726 F.2d 1420 (9th Cir. 1984), 83-3571, Matter of Reynolds

Docket Nº:83-3571, 83-3572.
Citation:726 F.2d 1420
Party Name:In the Matter of Eugene L. REYNOLDS, Elaine M. Reynolds, Alan Eugene Lindner, Michael A. Miltimore, Rosalie A. Miltimore, Robert S. Winterfeld, Debtors. STATE OF IDAHO, DEPARTMENT OF HEALTH & WELFARE, Plaintiff-Appellant, v. Eugene L. REYNOLDS, Alan Eugene Lindner, Michael A. Miltimore, Robert S. Winterfeld, Defendants-Appellees, In the Matter of J
Case Date:February 28, 1984
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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726 F.2d 1420 (9th Cir. 1984)

In the Matter of Eugene L. REYNOLDS, Elaine M. Reynolds,

Alan Eugene Lindner, Michael A. Miltimore, Rosalie

A. Miltimore, Robert S. Winterfeld, Debtors.

STATE OF IDAHO, DEPARTMENT OF HEALTH & WELFARE, Plaintiff-Appellant,

v.

Eugene L. REYNOLDS, Alan Eugene Lindner, Michael A.

Miltimore, Robert S. Winterfeld, Defendants-Appellees,

In the Matter of James E. HAZEN, Sherry Hazen, Debtors.

STATE OF IDAHO, DEPARTMENT OF HEALTH & WELFARE, Plaintiff-Appellant,

v.

James E. HAZEN, Defendant-Appellee.

Nos. 83-3571, 83-3572.

United States Court of Appeals, Ninth Circuit

February 28, 1984

        Argued and Submitted Oct. 13, 1983.

        Christopher D. Bray, Bray & Bernter, Boise, Idaho, for plaintiff-appellant.

        William Breck Seiniger, Jr., Boise, Idaho, for defendants-appellees.

        Appeal from the United States District Court for the District of Idaho.

        Before WALLACE, ALARCON and BOOCHEVER, Circuit Judges.

        ALARCON, Circuit Judge:

        We must decide whether an amendment to 11 U.S.C. Sec. 523(a)(5)(A), effective August 13, 1981, applies to pending bankruptcy cases in which the debtor filed a petition before that date. The district court, 26

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B.R. 181, held that the amendment should not be given retroactive effect and applied the law in effect as of the date of the filing of the bankruptcy petition. We reverse.

       I.

        The district court consolidated the cases of five individual debtors: Hazen, Reynolds, Miltimore, Winterfeld, and Lindner. There are common factual elements.

        All five individuals were divorced from their spouses pursuant to Idaho court judgments, which awarded custody of their minor children to the wives and specific amounts of child support per month. The women applied for and received monthly public assistance payments from the State of Idaho, Department of Health and Welfare, for the benefit of their minor children. The women assigned their rights to receive child support payments to the state.

        Some of the debtors filed bankruptcy petitions, seeking in part to discharge their child support obligations. In other cases, the State of Idaho filed suit pursuant to state law to collect delinquent child support payments and received a judgment awarding the state the unpaid child support, attorneys' fees, costs and statutory interest. The debtors then filed their bankruptcy petitions.

        After the filing of these bankruptcy petitions, Congress amended 11 U.S.C. Sec. 523(a)(5)(A) to disallow the discharge of a child support obligation assigned to an entity under section 402(a)(26) of the Social Security Act, which requires an applicant for assistance under the Aid to Families with Dependent Children program (AFDC) to assign child support obligations to the state administering the program. The amendment was made effective August 13, 1981. After this date, the bankruptcy court granted each of the debtors a discharge. The State of Idaho filed objections to the discharge of the child support obligations.

        The bankruptcy court held in Matter of Hazen, 19 B.R. 545 (Bkrtcy.D.Idaho 1982), that dischargeability of the child support obligations assigned to the state should be determined by the law in effect at the time of the filing of the debtor's petition in bankruptcy. Therefore, the debts were dischargeable. The cases of Hazen and Reynolds were decided together; those of Miltimore, Winterfeld, and Lindner were decided on the basis of Hazen. The district court affirmed the decisions of the bankruptcy judge.

       II.

        Whether the dischargeability of child support obligations should be determined by the law in effect on the date of the filing of the petition in bankruptcy or on the date of the ruling by the judge on the issue is a question of law subject to de novo review by this court. The facts have been stipulated by the parties. See Matter of B & W Enterprises, Inc., 713 F.2d 534, 536 (9th Cir.1983) (stipulated facts, remaining questions of law subject to de novo review).

        In 1974 Congress enacted legislation that prohibited the discharge of child support obligations assigned to a state as a prerequisite for the receipt of assistance payments. Social Services Amendments of 1974, Pub.L. No. 93-647, 88 Stat. 2337, 2356 (1975) (codified at 42 U.S.C. Sec. 656(b)). This provision was repealed by the Bankruptcy Reform Act of 1978, Pub.L. No. 95-598, 92 Stat. 2549, 2679. The Bankruptcy Reform Act of 1978 also provided that child support obligations owed directly to the spouse, former spouse, or child of the debtor were nondischargeable. 92 Stat. at 2590-91 (codified at 11 U.S.C. Sec. 523(a)(5)(A)). This was the state of the law at the time the five debtors now before us filed their petitions in bankruptcy.

        None of the debtors was granted a discharge before Congress reinstituted 42 U.S.C. Sec. 656(b) and amended 11 U.S.C. Sec. 523(a)(5)(A) to again prohibit the discharge of child support obligations assigned to a state as a condition of entitlement to assistance. Omnibus Budget Reconciliation Act of 1981, Pub.L. No. 97-35, 95 Stat. 357, 863. Congress made these provisions effective on enactment (August 13, 1981) rather

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than on October 1, 1981, the general date of effectiveness of the Act. 95 Stat. at 863-64. Thus, at the time the judge determined the dischargeability of these child support obligations, the law provided that these debts were not dischargeable.

A.

        The retroactive application of a federal statute (other than an ex post facto law or a bill of attainder) is not forbidden under the Constitution so long as due process requirements are met. 1 2 C.D. Sands, Statutes and Statutory Construction Sec. 41.03 (4th ed. 1973). Indeed, as a general rule, a judge should apply the law in effect on the date of decision. In United States v. The Schooner Peggy, 5 U.S. 103, 1 Cranch 103, 2 L.Ed. 49 (1801), the Supreme Court first set forth the principle in the following language:

It is, in the general, true, that the province of an appellate court is only to inquire whether a judgment, when rendered, was erroneous or not. But if, subsequent to the judgment, and before the decision of the appellate court, a law intervenes and positively changes the rule which governs, the law must be obeyed, or its obligation denied.

        5 U.S. at 110, 1 Cranch at 110. In clarifying this rule, in Thorpe v. Housing Authority of the City of Durham, 393 U.S. 268, 281-82, 89 S.Ct. 518, 525-26, 21 L.Ed.2d 474 (1969), the Supreme Court ruled that "an appellate court must apply the law in effect at the time it renders its decision," noting that the Schooner Peggy reasoning had been applied whether the change was constitutional, statutory, or judicial. This principle had been applied to a bankruptcy statute in Carpenter v. Wabash Railway Co., 309 U.S. 23, 60 S.Ct. 416, 84 L.Ed. 558 (1940) (amendment to bankruptcy statute enacted while case pending for review held applicable). 2 We, therefore, must follow the Schooner Peggy and apply the law now in effect to the cases before us, unless an exception to the limited retroaction rule is applicable. Legislation is not applied to pending cases where Congress has expressly directed that the law is prospective only or where manifest injustice would result from a retrospective application.

B.

        In Bradley v. School Board of the City of Richmond, 416 U.S. 696, 94 S.Ct. 2006, 40 L.Ed.2d 476 (1974), the Supreme Court held that "a court is to apply the law in effect at the time it renders its decision, unless ... there is statutory direction or legislative history to the contrary." Id. at 711, 94 S.Ct. at 2016. The Supreme Court also noted in Bradley that "even where the intervening law does not explicitly recite that it is to be applied to pending cases, it is to be given recognition and effect." Id. at 715, 94 S.Ct. at 2018.

        The Omnibus Budget...

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