Johnson v. Wetherspoon

• Decision Date: 20 May 1997
• Citation: 694 So.2d 203
• Parties: 96-0744 La
• Court: Louisiana Supreme Court

Page 203

694 So.2d 203

96-0744 La. 5/20/97, 118 Ed. Law Rep. 1249

Doris P. JOHNSON v. Charlie Mae WETHERSPOON, et al.

No. 96-C-0744.

Supreme Court of Louisiana.

May 20, 1997.

Rehearing Denied June 30, 1997.

David Alan Hamilton, Baton Rouge, for Applicant.

Marsha Mason Wade, Baton Rouge, for Respondent.

[96-0744 La. 1] JEFFREY P. VICTORY, Associate Justice.

[96-0744 La. 2] We granted certiorari in this case to review the court of appeal's ruling that while survivor benefits paid pursuant to La.R.S. 11:762(D) belong to the beneficiary in full ownership, the beneficiary takes such benefits with the obligation to account to a former spouse in community if receipt of said benefits violates the former spouse's community ownership rights. For reasons more fully discussed below, we affirm the court of appeal.

FACTS AND PROCEDURAL HISTORY

Doris Johnson ("plaintiff") and Albert Wetherspoon married on March 23, 1957 and lived under a community property regime. On August 28, 1958, Mr. Wetherspoon became a member of the Teacher's Retirement System of Louisiana ("TRSLA") and continued as an active member until his death. Plaintiff and Mr. Wetherspoon separated on November 12, 1966. A petition for separation was filed on November 15, 1966, and on January 6, 1967, a judgment of separation was rendered terminating the community retroactive to November 15, 1966. However, the community between plaintiff and Mr. Wetherspoon was never partitioned.

Following his divorce, Mr. Wetherspoon married Charlie Mae Clark, now Charlie Mae Wetherspoon ("defendant") on December 21, 1974. The couple remained married until Mr. Wetherspoon's death on September 13, 1984.

As Mr. Wetherspoon's widow and named beneficiary, defendant began receiving death benefits in 1984 pursuant to La.R.S. 11:762(D). The payment of these benefits continued without incident for almost ten years, until April 8, 1994, when plaintiff filed the instant suit seeking to have the court determine her interest, as a former spouse in community, in any benefits resulting from or attributable to [96-0744 La. 3] contributions made by Mr. Wetherspoon to TRSLA during the existence of the community between herself and Mr. Wetherspoon. ¹

Both parties filed motions for summary judgment in the trial court. After denying plaintiff's motion, the trial court granted defendant's motion for summary judgment, finding that the benefits received by defendant from TRSLA were hers alone and plaintiff did not have a right to any past, present, or future benefits as they did not constitute community property. On appeal, the First Circuit Court of Appeal reversed, holding plaintiff had a community interest in TRSLA benefits because they constituted community property and remanded the case to the trial court for further proceedings. Johnson v. Wetherspoon, 95-1280 (La.App. 1st Cir. 2/23/96), 669 So.2d 589. We granted defendant's writ to review the correctness of this ruling. Johnson v. Wetherspoon, 96-0744 (La.5/10/96), 672 So.2d 669.

DISCUSSION

In 1936, the Louisiana Legislature enacted TRSLA with the stated purpose of providing retirement allowances and other benefits for teachers of the State of Louisiana. La.R.S. 11:702. According to the TRSLA plan, members contribute a percentage of their salary to the system while employers of TRSLA members also contribute a percentage of their employees' salary to the system. However, TRSLA is a defined benefit system rather than a defined contribution system. As such, monthly payments that become payable under the plan are not based on the amount [96-0744 La. 4] of contributions made by the member, but instead are calculated based upon the member's highest average compensation, years of service credit, and the member's age. In accordance with the stated purpose of TRSLA, two primary categories of benefits are provided by the TRSLA plan: retirement benefits and survivors benefits.

It is well settled in Louisiana that a former spouse is entitled to a pro rata share of the retirement benefits of a member spouse to the extent the retirement benefits were attributable to the former community. Frazier v. Harper, 600 So.2d 59 (La.1992); Sims v. Sims, 358 So.2d 919 (La.1978). The issue presented in the case sub judice, however, concerns whether survivor benefits, paid pursuant to La.R.S. 11:762(D), belong to the surviving spouse in full ownership or whether the surviving spouse must account to a former spouse in community if receipt of said benefits violates the former spouse's community ownership rights. ²

This Court has previously held that "a spouse's right to receive an annuity, lump-sum benefit, or other benefits payable by a retirement plan is, to the extent attributable to the spouse's employment during the community, an asset of the community." Sims v. Sims, 358 So.2d 919, 922 (La.1978); See also, Frazier v. Harper, 600 So.2d 59 (La.1992); Hare v. Hodgins, 586 So.2d 118 (La.1991). ³ [96-0744 La. 5] Furthermore, in T.L. James & Co. v. Montgomery, 332 So.2d 834 (La.1975) (on rehearing), this Court determined that this right to share includes not only the employee's contributions, but also the matching contributions by the employer, as this too is a community asset acquired by community earnings and efforts. ⁴ Moreover, a close examination of these two decisions leads to the conclusion that this right to share applies whether the plan in question is private or public. Compare, Sims, 358 So.2d at 919 (holding that benefits payable by a federally created pension plan are community property), with T.L. James, 332 So.2d at 856 (finding that benefits payable by a private pension plan are community property). See also, Thrash v. Thrash, 387 So.2d 21 (La.App 3d Cir.1980) (stating, "In Sims and T.L. James, the Supreme Court set forth the guidelines to be followed in determining the community's interest in deferred compensation plans, be they private or public, acquired during the existence of the community"). Citing this Court's decisions in Frazier and Sims, the court of appeal determined that survivor [96-0744 La. 6] benefits payable by the employee's retirement plan, to the extent attributable to the community, are an asset of the community.

Defendant, however, contends that the court of appeal erred in two respects. First, defendant argues the court of appeal erred in interpreting this Court's holding in Sims that "other benefits payable by a retirement plan," Sims, 358 So.2d at 922, include all survivor or death benefits. Second, defendant states the court of appeal erred in applying a rule concerning retirement benefits accrued by an employee spouse during a community regime to this case when the benefits at issue are not part of any benefits accrued by the member of the retirement plan, but arise out of and are authorized by La.R.S. 11:762(D), which provides for survivor benefits. ⁵

[96-0744 La. 7] As for defendant's first contention, we disagree. As noted above, this Court held that "A spouse's right to receive an annuity, lump sum benefit, or other benefits payable by a retirement plan is, to the extent attributable to his employment during the community, an asset of the community." Sims, 358 So.2d at 922. Furthermore, the Sims court stated:

[O]ur courts have uniformly held that, at the dissolution of the community, the non-employed spouse is entitled to judgment recognizing that spouse's interest in proceeds from a retirement annuity, or profit sharing or contract, if and when they become payable, with the spouse's interest to be recognized as one-half of any payments to be made, insofar as they are attributable to the other spouse's contributions or employment during the existence of the community.

Not only did Sims decline to distinguish between retirement benefits and survivors benefits, but the Court cited with approval its earlier decision in T.L. James, where it determined that survivor benefits were community property and a former spouse in community was entitled to share in those benefits to the extent they were attributable to time and effort the former spouse spent in community with the member spouse. T.L. James, 332 So.2d at 856. Therefore, recognizing this Court's previous decisions that declined to distinguish between retirement and [96-0744 La. 8] survivor benefits, we likewise decline to now treat the payment of retirement and survivor benefits differently. See also, Elizabeth Alford Beskin, Retirement Equity Inaction: Division of Pension Benefits Upon Divorce, 48 La.L.Rev. 677 (1988) ("The [T.L. James ] Court's crucial assumption is that pension plan death benefits are similar to 'retirement or profit sharing funds' "). Furthermore, as the following discussion shows, the similarity in the method used to calculate retirement and survivor benefits reinforces our conclusion that retirement and survivor benefits should be treated synonymously when determining the interest in said benefits of a former spouse in community.

Retirement Benefits

La.R.S. 11:768 sets forth the manner in which retirement benefits are calculated. ⁶ The actual benefit received, however, may vary depending upon the [96-0744 La. 9] Option selected under R.S. 11:783. ⁷ According to La.R.S 11:783, upon retirement, any member may elect to receive his retirement in one of three ways. [96-0744 La. 10] The member can (1) choose to receive his full monthly benefit (commonly referred to as the Regular Maximum benefit) with nothing going to his survivors upon his death, (2) choose Option 1 which provides for a reduced benefit, but allows for the possibility of a lump-sum payment to the member's beneficiary(ies) upon his death, or (3) choose Option 2, 3, or 4 in which a reduced benefit is received in exchange for a benefit being provided to the member's beneficiary(ies) for the life of the beneficiary(ies).

Assuming no option had been selected, the Regular Maximum benefit a member would have been entitled to upon his retirement would be calculated by...