Title: Rauer v. McFee

State: wyoming

Issuer: Wyoming Supreme Court

Document:

Rauer v. McFee1990 WY 133802 P.2d 155Case Number: 90-119Decided: 12/04/1990Supreme Court of Wyoming
Wayne E. RAUER, 

Appellant 
(Defendant),

v.

Judith A. McFEE, f/k/a 
Judith A. Rauer, 

Appellee 
(Plaintiff).

Appeal from the District 
Court, Albany County, Arthur T Hanscum, J.

Floyd L. Hoover, 
Laramie, for appellant.

Lisa Sweeney, 
Laramie, for appellee.

Before 
URBIGKIT, C.J., MACY and GOLDEN, JJ., and RAPER and BROWN, JJ., 
Ret.

RAPER, Justice, 
Retired.

[¶1]      This appeal 
involves primarily the effect of husband and wife seeking federal chapter 11 
bankruptcy relief upon a divorce proceeding thereafter initiated by the wife. 
The trial judge proceeded to grant a divorce to the wife, provided for child 
support and distributed marital property.

[¶2]      Appellant husband 
declares the issues to be:

     1. Whether the trial 
court has jurisdiction to divide property in a divorce action when the property 
is protected under the provisions of 11 U.S.C. § 362, without relief from the 
automatic stay.

     2. Whether the trial 
court has jurisdiction to order child support paid from monies which emanate 
from earnings from property of a bankruptcy estate.

     3. Whether a change of 
circumstances must be shown when the relief sought is a modification of a 
divorce decree because of the trial court's lack of jurisdiction and/or 
irregularity in entering its order.

     4. Whether Appellee's 
Motion to Dismiss was timely and/or whether it was meritorious.

[¶3]      Appellee wife 
does not separately set out the issues but accepts them as stated by appellant 
and devotes her argument to meeting such issues.

[¶4]      We will affirm 
the district court.

[¶5]      In January 1987, 
appellant and appellee, husband and wife, filed for protection under the 
provisions of Chapter 11, U.S.C. § 1101 et seq. in the United States Bankruptcy 
Court for the District of Wyoming.

[¶6]      On February 19, 
1987, appellee filed a complaint for divorce in the state district court and the 
district judge set the case for trial on May 7, 1987. Appellant, pro se, was 
served with a copy of the order of setting, though he had filed no pleading 
responsive to the complaint.

[¶7]      On May 8, 1987, 
there was filed a judgment and decree granting a divorce to appellee, giving 
custody of the three children of the parties to her and providing for $600 per 
month for their support but giving appellant visitation rights. Appellee was 
awarded certain real property, mineral interests and an automobile. Appellant 
was awarded a van and his tools.

[¶8]      On May 9, 1988, 
appellant filed a motion to modify the decree of divorce alleging failure of the 
district court to have all facts before it, alleging the bankruptcy and the 
automatic stay as to property and income as provided by 11 U.S.C. § 362, and 
alleging the property division was invalid for want of jurisdiction.

[¶9]      A responsive 
pleading was filed and the trial judge set the matter for hearing. After various 
delays, appellee moved to dismiss the motion to modify.

[¶10]   On July 15, 1988, the Wyoming 
bankruptcy judge entered an order directing that all matters regarding the 
divorce and property were properly within the jurisdiction of the state district 
court and declined "to assert any jurisdictional authority over any matters 
regarding the post-petition divorce of the debtors and division of the marital 
property as between the debtors," but retained jurisdiction over the property of 
debtors for the purpose of the chapter 11 case.1

[¶11]   On April 17, 1990, the trial 
judge's order on appellant's motion to modify was entered and was as 
follows:

     THIS MATTER having 
come before the Court upon the Motion of the Petitioner/Defendant to Modify 
Decree and upon the Plaintiff/Respondent's Motion to Dismiss said motion; after 
a hearing where all parties and their counsel were present; and after 
consideration of the law, briefs and points and authorities filed in this 
action; the Court finds as follows:

1. The State District 
Court has jurisdiction to determine questions relating to marital property 
division notwithstanding action by the Bankruptcy Court.

2. An automatic stay 
issued by the Bankruptcy Court does not divest a state court from exercising 
subject matter jurisdiction over divorce actions.

3. A request for 
modification of a divorce decree must be accompanied by a showing of a change of 
circumstances.

4. The Court was aware of 
the parties' circumstances at the time the divorce decree was entered in the 
abovecaptioned action, including the pending bankruptcy action. There are no 
change of circumstances shown by the defendant to warrant modification of the 
divorce decree entered herein.

5. There are no change of 
circumstances proven in this action to warrant modification of the child support 
award in this case.

6. Child support 
arrearages have accrued and are collectible until such time as modification of 
the child support award is made. Child support arrearages are properly due and 
owing.

     WHEREFORE, IT IS 
THEREFORE, HEREBY ORDERED that the Plaintiff's Motion to Dismiss is granted, and 
Defendant's Motion to Modify Decree is denied.[2]

[¶12]   The order of the bankruptcy judge, 
note 1, supra, and the order of the state trial judge each respected the 
jurisdiction of the other, and there is no conflict. The principle is set out in 
In re Willard, 15 B.R. 898 (1981) in which it was held that a state court 
judgment is not rendered void by the automatic stay of 11 U.S.C. § 362, but it 
has no effect on property of the estate [bankruptcy parlance: property of the 
marriage in this case] in the hands of the trustee until a debtor obtains it 
back from the estate. This is all we need to decide in this case since the 
bankruptcy was the basic reason for appellant's motion to modify. The trial 
court had jurisdiction.

[¶13]   By way of a postscript, it can be 
said from the record that the bankruptcy court still has control of the property 
for the purposes of the bankruptcy so that appellee cannot realize the fruits of 
the trial judge's favorable holding until such time as the bankruptcy court 
releases the property. There may not be much left by the time secured creditors 
are satisfied.

[¶14]   Affirmed.

FOOTNOTES

1 The text of the 
bankruptcy order reads that:

     On June 29, 1988, 
debtor Judith Ann Rauer filed a Motion for Relief from Stay or for Approval and 
Confirmation of Divorce Decree.

      The court has 
considered the unusual Motion and the Traverse thereto, and being fully advised, 
it is

     ORDERED that all 
matters regarding the divorce and property settlement are in this case properly 
within the jurisdiction of the state district court; that all matters and issues 
regarding the divorce and property settlement should be properly determined in 
that court; and, that this court declines to assert any jurisdictional authority 
over any matters regarding the post-petition divorce of the debtors and division 
of the marital property as between the debtors; it is further

     ORDERED that this 
court will continue to exercise jurisdiction over the estate of debtors for the 
purpose of this Chapter 11 case.

DATED this 14 day of 
July, 1988.

BY THE 
COURT

(s) Harold 
L. Mai 

United States Bankruptcy 
Judge

2 This is the order 
appealed from.