In re Marriage of Cranor
| Citation | 78 S.W.3d 150 |
| Decision Date | 25 April 2002 |
| Docket Number | No. 24125.,24125. |
| Parties | In re the MARRIAGE OF Larry Wayne CRANOR and Gay Nell Cranor. Larry Wayne Cranor, Respondent, v. Gay Nell Cranor, Appellant. |
| Court | Missouri Court of Appeals |
Greggory D. Groves, Lowther, Johnson, Joyner, Lowther, Cully & Housley, L.L.C., Springfield, for appellant.
Christina L. Kime, L. Dwayne Hackworth, Hackworth, Kime & Hackworth, Piedmont, for respondent.
In this dissolution of marriage case, Gay Nell Cranor (Wife) challenges the division of property acquired during her marriage to Larry Wayne Cranor (Husband) and the denial of her request for maintenance. On appeal, Wife raises two primary allegations of trial court error. First, she contends the trial court misapplied the law in characterizing Husband's disability retirement as non-marital property and failing to set aside a portion to her. In her second point, Wife challenges the sufficiency of the evidence to support the trial court's denial of her request for maintenance.
The parties were married June 1, 1969. Shortly thereafter, Husband was drafted by the army and served twelve months in Vietnam where he saw actual combat. As a result of his service in Vietnam, he was diagnosed with post-traumatic stress disorder. He suffers from depression, memory loss, and insomnia.
Husband returned to the United States in 1971. A short time later he began working for the United States Postal Service (USPS). Husband worked for USPS for twenty-seven years. During this time, Husband contributed approximately $45,000 to his retirement account through payroll deductions. Including his year of service in Vietnam, Husband has accumulated twenty-eight-and-a-half years of federal service. Husband and Wife were married during Husband's entire term of employment with USPS.
After thirty years of marriage, Husband and Wife separated in June of 1999. Husband filed a petition for dissolution of the marriage in July of 1999. Six months after Husband filed for dissolution, the United States Office of Personnel Management (OPM) approved Husband's application for disability retirement benefits. At this time, Husband was 50 years and six months old. OPM based its approval of Husband's disability retirement benefits on his diagnosis of post-traumatic stress disorder stemming from his year of service in Vietnam.
On July 19, 2000, the trial court held a hearing on Husband's petition for dissolution. The evidence showed that the primary marital asset was a three-bedroom home in which the parties had lived for approximately ten years. The home was valued at $78,000 to $80,000 with a debt against it of $12,316. At the time of the hearing, Wife was residing in the marital residence and Husband was residing in a rented apartment.
At that time, Husband was paying Wife $435 per month in support pursuant to a temporary order. Husband claimed his monthly income, including the funds received from his disability retirement, totaled $2,029.29. He maintained his monthly expenses totaled $2,431. Wife testified that she was employed as a nurse by Baptist Bible College Health Services. Her salary was $20,951 annually, or $1,419.66 each month. Wife contended that her reasonable expenses amounted to $1,855 per month. Wife argued she was entitled to maintenance because she could not meet her expenses through her employment.
After hearing the evidence, the trial court entered judgment on January 9, 2001. In its findings, the trial court concluded that Husband's disability retirement benefits were his non-marital property and therefore were not subject to division. The court noted that "the value of the non-marital property awarded to [Husband] does significantly impact the overall division of the marital property and debt" and awarded Wife the marital home.
After setting aside the parties' non-marital property and dividing the marital property, the trial court addressed Wife's request for maintenance. The court determined that Wife was only employed fulltime for the nine-month term of the school year and imputed income to Wife for the remaining three summer months. The court concluded that Wife was capable of being self-supporting and denied her request for maintenance.
Wife's first point contends that the trial court erred in dividing the marital property because it misclassified the disability retirement benefits as Husband's non-marital property. Wife maintains the trial court erroneously applied or declared the law when classifying the retirement benefits because the evidence showed that the retirement benefits were based upon contributions from marital funds and were intended to provide retirement support rather than to replace lost wages. Therefore, Wife contends the division of property was inequitable.
Appellate review of the classification of property in a dissolution action is governed by the principles set forth in Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). The trial court's judgment must be affirmed unless it is not supported by substantial evidence, it is against the weight of the evidence, or it erroneously declares or applies the law. In re Marriage of Thomas, 21 S.W.3d 168, 172-73 (Mo.App.2000).
Missouri follows an "analytical approach" to determine whether awards or benefits are properly classified as marital or non-marital property. Hudson v. Hudson, 865 S.W.2d 405, 407 (Mo.App.1993). Under this approach, the focus is on what the benefits are intended to replace. Pauley v. Pauley, 771 S.W.2d 105, 109 (Mo. App.1989). Therefore, "if disability payments are merely a substitute for earnings lost due to the recipient's inability to work, they are the same as post-dissolution earnings and are nonmarital property." Thomas, 21 S.W.3d at 173. Conversely, pension or retirement benefits that merely act as deferred compensation for past services are considered marital property to the extent they were acquired during the marriage. In re Marriage of Medlock, 749 S.W.2d 437, 441 (Mo.App.1988).
A federal service employee who becomes disabled may be entitled to benefits under either of two plans under the Civil Service Code, 5 U.S.C.A.1 Compensation for workplace injuries for postal employees is addressed in chapter 81 of 5 U.S.C.A. The amount of compensation for a workplace injury is based upon the degree, nature, and duration of the resulting disability. Compensation payments are made from the Employees' Compensation Fund, which is funded by Congress. 5 U.S.C.A § 8147. Husband's disability did not occur in the performance of his postal duties. Thus, chapter 81 of 5 U.S.C.A. does not apply.
However, chapter 83 of 5 U.S.C.A. governs the retirement of USPS employees, including those retiring based upon a disability. Husband qualified for disability retirement under this portion of the Civil Service Code. Under chapter 83, an eligible employee may opt for retirement benefits under one of three classifications: immediate retirement, deferred retirement, and disability retirement. There are separate requirements for the vesting of retirement benefits under each classification.
Immediate retirement covers numerous scenarios, each of which entitles a civil service employee to an annuity. For example, an employee who has completed 25 years of service or who has reached 50 years of age and has completed 20 years of service qualifies for immediate retirement and is entitled to an annuity. 5 U.S.C.A. § 8336(j)(1)(A)(i). A postal employee who has completed five years of service and has reached the age of 62 may opt for an annuity under deferred retirement if the employee is separated from the service or transferred to a position in which he does not continue. 5 U.S.C.A. § 8338(a). Finally, a postal employee may opt for disability retirement if the employee has completed five years of service and has become disabled. 5 U.S.C.A. § 8337(a).
Annuities for immediate, deferred, and disability retirement are all paid from the same fund. The fund, unlike the Employees' Compensation Fund, is financed primarily by contributions deducted from the employees' pay, as permitted by 5 U.S.C.A. § 8334. Husband contributed almost $45,000 to his retirement fund through payroll deductions.
Husband elected to retire under the "disability retirement" provisions of 5 U.S.C.A. § 8337. As such, Husband receives an annuity based on the highest average salary of any three-year period in which he was employed by the USPS. This calculation is the same regardless of which section triggers the benefits. Following this formula, OPM calculated his monthly disability retirement benefit to be $1,011.29
Both parties concede that Missouri courts have never addressed the issue of whether post-dissolution benefits from a federal civil service disability annuity are subject to distribution as marital property. The trial court ruled that Husband's disability retirement benefits were non-marital property because they are compensation for loss of future earning capacity rather than compensation for past services.
In support of its ruling, the court cited a letter from OPM, which stated that until Husband reaches the age of 60 he may be required to submit evidence to demonstrate that his disabling condition is ongoing. If Husband's condition is no longer disabling, his annuity payments will cease one year from the date of the medical examination on which the action is based.
The trial court also relied upon Hudson, 865 S.W.2d at 405, for the proposition that Husband's civil service disability retirement is properly classified as non-marital. In Hudson, the husband was a member of the Sprinkler Fitters Union and had two assets, a Supplemental Fund and a Pension Fund, both of which were administered by The National Automatic Sprinkler Union. Id. at 406. The benefits were a result of his employment with the Union. Id. He suffered a hernia injury and was unable to...
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