Klass v. Klass

• Decision Date: 08 September 2003
• Docket Number: No. 125,125
• Citation: 377 Md. 13,831 A.2d 1067
• Parties: Lawrence Melvin KLASS v. Kathy Ann Hartman KLASS.
• Court: Maryland Court of Appeals

831 A.2d 1067

377 Md. 13

Lawrence Melvin KLASS v. Kathy Ann Hartman KLASS.

No. 125, Sept. Term, 2002.

Court of Appeals of Maryland.

September 8, 2003.

Michael J. Moran, Lutherville, for petitioner.

Kathy Ann Hartman Klass (Pro Se), for respondent.

Argued before BELL, C.J., ELDRIDGE, RAKER, WILNER, CATHELL, HARRELL, BATTAGLIA, JJ.

WILNER, Judge.

On June 29, 2001, the Circuit Court for Frederick County entered a judgment that, among other things, divorced petitioner, Lawrence Klass, from his wife, Kathy, awarded to Kathy custody of the three minor children, $1,600/month alimony, $1,200/month child support, a $100,000 monetary award, the entire value of Lawrence's profit sharing plan with Merrill Lynch, and $12,863 toward her attorney's fee, established arrearages of pendente lite alimony ($28,800) and child support ($19,200), and reduced some of those directives to money judgments. The judgments were affirmed by the Court of Special Appeals, in an unreported opinion.

We granted certiorari to consider two issues: whether the judgments should be vacated because certain pre-judgment orders and proceedings occurred during a period when an automatic stay under § 362 of the Bankruptcy Code (11 U.S.C. § 362) was in effect, and whether petitioner received adequate notice of the trial date. We shall affirm in part and reverse in part the judgment of the intermediate appellate court.

BACKGROUND

The Klasses married in 1984, had three children, and separated on December 31, 1998. In April, 1999, Kathy filed a complaint for limited divorce based principally on allegations of cruel and harassing treatment by Lawrence but also alleged a voluntary separation. In addition to her request for limited divorce, she sought a panoply of ancillary relief. In July, the court entered a pendente lite order that, among other things, granted sole custody of the children to Kathy, awarded her exclusive use and possession of the family home, directed Lawrence to return within 30 days all of the family use personal property that he had taken from the home, gave Kathy exclusive use and possession of all family use personal property, directed that pendente lite child support be established in accordance with the child support guidelines, and appointed a guardian ad litem for the children. Both parties filed exceptions to the order but, in September, 1999, prior to a hearing on those exceptions, they reached an agreement, entered as a consent order, that confirmed most aspects of the pendente lite order and set the child support at $1,200/month and alimony at $1,600/month. Lawrence did not return the family use personal property, and he ceased his payments of alimony and child support about two months later.

In September, 2000, he filed a complaint, in this action, for absolute divorce on the ground of voluntary separation. Trial was initially scheduled for October 30, 2000, but, at Lawrence's request, the trial date was postponed until January 3, 2001, apparently because Lawrence was in a mental institution in California.¹ On December 27, 2000—just a week before trial was to commence—Lawrence filed, in California, a pro se petition for voluntary bankruptcy under Chapter 7 of the Bankruptcy Code. Lawrence did not initially list Kathy as a creditor on the schedules he filed in the bankruptcy proceeding; nor did he inform the Bankruptcy Court of the proceeding pending in Maryland. The court was notified of the bankruptcy on January 2, 2001, whereupon trial was postponed for three months.²

Notwithstanding the bankruptcy proceeding and the automatic stay that proceeded from it pursuant to § 362, activity continued in the Circuit Court. After a status conference on January 3—the date trial was to have occurred—Lawrence's attorney withdrew her appearance, and a notice was sent to Lawrence to employ new counsel. On January 17, 2001, the guardian who had been appointed for the children filed a petition for counsel fees in the amount of $4,050. On February 15, the court granted the request and entered judgment against Lawrence for that amount. On January 20, Kathy mailed to Lawrence a set of interrogatories, a request for the production of documents, and a request for admission of facts. The interrogatories and requests were never answered.

On March 29, 2001, the court scheduled trial for April 30, and a notice to that effect, in the form of a subpoena duces tecum issued by Kathy, was sent to Lawrence in California by certified mail. The record contains a return receipt, although the signature on it, to us, is illegible. Although Lawrence contests the adequacy of the notice of trial, he does not dispute that he received that subpoena. On March 30, Lawrence's bankruptcy lawyer sent formal notice to the court of the bankruptcy filing and that the bankruptcy court had entered a stay order pursuant to 11 U.S.C. § 362. Ten days later—on April 9, 2001—Lawrence was granted a discharge by the bankruptcy court, although an order formally closing the case was not filed until August 7, 2001.

Trial commenced, as scheduled, on April 30, 2001. Lawrence did not attend. He did, however, send to the court a "Declaration" stating that, on March 8, 2000, he had been found disabled by the Social Security Administration and that he had been receiving disability benefits since September, 2000. Based on testimony by Kathy and by a corroborating witness, a statement by the children's guardian, the consent pendente lite order, and admissions imputed to Lawrence by reason of the unanswered request for admissions, the court entered its judgment on June 29, 2001. The divorce was based not on the original allegations of cruel conduct but on a voluntary separation, which Lawrence had previously confirmed in his own complaint for divorce.

Lawrence appealed, complaining, among other things, that the Circuit Court erred in continuing the divorce litigation after the filing of his bankruptcy petition and that he did not receive adequate notice of the April 30 trial date. Based on the subpoena sent to him by certified mail, the Court of Special Appeals dismissed without much discussion the notice complaint. It resolved the bankruptcy issue on the grounds that (1) actions to establish or modify alimony or child support are not subject to the § 362 stay and the fees ordered paid to the children's guardian were in the nature of child support, (2) the stay does not preclude all judicial proceedings, but only those that affect or touch on the debtor's property, and the discovery requests and subpoena sent by or on behalf of Kathy did not have that quality, and (3) a discharge terminates the § 362 stay, and, as the judgment entered by the court occurred after that date, it was not precluded by the stay. We granted certiorari to review those determinations. Kathy did not file a responsive brief and did not participate in oral argument.

DISCUSSION

I. Bankruptcy Stay

Lawrence presses his argument that "[t]he continuation of the family law action, after [he] filed his bankruptcy petition, violated the automatic stay and, consequently, all subsequent acts that occurred in the litigation are void." He urges that the stay mandated by 11 U.S.C. § 362 applies to all proceedings, whether or not the debt involved is dischargeable in bankruptcy, that all judicial activity in such proceedings is enjoined, and that any such activity undertaken in contravention of the stay—i.e., absent an order of relief from it—is void. Although he recognizes that the stay does not apply to actions to establish or modify alimony or child support, he contends that the exception for those kinds of proceedings does not allow them to be coupled with any other non-exempt proceeding, and that, if they are so coupled, they too are stayed. As to the judgment itself, which was entered after the discharge, his position seems to be that (1) it is in violation of the discharge order, and (2) it is void because of the invalidity of all that led to it.

A. Jurisdiction to Determine Effect of Stay

Although neither party has raised this issue, there appears to be some split of authority among Federal courts over whether any court, other than the Bankruptcy Court in which the bankruptcy proceeding is, or was, pending, has jurisdiction to determine whether action taken or proposed to be taken in a case pending in another court is subject to the automatic stay of § 362. The clearly predominant rule is that jurisdiction is concurrent, and that the court in which the non-bankruptcy case is pending may determine the effect of the stay on that case. See In re: Middlesex Power Equipment & Marine, Inc., 292 F.3d 61, 66 (1st Cir.2002); In Re Baldwin-United Corp. Litigation, 765 F.2d 343, 347 (2nd Cir.1985); U.S. Dept. of Housing & Urban Dev. v. CCMV, 64 F.3d 920, 927 (4th Cir.1995); Picco v. Global Marine Drilling Co., 900 F.2d 846, 850 (5th Cir.1990); N.L.R.B. v. Edward Cooper Painting, Inc., 804 F.2d 934, 939 (6th Cir.1986); In re Glass, 240 B.R. 782, 787 (Bkrtcy.M.D.Fla.1999); In re Montana, 185 B.R. 650, 652 (Bankr.S.D.Fla.1995); compare Gruntz v. County of Los Angeles, 202 F.3d 1074 (9th Cir.2000)

(replacing 166 F.3d 1020 (9th Cir.1999)); Rainwater v. State of Alabama, 233 B.R. 126, 139 (Bankr.N.D.Ala.1999); In re Raboin, 135 B.R. 682, 684 (Bankr.D.Kan.1991); In re Sermersheim, 97 B.R. 885, 889 (Bankr. N.D.Ohio 1989).

We need not consider here whether, under the so-called Rooker-Feldman doctrine (Rooker v. Fidelity Trust Co., 263 U.S. 413, 44 S.Ct. 149, 68 L.Ed. 362 (1923); District of Columbia Court of Appeals v. Feldman, 460 U.S. 462, 103 S.Ct. 1303, 75 L.Ed.2d 206 (1983)), a State court decision resolving the effect of a § 362 stay on a matter otherwise within its jurisdiction is entitled to preclusive effect in the Bankruptcy Court or another Federal court. In conformance with the prevailing view, however, we conclude that a Maryland court has, and, indeed, must have, jurisdiction to determine, at least in the first...