Danielson v. Evans

• Citation: 201 Ariz. 401,36 P.3d 749
• Decision Date: 18 December 2001
• Docket Number: No. 2 CA-CV 00-0184.,2 CA-CV 00-0184.
• Parties: Susan S. DANIELSON (fka Evans), Petitioner/Appellee, v. Donald W. EVANS, Respondent/Appellant.
• Court: Court of Appeals of Arizona

36 P.3d 749

201 Ariz. 401

Susan S. DANIELSON (fka Evans), Petitioner/Appellee, v. Donald W. EVANS, Respondent/Appellant.

No. -0184.

Court of Appeals of Arizona, Division 2, Department A.

December 18, 2001.

Karp, Heurlin & Weiss, P.C., By Leonard Karp and Laura C. Belleau, Tucson, for Petitioner/Appellee.

Law Office of Ethan Steele, By Ethan Steele, Tucson, for Respondent/Appellant.

Karalekas & Noone, By James A. Noone, Washington, D.C., for Amicus Curiae American Retirees Association.

Law Office of Marshal S. Willick, By Marshal S. Willick, Las Vegas, NV, for Amicus Curiae, Ex-Pose.

OPINION

PELANDER, J.

¶ 1 This post-dissolution, domestic relations case concerns division of military retirement benefits and again presents thorny issues that arise when state law community property principles allegedly clash with the Uniformed Services Former Spouses' Protection Act (the Act), 10 U.S.C. § 1408. See Mansell v. Mansell, 490 U.S. 581, 109 S.Ct. 2023, 104 L.Ed.2d 675 (1989)

; Harris v. Harris, 195 Ariz. 559, 991 P.2d 262 (App.1999); In re Marriage of Gaddis, 191 Ariz. 467, 957 P.2d 1010 (App.1997),

cert. denied, 525 U.S. 826, 119 S.Ct. 73, 142 L.Ed.2d 57 (1998). Appellant Donald Evans appeals from two trial court orders—the first requires him to compensate his former spouse, appellee Susan Danielson (fka Evans), for the difference between the projected value of her interest in his future military retired pay, as prescribed in the dissolution decree, and the reduced amount of that pay she actually received after Evans later waived much of it in order to receive veterans' disability benefits; and the second order holds him in contempt for failing to comply with the first. We affirm the first order but partially vacate the second.

FACTUAL AND PROCEDURAL BACKGROUND

¶ 2 The pertinent facts and procedural background in this matter are essentially undisputed. The parties were married from 1978 to 1993, when the marriage was dissolved pursuant to a Colorado decree. At the time of their marriage, both parties were employed as military officers in the United States Army. Based on their mutual decision, however, Danielson subsequently resigned her commission and became a military spouse, principal homemaker, and stay-at-home parent to the parties' three children. When the marriage was dissolved in 1993, Evans was on active duty and contemplating retirement.

¶ 3 The parties' dissolution proceedings in Colorado included five days of hearings before a special master, who issued extensive findings of fact and conclusions of law. The master found that because Evans's future military retirement could not be "accurately and actuari[al]ly determined" at that time due to unknown factors and "unresolvable contingencies,"

the most prudent way to share in this marital asset is to divide the same in accordance with a "coverture formula", wherein the numerator of the formula is the number of months in this marriage, i.e., 179 months divided by an anticipated military career of 240 months. This results in wife having a 37.3[%] interest into [sic] husband's future military benefits. Wife is given a 50% portion of the "coverture formula" as her sole and separate property.

The master further directed that "Husband shall assist wife in procuring and receiving 37.3% of his disposable pay, as defined by federal law, and wife shall be entitled to receive this compensation directly from the U.S. government." The master awarded spousal maintenance to Danielson, with the amount dropping to $1 per year once she began to receive her portion of Evans's military retirement benefits. The master noted, however, that, "[e]xcept for the future receipt of retirement benefits, [Danielson's] situation would rise to the level of a permanent award of spousal maintenance [until] death or remarriage." Danielson remarried after the dissolution.

¶ 4 The Colorado court's dissolution decree in August 1993 incorporated by reference the master's findings and conclusions. In December 1994, Evans received retirement orders for a non-disability retirement, effective September 30, 1995. On Evans's request for clarification of the master's findings, and after the Colorado court referred that request to the master, in 1995 the master reduced Danielson's interest in Evans's military retirement benefits to 35.5 percent¹ and further found:

In the event husband voluntarily diminishes the dollar value of his net disposable pay (predicated upon 21 years of active service at the status of Lt. Colonel) or should husband merge or otherwise diminish the dollar value of the gross military benefits wherein wife's interests are detrimentally affected, the Court of Colorado shall reserve jurisdiction to compensate wife for such diminution.

The master later denied Evans's motion for reconsideration.

¶ 5 At the time of the dissolution in 1993, both parties were in good physical and emotional health but were aware that Evans had suffered an injury during his military training in 1977. The Arizona trial court in this action found, and Danielson does not specifically contest, that before the dissolution both parties were aware of "the potential to declare a portion of retired pay as disability pay" and of the fact that "federal retirement pay was community property while federal disability pay was separate property." Danielson testified below, however, that during the marriage she had had no "reason to believe that [Evans] was disabled." It is undisputed that at the time of the dissolution, Evans had neither applied for nor received any disability rating by the government.

¶ 6 On September 30, 1995, Evans retired from the Army and also completed an eligibility application for Veterans' Administration (VA) disability benefits. He identified service-related disabilities consisting of angioedema and injuries suffered in the 1977 training fall. As the trial court found, Evans's application "set in motion a staggered series of disability ratings and increases." Beginning in February 1996, Evans received several notifications from the VA concerning its evaluation of his disability rating. Over time, that rating incrementally increased from twenty percent, retroactive to November 1, 1995, to seventy percent.

¶ 7 From October 1, 1995 through July 1996, Evans paid $757.19 per month directly to Danielson for her percentage share of his military retired pay. Federal law, however, required Evans to waive, dollar for dollar, his net disposable retired pay to the extent of any disability payments he received, thus reducing his retired pay but not his overall monthly benefits.² See 38 U.S.C. § 5305; Mansell, 490 U.S. at 583, 109 S.Ct. at 2026, 104 L.Ed.2d at 682. Consequently, beginning in August 1996, the federal government began sending Danielson payments that represented her 35.7 percent share of only the non-disability related portion of Evans's benefits. As he waived increasingly greater portions of his retired pay due to his application for and receipt of increased disability ratings, the value of Danielson's 35.7 percent share of the net disposable retired pay consequently decreased. Thus, as of early 2000, she was receiving only $130.66 per month.

¶ 8 In May 1996, the Colorado court entered a stipulated order concerning division of Evans's disposable military retired pay. Danielson and her Colorado counsel were actively involved in the drafting of that order, which stated in part that the Colorado court had "previously entered its Final Order dated August 6, 1993 ... [and] ... reserved jurisdiction to enter its Orders regarding the division of military retired pay upon the retirement of [Evans] from the military service." The order further provided that Danielson "will receive as and for her portion of [Evans's] disposable military retired pay, 35.7%" and that "[this] confirms the division of military retired pay contained in the Decree of Dissolution entered on August 6, 1993." Finally, the stipulated order stated that the Colorado court "shall retain jurisdiction over this matter, and in particular shall retain jurisdiction through the reserve jurisdiction method of dividing the parties' military retirement asset." At the time of the stipulated order, Danielson was not aware that Evans already had waived some retired pay for disability benefits.³

¶ 9 In July 1996, at Evans's request, the case was transferred from Colorado to Arizona. In April 1999, Danielson filed a petition for order to show cause in Pima County Superior Court, requesting a finding of contempt against Evans for his failure to pay her 35.7 percent of his total military pay including the disability portion, not just 35.7 percent of the retired pay portion. She sought judgment for 35.7 percent of the past due and future combined benefit of both retired pay and disability benefits or, alternatively, a permanent award of spousal maintenance in an amount equal to the difference between 35.7 percent of the combined benefit and 35.7 percent of only the retired pay portion.

¶ 10 After an evidentiary hearing in February 2000, the trial court (J. Stanford) entered detailed findings of fact and ruled, inter alia, that "[t]he parties are bound by the [Colorado court's] original decree" for payments made before May 1996, and by that court's "post-decree order" for payments made thereafter. The trial court further concluded that the parties had intended the May 1996 stipulated order to "confirm[] the original order" in a form acceptable to "secure direct federal payment," and had not intended to "change the value of the benefits confirmed and divided at the time of the original decree."

¶ 11 Accordingly, the trial court ruled that, "[u]nder the terms of the original decree and state law,⁴ [Danielson] is entitled to [35.7]% of the combined benefit regardless of the subsequent disability transmutations under federal law." The court further ruled that Danielson's "interests were finally determined on the date of the decree...