Marriage of Thorlin, In re, 1

• Decision Date: 10 September 1987
• Docket Number: No. 1,CA-CIV,1
• Citation: 746 P.2d 929,155 Ariz. 357
• Parties: In re the MARRIAGE OF Philip Scott THORLIN, Petitioner-Appellant, and Heidrun Thorlin, Respondent-Appellee. 9056.
• Court: Arizona Court of Appeals

Page 929

746 P.2d 929

155 Ariz. 357

In re the MARRIAGE OF Philip Scott THORLIN, Petitioner-Appellant and

Heidrun Thorlin, Respondent-Appellee.

No. 1 CA-CIV 9056.

Court of Appeals of Arizona Division 1, Department D.

Sept. 10, 1987.

Review Denied Jan. 5, 1988.

[155 Ariz. 358] Engler, Engler, Weil & Nelson by Richard D. Engler, John A. Weil, Yuma, for petitioner-appellant.

Westover, Choules & Shadle, P.C. by Allen James Clark, Yuma, for respondent-appellee.

OPINION

BROOKS, Judge.

Philip Scott Thorlin (Husband) appeals from an order modifying the decree of dissolution of his marriage with appellee Heidrun Thorlin (Wife). The amended judgment awarded Wife a 42.9% interest in Husband's military retirement pension, retroactive to the date of Husband's retirement from the United States Army. We affirm.

FACTS AND PROCEDURAL HISTORY

Viewed in the light most favorable to upholding the trial court's order, the facts are as follows. Husband entered the United States Army on June 5, 1963, and retired on June 30, 1983, after 20 years of service. Husband and Wife were married on February 5, 1965, and four children were born as issue of the marriage.

On June 26, 1981, the United States Supreme Court filed its opinion in McCarty v. McCarty, 453 U.S. 210, 101 S.Ct. 2728, 69 L.Ed.2d 589 (1981), holding that federal law precluded state courts from dividing military retirement benefits under state community property laws. Husband and Wife separated in October of 1981, and on October 16, 1981, Husband filed a petition for dissolution of the marriage.

Wife retained counsel in connection with the petition for dissolution. During the proceedings, her lawyer advised her that because of the holding in McCarty, she would not be able to obtain an interest in any of Husband's military retirement benefits. Wife testified that during those proceedings, her lawyer did not give her any impression that there might be a later change in the law that would entitle her to share in Husband's retirement benefits and did not discuss any proposed federal legislation with her. She also testified that she became aware from news reports that congressional legislation to change the rule established in McCarty was being considered.

On April 9, 1982, Husband and Wife entered into a property settlement agreement. Paragraph 2 of the agreement divided "[a]ll property, both real and personal, that HUSBAND and WIFE now have, whether acquired prior to or subsequent to the marriage of the parties, and whether community or otherwise...." In subparagraph (B)(2), Husband was awarded "[a]ll retirement benefits or other serviceman or employee benefits accruing or due the HUSBAND arising from his military service." In paragraph 4, Husband agreed to pay Wife child support in the amount of $800 per month, to be reduced by $100 per month as each child attained 18 years of age, and to terminate altogether when the last child reached the age of 18 years. In paragraph 5, Husband agreed to assume and pay all of the parties' joint, community, and common debts and obligations existing on the date the petition for dissolution was filed. Paragraph 12 of the agreement specified that neither Husband nor Wife would receive spousal maintenance. The agreement contained nothing that expressly governed the effect of future changes in the law on any of its provisions. In paragraph 9, the parties agreed that the terms of the property settlement agreement would be incorporated by reference in the decree of dissolution.

Wife testified that she signed the agreement based on her attorney's advice that she was not entitled to share in any of Husband's military retirement benefits. Both Wife and her attorney testified that they did not recall discussing whether a provision should be included that would entitle Wife to seek a portion of the retirement benefits if the McCarty rule were changed by appropriate federal legislation. Wife's attorney further testified that at the time the agreement was signed, he was not aware of any proposed legislation to alter the effect of McCarty and did not consider such legislation in advising Wife.

On April 12, 1982, a decree dissolving the marriage was entered. The decree determined that the property settlement agreement "fairly and equitably divides and makes disposition of joint, common and community property and debts and ... is reasonable as to support, custody and visitation of children." The decree ratified and approved the agreement and incorporated it by reference.

In February of 1983, Wife again consulted her lawyer because she had heard and read of a recent change in federal law relating to military retirement benefits. On March 7, 1983, Wife filed a motion for modification of the decree of dissolution pursuant to Rule 60(c), Arizona Rules of Civil Procedure. She alleged that she had relinquished any claim to Husband's military retirement benefits only because of the McCarty decision and that modification of the decree would be appropriate given the recent enactment of the Uniformed Services Former Spouses Protection Act, 10 U.S.C. § 1408. ¹ Husband twice moved to dismiss the motion for modification. The trial court denied both motions.

The formal order denying the second motion stated in pertinent part:

It was this court's conclusion on May 31, 1983 and is again now that because the respondent has been given the express right to return to this court to take advantage of the federal legislation to resolve disposition of the military retirement pay, that decision can only be made after consideration of the disposition made of all the other community property of the parties. The property settlement agreement, in other words, has to be weighed anew pursuant to [Arizona Revised Statutes] sec 25-317B and C and in light of its omission of the community's interest in the military retirement payments.

After delays totaling in excess of two years occasioned by discovery proceedings and various postponements, the court heard the motion for modification of the decree of dissolution. After post-trial memoranda were received, the trial court entered an order incorporating its findings of fact and conclusions of law and modifying the decree of dissolution. The order determined that Husband's entitlement to military retirement payments earned during the marriage, exclusive of his military disability benefits, was community property and amounted to 85.8% of the total of those payments. The order determined that Wife was entitled to half the community's interest in Husband's military retirement payments, or 42.9%.

The order also awarded Wife 42.9% of the military retirement payments Husband had received from his retirement through the end of the month preceding entry of the order, less an amount equal to half the community debts the entirety of which Husband had assumed and paid under the original decree of dissolution. The order provided that the net amount of $6,468 owing from Husband to Wife could be satisfied through execution of a promissory note with certain specified provisions. Husband was directed to execute an irrevocable allotment to Wife of her 42.9% share of Husband's future military retirement payments and to pay Wife's share to her directly until the allotment became effective.

In effect, the order modified the decree of dissolution to divide the community debts equally between Husband and Wife and to award Wife a 42.9% interest in Husband's military retirement benefits retroactive to the date of Husband's retirement from the army. Husband timely appealed to this court.

LEGAL ANALYSIS

Husband first argues that the "change in circumstances" represented by the enactment of the Uniformed Services Former Spouses Protection Act (hereinafter referred to as "the Act"), 10 U.S.C. § 1408, did not constitute a proper ground for post-judgment relief under Rule 60(c). Citing numerous decisions from Arizona and other jurisdictions, Husband further contends that it is well established that a division of property effected under a property settlement agreement cannot be modified after the agreement has been approved and accepted by the court absent proof that it was entered into under fraud or duress.

We need not unduly lengthen this opinion with a case-by-case analysis of these arguments, for our supreme court's recent decision in Edsall v. Superior Court, 143 Ariz. 240, 693 P.2d 895 (1984), is dispositive. Like the instant case, Edsall concerned a decree of dissolution that was founded on a property settlement agreement entered into after the United States Supreme Court's decision in McCarty, but before the enactment of 10 U.S.C. § 1408.

Consistent with McCarty, the agreement in Edsall provided that Ruth Edsall was not entitled to any of the military retirement benefits that her husband, Philip, was eventually to receive from the United States Government. About three months after the effective date of the Act, Ruth sought an order setting the decree aside and determining that she had an interest in Philip's retirement benefits. The trial court ruled that the decree would be reopened and the entire disposition of assets, including retirement benefits, would be reconsidered. In a special action brought by Philip, Division 2 of this court held that the principle of res judicata precluded reopening the decree of dissolution and that, in any event, the parties had intended to assign to Philip all of his military benefits regardless of any later changes in the law.

On petition for review, our supreme court vacated the opinion of the court of appeals. It concluded, contrary to the arguments of Philip, and of Husband in the instant case, that the trial court has the power to set aside a divorce decree based upon a negotiated separation agreement finalized after McCarty but before the enactment of 10 U.S.C. § 1408. The court noted that under § 1408(c)(1), individual states were once again permitted to determine under state law whether military...