LAKELAND – Florida’s 2nd District Court of Appeal has vacated a lower court’s ruling in a divorce case and remanded it for a ruling on reasonable attorneys' fees and costs for the wife involved in the case.
Shelly L. Chittim had filed an appeal of the ruling from the Hillsborough County Circuit Court that denied her motion for attorneys’ fees and costs, which had been based on a pre-bankruptcy award in her dissolution proceeding.
In August 2014, the trial court entered a final judgment of dissolution, awarding Shelly Chittim attorneys' fees and costs against her former husband, David M. Chittim.
In its ruling, the trial court ordered the parties to try to agree on the amount for reasonable attorneys’ fees that David Chittim would pay Shelly Chittim and reserving jurisdiction in case the parties were unable to agree.
In September 2014, having received no satisfactory response from her ex-husband, Shelly Chittim asked the court to enter an order awarding her reasonable attorneys’ fees and costs, court records state.
However, in December 2014, she declared bankruptcy, which stayed the determination.
Shelly Chittim was represented by Westchase Law in her dissolution and in the ensuing bankruptcy proceedings.
As part of its agreement to represent her in the dissolution proceeding, Westchase Law had filed a charging lien against her property. In the bankruptcy proceeding, it did not file any claim in connection with its fees and costs in the dissolution proceeding, and Shelly Chittim didn’t declare the fee award.
The bankruptcy court granted Shelly Chittim a discharge in April 2015, and by August 2015, the trial court directed both parties to file memoranda of law addressing the impact of the bankruptcy on the fee award.
David Chittim maintained that his ex-wife should be judicially estopped from seeking the fee award against him because she had failed to list it as an asset on her bankruptcy petition, according to court records. He also argued that if a fee were awarded, it should be zero because the bankruptcy proceeding had discharged her debt to Westchase Law.
In response, Shelly Chittim argued that judicial estoppel was unwarranted because she had consistently maintained that the fee award was not an asset of the bankruptcy estate, that her bankruptcy proceeding had not discharged her ex-husband’s debt to her. She also contended that Westchase Law's lien was enforceable against both her and the David Chittim and could not be discharged in the bankruptcy. She also reaffirmed her debt to the law firm after the bankruptcy had been discharged.
Judge Susan Rothstein-Youakim, writing the opinion for the appeals court, noted that the court agreed with Shelly Chittim’s position that the trial court erred in concluding she should be judicially estopped from claiming entitlement to the fee award because the dissolution proceeding and the bankruptcy proceeding do not involve the same parties.
“The record does not indicate that any party to either proceeding was misled by or changed its position based on the former wife’s failure to disclose the fee award as an asset in her bankruptcy petition,” Rothstein-Youakim wrote. “The bankruptcy trustee learned about the fee award during the bankruptcy proceeding and did not consider it to be an asset of the estate. And although the former wife’s failure to disclose the award gave the former husband an argument for not paying the award that he would not have had otherwise, the record does not indicate that he relied on or was misled by that failure to his detriment.”
Rothstein-Youakim also noted that the trial court erred in concluding that "the former wife is not entitled to recover attorneys' fees because she no longer owes her attorneys any fees or costs."
“Although the bankruptcy court discharged all of her prepetition debts, debts discharged in bankruptcy do not cease to exist; they simply become unenforceable,” she wrote in the opinion.
Citing In re Aloia, the court noted that disallowance of a claim owing to a creditor’s failure to file a timely proof of claim does not negate the claim itself. It simply means that the creditor may be unable to receive a distribution from the Chapter 7 trustee.
As a result, the court determined that if Shelly Chittim owed the law firm money at the time the bankruptcy was discharged, she still owes them.
However, the court also noted that unless Shelly Chittim reaffirmed the debt – and it sided with the trial court that nothing in the record established that she did – Westchase Law cannot collect on the debt.
As a result, the court vacated the lower court’s ruling on the fees because the trial court erred in concluding that Shelly Chittim was judicially estopped from pursuing the fee award and was otherwise no longer entitled to do so because she no longer owes her attorneys any fees or costs.
“We vacate the court's order on those grounds and remand for a determination of her reasonable attorneys’ fees and costs,” Rothstein-Youakim wrote. “The trial court's order is affirmed in all other respects.”