Hollbrook v. Hollbrook, 151 SW3d 825 (Ky.App., 2005)

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Hollbrook v. Hollbrook, 151 SW3d 825 (Ky.App., 2005)
Where wife did not file a complaint in Bankruptcy Court,
the Court did not have jurisdiction to reverse the order of
the Bankruptcy Court discharging husband's debt to wife
arising from pension benefits he received prior to entry
and acceptance of QDROs.

1991 divorce decree incorporated an agreement equally dividing the marital portion of husband's two pension funds. Because the husband had not retired, the parties agreed to postpone undertaking the calculations in order to determine their respective interest in the two funds. They agreed to communicate annually to determine the wife's interest, but they did not end up communicating after the divorce. The husband retired in 1992, failed to notify his former wife, and a QDRO was not entered. When wife learned in 1999 that former husband had retired, she filed for reimbursement of her share of the retirement benefits that had been disbursed to her former husband.

The trial court entered QDROs to enable her to receive her portion of the ongoing benefits, but they did not commence until 2001. The husband filed a petition in bankruptcy which resulted in an automatic stay of the former wife's efforts to enforce the decree and to collect the sums wrongfully withheld. She and her attorney were named as creditors and filed no claims to challenge the efforts to discharge the debt to the former wife. The discharge was granted September 9, 1999.

In 2001, the wife renewed her motion for contempt and reimbursement of her share of the pensions that had been paid between 1992 and 1999. The trial court affirmed the report of the DRC granting a common law judgment for the pension arrearage in excess of $60,000.

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 non-support obligation is dischargeable. Wife acknowledges that the debt at issue is not in the nature of support or maintenance.

The bankruptcy code further provides that a non-support marital debt shall be discharged unless the creditor files a complaint, which wife did not do. Since she failed to do so, neither the trial court nor the Court of Appeals has jurisdiction to reverse the order of the Bankruptcy Court discharging this debt. Repugnant as were both the deceptive behavior and the legal result of the bankruptcy proceeding, the Court has to give full faith and credit to the order of discharge and erred in failing to give effect to the discharge.

Finally, to the extent the husband received some pension benefits following the filing of his bankruptcy petition and before one or both of the QDROs were accepted by the pension funds, the case was remanded to the trial court to determine the amount of any benefits paid post-petition but before the effective date of the QDRO.

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