Staton v. Staton

• Citation: 624 S.E.2d 548
• Decision Date: 01 December 2005
• Docket Number: No. 32562.,32562.
• Court: Supreme Court of West Virginia
• Parties: In re the Marriage of Martha Carol STATON, Appellant, v. Steven Edward STATON, Appellee.

624 S.E.2d 548

In re the Marriage of Martha Carol STATON, Appellant, v. Steven Edward STATON, Appellee.

No. 32562.

Supreme Court of Appeals of West Virginia.

Submitted October 5, 2005.

Decided December 1, 2005.

Syllabus by the Court

1. "In reviewing a final order entered by a circuit judge upon a review of, or upon a refusal to review, a final order of a family court judge, we review the findings of fact made by the family court judge under the clearly erroneous standard, and the application of law to the facts under an abuse of discretion standard. We review questions of law de novo." Syllabus, Carr v. Hancock, 216 W.Va. 474, 607 S.E.2d 803 (2004).

2. "W. Va.Code, 48-2-1(e)(1) (1986) [W. Va.Code § 48-1-233 (2001) (Repl.Vol.2004)], defining all property acquired during the marriage as marital property except for certain limited categories of property which are considered separate or nonmarital, expresses a marked preference for characterizing the property of the parties to a divorce action as marital property." Syllabus point 3, Whiting v. Whiting, 183 W.Va. 451, 396 S.E.2d 413 (1990).

3. "`To the extent that its purpose is to compensate an individual for pain, suffering, disability, disfigurement, or other debilitation of the mind or body, a personal injury award constitutes the separate nonmarital property of an injured spouse.' Syl. Pt. 1, Hardy v. Hardy, 186 W.Va. 496, 413 S.E.2d 151 (1991)." Syllabus point 2, Huber v. Huber, 200 W.Va. 446, 490 S.E.2d 48 (1997).

4. Benefits that actually compensate for disability are separate property because such monies are personal to the spouse who receives them. In some cases, benefits will need to be separated into a retirement component and a true disability component, classifying the retirement component as marital property and the disability component as separate property.

Pat C. Fragile, Stacey L. Daniel-Fragile, Beckley, for the Appellant, Martha Carol Staton.

Carl W. Roop, Roop, Smith & Roop, Beckley, for the Appellee, Steven Edward Staton.

Justice DAVIS delivered the Opinion of the Court.

DAVIS, Justice:

Martha Carol Staton (hereinafter "Mrs. Staton"), appeals from an order entered June 30, 2004, by the Circuit Court of Raleigh County. By that order, the circuit court reversed the portion of an order of the family court that awarded Mrs. Staton an equitable share of Stephen Edward Staton's (hereinafter "Mr. Staton") police disability pension. The circuit court found that the family court was correct in classifying Mr. Staton's pension as a disability pension; however, the circuit court found that the family court erred in finding that the pension was a marital asset subject to equitable distribution. On appeal, Mrs. Staton argues that Mr. Staton's pension was a marital asset subject to equitable distribution. Based upon the parties' arguments, the record designated for our consideration, and the pertinent authorities, the decision of the circuit court is affirmed in part, reversed in part, and remanded for further consideration.

I. FACTUAL AND PROCEDURAL HISTORY

Mr. and Mrs. Staton were married in 1986. Prior to their marriage, Mr. Staton began employment with the City of Beckley Police Department in 1974. During his tenure with the police department, Mr. Staton contributed seven percent of his salary to the City of Beckley Retirement Fund. This employment continued until Mr. Staton was deemed disabled due to a knee injury on March 12, 1996. During the marriage, the parties received almost $80,000.00 from the disability fund. Mr. and Mrs. Staton separated on April 26, 2000, and Mrs. Staton filed for divorce.

The family court entered an order on May 3, 2002, and ordered that "[Mrs. Staton] shall be awarded a portion of [Mr. Staton's] pension account in relation to the years of the marriage and that [Mr. Staton] shall cooperate in all respects to cause a Qualified Domestic Relations Order to be entered." Mr. Staton appealed to the circuit court. The circuit court remanded the matter by order entered August 14, 2002, for the family court to take evidence to determine whether the pension was a retirement pension or a disability pension. The circuit court stated that the "[family court order] does not state whether the pension is a disability pension or a retirement pension. [Mr. Staton's] objection claims that it is a disability pension, and that unlike a retirement pension, it is not subject to marital distribution and the entry of a [Qualified Domestic Relations Order]." The circuit court reasoned that if the pension was to compensate Mr. Staton for future lost wages, then it was separate property and not subject to distribution. The circuit court directed:

Upon remand of this issue, the family court will take such evidence as it deems necessary to ascertain whether [Mr. Staton's] pension is a disability pension or a retirement pension. If it is found to be a disability pension, the payments received during marriage will be deemed to have been distributed with the parties's (sic) marital assets as determined at the time of separation. With respect to future payments, the family court will determine whether those payments compensate [Mr. Staton] for lost future income. If so, the payments are separate property and the value of the disability pension is not subject to marital distribution. If, however, the family court finds that any portion of the future payments are intended to restore a lost or damaged marital asset, such portion would be a marital asset subject to distribution.

If upon these principles the family court finds that [Mr. Staton's] disability pension is not subject to distribution as a marital asset, the future income he derives from the pension should be included in the income upon which child support and spousal support shall be calculated. If, however, the family court finds that all or part of the disability pension is subject to marital distribution, the family court must calculate the portion of his future payments that constitutes marital property, and only the remainder will be deemed part of [Mr. Staton's] income for the purposes of the calculation of child support and spousal support.

If the disability pension is not marital property, it is not subject to a [Qualified Domestic Relations Order] or to any further attention. If it is partly marital and partly nonmarital property, it is subject to a [Qualified Domestic Relations Order] only as to the portion that is marital property, if the administration of the disability pension is such that only a part of it can be subjected to a [Qualified Domestic Relations Order]. If the family court finds that it is partly marital and partly nonmarital, and that the fund from which payments are made cannot be segregated for [Qualified Domestic Relations Order] purposes, the family court may calculate the portion of each future payment that constitutes marital property, and the remainder of each payment will be deemed [Mr. Staton's] income for the purposes of the calculation of child support and spousal support. Under that arrangement, [Mr. Staton] will pay a portion of each future disability payment as marital distribution, and a portion as child and/or spousal support.

On remand, a hearing was held on April 11, 2003, and the family court heard testimony from the distributor of the fund, and determined that "[Mr. Staton] began receiving a disability pension on March 12, 1996[,] and continues to receive said pension." Further, the family court found that "on the date of being awarded the disability pension [Mr. Staton] was eligible for retirement with the City of Beckley and would have earned approximately sixty three percent (63%) of his pension and he became vested in such pension program in August of 1994."

The family court based these determinations on the testimony of Gary Sutphin, the City Treasurer and Recorder for the City of Beckley, West Virginia, who testified as to the distribution of the police pension fund.¹ Mr. Sutphin testified that there is no difference between the money collected by the City of Beckley Police Department for an employee's retirement pension versus an employee's disability pension. The money collected out of each check goes into a general fund that is available upon retirement. However, because Mr. Staton was disabled, he was able to receive a disability award and to access the pension fund prior to reaching the age of retirement.

Mr. Sutphin also explained that retirement benefits are calculated based on the average of the three highest years of salary, and that salary can include payment for unused sick time, vacation time, comp time, and overtime. He further espoused that disability benefits are determined based on sixty percent of the salary at the time of the disability, and do not include any buyback of unused benefits. The disability benefits are eligible for cost of living increases. It was further explained by Mr. Sutphin that retirement pensions are based on years of service and age; whereas, disability pensions are based on injury and illness.

The record reveals that Mr. Staton, at the time of his disabling injury, had worked long enough to meet the years of service component of his retirement. However, while he was vested in his retirement, he had not met the age requirement to begin drawing a full retirement. Because he was not yet able to draw his retirement, Mr. Staton exercised his right to draw disability benefits, which have no age prerequisite. Based on evidence taken from Gary R. Sutphin, City Treasurer and Recorder of Beckley, West Virginia, the family court found that "the disability pension was a replacement of lost wages and future lost wages on behalf of [Mr. Staton]." The family court directed that the disability pension be subjected to a marital distribution.

Mr. Staton appealed, and the circuit court found in its June 30, 2004, order that the pension was correctly classified as a disability pension by the family co...