This opinion is subject to revision before final

p ublication in the Pacific Reporter

201 8 UT 40

IN THE



## S UPREME 

## C OURT OF THE 

## S TATE OF 

## U TAH

In re D EBORAH M ICHELLE K ILEY

_________________________________________________

D EBORAH M ICHELLE K ILEY
, Appellant and Debtor

,

v.

M ARY M. H UNT
, Trustee

, Appellee

.

No. 20170472

Filed August 14, 2018

On Certification from the

United States Bankruptcy Court for the District of Utah The Honorable Judge Kevin R. Anderson

Case No. 15

- 27838

Attorneys:

Matt Wadsworth, Salt Lake City , for appellant

Peggy Hunt, Michael F. Thomson, Megan K. Baker, Salt Lake City

, for appellee

J USTICE P EARCE au thored the opinion of the Court in which

A SSOCIATE C HIEF J USTICE L EE
, J USTICE H IMONAS
, J USTICE P ETERSE N
, and J UDGE H AGEN joined.

Having recused himself, C HIEF J USTICE D URRANT did not participate
herein; C OURT OF A PPEALS J UDGE D IANA H AGEN sat.

J USTICE P EARCE , opinion of the Court:

INTRODUCTION ¶ 1 The bankruptcy court certified two questions of Utah law that lie at the intersection of family and bankruptcy law . Based upon a compelling certification order, we accepted the invitation to resolve those questions. A fter receiving briefing and conducting oralIn re K ILEY

Opinion of the Court

2 argument, we are left with dual concerns

— that the parties have not given us the briefing we need to actually answer the questions and that our opinion might ultimately be for naught . At oral argument, Kiley’s cou nsel admitted the deficiencies in the briefing. And the bankruptcy trustee suggested that the marital property division at

the heart of this case may have violated the automatic stay that accompanies a bankruptcy petition’s filing

. Because of the inadequat e briefing and the problematic procedural posture, we

revoke certification.

BACKGROUND

¶ 2 In 2012, Deborah Kiley file d for divorce from Jarod Marrott

. The district court entered temporary orders and bifurcated the proceeding ; that is, the district court grant ed the divorce but

deferr ed resolution of other questions, including the division of

marital assets. About a year later, after Marrott had fallen behind on alimony and child support payments, Kiley filed a motion to show cause and a motion to clarify . Kile y sought to enforce the temporary orders and to recover unpaid child support and alimony.

¶ 3 The district court granted the motion s and entered judgment for $121,188.22

. Two months later , Kiley and Marrott participated in mediation and stipulated to a property settlement

. The parties then , according to Kiley, read the stipulation into the

record before the domestic relations commissioner. As part of that stipulation, and to satisfy the judgment for unpaid child support and alimony, Kiley received “ all o f the value in any and all of her form er spouse’s retirement accounts

. . . .”

¶ 4 The day after mediation, Kiley petitioned for bankruptcy.
About a month after that, the district court entered a supplemental

decree reifying the settlement the pa rties had plac ed on the record. A couple months later, the district court entered the qualified domestic relations order (QDRO)

— the document that would permit Kiley to

access Marrott’s retirement fund s

. ¶ 5 Kiley did not list the retirement plan proceeds on her initial

bank ruptcy disclosures. At a meeting with her creditors

— a meeting that took place before the district court entered the order memorializing the stipulated property division

— Kiley disclosed her interest in the retirement funds. A few months later, after the QDR O was entered, Kiley filed an amended schedule that included the

retirement funds.Cite as: 201 8 UT 40

Opinion of the Court

3 ¶ 6 But Kiley claimed the retirement funds were exempt from the bankruptcy estate under Utah Code section 78B

- 5

- 505(1)(a)(xiv). 1

The trustee argued that the exemption was inapplicable because

, among other reasons, Kiley was entitled to the value of the
retirement funds, not the funds themselves

. About a month later, Kiley filed a nother amended schedule and claimed that the retirement funds were exempt under Utah Code sectio n
78B

- 5

- 505(1)(a)(xv). 2 The trustee asserted that th is exemption was not available to Kiley either.

¶ 7 Against this backdrop, t he bankruptcy court certified two questions to us :

1. What is the nature and scope of a party’s interest in marital property as of the filing of a divorce complaint

— contrasted with the nature and scope of such interest upon the entry of a divorce decree allocating such marital property? Stated differently, upon the filing for divorce, is a spouse’s interest in marital property merely cont ingent, unliquidated, and inchoate until the entry of a divorce decree creating a vested right to receive a specific sum of

m oney or a specific marital asse t?

_____________________________________________________________

1 This exemption provides that: (1)(a) An individual is entitled to exemp tion of the following property:

. . . (xiv) except as provided in Subsection (1)(b), any money or other assets held for or payable to the individual as a participant or beneficiary from or an interest of the individual as a participant or beneficiary in a retirement plan or arrangement that is described in Section 401(a), 401(h), 401(k), 403(a), 403(b) , 408, 408A, 409, 414(d), 414(e) , or 457, Internal

Revenue Code

. . . . U TAH C ODE § 78B

- 5

- 505 (1)(a)

.

2 And this exemption provides that: (1)(a) An individual is entitled to exemption of the following property:

. . . (xv) the interest of any money or other assets payable to an alternate payee under a qualified domestic relations order as those terms are defined in Section 414(p), Internal Revenue Code

. . . . U TAH C ODE § 78B

- 5

- 505 (1)(a)

.In re K ILEY

Opinion of the Court

4 2. Is an individual entitled to an exemption under Utah

Code Ann. § 78B

- 5

- 505(1)(a)(xv) in money or other assets payable to that individual as an alternate payee under a [ qualified domestic relations order ] (QDRO)? Stated more simply, is the Debtor entitled under Utah law to exempt the Retirement Plan

Proceeds?

¶ 8 We accepted the certified questions, ordere d briefing, and

held oral arguments.

ANALYSIS

¶ 9 Certified questions can present unique challenges, as we recently noted in Zimmerman v. University of Utah , 2018 UT 1, 417

P.3d 78

. In Zimmerman, we declined to answer two certified questions involving the Free Speech Clause of our constitution. Id.
¶ ¶ 1

– 2. We noted that “[i] f this case were before us on appeal we

would ha ve the benefit of a lower court’ s disposition of [these]

claims. We would also be presented with the legal standards adopted by the trial court and the application of those standards to

the evidence in the record. ” Id. ¶ 14.

¶ 10 We reasoned that these “ obstacles alone are not

insurmountable. ” Id. ¶ 16. But we concluded that the limited briefing the parties had presented us amplified the challenges inherent in answering a certified question. Id. Specifically, we were concerned that the parties had not provided the state constitutional analysis we needed to answer the certified questions. Id. ¶ ¶ 17

– 23. We noted that

“ [ o ] ur jurisdiction i n answering certified questions

. . . is elective”

and that our discretion “ necessarily encompasses the authority to decline to provide a conclusive answer after reviewing the parties’ briefing.” Id. ¶ 27. W e ultimately declined to answer the Free Speech Clause questions because the briefing did not provide us what we needed to tackle a question of that importance.

¶ 11 This case offers similar challenges. T h e first certified question asks us to address what inter est Kiley had in the marital property at various points in time

. During oral argument, Kiley’s counsel acknowledged: “I am apologetic because in reading both my brief and counsel’s brief, for the appellee in this case, I don’t think either of us really add ressed [the first question] very well.” And,
indeed, instead of analyzing what interest Kiley had in the martial

estate, Kiley spen ds a portion of her brief asserting that the question

did not matter.Cite as: 201 8 UT 40

Opinion of the Court

5 ¶ 12 Kiley argues that the “matter before the Court is far

broader than an academic discussion over the distinction between equitable interests in marital property as opposed to vest ed

interests.”

The state court cites the rule that dominates current

divorce law in Utah

— that regardless of who the owner

of record i s, both parties share an interest in marital property. The nature of that interest (i.e. equitable, contingent, vested etc.) is academic. The point is t hat both parties share interest

. . . . Here, Ms. Kiley owns 1⁄2

of the marital share of her husband’s 401 k

— whether it was as an actual owner or equitable ownership is

immaterial.

(Emphasis omitted).

¶ 13 B ut the bankruptcy court did not think the distinction

immaterial or academic . Indeed, we believe that is why the court specifically asks us to define “[t]he natu re of that interest” in the first certified question. And taking on that task, already complicated in a certified case, see supra ¶ 9 , becomes even more challenging when we

have inadequate briefing on th e question from one of the parties. Though we appreci ate counsel’s candor about the lackluster briefing

,

we are left with the task of answering the bankruptcy court’s question with one party declining to engage meaningfully on the

central issue.

¶ 14 We have constitutional and rule

- based authority to decide

when to answer a certified question. Zimmerman , 2018 UT 1, ¶ 2 (“ Our authority to answer certified questions, howe ver, is a matter of

discretion (citing U TAH C ONST

. art. VIII, § 3 and U TAH R. A PP

. P. 41. ” ) ). And, given the importance of the question and the potential

to decide it with only one side of the argument before us, we believe it best to leave this question for another day. 3

_____________________________________________________________

3 That the question arises in the conte xt of funds in a retirement account further complicates the question and informs our decision to

decline to answer the first certified question. The parties agree that the Employee Retirement Income Securities Act (ERISA) may have some impact on the dispos ition of the funds. T he bankruptcy court appears to have carefully drafted the question to leave the ERISA

issues out of our court

. Nevertheless, both parties analyze the question with reference to ERISA. For example, Kiley argues that (continued

. . .)In re K ILEY

Opinion of the Court

6 ¶ 15 The second certified question asks us to interpret the Utah Exemptions Act. 4 Specific ally, the bankruptcy court asks us to

dete rmine whether an alternate payee under a QDRO can claim the exemption in Utah Code s ection 78B

- 5

- 505(1)(a)(xv). Because the

Act’s exemptions are applied in a variety of contexts, our interpretation has the potential to reverberate throughout the Utah

Code. See , e.g. , Oliver v. Mitchell , 376 P.2 d 390, 391

– 93 (Utah 1962) (applying exemptions statute to the garnishment of wages ); Cricket
Commc’ns, Inc. v. All You Can Talk Partners, Inc.

, No.

2:11

- cv

- 315

- DB

- PMW, 2011 WL 4591099, at *1

– 2 (D. Utah Sept. 30, 2011) (applying exemptions statute to determine what property i s subject to “prejudgment writ of attachment” ).

¶ 16 Once again, the briefing hampers our ability to answer the question

. Kiley refused , both in her brief and at oral argument, to engage with the statute ’s plain language

. Kiley’s brief focuses instead on the “cataclysmic change” that might result from a decision that the exemption d oes not apply to Kiley

. And Kiley trots out a pretty serious parade of horribles for many debtors and divorcing spouses that she claims would occur if we were to credit the trustee’s interpretation. She also claims that this interpretation

would disrupt the “ status quo ”

— which we understand to mean the manner in which the bench and bar currently understand the way the exemptions operate. But Kiley cites no authority to support that

assertion.

¶ 17 Instead, Kiley ’s legal argument focuses on the interpretive canon that exemptions should be read in favor of the debtor. See

, e.g. , Russell M. Miller Co. v. Givan , 325 P.2d 908, 909 (Utah 195 8)

. The problem with Kiley’s legal argument is that this canon comes into play if the statute is ambiguous. See Marion Energy, Inc. v. KFJ Ranch P’ship , 2011 UT 50, ¶ 15, 267 P.3d 863 (“When the ‘meaning of [a] statute can be discerned from its language, n o other i nterpretive

“ERISA qualified accounts are sacrosanct to creditors” and that Kiley’s entitlement to the account is “pursuant to ERISA.” Similarly the trustee argues that

— whatever interest Kiley might have under

state law

— that interest is preemp ted by ERISA. So, d espite the bankruptcy court’s effort to present us with a question that avoided

the ERISA concerns , the parties have briefed the issue in a way that presumes we will analyze ERISA’s impact

.

4 U TAH C ODE § § 78B

- 5

- 501 to 513.Cite as: 201 8 UT 40

Opinion of the Court

7 tools are needed.’” (alteration in original) (citation omitted)). And despite repeated questions during oral argument aimed at permitting

, and indeed imploring, Kiley to identify an ambiguity, Kiley refused to play ball. Instead, K iley ’s counsel r esponded with a

discussion of how practitioners interpreted the exemptions and the

dire consequences flowing from a reading that would deny his client, and those like her, from claiming the exemption. In other words, because Kiley refused to en gage with the statute’s language, we have only one reading of the statute in front of us. And we hesitate to opine on a matter of Utah law that could have serious impacts b eyond this case with only one side of the issue analyzed.

¶ 18 One final consideration mo tivates us to decline to answer

the certified questions. There appears to be a question regarding

whether the automatic stay that accompanies a bankruptcy filing has the potential to void the property settlement at issue in this case

. 5

¶ 19 We asked the bankrup tcy trustee about the automatic stay’s potential impact. The response did not assuage our concerns that our

decision could be moot ed . At oral argument, the trustee’s counsel

stated tha t :
Section 362(b) (2) of the Bankruptcy Code does

. . . state

that the automatic stay does not apply to certain

_____________________________________________________________

5 When a bankruptcy petition is filed, the petition: (a)

. . . operates as a stay, applicable to all entitles, of

—

. . . (3) any act to obtain possession of property of the estate or of property from the estate or to exercise

cont rol over property of the es tate

. . . . (b) The fili ng of a petition

. . . does not operate as a
stay

—

. . . (2) under subsection (a)

— (A) of the commencement or continuation o f a civil action or proceeding

—

. . . (ii) for the establishment or modification of

an order fo r domestic s upport obligations;

. . . (iv) for the dissolution of marriage, except to the extent that such proceeding seeks to determine the division of property that is property of the estate

. . . . 11 U.S.C. § 362.In re K ILEY

Opinion of the Court

8 divorce

- related proceedings. Property div ision is not

one of them.

. . . [The automatic stay] was not lifted. We

have n’t gone to those issues, quite frankly, because, from our perspective,

. . . if we go down the ro ad of “was the automatic stay violat ed?” and “is that order
void?”,

. . . from our perspective, we don’t have to go

there because I think we win on these grounds.

¶ 20 T rustee’s counsel did assert that , “I think the same argument with respect to the exemption will apply regardless of whether those orders violated the automatic stay.” But the potential for the bankruptcy trustee to effectively moot our decision, coupled

with the concerns we have about th e briefing in this matter, convince

us that the best course of action is to decline to answer these certified questions.

CONCLUSION

¶ 21 The Utah Constitution provides us with jurisdiction to answer questions of state law certified by the federal courts. We hav e discretion to a n s wer those questions or not. Although we appreciate the work that the bankruptcy court invested in the certification order, we decline to answer the questions because the issues have not been adequately briefed and because of the potentia l impact of the automatic stay on the property settlement at the heart of this

case. We revoke certification.