Stephen Thomas Yelverton

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF COLUMBIA
In re
STEPHEN THOMAS YELVERTON,
Debtor.
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Case No. 09-00414
(Chapter 11)
Not for Publication in
West’s Bankruptcy Reporter
MEMORANDUM DECISION AND ORDER DENYING THE DEBTOR’S
MOTION TO VACATE AND ENTER A NEW JUDGMENT AND CLARIFYING
THE IMPACT OF THE COURT’S ORDER GRANTING RELIEF FROM THE
AUTOMATIC STAY ON PROCEEDINGS PENDING BEFORE THIS COURT
On November 27, 2009, Alexandra Senyi de Nagy-Unyom
(“Senyi”), a creditor in this bankruptcy case, filed an amended
motion seeking relief from the automatic stay to permit her to
continue her divorce proceeding against the debtor, Stephen
Thomas Yelverton, in the District of Columbia Superior Court. 	At
a December 17, 2009 hearing on the motion, the court determined
that the stay ought to be lifted to permit the Superior Court to
decide various disputes that are at issue in both this bankruptcy
case and the divorce proceeding. 	Accordingly, the court granted
Senyi’s motion and entered an order lifting the stay to permit
Senyi to continue her divorce proceeding against Yelverton,
including her claims for property division and spousal support
The document below is hereby signed.
Signed: February 03, 2010.
_____________________________
S. Martin Teel, Jr.
United States Bankruptcy Judge
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under a prenuptial agreement. 	Yelverton has filed a motion
pursuant to Fed. R. Civ. P. 59(a)(2) and (e), made applicable to
these proceedings by Fed. R. Bankr. P. 9023, to vacate the order
lifting the stay and for entry of a new judgment. 	Yelverton’s
motion fails to raise any meritorious arguments in support of the
requested relief, and as explained below, other than to clarify
the impact of the court’s order lifting the stay on matters
currently pending before this court, the court will deny the
debtor’s motion.
I
In his motion, Yelverton contends that 11 U.S.C.
§ 362(b)(2)(A)(iv) prohibits the lifting of the automatic stay
“where the divorce proceeding ‘seeks to determine the division of
property that is property of the debtor’s estate,’” and that “[a]
divorce court has no right to make a determination or disposition
of property, which is property of the debtor’s estate.” 	Citing
In re Ziets, 79 B.R. 222, 225 (Bankr. E.D. Pa. 1987). 	This is an
inaccurate statement of the law. 	First, § 362(b)(2)(A)(iv)
governs the extent to which the filing of a petition operates as
a stay with respect to an ongoing divorce proceeding. 	It does
not, however, purport to limit the court’s power to lift that
stay under appropriate circumstances. 	Likewise, although the
court in In re Ziets determined not to lift the stay, bankruptcy
courts are divided on the question of whether, and to what
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1 	Even the Ziets court allowed for the possibility that the
balance of hardships could subsequently shift such that it would
be appropriate to grant relief from the stay to permit the state
court proceeding to go forward. 	See In re Zeits, 79 B.R. 222,
227 (Bankr. E.D. Pa. 1987).
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extent, it is appropriate to lift the stay to permit the
continuation of state court divorce proceedings. 	See, e.g.,
Phillips v. Sanchez (In re Sanchez), 1997 WL 861753 *2 (Bankr.
E.D. Va., Nov. 7, 1997) (lifting the stay sua sponte to permit
the state court to equitably apportion property in a divorce
proceeding) (“This court has no desire to become involved in the
adjudication of family law matters since such issues are best
left to a court with expertise in these areas.”); In re White,
851 F.2d 170, 173 (6th Cir. 1988) (“Lifting the automatic stay as
provided in 11 U.S.C. § 362(d) in this case will permit the state
court to exercise limited jurisdiction in the kind of matter that
is traditionally exclusively reserved for state divorce
courts.”). 1 But see In re Becker, 136 B.R. 113 (Bankr. D.N.J.
1992) (declining to lift the stay to permit the divorce
proceedings to continue because, inter alia, a determination of
the parties’ respective property interests would require an
analysis of the relationship between bankruptcy and non-
bankruptcy law, and the bankruptcy court was better suited to
make such a determination). 	In short, although some courts may
disagree with this court’s approach, neither the Bankruptcy Code
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nor case law precedent binding on this court bars this court from
lifting the stay to permit the continuation of Senyi’s divorce
proceeding against the debtor in state court. 	The court thus
rejects Yelverton’s argument that the lifting of the stay in this
case was barred as a matter of law.
Yelverton further contends that the court’s order lifting
the stay was deficient because it failed to address whether cause
had been demonstrated to lift the stay pursuant to 11 U.S.C.
§ 362(d)(1), and that the court failed to consider various
factors relevant to that determination. 	At the December 17, 2009
hearing to address the lift stay motion, however, the court
issued an oral decision explaining the reasons why it was
appropriate to lift the stay to permit the state court divorce
proceeding to go forward. 	Yelverton’s objection to Senyi’s claim
and Yelverton’s adversary proceeding against Senyi, Yelverton v.
Senyi De Nagy-Unyom, Adv. Pro. No. 09-10048 (Bankr. D.D.C.),
raise many of the same issues that are at issue in the divorce
proceeding. 	At the December 17, 2009 hearing, this court
concluded that the issues in question present a classic domestic
relations dispute, and that the state court is better equipped to
deal with such disputes. 	For example, the court noted that one
of the issues to be resolved relates to the equitable
distribution of property, and the state court has more experience
in applying the applicable state law. 	Similarly, the court
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2 	In his motion, Yelverton contends that only after the
dispute as to Senyi’s claims and the adversary proceeding are
resolved would it be appropriate to lift the automatic stay.
This simply goes to the question of which court ought to resolve
the property disputes arising incident to the dissolution of
Senyi’s and the debtor’s marriage, and this court has concluded
that the Superior Court is better suited to the task.
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observed that the fixing of the amount of alimony will depend in
part on the resolution of the parties’ claims against each other,
and because all of these issues are related to each other, it
makes sense (and will further the objective of judicial economy)
to have a single court adjudicate these issues. 	In short, in
disposing of the motion, the court engaged in the type of
analysis Yelverton claims is lacking.
This court’s decision to lift the stay was based on
principles of abstention, and it was well within this court’s
discretion to lift the stay. 2 	See 28 U.S.C. § 1334(c)(1); In re
Dennis, 218 B.R. 52 (Bankr. E.D. Ark. 1997) (observing that
“[a]bstention and relief from the automatic stay are . . .
acceptable methods of dealing with domestic relations issues
arising in bankruptcy.”). 	As noted by the debtor, § 362(d) only
permits the lifting of the stay for cause. 	The Code, however,
does not define the term “cause,” see In re White, 410 B.R. 195,
200 (Bankr. W.D. Va. 2008), and I am satisfied, that to the
extent the court has properly exercised its power of abstention,
which I believe it has, it necessarily follows that cause exists
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3 	The court assumes that the Superior Court will dispose of
the issues before it in due course, and that this bankruptcy case
will not languish indefinitely on the docket. 	This order will be
made without prejudice to the filing of a motion to pursue
prosecution of the adversary proceeding and the objection to
Senyi’s claim in the unlikely event that the state court
proceedings cause undue delay in the administration of this
bankruptcy case.
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to lift the stay pursuant to § 362(d). 	To find otherwise would
render the court’s exercise of abstention meaningless.
II
Yelverton complains that the court’s order lifting the stay
erroneously failed to address the status of the pending creditor
claims filed by claimant Senyi and the pending adversary
proceeding, Yelverton v. Senyi De Nagy-Unyom, Adv. Pro. No. 09-
10048 (Bankr. D.D.C.), commenced by the debtor against Senyi on
December 4, 2009. 	The court having lifted the stay to permit
another court to address the issues raised by the debtor’s
objection to Senyi’s claim and by the debtor’s adversary
proceeding against Senyi, the court will stay the adversary
proceeding and adjudication of the debtor’s objection to Senyi’s
claim pending the completion of the divorce proceedings. 3
III
In accordance with the foregoing, it is
ORDERED that Yelverton v. Senyi De Nagy-Unyom, Adv. Pro. No.
09-10048 (Bankr. D.D.C.) is STAYED pending the conclusion of
Senyi’s divorce proceeding against Yelverton in the District of
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7	O:\TEEL\Laura\ORDERS\Order_denying motion to vacate and clarifying prior order_Yelverton.wpd
Columbia Superior Court. 	It is further
ORDERED that adjudication of Yleverton’s objection to the
claim of Alexandra Senyi Nagy-Unyom is STAYED pending the
conclusion of Senyi’s divorce proceeding against Yelverton in the
District of Columbia Superior Court. 	It is further
ORDERED that this order is without prejudice to the filing
of a motion seeking to reinstate the stay and to have this court
adjudicate the merits of the adversary proceeding and the
debtor’s objection to Senyi’s claim should the divorce
proceedings fail to move forward in due course in the Superior
Court. 	It is further
ORDERED that Yelverton’s motion to vacate and for entry of a
new judgment (Dkt. No. 195) is otherwise DENIED.
[Signed and dated above.]
Copies to: Debtor; Alexandra Senyi de Nagy-Unyom; Office of
United States Trustee.
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