Hearndon v. Hearndon

510 S.E.2d 183, 132 N.C. App. 98, 1999 N.C. App. LEXIS 34
CourtCourt of Appeals of North Carolina
DecidedJanuary 19, 1999
DocketCOA98-68
StatusPublished
Cited by4 cases

This text of 510 S.E.2d 183 (Hearndon v. Hearndon) is published on Counsel Stack Legal Research, covering Court of Appeals of North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hearndon v. Hearndon, 510 S.E.2d 183, 132 N.C. App. 98, 1999 N.C. App. LEXIS 34 (N.C. Ct. App. 1999).

Opinion

EAGLES, Chief Judge.

Initially we note defendant violated Rules 9(a)(1), 9(b)(4), and 28(b)(5) of the North Carolina Rules of Appellate Procedure. See N.C.R. App. P. 9(a)(1) (1998), N.C.R. App. P. 9(b)(4) (1998), N.C.R. App. P. 28(b)(5) (1998). The index of the contents of the record on appeal does not include the entire list of contents of the record. The pages in the record were not numbered consecutively and various documents granting extensions of time were not in chronological order, making the record difficult to follow. Finally, the argument in appellant’s brief does not contain the pertinent assignment of error number, nor does it contain the record page number where the assignment of error can be found. Despite these procedural errors, this Court has decided to review the merits of this appeal; however, under Rule 25 and Rule 34 we direct, as a sanction for violation of the rules, that defendant-appellant’s counsel pay as a penalty a sum equal to, but in addition to, the costs on appeal.

*101 The sole issue on appeal is whether defendant’s claim for equitable distribution of marital property was properly discharged in the plaintiffs bankruptcy proceeding. Defendant contends that the trial court committed reversible error in concluding as a matter of law that the defendant’s equitable distribution claim was discharged. After careful review, we disagree.

Equitable distribution is a statutory right granted to spouses under G.S. 50-20 which vests at the time of separation. G.S. 50-20(b). This vested right does not create a property right in marital property. Perlow v. Perlow, 128 B.R. 412, 415 (E.D.N.C. 1991). Nor does the separation create a lien on specific marital property in favor of the spouse. Id. It only creates “a right to an equitable distribution of that property, whatever a court should determine that property is.” Id. (quoting Wilson v. Wilson, 73 N.C. App. 96, 99, 325 S.E.2d 668, 670, cert. denied, 314 N.C. 121, 332 S.E.2d 490 (1985)). A “claim” is defined, under the bankruptcy section of the United States Code, 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.” 11 U.S.C. § 101(5)(A) (1996). Accordingly, an equitable distribution action can be a “claim” under the bankruptcy code. Perlow, 128 B.R. at 415.

In Perlow v. Perlow, the parties were granted an absolute divorce and equitable distribution was reserved for a later date. Id. at 413. On 18 October 1988 while the equitable distribution action was still pending, Mr. Perlow filed a petition for bankruptcy. Id. at 413. Mr. Perlow listed Ms. Perlow as an unsecured creditor on a claim listed as “Case 88 CVD 813; Contingent Disputed, Unliquidated; Division of Marital Property.” Id. at 413-14. Ms. Perlow received two different written notices that her equitable distribution claim was listed as a debt in Mr. Perlow’s bankruptcy case. Id. at 414. On 25 October 1988, Mr. Perlow filed a document entitled “Notice of Plaintiff’s Bankruptcy” and mailed a copy of it to Ms. Perlow’s attorney. Id. This notice specifically stated that “[a]ll matters of equitable distribution will be requested to be completed by the Bankruptcy Court.” Id. Ms. Perlow also received a document entitled “Order and Notice of Chapter 7 Bankruptcy.” Id. This notice stated that “ [i]f a creditor believes that debtor should not receive a discharge under 11 U.S.C. § 727 or a specific debt should not be discharged under 11 U.S.C. § 523(c) for some valid reason specified in the bankruptcy law, the creditor must take action to challenge the discharge.” Id. The notice provided that the *102 deadline to file a complaint objecting to the discharge of a debt was 17 January 1989. Id. Ms. Perlow never filed an objection. Id.

On 21 September 1989, Ms. Perlow filed a motion with the district court requesting that the court distribute the marital property and debts. Id. On 23 January 1990, Mr. Perlow sought an adversary proceeding in Bankruptcy Court to determine whether Ms. Perlow’s interest in the equitable distribution claim was discharged in the bankruptcy proceeding. Id.

The Bankruptcy Court determined that Ms. Perlow’s rights were those of an unsecured creditor and the claim for equitable distribution was discharged. Id. at 414-15. The district court upheld the Bankruptcy Court’s decision that Ms. Perlow’s claim for equitable distribution was appropriately discharged. Id. See also Justice v. Justice, 123 N.C. App. 733, 740, 475 S.E.2d 225, 230 (1996), aff'd, 346 N.C. 176, 484 S.E.2d 551 (1997) (holding that because plaintiff received adequate notice that his marital interests were at issue but did not object to the discharge of marital debts or request relief from the stay to pursue an action for equitable distribution, his equitable distribution claim was properly discharged in the bankruptcy proceeding).

The same reasoning applies here with regard to the excess funds from the foreclosure sale of the real property. Here, as in Perlow v. Perlow, plaintiff filed a petition for bankruptcy following the grant of a divorce from bed and board but prior to the hearing in state court on the parties’ equitable distribution claim. The petition for bankruptcy filed 13 March 1995 stated that the deadline for filing a complaint objecting to the discharge of the debtor or determining the dischargeability of certain types of plaintiff’s debt was 20 June 1995. Following the petition in bankruptcy, defendant filed a Proof of Claim listing the defendant’s pending equitable distribution claim which included real property and a retirement account. On 16 May 1995 the Trustee filed a motion to lift the automatic stay and on 24 May 1995, the defendant responded to the motion to lift the automatic stay and asked that the court acknowledge her one-half interest in the property. However, nowhere in defendant’s motion did defendant mention or indicate that she was seeking to have the dischargeability of her equitable distribution claim decided. Neither did defendant ask the Bankruptcy Court to lift the automatic stay to permit her to pursue her equitable distribution claim in state court. Additionally, the defendant’s response to the Trustee’s motion to sell the property free *103 and clear of liens cannot be construed as a valid complaint to determine dischargeability under 11 U.S.C.

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Cite This Page — Counsel Stack

Bluebook (online)
510 S.E.2d 183, 132 N.C. App. 98, 1999 N.C. App. LEXIS 34, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hearndon-v-hearndon-ncctapp-1999.