Surrette v. Surrette, 9329DC373

• Decision Date: 19 April 1994
• Docket Number: No. 9329DC373,9329DC373
• Court: North Carolina Court of Appeals
• Parties: Gwendolyn A. SURRETTE, Plaintiff, v. Donald R. SURRETTE, Defendant.

Page 123

442 S.E.2d 123

114 N.C.App. 368

Gwendolyn A. SURRETTE, Plaintiff, v. Donald R. SURRETTE, Defendant.

No. 9329DC373.

Court of Appeals of North Carolina.

April 19, 1994.

Averette & Barton by Donald H. Barton, Brevard, for plaintiff-appellant.

Ramsey, Hill, Smart, Ramsey & Pratt, P.A. by Michael K. Pratt, Brevard, for defendant-appellee.

EAGLES, Judge.

Plaintiff brings forward several assignments of error. After careful review of the record and briefs, we affirm.

I.

Plaintiff first contends that the trial court abused its discretion in calculating the value of defendant's DuPont pension plan and in valuing the marital portion of the plan. We disagree.

The trial court found that if defendant retired without prejudice on the date of separation, defendant could choose between two alternatives to begin receiving the monthly benefits under his pension. Under the first alternative, defendant would receive $206 per month for the remainder of his lifetime beginning at age 50. Under the second alternative, defendant would receive $806 per month for the remainder of his lifetime beginning at age 65. The trial court found that defendant's remaining lifetime from age 50 was 25.5 years. Using the legal rate of interest of 8% per annum, the trial court found that the present value of defendant's DuPont pension on the date of separation was $19,520 under the first alternative and $19,612 under the second alternative. Noting that the present value of defendant's pension under the two alternatives was nearly identical, the trial court apparently averaged the values of defendant's pension under both alternatives and found that the present value of defendant's pension on the date of separation was $19,566.

Plaintiff contends that the trial court erred in using the date of separation as defendant's retirement date instead of the date at which defendant became eligible for retirement. Plaintiff argues that defendant's pension should be valued according to the amount defendant would receive upon retirement and that the trial court should have assumed defendant's continuous employment with DuPont until defendant reached the earliest retirement age. We disagree. G.S. 50-20(b)(3) states that a distributive award of a vested pension plan "shall be based on the vested accrued benefit, as provided by the plan or fund, calculated as of the date of separation, and shall not include contributions, years of service or compensation which may accrue after the date of separation." Under G.S. 50-20(b)(3) the value of defendant's pension must be calculated as of the date of separation and years of service after the date of separation are not to be included in the valuation. Here, plaintiff urges us to assume defendant's continued employment with DuPont until defendant reaches retirement age and then to value defendant's pension as of that date. This method of valuation clearly violates the mandate of G.S. 50-20(b)(3). Bishop v. Bishop, 113 N.C.App. 725, 440 S.E.2d 591, 596 (1994) (it would have been error for the trial court to have valued defendant's pension assuming defendant's continuous employment beyond the date of separation); Seifert v. Seifert, 82 N.C.App. 329, 338, 346 S.E.2d 504, 509 (1986) (trial court correctly used defendant's basic pay at date of separation instead of defendant's basic pay at date of trial in determining the present value of defendant's military pension), aff'd, 319 N.C. 367, 354 S.E.2d 506 (1987). Accordingly, plaintiff's contention in this regard is without merit.

Plaintiff also contends that even if the trial court did not err in using the date of separation as defendant's retirement date, the trial court erred in double discounting the present value of defendant's pension. This contention is equally without merit. Plaintiff relies on language in Seifert v. Seifert, 319 N.C. 367, 354 S.E.2d 506 (1987), where our Supreme Court held that the trial court erred in discounting defendant's pension to its present value and then delaying plaintiff's receipt of discounted benefits until defendant retired and began receiving his benefits under the plan. Quoting from this court's opinion in the case, the Supreme Court stated, "This in effect, operated as a double reduction: plaintiff received a discounted value for immediate distribution but nevertheless was required to wait to receive payment until, if and when, the defendant reached retirement and began receiving benefits." Id. at 371, 354 S.E.2d at 509 (quoting Seifert v. Seifert, 82 N.C.App. 329, 338, 346 S.E.2d 504, 509 (1986)).

Plaintiff argues that defendant's evidence, particularly Exhibit I, showed that the present value of defendant's pension on the date of separation was $84,533.41. The pertinent part of Exhibit I reads as follows:

Alternative 2: At age 65 to provide $823.00 per month for 15.0 years (life expectancy). At an assumed 8.0% interest rate, the Present Value of an Annuity to provide $823.00 per month for 15 years at [defendant's] age 65, would be $84,533.41. Since he will not be 65 for 213 months from 1/26/91 (separation date), the Present Value of the $84,533.41 on 1/26/91 would be $19,611.75.

Plaintiff argues that $19,611.75 represents the amount necessary to place on deposit on the date of separation to yield $84,533.41 at the time defendant reaches retirement age. Plaintiff contends that this is a double discounting of her benefits under Seifert, 319 N.C. 367, 354 S.E.2d 506 (1987), because the court further discounted the present value of defendant's pension to arrive at a figure that would yield the present value amount at defendant's retirement age. We disagree.

In Seifert, supra, the plaintiff was forced to wait to receive at a time in the future benefits that had already been discounted to their present value. In Seifert, the defendant's pension had been discounted to its present value as of the date of separation. It was effectively discounted again when the plaintiff was forced to wait until a time in the future to receive those discounted benefits. Here, the $84,533.41 represents the present value of defendant's pension when he reaches age 65. This was not the present value of the pension as of the date of separation. The trial court then further discounted the $84,533.41 to arrive at its present value as of the date of separation. G.S. 50-20(b)(3) requires that the pension be valued as of the date of separation. Unlike the situation in Seifert, the order here does not require plaintiff to wait to receive her discounted benefits until defendant retires.

We note that since this case was heard, this court in Bishop v. Bishop, 113 N.C.App. 725, 440 S.E.2d 591 (1994), laid down specific guidelines for valuing defined benefit plans such as the DuPont pension plan at issue here. We stated that:

First, the trial court must calculate the amount of monthly pension payment the employee, assuming he retired on the date of separation, will be entitled to receive at the later of the earliest retirement age or the date of separation. This calculation must be made as of the date of separation and "shall not include contributions, years of service or compensation which may accrue after the date of separation." N.C.G.S. § 50-20(b)(3).... Second, the trial court must determine the employee-spouse's life expectancy as of the date of separation and use this figure to ascertain the probable number of months the employee-spouse will receive benefits under the plan. Third, the trial court, using an acceptable discount rate, must determine the then-present value of the pension as of the later of the date of separation or the earliest retirement date. Fourth, the trial court must discount the then-present value to the value as of the date of separation. In other words, determine the value as of the date of separation of the sum to be paid at the later of the date of separation or the earliest retirement date....

Id. at ----, 440 S.E.2d. at 595-96 (emphasis added). Here, the trial court calculated the present value of defendant's pension on the date of separation if he began drawing benefits at his earliest retirement age, age 50 (Alternative 1) and at age 65 (Alternative 2). The trial court found the present value of defendant's pension to be $19,520 on the date of separation assuming defendant began drawing benefits at age 50. The trial court found the present value of defendant's pension to be $19,612 on the date of separation if defendant delayed drawing benefits until age 65. The trial court then averaged these two figures and found the present value of defendant's pension to be $19,566 on the date of separation. We note that the trial court erred in averaging the age 50 and age 65 figures to arrive at the date of separation value of defendant's pension. Instead, the trial court should have chosen the valuation of defendant's pension under Alternative 1 ($19,520) because it assumed that defendant would begin drawing benefits at his earliest retirement age as our holding in Bishop, supra, requires. However, plaintiff was not prejudiced by this error because the trial court's valuation of defendant's pension ($19,566) was greater than the valuation that the trial court should have used ($19,520). Accordingly, we conclude that under these facts, the trial court's error in calculating the value of defendant's pension plan was harmless error.

II.

In a related assignment of error, plaintiff contends that the trial court erred in valuing the marital portion of defendant's pension because of it its underlying error in calculating the present value of defendant's pension plan. See I, supra. Since we have already concluded that the trial court did not commit prejudicial error in calculating the present value of d...