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In re Kiley

Supreme Court of Utah

August 14, 2018

In re Deborah Michelle Kiley
v.
Mary M. Hunt, Trustee, Appellee. Deborah Michelle Kiley, Appellant and Debtor,

          On Certification from the United States Bankruptcy Court for the District of Utah The Honorable Judge Kevin R. Anderson Case No. 15-27838

          Matt Wadsworth, Salt Lake City, for appellant.

          Peggy Hunt, Michael F. Thomson, Megan K. Baker, Salt Lake City, for appellee.

          Justice Pearce authored the opinion of the Court in which Associate Chief Justice Lee, Justice Himonas, Justice Petersen, and Judge Hagen joined.

          Having recused himself, Chief Justice Durrant did not participate herein; Court of Appeals Judge Diana Hagen sat.

          OPINION

          Pearce, Justice.

         INTRODUCTION

         ¶ 1 The bankruptcy court certified two questions of Utah law that lie at the intersection of family and bankruptcy law. Based upon a compelling certification order, we accepted the invitation to resolve those questions. After receiving briefing and conducting oral argument, we are left with dual concerns-that the parties have not given us the briefing we need to actually answer the questions and that our opinion might ultimately be for naught. At oral argument, Kiley's counsel admitted the deficiencies in the briefing. And the bankruptcy trustee suggested that the marital property division at the heart of this case may have violated the automatic stay that accompanies a bankruptcy petition's filing. Because of the inadequate briefing and the problematic procedural posture, we revoke certification.

         BACKGROUND

         ¶ 2 In 2012, Deborah Kiley filed for divorce from Jarod Marrott. The district court entered temporary orders and bifurcated the proceeding; that is, the district court granted the divorce but deferred resolution of other questions, including the division of marital assets. About a year later, after Marrott had fallen behind on alimony and child support payments, Kiley filed a motion to show cause and a motion to clarify. Kiley sought to enforce the temporary orders and to recover unpaid child support and alimony.

         ¶ 3 The district court granted the motions and entered judgment for $121, 188.22. Two months later, Kiley and Marrott participated in mediation and stipulated to a property settlement. The parties then, according to Kiley, read the stipulation into the record before the domestic relations commissioner. As part of that stipulation, and to satisfy the judgment for unpaid child support and alimony, Kiley received "all of the value in any and all of her former spouse's retirement accounts . . . ."

         ¶ 4 The day after mediation, Kiley petitioned for bankruptcy. About a month after that, the district court entered a supplemental decree reifying the settlement the parties had placed on the record. A couple months later, the district court entered the qualified domestic relations order (QDRO)-the document that would permit Kiley to access Marrott's retirement funds.

         ¶ 5 Kiley did not list the retirement plan proceeds on her initial bankruptcy disclosures. At a meeting with her creditors-a meeting that took place before the district court entered the order memorializing the stipulated property division-Kiley disclosed her interest in the retirement funds. A few months later, after the QDRO was entered, Kiley filed an amended schedule that included the retirement funds.

         ¶ 6 But Kiley claimed the retirement funds were exempt from the bankruptcy estate under Utah Code section 78B-5-505(1)(a)(xiv).[1]The trustee argued that the exemption was inapplicable because, among other reasons, Kiley was entitled to the value of the retirement funds, not the funds themselves. About a month later, Kiley filed another amended schedule and claimed that the retirement funds were exempt under Utah Code section 78B-5-505(1)(a)(xv).[2] The trustee asserted that this exemption was not available to Kiley either.

         ¶ 7 Against this backdrop, the bankruptcy court certified two questions to us:

1. What is the nature and scope of a party's interest in marital property as of the filing of a divorce complaint-contrasted with the nature and scope of such interest upon the entry of a divorce decree allocating such marital property? Stated differently, upon the filing for divorce, is a spouse's interest in marital property merely contingent, unliquidated, and inchoate until the entry of a ...

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