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In re Siragusa

filed: June 20, 1994.

IN RE: VINCENT SIRAGUSA, DEBTOR. VINCENT SIRAGUSA, DEBTOR-APPELLANT,
v.
JOANNE SIRAGUSA, CREDITOR-APPELLEE.



Appeal from the United States District Court for the District of Nevada. D.C. No. CV-91-00378-LDG. Lloyd D. George, District Judge, Presiding.

Before: Dorothy W. Nelson, Robert Boochever and Robert R. Beezer, Circuit Judges. Opinion by Judge D.w. Nelson.

Author: Nelson

D.W. NELSON, Circuit Judge:

Dr. Vincent Siragusa appeals from the district court's judgment affirming the bankruptcy court's dismissal of his complaint based on comity. The bankruptcy court dismissed the action because it already was being litigated in state court. We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

After 15 years of marriage, Dr. Siragusa and Joanne Siragusa were divorced in 1983. In the divorce decree, Dr. Siragusa agreed to pay Ms. Siragusa alimony of $3,000 per month for 60 months ("the alimony"). He also agreed to a division of the marital property that required him to purchase her share of the medical practice for $1.25 million, payable in monthly installments at 9% interest ("the property settlement").

Dr. Siragusa defaulted on these alimony and property settlement payments, and on November 5, 1987, the state court reduced these arrearages to judgment in favor of Ms. Siragusa. However, the court stayed enforcement of the judgment for one week, and in the interim, Dr. Siragusa filed a voluntary Chapter 7 bankruptcy petition for the primary purpose of obtaining a discharge of the approximately $1.2 million still owed on the property settlement.

Under 11 U.S.C. § 523(a)(5), alimony debts are not dischargeable. Therefore, the bankruptcy court required Dr. Siragusa to pay Ms. Siragusa $7,500 a month until the alimony arrearages that had been reduced to judgment in state court were paid. However, because debts stemming from property settlements are dischargeable in bankruptcy under 11 U.S.C. § 727, on May 4, 1988, the bankruptcy court discharged Dr. Siragusa's property settlement obligation.

Dr. Siragusa paid off the alimony arrearages as scheduled and one day prior to the final payment date, on August 31, 1990, Ms. Siragusa filed a motion in divorce court to have the alimony modified, citing the discharge of the property settlement in bankruptcy as a "changed circumstance." A Nevada divorce court referee granted the alimony modification, ordering Dr. Siragusa to pay his ex-wife $7,500 per month until the earlier of Ms. Siragusa's remarriage or the death of either of the parties. Dr. Siragusa did not object to the referee's findings and rulings, and the divorce court incorporated them into its final order. Dr. Siragusa then moved the divorce court for a reduction in the alimony, and also appealed the decision to the Nevada Supreme Court.

On March 11, 1991, Dr. Siragusa filed in bankruptcy court the complaint which is at issue in this appeal. He claimed that the modification of the alimony based on the bankruptcy court's discharge of the property settlement violated the standing injunction set forth in 11 U.S.C. § 524, which prohibits creditors from attempting to collect debts that were discharged in bankruptcy. In other words, Dr. Siragusa argued, as he does on appeal, that the modification of the alimony constituted a repackaging of the discharged property settlement in violation of the bankruptcy laws.

The bankruptcy court dismissed Dr. Siragusa's complaint based on comity. It held that the state court had jurisdiction to decide, as it did, that the alimony was not dischargeable in bankruptcy, and also found that Dr. Siragusa had fully litigated the matter in divorce court and was in the process of appealing the matter to the state Supreme Court.

The federal district court for Nevada affirmed the bankruptcy court's decision on August 24, 1992. Dr. Siragusa then timely appealed to this court. Our jurisdiction is based on 28 U.S.C. § 1291.

Discussion

I. Standard of ...


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