CourtListener opinion 10457748

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SO ORDERED. * □□□ □□ | 
 ON GS ELS 
SIGNED this 20th day of February, 2020. □□ 
 Istrict © 

 Dale L. Somers 
 United States Chief Bankruptcy Judge 

 Designated for online use but not print publication 
 IN THE UNITED STATES BANKRUPTCY COURT 
 FOR THE DISTRICT OF KANSAS 

In re: 
Shelly Nichole Pittman, Case No. 19-41057 
 Chapter 13 
 Debtor. 
 Memorandum Opinion and Order 
 Denying Objection to Confirmation and 
 Granting Motion for Relief from Stay 
 This Chapter 13 case was filed shortly after the divorce of Debtor Shelly 
Nichole Pittman ("Debtor" or "Shelly") and Dennis J. Pittman ("Dennis"). As 
part of the divorce proceeding, the parties entered into a Separation and 
Property Settlement Agreement and Parenting Plan ("Settlement 
Agreement"). If Debtor's Chapter 13 plan is confirmed, multiple terms of the 

Settlement Agreement that benefit Dennis will be abrogated. Dennis 
therefore objects to confirmation. He also moves for relief from stay to return

to state court to enforce a term of the Settlement Agreement whereby under
certain circumstances he is entitled to a qualified domestic relations order
(QDRO) with respect to Debtor's exempt pension plan asset. 
Trial on the Motion for Relief from Stay1 was held on December 19, 

2019.2 At the close of the evidence and after hearing the arguments of 
counsel, the Court ordered that the record remain open and continued the 
matter for further consideration at the hearing on Dennis Pittman's Objection
to Confirmation of Chapter 13 Plan.3 Thereafter, the parties agreed that the

record contained all of the evidence they would offer at a hearing on the 
objection to confirmation, but requested that the neither the motion for relief
from stay nor the objection to confirmation be placed under advisement until
after completion of additional briefing. These briefs have now been filed, and

the Court is ready to rule. For the reasons examined below, the Court grants
Dennis's Motion for Relief from Stay and overrules the Objection to 
Confirmation of Chapter 13 Plan. 

1 Doc. 22. 
2 Debtor appeared in person and by Adam M. Mack. Dennis Pittman 
appeared in person and by Todd A. Luckman. 
3 Doc. 18. 
 2 
I. Findings of Fact 
Dennis filed a petition for divorce in Shawnee County District Court on

May 11, 2018. Both he and Shelly were represented by counsel. Both an 
Agreed Decree of Divorce and the Settlement Agreement were executed by 
Shelly on July 9, 2019 and by Dennis on July 12, 2019. The divorce decree 
was filed on July 16, 2019. It recites that "the Separation and Property 

Settlement Agreement executed by . . . the parties on the 12th day of July,
2019 . . . is incorporated into this Decree as though fully set forth herein and
is made apart hereof and does become the Order, Judgment and Decree of the
Court."4 The Settlement Agreement was not filed until August 19, 2019. 

There is no evidence that the Settlement Agreement was reviewed by the 
court or found just and equitable. 
 The Settlement Agreement provides for the division of personal 
property, intangible assets, and real property. It provides that each party

shall keep all retirement and/or 401(k) accounts in their individual names. 
Article IV of the Settlement Agreement addresses obligations and divides 
them between the parties, with each agreeing to hold the other harmless from
the obligations assumed. Paragraph D(26) of Article IV states that in an effort

to equalize the parties' debt, Shelly owes Dennis $35,000, to be paid $500 per
4 Exh. 2 at 2. 
 3 
month at 5% interest, minus Shelly's share of the parties' 2018 tax return. It
also states that the $35,000.00 debt is not dischargeable in bankruptcy and 

 [s]hould wife default on the monthly payment for (2) 
 two consecutive months or more, the Court will grant 
 husband an unqualified Domestic Relations Order 
 against wife's retirement account. Husband shall be 
 granted the full-unpaid amount including interest. The 
 Court will retain jurisdiction of this case and approve 
 the Unqualified Domestic Relations Order in the event 
 such provision needs to be implicated (sic).5 
Paragraph G of Article IV provides: "The debts and obligation assigned herein
above are in the nature of alimony, maintenance or support, and are 
‘domestic support obligations' as defined by Section 101 (14A) of the United
States Bankruptcy Code." 
On or about March 20, 2019, several months before the agreed divorce 
was granted but after the initial terms of the Settlement Agreement were 
negotiated, Shelly contacted an attorney's office regarding bankruptcy. She
gave data for preparation of schedules to office staff, but she did not consult
with an attorney. Her credit counseling certificate is dated April 1, 2019. 
Thereafter, the Settlement Agreement was refined by the parties with 
the assistance of their separate counsel. The parties had agreed in March
that as part of the division of debts Shelly would owe Dennis $35,000, but the

5 Exh. 1 at 14-15. 
 4 
paragraphs addressing discharge in bankruptcy and Dennis's being granted 
an interest in Shelly's TSP6 retirement fund if she defaulted in her payments

to him were added between March and July. 
Based upon the Settlement Agreement, Dennis believed that he would 
be protected if Shelly filed for bankruptcy. Shelly shared this belief until she
met with her bankruptcy attorney on August 21, the date her Chapter 13 

petition was filed. The parties now agree that the events of this case do not
create a binding agreement about discharge and that Shelly's $35,000 debt to
Dennis is dischargeable on completion of a confirmed Chapter 13 plan. 
Debtor has four dependant children. She has been employed by her 

current employer for ten years and also has a part time job. Debtor's 
schedules report that she has no real property, that her personal property is
comprised of two unencumbered vehicles worth $16,000, retirement funds of 
$64,000 (comprised of a 401k TSP account of $59,000 and a 401k FERS 

account of $3,843.68), and miscellaneous exempt personal and household 
items. She has no secured debts. Her unsecured debts include $110,000 in 
student loans and $86,000 in other nonpriority unsecured debts, which 
include $40,000 owed to Dennis. Her monthly income is $4,293.42. After 

subtraction of expenses, her monthly net income is $100.00. 
6 Thrift Savings Plan. 
 5 
Debtor's Chapter 13 plan proposes to pay $100 per month for three 
years. Administrative fees of $3,155 are to be paid through the plan. A 

nonstandard provision of the plan addresses the $35,000 obligation of Shelly
to Dennis and the reference to discharge in the Settlement Agreement. It 
states: 
 Upon confirmation of the plan, any obligation owed by 
 Debtor to Mr. Pittman under the SPSA [Settlement 
 Agreement] is dischargeable upon completion of the 
 instant case. Further, any obligation to pay a creditor 
 or third party on any debt Debtor was assigned to pay 
 under SPSA, regardless of whether the debt is owed by 
 Debtor alone or jointly by Debtor and Mr. Pittman is 
 dischargeable upon completion of the instant case. 
 Further, Paragraph 26 of the SPSA is unenforceable 
 upon completion of the instant case. 
III. Conclusions of Law 
A. Objection to Confirmation 
Dennis objects to confirmation of Debtor's Chapter 13 plan. He does not
challenge the plan provision regarding discharge. Rather he contends that the
bankruptcy was filed in bad faith and only for the purpose of invalidating the
Settlement Agreement. As evidence of bad faith he relies upon the fact that
the bankruptcy was filed only two days after the Settlement Agreement was 
filed in the divorce proceeding. It is noted that it was Dennis's lawyer who did
not file the Property Settlement until more than a month after the divorce
 6 
was granted. 
The Court finds that any inference of bad faith which might arise from

the timing is refuted when the broader circumstances are considered. Shelly
made arrangements to file for bankruptcy before the Settlement Agreement 
was fully negotiated. She agreed with Dennis to include provisions in the 
Settlement Agreement to protect his claim against her from discharge. 

Shelly, like Dennis, believed those provisions would be effective. She learned
this was not true only after meeting with her bankruptcy counsel on the date
she filed her Chapter 13 petition, after the Settlement Agreement had been
filed. Further, Shelly's finances are such that she has need to file for 

bankruptcy relief independent of her agreement to pay Dennis $35,000. 
Dennis's objection to confirmation based upon the contention that the
case as filed in bad faith is denied. 
B. Motion for relief from stay 

Dennis also moves for relief from stay to return to state domestic court
for amendment or reconsideration of the judgment, which incorporates the 
Settlement Agreement, to obtain a QDRO granting him an interest in Shelly's
TSP retirement account as contemplated in Article IV, D(26) of the 

Settlement Agreement. Dennis is not seeking relief from stay to obtain 
payment from Shelly personally. 
 7 
A TSP is a defined contribution plan offered to federal employees that
operates similarly to 401(k) plans offered by private employers.7 Funds held

in a TSP, like funds in plans subject to ERISA, are excluded from the 
Bankruptcy estate by § 541(c)(2).8 This Court therefore has no jurisdiction to
determine interests in the TSP. 
Dennis contends that cause for relief from stay exists under 11 U.S.C. §

362(d)(1). It provides, "On request of a party in interest and after notice and
hearing, the court shall grant relief from the stay . . . (1) for cause, including
the lack of adequate protection of an interest in property of such party in
property." The statute provides that cause includes lack of adequate 

protection, but cause "is not so limited."9 "Because there is no clear definition
of what constitutes ‘cause,' discretionary relief from the stay must be 
determined on a case by case basis."10 

7 Njaka v. Kennedy, No. 12-2712 (JRT/JJG), 2014 WL 4954679, at *2 (Bankr.
D. Minn. Sept. 30, 2014). 
8 In re O'Neal, 462 B.R. 324, 331 (Bankr. D. Mass. 2011). See Patterson v.
Shumate, 504 U.S. 753 (1992); In re Carbaugh, 278 B.R. 512, 520 (10th Cir. BAP
2002) ( Hallmark ERISA plan is not property of the estate). 
9 In re Busch, 291 B.R. 137, 140 (10th Cir. BAP 2003). 
10 Pursifull v. Eakin, 814 F.2d 1501, 1506 (10th Cir. 1987) (quoting In re
Castlerock Properties, 781 F.2d 159, 163 (9th Cir. 1986)). 
 8 
Cause to lift the stay "encompasses a broad category of issues,"11 
including returning to domestic relations court to divide marital property.12 In

Carbaugh,13 the Tenth Circuit BAP affirmed an order granting relief from 
stay a former spouse to return to Kansas district court to obtain a valid 
QDRO. The property settlement agreement granted the debtor's ex-spouse a 
one-half interest in his ERISA qualified retirement plan, but there was no

QDRO becasue the divorce had been granted in 1982 when there was not 
federal law authorizing the administrator of an ERISA plan to segregate the
interest of a plan beneficiary's ex-spouse. Prepetition the ex-spouse had 
initiated proceedings in district court seeking to enforce her rights in the

plan, but debtor filed for bankruptcy relief before the QDRO was finalized. 
The bankruptcy court granted relief from stay to return to state court, and
the BAP affirmed. It reasoned that the ex-spouse had been granted an 
interest in the retirement funds by the divorce decree; that she was seeking

relief to enforce that right, not to seek relief from the debtor personally; and
that she was in the process of obtaining a valid QDRO when the bankruptcy 
was filed. 

11 In re Pence, 581 B.R. 654, 662 (Bankr. D. Utah 2018). 
12 See 1 Collier Family Law and the Bankruptcy Code ¶ 5.06[6] (Margaret Dee
McGarity, Alan N. Resnick & Henry J. Sommer, eds-in-chief 2019). 
13 278 B.R. 512 (10th Cir. BAP 2020). 
 9 
Relief from stay was granted in Jeffers14 under circumstances very 
similar to this case. Debtor was divorced before filing for relief under Chapter

13. The property division provisions of the divorce decree provided that the
ex-wife be given a QDRO, but such an order was never entered before the 
bankruptcy was filed. The debtor's ex-wife moved for relief from stay under §
362(d)(1) to allow her to proceed in state court to obtain the QDRO entitling

her to distribution of funds from her former husband's retirement plans. The
bankruptcy court observed that cause for relief from stay can arise under a
wide variety of circumstances and "the determination of cause for relief from
stay in these peculiarly specific circumstances lies with the bankruptcy 

court's discretion on a case-by-case basis."15 After examining the divorce
decree and Ohio domestic relations law, the court concluded that the ex-wife
had a separate property interest in a portion of the debtor's 401(k) plan at the
time the bankruptcy was filed, that her interest in those funds was not 

property of the estate, and the funds were being held "hostage by the 
automatic stay."16 The court found cause for relief from stay, and debtor's ex-
wife was allowed to proceed to state court to obtain the QDRO necessary for

14 572 B.R. 681 (Bankr. N. D. Ohio 2017). 
15 Id. at 684. 
16 Id. at 689. 
 10 
distribution of her assets. 
There is an obvious difference between this case and Jeffers. In Jeffers

the property division order provided that the ex-wife was entitled to a QDRO;
in this case the Settlement Agreement provides the divorce court will grant
Dennis a QDRO if Debtor defaults on her payments for two consecutive 
months. With respect to whether cause exists for relief from stay, the Court

finds this difference immaterial. Dennis's right to seek a QDRO is being "held
hostage" by the stay. 
The Debtor's retirement funds are not property of the estate. No 
creditors have an interest in the funds. Granting relief from stay will have no

impact on the bankruptcy estate. This Court lacks jurisdiction to determine if
Dennis has an interest in the TSP entitling him to a QDRO; Shawnee County 
District Court is the appropriate court to make that determination. Absent
relief from stay, Dennis is left without a forum to determine his right to the

TSP. The Court finds cause to grant relief from stay for the limited purpose
for approving a QDRO, if the district court determines that Dennis is entitled
to such an order. 
In opposition to the motion, Debtor argues that conditions for stay relief

are not present because Debtor has equity in the retirement funds and 
Dennis lacks an actual present interest in the TSP, making relief under § 
 11 
362(d)2) unavailable. This position overlooks the flexible standard for relief
from stay for cause under § 362(d)(1) discussed above. It erroneously 

"eliminates ‘cause' as a separate discretionary basis on which the bankruptcy
court may lift the stay."17 
Debtor also argues that relief from stay should not be granted because a
property division obligation is dischargeable in a Chapter 13 case.18 But 

Dennis is not seeking and the Court is not granting relief from stay to enforce
Debtor's obligation to Dennis; Dennis is seeking and the Court is granting
relief from stay to enforce a property right against the TSP. Prepetition 
Debtor agreed in the Property Settlement that Dennis would have a 

conditional partial interest in the TSP. Hence when the bankruptcy was filed
Dennis had an equitable interest in the Debtor's TSP.19 The district court will
need to determine if the conditions for entitlement to a QDRO are satisfied
and, if so, approve the terms of distribution from the TSP. A QDRO awarding

Dennis a portion of Debtor's TSP in accord with that Property Agreement 
would not create a dischargeable personal obligation of the Debtor.20 The 

17 In re Carbaugh, 278 B.R. at 526. 
18 11 U.S.C. §§ 1328(a)(2) (not including § 523(a)(15) exception to discharge). 
19 In re Long, 148 B.R. 904, 907 (Bankr. W.D. Mo. 1992). 
20 See In re Gendreau, 122 F.3d 815, 818 (6th Cir. 1997) (holding that
although the award of a portion of pension benefits could be dischargeable if it were
 12 
source of Dennis's payment would be the TSP, not Debtor. 
For the foregoing reasons, the Court finds that Dennis is entitled to

relief from stay to proceed to Shawnee Court District Court to request a 
QDRO granting him an interest in Shelly's TSP retirement account as 
contemplated in Article IV, D(26) of the Settlement Agreement. 
III. Conclusion 

For the reasons stated above, the Court concludes that Dennis's 
objection to confirmation on the basis of bad faith filing should be denied and
that Dennis should be granted relief from stay for cause to proceed in 
Shawnee County District Court to seek a QDRO granting him an interest in 

Shelly's TSP in accord with Article IV, D(26) of the Settlement Agreement. 
Separate orders granting such relief shall be entered. 
It is so ordered. 
 ### 

the debtor's personal liability, an interest in pension funds that is enforceable
against the pension plan, not the debtor, does not create a personal liability). 
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