Lindsey v. Lindsey

• Decision Date: 15 July 1987
• Docket Number: No. 86-1776,86-1776
• Parties: In re the Marriage of Bernice LINDSEY, Petitioner-Appellant, v. Charles B. LINDSEY, Respondent.
• Court: Wisconsin Court of Appeals

Page 132

412 N.W.2d 132

140 Wis.2d 684

In re the Marriage of Bernice LINDSEY, Petitioner-Appellant, v. Charles B. LINDSEY, Respondent.

No. 86-1776.

Court of Appeals of Wisconsin.

Argued March 24, 1987.

Opinion Released July 15, 1987.

Opinion Filed July 15, 1987.

Willard G. Neary of Burke & Schoetz, Milwaukee, for petitioner-appellant.

Thomas C. Krohn of Constantine, Christensen, Krohn & Kerscher, S.C., Racine, for respondent.

Before SCOTT, C.J., BROWN, P.J., and NETTESHEIM, J.

NETTESHEIM, Judge.

One of the major issues in this appeal is whether a city employee's retirement plan is subject to a domestic relations order which awards a portion of the plan to the nonemployee spouse and permits such spouse to elect a payout option. Because we conclude that the spendthrift provisions of sec. 66.81, Stats., forbid such an order, we affirm the trial court's ruling declining to enter such an order.

Another major issue is whether the trial court has the discretionary authority to order the employee spouse to make a specific payout selection under the retirement plan. We conclude the trial court has such discretionary authority. Since the trial court determined otherwise, we reverse this portion of the judgment and remand for further proceedings.

The remaining challenges to the property division are rejected on waiver grounds. Finally, we affirm the trial court's maintenance award.

Charles and Bernice Lindsey were married on November 8, 1952. At the time of the final hearing Bernice was fifty-five and Charles was fifty-four. No minor children of the marriage existed.

Charles has been employed for the entire length of the marriage as a firefighter for the city of Milwaukee. At the time of the final hearing, he was experiencing a host of medical difficulties such that he was on injury duty leave, collecting 80% of his normal salary. He had applied for duty disability which would entitle him to 75% of his normal salary, tax free. He testified that, although presently eligible for retirement, he intends to remain on duty disability until he reaches age fifty-seven when he wishes to retire and receive his pension. Following the entry of judgment in this case, Charles qualified for duty disability. ¹

Bernice has not been employed outside the home during the past thirty-three years. Prior to the marriage, she had been employed as an x-ray technician for a period of two and one-half years. A vocational expert testified that Bernice was qualified to do only entry level or minimum wage work.

The trial court made an equal division of the marital estate. This included a provision that Charles' pension plan, upon retirement, be divided equally between the parties. The trial court awarded Bernice a one-half interest in the plan and permitted her to make her own election as to a payout option. Implicit in the trial court's ruling was the assumption that the city of Milwaukee's Employes' Retirement System would honor this order. Based upon this property division award, the trial court denied maintenance to both parties.

Charles, however, refused to approve the proposed findings of fact, conclusions of law, and judgment which contained these pension-related provisions. Bernice brought a motion seeking to compel Charles to approve the final documents. Charles argued in response that if Bernice took an immediate payout, the rules of the plan required him to take immediate retirement, rather than allowing him to remain on duty disability until he was fifty-seven. The trial court ordered Charles to obtain an opinion of the Milwaukee city attorney on the question and adjourned the case.

At a further hearing on July 21, 1986, Charles submitted a letter from city attorney Grant F. Langley and special deputy city attorney Thomas E. Hayes. The letter, in relevant part, recited:

Section 66.81, Stats., contains a broad exemption for benefits and allowances of the Employes' Retirement System from court process. In 85 O.C.A. 97, we stated that this statute is inapplicable in alimony and child support matters. Courtney v. Courtney, 251 Wis. 443 (1947). The Employes' Retirement System will honor domestic relations orders meeting the requirements of sec. 767.265, Stats.

....

Section 36.05(7) of the Milwaukee City Charter, 1971 compilation as amended, requires that options be elected by the member. After the selection of an option, amounts payable to beneficiaries other than the member selecting the option would not be subject to the domestic relations order.

Based upon this letter, the trial court determined that its earlier order would not be honored. Therefore, the trial court retained the equal division of the pension, but accorded Charles the right to select the payout option. Bernice appeals.

DIVISION OF CHARLES' PENSION PLAN

Because this is the first Wisconsin appellate case to discuss an order which seeks to actually award a pension plan (or a portion thereof) to a nonemployee spouse and to accord such spouse payout options under the plan, we believe that some clarification of terms is necessary before we address the issue directly.

At various times in the proceedings in the trial court, the order at issue was referred to as a "qualified domestic relations order." This is technically incorrect.

Private pension plans are governed by the Employee Retirement Security Act of 1974 (ERISA) and applicable provisions of the Internal Revenue Code. See generally 29 U.S.C. § 1001 et seq. and 26 U.S.C. § 401 et seq. In order to qualify for employer tax benefits, private pension plans must, among other things, include a "spendthrift" provision to the effect that benefits may not be assigned or alienated. 29 U.S.C. § 1056(d); 26 U.S.C. § 401(a)(13). These spendthrift provisions created uncertainty as to whether they precluded an award of an employee's pension plan to a nonemployee spouse. As a result, Congress enacted the Federal Retirement Equity Act of 1984 (REA) ² which provided explicit ERISA, however, applies only to private pension plans. See 29 U.S.C. § 1003(b)(1). REA, as an amendment to ERISA, does likewise. Therefore, use of the term "QDRO" in the context of this case, which concerns a municipal retirement plan, is technically incorrect. Where such an order is made pursuant to a state domestic relations law, other commentators have denominated it a "domestic relations order" (DRO), a term which we adopt for purposes of this decision. ³ See A. Koritzinsky, D. Mahoney & T. Forkin, Tax Strategies in Divorce 19-20 (4th ed. 1987).

authority for payment of retirement plan benefits to an "alternate payee" (such as a nonemployee spouse, former spouse, children, or other dependents) pursuant to a "qualified domestic relations order" (QDRO). 26 U.S.C. § 414(p)(1)(A). Such an order, properly drafted, retains [140 Wis.2d 690] the tax benefits resulting from the spendthrift clause, but permits division, award, and distribution of the plan (or a portion thereof) to the alternate payee.

The record in this case contains a copy of the information booklet which is issued to employees of the city of Milwaukee and which explains the Employes' Retirement System. This booklet does not reveal the presence of a spendthrift clause as a provision of the retirement plan. However, as noted in the city attorney's letter, sec. 66.81, Stats., is a statutory spendthrift provision which applies to the "moneys and assets of any retirement system of any city of the first class" and to "all benefits and allowances and every portion thereof." ⁴ ]

We are thus left with a situation where the city of Milwaukee Employes' Retirement System is governed by a statutory spendthrift provision. Therefore, we must determine whether any statutory exception to this spendthrift requirement exists, thereby permitting entry of the DRO sought by Bernice in this case.

Bernice argues that sec. 767.265(1), Stats., represents such authority. This statute provides that certain family court orders constitute an assignment of pension benefits (among other income sources) to the clerk of the court in which the action is filed. ⁵ ] Statutory construction presents a question of law which we review without deference to any ruling by the lower court.

In re K.S., 137 Wis.2d 570, 574, 405 N.W.2d 78, 80 (1987).

Section 767.265(1), Stats., refers only to orders for child, spousal, or family support. Notably absent is any legislative reference to property division orders. The express mention of one matter means that similar matters are excluded. See State ex rel. Waldeck v. Goedken, 84 Wis.2d 408, 420, 267 N.W.2d 362, 367 (1978). Therefore, we conclude that the legislature did not intend sec. 767.265(1) to apply to property division orders.

Next, Bernice turns to secs. 767.01(1) and 767.255, Stats., as support for her argument. Section 767.01(1) provides, in part:

Jurisdiction. (1) The circuit courts have jurisdiction of all actions affecting the family and have authority to do all acts and things necessary and proper in such actions and to carry their orders and judgments into execution as prescribed in this chapter.

Section 767.255 provides, in part:

Property division. Upon every judgment of annulment, divorce or legal separation, ... the court shall divide the property of the parties and divest and transfer the title of any such property accordingly.

These statutes are general in nature. The only specific statute dealing with assignment of pension benefits is sec. 767.265(1), Stats., which, as already noted, does not apply to property division orders. The rules of statutory construction require us to apply the specific statute over the general. Liles v. Employers Mut. Ins., 126 Wis.2d 492, 504, 377 N.W.2d 214, 220 (Ct.App.1985). We reject Bernice's argument that secs. 767.01(1) and 767.255, Stats., permit the issuance of a DRO as to Charles' retirement plan.

Next Bernice cites Savings & Profit Sharing Fund of Sears Employees v. Gago, 717 F.2d 1038 (7th Cir.1983), in...