Is an award of lump sum spousal support to compensate wife for husband’s bankruptcy an abuse of the trial court’s discretion?
Yes, in the case of Mosley v. Mosley, 19 Va. App. 192, 450 S.E.2d 161 (1994) , where the Virginia Court of Appeals reversed the trial court’s award of lump sum spousal support due to the consequences of husband’s bankruptcy proceeding.
In Mosely, the husband and wife were married for twenty years before separating. After a year of separation, the wife filed for a no fault divorce. The husband responded with an answer and cross-bill for divorce based on adultery. The wife filed a demurrer to the husband’s cross-bill. The following year, while the divorce case was pending, the husband filed a chapter 7 bankruptcy case and received a discharge. The divorce case was subsequently tried and two months after the husband’s bankruptcy discharge, the trial court issued it letter opinion, awarding wife a no-fault divorce, one-half of the husband’s military pension, and lump sum spousal support in the amount of $29,330. The husband filed a motion to rehear the spousal support award and the equitable distribution decision.
In making his award of lump sum spousal support, the divorce court judge stated that the award was to compensate wife for husband’s use of the marital residence on which he did not make mortgage payments, for one-half the debt to the credit union, and for one-half of the secured and unsecured marital debt, debt the husband had discharged in his bankruptcy case. After a rehearing, the court issued a final decree of divorce three months later based on its letter opinion. The husband appealed on three grounds: (1) that he was not permitted enough time to present evidence relevant to equitable distribution; (2) that trial court erred in awarding the lump sum award of spousal support, which lacked sufficient supporting evidence; and (3) that the trial court erred in awarding half his military pension, instead of half of the marital share.
With regard to the husband’s first issue, the Virginia Court of Appeals recognized that the trial court’s equitable distribution duties under Virginia Code § 20-107.3 to determine legal title, ownership and value of all property did not require the court to classify or value every item of property, where the parties were given a reasonable opportunity to provide the necessary evidence but failed to do so due to a lack of diligence, citing Bowers v. Bowers, 4 Va. App. 610, 359 S.E. 2d 546 (1987). While the parties must be given a reasonable opportunity to develop and present evidence for equitable distribution, and the court cannot reject evidence simply because better evidence might exist, the court can refuse to accept additional evidence by one of the parties, particularly when the court set an additional deadline for the parties, as did the trial court judge in Mosley.
Next, the Virginia Court of Appeals reversed the trial court’s decision awarding lump sum alimony to compensate wife for the husband’s bankruptcy filing. The court first recognized that a spouse may not discharge a spousal support obligation under 11 U.S.C. 523(a)(5) . However, a court is not required to accept the characterization of a particular award as “spousal support or maintenance”, when such an award may not actually be in the nature of alimony or support. Carter v. Carter, 18 Va. App. 787, 447 S.E.2d 522 (1994). [The analysis of whether a claim is “in the nature of alimony or support” remains relevant, even after the enactment of the Bankruptcy Abuse Prevention and Consumer Protection Act in October 2005, due to the four-part definition of a “Domestic Support Obligation” in 11 U.S.C. 101(14A)].
In analyzing a spousal support award, the appellate court noted that the critical issue is the purpose of the award. In this case, the trial court stated that the lump sum spousal support award was to compensate wife for the consequences of the husband’s bankruptcy filing and the discharge of his share of the marital debts. Further, although the trial court has the authority to make a lump sum award of spousal support under Virginia Code § 20-107.1, there was no evidence supporting the husband’s ability to make the lump sum support awarded by the judge. The appellate court recognized that a lump sum spousal support payment may be appropriate in special circumstances or for compelling reasons, citing Blank v. Blank, 10 Va. App. 1, 389 S.E.2d 723 (1990) . However, in this case, the trial court judge failed to consider the relative needs and abilities of the parties when fashioning the award, as required under Collier v. Collier, 2 Va. App. 125, 341 S.E.2d 827 (1986), and Virginia Code § 20-107.1, specifically the earning capacity of the husband. The lump sum spousal support award was reversed as an abuse of the trial court’s discretion.
Finally, the Virginia Court of Appeals reversed the trial court’s award of fifty percent of the husband’s military pension, which exceeded its statutory authority to award up to fifty percent of the “marital share” of the pension, under Virginia Code § 20-107.3(G)(1).
You should discuss with your Virginia bankruptcy and divorce attorney or Richmond divorce lawyer James H. Wilson, Jr. , how a bankruptcy might affect your rights and duties in a divorce case.