Diffenderfer v. Diffenderfer

Decision Date26 June 1986
Docket NumberNo. 66221,66221
Citation11 Fla. L. Weekly 280,491 So.2d 265
Parties11 Fla. L. Weekly 280 Patricia DIFFENDERFER, Petitioner, v. Richard L. DIFFENDERFER, Respondent.
CourtFlorida Supreme Court

Cynthia S. Tunnicliff and Georg N. Meros, Jr. of Carlton, Fields, Ward, Emmanuel, Smith & Cutler, P.A., Tallahassee, for petitioner.

Keith J. Kinderman, Tallahassee, for respondent.

Melvyn B. Frumkes and Cynthia L. Greene of the Law Offices of Frumkes and Greene, P.A., Miami, for The Florida Chapter of The American Academy of Matrimonial Lawyers, amicus curiae.

ADKINS, Justice.

In reversing portions of the trial court's scheme of property distribution and support obligations in the dissolution proceeding of Diffenderfer v. Diffenderfer, 456 So.2d 1214 (Fla. 1st DCA 1984), the First District held that the husband's entitlement to retirement benefits could not properly be considered marital property subject to equitable distribution, and limited consideration of the benefits to a source of maintenance and support obligations. In so holding, the First District noted conflict and certified to this Court the question of how a spouse's entitlement to pension benefits should impact upon an equitable distribution of property. We have jurisdiction, article V, section 3(b)(4), Florida Constitution, and reverse that portion of the ruling which would require the trial court to close its eyes to such benefits in calculating an equitable distribution of property.

While the First District certified two questions in its opinion, we focus upon the second. The first question certified read as follows:

Do Conner v. Conner, 439 So.2d 887 (Fla.1983), and Kuvin v. Kuvin, 442 So.2d 203 (Fla.1983), limit the scope of appellate review enunciated in Canakaris v. Canakaris, 382 So.2d 1197 (Fla.1980)?

456 So.2d at 1216. We need not expound upon the above question, which we answered in the negative in Marcoux v. Marcoux, 464 So.2d 542 (Fla.1985). As we noted in Marcoux, nothing in either Conner or Kuvin limits the "reasonableness" review set forth in Canakaris.

Prior to exploring the remaining certified question, we turn to the facts of the case. The parties involved in this appeal, both now in their early fifties, were married in 1953 and over their thirty-year marriage raised four children. Mr. Diffenderfer began engineering school shortly after the marriage. During her husband's studies, Mrs. Diffenderfer worked as a part-time nurse and gave birth to two sons. Subsequently, he began work with the Federal Highway Administration, for which he has worked ever since, and she continued to work part-time during the marriage and care for the children. He now earns some $44,000 annually, and she has returned to full-time nursing at a salary of $23,000.

In fashioning an equitable distribution of the parties' assets, the trial court dealt with the following basic "building blocks" relevant to this appeal--a marital home valued at $119,500, encumbered by mortgages totaling approximately $51,000, a beach house valued at $60,000, encumbered with a $17,000 mortgage, the husband's retirement benefits, calculated over his expected lifetime and reduced to a present value of $297,000, and some $21,000 in personal property.

The trial court's distribution of this property, as noted by the dissent upon appeal, aimed at "devising a method by which the marriage could be truly ended rather than prolonged through financial dependence ad infinitum." 456 So.2d at 1219. Recognizing a special equity of the husband's in the beach house, the trial court granted him exclusive ownership of that property on the condition that he pay off the remainder of the first mortgage on the marital home. As lump sum alimony, the wife was granted one-half of the husband's interest in the marital home. She also received, as rehabilitative alimony, the right to exclusive use and possession of the marital home as long as she remains unmarried. Finally, she was apportioned personal property worth $20,000 to his $1,000.

Through a heavy-handed review, the First District left no part of the above distribution untouched. First, it remanded for possible application of the special equity formula set out in Landay v. Landay, 429 So.2d 1197 (Fla.1983), to the husband's interest in the beach house. Its remaining changes focused upon the retirement benefits and the court's view of their proper effect on the distribution scheme. Prior to discussing this view, it may be helpful to examine the nature of the asset involved.

During most of the marriage, the husband's employer deducted $119 from his monthly salary and invested the growing sum in a pension plan. These contributions, totalling about $44,000, have blossomed into an entitlement to a pension which is both "vested" (it cannot be forfeited even if employment terminates before retirement) and "mature" (the employee has an unconditional right to immediate payment upon retirement), with an estimated present value of $297,000. If the husband were to retire next year, he could expect an annual income of $25,000 through the plan.

The trial court's treatment of the benefits is unclear. While it initially ruled that only the $44,000 actually contributed to the plan could be treated as a marital asset, it subsequently allowed, over objection, testimony as to the benefits' estimated present value. Upon appeal, the First District, citing Witcig v. Witcig, 206 Neb. 307, 292 N.W.2d 788 (1980), rejected the wife's claims that the retirement plan should have been recognized as a marital asset, and limited consideration of the benefits to a source of maintenance and support obligations. It therefore found error in the lower court's failure to award permanent periodic alimony. This, in turn, led to the court's remanding with additional instructions to consider the propriety of the rehabilitative alimony awarded.

The husband urges this Court to affirm the First District's refusal to classify the retirement benefits as marital property, since the existence of certain contingencies and problems in valuation render calculations based on the pension inherently unworkable and unfair. We reject such a contention, joining the vast majority of jurisdictions which have found it necessary to consider entitlement to such benefits in order to achieve an equitable distribution. See Ohm v. Ohm, 49 Md.App. 392, 431 A.2d 1371 (Ct.Spec.App.1981); In re: Marriage of Brown, 544 P.2d 561 (Cal.1976); Pinkowski v. Pinkowski, 67 Wisc.2d 176, 226 N.W.2d 518 (1975); Golden, L., Equitable Distribution of Property, 169-77 (1983). We find persuasive the following observations of the New York Court of Appeals:

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 value, received in lieu of higher compensation which would otherwise have enhanced either marital assets or the marital standard of living and, therefore, are marital property.

Majauskas v. Majauskas, 61 N.Y.2d 481, 491-92, 463 N.E.2d 15, 20-21, 474 N.Y.S.2d 699, 704-05 (1984).

We accordingly find that the First District erred in its analysis and its resulting wholesale rejection of the delicate balance struck by the trial court through its scheme of property distribution. To adopt the position taken by the First District below would, in effect, place an artificial blinder upon the trial judge, and limit that discretion which is so essential to the doing of equity on the facts of each particular case. Our seminal decision of Canakaris v. Canakaris, 382 So.2d 1197 (Fla.1980), illustrates the vigilance with which this Court has endeavored to safeguard that discretion.

In Canakaris, we broadened the spectrum of remedies at the trial court's disposal by recognizing a novel use of lump sum alimony. While the remedy had traditionally been based on "need," or "upon some economic contribution by the wife to the accumulation of property," Colucci v. Colucci, 392 So.2d 577, 580 (Fla. 3d DCA 1980), citing Yandell v. Yandell, 39 So.2d 554 (Fla.1949), Canakaris recognized the usefulness of the remedy in ensuring an equitable distribution of property acquired during the marriage. It created, in effect, a hybrid based on concepts of both property distribution, requiring "a justification for such lump sum payment," 382 So.2d at 1201, and traditional alimony, requiring consideration of the "financial ability of the other spouse to make such payment without substantially endangering his or her economic status." Id. This Court has continued to honor the broad discretionary authority necessary to do equity between the parties. See Tronconi v. Tronconi, 466 So.2d 203 (Fla.1985).

Because an effective exercise of this discretion through the remedies available to the trial judge presupposes that the court has considered all relevant information, we reject the First District's holding that the pension may not be considered marital property. We affirm, however, its holding that such benefits may be considered as a source of payment of permanent periodic alimony. The potential income may certainly bear on the employee spouse's ability to pay, and as we noted in Canakaris, this factor can be determined "not only from net income, but also net worth, past earnings, and the value of the parties' capital assets." 382 So.2d at 1202, citing Firestone v. Firestone, 263 So.2d 223 (Fla.1972).

Obviously, however, injustice would result if the trial court were to consider the same asset in calculating both property distribution and support obligations. If the wife, for example, has...

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