On Appeal from the United States District Court for the Western District of Pennsylvania; D.C. Civil No. 89-1500.
Sloviter, Becker, and Rosenn, Circuit Judges.
This is an appeal from the district court's order affirming the bankruptcy court's determination that an obligation of appellant Paul Chris Gianakas to pay the second mortgage on his prior marital home is in the nature of alimony, maintenance or support, and therefore is not subject to the automatic stay of 11 U.S.C. § 362 (1988) and is not dischargeable pursuant to 11 U.S.C. § 523(a)(5) (1988). This court has jurisdiction under 28 U.S.C. § 158(d) (1988).
Appellant Paul Gianakas (Paul) and appellee Karen Gianakas (Karen) were divorced in March 1983. The divorce decree incorporated a settlement agreement which provided, inter alia, that Paul would pay Karen alimony until January 1988, make child support payments of $200 for each of the couple's four children under the age of 18, with the amount subject to adjustment depending upon his income, and pay certain enumerated expenses for the children. It was also agreed that Paul would convey to Karen the marital home, which was subject to certain encumbrances, and that he would "assume and pay until satisfied the second mortgage" on that marital home. The settlement agreement made Karen solely responsible for the first mortgage and an additional mortgage on an attached garage. After the divorce, she continued to live in the marital home with the four children.
Paul stopped making payments on the second mortgage in January 1988, and on October 3, 1988, he filed a claim for relief under Chapter 7 of the United States Bankruptcy Code. On November 14, 1988, Karen filed a motion in the bankruptcy court for a determination that Paul's obligation for the second mortgage was not subject to the automatic stay of 11 U.S.C. § 362(a) because it was in the nature of alimony, maintenance or support.
After an evidentiary hearing, which the bankruptcy court accorded the status of an adversary proceeding, the court agreed with Karen's position and found that appellant's second mortgage obligation was in the nature of alimony, maintenance or support. Therefore, it ruled that pursuant to 11 U.S.C. § 362(b)(2), the debt is not subject to the automatic stay and is exempt from discharge pursuant to 11 U.S.C. § 523(a)(5). In re Gianakas, 88-02647 (Bankr. W.D. Pa. filed June 9, 1989). Paul appealed to the district court, which affirmed. In re Gianakas, 89-1500 (W.D. Pa. filed Mar. 22, 1990). He now appeals to this court.
Under the Bankruptcy Code, the general discharge which a debtor obtains under 11 U.S.C. § 727(b) for debts that arose before the date of the order for relief,
does not discharge an individual debtor from any debt . . . to a spouse, former spouse, or child of the debtor, for alimony to, maintenance for, or support of such spouse or child, in connection with a separation agreement, divorce decree or other order
11 U.S.C. § 523(a)(5) (1988) (emphasis added).
Concomitantly, "the filing of a petition . . . [in bankruptcy] does not operate as a stay . . . of the collection of alimony, maintenance, or support from property that is not property of the estate." 11 U.S.C. § 362(b)(2) (1988). These provisions reflect the congressional preference for the rights of spouses to alimony, maintenance or support over the rights of ...