Croley v Tiede, 99-00649
| Decision Date | 05 October 2000 |
| Docket Number | 99-00649 |
| Parties | ELIZABETH ANN (TIEDE) CROLEY v. THOMAS KENT TIEDEIN THE COURT OF APPEALS OF TENNESSEE AT NASHVILLE January 2000 Session Filed |
| Court | Tennessee Court of Appeals |
Appeal from the Chancery Court for Montgomery County No. 91-67-423
Carol Catalano, Chancellor
This post-divorce case presents the single controlling question of how to calculate an ex-wife's interest in an ex-husband's pension under the deferred distribution method where the retirement plan formula for distribution gives added weight to post-divorce, pre-retirement months or years. Without elaboration, the trial court adopted the "time rule" formula, treating post-divorce pension benefit enhancements earned by a husband's continued post-divorce employment under the retirement system as applicable to the non-employee spouse share at retirement. For reasons stated herein, we affirm the action of the trial court.
Tenn. R. App. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed.
Denty Cheatham, Nashville, Tennessee, for the appellant, Thomas Kent Tiede.
Mark A. Rassas and Julia P. North, Clarksville, Tennessee, for the appellee, Elizabeth Ann (Tiede) Croley.
WILLIAM B. CAIN, J., delivered the opinion of the court, in which BEN H. CANTRELL, P.J., M.S., and PATRICIA J. COTTRELL, J., joined.
OPINIONElizabeth Ann Tiede, now Croley, ("the Wife") and Thomas Kent Tiede ("the Husband") were married June 16, 1963. The parties separated in September 1989 and were divorced on grounds of irreconcilable differences on December 18, 1992 by decree adopting their Marital Dissolution Agreement ("MDA"). Section 3 of the MDA provided:
The Husband shall pay to the Wife, 50% of his retirement benefits, based on 23 years of employment, such to be paid by direct wage assignment or allotment if available. Such benefits are to commence by February 1, 1999, or no earlier than 36 months from the entry of final decree in this cause if the Husband is involuntarily retired by AAFES. In addition, the Husband shall take immediate steps, other than financial expenditures, to make the Wife beneficiary of at least 50% of his AAFES retirement benefits, if he dies prior to his eligibility for such benefits. If income taxes are withheld from the total amount of the Husband's retirement resulting in a higher withholding from the Wife's one-half interest than if she was taxed at her own rate, the Husband shall pay to the Wife the difference.
The Husband retired in July 1996 and began receiving retirement benefits as of August 1, 1996. At the time of his retirement, the Husband had 28.863 years of employment with the Army and Air Force Exchange Service, the first 23 years of such service having occurred during the marriage of the parties and the remaining 5.863 years occurring after the divorce.
The parties do not dispute that the formula used, pursuant to the Marital Dissolution Agreement and controlling Tennessee law in Cohen v. Cohen, 937 S.W.2d 823, 831 (Tenn. 1996), is the correct formula. The numerator is 23 representing the number of years the parties were married while the Husband was under the retirement system. The denominator is 28.863 representing the number of years, marital and non-marital, that the Husband earned retirement benefits prior to his retirement. When the numerator is divided by the denominator, the result is that 79.687 percent of the Husband's total service in the retirement system equals the 23 years of service during the marriage. Under the 50 percent allocation of the MDA, "based on 23 years of employment," the Wife is entitled to 39.84 percent of the Husband's retirement benefits (79.687 percent times 50 percent equals 39.84 percent).
Where the parties differ is in the application of this percentage. The Husband's retirement benefits under the retirement plan are based on his annual income during his three highest paid years. His highest paid pre-divorce years were 1989 through 1992 with an average yearly income of $57,799.00. His highest three years salary prior to his retirement were the years 1993 through 1996 when his average income was $80,010.00 per annum. The Wife claims that she is entitled to 39.84 percent of the Husband's retirement actually drawn beginning August 1, 1996 based upon his average salary for the last three years prior to his retirement ($80,010.00). The Husband insists that the Wife is only entitled to 39.84 percent of what his retirement benefit would be based upon his average salary for the last three years of the marriage ($57,799.00).
The trial court held that section 3 of the MDA was unambiguous and that the Wife was entitled to 39.84 percent of the Husband's full retirement actually drawn by him subsequent to August 1, 1996. After this finding by the trial court, the Husband filed a motion to alter or amend claiming that the provision was ambiguous and seeking to introduce parol evidence to explain the alleged ambiguity. The trial court refused to allow parol evidence at the hearing on the motion to alter or amend but did allow the Husband to make a tender of proof of all of the parol evidence he wished to introduce. Thus, the record before this court is complete and if the chancellor is in error as to ambiguity in the controlling language of the MDA, we have before us for de novo review, all of the parol evidence which the Husband sought to introduce.
With the "increasingly prominent role" that pension rights are playing in divorce proceedings, the division of such benefits is not a new subject to our courts. Kendrick v. Kendrick, 902 S.W.2d 918, 920 (Tenn. Ct. App. 1994); see, e.g., Cohen v. Cohen, 937 S.W.2d 823 (Tenn. 1996); Umstot v. Umstot, 968 S.W.2d 819 (Tenn. Ct. App. 1997); Oaks v. Oaks, No. 01-A-01-9901-CH-00046, 1999 WL 734498 (Tenn. Ct. App. Sept. 22, 1999). In Kendrick, this Court first discussed "whether nonvested pension rights are marital property" and "the manner in which [such] pension rights should be valued and distributed if [they] are marital property." Kendrick, 902 S.W.2d at 921. The Kendrick court concluded that nonvested pension rights accruing during a marriage are marital property subject to equitable division in divorce cases. Id. at 924. With regard to the valuation and distribution of pension rights, the court discussed both the present value method1 and the retained jurisdiction or deferred distribution method. Id. at 927.
The court stated that Id. at 927. "The numerator of the fraction is the number of years or months of the marriage during which the pension interests accrued, and the denominator is the total number of years or months during which the pension benefits were accumulated before being paid." Id. at 930 n.17.
The parties in Kendrick, Sergeant Kendrick and Ms. Kendrick, had married in 1981, after Sergeant Kendrick had already begun his military career, and they separated in September of 1991.
After concluding that their case was "particularly amenable4 to the use of the deferred distribution method for valuing and distributing" pension rights, the Court of Appeals remanded the Kendricks' case to the trial court. Id. at 929. In so doing, this Court stated that Ms. Kendrick's "interest should also be valued as near to the date of the final divorce hearing as possible and should be based on Sergeant Kendrick's earliest possible vesting date and on his salary at the time of the divorce." Id. at 929. In addition, the court gave the following instructions:
On remand, the trial court should first calculate the portion of Sergeant Kendrick's pension that is marital property. 23 Next, the trial court should calculate Sergeant Kendrick's retirement pay if he retired at his present rank at his earliest possible vesting date. Then, the trial court should determine the portion of the marital interest in the pension Ms. Kendrick should receive. 24 Finally, the trial court should enter an order setting out Ms. Kendrick's share of Sergeant Kendrick's retirement pay. 25
The text of the footnotes referred to in this Court's instructive paragraph quoted above is as follows: In Footnote 23, we explained that Id. at 930 n.23. This Court next asserted that "[a]n equal division is equitable unless the evidence requires otherwise" such that Ms. Kendrick's share would be 26.25% (1/2 of 52.5%) if the pension vests after 20 years and 35% (1/2 of 70%) if the pension vests after 15 years. Id. at 930 n.24. In the final footnote, this Court states that "Ms. Kendrick's share may be expressed in a fixed dollar amount or may be stated later as a percentage of Sergeant Kendrick's actual retirement pay if and when he begins drawing it." Id. at 930 n.25.
Subsequent to Kendrick, in Cohen v. Cohen, the Tennessee Supreme Court concluded, as did this Court in Kendrick, that the value of unvested retirement plans is marital property. 937 S.W.2d at 830. The court's holding was based upon its determination that the statute's definition of marital property includes retirement benefits, both vested and unvested. Id. at 827-30. After reaching this conclusion, the court...
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