Expert: Mark J. Markus- California Bankruptcy Attorney - 9/6/2006

Question
I have a civil contempt judgment against my ex-wife for $197,000 issued in Oct 2004.  $132,000 of this amount is from a Court finding she fraudulently conveyed our former residence and diverted the proceeds to her now husband.  This act was pre-petition 04/03.  She filed her CH7 in 09/03 and received a discharge in 01/04 and case was closed in 5/05.  I filed my contempt action in 06/04 and judgment 10/04.  My ex-wife did not attempt to stay the contempt action nor list the judgment prior to the close of her case probably fearing I would disclose her hidden assets and false representations to the trustee resulting in a dismissal of her bankruptcy and possible criminal action.  She has been in jail for 18 months on civil contempt, filed 15 plus motions to avoid the judgment and 5 appeals.  Her most recent action is filed today is challenging the Superior Court's justification on a pre-petition debt and asserting the discharge as a defense this non-listed debt based on fraud, claiming the discharge applies to any pre-petition debt listed or not.  I thought to be discharged a debt had to be listed by the debtor.  Am I wrong?  I also thought it was the debtor's option to stay actions, and the debtors failure to do so did not stop litigation. Is it true that because this debt was pre-petition, the Superior Court lacked subject matter jurisdiction to give rise to the judgment.  Can this be asserted nearly 2 years later?  By the time of the hearing, it was known to me and the Court that a bankruptcy had been filed and discharged. Although never notified by the debtor or bankruptcy court.  No bankruptcy objections were made till 23 months after the judgment was issued and 5 unsuccessful appeals.  Any suggestions"


Answer
Unfortunately, she is probably correct. If her case was a "no asset" case, then it does not matter whether you were listed as a creditor or not.  The critical factor is going to be WHEN you found out about her bankruptcy case.  If it was within the past few weeks, and you can prove that you did not get any notice prior to then, you might be able to petition the bankruptcy court to reopen the case and litigate an non-dischargeability action against her based on the fraud.  The the civil contempt action you filed against her was actually in contempt of the bankruptcy discharge injunction.   Did she defend that action?  If so, she had some duty to inform the court (and you) that this debt was discharged in her bankruptcy case.  As to whether the Superior Court lacked subject matter jurisdiction, that's something I'd have to research and is way beyond the scope of this service.  You need to get a good bankruptcy attorney in your area to go through ALL the details of this and assess your options.  A lot of what you will be able to do will depend on the bankruptcy judge and how long you waited after you discovered there had been a bankruptcy case to do anything about it.  I believe that there is case law allowing a bankruptcy case to be reopened to litigate an action where there was no notice (actual or constructive) to a potential creditor/litigant (i.e. you), but again, I'd have to research that.