Megee v. Carmine
802 N.W.2d 669
Mich. Ct. App.2010Background
- Divorced spouses (1989); QDRO required 50% of plaintiff’s disposable retirement pay to defendant as property settlement.
- Plaintiff elected CRSC in 2008, waiving retirement pay, which stopped defendant’s share.
- USFSPA limits division to disposable retirement pay; CRSC is not retirement pay; waivers to VA disability benefits are treated differently under Mansell.
- Trial court ordered plaintiff to act as trustee and pay defendant half of CRSC, effectively diverting CRSC funds.
- Court reverses the trial court: CRSC cannot be divided; however, replacement compensation for the waived retirement pay is appropriate under Mansell principles.
- Remand to enter an order for replacement compensation (50% of retirement pay that would have been received) paid from any source, not limited to CRSC.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether unilateral CRSC election violated the divorce judgment/QDRO. | Megoe argues CRSC election complies with federal law; diverts funds not subject to division. | Defendant contends CRSC election reduces the share due under divorce judgment. | Yes; CRSC division not allowed; replacement compensation required. |
| Whether the court could order replacement compensation for waived retirement pay. | Plaintiff says Mansell prevents division of waived retirement pay. | Replacement payments to spouse align with divorce intent. | Yes; replacement compensation is proper, not division of CRSC. |
| What is the correct source and amount of replacement compensation? | Replacement should be 50% of the retirement pay that would have been received. | Any source acceptable; must reflect lost share due to waiver. | Remand to set monthly replacement payments equal to 50% of envisioned retirement pay. |
| Does Mansell preclude state courts from enforcing any remedy when retirement pay is waived for disability benefits? | Mansell precludes further action to divide waived pay. | USFSPA and related caselaw permit enforcement via replacement compensation. | Mansell supports replacement compensation; not a bar to enforcing the judgment. |
Key Cases Cited
- Mansell v. Mansell, 490 U.S. 581 (U.S. 1989) (preempts state division of waived retirement pay under USFSPA; defines disposable retired pay limits)
- Bandini v. Bandini, 935 N.E.2d 253 (Ind. App. 2010) (supports compensating former spouse for reduced retirement pay after waiver)
- Resare v. Resare, 908 A.2d 1006 (R.I. 2006) (breach-of-contract basis for relief to nonmilitary spouse)
- Hadrych v. Hadrych, 2007 NMCA 1, 140 NM 829 (N.M. App. 2006) (majority view that military spouse must compensate former spouse for reduced retirement benefits)
- In re Marriage of Warkocz, 141 P.3d 926 (Colo. App. 2006) (not precluded from enforcing equitable relief to offset diminished retirement pay)
- Scholarly cluster: Nielsen, 341 Ill. App.3d 863 (Ill. App. 2003) (recognizes vested pension interests cannot be unilaterally diminished)
- Krempin v. Krempin, 70 Cal.App.4th 1008 (Cal. App. 1999) (noting equitable offset for waived retirement pay)
- Johnson v. Johnson, 37 S.W.3d 892 (Tenn. 2001) (spousal entitlement remains despite military retirement changes)
- Sharp v. Sharp, 314 S.W.3d 22 (Tex. App. 2009) (CRSC not retirement pay; limitations on enforcement)
- Jackson v. Jackson, 319 S.W.3d 76 (Tex. App. 2010) (CRSC not subject to division; trustee duties limited)
- Whitfield v. Whitfield, 862 A.2d 1187 (N.J. Super. Ct. App. Div. 2004) (enforcement of equitable distribution without offsetting disability benefits)