Imagnu v. Wodajo

• Decision Date: 01 September 1990
• Docket Number: No. 283,283
• Citation: 582 A.2d 590,85 Md.App. 208
• Parties: Yeshi E. IMAGNU v. Mulugeta M. WODAJO. ,
• Court: Court of Special Appeals of Maryland

Page 208

85 Md.App. 208

582 A.2d 590

Yeshi E. IMAGNU v. Mulugeta M. WODAJO.

No. 283, Sept. Term, 1990.

Court of Special Appeals of Maryland.

Dec. 4, 1990.

Marcia K. Docter (Docter & Docter, P.C., on brief), Washington, D.C., for appellant.

Philip J. Santa Maria (Santa Maria and Associates, Chtd., on brief), Gaithersburg, for appellee.

Argued before BLOOM, WENNER and FISCHER, JJ.

BLOOM, Judge.

The Circuit Court for Montgomery County granted Yeshi E. Imagnu (wife) an absolute divorce from Mulugeta M. Wodajo (husband). Both parties were dissatisfied with the monetary award granted to the wife: the wife asserts that the chancellor erred or abused his discretion in evaluating the husband's pension, which was a major item of marital property; the husband complains that the court abused its discretion in granting a monetary award that amounted to an equal division of marital property.

We agree with the wife's contention and will vacate that part of the judgment of divorce granting her a monetary award.

Facts

The parties were married on 5 May 1964, in Addis Ababa, Ethiopia. The husband moved to the United States in 1974 and was joined shortly thereafter by his wife and their children. Throughout the marriage, the wife was responsible for managing the household and caring for the personal needs of the husband and their two children, while the husband provided the financial support. At the time of the divorce proceeding, both children were emancipated. On or about 1 August 1983, the parties separated and lived apart continuously until 15 November 1989, at which time the trial court, having determined that the husband was responsible for the estrangement of the parties, granted the wife an absolute divorce. Pursuant to Md.Code (1984), Fam. Law Art. §§ 8-203 and 8-204, the court found the marital property to consist of the marital home in Bethesda, Maryland valued at $265,000; the jointly owned furniture, valued at $2,500; and the husband's pension from the World Bank. ¹

In valuing the husband's pension, the chancellor chose to assign a value equal to the husband's contributions to the pension plus interest thereon to the date of the divorce. Thus computed, the pension was assigned a value of $122,936.87. The chancellor rejected, as speculative and inequitable, the testimony of the wife's expert witness, an economist, who opined that the present value of the husband's pension benefits was $429,131. The wife was awarded alimony of $1,200 per month for six years and attorney's fees of $10,500. The court ordered that the jointly owned home and furniture be sold and the proceeds divided equally between the parties. Finally, the wife was granted a monetary award of $61,468.44, amounting to one-half of the amount at which the husband's pension was valued.

I

There is, of course, no dispute as to whether pensions or retirement benefits that accrue during a marriage constitute marital property under Md.Code (1984), Fam. Law Art. § 8-201(e). That they are is well established. Deering v. Deering, 292 Md. 115, 437 A.2d 883 (1981); Gravenstine v. Gravenstine, 58 Md.App. 158, 168, 472 A.2d 1001 (1984). It is the method adopted by the chancellor to value that property which is being challenged.

In Ohm v. Ohm, 49 Md.App. 392, 405-06, 431 A.2d 1371 (1981), we recognized that

the problem of valuing and distributing pension benefits to be paid in the future is a difficult one and has not proved susceptible to the imposition of rigid rules. Rather the courts have generally held that a flexible approach is necessary, so as to accommodate the circumstances presented by each individual case.

The Court of Appeals, in Deering v. Deering, supra, after noting the difficulty inherent in valuing a pension and considering the need for flexibility in this process, stated:

It is thus apparent that an elastic approach to this problem is required, ..., and it is equally clear that [Md.Code (1984), Fam. Law Art. § 8-205] provides the chancellor in this State with the necessary flexibility to fairly devise a marital property adjustment. Although the law commands the trial court both to "determine which property is marital property," if its division is an issue, and to "determine the value of all [such] marital property," the enactment further provides that, "after making the [required] determination, the court may grant a monetary award as an adjustment of the equities and rights of the parties concerning marital property ..." .... Moreover, the amount, if any, of the monetary award and its method of payment is to be fixed by the trial court after its evaluation of several enumerated considerations, including "[s]uch other factors as the court deems necessary or appropriate to consider in order to arrive at a fair and equitable monetary award."

292 Md. at 129-30, 437 A.2d 883.

The Court in Deering then addressed the alternatives available to trial courts in allocating retirement benefits between the parties and approved the approach taken by the Wisconsin Supreme Court in Bloomer v. Bloomer, 84 Wis.2d 124, 267 N.W.2d 235 (1978). Bloomer discussed three methods of pension valuation. The first method is to place a value on the pension equal to the employee's contributions to it plus accrued interest thereon. The second method requires an assessment of the present value of the future benefits expected to be received by the employee after he retires. That method involves some degree of actuarial speculation. Benefits payable in the future must be discounted for future accrual of interest, with considerable uncertainty as to future interest rates. Whether the employee will ever actually receive retirement benefits depends upon his survival to retirement age. Subject to such guarantees as are afforded under ERISA, ² the eventual receipt of pension benefits may depend upon the solvency of the employer and on the continued existence of the pension plan at the time the employee reaches retirement age. Assuming that the employee continues to work until he retires and the fund is solvent, how much he eventually will receive in benefits will depend upon how long he survives after retiring. The value of what he does receive will be affected by inflationary factors impossible to predict with any degree of certainty. Nevertheless, a present value can be placed upon a contingent future annuity, based upon statistical data and actuarial experience. The third method discussed in Bloomer and Deering involves the determination of a fixed percentage for the nonemployee-spouse of any future retirement payments received by the employee-spouse, payable "as, if, and when" received. Bloomer, 84 Wis.2d at 135, 136, 267 N.W.2d 235; Deering, 292 Md. at 130-31, 437 A.2d 883. Adoption of that method does not eliminate the need to assign a value to the pension, Fam. Law Art., § 8-204, but as a practical matter it nullifies any risk of error in the evaluation.

The Court of Appeals, in Deering, concluded that any one of those three methods

may be the proper one for the trial courts of this State to take. And whether any particular option represents an appropriate exercise of discretion depends, of necessity, upon the circumstances of the individual case. In this regard, we point out that [Md.Code (1984), Fam.Law Art. § 8-205] does not require an equal division of marital property, nor does it contemplate a decretal award which is so harsh as to force a wage earner spouse to liquidate his or her pension interest in order to satisfy it.

292 Md. at 131, 437 A.2d 883.

In Grant v. Zich, 53 Md.App. 610, 456 A.2d 75 (1983), aff'd, 300 Md. 256, 477 A.2d 1163 (1984), we relied on Ohm v. Ohm, supra, and Deering, in holding that the chancellor did not abuse his discretion in measuring the extent of pension benefits accrued during the marriage in accordance with the value of the husband's contributions to the fund during that period. Further, we found no error in the chancellor's failure to consider other methods of valuation or in his decision to award the wife a portion of the contributions payable without interest when the husband retired. 53 Md.App. at 619-20, 456 A.2d 75. The chancellor's decision to employ the contributions method was justified in that the only evidence as to the value of the pension that was before the court related to the husband's contributions. We refused to require the chancellor to consider other methods of valuation, for which no evidence was presented, and noted that

the three approaches outlined in Deering were not intended to be mandatory rules or inflexible formulae. Rather, they were presented as examples. As the court said, "any of the just articulated approaches may represent the proper one for the trial courts of this State to take...." 292 Md. at 131, 437 A.2d at 892. This language does not require a chancellor to follow precisely any method of evaluation nor does it preclude him from adopting some other method.

53 Md.App. at 620, 456 A.2d 75.

The principles outlined in Grant and Deering have long been accepted by the Court of Appeals and this Court. Both courts have consistently shown great respect for the judgments of trial courts in choosing methods for valuing pension benefits in divorce proceedings. See Lookingbill v. Lookingbill, 301 Md. 283, 483 A.2d 1 (1984); Williams v. Williams, 71 Md.App. 22, 523 A.2d 1025 (1987); Rosenberg v. Rosenberg, 64 Md.App. 487, 497 A.2d 485, cert. denied 305 Md. 107, 501 A.2d 845 (1985); Harman v. Harman, 61 Md.App. 554, 487 A.2d 689 (1985); Nisos v. Nisos, 60 Md.App. 368, 483 A.2d 97 (1984); Bangs v. Bangs, 59 Md.App. 350, 475 A.2d 1214 (1984); Barr v. Barr, 58 Md.App. 569, 473 A.2d 1300 (1984); Cotter v. Cotter, 58 Md.App. 529, 473 A.2d 970 (1984). Heretofore, neither this Court nor the Court of Appeals has ever required a trial court to utilize a particular method of pension valuation.

In Cotter v. Cotter, supra, the husband challenged the use of the present value method, arguing that the...