Gendreau v. Gendreau (In Re Gendreau)

HAGAN, Before MEYERS and ASHLAND, Bankruptcy Judges. AMENDED OPINION MEYERS, Bankruptcy Judge:

I

Chapter bankruptcy debtor Gen- William (“Debtor”) complaint dreau filed a his spouse (“Appellee”) former Colleen Gendreau declaratory judgment for a his obli- gation pay pension plan benefits her pursuant divorce was a their decree dis- chargeable opposing debt. On motions for summary bankruptcy judgment, court Appellee’s right held that the the Debtor’s discharge. We AFFIRM.

II

FACTS employed The Debtor been has United (“United”) Airlines, Inc. since the Debtor’s denied married Appellee were Debtor and the granted Appellee’s cross-mo- motion summary judgment. Debtor tion by the Fami- decree was entered divorce appeals. County, Virginia on ly Court for Loudoun 2, determined 1992. The decree October III two portion that of the Debtor’s a prop- marital plans provided by United was OF STANDARD REVIEW percent this erty, 50 marital and awarded granted the court sum Given 25, January Appellee. property to the On mary judgment legal question on a of statu 1993, entitled court entered an order interpretation, essential facts tory and the (the “Qualified Relations Order” Domestic deci undisputed, we review court’s “Order”). provided that The it was Order East novo. Matter Far sion de qualified Pacific to be a domestic intended (9th Cir.1983). Inc., 476, Line, F.2d 478 713 (“QDRO”) pursuant to U.S.C. 1056(d). “This § also stated: The Order jurisdiction to specifically retains estab- IV Qualified maintain this as a

lish or DISCUSSION Order.” Domestic Relations Appellee’s right The issue of whether the The administrator the United pension plans to a Debtor’s plans copy a was served with Order. dischargeable centers whether benefits 17, 1993, May Zapel, Senior Coun- On Scott pre- right be as a this should characterized pension plans, sent letter sel for the United a petition against Debtor. 11 U.S.C. claim stating was Appellee that the Order 727(b) that, except provided § in 11 states The as defined the statutes. 523(a), discharge under Section U.S.C. this letter outlined the reasons for conclu- 727(a) discharges a from all debts debtor (1) plans’ names were sion: official Bankruptcy The bankruptcy.1 arose before (2) wrong; Appellee’s appeared address “liability “debt” on a Code defines a (3) wrong; there two methods were 101(12). to 11 claim.” Pursuant calculating Appellee, payments for due 101(5), a “claim” is defined as: ambiguous, with no indi- both of which were (A) right payment, or not such whether if cation as to which method to use the two judgment, liquidated, right reduced differing led to The letter methods results. fixed, matured, contingent, unliquidated, Appellee provided that the could commence unmatured, disputed, undisputed, legal, eq- days a clarified benefits within 60 after uitable, unsecured; secured, or by pension plan approved was (B) administrator. remedy equitable for gives performance if such breach breach Chapter Debtor filed a The payment, or not rise whether 15, petition Appel- on November 1993. equitable remedy to an is re- such lee had not obtained a clarified On fixed, judgment, ma- contingent, duced to 29, 1993, the filed com- November Debtor tured, unmatured, undisputed, disputed, seeking judgment plaint declaratory secured, or unsecured. Appellee’s right payment from the language dischargea- Congress was used pension plans United a debt intended adopt subsequently 101 to the broadest available bankruptcy. ble in Debtor Section summary term judgment filed motion and the definition .“claim.” Johnson Bank, 78, 83, summary 111 S.Ct. Appellee filed a cross-motion for Home State U.S. 2153, judgment. L.Ed.2d must We 523(a)(5) apply parties agree Act does 1. would form because Section discharge, except obligation as the not pension Act. case was fried before effective date of the benefit award not in nature Bankruptcy Act Pub.L. No. 103- Reform of Also, support. Section maintenance Sec. 108 Stat. 523(a)(15), Bankruptcy Re- established discharge- bankruptcy petition whether the has a was filed and there- decide against Here, claim the Debtor. discharge. able fore there was no debt to also, liability Appel- the Debtor had no Against the A. There Was No Claim Debtor lee. Under the Teichman and hold- Bush Teichman, F.2d 1395 ings, there debt for the Debtor to (9th Cir.1985), a dissolution decree ordered discharge.2 pay percent the debtor to his former wife age of his retirement benefits. The debtor payments Regardless of when the came $14,000 pay her of the benefits he failed due, Appel- no debt was created because the pay prepetition received and refused her lee did have a claim Debtor. given postpetition. him disagree argument We with the Debtor’s obligations argued that to his ex- debtor his because the did not have a discharged. Appeals wife were The Court filed, petition when the was the $14,000 by that the held the debt owed debt- pension funds were the Debtor’s prepetition discharged, or to his wife was against Appellee which merely the had a right percentage the to a that the debtor’s claim. monthly pension postpetition benefits points The Debtor out that the anti-alien subject discharge. a not debt The court provision assign ation in decree, precludes ERISA explained that under the dissolution ownership pension an ment of the por Appellee the wife had interest a benefits the post- QDRO. fund. tion the retirement Since the unless she has a valid See 29 U.S.C. 1056(d)(1) (“[e]aeh petition payments § were not under pension plan debts pro shall Code, they the court concluded were not provided plan vide benefits under the subject discharge. 774 F.2d at 1398. The alienated”). may assigned not be or 989, Taylor, court Bush v. 912 F.2d prohibition assignment ERISA’s on or (8th Cir.1990), also held that the former pension alienation of benefits has been strict spouse’s postpetition pension pay Shumate, ly enforced. Patterson v. 504 U.S. dischargeable, ments not for the reasons 760, 753, 2242, 2247, 112 S.Ct. 119 L.Ed.2d given in Teichman. (1992); Guidry Metal Sheet Workers Fund, case, asking this Pension 493 U.S. 110 S.Ct. is not for 685, 107 paid prepetition. monies Debtor L.Ed.2d 782 fact, any pen- the Debtor did receive express exception is prepetition. sion benefits Under the ratio- provision. anti-alienation See ERISA’s Bush, right nale Teichman and to a 1056(d)(3)(B)(i)(I); Abbata, § In re portion postpetition payments of these is not (N.N.Y.1993). 157 B.R. Domestic by a debt owed the Debtor and therefore not QDRO’s relations orders which are not are 727(b). subject discharge under Section subject anti-assignment provision. to the gov- As both Teichman and Bush involved 1056(d)(3)(A); Roper, Ablamis v. pensions, Employee ernment Retirement (9th Cir.1991). 937 F.2d (“ERISA”) Security Income Act of 1974 did 1056(d)(3)(B)(i) “qualified defines a apply in those eases. The Dissent at- a domestic relations order” as domestic rela- tempts distinguish Teichman and Bush on tions order basis, ground and also on the that those (I) recognizes or exis- which creates decisions noted a interest had to, right pension plans prepetition. payee’s tence an alternate been created below, assigns explained payee or to an do not find the alternate we dis- to, right prem- tinctions receive all or material. The decisions were payment pen- payable respect par- ised the fact from the benefits with ticipant plan, was not owed sion Debtor at time under a and Rather, misinterprets our we and Dissent reliance on unmatured. believe Teichman support do Teichman and Bush. We not cite these cases Bush our determination that a proposition pension the invalid are not a debt- debts benefits is claim discharge they contingent if are or. plan QDRO being by the (II) require- is determined to which the respect with (C) (D) administrator, juris- competent court of subparagraphs ments otherwise, plan administrator met.... diction separate in a account the segregate shall (C) (D), referenced Subparagraphs payable to the alter- amounts which would be above, the order must specify what details to be a payee if the order is determined nate include, name as the and address such (e)(1) 1132(a)(1)(B) QDRO. Section payee, the amount participant and alternate provides that ERISA statute a beneficia- paid the method of to be may bring civil action in state or district ry payment. benefits, her to recover enforce charged pension plan administrator clarify rights her to future benefits rights or responsibility to determine with the initial pension plans. See U.S.C. an order is whether 1056(d)(3)(G). Here, although Virginia Here, family order and court’s originally deemed state court Debt- expressly limited the ERISA statute pension plan did administrator disputed funds. The or’s argues than that rather not.3 Debtor safeguard disputed was to administrator pension plans, having property until a determination was funds contingent right pay- had a QDRO. to a made as whether the Order was broadly ment, a claim as defined which was not to the funds The Debtor was entitled Bankruptcy in Code. Under the Debt- the To such determination was made. until a liability analysis, on the claim was or’s his funds, pension the the would obtain 727(d). § discharged under 11 U.S.C. against action adminis- file a civil court the discharge bankruptcy operates A to dis- Appellee’s against claim is Unit- trator. The personal liabil- charge all debts that were the ed, Accordingly, the is no not Debtor. there 524; ity § 11 re the debtor. In subject discharge bankruptcy. claim to (9th Raiman, BAP 172 B.R. 936 Cir. 1994). incorrectly assumes that The Debtor It is true that under 11 U.S.C. right pension all the he had an unlimited to 541(c)(2), § as construed in Patterson v. Shu- funds, Appellee’s purported and that mate, supra, may his inter a debtor exclude right payment” “contingent was from the ERISA-qualified pension plan in an est Debtor, pension rather than from United’s bankruptcy property estate. Yet plans. premise This also seems to be pension the Debtor’s interest in the United by upon relied the Dissent. What the Debt- plans state order was limited court recognize or fail to is that Dissent statute. When a debtor’s ERISA Debtor, United, funds. controlled the right ultimate is mea receive provides The that amounts Order award- by dependent upon or which sured orders by be ed to the the Order “shall by court, a be state the bank would issued separately accounted for ... until the bene- subject rights these ruptcy estate is further fits are distributed....” The Order filing enlarge bankruptcy cannot them. states: “The benefits awarded this Order (9th Keller, B.R. BAP In re Cir. assigned, pledged, or shall not be otherwise 1995). Bankruptcy The creates Code neither transferred, voluntarily involuntarily, be- rights a debtor nor enhances Appellee] fore has received those bene- [the re brings bankruptcy into the estate. In fits.” (9th Braker, BAP 125 B.R. Cir. 1991).

Moreover, may pre- discharge debts the ERISA statute itself debtor reaching part against property the Debtor from that which he does not have a cluded dispute. pension legal equitable interest. See 11 U.S.C. 541(a)(1). 1056(d)(3)(H)(i) case, petition provides during that In this on the filing date period in which the issue of whether an order the Debtor was entitled to analysis thoughtful 3. is a of the issue. We need not decide whether sent’s question Dis- see no reason to funds, not, guise pension with the will in the with percentage complying We subject ERISA, pension remaining portion of the invalidate the Order. Appellee’s right QDRO. to obtain a recognizes this statute Rejected Other B. Decisions Have the Debt- 1056(d)(3)(H), by ordering that Argument or’s up segregated

funds be to 18 months QDRO the status of an order as a is while reported concerning two decisions being by acknowledging determined and bankruptcy petition entry filed of a before may process longer take than months. rejected QDRO argument have that the QDRO receive a claim was property right

The Debtor’s discharge. the debtor Like the upon filing did not increase funds case, In re Long, instant 148 B.R. 904 bankruptcy petition. A debtor’s interest (Bankr.W.D.Mo.1992), involved domestic in a which divided dissolution which did meet all the judgment prepetition is “fixed and limited requirements technical Paderewski, the divorce decree.” Matter property right eourt found a created in the (9th Cir.1977) 1353, 1357 (Bankrupt F.2d dissolution, namely decree of case). cy Act “cannot debtor claim title legal ownership obtain a and transfer greater him than awarded” pensions. aof of the debtor’s in the divorce decree. 564 F.2d at 1356-57. B.R. at 908. The court held “Once ... accomplished dissolution has been when secure fixed the divorce judicata judgment the final res final, decree became and could not dis- binding division charged as a Id. The explained debt. Keller, supra, trustee.” entry would not alter Keller, 185 B.R. at we held once amount of marital oth- awarded or family the eourt ordered the resi debtor’s finality judgment. affect erwise the jurisdiction ap dence sold and retained that court concluded because there was no prove proceeds, disbursement “those par- debtor-creditor relationship between the proceeds practical purposes were for all held settlement, arising from ties the legis by in custodia that court.” Id. entry of a was akin more to enforce- such, proceeds the the Panel deemed “be property right of a ment than to collection of yond part the reach of “not the debtor” and prepetition debt. 148 B.R. at 907-08. Here, the bankruptcy estate.” Id. at the adopting The other this is In decision view bankruptcy petition, time the Debtor filed his Brown, (Bankr.N.D.Ill.1994). re 168 B.R. 331 were, pension proceeds according the both case, In that court that although the held the procedures Virginia the the fam ERISA and recognizable legal had debtor’s ex-wife order, ily beyond court’s the reach of the right pension under ERISA to debtor’s the Debtor. benefits because she was unable to obtain the sum, argues Debtor the that the ERISA QDRO prepetition, equitable she did have an abrogates Appellee’s statute the in interest pensions in arising the debtor’s pension plans awarded under court state entry of the B.R. decree dissolution. 168 order did have a because 335-36 at n. 6. The eourt ruled that QDRO on date the filed bank- Debtor for spouse’s equitable pen former interest in the ruptcy anticipates relief. Because ERISA sion fund neither was the debtor QDRO may entry that aof be a time-con- filed, bankruptcy petition at the time the was suming process provides segregation bankruptcy nor estate. 168 during of funds that first months of at B.R. process, Congress we do not believe ever agree pensioner bypass meant to We with above-cited decisions: allow that nullify pension when process essentially court benefits arose state entered, not, by filing a bankruptcy petition. divorce and was decree respects argues, dependent ERISA statute court orders. the Debtor on an order state as to frustrate encourage other debtors could requirements detailed satisfying technical to the former pension award state court’s administrator.4 timing of bank- manipulating spouse Congres- with Ruling Is Consistent C. entry Our In re stay of a ruptcy Intent sional supra, 910. A debtor’s Long, 148 B.R. at discharge as a attempt use awarding prop- Construing the Order rather advantage, to take unfair “sword” a claim is consistent erty right rather than protect him fresh with a than as “shield” history of 29 legislative with the start, In re should not be countenanced. See purposes Congress’s primary 1056. One 1988). (9th Pieri, 208, 213 BAP 86 B.R. Cir. to ERISA’s enacting QDRO exception alienation was assignment on prohibition security Ruling Nortr- of women Is in Accord with financial D. Our safeguard earnings ERISA Decisions

dependent husbands’ their separation. Ablamis v. case of divorce Having not be ruled that ERISA should F.2d 1456-57. Roper, supra, 937 at discharge the interpreted to let Debtor spouse former Congress intended in bank Appellee’s pension interest obtain an enforceable could note law the ruptcy, we also state presumably realized that with a discharge could not Debtor be slow. processing could bankruptcy. nonbankruptcy law de Because B.R. Long, supra, re at 909. As stated debt- nature and extent of the termines the supra, F.2d Taylor, at 994: Bush property, Butner v. or’s interest United Congress ever intended “We doubt States, 48, 54-55, 917- 99 S.Ct. U.S. judicially decreed sole and a former wife’s (1979), courts have looked 59 L.Ed.2d separate pension pay- in a property interest how law and the divorce decree state husband should be subser- able to her former In In the interest benefits. define goal giving Bankruptcy Code’s vient to (5th Cir.1986), Chandler, F.2d a fresh start.” debtor recognized that the divorce decree pension benefits the former purpose detailed statuto awarded the separate property, ry defining QDRO’s spare wife’s sole and which language in who, law. The court held permissible to am under Texas plan administrators due monthly of the debtor’s biguities identity as to of the beneficia decree, for pay Army retirement benefits awarded to his designated ries in a divorce pursuant by a claim mer wife a divorce decree wrong person and are sued rival Wheaton, as it was the Metropolitan dischargeable ant. v. not debt because Ins. Co. Life (7th Cir.1994). 1080, 1084 spouse. property of the former 42 The Debt- sole debtor’s F.3d Zick, 825, Similarly, re 123 B.R. 829 attempting misapply the statute to in In or is (Bankr.E.D.Wis.1990), that Congress certainly the court held a result never achieve an obli gain a for himself in “the divorce court did not create intended: windfall a part' of wife of gation a state order and at the husband to the contravention of court discharge. now Appel- property that he can expense his former wife.5 The division portion Zick a portion pension Peggy a The court awarded lee’s receive name; in it merely pension fund husband’s funds should be forfeited because her not in In re bankruptcy petition property, be her not his.” And Debtor filed his became Thomas, 27, (Bankr.S.D.Cal.1984) 47 B.R. paperwork was submitted. fore J.), military pension ruling urged by (Meyers, in case the court found The Debtor Dissent, procedures complied focusing has with detailed 4. on the even before she ERISA, appears procedures obtaining QDRO. these provisions in view for a perfection. rea- akin to lien soning, Under the Dissent's beneficiary perfects until a her interest assets, pension exempt a Because the funds are by obtaining recognizable a she has pension determination that the benefits contrast, pension our interest in understanding benefits. In dischargeable would not increase estate assets acknowledges ERISA is it that for benefit of creditors. beneficiary's pension interest in the benefits nondisehargeable, dischargeable, despite for the reason not they that were deemed to be technical deficiencies in the Order.

the debtor’s former wife under California Because the Debtor did not owe debt to Brown, supra, See In re 168 B.R. law. also Appellee, nothing discharge. there was find (applying proper- at Illinois law to summary judgment The court’s in favor of ty right pension). in the debtor’s Appellee is AFFIRMED. hand, In the case at the divorce HAGAN, Bankruptcy Judge, dissenting: granted Appellee decree and the Order property right pension. in the Virginia analysis My applicable of the law would family pension plan court directed the admin appealed. mandate reversal of the order I Appellee portion istrator to award the her respectfully therefore dissent. The order implication the benefits. There was no stating Appellee had a money Appellee. the Debtor owed pension plan interest the Debtor’s was not Furthermore, plan administrator’s asser Qualified Order; Domestic Relations it problems tion that were there technical with could not create a the fact does alter pension plan; and therefore it was a debt Appellee pen was awarded a discharged in bankruptcy. law, Virginia

sion. Under the substantive dividing terms a final divorce decree DISCUSSION are to modification. Caudle, 795, 796, v. 18 Va.App. Caudle Appellee Could Not Obtain an (1994). may S.E.2d 248-49 A trial court Interest in the United Pension Plans modify a QDRO. final decree to effectuate its ex Absence of benefits, pressed regarding pension intent majority opinion properly notes that any adjustment must consistent with the Order did not create a debt provisions original the substantive de nondisehargeable under section1 as be Va.App. cree. 447 S.E.2d at 249. ing alimony, maintenance, “in the nature of Accordingly, Virginia law the 523(a)(5)(B). support.” 11 U.S.C. modify could ask the state court to the Order Order constituted a settlement. comply plan with the administrator’s tech “Property dischargeable ... settlements Indeed, requirements. nical the Order re bankruptcy.” E.g., Stedman v. Pederson jurisdiction family served (In (9th Pederson), 875 F.2d it establish as a The Debtor has Cir.1989), grounds, overruled other Far argued that the is time-barred from rey Sanderfoot, 500 U.S. S.Ct. requesting either the Order be modified Pederson, 114 L.Ed.2d 337 to alleviate the United administrator’s Appeals the Ninth Circuit Court relied concerns, bringing or from suit state or part provision permit on this the debtor to it district to establish that the Order as securing avoid a lien a settlement QDRO. presently reads is a through a obtained divorce. Because the was not in award the nature V alimony, support, of or maintenance it dischargeable have would been bank- CONCLUSION 523(a)(5). ruptcy Allowing under section reading provisions securing Our of the relevant of a Pederson to avoid lien such a Bankruptcy dischargeable property Code and the ERISA stat- settlement is thus ute, along legislative history Congress’s policy with with consistent “that enactment, policy behind their leads us settlements should be treated the Appellee’s property right conclude that in bankruptcy.” same as other debts noted, Code, ruptcy 1. Unless otherwise all references to "sec- Title United States Code. respective tion” are to the section the Bank- 806 1056(d)(3)(B)(ii);' 26 Robinson, § see also 29 Boyd v. U.S.C. (quoting

875 F.2d 784 undisputed (8th Cir.1984) (Ross, J., 414(p)(l)(B). It § U.S.C. 1116 741 F.2d a relations order.” the Order is “domestic dissenting)). § 1056 29 U.S.C. defined upon whether case therefore turns This following manner: presently vested has (i) “qualified term domestic relations or if her pension plans, or- order” means domestic property interest is “debt” such a obtain der— meaning Bankruptcy Code. within the debt, discharged. it (I) If is a will be it recognizes or the exis- which creates 727(b). to, § payee’s right U.S.C. of an alternate tence assigns payee an alternate

or to, all receive or Provi- 2. The ERISA Anti-Alienation par- payable respect with sion. ticipant plan, under the United undisputed It is (II) require- respect with to which Employee Retire- plans are (C) (D) subparagraphs ments Security Act of 1974 ment Income met[.] are (“ERISA”), 93^06, 88 Pub.Law Stat. 1056(d)(3)(B)(i); § see also U.S.C. amended, § seq. et Section 29 U.S.C. 414(p)(l)(A). plan § administra- U.S.C. Code, pro- of Title United States charged responsibility for tor is initial with pension plan provide shall “[e]aeh vides determining is a whether may provided plan that benefits 1056(d)(3)(G), (H); § 26 U.S.C. 29 U.S.C. assigned or alienated.” not be § 414(p)(6), 1056(d)(1); § see also 26 U.S.C. 401(a)(13)(A). “supersede any all These sections expressly § This section is they may now or here- State laws insofar orders: applicable domestic relations any employee benefit after relate (1) creation, Paragraph apply shall 1144(a). § plan....” That sec- assignment, recognition of a or clarify goes tion on to the nature of ERISA’s respect par- any payable benefit with law, part providing preemption state ticipant pursuant to a domestic relations that: (1) order, paragraph except that shall not For purposes of section: if to be a apply the order is determined (1) laws, term law” includes all Each “State order. qualified domestic relations decisions, rules, regulations, or other provide payment shall law, having action the effect of applica- in accordance with the State of benefits any State.... requirements any qualified domestic ble relations order. (2) State, any The term includes “State” thereof, any political subdivisions 1056(d)(3)(A); see 29 U.S.C. also U.S.C. either, instrumentality agency 401(a)(13)(B). A “domestic relations or- directly or purports regulate, which der” is defined as: indirectly, the terms and conditions decree, judgment, (including or order employee plans by this benefit covered agree- approval of a settlement subehapter. ment) which— 1144(c). QDRO’s expressly 29 U.S.C. (I) sup- provision the of child relates excepted preemption. 29 U.S.C. port, alimony payments, marital or 1144(b)(7). § rights spouse, former QDRO. Not A 3. The Order Is child, dependent or of spouse, other and participant, majority correctly opinion concedes noted, (II) QDRO. not a pursuant is made to a State domestic the Order is meet the re- (including community domestic relations order must relations law law). quirements subparagraphs of to be a two

«07 1056(d)(3)(B)(i)(II); added); § § U.S.C. see see 414(p)(2) also 26 U.S.C. (same). § 414(p)(l)(A)(ii). also 26 U.S.C. These sub-

paragraphs provide: statutory language explicit is and (C) A domestic relations order meets the emphatic. purpose is to reduce the

requirements subparagraph only of this expense plans of by sparing plan clearly specifies— if such order grief they administrators experience the uncertainty (i) concerning when because of the name and the last known mail- identity the beneficiary they pay the (if ing any) participant address of the person, wrong arguably wrong or per- and mailing and name address of son, by and are sued a rival claimant. payee by each alternate covered order, Wheaton, Metropolitan Ins. Co. v. Life (ii) percentage par- (7th Cir.1994). the amount or F.3d “[T]he ... by

ticipant’s paid benefits to be requirement that certain specified facts be plan payee, to each such alternate clearly or purpose serves aiding plan the manner in which such amount or administrators in determining whether cer determined, percentage is to be tain domestic by are orders covered exception the limited (iii) the antialienation of payments period the number or preemption rules.” Hawkins Com applies, to which such order Revenue, missioner Internal 102 T.C. (iv) plan ap- each to which such order (1994). 74-75, 1994 WL 26316 See also plies. 98-575, S.Rep. No. Cong., 98th 2d Sess. (D) A domestic relations order meets the reprinted in 1984 U.S.C.C.A.N. requirements subparagraph of this (guidelines to determine whether the if such order— exception to anti-assignment provision (i) plan require provide any does applies “necessary” are provide “[i]n order type benefit, any option, or form of or administrators”.) plan rational rules for provided plan, otherwise “[W]e conclude that a be should (ii) require provide does not plan specific’ ‘clear and and not ‘left to determina- (determined increased benefits on the by conjecture.’ tion inference or To allow value), basis of actuarial spawn again otherwise would tobe ‘a relent- (iii) require payment does of bene- litigation’.” Hawkins, less stream of payee fits alternate are which re- Among T.C. 1994 WL 26816. other quired to paid be to another alternate things, clearly specify must either payee previously under another order percentage amount be benefits to qualified determined to abe domestic paid payee, by to the alternate or the method relations order. percentage which that amount is to be 1056(d)(8)(C), (D); § 29 U.S.C. see also 26 1056(d)(3)(C)(ii); § calculated. see 414(p)(2), (same). 414(p)(2)(B) also 26 U.S.C. It requires is no accident that ERISA terms of Order no means met this “clearly speciffy]” requirement, certain informa- for reasons in a discussed foot- 1056(d)(3)(C) tion. (emphasis 29 U.S.C. note.2 following some of the more serious is the total number of months the First, ambiguities found in the Order. were Order Debtor married. This fraction is con- conflicting computing percentage, contains two formulae for verted to which paid Appellee. entitled receive one half. The Order Para- does not graph provides page which formula 1 of indicate administrator [Appellee] "the should use. Defendant entitled one-half shares, being problematic, marital particularly 50% 13.71% This is since the sec- properties.” Paragraph of each significantly aforesaid ond formula reaches different re- Appel- a second Interpreting contains formula which the sult from the first. second for- according meaning lee's interest is calculated. The probable denominator is mula its most result, gives following the total number months of the Debtor's total based on facts found in length employment begins of until he and retires the Order. The marital share the of 3, 1985, pension period to receive his benefits. The the numerator covers from December

808 only permitting such a transfer. that the does law

Despite the concession Order exception pro the anti-alienation QDRO, majority opinion possible a the constitute not 1056(d)(1) a of 29 U.S.C. in the Order vision the deficiencies characterizes nature, Appeals 1454. of sug- F.2d at The Court in and even 937 being “technical” QDRO’s provisions regarding that the requirements peculiar noted the were gests that Equity requirements been added the Retirement had the administrator. 98-397, (“REA”), being Pub.Law 98 the of Act of 1984 not sense are “technical” They defining 1426. 937 F.2d 1453. After are the charac- Stat. mere details. authorities, the compliance man- discussion of is extensive teristics of a as follows: court summarized its conclusion datory. ERISA, specific language of Given That Is A Domestic Relations Order If. REA, legislative history of Prop- Not A Create Cannot holdings regarding Supreme Court’s clear ERISA-Qualified erty In An Interest anti-assignment provi- applicability of Pension Plan. transfers, spousal we have no sions to 1056(d) of ERISA doubt whatsoever therefore, issue, a is whether The critical generally applicable to is transfers involv- a that is not domestic relations order necessarily ing spouses preempts all to transfer a could nonetheless act relating that do orders to such transfers pension plan. The in an ERISA specific not fall and limited within correctly majority opinion notes that it can QDRO exception forth in set REA. Or- Roper, Ablamis v. not. 937 F.2d excep- qualify ders that do not (9th Cir.1991), husband owned language of tion contravene the direct allegedly had com plan which wife provision. anti-assignment ERISA’s died, munity property interest. The wife leaving community property her share of the F.2d at 1459. presented was question trust. Ahlamis upon by cases is One relied nonparticipant spouse could be

whether a Guidry Nat’l Pen- v. Sheet Metal Workers pension plan. queath an interest Fund, 680, sion U.S. S.Ct. (1990). There, Appeals held L.Ed.2d a union official- The Ninth Circuit Court of permitted, as the had embezzled funds the union. The such transfer was trust provisions preempted state union obtained constructive However, August payable immediately. total of 57 months. The would be began working the Debtor at United Order states Debtor has not retired. Because the denomina- eligible August, is to retire with tor of the second formula is the number of 1, 1999, April length em- benefits on total retirement, the Debtor's the denom- months until figures ployment If of 392 months. these (It inator cannot be calculated. should be noted formula, the result is inserted into fractional exceptions record includes made significantly higher This is or 14.54%. 57/392 Order, entry of counsel to and that Debtor's paragraph figure than the Differing used in 1. 13.71% specifically excepted counsel to the Order on depending figures may be obtained on ground.) precisely this counted; however, partial how months are none Paragraph page 1 on 5 of the Order confuses 13.71%, figures equals these and the Appellee the situation further. It states the specify partial does how months should (50%) equal fifty percent sum "[a] awarded counted. according allocated to the formula amount noted, ambiguities paragraph Other exist. ambiguities Two exist. described hereinabove.” First, [Appellee] is 1 states that "the Defendant entitled noted, paragraph specify this does shares, being to one-half of the marital 50% percentage whether formula is the described properties.” of each of the aforesaid 13.71% paragraph percentage de- the fractional language say This could be either that the read Second, paragraph paragraph scribed in plans, award is or of of one-half of 13.71% halving already can be read as further the sums plans. one-half of 50% 13.71% previous halved in both the formulae. For exam- The denominator of second formula second, ple, provides fractional formula paragraph page ambiguous. The Order is entitled to one-half of the fraction. provides Appellee may elect to receive bene- Paragraph page suggest Appel- 1 on 5 would as of earliest date the Debtor could retire. fits amount, early of that already passed lee entitled one-half has his retire- The Debtor date, one-quarter of the fraction. ment so plans plan. Supreme The sion was not a “claim.” Both of these pension official’s arguments are flawed. violat that the constructive trust Court held provision of ERISA. ed the anti-alienation 6. Neither The Nor Order ERISA Limit- garnishment against an Noting that writs Property ed The Debtor’s Interest In by plan proscribed pension ERISA The Pension Plans. provision, the Court held: anti-alienation meaningful distinction between a larger portion majority opinion see no “We The garnishment and the constructive writ of is devoted to the assertion that the Debtor property remedy imposed portion in this case. That has no interest in that trust 206(d)(1) pensions Appellee. § remedy thereby prohibited by United awarded to the 1056(d)(1) Because “the Debtor’s interest in excep the United ] unless some [29 U.S.C. pension plan[s] was limited under the state statutory general applica ban is tion statute,” court order and the 372, 110 ERISA at S.Ct. at 685. The ble.” U.S. contends, majority opinion petition “on the general equitable held there was no Court filing date the Debtor was entitled to provision. exception to the anti-alienation funds, percentage pension of the with the 376-77, at 110 S.Ct. at 687. “Sec U.S. remaining portion pension[s] subject 1056(d) 206(d) [29 ] tion reflects a QDRO.” Appellee’s right to obtain a I congressional policy considered choice.... disagree. made, exceptions policy it If to this are to be Congress that is for to undertake task.” majority opinion The first contends (footnote at 687 omit U.S. S.Ct. provisions two of the Order restricted the ted). Guidry Supreme The Court later cited pension Debtor’s interest demonstrating “vigorously that the Court plans, or ac- otherwise limited the Debtor’s prohibition has enforced on the as ERISA’s plans. provided cess to the The benefits, signment or alienation of (1) Appellee the amounts awarded to the declining recognize any implied exceptions separately were to be accounted for until the statutory to the broad bar.” Patterson v. (2) benefits; Appellee received her Shumate, 753, 760, 504 U.S. S.Ct. benefits awarded the Order could not be 2247, 119 L.Ed.2d transferred, involuntarily, voluntarily or until Appellee.

distributed to the irrelevant, These terms of the Order are Summary: Had A Claim they legal already since have no effect. Against The Debtor That Was Dis- noted, law, meaning supersedes ERISA state charged. ... other action hav- “decisions State my opinion, this settles the matter. by any ing the effect of law” issued state divorce, had to ob- “instrumentality purports regu- ... which portion property. tain a of the Debtor’s This late, directly indirectly, terms 101(5). was a “claim” under section ERISA-qualified pension conditions” of an attempted award State (c)(2). 1144(a), (c)(1), plan. 29 U.S.C. pension plans part interest the Debtor’s segregation requirement apply tempo- did settlement, it failed to do of the but (see rarily beginning in the the discussion date, petition Appellee’s right so. On the however, temporary paragraph); next in the Debtor’s to obtain a interest way product in no restriction was pension plans was no different from an unse- ERISA, Order, only of and the Order levy judgment cured creditor’s restriction in was ineffective to extend the judgment property. debtor’s Un- any manner. discharged. section der majority opinion next turns several majority provisions allegedly restricted opinion reaches a different (1) result, contending prop- property interest in the the Debtor’s the Debtor’s During ad- erty pension plans plans. period where had been (2) jurisdiction competent Appellee, ministrator or court limited the award qualifies as pen- determining whether an order Appellee’s right Moreover, notes, “segregated argument plan the fund” majority opinion QDRO, if the result here even would not affect in a required segregate is administrator logic argument accepted. were It have been separate account funds would that the Debtor was appears from the record if payee the order payable to the alternate receiving plan during the time majority By opin- QDRO. this the fact is a evaluating plan administrator was existence of the Order suggests that the ion Thus, QDRO. the Order was a whether limit the Debtor’s ERISA to caused segregat- would not have plan administrator though pension plans, even in the interest Appellee. Even if any benefits for the ed QDRO. not a the Order was seg- segregated, that plan benefits had been If an agree this conclusion. approximately I cannot with six regation terminated bankruptcy, plan is debtor filed presented to a administrator months before the order (or rejected plan the or- QDRO if when the administrator determined not to be QDRO. segregated funds der as a With no elapse from the time benefits months would date, petition ERISA neither created on the order), duty to payable under the first be recognized any limitation on the Debtor’s nor plan and the admin- segregate is terminated pension plans.5 interest in the United plan pay funds over to the istrator must such Thus, segregation of funds participant.3 restrictions set forth the Order payees ERISA, or- protect legal alternate whose preempted does were Contrary majority opinion’s qualify QDRO. Even effect. to the does not der suggestion, ERISA itself demonstrates QDRO’s only receive payees with alternate protection in payees alternate receive no is protection if the issue resolved QDRO. logic if absence of a Even within 18 months. majority opinion’s argument accepted, no provision This demonstrates ERISA portion pension plans was of the Debtor’s participant’s property plan limit the does not segregation petition on the date. QDRO. rights in the absence of a Limited reject majority opinion’s I therefore must segregation4 provided protection is conclusion that the Debtor’s inter- against irreparable pay- harm for alternate pension plans on the est limited QDRO. payees who have a Alternate ees petition date. qualify as a do

whose order does not Appellee’s Right To Plan pro- not receive the of this minimal benefit Benefits Against Was A “Claim” The Debtor. not limit the tection. ERISA does Debtor’s pension plans, property interest as the majority opinion also contends that contends; provisions majority opinion these claim did have a again proper- Debtor, demonstrate the Debtor’s obligation pay pension because the plans ty interest in the is unlimited benefits was not due at the time the Debtor majority QDRO. bankruptcy. support, of a filed absence provides: plan considering time the administrator 3. The relevant of ERISA (iii) whether the order is a See 29 U.S.C. period If within 18-month described in 1056(d)(3)(H)(i) (v) plan (during ad- the time the clause (I) determining it is determined that the order is not a whether an order is a ministrator order, qualified plan separately domestic relations "the administrator shall (II) the issue as to whether such is a order account for the amounts ... which would have qualified domestic relations order is not re- payable payee during been to the alternate such solved, period if the order had been determined to be a pay then the administrator shall order.”) qualified (emphasis domestic segregated (including any amounts added); (same). § 414(p)(7)(A) 26 U.S.C. thereon) person persons who would have been entitled to such amounts if there 5. Note in addition that the limitation on the had been no order. pension plans Debtor’s interest in the 1056(d)(3)(H)(iii). See also 26 Appel- would not be the full amount awarded the (same). 414(p)(7)(C) lee, amounts, i.e., segregated those payable Segregation applies only benefits that would have been until the to benefits that would paid payee during have alternate issue was resolved. been (In pay- to make direct United States Teichman v. Teichman opinion cites (9th Cir.1985), share; instead, Teichman), it to the wife of her F.2d 1395 ments holding Taylor, in Bush v. 912 had to order the husband to turn over the the alternative (8th Cir.1990). position con- payments This F.2d 989 share of the after the hus- wife’s statutory language of the plain tradicts received each check. 774 F.2d at 1398. band “claim,” properly to and fails definition of reason, obligation to turn over For Bush, or both of interpret either Teichman proceeds not a Each debt. check prop- cases where a were non-ERISA which pension, although from the husband received in erty had been created interest him, payable to in fact contained the made plan prepetition. proceeds. prop- The had no husband wife’s majority opinion provides quite thor- The erty pro- in interest the wife’s share of the “claim,” definition of ough discussion obligation pay to ceeds. The wife was noting is accorded the breadth wife, payment owing not a of debt the term I would further note term. posses- to her transfer of the wife’s “unmatured” expressly includes “claim” obligation only upon the sion. This arose 101(5)(A). rights payment. check, receipt and therefore was not a “contingent” rights to includes “Claim” also at 1398. debt. F.2d id, meaning a ‘“which the payment, debt (8th Taylor, Bush v. 912 F.2d 989 Cir. pay only upon upon called debtor will be 1990), distinguishable exactly the happening of an extrinsic the occurrence or Bush, In same reasons. the wife was trigger liability event which will ” awarded a one-half interest husband’s alleged creditor.’ Fostvedt debtor to the government pension plan. 912 F.2d at 990. (9th Fostvedt), (In Dow re 823 F.2d Teichman, government in mailed a Cir.1987) Brockenbrough (quoting v. Com- the full amount each month to the cheek for (W.D.Va.1986)) missioner, 61 B.R. husband, obligated pay was then who 109(e)). (interpreting 11 Thus the portion over to the her of the check. wife statutory plain language of the definition (The obligations 912 F.2d at 990. between . obligations payment where “claim” includes husband wife were later modified yet By holding Appellee that the is not due. here.) The husband a manner not relevant no “claim” because benefits will has subsequently petition for relief filed future, majority paid opin- held, in bankruptcy. Eighth Circuit The effectively unmatured ion allows a debtor’s Teichman, holding relying upon alternative through bankruptcy obligations pass with- bankruptcy discharge had no effect that the narrowing being discharged radical out —a obligation to remit on the husband’s scope relief. pension payments, future wife’s A closer examination of Teichman and yet payments were not due because those Bush demonstrates that neither ease reached payable. F.2d at 993. Teichman, In the Ninth Circuit this result. the wife had In both Teichman and Bush Appeals question Court of addressed prepetition, obtained a interest discharge through a husband could whether dividing through court’s order the state obligation convey per- bankruptcy the community case involved property. Neither centage military pension of his to his former ERISA, court order was immedi- so the state here, however, the wife had a Unlike wife. regard. present ately in this effective pen- perfected property interest half the case, to create the was ineffective from the date of the state sion effective found in Teichman interest correctly “The district court court’s order. Bush, not a decree, the Order was because held that under the dissolution majority opinion misapplies Teichman forty-three ownership has an wife plain definition of and Bush to undercut the fund.” 774 F.2d at percent of the retirement “claim,” However, that neither court intended.6 could not a result the state court upon the Debt- majority opinion does not have a claim asserts that it relies agree. has a valuable proposition I cannot The Debtor that the or. Teichman and Bush for wages levy against garnish debtor’s upon majority opinion also relies two 101(5)(A) (In property. 11 U.S.C. Bigelow v. Brown the debtor’s court decisions. lower (Bankr.N.D.Ill. Brown), (“whether right is reduced to 168 B.R. 381 or not such re (In 1994); Long), disput- Long unliquidated, v. Donahue ... ... judgment, [or] (Bankr.W.D.Mo.1992). ed.”). right has both a B.R. recog- judgment payment and a state court statutory defi- Long, the court cited the Appellee’s right nizing right. “claim,” stated and then nitions of “debt” and analogous judgment obtain something spouse other that the former “has proper- attach the debtor’s creditor’s payment from the Debtor than a actually step necessary to obtain ty final at 908. The court property.” his 148 B.R. —a payment. satisfaction of the then stated: above, a domestic As discussed distinguish Guidry, Long attempted to form of a does not order not imposed holding a constructive trust could be right to benefits create an enforceable right spouse the nondebtor had a because ERISA-qualified pension; against Guidry QDRO. 148 B.R. at 909. obtain a therefore, right Ms. Donahue’s to obtain expressly a constructive trust stated that QDRO can not classified as a debt. exception imposed not be unless an could gave Dona- of Dissolution Ms. The Decree applied. provision anti-alienation QDRO and trans- right hue a to obtain the Unqualified at 110 S.Ct. at 685. U.S. legal ownership portion of her of Debt- fer excepted orders are not domestic relations property.- as marital pensions or’s awarded provision. from the anti-alienation words, Long In 148 B.R. at 908. other Brown, is no court held that since there enforceable the court held that a dissolution QDRO, right payment in absence of a immediately property, divides the decree no there is “debt.” spouse obtaining an with the nondebtor own- ership interest. 168 B.R. at 334-35. The a claim for contribution “To hold that spouse debtor holds the nondebtor’s interest only arises when there is an enforceable plan in constructive trust. 168 right payment appears ignore fact, upon entry B.R. 335. “In of the statutory of definition of breadth ” judgment, divorce the benefits became the Dep’t ‘claim.’ Health Services California property (In separate sole and of the Plain- Jensen), v. Jensen re 995 F.2d tiff_ QDRO merely (9th Cir.1993) served to en- (rejecting that lia- contention preexisting property rights in force her bility for environmental contamination was (citation omitted). pension.” Id. The court response until had been not a “claim” costs incurred). provision, noted the ERISA anti-alienation Although payment is “[A]lthough QDRO, but stated: the Plaintiff had no unenforceable in the absence of a recognizable legal right no under ERISA to the does not mean that the has “Right because payment. payment” is not de- debtor’s she was by ability prepetition, unable to obtain the termined the creditor’s to immedi- ately levy equitable without further Plaintiff did have an on action, arising entry pensions but rather on the creditor’s Debtor’s from the legal right payment. previously the decree of dissolution.” 168 B.R. at 336 n. to obtain noted, contingent (emphasis original). simply begs Brown “claim” includes both question, stating obligations. unmatured An unsecured credi- that a constructive trust “claim,” judgment though Guidry says it cannot tor without a has a even is created even be, holding though equitable property that an the creditor has current against pension plans; the debtor’ in- interest in the the Order Title 11 is "'claim debtor”); premised against property that fact. The cludes claim [a] itself is Bank, 78, 84-86, currently any property lacks interest in the Debt- Johnson v. Home State U.S. 2150, 2154-55, (1991) pension plans, or’s seeks to use her unse- 111 S.Ct. 115 L.Ed.2d 66 claim, judgment (mortgagee’s right to foreclose is a even cured Debt- obtain though personal liability property. debtor’s has been or’s This is a claim the Debtor. (rule 102(2) discharged). See 11 U.S.C. of construction in History Sup- language Legislative Does Not plain despite the interest exists port Rejection ERISA’s Plain provision.7 anti-alienation Language. majority opinion contends that its re Preemption Conditions Gener- 8. ERISA legislative history sult is consistent with the Regarding The Law al Statements of 1056, noting purpose of 29 that one Rights. Property safeguard exception was to award support of its conclusion that the security spouses financial of former in the absence of a was effective clear, participants. Where the statute to, or majority opinion also cites inquire legisla there is no need to into the from, involving state quotes numerous cases See, history. e.g., tive Patterson Shu Keller v. majority opinion cites law. The mate, 753, 761, 504 U.S. S.Ct. (9th Keller), (In B.R. Keller plain 119 L.Ed.2d 519 1995), proposition BAP for the that when Cir. unquali ly unambiguously provides that right to receive a debtor’s ultimate relations orders do not create fied domestic dependent upon orders is measured any property interest. “Domestic relations court, be issued a state which would ERISA, yet order” is a defined term Con rights to these estate gress excepted pro the anti-alienation enlarge bankruptcy filing cannot and the subcategory qualified do vision Appellee, not the Debt- Here it is the them. Congress clearly mestic relations orders. or, ultimate to receive whose that there would be domestic rela foresaw dependent or on a state court is measured qualified, and tions orders that were not however, is distin- Regardless, Keller order. directed that those orders were to be of it involved that was in guishable, Ablamis, E.g., 937 F.2d at 1458 effect. bankruptcy legis custodia on the date of (“Thus, readily apparent it that transfers petition. or pursuant .state domestic relations laws QDRO excep exempted under the rules not majority opinion Kel- The later cites both governed by anti-assignment tion are (In v. Barrett re Pader- ler and Paderewski (emphasis original)). It is dif provision.” (9th Cir.1977), ewski), for the 564 F.2d 1353 Congress speaking imagine more ficult to conclu- proposition that the divorce decree A clearly on the issue. domestic sively property interests of established the that is not a does not create order Appellee. and the I have no the Debtor ERISA-qualified any property interest in an disagreement proposition that state with the pension plan.8 However, usually controls such matters. law recognized Supreme this when Court nor Paderewski involved neither Keller warned, specific context of the it ERISA, bankruptcy they suggest nor do provision, anti-alienation pre- ignore express federal courts should unquali- equitable exceptions to creation of evaluating property emption statute when prohibitions. legislative requirements or fied majority opinion Keller and rights. The uses exceptions, in our preemption creation of such Paderewski to avoid the ERISA view, issue, especially problematic would be than address it. rather bill, briefly majority opinion Under the if domestic relations cites Zick Zick 7. The (Bankr.E.D.Wis.1990). (In Zick), part requires 123 B.R. 825 or a of a the distribution of all postpetition. obtained Zick also involved qualified plan participant’s benefits under merely See 123 B.R. at 828. Zick creation, recogni- payee, an alternate then allegation conclusoiy made the the state tion, payee’s assignment of the alternate gave interest in court’s award the wife a is not considered an as- to the benefits recognizing pension plan, without ever signment under the or alienation of benefits provision. addressing the ERISA anti-alienation qualified the order is a if if B.R. at 829. order. domestic relations 98-575, Cong., S.Rep. 2d Sess. No. 98th legislative history of the REA amendments (em- reprinted in 1984 U.S.C.C.A.N. requirements supports also that added the added). phasis this conclusion. provi- antigarnishment context of an acts, definition, provision sion. Such a of a lawful debt.

to hinder the collection garnishment therefore can restriction only on the view that be defended policies of certain broad social effectuation precedence de- takes over the sometimes equity particular par- sire to do between adopt It makes little sense to such a ties. policy and then to refuse enforcement inequita- appears whenever enforcement ble. 376-77, Guidry, at at 687 493 U.S. S.Ct. (emphasis original). majority opinion spec- also raises the filing manipulating the time of tre debtors deprive spouses of an award of pension benefits. There is no basis for this 523 was amended in 1994 to

fear. Section nondischargeable make settlements bankruptcy. Bankruptcy Reform Act of 103-394, 304(e), Pub.L. No. Stat. (1994), codified 523(a)(15). applies This amendment to all bankruptcy cases filed after October Id., 702(b)(1), 1994. 108 Stat. at 4150. Only cases filed before date would be affected this decision.

CONCLUSION was not a did not create interest, and therefore is a dis- chargeable I debt. would REVERSE the summary Bankruptcy judg- award of Court’s Appellee. ment to the In re Lawrence Edward HALL Hall,

and Loretta Debtors. Bankruptcy No. A95-00378. Court, Bankruptcy United States D. Alaska. Dec.

Case Details

Case Name: Gendreau v. Gendreau (In Re Gendreau)

Court Name: United States Bankruptcy Appellate Panel for the Ninth Circuit

Date Published: Jan 31, 1996

Citation: 191 B.R. 798

Docket Number: BAP No. NV-94-1832-HaMeAs. Bankruptcy No. 93-31897-JHT. Adv. No. 93-3119

Court Abbreviation: 9th Cir. BAP