Dapp v. Dapp

• Decision Date: 01 May 2013
• Docket Number: Sept. Term, 2011.,No. 0500,0500
• Citation: 211 Md.App. 323,65 A.3d 214
• Parties: Robert B. DAPP v. Linda C. DAPP.
• Court: Court of Special Appeals of Maryland

211 Md.App. 323

65 A.3d 214

Robert B. DAPP

v.Linda C. DAPP.

No. 0500, Sept. Term, 2011.

Court of Special Appeals of Maryland.

May 1, 2013.

Andrew M. Hermann, (Levy, Mann, Caplan, Hermann & Polashuk, LLP, on the brief), Owings Mills, MD, for Appellant.

Colleen A. Cavanaugh, (Cavanaugh & Warshaw, PA, on the brief), Towson, MD, for Appellee.

Panel: ZARNOCH, KEHOE, W. MICHEL PIERSON, (Specially Assigned).

PIERSON, J.

Appellant, Robert B. Dapp, appeals an order of the Circuit Court for Baltimore County requiring him to pay appellee, Linda C. Dapp, certain amounts based upon his past and future receipt of retirement benefits under the Railroad Retirement Act of 1974, 45 U.S.C. § 231 et seq., in accordance with the terms of the parties' Marital Separation and Property Settlement Agreement. He asserts that the division of so-called Tier I benefits pursuant to a marital settlement agreement is prohibited by the Railroad Retirement Act, and that, therefore, the Supremacy Clause of the United States Constitution precludes the circuit court from enforcing that portion of the Agreement. We agree, and reverse the judgment of the circuit court.

FACTUAL AND PROCEDURAL BACKGROUND

Mr. and Mrs. Dapp were married on September 7, 1968. Mr. Dapp became employed by Amtrak ¹ on January 1, 1981. The parties separated on February 26, 1986. On April 4, 1988, Mrs. Dapp was granted a judgment of absolute divorce by the Circuit Court for Baltimore County. The judgment incorporated the parties' Marital Separation and Property Settlement Agreement dated December 2, 1987. Paragraph 8 of the Agreement contained a mutual waiver of alimony and other spousal support. Paragraph 12 stipulated that “[t]he Wife shall be entitled to one-half ( 1/2) of all pension accrued by the Husband with Amtrak if she does not remarry within five (5) years from the date of final divorce.”

Mrs. Dapp has remained unmarried since the divorce. Mr. Dapp, who had worked for Amtrak for 88 months before the divorce, continued to work there for another 243 months after the divorce, until he retired in February 2009. Upon his retirement, Mr. Dapp began to receive monthly retirement benefits totaling $3,113.13 pursuant to the Railroad Retirement Act of 1974. Of this amount, $1,950.00 constitutes so-called Tier I benefits, and $1,163.13 constitutes so-called Tier II benefits and supplemental annuity payments.² Mr. Dapp did not inform Mrs. Dapp of his retirement at the time, and she received no portion of the retirement benefits.

On February 3, 2010, after learning of Mr. Dapp's retirement, Mrs. Dapp filed a complaint to enforce the Agreement in the Circuit Court for Baltimore County, seeking one-half of the entirety of Mr. Dapp's railroad retirement benefits under the authority of Paragraph 12. Mr. Dapp responded that Mrs. Dapp was entitled only to one-half of the “marital portion” of his Tier II benefits and supplemental annuity payments, and that she was not entitled to any portion of his Tier I benefits. The parties filed cross motions for summary judgment, which were denied in a written opinion. The court found that the language of Paragraph 12 of the Agreement was susceptible of more than one meaning. It reasoned that the word “accrued” was ambiguous because of the absence of any language relating to the timing of the accrual. It determined that a hearing should be held to take evidence on the meaning of the Agreement. As the opinion framed the issues to be resolved, they included (1) whether Paragraph 12 included only that portion of the retirement benefits attributable to Mr. Dapp's employment during the parties' marriage, or all retirement benefits that accrued during Mr. Dapp's employment with Amtrak, and (2) whether Paragraph 12 encompassed Tier I benefits as well as other benefits.

At the hearing, testimony was received from the drafter of the agreement, and from Mrs. Dapp and Mr. Dapp. Upon its conclusion, the court rendered an oral opinion. It found that the bargain made by Mr. and Mrs. Dapp was that the entirety of Mr. Dapp's retirement benefits, not simply those benefits resulting from employment during marriage, would be divided with Mrs. Dapp. It also found that the parties made no distinction between Tier I and Tier II benefits. In consequence, the meaning of the agreement was that Mrs. Dapp would receive one-half of all retirement benefits to which Mr. Dapp was entitled when he retired, including the Tier I benefits.

Based on these findings, the judge concluded that Mrs. Dapp was entitled to a qualified domestic relations order (QDRO) that divided Tier II benefits payable after the trial, as well as an award of one-half of the previously paid Tier II benefits, reduced by one half of the taxes that had been paid by Mr. Dapp based on their receipt. Recognizing that federal law precluded the court from directly dividing the Tier I benefits, the judge stated that he could “enforce in equity the parties' agreement to divide those benefits.” He determined to require that Mr. Dapp pay Mrs. Dapp one-half of the Tier I benefits received by him in the future, with a deduction for taxes paid by Mr. Dapp, and to award Mrs. Dapp an amount equal to one-half of the Tier I benefits previously paid, reduced by one-half of the taxes that had been paid by Mr. Dapp as a result of his receipt of those benefits.

The court's final order of April 28, 2011, therefore, had four components. The first was a judgment for $12,642.83, representing one-half of the Tier II benefits already received by Mr. Dapp between March 2009 and March 2011, less half of the taxes paid by him on those benefits. The second was a direction for the entry of a QDRO for Mr. Dapp's future Tier II benefits. The third was a judgment for $21,197.07, representing one-half of the Tier I benefits received between March [211 Md.App. 328]2009 and March 2011, less half of Mr. Dapp's tax burden. Finally, the court ordered Mr. Dapp to pay to Mrs. Dapp on the fifteenth of every month, beginning April 15, 2011, a sum equal to one-half of all Tier I benefits received by him, less half of his tax burden on those benefits. The court stayed the orders regarding the Tier I benefit liability pending appeal.

Mr. Dapp timely appealed those portions of the circuit court's order requiring payments to Mrs. Dapp based upon his Tier I benefits. He does not question the court's orders regarding his Tier II benefits; Mrs. Dapp currently receives $581.57 monthly pursuant to the QDRO dividing Mr. Dapp's Tier II benefits, and Mr. Dapp has satisfied the $12,642.83 judgment for past Tier II benefits.

DISCUSSION

Mr. Dapp argues that the circuit court erred as a matter of law by ordering him to pay Mrs. Dapp a portion of his Tier I retirement benefits because it was precluded from doing so by federal law. He does not question the circuit court's finding that the parties' agreement encompassed the Tier I benefits, but asserts that the court could not enforce this agreement because it contravenes the provisions of the Railroad Retirement Act. Neither party disagrees with the proposition that the court could not directly order the payment of Tier I benefits to Mrs. Dapp, through a QDRO or otherwise. Mrs. Dapp asserts that nonetheless the court had the power to enforce Paragraph 12 of the parties' Agreement, which stipulated that Mrs. Dapp would receive one-half of the benefits that Mr. Dapp would receive in the future, through an order requiring Mr. Dapp to make payments from his “general assets” that correspond to the Tier I benefits that he receives.

The basis of Mr. Dapp's argument is section 14(a) of the Railroad Retirement Act of 1974, which contains a broad provision against assignment of benefits. It states, in pertinent part:

Except as provided in subsection (b) of this section ... notwithstanding any other law of the United States, or of any State, territory, or the District of Columbia, no annuity or supplemental annuity shall be assignable or be subject to any tax or to garnishment, attachment, or other legal process under any circumstances whatsoever, nor shall the payment thereof be anticipated[.]

45 U.S.C. § 231m(a).

The United States Supreme Court applied a prior version of this statute ³ in Hisquierdo v. Hisquierdo, 439 U.S. 572, 574, 99 S.Ct. 802, 59 L.Ed.2d 1 (1979). There, the Court reversed a California Supreme Court decision that provided a remedy to a wife upon dissolution of marriage based on her husband's expectation of receiving railroad retirement benefits. The California court decided that the benefits were subject to the state's community property regime, and held that because the benefits flowed in part from the husband's employment during the parties' marriage they were community property. The Supreme Court held that the Supremacy Clause of the United States Constitution required reversal because the award conflicted with the Railroad Retirement Act. It reasoned that the right granted to the wife by state law conflicted with the express terms of federal law, and that the consequences of this grant injured the objectives of the federal program sufficiently to require nonrecognition of the right. The Court held that the critical terms of the federal scheme to which the Supremacy Clause required California to defer “include a specified beneficiary protected by a flat prohibition against attachment and anticipation.” Hisquierdo, 439 U.S. at 582, 99 S.Ct. 802. It rejected the argument that the right would not conflict with the statute because it could be effectuated by a remedy under which the husband would be required to pay a portion of his benefit or its monetary equivalent as he received it, stating that the anti-assignment provision “protects Congress's decision about how to allocate the benefits provided by the Act, and any automatic diminution of that amount frustrates the congressional objective.” Hisquierdo, 439 U.S. at 583, 99 S.Ct. 802. The Court also rejected the contention that the wife's...