In re Gendreau, BAP No. NV-94-1832-HaMeAs. Bankruptcy No. 93-31897-JHT. Adv. No. 93-3119.

Citation191 BR 798
Decision Date14 December 1995
Docket NumberBAP No. NV-94-1832-HaMeAs. Bankruptcy No. 93-31897-JHT. Adv. No. 93-3119.
PartiesIn re William O. GENDREAU, Debtor. William O. GENDREAU, Appellant, v. Colleen Rae GENDREAU, Appellee.
CourtBankruptcy Appellate Panels. U.S. Bankruptcy Appellate Panel, Ninth Circuit

191 B.R. 798 (1995)

In re William O. GENDREAU, Debtor.
William O. GENDREAU, Appellant,
Colleen Rae GENDREAU, Appellee.

BAP No. NV-94-1832-HaMeAs. Bankruptcy No. 93-31897-JHT. Adv. No. 93-3119.

United States Bankruptcy Appellate Panel of the Ninth Circuit.

Submitted Without Oral Argument March 22, 1995.

Decided December 14, 1995.

Amended Opinion January 31, 1996.

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

Peter L. Flangas, Gus Flangas, Las Vegas, NV, for Appellee.

Before HAGAN, MEYERS and ASHLAND, Bankruptcy Judges.


MEYERS, Bankruptcy Judge:


Chapter 7 bankruptcy debtor William Gendreau ("Debtor") filed a complaint against his former spouse Colleen Gendreau ("Appellee") for a declaratory judgment that his obligation to pay pension plan benefits to her pursuant to their divorce decree was a dischargeable debt. On opposing motions for summary judgment, the bankruptcy court held that the Appellee's right to a portion of the Debtor's pension benefits was not subject to discharge.




The Debtor has been employed by United Airlines, Inc. ("United") since 1966. The

191 BR 800
Debtor and the Appellee were married in 1985

A divorce decree was entered by the Family Court for Loudoun County, Virginia on October 2, 1992. The decree determined that a portion of the Debtor's two pension plans provided by United was marital property, and awarded 50 percent of this marital property to the Appellee. On January 25, 1993, the court entered an order entitled "Qualified Domestic Relations Order" (the "Order"). The Order provided that it was intended to be a qualified domestic relations order ("QDRO") pursuant to 29 U.S.C. § 1056(d). The Order also stated: "This court specifically retains jurisdiction to establish or maintain this Order as a Qualified Domestic Relations Order."

The administrator of the United pension plans was served with a copy of the Order. On May 17, 1993, Scott Zapel, Senior Counsel for the United pension plans, sent a letter to the Appellee stating that the Order was not a QDRO as defined in the statutes. The letter outlined the reasons for this conclusion: (1) the official plans' names were wrong; (2) the Appellee's address appeared to be wrong; and (3) there were two methods for calculating payments due the Appellee, both of which were ambiguous, with no indication as to which method to use if the two methods led to differing results. The letter provided that the Appellee could commence benefits within 60 days after a clarified QDRO was approved by the pension plan administrator.

The Debtor filed a Chapter 7 bankruptcy petition on November 15, 1993. The Appellee had not obtained a clarified QDRO. On November 29, 1993, the Debtor filed a complaint seeking a declaratory judgment that the Appellee's right to payment from the United pension plans was a debt dischargeable in bankruptcy. The Debtor subsequently filed a motion for summary judgment and the Appellee filed a cross-motion for summary judgment.

The bankruptcy court denied the Debtor's motion and granted the Appellee's cross-motion for summary judgment. The Debtor appeals.



Given that the court granted summary judgment on a legal question of statutory interpretation, and the essential facts are undisputed, we review the court's decision de novo. Matter of Pacific Far East Line, Inc., 713 F.2d 476, 478 (9th Cir.1983).



The issue of whether the Appellee's right to a portion of the Debtor's pension plans benefits is dischargeable centers on whether this right should be characterized as a prepetition claim against the Debtor. 11 U.S.C. § 727(b) states that, except as provided in 11 U.S.C. § 523(a), a discharge under Section 727(a) discharges a debtor from all debts that arose before bankruptcy.1 The Bankruptcy Code defines a "debt" as a "liability on a claim." 11 U.S.C. § 101(12). Pursuant to 11 U.S.C. § 101(5), a "claim" is defined as:

(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; or
(B) right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured, or unsecured.

Congress intended by the language used in Section 101 to adopt the broadest available definition of the term "claim." Johnson v. Home State Bank, 501 U.S. 78, 83, 111 S.Ct. 2150, 2153, 115 L.Ed.2d 66 (1991). We must

191 BR 801
decide whether the Appellee has a dischargeable claim against the Debtor

A. There Was No Claim Against the Debtor

In In re Teichman, 774 F.2d 1395 (9th Cir.1985), a dissolution decree ordered the debtor to pay his former wife a percentage of his retirement benefits. The debtor failed to pay her $14,000 of the benefits he received prepetition and refused to pay her any benefits given to him postpetition. The debtor argued that his obligations to his ex-wife were discharged. The Court of Appeals held that the $14,000 debt owed by the debtor to his wife prepetition was discharged, but that the right to a percentage of the debtor's monthly pension benefits postpetition was not a debt subject to discharge. The court explained that under the dissolution decree, the wife had an ownership interest in a portion of the retirement fund. Since the postpetition payments were not debts under the Code, the court concluded that they were not subject to discharge. 774 F.2d at 1398. The court in Bush v. Taylor, 912 F.2d 989, 993 (8th Cir.1990), also held that the former spouse's interest in postpetition pension payments was not dischargeable, for the reasons given in Teichman.

In this case, the Appellee is not asking for any monies paid to the Debtor prepetition. In fact, the Debtor did not receive any pension benefits prepetition. Under the rationale in Teichman and Bush, the right to a portion of these postpetition payments is not a debt owed by the Debtor and therefore not subject to discharge under Section 727(b).

As both Teichman and Bush involved government pensions, the Employee Retirement Income Security Act of 1974 ("ERISA") did not apply in those cases. The Dissent attempts to distinguish Teichman and Bush on this basis, and also on the ground that those decisions noted that a property interest had been created in the pension plans prepetition. As explained below, we do not find the distinctions material. The decisions were premised on the fact that payment from the pension was not owed by the Debtor at the time the bankruptcy petition was filed and therefore there was no debt to discharge. Here, also, the Debtor had no liability to the Appellee. Under the Teichman and Bush holdings, there was no debt for the Debtor to discharge.2

Regardless of when the payments came due, no debt was created because the Appellee did not have a claim against the Debtor. We disagree with the Debtor's argument that because the Appellee did not have a QDRO when the bankruptcy petition was filed, the pension funds were the Debtor's property against which the Appellee merely had a claim.

The Debtor points out that the anti-alienation provision in ERISA precludes assignment of the pension benefits to the Appellee unless she has a valid QDRO. See 29 U.S.C. § 1056(d)(1) ("each pension plan shall provide that benefits provided under the plan may not be assigned or alienated"). ERISA's prohibition on the assignment or alienation of pension benefits has been strictly enforced. Patterson v. Shumate, 504 U.S. 753, 760, 112 S.Ct. 2242, 2247, 119 L.Ed.2d 519 (1992); Guidry v. Sheet Metal Workers Pension Fund, 493 U.S. 365, 372, 110 S.Ct. 680, 685, 107 L.Ed.2d 782 (1990).

A QDRO is an express exception to ERISA's anti-alienation provision. See ERISA § 1056(d)(3)(B)(i)(I); In re Abbata, 157 B.R. 201, 205 (N.N.Y.1993). Domestic relations orders which are not QDRO's are subject to the anti-assignment provision. 29 U.S.C. § 1056(d)(3)(A); Ablamis v. Roper, 937 F.2d 1450, 1454 (9th Cir.1991). 29 U.S.C. § 1056(d)(3)(B)(i) defines a "qualified domestic relations order" as a domestic relations order

(I) which creates or recognizes the existence of an alternate payee\'s right to, or assigns to an alternate payee the right to, receive all or a portion of the benefits payable with respect to a participant under a plan, and
191 BR 802
(II) with respect to which the requirements of subparagraphs (C) and (D) are met. . . .

Subparagraphs (C) and (D), referenced above, specify what details the order must include, such as the name and address of the participant and alternate payee, the amount of benefits to be paid and the method of payment.

The pension plan administrator is charged with the initial responsibility to determine whether an order is a QDRO. See 29 U.S.C. § 1056(d)(3)(G). Here, although the Virginia state court originally deemed the order a QDRO, the pension plan administrator did not.3 The Debtor argues that rather than having a property right in the pension plans, the Appellee had a contingent right to payment, which was a claim as broadly defined in the Bankruptcy Code. Under the Debtor's analysis, his liability on the claim was discharged under 11 U.S.C. § 727(d).

A bankruptcy discharge operates to discharge all debts that were the personal liability of the debtor. 11 U.S.C. § 524; In re Raiman, 172 B.R. 933, 936 (9th Cir. BAP 1994). The Debtor incorrectly assumes that he had an unlimited right to all the pension funds, and that the Appellee's purported "contingent right to payment" was from the Debtor, rather than from United's pension plans. This also seems to be the premise relied upon by the Dissent. What the Debtor and the Dissent fail to recognize is that United, not the Debtor, controlled the funds. The Order provides that the amounts awarded to the Appellee by the...

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