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, Cha rlene Yu Steele Vaughn, is a limited partner

— wa s nondischargeable in bankruptcy. (C ode C iv. P roc., § 904.1 , subd. (a)(2).) P hilip 1
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 1 1
of the United States Code. 2 We hold that w hen 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 payab le 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 disc retion in the management and co ntrol 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 . H er 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 ne w 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
diss olution 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 [Cha rlene] harmless from” that debt.

Section 11.0 of the judgment i s 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 obli gation 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 20 15, 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 decid e whether the debt was dischargeable.

Charlene moved to recover Ph ilip’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 impl ied 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 t h e debt did not have to be directly payable to Charlene to fall under the exem ption 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 ba nkruptcy generally discharges all o f
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 sta tutes. ( 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 of5

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 2 018) 585 B.R. 446, 461 , fn. 7; see 28 U.S.C. § 1334(b).)

Whether Philip’s debt to CJPM is nondischargeable present s 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 .) O ur goal is to give effect to Congress’s inte nt. ( 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. E

Commerce Exchange, Inc. (2011) 51 Cal.4th 717, 724.) We follow the statute’s plain mea ning 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 Lo s Angeles (2012) 55 Cal.4th 783, 803.) We strive to harmonize p rovisions relating to the same subject matter ( Lakin v. Watkins Associated
Industries (1993) 6 Cal .4th 644, 659), bearing in mind that “[w]h ere a statute is framed in language of an earlier en actment 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

a lso “c onsider the impact of an interpretation on public policy, for ‘[w]here uncertainty exists consideration should be given to the6

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 (200 5 ) 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 unamb iguous,” and requir es 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 (B ankr. 9th Cir. 2014) 505 B.R. 1, 7

- 8 ( Gunness ) [section 523(a)(15) should be interpret ed narrowly to afford debtors a “fresh start”].) But m ost courts have determined that section 523(a)(15)’s language is ambiguous, and should be interpreted “ broadly and liberally

. . . to encourage paym ent 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 re7

G olio (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 a nd child support obligations.’ [Citation.]” ( In re Proyect (Bankr. N.D.Ga. 2013) 503 B.R. 765, 773.)

A s enacted

, s ection 523(a)(15) work ed in conjunction with section 523(a)(5). ( In re Cordia (Bankr. N.D.Ohio 2001) 280 B.R. 138, 146.) Former s ection 523(a)(5) exempted from discharge any debt “ to a s pouse, 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 s ection 523(a)(15) exempted from discharge any
debt

, other than on e de scribed in section 523(a) (5)

, “ that [was] incurred by the debtor in the co urse of a divorce or separation

. ” Section 523(a)(15) thu s enlarged t he scope of nondischargeable
deb ts to any debt incurred in the course of a divorce or separation, unless the debtor w as unable to repay the debt or the
benefit of discharging the debt outweighed the benef it 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 a nd reinforce the ability of [ non debtor ] 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) that8

allowed a debtor t o 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 o f nondischargeable marital debt by abandoning a need

- driven analysis of the dischargeability of non

support marital debt .” ( In re Taylor (Bankr . 10th Cir. 2012) 478 B.R. 419, 42 8 .)

BAPCPA also amended sections 523(a)(5) and 523(a)(15). S ection 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 t he 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 deb ts 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 . 9 th Cir. 201 4) 505 B.R. 914, 919

- 920 ( Francis ) ; see also In re Prensky (Bankr. D.N.J. 2009) 416 B.R. 406, 410 [ BAPCPA

was “ in tended to increase the scope of the discharge exception ,”
not limit its protection to spouses , former spouses , and children ].)

Prior judicial interpreta tions of section 523(a)(5)
reinforce our conclusion. B efore 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 “ to9

provide an exception from d ischarge 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

- 114 2 [col lecting cases] .) What mattered, the

courts s ai d, 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
inte nded 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

s ection 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
Ph ilip’s debt to CJPM i s 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 advers ely
affects Charlene’s finances. The debt i s 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 result s is misplaced. In10

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 obligation s on th os e debts in a future bankr uptcy 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 ; s he w as already damaged by the reduction in her CJPM capital account.
Reinhardt is in apposite. 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 borrow ed

. 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 inc urred 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 [sam e]; 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

conseque nce of the conduct of one of the parties , or of some other

person. ” (C iv. C ode, § 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 usu ally 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 liabi lity, 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 t he parties when they included the indemnification provision in the dissolution judgment . ( Zalkind

, at p. 1025.)
In s ection 11.0 of the dissolution judgment, Philip released Charlene “fr om any and all liabilities, debts [

, ] or obligations ” that he ha d incu rred, 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. Northro p Grumman Systems Corp. (2015) 242 Cal.App.4th 1166, 1181.) Had they instead intend ed to narrow the clause to only cover
third

- party claims, they c ould 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 the12

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 limitati ons has run. ( See C ode C iv. P roc., § 337 [four

year 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 , an d 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 disso lution judgment is 10 years. (C ode C iv.
P roc., § 337.5 , subd. (b); see In re Marriage of Hanley (1988) 199 Cal.App.3d 1109, 1121.) The trial court properly calculated the a mount owed Finally, Philip contends Charlene is entitled to recover, at most, $1 50,000 because her capital accoun t 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 th e 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.Paulin e 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. W almsley and Marlea F. Jarrette, for Respondent.