McGraw v. McGraw (In Re McGraw)

176 B.R. 149, 1994 Bankr. LEXIS 1995
CourtUnited States Bankruptcy Court, S.D. Ohio
DecidedDecember 23, 1994
DocketBankruptcy No. 93-14514. Adv. No. 94-1018
StatusPublished
Cited by9 cases

This text of 176 B.R. 149 (McGraw v. McGraw (In Re McGraw)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, S.D. Ohio primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
McGraw v. McGraw (In Re McGraw), 176 B.R. 149, 1994 Bankr. LEXIS 1995 (Ohio 1994).

Opinion

DECISION AND ORDER

J. VINCENT AUG, Jr., Bankruptcy Judge.

This adversary proceeding is before the Court on cross motions for summary judgment. The complaint of Debtor Kerry Lynn McGraw seeks a ruling that thirty-six and one-half percent (36$%) of his military pension, previously ordered paid to his ex-wife, Jenifer A. McGraw under a Judgment Entry and Decree of Divorce, constitutes a dis-chargeable debt under 11 U.S.C. § 523(a)(5) and (6). Defendant Jenifer McGraw seeks a ruling that Kerry McGraw’s obligation to pay over a percentage of his pension benefits is unaffected by a discharge in bankruptcy or, in the alternative, that such an obligation is nondischargeable.

The Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334, and the General Order of Reference entered in this District on July 30, 1984. This is a core proceeding under 28 U.S.C. § 157(b)(2)(I) and (J).

*150 I. FINDINGS OF FACT

After eighteen years of marriage and two children, plaintiff/debtor Kerry L. McGraw and defendant Jenifer L. McGraw were divorced in 1993. During the first fourteen and one-half years of the marriage, Kerry McGraw served on active duty in the U.S. Navy. Mr. McGraw retired from active duty in the United States Navy in 1989 and, at the time of the divorce, was receiving a Navy pension of approximately $1100 per month.

In November of 1992, while the parties were separated, Mrs. McGraw filed a Chapter 7 bankruptcy petition and received a discharge.

On October 19, 1993, the Butler County Common Pleas Court, Domestic Relations Division, entered a Judgment Entry and Decree of Divorce. The Entry and Decree were signed by both Jenifer and Kerry McGraw, their respective counsel and the Court. The Decree stipulated the following with regard to Kerry McGraw’s Navy pension:

Plaintiff [Jenifer A. McGraw] shall receive as and for a division of property, thirty-six and one-half percent (36/6%) of the total gross pension benefits that Defendant receives from his military pension.
This Court specifically finds that Defendant is retired from the Navy after twenty (20) years of service. Defendant receives a military pension of approximately One Thousand One Hundred Dollars ($1,100.00) per month. The Court finds that out of Defendant’s twenty (20) years in the military, the parties were married fourteen and one-half (14/6) years. Therefore, Plaintiff is entitled to thirty-six and one-half (36)6%) of the gross pension benefits received by the Defendant, including any increases for cost of living or on any other basis, subsequent to July 1, 1993.
The Court further orders that Defendant shall pay to the Plaintiff thirty-six and one-half percent (36)6%) of all benefits that he has received beginning July 1, 1993 and continuing until further order of the Court.
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The Court specifically finds that the pension benefits are divided as a division of property and therefore, there will be no order that the benefits are divided on the basis of a joint and survivorship division.
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Neither Plaintiff or Defendant shall be obligated to pay the other spousal support of any kind or nature.

The Domestic Relations Court further ordered that, if possible, arrangements should be made for Jenifer McGraw to receive her portion of the payments directly rather than from Mr. McGraw. Since June 1, 1994, Mrs. McGraw has been receiving her portion of the pension from the Navy.

Kerry McGraw filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code on October 28,1993, nine days after the Decree of Divorce was placed of record. He filed the instant complaint to determine dis-chargeability on January 26, 1994, not quite four months after the entry of the divorce decree.

II. OPINION AND CONCLUSIONS OF LAW

Bankruptcy Rule 7056 provides that Federal Rule of Civil Procedure 56 applies to all bankruptcy cases. Rule 56 allows the Court to grant summary judgment when, after reviewing the facts in the light most favorable to the nonmoving party, we conclude that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law.

In the case before us, there is no dispute as to any issue of material fact. We find under the applicable law that defendant Jenifer McGraw is entitled to judgment and that plaintiff Kerry McGraw’s obligation to pay 36)6% of his Navy pension to his ex-wife is not a dischargeable debt.

A. Pension benefits earmarked for ex-ivife under state court decree do not become property of the estate.

The parties here are in fundamental disagreement as to the import of the divorce decree awarding 36)6% of the pension to Jenifer McGraw. According to the Debtor, the decree merely ordered a property division, *151 giving rise to a debt that places Jenifer McGraw in the status of an unsecured creditor. The Debtor argues that in any action under § 523(a)(5), the analysis.set forth in the Sixth Circuit case of In re Calhoun, 715 F.2d 1103 (6th Cir.1983), must be considered. First, according to the Debtor, the Court must look at the actual intent of the parties at the time of the divorce and/or the underlying purpose of the state court decree. Only if the parties intended to create a support obligation does the Court then need to determine whether the obligation has the effect of providing support and whether the obligation is reasonable in light of traditional concepts of support and the parties’ relative financial positions and resources. Here, where it was clearly and unequivocally stated in the decree that the parties were not creating or intending to create a spousal support obligation, there would be no need to look beyond the language of the decree, and thus, the obligation, not being alimony or support, is dischargeable.

The Defendant, on the other hand, argues that because the property was divided through the decree, Mrs. McGraw’s portion never become property of the Debtor’s estate and thus the Debtor’s obligation cannot be subject to discharge. We agree. When the Domestic Relations court awarded a portion of Mi*. McGraw’s pension to Mrs. McGraw, she became the equitable owner of 36$% of the pension fund and that percentage became her sole and separate property. See, In re Wilson, 158 B.R. 709, 711 (Bankr.S.D.Ohio 1993); see also, In re Mace, 82 B.R. 864, 867 (Bankr.S.D.Ohio 1987).

B.

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Bluebook (online)
176 B.R. 149, 1994 Bankr. LEXIS 1995, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mcgraw-v-mcgraw-in-re-mcgraw-ohsb-1994.