Jones v. Jones
| Decision Date | 15 September 1989 |
| Docket Number | No. 13490,13490 |
| Citation | 780 P.2d 581,7 Haw.App. 496 |
| Parties | Colin M. JONES, Plaintiff-Appellant, v. Nancy Rose R. JONES, Defendant-Appellee. |
| Court | Hawaii Court of Appeals |
Syllabus by the Court
1. Under both federal and Hawaii law, the $335,584.00 cash value of the husband's time-of-divorce entitlement to receive United States Navy and Veterans Administration disability pay post-divorce cannot be used as the basis for an award to the wife of other marital property of an equal cash value.
2. Disability pay is an entitlement that is generated when the recipient becomes disabled during the recipient's employment and, to the extent of the disability, cannot work. Like disability compensation under workers' compensation laws, disability pay is paid in lieu of and is akin to income that is earned and received post-employment. Like other income that is earned and received post-divorce, disability pay is not property divisible in a divorce case. This rule applies to veterans' and military disability benefits.
3. The fact that a person cannot receive disability pay unless he waives his entitlement to disposable retirement or retainer pay, and the fact that he makes the waiver, does not change his disability pay into retirement or some other kind of pay. Moreover, a person cannot be penalized for making such a waiver.
4. Neither Hawaii's rule that a party's time-of-divorce right to receive disability pay post-divorce is not property divisible in a divorce case nor federal law precludes the family court, when dividing property and debts in a divorce case, from considering as one of the relevant circumstances of the case under Hawaii Revised Statutes § 580-47(a) (Supp.1988) a party's time-of-divorce right to receive veterans' and military disability pay post-divorce in the same way that the family court considers each party's ability or lack of ability to earn and receive income post-divorce.
Robert M. Harris, Honolulu, for plaintiff-appellant.
William C. Darrah, Honolulu, for defendant-appellee.
Before BURNS, C.J., and HEEN and TANAKA, JJ.
Plaintiff Colin M. Jones (Husband) appeals the division and distribution of property and debts portion 1 of the family court's September 6, 1988 Divorce Decree. Pursuant to Hawaii law and the recent United States Supreme Court opinion in Mansell v. Mansell, 490 U.S. 581, 109 S.Ct. 2023, 104 L.Ed.2d 675 (1989), we vacate the appealed portion of the Divorce Decree and remand for further proceedings consistent with this opinion.
Listed chronologically, the relevant events in this case are as follows:
2. Finding of fact 20 states that Husband was transferred to the permanent disability retired list in May 1987. However, Plaintiff's Exhibits 5 and 6 indicate that the transfer was effective on October 1, 1986.
Date Event
July 8, 1935 Husband's date of birth
April 7, 1937 Wife's date of birth
June 3, 1957 Husband entered the United States Navy
December 23, 1957 Date of marriage
February 20, 1983 Husband's heart attack
October 1, 1983 Husband placed on United States Navy's temporary
disability retired list and credited with 26.75
years of service.
August 11, 1986 Husband filed a complaint for divorce.
October 1, 1986 2 Husband placed on United States Navy's permanent
disability retired list.
2. Finding of fact 20 states that Husband was transferred to the permanent
disability retired list in May 1987. However, Plaintiff's Exhibits 5 and 6
indicate that the transfer was effective on October 1, 1986.
September 6, 1988 Divorce Decree entered.
Permitted a choice between United States Navy (Navy) longevity pension benefits and tax-free disability pension benefits, Husband chose the latter. He further chose to receive as much of his disability pension benefits as he could from the Veterans Administration (V.A.). In 1988 Husband received $2,614.00 per month from the Navy and $683.00 per month from the V.A. He paid $305.35 per month for a Navy Survivor's Benefit Plan in favor of defendant Nancy Rose R. Jones (Wife).
The family court divided what was apparently all category 5 3 property as follows:
We note that the family court reduced Husband's side of the ledger by $31,000.00 to reflect the reduction in the time-of-divorce value of his pensions caused by his obligation to pay for the Navy Survivor's Benefit Plan but increased Wife's side of the ledger by $83,006.00 to reflect the time-of-divorce value of the Navy Survivor's Benefit Plan.
Husband's appeal raises two issues which we now discuss and determine.
Under federal and Hawaii law, can the $335,584.00 cash value of Husband's time-of-divorce entitlement to receive Navy and V.A. disability pay post-divorce be used as the basis for an award to Wife of other marital property of an equal cash value? Our answer is no.
McCarty v. McCarty, 453 U.S. 210, 101 S.Ct. 2728, 69 L.Ed.2d 589 (1981), held that military retirement pay is not divisible in kind in divorce actions. A fortiori, under McCarty, military disability pay was also not divisible in kind in divorce actions.
The Uniformed Services Former Spouses Protection Act (USFSPA) amended the McCarty rule and allowed "disposable retired or retainer pay" to be equitably divided in kind in divorce cases. 10 U.S.C. § 1408(c)(1) (1982). Disposable retired or retainer pay does not include disability pay. 10 U.S.C. § 1408(a)(4)(E) (Supp.1989).
In Mansell, supra, the U.S. Supreme Court answered the question whether state courts "may treat, as property divisible upon divorce, military retirement pay waived by the retiree in order to receive veterans' disability benefits." 490 U.S. at ----, 109 S.Ct. at 2025, 104 L.Ed.2d at 681 In essence, disposable retirement or retainer pay is an entitlement that the recipient earns during his working years but receives during his retirement years. It is akin to an annuity for life that the recipient earns during his working years but receives during his retirement years. An annuity for life earned during the marriage, but receivable post-divorce, is property divisible in a divorce action. See Linson v. Linson, 1 Haw.App. 272, 618 P.2d 748 (1980).
(1989). It held that the USFSPA precluded state courts from dividing veteran's disability benefits in divorce cases. The USFSPA extends the Mansell rule to all military disability benefits. 10 U.S.C. § 1408(a)(4)(E).
On the other hand, disability pay is an entitlement that is generated when the recipient becomes disabled during the recipient's employment and, to the extent of his disability, cannot work. Like disability compensation under workers' compensation laws, military disability pay is paid in lieu of and is akin to income that is earned and received post-employment. Like other income that is earned and received post-divorce, disability pay is not property divisible in a divorce case. Under the USFSPA, as construed by Mansell, this rule applies to both veterans' and military disability benefits.
The fact that a person cannot receive disability pay unless he waives his entitlement to disposable retirement or retainer pay and the fact that he makes the waiver does not change his disability pay into retirement or some other kind of pay. Moreover, a person cannot be penalized for making such a waiver. See McCarty v. McCarty, supra.
In the instant case, the family court did not divide in kind Husband's time-of-divorce right to receive veterans' and military disability pay post-divorce. In other words, it did not award Wife a percentage of Husband's time-of-divorce right...
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