Marriage of Seligman, In re

• Citation: 18 Cal.Rptr.2d 209,14 Cal.App.4th 300
• Decision Date: 18 March 1993
• Docket Number: No. E006975,E006975
• Court: California Court of Appeals
• Parties: In re MARRIAGE OF Wendy and Karl SELIGMAN. Wendy SELIGMAN, Appellant, v. Karl SELIGMAN, Respondent.

Page 209

18 Cal.Rptr.2d 209

14 Cal.App.4th 300

In re MARRIAGE OF Wendy and Karl SELIGMAN.

Wendy SELIGMAN, Appellant, v. Karl SELIGMAN, Respondent.

No. E006975.

Court of Appeal, Fourth District, Division 2, California.

March 18, 1993.

[14 Cal.App.4th 302] Covington & Crowe, and Donald G. Haslam, Ontario, for appellant.

Lais & McCall, Inc., Ronald E. Lais, Paul Taylor Smith, Santa Ana, and Ian McLean, Orange, for respondent.

OPINION

McDANIEL, Associate Justice, Assigned. ^*

After the underlying dissolution proceeding was filed by Wendy Seligman (wife), she and Karl Seligman (husband) each filed separate, verified petitions in bankruptcy. Scheduled in wife's petition were items of the parties' community property, specifically identified, which she alleged under penalty of perjury ¹ to be exempt by statute from administration as part of her bankrupt estate.

At the conclusion of the latter portion of a bifurcated trial, conducted for the purpose of dividing this property, the trial court effected a division of several hundred items between husband and wife and ordered husband to pay wife $4,831.50 to "equalize" the division noted. This property division and equalization order were later memorialized in a formal, written judgment dated March 21, 1989. By the terms thereof additional items remained to be divided. Such final division was accomplished by a further judgment on reserved issues dated June 21, 1989.

In challenging on appeal the judgments which divided the personal property noted, wife makes the contention that "The discharge in bankruptcy deprives the superior court of jurisdiction to divide property belonging to the bankruptcy [sic] petitioner and also bars the superior court from ordering her to make an equalization payment." In passing, we note that the trial court ordered husband and not wife to make the equalization payment. More important, because the court undertook to divide only property which wife herself alleged to be exempt from bankruptcy administration and which her trustee later abandoned, it is disingenuous if not brazen to argue that the court had no jurisdiction to enter the judgments it did. In short, beyond advancing a wholly frivolous contention on appeal, wife has not even attempted to demonstrate error, and so we shall affirm the judgment.

SYNOPSIS OF THE TRIAL COURT PROCEEDINGS

After 12 years of marriage, wife filed for dissolution of her marriage to husband. Later, husband filed in Nevada a petition under Chapter 7 of the federal Bankruptcy Code. ² Wife followed suit, filing her petition two months later in California. Wife named husband as a creditor in her petition. More particularly, in her schedule A-3, wife declared under oath that the amount of her debt to husband was "unknown," not "unliquidated." Otherwise, in schedules B-1 and B-2 wife listed what actually consisted of community property which she valued at $242,375. In her schedule B-4, wife listed property in her possession, also community property, which she claimed to be exempt under the laws of the State of California, and which she valued at $68,700. ³

About one year after wife's bankruptcy petition had been filed, the trial began on April 14, 1988. According to the trial court's notes, midway through the morning and wholly without any preliminaries, attorney Fred M. Cohen was brought to the counsel table and associated as one of the counsel for wife. At that juncture, Mr. Cohen presented counsel for husband with a copy of a so-called supplemental trial brief. A recess was called to afford husband's counsel an opportunity to peruse it. This brief, after five pages of marshalling of authorities, included a "summation" which stated, "Based upon the authorities cited, there are no property issues remaining for this Court to determine.... [p] ... this Court does not have jurisdiction over any other assets that the parties may have had an interest in as community property assets prior to commencement of the respective bankruptcies and prior to commencement of these dissolution proceedings.... [p] The only remaining issues, then, are that of spousal and child support and satisfaction of the tax liabilities...."

The upshot of this tactical sortie, during the course of the trial on April 14, 1988, was the trial court's order to bifurcate, for immediate determination of the support issues, and for later resolution of the jurisdictional question and hence the property division issues. The court eventually decided it did have jurisdiction to divide the community personal property of the parties in the possession of wife, the very same property which she herself had scheduled as exempt from bankruptcy administration and which the trustee had abandoned. ⁴

With reference to the actual division of the exempt and abandoned property, the trial court instructed the parties, in effect, to bid on each of several hundred items. On the basis of these "bids," specific items were awarded, respectively, to each party. Such division awarded to wife $20,705 in art works and sculpture, $22,963 in furniture, $11,525 in collections and collectibles and $8,000 in china. A second order was required to effect a final division of all of the items which the parties each acknowledged were to be divided.

Although the timeliness thereof was disputed, wife moved for a new trial. The motion was denied, and this appeal followed.

DISCUSSION

In pursuing her appeal, wife urges that the judgment should be reversed because, as she argues, under 11 United States Code Annotated section 523(a)(5) (West 1991) ⁵ there is no exemption of property from the bankruptcy proceedings such as would allow division of that property in the dissolution of a marriage, and so the trial court, she argues further, had no jurisdiction to make the property division which it made in the judgments of March 21 and June 21, 1989. As can be readily discerned from the text in the margin, the cited section has absolutely nothing to do with the subject of jurisdiction; it deals with the survivability of certain kinds of family law orders after a discharge in bankruptcy.

On the other hand, 11 United States Code Annotated section 522(b) states, "Notwithstanding section 541 of this title, an individual debtor may exempt from property of the estate the property listed in either paragraph (1) or, in the alternative, paragraph (2) of this subsection.... Such property is--[p] (2)(A) any property that is exempt under Federal law, ... or State or local law that is applicable on the date of the filing of the petition ...; and [p] (B) any interest in property in which the debtor had, immediately before the commencement of the case, an interest as a tenant by the entirety or joint tenant to the extent that such interest as a tenant by the entirety or joint tenant is exempt from process under applicable nonbankruptcy law." ⁶ With reference to such property, once it is determined to be exempt, under either federal or state law, it is no longer part of the bankruptcy estate. (Matter of Paderewski (9th Cir.1977) 564 F.2d 1353, 1356; Browne v. San Luis Obispo National Bank (9th Cir.1972) 462 F.2d 129, 132; Rogers v. Rogers (Utah 1983) 671 P.2d 160, 165.)

Referring to state law in effect in 1987 when wife filed her petition in bankruptcy, California Code of Civil Procedure exempted from bankruptcy an extensive list of property. (Code Civ.Proc., §§ 704.010-704.850.) In general, and relevant to this appeal, exempt items included household furnishings and appliances, works of art, jewelry, heirlooms, wearing apparel, other personal effects and articles, and homesteads. Wife claimed exempt property almost verbatim per Code of Civil Procedure sections 704.760, 704.010. 704.020, and 704.040: "Residence," an automobile, "Household furnishings," "Jewelry, art objects" and "Personal effects and clothing." ⁷

Returning to the appeal, it seems unmistakably clear that wife's principal contention is that her discharge in bankruptcy, without more, operated to deprive the state court of jurisdiction to divide between the spouses the community property in her possession. More particularly, her brief states, "It is clear from the timing of the bankruptcy petitions that [wife] and [husband] intended to discharge their obligations to one another as well as their obligations to third parties. In spite of the ruling of the trial court, it is clear that this is what they did. Both of them received their discharges before the court divided the personal property and ordered [wife] to make an equalization payment." ⁸

In an attempt to understand better the elements of this novel theory on the jurisdiction question, we called up the trial court file. That file contains two briefs prepared by wife's bankruptcy attorney, Fred M. Cohen. We have read these two briefs and, in our view, they finally can be distilled down to a self-contradiction.

To demonstrate this contradiction, we shall summarize Mr. Cohen's separate presentments to the trial court. As noted, wife scheduled husband as a creditor in her bankruptcy petition. On this, Mr. Cohen said, "No specific dollar amount [was] indicated because the actual amount owed (if any) had not yet been determined. Indeed, the exact amount, if any, is still unknown. However ... it was not necessary to state a specific dollar amount simply because there would be no distribution of assets." After explaining the legal basis in both federal and state statutes for claiming certain property as exempt from bankruptcy administration, Mr. Cohen contended, after the trustee in bankruptcy had abandoned the property scheduled by wife as exempt, that "the net effect of this is that the personal property is [wife's]." In other words, Mr. Cohen concluded, "In essence, each party retains whatever personal property he or she had at the time of the filings of their respective bankruptcy petitions. [Wife] makes no claims against those items of personal property which [husband] has in his...