In Re the Marriage of McElroy

In re the Ronald MARRIAGE OF McELROY, Appellee,

D. McElroy, Appellant.

Donna M.

No. 94CA0957. Appeals,

Colorado Court

Div. V.

Aug. 1995. Rehearing

As Modified on Denial of

Sept. agree- part of their marital settlement

As in approved by ment a California court parties agreed would receive 25% of wife “gross military retirement/pension husband’s Air benefits” from the Force. Husband was notify days of writing to her in within 10 his eligibility to receive such benefits. agreement provided also for the estab- trust, writing by in lishment revocable trustee, required As to wife. husband was days wife’s benefit to her remit 25% within purpose receiving payment. each after trust secure wife’s share delays obtaining in it benefit the event or if she to obtain direct en- were unable parties’ the Air Force. The forcement from provided agreement further trial court jurisdiction retain over the retire- would menVpension provisions comply specific language the Air requirements of Force. wife moved to Colorado hus- registered

band the California decree then, state. Since Colorado has exercised jurisdiction in this case.

After creditable ser- vice, accepted totalling husband SSB funds $100,000 gross over but failed to notify wife. learned he had done When wife so, trial she filed a motion with the Springs, appellee. Pamp, F.R. Colorado benefits, plus requesting at least 25% of Braun, Springs, ap- D. Colorado John the date husband interest on her share from pellant. them. had received (1) that: The trial court found Opinion by Judge ROTHENBERG. (2) if property; marital constituted primary ap- issues in this There two eventually completes miltary career and his (wife) McElroy peal by M. from a Donna retires, “buy option have back” he will (1) marriage post-dissolution of action: SSB; by repaying the his retirement benefits jurisdiction trial court had whether the (3) circumstances, husband con- under such special separation portion award wife a she receipt of wife’s award and should trolled (SSB) husband, by former received accepting have the 25% the.SSB (husband), McElroy his Ronald D. vol- retaining right to 25% of the future or of her Force, untary discharge from the Air (4) pay; equitable it would be preempted whether court was award decree to wife California so; doing legislation if the court from payment because husband’s 25% of net preempted, was not whether the SSB consti- deprived her of acceptance the SSB had tuted marital division. portion her of his retirement. trial court was not Because hold Nevertheless, court ruled that it jurisdiction the trial preempted exercising over authority to 25% of net lacked alócate benefit and that the SSB does con- the SSB payment payment order such property, and re- wife stitute marital we reverse issue. law controls the On proceedings. because federal mand for further therefore, (1991), reprinted preemption, basis of denied Sess. 3 U.S. Code Cong. her motion division of the SSB. After & Admin. News 1112. finding significant no difference between the A member forces armed who is incomes,

parties’ respective the court also offered the computed VSI receives benefits attorney request denied wife’s fees. providing monthly payments under a formula period equal for a twice number of I. 1175(d)(3)(e)(l) years. § 10 U.S.C. Wife the trial court erred in contends de- (1994). purpose The stated of the VSI is to termining preempted law its “provide financial incentive to members of a. ability special separation divide bene- the armed forces ... appoint- agree. fit. We ment, enlistment, or transfer reserve 1175(a). component_” Section A. legislative history Additional discussing 1991, Congress established two re predating “force drawdown” and enact- programs lated to reduce the size of the ment of programs recom- VSI/SSB response perceived armed forces in to the comprehensive package mended a of benefits diminished threat United States’ interests. separating personnel assist and their fami- (D.D.C.1993). Aspin, F.Supp. Elzie v. adjusting lies in to civilian life. In a differ- payments provided SSB are for under 10 context, ent one court has described the VSI § voluntary separa 1174a programs and SSB as an inducement to elect (VSI) provided tion incentive benefits are early Aspin, supra. retirement. Elzie v. § 10 U.S.C. programs The designed compen- were B. sate career-oriented service members who had been opportunity denied career be-' that, The trial court concluded beyond cause of circumstances their control. preemption, the court lacked matter 101-665, H.Conf.Rep. Cong, No. 101st 2d jurisdiction any portion to award of hus- (1990), reprinted Sess. 6 in 1990 U.S. Code band’s We agree. do not Cong. & Admin. News pertinent reciprocal pro- statutes have concept that federal enactments members, granting visions armed forces who may prohibit the enforcement of state laws is have been pro- offered benefits under either grounded upon Supremacy Clause of the gram, to choose benefits under the United provides States Constitution which 1174a(e)(3) program. §§ other States, the laws of the United made 1175(c) (1994). pursuant constitution, to the national “shall eligible

An supreme member of the armed of the land.” forces U.S. Const., 1174a(a) requests separation who art. VI. lump

receives SSB that is a sum benefit equal to monthly 15% of Any member’s basic state law that conflicts with fed pay multiplied legislation, eral directly number of either or indirectly 1174a(b)(2)(A) service. because its enforcement would stand as a (1994). Legislative history shows that barrier accomplishment Congress’ offered program purposes under the SSB was full objectives, estab- is without effect lished at pay, 15% of basic rather than Cipollone cannot be enforced. See Inc., normal applicable determining 10% Liggett Group, invol- untary separation pay, (1992); so that such enhance- Celebrity L.Ed.2d Cus ment provide equitable, up-front would tom Appeals Builders Industrial Claim — - personnel Office, incentive for volunteer who are not (Colo.App. No. retirement-eligible 94CA1937, 15, 1995). facing choose in lieu of Tribe, June See also L. prospect (2d involuntary separation. American Constitutional Law 6-25 ed. 102-311, 1988). H.Conf.Rep. Cong, No. 102d 1st designed preeminently to defeat inference that the relations Domestic Therefore, displaced Con payments when mechanism

matters of state law. federal direct in legislation, rarely gress passes general of state courts divide and authority in area. displace state tends to garnish property not covered the mecha- 581, 109 S.Ct. Mansell v. 490 U.S. nism. L.Ed.2d 675 governing the do statutes Nor family law rare occasion when state On the any prohibition programs contain and VSI statute, a federal into conflict with come concerning power of the state court to Supreme Court has limited the United States nature such benefits. To determine the Supremacy Clause review under contrary, legislative history shows Congress posi- of whether determination adopted and benefits were that SSB VSI by that tively enactment required direct service members and their families benefit Rose, 481 preempted. Rose v. state law be designed to induce otherwise ca and were 2029, 619, 599 107 S.Ct. 95 L.Ed.2d U.S. voluntarily resign members reer-oriented (1987) (no regarding state preemption found early v. to seek retirement. See Elzie allowing a veteran to be statute disabled Hence, supra. no Aspin, perceive infer failing contempt pay child found in Belgard v. preempt. of an intent to See ence were support, when veteran’s benefits even Airlines, (Colo.App. 857 P.2d 467 United obligation). only satisfying that means 1992). Rahn, Marriage 1995 WL See In re of reported appellate - decisions we — In the two 478464, (Colo.App. P.2d No. preemp have found that have considered (ERISA 1995) 94CA0106, 10, does August context tion issue in the of SSB VSI of valid preempt not enforcement otherwise have both concluded federal regard agreement to waiver prenuptial with preempt courts from di benefits). law does not spousal of death Abernethy viding benefits. v. SSB and VSI 210, McCarty McCarty, In 453 101 U.S. Fishkin, (Fla.App.1994); 160 re 638 In So.2d 2728, (1981),the United 69 L.Ed.2d 589 324, Marriage Crawford, Ariz. 884 180 of Supreme Court held States (App.1994). P.2d 210 distributing mili- from precluded state courts tary in marital dissolu- retirement benefits Marriage Crawford, supra, In In re 884 of Thereafter, re- proceedings. Congress tion 212, Appeals of P.2d at the Arizona Court enacting sponded decision enacting Congress’ intent discussed Spouses’ the Uniformed Services Former programs: SSB VSI (USFSPA), 1408 Protection Act U.S.C. Report House find ... We relevant (1982), gave egress authori- which the states pro- enactment of the SSB predating the ty disposable a service member’s treat eongression- gram in relation to the property subject to pay retainer retired or ally force drawdown recom- mandated Marriage In equitable re distribution. See package of tran- comprehensive mended a (Colo.1988); Gallo, re Mar- In of person- separating to assist sition benefits (Colo.1987). Grubb, riage P.2d 661 of families, rep. H.R. No. nel and their Mansell, supra, Relying on Mansell (1990), suggesting Cong., 101st 2d Sess. the field contends that equitable benefits is division SSB completely preempted benefits financial congressional intent. not inconsistent However, preemp- federal law. also noted that literature The Crawford specific upon provi- tion was found based Department of Defense distributed sion in the definitional section the USFS- program states: explaining VSI the SSB of a excluding PA expressly consideration VSI or dictat- The treatment disability pay “dis- service member’s up It will be ed Federal law. pay.” See posable retired or retainer divisibility of rule on the state courts to 1408(a)(4)(B) Nothing in these incentives. prohibits division of a service Mansell 5) (fn. supra, Crawford, Indeed, Marriage re In the Court in Man- member’s added). (emphasis savings clause sell USFSPA’s concluded (1987 6B).

Contrary suggestion, 14-10-113, Repl.Vol. to husband’s der re C.R.S. Kuzmiak, Beckman, Marriage Cal.App.3d Marriage In re 800 P.2d 1376 denied, Cal.Rptr. cert. (Colo.App.1990). 107 S.Ct. 93 L.Ed.2d is distin contrast, salary pay severance is a guishable persuade and does not us to reach wages employee substitute for while the First, a different result. Kuzmiak was de Thus, job. searches for a new programs cided before the SSB VSI separate property of the employee. dismissed n were adopted. Secondly, it involved the is Holmes, Marriage In re 841 P.2d 388 separation pay sue of over re (Colo.App.1992). upon involuntary discharge ceived under 10 The fact that the amount of Baer, § 1174 also Baer v. to be (where length received is based (Fla.Dist.Ct.App.1995) 657 So.2d 899 employment salary current is not dis- given service member ultimatum to ac positive ques nature the benefit in immediately cept involuntarily VSI or be ter Holmes, Marriage tion. minated, supra. See In re payments his VSI constituted sever Smith, Marriage See also In re 817 P.2d ance rather than retirement and was of (Colo.App.1991) issue). (classifying workers’ separate property; preemption not compensation as property benefits marital Here, however, the trial found with separate property depending on loss the support record that husband had been in the for). compensated military for fifteen and one-half and Here, the'SSB funds awarded to husband on a voluntarily was career track he when were for a termination at his elec- the chose tion, though payment even the enhanced was summary, that we hold the trial court designed to him to induce exercise the preempted by was not from char- being subjected in lieu potentially of to invol- acterizing the SSB funds received hus- untary legislative history termination. The property band as marital and awarding expressly pay- of 1174a indicates that the portion of a them to wife. provided ment a contingency payment committed, for an officer career who was but II. to whom a full might career parties disagree as to denied, how the designed and was to benefit both the funds SSB should be Thus, characterized under family. member upon making and his that, They agree Colorado law. election, both if the right husband had an absolute benefit, is a SSB retirement it is marital lump to receive payment either the sum SSB property subject parties’ agree or, alternative, payment a VSI month- However, support ment. judgment, ly monthly a providing formula husband asserts that the SSB should be payments period equal for a twice and, therefore, characterized as severance years. number separate property, 1175(d)(3)(e)(l) (1994). his rather than as a re agree tirement benefit. We with the trial that, acknowledged Husband if ulti- he court that the SSB funds constitute marital mately eligible pension, became a he property. required would be govern- reimburse the ment for the amount had he property subject Marital to division already 1174a(g) §§ received. See U.S.C. generally property acquired does not include 1174(h) (1994). pay-back provision This after Marriage dissolution. In re supports also the trial court’s determination Faulkner, (Colo.1982). 652 P.2d 572 Howev that the is in SSB benefit lieu of retirement er, compensation which is deferred until after pay, and therefore prop- constitutes marital dissolution, fully during but earned erty. marriage, is marital property. In re Mar Miller, riage reasons, (Colo.App.1994). conclude, 888 P.2d 317 For these we did Also, military pension court, a non-vested trial consti that the SSB received subject property tutes marital to division un- has more of the characteristics of a deferred expressed the views payment ceedings consistent with plan'than a severance compensation part denying order and, therefore, property That marital herein. constituted attorney Marriage In re award is affirmed. subject to fees distribution. (SSB Crawford, supra payments constitute property pay and marital sub retirement RULAND, J., concurs. Fishkin, division); Abemethy supra

ject to ROY, J., dissents. (VSI payments constitute retirement distribution.). subject to property are marital dissenting. Judge ROY Baer, Kelson v. Kel supra; But see Baer v. I respectfully dissent. son, (Fla.Dist.Ct.App.1994) So.2d (VSI retirement); payments McClure v. not there a federal McClure, App.3d 647 N.E.2d 832 98 Ohio treating court from precludes state (VSI (1994) analogous payments more to sev Separation Program cre- Special Benefit benefits). than retirement erance benefits implemented by 10 1174a ated division. as marital conclusion, reject hus-

In view this argument wife related did band’s payment anything

bargain I. pension preeminently mat- relations are Domestic to redistrib- trial court lacked law, therefore, Congress, ters of state pension benefit as it existed in the ute rarely in- general legislation, passes when it Marriage See In re form the SSB. authority in area. displace tends (Colo.1993). Wells, P.2d 694 850 Mansell, 581, Mansell v. 490 U.S. 109 S.Ct. already court has deter- Since the trial (1989). 2023, L.Ed.2d 104 675 property mined is marital that the SSB family state law On rare occasion when the 25% would have of the found that it awarded statute, has a federal come into conflict with wife, necessary is to benefit to remand net Supreme Court has limited the United States only entry for the this case the trial court Supremacy the under Clause review payment of further to effect wife orders Congress “posi- determination whether remand, the designated share. court that On tively required enactment” that direct for request wife’s interest should reconsider Rose, preempted. Rose v. share the unpaid portion the of her on 2029, 2033, 619, 625, 107 S.Ct. (1987). 599, Before a state law L.Ed.2d will be overrid- governing domestic relations III. den, damage’ ‘major do to ‘clear it “must that trial also contends the Wife Hisquierdo federal substantial’ interests.” denying request for attor her court erred 802, 572, 581, 99 Hisquierdo, 439 U.S. S.Ct. disagree. ney fees. We 1, 808, L.Ed.2d met test is here. request The wife’s trial court denied (1986 14-10-119, Repl. § C.R.S. fees is authorized members Retirement 6B) a determination Vol. on the States Air Force based United n there was no significant difference between 8917, 8911, 8914, §§ of service U.S.C. the parties’ respective incomes. Because the (1994); 8925 & finding as to the supports the court’s record pay computed accordance retirement parties respective incomes the because §§ 1401-1412 with 10 8991 & one appeal of first the issue on constituted re- armed forces who Most members its impression, trial court did abuse twenty years active service tire do so after denying attorney fees. discretion to, essentially, they at time are entitled highest or pay rank of the as it one-half is reversed insofar denied order vesting, par- grade is no special separation attained. There bene- wife division of prior husband, vesting, tial of retirement benefits cause fits received prescribed completion term of service. pro- trial for further remanded to the 1408(c)(1) (1994) My issue, analysis (emphasis as it add- ed). voluntary separation military relates to the begins McCarty, Subsequently, in Mansell v. su 453 U.S. L.Ed.2d 589 pra, Supreme disability dealt with Court (1981). In McCarty, the United States Su- specifically benefits which are excluded from

preme Court held that there was a conflict “disposable definition of retired or retain between the retirement federal statutes and 1408(a)(4)(B) (1994). pay.” er community property right created In response argument Congress to the sufficiently injured objec- state law which rejection complete intended a McCarty, program require tives of the non- the court stated: recognition community property right, of the Where, here, question is one of i.e., preemption pursuant there was federal construction, statutory begin with the Supremacy analysis statute_ Clause. its language argu- [Wife’s] injury, stated, to the extent of the the court formidable, ment faces a obstacle in the part: language Spouses’ of the Former Protec- 1408(c)(1) tion Act. Section of the Act goals interference with of encour- affirmatively grants state power courts the aging orderly promotion youthful and a pay, yet divide retirement its military is no less direct.... But language precise is both and limited. It pay by community reduction of a retired provides may disposable that ‘a court treat property only discourages award not re- retired or ... pay prop- retainer either as by reducing tirement the retired avail- erty solely of the member or as member, gives able to the service him spouse of the member and his in accor- positive keep working, incentive since jurisdiction dance with the law the current income after divorce is not divisi- 1408(c)(1). such court.’ The Act’s defi- community ble as property.... Congress nitional, specifically section defines the youthful military has determined ‘disposable term pay’ retired retainer defense; essential to the national it is not exclude, alia, military inter for States to goal by interfere with that in waived order receive to veterans’ dis- lessening the incentive to retire created 1408(a)(4)(B). ability payments. Thus, § military system. the plain precise the Act’s and lan- McCarty McCarty, supra, v. 453 U.S. at guage, state granted courts have been 101 S.Ct. at 69 L.Ed.2d at 607. authority disposable to pay treat retired community property; they as have not response McCarty, direct Congress to granted been to treat total adopted the Uniformed Services Former pay community retired property. as Spouses’ Protection Act Pub.L. No. 97-252, (1982) X, (Act), 588-89, Title Mansell v. Stat. 490 U.S. at codified, 2028-29, which primarily is now with S.Ct. at (empha- amend- 104 L.Ed.2d at 685 ments, added). § as 10 sis U.S.C. While detailed, scope the Act very its limited. (civil disability pay The exclusion of service applies “disposable The Act to retired [or benefits) and “disposable re-, veteran’s from pay,” a retainer] which is defined term. 10 tired or in pay” retainer 1408(a)(4) opera- The 1408(a)(4)(B), and the manner of the exclu- tive language is: sion, important analysis. to the Disabili- not, ty pay is not normally and would Subject section, to the limitations this with, linked or “retired confused or retainer may court disposable treat retired [or re- pay.” The exclusion takes the form of de- pay payable to a pay tainer] member for ducting “gross” from pay retired or retainer periods 25, 1981, beginning after June ei- any disability the amount of benefit received solely property ther as of the member or pay. in lieu of retired or retainer spouse of the member and his jurisdic- “exclusion,” law of accordance with the The reason for the and its form, tion my view, of such court. is that retired service intent, may VI disability congressional arises under Article eligible for member disability Constitution, benefit. voluntarily and relates elect of the United States disability to elect bene- is an incentive subject legiti- There which would otherwise be they from income taxation. are free fits regulation. The state and mate interest may vol- Because retired member army; support powers raise and untarily disability courts elect navy; rules provide and maintain a to make would, disability probably include might, and regulation government of land preclude pay in retainer retired or war; forces; naval declare and to spouse. impact on former detrimental disci- provide organizing, arming, if not precludes logical, this The exclusion Congress plining of the militia are vested in precisely compelling, conclusion which is independent dimen- and are constitutional majority doing in instance what Const, I, § art. sion. pay. respect separation with McCarty, supra. v. expressly Act disabil- does not exclude Therefore, respect preemption with federal ity pay, may be former received and benefits is broad armed forces who are members is, my view, narrow pervasive. The Act pay, from be- eligible for or retainer retired community so ing proper- its terms should be construed. considered marital However, ty. impact of exclusion disability benefits from retired or retainer II. been of cases

pay under the Act has a series disability pay is holding that excluded in this The benefit received may as marital the Act and not be considered by 10 1174a matter was authorized community property to division by Congress in 1991. See adopted which was marriage primarily dissolution (D.D.C.1993). Aspin, F.Supp. 439 Elzie v. McHugh v. preemption. on fact that referred Elzie (Idaho McHugh, 124 Idaho voluntary separation benefit as “retire- Ark.App. Hapney, App.1993); Hapney v. is, me, binding persua- nor ment” neither (1992); Full v. 824 S.W.2d 408 Wallace purpose respect sive. With er, (Tex.App.1992); Inzinna 832 S.W.2d 714 voluntary separation program, the confer- Inzinna, (La.App.1984); 456 So.2d stated: ence committee Campbell Campbell, 474 So.2d see (La.App.1985). take this action because The conferees Supreme the United States strength the effect of their concern over recognized Court years on during the next few reductions and bene- respect to servicemember’s in their men uniform and our and women McCarty v. pervasive. fits is broad and See recog- especially conferees families. The McCarty, supra. strength nize that drawdown in this be- previous drawdowns not different recognize preemptions I that other Rahn, product who Marriage people are a pervasive. In re cause affects - — Therefore, 478464, con- (Colo.App. No. an all volunteer force. WL 10, 1995) (ERISA 94CA0106, pre au- August provide temporary these ferees would regulation of emption respect to assist the Ser- thorities tools surviving plans and waiver of reducing, retirement volun- selectively in on a vices preclude recog not spouse basis, per- benefits does tary portion the career implementation of an otherwise nition inventory that retirement not sonnel waiving any in prenuptial agreement valid these eligible. The conferees believe marriage proceed in a dissolution terest reasonable, fair give a authorities would ing). personnel who would otherwise choice to face selection have no distinction, view, my to both in relates being involuntary separation, and to risk and its preemption the source of the federal not their own separated point regula- at purpose. Federal choosing. on plans predicated tion regard provi- With to the first of the two could be treated state courts as communi- sions, agree the conferees that the ‘volun- ty or marital property and therefore tary’ separation pay benefit would be cal- to division. percent culated at 15 of basic multi- above, For expressed the reasons I do not plied by years the number of of service of believe state courts are accorded separating member. Current involun- to, the Act to treat benefit similar tary separation pay is calculated on 10 of, arguably in lieu retirement or retainer percent pay multiplied by of basic pay as community property marital or sub separat- number of ject to division state dissolution of mar

ing member. The conferees believe that riage proceedings. See Marriage In re provide equitable, enhancement will Kuzmiak, 1152, Cal.App.3d Cal.Rptr. up-front personnel incentive to choose denied, 885, 107 cert. 479 U.S. facing prospect lieu of involuntary (involuntary L.Ed.2d 252 separa separation. community tion benefit property subject 311,102d H.R.Conf.Rep. Cong., No. 1st Sess. division); Baer, Baer v. 657 So.2d 899 556, reprinted Cong. in 1991 U.S. Code (Fla.Dist.Ct.App.1995); Kelson, Kelson v. Admin. News (Fla.Dist.Ct.App.1994); So.2d 959 McClure v. purposes announced the Confer- McClure, App.3d 98 Ohio 647 N.E.2d 832 ence adoption voluntary Committee for the separation pay clearly fall well within the upon by federal interests relied Supreme would, therefore, I affirm the trial court. finding Court for preemption in the first instance. McCarty, supra.

Significantly, Congress did not

amend the voluntary separa- Act to include

tion benefits when such benefits were initial-

ly authorized in separately and did not

provide separation benefits

Case Details

Case Name: In Re the Marriage of McElroy

Court Name: Colorado Court of Appeals

Date Published: Sep 14, 1995

Citation: 1995 WL 478473

Docket Number: 94CA0957

Court Abbreviation: Colo. Ct. App.