Gendreau, In re, 96-15432

Citation122 F.3d 815
Decision Date15 August 1997
Docket NumberNo. 96-15432,96-15432
PartiesBankr. L. Rep. P 77,497, 21 Employee Benefits Cas. 1533, 97 Cal. Daily Op. Serv. 6492, 97 Daily Journal D.A.R. 10,622, Pens. Plan Guide (CCH) P 23936M In re: William O. GENDREAU, Debtor. William O. GENDREAU, Appellant, v. Colleen Rae GENDREAU, Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)

John R. Martz, Reno, NV, for Appellant.

Gus W. Flangas, Las Vegas, NV, for Appellee.

Appeal from the Ninth Circuit Bankruptcy Appellate Panel; Meyers, Ashland, and Hagan, Judges, Presiding. BAP No. NV-94-01832-HMeAs.

Before: HUG, Chief Judge, CHOY, and HAWKINS, Circuit Judges.

CHOY, Circuit Judge:

Appellant William O. Gendreau ("William") appeals the grant of summary judgment in favor of appellee Colleen R. Gendreau ("Colleen") by the United States Bankruptcy Court and the subsequent affirmance by the Bankruptcy Appellate Panel ("BAP") of the Ninth Circuit.


William and Colleen were married in 1985. In 1992 they were divorced. The Family Court for Loudoun County, Virginia, issued a divorce decree, awarding Colleen a fifty percent interest in amounts William accrued in his two United Pilot's pension plans during the years they were married. The Family Court did not award either party maintenance or spousal support.

In January, 1993, the Family Court entered an order entitled "Qualified Domestic Relations Order" ("QDRO"), which was intended to satisfy an exception to the Employee Retirement Income Security Act's ("ERISA") prohibition against the alienation of pension plan funds. The order directed the plans' administrator to pay Colleen directly her percentage of the pension funds. On May 17, 1993, the administrator determined that the payment order did not meet the specific criteria of a QDRO and refused to pay out funds to Colleen until he received an amended payment order that was approved as a QDRO.

On November 15, 1993, William filed a petition under Chapter 7 of the United States Bankruptcy Code, 11 U.S.C. § 701, et. seq. On November 29, William filed suit seeking a declaratory judgment that Colleen's award of part of his pension plans benefits was a dischargeable debt. Both parties filed motions for summary judgment. After a hearing on the matter, the bankruptcy judge entered an order denying William's motion and granting Colleen's. William appealed the grant of summary judgment in favor of Colleen. The BAP affirmed, finding that there was no claim against the debtor, William, to be discharged in bankruptcy. In re Gendreau, 191 B.R. 798 (9th Cir. BAP 1995).

William timely filed an appeal in this court. Having reviewed the bankruptcy court's conclusions of law de novo, see In re Alsberg, 68 F.3d 312, 314 (9th Cir.1995), cert. denied, --- U.S. ----, 116 S.Ct. 1568, 134 L.Ed.2d 667 (1996), and its findings of fact for clear error, see id., we affirm.


At issue is whether William's bankruptcy petition cut off any rights Colleen may have in a portion of William's pension proceeds that were awarded to her in the divorce. ERISA was promulgated to protect participants in private employee benefit plans. 29 U.S.C. § 1001. ERISA strictly prohibits the assignment or alienation of pension benefits. 29 U.S.C. § 1056(d)(1); see also Patterson v. Shumate, 504 U.S. 753, 760, 112 S.Ct. 2242, 2247-48, 119 L.Ed.2d 519 (1992); Guidry v. Sheet Metal Workers Nat'l Pension Fund, 493 U.S. 365, 372, 110 S.Ct. 680, 685, 107 L.Ed.2d 782 (1990). However, Congress expressly excepted QDROs from ERISA's anti-alienation rule. 29 U.S.C. § 1056(d)(3)(A). Domestic relations orders must meet specific requirements in order to qualify as QDROs. See 29 U.S.C. § 1056(d)(3)(B).

The QDRO exception was enacted to protect the financial security of divorcees. Ablamis v. Roper, 937 F.2d 1450, 1453 (9th Cir.1991). Because Congress was also concerned with reducing the expense to plan providers and protecting them from suits for making improper payments, it required that QDROs be specific and clear and allowed plan administrators to approve the QDRO before they would be required to act in accordance with it. Metropolitan Life Ins. Co. William asserts that ERISA's strict anti-alienation rules preclude Colleen from having a property interest in his pension plans absent a QDRO, which according to the plan administrator she does not have. Accordingly, he argues, Colleen merely has a right to obtain a QDRO and payment, which fits the bankruptcy code's definition of debt. Colleen concedes that the plan administrator was within his rights to determine that the state court order did not qualify as a QDRO, but maintains that she has a nondischargeable interest in a portion of the pension proceeds.

v. Wheaton, 42 F.3d 1080, 1084 (7th Cir.1994); 29 U.S.C. § 1056(d)(3)(G).

The Bankruptcy Code provides for the discharge of all debts that are the personal liability of the debtor and that arose before the debtor filed for bankruptcy under title 11. 11 U.S.C. §§ 524 and 727(a). Debt is defined as a "liability on a claim," 11 U.S.C. § 101(12), and claim is broadly defined to include a "right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured." 11 U.S.C. § 101(5). Debts incurred as a result of divorce, including property settlement debts, 1 are dischargeable except to the extent they represent obligations in the nature of alimony, maintenance, or support. 11 U.S.C. § 523. The award of a portion of pension benefits may constitute a property settlement that will be discharged in bankruptcy if it is determined to be a debt.

We find that Colleen's interest is not a dischargeable debt. Firstly, we agree with the BAP that Colleen's claim is against the United Pilot's pension plans and not against William. See Gendreau, 191 B.R. at 802. Therefore, the claim is not a personal liability of William that could be discharged by his bankruptcy.

The order required United to pay directly to Colleen her share of the proceeds and instructed the plan administrator to separately account for the portion awarded to Colleen until the benefits are distributed and provided that the "benefits awarded by this Order shall not be assigned, pledged, or otherwise transferred, voluntarily or involuntarily, before [Colleen] has received those benefits." Also, ERISA provides that "[d]uring any period in which the issue of whether a domestic relations order is a qualified domestic relations order is being determined (by the plan administrator, by a court of competent jurisdiction, or otherwise), the plan administrator shall segregate in a separate account in the plan or in an escrow account the amounts which would have been payable to the alternate payee [Colleen] during such period...." 29 U.S.C. § 1056(d)(3)(H)(i) (emphasis added).

If the plans failed to pay Colleen, her recourse would be to sue the plans, not William. See id. at 802 ("To obtain the pension funds, [Colleen] would file a civil court action against the administrator. [Colleen's] claim is against United, not the Debtor.") In no way can William be personally liable to Colleen for this money, so it cannot be a personal debt of William's that is dischargeable in bankruptcy. Even if Colleen did not have a QDRO at the time William filed for bankruptcy, his bankruptcy cannot eliminate her right to obtain a QDRO and seek payment from a different party.

Likewise, we agree with the BAP that the order by the Family Court, if not itself a proper QDRO, at least gave Colleen a right to obtain a proper QDRO that could not be discharged in William's bankruptcy proceeding. Colleen's interest in the pension plans (or, at a...

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