Holbrook v. Holbrook

151 S.W.3d 825, 2004 Ky. App. LEXIS 67, 2004 WL 459314
CourtCourt of Appeals of Kentucky
DecidedMarch 12, 2004
Docket2003-CA-000136-MR
StatusPublished
Cited by4 cases

This text of 151 S.W.3d 825 (Holbrook v. Holbrook) is published on Counsel Stack Legal Research, covering Court of Appeals of Kentucky primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Holbrook v. Holbrook, 151 S.W.3d 825, 2004 Ky. App. LEXIS 67, 2004 WL 459314 (Ky. Ct. App. 2004).

Opinion

OPINION

COMBS, Judge.

Vester Holbrook appeals from a judgment of the Boyd Circuit Court of November 22, 2002, which adopted the recommendation of the Domestic Relations Commission (DRC) and ordered him to pay his former wife, Gwendolyn Holbrook, the appellee, the sum of $60,659.07 — plus attorney’s fees. Vester argues that this money represents Gwendolyn’s portion of his pension benefits. However, he contends that it was a debt that was discharged by the United States Bankruptcy Court. We are compelled to agree and thus to conclude that the trial court erred as a matter of law in failing to give due effect to Vester’s discharge in bankruptcy. Therefore, we reverse and remand.

The parties’ twenty-year marriage was dissolved by a decree entered in the trial court on August 8, 1991. Incorporated into the final decree was their property settlement agreement, the terms of which awarded the parties an equal interest in the marital portion of Vester’s two pension funds: the Plumbers and Pipefitters National Pension Fund and the Plumbers and Pipefitters, Local # 348, Pension Fund. Because Vester had not retired at the time of the dissolution, the parties agreed to postpone undertaking the calculations required in order to determine their respective interest in the two funds. The agreement required that the parties communicate with one another to accomplish the division of the pensions as follows:

The parties hereto agree to obtain a yearly listing of any amounts paid into [Vester’s] pension plan. Upon obtaining said itemized yearly. list, the parties agree that [Gwendolyn] shall be entitled to a percentage of that pension based upon the number of years married and the number of years paid into the plan. For example, if [Vester] has been employed twenty-five years and married, nine years during that period, then [Gwendolyn] shall be entitled to eighteen percent of [Vester’s] pension. A Qualified Domestic Relations Order [QDRO] shall issue for the payment of same once the percentage is determined.

However, they did not communicate after the divorce. Vester retired in 1992, the year following the dissolution. He failed to notify Gwendolyn, and a QDRO was not entered. From his retirement date until some time in 1999, Vester received all of his monthly pension benefits. When Gwendolyn finally learned in 1999 that Vester had retired, she filed a motion in the Boyd Circuit Court seeking to hold him in contempt for failing to comply with their agreement. She also requested that the court order him to reimburse her for *827 her share of the retirement benefits that had already been disbursed to him.

Gwendolyn’s share of the pensions was determined, and QDRO’s were accordingly entered to enable her to receive her portion of the on-going monthly pension benefits. She has received $298.87 per month from the national pension fund since August of 1999; however, her monthly benefit of $885.80 from the local pension fund did not commence until January 2001.

Yester, by now a resident of Florida, sought protection from his creditors in bankruptcy court. His petition resulted in an automatic stay of Gwendolyn’s legal efforts both to enforce the provisions of the dissolution decree and to collect the sums wrongfully withheld by him.

Gwendolyn and her attorney were named as creditors in the pending bankruptcy action and were provided notice of that proceeding. Nonetheless, they filed no claims to challenge Vester’s effort to discharge his debt to Gwendolyn. Accordingly, Vester’s debts, including the debt to Gwendolyn, were discharged by order of the United States Bankruptcy Court for the Southern District of Florida on September 9,1999.

In February 2001, Gwendolyn renewed her motion for contempt and for reimbursement of her share of the pensions that had been paid to Vester between 1992 and 1999. Vester responded that Gwendolyn’s loss of her share of the pension benefits was directly attributable to her own failure to have QDRO’s entered at the time of the dissolution, arguing that it was not his duty to see that the QDRO’s were entered. He further contended that his personal liability to Gwendolyn had been discharged in the 1999 bankruptcy proceeding. The circuit court remanded the matter to the DRC.

The DRC entered her report on February 28, 2002, recommending that Vester be ordered to pay Gwendolyn the pension ar-rearage of $60,659.07. The DRC concluded that because Gwendolyn had possessed a property interest in the pension plans at the time of dissolution, Vester “no longer had any interest in [Gwendolyn’s] portion [of the plans].” However, the DRC did not address Vester’s defense that his discharge in bankruptcy barred any further attempt to collect the arrearage.

Vester timely filed exceptions to the DRC’s report, again contending that his debt to Gwendolyn had been discharged in bankruptcy. The circuit court approved the DRC’s report without elaboration on November 22, 2002. Vester filed a motion to amend the judgment or to enter specific findings of fact — asking the court once again to weigh and to properly consider the effect of his discharge in bankruptcy. That motion was denied on December 19, 2002. This appeal followed.

Vester argues that the court’s order violates his discharge in bankruptcy by attempting to enforce an obligation that was previously discharged. He challenges the underlying jurisdiction of the court even to entertain the issue of dischargeability in bankruptcy of his obligations to Gwendolyn arising from the decree of dissolution. He contends that Gwendolyn was required to file an objection to the discharge in the bankruptcy proceeding in order to preserve her claim against him for the pensions benefits already paid. Gwendolyn argues that the Boyd Circuit Court “saw through” Vester’s attempt to defraud her of her share of the pensions, urging that he “cannot hide behind the Bankruptcy code for this type of behavior.”

Neither the DRC nor the trial judge addressed the critical issue of the legal effect of Vester’s bankruptcy. Not all marital debts are dischargeable in *828 bankruptcy. The Bankruptcy Code separates debts arising from a marital relationship into two classes. Some debts (such as debts for child support or spousal support or maintenance) are non-dischargeable as a matter of law. 'll U.S.C. § 523(a)(5). Gwendolyn acknowledges that the debt at issue is not in the nature of support or maintenance and that it does not fall within the protected classification. However, other obligations incurred “in the course of a divorce or separation, or in connection with a separation agreement, [or] divorce decree” are dischargeable. 11 U.S.C. § 523(a)(15). Although state courts have concurrent jurisdiction to determine whether a debt is in the nature of support or maintenance, the bankruptcy court has exclusive jurisdiction to determine whether a nonsupport obligation is dischargea-ble. 11 U.S.C. § 523(c); In re Milburn, 218 B.R. 862, 865 (Bankr.W.D.Ky.1998).

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Cite This Page — Counsel Stack

Bluebook (online)
151 S.W.3d 825, 2004 Ky. App. LEXIS 67, 2004 WL 459314, Counsel Stack Legal Research, https://law.counselstack.com/opinion/holbrook-v-holbrook-kyctapp-2004.