BANDINI v. BANDINI, 49A04-1001-DR-26.

• Citation: 935 N.E.2d 253
• Decision Date: 08 October 2010
• Docket Number: No. 49A04-1001-DR-26.,49A04-1001-DR-26.
• Parties: Victor J. BANDINI, Appellant-Petitioner, v. Joann M. BANDINI, Appellee-Respondent.
• Court: Court of Appeals of Indiana

935 N.E.2d 253

Victor J. BANDINI, Appellant-Petitioner,

v.Joann M. BANDINI, Appellee-Respondent.

No. 49A04-1001-DR-26.

Court of Appeals of Indiana.

Oct. 8, 2010.

COPYRIGHT MATERIAL OMITTED.

William O. Harrington, Harrington Law P.C., Danville, IN, Attorney for Appellant.

Russell T. Clarke, Jr., Emswiller, Williams, Noland & Clarke, P.C., Indianapolis, IN, Attorney for Appellee.

OPINION

ROBB, Judge.

Case Summary and Issues

Victor Bandini (“Husband”) appeals the trial court's order granting the show cause petition filed by JoAnn Bandini (“Wife”) in this post-dissolution proceeding. For our review, Husband raises the following consolidated and restated issues: 1) whether the trial court properly concluded the parties' settlement agreement incorporated into the dissolution decree entitles Wife to fifty percent of Husband's gross military retirement pay, including amounts waived by Husband in order to receive Veterans' Administration' (“VA”) disability benefits and Combat-Related Special Compensation (“CRSC”); 2) whether the trial court abused its discretion by finding Husband in contempt; and 3) whether the trial court abused its discretion by ordering Husband to pay part of Wife's attorney fees and declining to order Wife to pay part of Husband's attorney fees.

We conclude the parties' settlement agreement contemplates an equal division of Husband's gross military retirement pay, but pursuant to federal law, amounts previously waived by Husband as deductions from gross retirement pay were not properly divisible in the dissolution decree. We further hold that, consistent with Indiana and federal law, a military spouse may not, by a post-decree waiver of retirement pay in favor of disability benefits or CRSC, unilaterally and voluntarily reduce the benefits awarded the former spouse in a dissolution decree. Thus, Husband must compensate Wife for the reduction in her amount of retirement pay caused by Husband's post-decree waiver and election of CRSC. Finally, we conclude the trial court did not abuse its discretion by finding Husband in contempt nor in its award of attorney fees to Wife. Accordingly, we affirm in part, reverse in part, and remand.

Facts and Procedural History

The relevant facts are largely undisputed. Husband and Wife married on August 14, 1971. Husband's military career spanned twenty-eight years in the Army and Army Reserve until his discharge in 1995. In 1997, Husband was awarded VA disability benefits for tinnitus and thirty-percent hearing loss. In 2003, Husband applied for additional disability benefits for post-traumatic stress disorder (“PTSD”).

Husband and Wife separated on March 22, 2004, and the following day, Husband filed a petition for dissolution of marriage. On March 28, 2005, Husband and Wife filed their settlement agreement, which the trial court approved on March 30, 2005 and incorporated into the decree dissolving the parties' marriage. The settlement agreement provided that “Wife shall have” certain property, including “ 1/2 (50%) of Husband's USAR military retirement/pension plan by QDRO, including survivor benefits.” Exh. 1, at 5.

In November 2005, Husband was awarded disability benefits for PTSD. On December 1, 2007, the Defense Finance and Accounting Service (“DFAS”) mailed Wife a letter stating she would begin receiving a portion of Husband's retirement pay within ninety days after the date Husband would begin receiving retirement pay. Husband turned sixty years old on January 5, 2008, and thus became eligible to begin receiving retirement pay. In February 2008, Husband received his first payment of retirement pay, without any deduction for Wife's share. DFAS also issued Husband an account statement providing that as of March 3, 2008, his retirement pay would be computed as follows: gross pay of $2,238.00, less VA Waiver of $240.71 and SBP Costs of $145.47, for taxable income of $1,851.82; less federal income tax withheld of $60.15, for net pay of $1,791.67. Exh. E. The “VA Waiver” was a deduction against gross pay for Husband's VA disability benefits, and the “SBP Costs” were a premium for a survivor benefit of which Wife was the beneficiary. On March 3, 2008, DFAS mailed Husband an account statement providing that as of April 1, 2008, his retirement pay would be computed as follows: gross pay of $2,238.00, less VA Waiver of $240.71, SBP Costs of $145.47, and a “former spouse deduction” of $925.91, for net pay of $925.91. Exh. 7. Thus, Wife would begin receiving payments of $925.91, and pursuant to the former spouse deduction, Husband's net pay would also be $925.91.

In March 2008, Husband applied for CRSC, following a change in the law that made Husband eligible for CRSC starting on January 1, 2008. Husband's eligibility for CRSC was based on his “[r]eceiv[ing] VA compensation for combat-related disabilities that result in offset to military retired pay.” Exh. 23. On April 1, 2008, Wife received her first payment from DFAS in the amount of $925.91, and received that same amount in each of the following three months. On May 14, 2008, the Army mailed Husband a letter informing him of his initial approval for CRSC for a combat-related disability of sixty percent. On June 11, 2008, DFAS mailed Husband a letter that informed him his CRSC payment would be $921 per month, retroactive to February 2008, and an election form that stated “CRSC is nontaxable and is not subject [sic] the provisions of the Uniformed Services Former Spouse Protection Act.” Exh. D. Husband then made an election, on June 24, 2008, to “authorize DFAS to recoup all CRDP [concurrent retirement and disability] payments previous [sic] paid from my retroactive CRSC payment.” Id. In effect, in order to receive CRSC, Husband elected to waive a larger amount of his retirement pay than he had previously waived in favor of VA disability benefits.

On July 15, 2008, DFAS mailed Husband an account statement providing that as of August 1, 2008, his retirement pay would be computed as follows: gross pay of $2,249.00, less VA Waiver of $1,006.00, SBP Costs of $146.19, and a former spouse deduction of $548.40, for net pay of $548.41. Thus, as of August 2008, Husband's and Wife's net shares of retirement pay were reduced to $548 each per month. However, Husband began receiving a CRSC payment of $1,006 monthly, as reflected in a CRSC pay statement issued by DFAS and dated August 21, 2008. ¹ On September 9, 2008, Wife's attorney mailed Husband a letter demanding payment of the difference between half of Husband's gross retirement pay and the amounts Wife was receiving from DFAS.

On April 23, 2009, Wife filed her petition for rule to show cause, arguing Husband was in contempt for depriving Wife of her share of military retirement pay as divided in the parties' dissolution settlement agreement. Wife argued she was entitled to fifty percent of Husband's “gross military retirement with no VA waivers, no disabilities, [or] anything taken out,” transcript at 63, and requested the trial court order Husband to pay her the difference between that amount and the amount payable to her by DFAS. Husband filed a request for specific findings of fact and conclusions of law.

The trial court held an evidentiary hearing and, on December 29, 2009, entered its findings of fact, conclusions of law, and judgment. The trial court found and concluded in relevant part:

10. [Wife] was eligible to receive her fifty percent (50%) share ($1,119.00) of [Husband]'s retired pay (CRDP) also on February 1, 2008, but she did not receive her share from DFAS or from [Husband]. Her first payment from DFAS came in April 2008....

11. [Husband] never paid [Wife] her fifty percent (50%) share of his monthly retirement benefits for February 2008 or March 2008.

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21. [Husband] did not notify [Wife] of his election to receive CRSC benefits prior to signing the documents putting them in place.

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28. [Wife] did not consent to [Husband]'s change in his military retirement benefits and the financial impact it had on her payments pursuant to the Decree.

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49. [Husband] consented to the division of his military pension in the Decree. He did not advance, and [Wife] did not contemplate the possibility of [Husband]'s subsequent waiver of a portion of his retirement pay in exchange for disability payments that ultimately reduced her monthly income.

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51. The Property Settlement Agreement demonstrates the clear intent that [Husband] and [Wife] would each ... receive half ( 1/2) of [Husband]'s military retirement that was in place at the time of the Decree. [Husband]'s act of changing the amount of monthly, military pay [Wife] would receive resulted in an impermissible modification of the Decree, and [Husband] cannot unilaterally diminish [Wife]'s interest in the military pension without her consent.

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57. The Court finds [Husband] in contempt for failing to pay to [Wife] 50% of the benefit he received for the months of February and March 2008, which is the period after he became qualified for benefits but before DFAS began paying to [Wife] her portion of the benefits.

58. The Court declines to find [Husband] in contempt for electing his CRSC benefit, as Congress provided him the authority to do so, and there was a genuine issue of law as to whether he would continue to owe [Wife] 50% of that benefit.

59.... While Federal Law may prohibit this Court from considering the VA waiver to be divisible marital property, Federal and State law are silent with regard to the treatment of CSRC [sic] benefits. Moreover, the parties may always agree to more than a Court may have the authority to order in their Property Settlement Agreement. While DFAS may not consider CSRC [sic] to be military pay that requires that separate checks be issued to [Husband] and [Wife], it is clear from the language of the Decree that the parties intended for [Wife] to share in 50% of the payments that [Husband] receives as a result of his...