ERICH M. MARTIN, Appellant, vs. RAINA L. MARTIN, Respondent.
No. 81810, No. 82517
IN THE SUPREME COURT OF THE STATE OF NEVADA
DEC 01 2022
138 Nev., Advance Opinion 78
Consolidated appeals from district court orders enforcing a divorce decree and awarding pendente lite attorney fees. Eighth Judicial District Court, Family Division, Clark County; Rebecca Burton, Judge. Affirmed.
Marquis Aurbach Coffing and Chad F. Clement and Kathleen A. Wilde, Las Vegas, for Appellant.
Willick Law Group and Marshal S. Willick and Richard L. Crane, Las Vegas, for Respondent.
Kainen Law Group and Racheal H. Mastel, Las Vegas, for Amicus Curiae American Academy of Matrimonial Lawyers.
Pecos Law Group and Shann D. Winesett, Henderson, for Amicus Curiae Family Law Section of the State Bar of Nevada.
BEFORE THE SUPREME COURT, EN BANC.1
By the Court, STIGLICH, J.:
In this opinion, we consider whether an indemnification provision in a property settlement incident to a divorce decree is enforceable where a divorcing veteran agrees to reimburse his or her spouse should the veteran elect to receive military disability pay rather than retirement benefits. Electing disability pay requires a veteran to waive retirement benefits in a corresponding amount to prevent double-dipping. And so, where a state court divides military retirement pay between divorcing spouses as a community asset, this election diminishes the amount of retirement pay to be divided and thus each party‘s share. Federal law precludes state courts from dividing disability pay as community property in allocating each party‘s separate pay, and courts may not order the reimbursement of a nonveteran spouse to the extent of this diminution. We conclude, however, that state courts do not improperly divide disability pay when they enforce the terms of a negotiated property settlement as res judicata, even if the parties agreed on a reimbursement provision that the state court would lack authority to otherwise mandate. We also conclude that a court does not abuse its discretion by awarding pendente lite attorney fees under
FACTS AND PROCEDURAL HISTORY
Erich and Raina married in 2002 while Erich was serving in the military. They later separated, Erich filed a complaint for divorce, and the district court ordered mediation. Following mediation, the parties put the terms of their divorce agreements into a signed marital settlement agreement. According to the district court minutes, the next day, at the scheduled case management conference, Erich‘s counsel informed the district court that “the parties reached an agreement resolving all issues, and a Decree of Divorce is forthcoming.”
The district court entered the divorce decree in November 2015. In relevant part, the decree allotted to Raina half of Erich‘s military retirement benefits and provided that Erich shall reimburse Raina for any reduction in that amount if he elects to receive disability pay instead of retirement pay. A year later, the court entered an order incident to the divorce decree to provide sufficient details to allow the Defense Finance and Accounting Service (DFAS) and the parties to correctly allocate Raina‘s percentage of the military retirement benefits in accordance with the divorce decree. The court specified that the order was intended to qualify under the Uniformed Services Former Spouses’ Protection Act,
Raina subsequently moved to enforce the divorce decree. Erich opposed, arguing that reimbursement for selecting disability pay is unenforceable under federal statute and United States Supreme Court precedent. Following a hearing, the district court issued an order enforcing the divorce decree. The district court determined that federal law did not “divest the parties of their right to contract” to the terms in the divorce decree requiring Erich to reimburse or indemnify Raina for any waiver of military retirement benefits resulting in a reduction of her payments. The district court also concluded that the decree was binding on the parties as res judicata. The district court accordingly granted Raina‘s motion to enforce the reimbursement provision of the divorce decree and ordered Erich to pay Raina monthly installments in the amount she would have been entitled to if Erich had not waived his retirement pay.
After Erich filed a notice of appeal, Raina moved for pendente lite attorney fees and costs for the appeal. Erich opposed, asserting that Raina could afford her own attorney fees. The district court granted Raina‘s request, although in a reduced amount, awarding $5000 in attorney fees.
Erich appealed both the order regarding enforcement of military retirement benefits and the order awarding pendente lite attorney fees, and the two appeals were consolidated for review. The court of appeals affirmed in part the order awarding attorney fees, reversed in part the district court order enforcing the divorce decree, and remanded. Martin v. Martin, Nos. 81810-COA & 82517-COA, 2021 WL 5370076 (Nev. Ct. App. Nov. 17, 2021) (Order Affirming in Part, Reversing in Part, and Remanding). Raina petitioned this court for review under NRAP 40B. We granted the petition and invited the participation of amici curiae. The American Academy of Matrimonial Lawyers (AAML) filed an amicus brief in support of Raina. The Family Law Section of the State Bar of Nevada joined AAML‘s brief.
DISCUSSION
Erich argues that the district court erred by enforcing the divorce decree and ordering indemnification because federal law, including
In response, Raina argues that the district court appropriately ordered indemnification pursuant to the divorce decree. She asserts that the district court correctly determined that res judicata applied because the parties negotiated and agreed to the terms of the divorce decree and that federal law did not preempt the court from enforcing the final, unappealed decree. She argues that Howell is distinguishable because contractual indemnification was never raised in Howell and asserts that the United States Supreme Court left open the possibility that parties may consider that a spouse could later waive retirement pay when drafting divorce terms.3
We review questions of law, including interpretation of caselaw, de novo. Liu v. Christopher Homes, LLC, 130 Nev. 147, 151, 321 P.3d 875, 877 (2014) (reviewing a district court‘s application of caselaw de novo); Wyeth v. Rowatt, 126 Nev. 446, 460, 244 P.3d 765, 775 (2010) (“Appellate issues involving a purely legal question are reviewed de novo.“). Statutory construction likewise presents a question of law that we review de novo. Leven v. Frey, 123 Nev. 399, 402, 168 P.3d 712, 714 (2007). “[W]hen a statute‘s language is plain and its meaning clear, [we generally] apply that plain language.” Id. at 403, 168 P.3d at 715.
Congress passed the Uniformed Services Former Spouses’ Protection Act (USFSPA) in 1982. See Pub. L. No. 97-252, §§ 1001-02, 96 Stat. 730-35 (1982) (codified at
The Supreme Court has held “that the [USFSPA] does not grant state courts the power to treat as property divisible upon divorce military retirement pay that has been waived to receive veterans’ disability benefits.” Mansell v. Mansell, 490 U.S. 581, 594-95 (1989). While retirement pay may be a community asset subject to division by state courts, disability benefits are not. Id. at 588-89. The Court further clarified that a state court may not “subsequently increase, pro rata, the amount the divorced spouse receives each month from the veteran‘s retirement pay in order to indemnify the divorced spouse for the loss caused by the veteran‘s waiver.” Howell, 581 U.S. at 214, 137 S. Ct. at 1402. When the Howell parties divorced, the divorce decree treated the veteran husband‘s future military retirement pay as community property and awarded the nonveteran wife 50 percent of the retirement pay as separate property. Id. at 218, 137 S. Ct. at 1404. After the husband waived some military retirement pay for disability benefits, the wife sought to enforce the decree in state court, and the court ordered the husband to pay the 50-percent portion of the original retirement amount. Id. The Supreme Court reversed, concluding any reimbursement was a division of disability benefits by the state court, which federal law prohibits. Id. at 222, 137 S. Ct. at 1406. Howell and Mansell thus provide that federal law preempts state courts from treating disability benefits as community property that may be divided to reimburse a divorcing spouse for a lost or diminished share of retirement pay. Howell, 581 U.S. at 221, 137 S. Ct. at 1405; Mansell, 490 U.S. at 594-95.
Neither of those cases, however, involved the parties agreeing to an indemnification provision in the divorce decree property settlement. See Howell, 581 U.S. at 218, 137 S. Ct. at 1404 (involving a state court ordering husband to pay wife the original amount set out in the divorce decree after he waived some military retirement pay for disability benefits); Mansell, 490 U.S. at 586 (involving a state court declining to modify a divorce decree where the parties divided disability benefits as community property). The Alaska Supreme Court distinguished Howell on this basis, explaining that
The instant matter is thus distinguishable. Here, Raina and Erich expressly agreed while negotiating marital settlement terms, as incorporated in the divorce decree, that “[s]hould Erich select to accept military disability payments, Erich shall reimburse Raina for any amount that her share of the pension is reduced due to the disability status.” Howell and Mansell direct that state courts lack the authority to treat disability pay as community property and to divide it in a divorce disposition. They do not bar parties themselves from taking into account the possibility that one divorcing spouse may elect to receive disability compensation in the future and structuring the divorce decree accordingly.
Federal law does not preempt enforcement
In light of our conclusion that Howell and Mansell are distinguishable, we proceed to Erich‘s argument that Congress intended to preempt state law in this instance. The Supremacy Clause of the United States Constitution provides that federal law is the supreme law of the land.
We further conclude that conflict preemption also does not apply. The Supreme Court has recognized that Congress, in enacting
Neither Howell nor Mansell confronted the intersection of
Nevada law requires enforcement of the decree of divorce
As federal law does not preempt enforcement of the divorce decree, we turn to analysis under Nevada law. Erich argues the reimbursement provision of the divorce decree is unenforceable on contract grounds and that the district court erred by enforcing the decree through the doctrine of res judicata. In this regard, he contends this court should revisit Shelton, contending that the decision is incompatible with federal law concerning veterans’ disability benefits.6
Divorce decrees that incorporate settlement agreements are interpreted under contract principles, Shelton, 119 Nev. at 497-98, 78 P.3d at 510, and are subject to our review de novo, May v. Anderson, 121 Nev. 668, 672, 119 P.3d 1254, 1257 (2005). See also Grisham v. Grisham, 128 Nev. 679, 685, 289 P.3d 230, 234 (2012) (providing that an agreement between parties to resolve property issues pending divorce litigation is governed by general contract principles). An enforceable contract requires “an offer and acceptance, meeting of the minds, and consideration.” May, 121 Nev. at 672, 119 P.3d at 1257. “Parties are free to contract, and the courts will enforce their contracts if they are not unconscionable, illegal, or in violation of public policy.” Rivero v. Rivero, 125 Nev. 410, 429, 216 P.3d 213, 226 (2009), overruled on other grounds by Romano v. Romano, 138 Nev., Adv. Op. 1, 501 P.3d 980 (2022).
Res judicata, or claim preclusion, applies when “[a] valid and final judgment on a claim precludes a second action on that claim or any part of it.” Univ. of Nev. v. Tarkanian, 110 Nev. 581, 599, 879 P.2d 1180, 1191 (1994), holding modified on other grounds by Exec. Mgmt., Ltd. v. Ticor Title Ins. Co., 114 Nev. 823, 963 P.2d 465 (1998). This court applies a three-part test to determine whether res judicata applies: “(1) the parties or their privies are the same, (2) the final judgment is valid, and (3) the subsequent action is based on the same claims or any part of them that were or could have been brought in the first case.” Five Star Capital Corp. v. Ruby, 124 Nev. 1048, 1054, 194 P.3d 709, 713 (2008) (footnote omitted),
This court has held that state courts may enforce divorce decrees as res judicata even if those decrees involve distributions of military disability pay. Shelton, 119 Nev. at 496-97, 78 P.3d at 509-10. In Shelton, this court considered a divorce decree designating a veteran husband‘s military retirement pay and disability benefits as community property. Id. at 494, 78 P.3d at 508. The parties agreed that the husband would receive $500 as half of his retired pay and $174 in disability pay and that the wife would receive $577 as the other half of the retirement pay. Id. After the husband was deemed fully disabled, he waived his military retirement benefits and stopped paying the wife. Id. The wife moved to enforce the divorce decree and sought the agreed-upon $577. Id. This court concluded that the parties clearly contracted for the husband to pay the wife $577 each month and enforced that obligation as res judicata. Id. at 497-98, 78 P.3d at 510-11 (explaining that the parties agreeing to a payment of $577 a month was more specific than simply “one-half” and that this amount was more than the amount the husband would receive from just the military retirement-specific pay). The court determined that Mansell and its progeny did not preclude enforcing the husband‘s obligations pursuant to the divorce decree. Id. at 495-96, 78 P.3d at 509. It observed that the husband may satisfy his contractual obligations with whatever monies he wished, even if that involved using disability pay. Id. at 498, 78 P.3d at 510-11.
Here, Erich and Raina engaged in negotiations, which were reduced to a signed settlement agreement and incorporated into the divorce decree. This created a valid, unambiguous contract between the parties. The divorce decree provided that Erich would reimburse Raina in the event that her share of the retirement benefits was reduced by Erich‘s decision to accept military disability payments. This indemnification provision may be enforced through contract principles, consistent with Shelton‘s embrace of contract law to govern a military disability indemnification provision in a divorce decree. The provision at issue is unambiguous and requires Erich to reimburse Raina for her share of any amount he elects to waive from his retirement pay.
We conclude that res judicata applies, and the obligations set forth in the decree cannot now be relitigated because Raina and Erich are the same parties in the matter, the divorce decree is a valid final judgment, and the action here enforces the original decree without modifying it or introducing matters that could not have been addressed initially. Cf. Mansell, 265 Cal. Rptr. at 229, 236-37 (precluding challenge to distribution of disability pay where husband stipulated to its inclusion in property settlement and declining to reopen and modify settlement); In re Marriage of Weiser, 475 P.3d 237, 246, 249, 252 (Wash. Ct. App. 2020) (affirming enforcement of divorce decree under res judicata where lower court enforced the original terms and did not modify its property disposition and rejecting argument that Howell barred distribution of military disability pay). Accordingly, we find no reason to depart from our decision in Shelton. And we therefore conclude the district court properly enforced the divorce decree under contract principles and res judicata.
The district court did not abuse its discretion in awarding pendente lite attorney fees
Erich argues that the district court abused its discretion by awarding Raina $5000 for pendente lite attorney fees. He contends the district court erred by not engaging
“In any suit for divorce the court may . . . require either party to pay moneys necessary . . . [t]o enable the other party to carry on or defend such suit.”
After Erich filed the initial appeal, Raina moved for pendente lite attorney fees and costs, requesting the district court award her $20,000 to defend against the appeal. The court considered the financial circumstances of both parties and found that “Erich‘s income currently is about three times as high as Raina‘s income.” The court highlighted that Raina‘s income had been reduced by COVID issues while Erich was still making his full-time income and that Raina would therefore be more financially impacted by the proceedings. At the same time, the court recognized that Raina‘s household expenses were reduced by her domestic partner but also noted that her domestic partner was not obligated to assist Raina in paying for these legal proceedings. After considering these circumstances, the court declined to award Raina all attorney fees sought and instead ordered Erich to contribute $5000 to Raina‘s pendente lite attorney fees.
We ascertain no abuse of discretion in this decision. The district court properly considered the financial circumstances of each of the parties before ordering attorney fees pursuant to
CONCLUSION
Under federal law, state courts may not treat disability pay as community property that may be divided in allocating the parties’ separate property. This prohibition does not prevent state courts, however, from enforcing an indemnification provision in a negotiated property settlement as res judicata. As res judicata applies to the divorce decree at issue here, we conclude the district court properly ordered its enforcement. We further
STIGLICH, J.
We concur:
PARRAGUIRRE, C.J.
HARDESTY, J.
HERNDON, J.
CADISH, J., with whom PICKERING, J., agrees, concurring:
I agree with the majority that, under our state law principles of res judicata, or claim preclusion, Erich‘s challenge to the parties’ divorce decree is barred, and I would affirm the district court decision on that basis. However, I write separately because I disagree that the Howell and Mansell cases are otherwise distinguishable or that the fact the parties here entered into a settlement agreement that was later incorporated into the divorce decree prevents the indemnification provision at issue from being preempted under the Uniformed Services Former Spouses’ Protection Act,
In this case, during their underlying divorce proceedings, the parties reached a marital settlement agreement at a mediation that included provisions by which Erich and Raina would each receive their portion of Erich‘s military retirement when he retired, based on a calculation of the community property interest therein. It further stated, “Should [Erich] elect to accept military disability payments, [Erich] shall reimburse [Raina] for any amount her amount of his pension is reduced due to the disability status from what it otherwise would be.” The divorce decree subsequently entered by the district court provided in pertinent part, “Raina shall be awarded the following[:] . . . One-half (1/2) of the marital interest in the [sic] Erich‘s military retirement. . . . Should Erich select to accept military disability payments, Erich shall reimburse Raina for any amount that her share of the pension is reduced due to the disability status.” The section of the decree awarding property to Erich has a similar provision, including verbatim the last sentence requiring reimbursement by Erich for any reduction in Raina‘s share of the pension due to his acceptance of disability benefits. These provisions in the decree are contrary to federal law and preempted, under the USFSPA and decisions of the United States Supreme Court interpreting it.
In Mansell v. Mansell, 490 U.S. 581, 594-95 (1989), the Supreme Court held “that the Former Spouses’ Protection Act does not grant state courts the power to treat as property divisible upon divorce military retirement pay that has been waived to receive veterans’ disability benefits.” Then in Howell v. Howell, 581 U.S. 214, 222, 137 S. Ct. 1400, 1406 (2017), the Supreme Court reiterated this holding, emphasizing that describing the order as just requiring the military spouse to “reimburse” or “indemnify” the nonmilitary spouse for a reduction in retirement pay as a result of such waiver does not change the outcome, as “[t]he difference is semantic and nothing more.” The Court specifically noted that the indemnification there was a “dollar for dollar” payment of the “waived retirement pay.” Id. In concluding this portion of its analysis, the Court stated, “Regardless of their form, such reimbursement and indemnification orders displace the federal rule and stand as an obstacle to the accomplishment and execution of the purposes and objectives of Congress. All such orders are thus pre-empted.” Id. (emphasis added).
The majority attempts to distinguish Mansell and Howell because those cases did not “involve[] the parties agreeing to an indemnification provision in the divorce decree property settlement.” Maj. Op., ante at 8. The majority also says that these cases do not deal with the interplay between the USFSPA and “such contractual issues.” Id. at 10. However, this ignores that the Mansell case did involve a divorce where the parties “entered into a property settlement which provided, in part, that Major Mansell would pay Mrs. Mansell 50 percent of his total military retirement pay, including that
Further, as discussed above, the Court made clear in Howell that calling it “indemnification” rather than a division of community property did not avoid the preemptive effect of the USFSPA. 581 U.S. at 222, 137 S. Ct. at 1406. The fact that the disability election came after the divorce decree was finalized, as in the instant case, also did not change that outcome. Id. at 218-222, 137 S. Ct. at 1404-06. The Howell Court thus acknowledged that, at the time of divorce, the parties may consider that the value of future military retirement pay may be less than expected should an election for disability pay be made, but simultaneously held that state courts may not account for this contingency by ordering reimbursement or indemnification if that occurs. Id. at 221-222, 137 S. Ct. at 1405-06. The Court held the following:
[A] family court, when it first determines the value of a family‘s assets, remains free to take account of the contingency that some military retirement pay might be waived, or . . . take account of reductions in value when it calculates or recalculates the need for spousal support.
We need not and do not decide these matters, for here the state courts made clear that the original divorce decree divided the whole of John‘s military retirement pay, and their decisions rested entirely upon the need to restore Sandra‘s lost portion. Consequently, the determination of the Supreme Court of Arizona must be reversed.
Id. at 222, 137 S. Ct. at 1406 (citations omitted).
Similarly, here, the provision of the divorce decree at issue discusses the division of the parties’ assets and is in an entirely separate section than that covering spousal support, or alimony, as they are separate concepts under Nevada law. See
The majority asserts that “[b]y its plain language, nothing in [the USFSPA] addresses what contractual commitments a veteran may make to his or her spouse in a negotiated property settlement incident to divorce.” Maj. Op., ante at 10. But Raina here does not seek to enforce a private contract or assert a claim for breach of a contract; rather, as the majority notes, she “moved to enforce the divorce decree.” Id. at 4. In response to her motion, “the district court issued an order enforcing the divorce decree.” Id. Indeed, the majority‘s analysis of the applicability of res judicata principles acknowledges that this case involves enforcement of a “final judgment [that] is valid.” Id. at 13 (quoting Five Star Capital Corp. v. Ruby, 124 Nev. 1048, 1054, 194 P.3d 709, 713 (2008)). Thus, the question is not whether a private contract can be enforced, but whether a court-entered judgment can be enforced. And the Supreme Court has made clear that such judgments are contrary to federal law and thus preempted, even when containing provisions agreed to by the parties. A state court cannot enter an order that is contrary to federal law—and would thus be preempted—simply because it is entered based on the parties’ settlement agreement. Mansell, 490 U.S. at 587-95 (holding preempted enforcement of a divorce decree provision based on the parties’ settlement
The majority incorrectly conflates the application of preemption principles to enforcement of the provision in the divorce decree and their application to res judicata or claim preclusion. While the Mansell Court recognized that the application of res judicata principles to the parties’ divorce settlement was a matter of state law, 490 U.S. at 586 n.5, the ability to treat disability benefits as divisible even when based on a settlement agreement was entirely a matter of federal law since it was preempted by the USFSPA, id. at 594-95. As the Supreme Court of Michigan held in Foster v. Foster, while “the offset provision in the parties’ consent judgment of divorce impermissibly divides defendant‘s military disability pay in violation of federal law,” “the doctrine of res judicata applies even if the prior judgment rested on an invalid legal principle,” and “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.” No. 161892, 2022 WL 1020390, at *6-7 (Mich. Apr. 5, 2022) (quoting, in the last clause, Pierson v. Pierson, 88 N.W.2d 500, 504 (1958)). Similarly, under Nevada law, “[a] decree of divorce cannot be modified or set aside except as provided by rule or statute.” Kramer v. Kramer, 96 Nev. 759, 761, 616 P.2d 395, 397 (1980). Thus, while the indemnification provision in the divorce decree is an impermissible division of military disability pay in violation of federal law, I agree with the majority that Erich may not now collaterally attack the decree, which has become final. I thus concur in the majority‘s decision to affirm.
CADISH, J.
I concur:
PICKERING, J.