Fultz v. Shaffer

• Decision Date: 01 September 1995
• Docket Number: No. 1657,1657
• Citation: 681 A.2d 568,111 Md.App. 278
• Parties: Douglas W. FULTZ et al. v. Roberta Souder SHAFFER. ,
• Court: Court of Special Appeals of Maryland

Page 278

111 Md.App. 278

681 A.2d 568

Douglas W. FULTZ et al. v. Roberta Souder SHAFFER.

No. 1657, Sept. Term, 1995.

Court of Special Appeals of Maryland.

Aug. 29, 1996.

Matthew W. Black, Jr. (Heeney, Armstrong & Heeney, on the brief), Rockville, for appellant Fultz.

Steven M. Gilbert, Assistant County Attorney (Charles W. Thompson, Jr., County Attorney and Linda B. Thall, Senior Assistant County Attorney, on the brief), Rockville, for appellants Montgomery County and Chief Administrative Officer.

Cassandra P. Hicks (Pasternak & Fidis, P.A., on the brief), Bethesda, for appellee.

Argued before CATHELL, HARRELL and MURPHY, JJ.

CATHELL, Judge.

In this case, we are asked to determine whether disability retirement benefits, received as a result of an injury occurring after the parties' divorce, were properly considered retirement benefits pursuant to a settlement agreement between the parties, which entitled the wife to share in a portion of her former husband's "pension and retirement benefits" if, as, and when paid to him. The trial court found that appellee, Roberta Shaffer, was in fact entitled to receive a share of those disability benefits, despite the claim by her former husband, appellant, Douglas Fultz, that the settlement agreement did not encompass them. He appealed the trial court's judgment, asking:

Whether the Trial Court erroneously awarded the former wife a marital share of the former husband's disability We are advised that, subsequent to taking this appeal, Douglas Fultz died; we are told that a suggestion of death has been, or will be, filed with this Court. We note that, because the underlying case involves the classification of significant property rights, our disposition of this appeal will not abate as a result of Mr. Fultz's death. See Goldman v. Walker, 260 Md. 222, 224-25, 271 A.2d 639 (1970).

benefits paid as a result of injury and total disability occurring after the divorce.

Also at issue on appeal is a provision in the parties' settlement agreement that required Mr. Fultz to elect a 100% joint and survivor annuity in favor of Ms. Shaffer. Ms. Shaffer asked the trial court to order her former husband to make that election. Montgomery County, which administers the retirement system at issue, disputed Mr. Fultz's ability to do so more than six years after the divorce. The County, also an appellant in the instant appeal, is aggrieved by the trial court's order that the election be made and asks:

A. Was the [trial] court authorized to award a 100% joint and survivor benefit to the former spouse?

B. Did the [trial] court have a legal basis for overruling the administrative order below that the former spouse was ineligible for designation as a 100% joint and survivor beneficiary?

We shall address each appellant's concerns in turn, following a recitation of the relevant facts.

CHRONOLOGY OF THE CASE

The parties were married in August of 1977, approximately three months after Mr. Fultz commenced employment as a Montgomery County police officer. He remained so employed throughout the marriage. His status as a Montgomery County employee entitled him to membership in the Montgomery County Employees' Retirement System (ERS), which was established "to maintain a system of retirement pay and benefits for [Montgomery County's] employees which is adequately funded and insures employees sufficient income to

                enjoy during their retirement years."   Montgomery County Code § 33-34 (1994);  see also id. § 33-36(b). 1  In 1988, the parties separated and, on February 14, 1990, they entered into a Voluntary Separation and Property Settlement Agreement (the Separation Agreement), whereby various[681 A.2d 570]  personal and property issues were resolved, including Ms. Shaffer's entitlement to a portion of Mr. Fultz's accrued pension benefits upon retirement and a 100% joint and survivor annuity.  Specifically, they agreed
                

9. DIVISION OF PENSION AND RETIREMENT BENEFITS

... The parties acknowledge that the husband's pension and retirement benefits earned during the marriage are marital property, and as such, are to be divided equally between [them].

Therefore, if, as and when the husband retires, or is eligible for retirement, the wife shall receive, by direct payment from Montgomery County, one-half of the monthly pension and retirement benefits, specifically including all Cost of Living Adjustments (COLAS) thereon, earned during the marriage, to be calculated as follows:

Wife's monthly = ** X Husband's monthly

----

pension benefit 2 pension benefits

** = Number of years of marriage

---- Number of years of service

The husband further agrees to select a 100% joint and survivor pension, and shall irrevocably designate the wife as a survivor and lifetime beneficiary of the pension and retirement benefits acquired through his employment with Montgomery County. The wife shall be entitled to the benefits payable to the surviving spouse based upon the above formula. In the event that the husband fails to comply with the requirements of this Article, and fails to designate the wife as the surviving spouse and beneficiary of death benefits ....

payable under the Employees' Retirement System of Montgomery County, his estate shall be liable to the wife for the full amount of the husband's death benefits to which she would be entitled, pursuant to this paragraph.

10. QUALIFIED DOMESTIC RELATIONS ORDER

The husband specifically agrees to cooperate with the wife, to perform any acts, and to execute any documents, necessary to enable the wife to prepare obtain [sic] a Qualified Domestic Relations Order, to effectuate the provisions of Article above. The Qualified Domestic Relations Order shall designate the wife as the alternate payee/surviving spouse under the Employees' Retirement System of Montgomery County, and shall recognize her right to receive her designated portion of the husband's retirement benefits as a division of marital property. The husband further agrees ... in the event that any Qualified Domestic Relations Order is rejected by the retirement system administrators, for any reason, to cooperate fully with the wife and modify any such O[r]der, to obtain its approval and acceptance by the administrators. The parties agree that the Court shall retain continuing jurisdiction over the Order until it has been approved and accepted by Montgomery County, and/or the plan administrators.

On February 23, 1990, the parties were divorced by decree entered in the Circuit Court for Montgomery County. The Separation Agreement was incorporated, but not merged, into the final decree. Pursuant thereto, the court retained continuing jurisdiction over the case, pending final approval of the Qualified Domestic Relations Order (QDRO).

Thereafter, Mr. Fultz was found to have sustained a service-connected disability and was placed on disability retirement on February 19, 1992. In conjunction therewith, he began receiving disability benefits. ² Thereafter, in February of 1993, Ms.

                Shaffer's attorney contacted the County Attorney for Montgomery County, confirming an earlier discussion that concerned the effect of Mr. Fultz's disability upon Ms. Shaffer's rights to her former husband's retirement benefits under the Separation Agreement and whether Ms. Shaffer was entitled either to share in the disability benefits then being received by Mr. Fultz or begin receiving payment of her [681 A.2d 571] share of the accrued retirement benefits. 3  Ms. Shaffer's attorney reiterated the County's position that disability benefits are not divisible in divorce, see § 33-54, and stated her understanding that Ms. Shaffer's share of the retirement benefits under the Separation Agreement remained unchanged by Mr. Fultz's disability:  "She has the same options with respect to the receipt of her portion of the marital retirement benefits as if [Mr. Fultz] had not retired on disability."   The County Attorney agreed with Ms. Shaffer's summary of their discussion, adding, "The fact that [Mr. Fultz] has already retired on a disability retirement has no [e]ffect on the amount which [Ms. Shaffer] receives ..., nor does it affect the dates on which the benefits could commence."
                

Mr. Fultz's Petition

Prompted by Ms. Shaffer's attempts to ascertain her right, if any, to the disability benefits under the terms of the Separation Agreement, Mr. Fultz sought, on March 25, 1993, a formal determination of the issue by the Chief Administrative Officer (CAO) of the ERS. ⁴ Specifically, he posed the following question to the CAO for resolution:

When a police officer/pensioner separates from his wife and they sign a Separation Agreement in which she is entitled to a marital share of his pension "if, as, and when he receives it," and they are divorced, and the husband/pensioner thereafter retires on disability retirement, what, if any, is the wife's entitlement to any kind of pension benefit?

He then restated Ms. Shaffer's position as seeking a reduction in Mr. Fultz's disability benefits "by the marital portion of the vested accrued benefit, even though (apparently) he will not be receiving his share of the vested accrued pension." His argument to the CAO was predicated upon his belief that "the disability retirement fund exists independent of the vested accrued benefit pension system and it is, in effect, an insurance policy against service related injuries and resulting incapacity." Thus, he argued, his former wife was not entitled to any part thereof.

The CAO issued his ruling on May 21, 1993, flatly rejecting Mr. Fultz's characterization of the nature of his disability benefits and stating that a "service connected retirement disability benefit is a special form of retirement benefit." The CAO continued:

I have interpreted the term marital property to be no more then the vested accrued benefit as of the date of the divorce. That vested accrued benefit can be split in whatever percentage the parties agree....

If the former spouse...