Brown v. Pitzer
| Decision Date | 02 June 2000 |
| Docket Number | Bankruptcy No. IP 96-8284-RLB-7. Adversary No. IP 97-8.,No. IP 99-1295-C-B/S,IP 99-1295-C-B/S |
| Citation | 249 BR 303 |
| Parties | Kevin D. BROWN, Appellant, v. Danielle M. PITZER, Appellee. In re Kevin D. Brown. Danielle M. Pitzer, Plaintiff, v. Kevin D. Brown, Defendant. |
| Court | U.S. District Court — Southern District of Indiana |
Kevin D. Brown, Indianapolis, IN, pro se.
Richard S. Mossler, Indianapolis, IN, for defendants.
ENTRY AFFIRMING BANKRUPTCY COURT'S GRANT OF SUMMARY JUDGMENT IN FAVOR OF APPELLEE PITZER
Appellant, Kevin D. Brown ("Brown" or the "Debtor"), accumulated a fairly sizeable pension fund during the course of his now-dissolved marriage to the appellee, Danielle Pitzer ("Pitzer"). When their union soured, the parties sought to dissolve their marriage and divide their property, turning to Indiana state court to accomplish the task. They succeeded, and the Indiana court issued a divorce decree, dividing the marital assets and requiring Brown to file a Qualified Domestic Relations Order ("QDRO") to effectuate the court's equal distribution of the marital property. As it turns out, the QDRO was unnecessary since Brown's pension fund was not subject to ERISA laws, which ordinarily require that a valid QDRO be filed before a pension administrator will release or assign funds in a pension to a third party, such as a former spouse like the appellee here. Nonetheless, instead of filing the QDRO as required by the divorce decree, Brown filed a voluntary bankruptcy petition over two months after the divorce seeking to discharge his "debts," which he claimed included the amount in the pension fund that the Indiana divorce court had awarded to Pitzer. Pitzer initiated an adversarial action in that bankruptcy proceeding, moving for summary judgment that the state court's pension award was not a dischargeable debt in bankruptcy. Pitzer contended that the pension award was not a component of Brown's bankruptcy estate because the pension fund, not Brown, owed her the amount specified in the divorce decree and because the divorce decree vested her with a specific property interest in the pension fund before Brown filed his bankruptcy petition. The bankruptcy court agreed with Pitzer and granted her motion for summary judgment. For the reasons discussed below, we conclude that the $55,770.33 in pension funds allocated to appellee Pitzer by the divorce decree does not qualify as a dischargeable debt in appellant Brown's bankruptcy proceeding and AFFIRM the judgment of the bankruptcy court.
On June 18, 1996, the Monroe Circuit Court issued a divorce decree dissolving Brown's and Pitzer's marriage. See Pitzer Compl. to Determine Dischargeability of Debt (Ex. A, Divorce Decree). Pursuant to that decree, the court assessed the assets and liabilities of each party, fixing the net value of the marital estate at $105,035.48. The court determined that an equal division of the value of the marital property was appropriate, although a significant disparity existed between Brown and Pitzer in respect to the pre-divorce distribution of those assets and liabilities — Brown possessed a net $108,288.07 in assets while Pitzer was saddled with a net liability of $3,252.59. Id. ¶ 28. Because Brown had accrued the largest marital asset, a pension fund with an accumulation during marriage valued at $106,501.07, the court determined that Pitzer was entitled to $55,770.33 of the pension funds as a means to equalize the property distribution between the parties. Id. ¶¶ 28, 30. Perhaps as a matter of course in Indiana whenever a division of marital property involves a pension plan, or perhaps under the mistaken impression that Brown's pension fund qualified as an ERISA-governed plan, the court ordered Brown to submit a QDRO to effectuate the transfer of the pension award to Pitzer:
30. The property distributed to the parties shall be made equal by a Qualified Domestic Relations Order transferring Fifty-five Thousand Seven Hundred Seventy Dollars and Thirty-three Cents ($55,770.33) from the funds in Brown's TIAA/CREF pension account to Pitzer. Brown's attorney shall submit a proposed order within forty-five (45) days from the date of this decree.
Id. ¶ 30. The court summarized the same conclusion in its final Order, directing that:
IV. The parties' property shall be divided between them as set out in Paragraph 28 of this Decree. Respondent, Kevin D. Brown, shall cause the amount of Fifty-five Thousand Seven Hundred Seventy Dollars and Thirty-three Cents ($55,720.33) sic in his pension account with TIAA/CREF to be set off to the Petitioner, Danielle M. Pitzer, by a Qualified Domestic Relations Order, to be submitted by Respondent within forty-five days (45) days of this Decree. Id. at 10.
Regardless of the reason for the courtordered QDRO, however, the pension fund at issue is not governed by ERISA laws, a fact that Brown acknowledges in this appeal. See Appellant Br. at 7 n. 1, 17 n. 2 ().1 Thus, ERISA's anti-alienation provision, which operates to preempt state law and requires that a valid QDRO be filed before a plan administrator can relinquish pension funds to a third party, is also inapplicable to this case.2
Instead of executing a QDRO as ordered by the Indiana court, Brown filed his petition for voluntary bankruptcy on September 3, 1996, over two months after issuance of the divorce decree and well after the 45 days within which the Indiana court required Brown to tender the QDRO. Brown listed in his bankruptcy petition all "debts" that he claimed were dischargeable, including that $55,770.33 in pension funds that the state court had awarded to Pitzer.
On January 7, 1997, appellee Pitzer instituted an adversarial action in Brown's bankruptcy proceeding. On March 26, 1998, Pitzer filed a motion for summary judgment, asserting that the divorce decree vested her with an interest in the pension fund that was her sole and separate property distinct from Brown's dischargeable debts in the bankruptcy estate. On August 4, 1999, the bankruptcy court granted Pitzer's motion for summary judgment, finding that the divorce decree awarded Pitzer a present interest in the pension fund that was neither a debt owed by Brown nor a part of the bankruptcy estate. Brown appeals the bankruptcy court's judgment, which we affirm.
We have jurisdiction to consider this bankruptcy appeal pursuant to 28 U.S.C. § 158(a). We review the bankruptcy court's legal interpretations de novo; however, we review findings of fact entered by the bankruptcy court only for clear error. See In re Hancock, 192 F.3d 1083, 1085 (7th Cir.1999); Peterson v. Scott (In re Scott), 172 F.3d 959, 966 (7th Cir.1999). To determine the nature of a debtor's interest in property, we look to state law; to determine whether that interest counts as property of the debtor's estate, we look to federal bankruptcy law. See In re Krueger, 192 F.3d 733, 737 (7th Cir.1999); In re A-1 Paving & Contracting, Inc., 116 F.3d 242, 243 (7th Cir.1997). Because the bankruptcy court granted Pitzer's motion for summary judgment, we must determine whether a genuine issue of material fact exists such that a reasonable trier of fact could return a judgment in appellant Brown's favor. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). Summary judgment is appropriate if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." FED. R.CIV.P. 56(c). In considering a motion for summary judgment, any inferences drawn from the facts must be viewed in the light most favorable to the non-moving party, but only reasonable inferences need be made. See Mills v. Health Care Serv. Corp., 171 F.3d 450, 459-60 (7th Cir.1999). However, in this case the facts are not in dispute, leaving us with plenary review of a purely legal issue.
The question before us, whether Brown's bankruptcy petition circumscribed any rights that Pitzer may have secured pursuant to the divorce decree, is rendered considerably more straightforward by virtue of the pension fund's independence from ERISA laws. While some courts considering similar questions have tangled with the potentially pre-emptive effect of ERISA's QDRO requirement on a state court's division of marital assets, that concern is not before us. Rather, we look to state law to determine the nature of Pitzer's interest in the marital pension, although we are mindful that federal law determines whether that state law-defined interest constitutes a debt within the meaning of the bankruptcy code. This application of federal law is altogether logical since the bankruptcy code defines what constitutes a dischargeable "debt." The Supreme Court has recognized that while the bankruptcy code provides specific definitions that guide a court's analysis, in the absence of such controlling federal law, terms such as "property" and "interests in property" are creatures of state law. See Barnhill v. Johnson, 503 U.S. 393, 397-98, 112 S.Ct. 1386, 1389, 118 L.Ed.2d 39 (1992) ().
In order for a financial obligation to be dischargeable under federal law, the obligation must be the personal liability of the debtor, as defined by the bankruptcy code. See, e.g., 11 U.S.C. § 524. Hence, a "debt" that arises pre-petition is dischargeable unless it falls within one of the...
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