Blair v. Blair

• Citation: 894 P.2d 958,271 Mont. 196,52 St.Rep. 401
• Decision Date: 18 May 1995
• Docket Number: No. 94-521,94-521
• Parties: In re Marriage of Kathy Darlene BLAIR, Petitioner and Respondent, v. Stephen J. BLAIR, Respondent and Appellant.
• Court: United States State Supreme Court of Montana

Page 958

894 P.2d 958

271 Mont. 196

In re Marriage of Kathy Darlene BLAIR, Petitioner and Respondent, v. Stephen J. BLAIR, Respondent and Appellant.

No. 94-521.

Supreme Court of Montana.

Submitted on Briefs March 2, 1995.

Decided May 18, 1995.

Marcia Birkenbuel, Great Falls, for appellant.

James D. Elshoff, Great Falls, for respondent.

WEBER, Justice.

This is an appeal from a decision of the Eighth Judicial District Court, Cascade County, granting Kathy Darlene Blair's motion requesting she be awarded her percentage interest in Stephen J. Blair's military Special Separation Benefits. We affirm.

We restate the issues on appeal:

I. Did the District Court err when it found payments received by a member of the military under the Special Separation Benefits program an item of marital property or retirement benefits subject to division by the dissolution court?

II. Did the District Court lose jurisdiction to change the property settlement provisions of the Decree when it failed to rule on the motion within forty-five days from the time it was filed?

III. Was the District Court's decision barred by res judicata?

IV. Did the District Court err when it did not order Stephen Blair to reimburse Kathy Blair for attorney fees?

The parties were married in 1980, and their marriage was dissolved by the District Court in 1993. The parties agreed to and signed a marital property settlement which the court found not unconscionable. The court divided the marital estate as the parties suggested. Part of the division was that Kathy Blair (Kathy) would receive a share of Stephen Blair's (Stephen) future net disposable military retirement pay. Her share would be based on a percentage using the number of years they were married (twelve) and the actual number of years Stephen served on active duty. At that time, it was assumed Stephen would retire from the military after twenty years of active duty.

In 1994, Stephen was accepted into the Special Separation Benefits program (SSB) pursuant to 10 U.S.C. § 1174a. He voluntarily separated from his military service on October 1, 1994, and agreed to serve in the Ready Reserve for a minimum of three years. He received separation pay based on years of service and current base pay. Stephen completed fifteen years of active service.

On March 24, 1994, Kathy filed a motion entitled Motion for an Order Modifying Decree as to Retirement Benefits. On May 6, 1994, she filed a motion to divide the retirement benefits Stephen received from the SSB program. The District Court held a hearing on the motions on May 6, 1994, and awarded Kathy a percentage interest of Stephen's separation pay.

Stephen appeals from the District Court's September 21, 1994 decision.

I.

Did the District Court err when it found payments received by a member of the military under the Special Separation Benefits program an item of marital property or retirement benefits subject to division by the dissolution court?

Stephen argues that military retirement and SSB are defined by two different statutes and are two distinct groups of military entitlement. He then argues that 10 U.S.C. § 1408 specifically authorizes the division of military retirement pay as a marital asset in a proceeding for dissolution, but 10 U.S.C. § 1174a does not contain any language authorizing the division of SSB pay in a dissolution proceeding.

Stephen refers to McCarty v. McCarty (1981), 453 U.S. 210, 101 S.Ct. 2728, 69 L.Ed.2d 589, in which the U.S. Supreme Court emphasized that the decision as to the availability of retirement pay to a spouse is left to Congress alone. After the McCarty ruling, Congress enacted the Uniformed Services Former Spouses' Protection Act (Spouses' Protection Act), 10 U.S.C. § 1408. This act authorizes a dissolution court's division of "disposable retired or retainer pay."

Stephen argues that his separation pay is not an early retirement benefit. He states that he is no longer eligible for military retirement because he terminated his active duty status prior to the number of years of service required for retirement, and that he received special separation pay in return for serving in the military's Ready Reserve for at least three years following his separation from active duty.

Stephen also refers to Mansell v. Mansell (1989), 490 U.S. 581, 109 S.Ct. 2023, 104 L.Ed.2d 675, in which the U.S. Supreme Court ruled that state courts could not treat the portion of military retirement waived in order to receive Veteran's Administration disability benefits as marital property divisible under the Spouses' Protection Act. Stephen concludes, under McCarty and Mansell, state courts do not have authority to divide SSB pay as a marital asset unless Congress specifically authorizes such a division.

Kathy argues that the benefits provided under 10 U.S.C. § 1174a are clearly for purposes of retirement. She states that the SSB program is known as the "Early Out Program." She points out that SSB benefits are awarded based on years served of active duty the same as other retirement benefits.

Kathy refers to Elzie v. Aspin (D.D.C.1993), 841 F.Supp. 439, 440, which found that SSB benefits provide incentive payments as inducements "to elect early retirement." In addition, Kathy includes a copy of a brochure disseminated by the Department of Defense describing the voluntary separation incentives and what they mean to eligible military members. On page six of the brochure, in a question/answer format, it states:

What happens to VSI or SSB if I become retirement-eligible?

Essentially, you pay it back from your retirement pay. Kathy stresses the point that if a member voluntarily separates from active duty and then re-enlists, his or her retirement pay, not the current wages, would be tapped for reimbursement. Kathy then refers to the District Court in Cascade County which has twice ruled that SSB benefits are marital property and subject to division upon receipt. In re the Marriage of Daws, BDR 91-626, decided on July 1, 1992; and, In re the Marriage of Plunkett, BDR 90-520, decided on September 8, 1992.

The District Court found that Stephen and Kathy, prior to dissolution, negotiated the terms and freely entered into a Property Settlement Agreement stating "[Kathy] was awarded a share of [Stephen's] future net disposable military retirement pay, to be calculated based upon [Stephen's] actual number of years of service at the time of retirement."

The District Court then likened SSB payments to military pensions because they are both based on longevity of service. The court stated that military pensions have long been declared in Montana to be a marital asset divisible upon dissolution; therefore, SSB payments are also divisible. Stephen and Kathy were married twelve of the fifteen years of his active service. Since a portion of Stephen's separation benefits accrued during his marriage to Kathy, the court concluded that portion is divisible by the court upon dissolution.

Our standard of review of the District Court's conclusions of law is to determine if the District Court's interpretation of the law is correct. Steer, Inc. v. Department of Revenue (1990), 245 Mont. 470, 474-475, 803 P.2d 601, 603-604.

Stephen relies on McCarty and Mansell for the principle that federal law preempts state law in the treatment of military retirement. In McCarty, the U.S. Supreme Court held that the husband's military retirement pay was not subject to California's community property laws; and, therefore, could not be attached to satisfy a property settlement incident to the dissolution of marriage absent congressional authority to do so. McCarty, 453 U.S. at 228-232, 101 S.Ct. at 2739-2741, 69 L.Ed.2d at 603-605. However, in response to McCarty, Congress enacted Title 10 U.S.C. § 1408, known as the Former Spouses' Protection Act. This act provided the congressional authority the Supreme Court found absent.

Further, the Court's reasoning, in Mansell, is contrary to Stephen's analysis. There, the Court reiterated its prior holding that state law preempts federal law in all domestic relations unless Congress positively enacts it. Mansell, 490 U.S. at 587, 109 S.Ct. at 2028, 104 L.Ed.2d at 684. Congress expressly excluded VA disability benefits received in lieu of military retirement from division by the state dissolution court. 10 U.S.C. § 1408(a)(4)(B). No such expression was enacted for military retirement waived to receive special separation benefits under 10 U.S.C. § 1174(a). The holding in Mansell clearly sets forth limitations on the holding in McCarty as applied to this case.

Further, we note the Department of Defense's statement concerning a dissolution court's ability to divide SSB payments. Page six of the Department's brochure states:

How will state courts treat VSI/SSB in a divorce settlement?

The treatment of VSI or SSB is not dictated by Federal law. It will be up to the state courts to rule on the divisibility of these incentives.

We also note that a federal district court has stated:

The VSI/SSB program provides, to those members who qualify, incentive payments and medical and veterans benefits as inducements to elect early retirement.

Elzie, 841 F.Supp. at 440.

Like retirement, Stephen's eligibility for the SSB program was based on the number of years he served in active duty. 10 U.S.C. § 1174a(c). As with retirement pay, Stephen's separation pay was calculated according to the number of years he was in active service. 10 U.S.C. § 1174a(b)(2)(A). Stephen could have remained on active duty for five more years and received retirement pay. Instead, he chose voluntary separation from the military and received his compensation at an earlier date. For the reasons we have stated, we characterize separation pay received under the Special Separation Benefits program (10 U.S.C. § 1174a) as an election for early retirement.

We hold that payments received by a member of the military under the Special Separation Benefits program...