In Re Werthen

329 F.3d 269 (2003)

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Nature of the Case

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Facts

H and W were married in 1982 and separated in 1995, when W filed for divorce. W was the primary caretaker of the home and the couple's four children. H was the primary earner, working full time at Whitman Tool & Die Co., his family's business in which he held a considerable equity interest. The Family Court issued an initial divorce decree. H had drinking problems, and physically abused W and the children during the marriage. H frustrated W's efforts to obtain a college degree and a measure of financial independence while strictly limiting her allowance. H and other family members engaged in obfuscatory tactics aiming to diminish the award against him. H and W were a 'middle-to-high income family.' W's ability to work was affected by a back injury and limited by her curtailed education; that H's past income and the value of his family-company stock were large. H had understated income and value to decrease the award. The state court found: 'Any which way H could avoid his financial obligations to his wife and children, obfuscate his financial condition, and shrink the marital pool of assets, he tried with all his might.' Under the title of 'Property Division,' the state court awarded W (1) $ 222,000, representing 60 percent of the gross bonuses received in the years 1996-99, reduced to $ 124,485.84 by amounts in savings accounts already awarded W (the 'past bonus award'); and (2) $ 611,163.20, representing W's 40 percent marital share of H's 22 percent equity interest in Whitman (the 'stock award'). The court structured H's payment schedule as yearly installments of $50,000 for nine years beginning in 2000, with the remaining balance due in two separate payments in the tenth and the eleventh years (plus interest on unpaid balances). Less than 90 days after the final judgment, H filed a voluntary petition for chapter 7 bankruptcy. W sought a ruling that the past bonus and stock awards were not subject to discharge based on the above-quoted paragraph (5) of subsection 523(a), which prevents discharge of obligations for alimony or support. The bankruptcy court held that both the bonus and stock awards were nondischargeable under paragraph (5). The court treated the issue as one turning on the intent of, but not necessarily the label employed by, the state court judge in making the awards. On appeal, the BAP affirmed. H appealed.