Hadrych v. Hadrych

• Decision Date: 04 October 2006
• Docket Number: No. 25,456.,25,456.
• Citation: 149 P.3d 593,2007 NMCA 001
• Parties: Sherry R. HADRYCH, n.k.a. Sherry R. Foote, Petitioner-Appellee, v. Timothy B. HADRYCH, Respondent-Appellant.
• Court: Court of Appeals of New Mexico

149 P.3d 593

2007 NMCA 001

Sherry R. HADRYCH, n.k.a. Sherry R. Foote, Petitioner-Appellee, v. Timothy B. HADRYCH, Respondent-Appellant.

No. 25,456.

Court of Appeals of New Mexico.

October 4, 2006.

Certiorari Denied, No. 30,077, January 5, 2007.

Antonio Maestas, Albuquerque, NM, for Appellee.

Acton Law Office, PC, Gregory M. Acton, Law Offices of Heidi S. Webb, Heidi S. Webb, Albuquerque, NM, for Appellant.

OPINION

CASTILLO, Judge.

{1} In this divorce case, Husband appeals an order awarding Wife a money judgment in the amount of her share of Husband's military retirement benefits. Husband effected a significant reduction to Wife's share of the benefits when he converted his benefits to 100% disability payments and waived further retirement benefits. We addressed this issue in Scheidel v. Scheidel, 2000-NMCA-059, 129 N.M. 223, 4 P.3d 670. There, we relied in part on language in a marital settlement agreement (MSA) and held that an ex-spouse may not reduce the other party's share of military retirement benefits in this way. Id. ¶¶ 1, 22-23. By contrast, in our case, there was no MSA, only a final decree. We assigned this case to the general calendar to consider whether our holding in Scheidel should be expanded to include a situation in which there is no MSA and there is no language prohibiting Husband from reducing Wife's benefits in the final decree. We conclude that Scheidel still applies because it would be inequitable to allow one party, after judgment, to unilaterally reduce the other party's award of retirement benefits. Consequently, we affirm the trial court.

I. BACKGROUND

{2} The facts are undisputed. The parties were divorced in 1996. In the original divorce decree, Wife was awarded 50% of Husband's retirement pay attributable to the time they were married. On December 11, 1998, the trial court entered an order clarifying the property settlement in the divorce decree and applying a mathematical formula to ascertain the exact amount of Husband's retirement pay that would be awarded to Wife. Husband retired from the military in 2000, and Wife began receiving her portion of the retirement pay. In January 2000, Husband was injured in a helicopter accident, was adjudged to be disabled, and was entitled to disability pay. At some point in late 2003, he waived his retirement pay in order to receive the disability pay instead.

{3} Section 1408 of the Uniformed Services Former Spouses' Protection Act provides that military disability pay is not divisible as community property upon divorce. See 10 U.S.C. § 1408(a)(4)(B). Consequently, once Husband waived his retirement benefits and elected disability pay, payments to Wife stopped in January and February 2004. After February 2004, payments resumed, but they were reduced from $663.20 per month to $248.50. Wife responded by filing an application for order to show cause on January 20, 2004.

{4} The trial court held that Wife was entitled to continue receiving an amount equal to the portion of military retirement payments that Husband had waived in order to receive the disability pay, and the court entered judgment against Husband. He does not challenge the amount awarded. He only argues that no award could be made at all. He claims that state courts are without authority to award a portion of disability payments and that the trial court's order thus violates federal law and the United States Supreme Court decision in Mansell v. Mansell, 490 U.S. 581, 109 S.Ct. 2023, 104 L.Ed.2d 675 (1989). Husband seeks to avoid our holding in Scheidel and argues that the lack of an MSA prohibiting conversion of his retirement benefits to disability benefits makes his case distinguishable. He also claims that the trial court had no jurisdiction to enter the order because it constitutes a modification of the divorce decree, rather than enforcement.

II. DISCUSSION

A. Standard of Review

{5} Because the facts are undisputed, the legality of the trial court's order presents a question of law, which we review de novo. See Largo v. Atchison, Topeka & Santa Fe Ry. Co., 2002-NMCA-021, ¶ 5, 131 N.M. 621, 41 P.3d 347 (stating that federal preemption is a legal question, which is reviewed de novo); Kropinak v. ARA Health Servs., Inc., 2001-NMCA-081, ¶ 4, 131 N.M. 128, 33 P.3d 679 (applying a de novo standard of review where the appellant's position on appeal raises a question of law arising out of undisputed facts).

B. Federal Preemption

{6} In Mansell, the Supreme Court held that state courts lack the power to treat as property divisible upon divorce military retirement pay that has been waived in order for the retiree to receive disability benefits. 490 U.S. at 594-95, 109 S.Ct. 2023; see 10 U.S.C. § 1408(a)(4)(B) (defining "`disposable retired pay'" to exclude any amounts waived in order for the retiree to receive disability benefits).

{7} In Scheidel, we considered the prohibition against awarding disability payments discussed in Mansell. An MSA divided the husband's military retirement benefits between the parties and prohibited the husband from taking any voluntary action to reduce the wife's share of the benefits; the MSA also contained an indemnity provision requiring the husband to compensate the wife for any reductions in her benefits that might result from the husband's voluntary actions. Scheidel, 2000-NMCA-059, ¶¶ 1-2, 129 N.M. 223, 4 P.3d 670. At the time of the divorce, the husband was 30% disabled, but in subsequent years, the husband's disability rating increased to 100%. Id. ¶ 3. Since the wife's share of the military pension was based upon the husband's retirement pay, her share went down dramatically when the husband began receiving additional disability benefits and waived a corresponding amount of retirement pay, as required by federal law. Id. ¶ 4. The wife sought an order forcing the husband to compensate her for a reduction in benefits, and the trial court ruled in favor of the wife. Id. On appeal, we affirmed the trial court's order and rejected the husband's challenge, which was based on Mansell. Scheidel, 2000-NMCA-059, ¶¶ 7-12, 129 N.M. 223, 4 P.3d 670. We were persuaded by cases from other jurisdictions holding that neither Mansell nor federal law prohibit a state court from enforcing indemnity provisions designed to guarantee a minimum monthly income to a non-military spouse. Scheidel, 2000-NMCA-059, ¶ 8, 129 N.M. 223, 4 P.3d 670.

{8} We relied on the indemnity provision in the MSA and distinguished cases in which nothing in the settlement agreement precluded the husband from "doing anything to alter the amount the wife was to receive." Id. ¶ 11. We did not have to consider whether the same result would apply in a case such as the current one, where there is no indemnity provision or any MSA whatsoever. See id. ¶ 12 (holding that "federal law does not prohibit state courts from enforcing indemnity provisions which ensure the payment of a minimum sum to a non-military spouse as his or her share of a community pension").

{9} In our case, there is no indemnity provision and no non-alteration provision like those contained in Scheidel. Husband contends that the lack of an indemnity provision and MSA warrant a departure from Scheidel, and Husband argues that his case is controlled by Mansell, instead. Husband relies on language in Scheidel to support his position. See id. ¶ 11 (citing In re Marriage of Pierce, 26 Kan.App.2d 236, 982 P.2d 995, 998 (1999), and stating that the Pierce court "rightly held" that the husband was free to waive his retirement benefits because there was no language in an MSA prohibiting him from waiving his retirement benefits).

{10} We disagree with Husband's argument. The final decree appropriately awarded Petitioner "[o]ne-half of Respondent's retirement pay attributable to the period of time the parties were married." The actual formula, based on the number of months the parties were married, was included in a later filed stipulated order, which clarified the "award from Respondent's military retirement pay." Husband makes much of the fact that Wife is relying solely on a divorce decree and cannot point to language in an MSA that prohibits him from waiving his right to retirement benefits. We do not find this distinction compelling. Divorce decrees are construed in the same manner as other written instruments are. See Schueller v. Schueller, 117 N.M. 197, 199, 870 P.2d 159, 161 (Ct.App.1994). Wife's half interest in the military benefits was clearly established by the decree, and her interest was unconditional. There was no language expressly prohibiting what Husband did, but there was no language permitting it, either. The only fair and reasonable interpretation of the decree is that Wife was entitled to and reasonably expected that she would continue to receive half of the retirement benefits as they then existed. By contrast, Husband's argument that he could avoid the final decree's award and reduce Wife's benefits, at his sole election, is not a reasonable interpretation of the final decree.

{11} Given the clear division of benefits set by the final decree, we hold that the trial court could act to enforce and preserve Wife's right to benefits established by the final decree. We reach this conclusion because we cannot accept the inequity and unfairness that results when one party is allowed to unilaterally reduce the other's benefits established either under an agreement or a final decree. See Scheidel, 2000-NMCA-059, ¶¶ 7-9, 129 N.M. 223, 4 P.3d 670 (stating that it is equitable to require the husband to make up for the reduction caused by his conversion of his retirement benefits to disability benefits, since one spouse may not unilaterally reduce the other's benefits); cf. Montero v. Montero, 96 N.M. 475, 477, 632 P.2d 352, 354 (1981) (rejecting the idea that one parent, unilaterally and at his or her whim, could undermine child visitation rights simply by moving); Bernal v. Nieto, 1997-NMCA-067, ¶¶ 15-17, ...