Why would a federal bankruptcy court in Texas order a Texas Family District Court to “determine whether Rental Income is Community or Separate Property” in Texas? Under Texas law, the answer to that question is very simple:
Under the plain meaning of Tex. Fam. Code 3.002, Tex. Fam. Code 3.102(a)(2), and Tex. Fam. Code 3.102(a)(4) “all revenue received during a marriage is community property.” Tex. Fam. Code 3.002 expressly states that “Community property consists of the property, other than separate property, acquired by either spouse during marriage.” Tex. Fam. Code 3.102(a)(2) expressly states that community property consists of all “revenue from separate property.” Tex. Fam. Code 3.102(a)(4) expressly defines community property as all “revenue from, all property subject to the spouse’s sole management, control, and disposition.”
Perhaps this exchange between attorney Michelle Shriro and the Honorable Russell Nelms provides the answer as to why a federal bankruptcy judge would order a Texas District Court to issue and advisory opinion on Texas law:
See Page 17, Transcript of January 8, 2015 Hearing
Yes, attorney Michelle Shriro advised the federal bankruptcy court that if the federal court did not act to help the federal bankruptcy trustee that the Texas District Family might follow Texas law and the federal bankruptcy trustee would be “left with nothing.”
After the please for assistance from attorney Michelle Shriro to the federal bankruptcy judge to circumvent both the laws of the State of Texas and the Federal Bankruptcy Code, the Federal Bankruptcy Court issued the following Order to the Texas Family District Court ordering the Texas Court to issue a Constitutionally prohibited advisory opinion:
The court abstains in favor of the Family Court with respect to determining whether the rental income generated by the Real Property is community property or the separate property of Carlos Foster. The automatic stay is terminated to permit the Family Court to make that determination.
[the bankruptcy court] retains authority over the distribution of any rental income. . .any settlement between the debtor and defendants . . must be approved by this [bankruptcy] Court. (Emphasis added)
Community property does not simply become a part of the bankruptcy estate simply because the property was acquired during a debtor’s marriage. Under federal bankruptcy law, the community property under the debtor’s spouse’s sole management and control only becomes a part of the bankruptcy estate if the community property under the debtor’s spouse control is also liable to the creditors who have claimed that the debtor owes them money in the bankruptcy proceeding. Under the federal bankruptcy code, the law is clear that “LIABILITY” is the legal requisite for property becoming part of the bankruptcy estate:
All interests of the debtor and the debtor’s spouse in community property as of the commencement of the case that is—
(A) under the sole, equal, or joint management and control of the debtor; or
(B) liable for an allowable claim against the debtor, or for both an allowable claim against the debtor and an allowable claim against the debtor’s spouse, to the extent that such interest is so liable.
11 U.S.C. 541(a)(2) (emphasis added)
So, why would the federal bankruptcy trustee need the federal bankruptcy judge to order the Texas District Court to issue an Advisory opinion instead of following Texas law? Because under Texas law, a spouse is not LIABLE for the debts that the other spouse incurred before marriage.
The Federal Bankruptcy Trustee prepared the Affidavit that admitted that the rental income and the income producing property were under the sole management and control of the bankruptcy debtor’s spouse. Although the Trustee Reports that there are over $1 Million is assets that could be LIABLE, there are less than an aggregate dollar amount of $180,000.00 in Proofs of Claims for unsecured debts on file with the bankruptcy court.
As the Texas Supreme Court has expressly held:
“[m]arriage itself does not create joint and several liability.” These and other commentators agree that one spouse’s liability for debts incurred by or for the other  is determined by statute. We agree.
Section 3.201(a) states:
A person is personally liable for the acts of the person’s spouse only if:
1) the spouse acts as an agent for the person; or
(2) the spouse incurs a debt for necessaries as provided by [Section 2.501].
Section 2.501 states:
(a) Each spouse has the duty to support the other spouse.
(b) A spouse who fails to discharge the duty of support is liable to any person who provides necessaries to the spouse to whom support is owed.
Thus, one spouse is not liable for the other’s debt unless the other incurred it as the one’s agent or the one failed to support the other and the debt is for necessaries.
Tedder v. Gardner Aldrich, LLP, 421 S.W.3d 651, 654-655 (Tex. 2013). (Emphasis added).
The REAL problem for the Federal Bankruptcy Trustee is that of the 180,000.00 in unsecured debt shown in the Proofs of Claim, $150,000.00 of the unsecured debt, Claim #9 and Claim # 11 were submitted for non-dischargeable student loan debts that the debtor had before marriage. Under Texas law, the community property under the debtor’s spouse sole management and control is not liable for debts incurred before marriage. Under Fam. Code Sec. 3.202(b), the Texas Legislature has affirmatively provided that:
Unless both spouses are personally liable as provided by this subchapter, the community property subject to a spouse’s sole management, control, and disposition is not subject to:
(1) any liabilities that the other spouse incurred before marriage; or
(2) any nontortious liabilities that the other spouse incurs during marriage.
So, in order to “help” make sure that a Texas District Court would not apply Texas Law to the claims that the Federal Bankruptcy Trustee could possibly assert in an ongoing divorce proceeding in a Texas Family District Court, the federal bankruptcy court issued not ONE but TWO UNCONSTITUTIONAL ORDERS to limit the final judgment that the Texas Family District Court could enter in the Texas Divorce Proceeding. At least one Texas District Judge has tried to express his concerns over being unable to proceed to Final Trial in the Texas Divorce Proceeding as long as the bankruptcy order remain in place. Before the Honorable Jerome Hennigan recused himelf from the Texas Divorce Proceeding, he wrote the following letter:
We will be setting up a GOFUNDME Account shortly for our appeal to the U.S. Supreme Court in connection with our appeal of the federal bankruptcy court’s flagrant violation of the 10th Amendment right of the Texas District Court. This is an issue of State Rights because Texas Court MUST remain FREE and INDEPENDENT from federal interference. Check back soon for more details!