Harmand v. Harmand, 2040365.

• Decision Date: 23 November 2005
• Docket Number: 2040365.
• Citation: 931 So.2d 18
• Parties: John William HARMAND v. Arlene Margo HARMAND.
• Court: Alabama Court of Civil Appeals

Page 18

931 So.2d 18

John William HARMAND v. Arlene Margo HARMAND.

2040365.

Court of Civil Appeals of Alabama.

November 23, 2005.

David A. Simon of Wills & Simon, Bay Minette, for appellant.

Catherine F. Golden, Fairhope, for appellee.

CRAWLEY, Presiding Judge.

The parties were divorced in April 1995, after a 30-year marriage. At the time of the divorce, John William Harmand ("the husband") was a civil-service employee of the United States government covered by the Federal Employees' Retirement System ("FERS"). Arlene Margo Harmand ("the wife") had no retirement benefits. The final judgment of divorce incorporated the parties' settlement agreement. Paragraph 10 of the divorce judgment states:

"10. The [wife] shall receive as her separate property, an interest equal to one-half (½) of the value of the [husband's] retirement plan upon his retirement. If the [husband] shall predecease the [wife], she shall be entitled to one-half of any retirement benefits accrued. If necessary, the parties shall cooperate in submitting and effecting a Qualified Domestic Relations Order to the Plan Administrator and/or to the Circuit Court of Baldwin County. The intent of this paragraph is to assure to each party the benefits of said retirement funds without incurring tax liability or associated penalties or costs. Moreover, the award to [the wife] of an interest in [the husband's] retirement plan is not intended to affect tax liability, penalties or costs to the retirement funds to be maintained by [the husband]. It is understood that this provision shall not entitle the wife to funds from the [husband's] separate Social Security checks. Either party agrees to pay the attorney fees and costs for the other should it become necessary to enforce this provision."

In December 1995, the trial court entered a Qualified Domestic Relations Order ("QDRO") that provided, in pertinent part:

"The former [wife] is entitled to 50% of the [husband's] gross monthly annuity under the Civil Service Retirement System. The United States Office of Personnel Management is directed to pay the former [wife's] share directly to the former [wife]. The former [wife] shall have this amount as her separate property and in addition thereto shall have as her separate property any interest or earnings accruing thereon subsequent to the date of this order."

Neither party appealed the judgment of divorce.

The husband worked eight years after the divorce and retired in June 2003. He testified that his gross monthly FERS retirement benefit was $1,014, from which he received $373 per month, the wife received $296.39 per month, and the balance, he said, was applied to taxes and health insurance. The wife received direct payments of $296.39 per month from the United States Office of Personnel Management ("OPM") based on the following benefit-calculation formula for a former spouse's "prorata share" of benefits contained in 5 C.F.R. § 838.621:

"(a) Prorata share means one-half of the fraction whose numerator is the number of months of Federal civilian and military service that the employee performed during the marriage and whose denominator is the total number of months of Federal civilian and military service performed by the employee."

OPM determined that the wife's pro rata share was 29.23% of the husband's monthly gross retirement benefit. It derived that percentage by calculating one-half of the fraction 145/248, with 145 representing the number of months the husband worked for the federal government during the marriage and 248 representing the total number of months the husband worked for the federal government. This fraction is known as the "coverture fraction." See Wilkinson v. Wilkinson, 905 So.2d 1, 14 (Ala.Civ.App.2004)(Yates, P.J., concurring in the result).

On January 16, 2004, the wife filed a contempt petition, alleging that the husband had failed to pay her one-half of his retirement benefits ($507 per month), which, she claimed, the divorce judgment had ordered him to pay. Following an ore tenus proceeding, the trial court entered a judgment in August 2004 that states, in pertinent part:

"This Court finds that the parties did agree in their original divorce agreement that the [wife] would be entitled to one-half (½) of the [husband's] federal retirement annuity. Presently, the husband is receiving $1,014.00 per month. Of this amount, only $296.39 is presently being paid directly to [the wife]. This payment is contrary to the parties' agreement. [The husband] is ordered to pay directly to [the wife] $210.61 per month effective August of 2004 forward to comply with the parties' agreement.

"A judgment shall be entered against [the husband] to [the wife] representing monies owed to her since August of 2003 through July of 2004 in the amount of $2,527.32. The monies shall be payable to [the wife] at the rate of $100.00 per month beginning August of 2004 until paid in full."

The husband appeals. Initially, we note that § 30-2-51(b), Ala.Code 1975, the current statute permitting a trial court to divide retirement benefits as marital property, does not apply to the issues raised in this appeal because the parties were divorced in 1995, before the January 1, 1996, effective date of the statute. See § 30-2-51, Ala.Code 1975 (History).

In the present case, the evidence was undisputed that the husband's gross monthly retirement benefit was $1,014 and that the wife was receiving direct payments from OPM of $296.39 per month. The trial court's judgment ordered the husband to pay the wife an additional $210.61 per month, thus giving the wife a total monthly benefit of $507, equal to exactly one-half of the husband's gross monthly retirement benefit. "It is ... well established that in the absence of specific findings of fact, appellate courts will assume that the trial court made those findings necessary to support its judgment, unless such findings would be clearly erroneous." Ex parte Bryowsky, 676 So.2d 1322, 1324 (Ala.1996). We conclude that the trial court construed paragraph 10 of the divorce judgment as an agreement by the parties to a simple "50-50" division of the husband's retirement benefits when those benefits were ultimately determined and distributed, regardless of the fact that the husband worked and accrued retirement benefits for eight years after the parties were divorced. In other words, the trial court determined that there was to be no offset for postdivorce accumulations to the husband's retirement plan because the parties had agreed that the wife's share did not depend upon what portion of the total benefits was accrued during the marriage.

On appeal, the husband does not take issue with the trial court's construction of paragraph 10, at least insofar as the court determined as a matter of state law that the parties had agreed that the wife would receive one-half of his gross monthly retirement benefit. The husband argues, however, that federal law limits the wife to a "prorata share" of his monthly retirement benefit, as defined in 5 C.F.R. § 838.621. He maintains that the wife's pro rata share is 29.23%, as OPM determined, and that, by virtue of Article VI, clause 2 of the United States Constitution (the Supremacy Clause), neither he nor the state court had the right to assign the wife a greater share of his benefits.

The husband also argues that the trial court impermissibly modified the divorce judgment (1) by making him a payor of the wife's share of his retirement benefits, when, he says, paragraph 10 of the divorce judgment contemplated that only OPM would pay the wife's share, and (2) by imposing on him the tax liability for the wife's share of his retirement benefits when, he says, paragraph 10 of the divorce judgment contemplated that neither party was to suffer increased tax liability as a consequence of the agreement.

I. The Husband's Federal Preemption Argument

At the outset, we point out that there is no issue in this case regarding preemption by the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq. ERISA applies "to any employee benefit plan if it is established or maintained... by any employer engaged in commerce," 29 U.S.C. § 1003(a)(1), and its provisions "supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan described in section 1003(a) of this title and not exempt under section 1003(b) of this title," 29 U.S.C. § 1144(a). Despite its broad scope, ERISA expressly exempts from its provisions any "governmental plan." 29 U.S.C. § 1003(b)(1). Section 1002(32) defines "governmental plan" as "a plan established or maintained for its employees by the Government of the United States, by the government of any State or political subdivision thereof, or by any agency or instrumentality of any of the foregoing."

Preemption of state law occurs in three ways. First, Congress may define expressly to what extent a federal statute preempts state law. See English v. General Elec. Co., 496 U.S. 72, 78, 110 S.Ct. 2270, 110 L.Ed.2d 65 (1990). Second, preemption may be found when a pervasive scheme of federal regulation makes it reasonable to infer that Congress intended exclusive federal regulation of the subject matter. Id. at 79, 110 S.Ct. 2270. Third, preemption occurs where there is a direct conflict between the terms of the federal law and the state law. Id. Whether a federal statute preempts a common-law property division by a state court depends on the legislative intent behind the federal statute. The intent may be explicitly stated in the statute, see Mansell v. Mansell, 490 U.S. 581, 109 S.Ct. 2023, 104 L.Ed.2d 675 (1989)(holding that military-retirement pay that had been waived by the former husband in order to receive veteran's disability benefits was not community property divisible upon divorce), or implied from the legislative purpose underlying the enactment of the statute, see Hisquierdo v. Hisquierdo, 439 U.S. 572, 583, 99...