Sunday, December 8, 2013

In re Werthen case brief

In re Werthen case brief summary
329 F.3d 269 (2003)

Appellant debtor-husband appealed the decision of the United States Bankruptcy Appellate Panel for the First Circuit, which affirmed the bankruptcy court's determination that two obligations of the husband to appellee ex-wife incurred in their state-court divorce proceeding were alimony or support rather than property division, and were nondischargeable under 11 U.S.C.S. § 523(a)(5).

In the divorce action, the ex-wife was awarded as child support and alimony, one-third of the husband's future bonuses and $ 450 a week in child support. The divorce decree also awarded to the ex-wife under the rubric of property division two cash awards based on past bonuses and stock awards, which were to be paid in yearly installments of $ 50,000 for 9 years, with the balance due in two separate payments in the 10th and 11th years. The husband filed for Chapter 7 bankruptcy and the ex-wife claimed that the bonus and stock awards were not subject to discharge.


  • The court of appeals found that there was no basis to disturb the conclusion of the bankruptcy court. Just how much deference was due to its assessment was debatable, but there was substantial reason to believe that the state court in some measure intended the property division to assure adequate support for the ex-wife and her children. 
  • The raw numbers, the uncertainty of future bonus payments, and the lengthy payout period all supported this conclusion. 
  • The property division label seemed most likely to have reflected no more than the mechanical fact that the payments were to come from identified existing resources.

The judgment was affirmed.

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