107 Wash. App. 313 | Wash. Ct. App. | 2001
The question in this appeal is whether the trial court violated federal law by awarding the wife “permanent compensatory spousal maintenance” in the amount of 45 percent of the husband’s veterans’ disability pension. The answer is yes. Accordingly, we reverse in part and remand for further proceedings.
Jeffrey and Deanna Perkins married on February 11, 1978, and separated on February 19, 1999. Jeffrey joined the Air Force shortly before marriage and retired shortly before separation. He served 22 years, 20 of them while married.
When Jeffrey retired from the Air Force, he was eligible to receive a taxable military service pension in the gross amount of $1,446 per month. He also was eligible to receive a nontaxable veterans disability pension equal to 40 percent of his service pension, but only if he waived 40 percent of his service pension.
In March 1999, Deanna petitioned for dissolution. In October 1999, a bench trial was held, and in February 2000, the court entered findings of fact and a decree of dissolution. The court found as fact:
The main asset of the parties is the husband’s military retirement, most of which accumulated during the parties!’] marriage. 90% of the military retirement is community property. 10% of the retirement is the husband’s separate property. The wife’s community interest in the military retirement is 45% of*316 the entire retirement. The husband and wife suffered an automobile accident in 1997 while the husband was in the United States Air Force. The accident was work related. Both the husband and wife suffered substantial injuries from the accident. Due to the accident, the husband has qualified for a 40% VA disability which results in a 40% reduction in the military retirement, a dollar for dollar offset.... Prior to qualifying for the disability, the husband’s monthly military retirement was as follows:
$1,446.00 gross pay
- $94.23 survivor benefit plan
$1,351.77 taxable income
After the husband’s 40% disability, the military retirement pay is as follows:
$1,446.00 gross pay
- $94.23 survivor benefit plan
- $482.00 disability reduction
$869.77 taxable income
The wife should receive 45% of the disability portion (45% times $482 equals $216.90). Husband should pay to wife compensatory spousal maintenance in an amount which represents 45% of husband’s total monthly compensation for disability. This is in addition to the 45% of the reduced military retirement that she is awarded. The maintenance payments shall survive petitioner’s remarriage. If the husband is not able to deduct this compensatory spousal maintenance payment as income on his Federal Income Tax Return, then husband may reduce his compensatory spousal maintenance payment to the wife by 20% to compensate him for the Federal Income Tax he is required to pay.
The wife is losing $216 per month in military retirement due to the change to 40% of the retirement to disability. The wife should receive this difference as compensatory spousal maintenance pursuant to the analysis in the Supreme Court case, In*317 re the Marriage of Jennings, 138 Wn.2d[] 612[, 980 P.2d 1248] (1999).[2 ]
The court ruled in its decree that the wife
is hereby entitled to 45% of the . . . husband’s . . . military retirement. ... If the husband’s military retirement [pension]... is .. . changed in form to a disability payment, the wife shall be entitled to her 45% shared.[3 ]
The court ordered in its decree that the husband
pay to . . . wife . . . permanent compensatory spousal maintenance in an amount which represents 45% of [husband’s] total monthly compensation for disability and retirement; provided that [wife’s] maintenance amount shall be reduced by military retirement actually received by [the wife][.][4 ]
Jeffrey now appeals. He claims that the trial court violated federal law by dividing and distributing his veterans’ disability pension. We agree.
We begin with three state law propositions. (1) When disability benefits replace future compensation (e.g., postdissolution wages), they are not distributable at a dissolution trial. Future compensation is not distributable because it is not on hand at trial, so when disability benefits replace such compensation, they are treated in the same fashion.
Federal law preempts the second proposition with respect to a veterans’ disability pension. Federal law prohibits a state dissolution court from dividing such a pension, and from distributing by any means any part of such pension, according to Hisquierdo v. Hisquierdo,
Hisquierdo was decided in 1979. The question was whether the federal Railroad Retirement Act of 1974 prohibited a state dissolution court from dividing the husband’s railroad service pension. The Act provided that the payment of retirement benefits was not to “be anticipated,”
McCarty was decided in 1981. The question presented was “whether, upon the dissolution of a marriage, federal law precludes a state court from dividing military nondisability retired pay pursuant to state community property laws.”
The USFSPA was enacted in 1982.
Mansell was decided in 1989. The question was “whether state courts, consistent with [USFSPA], may treat as property divisible upon divorce military retirement pay waived by the retiree in order to receive veterans’ disability benefits.”
Although federal law preempts the second of our state-law propositions, it does not preempt the third. In In re Marriage of Kraft, a 1992 case, the Washington Supreme Court sought to harmonize Mansells requirement “not to treat military disability retirement pay as divisible” with RCW 26.09.080’s requirement “to make an equitable distribution in light of the parties’ postdissolution economic circumstances.”
[WJhen making property distributions or awarding spousal support in a dissolution proceeding, the court may regard military disability retirement pay as future income to the retiree spouse and, so regarded, consider it as an economic circumstance of the parties. In particular, the court may consider the pay as a basis for awarding the nonretiree spouse a proportionately larger share of the community property where equity so requires. The court may not, however, divide or distribute the military disability retirement pay as an asset. It is improper under Mansell for the trial court to reduce military disability pay to present value where the purpose of ascertaining present value is to serve as a basis to award the nonretiree spouse a proportionately greater share of the community property as a direct offset of assets.[31 ]
And the court reiterated later in its opinion:
[T]he trial court in a marriage dissolution action may consider military disability retirement pay as a source of income in awarding spousal or child support, or generally as an economic*322 circumstance of the parties justifying a disproportionate award of community property to the nonretiree spouse. The trial court may not, however, divide and distribute the disability pay or value it and offset other property against that value. In the present case, the trial court reduced the military disability pay to present value and then offset assets against it by awarding to Mrs. Kraft a proportionately larger share of the community property. This is not a permissible way of considering military disability retirement pay under the Mansell holding.[32 ]
In short, according to Kraft, a Washington dissolution court may not divide or distribute a veterans’ disability pension, but it may consider a spouse’s entitlement to an undivided veterans’ disability pension as one factor relevant to a just and equitable distribution of property
In light of these authorities, the key question here is whether the trial court divided Jeffrey’s veterans’ disability pension and distributed part of it to Deanna; or, alternatively, whether the trial court merely considered the undivided disability pension as one factor tending to show Jeffrey’s postdissolution ability to pay maintenance. The trial court stated in its findings that “[t]he wife’s community interest in the military retirement is 45% of the entire retirement”; that “[t]he wife should receive 45% of the disability portion (45% times $482 equals $216.90)”; and that the husband should pay the wife “45% of husband’s total monthly compensation for disability ... in addition to the 45% of the reduced military retirement that she is awarded.”
Deanna argues that the trial court purified this otherwise improper division and distribution by calling it “maintenance.” Mansell flatly prohibits a state dissolution court from dividing, and then distributing any part of, a veterans’ disability pension.
Attempting to bolster her argument, Deanna relies on In re Marriage of Jennings.
Probably in 1995,
In October 1995, the wife moved to vacate, modify, or clarify the 1992 decree. In June 1996, after finding “extraordinary circumstances” under CR 60(b)(11),
On appeal, the husband contended that the trial court had violated state law by reopening and altering a res judicata decree. The wife responded alternatively: (a) the trial court could clarify without reopening because the decree was ambiguous; or (b) the trial court was authorized to reopen under CR 60(b)(11). As far as the opinion shows, no one contended that the trial court had violated federal law when it entered its 1992 decree, or when it entered its 1996 order revising the 1992 decree.
As can be seen, the question discussed in Jennings is different from the question presented here. The question discussed in Jennings was whether state law afforded the wife a remedy when, years after the original decree, the husband waived most of the service pension that the trial court had properly divided and distributed in its original decree. The question presented here is whether the trial court violated federal law when it entered its original decree. The question presented here was not discussed in
Nothing said herein means that on remand the trial court may not award maintenance after considering the existence of an undivided disability pension as one factor (among many) bearing on the husband’s ability to pay, and after entering proper findings of fact under RCW 26.09.090.
Because the trial court divided and distributed the veterans’ disability pension in violation of federal law, we reverse and vacate the property, debt, and maintenance parts of the dissolution decree. We affirm the balance of the decree. We remand for redistribution of property and debts, and for reconsideration of maintenance. On remand, the trial court may redistribute and reconsider based on the record already made, or it may in its discretion take more evidence. On remand,
*328 the trial court may, if in its view equity so requires, distribute the [parties’] property in the same manner in which it did initially. What is required is that [it] arrive at its decision as to what is just and equitable under all the circumstances after considering the military disability retirement pay in the manner we here explain.[59 ]
Reversed in part, affirmed in part, and remanded for further proceedings.
A majority of the panel having determined that only the foregoing portion of this opinion will be printed in the Washington Appellate Reports and that the remainder shall be filed for public record pursuant to RCW 2.06.040, it is so ordered.
Hunt, A.C.J., and Seinfeld, J., concur.
See 38 U.S.C. § 5305; Mansell v. Mansell, 490 U.S. 581, 583-84, 109 S. Ct. 2023, 104 L. Ed. 2d 675 (1989).
Clerk’s Papers (CP) at 42-43 (emphasis added).
Id. at 49 (emphasis added).
Id.
In re Marriage of Brewer, 137 Wn.2d 756, 767-69, 976 P.2d 102 (1999); In re Marriage of Geigle, 83 Wn. App. 23, 30, 920 P.2d 251 (1996); In re Marriage of Nuss, 65 Wn. App. 334, 343, 828 P.2d 627 (1992); In re Marriage of Anglin, 52 Wn. App. 317, 324, 759 P.2d 1224 (1988); 20 Kenneth W. Weber, Washington Practice: Family and Community Property Law § 32.17, at 190-91 (1997).
In re Marriage of Geigle, 83 Wn. App. 23, 31, 920 P.2d 251 (1996) (citing In re Marriage of Kollmer, 73 Wn. App. 373, 377, 870 P.2d 978, review denied, 124 Wn.2d 1022 (1994); Nuss, 65 Wn. App. at 343; In re Marriage of Leland, 69 Wn. App. 57, 73, 847 P.2d 518, review denied, 121 Wn.2d 1033 (1993)); 20 Weber, supra, § 32.17, at 191.
RCW 26.09.080(4), .090(1)(a); In re Marriage of Kraft, 119 Wn.2d 438, 446, 448, 451, 832 P.2d 871 (1992).
Hisquierdo v. Hisquierdo, 439 U.S. 572, 99 S. Ct. 802, 59 L. Ed. 2d 1 (1979).
McCarty v. McCarty, 453 U.S. 210, 101 S. Ct. 2728, 69 L. Ed. 2d 589 (1981).
10 U.S.C. § 1408(c)(1).
Mansell v. Mansell, 490 U.S. 581, 109 S. Ct. 2023, 104 L. Ed. 2d 675 (1989).
45 U.S.C. § 231m; see also Hisquierdo, 439 U.S. at 576.
45 U.S.C. § 231a; Hisquierdo, 439 U.S. at 574.
Hisquierdo, 439 U.S. at 583.
Hisquierdo, 439 U.S. at 579.
Hisquierdo, 439 U.S. at 588.
McCarty, 453 U.S. at 211.
10 U.S.C. § 3929; McCarty, 453 U.S. at 224.
McCarty, 453 U.S. at 217 (alteration in original).
McCarty, 453 U.S. at 232.
McCarty, 453 U.S. at 230 n.22.
Pub. L. No. 97-252, 96 Stat. 730 (1982).
10 U.S.C. § 1408(a)(4); see Mansell, 490 U.S. at 584-85.
10 U.S.C. § 1408(c)(1).
10 U.S.C. § 1408(c)(1); Mansell, 490 U.S. at 589.
Mansell, 490 U.S. at 583.
Mansell, 490 U.S. at 584-85.
Mansell, 490 U.S. at 589 (emphasis added).
Mansell, 490 U.S. at 594-95.
In re Marriage of Kraft, 119 Wn.2d 438, 444, 832 P.2d 871 (1992).
Kraft, 119 Wn.2d at 447-48 (emphasis added); see also 20 Weber, supra, at 196; cf. In re Marriage of Roark, 34 Wn. App. 252, 255, 659 P.2d 1133 (1983) (though not divisible under federal law, railroad pension may be considered as one future economic circumstance).
Kraft, 119 Wn.2d at 451 (emphasis added). See also Clauson v. Clauson, 831 P.2d 1257, 1264 (Alaska 1992) (“We . . . hold that federal law does not preclude our courts from considering, when equitably allocating property upon divorce, the economic consequences of a decision to waive military retirement pay in order to receive disability pay.”); McMahan v. McMahan, 567 So. 2d 976, 980 (Fla. Dist. Ct. App. 1990) (notwithstanding Mansell, state courts may consider the impact of veterans’ disability payments in determining the “entire equitable distribution scheme ... in an effort to do equity and justice to both [parties]”); Jones v. Jones, 7 Haw. App. 496, 780 P.2d 581, 584 (“Neither Hawaii’s rule nor federal law precludes the family court, when dividing property and debts in a divorce case, from considering as one of the relevant circumstances ... a party’s time-of-divorce right to receive veterans’ and military disability pay post-divorce in the same way that the family court considers each party’s ability or lack of ability to earn and receive income post-divorce.”), cert. denied, 833 P.2d 900 (Haw. 1989); Bewley v. Bewley, 116 Idaho 845, 780 P.2d 596, 598 (Ct. App. 1989) (“We do not interpret Hisquierdo to bar unequal awards of community property in all cases where nondivisible federal benefits are involved. But any inequality must be based upon bona fide considerations other than dissatisfaction with the federal scheme.”); Strong v. Strong, 2000 MT 178, 300 Mont. 331, 8 P.3d 763, 769 (A court “may consider VA disability benefits in the same way it considers each party’s ability to earn income post-dissolution as an import factor in achieving an equitable property division.”); Weberg v. Weberg, 158 Wis. 2d 540, 463 N.W.2d 382, 384 (Ct. App. 1990) (trial court may consider veterans’ disability payments as a factor in assessing ex-husband’s ability to pay spousal maintenance); but see Billeck v. Billeck, 777 So. 2d 105, 109 (Ala. 2000) (“When a trial court makes an alimony award based upon its consideration of the amount of veteran’s disability benefits, the trial court essentially is awarding the wife a portion of those veteran’s disability benefits; and in doing so .. . violate [s] federal law.”).
See also Edwards v. Edwards, 74 Wn.2d 286, 287, 444 P.2d 703 (1968); Roach v. Roach, 72 Wn.2d 144, 147, 432 P.2d 579 (1967); DeRevere v. DeRevere, 5 Wn. App. 741, 746-47, 491 P.2d 249 (1971).
RCW 26.09.080 provides that a dissolution court “shall, without regard to marital misconduct, make such disposition of the property and the liabilities of the parties, either community or separate, as shall appear just and equitable after considering all relevant factors including, but not limited to ... [t]he economic circumstances of each spouse at the time the division of property is to become effective.”
RCW 26.09.090 provides that a dissolution court “may grant a maintenance order for either spouse. The maintenance order shall he in such amounts and for such periods of time as the court deems just, without regard to marital misconduct, after considering all relevant factors including but not limited to . .. [the] ability of the spouse from whom maintenance is sought to meet his [or her] needs and financial obligations .. ..”
The court must, for example, consider all relevant factors, RCW 26.09.090(1); In re Marriage of Williams, 84 Wn. App. 263, 267-68, 927 P.2d 679 (1996), review denied, 131 Wn.2d 1025 (1997); In re Marriage of Terry, 79 Wn. App. 866, 869, 905 P.2d 935 (1995), and enter findings of fact. In re Marriage of Crosetto, 82 Wn. App. 545, 558, 918 P.2d 954 (1996).
CP at 42.
Id. at 49.
Mansell, 490 U.S. at 589; see also Hisquierdo, 439 U.S. at 579; McCarty, 453 U.S. at 230 n.22; Kraft, 119 Wn.2d at 447-48.
Mansell, 490 U.S. at 589.
See Mansell, 490 U.S. at 589.
Hisquierdo, 439 U.S. at 588; McCarty, 453 U.S. at 230 n.22; Kraft, 119 Wn.2d at 447-48, 451.
Hoskins v. Skojec, 696 N.Y.S.2d 303, 305, 265 A.D.2d 706 (1999) (“[A] court in an action for divorce or separation cannot order as spousal maintenance the allocation of compensation received .. . from ... veterans’ disability benefits . . . .”).
In re Marriage of Jennings, 138 Wn.2d 612, 980 P.2d 1248 (1999).
The decree contained mathematical inconsistencies. We ignore them, yet still state the facts material to this case, by describing the service pension as “at least” $1,627 per month.
Jennings, 138 Wn.2d at 614.
This date does not appear in the opinions. We infer it from the fact that the wife moved to vacate, modify, or clarify in October 1995.
See 10 U.S.C. § 1408(a)(4)(B); 38 U.S.C. §§ 1110, 1131.
CR 60(b)(11) provides:
The motion shall be made within a reasonable time and for reasons (1), (2) or (3) not more than 1 year after the judgment, order, or proceeding was entered or taken.... A motion under this section (b) does not affect the finality of the judgment or suspend its operation.
The new order actually gave the wife $746 rather than $813. The difference is immaterial here, so we use $813 in an effort to simplify our description.
No one contended that the trial court had violated federal law when it entered
Jennings, 138 Wn.2d at 625.
Jennings, 138 Wn.2d at 625.
RCW 26.09.170 provides with reference to a final decree, “The provisions as to property disposition may not be revoked or modified, unless the court finds the existence of conditions that justify the reopening of a judgment under the laws of this state.”
Jennings, 138 Wn.2d at 625-26.
The Jennings trial court awarded the undivided disability pension to the veteran spouse as required by Mansell’s reading of the USFSPA. The Jennings trial court divided and distributed the service pension to both spouses as expressly permitted by the USFSPA.
Incidentally, Jennings is distinguishable from this case even if one considers the federal-law question that could have been presented in Jennings. The federal-law question in Jennings was whether the USFSPA allows a state dissolution court to restore, by an award of maintenance or otherwise, service benefits that were properly divided and distributed in an original decree; that were thereafter the recipient spouse’s separate property, see Farver v. Dep’t of Ret. Sys., 97 Wn.2d 344, 348, 644 P.2d 1149 (1982); In re Marriage of Moore, 99 Wn. App. 144, 147, 993 P.2d 271 (1999); and that were later stripped from the recipient spouse by a waiver executed without her consent. The federal-law question in this case is whether the USFSPA allows a state dissolution court to divide and distribute disability benefits by awarding maintenance in its original decree. These questions are not the same, and thus Jennings is of no help here.
Williams, 84 Wn. App. at 267-68; Crosetto, 82 Wn. App. at 558.
Kraft, 119 Wn.2d at 450.