Same-Sex Married Debtors May File a Joint Petition for Bankruptcy The DOMAs Definition of Spouse is Held Unconstitutional

By: Jennifer K. Arcarola

St. John's Law Student

American Bankruptcy Institute Law Review Staff

In In re Balas & Morales,[1] the United States Bankruptcy Court for the Central District of California held that a legally married same-sex couple could jointly petition for bankruptcy.[2]  The debtors, Gene Balas and Carlos Morales, are a same-sex couple legally married in California who jointly filed for bankruptcy under chapter 13.[3] The United States Trustee (the “Trustee”) moved to dismiss the case, alleging that section 1307(c) of the United States Bankruptcy Code (the “Code”) prohibits two males from jointly filing for bankruptcy[4] because the Defense of Marriage Act (the “DOMA”) defines “spouse” as a person of the opposite sex who is a husband or a wife,[5] and so Trustee alleged that their case should be dismissed “for cause” pursuant to section 1307(c) of the Code.[6]  The court concluded that (1) the DOMA was unconstitutional as applied to a same-sex married couple under the Equal Protection Clause of the Fifth Amendment, (2) no legitimate government interest was served in applying the statute, and (3) none of the eleven grounds for dismissal listed in section 1307 were implicated.[7]

 The Balas & Morales court repeatedly cited to a February 23, 2011 letter from Attorney General Eric Holder (the “Holder Letter”),[8] in which the Attorney General announced that the Department of Justice will no longer defend cases based on the DOMA’s definition of “spouse.”[9] The Holder Letter concludes with President Obama’s determination that “section 3 of DOMA may not be constitutionally applied to same-sex couples whose marriages are legally recognized under state law.”[10] The court also cited, with approval, one decision involving legally married same-sex couples where a motion to dismiss “for cause” under the DOMA were denied.[11] In In re Somers,[12] the district court held that, “[t]he mere existence of DOMA is not sufficient to remove the duty imposed . . . by section 707(a) to find ‘cause’ prior to dismissing the case.”[13] Here, the Balas & Morales court similarly held that “cause” to dismiss was not present under section 1307(c), especially where none of the debtors’ creditors sought dismissal. [14]   The Trustee’s sole reliance on the DOMA was insufficient to dismiss the debtors’ case.[15]

Twenty out of the twenty-four judges in the Central District of California signed on to the opinion, signaling that the effects of this case are likely to reach beyond Balas and Morales.[16] Considering the Department of Justice and the Executive Branch’s decision to no longer defend cases based on the DOMA’s definition of spouse, the door is seemingly now open, particularly in California, for legally married same-sex debtors to file joint petitions under section 302(a). On the other hand, Congress may decide to defend these cases on its own behalf[17] through the House Bipartisan Legal Advisory Group and enforce the DOMA.[18] However, according to Brendan Buck, a spokesperson for the Speaker of the House, Representative John Boehner, In re Balas & Morales would not be appealed, and litigation and appeals of similar cases will be too expensive to pursue.[19]