Appeal from Superior Court of King County. Docket No: 95-2-16789-6. Date filed: 01/17/96. Judge signing: Hon. Robert S. Lasnik.
Authored by H. Joseph Coleman. Concurring: Susan R. Agid, Ann L. Ellington.
The opinion of the court was delivered by: Coleman
COLEMAN, J. -- Aerospace Machinists Union, Thomas Baker's former employer, began an interpleader action to determine to whom it should pay approximately $10,000 in vacation benefits accrued to Baker. The Union named several interpleader defendants, including: Baker; Edith Cantu, Baker's ex-wife; and Gary Abolofia, Baker's former dissolution attorney. Cantu claimed that she was entitled to the benefits based on a 1993 dissolution decree. Baker also argued that Cantu was entitled to the benefits. Abolofia, however, claimed that he was entitled to the benefits based on an attorney lien filed three months after the divorce decree entry. Baker had declared bankruptcy after the divorce and the filing of the lien.
After the interpleader action was commenced, Baker brought a motion for contempt against Abolofia in bankruptcy court, alleging that Abolofia's claim to the interpleaded funds violated bankruptcy's "fresh start" policy because the benefits belonged to Cantu, not Baker. The bankruptcy court found that the funds were Baker's and that Abolofia had a valid lien. Subsequently, the Superior Court awarded Abolofia the benefits in the interpleader action.
Cantu appeals the Superior Court's determination, arguing that the bankruptcy court's order has no operative role because she was not joined. Cantu further claims that the funds are her separate property under the dissolution decree. Therefore, Cantu argues that Baker had no interest in the funds, and thus, Abolofia could not have a valid lien. We hold that Cantu is collaterally estopped from challenging the bankruptcy court's determination and therefore give full faith and credit to the court's decision. We further find that Cantu had no security interest in the funds, and thus, her interest was discharged in bankruptcy. Consequently, the funds were properly awarded to Abolofia. We affirm.
Baker and Cantu entered a dissolution decree on June 16, 1993, that required Baker to pay Cantu a sum of money when he received his vacation benefits:
The wife is awarded as her separate property the following property:
7. The sum of $21,495, less any actual income tax liability paid by husband on the amount, to be paid by husband at the time husband is paid for any vacation benefits, or at his retirement, or at termination of employment with Local 751, whichever event is sooner. Baker was to be awarded "all vacation benefits, except those specifically awarded to wife below." The decree also required Baker to pay Cantu maintenance for four years or until she remarried.
Abolofia was Baker's attorney at the time of dissolution. Baker subsequently terminated Abolofia, who filed a lien for $58,711.37 on September 10, 1993.
On November 8, 1993, Baker petitioned for bankruptcy. Baker listed Abolofia as both a secured creditor and an unsecured creditor for $60,000. Baker also listed Cantu as an unsecured creditor for several debts, including $22,000, representing the money owed to her in vacation benefits.
On May 10, 1994, Cantu remarried pursuant to a confidential California marriage license. The marriage was declared invalid on August 25, 1994. Baker discovered the marriage in March 1995 and moved to recover overpaid maintenance. Superior Court Judge Carol Schapira granted that motion, finding that Baker was not bound by the invalidity decree.
Judge Schapira further noted that the dissolution decree awarded Cantu $21,495 in vacation benefits: "This obligation of Petitioner to Respondent Cantu was discharged in Petitioner's bankruptcy on February 24, 1994, but Respondent Cantu retains a property right to said funds." The Union claimed it only owed Baker approximately $10,000 in vacation benefits. *fn1 Thus, Judge Schapira held that to the extent that Baker recovered from the Union, the amount recovered was to offset the judgment entered against Cantu.
On June 23, 1995, the Union interpleaded Baker's vacation benefits because his creditors were unable to agree on a distribution. Cantu argued that she was entitled to the benefits pursuant to the divorce decree awarding her the first $21,495 of any vacation benefits distributed. Baker brought a motion for summary judgment in the ...