Arena v. Arena

Decision Date13 November 1991
Docket NumberNo. 2-90-173-CV,2-90-173-CV
Citation822 S.W.2d 645
PartiesJavier ARENA, Appellant, v. Ellen Frances ARENA, Appellee.
CourtTexas Court of Appeals

Gould, Broude & Nelson, P.C., Steven E. Katten, Fort Worth, for appellant.

Bishop, Payne, Lamsens, Williams & Werley, S. Gary Werley, Fort Worth, for appellee.




This is an appeal by Javier Arena of a judgment in favor of the appellee, Ellen Francis Arena. This suit arose out of a divorce proceeding when appellee brought an action to enforce the Decree of Divorce and for clarification of the Order. Appellee was awarded certain benefits from the retirement plans of Javier Arena and sought damages in the delay of her receipt of such.

Javier Arena asserts the following seven points of error: (1) the trial court erred in rendering judgment in favor of the appellee and in overruling the appellant's motion for new trial because the enforcement action is preempted by the Employee Retirement Income Security Act of 1974 ("ERISA") and the exclusive forum for the appellee's claims is within the federal courts; (2) the trial court erred as a matter of law in determining that the appellant could have delivered the retirement plan assets to the appellee as such distribution was not required by the Decree of Divorce and was prohibited by federal law; (3) the trial court erred in its finding that the appellant, in his individual capacity, was liable to the appellee for the delay in distributing retirement plan assets to the appellee because there is no evidence that the appellant, in his individual capacity, breached any duty owed to the appellee pursuant to the Decree of Divorce; (4) there is insufficient evidence to support the finding of the trial court that the value of the gun collection converted by the appellee was only $2,500.00; (5) the trial court erred in awarding the appellee attorney's fees; (6) the trial court erred in failing to award damages to the appellant with respect to the New England Life Insurance policy as such an award was supported by evidence; and (7) the judgment of the trial court is inconsistent with the findings of fact and conclusions of law, and should be reformed to be consistent with such findings of fact and conclusions of law.

Judgment affirmed as modified.

Statement of Facts

Javier Arena and Ellen Arena were divorced on November 16, 1984. Pursuant to the Decree of Divorce, appellee was awarded an interest in five separate benefit plans. Ellen Arena was to receive a total of $421,280.00 from these benefit plans. The Decree of Divorce ordered the appellant and the appellee to execute all instruments necessary to effectuate the Decree within seven (7) days after the judgment was final. In January of 1985, Javier Arena transferred the funds designated for Ellen Arena in the Decree of Divorce from the employee benefit plan into a "special" account which was supervised by Vernon Minton ("Minton"). Then in September of 1985, the funds were transferred to Ellen Arena in the form of annuities.

Subsequent to the purchase of the annuities, Ellen Arena brought an action to clarify the Decree of Divorce and to recover damages for appellant's failure to distribute the designated plan assets prior to September, 1985. Following a trial on the matter, the court found that Ellen Arena was damaged in the amount of $31,001.37 as a result of the appellant's tardy transfer of assets. The trial court also found that the appellee was entitled to damages in the amount of $10,000.00, plus interest, for failure to timely pay an obligation, and the appellee was also entitled to attorney's fees. In addition, the trial court found that Ellen Arena had converted firearms belonging to Javier Arena with an estimated value of $2,500.00 and that the appellant was entitled to other damages resulting from the conversion of items belonging to Javier Arena in the amount of $2,010.00. Appellant was also awarded attorney's fees of $2,000.00. The amounts awarded Javier Arena were offset against the award to the appellee. It is from this judgment that Javier Arena now appeals.

Appellant's Points of Error

Appellant's first point of error asserts that the trial court erred in rendering judgment in favor of the appellee and in overruling the appellant's motion for new trial because the enforcement action is preempted by ERISA and the exclusive forum for the appellee's claims is in federal courts. Under the Supremacy Clause of the United States Constitution, federal law that regulates a specific field of activity overrides state law in that area. U.S. Const. art. VI; Free v. Bland, 369 U.S. 663, 666, 82 S.Ct. 1089, 1092, 8 L.Ed.2d 180, 183 (1962). Once Congress moves into an area of the law, the power of the state to regulate that subject matter is effectively negated. Free, 369 U.S. at 666, 82 S.Ct. at 1092, 8 L.Ed.2d at 183. Judicial decisions that apply state law to an area that has been federally preempted are subject to nullification on the basis that federal law supersedes state law in that area. Kalb v. Feuerstein, 308 U.S. 433, 439, 60 S.Ct. 343, 346, 84 L.Ed. 370, 374 (1940). A claim of federal preemption under ERISA warrants particular consideration because the preemption provisions of that statute are designed to establish pension and benefit plan regulation as an exclusive federal concern. Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 45-46, 107 S.Ct. 1549, 1552, 95 L.Ed.2d 39, 46 (1987).

The primary question before this court is whether the Decree of Divorce from the trial court falls within one of the statutory exceptions to ERISA's broad preemptive language. Javier Arena argues that the action brought by the appellee is for enforcement of the Decree of Divorce as it relates to an interest awarded to the appellee in various employee benefit plans. Therefore, pursuant to ERISA's broad preemptive language, state courts do not have subject matter jurisdiction.

In determining whether ERISA preempts the Decree of Divorce, we look to the language of the statute, assuming the ordinary meaning of that language expresses Congress's intent. Park 'N Fly v. Dollar Park & Fly, 469 U.S. 189, 194, 105 S.Ct. 658, 661, 83 L.Ed.2d 582, 587 (1985). The statute defines "State law" subject to preemption to include "all laws, decisions, rules, regulations, or other State action having the effect of law, of any State." 29 U.S.C.S. § 1144(c)(1) (1990). Although this language apparently would include claims based on the Decree of Divorce issued by state courts, subsection (b)(7) explains that the preemption clause "shall not apply to qualified domestic relations orders [QDROs] 1 (within the meaning of section 206(d)(3)(B)(i) [29 USCS § 1056(d)(3)(B)(i) ] )." Id. § 1144(b)(7).

According to section 1056(d), a court order relating to spousal property rights is a QDRO if it "creates or recognizes the existence of an alternate payee's 2 right to ... receive all or a portion of the benefits payable" under a plan. Id. § 1056(d)(3)(B)(i)(I). To qualify under the statute, a court order must include: (1) the name of the participant and the name and mailing address of an alternate payee covered by the order; (2) the amount or percentage of benefits payable to an alternate payee or a manner of determining the amount or percentage; (3) the number of payments or period affected by the order; and (4) the plan to which the order applies. Id. § 1056(d)(3)(B)(i)(II), (d)(3)(C). The statute also includes three general prohibitions for a QDRO. The order may not require a plan to provide: (1) any type of benefit or option not provided under the plan; (2) increased benefits; or (3) payment of benefits to an alternate payee required to be paid to another alternate payee under a previous QDRO. Id. § 1056(d)(3)(B)(i)(II), (d)(3)(D).

The domestic relations order issued by the trial court in this case recognized Ellen Arena's right to receive the vested policy benefits. The Decree of Divorce specifically identifies the name of the participant, Javier Arena, and the beneficiary, Ellen Frances Arena; in addition, it provides the name and address of Mrs. Arena's attorney. The decree specifically identifies five separate benefit plans under which Ellen Arena will be the beneficiary. The domestic relations order also states the amount of each plan and that Mrs. Arena will be entitled to the entire vested portion of each. Because the Decree of Divorce includes all of the information required by the statute and does not involve any of the prohibitions, the decree is deemed a QDRO.

Section 1056(d)(3), which lists the requirements for a QDRO, exempts qualifying domestic relations orders from the general anti-alienation requirement in section 1056(d) applicable to pension benefit plans. Id. § 1056(d)(3). Because the reference in the preemption clause to section 1056(d)(3)(B)(i) does not restrict application of the statutory preemption exception to pension benefit plans, we interpret the exception to apply to all qualifying domestic relation orders whether they involve a pension or welfare benefit plan. Taken together, sections 1144(b)(7) and 1056(d)(3)(B)(i) of the statute exempt divorce decrees meeting the statutory requirements from ERISA preemption. 3

This provision, which provides an exception for QDROs to the general anti-alienation requirement, was created by the Retirement Equity Act of 1984 (REA) which was signed into law on August 23, 1984. Act of Aug. 23, 1984, Pub.L. No. 98-397, 1984 U.S.CODE CONG. & ADMIN.NEWS (98 Stat.) 1453. Yet, the Act specifically provides that this exception to ERISA would not take effect until January 1, 1985. Id. The trial court's judgment became final on December 17, 1984, approximately two weeks prior to the creation of the QDRO exception. However, the enacting legislation provides:


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