983 N.W.2d 180
S.D.2022Background
- Vernon (79) and Alice (78) married 1993; separated April 2019; long marriage with Alice as homemaker and Vernon receiving military retirement and disability benefits.
- A temporary restraining order under SDCL 25-4-33.1 issued at the separation prohibited dissipating marital assets.
- Joint bank account had about $126,000 at separation and roughly $10,000 at trial; Vernon’s individual account similarly showed large withdrawals and transfers; Vernon made large purchases (boat, pickup) during separation.
- Circuit court awarded divorce, divided property, and ordered Vernon to pay Alice $201,830 (including $140,000 found to reflect dissipation of marital assets) and permanent alimony of $1,500/month.
- Vernon appealed, challenging (1) classification/division of military retirement and disability benefits, (2) the court’s finding of dissipation under SDCL 25-4-33.1, and (3) the alimony award.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held | |
|---|---|---|---|---|
| Whether military retirement pay and disability benefits are marital property subject to division | Alice: Vernon’s post-separation receipts and pre-separation bank funds are marital because he commingled funds and Alice contributed/needs support | Vernon: Federal law (USFSPA and Supreme Court precedents) precludes treating disability benefits (and waived portions) as divisible; retirement earnings pre-marriage should be non-marital | Disability benefits obtained by waiver of retirement pay cannot be treated as marital property — federal law preempts; retirement pay may be classified as marital or non-marital under state law on remand | |
| Whether court clearly erred in finding $280,000 dissipated in violation of SDCL 25-4-33.1 | Alice: Vernon dissipated marital assets by massive unexplained cash spending during the separation | Vernon: Court misclassified some funds as marital (disability), failed to account for necessities, interim support, and other credits; the $280k finding is unsupported | Finding of $280,000 dissipation is clearly erroneous in part (due to improper inclusion of disability benefits and unclear accounting); remand required for recalculation and proper classification | |
| Whether alimony award ($1,500/month permanent) was an abuse of discretion | Alice: Needs exceed income; Vernon has substantially higher monthly income; alimony is warranted | Vernon: Court failed to properly consider post-division financial condition and improperly relied on disability benefits | Court may consider disability for support, but because property division is being remanded, the alimony award is vacated and remanded for reconsideration in light of the revised property division | |
| Request for appellate attorney fees | Alice: Seeks fees under statutory authority, limited resources | Vernon: Also seeks fees | Court finds appeal meritorious for Vernon but declines to award fees to either party based on relative incomes and reasonableness | No appellate attorney fees awarded |
Key Cases Cited
- Howell v. Howell, 581 U.S. 214 (U.S. 2017) (federal law preempts state orders that effectively divide disability benefits obtained by waiver of retirement pay)
- Mansell v. Mansell, 490 U.S. 581 (U.S. 1989) (USFSPA preempts state treatment of disability benefits waived from retirement pay)
- Hisgen v. Hisgen, 554 N.W.2d 494 (S.D. 1996) (state treatment of post-waiver disability benefits is limited by federal law)
- Urbaniak v. Urbaniak, 807 N.W.2d 621 (S.D. 2011) (distinguishes retirement pay and disability benefits; state may consider disability in support determinations)
- Osdoba v. Kelley-Osdoba, 913 N.W.2d 496 (S.D. 2018) (standard and factors for classifying and equitably dividing marital property)
- Ahrendt v. Chamberlain, 910 N.W.2d 913 (S.D. 2018) (SDCL 25-4-33.1 may be violated without evidence of bad faith; transfers can be treated as dissipation)
- Pennock v. Pennock, 356 N.W.2d 913 (S.D. 1984) (dissipation inquiry focuses on whether transfers were made to deplete the marital estate)