PHILADELPHIA — A panel of the Third Circuit U.S. Court of Appeals on June 6 ruled that a state court award in a divorce proceeding was nondischargeable because the debtor’s wife required the amount of the award for maintenance and support under 11 U.S. Section 523 (Kirston J. Farelli v. Joseph A. Farelli [In Re: Joseph A. Farelli], No. 07-1157, Chapter 7, 3rd Cir.; 2008 U.S .App. LEXIS 12245).
Joseph A. Farelli filed for Chapter 7 bankruptcy in the U.S. Bankruptcy Court for the Western District of Pennsylvania shortly after he and his former wife, Kirston J. Farelli, had filed for divorce.
The Beaver County, Pa., Court of Common Pleas awarded Kirston Farelli $103,679 in the form of marital property.
After the debtor filed for bankruptcy, Kirston Farelli filed an adversary proceeding against Joseph Farelli, seeking to except from discharge the award made by the state court.
The Bankruptcy Court found that the state court award was in the nature of maintenance and support under 11 Code Section 523(a)(5) and concluded that the debt was not dischargeable.
Joseph Farelli appealed to the U.S. District Court for the Western District of Pennsylvania, which affirmed the Bankruptcy Court ruling.
He then appealed to the Third Circuit, contending that the two lower courts erred in ruling that the award was in the nature of maintenance and support.
Joseph Farelli argued that Kirston’s financial circumstances were such that the money from the award was not required for her support.
A Third Circuit panel found that the Bankruptcy Court did not err in its decision.
The panel said that although Joseph pointed to circumstances that had changed regarding Kirston’s financial condition, those circumstances were not relevant in its determination as to the state court’s intent at the time it issued its decree.