Citing DOJ's "Nationwide Effect" Given to Bankruptcy Decision, Gay Couple OKs Ending Appeal

Posted by Chris Geidner
July 8, 2011 11:50 PM |

Today, in a bankruptcy court filing in Los Angeles, lawyers for a married gay couple seeking to file a joint bankruptcy petition claimed victory, following several days of moves by the government suggesting -- and then announcing -- that it would no longer challenge such filings in court.

The move appears to be the first time that the federal government is, as a matter of policy, recognizing same-sex marriages for purposes of applying federal law. Before this week, married same-sex couples' joint bankruptcy petitions were opposed by the government as impermissible under the Defense of Marriage Act.

Notably, the move has come without any apparent opposition from House Republican leaders, whose 3-2 majority on the House Bipartisan Legal Advisory Group (BLAG) has led the Republicans to defend DOMA in other court challenges.

The bankruptcy petition of Gene Douglas Balas and Carlos Morales, the couple at issue in the Los Angeles bankruptcy case, received nationwide attention in June when U.S. Bankruptcy Court Judge Thomas B. Donovan issued his decision -- also signed by 19 of his fellow bankruptcy court judges in the Central District of California -- finding that DOMA unconstitutionally prohibited joint bankruptcy filings by same-sex couples who were legally married under state law.

Thumbnail image for USTrustee.jpgThe U.S. Trustee -- a government position established to serve as a watchdog over the bankruptcy process -- had initially filed a notice that it would be appealing the ruling in order to let the BLAG intervene in the case if it wished to do so. The lawyers for Balas and Morales responded by seeking certification of the appeal directly to the U.S. Court of Appeals for the Ninth Circuit.

On July 6, however, the U.S. Trustee told the bankruptcy court that it no longer wished to appeal the case because neither DOJ nor the BLAG planned to defend DOMA on appeal in the case. The U.S. Trustee noted in the filing that Balas and Morales opposed the attempt to withdraw the appeal.

On July 7, a Department of Justice spokeswoman told Metro Weekly that DOJ "will no longer seek dismissal of bankruptcy petitions filed jointly by same-sex debtors who are married under state law."

This afternoon, lawyers for Balas and Morales told the Los Angeles bankruptcy court that they no longer opposed the dismissal of the case because of the "nationwide effect" given to their decision by the DOJ announcement.

Explaining their initial opposition to the U.S. Trustee's motion to withdraw its appeal, the lawyers write:

As the Debtors explained to the United States Trustee in declining to so stipulate, absent indication that dismissal of the appeal in this particular bankruptcy case was part of a larger shift in policy by which no further challenges would be brought under DOMA to joint bankruptcy cases filed by legally married same-sex couples, the Debtors believed that the appeal should proceed so that definitive appellate guidance could be provided.

Then quoting extensively from Metro Weekly's July 7 report about DOJ's decision not to oppose such filings any longer and noting additional bankruptcy cases in which the U.S. Trustee is seeking to withdraw its opposition -- up to and including a filing by the U.S. Trustee today in a case in the Southern District of New York -- the lawyers conclude:

In view of the Department of Justice's decision to no longer seek dismissal of joint bankruptcy cases filed by lawfully married same-sex couples anywhere in the country (a decision apparently prompted by BLAG's repeated refusal to appear and defend DOMA in the bankruptcy context), this Court’s landmark June 13, 2011 opinion will now be given nationwide effect. Accordingly, the Debtors are pleased to report that they have no objection to the dismissal of the United States Trustee's appeal.

The bankruptcy judge still needs to approve the U.S. Trustee's June 6 motion to withdraw its appeal.

Read the filing: 2011-07-08 Response to Motion to Dismiss.pdf

Metro Weekly

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