Schwab v. Schwab

• Decision Date: 22 June 2021
• Docket Number: No. 2019AP1200,2019AP1200
• Citation: 961 N.W.2d 56,2021 WI 67
• Court: Wisconsin Supreme Court
• Parties: In re the Marriage of: Kathy SCHWAB, n/k/a Siech, Petitioner-Respondent-Petitioner, v. Paul SCHWAB, Respondent-Appellant.

961 N.W.2d 56

2021 WI 67

In re the Marriage of: Kathy SCHWAB, n/k/a Siech, Petitioner-Respondent-Petitioner,

v.Paul SCHWAB, Respondent-Appellant.

No. 2019AP1200

Supreme Court of Wisconsin.

Oral Argument: March 15, 2021

Opinion Filed: June 22, 2021

For the petitioner-respondent-petitioner, there were briefs filed by Carlton D. Stansbury, Colin A. Drayton, and Burbach & Stansbury S.C., Milwaukee. Oral argument was presented by Carlton D. Stansbury.

For the respondent-appellant, there was a brief filed by Andrew J. Laufers, Laura Stack, and Cordell Law, LLP. Edina, Minnesota and Milwaukee. Oral argument was presented by Andrew J. Laufers.

DALLET, J., delivered the majority opinion of the Court, in which ANN WALSH BRADLEY, ROGGENSACK, and KAROFSKY, JJ., joined. ZIEGLER, C.J., filed a dissenting opinion, in which REBECCA GRASSL BRADLEY and HAGEDORN, JJ., joined. REBECCA GRASSL BRADLEY, J., filed a dissenting opinion.

REBECCA FRANK DALLET, J.

¶1 Kathy Siech and Paul Schwab divorced in 1992. As part of the divorce judgment, the circuit court incorporated their marital settlement agreement, in which Paul promised to pay Kathy half of his pension "when and if" that benefit first became available to him. But when Paul first received his pension nearly 21 years later, he refused to pay Kathy her share. Kathy sought to judicially enforce their agreement via a contempt order, to which Paul responded that her action was barred by a 20-year statute of repose, Wis. Stat. § 893.40 (2019–20).¹ The circuit court disagreed and concluded that, under Johnson v. Masters, 2013 WI 43, 347 Wis. 2d 238, 830 N.W.2d 647, it had the authority to order Paul to comply with the settlement agreement.² The court of appeals reversed that order, concluding that § 893.40 barred Kathy's action.³ We agree with the circuit court that Johnson v. Masters is instructive. Accordingly, § 893.40 does not bar Kathy's action because it was impossible for Paul to perform on his promise—and therefore for Kathy to enforce that promise—until after the statutory period of repose had run. We therefore reverse the court of appeals’ decision and reinstate the circuit court's order.

I

¶2 In February 1992, the circuit court granted Kathy and Paul, then both 39 years old, a divorce judgment. The judgment incorporated Kathy and Paul's marital settlement agreement, which detailed how they would divide their marital property and stated that the circuit court would retain "continuing jurisdiction ... to make orders enforcing" that division. Under one provision, Paul agreed to provide Kathy half his Air National Guard pension "when and if" it became available to him.

¶3 Paul's pension first became available to him in February 2013 when he turned 60 years old, roughly 21 years after the divorce judgment was entered. Although he received regular pension disbursements, Paul never paid Kathy her share. In 2017, Kathy requested both her share of past payments and that Paul sign a military retired pay order per 10 U.S.C. § 1408 so that her share of Paul's future disbursements would be sent directly to her.⁴ Paul refused to pay her or to sign the pay order.

¶4 Kathy then initiated contempt proceedings. Paul argued that Kathy's contempt action was untimely under Wis. Stat. § 893.40. That provision, a statute of repose, bars any "action upon a judgment or decree of a court" brought more than "20 years after the judgment ... is entered." § 893.40. Paul reasoned that because the 1992 judgment was entered more than 20 years earlier, Kathy's contempt action was barred by § 893.40.

¶5 The circuit court disagreed, concluding that under our decision in Johnson v. Masters, 347 Wis. 2d 238, 830 N.W.2d 647, it had the equitable authority to enforce a pension-division obligation extending beyond 20 years, § 893.40 notwithstanding. The circuit court ordered Paul to pay Kathy her share of pension payments and to sign the military retired pay order within 30 days or it would find him in contempt of court. It stayed enforcement of that order pending Paul's appeal.

¶6 The court of appeals reversed, determining that § 893.40 barred Kathy's contempt action. The court of appeals distinguished Johnson on factual grounds and dismissed the equitable-authority rationale on which the circuit court relied because that reasoning did not garner a majority. We granted Kathy's petition for review.

II

¶7 We review whether Wis. Stat. § 893.40 bars the enforcement of a marital property division that was impossible until after the statutory period of repose had run. Resolving this question requires us to interpret the language of both the statute and the parties’ agreement, matters which we review de novo. See Jones v. Est. of Jones, 2002 WI 61, ¶9, 253 Wis. 2d 158, 646 N.W.2d 280.

A

¶8 We resolved a similar question in Johnson v. Masters, 347 Wis. 2d 238, 830 N.W.2d 647. There, we held that Wis. Stat. § 893.40 did not bar an action to enforce a divorce judgment's pension division brought more than 20 years after the judgment was entered, because it was impossible to comply with the judgment for the first nine years. Johnson and Masters’ divorce judgment, entered in 1989, required that Johnson be awarded half of Masters’ pension and that a "QDRO [qualified domestic relations order] shall be submitted to secure these rights." Id., ¶7. The parties could not immediately submit the required QDRO, however, because from the time of their divorce until the law was amended in 1998, Wisconsin law prohibited the assignment of state pension benefits via a QRDO. Id., ¶6. Upon learning in 2010 that Masters had retired a year earlier, Johnson filed a QDRO. When Masters refused to sign the required authorization, Johnson filed a post-judgment motion requesting that Masters release his pension information. Id., ¶9. Masters argued that Johnson's motion, filed 21 years after entry of the divorce judgment, was untimely under § 893.40. Id., ¶10. The circuit court agreed. Id., ¶11.

¶9 We reversed the circuit court's order, determining that § 893.40 did not bar Johnson's motion because then-existing law made it impossible for the parties to execute the required QDRO for the first nine years after the divorce judgment. Id., ¶¶19, 26. Johnson turned on our duty to interpret statutes to avoid "unreasonable results" and to "constru[e] each in a manner that serves its purpose." Id., ¶¶19-26 (citing State ex rel. Kalal v. Cir. Ct. for Dane Cnty., 2004 WI 58, ¶¶45–46, 271 Wis. 2d 633, 681 N.W.2d 110, and State v. Szulczewski, 216 Wis. 2d 495, 503, 574 N.W.2d 660 (1998) ). Citing several prior decisions in which we rejected interpretations that would produce results contrary to both the statute's purpose and common sense, we concluded that it would be similarly illogical for § 893.40 to penalize Johnson for failing to do something not possible. Id., ¶¶20-21 ; see also Teschendorf v. State Farm Ins. Cos., 2006 WI 89, ¶¶30-43, 293 Wis. 2d 123, 717 N.W.2d 258 (lead opinion) (rejecting a literal interpretation that both "produce[d] absurd results and defie[d] common sense").⁵ We further recognized that this court elsewhere accommodates ongoing obligations in family law judgments that extend beyond 20 years. Johnson, 347 Wis. 2d 238, ¶¶22-24, 830 N.W.2d 647 (explaining that under SCR 72.01(11)-(14), records for family law matters must be retained for 30 years; and that Wis. Stat. § 767.01 authorizes courts to do "all acts and things necessary and proper" in family law actions "to carry their orders and judgments into execution"). Therefore, we held that § 893.40 did not bar Johnson's action because the 20-year clock for the statute of repose did not start running until 1998, when it first became possible to divide the pension according to the judgment. Id., ¶26.

¶10 Those same principles apply here. At the time Kathy and Paul's divorce judgment was entered in 1992, Paul's pension benefits would not be available to him until he turned 60 years old in February 2013, 21 years later. See 10 U.S.C. § 1331(a)(1) (1988) (requiring that a service member in Paul's situation be "at least 60 years of age" before becoming entitled to retired pay benefits). Because the divorce judgment required Paul to divide his pension only "when and if" the pension became "available" to him, that division was impossible prior to February 2013. The "when and if" condition also made it impossible for Kathy to judicially enforce the agreement during those first 21 years because that action would not be ripe until Paul's pension became available. See Tooley v. O'Connell, 77 Wis. 2d 422, 439, 253 N.W.2d 335 (1977). It would be unreasonable to interpret § 893.40 as barring enforcement now of a marital property division that was impossible to enforce during the 20 years prior.⁶ See State v. Wachsmuth, 73 Wis. 2d 318, 326, 243 N.W.2d 410 (1976) (avoiding an "unreasonable" interpretation that would require someone to do the "impossible"); Hines v. Resnick, 2011 WI App 163, ¶16, 338 Wis. 2d 190, 807 N.W.2d 687 (same).

¶11 That result would also be unreasonable because it would render Paul's promised pension division illusory and deny Kathy the benefit she bargained for in the marital settlement agreement. When Paul promised to pay Kathy half his pension, the earliest he could do so was one year after the statute of repose would have run. See 10 U.S.C. § 1331(a)(1). Under Paul's reading of § 893.40, then, he made no real promise to pay Kathy half his pension. Rather, at Paul's sole "will and discretion," he could pay Kathy her share or not and be free of liability either way under the statute of repose. See Runzheimer Int'l, Ltd. v. Friedlen, 2015 WI 45, ¶45, 362 Wis. 2d 100, 862 N.W.2d 879 (quoted source omitted). Such a "promise" is illusory.

¶12 An illusory promise in a martial settlement agreement disturbs the balance of mutual obligations. Paul's promise to pay Kathy half his pension's value "when" it became available to him was critical to the rest of their agreement. See Washington v....