In re Hohenberg, Bankruptcy No. 91-20777-B (mjn)

• Decision Date: 10 July 1992
• Docket Number: Bankruptcy No. 91-20777-B (mjn),Adv. No. 91-0297.
• Citation: 143 BR 480
• Parties: In re Julien J. HOHENBERG, Debtor. Sarah J. HOHENBERG, Plaintiff, v. Julien J. HOHENBERG, Defendant.
• Court: U.S. Bankruptcy Court — Western District of Tennessee

143 B.R. 480 (1992)

In re Julien J. HOHENBERG, Debtor Sarah J. HOHENBERG, Plaintiff, v. Julien J. HOHENBERG, Defendant.

Bankruptcy No. 91-20777-B (mjn), Adv. No. 91-0297.

United States Bankruptcy Court, W.D. Tennessee, W.D.

July 10, 1992.

COPYRIGHT MATERIAL OMITTED

Bradley A. MacLean, Farris, Warfield & Kanaday, Nashville, Tenn., for plaintiff Sarah J. Hohenberg.

Robert D'Agostino, Law Office of William L. Norton, Jr., Atlanta, Ga., Elizabeth G. Ford, Wolff Ardis, Memphis, Tenn., for debtor.

William J. Landers, Martin, Tate, Morrow & Marston, P.C., Memphis, Tenn., for Bankers Trust Co.

Julie C. Chinn, Memphis, Tenn., Asst. U.S. Trustee.

Jack F. Marlow, trustee, Udelsohn, Blaylock & Marlow, P.C., Memphis, Tenn., for The Julien Co.

John W. McQuiston, III, Evans & Petree, Russell J. Hensley, Bogatin, Lawson & Chiapella, Memphis, Tenn., for Unsecured Creditors.

David J. Harris, Burch, Porter & Johnson, David J. Cocke, F. Guthrie Castle, C. William Denton, Borod & Kramer, Memphis, Tenn., for trustee.

MEMORANDUM OPINION AND ORDER ON PLAINTIFF'S COMPLAINT REQUESTING RELIEF FROM THE AUTOMATIC STAY

WILLIAM H. BROWN, Bankruptcy Judge.

This cause¹ is before the Court on the complaint of the plaintiff, Sarah J. Hohenberg, requesting relief from the automatic stay and a determination of the parties' respective interests in their marital property. The plaintiff originally requested relief from the automatic stay in order to commence divorce proceedings against the debtor in state court. At issue is this Court's determination of the extent to which the state court may exercise jurisdiction over the issues involved in the parties' divorce proceedings. The following constitutes findings of fact and conclusions of law pursuant to F.R.B.P. 7052.

The record reflects that the debtor voluntarily filed this Chapter 11 case on January 18, 1991. The plaintiff then filed this adversary proceeding on July 31, 1991, requesting that the automatic stay be lifted so that she could commence divorce proceedings against the debtor in state court. On August 28, 1991, this Court entered an order granting Mrs. Hohenberg relief from the stay, to the extent such relief was necessary, to permit her to begin a divorce action seeking divorce, alimony and child support. However, the Court ordered that the stay would remain in effect with respect to any action to determine the equitable division of marital property pending further order of the Court. Subsequently, on September 6, 1991, the debtor filed for divorce, pro se, in state court without obtaining leave of this Court. His divorce complaint prayed for, among other things, equitable division of the parties' marital property and debt. On November 27, 1991, this Court therefore ordered that the automatic stay with respect to any action to determine the equitable division of marital property would remain in effect pending further order and that the divorce action commenced by the debtor in state court would also be stayed pending further order. The Court then invited all parties in interest to submit memoranda concerning the relationship between Tennessee domestic relations law and bankruptcy law in this case.²

Having studied each party in interest's brief, this Court must now determine the extent to which the stay may be lifted and to which the state court may exercise jurisdiction to resolve the following issues:

(1) Right to divorce, child custody and/or child visitation;

(2) Right to alimony, maintenance and/or support;

(3) Dischargeability of alimony, maintenance and/or support under 11 U.S.C. § 523(a)(5);

(4) Determination of and equitable division of "marital property" pursuant to Tenn.Code Ann. § 36-4-121(a) and (b);

(5) Enforcement of a state court judgment;

(6) Entry of a consensual property settlement agreement;

(7) Resolution of exemption issues; and

(8) Participation of the creditors in state court litigation.

(1) RIGHT TO DIVORCE, CHILD CUSTODY AND/OR CHILD VISITATION

"There can be no doubt that the state court action as it pertains to divorce and the custody of the minor children should not be stayed." Schulze v. Schulze, 15 B.R. 106, 108 (Bankr.S.D. Ohio 1981). The jurisdiction to determine the right to and grounds for a divorce, along with a determination of custodial relationships, falls exclusively with the state court. In re Palmer, 78 B.R. 402, 405 (Bankr. E.D.N.Y.1987); In re Cunningham, 9 B.R. 70, 71 (Bankr.D.N.M.1981). See In re Schock, 37 B.R. 399, 400 (Bankr.D.N.D. 1984). However, "the denial of jurisdiction over the divorce petition itself is not to deny jurisdiction over the property of the divorce proceeding when one of the parties is a debtor in bankruptcy, . . ., and the ruling here is not to be construed to extend that far." In re Cunningham, 9 B.R. at 71. This Court therefore grants relief from the automatic stay, to the extent such relief is necessary, to permit the parties to proceed with any divorce action by either the debtor or his spouse in state court seeking a divorce, child custody and/or child visitation.

(2) RIGHT TO ALIMONY, MAINTENANCE AND/OR SUPPORT

The underlying obligations of ". . . alimony, support and maintenance are issues within the exclusive domain of the state courts." In re Calhoun, 715 F.2d 1103, 1107 (6th Cir.1983). "The federal bankruptcy courts are obviously not empowered to create an obligation to support where it did not previously exist." Id. Moreover, 11 U.S.C. § 362(a) does not operate as a stay of any action to collect "alimony, maintenance, or support from property that is not property of the estate." 11 U.S.C. § 362(b)(2). Therefore, this Court grants relief from the automatic stay, to the extent such relief is necessary, to allow the parties to proceed with any divorce action by either the debtor or his spouse in state court seeking temporary or permanent alimony, maintenance and/or support from property that is not property of the bankruptcy estate. See 11 U.S.C. § 541.

(3) DISCHARGEABILITY OF ALIMONY, MAINTENANCE AND/OR SUPPORT UNDER 11 U.S.C. § 523(a)(5)

Pursuant to 11 U.S.C. § 523(a)(5), an individual debtor is not discharged from any debt "to a spouse, former spouse, or child of the debtor, for alimony to, maintenance for, or support of such spouse or child, in connection with a . . . divorce decree . . . or property settlement agreement. . . ." Id.; see generally Brown, The Impact of Bankruptcy On Alimony, Maintenance And Support Obligations: The Approach In The Sixth Circuit, 56 TENN. L. REV. 507 (Spring, 1989). The state court has concurrent jurisdiction with the bankruptcy court to determine whether alleged alimony, maintenance or support is dischargeable. 11 U.S.C. § 523(c)(1); 28 U.S.C. § 1334(b); In re Richards, 131 B.R. 76, 78 (Bankr.S.D. Ohio 1991); In re Rickman, 79 B.R. 753, 756 (Bankr.W.D.Tenn. 1987). However, in this case an award of "support" obligations has not been made by a state court; and therefore, a decision regarding the dischargeability of such obligations is premature. See In re Baker, 75 B.R. 120, 121 (Bankr.D.Del.1987).

This Court does note, though, that if dischargeability litigation is brought in state court, the In re Calhoun, 715 F.2d 1103 (6th Cir.1983), factors for determining nondischargeability under § 523(a)(5) should be followed.³ Additionally, this Court observes that if the debtor fails to raise the defense of dischargeability in the post-bankruptcy state court divorce proceedings, he may be precluded in this Court from litigating dischargeability. A bankruptcy court in the Southern District of Ohio recently held that where "a state court would be bound to accord res judicata effect to a state court decree, . . .," the bankruptcy court is likewise bound. In re Richards, 131 B.R. at 78. See In re Aurre, 60 B.R. 621, 626-28 (Bankr. S.D.N.Y.1986). The Ohio Rules of Civil Procedure require that a party affirmatively raise the defense of "discharge in bankruptcy." Ohio R.C.P. § 8(c). The debtor in a post-petition divorce neglected to do so in state court; and therefore, the bankruptcy court was barred from considering the defense which could and should have been raised in the first suit in state court involving the same parties and issues. In re Richards, 131 B.R. at 78. Accord Rosenbaum v. Cummings (In re Rosenbaum), Ch. 7 Case No. 91-32163-S, Adv. No. 91-3128 (Bankr.E.D.Tenn. June 10, 1992) (following Richards, but applying Virginia state law). Tennessee Rule of Civil Procedure 8.03, which would be applicable in the present case, also requires the defense of "discharge in bankruptcy" to be pled affirmatively. Therefore, the same res judicata principles would apply in this Court.

In summary, a request for this Court to determine the dischargeability of future "support" obligations which have not yet been awarded is premature. Furthermore, the state court has concurrent jurisdiction to determine matters arising under § 523(a)(5) which therefore may preclude this Court from hearing dischargeability issues in this case.⁴

(4) DETERMINATION OF AND EQUITABLE DIVISION OF "MARITAL PROPERTY" PURSUANT TO TENN. CODE ANN. § 36-4-121(a) AND (b)

Pursuant to Tenn.Code Ann. § 36-4-121(a)(1), Tennessee state courts may ". . . equitably divide, distribute or assign the marital property between the parties without regard to marital fault in proportions as the court deems just." Id. The state court therefore must classify the parties' property as either "marital property" or "separate property" under Tenn.Code Ann. § 36-4-121(b)(1) and (2). The classification and division of the marital estate are traditionally reserved for state courts. In re White, 851 F.2d 170, 173 (6th Cir.1988). However, where property of the bankruptcy estate is involved, the bankruptcy court has exclusive jurisdiction over this property unless the automatic stay is lifted pursuant to § 362(d). 11 U.S.C. § 541; 28 U.S.C. §§ 157(a), 1334(a). See In re White, 851 F.2d at 174; In re Baker, 75 B.R. at 121.

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