United States District Court, W.D. Wisconsin
LESLIE E. MARTIN, III, Appellant,
JEANNE AWVE and MARK HARRING, Appellees.
OPINION & ORDER
D. PETERSON District Judge
Leslie E. Martin, III appeals two final decisions by the
United States Bankruptcy Court for the Western District of
Wisconsin. One decision granted appellee Jeanne Awve relief
from the automatic bankruptcy stay so that she could enforce
her rights under a judgment of divorce. Dkt. 1-2. The other
dismissed Martin's case for lack of good faith. Dkt. 1-1.
bankruptcy court did not err when it granted Awve relief from
the automatic stay; the court will affirm that decision. But
because the bankruptcy court dismissed Martin's case
without notice, the court will reverse that decision and
remand the case so that Martin has the chance to convince the
bankruptcy court that his petition is in good faith.
and Awve are ex-spouses, and some background on their divorce
proceedings is necessary to understand the issues in
Martin's bankruptcy. On January 18, 2013, the divorce
court entered findings of fact, conclusions of law, and
judgment of divorce. The order provided that “[e]ach
party is awarded 100% interest in the retirement and bank
accounts in his or her own name.” Dkt. 4-1, at 51. The
order also provided that Martin owed Awve “an
equalization payment of $116, 695 by February 21,
2013.” Id. This initial order provided that
Awve could choose to receive the payment from Martin's
retirement account. Id. But on October 21, 2014, the
divorce court entered an amended order, which provided, in
Respondent [Awve] was previously awarded the right to chose
[sic] whether she wants payment via QDRO from
Petitioner's [Martin's] retirement assets or cash.
Exhibit A delegates the portions to be satisfied by cash
payment and a portion via QDRO: that value as of the date of
the divorce, to be assigned to her via QDRO, with all
gains/losses since the date of divorce.
All prior orders not inconsistent with the terms herein shall
remain in full force and effect.
Id. at 58. Apparently, based on state court records,
Martin declined to make the QDRO transfer to Awve, and Awve
tried to enforce the QDRO through the divorce court.
8, 2015, Martin filed a chapter 13 voluntary bankruptcy
petition. B. Dkt. 1.The next day, July 9, 2015, the divorce
court entered an oral ruling regarding the relationship
between the divorce proceedings and Martins' bankruptcy
case. B. Dkt. 59, at 6-13. The divorce court determined that
the divorce proceedings were subject to the automatic
bankruptcy stay. The court also commented on the parties'
retirement accounts. The court stated that “the money
that was ordered paid by Mr. Martin is not subject to the
bankruptcy estate, and I think ultimately, that will be the
finding of the bankruptcy court. . . . This obligation-this
property belonged to Ms. Martin as of February of
2013.” Id. at 10. The court also noted that
“the bankruptcy court is more than competent to make
that decision. If they don't, then you can come back to
this Court. And if there is a discharge of that obligation in
this divorce decree, then I am powerless to go
further.” Id. The divorce court's comments
are not dispositive of the issues that were before the
bankruptcy court, although if there were ambiguity in the
meaning of the divorce court orders, these comments would be
filed his first chapter 13 plan on July 30, 2015. B. Dkt. 15.
Awve objected, B. Dkt. 27, and the bankruptcy court scheduled
a preliminary hearing on confirmation of the plan. Before the
preliminary hearing, Martin filed an amended plan, soon
followed by a second amended plan. B. Dkt. 30 and B. Dkt. 35.
Awve objected, B. Dkt. 38, as did the trustee, B. Dkt. 37.
The bankruptcy court scheduled a final hearing on
confirmation of the plan for January 15, 2016. B. Dkt. 47.
weeks before the final hearing, Awve moved for relief from
the automatic bankruptcy stay. B. Dkt. 55. Awve sought leave
to return to the divorce court to compel Martin to
“execute a Broker/Dealer form, or any other such
document as required by H.T.L.F. Investment Services to
memorialize that Court's previous award and assignment of
funds held in the Debtor's name at H.T.L.F. Investment
Services.” Id. at 1. In other words, Awve
wanted the opportunity to secure funds from Martin's
retirement account pursuant to the divorce court's
division of property orders. Martin objected, arguing that
Awve's claim was unsecured: the divorce court did not
award Awve a vested interest in Martin's individual
retirement account, just a right to payment that could be
discharged in bankruptcy. Martin then filed a third amended
chapter 13 plan. B. Dkt. 57.
January 4, 2016, the bankruptcy court held a preliminary
hearing on Awve's motion for relief from the automatic
stay. Dkt. 3-1. At the hearing, the bankruptcy court granted
Awve's motion-“per reasoning of Bigelow v.
Brown, 168 B.R. 331”-and dismissed Martin's
case as “filed in lack of good faith per In re
Schaitz.” Id. at 5. The court reasoned
that “[t]his is clearly a case in which the debtor is
seeking to avoid paying Ms. Awve, and it is not a case in
which it was directed to the general payment of
creditors.” Id. The bankruptcy court issued a
short written order the following day, noting that it had
dismissed Martin's case after finding “that no Plan
meeting the requirements of Chapter 13 of Title 11, United
States Code has been presented: and further finding that no
cause has been shown why this case should not be
dismissed.” Dkt. 1-1.
court has subject matter jurisdiction over this appeal