Dennis v. Retirement System

• Decision Date: 18 January 2006
• Docket Number: No. 27, September Term, 2005.,27, September Term, 2005.
• Citation: 390 Md. 639,890 A.2d 737
• Parties: Elmer DENNIS, et al. v. FIRE & POLICE EMPLOYEES' RETIREMENT SYSTEM, et al.
• Court: Court of Special Appeals of Maryland

890 A.2d 737

390 Md. 639

Elmer DENNIS, et al. v. FIRE & POLICE EMPLOYEES' RETIREMENT SYSTEM, et al.

No. 27, September Term, 2005.

Court of Appeals of Maryland.

January 18, 2006.

COPYRIGHT MATERIAL OMITTED

Michael Marshall (Schlachman, Belasky & Weiner, P.A., on brief) of Baltimore, for petitioners.

Wendy Widmann (Daneker, McIntire, Schumm, Prince, Goldstein, Manning & Widmann, P.C., Abraham M. Schwartz on brief) of Baltimore, for respondents.

Argued before BELL, C.J., RAKER, WILNER, CATHELL, HARRELL, BATTAGLIA and GREENE, JJ.

RAKER, J.

Appellants, both former Baltimore City police officers, ask this Court to determine whether payments of deferred retirement option plan ("DROP") retirement benefits from the Baltimore City Fire and Police Employees' Retirement System ("the Retirement System") are "pension" payments within the meaning of the Qualified Domestic Relations Orders ("QDROs") entered in appellants' divorces, entitling the appellee spouses to a portion of the DROP payments in accordance with the terms of the QDROs. We shall hold that the DROP payments are "pension" payments under the QDROs, and that consequently the appellee spouses are entitled to their shares of the DROP payments under the QDROs.

I.

Appellants, Elmer Dennis and Edmund Lubinski, are retired Baltimore City police officers. Appellees Catherine Dennis and Edna Sullivan are the former spouses of Elmer Dennis and Edmund Lubinski, respectively. The Retirement System and the Mayor and City Council of Baltimore are also appellees in this action.

Lubinski and Sullivan were divorced by a Judgment of Absolute Divorce entered on February 22, 1990. The judgment was entered in accordance with an agreement reached by the parties. It provided as follows:

"IT IS FURTHER ORDERED, in accordance with the aforesaid Agreement of the parties, that this is a qualified Domestic Relations Order as defined in the Retirement Equity Act of 1984, as from time to time amended, and, in accordance therewith, the civil pension known as the FIRE AND POLICE EMPLOYEES RETIREMENT SYSTEM OF THE CITY OF BALTIMORE . . . is the civil pension which is subject to this order. The participant in the pension is the Defendant/Counter-Plaintiff, EDMUND LUBINSKI . . . The alternate payee is the Plaintiff/Counter-Defendant, EDNA J. VENAZI . . . The Plaintiff/alternate payee's equitable interest in said pension is hereby declared to be fifty percent (50%) of the `marital share' of said pension benefits, the marital share being that fraction of the benefit whose numerator shall be the number of months of the parties' marriage, during which benefits were being accumulated, up to and including January 18, 1990, which number is 306, and whose denominator shall be the total number of months during which benefits were accumulated prior to the time when the payment of such benefits shall commence. The Plaintiff/Counter-Defendant shall receive fifty percent (50%) of the aforesaid marital share of any payments made from the pension to the participant, including any death benefits, if, as, and when, such payments are made."

(emphasis added).

Elmer Dennis and Catherine Dennis were divorced by a Judgment of Absolute Divorce entered on June 7, 1993. The judgment was apparently entered by the court without the agreement of the parties.¹ The judgment contained a provision similar to that in the Lubinski judgment:

"AND IT IS FURTHER ORDERED, that this is a Qualified Domestic Relations Order as defined in the Retirement Equity Act of 1984, as amended from time to time, and in accordance therewith, the Civil Pension known as the Baltimore City Fire and Police Employees' Retirement System . . . is the pension which is subject to this Order. The participant in the pension is the Plaintiff, Elmer Dennis, Jr. . . . The alternate payee is the Defendant, Catherine J. Dennis . . . The Defendant/Alternate Payee's equitable interest in said pension is hereby declared to be fifty percent (50%) of the `marital share' of said pension benefit, the marital share being that fraction of the benefit whose numerator shall be the number of months of the parties' marriage during which benefits were being accumulated, which number is 345, and whose denominator shall be the total number of months during which benefits were accumulated prior to the time when the payment of such benefits shall commence. The Defendant, Catherine J. Dennis, shall receive fifty percent (50%) of the aforesaid marital share of any payments made from the pension to the participant if, as, and when such payments are made."

(emphasis added).

Elmer Dennis began work at the Baltimore City Police Department on September 24, 1964, and Lubinski began work at the Department on January 24, 1963. Both began participation in the DROP on August 1, 1996, and ceased participation on July 31, 1999. Both continued to work at the Department after participating in the DROP, with Elmer Dennis retiring on September 2, 2002, and Lubinski retiring on February 9, 2001.

The Retirement System notified appellants by letter dated January 20, 1999, that it intended to treat payments of their DROP benefits as subject to division between them and their spouses in accordance with the formula specified in their QDROs. In response, appellants, along with other Baltimore City police officers, filed a Complaint in the Circuit Court for Baltimore City, seeking injunctive relief. This Complaint, the subject of a previous appeal to this Court, Brown v. Retirement System, 375 Md. 661, 826 A.2d 525 (2003), set out the facts relating to this Complaint as follows:

"Petitioners filed in the Circuit Court for Baltimore City on June 29, 1999, a Complaint for Declaratory and/or Injunctive Relief, seeking a declaration that their benefits under the City's Deferred Retirement Option Plan (`DROP') are not marital property and should be disbursed solely to them. On April 19 2000, petitioners filed an Amended Complaint for Declaratory and/or Injunctive Relief, joining their former spouses as necessary parties under Maryland Rule 2-211. Respondents argued that the Circuit Court lacked jurisdiction to determine marital property and that the ex-spouses were entitled to a share of petitioners' DROP benefits. Motions by both sides for summary judgment were denied."

* * * * * *

"In lieu of testimony, the Circuit Court received the parties' trial briefs, stipulations, and documentary evidence and heard oral argument in April 2001. Respondents asked for a dismissal of the amended complaint and a judgment that petitioners be required to pay DROP benefits to their former spouses in accordance with the orders in the divorce proceedings. In a written order issued April 11, 2001, the Circuit Court dismissed, with prejudice, the petitioners' complaint, but quixotically ordered the Retirement System to `treat all DROP benefits as ordinary pension benefits for the purposes of payments pursuant to the parties' Judgments of Divorce."

"Petitioners noted a timely appeal to the Court of Special Appeals. In an unreported opinion, that court affirmed the trial court's determination that the DROP should be treated as an ordinary pension benefit for the purposes of payments pursuant to the parties' judgments of divorce. The officers filed a petition for a writ of certiorari, and we granted the petition."

Id. at 665, 668-69, 826 A.2d at 527-30 (footnotes omitted). In Brown, we held that the Circuit Court erred in reaching the merits of the Complaint, as the petitioners had failed to exhaust their administrative remedies. Id. at 673-74, 826 A.2d at 532-33. Consequently, we vacated the judgment of the Court of Special Appeals, and remanded with instructions to vacate the lower court judgments and dismiss the case. Id. at 674-75, 826 A.2d at 533.

After our decision in Brown, appellants filed claims with the Fire and Police Employees' Retirement System Board of Trustees ("the Board"), challenging the Retirement System's treatment of their DROP benefits as subject to division under their QDROs. Pursuant to Article 22, § 41 of the Baltimore City Code (2000), a hearing was held on appellants' claims on August 28, 2003. The Board then denied their claims, concluding that "[t]he DROP benefit is an integral part of the [Retirement System] benefit scheme" and that appellants' "DROP accounts must be assigned to their ex-spouses under their deferred division divorce decrees."

Appellants then filed a Petition for a Writ of Mandamus and Complaint for Declaratory Relief and/or Petition for Judicial Review in the Circuit Court for Baltimore City. Appellants sought judicial review of the Board's decision pursuant to Md. Rule 7-202, a declaratory judgment that appellants' DROP benefits should be disbursed in full to appellants, and a writ of mandamus ordering the Board to so disburse their DROP benefits. After the appellee spouses intervened in the action, the parties filed cross-motions for summary judgment. Ruling on these motions, the court declared that "the DROP is subject to the deferred division stated in the parties' Judgments of Divorce as a matter of law," affirmed the decision of the Board of Trustees of the Retirement System, and denied appellants' petition for a writ of mandamus.

The appellants then noted timely appeals to the Court of Special Appeals. We granted appellants' petition for a writ of certiorari prior to decision in the Court of Special Appeals. Dennis v. Fire Retirement, 387 Md. 465, 875 A.2d 769 (2005).

II.

In Brown, we detailed the operation of the Retirement System and the DROP as follows:

"The Retirement System is a governmental pension plan offered by Baltimore City and is codified in Baltimore City Code (2000 Supp.) Article 22. The Retirement System provides several different types of benefits, including service retirement benefits, line-of-duty disability benefits, line-of-duty death benefits, ordinary disability benefits, and ordinary death benefits. Membership in the...