FOSTER v FOSTER
No. 161892
Michigan Supreme Court
April 5, 2022
509 Mich. 139
VIVIANO, J.
Chiеf Justice: Bridget M. McCormack; Justices: Brian K. Zahra, David F. Viviano, Richard H. Bernstein, Elizabeth T. Clement, Megan K. Cavanagh, Elizabeth M. Welch. Reporter of Decisions: Kathryn L. Loomis.
Syllabus
This syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader.
FOSTER v FOSTER
Docket No. 161892. Argued November 9, 2021 (Calendar No. 2). Decided April 5, 2022.
Plaintiff, Deborah L. Foster, sought to hold defendant, Ray J. Foster, in contempt in the Dickinson Circuit Court, Family Division, for failing to abide by a provision in their consent judgment of divorce. The judgment stated that defendant would pay plaintiff 50% of his military disposable retired pay accrued during the marriage or, if defendant waived a portion of his military retirement benefits in order to receive military disability benefits, that he would continue to pay plaintiff an amount equal to what she would have recеived had defendant not elected to receive such disability benefits (the offset provision). Defendant subsequently elected to receive increased disability benefits, including Combat-Related Special Compensation (CRSC) under
In a unanimous opinion by Justice VIVIANO, the Michigan Supreme Court held:
Federal preemption under
1. The doctrine of res judicata bars a second, subsequent action when (1) the prior action was decided on the merits, (2) both actions involve the same parties or their privies, and (3) the matter in the second case was, or could have been, resolved in the first. A judgment of divorce dividing marital property is res judicata and not subject to collateral attack even if the judgment may be have been wrong or rested on a subsequently overruled legal principle; in other words, the doctrine of res judicata applies to a valid but erroneous judgment. A divorce decrеe that has become final may not have its property-settlement provisions modified except for fraud or for other such causes as any other final decree may be modified. The doctrine of res judicata in this context is an issue of state law. Thus, a provision in a consent judgment of divorce that divides a veteran‘s military retirement and disability benefits is generally enforceable under the doctrine of res judicata even though it is preempted by federal law.
2. There is a distinction between a court‘s jurisdiction of the parties and the subject matter of the action, on the one hand, and the court‘s erroneous exercise of that jurisdiction. To that end, when a court has personal jurisdiction over the parties and has jurisdiction over the subject matter of the action but erroneously exercises jurisdiction—such as when a property sеttlement in a divorce action conflicts with federal law—any error in the exercise of jurisdiction by the trial court can only be corrected by direct appeal. In contrast, when the trial court lacks personal jurisdiction over the parties or subject-matter jurisdiction, any judgment by the court is void and may be assailed by both direct appeal and collateral attack. The preemption doctrine does not deprive state courts of subject-matter jurisdiction over claims involving federal preemption unless Congress has given exclusive jurisdiction to a federal forum. Generally, state law controls matters of domestic relations. For that reason, before state law governing domestic relations will be overridden as preempted by federal law, it must do major damage to clear and substantial federal interests. To determine whether Congress has impliedly preempted state law, a court must (1) determine whether Congress has preempted states from legislating or regulating the subject matter of the instant case and (2) if Congress has, the court must determine whether it has also vested exclusive jurisdiction of that subject matter in the federal court system. Regarding the division of military benefits,
3. In this case, even though the offset provision in the consent judgment was contrary to federal law, the judgment was not void or subject to collateral attack, because the type of federal preemption at issue does not deprive Michigan courts of subject-matter jurisdiction and there was no other justification for a collateral attack on the consent judgment. Accordingly, the Court of Appeals erred when it concluded that the type of federal preemption at issue in this case deprived state courts of subject-matter jurisdiction.
Court of Appeals judgment reversed; case remanded to the trial court for further proceedings.
OPINION
FILED April 5, 2022
STATE OF MICHIGAN
SUPREME COURT
DEBORAH LYNN FOSTER,
Plaintiff/Counterdefendant-Appellant,
v.
RAY JAMES FOSTER,
Defendant/Counterplaintiff-Appellee.
No. 161892
BEFORE THE ENTIRE BENCH
At issue presently in this case is whether defendant can collaterally attack a provision in the parties’ consent judgment of divorce related to the division of defendant‘s military retirement benefits on the ground that it conflicts with federal law. We previously held, among other things, that “[t]he trial court was preempted under federal law from including in the consent judgment the . . . provision on which plaintiff relies.” Foster v Foster, 505 Mich 151, 175; 949 NW2d 102 (2020) (Foster I). But we “express[ed] no opinion on the effect our holdings have on defendant‘s ability to challenge, on collateral review, the consent judgment” and, instead, “remand[ed] the case to the Court of Appeals so that the panel [could] address the effect of our holdings on defendants’ ability to challenge the terms of the consent judgment.” Id. at 175, 175-176. On
I. FACTS AND PROCEDURAL HISTORY
The facts and procedural history of this case are adequately set forth in our previous opinion, Foster I, 505 Mich at 157-161, and need not be restated in their entirety here. For purposes of this opinion, it is sufficient to highlight the following points.
The parties’ consent judgment of divorce was entered in December 2008. At the time of the divorce, defendant was receiving both military retirement pay and military disability benefits for injuries he sustained during the Iraq War. Pursuant to their property settlement, plaintiff was awarded 50% of defendant‘s retirement pay, also known as “disposable military retired pay.” She was not awarded any of defendant‘s military disability benefits. To protect plaintiff in the event that defendant became entitled to (and accepted) more disability benefits than he currently received, consequently diminishing the retirement benefits that were divided and awarded to plaintiff, the parties agreed to include a provision in the consent judgment of divorce that has become known as the “offset provision.” In the offset provision, if defendant elected to receive an increase in disability pay, he agreed to pay plaintiff an amount equal to what she would have received had defendant not elected to do so.1
In February 2010, defendant became eligible for, and elected to receive, increased disability benefits, which included Combat-Related Special Compensation (CRSC).2 As a
result, the
In May 2010, plaintiff filed a petition seeking to hold defendant in contempt for failing to comply with the consent judgment. A few months later, defendant argued, for the first time, that under federal law, CRSC benefits are not subject to division in a divorce action. In an opinion and order dated October 8, 2010, the trial court denied plaintiff‘s request to hold defendant in contempt but ordered defendant to comply with the provisions of the judgment. The trial court acknowledged that it did not have the power to divide military disability pay but noted that the parties here had agreed upon the division and neither party had moved to set aside the judgment on the ground of mutual mistake. The trial court warned that if defendant failed to comply with the order that he would be held in contempt.
On March 25, 2011, plaintiff filed a petition to hold defendant in contempt, alleging that he had not made any payments as ordered. Although he did not appear at the hearing, defendant filed a response, arguing that he was not in contempt and, for the first time, arguing that the issue was within the jurisdiction of the federal courts. On May 10, 2011, the trial court entered an order holding defendant in contempt, granting a money judgment to plaintiff, and issuing a bench warrant for defendant‘s arrest because he did not appear at the hearing.
At a show-cause hearing on June 27, 2014, defendant, relying on
On September 22, 2014, the trial court entered an order holding defendant in contempt and ordering him to pay the arrearage and attorney fees. Defendant appealed that order in the Court of Appeals.
The Court of Appeals initially affirmed the trial court order. Foster v Foster, unpublished per curiam opinion of the Court of Appeals, issued October 13, 2016 (Docket No. 324853). Defendant sought leave to appeal in this Court. We vacated the judgment and remanded
Defendant again sought leave to appeal in this Court. After granting the application, thе Court held as follows:
We conclude that federal law preempts state law such that the consent judgment is unenforceable to the extent that it required defendant to reimburse plaintiff for the reduction in the amount payable to her due to his election to receive CRSC. Although the Court of Appeals indicated its agreement with plaintiff‘s assertion that defendant was engaging in an improper collateral attack against the consent judgment, the panel did not discuss the effect of federal preemption on the trial court‘s subject-matter jurisdiction or defendant‘s ability to challenge the terms of the consent judgment outside of direct appeal. Because these questions remain important, we vacate that portion of the Court of Appeals’ opinion agreeing with plaintiff that defendant was engaging in an improper cоllateral attack and reverse the balance of the Court of Appeals’ opinion in this case. Moreover, we overrule the Court of Appeals’ opinion in Megee v Carmine, 290 Mich App 551, 574-575; 802 NW2d 669 (2010), which held that a veteran is obligated to compensate a former spouse in an amount equal to the share of retirement pay that the nonveteran spouse would have received, pursuant to a divorce judgment, had the veteran not elected to waive military retirement pay in favor of CRSC. This case is remanded to the Court of Appeals so that the panel may address the effect of our holdings on defendant‘s ability to challenge the terms of the consent judgment. [Foster I, 505 Mich at 156 (citation omitted).]
On the second remand, the Court of Appeals reversed in Foster II. After a lengthy block quote of this Court‘s opinion in Foster I, the Court of Appeals dedicated a single paragraph to the issue of subject-matter jurisdiction. It cited Ryan v Brunswick Corp, 454 Mich 20, 27; 557 NW2d 541 (1997), abrogated in part on other grounds in Sprietsma v Mercury Marine, 537 US 51, 63-64 (2002); People v Kanaan, 278 Mich App 594, 602; 751 NW2d 57 (2008); and Konynenbelt v Flagstar Bank, FSB, 242 Mich App 21, 25; 617 NW2d 706 (2000), for the propоsition that state courts are deprived of subject-matter jurisdiction when principles of federal preemption are applicable. The Court concluded that “defendant did not engage in an improper collateral attack on the consent judgment and the trial court lacked subject-matter jurisdiction to enforce the consent judgment with respect to the offset provision due to the principle of federal preemption.” Foster II, unpub op at 2.
Plaintiff sought leave to appeal in this Court, and we granted plaintiff‘s application to address
whether the defendant has the ability to challenge the relevant term of the consent judgment in this case given that federal law precludes a provision requiring that the plaintiff receive reimbursement or indemnification payments to compensate for reductions in the defendant‘s military retirement pay resulting from his election to receive any disability benefits. See Howell v Howell, 581 US ___; 137 S Ct 400; 197 L Ed 2d 781 (2017). [Foster v Foster, 506 Mich 1030 (2020).]
II. STANDARD OF REVIEW
The application of the doctrine of res judicata is a question of law that we review de novo. Washington v Sinai Hosp of Greater Detroit, 478 Mich 412, 417; 733 NW2d 755 (2007). Questions of subject-matter jurisdiction are also questions of law that we review de novo. Winkler v Marist Fathers of Detroit, Inc, 500 Mich 327, 333; 901 NW2d 566 (2017).
III. ANALYSIS
This Court previously held that the offset provision in the parties’ consent judgment of divorce impermissibly divides defendant‘s military disability pay in violation of federal law. See Foster I, 505 Mich at 175 (“The trial court was preempted under federal law from including in the consent judgment the offset provision on which plaintiff relies.“). We must now answer the question we left open in Foster I: whether defendant may challenge this provision of the consent judgment on collateral review.
A. THE DOCTRINE OF RES JUDICATA APPLIES TO JUDGMENTS THAT DIVIDE MILITARY RETIREMENT AND DISABILITY BENEFITS
We have previously explained the doctrine of res judicata as follows:
The doctrine of res judicata is employed to prevent multiple suits litigating the same cause of action. The doctrine bars a second, subsequent action when (1) the prior action was decided on the merits, (2) both actions involve the same parties or their privies, and (3) the matter in the second case was, or could have been, resolved in the first. This Court has taken a broad approach to the doctrine of res judicata, holding that it bars not only claims already litigated, but also every claim arising from the same transaction that the parties, exercising reasonable diligence, could have raised but did not. [Adair v Michigan, 470 Mich 105, 121; 680 NW2d 386 (2004) (citation omitted).]
Importantly for purposes of this case, the doctrine of res judicata applies even if the prior judgment rested on an invalid legal principle. See Colestock v Colestock, 135 Mich App 393, 397-398; 354 NW2d 354 (1984) (“A judgment of divorce dividing marital property is res judicata and not subject to collateral attack, even if the judgment may have been wrong or rested on a subsequently overruled legal principle.“); Detwiler v Glavin, 377 Mich 1, 14; 138 NW2d 336 (1965) (holding that the doctrine of res judicata applies to “a valid but erroneous judgment“). See also Federated Dep‘t Stores, Inc v Moitie, 452 US 394, 398; 101 S Ct 2424; 69 LEd2d 103 (1981) (“Nor are the res judicata consequences of a final, unappealed judgment on the merits altered by the fact that the judgment may have been wrong or rested on a legal principle subsequently overruled in another case.“).
This Court has long recognized as “a settled rule of law that a divorce decree which has become final may not have its property settlement provisions modified except for fraud or for other such causes as any other final decree may be modified.” Pierson v Pierson, 351 Mich 637, 645; 88 NW2d 500 (1958).3 The Court of
Public policy demands finality of litigation in the area of family law to preserve surviving family structure. To permit divorce judgments which have long since become final to be reopened so as to award military pensions to the husband as his separate property would flaunt the rule of res judicata and upset settled property distributions upon which parties have planned their lives. The consequences would be devastating, not only from the standpoint of the litigants, but also in terms of the work load of the courts. [McGinn v McGinn, 126 Mich App 689, 693; 337 NW2d 632 (1983) (citation omitted).]4
The United States Supreme Court has recognized that the application of the doctrine of res judicata in this context is an issue of state law. See Mansell v Mansell, 490 US 581, 586 n 5; 109 S Ct 2023; 104 L Ed 2d 675 (1989) (“Whether the doctrine of res judicata . . . should have barred the reopening of pre-McCarty [v McCarty, 453 US 210; 101 S Ct 2728; 69 L Ed 2d 589 (1981)] settlements is a matter of state law оver which we have no jurisdiction.“). See also 2 Turner, Equitable Distribution of Property (4th ed), § 6:6, p 49 (noting that the Court had dismissed in Sheldon v Sheldon, 456 US 941 (1982), for want of a substantial federal question, a petition raising the issue of whether ” ‘federal preemption of state community property laws regarding division of military retirement pay render state judgments void for lack of subject matter jurisdiction where such judgments were entered after Congress had preempted area of law’ “).5
Applying these principles, the provision of the parties’ consent judgment of divorce that divides defendant‘s military retirement and disability benefits is generally enforceable under the doctrine of res judicata even though it is preempted by federal law. See generally Kirby v Mich High Sch Athletic Ass‘n, 459 Mich 23, 40; 585 NW2d 290 (1998) (noting that “[a] party must obey an order entered by a court with proper jurisdiction, even if the order is clearly incorrect, or thе party must face the risk of being held in contempt“).6
Even though it is otherwise enforceable, defendant argues that because the offset provision is preempted by federal law, it is automatically void and, therefore, subject to collateral attack at any time.7 As an initial matter, defendant asserts that a judgment containing a provision that exceeds the limits of the trial court‘s authority is void. However, as we explained in Buczkowski v Buczkowski, 351 Mich 216, 221-222; 88 NW2d 416 (1958), there is an important distinction between the court‘s jurisdiction of the parties and the subject matter of the suit, on the one hand, and the court‘s erroneous exercise of that jurisdiction, on the other:
The failure to distinguish between “the erroneous exercise of jurisdiction” and “the want of jurisdiction” is a fruitful source of confusion and errancy of decision. In the first case the errors of the trial court can only bе corrected by appeal or writ of error. In the last case its judgments are void, and may be assailed by indirect as well as direct attack. The judgment of a court of general jurisdiction, with the parties before it, and with power to grant or refuse relief in the case presented, though (the judgment is) contrary to law as expressed in the decisions of the supreme court or the terms of a statute, is at most only an erroneous exercise of jurisdiction, and as such is impregnable to an assault in a collateral proceeding.
The loose practice has grown up, even in some opinions, of saying that a court had no “jurisdiction” to take certain legal action when what is actually meant is that the court had no legal “right” to take the action, that it was in error. If the loose meaning were correct it would reduce the doctrine of res judicata to a shambles and provoke endless litigation, since any decree or judgment of an erring tribunal would be a mere nullity. It must constantly be borne in mind, as we have pointed out in Jackson City Bank & Trust Co. v Fredrick, 271 Mich 538, 544[; 260 NW 908 (1935)], that:
There is a wide difference between a want of jurisdiction, in which case the court has no power to adjudicate at all, and a mistake in the exercise of undoubted jurisdiction, in which case the action of the trial court is not void although it may be subject to direct attack on appeal. This fundamental distinction runs through all the cases.8
“[W]hen there is a want of jurisdiction over the parties, or the subject-matter, no matter what formalities may have been taken by the trial court, the action thereof is void because of its want of jurisdiction, and consequently its proceedings may be questioned collaterally as well as directly. They are of no more value than as though they did not exist. But in cases where the court has undoubted jurisdiction of the subject matter, and of the parties, the action of the trial court, though involving an erroneous exercise of jurisdiction, which might be taken advantage of by direct appeal, or by direct attack, yet the judgment or decree is not void though it might be set aside for the irregular or erroneous exercise of jurisdiction if appealed from. It may not be called in question collaterally.” [Ferranti, 504 Mich at 22, quoting Jackson City Bank, 271 Mich at 544-545.]
As these authorities make clear, defendant‘s assertion that the judgment is void and subject to collateral attack simply because it conflicts with federal law is “manifestly in error.” Buczkowski, 351 Mich at 221.
Next, defendant argues that the judgment is void and subject tо collateral attack because Congress deprived state courts of subject-matter jurisdiction over the division of military disability benefits.9 To prevail on this argument, defendant must demonstrate that Congress has given exclusive jurisdiction over the division of military disability benefits in a divorce action to a federal forum. See, e.g., 21 CJS, Courts, § 272, p 288 (“The preemption doctrine does not deprive state courts of subject matter jurisdiction over claims involving federal preemption unless Congress has given exclusive jurisdiction to a federal forum.“).10 However, as discussed
us that the Veteran‘s Administration or any other federal forum has exclusive jurisdiction over the division of military disability benefits in a divorce action.
The United States Supreme Court rejected a similar argument in Rose v Rose, 481 US 619; 107 S Ct 2029; 95 L Ed 2d 599 (1987), after first observing:
We have consistently recognized that the whole subject of the domestic relations of husband and wife, parent and child, belongs to the laws of the States and not to the laws of the United States. On the rare occasion when state family law has come into conflict with a federal statute, this Court has limited review under the Supremacy Clause to a determination whether Congress has positively required by direct enactment that state law be preempted. Before a state law governing domestic relations will be overridden, it must do major damage to clear and substantial federal interests. [Id. at 625 (cleaned up).]
Relying on
This jurisdictional framework finds little support in the statute and implementing regulations. Neither [
38 USC 3107(a)(2) nor 38 CFR 3.450 through 3.461 (1986)] mentions the limited role appellant assigns the state court‘s child support order or the restrictions аppellant seeks to impose on that court‘s ability to enforce such an order. . . . Nor is it clear that Congress envisioned the Administrator making independent child support determinations in conflict with existing state-court orders. . . .. . . Given the traditional authority of state courts over the issue of child support, their unparalleled familiarity with local economic factors affecting divorced parents and children, and their experience in applying state statutes . . . that do contain detailed support guidelines and established procedures for allocating resources following divorce, we conclude that Congress would surely have been more explicit had it intended the Administrator‘s apportionment power to displace a state court‘s power to enforce an order of child support. Thus, we do not agree that the implicit pre-emption appellant finds in § 3107(a)(2) is “positively required by direct enactment,” or that the state court‘s award of child
support from appellant‘s disability benefits does “major damage” to any “clear and substantial” federal interest created by this statute. [Rose, 481 US at 627-628, quoting Hisquierdo v Hisquierdo, 439 US 572, 581; 99 S Ct 802; 59 L Ed 2d 1 (1979).]11
Although the Court in Rose found that the state child support statute was not preempted by federal law, its analysis is still helpful in determining whether Congress has established an exclusive forum for dividing military disability benefits in a divorce action.
Defendant here contends that the Secretary of Veterans Affairs has exclusive jurisdiction over all issues concerning veteran‘s benefits, including the division of those benefits in a state court divorce action. Defendant correctly notes that appellate jurisdiction from a decision by the Secretary is limited to the federal courts.12
In sum, we hold that federal preemption under
the division of marital property. Therefore, while the offset provision in the parties’ consent judgment of divorce was “a mistake in the exercise of undoubted jurisdiction,” Jackson City Bank, 271 Mich at 544, that judgment is not subject to collateral attack.13
Because the Court of Appeals erroneously concluded that the type of federal preemption at issue in this case deprives state courts of subject-matter jurisdiction, and because there is no other justification for a collateral attack on the consent judgment in this case, we reverse the judgment of the Court of Appeals and remand this case to the Dickinson Circuit Court for further proceedings not inconsistent with this opinion.
David F. Viviano
Bridget M. McCormack
Brian K. Zahra
Richard H. Bernstein
Elizabeth T. Clement
Megan K. Cavanagh
Elizabeth M. Welch
Notes
If Defendant should ever become disabled, either partially or in whole, then Plaintiff‘s shаre of Defendant‘s entitlement shall be calculated as if Defendant had not become disabled. Defendant shall be responsible to pay, directly to Plaintiff, the sum to which she would be entitled if Defendant had not become disabled. Defendant shall pay this sum to Plaintiff out of his own pocket and earnings, whether he is paying that sum from his disability pay or otherwise, even if the military refuses to pay those sums directly to Plaintiff. If the military merely reduces, but does not entirely stop, direct payment to Plaintiff, Defendant shall be responsible to pay directly to Plaintiff any decrease in pay that Plaintiff should have been awarded had Defendant not become disabled, together with any Cost of Living increases that Plaintiff would have received had Defendant not become disabled. Failure of Defendant to pay these amounts is punishable through all contempt powers of thе Court.
The interest in uniform administration of veterans’ benefits focuses, instead, on the technical intеrpretations of the statutes granting entitlements, particularly on the definitions and degrees of recognized disabilities and the application of the graduated benefit schedules. These are the issues Congress deemed especially well-suited for administrative determination insulated from judicial review. Thus, even assuming that [
38 USC] 211(a) covers a contempt proceeding brought in state court against a disabled veteran to enforce an order of child support, that court is not reviewing the Administrator‘s decision finding the veteran eligible for specific disability benefits. [Rose, 481 US at 629 (cleaned up; emphasis added).]
Initial division of military benefits must be made under federal substantive law, which requires that the benefits be awarded only to the service member and not to the former spouse. If the service member requests that the state court apply federal substantive law, and the state court instead applies state substantive law, McCarty requires that the state court decision be reversed. But if the service member never raises the issue—if he or she allows the state court to enter an erroneous order dividing military benefits under state substantive law, as happened in most of the pre-McCarty cases—Sheldon recognizes that McCarty does not support reversal of the state court judgment. Federal substantive law controls the issue, but under either federal or state procedural rules, a decision which is based upon the wrong substantive law cannot be collaterally attacked after it becomes final.