Berrington v. Berrington
| Decision Date | 12 November 1993 |
| Citation | 633 A.2d 589,534 Pa. 393 |
| Parties | , 62 USLW 2346, 17 Employee Benefits Cas. 2394, Pens. Plan Guide (CCH) P 23889G Charles L. BERRINGTON, Appellee, v. Claire L. BERRINGTON, Appellant. |
| Court | Pennsylvania Supreme Court |
Patricia G. Miller, Amy Acheson, Reed, Smith, Shaw & McClay, for appellee.
Richard R. Isaacson, Berlin, Boas & Isaacson, Pittsburgh, for appellant.
Stewart B. Barmen, Buchanan Ingersoll, P.C., Philadelphia, for Pennsylvania Chapter of American Academy of Matrimonial Lawyers.
Vicki L. Beatty, Women's Bar Ass'n of Western Pennsylvania, Frederick N. Frank, Pittsburgh, for Allegheny County Bar Ass'n, Family Law Section.
Sharon J. Phillips, Pepper, Hamilton & Scheetz, Linda Wharton, Women's Law Project, Philadelphia, for Women's Law Project, Now Legal Defense and Educ. Fund, Pennsylvania Nat. Organization for Women, Senior Citizen Judicare Project, Community Women's Educ. Project, Supportive Older Women's Network, Nat. Center on Women and Family Law, Inc., Nat. Women's Law Center, Northwest Women's Law Center, Women's Law Center, Connecticut Women's Educ. and Legal Fund, and Older Women's League.
Before NIX, C.J., and LARSEN, FLAHERTY, ZAPPALA, PAPADAKOS, CAPPY and MONTEMURO, JJ.
This is a divorce case involving equitable distribution of a defined benefit pension fund. The issue presented is whether the non-employee spouse's share in a deferred distribution of a pension should be based upon the salary which the employee-spouse earned at the date of separation or upon the amount earned at some post-separation retirement date. The trial court determined that the marital share should be based on the employee's pension to be received at the time the pension plan enters pay status. Superior Court reversed, holding that the amount to be awarded the non-employee spouse should be based on the employee's salary at the date of separation, but augmented by growth in the pension fund based on factors other than the employer's or employee's contributions to the fund after the date of separation. 409 Pa.Super. 355, 372, 598 A.2d 31, 40 (1991). We affirm.
The parties were married on May 7, 1955. From marriage until husband left the marital home on July 15, 1984, he was a participant in the retirement plan of the Westinghouse Electric Corporation, his employer. After separation, husband continued to work for Westinghouse and to participate in the retirement plan. On January 9, 1985, husband filed a complaint in divorce. Divorce was granted on July 27, 1987 and the trial court retained jurisdiction over unresolved claims.
Among the marital assets at issue in the equitable distribution was husband's Westinghouse pension plan. This plan is a defined benefit plan consisting of a basic and a supplemental portion. 1 Husband participates in both. Under the supplemental plan, the employer's contributions are based on the employee's contributions. If the employee makes no contributions, the employer makes none. Between the date of separation and February 28, 1990, husband contributed $14,770.16 to the basic and supplemental portions of the plan.
Husband also participated in the Westinghouse executive benefit plan, which is available only to employees in an executive position for five continuous years preceding retirement. Pursuant to this plan, the pension benefit per month is determined by multiplying an executive pension multiplier (the employee's years of service at retirement multiplied by 1.47%) by the average of the highest five months' salaries for each year of the ten years immediately preceding retirement.
The parties reached a settlement agreement concerning equitable distribution which provided that wife was to receive non-modifiable alimony in the amount of fifteen hundred dollars per month until wife cohabited or remarried, husband became 65, husband retired from Westinghouse at age 62, 63, or 64, or the death of either party. Wife was awarded 60% of marital property, including husband's pension, pursuant to this agreement.
Difficulty arose, however, when the parties attempted to prepare orders which embody the agreement. Because the Westinghouse plan is a qualified plan under the Retirement Equity Act of 1984, 2 but the executive plan is not, the parties submitted two proposed orders, a Qualified Domestic Relations Order (QDRO) 3 and a Domestic Relations Order. 4 Husband's proposed orders calculated his pension benefit by using his annual salary on the date of separation. Wife's proposed orders calculated the amount of the pension benefit as of the deferred date, i.e., husband's retirement, husband's death, or the date wife begins receiving her portion of the benefit. 409 Pa.Super. at 358, 598 A.2d at 33.
The trial court entered an order based on wife's proposal and husband appealed. Superior Court reversed and this court granted allocatur.
The trial court's rationale was that LaBuda v. LaBuda, 349 Pa.Super. 524, 503 A.2d 971 (1986), controls and compels its result. In that case, the court determined that the marital share of husband's pension was calculated by creating a fraction representing the number of years husband was in the pension plan as of the date of marital separation divided by the total number of years in the plan ("the coverture fraction") 5, multiplied by the monthly pension to be received by husband at his normal retirement, multiplied by wife's marital share as awarded at equitable distribution. This is the same method the trial court used in the present case. The trial court in this case expressed the belief that if wife were not paid in dollars calculated at the time of husband's retirement, her share of the pension accumulated during marriage would be reduced in value by inflation. In the trial court's words, wife would "be paid in the year 1994 with 1984 dollars even though his salary and thus his pension have been adjusted for inflation." Common Pleas Slip Op. at 9.
Superior Court reversed based on the following: (1) LaBuda was decided as it was because husband did not propose to the court another method of calculating the benefit owing to wife; (2) using husband's retirement benefits at the date of retirement as the base on which to calculate wife's marital share improperly uses husband's non-marital contributions, i.e., those made after separation, to determine marital property; (3) husband in this case has proposed a method of calculating wife's marital share of the pension which allows her to benefit from increases accruing from the date of separation until the date of payout without utilizing contributions made by husband after the date of separation.
The pivotal questions are (1) whether the trial court's method of calculating wife's share of husband's pension requires husband to pay, in part, with non-marital property acquired after separation; and (2) whether wife is unfairly penalized if her marital share of husband's pension is calculated by utilizing husband's salary as of the date of marital separation, even though she will not collect her share, possibly, for years after separation.
As to the first question, the Divorce Code defines "marital property" as all property acquired during the marriage, with enumerated exceptions:
(e) For purposes of this chapter only, "marital property" means all property acquired by either party during the marriage, including the increase in value prior to the date of final separation of any nonmarital property acquired pursuant to paragraphs (1) and (3) except:
* * * * * *
(4) Property acquired after final separation until the date of divorce, except for property acquired in exchange for marital assets.
The Divorce Code of April 2, 1980, P.L. 63, No. 26, 23 P.S. § 401(e), as amended 1988, February 12, P.L. 66, No. 13. This provision is substantially reenacted at 23 Pa.C.S. § 3501(a), Act of Dec. 19, 1990, P.L. 1240, No. 206, § 2.
Thus, the Divorce Code excludes property acquired after the date of separation from consideration as marital property. The trial court's order, however, relies on increased contributions made after separation 6 as well as contributions made during the marriage.
It may seem at first consideration that the trial court's application of the coverture fraction (see note 5) to these increased contributions would prevent the post-separation (i.e., non-marital) increases from being distributed to wife. This, however, is not correct, for although the pension benefit would be reduced by the coverture fraction, the reduction would be applied to a pension that was partially produced by increased post-separation contributions. This is prohibited by section 401(e), for property contributed to the retirement plan after separation is not marital property. We conclude, therefore, that the trial court's method of calculating wife's share of husband's pension benefits was in error.
The evil which the trial court was trying to avoid, of course, was awarding wife a marital share of the pension which she would not receive for years 7 and which would be dramatically diminished in value when she received it because of the time interval between being awarded a share of the pension and actually being paid that share.
Husband's proposal addresses this problem. Under his proposal wife receives 60% (her share of the marital property, including the pension) times the coverture fraction times the benefit at the determination date 8 of the retirement plan on the basis of husband's annual salary on July 31, 1984, the date of marital separation. Husband's benefit statement, dated December 31, 1984, provides in pertinent part:
YOUR CONTRIBUTIONS TO THE PLAN
DURING 1984 -----TOTAL-----
WITH INTEREST WITHOUT INTEREST
$ 256.50 BASIC $ 840.60 $ 777.96
$1,796.25 SUPPLEMEN- $26,283.43
...To continue reading
Request your trial
-
Bender v. Bender
... ... Delorey, 357 N.W.2d 488, 491 (N.D. 1984) ; Carpenter v. Carpenter, 657 P.2d 646, 651 (Okla. 1983) ; Berrington v. Berrington, 409 Pa. Super. 355, 360, 598 A.2d 31 (1991), aff d, 534 Pa. 393, 633 A.2d 589 (1993) ; Ball v. Ball, 314 S.C. 445, 447, 445 ... ...
-
Marriage of Hunt, In re
... ... increases in pension benefits accruing after divorce since such benefits are not "acquired during the marriage" and hence are separate); Berrington v. Berrington, 534 Pa. 393, 633 A.2d 589, 594 (1993) (holding that "in a deferred distribution of a defined benefit pension, the spouse not ... ...
-
In re Simeone
... ... 1094, 115 S.Ct. 759, 130 L.Ed.2d 657 (1995); Perlberger v. Perlberger, 426 Pa.Super. 245, 259-62, 626 A.2d 1186, 1192-95 (1993); and Berrington v. Berrington, 409 Pa.Super. 355, 369, 598 A.2d 31, 38 (1991), aff'd, 534 Pa. 393, 633 A.2d 589 (1993). It appears to us that the Wife has ... ...
-
Gordon v. Gordon
... ... Retirement pension benefits, vested and non-vested, are marital property subject to equitable distribution. Berrington v. Berrington, 409 Pa.Super. 355, 360, 598 A.2d 31, 34 (1991) (citing Verdile v. Verdile, 370 Pa.Super. 475, 485, 536 A.2d 1364, 1369 (1988)). If ... ...
-
§ 7.10 Pensions
...34 S.W.3d 83 (Ky. App. 2000). Minnesota: Petschel v. Petschel, 406 S.W.2d 604 (Minn. App. 1987). Pennsylvania: Berrington v. Berrington, 534 Pa. 393, 633 A.2d 589 (1993). Texas: Berry v. Berry, 647 S.W.2d 945 (Tex. 1983). A few other courts have created mechanisms so that pension increases ......