In re Esposito
| Decision Date | 20 July 1983 |
| Docket Number | Bankruptcy No. 5-81-00834,Adv. No. 5-81-0120,5-81-01040,5-81-0454. |
| Citation | 31 BR 872 |
| Court | U.S. Bankruptcy Court — District of Connecticut |
| Parties | In re Lawrence ESPOSITO, Jr., Debtor. In re Richard A. MARRO, Debtor. Lawrence ESPOSITO, Jr., Plaintiff, v. STATE OF CONNECTICUT, Defendant. Richard A. MARRO, Plaintiff, v. COMMISSIONER OF INCOME MAINTENANCE, Defendant. |
Francis X. Dineen, New Haven, Conn., for plaintiffs.
Wilbur Ward Dinegar, Asst. Atty. Gen., Hartford, Conn., for defendants.
ALAN H.W. SHIFF, Bankruptcy Judge.
These matters were reached for trial on the complaints filed by debtors, Richard A. Marro (Marro) and Lawrence Esposito, Jr. (Esposito), to determine the dischargeability of a debt each owes to the State of Connecticut, arising out of child support obligations assigned to the State under the Aid To Families With Dependent Children Program (AFDC). In each proceeding, the evidence consisted of a stipulation entered into between the parties which follows.
B.
The Esposito stipulation is, in all material respects, identical to the Marro stipulation except for amounts of public assistance and the dates of the Chapter 7 petition and discharge. Esposito filed his Chapter 7 petition in this court on August 4, 1981, and obtained a discharge on December 1, 1981.
Are the child support obligations assigned to the State of Connecticut pursuant to Title IV, section 402(a)(26) of the Social Security Act, as amended, released by a discharge in bankruptcy under Title 11 of the United States Code?
If not, what is the amount of the nondischarged debt?
The resolution of this issue depends upon the reach of the amendment to section 456 of the Social Security Act, 42 U.S.C. § 656(b), by the Omnibus Budget Reconciliation Act of 1981, (Budget Act), Pub.L. No. 97-35 § 2334, 95 Stat. 863, effective August 13, 1981, which, in pertinent part provides:
"(b) A debt which is a child support obligation assigned to a state under section 402(a)(26) 42 U.S.C. § 602(a)(26) is not released by a discharge in bankruptcy under Title 11, United States Code."
In Marro, the debtor filed his petition prior to the effective date of the Budget Act; but, in both Marro and Esposito, the discharge entered after that date. In each case, the debtor seeks to avoid the consequences of the Budget Act.
The fact pattern in these proceedings is not significantly different from the facts presented to this court in In re Leach, 15 B.R. 1005, 8 B.C.D. 587 (Bkrtcy.Conn.1981). In Leach, as here, the debtor's child support obligation was assigned to the State pursuant to 42 U.S.C. § 602(a)(26).1 In Leach, as here, the effect of the Budget Act upon the debtor's obligation was an issue. I concluded that this court was bound by the principle of law stated by the Court of Appeals in this circuit in In re Spell, 650 F.2d 375 (2 Cir.1981). The court in Spell at 377 observed:
This general principle that a court must apply the law that exists as of the date it renders its decision has been consistently applied in cases arising under the Bankruptcy Act. The issue has arisen most frequently in the context of a change of law in the period between the filing of a bankruptcy petition and the court\'s ruling on the bankrupt\'s application for a discharge from bankruptcy. In these cases, this circuit has repeatedly held that "the grounds which would bar a discharge must be determined by the law in force at the time the judge passed on the question of discharge . . ." In re Carter, 32 F.2d 186, 188 (2d Cir.1929); see also United Wallpaper Factories v. Hodges, 70 F.2d 243 (2d Cir.1934); Royal Indemnity Co. v. Cooper, 26 F.2d 585 (4th Cir.1928); In re Sloss, 192 F.Supp. 136 (S.D.N.Y.1961). It is noteworthy that this rule was applied even though the result for the bankrupt was harsh, as in In re Carter, supra, or Royal Indemnity Co. v. Cooper, supra.
Accordingly, I concluded in Leach that this court must apply the law in effect at the time of the determination of dischargeability, even if it differs from the law at the date the debtor received his discharge. Thus under the Budget Act, the child support obligations assigned to the State were not discharged.2
The debtors seek to distinguish Leach and Spell by a progression of arguments which inter alia contend that the purpose of the Budget Act is to protect children, that the Budget Act must be read with Code section 523(a)(5)(A)3 to apply only in cases where the obligation arises out of a separation agreement, divorce decree, or property settlement agreement, and that there is a conflict between Code section 727(b)4 and the Budget Act which must be resolved in favor of the debtors' discharge of the child support obligation. The debtors further argue that even if the Budget Act excepts child support obligations assigned to the State, its application in these cases would be retroactive and thus improper. Finally, the debtors contend that they have a vested right to a discharge of these obligations.
There is no merit to the debtors' claims. A traditional approach to statutory construction is to analyze the language of a statute in the context of legislative intent on the assumption that the legislative branch chose particular words to accomplish a specific purpose.
Here, the debtors' argument seems to suggest that Congress is without authority to amend the law or to provide for limitations upon a debtors' discharge in any body of law other than the Bankruptcy Code. Congress labors under no such restraint. It is abundantly clear from the plain language of the Budget Act that Congress intended to modify the statutory formula for discharge under Code sections 727(b) and 523(a)(5)(A) by amending section 456 of the Social Security Act. The effect of the amendment, for the purposes of these proceedings, was to add to the exceptions to discharge provided by Code section 523(a), an additional exception—to wit, debts which are child support obligations assigned to the State under 42 U.S.C. § 602(a)(26).
The debtors' attempt to distinguish Spell is equally without merit. A debtor has no vested right in a discharge, particularly when, as here, the law changes before the discharge enters. As noted in Leach, "the discharge ordered . . . merely released the debtor from his dischargeable debts." At the time of the discharge in these cases, it was the law that the debtors' child support obligations to the State of Connecticut were not discharged. In fact, in Marro that was the law before the debtor filed his petition.
Having concluded that 42 U.S.C. § 656(b) renders the subject debts of the debtors nondischargeable, I next consider the nature and extent of the child support that is nondischargeable. Initially, however, I address the threshold issues raised by the defendant regarding this court's authority to consider this question.
The defendant first argues that the decision of Northern Pipeline Construction Co. v. Marathon Pipe Line Co., ___ U.S. ___, 102 S.Ct. 2858, 73 L.Ed.2d 598 (1982) has left this court without any jurisdiction. In Northern Pipeline, the Supreme Court held that the grant of power to Bankruptcy Judges in § 241(a) of...
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