Foster v. Foster

• Decision Date: 29 April 2020
• Docket Number: Calendar No. 3,Docket No. 157705
• Citation: 505 Mich. 151,949 N.W.2d 102
• Parties: Deborah Lynn FOSTER, Plaintiff/Counterdefendant-Appellee, v. Ray James FOSTER, Defendant/Counterplaintiff-Appellant.
• Court: Michigan Supreme Court

505 Mich. 151

949 N.W.2d 102

Deborah Lynn FOSTER, Plaintiff/Counterdefendant-Appellee,

v.Ray James FOSTER, Defendant/Counterplaintiff-Appellant.

Docket No. 157705

Calendar No. 3

Supreme Court of Michigan.

Argued October 3, 2019

Decided April 29, 2020

Zahra, J.

This case involves a dispute between former spouses who entered into a consent judgment of divorce (the consent judgment), which provided that defendant would pay plaintiff 50% of his military retirement benefits. Beyond that, the parties agreed that if defendant waived a portion of his military retirement benefits in order to receive military disability benefits, he would continue to pay plaintiff an amount equal to what she would have received had defendant not elected to receive such supplemental disability benefits. Defendant elected to increase his disability benefits when he applied for Combat-Related Special Compensation (CRSC), a form of military disability benefits, pursuant to 10 USC 1413a. He started receiving CRSC shortly after the divorce. As a result, defendant's retirement benefits decreased, which in turn decreased the share of the retirement benefits payable to plaintiff. When defendant failed to reimburse plaintiff for the reduced payment she received in connection with defendant's lowered military retirement benefits, plaintiff sought relief in the Dickinson Circuit Court, asking that the consent judgment be enforced. The trial court and the Court of Appeals enforced the plain terms of the consent judgment and required defendant to reimburse plaintiff for the reduction in her interest in defendant's retirement benefits. Defendant argues that federal law preempts state law in regard to the division of veteran benefits and, thus, the consent judgment is unenforceable.

We conclude that federal law preempts state law such that the consent judgment is unenforceable to the extent that it required defendant to reimburse plaintiff for the reduction in the amount payable to her due to his election to receive CRSC. Although the Court of Appeals indicated its agreement with plaintiff's assertion that defendant was engaging in an improper collateral attack against the consent judgment, the panel did not discuss the effect of federal preemption on the trial court's subject-matter jurisdiction or defendant's ability to challenge the terms of the consent judgment outside of direct appeal. Because these questions remain important, we vacate that portion of the Court of Appeals’ opinion agreeing with plaintiff that defendant was engaging in an improper collateral attack and reverse the balance of the Court of Appeals’ opinion in this case. Moreover, we overrule the Court of Appeals’ opinion in Megee v. Carmine , which held that a veteran is obligated to compensate a former spouse in an amount equal to the share of retirement pay that the nonveteran spouse would have received, pursuant to a divorce judgment, had the veteran not elected to waive military retirement pay in favor of CRSC.¹ This case is remanded to the Court of Appeals so that the panel may address the effect of our holdings on defendant's ability to challenge the terms of the consent judgment.

I. FACTS AND PROCEDURAL HISTORY

Defendant, Ray Foster, commenced service in the United States Army in 1985, prior to his marriage to plaintiff, Deborah Foster. During the marriage, defendant was deployed in the Iraq war and suffered serious and permanently disabling combat injuries. Thereafter, defendant continued his military career and, after more than 22 years of service, he retired in September 2007. Because defendant was injured during combat, he was eligible for CRSC under 10 USC 1413a, and defendant applied for CRSC around the time of his retirement. In February 2008, defendant received notice that he was eligible for CRSC retroactive to October 2007.

Plaintiff filed for divorce in November 2007, and a final consent judgment of divorce was entered in December 2008. Before entering that judgment, the trial court conducted a hearing regarding the proposed consent judgment. Defendant testified that he was receiving both military retirement pay and military disability benefits based on his combat-related injuries. The litigants, through counsel, agreed that defendant's disability benefits were not subject to division by the court because they were not marital property under federal law. At the time of the divorce, plaintiff was gainfully employed as a registered nurse.

The proposed property settlement awarded plaintiff 100% of any interest she acquired in retirement and pension benefits as a result of her employment during the marriage. Additionally, plaintiff was to receive 50% of defendant's disposable retirement pay that accrued during the marriage.² The parties also agreed to the inclusion of the following provision (the offset provision) in the proposed consent judgment:

If Defendant should ever become disabled, either partially or in whole, then Plaintiff's share of Defendant's entitlement shall be calculated as if Defendant had not become disabled. Defendant shall be responsible to pay, directly to Plaintiff, the sum to which she would be entitled if Defendant had not become disabled. Defendant shall pay this sum to Plaintiff out of his own pocket and earnings, whether he is paying that sum from his disability pay or otherwise, even if the military refuses to pay those sums directly to Plaintiff. If the military merely reduces, but does not entirely stop, direct payment to Plaintiff, Defendant shall be responsible to pay directly to Plaintiff any decrease in pay that Plaintiff should have been awarded had Defendant not become disabled, together with any Cost of Living increases that Plaintiff would have received had Defendant not become disabled. Failure of Defendant to pay these amounts is punishable through all contempt powers of the Court.

At the divorce hearing, the trial court inquired as to why the language of this provision suggested that defendant was not currently receiving any disability benefits when, in fact, he was. Counsel explained that it was intended to apply in the event that defendant was offered an increase in disability benefits because such an increase would diminish the retirement benefits owed to plaintiff under the proposed settlement. The trial court inquired into defendant's understanding of this provision:

The Court : ... Mr. Foster, you do acknowledge that if you were to defer any of your current military retirement pay or convert it to disability pay, or if your military retirement pay were reduced because the level of your disability pay was increased, you acknowledge this Court's ability to enforce payment to Ms. Foster [of] the level of benefits that she would be entitled [to] presently from your retirement pay?

[Defendant ]: Yes.

No specific amounts were mentioned at the hearing or in the actual consent judgment. Suffice it to say, however, that plaintiff received slightly more than $800 per month until February 2010. When defendant began receiving CRSC,³ his disposable retirement benefit amount was reduced, and plaintiff's monthly payment was reduced to a little more than $200.⁴

Defendant nonetheless failed to pay plaintiff the difference between the reduced amount of retirement pay she received beginning in February 2010 and the amount that she had received shortly after entry of the consent judgment. Consequently, numerous hearings took place in the trial court over several years, all of which were designed to compel defendant to pay plaintiff the difference between the amount plaintiff would have been entitled to under the consent judgment had defendant not received CRSC and the amount plaintiff actually received after the government commenced paying defendant CRSC. These proceedings culminated in the order from which defendant appeals that found him in contempt of court for failure to pay plaintiff in compliance with the consent judgment. The court ordered him to pay plaintiff $1,000 per month, with $812 credited as current payments due under the consent judgment and $188 to be credited against the arrearage of $34,398 until the arrearage was paid in full. Defendant has been paying plaintiff in monthly installments since the contempt order was entered. Payments were guaranteed by an "appearance bond" in the amount of $9,500 and secured with a lien on his mother's home.

Defendant appealed in the Court of Appeals, arguing that the trial court erred by not finding plaintiff's attempts to enforce the consent judgment preempted by federal law. The Court of Appeals concluded that the matter was not preempted by federal law and affirmed the trial court's contempt order.⁵ Defendant sought leave to appeal in this Court. In lieu of granting leave to appeal, we vacated the judgment of the Court of Appeals and remanded the case to that Court for reconsideration in light of the opinion of the Supreme Court of the United States in Howell v. Howell .⁶ On remand, the Court of Appeals again affirmed the trial court's finding of contempt, concluding that Howell did not overrule the Court of Appeals’ decision in Megee .⁷

The panel reasoned that Howell was distinguishable because it involved general service-connected disability benefits and because the Howell opinion rested squarely on the language in former 10 USC 1408(a)(4)(B), which provided—and still provides in 10 USC 1408(a)(4)(A)(ii) —that "disposable retired pay" means a member's total monthly retired pay less amounts that "are deducted from the retired pay ... as a result of ... a waiver of retired pay required by law in order to receive compensation under title 5 or title 38[.]"⁸ The Court of Appeals also observed that the Megee decision distinguished CRSC from general service-connected disability pay found in Title 38 on the basis of CRSC's status as Title 10 compensation.⁹ Given that CRSC is at issue in the instant case, and that Howell did not concern or analyze a waiver of retirement pay in favor of CRSC, the...