Howell v. Howell

• Decision Date: 15 May 2017
• Docket Number: No. 15–1031.,15–1031.
• Parties: John HOWELL, Petitioner v. Sandra HOWELL.
• Court: U.S. Supreme Court

137 S.Ct. 1400

197 L.Ed.2d 781

John HOWELL, Petitioner

v.Sandra HOWELL.

No. 15–1031.

Supreme Court of the United States

Argued March 20, 2017.

Decided May 15, 2017.

Adam G. Unikowsky, Washington, DC, for Petitioner.

Charles W. Wirken, Phoenix, AZ, for Respondent.

Ilana H. Eisenstein, for the United States as amicus curiae, by special leave of the Court, supporting the respondent.

Keith Berkshire, Berkshire Law Office, Phoenix, AZ, Adam G. Unikowsky, Emma P. Simson, Jenner & Block LLP, Washington, DC, for Petitioner.

Charles W. Wirken, Gust Rosenfeld, PLC, Phoenix, AZ, for Respondent.

Justice BREYER delivered the opinion of the Court.

A federal statute provides that a State may treat as community property, and divide at divorce, a military veteran's retirement pay. See 10 U.S.C. § 1408(c)(1). The statute, however, exempts from this grant of permission any amount that the Government deducts "as a result of a waiver" that the veteran must make "in order to receive" disability benefits. § 1408(a)(4)(B). We have held that a State cannot treat as community property, and divide at divorce, this portion (the waived portion) of the veteran's retirement pay. See Mansell v. Mansell, 490 U.S. 581, 594–595, 109 S.Ct. 2023, 104 L.Ed.2d 675 (1989).

In this case a State treated as community property and awarded to a veteran's spouse upon divorce a portion of the veteran's total retirement pay. Long after the divorce, the veteran waived a share of the retirement pay in order to receive nontaxable disability benefits from the Federal Government instead. Can the State subsequently increase, pro rata, the amount the divorced spouse receives each month from the veteran's retirement pay in order to indemnify the divorced spouse for the loss caused by the veteran's waiver? The question is complicated, but the answer is not. Our cases and the statute make clear that the answer to the indemnification question is "no."

I

A

The Federal Government has long provided retirement pay to those veterans who have retired from the Armed Forces after serving, e.g., 20 years or more. It also provides disabled members of the Armed Forces with disability benefits. In order to prevent double counting, however, federal law typically insists that, to receive disability benefits, a retired veteran must give up an equivalent amount of retirement pay. And, since retirement pay is taxable while disability benefits are not, the veteran often elects to waive retirement pay in order to receive disability benefits. See 10 U.S.C. § 3911 et seq. (Army retirement benefits); § 6321 et seq. (Navy and Marines retirement benefits); § 8911 et seq. (Air Force retirement benefits); 38 U.S.C. § 5305 (requiring a waiver to receive disability benefits); § 5301(a)(1) (exempting disability benefits from taxation). See generally McCarty v. McCarty, 453 U.S. 210, 211–215, 101 S.Ct. 2728, 69 L.Ed.2d 589 (1981) (describing the military's nondisability retirement system).

In 1981 we considered federal military retirement pay alone, i.e., not in the context of pay waived to receive disability benefits. The question was whether a State could consider any of a veteran's retirement pay to be a form of community property, divisible at divorce. The Court concluded that the States could not. See McCarty, supra . We noted that the relevant legislative history referred to military retirement pay as a " ‘personal entitlement.’ " Id., at 224, 101 S.Ct. 2728. We added that other language in the statute as well as its history made "clear that Congress intended that military retired pay ‘actually reach the beneficiary.’ " Id., at 228, 101 S.Ct. 2728. We found a "conflict between the terms of the federal retirement statutes and the [state-conferred] community property right." Id., at 232, 101 S.Ct. 2728. And we concluded that the division of military retirement pay by the States threatened to harm clear and substantial federal interests. Hence federal law pre-empted the state law. Id., at 235, 101 S.Ct. 2728.

In 1982 Congress responded by passing the Uniformed Services Former Spouses' Protection Act, 10 U.S.C. § 1408. Congress wrote that a State may treat veterans' "disposable retired pay" as divisible property, i.e., community property divisible upon divorce. § 1408(c)(1). But the new Act expressly excluded from its definition of "disposable retired pay" amounts deducted from that pay "as a result of a waiver ... required by law in order to receive" disability benefits. § 1408(a)(4)(B). (A recent amendment to the statute renumbered the waiver provision. It now appears at § 1408(a)(4)(A)(ii). See Pub.L. 114–328, § 641(a), 130 Stat. 2164. )

In 1989 we interpreted the new federal language in Mansell, 490 U.S. 581, 109 S.Ct. 2023, 104 L.Ed.2d 675. Major Gerald E. Mansell and his wife had divorced in California. At the time of the divorce, they entered into a "property settlement which provided, in part, that Major Mansell would pay Mrs. Mansell 50 percent of his total military retirement pay, including that portion of retirement pay waived so that Major Mansell could receive disability benefits." Id., at 586, 109 S.Ct. 2023. The divorce decree incorporated this settlement and permitted the division. Major Mansell later moved to modify the decree so that it would omit the portion of the retirement pay that he had waived. The California courts refused to do so. But this Court reversed. It held that federal law forbade California from treating the waived portion as community property divisible at divorce.

Justice Thurgood Marshall, writing for the Court, pointed out that federal law, as construed in McCarty, "completely pre-empted the application of state community property law to military retirement pay."

490 U.S., at 588, 109 S.Ct. 2023. He noted that Congress could "overcome" this pre-emption "by enacting an affirmative grant of authority giving the States the power to treat military retirement pay as community property." Ibid. He recognized that Congress, with its new Act, had done that, but only to a limited extent. The Act provided a "precise and limited" grant of the power to divide federal military retirement pay. Ibid. It did not "gran[t]" the States "the authority to treat total retired pay as community property." Id., at 589, 109 S.Ct. 2023. Rather, Congress excluded from its grant of authority the disability-related waived portion of military retirement pay. Hence, in respect to the waived portion of retirement pay, McCarty, with its rule of federal pre-emption, still applies. Ibid.

B

John Howell, the petitioner, and Sandra Howell, the respondent, were divorced in 1991, while John was serving in the Air Force. Anticipating John's eventual retirement, the divorce decree treated John's future retirement pay as community property. It awarded Sandra "as her sole and separate property FIFTY PERCENT (50%) of [John's] military retirement when it begins." App. to Pet. for Cert. 41a. It also ordered John to pay child support of $585 per month and spousal maintenance of $150 per month until the time of John's retirement.

In 1992 John retired from the Air Force and began to receive military retirement pay, half of which went to Sandra. About 13 years later the Department of Veterans Affairs found that John was 20% disabled due to a service-related shoulder injury. John elected to receive disability benefits and consequently had to waive about $250 per month of the roughly $1,500 of military retirement pay he shared with Sandra. Doing so reduced the amount of retirement pay that he and Sandra received by about $125 per month each. In re Marriage of Howell, 238 Ariz. 407, 408, 361 P.3d 936, 937 (2015)

Sandra then asked the Arizona family court to enforce the original decree, in effect restoring the value of her share of John's total retirement pay. The court held that the original divorce decree had given Sandra a "vested" interest in the prewaiver amount of that pay, and ordered John to ensure that Sandra "receive her full 50% of the military retirement without regard for the disability." App. to Pet. for Cert. 28a.

The Arizona Supreme Court affirmed the family court's decision. See 238 Ariz. 407, 361 P.3d 936. It asked whether the family court could "order John to indemnify Sandra for the reduction" of her share of John's military retirement pay. Id., at 409, 361 P.3d, at 938. It wrote that the family court order did not "divide" John's waived military retirement pay, the order did not require John "to rescind" his waiver, nor did the order "direct him to pay any amount to Sandra from his disability pay." Id., at 410, 361 P.3d, at 939. Rather the family court simply ordered John to "reimburse" Sandra for "reducing ... her share" of military retirement pay. Ibid . The high court concluded that because John had made his waiver after, rather than before, the family court divided his military retirement pay, our decision in Mansell did not control the case, and thus federal law did not preempt the family court's reimbursement order. 238 Ariz., at 410, 361 P.3d, at 939.

Because different state courts have come to different conclusions on the matter, we granted John Howell's petition for certiorari. Compare Glover v. Ranney, 314 P.3d 535, 539–540 (Alaska 2013) ; Krapf v. Krapf, 439 Mass. 97, 106–107, 786 N.E.2d 318, 325–326 (2003) ; and Johnson v. Johnson, 37 S.W.3d 892, 897–898 (Tenn.2001), with Mallard v. Burkart, 95 So.3d 1264, 1269–1272 (Miss.2012) ; and Youngbluth v. Youngbluth, 2010 VT 40, 188 Vt. 53, 62–65, 6 A.3d 677, 682–685.

II

This Court's decision in Mansell determines the outcome here. In Mansell, the Court held that federal law completely pre-empts the States from treating waived military retirement pay as divisible community property. 490 U.S., at 594–595, 109 S.Ct. 2023. Yet that which federal law pre-empts is just what the Arizona family court did here. App. to Pet. for Cert. 28a, 35a (finding that the divorce decree gave Sandra a "vested" interest in John's retirement pay and ordering that Sandra receive...