Olsen v. Olsen

• Decision Date: 13 September 2007
• Docket Number: No. 20060687-CA.,20060687-CA.
• Citation: 2007 UT App 296,169 P.3d 765
• Parties: Carolyn A. OLSEN, Petitioner, Appellee, and Cross-appellant, v. Mark K. OLSEN, Respondent, Appellant, and Cross-appellee.
• Court: Utah Court of Appeals

169 P.3d 765

2007 UT App 296

Carolyn A. OLSEN, Petitioner, Appellee, and Cross-appellant, v. Mark K. OLSEN, Respondent, Appellant, and Cross-appellee.

No. 20060687-CA.

Court of Appeals of Utah.

September 13, 2007.

Robert L. Neeley, Ogden, for Appellant and Cross-appellee.

Martin W. Custen, Ogden, for Appellee and Cross-appellant.

Before GREENWOOD, Associate P.J., BILLINGS and THORNE, JJ.

OPINION

GREENWOOD, Associate Presiding Judge:

¶ 1 Carolyn Olsen (Wife) appeals from a divorce judgment, contending that the trial court erred in categorizing her anticipated social security benefits as a marital asset subject to division. Her ex-husband, Mark Olsen (Husband), cross-appeals, claiming that the trial court erred by including health insurance coverage for the couple's two adult children in Wife's standard of living, and by denying Husband's motion for a new trial based on newly discovered evidence. We affirm in part, and reverse and remand in part.

BACKGROUND

¶ 2 During Husband and Wife's twenty-five-year marriage, Wife worked as a school teacher for the Weber County School District, and Husband worked as a civil service employee at Hill Air Force Base. At the dissolution of the marriage, Wife, age fifty-two, earned $48,491 gross per year, while Husband, age fifty-five, earned $104,987 gross per year. The parties' two children were twenty-one and eighteen at the time of the divorce.

¶ 3 Along with their home, two cabins, and other assets, the parties had five retirement plans. Wife had three: (1) a pension plan with the Utah State Retirement System (USRS), valued at $479,121; (2) a 401(k) plan with USRS, valued at $119,519; and (3) federal social security, valued at $115,435. An accountant testified at trial that he based the $115,435 present value of Wife's social security benefits on Wife living to her anticipated life expectancy, meeting all the requirements of social security, and surviving thirteen additional years until she was age sixty-five. Wife contributed $216.03 per month from her salary to social security. During the term of the marriage, Wife contributed a total of $53,196 to social security.

¶ 4 Husband had two retirement plans: (1) a thrift savings plan, valued at $93,639; and (2) a pension plan to which he contributed in lieu of social security called the Civilian Service Retirement System Plan (CSRS), valued at $897,804. Husband contributed $610 per month to his CSRS retirement plan.

¶ 5 The trial court ordered that each party receive half the benefits accrued during marriage of Husband's CSRS account ($897,804) and Wife's USRS pension ($479,121). The trial court included, as marital assets, Husband's thrift account ($93,639), Wife's 401(k) account ($119,519), and the present value of Wife's social security benefits ($115,435). Wife appeals only the inclusion of her social security account as a marital asset. In dividing the marital assets, the trial court stated in its conclusions of law, "Since there is no established controlling law, the Court determines [Wife's] social security benefits are a marital asset and therefore credits her with $115,435.24 of marital property, the present fair market value of her social security." Taking into consideration the present value of these social security benefits, as well as both parties' other marital assets, the trial court ordered Wife to pay Husband $9421 at the sale of the marital residence to equalize the parties' marital assets.

¶ 6 In addition to dividing the marital assets, the trial court made findings regarding alimony. The trial court found that Wife's total monthly living expenses, necessary to maintain the standard of living to which she had grown accustomed during the marriage, were $3920. Because Wife had "always maintained the family medical insurance and insuring their children has become a part of the standard of living of the parties," the trial court approved, as part of Wife's monthly expenses, $556 per month in health insurance coverage for Wife and the couple's two children as long as the children were eligible to receive insurance under Wife's insurance plan. Taking into consideration Wife's monthly income, plus rental income from two cabins, the trial court found that Wife's monthly financial shortfall was $862. The trial court found Husband had monthly living expenses of $4255, and had the ability, based on his income, to pay $1010 per month in alimony. The trial court ordered Husband to pay $862 per month in alimony for twenty-six years and nine months, unless Wife remarried, co-habitated, or either party died. Several months after trial, Wife's health insurance costs for herself and the two children were reduced from $556 to $74 per month. After entry of the divorce decree and judgment, Husband filed a motion for new trial and to alter or amend the judgment, seeking a reduction in alimony premised on the reduction in Wife's health insurance costs.

ISSUES AND STANDARDS OF REVIEW

¶ 7 Wife claims the trial court erred in treating her federal social security benefits as a "marital asset" because Congress has preempted the state's divorce laws related to social security. Decisions regarding whether a state law has been preempted by federal law are reviewed for correctness "without deference to the conclusions of the trial court." State v. Mooney, 2004 UT 49, ¶¶ 9-10, 98 P.3d 420; see also Utah Dep't of Human Servs. v. Hughes, 2007 UT 30, ¶¶ 3, 15, 156 P.3d 820. "Application of statutory law to the facts presents a mixed question of fact and law. We review the [trial court's] findings for clear error and its conclusions of law for correctness, affording the court some discretion in applying the law to the facts." E.B. v. State, 2002 UT App 270, ¶ 11, 53 P.3d 963 (quotations omitted).

¶ 8 Husband cross-appeals, claiming the trial court erred as a matter of law in including the cost of maintaining health insurance coverage for the couple's two adult children in its alimony award. "In a divorce proceeding, the trial court may make such orders concerning property distribution and alimony as are equitable. The trial court has broad latitude in such matters, and orders distributing property and setting alimony will not be lightly disturbed." Jones v. Jones, 700 P.2d 1072, 1074 (Utah 1985) (citation omitted). Therefore, we review alimony awards under an abuse of discretion standard. See id.

¶ 9 Husband also claims that the trial court exceeded the scope of its discretion in denying Husband's motion for a new trial based on newly discovered evidence related to the reduced cost of Wife's health insurance. "Rulings on motions for a new trial are addressed to the sound discretion of the trial court, and its decision will be reversed on appeal only for a clear abuse thereof." Hancock v. Planned Dev. Corp., 791 P.2d 183, 184-85 (Utah 1990) (footnotes and citations omitted).

ANALYSIS

I. Social Security Benefits

¶ 10 Wife appeals the trial court's ruling that Utah state courts may consider the present value of a spouse's social security benefit to be a marital asset¹ subject to division upon divorce. Specifically, Wife argues that social security benefits cannot be classified as marital property because Congress's enactment of the Social Security Act preempted the states' divorce laws regarding social security benefits. See 42 U.S.C. § 407(a) (2000). Husband, in contrast, urges that Utah courts have considerable discretion concerning property division in divorce proceedings, and that considering the present value of Wife's social security benefits was within the proper exercise of that discretion. Husband also argues that Congress prohibits only the direct division of social security benefits, but does not prohibit a court from considering the benefits in fashioning an equitable distribution of marital property.

¶ 11 While other state appellate courts have decided how social security benefits should be characterized and considered upon divorce, this is an issue of first impression in Utah.² As we explain below, we hold that Congress has preempted state trial courts from including social security benefits as a marital asset; however, trial courts may consider social security benefits in relation to all joint and separate marital assets in seeking to ensure that "property be fairly divided between the parties, given their contributions during the marriage and their circumstances at the time of the divorce." Newmeyer v. Newmeyer, 745 P.2d 1276, 1278 (Utah 1987). Therefore, we conclude that the trial court incorrectly classified Wife's social security benefits as a marital asset, and consequently, the division of property must be reconsidered on remand.

A. The Proper Classification of Social Security Benefits

¶ 12 We first address Wife's argument that "courts may not consider social security benefits as a marital asset divisible in domestic relations proceedings because Congress's enactment of the Social Security Act preempted state divorce laws." The federal law at issue here, section 407(a) of the Social Security Act, provides:

The right of any person to any future payment under this title shall not be transferable or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under this title shall be subject to execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law.

42 U.S.C. § 407(a). Congress has authorized an exception to this prohibition against the transfer or assignment of social security benefits in order to allow for the collection of child support and alimony.³ See 42 U.S.C. § 659(a) (2000). Congress explicitly excluded from the child support and alimony exception "any community property settlement, equitable distribution of property, or other division of property between spouses or former spouses." Id. § 659(i)(3)(B)(ii) (2000). Congress has also provided certain benefits for divorced spouses married more than ten...