Hodowal v. Hodowal

• Decision Date: 31 January 1994
• Docket Number: No. 06A01-9306-CV-207,06A01-9306-CV-207
• Citation: 627 N.E.2d 869
• Parties: , 18 Employee Benefits Cas. 1500 In re the Marriage of John R. HODOWAL, Appellant-Petitioner, v. Virginia HODOWAL, Appellee-Respondent.
• Court: Indiana Appellate Court

Page 869

627 N.E.2d 869

62 USLW 2515, 18 Employee Benefits Cas. 1500

In re the Marriage of John R. HODOWAL, Appellant-Petitioner, v. Virginia HODOWAL, Appellee-Respondent.

No. 06A01-9306-CV-207.

Court of Appeals of Indiana,

First District.

Jan. 31, 1994.

Marvin Mitchell, Steven K. Huffer, Mitchell Hurst Jacobs & Dick, Indianapolis, for appellant-petitioner.

Audrey K. Grossman, Treacy Grossman & Sullivan, Indianapolis, for appellee-respondent.

NAJAM, Judge.

STATEMENT OF THE CASE

We are asked to decide whether an early retirement subsidy is marital property subject to division under our Dissolution of Marriage Act. Petitioner, John R. Hodowal ("Husband"), appeals from a Decree of Marriage Dissolution ("Decree") and Qualified Domestic Relations Order ("QDRO") awarding the Respondent, Virginia Hodowal ("Wife"), a part of Husband's subsidized early retirement benefits if he qualifies and retires before the normal retirement age. The trial court awarded Wife seventy-five percent (75%) of the current value of Husband's retirement plans, including that part of the early retirement subsidy attributable to Wife's share of Husband's benefits earned as of May 8, 1991, the date of separation. Husband contends that because there is only the possibility he will receive an early retirement subsidy, the subsidy is not marital property and cannot be divided.

We agree and reverse.

ISSUE

The issue presented is whether an early retirement subsidy is marital property subject to division where the subsidy is available only if (1) the spouse continues his employment until he qualifies by age and years of service and (2) retires early.

FACTS

Husband and Wife were married on September 3, 1966, and were separated on May 8, 1991, the date Husband filed a petition for The Husband participated in a Base Plan and a Supplemental Plan with Indianapolis Power & Light Company (IPALCO). Under the plans, age 65 is the normal retirement age, but a qualified participant who retires before normal retirement age is eligible for subsidized early retirement benefits to close the gap between a participant's early retirement annuity and his normal full retirement annuity. The Husband's normal retirement date would be March 1, 2010. However, a plan participant who has reached the age of 55 and has at least ten years of service is eligible for an early retirement subsidy if he also meets the "Rule of 85," that is, the numbers representing his age and years of service combined must total at least 85. As of the date of separation, the Husband was 46 years old and had worked for IPALCO for 23 years. Therefore, the Rule of 85 had not been satisfied and the Husband would not be eligible for an early retirement subsidy unless he continued his employment for some 9 more years.

                dissolution of marriage.  After a contested final hearing on May 4, 1992, the trial court entered a Decree on June 17, 1992, which incorporated findings of fact and conclusions of law.  The court found that the Husband's economic circumstances as Chairman and CEO of IPALCO Enterprises were substantially superior to those of the Wife and that given the extraordinary disparity in economic circumstances between them, an equal division of marital property would not be just or reasonable.  Thus, the court awarded seventy-five percent (75%) of the marital estate to the Wife and twenty-five percent (25%) to the Husband, and specifically awarded the Wife seventy-five percent (75%) of the Husband's two retirement plans based on their "current value, as of the date of separation, to-wit:  May 8, 1991."   Record at 294
                

The court directed the Wife's counsel to prepare a QDRO for the plans. However, the parties disagreed on whether the QDRO should provide for payments to the Wife from the Husband's early retirement subsidy. Husband maintained that the subsidy was not marital property and was not subject to division because it would not be available unless he continued to work until the year 2000. Wife contended that Husband's right to a subsidy was a benefit in a vested pension plan and that she was entitled to receive a part of it if he qualified for early retirement and retired early.

After hearing oral argument, the trial court concluded that the early retirement subsidy attributable to the value of the subsidy "earned on May 8, 1991" should be included in the marital estate and divided. Record at 43. In its order the court reasoned that the Wife was entitled to share in the subsidy which "had already, at least in part, been earned and paid for by services rendered" by the Husband prior to the separation date. Record at 43. Husband appeals from that determination.

DISCUSSION AND DECISION

Standard of Review

Traditionally, the division of marital assets has been a matter within the sound discretion of the trial court. In re Marriage of Davidson (1989), Ind.App., 540 N.E.2d 641, 643. The party challenging the trial court's property division must overcome a strong presumption that the court considered and complied with the applicable statute. DeHaan v. DeHaan (1991), Ind.App., 572 N.E.2d 1315, 1325, trans. denied. We presume the trial court followed the law and made all proper considerations in making its decision. R.E.G. v. L.M.G. (1991), Ind.App., 571 N.E.2d 298, 300.

When we review a claim that the trial court improperly divided marital property, we must decide whether the trial court's decision constitutes an abuse of discretion, considering only the evidence most favorable to the trial court's disposition of the property. Id. An abuse of discretion occurs if the trial court's decision is clearly against the logic and effect of the facts and circumstances before the court, or the reasonable, probable, and actual deductions to be drawn therefrom. Myers v. Myers (1990), Ind., 560 N.E.2d 39, 42. An abuse of discretion also occurs when the trial court has misinterpreted the law or disregards evidence of factors listed in the controlling statute. Id. It is under this strict standard of review that we

consider the Husband's contention that the trial court's determination was contrary to law.

Early Retirement Subsidy

The question before us is whether the Husband's early retirement subsidy is marital property under the relevant statute, Indiana Code Sec. 31-1-11.5-2(d), which provides:

"(d) The term 'property' means all the assets of either party or both parties, including:

(1) a present right to withdraw pension or retirement benefits;

(2) the right to receive pension or retirement benefits that are not forfeited upon termination of employment, or that are vested, as that term is defined in Section 411 of the Internal Revenue Code, but that are payable after the dissolution of marriage; and

(3) the right to receive disposable retired or retainer pay, as defined in 10 U.S.C. 1408(a), acquired during the marriage, that is, or may be payable after the dissolution of marriage."

This section of our Dissolution of Marriage Act expressly permits the inclusion of specified pension-type interests among the marital assets to be divided. In re Marriage of Adams (1989), Ind., 535 N.E.2d 124, 125. Here, we must determine whether Husband's early retirement subsidy is "property" which falls within any of these statutory categories. See id. at 126.

Wife reasons that once a pension plan is vested, the plan in its entirety is part of the marital estate and that the subsidy here at issue is a benefit included within Husband's pension plans which vested during the marriage. Wife's argument rests upon at least two premises. First, Wife assumes that the plans are indivisible and that if the plans are vested before the date of separation, all benefits which become available under the plans after the date of separation are marital property regardless of whether or not a particular benefit falls within Indiana Code Sec. 31-1-11.5-2(d). Second, Wife assumes that Husband's right to an early retirement subsidy was earned, at least in part, during the marriage prior to the date of separation and that a part of the earned subsidy can be attributed to the Wife's portion of the pension which had vested as of May 8, 1991. Husband responds that the subsidy did not vest and cannot be claimed until the Husband has satisfied the conditions of the "Rule of 85." In other words, Husband contends that the subsidy had no value as property on the date of separation and cannot be included in the "current value" of the plans as of that date.

The trial court's order was based upon the following rationale:

"On May 8, 1991, the early retirement subsidy had already, at least in part, been earned and paid for by services rendered by the husband prior to that date. The date upon which the husband decides to retire is no more significant when applied to the early retirement subsidy than to any other part of the pension."

Record at 43. After considering Husband's incredibly complex retirement plans, the trial court concluded that a pro-rata part of the early retirement subsidy was property "already in existence, bought and paid for as of the date of separation." Record at 43. The trial court was persuaded by the "logic" of the wife's argument that the Wife should get her pro-rata share of that part of the early retirement subsidy which was "earned" during the marriage. Record at 43.

The opinions of our supreme court in Adams, and in Kirkman v. Kirkman (1989), Ind., 555 N.E.2d 1293, provide the analytical framework to be applied under Indiana Code Sec. 31-1-11.5-2(d). In Adams, the question was whether the husband's police pension was marital property. The husband had accumulated over twenty years of active service and was eligible for retirement. The police pension was not "disposable retired or retainer pay." The husband had no present right to withdraw the pension and, as a public employee, would have no contractual pension rights until retirement. However, the husband had qualified to receive accrued pension benefits, and his...