Opinion ID: 2267900
Heading Depth: 4
Heading Rank: 2

Heading: Other Aspects of the Judgment

Text: Lawrence asks that all judgments entered by the Circuit Court be vacated, in part because he claims to have received inadequate notice of trial and in part because the continuation of the action was barred by the automatic stay. As we have noted, the language of § 362(a) is very broad: except as provided in subsection (b) the continuation of any judicial action or proceeding commenced prior to the bankruptcy petition is stayed. Although that language would certainly embrace all non-exempted financial aspects of a divorce case and would seem to embrace even non-financial aspects, such as the divorce itself and custody and visitation provisions, a number of Bankruptcy Courts and at least one State court have concluded that the stay does not preclude State court judgments that simply dissolve the marriage or that provide for custody of and access to the children. In In re Becker, 136 B.R. 113 (Bankr.D.N.J.1992), the court held: To summarize, the filing of a bankruptcy petition stays the determination in a divorce case of the interests of a debtor in property of the estate, any exercise of control over such property, and any monetary claims against a debtor other than for alimony, maintenance or support. Other aspects of a divorce case, such as the dissolution of the marriage, child custody issues, and collection of alimony, maintenance and support from postpetition earnings in a chapter 7 or 11 case, are not stayed. (Emphasis added). See also In re Schock, 37 B.R. 399, 400 (Bankr.D.N.D.1984) ([a] divorce petition is clearly not within the meaning of sections 362(a)(1) and 101(4)); In re Cunningham, 9 B.R. 70, 71 (Bankr. D.N.M.1981); In re Briglevich, 147 B.R. 1015, 1019 (Bankr.N.D.Ga.1992) (The portions of the divorce decree dissolving the marriage and dealing with non-economic issues do not violate the stay and are valid between the Brigleviches); Perkins v. Perkins (In re Perkins), 36 B.R. 618 (Bankr.M.D.Tenn.1983); Kaylor v. Kaylor (In re Kaylor), 25 B.R. 394 (Bankr. M.D.Fla.1982); Frankel v. Frankel, 274 N.J.Super. 585, 644 A.2d 1132 (1994). Lawrence has cited no cases to the contrary, and we have found none. As this, too, is a matter of Federal bankruptcy law, we shall follow the view of the Bankruptcy Courts and conclude that the provisions of the judgment dissolving the marriage, awarding custody of the children to Kathy, and limiting Lawrence's access to the children were not precluded by the stay. The remaining aspects of the judgmentthe grant of a monetary award to Kathy, the reduction of that award to judgment, the entry of a Qualified Domestic Relations Order directing a lump sum distribution to Kathy from Lawrence's profit sharing plan with Merrill Lynch, and the grant to Kathy of use and possession of the automobile titled in both names for a period of three yearsstand on a different footing. Continuation of the action with respect to those matters was clearly subject to the stay, while the stay was in effect. There is some debate as to whether actions taken in contravention of an automatic stay under § 362(a) are absolutely void or merely voidable, but, in the context of this case, such actions must be regarded as void. The prevailing sentiment among the Federal courts and Bankruptcy Courts is that actions taken in violation of a § 362 stay are void ab initio. See 3 COLLIER ON BANKRUPTCY, § 362.11[1] (15th ed. rev.2003) and cases cited there (Most courts have held that actions taken in violation of the stay are void and without effect.). The contrary view, that such actions are merely voidable, seems to emanate from the authority of the Bankruptcy Court under § 362(d) and (f) to annul the stay retroactively, thereby effectively validating actions taken in violation of a stay. Collier suggests that the better approach is to view the annulment option as a means of avoiding the effect of the stay, rather than as an indication that acts taken in violation are voidable. Id. We need not weigh in on that debate, for there has been no annulment of the stay that was in effect here. Lawrence complains principally about two actions taken during the period that the stay was in effectthe filing of discovery requests by Kathy and the subpoena that she caused to be issued for his attendance at trial. Relying on David v. Hooker, Ltd., 560 F.2d 412 (9th Cir.1977), the Court of Special Appeals concluded that the discovery requests did not violate the stay because they merely sought disclosures regarding [Lawrence's] financial condition and did not and could not alter the status quo regarding [his] estate. If Lawrence wished to challenge the discovery, it added, he could have sought a protective order. Referencing that discussion but with no further explanation, the court also held that the subpoena did not violate the stay. This is where we part company with the intermediate appellate court, at least with respect to the discovery. A number of courts have held, in Collier's words, that [p]urely ministerial acts are not subject to the automatic stay. Collier, supra, § 362.03[3][3][e] and cases cited there. Collier notes further, however, that given the importance of the automatic stay, the concept of purely ministerial acts should be narrowly construed to protect only those acts that are clerical in nature and do not involve the exercise of any discretion or judgment. Id. See Soares v. Brockton Credit Union (In re Soares), 107 F.3d 969 (1st Cir.1997). The filing of discovery by a party against the debtor with respect to a non-exempt claim against the debtor does not fall within that exception. [4] Nor does the Ninth Circuit Court's decision in David v. Hooker, supra , support the Court of Special Appeals conclusion that discoveryat least discovery relating to non-exempt mattersis not subject to the stay. In David, the defendant failed to answer interrogatories and was ordered to answer them by December 16. On November 26, it filed a petition in bankruptcy. The court stayed the action but ordered the defendant to answer the interrogatories within 10 days. Eventually, it did so, but the plaintiff objected to the sufficiency of the answers. The court ordered the corporate defendantthe debtorto file supplementary answers by May 1, and assessed the individual president of the defendant $2,000. The court held that the order directing the bankrupt defendant to answer the interrogatories was interlocutory and not appealable. It did entertain an appeal by the president, however, from the order to pay the $2,000. In the context of his appeal, the court considered whether the trial court had jurisdiction under Fed R. Bnkr. Proc. 401(a) [5] to order the defendant to answer the interrogatories, and, for two reasons, held that such jurisdiction existed. First, the court concluded that ordering Hooker to comply with its previous, pre-stay, order to answer the interrogatories did not involve a determination of the ultimate obligation of the debtor, did not represent a ploy to harass it, and did not affect the operation of the stay of the main proceeding. Second, the court likened the order to a contempt proceeding for disobedience to a court order issued prior to the stay which, the court held, was not barred by the stay. Whether those conclusions represent a prevailing view among the Federal and Bankruptcy Courts is not clear. The David court noted that it had discovered no cases addressing the issue. Even if they do, that situation is quite different from the one before us. In David, the motion to compel discovery was filed and the initial order to comply was entered prior to the bankruptcy; the second order to answer simply enforced an earlier one that had been entered prior to the stay. In Paden v. Union for Experimenting Colleges and Universities, 7 B.R. 289, 292 (N.D.Ill.1980), the court distinguished David and stayed rulings on motions to compel discovery where the motions were filed after commencement of the bankruptcy. Here, of course, we are not dealing with a ruling enforcing discovery that was requested prior to the stay. The discovery was filed on January 20, 2001, while the stay was in effect. Under Maryland Rule 2-424, Lawrence had 30 days to respond or have the facts included in the demand for admission deemed admitted. Rule 2-424(b) provides, in relevant part, that [e]ach matter of which an admission is requested shall be deemed admitted unless, within 30 days after service of the request ... the party to whom the request is directed serves a response signed by the party or the party's attorney. The stay was still in effect when that time expired. At trial, the court admitted into evidence the unanswered demand for admission of facts, presumably regarding the facts as admitted. Many of the requested facts dealt with Lawrence's income, bank and investment accounts, and other financial resources, which were relevant to the determination of the $100,000 monetary award made by the court and to the transfer of the balance of Lawrence's profit sharing plan account. Responding to discovery can be onerous, time-consuming, and expensive. The interrogatories filed by Kathy are not in the record, but the demand for admission alone encompassed 54 facts. It is not, as the Court of Special Appeals suggested, for Lawrence to seek a protective order, although he certainly could have done so. Section 362(a) provides for an automatic stay of pending proceedings so that the debtor is not forced to continue the litigation in order to stay it. We hold that the discovery initiated by Kathy constituted an impermissible continuation of the proceeding, that the deemed admissions that arose while the stay was in effect were void, and that the court therefore erred in admitting the request into evidence. That error requires reversal of all aspects of the judgment other than the divorce, the custody and visitation provisions, provisions for alimony, child support, the fees awarded to the guardian ad litem and to Kathy's attorney, and the determination of alimony and child support arrearages. It is not clear, from the record before us, whether, in light of the discharge in bankruptcy, further proceedings are permissible on those matters. That is an issue that can be addressed on remand.