Morgan v. Morgan

• Decision Date: 01 April 2008
• Docket Number: No. WD 68156.,WD 68156.
• Citation: 249 S.W.3d 226
• Parties: David E. MORGAN, Respondent, v. Karen E. MORGAN, Appellant.
• Court: Missouri Court of Appeals

249 S.W.3d 226

David E. MORGAN, Respondent, v. Karen E. MORGAN, Appellant.

No. WD 68156.

Missouri Court of Appeals, Western District.

April 1, 2008.

Leonard Breon, Carroll G. Leffler, Warrensburg, MO, for appellant.

Matthew Morgan, Warrensburg, MO, for respondent.

Before: HOLLIGER, P.J., LOWENSTEIN and SMART, JJ.

FACTUAL BACKGROUND

:

LOWENSTEIN, Judge.

The marriage of David Morgan (David) and Karen Morgan (Karen)¹ was dissolved by a June 30, 1997 decree of the Circuit Court of Johnson County. At that time, David was serving in the United States Air Force. As part of the distribution of marital property, the court apportioned a percentage of David's future military retired pay to Karen. The court's order stated, "[P]etitioner's military retirement is divided by setting off 50% of the marital portion of the petitioner's military retirement to the respondent with the remaining portion of the military retirement being set off to the petitioner" (David was the petitioner in the dissolution, Karen the respondent). The court further ordered that marital personal property and debt be divided in accordance with the provisions of the parties' Marital Settlement Agreement, which was incorporated into the judgment by reference.²

DEVELOPMENTS SINCE DISSOLUTION:

In July 2005, David retired from the Air Force and began to draw his military retired pay. David was entitled to receive $2,358 per month in retired pay. Upon his retirement, the Veterans Administration determined that David was eligible for a non-taxable disability benefit of $406 per month due to a shoulder injury associated with his military service. This benefit could not be received in addition to retired pay, but could be taken in lieu of a portion of the retired pay that David could otherwise collect. As disability benefits are not subject to taxation, it is advantageous for eligible retirees to waive retired pay in favor of such benefits. Thus, David waived $406 of his retired pay, which reduced his retired pay from $2,358 to $1,952.

In October of 2005, Karen applied to the Defense Finance and Accounting Service (DFAS) for payment of her portion of David's retired pay. DFAS rejected the request because the language of the circuit court's judgment was not specific enough to allow DFAS to define the portion of the retired pay that was payable to Karen. The rejection letter stated that the applicant "must provide this agency a certified copy of an ... order that provides for payment as a fixed amount or payment as a percentage of the [retiree's] actual disposable military retired/retainer pay."

CORRECTION OF JUDGMENT BY CIRCUIT COURT:

In response to this rejection, Karen filed a motion to construe the 1997 judgment. After hearing evidence, the court issued a judgment nunc pro tunc that restated the original judgment's distribution of the retired pay. The corrected distribution reads as follows:

The Respondent [Karen] is awarded a percentage of the Petitioner's disposable military retirement pay, to be computed by multiplying 50% times a fraction, the numerator of which is 168 months of marriage during the Petitioner's creditable military service, divided by the member's total number of months of creditable military service.³ (emphasis added)

It is this judgment to which Karen assigns error. She contests the addition of the word "disposable" to the description of retired pay amounts subject to division. Karen asserts that, since "disposable retired pay" does not include amounts waived to receive disability benefits or the disability benefits themselves, the judge validated David's unilateral reduction of the amount Karen would receive pursuant to the dissolution order. This, Karen contends constituted an impermissible, de facto re-division of a martial asset.

STANDARD OF REVIEW:

The standard of review in a court-tried civil case is set out in Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). This court must affirm the trial court's judgment unless there is no substantial evidence to support it, it is against the weight of the evidence, or it erroneously declares or applies the law. Although this court must give deference to the trial court's factual determinations, review of any error in applying the law is de novo. Lafayette v. Courtney, 189 S.W.3d 207, 209 (Mo.App.2006).

DISCUSSION:

Members of the Armed Forces who serve for a specified period may receive retired pay upon their retirement. Mansell v. Mansell, 490 U.S. 581, 583, 109 S.Ct. 2023, 104 L.Ed.2d 675 (1989). "Veterans who became disabled as a result of military service are eligible for disability benefits." Id.; see 38 U.S.C. §§ 1110, 1131. The amount of disability benefits a veteran is eligible to receive is calculated according to the seriousness of the disability and the degree to which the veteran's ability to earn a living has been impaired. Mansell, 490 U.S. at 583, 109 S.Ct. 2023; see 38 U.S.C. §§ 1114, 1155. "In order to prevent double dipping, a military retiree may receive disability benefits only to the extent that he [or she] waives a corresponding amount of his military retired pay." Mansell, 490 U.S. at 583, 109 S.Ct. 2023. "Because disability benefits are exempt from federal, state, and local taxation, military retirees who waive their retired pay in favor of disability benefits [can] increase their after-tax income." Id. at 583-84, 109 S.Ct. 2023 (citation omitted).

"The Uniformed Services Former Spouses' Protection Act (USFSPA) authorizes state courts to treat `disposable retired pay' as marital property." 10 U.S.C. § 1408(c)(1); In re Marriage of Strassner, 895 S.W.2d 614, 616 (Mo.App. 1995). Missouri considers such disposable retired pay as is received for service performed during the marriage to be marital property, subject to division in a dissolution proceeding. Strassner, 895 S.W.2d at 616. Under the USFSPA, "disposable retired pay" is defined as "the total monthly retired pay to which a [military] member is entitled," less certain deductions. 10 U.S.C. § 1408(a)(4). The deductions include amounts waived in order to receive disability benefits. § 1408(a)(4)(B). In Mansell v. Mansell, the United States Supreme Court interpreted 10 U.S.C. § 1408 to preclude an award to a former spouse of any amounts of retired pay that are not within the definition of "disposable retired pay." 490 U.S. at 594-95, 109 S.Ct. 2023. Mansell prevents state courts from treating military retired pay that has been waived in favor of disability benefits as property divisible in a dissolution proceeding. Strassner, 895 S.W.2d at 617. For purposes of property division in Missouri, this means that both disability benefits and any retired pay amounts waived to receive them are non-marital property. In re Marriage of Bowman, 972 S.W.2d 635, 638 (Mo.App.1998).

In Missouri, the distribution of marital property constitutes a final order and is not subject to modification or alteration. § 452.330.5, RSMo 2000; Wandfluh v. Wandfluh, 716 S.W.2d 420, 422 (Mo. App.1986). "An award of military retired pay is a property division and not a maintenance award." Strassner, 895 S.W.2d at 618. For this reason, once it has been divided as part of a final judgment, military retired pay may not be re-divided after circumstances have changed. Id. It has been recognized that the operation of section 1408, especially when combined with a prohibition on re-dividing marital property, gives a military retiree such as the respondent unique control over a marital asset. See, e.g., Mansell, 490 U.S. at 594, 109 S.Ct. 2023; Moon v. Moon, 795 S.W.2d 511, 514 n. 2 (Mo.App.1990). Since Missouri courts cannot re-divide the marital portion of a retiree's disposable retired pay after the final dissolution decree, a retiree can thereafter alter the amount designated as disposable retired pay, by waiving some portion of it in favor of disability benefits, and thereby reduce the amount payable to his or her former spouse. See Moon, 795 S.W.2d at 514. The court in Moon noted, "It is apparent that this result allows former military personnel unilaterally to alter the terms of a final judgment dividing marital property. The [United States] Supreme Court recognized the harshness of this result when it observed: `We realize that reading [section 1408] literally may inflict economic harm on many former spouses. But we decline to misread the statute in order to reach a sympathetic result....'" Moon, 795 S.W.2d at 514 n. 2 (quoting Mansell, 490 U.S. at 594, 109 S.Ct. 2023).

As the appellant Karen notes in her brief, the important issue here is the addition of the word "disposable" to the description of the retired pay subject to division by the dissolution judgment. It is her argument that the term should not have been added and that she should receive her percentage as if David had not waived any amount of retired pay. Essentially, what Karen seeks is a percentage of David's total retired pay, as opposed to a percentage of his disposable retired pay. This request simply cannot be granted.

To gain perspective with regard to Karen's argument, it is helpful to examine her rights relating to David's retired pay at the time of the dissolution decree. The Marital Settlement Agreement prepared by Karen and David and incorporated into the dissolution court's judgment describes the retired pay to be divided as "disposable military retired pay." (Emphasis added.) At the outset, Karen bargained for a fraction of an asset with an undetermined value. Since David was still in active service at the time of the dissolution and the amount of retired pay is determined by the number of years served and rank achieved at retirement, it was impossible at the time of dissolution to determine the total retired pay for which David would be eligible. Since disposable retired pay is subject to reduction by waivers for disability benefits, along with several other deductions under section 1408(a)(4), the amount that Karen was to receive under the agreement...