Surratt v. Surratt

• Decision Date: 25 February 2004
• Docket Number: No. CA 03-863.,CA 03-863.
• Citation: 85 Ark. App. 267,148 S.W.3d 761
• Parties: Jerry M. SURRATT v. Barbara Joe SURRATT.
• Court: Arkansas Court of Appeals

148 S.W.3d 761

85 Ark. App. 267

Jerry M. SURRATT v. Barbara Joe SURRATT.

No. CA 03-863.

Court of Appeals of Arkansas, Division I.

February 25, 2004.

James R. Wallace & Associates, by: Kimberly Bossheart, Little Rock, for appellant.

Jeanette Stephens Heimbaugh, P.A., Conway, for appellee.

ANDREE LAYTON ROAF, Judge.

Jerry M. Surratt appeals from the trial court's order interpreting a provision in the parties' 1988 settlement agreement that pertained to the division of his military retirement benefits. The trial court found that the agreement required Jerry to continue paying appellee Barbara Joe Surratt a sum equal to one-half of the amount of his military retirement income as of the time of the parties' 1988 divorce, despite the fact that Jerry's disability rating had been subsequently increased to 100%, with a resulting change in his monthly income to 100% disability pay. On appeal, Jerry argues that the trial court erred in construing the property-settlement agreement as obligating him to make monthly payments to Barbara, even though he receives only military disability benefits, because: (1) the Uniformed Services Former Spouses' Protection Act (Act) prohibits it; (2) Barbara has remarried, and thus, is ineligible for alimony; (3) the property settlement agreement, having been drafted by Barbara's attorney, should have been construed against her. We affirm on all points.

The parties entered into a property-settlement agreement that was incorporated into their 1988 divorce decree. At the time of the divorce, appellant Jerry Surratt was drawing both military retirement and disability benefits, having been rated 20% disabled. The settlement agreement provided in part:

Barbara shall be entitled to receive one-half of Jerry's military monthly retirement income as it was at the time of the Complaint for Divorce being filed and that should there be any cost of living increases that Barbara will be entitled to one-half of the same. That the said retirement income will not fall below the amount that Jerry was receiving at the time of filing this suit even if Jerry's disability retirement increases. Jerry will receive 100 per cent of the monthly retirement income that is related to and labeled as disability income and Barbara shall receive one-half of the balance of the monthly retirement income as stated above as well as any increases thereto but never will receive less than the amount that Jerry is receiving as of the day of the Complaint being filed and that Barbara will be paid directly from the U.S. Government, if possible and in the event that the regular retirement reduced below the amount Jerry is receiving at the time of filing then Jerry shall pay the difference.

The parties placed their initials beside the phrase that was marked out, which stated: "and in the event that the regular retirement reduced below the amount Jerry is receiving at the time of filing then Jerry shall pay the difference."

The Department of Veterans Affairs notified Jerry in July 2001 that he had received a 100% disability rating, retroactive to November 2, 2000, and that he would henceforth receive an increase in his disability benefits with a concurrent termination of his military retirement pay.¹ Barbara received her share of Jerry's retirement benefits until August 2001, after which she received nothing. Barbara filed a petition for citation of contempt against Jerry in January 2002 and sought judgment for the arrearages. In response, Jerry argued that, according to the Uniformed Services Former Spouses' Protection Act, 10 U.S.C. § 1408 (2000 and Supp. I), Barbara was ineligible for any share of his disability income, and that, because she had remarried, she could not receive alimony.

At the hearing, both parties testified about their understanding of the property-settlement agreement. Barbara testified that she had believed that Jerry would be obligated to continue paying her at least as much as she received at the time of the divorce, even if Jerry later received only disability pay. She said that Jerry had, in fact, told her that the agreement obligated him to do so. She also stated that her attorney had explained to her that the phrase that had been marked through had the same effect as the preceding sentences. Jerry testified that he is now receiving 100% disability income of $2,229 per month and that his understanding was to the contrary, that, if the "government" could not pay Barbara directly, she would not get anything. The trial court ruled that the property-settlement agreement, which became part of the divorce decree, guaranteed a minimum payment to Barbara and anticipated that Jerry would continue to receive his disability payments. The trial court entered an order awarding judgment in the amount of $5,976.95 to Barbara for the arrearages and finding that the property-settlement agreement obligated Jerry to make monthly payments of $483 until the arrearages are paid and, thereafter, monthly payments of $383, representing one-half of the amount of the retirement pay at the time of the divorce decree. That order is the basis for this appeal.

The standard of review in equity cases is de novo. Tyson Foods, Inc. v. Conagra, Inc., 349 Ark. 469, 79 S.W.3d 326 (2002). We review both law and fact and, acting as judges of both law and fact as if no decision had been made in the trial court, sift the evidence to determine what the finding of the trial court should have been and render a decree upon the record made in the trial court. Id. The trial court's findings of fact will not be reversed unless they are clearly erroneous. Id.

In Arkansas, military-retirement benefits are marital property. Day v. Day, 281 Ark. 261, 663 S.W.2d 719 (1984). In 1982, Congress enacted the Uniformed Services Former Spouses' Protection Act, which provides that a court may treat disposable "retired pay" as the property of the member and his spouse in accordance with the law of the jurisdiction of that court. 10 U.S.C. § 1408(c)(1). The United States Supreme Court held in Mansell v. Mansell, 490 U.S. 581, 109 S.Ct. 2023, 104 L.Ed.2d 675 (1989), that the Act excludes from division in divorce military retired pay that has been waived to receive veterans' disability benefits, leaving the state courts free to divide only "disposable" retired pay.

Since Mansell, a number of Arkansas cases have addressed issues relating to division of assets where one of the parties to a divorce is receiving veterans' disability benefits. In Murphy v. Murphy, 302 Ark. 157, 787 S.W.2d 684 (1990), the husband's entire military pension was drawn as disability payments amounting to $1,554 per month, and the chancellor noted this fact in ordering him to pay $361 per month to the wife. On appeal, the husband argued that the chancellor erred in requiring him to pay alimony out of his disability benefits. Although it agreed that the wife was not entitled to direct payments for alimony under the Act, because the husband had no disposable retirement pay as defined in that Act, and his disability benefits were unavailable to the wife for alimony payments, the Arkansas Supreme Court rejected his argument. It stated: "Even so, such conclusions do not preclude the trial court from ordering appellant to pay alimony, and once awarded, the FSPA does not relieve a retiree from paying such alimony obligations. See 10 U.S.C. § 1408(d)(6) (1982)." 302 Ark. at 159, 787 S.W.2d at 685.

In Womack v. Womack, 307 Ark. 269, 818 S.W.2d 958 (1991), the Arkansas Supreme Court affirmed the chancery court's award of a $19,402 judgment to the wife and its finding that the husband was in contempt of the prior 1985 divorce decree, which had stated that the husband was to pay the wife $425 per month, one-half of the husband's military disability benefits, as permanent alimony "in lieu of her right to receive said amount as a distribution of marital property." 307 Ark. at 269-70, 818 S.W.2d at 959. On appeal, the husband argued that the chancellor had actually made a property division of his disability benefits in violation of the Act. Citing Murphy v. Murphy, supra, the supreme court disagreed, noting that the chancellor had made an award of alimony and nothing more; he did not order a division of the husband's benefits, nor did he direct that alimony be withheld from them. The court held that the Act's exclusion of disability benefits from division or alimony does not prevent a trial judge from awarding alimony or relieve a military retiree of satisfying that obligation.

We dealt with the Act in Hapney v. Hapney, 37 Ark.App. 100, 824 S.W.2d 408 (1992). After twenty-four years of marriage, the parties were divorced, and the husband's military retirement was found to be marital property subject to division. By agreement of the parties, the wife was awarded $300 per month as her share of his retirement pay. Later, the husband's disability benefits were increased, causing a concomitant reduction in his military retirement pension. After the husband elected to take an increase in his disability benefits, which caused his retirement benefits to be reduced to $400 per month, the direct payments to the wife were reduced to $200, pursuant to the terms of the Act. The wife filed a petition for contempt in the chancery court, and the chancellor found the husband in contempt and entered a judgment for the arrearages.

One of the husband's arguments on appeal was that the chancellor violated the Act by awarding the wife military retirement pay that he had waived in order to receive disability benefits. We disagreed, explaining:

We find no merit to this contention. Although the United States Supreme Court has held that the Uniformed Services Former Spouse's Protection Act does not permit state courts to treat certain military retirement pay, waived by the retiree in order to receive (or increase) Veteran's disability benefits, as property divisible upon divorce, Mansell v. Mansell, 490 U.S. 581, 109...