Barros v. Barros

• Decision Date: 16 March 1983
• Docket Number: No. 5590-2-II,5590-2-II
• Citation: 34 Wn.App. 266,660 P.2d 770
• Parties: Anna M. BARROS, Appellant, v. Rita M. BARROS, Respondent.
• Court: Washington Court of Appeals

Page 266

34 Wn.App. 266

660 P.2d 770

Anna M. BARROS, Appellant, v. Rita M. BARROS, Respondent.

No. 5590-2-II.

Court of Appeals of Washington Division 2.

March 16, 1983.

Robert B. Taub, Tacoma, for appellant.

M.H. Hemmen, Tacoma, for respondent.

WORSWICK, Judge.

Anna Barros, first wife of decedent John Barros, appeals dismissal of her complaint in which she claimed a one-half interest in a Survivor Benefit Plan available to spouses of military retirees and received by John's second wife, Rita. Two significant issues are presented: whether the trial court erred in concluding that Anna has no property interest in the annuity; and whether federal law preempts Washington community property law as it might otherwise apply to the annuity. Although we hold that the trial court erred in deciding the first issue adversely to Anna, we also hold that federal law precludes her from claiming an interest. Therefore, we affirm.

Anna and John were married from February 14, 1955 to March 1, 1973. When they divorced they stipulated to a complete list of community assets; among the items included was John's "military retirement fund." Both the findings of fact and conclusions of law listed the retirement fund as community property. The trial judge's oral opinion indicated that the military benefits were to be awarded to John; however, the divorce decree made no disposition of the retirement fund. Rita was married to John from March 6, 1973 to his death on July 29, 1976. Since John's death, Rita has received monthly annuity payments pursuant to the military Survivor Benefit Plan (SBP). 10 U.S.C. § 1447 et seq. (1975).

Anna contends the trial court erred in concluding that she has no property interest in the annuity under Washington law. We agree. At John's death, the SBP allowed a service member to provide an annuity for his surviving spouse or children. 10 U.S.C. § 1448 (1975). While the annuity is not technically life insurance, it is similar in nature. Under Washington law, therefore, community property principles governing life insurance ownership apply. Generally, ownership of a life insurance policy or the proceeds therefrom are separate or community property in proportion to the percentage of the total premiums which have been paid with separate or community funds. Estate of Madsen v. Commissioner of Internal Revenue, 97 Wash.2d 792, 650 P.2d 196 (1982). With certain exceptions not pertinent here, a community which pays a portion of the premiums (the husband's employer paying the other portion) on a group life, disability or medical insurance policy, even though no cash value is developed thereby, acquires a property right characterized as an inchoate interest in the insurance proceeds properly distributable in a divorce action. Chase v. Chase, 74 Wash.2d 253, 444 P.2d 145 (1968).

The SBP annuity is funded partially by the government and partially by a reduction in the member's monthly retirement pay. 10 U.S.C. § 1452 (1975). At the time John divorced Anna he was receiving reduced retirement pay. ¹ John and Anna agreed in their divorce action that John's military retirement fund was community property. Therefore, while John was retired and still married to Anna, community funds were being used to pay for the annuity. ²

Community property not disposed of in a dissolution is owned thereafter by the former spouses as tenants in common. Yeats v. Estate of Yeats, 90 Wash.2d 201, 580 P.2d 617 (1978). Neither John's retirement pay nor the annuity was disposed of in the divorce decree; therefore, John and Anna owned them as tenants in common.

Anna contends the trial court erred in concluding that federal law preempts Washington law and disallows her claim. We disagree. Generally, state law rather than federal law governs the subject of domestic relations. Hisquierdo v. Hisquierdo, 439 U.S. 572, 99 S.Ct. 802, 59 L.Ed.2d 1 (1979). Whether federal legislation preempts state family law depends upon whether the right asserted conflicts with the express terms of federal law and whether its consequences sufficiently injure the objectives of the federal program to require nonrecognition. McCarty v. McCarty, 453 U.S. 210, 221, 101 S.Ct. 2728, 2735, 69 L.Ed.2d 589 (1981). Anna's claim conflicts with express terms of the SBP. A service member can provide the annuity only for his dependent children, provide the annuity for his wife, or elect not to participate in the plan at all. In any case, the decision is solely that of the service member. 10 U.S.C. §§ 1448(a) and 1450 (1975). In addition, as the Supreme Court noted in McCarty:

An Annuity under either plan [RSFPP or SBP] is not "assignable or subject to execution, levy, attachment, garnishment, or other legal process." 10 U.S.C. § 1440 and § 1450(i) [10 U.S.C.S. §§ 1440 and 1450(i) ]. Clearly, then, a spouse cannot claim an interest in an annuity not payable to him or her on the ground that it was purchased with community assets. See [Wissner v.] Wissner, 338 U.S. at 659, [70 S.Ct. 398 at 400, 94 L.Ed. 424 (1949) ].

McCarty, 453 U.S. at 226, n. 18, 101 S.Ct. at 2738, n. 18.

The Former Spouses' Protection Act, passed in September 1982, also manifests Congressional intent to disallow community property claims to the annuity. ³ The Act was designed in part to remove the effect of McCarty by permitting federal and state courts to apply community property laws to military retirement pay in community property jurisdictions. See S.Rep. 97-502, 97th Cong., 2nd Sess. 1-5 (1982) reprinted in [1982] U.S.Code Cong. & Ad.News 1555, 1596-1600. However, the Act does not alter McCarty's statements regarding annuities. 10 U.S.C. § 1448(b)(2) as amended reads:

A person who is married or has a dependent child may elect to provide an annuity to a former spouse instead of providing an annuity to a spouse or dependent child if the election is made in order to carry out the terms of a written agreement entered into voluntarily with the former spouse (without regard to whether such agreement is included in or approved by a court order). Act of September 8, 1982, Pub.L. 97-252 § 1003(b)(2), 96 Stat. 735.

10 U.S.C. § 1450(f)(3) as amended reads:

Nothing in this chapter authorizes any court to order any person to elect under section 1448(b) of this title to provide an annuity to a former spouse unless such person has voluntarily agreed in writing to make such election. Act, supra, § 1003(f)(3), 96 Stat. 736.

The Act neither requires nor allows states to apply community property law to the SBP. It merely allows a member to provide an annuity for his former spouse. The amendments did not change § 1450(i), which provides that an annuity is not assignable or subject to execution, levy, attachment, garnishment or other legal process. The legislative history of the Act never spoke of eliminating the effect of McCarty on annuities but only of eliminating its effect on retirement pay. The history states:

This amendment to subsection 1448(b) of title 10 will give increased flexibility to certain persons eligible to participate in the Plan and will permit those persons to provide a measure of financial protection to a former spouse in the event of termination of a marriage. At the same time, the amendment continues the basic concept of SBP that an election to provide any annuity is strictly the option of the person eligible to participate in the Plan. That is, no person could be required to provide an annuity to a former spouse.

S.Rep. 97-502, 97th Cong., 2nd Sess. 24 (1982) reprinted in [1982] U.S.Code Cong. & Ad.News 1596, 1619.

In view of the express language of the amendment and the accompanying legislative history, it is clear that Congress has not evidenced an intent to change the effect of McCarty on the SBP or to allow states to apply community property laws to the distribution of the annuities. Anna's claim conflicts with the express terms of federal law and recognition of her claim here would sufficiently injure the objectives of the SBP program to require nonrecognition. See McCarty, 453 U.S. 210 at 232-35, 101 S.Ct. 2728, 2741-42, 69 L.Ed.2d 589 (1981); Wissner v. Wissner, 338 U.S. 655, 659, 70 S.Ct. 398, 400, 94 L.Ed. 424 (1949). Therefore, the trial court did not err in dismissing Anna's complaint.

Anna contends that while a state court may not compel the federal authorities to distribute the annuity, a state court may award property from the annuity, citing Farver v. Department of Retirement Systems, 29 Wash.App. 138, 629 P.2d 903 (1981). Anna's contention fails for two reasons. First, it misconstrues Congressional intent regarding the SBP. Congress did not merely prohibit federal authorities from distributing the annuity to a nonbeneficiary. Rather, it specifically provided that the annuity is not to be subject to execution, levy, attachment, garnishment or other legal process. In other words, Congress has said that Anna's lawsuit must fail. Second, Anna's contention misconstrues Farver. Farver dealt only with the character of the community interest in a state employee's pension under state law. No federal legislation or policy was involved. Farver is clearly distinguishable.

Finally, Anna contends that McCarty should not be applied retroactively. We disagree. It is the general rule that decisional law is given retroactive effect; prospective application is an exception. Bradbury v. Aetna Cas. & Sur. Co., 91 Wash.2d 504, 589 P.2d 785 (1979). In considering whether to limit a decision to prospective application, three factors are to be considered:

First, the decision to be...