MATTER OF MARRIAGE OF MENARD

• Court: Court of Appeals of Oregon
• Writing for the Court: SCHUMAN, J.
• Citation: 42 P.3d 359,180 Or. App. 181
• Parties: In the Matter of the MARRIAGE OF Bernadine Angela MENARD, Respondent, and Raymond Thomas Menard, aka Raymond Thomas Menard, III, Appellant, and Amber Rae Menard, Third-Party Respondent.
• Decision Date: 13 March 2002

42 P.3d 359
180 Or. App. 181

In the Matter of the MARRIAGE OF Bernadine Angela MENARD, Respondent, and
Raymond Thomas Menard, aka Raymond Thomas Menard, III, Appellant, and
Amber Rae Menard, Third-Party Respondent

C89-1024DR; A113218

Court of Appeals of Oregon.

Argued and Submitted December 13, 2001.

Decided March 13, 2002.

42 P.3d 361

Laura Graser, Portland, argued the cause and filed the brief for appellant

Robert T. Scherzer, Portland, argued the cause and filed the brief for respondent.

Before LANDAU, Presiding Judge, and BREWER and SCHUMAN, Judges.

SCHUMAN, J.

Husband appeals from a trial court judgment that awarded wife a share of his "voluntary separation incentive" (VSI) benefits from the military. The court found that VSI payments were the "functional equivalent" of retirement benefits and therefore marital property under the terms of the dissolution judgment. Husband argues that wife's claim is barred by laches and equitable estoppel and, if not, then it fails on the merits because VSI benefits are not retirement benefits. These arguments did not persuade the trial court, and they do not persuade us either. We therefore affirm.

The parties' 12-year marriage was dissolved in 1989. Husband was in the military during the entire marriage. The dissolution judgment awarded wife custody of the parties' two children and imposed a child support obligation on husband. It also incorporated a marital settlement agreement that provided for wife to receive 25 percent of husband's "military retired pay," or of his "disposable compensation" from the military if he chose to "voluntarily separate from the military prior to retirement." At the time of the dissolution, the parties anticipated that husband would remain in the military for seven more years, at which time he could retire with 20 years' service and full benefits. However, shortly after the dissolution, Congress, reacting to a surplus of senior military personnel, created the "voluntary separation incentive" program to encourage early separation from active duty. 10 U.S.C. § 1175. That program allowed members to separate from active duty, transfer to the Ready Reserves, and receive a stipend in an amount determined by current level of pay and years of service, distributed in annual installments until depleted. In December 1992, three years after the dissolution and four years before his anticipated retirement, husband took the incentive, transferred to Ready Reserve, and received a VSI benefit of $523,930.16, payable in annual installments of $16,162.37 until the sum is depleted in the year 2025. Wife learned of this state of affairs almost immediately from the children and wrote to military authorities seeking details.

Husband's business ventures after separation from active duty did not prosper, and, in July 1993, he moved for a modification of his child support obligation. Wife, in turn, moved to show cause "why the judgment should not be modified to award [her] 25% of [husband's] Voluntary Separation Incentive." At the hearing on these motions, the court expressed some confusion regarding the nature of the VSI payment: "I cannot determine how much of it is retirement and how much of it is not." Wife withdrew her motion for direct VSI payments as part of the property division, and the court set child support amounts based on husband's income, including the monthly VSI payments.

Between that hearing and 1999, wife and husband were in court on several occasions over husband's alleged failures to pay child support. In none of those proceedings did wife assert a claim to any portion of husband's VSI payments except insofar as they contributed to the monthly income that served as the basis for determining his support obligation. In April 2000, however, in an amended motion to modify child support, wife demanded that husband show cause why "all past VSI payments and/or retirement payments received by [husband] should not be accounted for and 25% of such reduced to judgment in favor of [her]." The trial court found that VSI payments are the "functional equivalent of retirement" and that therefore, under the terms of the dissolution judgment, wife was entitled to 25 percent of them, both retroactively and in the future. Specifically, the court ordered that wife receive 25 percent of husband's net VSI payments after federal and state taxes, social security and other mandatory deductions are subtracted,

42 P.3d 362

retroactive to December 1992 ($30,350.43), with credit for the part of child support payments based on husband's VSI income ($6,061). This brought the amount due to $24,289.43.¹ On appeal, husband argues that both laches and equitable estoppel bar wife's claim for a share of his VSI, and that, even if the claim is not barred, it fails on the merits because VSI payments are not "retirement benefits."

I. LACHES

Laches is an equitable defense; we therefore review the trial court's decision de novo. ORS 19.415(3). To prevail, husband must establish that (1) wife delayed asserting her claim for an unreasonable length of time, (2) with full knowledge of all relevant facts (and laches does not start to run until such knowledge exists), (3) resulting in such substantial prejudice to husband that it would be inequitable for this court to grant relief to wife. See Stephan v. Equitable S & L Assn., 268 Or. 544, 569, 522 P.2d 478 (1974).

Although what a "reasonable time" is for purposes of laches depends on the circumstances of each case as opposed to some mechanical formula, McIver v. Norman, 187 Or. 516, 544, 213 P.2d 144 (1949), Oregon courts take guidance from analogous statutes of limitations. Hilterbrand v. Carter, 175 Or.App. 335, 343, 27 P.3d 1086 (2001); Fontana v. Steenson, 145 Or.App. 229, 232, 929 P.2d 336 (1996). Delay beyond the analogous statute of limitations creates a rebuttable presumption of unreasonableness. Id.

In this case, husband asserts that the analogous statute of limitations is the six-year time limit for breach of contract claims, ORS 12.080, and that wife delayed beyond that time: She discovered husband's VSI in late December 1992 and did not serve husband with notice that she was claiming a share of it until April 2000. Wife argues that an earlier letter from her to military authorities actually commenced her action at a much earlier time and that, in any event, the applicable analogous time limit is the 10-year period for bringing an action on an obligation pursuant to a judgment. ORS 12.070.

Wife's latter position is correct. The 1989 marital settlement agreement was incorporated into the amended judgment of dissolution. Thus, although the terms of the marital settlement agreement are construed as though they were contract terms, Smith and Smith, 176 Or.App. 619, 622, 32 P.3d 925 (2001), nonetheless "when a claim arising from a contract is held to have merged into a judgment, a party cannot maintain an action on the contract for those claims, but may enforce the judgment only[.]" ...