Scheidel v. Scheidel

Decision Date31 May 2000
Docket NumberNo. 19,937.,19,937.
Citation4 P.3d 670,129 N.M. 223,2000 NMCA 59
PartiesNancy SCHEIDEL, Respondent-Appellant, v. Paul Neal SCHEIDEL, Petitioner-Appellee.
CourtCourt of Appeals of New Mexico

Michael C. Jordan, Albuquerque, for Appellant.

William Short, Albuquerque, for Appellee.

OPINION

BUSTAMANTE, Judge.

{1} Brigadier General Paul Neal Scheidel (Husband) appeals from the trial court's order enforcing the terms of a Marital Settlement Agreement (MSA) entered into by Husband and Nancy Scheidel (Wife). The MSA divided Husband's military retirement benefits between the parties and prohibited Husband from taking any voluntary action to reduce Wife's share of those benefits. The MSA also contained an indemnity provision that would require Husband to compensate Wife for reductions in her benefits that might result from voluntary action by Husband. In the proceedings below, Wife successfully sought indemnity from Husband after Husband waived a portion of his retirement pay. On appeal, Husband argues that the trial court's order violates federal law. Husband further asserts that the trial court's determination that he violated the terms of the MSA, thereby triggering the indemnity provision, was in error. We affirm.

FACTS AND PROCEDURAL BACKGROUND

{2} Husband and Wife were married on June 3, 1960, while Husband was in the Air Force. Husband retired from the military in 1986. After the parties divorced in 1991, they entered into the MSA at issue, which was incorporated into the court's amended final decree. For the purposes of this appeal, the most significant portions of the agreement provide as follows:

D. Wife is awarded fifty percent (50%) of the community property interest in Husband's military retirement benefits. At the time of execution of this Marital Settlement Agreement, fifty percent (50%) is equal to $1,861.00 monthly.... Wife shall share in all future increases in the military retirement benefits....
(1) Wife's interest in Husband's military retirement pay shall be calculated according to the following formula:
Wife's interest is expressed as one-half of the community interest.
Community interest is two hundred eighty-eight (288) months marriage divided by three hundred (300) months service equals .96 of the amount remaining after Veterans Administration compensation of $259.00 monthly (or the Veterans Administration compensation amount, as the same may change from time to time by government action) is deducted from gross monthly military retirement pay.
Wife's interest is equal to one-half of the community interest, or .96 divided by 2 equals .48 or 48 percent (48%).
....
(4) Husband shall never voluntarily modify his military retirement pay in such a manner as to cause Wife's share to be diminished or reduced. If Husband does so, he will be responsible to pay to Wife the difference in monies she then receives via direct payment and the amount due her as calculated above.

The MSA also provides that Wife shall receive her payments from the Defense Finance and Accounting Service (DFAS), pursuant to a direct payment program established by federal law. See 10 U.S.C. § 1408(d)(1)-(2) (1994 & Supp. IV 1998).

{3} At the time of the divorce Husband was 30% disabled, and he received a commensurate amount of disability pay in lieu of retirement benefits. However, Husband suffered worsening heart problems in the years following the divorce. He had a number of strokes, and began taking medication to thin his blood. He also developed serious dental problems. Husband's condition required that he be hospitalized and put on medication to thicken his blood before he could have his dental problems treated. Because the Veterans Administration (VA) provides dental care only to military persons who are completely disabled, Husband applied for a reevaluation, and received a 100% disability rating.

{4} In accordance with federal law, Wife's share of Husband's military pension is based upon Husband's retirement pay, excluding any amounts received from the VA as disability pay. See 10 U.S.C. § 1408(a)(4)(B) (1994). Because a military retiree must waive a corresponding amount of retirement pay in order to receive veterans' disability benefits, see 38 U.S.C. § 5305 (1994), the amount received monthly by Wife as her share of the retirement benefits decreased dramatically after Husband's disability rating increased. Based upon the indemnity provision in the MSA, Wife therefore filed a motion for order to show cause, seeking an order forcing Husband to compensate her for the reduction in benefits. The trial court determined that Husband had violated the terms of the MSA by applying for and receiving a higher disability rating, and required Husband to indemnify Wife for her losses. This appeal followed.

DISCUSSION
1. Federal Preemption

{5} Husband asserts that the trial court's order is directly at odds with the Uniformed Services Former Spouses' Protection Act, 10 U.S.C. § 1408 (the USFSPA), and the Supreme Court's ruling in Mansell v. Mansell, 490 U.S. 581, 109 S.Ct. 2023, 104 L.Ed.2d 675 (1989).

{6} Enacted in response to McCarty v. McCarty, 453 U.S. 210, 101 S.Ct. 2728, 69 L.Ed.2d 589 (1981), the USFSPA eliminated federal preemption in regard to the postmarital disposition of military pensions. See Walentowski v. Walentowski, 100 N.M. 484, 486, 672 P.2d 657, 659 (1983)

. Specifically, the USFSPA authorizes state courts to treat "disposable retired pay ... as property of the [military] member and his spouse in accordance with the law of the jurisdiction of such court." 10 U.S.C. § 1408(c)(1) (1994). "[D]isposable retired pay" is defined as "the total monthly retired pay to which a member is entitled," less certain deductions. 10 U.S.C. § 1408(a)(4). Among the amounts that are deducted from the retired pay of the military member are any amounts waived in order to receive disability benefits. See 10 U.S.C. § 1408(a)(4)(B). Interpreting these provisions, the Supreme Court held in Mansell that disability payments are excluded from the scope of the USFSPA. By extension, the Court concluded that state courts lack the power to treat military retirement pay that has been waived in order to receive disability benefits as property that is divisible upon divorce. See Mansell, 490 U.S. at 594-95,

109 S.Ct. 2023.

{7} In reliance upon Mansell, Husband contends that the trial court's order, which requires him to compensate Wife for the reduction in benefits that she suffered as a result of the increase in his disability rating, amounts to an impermissible distribution of disability benefits to Wife. We disagree.

{8} Courts in a number of other states have addressed post-judgment waivers of retirement pay in circumstances similar to those presented here. In recognition of the fact that Mansell merely prohibits state courts from ordering the division of the military spouse's disability pay, several courts have determined that nothing in Mansell or in the USFSPA prohibits them from enforcing indemnity provisions designed to guarantee a minimum monthly income to the non-military spouse. See, e.g., Abernethy v. Fishkin, 699 So.2d 235, 239-40 (Fla.1997)

; In re Marriage of Strassner, 895 S.W.2d 614, 617-18 (Mo.Ct.App.1995); Owen v. Owen, 14 Va. App. 623, 419 S.E.2d 267, 269-71 (1992). However, these courts have observed that the enforceability of such an indemnity provision depends upon the source of the funds committed in satisfaction of the military spouse's obligation. See, e.g., Abernethy, 699 So.2d at 239 (affirming enforcement of settlement agreement because it "did not expressly provide for a division of disability," which, under the USFSPA and Mansell, would be invalid). Neither the marital settlement agreement, nor the court order enforcing the relevant portions of that agreement, may require the military spouse to remit disability funds, specifically, to the non-military indemnitee. See Mansell, 490 U.S. at 594-95,

109 S.Ct. 2023. However, so long as the military spouse is free to satisfy an indemnity obligation from any source, these courts have ruled that the enforcement of such indemnity provisions does not result in the impermissible division of disability benefits. See Abernethy, 699 So.2d at 240; Strassner,

895 S.W.2d at 618; Owen, 419 S.E.2d at 269-70.

{9} We find these cases persuasive. Not only is the rationale analytically sound, but the result is equitable. As this Court has previously noted, one spouse should not be permitted to benefit economically in the division of property from a factor or contingency that could reduce the other spouse's share, if that factor or contingency is within the first party's complete control. See Irwin v. Irwin, 121 N.M. 266, 271, 910 P.2d 342, 347 (Ct.App.1995)

.

{10} We acknowledge that when deciding cases with similar facts, courts in some jurisdictions appear to have reached conclusions contrary to ours. See, e.g., Ashley v. Ashley, 337 Ark. 362, 990 S.W.2d 507, 509 (1999)

; In re Marriage of Pierce, 26 Kan.App.2d 236, 982 P.2d 995, 998 (1999); Ryan v. Ryan, 257

Neb. 682, 600 N.W.2d 739, 744-45 (1999); Johnson v. Johnson, No. 02A01-9901-CV-00015, 1999 WL 713574, at * 3-5 (Tenn.Ct. App.1999), appeal granted, Apr. 10, 2000; Wallace v. Fuller, 832 S.W.2d 714, 718 (Tex. Ct.App.1992). Upon closer review, however, we find many of these cases distinguishable, and we find that they do not dissuade from our position.

{11} For example, in In re Marriage of Pierce, in contrast to this case, the settlement agreement at issue did not specify that the wife was to receive a certain sum of money per month, nor did it preclude the husband from doing anything to alter the amount the wife was to receive. See 982 P.2d at 997. As such, the court rightly held that the husband was free to waive his retirement pay in favor of disability benefits and that Mansell precluded the trial court from ordering otherwise. See In re Marriage of Pierce, 982 P.2d at 998

. In several of the other cases, the courts rightly...

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