Johnson v. Masters, 2011AP1240.

• Court: United States State Supreme Court of Wisconsin
• Writing for the Court: N. PATRICK CROOKS
• Citation: 347 Wis.2d 238,830 N.W.2d 647,2013 WI 43
• Parties: In re the marriage of Patricia A. JOHNSON, p/k/a Patricia Masters, Petitioner–Appellant, v. Michael R. MASTERS, Respondent–Respondent.
• Docket Number: No. 2011AP1240.,2011AP1240.
• Decision Date: 17 May 2013

347 Wis.2d 238
830 N.W.2d 647
2013 WI 43

In re the marriage of Patricia A. JOHNSON, p/k/a Patricia Masters, Petitioner–Appellant,
v.
Michael R. MASTERS, Respondent–Respondent.

No. 2011AP1240.

Supreme Court of Wisconsin.

Argued Sept. 7, 2012.
Decided May 17, 2013.

[830 N.W.2d 648]

For the petitioner-appellant, there was a brief (in court of appeals) by

[830 N.W.2d 649]

Joseph F. Owens and Law Offices of Joseph F. Owens, New Berlin, and Debra K. Riedel and Law Offices of Debra K. Riedel, New Berlin, and a reply brief to the Supreme Court by Joseph Owens and Debra K. Riedel. Oral argument by Joseph F. Owens.

For the respondent-respondent, there was a brief by Erik I. Colque and Colque Law, LLC, Waukesha, and oral argument by Erik I. Colque.

N. PATRICK CROOKS, J.

[347 Wis.2d 241]¶ 1 This case is before the court on certification from the court of appeals pursuant to Wis. Stat. § 809.61 (2009–10). It concerns a dispute over the enforceability of a pension award in a divorce judgment. The specific question we address is whether the circuit court erred when it denied Patricia Johnson's motion for the entry of a qualified domestic relations order (QDRO) on the grounds that the motion was barred by Wis. Stat. § 893.40, a statute of repose,¹ which states that “action upon a judgment or decree ... shall be commenced within 20 years after the judgment or decree is entered or be barred.” Johnson had filed a motion on September 13, 2010, seeking to compel Michael Masters to provide pension information so that the necessary QDRO could be prepared and his Wisconsin Retirement System (WRS) pension could be divided in accordance with the judgment of divorce. The judgment in the divorce had been filed more than 20 years before, on July 20, 1989. With regard to the pension benefits, the judgment had awarded Johnson half of the value accrued during the span of the marriage and stated that a QDRO “shall be submitted to secure these rights.”

¶ 2 This court has upheld the application of Wis. Stat. § 893.40 in a family law context.² We see no evidence for the argument that the legislature intended [347 Wis.2d 242]for family law judgments to be categorically exempted from its application though we recognize the realities of family court judgments and see some evidence that this court has made certain accommodations for the ongoing obligations that are common in that area. There is a twist in this case, however, that we consider dispositive of the question, and that is the fact that even though the 1989 judgment required the filing of a QDRO, the WRS was not authorized under statute to accept a QDRO related to this divorce until May 2, 1998.

¶ 3 In order to interpret the relevant statutes to avoid “absurd or unreasonable results,” ³ and in order to “constru[e] each in a manner that serves its purpose” ⁴ as we are bound to do, we hold that Johnson's motion is not barred by the operation of Wis. Stat. § 893.40. The judgment contained a provision that required the filing of a QDRO with the WRS, and it was not until 1998 that legislation authorized WRS

[830 N.W.2d 650]

to accept such orders for marriages such as this one that were terminated in 1989. It would be absurd and unreasonable to construe the statute of repose in such a way that it would begin to run at the time of a judgment with regard to a provision that assigned Masters' interest contrary to existing law, which was and continued for the next nine years to be that WRS pension interests were not assignable. ⁵[347 Wis.2d 243]Construing the statute as starting to run as to the pension provision at the point when the provision was no longer contrary to law is a way to retain the statute's limiting function “in a manner that serves its purpose.” Under the circumstances present in this case ⁶ where a statute precludes a provision in a judgment, the statute of repose cannot begin to run as to that provision until the legislature changes the law such that the provision can be carried out. In this case, that change went into effect on May 2, 1998, and the statute of repose will bar actions on such a provision only after May 1, 2018. We therefore reverse the order of the circuit court and remand for further proceedings consistent with this opinion.

BACKGROUND

¶ 4 The circuit court's order that we review denied Johnson's motion for the entry of a QDRO and granted Masters' motion to dismiss based on Wis. Stat. § 893.40. The QDRO that Johnson sought from the Waukesha County Circuit Court, the Honorable Kathryn W. Foster presiding, is an order that would authorize the administrator of Masters' pension plan, the Wisconsin Retirement System, to assign Johnson a [347 Wis.2d 244]portion of his pension benefits, in accordance with the divorce judgment. It is important to provide a brief explanation of what a QDRO is and why there was no authority for the WRS to accept one when Johnson and Masters divorced in 1989.

¶ 5 QDROs are defined by the Employee Retirement Income Security Act (ERISA), the federal law that governs private sector pension plans. “The primary objective of ERISA is to protect employees from the mismanagement of funds set aside to finance employee benefits and pensions by establishing a comprehensive regulatory scheme that required employers to fulfill certain reporting, disclosure and fiduciary duties.” Aurora Med. Group v. DWD, 2000 WI 70, ¶ 16, 236 Wis.2d 1, 612 N.W.2d 646 (citations omitted). Federal law generally prohibits assigning pension benefits; however, it provides a mechanism in QDROs to assign pension benefits under certain circumstances:

[T]he anti-alienation provision in [the Employee Retirement Income Security Act] precludes assignment of the pension benefits [without] a valid QDRO. See29 U.S.C. § 1056(d)(1) (“[e]ach pension plan shall provide that benefits provided under the plan may not be assigned or alienated”). ERISA's prohibition on the assignment or alienation of pension benefits has been strictly enforced. A QDRO is an express exception

[830 N.W.2d 651]

to ERISA's anti-alienation provision. See ERISA § 1056(d)(3)(B)(i)(I).... 29 U.S.C. § 1056(d)(3)(B)(i) defines a “qualified domestic relations order” as a domestic relations order

(I) which creates or recognizes the existence of an alternate payee's right to, or assigns to an alternate payee the right to, receive all or a portion of the benefits payable with respect to a participant under a plan, and

[347 Wis.2d 245](II) with respect to which the requirements of subparagraphs (C) and (D) are met....

In re Gendreau, 191 B.R. 798, 801–02 (9th Cir. BAP 1995)aff'd,122 F.3d 815 (9th Cir.1997) (citations omitted). “A qualified domestic relations order permits payment of benefits of qualified private retirement plans to one other than the employee spouse. Such a recipient is denominated an ‘alternate payee,’ which includes a nonemployee spouse.” Schinner v. Schinner, 143 Wis.2d 81, 86 n. 1, 420 N.W.2d 381 (Ct.App.1988) (citations omitted).

¶ 6 ERISA does not apply to government retirement plans such as the WRS, see29 U.S.C.A. § 1003(b)(1), and the Wisconsin statutes that governed those plans initially made no provision for QDROs. In Lindsey v. Lindsey, the court of appeals described an early unsuccessful attempt to pass legislation authorizing the Wisconsin Retirement System to accept QDROs:

1985 Assembly Bill 689 was a proposal to create a procedure whereby a participant's accumulated rights and benefits under the Wisconsin Retirement System could be made the subject of a “qualified domestic relations order.” See Analysis by the Legislative Reference Bureau to 1985 Assembly Bill 689. The fiscal note to this proposed legislation observed that “[t]he statutes governing the Wisconsin Retirement System (WRS) do not provide a mechanism for dividing rights and benefits under the system to comply with a court order.” “The purpose of this bill is to provide a mechanism for the division of WRS benefits pursuant to a qualified domestic relations order issued by a court in a manner similar to that established by Federal law for private sector pension plans.” Report of Joint Survey Committee on Retirement Systems for 1985 Assembly Bill 689 (emphasis added). This proposed legislation failed to pass the Assembly.

347 Wis.2d 246]Lindsey v. Lindsey, 140 Wis.2d 684, 694 n. 8, 412 N.W.2d 132 (Ct.App.1987). The state of the law in Wisconsin in 1989 was that benefits, rights and interests of any WRS member “shall not be assignable, either in law or equity, or be subject to execution, levy, attachment, garnishment or other legal process except as specifically provided in this section[,]” and no provisions were included for QDROs. Wis. Stat. § 40.08(1) (1987–88). That remained the law until the passage of 1989 Wis. Act 218, which authorized WRS to accept QDROs beginning April 28, 1990, but did not apply retroactively to divorces occurring prior to the new statute's effective date, which was April 28, 1990. It was not until May 2, 1998, that WRS was authorized by 1997 Wis. Act 125 to accept QDROs related to divorces that became effective between January 1, 1982, and April 28, 1990. In part, 1997 Wis. Act 125 stated,

40.08(1m)(k) of the statutes is created to read: ... [A] court may revise or modify a judgment or order specified under subd. 1. for participants whose marriages were terminated by a court on or after January 1, 1982, and before April 28, 1990, but only with respect to providing for payment in accordance with a

[830 N.W.2d 652

qualified domestic relations order of benefits under the Wisconsin retirement system that are already divided under the judgment or order.

1997 Wis. Act 125, § 5. That authorization closed a gap that had been created by the earlier legislation authorizing WRS to accept QDROs but failing to state clearly that it applied retroactively to divorces that became final after January 1, 1982 and before April 28, 1990.

¶ 7 The final judgment in Johnson and Masters' divorce was entered on July 20, 1989, so it...