Court Opinion

ID: 9479892
Source: CourtListenerOpinion
Date Created: 2023-08-05 07:31:49.142145+00
Date Added: 2024-06-11T17:47:20.770401
License: Public Domain

BOWMAN, Circuit Judge,
dissenting.
The Court’s decision is indefensible. It permits a deadbeat husband to use the Bankruptcy Code’s grace for honest debtors as a slick scheme for euchring his former wife out of her “sole and separate property” in one-half of the benefits he receives under a pension plan. Under the Court’s decision, the former wife’s entitlement to one-half of the pension benefits — a property right established by judicial decree when the marriage was dissolved — becomes merely another debt dischargeable in bankruptcy. The result is that, post-bankruptcy, the husband will enjoy 100 per cent of the monthly pension benefits for as long as he lives, and his ex-wife will be deprived forever of her half of these benefits. Short of outright thievery, it is hard to imagine a more compelling case of unjust enrichment.
If I truly thought that Congress had commanded such a bizarre and unjust result, I would join the Court’s opinion. I believe, however, that Congress has commanded no such thing. Although the Court correctly notes, ante at 965, that the Bankruptcy Code provides a broad definition of “debt,” the Court’s reliance on that definition is misplaced. The essential concept of “debt” — whether defined broadly or narrowly — posits a claim against the debtor for which he is answerable out of his own property. Here, the former wife does not press a claim against the husband’s property. By reason of the decree dissolving the marriage, the husband was stripped of his property interest in one-half of the future pension payments, and to that extent his property interest in these payments was transferred to and became the property of his ex-wife. To speak of the husband’s duty not to interfere with his former wife’s enjoyment of property already adjudicated to be hers as a “debt” within the meaning of the Bankruptcy Code is to attribute to Congress an intention that it has nowhere expressed and that it almost certainly never had.
The Court acknowledges, ante at 964, that “[cjourts have not been receptive to attempts by a former spouse to retrieve in bankruptcy an interest in pension payments that has been awarded to an ex-spouse upon divorce.” That is indeed so, and there is good reason for it. Simply put, the Bankruptcy Code is designed to give a fresh start to honest debtors whose debts have grown larger than their ability to pay. The Code is not intended to provide a way for a tricky debtor to obtain clear title to the property of another. Yet here that is the very result our Court ordains, since under its decision the husband will walk away from his discharge in bankruptcy with clear title to his ex-wife’s half of the ongoing monthly pension payments from his former employer. He will have full use and enjoyment of the monthly pension payments for the rest of his life. His ex-wife will have nothing, despite the carefully drawn terms of the divorce decree explicitly awarding her one-half of these payments as her “sole and separate property.”
This result is unconscionable, and we should not countenance it. Nor are we somehow required to do so. The Bankruptcy Court quite correctly and quite sensibly found that the ex-wife’s half of the pension payments was not a part of the husband’s estate and that with respect to her half of these payments he was a constructive trustee for her benefit. The District Court agreed. Both courts emphasized the unjust enrichment that the debtor would enjoy were he to succeed in his gambit to have his wife’s share of the ongoing pension payments treated as a debt discharge-*968able in bankruptcy. The decisions of the lower courts are based on findings of fact that are not clearly erroneous and on a correct reading of the law. In addition, those decisions have the virtue of avoiding the strong sense of injustice that today’s decision creates. I therefore respectfully dissent and cast my vote to affirm the District Court.