DeLoach v. DeLoach

• Decision Date: 21 November 1991
• Docket Number: No. 90-3139,90-3139
• Citation: 590 So.2d 956
• Parties: 16 Fla. L. Weekly D2939 Franklin DeLOACH, husband, Appellant, v. Ruthie Mae DeLOACH, wife, Appellee.
• Court: Florida District Court of Appeals

Page 956

590 So.2d 956

16 Fla. L. Weekly D2939

Franklin DeLOACH, husband, Appellant, v. Ruthie Mae DeLOACH, wife, Appellee.

No. 90-3139.

District Court of Appeal of Florida First District.

Nov. 21, 1991.

Rehearing Denied Jan. 2, 1992.

William H. Grant, III, Orange Park, for appellant.

No brief filed for appellee.

ERVIN, Judge.

In this appeal from an order modifying a marital dissolution judgment, which awarded his former wife, Ruthie Mae DeLoach, a portion of his nonvested military pension, appellant, Franklin DeLoach, contends that the trial court erred in (1) determining a military retirement pension that had not vested to be a marital asset subject to equitable distribution, (2) holding that his former wife was automatically entitled to one-half of his pension, (3) failing to take judicial notice of 10 U.S.C.S. Secs. 6326 and 6330 (Law.Coop.1980), which establish the vesting periods for retirement and retainer pay, (4) distributing his military retirement benefits without considering any factors other than the duration of the marriage and the number of years of military service, and (5) ordering him to submit documentation to the government that would authorize direct payment of his pension benefits to the former wife. We affirm in part, reverse in part, and remand for the reasons stated herein.

The parties were divorced on January 8, 1988, at a time when the former husband had served as a career enlisted member of the United States Marine Corps for approximately thirteen and one-half years, nine years of which were during the marital relationship. In the original distribution order, the court awarded the former wife one-half of the husband's future military pension earned during the marriage. On appeal, this court reversed, stating that although the husband's pension was marital property which could be equitably distributed or treated as a source of alimony, there was insufficient evidence to support the trial court's award. DeLoach v. DeLoach, 552 So.2d 324 (Fla. 1st DCA 1989) (hereafter DeLoach I ). We remanded to the trial court to determine "whether the pension was vested or mature, when it would become vested, its present value, or when the husband would be entitled to begin to receive his benefits thereunder." Id. at 325.

In the proceedings conducted on remand, the trial court took judicial notice of 10 U.S.C.S. Secs. 1406, 1408, and 6333 (Law Coop.Supp.1991), and concluded that the former wife was entitled to one-half of the value of nine years of the husband's pension upon his retirement from military service, to be calculated according to his monthly base pay of $1,520 at the time of dissolution. The court also required appellant to complete documentation that would permit the proper military authorities to pay the retirement-benefit portion directly to the former wife.

I.

In arguing that the trial court erred in considering his military pension, which had neither vested ¹ nor matured, ² as a marital asset, the former husband relies upon the Second District Court of Appeal's decision in Summers v. Summers, 491 So.2d 1270 (Fla. 2d DCA 1986). In that case, the Second District held that a pension plan could not be considered an asset for equitable distribution purposes until it had vested, for the reason that the employee's entitlement to future payments from such a plan could be destroyed, for instance, by a change in employment. Id. at 1271. Without explicitly stating so, the Second District apparently considered the employee's interest to retirement benefits in a nonvested pension to be only an expectancy.

We cannot agree with the Second District, because we are of the view that it is inconsistent with prevailing decisional law in this and other jurisdictions. In so saying, we recognize that appellant's nonvested, noncontributory pension plan may never vest; that such contingencies as "resignation, discharge, death and other factors may occur before the service member is eligible to receive retirement pay." Bullock v. Bullock, 354 N.W.2d 904, 910-11 (N.D.1984). Such factors, nonetheless, do not in our view militate against a determination that a portion of a nonvested pension that has accumulated retirement credits during the marital partnership may be considered a marital asset.

Our conclusion in this regard is strongly supported by an opinion of the Supreme Court of California in Brown v. Brown, 15 Cal.3d 838, 126 Cal.Rptr. 633, 544 P.2d 561 (1976), in which the court receded from a long line of California decisions which had held that nonvested pension rights were not property, but a mere expectancy, and as such were not subject to division upon dissolution of marriage. In reaching its decision to the contrary, the court recognized that the employee's right to retirement benefits is one that is contractual in nature, and "[t]he fact that a contractual right is contingent upon future events does not degrade that right to an expectancy. The law has long recognized that a contingent future interest is property no matter how improbable the contingency." Id. 126 Cal.Rptr. at 638 n. 8, 544 P.2d at 566 n. 8 (citation omitted). The essential nature of a pension plan as a contractual right, whether vested or not, was explained by the court in the following terms:

Although some jurisdictions classify retirement pensions as gratuities, it has long been settled that under California law such benefits "do not derive from the beneficence of the employer, but are properly part of the consideration earned by the employee." Since pension benefits represent a form of deferred compensation for services rendered, the employee's right to such benefits is a contractual right, derived from the terms of the employment contract. Since a contractual right is not an expectancy but a chose in action, a form of property, we [have] held ... that an employee acquires a property right to pension benefits when he enters upon the performance of his employment contract.

Id. 126 Cal.Rptr. at 637, 544 P.2d at 565 (citations omitted).

The distinction between a nonvested pension and an expectancy was also well analyzed as follows by the Superior Court of New Jersey, Appellate Division, in Whitfield v. Whitfield, 222 N.J.Super. 36, 535 A.2d 986 (App.Div.1987), in regard to a pension that would not vest until four years after the parties' marital dissolution:

Concededly, there is an element of uncertainty connected with this pension insofar as defendant must continue to work until 1988 in order to receive it. In our estimation, this uncertainty has been the source of the analytical error on the part of the courts which have characterized a nonvested pension as a "mere expectancy." In fact, a nonvested pension is a far cry from an entirely speculative "mere expectancy," the nature of which would not justify inclusion in the marital estate. An expectancy "describes the interest of a person who merely foresees that he might receive a future beneficence, such as the interest of an heir apparent ..., or of a beneficiary designated by a living insured who has a right to change the beneficiary.... As these examples demonstrate, the defining characteristic of an expectancy is that its holder has no enforceable right to his beneficence."

Unlike an expectancy, accession to which comes entirely by chance, the employee has some control over receipt of a non-vested pension. To be sure, the control is not absolute because the employee may be terminated or the business may close. However, if the employee continues to work for the required number of years, he will be legally entitled to his pension. This is what distinguishes a non-vested pension from a mere expectancy. Such a pension is property in the form of a contract right to deferred compensation subject only to the fulfillment of the condition of the requisite number of years of employment by the employee.

Id. 535 A.2d at 991 (citations omitted). Stated another way, the interest an employee has in a nonvested pension is, beginning with such person's employment, "a vested interest to participate in the plan, which if wrongfully denied by his employer would be the proper basis for a suit at law to enforce his contractual rights." Poe v. Poe, 711 S.W.2d 849, 855 (Ky.Ct.App.1986) (emphasis omitted).

We are confident that Florida has now aligned itself with those courts in a large number of out-of-state jurisdictions that recognize that nonvested pensions are property rights which may be subject to division upon dissolution of the marriage. See Charles C. Marvel, LL.B., Annotation, Pension or Retirement Benefits as Subject to Award or Division by Court in Settlement of Property Rights Between Spouses, 94 A.L.R.3d 176, 214-222, 242-244 (1979 & Supp.1991). Our conclusion is in part supported by the Florida Supreme Court's opinion in Diffenderfer v. Diffenderfer, 491 So.2d 265 (Fla.1986). Although the court in Diffenderfer addressed only the explicit question of whether an employee spouse's entitlement to retirement benefits in a vested pension plan could be regarded as marital property subject to equitable distribution, we do not consider that Diffenderfer precludes consideration of nonvested pensions as marital property. The following broad language in Diffenderfer appears to acknowledge that an employee's right to future retirement benefits, whether vested or not, is contractual in nature, rather than simply an expectancy or gratuity:

Whether the [pension] plan is contributory or noncontributory, the employee receives a lesser present compensation plus the contractual right to the future benefits payable under the pension plan. The value of those contractual rights will vary depending upon the number of years employed but where, as here, the rights are vested, or where they are matured, they have an actuarially calculable value. To the extent that they result from employment time after marriage and before commencement of a matrimonial action, they are contract rights of...