Lead Opinion
¶ 1. Husband appeals from the Washington Family Court’s enforcement order increasing the percentage of his military retirement benefits going to wife under the property division order that was finalized when the parties divorced. We affirm in part and reverse in part.
¶2. Husband is a career military man who spent more than twenty years in the United States Marine Corps. On July 1, 2005, husband, who was in his forties at the time, took a forced retirement from the military, and he is now collecting retirement benefits. In the initial divorce proceeding, which began before husband’s retirement but was not decided until October 14, 2005, the trial court treated husband’s expected monthly retirement benefits as property and included it in the final property division. Specifically, the court granted wife “35% of the marital portion of the retirement plan,” which, as the court later clarified, translated to 19.81% of husband’s monthly retirement benefits. Husband appealed that determination to this Court, arguing (among other things) that his military retirement benefits should not have been subject to property division. We issued an unpublished entry order
¶ 3. After husband retired from military service, and after the October 14, 2005 final divorce decree was issued, husband applied for disability benefits from the United States Department of Veterans Affairs (VA). According to husband, this was a routine part of the process of filling out the retirement paperwork. Husband’s disability application listed numerous potential disabilities, most of which were denied by the VA. On April 3, 2006, the VA granted husband a 30% disability rating. This meant that a significant portion of husband’s taxable retirement benefits would be forfeited and replaced dollar-for-dollar by tax-exempt and garnishment-exempt disability benefits. As a result, wife was now receiving 19.81% of a smaller retirement payment.
¶ 4. Wife was upset with what she viewed as husband’s unilateral modification of the final property division. Meanwhile, wife was having trouble receiving any payments at all from the federal Defense Finance and Accounting Service (DFAS). Wife had submitted paperwork to DFAS to receive direct payments of her portion of husband’s monthly retirement benefits, but DFAS found the paperwork unaccеptable because the trial court’s original order referred to 35% of an undefined “marital portion” of husband’s retirement benefits. Although this clearly translated to 19.81% of the monthly retirement benefits, the original property division order did not mention that number and therefore did not meet the strict requirements for allowing wife to receive direct payments from DFAS.
¶ 5. Wife filed various motions with the trial court asking the court to grant two modifications to the original property division order: (1) wife wanted the trial court to define the exact percentage of husband’s monthly retirement benefits that husband had to pay to wife, so that the order would meet the requirements for receiving direct payments from DFAS; and (2) wife wanted the court to give her a larger portion of husband’s retirement benefits than the 19.81% that was granted to wife in the original property division order, since by now husband had sheltered some of his retirement benefits when he received a 30% disability rating from the VA. Wife labeled the latter request as a “motion to amend” the original property division order, since, rather than asking for the 19.81% that was provided to her under the original property
¶ 6. Husband raises two main arguments on appeal. First, husband argues that under Vermont law the trial court cannot grant wife any portion of husband’s retirement benefits. Second, husband argues that even if the court is allowed to grant wife a portion of husband’s retirement benefits, the court erred in changing that portion from 19.81% to 22.4% in an enforcement proceeding.
¶ 7. Husband’s first argument merits little discussion; we have already rejected in an earlier proceeding the claim that Vermont law prеcludes trial courts from granting wife a portion of husband’s retirement benefits. See Youngbluth I,
¶ 8. While the finality of the original property division order works against husband’s first argument, the principle of finality is one reason why we agree with husband’s second argument and hold that wife can receive only 19.81% of husband’s disposable retirement benefits. In the recent enforcement order, the trial court increased that number to 22.4% based on the court’s interpretation of the original property division order. Unlike situations where our review of a trial court order is limited to determining whether there was an abuse of discretion, the proper interpretation of a previous court order “is strictly a question of law that we must determine independently.” Sachs v. Sachs,
¶ 9. Further, in our review of the original property division order, we must address husband’s argument that federal law preempts state courts from granting wife an interest in husband’s disability benefits. The issue of federal preemption is a purely legal question that we review de novo. Cf., e.g., Meyncke v. Meyncke,
¶ 10. Although wife’s original motion was entitled a motion for modification, the trial court seemed to recognize that it was without power to modify the original property division оrder, and the court referred to its decision as addressing “enforcement motions” that have “only to do with just execution of the judgment already ordered, not the legitimacy of that judgment in the first instance.” To reach this conclusion, the trial court had to treat wife’s motions as requesting enforcement, rather than modification, because Vermont places great emphasis on the finality of property divisions: ‘Vermont law is clear that the court cannot modify the property disposition aspects of a divorce decree absent circumstances, such as fraud or coercion, that would warrant relief from a judgment generally.” Boisselle v. Boisselle,
¶ 11. Given that this was an enforcement proceeding, we must “determine independently” what the original property division order granted wife. Sachs,
¶ 12. To understand why we must interpret the trial court’s reference to husband’s “retirement plan” as referring only to husband’s disposable retirement benefits, it is helpful to recount the histоry of state trial courts’ authority to treat military retirement benefits and disability benefits as community property. The Supremacy Clause of the United States Constitution proclaims federal law to be “the supreme Law of the Land.” Art. VI, cl. 2. Consequently, federal law can preempt state law whenever Congress explicitly states that it is preempting state law or implicitly preempts state law by occupying an entire field of regulation or passing laws that conflict with state law. Mich. Canners & Freezers Ass’n v. Agric. Mktg. & Bargaining Bd.,
¶ 13. Even before Mansell, this Court specifically stated that although disability benefits can be considered in determining something such as a party’s ability to pay alimony, the USFSPA still stands for the proposition that “disability benefits received in lieu of retirement benefits are not subject to division.” Repash v. Repash,
¶ 14. It is in this light that we must interpret the trial court’s original property division order, which refers to 19.81% of husband’s “retirement pay.” Given that Mansell held that state courts are without power to divide disability benefits in a property division order, we agree with those courts that have held that in this type of situation the trial court’s order cannot be read to have granted wife an interest in husband’s disability benefits. See, e.g., Morgan v. Morgan,
Regardless of the wording of the dissolution judgment, Mansell allows only disposable retired pay to be considered as marital property. Total retired pay amounts that*63 do not fit into the category of disposable retired pay cannot be divided in a dissolution judgment. This includes both disability benefits and amounts waived to receive disability benefits. Therefore, the omission of the word “disposable” from the original dissolution judgment is immaterial. The dissolution court could not have awarded [the former spouse] a fraction of [the military servicеmember’s] total retired pay.
Id. Thus, even if the original property division order had explicitly granted wife an interest in husband’s total retirement benefits, federal law would require us to read the order as applying only to disposable retirement benefits. See Gallegos v. Gallegos,
¶ 15. Wife argues, and the trial court held, that it would be unjust to allow a military servicemember to “unilaterally” modify a judgment by reclassifying the form in which he receives payments. State courts are split on this issue.
We realize that reading the [USFSPA] literally may inflict economic harm on many former spouses. But we decline to misread the statute in order to reach a sympathetic result when such a reading requires us to do violence to the plain language of the statute and to ignore much of the legislative history. Congress chose the language that requires us to decide as we do, and Congress is free to change it.
Id.; see also id. at 592 (noting that when Congress defined disposable retirement benefits as excluding disability benefits, Congress made the “decision to shelter from community property law that portion of military retirement pay waived to receive veterans’ disability payments”). Given this “harsh reality,” id. at 595 (O’Connor, J., dissenting), it is not surprising that “Mansell . . . [has] led many state courts to look for creative solutions to prevent a former spouse from losing his or her interest in the military retirement as the result of unilateral action on the part of the military spouse.” In re Marriage of Smith,
¶ 17. Given our holding that the original property division order did not grant wife any interest in disability benefits that the VA later awarded to husband, an enforcement proceeding of that order cannot grant wife a larger percentage of husband’s disposable retirement benefits. Our holding in Mason v. Mason,
¶ 18. Our decision in Mason represented an exception; the general rule is that enforcement proceedings should not disturb the plain language of the original property division order. As noted earlier, one reason that we must stick to the plain language of the original property division order is that property division orders are meant to be final. Here, the trial court correctly recognized that “a property settlement is meant to happen once.” Under Vermont law, the initial property division order “shall settle the rights of the parties to their property.” 15 V.S.A. § 751(a). Parties should not have to bring further litigation whenever future actions affect the division of benefits. We recognize that it may be argued that here it was husband’s actions — in unilaterally applying for disability benefits — that upset the finality of the original property division order. To focus on this, however, is to ignore the critical point that finality is about ending litigation. Indeed, we define a final judgment as one where “the effect ... is to end the litigation.” City of St. Albans v. Goodrich,
¶ 19. Other courts have concluded that in general a party cannot be required to pay more than the original percentage stated in the final property division order. For instance, in Ex parte Billeck, 777 So. 2d 105 (Ala. 2000), the Alabama Supreme Court overturned a lower court decision that had forced the husband to pay additional money to the wife when, as in this case, the wife started receiving less money from the husband’s military retirement benefits because the husband applied for and was granted disability benefits. One of the reasons the Billeck court sided with the husband was that “[t]he husband ha[d] complied with the literal language of the judgment” by pаying the full percentage of disposable retirement benefits. Id. at 109. Similarly, here husband need pay only 19.81% of his disposable retirement benefits to be in full compliance with the literal language of the original property division order.
¶ 20. The trial court’s decision relied on cases from the Tennessee Supreme Court and from intermediate courts of appeal in Arizona, Arkansas, Colorado, Missouri, and New York, all of which the trial court found to have held that a military servicemember cannot “unilaterally” modify a judgment by reclassifying the form in which the servicemember receives payments. See Johnson v. Johnson,
¶ 21. Two of the cases cited by the trial court — Lodeski and Mills — are easily distinguishable. In Lodeski, the original property division order granted the wife a specific dollar amount, and the court was therefore able to use an enforcement proceeding to guarantee that she continued to receive those payments. Here, on the other hand, the property division order grants wife only a percentage and therefоre does not guarantee any fixed dollar amount. Mills is distinguishable because there the husband had agreed to make certain payments as both an equitable property division and as spousal support, and the court therefore held that the husband was contractually bound to continue to provide support even after he was classified as 100% disabled. Here, on the other hand, husband’s payments from his retirement benefits were not meant for spousal support, and husband has not agreed to any minimum payment.
¶ 22. The trial court’s reliance on Surratt and Strassner is also misplaced. In each of those cases, unlike the case before us on appeal, the original property division order contained an indemnity provision protecting the spouse from any efforts by the military servicemember to take disability benefits or do anything else that would decrease retirement benefits. Strassner is particularly enlightening with respect to the significance of this distinction. In Strassner, the trial court’s initial property division order included a special provision requiring the husband to either (1) refrain from doing anything (such as applying for disability benefits) that would reduce the amount of the payments going to the wife, or (2) indemnify the wife for any sums reduced by such action. Although here the trial court cited Strassner as supporting the wife’s argument, it actually supports husband’s position. Last year, a separate appellate division of the Missouri Court of Appeals distinguished Strassner because “[h]ere, there was no indemnity clause protecting [wife] from the possibility of [hus
¶ 23. Without an indemnity clause, and without any specific dollar amount guaranteed to wife, the trial court’s order put wife on constructive notice that 19.81% of husband’s retirement benefits could result in a different dollar amount from month to month.
¶ 24. The trial court’s actions here represented an attempt to attach funds that federal law does not allow the trial court to distribute as property in a divorce proceeding. See, e.g., Pierce,
¶ 25. Some courts have gone even further and held that former spouses cannot use the original proceeding to impose indemnity provisions or other protections against future actions by the military servicemember, since federal law precludes spouses from benefitting in any way from a military servicemember’s disability benefits. Halstead,
¶ 27. The Texas Supreme Court recently addressed this same issue in a case where the original property division order referred only to a specified percentage of the military servicemember’s retirement benefits and said nothing about disability benefits. Hagen,
¶ 28. For these reasons, we hold that the trial court erred when it used an enforcement proceeding to increase wife’s percentage of husband’s disposable, retirement benefits. Our holding today is a narrow one. We express no view on whether a former spouse in another case could receive an increased share of a military servicemember’s disposable retirement benefits either through an indemnity provision in the original property division order or through meeting the standard in Rule 60(b) for relief from judgment. We hold only that in this case an enforcement proceeding cannot provide the mechanism for this type of adjustment.
Reversed and remanded for rеinstatement of 19.81% as the allocation to wife of husband’s disposable retirement benefits; affirmed in all other respects.
Notes
Husband also argues that the trial court improperly assessed interest payments against him. He claims, for instance, that the court erred in assessing him interest on a payment of attorney’s fees, since the parties had allegedly stipulated that this payment would be taken out of the amount that wife owed husband. Thus, according to husband, he should not owe any interest on money that wife was essentially withholding from herself. But husband has not provided any support for his claim that the parties stipulated as to how husband would make his payment of attorney’s fees. Ordinarily, “we do not search the record for error not adequately briefed or referenced.” Quazzo v. Quazzo,
See Black v. Black,
It is possible that those courts that have claimed that there is a majority on this issue have conflated the consideration of disability benefits for a property division award with thе consideration of disability benefits to determine child support or alimony. For instance, in Robinson, the court explicitly held that under federal law “former wife’s special equity interest in former husband’s retirement benefits was extinguished by operation of law upon the reallocation of former husband’s benefits from retirement to disability,”
Federal statutes clearly delineate a number of ways in which military disposable retirement benefits are automatically reduced, see 10 U.S.C. § 1408(a)(4)(A)-(D), including the exact situation of waiving retirement benefits in favor of disability benefits, id. § 1408(a)(4)(B).
Many of the cases interpreting § 5301 refer to an earlier version of the statute, §3101. Congress renumbered this and many other statutory sections in 1991, without making any substantive changes to this statute. See Department of Veterans Affairs Health-Care Personnel Act of 1991, Pub. L. No. 102-40, § 402, 105 Stat. 187.
Concurrence Opinion
¶29. concurring. I write separately to emphasize that though the procedural posture of this case dictates the result reached by the majority, a motion under Rule 60(b) may provide a vehicle for relief where a spouse has been intentionally misled during a divorce proceeding as to a veteran’s intentions with
¶ 30. This case arises from what appears to be a contentious and much-litigated property distribution following husband and wife’s divorce. The parties were married in October 1989 and separated in October 2003. Husband entered the military in 1980 and was in military service primarily with the Marine Corps, up until his retirement in July 2005. Throughout the marriage, the couple moved on a regular basis to accommodate husband’s military assignments. In addition, husband was frequently away from the family home and spent months at a time away at sea or deployed to foreign assignments. While husband was away, wife managed the household and was the primary caretaker for the parties’ two sons. Until 2002, wife was employed outside the home only for brief periods and only on a part-time basis. The divorce proceedings occurred in the spring of 2005; all parties were aware, however, that husband would be required to retire from the military on July 1, 2005. Over his twenty-two years of military service, husband accrued a defined benefit retirement plan and was thus eligible to receive monthly retirement benefits beginning on July 1, 2005. These retirement benefits were treated as marital property for purposes of the divorce settlement.
¶ 31. In the property distribution order, the trial court noted that because wife was awarded a larger share of the marital estate, rather than award wife a full fifty percent of the marital share of husband’s defined benefit pension, it was more equitable that wife receive thirty-five percent. The court noted that such a figure “will provide some retirement cushion for [wife] but ensures that [husband] will have available the majority of the funds that he worked so hard to earn.” The court also noted that “[t]he pension is a significant benefit because it is payable now and will continue to be paid until [husband] dies.” In addition to the property distribution, the court awarded a limited amount of
¶ 32. The final divorce and property distribution order was issued on October 14, 2005, and husband applied for disability benefits on November 9, 2005. On April 3, 2006, husband was found to be thirty percent disabled and was approved for partial disability benefits. The main subject of the current dispute is over the effect that husband’s subsequent waiver of thirty percent of his military retirement benefits in favor of disability benefits has on the final property distribution.
¶ 33. I agree with the majority that effecting the type of modification wife argues for here simply by calling it “enforcement” is an affront to the finality of property distributions and an end-around to the Supreme Court’s holding in Mansell v. Mansell,
¶ 34. In enacting the Uniformed Services Former Spouses’ Protection Act (USFSPA), Congress recognized the unique circumstances of the military family, including the sacrifices made by military spouses, and sought to protect the economic security of those spouses upon divorce. Mansell,
¶ 35. As the majority states, ante, ¶ 12, the Supreme Court’s decision in Mansell interprets the USFSPA quite narrowly and accordingly limits the property assets state courts may equitably divide at divorce.
¶ 36. Justice O’Connor, joined in her dissent by Justice Blаckmun, roundly criticized the “harsh reality” of the Court’s holding. Id. at 585 (O’Connor, J., dissenting). The dissent emphasized that the purpose of the USFSPA was to provide greater protection to military spouses:
To read the statute as permitting a military retiree to pocket 30 percent, 50 percent, even 80 percent of gross retirement pay by converting it into disability benefits and thereby to avoid his obligations under state community property law, however, is to distort beyond recognition and to thwart the main purpose of the statute, which is to recognize the sacrifices made by military spouses and to protect their economic security in the face of a divorce.
Id. at 601-02. Twenty years later, Congress has not yet heeded Justice O’Connor’s call to “address the inequity created by the Court.” Id. at 604. The existing law, simply put, is that military retirement benefits are divisible marital property upon divorce, and veterans’ disability benefits are not. State courts, however, are not without power to remedy situations in which a divorce judgment is premised on fraudulent representations by a military retiree with regard to his decision to waive retirement in favor of disability benefits.
¶ 37. Though property settlements following divorce are final, they may be modified in circumstances indicating “fraud or coercion, that would warrant relief from a judgment generally.” Boisselle v. Boisselle,
¶ 38. To put this type of Rule 60(b)(3) motion in context, if a spouse represents to the court that he is in excellent health and that he expects to receive military retirement benefits, while at the same time he is secretly applying for disability benefits, these actions could be characterized as fraudulent, and if proven by clear and convincing evidence, could justify vacating a property settlement. Indeed, and as evidenced by the settlement here, because a property distribution is often also the basis for other awards, including amounts awarded in spousal support, a fraudulent misrepresentation as to pension assets could upset the equity of the entire settlement.
¶ 39. Moreover, though a court may not divide the portion of a military retiree’s benefits waived in favor of disability benefits, it may take intо account this waiver as an equitable consideration in fashioning a fair settlement agreement. See Repash v. Repash,
¶ 40. Failing to remedy a property distribution secured by fraudulent representations as to a party’s plans to apply for disability benefits allows a military retiree to use the illusive potential of retirement benefits to secure a windfall when he converts such retirement benefits to disability benefits at the earliest opportunity. Allowing a party to a divorce to prevail on such a scheme sets up the nonmilitary spouse for financial hardship. The same purрose underlying the USFSPA — protection of military spouses who have sacrificed careers in the mainstream economy in support of their spouses’ military careers — dictates that courts take care to ensure that a divorce proceeding that includes distribution of military retirement benefits is not based on fraud.
The divorce order became final following this Court’s decision in Youngbluth v. Youngbluth (Youngbluth I), No. 2006-083,
Despite a claim for fraud not being properly before it, in its post-judgment order, the trial court noted:
What complicates this ease is that [husband] was found eligible for partial veteran’s disability benefits on April 28, 2006, shortly after the Final Order. Although the disability qualification process must have been well underway when the divorce was tried — husband says it took nine months — the possibility of this occurrence evidently was not made known to the trial judge and consequently was not within the contemplation of the Final Order.
. . . [Husband’s] failure to be candid with the trial court about his plan to have pay reclassified, underway at the time of trial, is not suggestive of good faith and indicates a longstanding plan merely to evade equitable settlement because he did not agree with it.
