In re Marriage of Wherrell, 86,791.

Decision Date06 December 2002
Docket NumberNo. 86,791.,86,791.
Citation274 Kan. 984,58 P.3d 734
PartiesIn the Matter of the Marriage of DEBORAH S. WHERRELL, Appellee, and WESLEY R. WHERRELL, Appellant.
CourtKansas Supreme Court

Frank D. Taff, of Topeka, argued the cause and was on the brief for appellant.

Chris R. Davis, of Phelps, Chartered, of Topeka, argued the cause and was on the brief for appellee.

The opinion of the court was delivered by

LOCKETT, J.:

This case comes before the court on a petition for review pursuant to K.S.A. 20-3018(c). Based upon the terms of the journal entry of divorce, the district court awarded ex-wife 50 percent of the military severance pay received by her ex-husband, plus prejudgment interest. Ex-husband appealed, contending the military severance pay was a disability benefit, not a retirement benefit subject to division. Ex-wife asserted the district court was correct in finding she (1) was entitled to 50 percent of the military severance pay; (2) was entitled to prejudgment interest; and (3) was entitled to relief under K.S.A. 60-260(b)(6). The Court of Appeals determined the severance pay was an indivisible disability benefit and reversed the district court. In 1976, appellant Wesley Wherrell enlisted in the United States Navy. Appellee Deborah Wherrell and Wesley were married in October of 1976. In July 1994, Wesley was found fit for only limited duty as a result of interstitial pneumonitis (a respiratory disease), which was directly related to his military service. After a review by the Record Review Panel of the Navy Physical Evaluation Board in March 1995, Wesley was placed on the "Temporary Disability Retired List" (TDRL). Wesley had been diagnosed with desquamative interstitial pneumonitis and given a 30 percent disability rating. In July 1995 and in response to Wesley's compensation claim, the Department of Veterans' Affairs (VA) assigned Wesley a 10 percent disability rating because of his condition. The VA informed Wesley that he was entitled to $89 per month as compensation for his disability.

After nearly 22 years of marriage, Deborah filed for divorce in May 1998. The divorce was finalized on August 18, 1998. The agreed-upon journal entry of divorce contained the following provision regarding Wesley's military retirement:

"6. That petitioner [Deborah] should be awarded fifty percent (50%) of the disposable retired or retainer pay otherwise payable to respondent due to his military service; and that a qualified domestic relations order should be issued to the payor of such retired or retainer pay pursuant to the Uniformed Services Former Spouses' Protection Act, 10 U.S.C. [§1401 et seq.], as amended, to effect such award."

The journal entry of divorce also provided that Deborah waived any potential right to maintenance. The waiver of maintenance was the result of Wesley agreeing to give Deborah 50 percent of his retirement or retainer pay. From the record, it appears that at the time of the divorce Wesley was receiving $795.51 per month in military retirement and $94 per month in disability. From August 1998 until October 1999, Wesley paid Deborah 50 percent of his retirement pay.

By letter dated October 12, 1999, Wesley was notified that he had been removed from the TDRL and "discharged from the naval service by reason of physical disability with severance pay effective 28 September 1999." Wesley then informed Deborah that she would not receive additional payments because he was no longer receiving military retirement pay.

In August 2000, Deborah discovered a 1099-R addressed to Wesley from the Defense Finance and Accounting Center dated December 16, 1999. The 1099-R reported a gross distribution of $60,910.15. Federal income tax withheld was reported as $15,100.39.

On August 25, 2001, Deborah filed a motion to enforce paragraph six of the journal entry of divorce. Deborah alleged she was entitled to 50 percent of the $60,910.15. Wesley responded, contending Deborah was not entitled to this money because it was indivisible disability severance pay.

After a hearing, the district court found that Wesley had received a lump sum retirement benefit totaling $57,000 rather than $60,910.15 as Deborah alleged. The district court awarded Deborah $21,435 plus prejudgment interest at 10 percent per annum from November 1999.

Wesley filed a motion for amendment of the judgment or for additional findings and amendment of the judgment, contending the district court's award of prejudgment interest was erroneous and that the specific grounds for awarding prejudgment interest were required to be stated. The district court denied the motion. Wesley filed a timely notice of appeal. Deborah did not file a cross-appeal; therefore, the district court's determination as to the amount of the lump sum stands.

The Court of Appeals found that because Wesley was not eligible to retire from the Navy, the district court had incorrectly decided that the lump sum received by Wesley was a divisible military retirement benefit. It then determined that the payment was a disability severance benefit and reversed the district court. In the Matter of the Marriage of Wherrell, 30 Kan. App.2d 166, 38 P.3d 753 (2002). This court granted Deborah's petition for review.

We note that the district court is vested with broad discretion in adjusting the property rights of parties involved in divorce actions and that the exercise of that discretion will not be disturbed on appeal absent a clear showing of abuse. In re Marriage of Sadecki, 250 Kan. 5, 8, 825 P.2d 108 (1992); Powell v. Powell, 231 Kan. 456, 459, 648 P.2d 218 (1982). The Court of Appeals cited and used this standard in reviewing the district court's decision. Wherrell,30 Kan. App.2d at 167.

The question of whether the lump sum payment to Wesley was divisible military retirement or indivisible military disability determines whether the district court had jurisdiction to order the division of the payment pursuant to the journal entry of divorce. The existence of jurisdiction is a question of law over which this court's scope of review is unlimited. Cypress Media, Inc. v. City of Overland Park, 268 Kan. 407, 414, 997 P.2d 681 (2000). Thus, the answer involves a mixed question of law and fact. Where a court reviews a mixed question of law and fact, it applies the substantial competent evidence test to the factual findings and determines by unlimited review whether the findings support the legal conclusions. State Bd. of Nursing v. Ruebke, 259 Kan. 599, 611, 913 P.2d 142 (1996).

In 1982, Congress enacted the Uniformed Services Former Spouses' Protection Act (USFSPA), 10 U.S.C. §1408 (2000). The USFSPA was enacted in response to the decision in McCarty v. McCarty, 453 U.S. 210, 69 L. Ed.2d 589, 101 S. Ct. 2728 (1981), in which the United States Supreme Court precluded state courts from ordering the distribution of any military retirement pay to a former spouse. Mansell v. Mansell, 490 U.S. 581, 584, 104 L. Ed. 2d 675, 109 S. Ct. 2023 (1989). The USFSPA authorizes state courts to treat "disposable retired" or "retainer" pay as either the sole property of the member or former member of the armed forces or the joint property of the member and his spouse in accordance with the law of the jurisdiction. See 10 U.S.C. § 1408(a)(7) and (c)(1).

In Mansell, the United States Supreme Court was faced with determining whether the state courts had the authority under the USFSPA to divide up total military retired pay when the retiree waived a portion of the retired pay in order to receive veterans' disability benefits. The Court decided in the negative, relying upon the USFSPA's specific exemption of amounts deducted from retired pay in order to receive compensation under Title 38 of the United States Code (Veterans' Benefits) from the definition of "disposable retired pay." 490 U.S. at 589.

In arriving at its decision, the Mansell Court noted that for the purpose of avoiding double payment, a military retiree is required to waive a corresponding amount of his or her military retirement in order to receive veterans' disability benefits. 490 U.S. at 583. See 38 U.S.C. § 5305 (2000) (previously 38 U.S.C. § 3105). Because disability benefits are exempt from taxation resulting in higher after-tax income for retirees, the Court also noted that waivers are common. 490 U.S. at 583-84. See 38 U.S.C. § 5301(a) (2000) (previously 38 U.S.C. § 3101[a]).

Our Court of Appeals addressed a similar issue in In the Matter of the Marriage of Pierce, 26 Kan. App.2d 236, 982 P.2d 995, rev. denied 268 Kan. 887 (1999). The Pierce court was faced with determining whether the petitioner was entitled to a share of her exhusband's military retirement benefits under a divorce settlement agreement when the benefits were subsequently converted into disability benefits. The petitioner requested that the district court either compel her ex-husband to reinstate his military retirement or order him to pay the amount she would have received if the benefits were still classified as retirement benefits. The district court refused to grant the petitioner's request. The ex-wife appealed.

The Pierce court, relying upon the United States Supreme Court's decision in Mansell, held:

"Mansell makes it perfectly clear that the state trial courts have no jurisdiction over disability benefits received by a veteran. The trial court in this case cannot order [respondent] to change the payments back to retirement benefits, and it cannot order him to pay his disability benefits to [petitioner]. We conclude the court may not do indirectly what it cannot do directly." 26 Kan. App.2d at 240.

In this action, the district court noted In re Marriage of Pierce and determined that Pierce did not apply because Pierce involved the division of veterans' disability benefits and Wesley had not received veterans' disability benefits. The district court concluded:

"In this instance, Mr. Wherrell has not waived military retirement pay in
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