SMITH, Circuit Judge.
Clarence Burnett ("Mr. Burnett") reopened his Chapter 13 bankruptcy proceedings and, thereafter, moved the bankruptcy court to hold in contempt his former spouse, Nancy Jo Burnett ("Ms. Burnett"), and her subrogee, West Virginia's Department of Health and Human Resources, Bureau of Child Support Enforcement (BCSE), for violating the terms of Mr. Burnett's confirmed Chapter 13 repayment plan by seeking income-withholding orders against him for child- and spousal-support arrears. The bankruptcy court refused to hold Ms. Burnett or BCSE in contempt but did reduce the income withholding. On appeal, the Bankruptcy Appellate Panel (BAP) reversed the bankruptcy court's order and reinstated the income withholdings. We affirm in part and reverse in part the BAP's order, and remand to the bankruptcy court for further proceedings consistent with this opinion.
In 1969, Mr. Burnett married Ms. Burnett, and, on May 24, 1971, the two had their only child. In 1982, Ms. Burnett petitioned the Boone County Circuit Court ["circuit court"] in West Virginia, to dissolve the marriage. On November 12, 1983, Mr. Burnett and Ms. Burnett memorialized a written separation agreement, pursuant to which, Mr. Burnett committed to pay Ms. Burnett "$750.00 per month for child support and alimony until the child reaches the age of eighteen years of age, becomes self-supporting, marries or dies." The agreement did not state what percentage of the monthly $750.00 payment would serve as child support, and what percentage would serve as alimony/spousal support.
Mr. Burnett soon became delinquent in his monthly payments, and over time amassed a substantial arrearage. On August 29, 2001, the circuit court entered an order finding Mr. Burnett in arrears for the principal sum of $57,402.70. Nevertheless, the circuit court concluded that it was "unable to make a finding as to the appropriate amount of outstanding interest" and resolved to "hold[] said matter in abeyance pending further testimony at a
On July 1, 2004, following three years of protracted bankruptcy litigation focusing largely on the child/spousal support issue, the bankruptcy court approved the parties' agreed order, which provided in paragraph two as follows:
Paragraph two of the parties' agreed order thus reserved Ms. Burnett's right to return to the circuit court to litigate the accrued interest on the "support arrears." (Emphasis added.) In reserving this right, the agreed order did not distinguish between child support and spousal support/alimony. In contrast, Mr. Burnett's resulting third modified plan—to which Ms. Burnett did not object
(Emphasis added.)
On November 13, 2007, Mr. Burnett completed all of the non-support payments under his Chapter 13 plan, and the bankruptcy court discharged those debts accordingly. The bankruptcy court also issued an order finding that, as of that date, Burnett had paid $20,100.00 toward the $57,402.70 support arrearage. One month later, on December 13, 2007, BCSE—appearing on behalf of Ms. Burnett and as her subrogee—filed its "Motion to Determine Support Arrears and Motion for Judgment" in the Boone County Family Court ["family court"]. BCSE's motion recited the history of the antecedent bankruptcy proceedings, noting Ms. Burnett's reserved right in Mr. Burnett's plan to "return to the Boone County Circuit Court in West Virginia after completion of the bankruptcy to litigate the issue of accrued interest on the child support arrearage." Accordingly, BCSE prayed that the family court "determine the amount of interest on the arrears owed," that "[Ms. Burnett], as well as the State of West Virginia[,] be awarded a judgment against [Mr. Burnett] in the amount of child support arrears, including interest, found due" and that the
On February 14, 2008, the family court held a hearing on BCSE's motion, and Mr. Burnett failed to appear despite receiving notice. BCSE appeared at the hearing along with Ms. Burnett, who appeared pro se. The family court proceeded with the hearing in Mr. Burnett's absence and, on March 7, 2008, issued an order awarding judgment to BCSE and Ms. Burnett. Specifically, as the BAP observed, the family court, "[w]ithout explanation," allocated "the entire $750.00 monthly obligation" originally ordered in the 1983 divorce proceedings, "to child support until May of 1989 (when the child reached age 18)" and, "[a]fter that date," factored into its calculations "an ongoing obligation of $375.00 per month for spousal support." Based on these calculations, the family court found that Mr. Burnett owed a principal arrearage of $11,348.45 for child support, plus $76,956.53 interest accrued thereon from December 1, 1983, to December 31, 2007.
Additionally, the family court found that Mr. Burnett owed a principal arrearage of $52,215.13 to Ms. Burnett for spousal support, plus $55,452.50 interest accrued thereon for the same time period. The family court included BCSE's accounting as an exhibit to its final order to support these calculations. Finally, the family court found "that based upon the evidence presented, it is uncontroverted that [Mr. Burnett] is in arrears in the payment of his child support and spousal support obligations" and consequently awarded judgment in the amounts mentioned and ordered that income withholding commence immediately. In accordance with this order, BCSE initiated a $703.45 monthly withholding from Mr. Burnett's military pension.
On April 17, 2008, Mr. Burnett, moved to reopen his Chapter 13 bankruptcy case in order to file a motion for contempt against BCSE and Ms. Burnett. He declined to appeal the family court's order directly. In his motion to reopen, Mr. Burnett alleged that BCSE and Ms. Burnett "not only . . . obtained a determination of interest that added $21,000.00 to the child support debt," but also "added a judgment for spousal support in the amount of $106,667.63" and "initiated a garnishment against [Mr. Burnett's] income for an amount in excess of the $300.00 per month as provided in the confirmed plan." The bankruptcy court granted Mr. Burnett's motion and reopened the case to consider Mr. Burnett's motion for contempt, as well as BCSE's and Ms. Burnett's response thereto.
On January 15, 2009, the bankruptcy court issued its "Order on Motion for Contempt," granting in part and denying in part Mr. Burnett's motion. Specifically, the bankruptcy court refused to hold BCSE and Ms. Burnett in contempt but did conclude that the family court's income-withholding order contravened the confirmed bankruptcy plan in that it exceeded the $300.00-per-month repayment schedule that the plan provided for. Accordingly, the bankruptcy court ordered that the withholding cease immediately and any amounts withheld in excess of the $300.00-per-month schedule be refunded to Mr. Burnett. Finally, the bankruptcy court ordered that Mr. Burnett "continue to pay the sum of $300.00 per month in accordance with the confirmed plan until the child support arrears, spousal support arrears, and interest thereon are all paid in full." BCSE and Ms. Burnett unsuccessfully moved the bankruptcy court to reconsider its ruling and subsequently appealed to the BAP.
The BAP resolved that "the ultimate issue to be decided is whether the confirmed plan prevents Ms. Burnett from collecting more than $300.00 per month on any obligation Debtor may owe to her" and "conclude[d] that Ms. Burnett's right to collect accrued interest and to be paid any post-petition domestic support obligations were not limited by the confirmed plan." (Emphasis added.) In reaching this conclusion, the BAP noted that Mr. Burnett's "plan only dealt with the principal amount of the support arrearage claim held by Ms. Burnett as of the date of the bankruptcy filing" and "specifically did not address any claim which was awarded post-petition, namely, the interest due to Ms. Burnett."
Mr. Burnett timely appealed the BAP's ruling.
On appeal, Mr. Burnett contends that the confirmed plan's plain language authorized Ms. Burnett to return to family court for the sole purpose of litigating accrued interest on pre-petition child support, not to seek additional recovery of pre- and post-petition spousal support. In response, Ms. Burnett asserts that the confirmed plan "impermissibly modified" paragraph two of the parties' agreed order to "state that [Ms. Burnett] could return to the state court of West Virginia[] to only litigate the issue of interest on CHILD SUPPORT arrearage[]." Ms. Burnett urges that Mr. Burnett's "impermissibly modified" plan cannot alter her rights under the agreed order or the Bankruptcy Code. "We review under the same standards used by the Bankruptcy Appellate Panel, which means we review the bankruptcy court's factual findings for clear error and its legal conclusions de novo." Peltz v. Edward C. Vancil, Inc. (In re Bridge Info. Sys., Inc.), 474 F.3d 1063, 1066 (8th Cir.2007).
Upon review, we conclude that Mr. Burnett is correct, but we do so based on § 1327(a), not § 1322(a)(2). Moreover, § 1327(a) inhibits Ms. Burnett only from seeking interest on her pre-petition spousal support. Section 1327 governs the "Effect of confirmation," and subsection (a) thereunder provides:
Our court has never directly addressed the interplay between §§ 1322(a)(2) and 1327(a). See In re Mammel, 221 B.R. 238, 240 (Bankr.N.D.Iowa 1998) (noting that Eighth Circuit has not ruled on § 1327's effect on an improvidently-confirmed plan). However, the Northern District of Iowa has done so in a very similar context. In In re Northrup, the district court considered a debtor's appeal from a bankruptcy court's denial of confirmation of a proposed Chapter 13 plan. 141 B.R. 171, 171 (N.D.Iowa 1991). In that appeal to the district court, the creditor-appellees were state and federal tax-enforcement agencies that held tax claims which, like Ms. Burnett's, are non-dischargeable in bankruptcy.
Thus, § 1322(a)(2) does not apply to this case because the bankruptcy court confirmed Mr. Burnett's plan. Now, post-confirmation, § 1327(a) affords the confirmed plan res judicata effect and bars Ms. Burnett's attempts in a collateral state-court proceeding to expand her entitlement to relief to include interest on her pre-petition spousal support. See Harmon v. United States ex rel. Farmers Home Admin., 101 F.3d 574, 582 n. 5 (8th Cir.1996) (rejecting the notion "that res judicata, by which we mean claim preclusion, is irrelevant in bankruptcy cases," and noting accordingly that, "[i]f the government were . . . raising an argument that could have been decided during the confirmation hearing (e.g., that the Plan should not have been confirmed because it did not meet the Code's requirements), those arguments would be barred except on appeal of the confirmation order"). The plan explicitly limited Ms. Burnett's privilege to return to family court for the sole purpose of litigating child-support interest. Although the Bankruptcy Code provides that, to be confirmed, a plan must provide for the full payment of accrued interest on child and spousal support, 11 U.S.C. § 101(14A) (defining "domestic support obligation" to include "interest that accrues on that debt"), a confirmed plan is given res judicata effect even when it violates the Code. See Travelers Indem. Co. v. Bailey, ___ U.S. ___, 129 S.Ct. 2195, 2205, 174 L.Ed.2d 99 (2009) (stating that once certain injunctive orders incorporated into the confirmed plan of reorganization "became final on direct review (whether or not proper exercises of bankruptcy court jurisdiction and power), they became res judicata to the `parties and those in privity with them, not only as to every matter which was offered and received to sustain or defeat the claim or demand, but as to any other admissible matter which might have been offered for that purpose.'") (quoting Nevada v. United States, 463 U.S. 110, 130, 103 S.Ct. 2906, 77 L.Ed.2d 509 (1983)).
For similar reasons, Ms. Burnett's recovery of post-petition spousal and child support is permitted because they are post-petition domestic support obligations, for which the Bankruptcy Code allows no proof of claim. See 11 U.S.C. § 502(b)(5) (disallowing any claim "to the extent that. . . such claim is for a debt that is unmatured on the date of the filing of the petition and that is excepted from discharge under section 523(a)(5)," e.g., a domestic support obligation). The BAP recognized this as well, writing that "[t]o the extent Debtor had a continuing post-petition obligation to pay spousal support, the confirmed plan could not, and did not, affect that obligation." (Citing 11 U.S.C.
Based on the foregoing, we affirm in part and reverse in part the BAP's order. Specifically, we reverse the BAP's ruling insofar as it awards Ms. Burnett interest on her pre-petition spousal support and remand to the bankruptcy court with instructions that it order the family court to deduct from its judgment any portion thereof that is attributable to the accrued interest on pre-petition spousal support. We affirm the remainder of the BAP's order.