Court Opinion

ID: 9480761
Source: CourtListenerOpinion
Date Created: 2023-08-05 07:57:34.659927+00
Date Added: 2024-06-11T17:47:53.311943
License: Public Domain

ARNOLD, Circuit Judge,
with whom LAY, Chief Judge, JOHN R. GIBSON and MAGILL, Circuit Judges, join, dissenting.
This case is about interpreting the bankruptcy laws Congress has enacted, not about doing justice in the abstract. Because the Court, in its zeal for its own brand of justice, ignores Congress’s plain command and refuses to discharge the Tay-lors 1 from their debt to Mrs. Bush, I dissent.
At issue in this case is the dischargeability of the Taylors’ obligation to pay Mrs. Bush part of some pension benefits. The relevant facts are these. Mr. Taylor used to be married to Mrs. Bush. While they were married, Mr. Taylor acquired pension rights from his employment. In 1975 their marriage ended in divorce. By the terms of the decree, Mrs. Bush received a one-half interest in Mr. Taylor’s pension as her “sole and separate property.” For a while, Mr. Taylor sent Mrs. Bush (since remarried) her part of the pension each month. He eventually stopped making those payments, however. The parties then entered into an agreed judgment and a covenant not to execute. Mr. Taylor paid some of what he owed in back payments, and promised to pay Mrs. Bush $500 a month and one-half of any increases in the pension as her share of this marital property. Mrs. Bush retained the right to execute her judgment for the full amount owed, if Mr. Taylor failed to make regular payments. He fulfilled that obligation for a while, and then again stopped making payments.
Taylor and his new wife, Barbara, then filed a chapter 7 bankruptcy petition, and that is where this lawsuit begins. The Taylors listed their obligation to Mrs. Bush as a debt, and sought to have it discharged. Mrs. Bush objected. She argued that this obligation couldn’t be a debt because the property — the right to one-half of Mr. Taylor’s pension — was already hers. The Bankruptcy Court, and the District Court on review, agreed with Mrs. Bush, and refused the Taylors’ request for discharge. As this Court notes, both courts supported their decision with alternative holdings. First, both courts held that this obligation was not a pre-petition debt within the meaning of the Bankruptcy Code. Thus it could not be discharged. Alternatively, both courts held that the divorce decree created a constructive trust for Mrs. Bush’s benefit, and further, that that trust relationship (between Mr. Taylor and Mrs. *995Bush) should not be disturbed in bankruptcy. Today Our Court adopts both these grounds. I think it errs in doing so.
The Taylors’ obligation to Mrs. Bush falls within the Bankruptcy Code’s broad and flexible definition of a debt. Since it is a debt, it is dischargeable. The words of the statute leave no legitimate room for doubt. Under 11 U.S.C. § 101(11), a “debt” is simply a liability on a claim. A “claim,” in turn, is:
(A) [a] right to payment, whether or not such right is reduced to judgement, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured ....
11 U.S.C. § 101(4). Bush has a claim against the Taylors. She had, each month for as long as Mr. Taylor lived, a right to payment of a portion of his pension.
The Court suggests that there can be no discharge in this case because, instead of one debt, it involves a lot of mini-debts, each accruing on the fifteenth of every month. This reasoning ignores the Code’s plain inclusion of unmatured debts within the definition of dischargeable debts. The fifteenth of each month brings partial maturity of the debt in this case, not a new debt. This “many-debts” understanding of the Taylors’ obligation is further undermined by Mrs. Bush’s theory of the case: part of the pension has been hers since the divorce. Whatever her interest in this property, it does not appear on the fifteenth of each month. Right reason and the plain meaning of the Code point unequivocally in one direction: there is only one debt in this case, and it is dischargea-ble.
A former spouse’s obligations for alimony, maintenance, and child support are not debts under the Code, 11 U.S.C. § 523(a)(5), and therefore are not dischargeable. But Mrs. Bush stipulated below that the Tay-lors’ obligation was for a property settlement, and was not in the nature of alimony, maintenance, or support. The Court seeks to avoid this characterization by labeling the Washington court’s action a division of property rather than a property settlement, ante at 993. This, however, is a distinction more subtle than real, given counsel’s arguments in this case. Washington is a community-property state, and that may well affect the nature of Mrs. Bush’s property rights under the divorce decree. Property is, after all, a creature of state law. But Mrs. Bush has not argued — not in this Court or in the District Court or the Bankruptcy Court — that the Taylors should be denied a discharge because of the special pre-divorce nature or origin of her property rights in the pension. That argument might be promising. It is, however, a matter of Washington state law, of which neither the Court nor I can be certain, because no one has argued the matter. This theory is foreclosed to Mrs. Bush at this late date in the suit. And it is likewise inappropriate for the Court to inject the issue into the case now.
The Court also places great weight on the fact that the divorce decree speaks of Mrs. Bush’s interest in Mr. Taylor’s pension as her “sole and separate property.” But that language does not compel the result sought by the Court. Whenever a debt arising from the division of marital property is discharged, the non-debtor spouse is thereby deprived of his or her sole and separate property. That is the hard, but legislatively settled, fact of bankruptcy involving former spouses. Whatever the merits of that decision, Congress has not excepted marital property settlements from the reach of bankruptcy. And we are not at liberty to redefine “debt” in order to accomplish that result. The Taylors’ obligation to make periodic payments to Mrs. Bush is a debt. It should, pursuant to their request and along with the rest of their debts, be discharged.
The Court also affirms the District Court’s alternative holding that the nature of this obligation implies a constructive trust. On this theory, the Taylors received one-half of Mr. Taylor’s pension in trust for the benefit of Mrs. Bush. No Washington authority is cited to support this holding, though everyone agrees that the Taylors’ obligation arose there. In fact, it appears that Washington, generally — though not al*996ways — requires some fraud or overreaching before imposing a constructive trust. Compare In re Marriage of Rhoads, 645 P.2d 1153, 1154 n. 1 (Wash.App.1982), with Department of Revenue v. Puget Sound Power and Light Co., 103 Wash.2d 501, 515, 694 P.2d 7, 15 (1985) (en banc) (Dore, J., concurring and dissenting). There has been no claim or proof of any such wrongdoing here. The Court is, of course, correct that the desire to prevent unjust enrichment is the animating principle of every constructive trust. G.T. Bo-gert, Trusts § 77 (6th ed. 1987). There has also been no showing of any such enrichment — -beyond what always occurs when any bankrupt is given a fresh start.
As far as the Code is concerned, Bush’s loss is not materially different from that of any creditor who advances goods or services or money before bankruptcy, and is then barred from collecting his due. There is a sense in which anyone who avoids his debts is unjustly enriched, yet that is the whole purpose of the bankruptcy laws. Unjust enrichment is the other side of the fresh-start coin. We cannot allow the mere label “constructive trust” to circumvent that purpose. The Court’s citation of the Employee Retirement Income Security Act and the Uniformed Services Former Spouses Protection Act, ante at 993-994, likewise misses the mark. Rather than showing some generalized congressional intent to guarantee fair treatment for former spouses, those laws show Congress’s particularized intent to protect spouses within those statutory schemes. In the Bankruptcy Code, Congress has also chosen to protect former spouses — but only in matters of alimony, maintenance, and child support, not with regard to property settlements.
Statutes require policy choices, and it is beyond the legitimate power of courts to choose differently once the law is written. Under the law as Congress gives it to us, the Taylors are no different from any other debtors seeking relief, and their obligation to Mrs. Bush is no different from any other debt. They are entitled to be discharged.

. I agree with the Court that this case is not moot even though Mr. Taylor died during the pendency of this appeal. The question whether the obligation he and his current wife owe Mrs. Bush is dischargeable in bankruptcy still has legal and practical consequences.