Can a civil contempt citation in a Virginia divorce case convert into a criminal contempt citation not protected by the automatic stay in bankruptcy?
In In re Rook, 102 B.R. 490 (Bankr. E.D.Va. 1989), the husband filed for a permanent injunction in bankruptcy court staying two contempt order issued in his Virginia Circuit Court divorce case. The first contempt order, entered in 1983, suspended a jail sentence provided the husband made all payments required under the parties’ separation agreement or property settlement agreement, but preserved husband’s right to a hearing on the validity of the agreement. Husband contended that the separation agreement was invalid and unenforceable as void against public policy. The divorce court agreed with husband and wife appealed. The Supreme Court of Virginia agreed with wife and upheld the validity of the property settlement agreement, remanding the case to the Circuit Court. Rook v. Rook, 233 Va. 92, 353 S.E.2d 756 (1987). Husband filed chapter 7 bankruptcy. In 1989, the Circuit Court judge entered the second contempt order, finding that husband had continued to be in contempt of the 1983 order and ruling that husband was not protected from this later contempt by the automatic stay in bankruptcy.
The bankruptcy judge recognized that the purpose of the automatic stay is to protect the relative positions of creditors and shield the debtor from financial pressure during the pendency of a bankruptcy proceeding. Furthermore, the judge recognized that in “the realm of domestic relations litigation, matters which do not bear on a debtor’s economic status, such as the dissolution of the marital relationship, are not stayed by a bankruptcy court…”, while “[m]atters which involve the distribution of marital assets are perforce subject to the automatic stay.’’ Rook at 492. (Section 362 of the Bankruptcy Code has since been amended to reflect this distinction.) Consequently, the court first ruled that the portions of the 1989 order addressing the funds or property of the debtor’s estate were void as obtained in violation of the automatic stay, regardless of the divorce court judge’s knowledge of the bankruptcy filing.
Regarding the citations for contempt, the judge recognized three lines of authority: first, that proceedings excepted from the automatic stay must be criminal in nature; second, that the circumstances surrounding the issuance of the order of contempt must be examined to determine whether the intent of the court was to satisfy a judgment or simply to punish; and third, a line upholding the dignity of the issuing court – that the divorce court must retain the ability to compel compliance with its orders. In this case, the judge adopted the analysis of the courts which examine all aspects surrounding the issuance of a contempt order. Here, the 1983 contempt order was designed to exact payment of debts from the debtor and the automatic stay would apply to prevent the “coerced dilution of the estate.” Rook at 494. The automatic stay did not, however, apply to the second 1989 order, which punished the debtor and was designed to uphold the dignity of the prior circuit court orders. The debtor’s opportunity to purge himself of contempt had expired and the civil and remedial contempt order thereby converted to a criminal and punitive contempt order, one not protected by the bankruptcy filing.
You should consult with your bankruptcy or divorce lawyer regarding the applicability of the automatic stay to a contempt proceeding in a Virginia divorce case.