Cohen v. Cohen

• Court: Tennessee Supreme Court
• Writing for the Court: WHITE; BIRCH
• Citation: Cohen v. Cohen, 937 S.W.2d 823 (Tenn. 1996)
• Decision Date: 16 September 1996
• Parties: Pamela Dianne Lomax COHEN, Plaintiff, v. Jay Steven COHEN, Defendant.

Page 823

937 S.W.2d 823

Pamela Dianne Lomax COHEN, Plaintiff, v. Jay Steven COHEN, Defendant.

Supreme Court of Tennessee at Nashville.

Sept. 16, 1996.

Vance Cramb, Jr., Nashville, for Plaintiff.

Fred C. Dance, Dance, Dance & Lane, Nashville, for Defendant.

OPINION

WHITE, Justice.

This divorce case raises two important questions involving the classification of marital property under our statutes. The first question is whether an interest in an unvested retirement plan is marital property. The second question is whether increased equity in separate real property is martial property. The trial court declined to consider the husband's interest in an unvested retirement plan as marital property, but did conclude that the increased equity in the husband's separate real property was marital property subject to division. The Court of Appeals reversed on both counts. We granted permission to appeal to determine whether the legislature's definition of marital property set forth in Tennessee Code Annotated Section 36-4-121(b)(1) includes either unvested retirement plans or increased equity in separate real property. We hold that the value of unvested retirement plans and increased equity in real separate property accruing during the marriage constitute marital property. Accordingly, we affirm in part and reverse in part the judgment of the Court of Appeals. ¹

I.

Prior to his marriage to Pamela Cohen on September 1, 1982, Jay Cohen purchased a house for $75,000 from his aunt. ² After the marriage, as a gift to Pamela Cohen, her family made improvements to the house valued at $10,000.

During the parties' marriage, Mr. Cohen was employed by Nashville Metropolitan Fire Department as a paramedic. ³ In April, 1987, the department began making monthly contributions to the retirement plan on Cohen's behalf.

In January, 1992, Mrs. Cohen filed for divorce. Mr. Cohen counterclaimed. The amended final decree of divorce, entered on August 11, 1993, awarded the wife an absolute divorce and sole custody of the child. It also divided the couple's personalty and other assets. As to the marital residence, the decree ordered that the residence be sold with each party paying half of the monthly payments until the sale. The trial court extended credit as gifts to the husband for $25,000 and to the wife for $10,000 upon the sale of the home. The remaining equity was to be divided equally. The trial court declined to award the wife any interest in the husband's unvested retirement benefits.

The Court of Appeals reversed the trial court on both issues. The appeals court held that the wife was not entitled to a division of the equity in the real property because she had not made a substantial contribution to its increase. Conversely, the intermediate court held that the unvested retirement benefits which had accrued during the course of the marriage was marital property. The case was remanded the case to the trial court for valuation of the retirement account and a determination of the most appropriate method of division and distribution.

We granted permission to appeal to review these two determinations. We conclude that Tennessee Code Annotated Section 36-4-121 contemplates that both the unvested retirement benefits and the increased equity in the real property be considered marital property.

II. Unvested Retirement Benefits

Prior to determining whether unvested retirement benefits are marital property under our statute, we will review the concepts. An employee has a "vested" retirement right when the employee has completed the requisite term of employment necessary to be entitled to receive retirement benefits at some future time. In re Marriage of Brown, 15 Cal.3d 838, 126 Cal.Rptr. 633, 635, 544 P.2d 561, 563 (1976); In re Marriage of Grubb, 745 P.2d 661, 665 (Colo.1987); Grode v. Grode, 543 N.W.2d 795, 801 (S.D.1996); G. Blumberg, Marital Property Treatment of Pensions, Disability Pay, Workers' Compensation, and Other Wage Substitutes: An Insurance, or Replacement, Analysis, 33 UCLA L.Rev. 1250, 1259 (1986). A "vested" right matures when an employee reaches retirement age and elects to retire. In re Marriage of Grubb, 745 P.2d at 665. Frequently, vested, but immature rights, are conditioned upon the employee reaching retirement age. In re Marriage of Brown, 126 Cal.Rptr. at 635, 544 P.2d at 563. An "unvested" retirement account is one in which the time period requirements have not been fulfilled. Grode v. Grode, 543 N.W.2d at 802.

Our analysis begins with Tennessee Code Annotated Section 36-4-121 which defines marital and separate property:

(b)(1)(A) "Marital Property" means all real and personal property, both tangible and intangible, acquired by either or both spouses during the course of the marriage up to the date of the final divorce hearing and owned by either or both spouses as of the date of filing of a complaint for divorce, except in the case of fraudulent conveyance in anticipation of filing, and including any property to which a right was acquired up to the date of the final divorce hearing, and valued as of a date as near as reasonably possible to the final divorce hearing date.

(B) "Marital property" includes income from, and any increase in value during the marriage, of property determined to be separate property in accordance with subdivision (b)(2) if each party substantially contributed to its preservation and appreciation and the value of vested pension, retirement or other fringe benefit rights accrued during the period of the marriage.

...

(2) "Separate property" means:

(A) All real and personal property owned by a spouse before marriage:

(B) Property acquired in exchange for property acquired before the marriage;

(C) Income from and appreciation of property owned by a spouse before marriage except when characterized as marital property under subdivision (b)(1); and

(D) Property acquired by a spouse at any time by gift, bequest, devise or descent.

Tenn.Code Ann. § 36-4-121(b)(1)(A), (B) & (2) (1991 Repl.).

First, we must determine whether the right to an unvested retirement benefit fits within the statutory definition of marital property. In construing statutes, we look to the plain language and give effect to the ordinary meaning of the words. Marital property, under our law, includes "all " property "acquired ... during the course of the marriage" or to which "a right was acquired up to the date of the final divorce hearing." Tenn.Code Ann. § 36-4-121(b)(1)(A) (1991 Repl.) (emphasis added). Property is generally understood to include anything of value. See generally Black's Law Dictionary 1095 (5th ed. 1979). Under that unambiguous language, clearly the right to unvested retirement benefits is marital property.

Our inquiry, however, does not end there. We must consider statutes in pari materia, not in a vacuum. Thus, it is argued that further descriptions of marital property in the statute exclude unvested retirement benefits. Specifically, Mr. Cohen contends that the plain language of subsection (B) which specifically identifies vested pension benefits as marital property impliedly excludes unvested retirement benefits. Tenn.Code Ann. § 36-4-121(B) (1991 Repl.) ("and the value of vested pension, retirement or other fringe benefit rights....")

Unlike subsection (A) the language of which is plain and unambiguous, subsection (B) is not without ambiguity. It is not at all clear whether the adjective "vested" in the phrase "vested pension, retirement or other fringe benefit rights" modifies "retirement" or "other fringe benefit" or only "pension." Further, if the term "vested" is interpreted to modify each of the three, the question remains whether the inclusion of the phrase operates to exclude unvested retirement benefits included under the broad definition set forth in subsection (A).

When the language of a statute is ambiguous, this Court's role is to determine and to "give effect to the legislative's intent without unduly restricting or expanding a statute's coverage beyond its intended scope." Wilson v. Johnson County, 879 S.W.2d 807, 809 (Tenn.1994); State v. Sliger, 846 S.W.2d 262, 263 (Tenn.1993). If possible, we must determine the legislative intent from the plain language of the statute, "read in the context of the entire statute, without any forced or subtle construction which would extend or limit its meaning." National Gas Distributors, Inc. v. State, 804 S.W.2d 66, 67 (Tenn.1991). We must give effect to every word, phrase, clause, and sentence of an act to achieve the legislature's intent. United Canners, Inc. v. King, 696 S.W.2d 525, 527 (Tenn.1985). Furthermore, in order to ascertain the legislative intent, the component parts of a statute should be construed, if practicable, so that the parts are consistent and reasonable. Marsh v. Henderson, 221 Tenn. 42, 424 S.W.2d 193, 196 (1968).

A court must presume that the legislature intended that every word used in a statute would have a purpose and would convey meaning. General Care Corp. v. Olsen 705 S.W.2d 642, 646 (Tenn.1986). We must give effect to every word, phrase, clause, and sentence in constructing a statute. Further, we must read the statute in its entirety and construe it in light of the purposes and goals the statute serves.

In applying these rules of statutory construction, we conclude that the legislature intended to include unvested retirement benefits as marital property. First, the definition of marital property found in subsection (A) is virtually all inclusive. That broad definition clearly includes unvested retirement benefits. Second, subsection (B), which serves to append to subsection (A's) definition "vested pension, retirement, or other fringe benefit rights" and certain forms of separate property does not exclude unvested retirement benefits. ⁴ Third, we note that unvested retirement benefits are not included in the definition of separate property. ⁵ Tenn.Code Ann. § 36-4-121(2) (1991 Repl.). Thus,...