Filed 11/27/18

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SIX

In re Marriage of PHILIP and 

CHARLENE YU STEELE 

VAUGHN.

2d Civil No. B286871

(Super. Ct. No. 16FL-00726)

(Santa Barbara County)

PHILIP VAUGHN,

 Appellant,

v.

CHARLENE YU STEELE 

VAUGHN,

 Respondent.

Philip Vaughn appeals from the trial court’s 

postjudgment order concluding that his outstanding debt on a 

loan from a family partnership—in which his ex-wife, Charlene 

Yu Steele Vaughn, is a limited partner—was nondischargeable in 

bankruptcy. (Code Civ. Proc., § 904.1, subd. (a)(2).) Philip1

contends the court incorrectly determined that his debt was 

 

1 We use the parties’ first names for clarity.
2

exempt from discharge pursuant to section 523(a)(15) of title 11 

of the United States Code.2 We hold that when the nature of a 

debt is such that its discharge will directly and adversely impact 

the finances of the debtor’s spouse or former spouse, it is 

nondischargeable in bankruptcy, even if it is not directly payable 

to the spouse. We therefore affirm.

FACTUAL AND PROCEDURAL HISTORY

In May 1995, Charlene’s parents created CJPM 

Family Partnership, Ltd. Charlene’s parents are the general 

partners of CJPM. They have “full, exclusive, and complete 

authority and discretion in the management and control of the 

business of the [p]artnership.” Charlene, her parents, and her 

three siblings are limited partners of CJPM. No limited partner 

is liable for the “debts, liabilities, contracts, or any other 

obligations of the [p]artnership.” 

Each partner has a capital account in the 

partnership. Charlene’s account contains 20 percent of the 

partnership’s total capital. The amount of money distributed to a 

partner, the partner’s share of partnership losses, and the 

amount of the partner’s liabilities that are assumed by the 

partnership all decrease a partner’s capital account.

Philip and Charlene married in June 1995. Ten 

years later, CJPM made three loans to Philip totaling $150,000. 

The promissory notes name Philip as the borrower and CJPM as 

the note holder. The loans were credited against Charlene’s 

partnership interest. Her capital account was reduced by 

$150,000. 

 

2 All undesignated statutory references are to title 11 of the 

United States Code.
3

In 2009, Philip executed a new promissory note for 

$150,000, restating the total amount he had borrowed from 

CJPM. The note provided for 8 percent annual interest. Interest 

began to accrue from the date of the notes that were executed in 

2005. 

Philip did not repay his debt to CJPM. He and 

Charlene divorced in 2011. Section 9.3 of their stipulated 

dissolution judgment awarded Charlene “[a]ll rights, title[,] and 

interest to any community interest that may exist in [CJPM].” 

Section 10.1 assigned to Philip, as his separate obligation, his 

debt to CJPM. It also required Philip to “indemnify and hold 

[Charlene] harmless from” that debt. 

Section 11.0 of the judgment is a separate warranty 

clause: 

[E]ach party has released the other from any and all 

liabilities, debts[,] or obligations that have been or 

will be incurred[,] and each party shall indemnify

and hold the other harmless therefrom. If any claim, 

action[,] or proceeding hereafter shall be brought 

seeking to hold the other party liable on account of 

any such debt, liability[,] or obligation, the party who 

incurred such debt, liability[,] or obligation will[,] at 

his or her sole expense, defend the other party 

against any such claim or demand or threat thereof

. . . .

Later that year, Philip filed for Chapter 7 

bankruptcy. All of his debts, including his loan from CJPM, were 

discharged. 
4

In 2015, Charlene moved to reopen bankruptcy 

proceedings to obtain a ruling that Philip’s debt to CJPM was 

nondischargeable. The bankruptcy court declined to reopen the 

case. It did not decide whether the debt was dischargeable. 

Charlene moved to recover Philip’s CJPM debt in the 

trial court. Charlene testified that the money loaned to Philip 

came from her share of CJPM. She said Philip acknowledged 

that he knew the loan came from her share. She also said she is 

responsible for the loan to Philip, as implied by the CJPM 

partnership agreement. Her father confirmed this. Charlene’s 

capital account in the partnership was reduced by the amount of 

the unpaid loan. 

The trial court determined that Philip’s CJPM debt 

was nondischargeable. It concluded that the debt did not have to 

be directly payable to Charlene to fall under the exemption set 

forth in section 523(a)(15). The court calculated that Philip owes 

Charlene $345,963, representing $150,000 principal plus accrued 

interest. 

DISCUSSION

A Chapter 7 bankruptcy generally discharges all of 

an individual’s debts, but there are exceptions. (In re Hicks

(Bankr. D.Mass. 2005) 331 B.R. 18, 22; see § 727(a), (b).) Debts 

excepted from discharge are limited to those “plainly expressed”

in federal bankruptcy statutes. (Bullock v. BankChampaign, 

N.A. (2013) 569 U.S. 267, 275-276.) They include debts for 

“domestic support obligation[s]” (§ 523(a)(5)) and those “to a 

spouse, former spouse, or child of the debtor and not of the kind 

described in paragraph (5) that [are] incurred by the debtor in 

the course of a divorce or separation or in connection with a 

separation agreement, divorce decree, or other order of a court of 
5

record” (§ 523(a)(15)). State courts have concurrent jurisdiction 

to decide whether a debt is dischargeable under these provisions. 

(In re Doll (Bankr. N.D.Ohio 2018) 585 B.R. 446, 461, fn. 7; see 28 

U.S.C. § 1334(b).)

Whether Philip’s debt to CJPM is nondischargeable 

presents a mixed question of law and fact. (Miller v. United 

States (9th Cir. 2004) 363 F.3d 999, 1003-1004.) The

interpretation of section 523(a)(15) is a question of law for our 

independent review. (Western States Petroleum Assn. v. Board of 

Equalization (2013) 57 Cal.4th 401, 415.) Our goal is to give 

effect to Congress’s intent. (Harris v. City of Santa Monica (2013) 

56 Cal.4th 203, 215.) We first examine the words of the statute, 

giving them their plain, commonsense meaning. (Bruns v. ECommerce Exchange, Inc. (2011) 51 Cal.4th 717, 724.) We follow 

the statute’s plain meaning unless doing so would lead to absurd 

results Congress did not intend. (Ibid.) 

If section 523(a)(15)’s meaning is unclear, we 

examine its legislative history to determine Congress’s intent. 

(Pacific Palisades Bowl Mobile Estates, LLC v. City of Los Angeles

(2012) 55 Cal.4th 783, 803.) We strive to harmonize provisions 

relating to the same subject matter (Lakin v. Watkins Associated 

Industries (1993) 6 Cal.4th 644, 659), bearing in mind that 

“[w]here a statute is framed in language of an earlier enactment 

on the same or an analogous subject, and that enactment has 

been judicially construed, [Congress] is presumed to have 

adopted that” interpretation in the more recently enacted statute 

(People v. Harrison (1989) 48 Cal.3d 321, 329 (Harrison)). We 

also “consider the impact of an interpretation on public policy, for 

‘[w]here uncertainty exists consideration should be given to the 
6

consequences that will flow from a particular interpretation.’ 

[Citation.]” (Mejia v. Reed (2003) 31 Cal.4th 657, 663.)

We review the trial court’s resolution of disputed 

facts and inferences for substantial evidence. (HLC Properties, 

Ltd. v. Superior Court (2005) 35 Cal.4th 54, 60.) 

Philip’s debt to CJPM is a debt to a former spouse

Philip first contends section 523(a)(15)’s meaning is 

“clear and unambiguous,” and requires that his debt be payable 

directly to Charlene to be nondischargeable. (In re Reinhardt

(Bankr. M.D.Fla. 2012) 478 B.R. 455, 457 (Reinhardt); see also In 

re Gunness (Bankr. 9th Cir. 2014) 505 B.R. 1, 7-8 (Gunness) 

[section 523(a)(15) should be interpreted narrowly to afford 

debtors a “fresh start”].) But most courts have determined that 

section 523(a)(15)’s language is ambiguous, and should be 

interpreted “broadly and liberally . . . to encourage payment of 

familial obligations rather than to give a debtor a fresh financial 

start.” (In re Reynolds (Bankr. M.D.Fla. 2016) 546 B.R. 232, 237; 

see also id. at p. 236, fn. 19 [compiling cases].) We agree with the 

latter line of cases.

Section 523(a)(15)’s legislative history supports a 

broad interpretation. For over a century, Congress has sought to 

protect a debtor’s spouse and children in bankruptcy proceedings. 

(Beale v. Kurtz (Bankr. S.D.Ind. 2008) 381 B.R. 727, 731; see 

Wetmore v. Markoe (1904) 196 U.S. 68, 77 [bankruptcy law 

should not be “an instrument to deprive [a] dependent [spouse] 

and children of the support and maintenance due [to] them”].) It 

enacted section 523(a)(15) in 1994 because it recognized “that the 

economic protection of dependent spouses and children under 

state law [could] no longer [be] accomplished solely through the 

traditional mechanism of support and alimony payments.” (In re 
7

Golio (Bankr. E.D.N.Y. 2008) 393 B.R. 56, 61.) The enactment of 

this section evidenced Congress’s “intent that ‘a debtor should not 

use the protection of a bankruptcy filing in order to avoid 

legitimate marital and child support obligations.’ [Citation.]” (In 

re Proyect (Bankr. N.D.Ga. 2013) 503 B.R. 765, 773.) 

As enacted, section 523(a)(15) worked in conjunction 

with section 523(a)(5). (In re Cordia (Bankr. N.D.Ohio 2001) 280 

B.R. 138, 146.) Former section 523(a)(5) exempted from 

discharge any debt “to a spouse, former spouse, or child of the 

debtor, for alimony to, maintenance for, or support of such spouse 

or child, in connection with a separation agreement [or] divorce 

decree.” Former section 523(a)(15) exempted from discharge any 

debt, other than one described in section 523(a)(5), “that [was]

incurred by the debtor in the course of a divorce or separation.” 

Section 523(a)(15) thus enlarged the scope of nondischargeable 

debts to any debt incurred in the course of a divorce or 

separation, unless the debtor was unable to repay the debt or the 

benefit of discharging the debt outweighed the benefit to the 

spouse or child. Together, sections 523(a)(5) and 523(a)(15)

“demonstrate[d] a policy against discharging . . . essentially any 

debt arising out of the demise of a marital relationship.” (In re 

Nugent (Bankr. S.D.Tex. 2012) 484 B.R. 671, 684.)

In 2005, Congress enacted the Bankruptcy Abuse 

Protection and Consumer Protection Act (BAPCPA). (In re 

Wodark (Bankr. 10th Cir. 2010) 425 B.R. 834, 837 (Wodark).) 

“One of Congress’s overarching themes in enacting BAPCPA was 

to redefine and reinforce the ability of [nondebtor] former spouses 

to recover both support and property settlement obligations from 

debtors in bankruptcy.” (Id. at p. 838.) It sought to accomplish 

this goal by eliminating the provisions of section 523(a)(15) that 
8

allowed a debtor to discharge a debt if the debtor was unable to 

repay it or the benefit to the debtor outweighed that to the 

nondebtor spouse or child. (Gunness, supra, 505 B.R. at p. 5.) 

The elimination of these provisions shows Congress’s intent to 

“broaden the scope of nondischargeable marital debt by 

abandoning a need-driven analysis of the dischargeability of nonsupport marital debt.” (In re Taylor (Bankr. 10th Cir. 2012) 478 

B.R. 419, 428.)

BAPCPA also amended sections 523(a)(5) and 

523(a)(15). Section 523(a)(5) now exempts from discharge any 

debt “for a domestic support obligation.” Section 523(a)(15) now 

exempts from discharge any debt “to a spouse, former spouse, or 

child of the debtor and not of the kind described in [section 

523(a)(5)] that is incurred by the debtor in the course of a divorce 

or separation.”

The elimination of the words “to a spouse, former 

spouse, or child” from section 523(a)(5) necessitated their 

addition to section 523(a)(15), given the latter’s reference to the 

former. (Wodark, supra, 425 B.R. at p. 838.) Thus, rather than 

narrowing the scope of debts exempt from discharge pursuant to

section 523(a)(15), as Philip maintains, BAPCPA restated them. 

(Ibid.) It did not add a “direct pay” requirement. (In re Francis

(Bankr. 9th Cir. 2014) 505 B.R. 914, 919-920 (Francis); see also 

In re Prensky (Bankr. D.N.J. 2009) 416 B.R. 406, 410 [BAPCPA 

was “intended to increase the scope of the discharge exception,” 

not limit its protection to spouses, former spouses, and children].)

Prior judicial interpretations of section 523(a)(5) 

reinforce our conclusion. Before BAPCPA’s enactment in 2005, 

the phrase “to a spouse, former spouse, or child” was part of 

section 523(a)(5). Most courts broadly interpreted that phrase “to 
9

provide an exception from discharge for certain debts to third 

parties . . . when the debts were incurred . . . in furtherance of 

domestic support obligations.” (In re Langman (Bankr. D.N.J. 

2012) 465 B.R. 395, 406; see also In re Chang (9th Cir. 1998) 163 

F.3d 1138, 1140-1142 [collecting cases].) What mattered, the 

courts said, was “the nature of the debt rather than the identity 

of the payee” (In re Miller (10th Cir. 1995) 55 F.3d 1487, 1490)—

i.e., whether “discharge of the debt would have adversely 

impacted the finances” of the debtor’s spouse, former spouse, or 

child (Gunness, supra, 505 B.R. at p. 6). 

We presume Congress was aware of and adopted this 

interpretation when it enacted BAPCPA. (Harrison, supra, 48 

Cal.3d at p. 329.) It would be “strange indeed” if Congress 

intended a different statutory interpretation when it moved the 

phrase “to a spouse, former spouse, or child” to section 523(a)(15). 

(In re Notary (Bankr. D.Colo. 2016) 547 B.R. 411, 421-422.) We 

accordingly hold that a debt is nondischargeable pursuant to

section 523(a)(15) if the nature of the debt is such that its 

discharge would directly and adversely impact the finances of the 

debtor’s spouse or former spouse. The identity of the payee is not 

determinative. 

Here, the trial court correctly determined that 

Philip’s debt to CJPM is a debt to a former spouse. Philip’s loan 

came from Charlene’s share of CJPM. The debt was credited 

against her partnership interest, and her capital account was 

reduced accordingly. Philip’s failure to repay the debt adversely 

affects Charlene’s finances. The debt is therefore “to a former 

spouse” pursuant to section 523(a)(15).

Philip’s concern that our interpretation of section 

523(a)(15) will lead to inequitable results is misplaced. In 
10

Reinhardt, supra, 478 B.R. 455, 457, on which Philip relies, the 

bankruptcy court refused to deem a debtor husband’s mortgage 

and credit card debts nondischargeable because doing so could be

inequitable: The nondebtor wife could discharge her obligations

on those debts in a future bankruptcy case, but the husband 

would remain liable based on the court’s nondischargeability 

finding. Here, in contrast, there is no potential financial burden 

Charlene can stave off in a future proceeding; she was already

damaged by the reduction in her CJPM capital account. 

Reinhardt is inapposite.

Philip’s promise to repay his debt was incurred in connection with 

a divorce decree

Philip next contends only his promise to indemnify 

and hold Charlene harmless for his debt to CJPM—and not his 

promise to repay that debt—was incorporated into the dissolution 

judgment and is thus nondischargeable. (In re Brown (Bankr. 

S.D.Ga. 2013) 488 B.R. 810, 813.) We disagree.

Section 10.1 of the dissolution judgment awarded to 

Philip, as his separate debt, the CJPM loan. The promissory note 

on that loan requires Philip to repay the $150,000 he borrowed. 

Philip’s promise to repay his debt to CJPM was incorporated, by 

reference, into the dissolution judgment. (Flynn v. Flynn (1954) 

42 Cal.2d 55, 59.) It was therefore incurred in connection with a 

divorce decree, and is nondischargeable. (Francis, supra, 505 

B.R. at pp. 916, 921-922 [debtor husband’s promise to pay debts 

assigned to him in divorce was nondischargeable]; see also 

Wodark, supra, 425 B.R. at pp. 838-839 [same]; In re Burckhalter 

(Bankr. D.Colo. 2008) 389 B.R. 185, 190 [same].)

The warranty clause in section 11.0 of the dissolution 

judgment also includes Philip’s promise to repay the CJPM debt. 
11

To “indemnify” a person is to “save [them] from a legal 

consequence of the conduct of one of the parties, or of some other 

person.” (Civ. Code, § 2772, italics added.) It is “the obligation 

resting on one party to make good a loss or damage another party 

has incurred.” (Rossmoor Sanitation, Inc. v. Pylon, Inc. (1975) 13 

Cal.3d 622, 628 (Roosmoor).) 

While indemnity usually relates to third party 

claims, it may also refer to direct liability. (Zalkind v. Ceradyne, 

Inc. (2011) 194 Cal.App.4th 1010, 1024 (Zalkind).) Whether an 

indemnity agreement covers direct liability, third-party liability, 

or both, is a question of contract interpretation (Rossmoor, supra, 

13 Cal.3d at p. 633) for our independent review (Argonaut Ins. 

Co. v. Transport Indem. Co. (1972) 6 Cal.3d 496, 502). Our goal 

is to determine the intent of the parties when they included the 

indemnification provision in the dissolution judgment. (Zalkind,

at p. 1025.)

In section 11.0 of the dissolution judgment, Philip 

released Charlene “from any and all liabilities, debts[,] or 

obligations” that he had incurred, and “indemnif[ied] and [held 

her] harmless therefrom.” (Italics added.) He also agreed to 

defend her against “any claim, action[,] or proceeding . . . seeking 

to hold [her] liable on account of any such debt, liability[,] or 

obligation.” (Italics added.) The use of such broad language 

demonstrates the parties’ intent that the warranty clause refer to 

both direct and third-party liability. (Hot Rods, LLC v. Northrop 

Grumman Systems Corp. (2015) 242 Cal.App.4th 1166, 1181.) 

Had they instead intended to narrow the clause to only cover 

third-party claims, they could have done so expressly. (Zalkind, 

supra, 194 Cal.App.4th at p. 1026.) Because they did not, the 

warranty clause requires Philip to indemnify Charlene for the 
12

losses she suffered when he failed to pay his CJPM debt. That 

promise is nondischargeable.

The statute of limitations does not bar Charlene’s action

Philip next contends that, even if his CJPM debt was 

nondischargeable, he cannot be forced to pay it because the 

statute of limitations has run. (See Code Civ. Proc., § 337 [fouryear statute of limitations to enforce obligations in a promissory 

note].) He bases his contention on the assumption that CJPM 

would have to bring a claim against Charlene to recover Philip’s 

unpaid debt, and Charlene would then have to bring a claim 

against him to recover her damages. But Charlene’s right of 

recovery is based on the dissolution judgment, not an action to 

enforce the promissory note. The statute of limitations for the 

enforcement of a dissolution judgment is 10 years. (Code Civ. 

Proc., § 337.5, subd. (b); see In re Marriage of Hanley (1988) 199 

Cal.App.3d 1109, 1121.) 

The trial court properly calculated the amount owed

Finally, Philip contends Charlene is entitled to 

recover, at most, $150,000 because her capital account has not 

been charged interest. He cites no evidence in support of this 

contention. (People v. Garza (2005) 35 Cal.4th 866, 881 [party 

attacking judgment must affirmatively demonstrate error on 

appeal].) It is forfeited. (Fernandes v. Singh (2017) 16 

Cal.App.5th 932, 942-943.)

Even if it were not, Charlene seeks to enforce the 

dissolution judgment. The judgment incorporates Philip’s 

promissory note. The note requires Philip to repay his CJPM 

loan at 8 percent annual interest. The trial court’s calculation 

was correct.
13

DISPOSITION

The judgment is affirmed. Charlene Yu Steele 

Vaughn shall recover costs on appeal.

CERTIFIED FOR PUBLICATION.

TANGEMAN, J.

We concur:

YEGAN, Acting P. J.

PERREN, J.
Pauline Maxwell, Judge

Superior Court County of Santa Barbara

______________________________

Law Office of Charles M. Oxton, Charles M. Oxton; 

Ferguson Case Orr Paterson, Wendy C. Lascher and John A. 

Hribar, for Appellant.

Jarrette & Walmsley, Robert R. Walmsley and 

Marlea F. Jarrette, for Respondent.