Sachs v. Sachs, 94-263

• Decision Date: 14 April 1995
• Docket Number: No. 94-263,94-263
• Citation: 659 A.2d 678,163 Vt. 498
• Parties: , Unempl.Ins.Rep. (CCH) P 14561B Margit B. SACHS v. Thomas D. SACHS.
• Court: Vermont Supreme Court

Page 678

659 A.2d 678

163 Vt. 498, Unempl.Ins.Rep. (CCH) P 14561B

Margit B. SACHS v. Thomas D. SACHS.

No. 94-263.

Supreme Court of Vermont.

April 14, 1995.

Neil H. Mickenberg and William M. Dorsch of Mickenberg, Dunn, Sirotkin & Dorsch, Burlington, for plaintiff-appellant.

Susan L. Fowler, Burlington, for defendant-appellee.

Before ALLEN, C.J., and GIBSON, DOOLEY, MORSE and JOHNSON, JJ.

JOHNSON, Justice.

Plaintiff wife appeals and husband cross-appeals from an order of the Chittenden Family Court construing the parties' 1984 divorce decree with respect to retirement benefits, Social Security benefits, and attorney's fees. We affirm the court's decision entitling plaintiff to share in the appreciation of defendant's retirement and Social Security benefits, but reverse the court's method of calculating those benefits and the court's denial of attorney's fees.

The parties were divorced in 1984 after twenty-two years of marriage. At the time of the divorce, defendant was fifty-nine years old and had been employed as a professor at the University of Vermont since 1962. The final order provided for alimony and child support, and paragraph 10 allocated husband's retirement and Social Security benefits upon retirement. It stated:

[U]pon Defendant's retirement, Plaintiff shall be entitled to and shall receive 50% of any of Defendant's employment related and Social Security pension or retirement benefits as those benefits existed as of August 1, 1984 (including both lifetime retirement and survivors benefits as available) which payments shall constitute alimony. It is agreed that the amount of Plaintiff's share of such benefits will not continue to accrue after August 1, 1984.... It is agreed that Defendant's accrued retirement benefits under TIAA-CREF as of August 1, 1984[,] during the first year of payments under the 20 year guaranteed option are expected to yield approximately $669 in total monthly benefits if Defendant retires at age 62 and $814 in total monthly benefits if Defendant retires at age 65. It is also understood that the amount of TIAA-CREF retirement benefits will vary (subsequent to the first year of payments) depending upon the status of TIAA-CREF investments. Using the above figures as a base, Plaintiff shall share in 50% of any increase or decrease in TIAA-CREF retirement benefits accrued to August 1, 1984[,] and caused by market fluctuations.

Husband retired on June 30, 1993 at age sixty-eight, and when the parties could not agree on the interpretation of paragraph 10 of the 1984 agreement, wife moved to enforce. The central issue at trial was the division of the TIAA-CREF account, to which husband contributed throughout the marriage. The total investment in the account at the date of the divorce in 1984 was $77,679. This amount, less husband's post-divorce contributions, appreciated to $304,556 by the time of his 1993 retirement, due solely to an increase in the value of the underlying investments, and not to additional contributions from earnings on husband's part.

The court concluded that wife was entitled to share in 50% of the TIAA-CREF benefits, amounting to $814 per month--the dollar amount specifically set forth in the 1984 order as husband's approximate benefits at age sixty-five. The court further concluded that wife was entitled to share in 50% of husband's Social Security benefits that were payable at age sixty-five. Wife's motion for attorney's fees was denied.

Wife moved to alter or amend, arguing, inter alia, that the court should have awarded her 50% of the actual TIAA-CREF and Social Security benefits payable to the husband at age sixty-eight, rather than the amount set forth in paragraph 10 of the 1984 order as an example of benefits applicable if he retired at sixty-five. The motion was denied, and wife appealed. Husband objected to the award of any sum greater than 50% of the value of the retirement account in 1984 and cross-appealed on that question.

Addressing the claims of both parties, we must examine the court's reasoning carefully, recognizing, however, that its construction of the 1984 order is strictly a question of law that we must determine independently. See Dartmouth Sav. Bank v. F.O.S. Assocs., 145 Vt. 62, 66, 486 A.2d 623, 625 (1984) (legal effect of written instrument is matter of law determinable at appellate level).

Husband's first claim is that the court incorrectly ordered that wife should receive 50% of the growth of husband's retirement benefits. He relies first on the meaning of the word "accrue" in the clause in paragraph 10 stating that "[i]t is agreed that the amount of Plaintiff's share of such benefits will not continue to accrue after August 1, 1984." He contends that after the date of the 1984 order no further credits, including interest and appreciation, were intended to "accrue" to wife's benefit.

The fallacy in his argument is that, construed in isolation, the word "accrue" does not convey any notion of what is to be accrued. In context, however, paragraph 10 establishes a clear overall scheme under which wife's 50% share of husband's benefits on the date of the 1984 order "accrues," i.e., is fixed and established as a "base." The word "accrue" in the clause in question clearly refers to amounts credited to that base. Cf. Hoover v. Cumberland, Md. Area Teamsters Pension Fund, 756 F.2d 977, 983-84 (3d Cir.1985) (under ERISA, accrual provisions provide formula for calculating amount of normal retirement benefit employee has earned at any given time). What would happen to that share or base was not determinable in 1984; hence, the parties used illustrations based on estimates of what wife's share might be worth if husband retired at sixty-two and at sixty-five.

As the court pointed out, these estimated amounts are substantially higher than the $581 in total monthly benefits as of the date of the 1984 order, and the clear intent of the provision was that wife's share would include future growth in the value of her share of the base account. If the parties had intended to base the wife's share of post-retirement benefits on the $581 figure, they could simply have said so and avoided the need for additional estimates and formulas. To the contrary, the provision makes clear that the base amount should be set as of the date of divorce and adjusted for later fluctuations reflecting investment experience. Assuming positive growth after 1984, the later husband retired the greater the adjusted base and the concomitant benefits to wife would be.

In light of this overall scheme, the word "accrue," as wife contends, simply underscores that the date of the 1984 order was a focal date after which retirement benefits attributable to the marriage were to be calculated and set as a base, with benefits to be calculated and awarded upon husband's subsequent retirement.

Husband's second textual argument is that the use of the word "fluctuations" implies that the order did not pertain to growth of the base amount. The 1984 order allowed wife to "share in 50% of any increase or decrease in TIAA-CREF retirement benefits accrued to August 1, 1984, and caused by market fluctuations." Husband argues that the word "fluctuations" does not imply "growth," since the former implies movements both up and down, while the latter means only upward movement. This argument is without merit. In referring to "any increase or decrease," the order acknowledged that the future might enhance or diminish wife's base. The future was uncharted, and the risks were to be shared. Use of the word "fluctuations" was appropriate and did not imply that "growth" meant anything different or that it was to be excluded.

Finally, husband argues that because the 1984 order treated defendant's retirement benefits as income for purposes of determining alimony, and not as marital property, wife was not entitled to any growth in the base amount. In the context of the 1984 order, his emphasis on the distinction between alimony and a property award is misplaced. As the court pointed out, pensions may be considered as marital assets, McDermott v. McDermott, 150 Vt. 258, 259-60, 552 A.2d 786, 788 (1988); they may also be considered as a source of income upon which an award of spousal maintenance may be based. Repash v. Repash, 148 Vt. 70, 72, 528 A.2d 744, 745 (1987).

Ultimately, it is the agreement terms, not the characterization of the benefit, that determined the allocation of growth in the value of the TIAA-CREF account between the date of the 1984 order and the date of retirement. This reading makes sense as a matter of construction of the 1984 order, and it does not violate notions of equity. The court did not err in ruling that wife was entitled to growth in the base amount.

Each of the parties challenges the court's method of calculating...