Opinion ID: 762482
Heading Depth: 2
Heading Rank: 1

Heading: qdro order

Text: 8 Debtor contends that the bankruptcy court erred by granting Selnick's motion to lift the automatic stay to allow Selnick to petition the Pennsylvania courts for a QDRO. We disagree. 9 We will reverse the QDRO order only if the bankruptcy court abused its discretion. In re Conejo Enters., Inc., 96 F.3d 346, 351 (9th Cir.1996). The bankruptcy court did not abuse its discretion because Selnick showed more than adequate cause for relief from the automatic stay in her motion to petition the Pennsylvania courts for a QDRO. 4 See 11 U.S.C. § 362(d)(1); Conejo, 96 F.3d at 352 (requiring bankruptcy court to grant relief from automatic stay for cause). 10 Debtor listed on his bankruptcy petition as excluded under 11 U.S.C. § 541(c)(2) and Patterson v. Shumate, 504 U.S. 753, 112 S.Ct. 2242, 119 L.Ed.2d 519 (1992), his beneficial interest in the Pension Plan. The Supreme Court decided in Patterson that a debtor's interest in a pension plan could be excluded from the debtor's bankruptcy estate if the pension plan contained a transfer restriction that was enforceable under ERISA. See 504 U.S. at 758-60, 112 S.Ct. 2242. Because Patterson was decided in June 1992, almost one year after the Divorce Decree was entered and just two months before Debtor filed his petition, the QDRO issue did not become important until Debtor's bankruptcy. Therefore, the bankruptcy court did not abuse its discretion when it granted Selnick's motion to lift the automatic stay to allow her to return to the Pennsylvania courts to seek a QDRO. Neither Debtor, Selnick, nor the Pennsylvania divorce court could have known during the divorce proceeding that the QDRO issue would be important in the future. 5 Nor could the divorce court have anticipated that Debtor would transfer all of his assets out of Pennsylvania and flee the jurisdiction of the Pennsylvania courts. 11 Debtor contends that the bankruptcy court granted Selnick's motion for a QDRO only because the district court ordered it do so, and that the bankruptcy court failed to find the requisite cause to lift the automatic stay. Debtor is incorrect. The bankruptcy court stated in its order that it had read and considered Selnick's motion, Debtor's opposition, and all of the papers and pleadings filed with the court, and that it had considered the argument of counsel. The bankruptcy court stated that, based upon this information, it was entering its order for good cause shown. 12 Debtor also contends that the Confirmation Order ousted the bankruptcy court of jurisdiction to lift the automatic stay to allow Selnick to seek a QDRO in the Pennsylvania courts. Debtor's argument is without merit because the district court effectively stayed the Confirmation Order pending resolution of the exclusion and exemption issues. Where, as here, an asset worth over sixty percent of approximately $8 million 6 -Debtor's beneficial interest in the Pension Plan on the petition date-has been erroneously excluded from the bankruptcy estate, the plan cannot be confirmed. See In re Chinichian, 784 F.2d 1440, 1444 (9th Cir.1986). Therefore, the bankruptcy court had jurisdiction to grant Selnick's motion. 13 Debtor also contends that the bankruptcy court violated his right to due process by granting Selnick's motion without a meaningful hearing. After a careful review of the record, we find Debtor's argument to be without merit. Debtor had numerous opportunities to be heard on this issue, filed a lengthy opposition to Selnick's motion, and appeared at the hearing on Selnick's motion. 14 Finally, Debtor contends that the QDRO order was barred by principles of res judicata. Res judicata prevents relitigation in a subsequent action of a claim based on a cause of action that has already been settled by a final judgment. See Montana, 440 U.S. at 153, 99 S.Ct. 970. In this case, the issue of whether the Pension Plan was ERISA qualified was never litigated during the divorce proceedings because Debtor testified during those proceedings that he was the sole participant in the Pension Plan, which would have prevented the Pension Plan from being ERISA qualified. Therefore, the district court's order granting Selnick's motion for a QDRO is not a subsequent action that relitigates an issue already decided in a previous action. Instead, the QDRO Order merely allows the Pennsylvania divorce court to modify the Divorce Decree in light of Debtor's new position in these bankruptcy proceedings. Therefore, Debtor's res judicata argument is without merit.