Dewan v. Dewan

• Decision Date: 25 March 1991
• Docket Number: No. 89-P-669,89-P-669
• Citation: Dewan v. Dewan, 566 N.E.2d 1132, 30 Mass.App.Ct. 133 (Mass. App. 1991)
• Parties: Karen Dean DEWAN v. Edmond M. DEWAN.
• Court: Appeals Court of Massachusetts

Page 1132

566 N.E.2d 1132

30 Mass.App.Ct. 133

Karen Dean DEWAN v.Edmond M. DEWAN.

No. 89-P-669.

Appeals Court of Massachusetts Middlesex.

Argued Nov. 8, 1990.

Decided Feb. 19, 1991.

Further Appellate Review Denied

March 25, 1991.

Sheldon H. Ganz(Karen Dean-Smith, Boston, with him), for Karen Dean Dewan.

Richmond T. Edes, Concord, for Edmond M. Dewan.

Before BROWN, KASS and IRELAND, JJ.

KASS, Justice.

After two full blown appeals (Dewan v. Dewan, 17 Mass.App.Ct. 97, 455 N.E.2d 1236[1983]["Dewan I"], andDewan v. Dewan, 399 Mass. 754, 506 N.E.2d 879[1987], ["Dewan II "] )¹, this contentious couple are once again before an appellate tribunal.The subject is still the same: how to value and distribute the employee pension benefits accrued by the husband during the marriage.What is left to argue about falls into the category of mechanical details, but those details translate into money.

Dewan I, 17 Mass.App.Ct. at 100, 455 N.E.2d 1236, decided that the amount paid into a retirement pension was not the measure of its value for purposes of equitable distribution of property upon divorce.Dewan II, 399 Mass. at 757, 506 N.E.2d 879, decided that, if there are sufficient other assets available in the marital estate, it is better to find the present value of the future pension benefits, and to make a distribution of marital assets taking that present value into account.This had the merit of a clean break at the time of the divorce judgment.If there were not sufficient other assets in the marital estate to be distributed, it would be preferable to make equitable distribution of the pension benefits when and if received.Ibid.To take a simple example, suppose that the marital estate contained $200,000 in United States Treasury notes, the husband had a pension with a present value of $100,000, and the judge had determined to make a fifty-fifty division of that marital estate.Each spouse was to receive $150,000.Under Dewan II, the wife will receive $150,000 in treasury notes, and the husband will receive $50,000 in treasury notes and retains his pension, with its present value of $100,000.

In the case at hand, the major asset other than the husband's pension was the marital residence.Dewan II, at 760, 506 N.E.2d 879, had concluded with an instruction to determine the present value of the husband's pension as of the date of the calculation.At that time (May-July, 1988), the marital residence had a value over the mortgage of $260,000, one of the few points of fact upon which the parties agreed.

Concerning the present value of the husband's pension (he was employed by the United States as a physicist), the judge heard opinion testimony from expert witnesses for the wife and the husband.Both were consulting actuaries.The wife's expert gave his opinion that the present value of the pension was $628,222 and that if the pension were paid in a joint and survivor form, the present value would be $730,067.The husband's expert offered four opinions: assuming what he described as a "normal" retirement age of sixty-five, a present value of $186,804; assuming a late retirement age of seventy, a present value of $96,970; assuming an early retirement age of sixty-two, a present value of $265,985; assuming a still earlier retirement age of fifty-seven, a present value of $455,989.As is apparent, much depends on what retirement age an actuary assumes.Other important variables included assumptions about the amount of the annual benefit and about the present value factor to be applied to each one dollar of anticipated benefit.

The judge chose the present value arrived at by the husband's expert on the basis of assumed retirement at age sixty-five, i.e., $186,804.It is, of course, common currency, that a judge faced with conflicting expert evidence, may accept or reject all or parts of the opinions offered.Fechtor v. Fechtor, 26 Mass.App.Ct. 859, 863, 534 N.E.2d 1(1989), and cases there cited.But, the wife objects, the limitation on that principle is that the facts and assumptions upon which the expert opinion is based must be defensible.She attacks the opinion of the husband's expert (Peters) on three grounds.

First, she complains that Peters used the wrong weighted average salary, upon which the retirement benefit would be based.The wife's expert, Anderson, had assumed a weighted average salary of $58,252.Peters assumed a weighted average salary of $57,350.It is not a vast difference and seems to have come about from Peters having used a three-year period ending eight months earlier than the three-year period employed by Anderson.

Second, there is the assumption about retirement age.Peters, it will be recalled, offered four possible retirement ages and left it to the judge to choose.Anderson assumed the immediate retirement of the husband.The judge consciously chose to assume that someone in the position of the husband, who was healthy, would wish to work to "normal" retirement age, stay active in his vocation, and collect full pay.We shall return to this point.Third, the wife insists that Peters blatantly erred in building a four percent real interest rate into his present value factor; Anderson had used two percent.This seems to have been a difference of opinion, rather than a fundamental flaw in methodology.Peters explained that the four percent rate more accurately reflected potential future limits in government pension benefits.

Although the Peters valuation was attacked, the judge could reasonably have preferred it.It came with more analysis and presentation of the assumptions upon which it was based.It laid out methods and allowed the judge some choices.The judge could come to the conclusion that over-all it was a slightly less result driven report than that submitted by Anderson.The interest factor and, derivatively, correct present value factor, obviously had an element of judgment built in and the judge was free to choose.As a check on whether the Peters analysis falls within the poles of reasonableness, we have applied a method of determining present value recommended in Woodbury, Valuing Pensions of Moderate-Income Divorce Clients, 1 The Best of MCLE Journal 61, 63, 67 (1990).Assuming retirement at age sixty-five and assuming the retirement benefit calculated by Peters (a function of the weighted average salary of the employee), the present value comes out $144,116; assuming the higher retirement benefit used by Anderson, the present value comes out $151,393.Both figures are below that amount which the judge found to be the present value of Edmond Dewan's pension at the time of calculation.One may be skeptical about Karen Dewan's claim that the figure of $186,304 is egregiously low.

We turn to the propriety of assuming age sixty-five as Edmond's retirement age.Edmond had been employed by the government in excess of thirty years at the time the judge calculated the present value of his retirement pension.He was eligible to retire and collect his pension.The wife argues that for purposes of computing present value in the context of divorce proceedings, a court should assume the earliest possible retirement date for the spouse with the pension.Some courts have thought this a sound principle.SeeIn re Marriage of Gillmore, 29 Cal.3d 418, 426, 174 Cal.Rptr. 493, 629 P.2d 1(1981);Kilbride v. Kilbride, 172 Mich.App. 421, 437-438, 432 N.W.2d 324(1988);Mattox v. Mattox, 105 N.M. 479, 483-484, 734 P.2d 259(1987).The point, adverted to in the Gillmore opinionat 424-425, is that the spouse with the retirement benefits should not be able to manipulate them to impair the other spouse's benefits.That consideration was...