COURT OF APPEALS DECISION DATED AND RELEASED October 23, 1996 |
NOTICE |
A party may file with the
Supreme Court a petition to review an adverse decision by the Court of
Appeals. See § 808.10 and
Rule 809.62, Stats. |
This opinion is subject to
further editing. If published, the
official version will appear in the bound volume of the Official Reports. |
No. 95-1212
STATE
OF WISCONSIN IN COURT OF
APPEALS
DISTRICT II
In re the Marriage of:
SHARON L. PRETSCH,
n/k/a SHARON L.
PHILLIPS,
Petitioner-Appellant,
v.
KENNETH A. PRETSCH,
Respondent-Respondent.
APPEAL from an order of
the circuit court for Fond du Lac County:
STEVEN W. WEINKE, Judge. Affirmed.
Before Anderson, P.J.,
Nettesheim and Snyder, JJ.
PER
CURIAM. Sharon L. Pretsch, n/k/a Sharon L. Phillips, has
appealed from an order denying her motion for relief from a stipulation, order
and judgment entered in the trial court on February 13, 1989. We affirm the trial court's order denying
relief.
Phillips and Kenneth A.
Pretsch were divorced by judgment entered on February 16, 1988.[1] On March 16, 1988, Phillips filed a petition
for bankruptcy with the United States Bankruptcy Court for the Eastern District
of Wisconsin. Based on debts owed by
her pursuant to the property division in the divorce judgment, she listed
Pretsch among her creditors.
After receiving notice
of the bankruptcy petition, Pretsch immediately began an adversary proceeding
in the bankruptcy court to challenge the dischargeability of the debt arising
under the divorce judgment. The bankruptcy
court then granted Phillips a discharge of other debts, but provided that the
dischargeability of the divorce judgment debt would remain pending in the
adversary proceeding in bankruptcy court.
While the adversary
proceeding remained pending, Pretsch filed a motion to reopen the divorce
judgment in the circuit court pursuant to § 806.07, Stats., alleging fraud, mistake,
surprise and misrepresentation. On June
16, 1988, the circuit court requested briefs from the parties on the issue of
whether the filing of the bankruptcy petition precluded it from vacating the
judgment.
Before the circuit court
resolved this issue, a pretrial conference was held in bankruptcy court. At that August 16, 1988 hearing, the
bankruptcy court was informed that Pretsch had filed a motion in the state
circuit court to set aside the divorce judgment and allow maintenance to be
awarded to him. According to the
minutes of the pretrial conference, the bankruptcy court indicated that since
maintenance would not come from the property of the estate, the hearing of the
motion by the state circuit court would not violate the automatic stay. The record indicates that the minutes of the
bankruptcy court pretrial hearing were transmitted to the circuit court by
letter by counsel for Pretsch.
According to the letter, the bankruptcy court judge indicated that the
circuit court judge should give her a call if he had any questions.
At a subsequent hearing
on September 27, 1988, the circuit court stated that it would proceed to hear
the motion to reopen because the bankruptcy court had relinquished jurisdiction
and indicated that it could "go ahead in this matter." On October 5, 1988, the bankruptcy court
provided that it would hold over the bankruptcy proceedings pending a circuit
court determination as to whether to award maintenance to Pretsch. On January 26, 1989, the bankruptcy court
was informed by counsel that the parties had reached a settlement which would
make the adversary proceeding in bankruptcy court unnecessary and that
Pretsch's counsel would transmit a stipulation and order for dismissal.
Phillips and Pretsch
subsequently entered into a stipulation to resolve both the circuit court
action and the bankruptcy court proceeding.
The stipulation was approved and adopted by the circuit court in an
order entered on February 13, 1989.
Pursuant to the stipulation and order, Pretsch was granted a civil
judgment against Phillips in the amount of $11,039, representing Phillips'
share of the marital debt divided in the divorce judgment. The stipulation further provided that the
civil judgment would be nondischargeable in the bankruptcy proceeding and that
maintenance was denied to both parties.
Pretsch then stipulated to the dismissal of the adversary proceeding in
the bankruptcy court with prejudice and without costs. The bankruptcy court subsequently dismissed
and closed the adversary proceeding.
Phillips never appealed
the 1989 circuit court order or the bankruptcy court order. However, in late 1994 she moved for relief
from the February 13, 1989 stipulation, order and judgment. She claims that the circuit court lacked
jurisdiction to enter the order and judgment because the automatic stay
provided for bankruptcy proceedings by 11 U.S.C. § 362(a) was never lifted
by the bankruptcy court. She contends
that the 1989 judgment and order approving the stipulation therefore were
void. She also contends that the
circuit court had no authority in 1989 to reopen the divorce judgment to
consider maintenance because maintenance had been specifically waived by both
parties at the time of divorce. In
addition, she contends that the stipulation did not satisfy the requirements of
11 U.S.C. § 524(c) and (d) and therefore was unenforceable as a
"reaffirmation agreement."
She also contends that the stipulation is invalid because it was not
supported by consideration.
We conclude that the
bankruptcy court's actions in permitting the motion to reopen to go forward in
the state circuit court constituted the functional equivalent of lifting the
automatic stay provided by 11 U.S.C. § 362(a). This conclusion is corroborated by the bankruptcy court's
subsequent dismissal of the adversary proceeding based on the stipulation and
order entered in circuit court, indicating that it viewed the circuit court
settlement and disposition as falling within the scope of the proceedings
contemplated by it in circuit court.
While a formal written order lifting the stay was never entered by the
bankruptcy court, it is clear from the bankruptcy court's actions that it was
willing to permit the circuit court to hear and decide Pretsch's motion for
relief from the divorce judgment, going so far as to invite the circuit court
judge to call if he had any questions and holding the adversary proceeding in
abeyance in the bankruptcy court pending proceedings in the circuit court.
Phillips argues that the
bankruptcy court's "‘divestment' of jurisdiction can only be explained as
a result of a mistaken impression that the circuit court had retained
jurisdiction over maintenance."
She argues that the circuit court had no authority to award maintenance
after entry of the divorce judgment because the parties waived their right to
maintenance in the divorce judgment.
She contends that if the bankruptcy court had realized that maintenance
was waived and been afforded a chance to grant relief from the automatic stay,
it may have reserved the issue of dischargeability to itself.
The problem with
Phillips' argument is that when the bankruptcy court held bankruptcy
proceedings in abeyance and indicated that circuit court proceedings could be
held on Pretsch's motion to reopen, it did not indicate that some, but not all,
of the issues raised by the motion to reopen could be dealt with in the circuit
court. If Phillips believed the circuit
court was going beyond what was contemplated by the bankruptcy court, she could
have obtained a clarification from the bankruptcy court at that time. Instead, she proceeded to enter into a
stipulation in the circuit court, including a provision for a nondischargeable
judgment in favor of Pretsch which was accepted by the bankruptcy court when it
dismissed the adversary proceeding.
Based on the totality of these facts, the only conclusion that
reasonably can be drawn is that the bankruptcy court consented to the circuit
court's addressing of the motion to reopen and thus lifted the automatic
stay. No basis therefore exists for
this court to conclude that the automatic stay provisions of 11 U.S.C. § 362(a)
deprived the circuit court of jurisdiction to enter the February 13, 1989 order
and judgment.
Phillips also argues
that the stipulation did not satisfy the requirements of 11 U.S.C. § 524(c) and
(d) and therefore was unenforceable as a "reaffirmation
agreement." However, this argument
does not affect the issue of whether the circuit court had jurisdiction to
enter the February 13, 1989 order and judgment. Moreover, while the issue of whether the stipulation satisfied 11
U.S.C. § 524 might have been a proper issue for appeal in 1989 in either
the circuit court or bankruptcy court actions, those appeals were never
taken. Similarly, we are not concerned
with the issue of whether the circuit court had authority to award maintenance
after it was waived in the original divorce judgment because ultimately it did
not award maintenance.
We also reject Phillips'
argument that the 1989 stipulation was void for lack of consideration. Assuming arguendo that this issue could
properly be raised in Phillips' 1994 motion for relief, it lacks merit on its face. Among other things, by entering the
stipulation Pretsch relinquished his right to challenge the dischargeability of
the debt in bankruptcy court, which saved Phillips the travail and cost of
participating further in that proceeding.
By the Court.—Order
affirmed.
This opinion will not be
published. See Rule 809.23(1)(b)5, Stats.