Domestic partners cannot be considered “spouses” for bankruptcy purposes following the recent legalization of same-sex marriage in California and throughout the country. This was the holding in the recently decided case by the U.S. Bankruptcy Court for the Central District of California in the matter of In re Villaverde, 2015 Bankr. LEXIS 3561 (Bankr. C.D. Cal. 2015).
Villaverde involved joint debtors: two women in a same-sex relationship. The couple registered their domestic partnership with the California Secretary of State’s Domestic Partners Registry in June 2004, before California recognized same-sex marriage in 2013. Notwithstanding California’s subsequent recognition of same-sex marriage, the couple never married.
The debtors filed a joint Chapter 13 petition July 13. At the hearing on confirmation of the debtors’ Chapter 13 plan, the trustee raised an objection to the debtors’ plan and requested the case be dismissed. The trustee argued that the debtors were ineligible to file a joint petition due to their status as registered domestic partners.
After taking the matter under advisement, the bankruptcy court first noted that the court may dismiss a Chapter 13 case or convert it to a Chapter 7 case upon the finding of cause. “Cause” includes a debtor’s failure to meet eligibility requirements under Chapter 13.
Eligibility in this case arose under the statute that permits the filing of a joint petition—Section 302(a) of the U.S. Bankruptcy Code. Section 302 provides, “A joint case … is commenced by the filing with the bankruptcy court of a single petition … by an individual that may be a debtor … and such individual’s spouse.”
Having defined the term “cause” for purposes of making its determination, the court then turned its attention to the definition of the term “spouse,” noting that the term appears in various provisions of the Bankruptcy Code, but the term is not itself defined in the code. The court discussed the history of definition, citing the Defense of Marriage Act (DOMA). DOMA provided controlling definitions of “marriage” and “spouse” for all federal law purposes up until 2013 when the U.S. Supreme Court decided the matter of United States v. Windsor, 133 S.Ct. 2675 (2013), which thereafter struck down DOMA’s definitions of “marriage” and “spouse.” “Following Windsor, there no longer remains a federal statute specifically defining ‘spouse,’” the opinion said.
The court then looked to dictionaries and other such sources for the ordinary meaning of the term “spouse.” “One dictionary defines the term to mean ‘one’s husband or wife by lawful marriage; a married person.’ Another describes ‘spouse’ as ‘[a] marriage partner; a husband or wife.’ And another dictionary similarly defines it as a ‘married person: husband, wife,’” the opinion said.
The court held, “The common thread among these dictionary definitions is that a ‘spouse’ must be an individual who is married to another or who is considered to be another’s husband or wife (regardless of either individual’s sex or gender). Thus, for purposes of 11 U.S.C. Section 302, it appears that a ‘spouse’ must be a married individual.” The issue then became whether a domestic partner registered in California is considered to be a husband, a wife, or otherwise a married individual. To resolve the issue, the court turned to California state law.
The court noted that under California law, “domestic partners” are defined as “‘two adults who have chosen to share one another’s lives in an intimate and committed relationship of mutual caring,’” citing California Family Code Section 297(a). “Same-sex couples, as well as some opposite-sex couples, may register as domestic partners if they meet certain statutory requirements.”
Once a couple properly registers their domestic partnership with the California secretary of state, California law treats them as if they were spouses, inasmuch as registered domestic partners have the same rights, protections and benefits of spouses, and shall be subject to the same responsibilities, obligations and duties under law.
Notwithstanding the similarities between domestic partners and spouses with respect to how they are treated under California law, the court noted there are still differences between the two unions inasmuch as the prerequisites and methods for forming a domestic partnership are different than those for marriage. The court further held, “Although California law does treat domestic partners similarly to spouses, the law nevertheless fails to classify domestic partners as spouses or married partners. … Although the legislation was intended to create ‘substantial legal equality between domestic partners and spouses,’ substantial legal equality is nevertheless not complete legal equality.”
The court held that since same-sex marriage is available nationwide, and there no longer exists a legal obstacle hindering two otherwise eligible individuals—regardless of sex or gender—from getting married and becoming each other’s spouse, denying same-sex domestic partners the ability to jointly file is no different than denying an unmarried, cohabitating opposite-sex couple the same. In response to the debtors’ argument that denying domestic partners the ability to jointly file constitutes discrimination, the court observed that their argument may have been valid prior to the legalization of same-sex marriage. However, since the debtors chose to remain in a domestic partnership notwithstanding marriage having become available to same-sex couples, their argument is rendered unsound. For these reasons, the court concluded that domestic partners cannot be considered “spouses” under the Bankruptcy Code and are not eligible to file a joint petition.
Prior to the Obergefell v. Hodges, 135 S. Ct. 2584 (U.S. 2015), decision, which held that same-sex couples have a fundamental right to marry, several states expanded the legal rights available to spouses in same-sex relationships through civil unions and domestic partnerships as an alternative to permitting same-sex marriage. For example, Colorado, Delaware, Hawaii, Illinois, New Jersey and Rhode Island adopted civil unions as an available option to both same-sex and opposite-sex couples, though, in 2013, Delaware and Rhode Island replaced their civil union provisions with same-sex marriage. California, Oregon, Washington, Maine, Hawaii, the District of Columbia, Nevada and Wisconsin recognize domestic partnerships. While it is unclear how the Obergefell decision will affect the relevance of these alternatives, they continue to be legally available and, as reflected in Villaverde, some couples continue to maintain a legal relationship through these alternatives. The Villaverde case is another illustration of how the law—and, more specifically, the Bankruptcy Code—and its interpretations continue to evolve to reflect the times. Surely, the Villaverde case is not the last we will hear on how the law responds to issues of equality and fundamental rights. Only time will tell if the law will ever fully catch up with the times. •