Johnson v. Johnson

• Decision Date: 26 January 2012
• Docket Number: No. 20100705–CA.,20100705–CA.
• Citation: 700 Utah Adv. Rep. 55,270 P.3d 556,2012 UT App 22
• Parties: Mark Lawrence JOHNSON, Petitioner and Appellant, v. Elizabeth Ann JOHNSON nka Elizabeth Ann Zoric, Respondent and Appellee.
• Court: Utah Court of Appeals

2012 UT App 22
270 P.3d 556
700 Utah Adv. Rep. 55

Mark Lawrence JOHNSON, Petitioner and Appellant,
v.
Elizabeth Ann JOHNSON nka Elizabeth Ann Zoric, Respondent and Appellee.

No. 20100705–CA.

Court of Appeals of Utah.

Jan. 26, 2012.

[270 P.3d 558]

Raymond B. Rounds, Ogden, for Appellant.

Bryce M. Froerer, Ogden, for Appellee.

Before Judges VOROS, DAVIS, and CHRISTIANSEN.OPINION VOROS, Associate Presiding Judge:

¶ 1 This appeal involves the allocation of the military retirement benefit of an employee spouse pursuant to a 1984 divorce decree. Mark Lawrence Johnson, a retiree from the United States Air Force, seeks review of the amount of his military retirement the trial court awarded to his ex-wife, Elizabeth Ann Zoric. We affirm in part, reverse in part, and remand for further proceedings.

BACKGROUND

¶ 2 Johnson and Zoric were married from 1974 to 1984.¹ They had two children together. During the marriage, Johnson accrued approximately ten years of service in the United States Air Force. At the time of the divorce, Johnson was a Staff Sergeant at a pay grade of E–5. In the divorce decree, the trial court awarded Zoric one-half of ten years of Johnson's military retirement. Because Johnson's retirement had yet to vest, the trial court did not determine a specific amount owed to Zoric.

¶ 3 In 1998, Zoric made an attempt to claim her portion of Johnson's retirement; however, the retirement office denied her application on the ground that the court order she submitted lacked specificity. Thereafter, Zoric allegedly made statements to the parties' adult son to the effect that she was not intending to seek her portion of Johnson's retirement. According to Johnson, the son conveyed those statements to Johnson and, as a result, he “made substantial changes in his life financially.”

¶ 4 In 1999, Johnson retired and began receiving military retirement benefits. At that time he was a Master Sergeant at a pay grade of E–7. His military pension was thus calculated based on a pay grade of E–7. In September 2000, Johnson received a veteran's disability award for various ailments that arose after the divorce. Johnson's final retirement benefit was reduced by amounts Johnson received under that award.

¶ 5 Zoric next attempted to secure her portion of Johnson's military retirement in October 2008, when she filed a Qualified Domestic Relations Order (QDRO).² In keeping with the 1984 divorce decree, the trial court awarded Zoric a share of Johnson's actual monthly military retirement benefit. The court calculated her share based on Johnson's actual retirement benefit, which was based on Johnson's salary at the time of retirement, less the disability reduction. The trial court also calculated Zoric's share based on Johnson's gross monthly retirement benefit without first deducting federal, state, and local taxes. However, the trial court determined that the doctrine of laches barred Zoric from recovering her share of any retirement benefits paid before she filed the QDRO.

ISSUES AND STANDARDS OF REVIEW

¶ 6 Johnson first contends that the trial court erred by calculating Zoric's share of the retirement benefit using his pay grade at the time of retirement instead of his pay grade at the time of divorce. “A trial court has considerable discretion considering property [division] in a divorce proceeding, thus

[270 P.3d 559]

its actions enjoy a presumption of validity. We will disturb the trial court's division only if there is a misunderstanding or misapplication of the law such that a manifest injustice or inequity results, indicating an abuse of discretion.” Oliekan v. Oliekan, 2006 UT App 405, ¶ 16, 147 P.3d 464 (applying this standard of review to distribution of a retirement benefit) (citation and internal quotation marks omitted).

¶ 7 Johnson next contends that the trial court erred by calculating Zoric's share of the retirement benefit based on his gross retirement pay rather than first deducting federal and state taxes. This contention presents a question of law, which we review for correctness. See Maxwell v. Maxwell, 796 P.2d 403, 404 (Utah Ct.App.1990).

¶ 8 Johnson next contends that Zoric's claim is barred by the applicable statute of limitations. The application of a statute of limitations is a question of law, reviewed for correctness. See Nolan v. Hoopiiaina (In re Hoopiiaina Trust), 2006 UT 53, ¶ 19, 144 P.3d 1129.

¶ 9 Finally, Johnson contends that Zoric's claim is barred by the common law doctrines of estoppel, waiver, and laches. These issues present mixed questions of law and fact. See United Park City Mines Co. v. Stichting Mayflower Mountain Fonds, 2006 UT 35, ¶ 21, 140 P.3d 1200; Nunley v. Westates Casing Servs., Inc., 1999 UT 100, ¶ 31, 989 P.2d 1077; Anderson v. Doms, 1999 UT App 207, ¶ 8, 984 P.2d 392. We review the trial court's legal conclusions for correctness and its factual findings for clear error. See United Park City Mines Co., 2006 UT 35, ¶ 21, 140 P.3d 1200; Nunley, 1999 UT 100, ¶ 31, 989 P.2d 1077; Anderson, 1999 UT App 207, ¶ 8, 984 P.2d 392.

ANALYSIS I. Retirement Calculation: Pay Grade

¶ 10 Johnson contends that the trial court erred in calculating Zoric's share of his retirement benefit based on Johnson's pay grade at the time of retirement rather than his pay grade at the time of the divorce.

¶ 11 An employee spouse's retirement benefits are subject to equitable distribution in a divorce proceeding, provided that the benefits “accrued in whole or in part during the marriage.” Woodward v. Woodward, 656 P.2d 431, 433 (Utah 1982). Where the benefits accrued in part during the marriage, the nonemployee spouse's share is calculated using what is commonly known as the time rule formula. See In re Marriage of Hunt, 909 P.2d 525, 531 (Colo.1995). The time rule formula employs a “marital fraction” to calculate the nonemployee spouse's interest in the employee spouse's pension benefit:

The marital fraction consists of the numerator[,] which is the number of years (or months if more accurate) that the employee spouse has earned towards the pension during the marriage, over the denominator, which is the number of years (or months if more accurate) of total service towards the pension. The marital fraction is multiplied times the monthly benefit and divided in half (in order to divide the marital portion of the pension benefits).

Id.

¶ 12 Utah's version of the time rule formula was explained in Woodward v. Woodward, 656 P.2d 431 (Utah 1982). In Woodward, the husband accrued fifteen years towards his government pension during the parties' marriage, but the parties divorced before the husband's pension had fully vested. See id. at 431–32. The husband needed to work thirty years to qualify for a government contribution to his pension, which would be made at the time the husband retired, at least fifteen years after the divorce. See id. at 432. The issue was whether the amount of the husband's pension that would be contributed by the government at his retirement was a marital asset and thus apportionable by the trial court at the time of the divorce. See id. at 431–32. Much like the argument advanced by Johnson in the instant case, the husband in Woodward argued that the wife had no right to the amount of his pension that would be contributed by the government because that amount was contingent upon his continued government employment after the divorce. See id. at 432.

[270 P.3d 560]

¶ 13 The supreme court held that the government contribution was a marital asset subject to equitable division and that “the wife [was] entitled to share in that portion of the benefits to which the rights accrued during the marriage.” Id. at 433. Furthermore, because the husband had to “work for a total of thirty years, his pension benefits, including any contribution by the government, [were] as dependent on the first fifteen years as the last fifteen.” Id. The court then described what has come to be known as the Woodward formula. Under that formula, “the marital property subject to distribution is a portion of the retirement benefits represented by the number of years of the marriage divided by the number of years of the husband's employment.” Id. at 433–34. The non-employee spouse is then awarded a share of that amount. Id.

¶ 14 Here, the trial court applied the Woodward formula without elaboration. It divided the number of years of the marriage (ten) by the number of years of the husband's employment (twenty-four) and multiplied the quotient by the wife's share (one-half), yielding a percentage of 20.8%. Thus far the parties agree.³ They part company on the question of what benefit amount this percentage should be applied to. The trial court applied it to Johnson's actual monthly retirement benefit, which is based on his pay grade at retirement, E–7.

¶ 15 Johnson maintains that Zoric's share should be calculated by using his pay grade at the time of the divorce, E–5. Johnson argues that using his pay grade at the time of retirement allows Zoric to unjustly reap the benefits of rank advancements that he achieved—without her help—after the parties' divorce. Zoric responds that Johnson seeks the benefits of his post-divorce years of service without the burdens. While Johnson's years of service after the divorce allowed him to increase his pay grade and thus his retirement benefit, they also diluted Zoric's share from 50% to 20.8%. Thus, she reasons, if her portion of his retirement benefit is calculated based on his pay grade at the time of the divorce, it should likewise be calculated based on her spouse's share at the time of the divorce (50%). Similarly, Zoric argues that if Johnson alone enjoys the benefit of post-divorce pay grade increases, he alone should bear the burden of the deduction based on his post-divorce disability.

¶ 16 The approach advocated by Johnson is sometimes referred to as the “bright line” rule.⁴ Cases applying this rule “equate post-dissolution pension benefit enhancements with post-dissolution...