Bankruptcy Judge Stuart M. Bernstein confronted a case at the intersection of Islamic matrimonial law and a question of bankruptcy law where the courts are divided. His May 30 opinion reads like a mystery novel, with a surprise ending.
A couple married in a civil ceremony. Three years later, they married again in a Muslim ceremony. The Islamic certificate of marriage, signed by both parties, contained a $30,000 dowry, which was postponed in its entirety.
Three days after the Islamic ceremony, the wife filed a divorce complaint in the District of Columbia Family Court. Ultimately, the husband defaulted, and the D.C. court entered a divorce decree. Although the divorce decree did not provide for alimony or support, nor did it divide property or debts, it did recite that the dowry was an enforceable contract. Later, the D.C. court entered a $30,000 judgment against the husband, who subsequently filed a chapter 7 petition.
In bankruptcy court, the wife filed a motion for judgment on the pleadings, seeking a declaration that the $30,000 dowry was nondischargeable under Section 523(a)(15), which says that a debt to a former spouse is not dischargeable if it “was incurred by the debtor in the course of a divorce or separation or in connection with a separation agreement, divorce decree or other order of a court of record . . . .”
In opposition, the debtor-husband argued that the debt did not fall within the ambit of (a)(15) because it was a preexisting debt that was not incurred “in the course of a divorce or separation.”
Judge Bernstein cited cases demonstrating that the courts are split in similar circumstances when a divorce decree lists the parties’ obligations to one another on account of preexisting debts.
Although the debt was postponed, Judge Bernstein said it was incurred before the parties’ divorce and thus was not “incurred” in the course of divorce. The judgment in the matrimonial court only enforced a preexisting debt.
Implying that he would rule the dowry to be dischargeable, Judge Bernstein sided with a leading bankruptcy court decision, cited approvingly in the Collier treatise, which concludes that a preexisting debt was not “incurred” in divorce and would therefore be dischargeable even though it was recited in the divorce decree.
Other courts, Judge Bernstein said, interpret (a)(15) “more broadly.”
Like a good mystery novel, Judge Bernstein added a twist at the end of the opinion, saying that his discussion of (a)(15), standing alone, does not “end the matter.”
Judge Bernstein cited a treatise on Muslim family law for the proposition that a postponed dowry, payable only if the marriage is terminated, “serves as protection in the event of divorce.” He described how the pleadings “suggest” that the dowry “was contracted as part of a post-nuptial agreement made in contemplation” of separation and divorce, especially since the couple separated only five days after the Islamic ceremony.
Saying he could not decide the case on the pleadings, Judge Bernstein called for discovery and trial. The dowry would not be dischargeable, he said, were he to conclude that the debt was “triggered” by their separation or divorce or was given “in lieu of any alimony or other division of property.”