In re Marriage of Mugge

• Decision Date: 13 February 2003
• Docket Number: No. 01CA2159.,01CA2159.
• Citation: 66 P.3d 207
• Parties: In re the MARRIAGE OF Rebecca J. MUGGE, Appellant, and Mark A. Mugge, Appellee.
• Court: Colorado Court of Appeals

66 P.3d 207

In re the MARRIAGE OF Rebecca J. MUGGE, Appellant, and

Mark A. Mugge, Appellee.

No. 01CA2159.

Colorado Court of Appeals, Div. V.

February 13, 2003.

Jeffrey W. Ludwig, Highlands Ranch, for Appellant.

Martin D. Brown, PLLC, Martin D. Brown, Littleton, for Appellee.

Opinion by Judge WEBB.

In this post-dissolution of marriage proceeding, Rebecca J. Mugge (mother) appeals from the trial court's order modifying the child support obligation of Mark A. Mugge (father). This appeal concerns the exclusion of father's special early retirement benefit from the calculation of his gross income for child support purposes. We affirm.

The parties' marriage was dissolved by decree in 1999. The separation agreement required father to pay child support of $636.64 per month.

In 2001, mother filed a motion to modify that obligation, contending, as here relevant, that there had been a substantial and continuing change of circumstances regarding the parties' financial affairs resulting from father's receipt of a special early retirement benefit. She asserted this benefit should be included as gross income under the child support guidelines.

The parties agree that in 2000 father, then age 51, elected to participate in his employer's Voluntary Enhanced Retirement Program (VERP). Father's employer offered that election because it planned to close the facility where he worked, and the VERP enabled him to avoid the risk of a later layoff with fewer retirement benefits.

Father provided the employer with a general release of all claims relating to his employment and voluntarily retired, as required by the VERP. The employer then valued his account in its pension plan at $104,480.40, consisting of the then present value of his accrued normal retirement benefits plus a $64,172.90 special early retirement benefit.

The VERP benefit arose from recalculating father's normal retirement benefits by adding three years to his service and three years to his age. Father had no discretion over receiving the VERP benefit as a direct payment rather than a credit to his account in the pension plan.

Because he retired from the employer, however, father had to withdraw his account from the employer's pension plan. He could elect a lump sum distribution, roll over the entire account into another qualified pension plan, or begin receiving a monthly annuity. Father could not elect a lump sum or annuity payment of the VERP benefit while rolling over his accrued normal retirement benefits.

Father chose the rollover option, which deferred any income tax, because he believed it provided him the greatest financial benefit. Mother does not assert that this election was unreasonable or in bad faith.

Following an evidentiary hearing, the magistrate determined that inclusion of the VERP benefit would unfairly impact father, create adverse tax consequences for him, unnecessarily complicate the support computation, and conflict with the public policy favoring preparation for retirement. The magistrate further found that such inclusion would be inequitable, unjust, or inappropriate and therefore determined that a deviation from the guidelines was warranted. The magistrate then calculated father's support obligation without considering the enhanced benefit and reduced his support obligation to $514.61 per month.

Mother sought timely review from the trial court, which upheld the magistrate's order.

The trial court found the VERP benefit was not severance pay, noting that the benefit was not paid as a wage substitute while father looked for another job. The trial court also found the VERP benefit was not income, interpreting the reference to "pensions and retirement benefits" in the definition of "gross income" under § 14-10-115(7)(a)(I)(A), C.R.S.2002, as encompassing only those employer pension benefits paid out to an employee upon retirement, and not employer contributions to a pension plan.

The trial court concluded the magistrate correctly excluded the VERP benefit from the child support calculation. As to mother's claim that the magistrate erred in deviating from the guidelines without first establishing a presumed child support amount, the court concluded the issue was moot.

I. Gross Income

Mother contends the trial court erred as a matter of law in excluding the VERP benefit from gross income. We disagree.

For purposes of the child support guidelines, "gross income" means the actual gross income of a parent determined from any financial source. Section 14-10-115(7)(a)(I)(A); In re Marriage of Laughlin, 932 P.2d 858 (Colo.App.1997). The phrase "income from any source," as used in the statute, is to be broadly construed and includes "all payments from a financial resource, whatever the source thereof." In re Marriage of Armstrong, 831 P.2d 501, 502 (Colo.App.1992).

The statute identifies many income sources, among them "wages," "severance pay," and "pensions and retirement benefits, including but not limited to those paid pursuant to [various Colorado statutes]." It also provides that the list is not exclusive. However, the determination of income for child support purposes under the guidelines is not controlled by definitions of gross income used for federal or state income tax purposes. In re Marriage of Fain, 794 P.2d 1086 (Colo.App.1990).

In light of the statutory language, our resolution of mother's contention that the VERP benefit constitutes income for child support purposes requires that we answer four questions: first, is the VERP benefit severance pay; second, is the VERP benefit an employer contribution to pension and retirement benefits; third, should an undistributed employer contribution be treated as income; and fourth, does father's option to elect a lump sum distribution or monthly annuity payments of his retirement account, including the VERP benefit, mean that the VERP benefit should be credited as income?

A. Severance Pay

The record supports the trial court's finding that the VERP benefit was not severance pay because it was not merely a salary substitute while father searched for another job. The requirements that father voluntarily retire rather than be terminated and that he provide a general release of the employer distinguish the VERP from a typical severance pay program. See In re Marriage of Holmes, 841 P.2d 388 (Colo.App.1992).

Accordingly, we conclude the VERP benefit did not constitute severance pay includable within the statutory definition of gross income. See In re Marriage of Heupel, 936 P.2d 561 (Colo.1997) (military early retirement benefit not severance pay).

B. Contribution to Pension and Retirement Benefit

The record also supports the trial court's finding that the VERP benefit was an employer-contributed pension or retirement benefit. The employer denominated this benefit as a retirement benefit, credited the benefit to father's retirement account in its pension plan, and calculated the amount using age and years of service.

Early retirement programs "are meant to compensate for the loss of the right to receive retired pay in the future" and are not "compensation for lost future income." In re Marriage of Heupel, supra, 936 P.2d at 569, 571.

Hence, we conclude that the VERP benefit falls within the category of "pensions and retirement benefits" under § 14-10-115(7)(a)(I)(A).

C. Undistributed Employer Contribution

We next consider whether the VERP benefit constituted gross income under § 14-10-115(7)(a)(I)(A), before it was distributed to father. We conclude that it did not.

Whether an employer's contributions to pension or retirement benefits, not yet distributed to an employee, constitute gross income under the child support guidelines presents a statutory interpretation issue of first impression in Colorado.

Statutory interpretation is a question of law that we review de novo. Colo. State Bd. of Accountancy v. Paroske, 39 P.3d 1283 (Colo.App.2001). Our responsibility when interpreting a statute is to determine the General Assembly's intent. We begin with the language of the statute, People v. Cooper, 27 P.3d 348 (Colo.2001), which is afforded its ordinary and common meaning. Bd. of County Comm'rs v. Vail Assocs., Inc., 19 P.3d 1263 (Colo.2001).

We construe statutes as a whole, giving effect to every word. Bd. of County Comm'rs v. Vail Assocs., Inc., supra. Strained or forced constructions are disfavored. Martin v. Montezuma-Cortez Sch. Dist. RE-1, 841 P.2d 237 (Colo.1992).

Further, we presume that the General Assembly meant what it clearly said, Askew v. Indus. Claim Appeals Office, 927 P.2d 1333 (Colo.1996), and did not use language idly. See Colo. Ground Water Comm'n v. Eagle Peak Farms, Ltd., 919 P.2d 212 (Colo. 1996).

If statutory language is ambiguous, or if the statute appears to conflict with other provisions, we may look to extrinsic factors, such as prior law, the consequences of a given construction of a statute, the end to be achieved by the statute, and legislative history. Grant v. People, 48 P.3d 543 (Colo.2002); People v. Cooper, supra.

As originally enacted, § 14-10-115(7)(a)(I)(A) included "pensions" as gross income. In Brown v. Central City Opera House Ass'n, 36 Colo.App. 334, 336, 542 P.2d 86, 88 (1975), aff'd with modification, 191 Colo. 372, 553 P.2d 64 (1976), the division cited Webster's Third New International Dictionary to define "pension" in another context, adding that the term also "includes payments made regularly to any person even for current services."

"Pension" means "a fixed sum paid regularly to a person ... following his retirement from service" or "the portion of an employee's retirement income provided by the employer's contributions under a contributory plan." Webster's Third New International Dictionary 1671 (1976); see also Black's Law Dictionary 1155 (7th ed. 1999)("Pension" is "a fixed sum paid regularly to a person ... as a retirement benefit.").

In 1996, the General Assembly added to the definition of "pensions" the phrase, "and...