i FAMILY AND
Published b the F a m i l and Juvenile Law Section
Marital Dissolution and the Why the $300 Divorce Now Costs
Consequences of Bankruptcy $3,000
by Ira Gottlieb, Esq.
Part I: Discharge and Related
xgsues In 1969 the Oregon State Bar schedule of minimum fees and
charges stated "Divorce with no child custody. support or proper.
by David A . Foraker, Esq. * ty rights to be resolved: services including consultation, prepara
tion of complaint. summons, board of health forms, filing motion,
* The author grafelully acknowledges (he Conlribulions 01 the Hon. affidavit. order, default. non.military affidavit, appearance and
Elizabeth L. Perris. This article is based in large part on lhe more cam. decree, at least 5250." Extra services such as resolving con-
prehensive discussion contained in her arlicle entitled "Bankruplcy and troversies on property rights. child custody, visitation, or support,
Domestic Relalions Practice. " Judge Perris formerly practiced law in increased the fees by at least 5100.
Portland, and now serves as a Banhruplcy Judge in lhe District of Oregon. Since 1969, the practice of matrimonial law has changed
radically, the most significant change being the adoption 01 a no
1. Introduction fault standard. As a result. the focus of a divorce suit shifted from
a subjective standard of fault to a hopefully objective standard for
The dissolution of a marital relationship requires legal counsel determining income. need. and the value of assets. At the same
to analyze a multitude of consequences confronting the members time the concept of marital assets has grown and continues to
of the affected family. The resultant change in lifestyle for family grow. Retirement plans such as SEP, Keogh. ESOP's, 401K and
members is almost always accompanied by a host of legal, finan- IRA'S have become part 01 the matrimonial lawyer's vocabulary.
cial and emotional problems, particularly in those cases which in. Insurance can now be an integral part of any marital estate. In the
volve a shift in parental responsibilities. For many people, the future, intangibles such as professional licenses and educational
problems they experience as a result of a marital breakup seem degrees may also be recognized as assets which must be in.
like a low point in their lives. The recipient of benefits under a vestigated and evaluated by domestic relations lawyers.
divorce decree or settlement agreement frequently relies upon Rodgers and Rodgers. 45 Or App (1980). thrust forward retire.
the rights created by those documents in attempting to rebuild his men1 benefits as a marital asset to be considered. As a resuit, the
pr her financial life. A subsequent bankruptcy by one of the parties plans must now be obtained, investigated, reviewed and valued. 11-
to a divorce often complicates an already difficult situation. respective of whether the attorney himself or an actuary is used.
The divorce practitioner plays a large role in the process of the investment of time and expense can become substantial. U s
restructuring family affairs. The disentanglement of financial mat. ing an actuary lo make the necessary computations will cost be-
ters in most divorces creates a whole new set of debtorlcreditor tween 5100.$200. The attorney. to fully understand the complex-
relationships among the family members. The division of property ities of a plan, may often commit five to ten hours obtaining the
and debts of the marriage and the allocation of family support materials, reading them. and consulting with the actuary. In many
obligations raise many of the same issues that lace the business cases each of the parties will have their own expert witness ac.
lawyer every day. As in a business context, a restructuring of tuaries because, as we all know, appraising is an art and not a
?alth and monetary responsibility between spouses is oltentimes science.
,.luenced by non.legal considerations, such as personal choice The Equity Retirement Act of 1984 provides a vehicle which
and tax implications. that affect the manner in which a transaction gives attorneys great flexibility in the treatment of retirement
is formulated by the lawyer. It is far too often though that lawyers plans. However, time costs increase with communications with
handling a divorce or separation fail to view these matters from a plan administrators, preparations of qualified domestic relations
long-term perspective and overlook the possibility of bankruptcy orders, and perhaps even having the plan amended.
(continued on page 2) [continued on page 2
Why the $300 Divorce Marital Dissolution and
Now Costs $3,000 the Consequences of
continued from page 1 Bankruptcy
Recently, in Swan and Swan, 74 Or App 616 (1985). the speclei continued from page I
of social security as a marital asset arose. The somewhat am by one or both spouses. The results of poor planning and inade-
biguous language of the opinion makes it unclear as to whethei quate documentation can then come as a big surprise to the par.
the same valuation process being used for retirement plans is tc ties when the financial crisis occurs.
be applied to prospective social security benefits, or whether the This article is the first of a twO-part series that will address
trial court should merely be aware of its existence. If the former i
: bankruptcy issues most commonly litigated in the context of
correct, an awesome responsibility is thrust upon the attorney ant domestic relations. Its main purpose is to help the practitioner
courts because, as everyone knows, this federal program is in i identify these issues and thereby avoid some of the common pit-
state of flux. Each new marital asset to be considered increase: falls. Both articles will focus primarily on the law as it has
the cost of attorney fees. developed in the District of Oregon.
The valuation of retirement plans is only the beginning. Tax con This article will discuss what obligations a debtor spouse can
sequences have a major impact upon asset valuations and in discharge in bankruptcy. it will also briefly touch on related topics
come. Therefore, it becomes almost mandatory when confrontec of jurisdiction and the scope of the automatic stay. The next article
with support or the sale of an asset to consider these tax implica will focus on the effects of bankruptcy avoidance powers on
tions. An accountant must be obtained to make the necessar) divorce decrees and settlement agreements.
assumptions and projections in regard to various scenarios. Tim€
must be spent reviewing past tax returns and other reievan II. Dischargeability of Family
documents. Conferences with the accountant and client can alsc
take time. Another five to ten hours can easily be invested in thi: Obligations
facet of the case.
The attorney may often find him or herself between a rock and i The objective of every individual debtor who files bankruptcy is to
hard spot. On the one hand, in a effort to save a client somi obtain a discharge of all indebtedness. A discharge is a court order
money in attorney fees, investigation and the hiring of experts m a which, with certain limited exceptions. has the effect of precluding
be curtailed. On the other hand, if he or she does not do it, the a1 any further efforts by creditors to collect, recover or offset debts
torney may, in the future, be faced with a claim for malpractice that arose before the filing of the bankruptcy petition. See 11 USC 5
One has only to consider the recent increases in malpractice ir 524(a).' The confirmation of a chapter 11 plan of reorganization also
surance premiums to recognize the risks. operates to generally discharge debts that arose after the filing of
the petition but before the date of such confirmation. The types of
Along with accountants and actuaries, other experts. such a debt that are not subject to discharge in cases under chapter 7 and,
appraisers, economists. physicians, may have to be consultec chapter 11 are enumerated in Code 5 523(a). By comparison, j
They all take time and can be expensive. discharge given to a debtor who performs a confirmed chapter i3
plan is even more expansive than that given to individual debtors
In an effort to save valuable court time and insure that thi under chapter 7 or chapter 11. Such a debtor is discharged of all
client's interests are fully protected, a plethora of legal ir debts provided for by the chapter 13 plan, except certain long-term
struments may now have to be prepared, served and filed. A pal installment obligations and certain debts in the nature of alimony,
tiat list of these instruments includes a Petition. Summons, Boari maintenance or support.' It should be noted. however, that a
of Health form, Request for Production of Documents. Motion an1 discharge does not prevent a creditor from enforcing a valid lien
Affidavit for Temporary Relief and Suit Money, Uniform Affidavi after the automatic stay created by Code 5 362(a) terminales so
for Support. Affidavit of Non.Military Service, Order of Default, A1 long as there is no attempt to establish a deficiency judgmenl. See
fidavit for Judgment by Affidavit. Judgment, Support Orde Code § 524(a)(2).
The Code establishes several grounds for denial or revocation of
The increase in time required by attorneys in domestic relation a discharge, the standards of which differ slightly under each
cases is only one aspect of cost to the client. Court costs hav' chapter of the Code. AS a praclical matter, creditors are rarely will-
risen substantially. The 1976 Multnomah County divorce filing fe' ing to object to discharge because i f the creditor succeeds, all
of $95.80 is now $199.00, an increase of $103.20, or 107%. Thu: creditors, not just the objecting creditor. can continue collection ef.
the $300 1969 divorce now can cost $3,000, and one can on1 forts. But an unhappy former spouse will oftentimes have the motive
speculate what it will cost in the year 2000. I and the type of knowledge necessary to pursue an objection to
discharge. It is far more common for the nomdebtor spouse to only
take action to have his or her claims excepted from the general
Family and Juvenile Law Section Newsletter The following is a summary of the common grounds for objecting
to discharge in a case under chapter 7: (a) the debtor, with intent to
Published Six Times a Year by the hinder, delay or defraud a creditor or the trustee, has transferred.
Family and Juvenile Law Section of the Oregon State Bar concealed or destroyed property either after the case was filed or
Co.Editors within one year before the filing of the case; (b) the debtor has failed
Richard E. Fowlks to keep or preserve records trom which the debtor's financial condi.
Deanna Cereghino Fowlks tion can be ascertained, unless such failure is justified under the cir.
18445 E. Burnside cumstances of the case; (c) the debtor perjures himself during or in
Portland, Oregon 97233
connection with the bankruptcy; (d) the debtor withheld from t h t
Executive Committee Officers trustee records relating to the debtor's property or financial aff' ,'
Chairperson . . . . . . . . . . . . . . . .StephenJ.R. Shepard
~ ~ ~
(e) the debtor refuses l o obey a court order in connection w i t h ' l d
Chair-Elect . . . . . . . . . . . , . . . . . . . . . . . . . Lawrence Young bankruptcy; (f) the debtor fails to satisfactorily explain any loss of
Secretary. , . . . . . . . ~. . . , . ...... . . . . . .Betsy Welch
assets or deficiency of assets to meet the debtor's liabilities; and (9)
Treasurer . . . . . ~ . . . . . . .. ,, , . . . . . . . . . . . ~ . .BlakeRamSey
the debtor was granted a discharge in a case filed within six years of
the pending case. uniess the disinarge w a 5 granted in a chapter 13 a delermination. Wiley v. Wiley. Case No. 382-00574. Adversary
case and the debtor ellhe! e aid l a c ' ? of the unsecured claims or NO. 82-0381 (Bankr D Or, Sept 29. 19821, And the court generally
paid 70% or the I!nse:s?d i i a m s an0 ;'le pian was a good faith will only look to the facts behind the decree i t the necessary fin
best effort. See Code 5 727ia). dings cannot be made from the face o f Ihe decree. In re
Grounds for denial 01 a discharge in a case under chapter 11 Blackburn. Case Nos. 381-01354. 381-01618. Adversary NO.
.Id chapter 13 are far more limited than those under chapter 7. 81-0366 (Bank D Or. Dec 28. 19811,
An individual in a chapter 11 case generally will be denied a Debls arising pursuant to a court order or selllement agree-
discharge only if (a) the plan provides for the liquidation 01 all or ment in a divorce are therelore dischargeable under Code §
substantially all of the properly 01 the estate: (b) the debtor does 523(a)(5) by negative implication unless they are actually in the
not engage in business alter consummation of the plan: and (c) the nature of alimony, maintenance or SUppOrl. Debts lo a former
debtor would be denied a discharge under chapter 7. Code 5 spouse resulting lrom a division of marital property are always
114t(d)(3).Therefore, uniess the plan itself or the order confirming dischargeable.
the plan provides otherwise. a chapter 11 debtor can receive a The issue most frequently litigated is whether an obligation to
discharge despite engaging in aclivities that wouid prevent a pay rnarilal debts is in the nalure of support. The general rule is
discharge in a case under chapter 7. that the debtor's obligation to pay debts of Ihe marriage is
The grounds for denial of a discharge in a case under chapter dischargeable under the code. There are two broad exceptions l o
13 are even more limited, The chapter 13 debtor who has per. this rule. The debtor's obligation to Satisly an award 01 attorney
lormed under a conlirmed Dlan is entitled lo a discharge as a mat. fees granted in connection with or incurred in obtaining a divorce
ter of right. Code 5 i328ta). Even a ChaDler 13 debtor who did not decree providing for alimony or child support is non-
perform under the plan may be entitled to a "hardship discharge'. dischargeable. In re Callow. 663 F2d 960 (9th Cir 19811: In re Mc-
under Code 5 1328ibi 11 Ihe lailure to complele payments under Cormick. Case No. 381.02728. Adversary N O. 81-0648 (Bank D Or,
the plan was due to circumslancec for which the deblor should not Dec 21. 1981.)" The debtor's obligation to pay debts of the mar-
justly be held accountabie. credilors received at least as much as riage is also nondischargeabte to the extent such debts are
thev would have received under chaoie! 7 and modilicalion is not secured by property necessary lor the support and care 01 the ex.
practicable. spouse and children. In re Sfewarl. Case No. 383-03855. Adver-
The orounds for revokino a discharoe oranted under the Code sary No. 84-0127 (Bankr D Or, Nov 1. 1984: In re McCorrnick.
are generally confined lo fraud that was n i l discovered until alter supra. The Courts in Oregon have reasoned that debts withln these
the granting of [he discharge Code 5 l l i 7 ( d ) . 1144. 1328(a) and two categories are in the nature of support and therefore non.
1330(a). dischargeable under Code 523(ai15).
6. Exceptions to Discharge. It is thus possible that obligations that cannot be classified as
AS mentioned above. the Code pmvides that certain debts are support under state law may be deemed in the n a m e of support
not subject to discharge even i f the debtor obtains a general lor nondischargeability purposes under the Code. See In re Har-
discharge pursuant 10 court order. Broadly speaking. there are rell. supra. For example. debls secured by a mortgage or. B home
two types of exceplions-those created for public policy reasons occupied by the ex-spouse and debts secured by securily in-
'such as taxes. child support, student loans and drunk driving) and terests in the ex.spouse's car or household furnishings are non.
)ose created lo orevent the debtor from benefitting from wrong- dischargeable. However. obligatlons owed lo the third parltes and
doing (such as fraud. malicious acts and governmental fines). The not owed direcl!y to the spouse are strictly construed by the
most common issue which arises in a bankruptcy loilowing a courts, In re Nix. Case N O ,680.06338 (Bank D Or. June 5. 19811.
divorce is whether obligalions imoosed by a dissolution decree or see Slout v. Prussel. 691 F2d 859 (9th Cir 1982i.
properly settlement agreement can be discharged. Code 5 A related bul less lrequently litigated issue is whelher marital
523(a)151 provides. debts assumed under a properly setllemenl agreement accompa.
A discharge under g 7 2 i . 1 7 4 : or 13281bi 01 this lille does no1 nying a parties' divorce are nondischargeabie on lhe grounds of
discharge an Individual deb101 lrom any debl- fraud^ Code 5 523ia)(Z)iA)excepts from a genera! discharge debts
151 lo a SDouse lorrner SDouse. 01 cnild or the debtor. lor alimony obtained by false pretenses. false representation or actual fraud.
lo. mamlenance lor. or s u ~ o o io! Such soouse or Child. in connec-
l For example, in In re Brasher. 20 BR 408 (Bankr WD Tenn 1982).
lion wiih a SeDaraiiOn agreemen;. divorce decree. or other order 01 the court ruled that the debts which the debtor oromlsed lo oay in
B cob,' 01 rezcrg i C ' O O P
: eilwi aGr:ement, bul not lo the
divorce decree were nondischargeable because they were Incur-
iCi s u c r dPhi 8s assigneo Ic anoiner enlily, voluntarily. by red pursuant lo a plan 10 induce the ex-wife lo waive alimony In
ODeraIion 01 law 0' Oinewse (other lhan deb15 assigned return lor his promise to pay debts he intended to discharge in
DUrSUanl lo seclion 402rai125i 01 !he Social Securily AcI. or bankruptcy.
any Such debl which has been assigned 10 Ihe Federal
Government or lc a 51818 or any ~ o i i t l c asubdivision 01 such
Slalel: or 111. Jurisdiction and Choice of Forum
IBI such &@Iincludes a liability designaled a s alimony.
maintenance or S U D D O ~ I , un!ess such lhabilily 1s aclually The district courts have jurisdiction over all civil oroceedings
Ihe nalure of a i l m o w main!enance. or su~port. "arising under'. or "related to'. cases under the Code 28 USC g
The basic findings necessary for a derermination 01 non- 1334(b). However. the district court has the autnoriiy to refer vir.
dischargeability under Code 5 523la)fj)thus are that the debl (a) is tually all bankruptcy matters to the bankruptcy judges in the
owed to a spouse. former spouse or child o f the deblor. (b) is for disfricl. 28 USC § 157. Such a reference order has been entered in
alimony. maintenance or support. and i c I arose in connection with Oregon. See Misc. Order No. 85.163 of Ihe United Sta!es District
a setllemenl agreement. divorce decree or other court order. The Court of the District of Oregon.
label attached to a debl by an agreement or by a court order is not The broad grant of jurisdiction began in 1979 when the Code
determinative 01 whelher an obligalion is actually alimony, main. became effective, As practitioners began filing cases under the
lanence or suoporl for bankruplry purposes. Code 5 523(a)(5)(B). Code, many of them speculated about whether the Dankruptcy
The court can loOk beyond the ianguage of the documents to court would handle dissolutions if one of the parties to the divorce
ascertain the intent of the par!ies and !he Substance of the obliga- liled bankruptcy. The federal courts have traditionally been unwilt.
;on. Shaver v. Shaver. 736 F2d 131A (9th Cir i984), It is a facl ing to get involved in domestic relations issues such as child
question lo be resolved under lederal law Shaver v. Shaver. custody. determination of Support awards and the dissolution of
supra: In re Harrell. 12 BCD 1328 (11th Cir 1985). However, the the marriage itself. The bankruptcy courts have thas generally
labeling of an obligation under a decree 15given weight in making limited their involvement to those issues related to the division of
property and debts. See In re Warner. 5 BR 34 (Bankr D Utah deb!or should obtain permission of the bankruptcy court to con-
1980). The power of the bankruptcy court to consider such issues tinue collection efforts if the chapter 13 plan does not propose to
depends upon the court's interpretation of the phrase "related to" satisfy these claims in lull. The consequences of violating the
contained in 28 USC § 1334(b). automatic slay can be quite serious and such action may be void
The federal court in the district in which a case is pending has regardless of whether the party was aware of the existence of.'.:.>,
exclusive jurisdiction of all property of the debtor wherever stay. BorgWarner Acceptance Corp. v. Hall. 685 F2d 1306 (i' 1
located. 28 USC 5 1334(d). The federal Court similarly has ex- C!r 1982); In re Diefz, Case No. 382.00815 (Bankruptcy D Or
clusive jurisdiction to make determinations 01 nondischargeability 1983). Moreover, a knowing and willful violation of the stay can
actions based on fraud and other intentional conduct of the deb- subject the non-debtor spouse to sanctions for contempt and
tor. See Code §523(c). But the bankruptcy courts have concurrent result in liability for actual damages, including atlorney fees and
jurisdiction with the relevant state courts in making determina. punitive damages. Code 362(h).
lions pursuant to Code § 523(a)(5).This creates an opportunity for
the parties to forum shop in disputes to determine whether debts
are actually in the nature of alimony, maintenance or support.
V. Timing of the Bankruptcy
The possibility of the parties to choose the forum tor litigation A cornmoi ! s u e I r a ! faces a oomesi c relai ons awyer wnen ,I
permits the lawyer to use this as a tool for strategy. The spouse s mown tpal one 0' ootb 0' Ine pert es w nee0 10 t e oandr-plcy
who believes that a former spouse's obligation to pay debts is in s meiner i r e pel t o - sro.. c oe I eo oetore or atler tne reso tio on
the nature of support may be better served by commencing suit in 0' :ie c SsoI-!ion proceeo ngs A re alea q-esl on s whetner tne
state court. A domestic relations judge may be more sympathetic par1 es sno- 3 I e a ,on: oankr-plc, pet: on oelore Ine marl age
to the needs of the spouse seeking a determination 01 non- s o sso bec
dischargeability than would a bankruptcy judge. On the other Tne firs1 q-es: on ndo be8 a oa anc ng 01 r sks The 111 ng 01
hand, the spouse seeking to avoid liability may fare better in the oandrmcy 0 ) Ine ~ a ' l y uno u nave to pay sJpoorl oelore a l r a
bankruptcy court. n !ne o sso J I on proceeo ng may caJse Ira! party to gev slrappeo
A Dartv to a state court action has the riaht to remove it to the A In n p e r s a p o r l oaymen!s 0 Stale coLrt oeca-se 01 tne
oca' teokral co-rl to the extenl 1 tnvo u e s k e s re a1 ng to Ine o scra,ge 01 olner ceo:s On me other nano an ear y I ng w
dvston of oeots ana property 01 tne marl age an0 10 the creale areaier cerla nty tor ootn parties w In respect to wneiler
dischargeability of debts under a decree or settlement agreemen!. tne a s s m p l or 01 cer!ain mar :a 00 igal o m are d schargeab e A
See 28 USC 5 1452; Bankruptcy 9027. However, a former spouse taclcr wnicn may u e gn n favor 01 an ear y oandruplcy f ing s
who would prefer to obtain a ruling on these issues in the state lnal t u avoc :ne pro3 ern 01 i a v ng Ine oomesttc :e atlons cod1
court can request the federal court to abstain from hearing a pro- o d 00 me oeo:s 2elneen me pail es ano nav ng a ater aeterm na.
ceeding under 28 USC § 1334(c) or can request the court 10 re- t 01by emer me oomesi c :e at ons court or a leoera c0t.r: tna:
mand a case that has been removed from Ihe state court under 28 cexa Ioeols are n me nature 01 s-ppor: and Inerelore non.
USC 1452(b). Decisions by federal courts to abstain lrom hear- o scnargeaz e An brre ale0 laclor re.e<an: 10 me t m ng qJesI on
ing an action or to remand a removed action to state court are not s wnetner tne qd da; on va Je 01 non-exempl assets s c ose 10
reviewable by appeal or otherwise. Ine arro-nt 01 rnar la deots ! ' s key tnal one party wi be re.
q- re0 10 pay a oisproporl ona:e snare 01 mar la! oeols that p
u orooao:y man: to f e an ear y oankrmcy to ens-re me p-,.
IV. The Automatic Stay men1 of marita 00 gal on8
The filing of a bankruptcy petition by or against a debtor creates Tne COLP e m 1 rnar la! d I t c.. ties can agree to tile a 10 nl
an automatic stay against the commencement or continuation 01 oanfir-pic) pe: tion a1 any 1 me oetore lheir marr age IS d ssoweo
nearly all actions which could affect the debtor or property owned Co3e 5 3021ai Tnere s no req;iremeni tnal botn spoLses lhve
by the debtor. Code 362(a). Efforts to effect collection Of iogetner a i me I me 01 I ing Tne auractive IealLre 01 a ,o n l I nS
alimony, maintenance or support from property that does not con. 1 cosf sav 10s 11 e im nares an extra S60 f ng les ana m nirntzes
stitute property of the estate are beyond the scope of the Jnnecessary OLP ical ve ega serw ces But before consentng 10
automatic stay. Code §362(b)(2). nano P a 10 nl oandrLpicy 01 a oiuorc ng coLple tne attorney r n s l
Estate property includes virtually all 01 the debtor's assets ex- cons oe. me etntca mp cal ons n/o /eo unen represent ng OOtn
cept future earnings. Code § 541(a). Moreover, it the deblor ob. par1 es
tains protection under chapter 13. even future earnings become
part of the estate and thus subject to the automatic stay. Code
1306. However, it has been held that the automatic stay is not ap-
plicable to a creditor of a chapter 13 debtor whose debt arose The domestic relations practitioner. like the commercial lawyer,
after the filing of the petition if the creditor garnishes the debtor's must consider the effects of bankruptcy in order to adequately
wages after the chapter 13 plan is confirmed by the court. In re represent the interests 01 the client. Tax consequences should not
Mason. Case No. 381-04180. Adversary No. 84-0284 (Bank D Or alone dictate the terms of out-of.court settlements. The parties'
1984). financial condition oftentimes changes drastically over the course
A non-debtor spouse therefore can enforce support and 01 the dissolution process. A spouse's obligation to pay debts is
alimony obligations that arise postpetition out of property acquired dischargeable in bankruptcy unless either'it is for attorney fees in
by the debtor spouse after the filing of the petition. A non-debtor connection with the dissolution or the debts are secured by
spouse can also seek satisfaction of pre-petition debts owed by a necessities such as home, furniture or an automobile5. To the ex-
chapter 7 debtor that are nondischargeable pursuant to Code § lent possible, the relative rights of the parties to the marriage
523 out of property acquired by the debtor spouse after the filing should be spelled out clearly under the governing court decree or
ot the petition. However, a non-debtor spouse probably is not en. settlement agreement. Although the court has the power to look
titled to enforce nondischargeable prepelition debts against a beyond the face of the decree, the characterization of the obliga.
debtor in a case under chapter 11 or chapter 13 if a confirmed lion as support will be given weight by the court. If questions exist
plan proposes payment in full. concerning the dischargeability of certain obligations arising pur.
All doubts regarding the applicability of the automatic stay or want to a court decree or settlement agreement, the Y ' - ' ' <
the nondischargeabilily of debts should be resolved judicially by informed lawyer will use the option to have the matter heal. : ,
filing a motion in the bankruptcy court. See Code § 362(d); state or federal court to the client's advantage. All doubts
Bankruptcy Rule 4001. For example, a non-debtor spouse with concerning the applicability of the automatic stay should be
nondischargeable prepetition support claims against a chapter 13 resolved by filing a motion in the bankruptcy court before taking
any action to collect from the debtor spouse. The unpleasant con. the Uniform Act which would have allowed the presumption to be
sequences of bankruptcy are inescapable, but the well- overcome by blood tests showing that the husband could not have
represented party will have few surprises. been the father.
The Court held that the trial court had properly determined that
iless noted otherwise. all citations reler to the Bankruplcy Reform Act wife, as the party seeking to defeat application of the presumption.
01 1978, as amended. which is codilied in title 11 of Ihe United States Code had the burden of persuasion on the issue of cohabitation. and
("The Code"). that wife had not met that burden.
*For a more detailed comparison of the eflect 01 discharge under Ihe dil- Procedure and Appeal
ferent chapters of the Code. reference is made to Code 3s 727(b). ll 4 i ( d )
and 1328 McManus and McManus,-Or App-(Dec‘d. January29.
1986). The Court of Appeals dismissed, for lack of jurisdiction, a
'Prior to the enactrnenl of the Bankruptcy Arnendmenls and Federal motion to stay that portion 01 a dissolution decree granting
Judgeship Acl 01 1984. Ihe lerms 01 which became generally effective on custody of a minor child to husband, pending appeal of the
October 8. 1984, there was a serious question whether paternity awards custody determination by wife. Wife had had temporary custody of
and awards in connection with an annulment proceeding were within Ihe
scope 01 Code 5 523(a)(5).See In re Richards,33 BR 56 (Bankr D Or 1983); the child during the dissolution proceeding.
In re Fensfermacher. 31 BR 77 (Bankr D Neb 1983). The slatule prior to The Court disavowed dictum in Niedert v. Niedert. 28 Or App
the effective date of the new law referred only lo separation agreements. 309 (1977) which wile cited as supporting the Court's jurisdiction.
divorce decrees and DroDertv Settlement aareements. The 1984 amend-
The Court reasoned that the trial c0urt.s denial of wife's motion lor
ments added a provision designed to inclide all Court ordered support a stay was equivalent to a denial of a lemporary custody order.
within the scope 01 Code 5 523(a)(5). ORS 107.105(4) provides that no appeal lies from a temporary
custody order pending an appeal; therefore. said lhe Court. no ap-
'The nowdebtor Spouse is not entitled to an award 01 attorney lees in. peal can lie from the denial of such an order (or its equivalent).
curred in bringing or delending nondischargeability aclions because such
actions arise under federai law. In re Black. Case No. 381-02202. Adver. Juvenile Law
Sary No. 81.0560 (Bankr D Or, Feb 3, 1982): compare In re Johnson 13
BCD 431 (9th Cir 1985). Stale ex re1 Juv. Depl. v. S.C.G.. - Or App __ (Dec'd.
February 5. 1986). A finding that the Juvenile Court had jurisdic.
%ee In Re Sanfa Maria. Case No. 683-08224. Adversary No. 684-6005 lion over a 13-year.old boy was reversed by the Court of Appeals.
(Bank D Or. Jan 23. 1986). This ruie may be slighlly exllanded under this Statements made to a CSD worker and a police officer by the boy
case in which the Court examined Ihe parties' relalive ability to pay al. while being questioned about his alleged sexual misconduct with
lorney fees. another minor child were held to be involuntary and inadmissible.
Reviewing de novo. the Court noted that the boy had at first
denied involvement and expressed fears of being removed from
Summary of Selected State his home, that both the CSD worker and the police olficer had
assured him that that was not being considered and that he would
Appellate Decisions merely be put into a treatment program. The Court found that
these assurances amounted to implied promises of leniency and
Custody that they had induced the child to make incriminating admissions
as to his conduct.
Gribkofl v. Bedford. 76 Or App 695. The Uniform Child Custody
Jurisdiction Act (UCCJA). ORS 109.700.109.930. was held to have U.S. Supreme Court Proceedings
been correctly applied to this guardianship action. because a p
On December 9. 1985. the Supreme Court noted probable
pointment of a guardian would have significantly affected
custodial rights. jurisdiction in the case of Reed v. Campbell, No. 85-755. In the
Maternal grandparents, residing in Oregon, sought to be ap- ruling below, the Texas Court 01 Appeals. 8th Dist., held that
pointed guardians of their minor granddaughter. The child's daughter, born out of wedlock, was not entitled to inherit from her
father, who died intestate, because father had not acknowledged
parents had separated a year after the child's birth. but had not
paternity in any manner provided for by Texas statute (682 SW2d
dissolved their marriage or obtained a custody determination. For
approximately six years, the child was shuttled back and forth be- 697).
tween Oregon and California. alternately cared for by her mother, Questions presented: (1) Should daughter benefit from Trimble
her maternal grandparents. and her paternal grandparents.
v. Gordon under test of Chevron v. Huson? (2) Should daughter be
denied benefit of Trimble v. Gordon under "date.of-filing" test a p
The trial court determined that it had jurisdiction under ORS
plied by court below? (3) Should retroactivity of Trimble v. Gordon
109.730(1)(b) because there was a significant connection with
Oregon. It decided, however, that jurisdiction should not be be determined by whether claim was filed in open estate or as COIL
assumed because Oregon was an inconvenient forum: California lateral attack on closed estate? (4) Does Fourteenth Amendment
require opportunity for daughter to legitimate herself equivalent to
was the child's home state and had a closer connection with the
statutory procedures arbitrarily denied daughter? (5) Where
child and her family (both her parents and her palernal grand-
parents resided in California). The Court of Appeals agreed and af- maternal heirship requires oniy preponderance of evidence, while
firmed. paternal heirship is not allowed, is distinction permissible? (6) Was
denial of daughter's heirship from father justified in light of jury's
Hodge and Hodge. - Or App -(Dec'd. February 5, unchallenged finding of paternity and convincing proof at trial?
1986). An award of custody to husband as primary parent was af. In another case involving paternity, the Supreme Court denied
firmed by the Court 01 Appeals in spite of wife's contention that certiorari for want of a substantial federal question: Michelle
blood tests showed husband nor to be the child's biological father. Marie W. v. Riley, No. 85-749. The California Supreme Court had
The Court found that husband met the requirements of ORS held that a California statute declaring as a conclusive presump-
-79.070(1) which establishes a conclusive presumption that a tion that the issue of a wife cohabiting with her husband is a child
,hd is husband's child il husband and wife were cohabitating at of the marriage did not violate the due process or equal protection
the time of conception and if husband was not impotent or sterile. rights of either the putative father or the child, under either the
Examining the legislative history of the statute, the Court pointed California or federal constitutions. Michelle W. v. Ronald W., 39
out that when the legislature adopted parts of the Uniform Act on Cal 3d 354, 703 P2d 88. Justices White and Stevens would have
Blood Tests to Determine Paternity. it did not adopt a provision 01 noted probable jurisdiction.
Ihe inability 10 afford childcare 11 you CannOl allord lhis cale. Dlease call
Section News us We hope lo Se able lo assis! some low-income members
.MEALS AND SNACKS- Children will have meat and
Annual Meeting to be vegetarian choices. Breaktast will include hot/cold whole grqin
Held a t Rippling River cereals, scrambled eggs, fresh fruit. muffins. Lunches v ' 11.
whole grain sandwiches (tuna, peanut butter). hot soup. ( , d h
The annual meeting and spring conlinuing legal education con. fruit. honey cakes. Dinner will include chicken or meat loaf. fresh
ference of the Family and Juvenile Law Section will be held on Fri. vegies. potatoes. and lruit. Milk and natural juices.
day, May 9th and Saturday. May 10th at the Rippling River Resort Snacks will include natural juices. milk. vegie and fruit crun-
in Welches. Brochures containing registration lorms will be sent to chies, nuts. and honey cookies,
section members. Staff will accommodate any special food. formula. or dietary
At present, the following topics and speakers are planned: Joint needs 01 children, inlants.
Custody-a panel discussion (panel members so far are Maureen .Activities-Activities will be specially planned in advance
McKnighl, Anita Paulson, and Ron Johnston): The State of the depending upon age group 01 children attending.
Family in Oregon-Hon. Alvin W. Norblad: How to Plan lor or Among those activities envisioned:
Avoid Bankruptcy-Hon. Elizabelh Perris: Appellate Court Update Outdoor lield trips. Nature walks, plant gathering. Rippling
-Hon. George Van Hoomison: Practice Tips for Support En- River shuttle to the mountain (licensed. insured. salety.bettedl.
forcement- Blake Ramsey: Avoiding Malpractice-Linda Peter. Swimming. Patio games.
son, PLF; How to Streamline Your Practice and Make Money- Indoor activities. 16mm films lor children. Storytelling. Cralts
Scott McArthur: and Dealing With the Mentally 111 Client. (including cutting. pasting. collage making, coloring. nOn-StOve
Reservations for accommodations must be made by calling Rip- cooking). Music making, playacting. Polaroid picture-taking.
pling River Resorl a l 1-800-452.4612. Please identify yourself as lace-painting.) Educational (flash cards. Speak 'N Spell. Speak 'N
an Oregon Slate Bar member and conference attendee before re. Math. Leg0 building. board games. doll-playing.]
questing a reservation. The following rates will apply: Ail toys and malerials wili be provided. Staff will walch out lor
Deluxe double-$54 (0ccup:Z) Deluxe king-$68 ( O C C U ~ : ~ ) sDecial tovsldolls il children want l o bring them.
Deluxe queen-$59 (occup.2) 3 bedroom-$128 (OCCUP:~) If you have any questionslsuggeslions be sure to call or writel
In addilion to the above prices, there is a 6 % county room tax Then, SIGN UP1
on all lodging. Reservations are first come first serve. Please lill in the reservation form included in this newsletter.
Be sure to plan lor the banquet at 7 p.m. on Friday night. attach your check. and send it in. We will send you the IN-DETAIL
inlormation packet and forms lor you to lit1 out about your child.
Childcare Katherine English
For the first time ever, a section of the Oregon State Bar is go- Committees Address Section Concerns
ing to try to ofler quality childcare lor the lamilies 01 conference The Family and Juvenile Law Section Executive Committee met
goers. on January 31, 1986 at the office of William Crothers in Salem.
We have no idea how many bar members could or would use
childcare. But i f there are enough 01 you, then we want to be able
A report lrom the Oregon Slate Bar Committee on UC,
State Laws on the question 01 adoption 01 the Uniform Maritai r r o -
to plan and provide lor your kids well.in.advance 01 the con. perty Act was presented. The Committee on Uniform State Laws
ference. While drop-in care would be ideal someday, we think our has recommended against ap?rovaloI the UMPA. The same COm-
best chance at success initially is to plan reserved childcare. so mittee is studying the Uniform Guardianship and Protected Pro.
that facilities. stall, activities and meals are in place and waiting ceedings Act, but as yet has taken no position on it.
for you and the kids when you arrive at Rippling River. The Joint Custody study committee headed by Maureen
So, as our first big step into the business. we are asking you lo McKnight expects to have a report ready by the May Conlerence
think about it now. talk it over. and make a commillment in ad. on the status of their study.
vance. Once we know how many children. and who. and what The subcommitlee on Uniform Trial Court Rules is soliciting In.
ages, are allending- we'll do the rest. put from attorneys regarding proposed changes to the Rules. as
*Kiddie Condo-We are renting a large, 5-bedroom condo which well as to revision 01 the Uniform Support Allidavit and develop-
will be used exclusively as the childcare facility. All meals and ment of a uniform form lor proposed distribution 01 assets and
snacks will be prepared in the full-kitchen. There is an outdoor liabilities for use at lrial. (See article below.)
patio and close proximity to the kiddie pool. All on onelevel. no The Bylaws subcommittee plans to present proposals at the
stairs. Separate rooms will be used for naps. cralts, films. Nature May conlerence for amendments to the Bylaws in the areas of of-
trips. field trips will take off from here. Facility is short-drive, ficers and executive committee members, length of terms. and
longish walk from actual conference rooms. elections and nominations.
*Staff-Staff:child ratio. 1:3. Staff:infant ratio, 1 :2. Staff will be It was brought to the Committee's attention that the House and
professional daycareprovider adults assisted by lhree experi. Senate Judiciary Committee of the Oregon Legislature. Family
enced daycare aides each. Names. qualifications. and and Juvenile Law Legislative Subcommittee. is looking into a
references 01 stafl will be provided to parents in advance. Cer- revitalization of Senate Bill 531 (1985) on conlempt that was u n .
tified lifesaver with swimming children at all times. Staff will be successful in the last session.
paid minimum wage +
*TimeslCost- Proposals Sought for Changes
FRIDAY BLOCK. NOON-5:00 P.M.. first child $10.00 (each addi. in Uniform Trial Court Rules
tional child, $5). LUNCH $2.00 extra The Uniform Trial Court Rules Subcommittee of the Executive
FRIDAY EVENING KIDDIE CONDO, 5:OO P.M.-BEDTIME. first Committee of the Family and Juvenile Law Section will present lo
child $2.00/hr. (each additional child $l/hr.), DINNER $2.00 extra Judge Laurie Smith, as requested at Ihe November conference,
FRIDAY EVENING, Your Unit. 5:OO P . M ~ ON. first child $2.00lhi, proposals for changes in the Uniform Trial Court Rules and in the
(each additional child $l/hr.) sample forms attendant to the Rules. .' >
SATURDAY BLOCK, 7:OO A.M.-NOON. first chlld $10.00 (each We would like to be prepared lo submit these proposalsel .
additional child $5/hr.). BREAKFAST $2.00 exlra. LUNCH $2.00 entire membership for its approval at the May COnferenCe.
extra We are, therelore, soliciting recommendations lor changes in
'We do no1 wan1 anyone to be precluded lrom Ihis conlerence because 01 the rules and forms from the membership as a whole.
Please submit any suggestions which you may have to the Ex- “Changing Circumstances, Changing Agreements,” by
ecutive Committee, care of Michael Yates, Suite 808. 1515 S.W. Scott Bassett. How different jurisdictions apply standards for
F.’‘Ave., Portland, OR 97201, by March 21, 1986. modification of alimony, including whether they allow modification
based on adjustments for inflation and how they treat agreements
In particular, we ask you to review the rules in Chapter 8 between parties to prohibit modification.
(Domestic Relations) and Chapter 11 (Juvenile Court proceedings) “Maintenance Clauses end Modlfiabllity,” by Roger P.
and make suggested changes to those rules and any or all forms. Krumm. Forms of clauses (drafted in accordance with Missouri
In addition, it would be helpful if you would review other chapters law) for modifiable alimony. automatic modifiers tied to Consumer
which relate to our Family and Juvenile Law practice (including Price Index or wife’s income, contractual Deriodic alimony and
Chapters 1, 2 , 3, 5, 6, and 9) and make recommended changes nonmodifiable alimony.
there as well. “The HardshlDs of Reform.” bv Joanne Schulman, is a review
As all of us know by now, some of these rules are impracticable of Weitzman. The Divorce Revolution. which sets out Weitzman’s
for our particular practice in Multnomah County. In addition, the statistics and conclusions as to the gender.related economic i n e
forms could be improved, in the opinion of some members. This is quities resulting from California’s no-fault divorce law reform (e.g.,
our opportunity to present a clear and concise recommendation women and their children suffered a 7 4 % drop in their standard of
for a change to Judge Smith as she has invited, and welcomes. living after divorce, while their ex-husbands enjoyed a 42% in.
these proposals. Please forward any suggestions which you have crease). The reviewer points out that nmfault reform was designed
to us. We will review and incorporate them into our subcommittee to reduce the acrimony and hostility of the fault system and
proposal and will present them to the membership for its full ap- replace it with a less adversarial process. She warns that newer.
proval at the May conference. similarly intentioned reforms, such as mediation, need to be close.
ly scrutinized for their economic impact on women and children.
Kafherine English “Grappling with Alimony: What the Courts Have to Say,” by
Executive Committee Max A. Goodman. A survey of issues that have arisen in recent
support cases, including the effect of fault on spousal support:
Articles and Publications equitable distribution when a professional degree is involved; need
vs. ability to pay; depressed earnings (intentional income reduc-
of Interest tion); duration of support; modification; and nonmonetary support
Family Advocate, Vol. 8. No. 3 (Winter. 1986) is devoted to
Alimony and Maintenance: Children’s Legal Rights Journal, Vol. 6. No. 3 (Summer, 1985):
“The Widenina Door of Alimonv“ bv Linda D. Elrod. describes “Consent issues in lntercountry Adoption,” by Cynthia J.
the different categories of alimony hermanent. rehabiliiative. etc.) Bell, outlines documentation necessary to establish the adoptable
and oives examdes of wavs that a creative lawver can use status of a foreign-born child for purposes of the laws of the child’s
.‘-pony to draft a fair settlement. homeland, the U.S. Immigration and Nationality Act, and the adop.
‘Gettina SuDDort: The Traditional Route.“ bv Kathleen H. tion law of the child’s proposed residence. Because of the
casey. The aut‘hbr cites statistics from Wietzman: The Divorce numbers of prospective adoptive parents who are conducting
Revolution (see December, 1985 FJLN) in support of her proposi. their own unsophisticated legal and immigration work in “direct”
lion that limited alimony awards are insufficient, in most cases, to adoptions from foreign countries, the author fears that the adop.
keep divorcing wives out of poverty. She advises attorneys table status of foreign-born children is at greater risk than that of
representing wives to have their clients prepare written life plans nativeborn children, and suggests reforms are needed on the part
to support their claims for permanent alimony. of state courts and the Immigration and Naturalization Service.
“Getting Support: The Untraditional Route,” by Timothy H. “Child Welfare: A Contempt Power of Family Court Used to
Esser, explores methods of compensating a spouse, most often Incarcerate Chronic Status Offenders,” by Alita M. Pillick. ad-
the wife, who, after financing her spouse’s education. is divorced dresses the problem of repeated violation by status offenders of
at the end of the educational process. (Since she is capable of court orders placing them in non-secure facilities. A South
self-support she is not a candidate for alimony from a traditional Carolina case in which a family court’s contempt power was ex.
view.) tended to incarcerate a chronic runaway in a secure facility
“How to Represent the Husband Agalnst the Unemployed (despite explicit statutory language prohibiting detention of status
‘Disabled’ Wlfe,” by Chris F. Gillotti. deals with cross- offenders) is contrasted with decisions from other jurisdictions
examination of a wife who seeks alimony on the basis of medical which reject the use of this “bootstrapping’’ procedure. A possible
disability. legislative solution to the problem is discussed in light of amend.
“Some Obligations Are More Taxing than Others,” by ments to the Juvenile Justice and Delinquency Act.
Patrick B. Mathis. Qualifying alimony or separate maintenance
oavments as tax-deductible under the Domestic Relations Tax
- , Family Law Quarterly. VoI. XIX, No. 3 (Fall, 1985):
Reform Act of 1984. “Artificial Conception: Legislative Approaches,” by Harry
“Alimonv and BankruDtcv: A Delicate Balance.” bv Richard D. Krause. Taking a pragmatic, rather than a moral or
Mednick. &presenting t i e iondebtor spouse when tLe spouse philosophical approach to the question of the role of legislation in
owing alimony has filed for bankruptcy. the area of artificial conception, the author asserts that safeguar-
“The Enforcement Struggle: What l o Do When A Spouse ding the chiid’s best interests should be th? overriding concern.
Falls to Pay,” by Ellen J. Effron. Methodsfor dealing with nonpay- He sees the need for legal regulation as varying with the technique
ment upon default, including contempt proceedings, garnishment, used, in proportion to the amount of uncertainty regarding the
wage assignment, income withholding. and new state statutes im. child’s legal status which results from the use of that particular
plementing the Federal Child Support Amendments of 1984 which technique. The following methods are thus analyzed: artificial in.
aDply to spouses. semination by the husband, in vitro fertilization with husband’s
)’The Enforcement Struggle: How to Structure Payment sperm, artificial insemination by a donor, egg donation and em-
,greements,” by Richard J. Keidel. Minimizing post-divorce en- bryo transfer, and surrogate motherhood.
forcement battles by obtaining security in the form of pledges, “Expert Wltnesses In Child Custody Cases,” by Reginald H
deposits, mortgages, liens, life insurance, personal guaranties, Hirsch. Basic tenets of law regarding expert testimony and
performance bonds, security accounts, trust, annuities or zero preparation of expert witnesses (limited to medical doctors,
coupon bonds. psychiatrists and psychologists) in child custody cases. Originally
OREGON STATE BAR
Section on Family and Juvenile Law
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1776 S.W. Madison Street U S POSTAGE
Portland, Oregon 97205 PAID ->
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written in 1978. this article has been revised to take into account need for protection for statements made during negotiations and
the adoption by many states of the Federal Rules of Evidence, and mediation so that they may not be used against a party in subse-
by the American Psychiatric Association of the Diagnostic and quent litigation.
Statistical Manual of Mental Disorders (DSM-Ill).
"Due Process and Determination o Parental Rights," by
f Family Law Reporter, BNA, Vol. 12. No. 6 (December 10, lY85)
Susan B. Hershkowitz. discusses sources of state intervention in contains a Monograph, "The Uniform Marital Property Act: New
family autonomy and constitutional limitations upon it. It criticizes Concepts for Dlvorce Lawyers," by James J. Podell. This
U.S. Supreme Court decisions, Lassiter v. Depf. of Social Services monograph focuses mainly on the impact on Wisconsin family law
and Santosky v. Krarner. The author feels that federal intervention of the adoption by that state of a version of the Uniform Marital
in the parent-child relationship is undesirable and will prolong Property Act (UMPA). The UMPA, approved by the National Con-
resolution of child custody cases. ference of Commissioners on Uniform State Laws on July 23.
"The Taxatlon of Below.Market and interest.Free Family 1983. embodies many principles of community property law.
Loans: A Leglsiative and Judlclal History," by Clifford E. Hutton although the National Conference of Commissioners denies that it
and Michael J. Tucker, traces the demise of the interest-free loan is a community property statute. (The Wisconsin legislature,
from parents to children, formerly one of the most popular means however, expressly stated in its statute its intent that marital pro-
of lowering family taxes. perty is a form of community property.)
"New Jersey v. TLO: 01 Chlldren and Smokescreens,'' by The monograph also contains a summary of principal provisions
Irene Meeker Rosenberg. The U.S. Supreme Court's decision is of the UMPA and the status of UMPA bills recently introduced in
seen by Professor Rosenberg as part of a trend toward contrac- the state legislatures. (See Section News for the status of UMPA in
ting the scope of constitutional protection for children and Oregon.)
creating precedent for similar curtailment of the rights of adults.
Calendar of Upcoming Events
Problem Solvlng Through Mediatlon, ABA Special Committee Aprll 4.5, 1986. Second national Conference on Child Support
on Dispute Resolution. This is one of two books on mediation Practice, Queen Mary Hotel, Long Beach, California. Sponsored
recently made available in the Multnomah County Courthouse Law by ABA Young Lawyers Division National Legal Resource Center
Library. It is a compendium of the proceedings of a conference For Child Advocacy and Protection. and the Family Law Section.
held in December, 1983, with chapters entitled: "Mediation in the Will cover new child support legislation. tax and bankruptcy mat-
'80s: Where Are We Headed?"; "Problem Solving Through Media ters related to support, collection techniques. etc. Contact: Child
tion"; "The Community Board Concept"; "Relationship of Media- Support Project, ABA. 1800 M Street, N.W., Suite 5-200,
tion to the Justice System"; and "Meeting the Continuing Educa- Washington. D.C. 20036. Attention: Joyce Moore.
tion Needs of Mediators: Resources for the Future." (Neither of
these books is limited solely to domestic relations mediation.) May 9.10, 1988, Family and Juvenile Law Section Spring CLE.
Confldentlality In Medlatlon: A Practltloner's Guide, ABA ij
Alternative Dispute Resolution Committee. Young Lawyers Divi- Your input is needed in order to keep this Newsletter current
sion. The second of the books in Multnomah County Law Library and accurate. Please send ideas lor future articles or other
mentioned above, this is a compilation of articles, sample program improvements to: Family and Juvenile Law Section Newslet.
policies, legal opinions, briefs, motions and orders dealing with the ter, 18445 E. Burnside, Portland, Oregon 97233.