Edsall v. Superior Court In and For Pima County

• Decision Date: 13 December 1984
• Docket Number: No. 17561-PR,17561-PR
• Parties: Philip V. EDSALL, Petitioner, v. SUPERIOR COURT of the State of Arizona, In and For the COUNTY OF PIMA; Hon. Norman S. Fenton, a judge thereof, and Ruth E. EDSALL, the real party in interest, Respondents.
• Court: Arizona Supreme Court

Page 895

693 P.2d 895

143 Ariz. 240

Philip V. EDSALL, Petitioner, v. SUPERIOR COURT of the State of Arizona, In and For the COUNTY OF PIMA; Hon. Norman S. Fenton, a judge thereof, and Ruth E. EDSALL, the real party in interest, Respondents.

No. 17561-PR.

Supreme Court of Arizona In Banc.

Dec. 13, 1984.

Waterfall, Economidis, Caldwell & Hanshaw by W. Patrick Traynor, John C. Rambow, Tucson, for petitioner

Whitehill, Stolkin, Karp, West, Weiss & Berger by Leonard Karp, Elaine Hardin, Tucson, for respondents.

Wallace R. Hoggatt, Douglas, and David P. Flannigan, Bisbee, for amicus curiae Helen K. Garrett.

GORDON, Vice Chief Justice:

Petitioner Philip Edsall and respondent Ruth Edsall were married on September 25, 1959. At that time Phil was a member of the United States Air Force and continued on active duty during the marriage. Phil and Ruth were divorced in 1981. A separation agreement was entered into between the parties and incorporated into the decree of dissolution entered on December 7, 1981. The agreement provided that respondent was not entitled to any of the military retirement pension that petitioner would eventually receive from the government. This agreement was consistent in that regard with McCarty v. McCarty, 453 U.S. 210, 101 S.Ct. 2728, 69 L.Ed.2d 589 (1981) [decided June 26, 1981], which held that there were no community property rights in military retirement benefits because the consequences of the community property interest injures the objectives of the federal laws that created the military retirement program. McCarty directly overruled Van Loan v. Van Loan, 116 Ariz. 272, 569 P.2d 214 (1977) and Neal v. Neal, 116 Ariz. 590, 570 P.2d 758 (1977) which held that military retirement pay is community property to the extent that such property is earned through community effort. Effective February 1, 1983 Congress passed the "Uniformed Services Former Spouses Protection Act" Pub.L. No. 97-252 passed by Congress and signed by the President on September 8, 1982 and now codified in 10 U.S.C. § 1408 (1983) [hereinafter referred to as "the Act"] which made On April 22, 1983, about three months after passage of the Act, Ruth filed a petition for Order to Show Cause, wherein she sought a court order to set aside the parties' divorce decree and to determine that, pursuant to the Act, she had an interest in Phil's retirement benefits. Phil responded by filing a Motion to Dismiss seeking to dismiss the portion of the petition for Order to Show Cause relating to the disposition of military retirement benefits. Following a hearing including testimony and oral argument on the motion to dismiss, the trial judge granted Ruth's petition for Order to Show Cause reopening the Decree of Dissolution of Marriage and ruled that the entire disposition of assets, including retirement benefits, be reconsidered.

military retirement benefits subject to state community property laws. The Act legislatively overruled McCarty and was retroactive to the date of the McCarty decision.

A special action was filed by Phil in the Court of Appeals, Division Two, concerning the reopening. The Court of Appeals held that the final divorce decree could not be reopened due to res judicata. The court also found that the parties had intended all of Phil's military retirement income to be his regardless of any subsequent changes in the law. Phil was awarded costs in the amount of $161.00 and attorneys' fees in the amount of $3,322 on appeal and $4,000 in the trial court.

Ruth petitioned this Court for review of the Court of Appeals' opinion. Because this case presents an issue of first impression in this state, we granted the petition. Ruth also requested review of the costs and attorneys' fees award. The opinion of the Court of Appeals, Edsall v. Superior Court, 143 Ariz. 293, 693 P.2d 942 (App.1984) is vacated. We have jurisdiction pursuant to Ariz. Const. art. 6, § 5(3) and Ariz.R.Civ.App. P. 23.

Three issues are presented for review:

1. Whether the Court of Appeals erred in holding that decrees entered into and finalized between June 26, 1981 and February 1, 1983 could not be modified under the terms of the Uniformed Services Former Spouses Protection Act, 10 U.S.C. § 1408 (1983).

2. Whether the Court of Appeals erred in finding that the parties intended that Phil's military retirement income would be Phil's regardless of any change in the law.

3. Whether the Court of Appeals erred in setting aside its award of attorney's fees in favor of Phil.

MILITARY RETIREMENT BENEFITS

I

The first issue we must decide is whether the trial court has the power to set aside a divorce decree based upon a negotiated separation agreement finalized after the McCarty decision but prior to the "Uniformed Services Former Spouses Protection Act." The applicable section of the Act, 10 U.S.C.A. § 1408(c)(1) reads:

"Subject to the limitations of this section, a court may treat disposable retired or retainer pay payable to a member for pay periods beginning after June 25, 1981, either as property solely of the member or as property of the member and his spouse in accordance with the law of the jurisdiction of such court."

We note that the Act itself does not require a division of military retirement income, but rather leaves such a determination to the individual states. Pursuant to the Act, we will again treat military retirement pay as community property to the extent that it was derived from community efforts. See Van Loan v. Van Loan, supra. This treatment will be retroactive to the date of McCarty.

Phil argues, however, that this application does not apply to decrees that became final during the period between McCarty and the Act. Phil contends that Arizona has long recognized the need for finality in family law cases and that changes in community property law do not alter the res judicata consequences of a final decree citing Rodriguez v. Rodriguez, 133 Ariz. 88, 649 P.2d 291, approved 133 Ariz. 87, 649 P.2d 290 (1982). We believe, however, that there is authority in Arizona that will allow a final divorce decree to be reopened in the limited circumstances presented by this case notwithstanding res judicata principles.

A.R.S. § 25-327(A) expressly allows property dispositions to be revoked or modified where the court "finds the existence of conditions that justify the reopening of a judgment under the laws of this state." Rule 60, Arizona Rules of Civil Procedure states the conditions which entitle one to relief from judgments or orders. Specifically, Rule 60(c) provides the vehicle in which the trial court "may relieve a party or his legal representative from a final judgment, order or proceeding" if "it is no longer equitable that the judgment should have prospective application, or (6) any other reason justifying relief from the operation of the judgment." Arizona Rules of Civil Procedure. Rule 60(c)(5) and (6). Rules 60(c)(5) and/or (6) have been used liberally in reopening otherwise final court orders where there has been a change in the law affecting substantial rights of a litigant. See Smith v. Smith, 458 A.2d 711 (Del.Fam.Ct.1983); See, e.g., Theriault v. Smith, 523 F.2d 601 (1st Cir.1975); McGrath v. Potash, 199 F.2d 166 (D.C.Cir.1952); Coca Cola Bottling Co. v. Standard Bottling Co., 138 F.2d 788 (10th Cir.1943); Bailey v. Ryan Stevedoring Co., 443 F.Supp. 899 (M.D.La.1978) rev'd on other grounds, 613 F.2d 588 (5th Cir.1980); Harrell v. Harder, 369 F.Supp. 810 (D.C.Cir.1974); Griffin v. State Board of Education, 296 F.Supp. 1178 (E.D.Va.1969); See generally 7 Moore's Federal Practice para. 60.26 (2d ed. 1983) (breadth of (b)(5) is broad and encompasses any final judgment having prospective application). ¹ We note that in applying clause 6 two limitations must be met.

"First, the reason for setting aside the [judgment or order] must not be one of the reasons set forth in the five preceding clauses. * * * Second, the 'other reason' advanced must be one which justifies relief." (citations omitted)

Webb v. Erickson, 134 Ariz. 182, 186, 655 P.2d 6, 10 (1982). "We concluded that, to justify relief under clause 6, the facts must go beyond the factors enumerated in clauses 1 through 5 and raise 'extraordinary circumstances of hardship or injustice * * *.' " Bickerstaff v. Denny's Restaurant, Inc., 141 Ariz. 629, 688 P.2d 637 (1984).

The Court in DeGryse v. DeGryse, 135 Ariz. 335, 661 P.2d 185 (1983) discussed A.R.S. § 25-327A and Rule 60(c) and provides authority for the trial court to set aside a divorce decree. While finding no circumstances in that particular case to reopen the decree of dissolution, the Court in DeGryse recognized that the Act returned the law to its pre-McCarty state under Van Loan v. Van Loan, supra and Neal v. Neal, supra with respect to the division of military retirement benefits upon divorce. The Court noted the need for finality in marriage and family law but stated that the Act constituted "express authorization" for setting aside divorce decrees entered in the McCarty interim period. 135 Ariz. at 338, 661 P.2d at 188. Although this language is dicta, its statement, the strong statement of intent by Congress in enacting the Act, and equitable considerations discussed infra, constitute "extraordinary circumstances" justifying relief from the judgment.

Congress made it clear that in passing the Act, their intent was to wipe out the effects of McCarty on persons divorced in the interim period.

"The purpose of this provision is to place the courts in the same position that they were in on June 26, 1981, the date of the McCarty decision, with respect to treatment of non-disability military retired or retainer pay. The provision is intended to remove the federal pre-emption found to exist by the United States Supreme Court and permit State and other courts of competent jurisdiction to apply pertinent State or other laws in determining whether military retired or retainer pay should be divisable. ...