Louisiana State Employees' Retirement System v. McWilliams, No. 2006-C-2191 consolidated with (La. 12/7/2007)
| Decision Date | 07 December 2007 |
| Docket Number | No. 2006-C-2191 consolidated with.,No. 2006-C-2204.,2006-C-2191 consolidated with.,2006-C-2204. |
| Parties | LOUISIANA STATE EMPLOYEES' RETIREMENT SYSTEM (LASERS) v. JANE McWILLIAMS, JOELLE McWILLIAMS, AND DIANNE (McWILLIAMS) SANDERS. |
| Court | Louisiana Supreme Court |
Resolution of the difficult issues presented in this community property case requires that this court clarify some of its previous pronouncements concerning a former spouse's interest in a pension plan1 to which that former spouse made contributions while involved in a community property regime with a plan member.2 Specifically, we find it necessary to distinguish between the types of pension plans, as well as the various types of benefits paid by those pension plans, in order to develop more specific, efficient, and accurate rules for determining whether a former spouse is entitled to a portion of a specific benefit provided by a specific plan, or perhaps to some other type of recompense for his or her community contributions to the plan. Ultimately, we believe, our decision today will provide guidance to divorcing spouses, practitioners, and lower courts concerning the proper method for protecting community property interests in pension plans.
Specifically, this case involves a concursus proceeding initiated by the Louisiana State Employees Retirement System ("LASERS"), which administers a public pension plan, seeking guidance concerning the proper resolution of a claim by the former spouse of a LASERS' member. When the member died before retirement (and thus before he and/or his former or then-current spouse had received any regular retirement benefits), the claimant sought a portion of LASERS survivors' benefits, which are governed by statute. Whether the claimant is entitled to receive a portion of the statutory survivors' benefits being distributed by LASERS is the issue we must decide.
La. Rev. Stat. 11:471, the general statute that specifies those persons qualified to receive LASERS survivors' benefits, includes only three categories of qualified survivors: (1) surviving minor children, (2) surviving handicapped children, and (3) surviving spouses. Further, the word "spouse" is defined by the controlling statute as "a person who is legally married to a member of this system." La. Rev. Stat. 11:403(26). Thus, former spouses unquestionably are not qualified recipients of LASERS survivors' benefits under the applicable statute. Despite the fact that she clearly is not a qualified recipient under the applicable statute, the claimant here asserts that she is nonetheless entitled to receive a portion of the LASERS survivors' benefits at issue for two reasons. First, the claimant points to this court's previous pronouncements concerning a former spouse's "interest" in a member's pension plan and particularly this court's decision in Johnson v. Wetherspoon, in which a majority of the court as it was constituted in 1997 held that a former spouse in community with a member of the Teacher's Retirement System of Louisiana ("TRSLA"), a different public pension plan than the one at issue here, was entitled to receive a portion of statutory survivors' benefits under that plan. 96-0744 (La. 5/20/97), 694 So. 2d 203.3 Second, the claimant relies on the language of the partition judgment that memorialized her settlement of the community property issues with the member in this case. That judgment expressly recognized the claimant's interest in the member's LASERS pension plan and provided a formula for calculating that interest "when and if [the member] retires, terminates employment, or dies."
The district court in this case denied the former spouse's claim for a portion of the survivors' benefits. The court of appeal agreed that the former spouse was not entitled to receive survivors' benefits, but nevertheless reversed the district court judgment in part and ordered LASERS to refund a community portion of the relevant accumulated contributions to the estate of the former spouse, who had herself died while the appeal was pending. La. State Employees' Ret. Sys. v. McWilliams, 05-0938 (La. App. 1 Cir. 6/9/06), 938 So. 2d 782.
For the reasons set forth below, we agree with both lower courts that the LASERS member's former spouse is not entitled to receive any survivors' benefits. We find that the only persons who may receive LASERS survivors' benefits are those listed in the applicable governing statute, La. Rev. Stat. 11:471—i.e., surviving minor children, surviving handicapped children, and surviving spouses. Contrary to her contentions, neither the "jurisprudence" nor the community property judgment justify the creation of a new category of "survivors" not included in the applicable statutory language. We thus affirm the portion of the court of appeal judgment denying the former spouse's claim against LASERS for survivors' benefits.
However, we find that the court of appeal erred when it ordered LASERS to refund a portion of the accumulated contributions to the estate of the deceased member's former spouse while also paying survivors' benefits to the member's qualified survivors. Thus, we reverse that portion of the court of appeal judgment.
Joel McWilliams and Dianne Ard were married on April 26, 1969. On January 10, 1972, during the existence of the community regime between Joel and Dianne, Joel became employed by the State of Louisiana with the Department of Transportation and Development ("DOTD"). The community property regime between Joel and Dianne ended on June 15, 1987, and Joel and Dianne were divorced on October 12, 1987. Their community property was later partitioned by stipulation of the parties and memorialized in a December 15, 1989, judgment issued by Louisiana's 21st Judicial District Court. That judgment recognized Dianne's interest in Joel's U.S. Army Reserve Retirement plan and in Joel's LASERS retirement plan, as to which there was specified the formula for calculating Dianne's interest [consistent with the formula set forth in Sims v. Sims, 358 So. 2d 919 (La. 1978)] if Joel were to retire, terminate employment, or die. The same judgment recognized Joel's interest in Dianne's retirement plan with the Diocese of Baton Rouge Retirement System and provided the formula for calculating Joel's interest if Dianne were to retire, terminate employment, or die.4 On May 15, 1993, Joel married Jane McMahon. On May 24, 2003, while still employed by DOTD, Joel died.
Following Joel's death, LASERS Applications for Survivors' Benefits were filed by three parties: (1) Joel's second wife, Jane, to whom he had been legally married for more than ten years at the time of his death; (2) Joel's daughter with Dianne, namely Joelle; and (3) Joel's first wife, Dianne, who had also remarried and whose married name by then was "Sanders." As revealed by the LASERS file included in the record of this case, the filing of these applications was followed by extensive discussions regarding Dianne's right to receive survivors' benefits. Citing the fact that a former spouse does not qualify as a "surviving spouse" under La. Rev. Stat. 11:471, Jane argued that Dianne was not entitled to receive any portion of the survivors' benefits. LASERS responded by invoking this concursus proceeding in the 19th Judicial District Court, and by placing the amount claimed by Dianne into the registry of the court.
At the hearing, the parties stipulated:
LASERS has done calculations and computations of what Dianne Sanders' Interest would be and the total payments. And that would be 24.60 percent. And also they provided us information showing that those payments would convert to $1,144.92 per month.
The parties further stipulated that
the community contributions during the community years to the plan totaled just under twenty-six thousand dollars, and that is $25,963.62.
The record indicates that LASERS, using these stipulations, placed 24.60 percent of the survivors' benefits (i.e., the amount claimed by Dianne) into the registry of the court, then distributed the remainder of the survivors' benefits (the undisputed percentage) to Jane and Joelle in accordance with the percentages set forth in the LASERS Member Handbook.5 Thus, the benefits distributed to both Jane and Joelle were reduced by the 24.60 percent that represented Dianne's claimed entitlement.
After receiving exhibits and stipulations of the parties and hearing arguments of counsel, the district court ruled that the formula set forth by this court in Sims v. Sims, 358 So. 2d 919 (La. 1978), applies only to retirement benefits, not to survivors' benefits under LASERS. Citing La. Rev. Stat. 11:471,6 the district court found that the funds deposited into the registry of the court were survivors' benefits, not retirement benefits, that survivors' benefits payable by LASERS were not subject to a Sims formula proration in favor of a former spouse, and that the qualified survivors under LASERS, Jane and Joelle, were entitled to receive all of the survivors' benefits, as determined by law.7
Dianne appealed the judgment of the district court, but she died while the appeal was pending, and her estate, represented by her second husband, Richard Sanders, was substituted as a party in these proceedings. The court of appeal agreed with the district court that a former spouse in community, like Dianne, is not entitled to receive LASERS survivors' benefits. McWilliams, 05-0938, 938 So. 2d 782. In support of this conclusion, the court of appeal noted that La. Rev. Stat. 11:471 lists three and only three categories of individuals who may qualify for survivors' benefits: (1) surviving minor children, (2) surviving handicapped children, and (3) surviving spouses. Id. at 4, 938 So. 2d at 785. The First Circuit Court of Appeal also cited its previous decision in Bonfanti v. Percy, which had held that LASERS survivors'...
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