Holz v. Holz

• Decision Date: 24 May 2004
• Citation: 850 A.2d 751
• Parties: Robert HOLZ, Appellee, v. Joan HOLZ, Appellant. Robert Holz, Appellant, v. Joan Holz, Appellee.
• Court: Pennsylvania Superior Court

850 A.2d 751

Robert HOLZ, Appellee, v. Joan HOLZ, Appellant.

Robert Holz, Appellant, v. Joan Holz, Appellee.

Superior Court of Pennsylvania.

Argued January 13, 2004.

Filed May 24, 2004.

Joseph P. Kerrigan, Philadelphia, for Robert Holt.

Richard K. Doty, Philadelphia, for Joan Holz.

Before: BENDER, BECK and KELLY, JJ.

BENDER, J.

¶ 1 Joan Holz (Wife) appeals and Robert Holz (Husband) cross-appeals from the order entered June 25, 2003, whereby the court vacated a previously issued order dated May 2, 2002, enforced the parties' property settlement agreement (PSA) except with regard to Wife's survivorship interest in Husband's pension plan, and granted a decree in divorce. Both parties assert arguments concerning the validity of their agreement in connection with Husband's pension plans and the award of attorney's fees to Wife. For the reasons that follow, we reverse in part, vacate in part and remand.

¶ 2 The following facts are gleaned from the parties' stipulation of facts, two trial court opinions, dated May 2, 2002 and June 25, 2003, a prior decision of this Court, Holz v. Holz, 778 A.2d 741 (Pa.Super.2001) (unpublished memorandum) (Holz I), and our own review of the certified record. Husband and Wife were married in 1957, and separated in 1986. After Wife filed a divorce complaint in 1986, the parties entered into a PSA, dated February 24, 1988, which contained the following provision:

Wife waives all claims against Husband's pension and work plans.

PSA at ¶ 10 (Reproduced Record (RR) at 27). The 1986 action was ultimately dismissed for lack of prosecution.

¶ 3 In 1999, Husband filed the present divorce action in which he sought court approval of the 1988 PSA. Wife responded, asserting that the PSA did not make fair and reasonable provisions for her, that Husband did not fully disclose his assets at the time they entered into the PSA, and that she signed the PSA under duress. Most important to the present appeal, Wife challenged the validity under ERISA¹ of the above-quoted waiver of pension benefits contained in ¶ 10 of the PSA. After argument and hearing, the trial court entered an order, dated May 7, 1999, granting Wife the right to challenge the validity of the PSA on the basis of non-disclosure, misrepresentation and/or duress and directing that an evidentiary hearing be held to determine the validity of Wife's defenses to the PSA. However, the May 7th order was silent as to the alleged invalid waiver/ERISA issue. Wife then filed a declaratory judgment action in United States District Court and ultimately obtained an order declaring the waiver invalid.² As a result of the district court's determination, Wife sought to enforce her rights to the pension without establishing non-disclosure, misrepresentation and/or duress as set forth in the May 7th order.

¶ 4 Thereafter, Husband filed a contempt petition, alleging that because Wife was seeking an equitable distribution hearing based on the federal court's decision, she was in contempt of the trial court's May 7th order. On June 7, 2000, the trial court ruled in Husband's favor, ordering Wife to pay $500 in attorney's fees and to refrain from seeking an equitable distribution hearing until she proved non-disclosure, misrepresentation and/or duress in connection with the PSA. Wife appealed from the June 7th order to this Court, which resulted in a quashal due to the interlocutory nature of the appeal. See Holz I, supra. In the interim, Husband retired and his pension was placed in pay status. Husband elected a joint and 50% survivor benefit.³ However, a court order, dated April 30, 2001, which incorporated a master's interim report, enjoined Husband from distributing the 401(k) assets.

¶ 5 Meanwhile, on April 24, 2001, Wife requested a hearing to determine the validity of the PSA as required by the May 7, 1999 order that would be followed by a hearing on equitable distribution, if necessary. However, the master determined that the federal court's order superceded the May 7, 1999 order and this Court's quashal, both of which provided Wife with an opportunity to void the agreement on the basis of non-disclosure, misrepresentation and/or duress. Thus, only an equitable distribution award was recommended by the master in his report. In response to Husband's exceptions, the trial court requested that the parties enter into a stipulation of facts. As part of the stipulation, Wife indicated that she did not intend to challenge the PSA on the basis of non-disclosure, misrepresentation and/or duress. The court then entered an order and opinion dated May 2, 2002, invalidating the PSA and indicating that it would follow the federal court's decision holding that Wife's waivers in the PSA to Husband's pension benefits were void under ERISA.⁴ Thus, the matter was scheduled for a hearing to determine issues of equitable distribution and counsel fees.

¶ 6 In its opinion dated May 2, 2002, the trial court discussed the parties' positions with regard to which prior court orders it was required to follow, i.e., the May 7, 1999 and June 7, 2000 orders that required proof of non-disclosure, misrepresentation and/or duress or the September 15, 2000 Third Circuit Court of Appeals decision voiding Wife's waiver. Recognizing that the federal decision was the most recent, the trial court found it to be the law of the case. The court explained its reasoning as follows:

This court agrees with [W]ife's position that if the waivers of her marital property interest in Husband's pension and 401(k) plans are invalid under federal law, there must be an equitable distribution hearing for these assets only.

The more problematic issue is whether or not the invalid waiver under ERISA only applies to wife's survivorship interest in the pension plans of Husband. Husband concedes that Wife has not waived her survivorship interest in the plan which needs to be valued and equitably divided pursuant to Palladino v. Palladino, 713 A.2d 676 (Pa.Super.19[9]8).

Husband argues that § 1055 of ERISA, 29 U.S.C. § 1055, is limited to only survivorship benefits and therefore does not control the purported waiver by [W]ife of her equitable distribution rights to these plans.

....

Judge Bartle [District Court Judge] held that, "... we declare that any purported waiver of her rights to the benefits of Husband's pension and 401(k) plan are void and of no effect."... This conclusion was reached based upon 29 U.S.C. § 1055(c)(2)(A)(iii) since the waivers were not signed before a notary public or plan representative.

It is noteworthy that Judge Bartle, as affirmed without opinion by the Third Circuit, did not distinguish between survivor benefits and other pension benefits.

From a review of the applicable caselaw, it appears that § 1055(c) waivers apply only to fact patterns involving surviving spouses and former spouses of deceased participants. See Boggs v. Boggs, 520 U.S. 833, 843 [117 S.Ct. 1754, 138 L.Ed.2d 45] (1997); Egelhoff v. Egelhoff, 532 U.S. 141 [121 S.Ct. 1322, 149 L.Ed.2d 264] (2001); Lasche v. Lasche Profit Sharing Plan, 111 F.3d 863 (11th Cir.1997).

However, this court is constrained in the interpretation and applicability of a federal statute to follow decisions of our Third Circuit. Werner v. Plater-Zyberk, (Pa.Super.2002)[, appeal denied, 806 A.2d 862 (Pa.2002) ]. Accordingly, this court holds that the waiver of Husband's pension and 401(k) plans is invalid and those assets are exposed to equitable distribution under the Divorce Code.

Trial Court Opinion, 5/2/02, at 2-3.

¶ 7 Finally, a hearing was held on April 2, 2003. Although no testimony was taken, the parties submitted various documents, including a fee certification from Wife's attorney in the amount of $72,850, with a later amendment that brought the fee total up to $78,475. However, before the trial court issued a final order in the matter, this Court filed an opinion that appeared to directly impact the decision here. See Sabad v. Fessenden, 825 A.2d 682 (Pa.Super.2003).⁵ As a result, the trial court requested briefs from the parties, discussing the impact of the Sabad decision on the instant case. The trial court, with reliance on Sabad, then vacated its May 2, 2002 order that invalided Wife's waiver, and ordered instead that the parties' PSA "shall control the disposition of the economic claims of the parties except for [Wife's] survivorship interest in [Husband's] pension plan...." Trial Court Order, 6/25/03 (RR at 352). Specifically, the court denied Wife's claim for equitable distribution of the marital portion of Husband's pension and 401(k) plans, but awarded Wife "100 percent of her survivor benefits to [Husband's] pension plan...." Id. Additionally, the court awarded counsel fees to Wife in the sum of $20,000.

¶ 8 Wife now appeals to this Court and raises the following issues for our review:

A. Did the court below err as a matter of law when it decreed "the agreement of the parties entered February 24, 1988 shall control the disposition of the economic claims of the parties except for [Wife's] survivorship interest in [Husband's] pension plan and counsel fees that were not waived," thereby overruling a prior federal court order voiding any waiver, and denying [W]ife's claim for equitable distribution of the marital portion of [H]usband's ERISA qualified pension plans?

B. Did the court below err in failing to recognize the supremacy clause of the United States Constitution by ignoring the applicability of federal law to qualified pension plans?

C. Did the court below err in not recognizing the federal court order as res judicata?

D. Did the court below err in considering a Palladino type credit of a 50% survivorship interest, because as a matter of fact and law, Palladino does not apply to this case?

E. Did the court below err as a matter of law, and abuse its discretion, by not awarding reasonable counsel fees, expenses, expert fees, and costs of suit?

Wife's brief at 4.

¶ 9 Husband filed a...