In re Brown, Bankruptcy No. 93 B 06822. Adv. No. 93 A 0828.
| Decision Date | 27 May 1994 |
| Docket Number | Bankruptcy No. 93 B 06822. Adv. No. 93 A 0828. |
| Citation | 168 BR 331 |
| Parties | In re David L. BROWN, Debtor. Betty J. BIGELOW, f/k/a Brown, Plaintiff, v. David L. BROWN, Debtor. |
| Court | U.S. Bankruptcy Court — Northern District of Illinois |
Leigh M. Rawson, Leo Flanagan, Brittain & Ketcham, Elgin, IL, for plaintiff.
William A. Feda, Elgin, IL, for debtor.
At present, there are two related proceedings pending before the Court, both brought by the debtor's former spouse. The first is a motion to modify the automatic stay and the second is a complaint to determine the dischargeability of a debt. The parties have filed cross motions for summary judgment under Fed.R.Civ.P. 56, made applicable to adversary proceedings in bankruptcy cases by Fed.R.Bankr.P. 7056. The motions for summary judgment are made only in connection with the complaint to determine dischargeability filed by the Plaintiff, Betty J. Bigelow, f/k/a Brown. Nevertheless, the disposition of the summary judgment motions in the adversary proceeding also necessarily determines the outcome of the stay motion. Accordingly, for the reasons stated below, this court denies the motion to lift the automatic stay as moot, denies both motions for summary judgment as moot, and dismisses the adversary complaint as unnecessary.
The debtor, David Brown, and the plaintiff in both matters, Betty Bigelow f/k/a Brown, were married on October 9, 1965. Some two decades later, on May 27, 1986, the two were divorced. After a bench trial, the state court judge entered a Judgment for Dissolution of Marriage which stated, inter alia:
Betty Brown is awarded fifty percent (50%) of the present value, as of the date of the Judgment, in the pension plan in which David Brown participates through his employer, AT & T. An appropriate Qualified Domestic Relations Order ("QDRO") shall be entered in conjunction with this Judgment.
A QDRO was entered on May 27, 1986. Sometime thereafter, the Debtor took early retirement and began receiving his retirement benefits. During that time, all of the benefits were paid directly to the Debtor. The Plaintiff learned of this situation and returned to the state court to enforce the divorce decree. On September 17, 1991, the state court ordered the Debtor to pay $356.07 per month to the Plaintiff. Unfortunately, the Debtor again failed to comply with the state court's order, and the Plaintiff was forced yet another time to seek relief in state court.
On December 17, 1992, the Circuit Court entered an order directing AT & T, the Debtor's former employer and pension plan administrator, to pay the sum of $356.07 per month from the Debtor's pension plan payments directly to the Plaintiff. An additional sum of $150.00 was to be paid directly to the Plaintiff until she was reimbursed the sum of $1,780.35 representing the amount she should have been paid for her portion of the pension payments made August through December, 1992, inclusive. A certified copy of the QDRO was filed with the state court in conjunction with this order and served on AT & T. Apparently, this QDRO did not meet with AT & T's requirements for distribution of pension payments, and no payments were made directly to the Plaintiff from the pension plan.1
On March 29, 1993, the Debtor filed a petition under Chapter 7 of the Bankruptcy Code. In his schedules, the Debtor listed the Plaintiff as a judgment creditor holding an unsecured nonpriority claim in the amount of $141,429.09. On July 1, 1993, shortly after the debtor filed his Chapter 7 petition, the Plaintiff obtained an amended QDRO from the state court. This amended QDRO satisfied AT & T's requirements. The Plaintiff made no effort to obtain relief from the automatic stay created under Section 362(a) before proceeding in the state court post-petition.2
The Plaintiff filed her initial complaint objecting to discharge on July 2, 1993.3 On August 12, 1993, this court stated in open court that the amended QDRO entered in the 16th Judicial Circuit dated July 1, 1993 was void and of no force and effect. This court then sua sponte dismissed the Plaintiff's complaint objecting to discharge. However, on October 14, 1993, this court, recognizing that it may have acted precipitously, entered a minute order reinstating the Plaintiff's adversary complaint and granting the Plaintiff leave to amend the complaint within 14 days.
On October 20, 1993, an order was entered in state court with regard to the divorce case staying the effect of the July 1, 1993 order until the bankruptcy court had an opportunity to determine the rights of the Debtor and the Plaintiff in the pension. The Plaintiff filed her motion to lift the automatic stay on October 29, 1993.4 Also on October 29, 1993, the Plaintiff filed her Amended Complaint Objecting to Discharge. On December 16, 1993, the Debtor filed his answer to the Amended Complaint Objecting to Discharge. Thereafter, on January 6, 1994, the Plaintiff filed a Motion for Summary Judgment in the Amended Complaint Objecting to Discharge.
The Debtor responded to the Plaintiff's motion for summary judgment on February 4, 1994. At the same time, he filed his own motion for summary judgment with respect to the Complaint Objecting to Discharge. On March 10, 1994, the Plaintiff filed her Response to Defendant's motion for Summary Judgment.5
In support of her motion for summary judgment, the Plaintiff argues that as a result of the divorce decree, her interest in the pension plan is her sole and separate property and that accordingly, any pension payments received by the Debtor from her portion of the pension plan were received by the Debtor as constructive trustee for the Plaintiff's benefit. Consequently, according to the Plaintiff, her interest in the pension plan is not part of the bankruptcy estate and is not a debt subject to discharge.
In response, the Debtor argues that the divorce order did not create a property right in the Debtor's pension. Instead, he contends that the decree was a property settlement which thereby created a debtor/creditor relationship between the parties. It is his view that the entire pension plan continues to be his sole and separate property. Further, the Debtor argues that even if the Plaintiff has a property right in the pension, that right can only be "perfected" when a valid QDRO is submitted to the Debtor's pension plan administrator, AT & T. According to the Debtor, since the July 17, 1993 Amended QDRO was entered in violation of the automatic stay and is void, the Plaintiff has failed to "perfect" her property rights she might have against a levying creditor. Thus, the Debtor argues, the Plaintiff is merely an unsecured creditor of the Debtor (apparently relying on 11 U.S.C. §§ 544(a) and 522(h)), and any debt owing to the Plaintiff is dischargeable in bankruptcy.
The court has jurisdiction over these matters pursuant to 28 U.S.C. §§ 1334(b) as matters arising under §§ 362 and 523 of the Bankruptcy Code. These matters are core proceedings under 28 U.S.C. § 157(b)(2)(G) and (I) and are before the court pursuant to Local Rule 2.33 of the United States District Court for the Northern District of Illinois automatically referring bankruptcy cases and proceedings to this court for hearing and determination.
Under Fed.R.Civ.P. 56(c), made applicable to adversary proceedings by Fed.R.Bankr.P. 7056, summary judgment is proper if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). On a summary judgment motion, the inferences to be drawn from the underlying facts must be viewed in the light most favorable to the party opposing the motion. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). There is no genuine issue for trial if the record, taken as a whole, could not lead a rational trier of fact to find for the non-moving party. Matsuhita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986).
In the present matter, the court is called upon to determine whether the division of the Debtor's pension under the state court decree gave rise to a separate property interest in the pension in favor of the Plaintiff or merely created a debt owing to the Plaintiff. If the decree creates a debt rather than a property interest, the court will have to determine whether the award to the Plaintiff in the divorce decree is in the nature of alimony, maintenance or support, and therefore is nondischargeable, or whether it is a debt resulting from a division of property and is dischargeable. See 11 U.S.C. §§ 727(a), 523(a)(5).
The question of whether or not the Plaintiff's interest in the pension plan is her separate property interest, and thus not part of her former husband's bankruptcy estate, is determined by reference to state law. See e.g., Barnhill v. Johnson, ___ U.S. ___, 112 S.Ct. 1386, 118 L.Ed.2d 39 (1992); Jones v. Atchison, 925 F.2d 209 (7th Cir.1991), cert. denied, ___ U.S. ___, 112 S.Ct. 178, 116 L.Ed.2d 140 (1991). Under Illinois law, a pension fund created during the marriage is marital property subject to division. In re Marriage of Norfleet, 243 Ill.App.3d 925, 612 N.E.2d 939, 184 Ill.Dec. 63 (1993); In re Marriage of Roehn, 216 Ill.App.3d 891, 894, 576 N.E.2d 560, 562, 159 Ill.Dec. 891, 893 (1991) (); In re Marriage of Hackett, 113 Ill.2d 286, 497 N.E.2d 1152, 100 Ill.Dec. 790 (1986) (same); In re Marriage of Korper, 131 Ill.App.3d 753, 757, ...
To continue reading
Request your trial