, there can be no charging lien placed on the proceeds of a property interest that the client already had before his lawyer expended time and energy either in preserving that interest or selling it to convert it to cash. The court looked at the divorce settlement's terms and found that they did not show that the fund in question was a “new” fund that could be subject to a charging lien. And the fact that the attorney seeking the charging lien had worked hard for his fee was immaterial. The bankruptcy court found that while “the firm surely earned its fee ' the dispute here is not entirely between the Debtor and the firm. It is also between the firm and the Debtor's other creditors, as represented by the Trustee. Thus, 'equity' is not the touchstone for decision. Rather, bankruptcy jurisprudence requires that unsecured creditors (which now will include the firm) enjoy a distribution from estate property that is not subject to a valid and enforceable lien.” Because the fund represented only the debtor husband's interest in the marital residence, now turned into cash, the law firm's motion for a charging lien must be denied, the court concluded.

Native American Parent Never Had Custody

The U.S. Supreme Court has determined that a South Carolina court misinterpreted federal law intended to preserve Native American families and their culture when it took a child from her would-be adoptive parents and returned her to a father who had voluntarily declined to take a role in her life. Adoptive Couple v. Baby Girl, 2013 U.S. LEXIS 4916 (U.S. 6/25/13).

The child's birth father is a member of the Cherokee Nation, but her mother is not. Once the child was conceived, these expectant parents broke up. When he learned that he was going to have a child, the father conditioned his support on the mother's marrying him, which she refused to do. After the child's birth, the mother sent the father a text message asking if he wanted to support the child or give up his parental rights. He texted back that he would relinquish his rights. He did not offer any support to the child or try to see her. However, after the mother gave the child up for adoption to a South Carolina couple, the father sought to get her back, invoking the Federal Indian Child Welfare Act (ICWA). The case was tried and appealed to the Supreme Court of South Carolina, which held that
“[w]here an Indian child's best interests are at stake, our inquiry into that child's best interests must also account for his or her status as an Indian, and therefore, we must also inquire into whether the placement is in the best interests of the Indian child. See 25 U.S.C. ' 1902 ('The Congress hereby declares that it is the policy of this Nation to protect the best interests of Indian children and to promote the stability and security of Indian tribes and families by the establishment of minimum Federal standards for the removal of Indian children from their families and the placement of such children in foster or adoptive homes which will reflect the unique values of Indian culture, and by providing for assistance to Indian tribes in the operation of child and family service programs.').” Even though the child had been living with her would-be adoptive parents for more than two years at the time of the state high court's decision and they would have been allowed to keep her had only South Carolina law been applied, the South Carolina Supreme Court concluded that because of the ICWA she must be returned to her biological father.

The U.S. Supreme Court's reason for overturning the South Carolina decision, as stated by Justice Samuel Alito, writing for the court, was as follows: “Contrary to the State Supreme Court's ruling, we hold that' 25 U.S.C. ' 1912(f) ' which bars involuntary termination of a parent's rights in the absence of a heightened showing that serious harm to the Indian child is likely to result from the parent's 'continued custody' of the child ' does not apply when, as here, the relevant parent never had custody of the child. We further hold that ' 1912(d) ' which conditions involuntary termination of parental rights with respect to an Indian child on a showing that remedial efforts have been made to prevent the 'breakup of the Indian family' ' is inapplicable when, as here, the parent abandoned the Indian child before birth and never had custody of the child. Finally, we clarify that ' 1912(a), which provides placement preferences for the adoption of Indian children, does not bar a non-Indian family like Adoptive Couple from adopting an Indian child when no other eligible candidates have sought to adopt the child Therefore, her non-Indian biological mother had full authority to give her up for adoption.” The case has been remanded to South Carolina, where both sides vow to continue fighting for custody.

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