Marriage of Gaddis, In re

• Citation: 191 Ariz. 467,957 P.2d 1010
• Decision Date: 14 August 1997
• Docket Number: CA-CV,No. 2,2
• Parties: , 250 Ariz. Adv. Rep. 21 In re the MARRIAGE OF Sharon H. GADDIS, Petitioner/Appellee, and Eugene H. Gaddis, Respondent/Appellant. 96-0315.
• Court: Court of Appeals of Arizona

Page 1010

957 P.2d 1010

191 Ariz. 467, 250 Ariz. Adv. Rep. 21

In re the MARRIAGE OF Sharon H. GADDIS, Petitioner/Appellee,

and

Eugene H. Gaddis, Respondent/Appellant.

No. 2 CA-CV 96-0315.

Court of Appeals of Arizona,

Division 2, Department B.

Aug. 14, 1997.

Reconsideration Denied Sept. 10, 1997.

Review Denied June 2, 1998.

Cynthia L. Anson, Tucson, for Petitioner/Appellee.

Eugene H. Gaddis, Tucson, In Propria Persona.

OPINION

PELANDER, Presiding Judge.

The issue in this domestic relations case is whether, after a final decree of dissolution has been entered, a retired veteran may reduce his or her former spouse's community property interest in military retirement pay by obtaining civil service employment. The trial court prohibited such a reduction and thereby preserved the decree's allocation of community property to petitioner Sharon Gaddis (wife). Because we conclude that the trial court's order is consistent with the decree and Arizona law and does not conflict with federal law, we affirm.

BACKGROUND

The parties were divorced in April 1993, after almost twenty-eight years of marriage. Respondent Eugene Gaddis (husband) was a member of the United States Air Force throughout the marriage and had retired in April 1992. The trial court initially entered a dissolution decree under which wife waived any rights to husband's military retirement pay. After an evidentiary hearing on wife's motion to set aside the decree, the trial court entered judgment in November 1994, awarding her "one-half of [husband's] military retirement benefits as of February 1994." Wife also received the family home, while husband received substantial savings bonds and interests in credit union and individual retirement accounts of approximately equal value. No spousal maintenance was requested or awarded. ¹

Husband appealed, objecting only to the trial court's awarding wife an interest in his military retirement benefits. After this court affirmed, Gaddis v. Gaddis, 2 CA-CV 94-0337 (memorandum decision filed March 31, 1995), the trial court issued a qualified domestic relations order in December 1995, ordering the appropriate agency to pay wife 50% of husband's "disposable military retirement pay as calculated by the United States Joint Military Service Finance Center."

Between March 1994 and June 1995, husband's gross monthly retirement pay ranged between $2,923 and $3,004. After deductions for veterans' benefits (ranging between $166 and $681) and disability benefits (averaging $964), husband's disposable retirement income ranged from $1,359 to $1,870 per month. Although it is not entirely clear from the record, it appears that husband paid wife her share of his retirement pay directly, with monthly checks ranging from $750 to $785.

In October 1995, husband obtained civil service employment with the federal government. His retiree account statement that month reflected a new $848.22 deduction for the "dual compensation offset" required by 5 U.S.C. § 5532(b), which provides:

A retired officer of a regular component of a uniformed service who holds a [civil service] position is entitled to receive the full pay of the position, but during the period for which he receives pay, his retired or retainer pay shall be reduced to an annual rate equal to the first $2,000 of the retired or retainer pay plus one-half of the remainder, if any.

Section 5532(b) thus reduced husband's disposable retired pay to approximately $680 per month, half of which he paid to wife in November 1995. Wife then filed a petition for order to show cause, claiming that her share of husband's retirement pay should not be reduced by the "dual compensation offset."

After an unreported evidentiary hearing, the trial court ruled in April 1996 that the value of wife's one-half interest in husband's retirement pay was "not reduced by virtue of [husband's] obtaining government employment and implication of the dual compensation offset." The court further ruled that "the original, actual value of the retirement plan, to which [wife] is entitled to one-half ... is $1,500.00 per month;" it thus ordered husband to pay wife $750 per month. The court subsequently denied husband's two motions for a new trial, reaffirmed its prior rulings, and held that "[husband's] seeking and securing Federa[l] employment alters the calculation of disposable income, but does not alter the value of [wife's] community property interest in the retirement plan at the time of the Decree, when it was distributed by the Court and it vested in her." The court again ordered husband to pay wife $750 per month, less any amounts paid directly by the government, plus arrearages totaling $4,932.68, attorney's fees, and costs. This appeal followed.

DISCUSSION

The Uniformed Services Former Spouses' Protection Act (the Act), 10 U.S.C. § 1408, authorizes courts in community property states like Arizona to divide "disposable retired pay" as community property in dissolution proceedings. § 1408(c). The Act was a "direct response" to the decision in McCarty v. McCarty, 453 U.S. 210, 101 S.Ct. 2728, 69 L.Ed.2d 589 (1981), in which the Supreme Court held that federal law prevented states from dividing military retirement pay as community property. Mansell v. Mansell, 490 U.S. 581, 584, 109 S.Ct. 2023, 2026, 104 L.Ed.2d 675 (1989). See also Edsall v. Superior Court, 143 Ariz. 240, 693 P.2d 895 (1984). In pertinent part, the Act defines "disposable retired pay" that is subject to division as follows:

the total monthly retired pay to which a member is entitled less amounts which--

* * * * * *

are deducted from the retired pay of such member as a result of ... a waiver of retired pay required by law in order to receive compensation under title 5 or title 38 10 U.S.C. § 1408(a)(4)(B). Section 1408(e) then limits the "total amount of the disposable retired pay of a member payable under all court orders pursuant to subsection (c)" to "50 percent of such disposable retired pay."

In Mansell, the Supreme Court held that the Act "does not grant state courts the power to treat as property divisible upon divorce military retirement pay that has been waived to receive veterans' disability benefits." ² 490 U.S. at 594-95, 109 S.Ct. at 2032. The Court noted that the Act's grant of authority to state courts to divide military retirement pay "is both precise and limited" and that the statute expressly excludes amounts waived to receive disability benefits from the definition of "disposable retired pay." Id. at 588, 109 S.Ct. at 2028. According to the Court, the defined term is used "to limit specifically and plainly the extent to which state courts may treat military retirement pay as community property." Id. at 590, 109 S.Ct. at 2029. Moreover, the section of the Act addressed in Mansell, 10 U.S.C. § 1408(a)(4)(B), also excludes from the definition of "disposable retired pay" amounts waived to receive civil service compensation under title 5, U.S.C.

Relying on § 1408 and Mansell, husband contends that wife's community interest in his retirement benefits must automatically be reduced by the amount he waived in order to receive civil service compensation, despite the fact that the waiver occurred well after the final dissolution decree was entered. We disagree because Arizona law does not permit, and federal law does not require, such an outcome.

Husband's contention, which essentially calls for a de facto modification of the dissolution decree's community property allocations, is inconsistent with Arizona law. In Arizona, "[a] decree of dissolution of marriage ... is final when entered, subject to the right of appeal." A.R.S. § 25-325. Provisions in a decree "as to property disposition may not be revoked or modified, unless the court finds the existence of conditions that justify the reopening of a judgment under the laws of this state." § 25-327(A). As our supreme court has emphasized, "[t]he well-established rule is that property settlements are not subject to modification or termination." DeGryse v. DeGryse, 135 Ariz. 335, 338, 661 P.2d 185, 188 (1983). See also Edsall, 143 Ariz. at 248, 693 P.2d at 903 ("A property award is essentially permanent."). "The need for finality and stability in marriage and family law is great. Absent express authorization ... or a finding of 'extraordinary circumstances' as contemplated by rule 60(c)(6), a property settlement cannot be disturbed." DeGryse, 135 Ariz. at 338, 661 P.2d at 188. See also Reed v. Reed, 124 Ariz. 384, 385, 604 P.2d 648, 649 (App.1979) ("There is a compelling policy interest favoring the finality of property settlements.").

These principles strongly support the trial court's implicit refusal to essentially modify the decree in this case by reducing wife's community property interest in husband's retirement pay due to a post-decree change in circumstances unilaterally imposed by husband. This court generally has not permitted a former spouse, post-decree, "to transform retirement benefits constituting community property to [other, non-retirement] benefits constituting separate property." McNeel v. McNeel, 169 Ariz. 213, 215, 818 P.2d 198, 200 (App.1991). See also In re Marriage of Crawford, 180 Ariz. 324, 884 P.2d 210 (App.1994). In Crawford, a somewhat analogous case, we held that a husband could not divest his former spouse of a community property interest in accrued military retirement benefits by voluntarily relinquishing those benefits post-decree in order to receive a lump sum Special Separation Benefit, stating: "An employee spouse cannot defeat the nonemployee spouse's interest in retirement benefits by invoking a condition wholly within his or her control." Id. at 327, 884 P.2d at 213. Neither the Act nor Mansell compels a different conclusion here. Nothing in the Act suggests that a court's final award of a community property interest in retirement pay must be altered when the military retiree obtains civil service employment post-decree. Although...