Parada v. Parada

• Decision Date: 19 April 2000
• Docket Number: No. CV-97-0520-PR.,CV-97-0520-PR.
• Citation: 999 P.2d 184,196 Ariz. 428
• Parties: Guillermina Suarez PARADA, Plaintiff/Appellee, v. Ana PARADA, Defendant/Appellant.
• Court: Arizona Supreme Court

999 P.2d 184

196 Ariz. 428

Guillermina Suarez PARADA, Plaintiff/Appellee, v. Ana PARADA, Defendant/Appellant.

No. CV-97-0520-PR.

Supreme Court of Arizona, En Banc.

April 19, 2000.

J. Marc Montijo Tucson Attorney for Plaintiff/Appellee.

Machado and Gonzales, P.C. Nogales By Jose Luis Machado Attorney for Defendant/Appellant.

Lieberman, Dodge, Sendrow & Gerding, LTD. Phoenix By Marc R. Lieberman Attorney for Amicus Curiae, Fund Manager, Arizona Public Safety Personnel Retirement System.

OPINION

ZLAKET, Chief Justice.

¶ 1 Raul Parada was married to Guillermina Suarez Parada during all of the time he worked for Santa Cruz County. That employment qualified him for benefits under the Arizona Public Safety Personnel Retirement System (hereinafter referred to as "the plan"), which is funded by contributions from employee members, their employers, and investment earnings. See A.R.S. § 38-843. Under the plan, a member's monthly retirement benefit is calculated as a percentage of salary based on years of service. See id. § 38-845. The plan further provides for the monthly payment of a reduced amount to a "surviving spouse" upon the member's death. See id. § 38-846(B).

¶ 2 In September 1987, after Raul had retired, he and Guillermina were divorced in the Pima County Superior Court. Each spouse was awarded "50% of the retirement benefits from Husband's employment with Santa Cruz County." The dissolution decree further provided as follows:

6. Petitioner [Raul] shall arrange to secure payment of 50% of the monthly retirement benefit directly to Respondent [Guillermina], if possible. Petitioner shall provide Respondent with proof of efforts to accomplish same.

7. Petitioner shall name Respondent as an irrevocable beneficiary of 50% of any death benefits payable by reason of his former employment with Santa Cruz County. Petitioner shall provide Respondent with documentation of said beneficiary designation.

Thereafter, Guillermina collected one-half of Raul's retirement benefit until his death in 1995.

¶ 3 On April 26, 1989, Raul and his second wife, Ana, signed an "Irrevocable Assignment" granting Guillermina "50% of any and all benefits payable from the Public Safety Personnel Retirement System, be these retirement benefits, death benefits or refund benefits." The document further states that

ANA PARADA hereby agrees that she will remit one-half of any and all proceeds paid to her as the surviving spouse of

RAUL N. PARADA to GUILLERMINA SUAREZ PARADA.

ANA PARADA does hereby irrevocably assign to GUILLERMINA SUAREZ PARADA 50% of any and all benefits payable to her or to which she may be entitled from the Public Safety Personnel Retirement System earned by or payable by reason of RAUL N. PARADA's participation.

Guillermina Parada's signature does not appear on this assignment, nor is there evidence in the record regarding the circumstances surrounding its execution.

¶ 4 On May 5, 1989, the attorneys for Raul and Guillermina presented the court with a "Stipulation and Order Modifying Decree of Dissolution," which recites in part: "It is further agreed that Ana Parada shall join in the irrevocable assignment of 50% of athe [sic] monthly death benefit and agrees to be bound by this Court's Order in such regard, and only for the purposes of this agreement is a party to this action."¹ We cannot discern from the record whether the April assignment was attached to the stipulation, or if the court knew it had already been executed. In any event, the judge signed the order despite the fact that neither Ana Parada nor her lawyer, assuming she had one at the time, was a party to the stipulation. Moreover, there is no indication in the record that she ever made a formal appearance in these dissolution proceedings.

¶ 5 Upon Raul's death in the fall of 1995, Ana began receiving the surviving spouse's benefit but did not share it with Guillermina, who thereafter brought suit for breach of contract and quantum meruit. Venue was transferred to Santa Cruz County, where Ana resides. In October, 1996, the trial court ruled that although the assignment was invalid, Guillermina retained a community interest in Raul's death benefit. Therefore, it granted summary judgment in her favor.

¶ 6 The court of appeals agreed that A.R.S. § 38-850 prevented both Raul and Ana from assigning any portion of Raul's death benefit to Guillermina. Parada v. Parada, 191 Ariz. 421, 423, 956 P.2d 1243, 1245 (App.1997). Like the trial court, however, it found nothing in the statutes indicating "a legislative intent to deprive the non-employee ex-spouse of whatever community interest he or she might have in the employee spouse's death benefits." Id. at 424, 956 P.2d at 1246. It reversed the summary judgment in favor of Guillermina, holding that she had an interest in such payments to the extent that she might not have received her full community share of Raul's retirement benefits before his death, id. at 423-24, 956 P.2d at 1245-46, and remanding the case to the trial court for a valuation of those benefits at the time of dissolution. Guillermina petitioned for review.

Type of Plan

¶ 7 The court of appeals mischaracterized the retirement program here as a "defined contribution plan." Id. at 423, 956 P.2d at 1245. The amicus fund manager asks that we correct this error to reflect that we are dealing with a defined benefit plan.

¶ 8 A defined contribution plan is one "which provides for an individual account for each participant and for benefits based solely on the amount contributed to the participant's account, and any income, expenses, gains or losses, and any forfeitures of accounts and of other participants which may be allocated to such participant's account." 26 U.S.C. § 414(i). In contrast, a defined benefit plan is one in which "benefits are specified in advance, usually as a percentage of salary and related to years of service, and no account is kept for the employee." Johnson v. Johnson, 131 Ariz. 38, 42, 638 P.2d 705, 709 (1981).

¶ 9 Here, when a member of the plan qualifies for retirement, he or she "shall receive a monthly amount which equals fifty per cent of the member's average monthly benefit compensation." A.R.S. § 38-845(A). The percentage is adjusted up or down according to the employee's length of service. See id. When the employee dies, the surviving spouse is entitled to "a monthly amount equal to two-thirds of the monthly amount of pension which the decedent would have received immediately before death." Id. § 38-846(B).² In addition, even though employees contribute to the plan, no individual accounts are kept. See id. § 38-850(B). Thus, the statutes clearly create a defined benefit plan, not a defined contribution plan. See Miller v. Miller, 140 Ariz. 520, 523, 683 P.2d 319, 322 (App.1984) (examining this plan and holding that it is a "defined benefit plan"). Obviously, this distinction could be important during the asset valuation phase of an appropriate case, though it has little impact here.

¶ 10 No individual account ever existed in Raul's name. When he stopped working, retirement benefits in a fixed amount were payable until his death. Following the divorce, Guillermina collected one-half of those payments. After Raul died leaving a surviving spouse, Guillermina wanted to continue receiving one-half of the monthly death benefit. In our view, the law does not allow for this.

Assignment of Benefits

¶ 11 We agree with the trial court and the court of appeals that the purported assignment of benefits to Guillermina was not valid. A.R.S. § 38-850(C) unequivocally states that the assignment of

[b]enefits, employee contributions or employer contributions, including interest, earnings and all other credits, payable under this system ... either voluntary or involuntary, prior to actually being received by the person entitled to the benefit, contribution, earning or credit, under the terms of the system, and any attempt to ... assign ... any such right hereunder shall be void.

¶ 12 The attempted incorporation of the assignment into the modified decree of dissolution did not cure this defect. While it may be true that even an erroneous judgment is conclusive as to the parties, see Arizona Downs v. Superior Court, 128 Ariz. 73, 76, 623 P.2d 1229, 1232 (1981), the mere assertion in the stipulation and order that Ana was a party for purposes of the modification was insufficient to bind her. "Parties cannot be brought into court and a valid judgment rendered for or against them by merely including them in the judgment." McDonnell v. Southern Pac. Co., 79 Ariz. 10, 12, 281 P.2d 792, 793 (1955). Aside from her signature on the purported assignment, we find nothing in the record to suggest that Ana was given proper notice of the modification hearing or that she ever appeared personally or through counsel at any stage of the proceedings. She cannot, therefore, be subject to the court's decree.

Benefits Pursuant to A.R.S. § 38-846

¶ 13 Guillermina argues, however, that even without the assignment she qualifies as a "surviving spouse" under the statute providing for benefits payable upon the death of the employee. A.R.S. § 38-846(A) reads in part:

If the spouse of a member or retired member is surviving at such member's death, the spouse shall be eligible for a surviving spouse's pension, provided that such spouse had been married to the decedent either for a period of at least two years prior to such member's date of death or during such member's service.

The statute does not define "surviving spouse." It also does not allow the member to specify the recipient of this benefit, in contrast to § 38-846(F)(formerly subsection H), which permits the designation of a "refund beneficiary."

¶ 14 In considering Guillermina's argument, we apply the plain meaning of the language in question. See State v. Scotia, 146 Ariz. 159, 160, 704 P.2d 289, 290 (App. 1985) ("Statutory construction applies generally accepted meanings to challenged...