In re Jacobs

Decision Date10 October 2008
Docket NumberAdversary No. 05-9222-JS.,Bankruptcy No. 05-36176-JS.
PartiesIn re John Webster JACOBS, Debtor. Rosemarie Jacobs, Plaintiff, v. John Webster Jacobs, Defendant.
CourtU.S. Bankruptcy Court — District of Maryland

Page 202

401 B.R. 202
In re John Webster JACOBS, Debtor.
Rosemarie Jacobs, Plaintiff,
John Webster Jacobs, Defendant.
Bankruptcy No. 05-36176-JS.
Adversary No. 05-9222-JS.
United States Bankruptcy Court, D. Maryland.
October 10, 2008.

Page 203

Bud Stephen Tayman, Greenbelt, MD, for Defendant.

Alan D. Eisler, Meyers, Eisler & Leatham, LLC, Rockville, MD, for Plaintiff.

George W. Liebmann, Liebmann & Shively, Baltimore, MD, for trustee.


JAMES F. SCHNEIDER, Bankruptcy Judge.

This matter is before the Court on the motion of the plaintiff for summary judgment [P. 40] and the amended motion of the defendant for abstention [PP. 41 and P. 42]. Additionally, the plaintiff has moved to strike the defendant's amended opposition to plaintiff's motion for summary judgment as untimely filed [P. 49]. For the reasons stated, the motion for abstention will be granted in part and denied in part, the motion to strike will be denied as moot, and the Motion of Rosemarie Jacobs will be granted in part and denied in part as moot.


1. On January 27, 1998, the plaintiff, Rosemarie Jacobs ("Rosemarie") filed a complaint for divorce against the debtor/defendant John Jacobs ("John") in the Court of Common Pleas of York County, Pennsylvania. On September 15, 2004, a consensual domestic relations order (the "DRO") was entered that related to John's military pension. Plaintiff's Exhibit G.1

2. Paragraph 6 of the DRO stated: "[John] assigns to [Rosemarie] an interest in [John's] disposable military retired pay. [Rosemarie] is entitled to a direct payment in the amount specified below and shall receive payments at the same time as [John]." Id.

Page 204

3. Paragraph 8 of the DRO assigned 50% of the pension to Rosemarie as payment of her marital property rights.

4. Paragraph 9 provided that "DFAS is hereby ordered to deduct [Rosemarie's] alimony award of 15% of the Participant's gross monthly retired pay, and remit it directly to [Rosemarie] ..." Id.

5. Paragraph 18 of the DRO provided that if for any reason DFAS does not pay the required monthly amounts, Rosemarie may pursue John directly.

6. On October 11, 2005, six days before the effective date of the Bankruptcy Abuse Prevention and Consumer Protection Act ("BAPCPA"), John filed a voluntary Chapter 7 bankruptcy petition in this Court.

7. On October 16, 2005, John filed his schedules of assets and liabilities [P. 10]. On schedule B, John listed his military pension as his personal property, to which he assigned an undetermined value. On Schedule C, he declared the pension as exempt pursuant to Maryland Courts and Judicial Proceedings Code, § 11-504(h).

8. On December 22, 2005, Rosemarie filed an objection [P. 21] to a number of John's claimed exemptions, including the military pension.

9. On December 29, 2005, Rosemarie filed the instant complaint against John as to the dischargeability of a number of debts, including his obligations under the DRO.

10. On April 3, 2006, this Court approved a consent order [P. 37] between the parties that resolved most of Rosemarie's objections to exemptions. Certain objections were sustained while others were overruled. However, the parties have not been able to agree as to a classification of the 15% accorded to Rosemarie by Paragraph 9 of the DRO or the contingent liability under Paragraph 18. Therefore, the consent order provided as follows:

ORDERED that the Debtor's claims of exemption for the following property are allowed, except as to Rosemarie's claim of ownership or entitlement pursuant to the terms of the Master's Report, Supplemental Master's Report, Order Adopting Reports, DRO, and Divorce Decree (collectively the "Domestic Relations Orders"):

Description of Property Amount Listed Value
                Tax deferred annuity with Total Undetermined
                Mutual of America Life
                Insurance Co. No.
                IRA Account No. ***3-656 Total Undetermined
                maintained at Fidelity
                Military Pension Total Undetermined

Order at 3.

11. Accordingly, Rosemarie has requested this Court to determine that the 15% is her property under the DRO. On the other hand, John has requested that this Court abstain from deciding the issue, in order for the state court to interpret its own order. In the alternative, John requests that this Court determine the property to be a non-dischargeable debt under 11 U.S.C. § 523(a)(5) and 11 U.S.C. § 523(a)(15).2 Additionally, Rosemarie requests that the contingent liability under Paragraph 18 be declared nondischargeable, while John opposes.

12. If the 15% is declared to be a nondischargeable debt for alimony, it may be subject to a later reduction when and if the state court reduces the debtor's obligation to pay alimony repayments, or may be dispensed with due to the plaintiff's remarriage.

13. On December 14, 2007, Rosemarie filed the instant motion for summary judgment [P. 40] and John filed the instant motion for abstention [P. 41], which he amended on December 15, 2007 [P. 42].

Page 205

On December 18, 2007, Rosemarie filed an opposition to John's motion to abstain [P. 43]. On January 25, 2008, Rosemarie filed a motion to strike John's amended opposition [P. 49]. A hearing was held, after which the parties submitted supplemental briefs [P. 55, 56].

14. On June 2, 2008, this Court approved a consent order [P. 59] which resolved all issues except that relating to the military pension.


1. The Court need not consider the timeliness of John's motion to abstain or John's "consent" to the Bankruptcy Court's jurisdiction. The Bankruptcy court "has the inherent power to question its own jurisdiction in any given case, and its ability to dismiss a cause of action for want of subject matter jurisdiction is not dependent upon the timeliness of a motion to dismiss." See First Nat'l Bank of Maryland v. United States Wall Corp. (In re Incor, Inc.), 100 B.R. 790, 793 (Bankr. D.Md.1989), citing 1 COLLIER ON BANKRUPTCY, ¶ 3.01[2][c] (15th ed.1988).

2. Bankruptcy subject matter jurisdiction is conferred by statute. Section 1334(a) of the United States Judicial Code provides that the United States district courts "shall have original and exclusive jurisdiction of all cases under title 11." 28 U.S.C. § 1334(a). Section 1334(b) provides that the United States district courts "shall have original but not exclusive jurisdiction of all civil proceedings arising under title 11, or arising in or related to cases under title 11."3 28 U.S.C. § 1334(b). Section 1334(b) is the only statute that provides a jurisdictional basis for a bankruptcy court to conduct civil proceedings. Valley Historic Ltd. P'ship v. Bank of NY, 486 F.3d 831, 838 (4th Cir.2007) ("the Debtor would still have had to establish jurisdiction under § 1334(b), since § 1334(e) does not by itself create jurisdiction to conduct civil proceedings").

3. The Fourth Circuit has stated that "the test for determining whether a civil proceeding is "related to" bankruptcy is whether the outcome of that proceeding could conceivably have any effect on the estate being administered in bankruptcy." Owens-Ill., Inc. v. Rapid Am. Corp. (In re Celotex Corp.), 124 F.3d 619, 625 (4th Cir. 1997) (quoting Pacor, Inc. v. Higgins, 743 F.2d 984, 994 (3rd Cir.1984)); see also A.H. Robins Co. v. Piccinin (In re A.H. Robins Co.), 788 F.2d 994, 1002 n. 11 (4th Cir.1986) (The accepted definition of the `related to' in these statutes is that declared in Pacor, Inc. v. Higgins, 743 F.2d 984, 994 (3d Cir.1984): "An action is related to bankruptcy if the outcome could alter the debtor's rights, liabilities, options, or freedom of action (either positively or negatively) and which in any way impacts upon the handling and administration of the bankrupt estate."). (Emphasis added).

4. The creation of the bankruptcy estate is governed by 11...

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