Eller v. Bolton

• Decision Date: 31 March 2006
• Docket Number: No. 692 September Term, 2004.,692 September Term, 2004.
• Citation: 168 Md. App. 96,895 A.2d 382
• Parties: Harold Wayne ELLER, Sr. v. Wilbur W. BOLTON, III, Personal Representative of the Estate of Virginia Denton Eller.
• Court: Court of Special Appeals of Maryland

895 A.2d 382

168 Md. App. 96

Harold Wayne ELLER, Sr. v. Wilbur W. BOLTON, III, Personal Representative of the Estate of Virginia Denton Eller.

No. 692 September Term, 2004.

Court of Special Appeals of Maryland.

March 31, 2006.

Mercedes C. Samborsky, Joppatown, for Appellant.

John J. Condliffe, Towson, for Appellee.

Panel: MURPHY, C.J., KENNEY and LAWRENCE F. RODOWSKY, (Retired, specially assigned), JJ.

KENNEY, Judge.

Harold Wayne Eller ("Husband") appeals the judgment of the Circuit Court for Harford County, amending a Qualified Domestic Relations Order ("QDRO") issued by that court as a Domestic Relations Order ("DRO") on March 13, 2001. The amendments removed language terminating the interest of Virginia Denton Eller ("Wife") in a portion of Husband's pension benefits upon her death. In addition, the amended QDRO designated Wife as "the alternate payee through Wilbur S. Bolton, III, Personal Representative of the Estate of [Wife]." Husband presents one question for our review, which we have divided and recast as the following:

I. Did the circuit court have the authority to amend a QDRO in order to secure Wife's marital property award in accordance with a Consent Order that was incorporated, but not merged, into the judgment of divorce?

II. Is the QDRO, as amended, invalid under 29 U.S.C. § 1056(D)(3)(K) because it provides for payment to an individual not included within the definition of an "alternate payee?"

We answer the first question in the affirmative, but because the domestic relations order, as amended, may not be qualifiable, we shall vacate the judgment of the circuit court and remand for further proceedings consistent with this opinion.

FACTUAL AND PROCEDURAL HISTORY

Husband and Wife were married on December 11, 1961. They separated on May 11, 1997, and on July 20, 1998, Husband filed a complaint for absolute divorce in the Circuit Court for Harford County. In her counter-complaint for absolute divorce, Wife sought, among other things, alimony, child support, and a monetary award pursuant to Maryland Code (1984, 1999 Repl. Vol.), § 8-205-208 of the Family Law Article ("F.L.").

On June 27, 2000, the circuit court approved a consent order executed by Husband and Wife (the "Consent Order"). In consideration of Wife's waiver of any right to a monetary award, alimony, and attorneys' fees, Husband assigned to Wife, among other things, one-half of his interest in the Robert Preston Excavating Co., Inc., Profit Sharing Plan and Trust (the "Plan"). The Plan is identified as a defined contribution plan.¹

Husband and Wife covenanted, in pertinent part:

L. The Plan Administrator for [Husband's] interest in the [Plan], shall distribute directly to [Wife], by way of a roll-over to her designated plan, 50% of the total value in the Plan, not to exceed 1/2 of $50,000 as indicated on Statement of Account for Plan dated 12/31/99, copy attached as Ex. 1.

M. [Husband] assigns to [Wife] one-third (1/3) of the pre-retirement death benefits, not to exceed 1/3 of $126,000.00 as indicated on Ex. 1, but a lesser amount if value of said pre-retirement death benefit has decreased at the time of [Husband's] death.

N. [Husband] assigns to [Wife] one-third (1/3) of the proceeds from life insurance benefits incident to the Plan, not to exceed 1/3 of $76,000.00 as indicated on Ex. 1, but a lesser amount if value of said insurance death benefit has decreased at the time of plaintiff's death.

O. [Husband] shall not do nor suffer to be done any act, except as herein set forth, to decrease the value of his said pre-retirement death benefit or the value of the life insurance proceeds either by way of requesting disbursement thereof, by assignment, or by loan against such benefits.

P. [Wife's] attorney shall draft the Qualified Domestic Relations Orders necessary to distribute the pension plan benefits as herein indicated[.]

(Emphasis added.)

On March 9, 2001, the circuit court granted Husband an absolute divorce. The court incorporated, but did not merge, the Consent Order in its judgment of divorce. Furthermore, in granting the divorce, the court ordered:

[T]his Court shall retain jurisdiction over the matter of the pension for purposes of securing a Qualified Domestic Relations Order to protect said [Wife's] monetary award, and to retain jurisdiction to amend[] this Judgment and/or the aforesaid Qualified Domestic Relations Order for the purpose of maintaining its qualifications as a qualified domestic relations order under the Retirement Equity Act of 1984, or any other subsequent legislation; and both parties and the manager of [Husband's] retirement plan shall take whatever actions may be necessary to establish or maintain these qualifications, provided that no such amendment shall require the retirement plan to provide any type or form of benefits, or any option not otherwise provided under the [P]lan, and further provided that no such amendment or the right of the Court to so amend will invalidate the order as "Qualified" under the Retirement Act.

On March 13, 2001, the circuit court signed a domestic relations order ("DRO"), which was "consent[ed][to] as to form" by counsel for both Husband and Wife. The DRO included the name and address of Husband, the plan participant, and the name and address of Wife, the alternate payee. Additionally, the DRO provided:

(3) The Plan Administrator for [Husband's] interest in the [Plan], shall distribute, directly to [Wife], by way of a roll-over to her designated plan, Fifty Percent (50%) of the total value in the Plan, not to exceed one-half (½) of Fifty Thousand Dollars ($50,000.00) as indicated on Statement of Account for Plan dated December 31, 1999, copy attached as Exhibit No. 1, when, if, and as paid to [Husband.]

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(6) The [Plan], from which benefits are assigned hereinabove, including both Company Accounts and Voluntary Accounts of the Participant under the Profit Sharing Plan & Trust, will pay benefits to [Wife] in accordance with the provisions of Annotated Code of Maryland, Family Law Article Section 8-205 (Cumm. Supp. 1990) and based on the following formula. [Wife] is hereby assigned Fifty Percent (50%) of the total value of [Husband's] profit sharing plan & trust account (not to exceed ½ of $50,000.00), which he has earned through his employment with Robert Preston Excavating Co., Inc., said Fifty Percent (50%) interest to be calculated as of December 31, 1999. [Husband] assigns to [Wife], 50% of assets of account as of December 31, 1999 (not to exceed $50,000.00, in value), plus all accretions and losses attributable to [Wife's] 50%, rolled over into a separate account for [Wife]....

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(7) [Wife] shall commence her portion of the benefit plan when eligible in accordance with the Plan. Payments will continue until [Wife's] death.

(8) [Husband], [Wife], and the [c]ourt, intend this Order to be a Qualified Domestic Relations Order as defined in Section 414(p) of the Internal Revenue Code of 1986 as amended.

(9) This Order is issued pursuant to the Family Law Article of the Annotated Code of Maryland which relates to the provisions of child support, alimony payments, or marital property rights as defined therein between spouses and former spouses in actions for divorce.

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(13) The parties agree that their mutual intent is to provide the Alternate Payee [Wife] with a retirement payment that fairly represents a marital share of the retirement before as defined herein. If this Order submitted to the Administrator of the Plan is held not to be a Qualified Domestic Relations Order within the meaning of IRC Section 414(p), the parties permit this Court to retain jurisdiction over this matter and they further agree to request this [c]ourt to modify the Order so as to make it a Qualified Domestic Relations Order that reflects the parties' intent, said modification order to be entered nunc pro tunc, if appropriate.

Although the Plan administrator initially accepted, and presumably "qualified," the proposed DRO (the "original QDRO"), several problems soon became apparent. The original QDRO was unclear whether Wife's benefits were to be distributed through a single lump sum payment. The Plan administrator also determined that the pre-retirement death benefit figure of $126,000 in the Consent Order was inaccurate. According to the Plan administrator, Husband's interest should have been stated as $76,000. Finally, the Plan noted that, as the original QDRO was drafted, the Plan could not pay Wife the death benefit because the provision of the Consent Order granting Wife such an interest was not included.

It appears that, in response, Husband and Wife agreed to amend the original QDRO to address the Plan administrator's concerns, and that a revised DRO was drafted (the "Revised DRO"), but was never approved by the circuit court.² It is unclear from the record whether it was actually submitted to the circuit court, but, according to the Plan's complaint in the subsequent interpleader action, the Revised DRO was submitted to the Plan.

On September 18, 2001, before Husband became eligible for benefits under the Plan and before Wife had returned required distribution request forms to the Plan, Wife died. When Husband subsequently became eligible for benefits, Husband and Wife's estate ("the Estate") filed competing claims. Uncertain as to which party or parties it should pay and whether it should honor the original QDRO or the Revised DRO, the Plan filed an interpleader action in the United States District Court for the District of Maryland, Civil Action number WMN-02-0077, naming Husband and the Estate as defendants. After the District Court realigned the parties, Husband, as plaintiff, filed a motion for summary judgment, asserting that Wife was not entitled to benefits under the original QDRO, the only order approved by the circuit court, because payments to Wife were to cease upon Wife's death. The Estate moved for summary judgment on the...