Opinion ID: 2604341
Heading Depth: 1
Heading Rank: 6

Heading: The Discharged Property Settlement Obligation.

Text: Vincent contends the district court, in modifying the alimony award, substituted an alimony obligation in place of a debt validly discharged in bankruptcy, in contravention of supreme federal law. The determination of whether an obligation is dischargeable in bankruptcy is a matter of federal law. Shaver v. Shaver, 736 F.2d 1314, 1316 (9th Cir.1984); Martin v. Martin, 108 Nev. 384, 386, 832 P.2d 390, 391 (1992). While obligations for alimony, maintenance, and support are not dischargeable in bankruptcy, 11 U.S.C. § 523(a)(5) (1979 & supp. 1992), property division obligations are dischargeable. Matter of Coil, 680 F.2d 1170, 1171 (7th Cir.1982); In re Marriage of Clements, 184 Cal. Rptr. 756, 759 (Cal.Ct.App. 1982); Martin, 108 Nev. at 386, 832 P.2d at 391. State and federal courts have concurrent jurisdiction to determine whether an obligation is one for property settlement or one for alimony and support. In re Aldrich, 34 B.R. 776, 780 (Bankr. 9th Cir.1983); In re Reak, 92 B.R. 804, 807 (Bankr.E.D.Wis. 1988); Hopkins v. Hopkins, 487 A.2d 500, 503 (R.I.1985). The bankruptcy court in the instant case discharged Vincent's $1,300,000.00 property settlement obligation, but not his alimony obligation. The district court adopted the referee's findings that, due in part to Vincent's bankruptcy and the discharge of his property settlement obligations, both Joanne's and Vincent's financial circumstances had sufficiently changed, to the advantage of Vincent, such that modification of the alimony award in the divorce decree was appropriate. The issue thus becomes whether it is proper for a district court to consider a discharge of property equalization debts in bankruptcy as a changed circumstances [2] which would merit the modification of an alimony award. While we have never addressed the issue, both state and federal courts in other jurisdictions have uniformly determined that the discharge of a property settlement obligation in bankruptcy may be taken into account in determining whether the parties' circumstances have changed sufficiently to justify a modification of alimony. See In re Danley, 14 B.R. 493, 495 (Bankr.D.N.M. 1981); In re Reak, 92 B.R. at 806: In re Marriage of Clements, 184 Cal. Rptr. at 760-61; Foster v. Childers, 416 N.W.2d 781, 786 (Minn. Ct. App. 1987); Coakley v. Coakley, 400 N.W.2d 436, 441 (Minn. Ct. App. 1987); Hopkins, 487 A.2d at 504-05; In re Marriage of Myers, 773 P.2d 118, 120-22 (Wash. Ct. App. 1989); Eckert v. Eckert, 424 N.W.2d 759, 760, 763 (Wis. Ct. App.), review denied, 430 N.W.2d 351 (Wis. 1988). The uniformity of decisions does not mean that the question is not a close one, and two strong competing interests must be weighed. The court in In re Marriage of Clements, 184 Cal. Rptr. 756 (Cal. Ct.App. 1982), stated: Through discharge, the bankruptcy court attempts to provide a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt. On the other hand, the family law court has a strong interest in requiring the bankrupt to fulfill obligations that are an indivisible part of the equal division of community property. Id. 184 Cal.Rptr. at 759 (quoting Local Loan Co. v. Hunt, 292 U.S. 234, 244 (1934)). See Wetmore v. Markoe, 196 U.S. 68, 77 (1904) ([s]ystems of bankruptcy are designed to relieve the honest debtor from the weight of indebtedness which has become oppressive and to permit him to have a fresh start in business or commercial life). Thus, the mandates of the Supremacy Clause [3] of the United States Constitution compete with the equitable interest in preventing one spouse from unilaterally acting to deprive the other spouse of marital assets. The Supremacy Clause prevents states from enacting laws which do major damage to clear and substantial federal interests or sufficiently injure the objectives of the federal program. Hisquierdo v. Hisquierdo, 439 U.S. 572, 581, 583, 99 S.Ct. 802, 808, 809, 59 L.Ed.2d 1 (1979), superseded in part, 45 U.S.C. § 231m (1986). See Rose v. Rose, 481 U.S. 619, 625, 107 S.Ct. 2029, 2033, 95 L.Ed.2d 599 (1987). Under the Supremacy Clause, U.S. Const., Art. VI, cl. 2, state laws which are contrary to, or which interfere with, the laws of Congress are invalid. Davidson v. Velsicol Chemical, 108 Nev. 591, ___, 834 P.2d 931, 932 (1992), reh'g denied. However, the whole subject of the domestic relations of husband and wife, parent and child, belongs to the laws of the States and not to the laws of the United States. Popovici v. Agler, 280 U.S. 379, 383, 50 S.Ct. 154, 155, 74 L.Ed. 489 (1930) (quoting Ex parte Burrus, 136 U.S. 586, 593, 594, 10 S.Ct. 850, 852, 853, 34 L.Ed. 500 (1890)). State courts deciding the issue have resolved the tension between federal and state objectives in favor of the state interest in resolving domestic relations disputes. In In re Marriage of Myers, 54 Wash.App. 233, 773 P.2d 118 (1989), the Washington Court of Appeals determined that, although it could not recharge husband with debts he discharged in bankruptcy, federal law did not preempt state procedures for modifying alimony to compensate the wife for the discharged obligations. Id., 773 P.2d at 120. The court found that issues of support and maintenance are generally left to the states and [c]onsidering post-bankruptcy changes in financial relationships does not necessarily result in or frustrate the Bankruptcy Code's fresh start policy. Id. at 121. See Eckert, 424 N.W.2d at 762 ([t]he exercise of judicial power modifying spousal support post-bankruptcy is not antagonistic to the federal `fresh start' policy of bankruptcy relief). In In re Marriage of Clements, the California Court of Appeal recognized the tension between state family law and federal bankruptcy law, but found [a]s a matter of policy, domestic relations is considered a field particularly suited to state control, and federal courts have traditionally been inclined to respect the power of state courts to make, modify, and terminate provisions for spousal support. In re Marriage of Clements, 184 Cal. Rptr. at 760. We find these authorities to be persuasive and therefore conclude that a district court may consider a spouse's discharged property settlement obligation as a changed circumstance in ruling upon a motion for modification of alimony. Modification of an alimony award based upon a discharged property settlement obligation does not re-create a debt discharged under federal bankruptcy laws, and therefore the district court in the instant case properly considered Vincent's discharged property settlement obligation in ruling upon the motion for modification of alimony. We have considered Vincent's other contentions of error, and we conclude they are without merit. Accordingly, we affirm the judgment of the district court.