*1 Mary Plaintiff-Respondent-Cross- K. Sulzer,
Appellant-Petitioner, Mary Defendant-Appellant-Cross- Susan Diedrich,
Respondent.
Supreme Court
No.
argument
02-0036. Oral
May
2003. Decided
July
For the defendant-appellant-cross-respondent there awas brief by John K. Brendel and Brendel Law Offices, Brookfield, and oral argument by John K. Brendel. 1. ANN WALSH BRADLEY, J. The petitioner,
498 (Sulzer), Mary published of a court Sulzer seeks review appeals that reversed an order of the circuit of decision court order its initial order court.1 The circuit vacated imposing Instead, a constructive trust. it awarded money judgment in connection the divi- Sulzer a husband, of the retirement of her former sion accounts (Fred), Fred Diedrich which were be divided Upon death, at the time of their divorce in 1989. Fred's subsequently were converted to survivor- respondent Mary ship wife, the benefits with his second (Diedrich), beneficiary. Diedrich named as the The appeals erred court of concluded that the circuit court imposing it its initial order a constructive when vacated funds, and instead trust on Sulzer's these money judgment. awarded a analyzing
¶ 2.
the amount that should be sub
ject
the court of
trust,
to the constructive
expe
that it
include the investment
determined
should
rience of Sulzer's
of the accounts between
1995,
the date of Fred's death in
but
1989 divorce and
experience after
should not include the investment
App
Diedrich,
278, 2,
death.2 Sulzer v.
2002 WI
Fred's
agrees that a
684,
2d
¶ 3. While we the of a case, constructive trust is warranted in this con- we clude that the constructive trust should include the on Sulzer's of the retire- through payment ment accounts the date of to Sulzer. modify appeals, Wetherefore the decision of the court of affirm modified, the decision as and remand to the proceedings circuit court for further consistent with opinion. this
¶ 4. The retirement accounts at issue in this case (WRS) System are Fred's Wisconsin Retirement ac- compensation count and his deferred account adminis- by Copeland Companies (Copeland) tered at the During time of the divorce.3 Sulzer and Fred's divorce proceedings, parties stipula- entered into an oral following exchange place regarding tion. The took pension benefits: addition, parties
ATTORNEY D'ANGELO:... agreed equally respondent's have to divide all of the through the System Wisconsin Retirement interests. date, today's the value established as of and all of respondent's interest in his compensation deferred program through the State of Wisconsin. So,
THE plans COURT: those two retirement or in- plans going vestment are to be divided qualified domestic relation order. divorce, compensation At the time of the Fred's deferred
plan managed by was the Copeland Companies. Apparently, the company managing plan changed. However, has since clarity, holding we refer to the account compensa deferred account, Copeland tion benefits as the as did circuit court appeals. and the court of *5 compensa-
ATTORNEY D'ANGELO: On the deferred slightly tion but the State of Wisconsin a different uses division, program for but that is the intent of it. going qualified
THE COURT: ... are to use a compensation domestic relation order for the deferred going are plan, approach, we to use another which going up owning present is to end with her half of his today plan. Okay. value as of in his retirement Not exactly order, a domestic relation it's another kind of whereby procedure by up used the State she ends receiving half of it.... In with the oral conformity stipulation, divorce, 12, 1989, of entered on December
contained a Division" section that "Property provided: parties respondent's
The will all of inter- divide retirement, pension, profit sharing, est in the or de- compensation through ferred benefits the Wisconsin System Retirement or the State of Wisconsin. The respondent compensation plan pres- deferred is ently by Copeland Companies administered and his are the State retirement benefits of Wisconsin System. parties' Retirement It is the intent to have on the date these benefits divided as to their balance 6, 1989, Qualified September trial on the divorce Order, Domestic Relations or an order of the Court having a similar effect. divorce, 6. After Sulzer obtained various in her efforts to the division
circuit court orders cause in the of the retirement accounts as provided an August divorce she obtained judgment. for Division of Benefits the Wisconsin directing Order Fred's Trust Funds to issue Department Employee checks to the Clerk of Courts of Waukesha benefit County payments pursuant to the divorce for division rejected judgment. Copeland plan The administrators order. this
¶ A Domestic Relations Order was then en- 7. February Copeland account, in as to the tered ordering among things, designate to, Fred other Sulzer beneficiary the as the under the account as to amount judgment. provided in the divorce Fred failed to name beneficiary required the order. Sulzer as the as ¶ 1995, 8. In March an Order to Divide Wisconsin System Benefits was entered as to the Retirement WRS order, Quali- account. The which was intended to be a (QDRO), fied Domestic Relations Order awarded Sulzer However, 50% of the value of the WRS account. WRS QDRO because, to be at considered unenforceable exception time, QDRO to the WRS restrictions apply marriages prior April 28, did not to terminated to 1990. May 9, Fred Diedrich 9. married on 1992.
Shortly May designated thereafter, 22, on 1992, he beneficiary Copeland Diedrich as the and WRS accounts. February Fred died in Soon his 1995. after requested
death, her Sulzer of the retirement Copeland, provided from WRS and as in the judgment. requests Both divorce were denied because designated beneficiary not Sulzer was on the accounts. May changed permit
¶ 11. 1998, law was to the division of retirement accounts in accordance WRS agreements pursuant QDRO reached to divorce judgments granted prior April on 27, and 1990. In change response requested law, implement responded QDRO. WRS WRS Febru- ary setting refusing forth its reasons for to honor QDRO. WRS stated that it would not honor the prior QDRO in this case because Fred died change already in the law and his benefits had been paid designated beneficiary. to Diedrich as the
¶ 12. Sulzer commenced this action in December seeking against a constructive trust Diedrich, and any just appropriate equitable other relief. After delays, postponements, adjournments, numerous imposed the circuit court a constructive trust on the September hearing retirement accounts in 2000. At a monetary determine Sulzer's interest in the retirement fully accounts, the court, circuit for reasons not ex- plained on the record, vacated the constructive trust monetary judgment and awarded Sulzer a in the $169,482. amount of This is the amount that inwas Sulzer's of the retirement accounts as of the together date of divorce with the investment *7 portion up hearing, on that to the date of the by expert. calculated Sulzer's appealed
¶ judg 13. Diedrich the circuit court's cross-appealed. appeals ment and Sulzer The court of vacating concluded that the circuit court erred in awarding money judgment. constructive trust and a App Diedrich, ¶ Sulzer v. 2002 WI 258 Wis. 2d 684, 654 N.W.2d 67. It determined that the circum imposition stances warranted of a constructive trust. Id.
¶ 14. The court also concluded that Sulzer was appreciation not entitled to after Fred's death because the funds had been converted from retirement benefits survivorship noting Id., ¶ to Further, benefits. 17. equity, the action in sounded it concluded that Sulzer was not entitled to interest because of her numerous requests postponements and because Diedrich did wrongfully money. not Id., retain the use Sulzer's appeals matter to the remanded the
¶ 18. The court trust. of the constructive circuit court for ¶ Id., II whether the must determine
¶ case, In this we give effect is warranted to a constructive trust use of judgment. is, If it we must in a divorce terms contained expe- extent to which the address the then retirement accounts of the of Sulzer's rience constructive trust. included should be impose question a con of whether 16. The Singer equity. Jones, trust sounds structive 1992). (Ct. App. 191, 194, 496 N.W.2d 2dWis. type of apply of review in this standard a two-tiered legal the construction issues, such as Id. As to the case. judgment, apply a de novo standard. we of the divorce grant the whether to ultimate decision Id. As to the apply equitable trust, we relief of a constructive discretionary Id. standard. discretionary application stan- 17. Our of whether to the ultimate decision
dard of review pro- complicated impose trust is a constructive complaint history re- of this case. Sulzer's cedural quested impose court a constructive the circuit initially However, it did so. and the circuit court and ordered a constructive trust later vacated the money judgment. noted that The court of forth on the record its reason- court did not set circuit *8 judgment. ordering money ing Sulzer, 258 Wis. for on the circuit court did so It assumed that 2d unjust grounds Id. enrichment. appeals then determined 18. The court of unjust necessary en- establish one of the elements 504 namely requirement richment, that a benefit be upon plaintiff, conferred the defendant did not Id., ¶ exist here. 11. It therefore concluded that the unjustment elements of enrichment had not been met money judgment thus, as a matter of law, a was erroneously granted. Accordingly, Id. it discussed and imposing reaffirmed the court's intial order a construc- tive trust.
¶ 19. We first discuss the circumstances in which imposition of a constructive trust is warranted and appeals correctly conclude that the court of affirmed the use of a constructive trust in this case.4Wethen address appropriate period during which the investment of Sulzer's of the retirement ac- counts should be included in the calculation and con- period clude that this should extend from the date of paid divorce until the date that the funds are Sulzer.
4 We address the constructive
trust
issue
this case even
though Diedrich
petition
did not file a
for
request
cross-review
ing
general rule,
review of this issue. As a
"a party may not raise
a new issue in this court that
require
will
a modification of the
decision of the court
appeals
filing
petition
without
Co.,
review." Ranes v.American Family Mut. Ins.
review or cross
(1998).
n.4,
219 Wis. 2d
Here,
H-i HH 1—I equitable device ¶ is an A constructive trust 20. unjust prevent when a enrichment which arises used party unjust of which is a the retention receives benefit party. Wilharms, 2d 93 Wis. to another Wilharms (1980). unjust However, enrich 678-79, 287 N.W.2d imposing a to warrant alone is not sufficient ment be Rather, a constructive trust will trust. constructive property only party imposed received the when the who by specific in our case means as enumerated it obtained receipt property being the means law, one such by mistake: imposed only in limited
A trust will be constructive by held someone legal The title must be circumstances. not be equity good conscience should who enjoyment. Title also have must entitled to beneficial fraud, by means of actual or constructive been obtained mistake, relationship, duress, of a confidential abuse wrong, by any a or form of unconscio- commission nable conduct. (citations omitted).
Id. appeals The court of concluded a con- of this case warranted facts Sulzer, 2d 15. It noted trust. 258 Wis. structive divide the of Sulzer and Fred was to that the intent equally. Copeland Further, Id. it WRS and title to these accounts that Diedrich obtained observed by only otherwise, Fred, mistake or whether because beneficiary incorrectly on Diedrich as the sole named according court of result, Id. As a the accounts. appeals, portion in the of the funds allocated to Sulzer wrongfully being held were divorce equity good Diedrich, inwho conscience should not enjoyment. be entitled to their beneficial Id. agree
¶ 22. court of and the judgment, circuit court that divorce written both *10 pronouncements, clearly expressed and oral Sulzer's and to Fred's intent divide the retirement accounts as of the date of To the divorce. Id. allow Diedrich the to retain funds attributable Sulzer's parties would thwart the intent of the unjust be would Sulzer. argues imposition
¶ 23. Diedrich the that of a against appropriate. constructive is trust her not She nothing notes that is the in record to indicate that there anything wrongful. did However, she observed in wrongful Wilharms, while conduct can serve as the necessary trust, basis for a constructive it is not that person imposed whom on a constructive trust is any wrongdoing. have Wilharms, committed 93 Wis. 2d Singer, 678-79; at see also 173 Wis. 2d 198 n.2. A at may constructive be trust warranted circumstances person property in which a result of obtains as the person any committing wrong. mistake, with that not Wilharms, 93 2dWis. at 679-80. By incorrectly otherwise, mistake or Fred beneficiary. addition,
named Diedrich as the In sole at divorce, time of their Sulzer and Fred were under a ability convey mistaken that belief Fred had the one-half of the retirement accounts to Sulzer. Wil- grounds harms, we noted that as a for the mistake imposition "may of a refer to a constructive also conveyed arising property mistake when is not which grantor convey."Wilharms, intended to 93 Wis. 2d 680 n.2. at proceedings, divorce 25. At the time of the assumption operating under the Fred were possible it to divide the retirement
that would be equally. The divorce indicates assign parties of each of that Fred one-half intended out, As it retirement accounts to Sulzer. turned his existing permit not Fred to make such an then law did assignment.5 mistake in and the This mutual beneficiary naming accounts in of Diedrich as the together unjust results enrichment that portion of the retention of Sulzer's from Diedrich's grounds a construc- accounts, are tive trust. questions
¶ 26. Diedrich whether a constructive imposed because, time of trust can be this case at the judgment, permit did not Fred to the divorce the law assign maintains the retirement accounts to Sulzer. She illegal, QDRO since of a was Sulzer is the use *11 nothing. Additionally, entitled to she asserts that a constructive trust this case will agree encourage provisions are con- others to to that day trary be to in case the law should some the law changed. specifically
¶ 27. The did of divorce not require provided QDRO a QDRO, a but "or an order having a effect." need not of the Court similar legal speculate a at the whether mechanism existed 40.08(1) (1987-1988) § in rel provided Wisconsin Stat. part: evant to, any rights payable or and The benefits other interests of member, any any beneficiary or distributee of estate under of the plans department... by
benefit administered shall not be execution, assignable, equity, subject levy, to in law or or be either attachment, garnishment legal process except specifi- or as other cally provided in this section. sufficiently time of the divorce that would have ensured comply of the to division accounts with the divorce judgment. Lindsey As the indicates, case the circuit discretionary powers court had broad over the mecha- pensions nism of the division of in order to fulfill parties equally. Lindsey intent of the to divide them (Ct. Lindsey, App. 684, 686, Wis. 2d 412 N.W.2d132 1987). dispute Here, is no there as to the intent parties pensions equally to divide the value of the they
of the time of the divorce. That were able to not legal identify a mechanism at the unfortunate, time was preclude but does this not the circuit court from now imposing accomplish a constructive trust in- to their tent.6 respect allegation
¶ 29. With to Diedrich's imposing a trust in constructive this case will somehow encourage agree provisions others to con- that are trary any law, no there is indication parties knowingly agreed provision to a that was not legally permissible. If Sulzer had known that there was legal no mechanism divide the benefits at and issue intentionally law, had defied she would able not be
6 Currently, by the type sought of division Fred accomplished can qualified be a order domestic relations (QDRO). alive, If Fred were division of could be 40.08(lm) (2001-2002) QDRO. accomplished § with a Wis. Stat. pursuant qualified contains the rules to which domestic 1,1982 relations after January order issued on or can be used to rights divide participants the accumulated benefits *12 marriages whose a have been terminated court on after or However, January 1982. is because Fred deceased and the name, QDRO accounts have been titled a cannot Diedrich's accomplish be used to the division. on a mistake that her conduct was based
to assert that grounds imposing a constructive could serve as trust.
¶ reten- sum, In conclude that Diedrich's 30. we portion of of funds that are attributable to Sulzer's tion unjust to Sulzer. the retirement accounts would be Further, Diedrich the transfer of those funds to resulted regarding ability a the to divide from mutual mistake from at the time of the divorce and Fred's the accounts beneficiary naming Diedrich the of all of the of including portion. therefore de- accounts, Sulzer's We of a constructive trust is termine that warranted in this case.
IV appropri- ¶ of 31. turn now to discussion period during experience ate which the portion of retirement accounts should be Sulzer's subject of the amount included the calculation appeals court constructive trust. The determined that Sulzer is not entitled the investment past the of her of the retirement accounts date Sulzer, ¶ of Fred's 258 Wis. 2d 17-18. It death. upon that, death, Fred's at issue concluded funds compensation converted from retirement and deferred survivorship ¶ Id., 17. benefits to benefits. according appeals, ¶ Thus, court of only is entitled the accounts upon Id., received death. that she would have Fred's goes argues if 17-18. Diedrich further anything, Sulzer is entitled to the amount should be frozen as of the date of divorce. disagree the court of 33. We both case,
and Diedrich. this constructive trust should *13 experience portion include the investment of Sulzer's up payment. the accounts until the date of support argument ¶ 34. To her that the amount should be frozen as of the date of the divorce, Diedrich stipulation cites the oral in which the value to be today's divided was to be "established as of date." She also cites the divorce in which the accounts September are to be "divided as to their balance on" 6, argues 1989. Diedrich that there would be no need to specific specific make reference to a balance on a date if parties did not intend that to be a limitation. stipulation judg- 35. The oral and the divorce ment do contain a limitation, but the limitation not is an elimination of Sulzer's entitlement to the invest- experience portion ment of her after the date of the provides Rather, divorce. the limitation that she is not any portion any entitled to of Fred's contributions to periods the retirement accounts that are attributable to experi- after the date of the divorce or the investment ence of such contributions. stipulation judg- 36. The oral and the divorce express provision regarding
ment do not contain an experience calculation of investment on Sulzer's stipulation of the Nevertheless, accounts. both the oral and the divorce decree reflect Fred's and Sulzer's intent equally. to divide the retirement However, accounts it possible immediately was not effect the division. We accomplish parties that, conclude dividing the intent of the the retirement as of the date divorce, Sulzer should be entitled to the invest- ment on her of the accounts. analy ¶ 37. This conclusion is consistent with our Washington Washington, insis 234 WI Wis. 2d case, N.W.2d 261. we a construed' judgment dividing pension divorce a fund to include judgment, experience. which involved The investment lump immediately, payable pension not of a sum share experi of whether silent on the issue was payment and when and how included ence would be Id., ¶ this determined made. would be *14 ambiguous. ¶ Id., 32. We made the silence great lengths to court went to the circuit noted that equally property and that was divided that the ensure experience of investment allocation failure to consider unequal of pension in an division result the could on property. ¶ Id., 28. justifications for ex- that exist
¶ The same 38. beyond experience tending the date of the investment extending apply the investment to divorce also why beyond experience no reason death. There is Fred's por- experience to Sulzer's attributable the investment of accrue to the benefit Fred's death should tion after rather than Sulzer. Diedrich Washington, that the failure to ¶ we noted 39. give experience the husband would divide investment approximately experience years on of the investment spouses. lump Id. observed to both sum awarded gave invest- all of the a decision that husband contrary appeared experience on shares ment both property objective to divide the circuit court's appeared Id. unfair. Washington, ¶ the failure to include 40. Similar up payment experience to Sulzer until the investment judg- objective contrary appears the divorce property parties to divide ment and the intent appears equally. to allow it unfair to Sulzer Further, experience years of investment Diedrich to retain seven Diedrich is entitled of the accounts. on Sulzer's Fred have than what would no more and no less received.
¶ 41. The court of concluded that longer funds at issue are no benefits retirement but survivorship were converted to benefits that were dis- upon Sulzer, tributed Fred's death. 2dWis. is, 17. The however, fact that the funds remain in Copeland WRS and accounts and are traceable. This may abe different case if Diedrich had removed the making tracing impossible. death, funds after Fred's However, is not the case here. The Copeland funds remain WRS accounts and the experience easily actual investment can be traced. We conclude therefore that the constructive trust should include the investment of Sulzer's through payment the accounts the date of to Sulzer. ¶ 43. We remand this case to the circuit court for appropriate remand, calculations.7 On the circuit payout court should order Diedrich to cause *15 portion including accounts, Sulzer's of the the invest- experience. ment type We note court, that a circuit in this discretionary authority case, of has the to order an specific payout option individual to select a retirement 7 We note that the expert's calculations were made as of 8, 2001, August judgment. the date of the circuit court Remand appropriate only is experience not to determine the investment payment, between that date and the date of but also to consider any changes may whether in the law have occurred since the date of the that could affect the valuation. argument, At oral Diedrich asserted that upon calculations remand should take into consideration that Fred died before reaching age 50. It is unclear if from the record the calculations need age to be modified to reflect his at the time of death. In addition, argument brief, both at oral in reply and her acknowledged paid that the amount to her should be reduced the amount of the tax consequences directly to Diedrich that are payout attributable of portion. Sulzer's Lindsey, accomplish of retirement assets. a division to Lindsey, the circuit court 2d at 686. Similar 140 Wis. authority discretionary to order in this case has option payout of the WRS Diedrich to select pay Copeland over her to that will allow promptly and com- of those accounts Sulzer's pletely. the circumstances sum, conclude that we imposition constructive of a
of this case warrant include the constructive trust should and that the trust experience retire- on Sulzer's investment payment through date of to Sulzer. ment accounts appeals, modify of the court of the decision Wetherefore court for remand to the circuit modified, as affirm opinion. proceedings consistent with this further appeals By of the court of decision the Court.—The modified, the cause is and, affirmed is modified and remanded. (concurring part, SYKES, S. J. 45. DIANE majority's
dissenting part). agree decision I with the impose I in favor of Sulzer. a constructive trust majority opinion disagree, however, Part IV of the a of it authorizes the to the extent in an amount includes constructive up the retirement accounts payment. I affirm the court of would the date including determination that issues, its on all expe- the investment trust should include constructive only until the date the retirement accounts rience of death. Fred Diedrich's *16 majority trust is notes, a constructive 46. As the unjust prevent "equitable device created law
an 2d Wilharms, 93 Wis. v. enrichment." Wilharms (1980); majority op., ¶ 20. While 678, 287 N.W.2d equities fully support in this case against Mary though a constructive trust Diedrich even fault, she is not at her blamelessness should come into play discretionary in the determination of the extent to experience which investment on the ac- retirement counts is awarded. precipitates 47. The mutual mistake that impose justifies
need to a constructive this case experience an award that includes the investment on up Sulzer's of the retirement accounts to the justify forcing date of Fred Diedrich's death; it does not Mary disgorge experience Diedrich to the investment survivorship on her interest her deceased husband's Mary played retirement accounts. Diedrich no role in unjust deprivation the mistake which led to the dispute Sulzer's of the retirement accounts. The essentially parties, here is between two innocent one party original who awas mistake and one who was not. majority significant
¶ 48. The finds it Copeland funds remain in the WRS and accounts Majority op., Mary ¶¶ are therefore traceable. 41-42. penalized choosing Diedrich should not be to leave survivorship her benefits in the retirement I accounts. appeals, conclude, would as did the court of that a imposed constructive trust should be in favor of Sulzer equal in an amount to one-half the value of the retire- plus ment divorce, of the date of investment experience up to the date of Fred Diedrich's death. certainly equitably Sulzer is entitled to that amount experience; encompasses investment an amount that post-death eq- is harder to uitably justify under the circumstances here. equities distinguish
¶ 49. The constructive trust Washington Washington, this case from 2000 WI *17 majority notes, 261. As the N.W.2d 2d 234 Wis. Washington the husband case which was a divorce pension. sought Ma- to divide the husband's and wife proper dispute jority op., valuation ¶ over 39. The divorcing parties, pension fund was between of the pension judgment specified was that the and the divorce parties. Here, the Id. between to be divided divorcing parties longer dispute but between the is no over a deceased and second wife a first between accounts; the determination retirement husband's appropriate trust of the constructive valuation required equitably under what is turns on award required an to effectuate circumstances, not what is Washington. equal property divorce, in a as in division non-party Mary Diedrich is an innocent 50. justifies con- of the which the mistake suffered the of Sulzer. She has favor structive prolonged court battle over and a of her husband loss legal part I would conclude that had no in. mistake she equitably in the to a constructive trust is entitled of the retirement accounts of one-half the value amount experience up plus divorce, investment of the date of I from that death. dissent date of Fred Diedrich's majority opinion part which awards payment; through in all other date of respects, I concur. JON E that Justice I am authorized state concurring dissenting opinion. joins this
WILCOX