Terry v. Lee

• Court: South Carolina Supreme Court
• Writing for the Court: TOAL; CHANDLER, Acting C.J., FINNEY and MOORE, JJ., and BRUCE LITTLEJOHN
• Citation: Terry v. Lee, 314 S.C. 420, 445 S.E.2d 435 (S.C. 1994)
• Decision Date: 04 May 1994
• Docket Number: No. 24081,24081
• Parties: Nancy W. TERRY, Appellant, v. Clyde J. LEE, Respondent. . Heard

Page 435

445 S.E.2d 435

314 S.C. 420

Nancy W. TERRY, Appellant, v. Clyde J. LEE, Respondent.

No. 24081.

Supreme Court of South Carolina.

Heard May 4, 1994.

Decided June 6, 1994.

Robert J. Thomas and D. Randolph Whitt, both of Sherrill and Rogers, P.C., Columbia, for appellant.

Harvey L. Golden and Douglas K. Kotti, Columbia, for respondent.

TOAL, Justice:

This appeal arises from the family court's dismissal of an action for partition of military retirement under Rule 12(b), SCRCP, for lack of subject matter jurisdiction, failure to state a cause of action, and under the equitable doctrine of laches. We affirm.

FACTS

Nancy Terry and Clyde J. Lee, who was a Captain on active duty in the United States Navy, were divorced in California on May 3, 1968. Subsequent to the divorce, Captain Lee, who was remarried, retired from the United States Navy in 1973 and relocated to South Carolina. During this same time frame, Nancy Terry married and divorced her second husband and then married a third husband. Nancy Terry is currently a resident of the State of Washington.

In 1990, twenty-two years after the divorce was final, Nancy Terry brought an action to partition Captain Lee's military retirement in a South Carolina Circuit Court which denied Captain Lee's motion to dismiss for lack of subject matter jurisdiction. The circuit court's decision was appealed and we reversed in Terry v. Lee, 308 S.C. 459, 419 S.E.2d 213 (1992). In Terry, supra, we held that the matters presented were marital litigation and that exclusive jurisdiction was found in the family court.

On July 14, 1992, Nancy Terry filed this partition action in the South Carolina Family Court. On August 12, 1992, Captain Lee filed a motion to dismiss for failure to state facts constituting a cause of action, for lack of subject matter jurisdiction, and pursuant to the equitable doctrine of laches. Following oral argument in the family court, the motion to dismiss was granted on the asserted grounds by Family Court Order filed November 19, 1992. It is from this Order filed in 1992 that Nancy Terry now appeals.

ISSUES

Nancy Terry raises the following four issues on appeal:

1. Whether the family court erred by applying South Carolina substantive law rather than California substantive law;

2. Whether the family court erred by dismissing the action based on the terms in the 1968 property settlement agreement;

3. Whether the family court erred in concluding that Nancy Terry's action was barred under federal law; and while not specifically raised, Nancy Terry argues in conjunction with the first issue that

4. The family court erred by dismissing the action under the equitable doctrine of Laches.

LAW/ANALYSIS

Choice of Laws

The family court, citing Eichor v. Eichor, 290 S.C. 484, 351 S.E.2d 353 (Ct.App.1986), determined that South Carolina law was applicable to this action and we agree. In Eichor, the Court of Appeals relied on the language of the federal statute which allowed for the division of military retirement as well as the variance in public policy between Texas and South Carolina. Because the decree issued in Texas did not specifically address military retirement, the Court of Appeals concluded that there was no Texas decree to receive full faith and credit.

Terry argues that since the public policy of South Carolina is now in accord with other states, ¹ the choice of law rule followed in Eichor is no longer applicable. The language of the Uniformed Services Former Spouses' Protection Act, 10 U.S.C. § 1408 (Supp.1993) (hereinafter the USFSPA), empowers the States to divide federal military retirement and offers guidance on how the division is to be accomplished. Section 1408(c)(4) provides that a state court is not empowered to address military retirement "unless that court has jurisdiction over the [retired service] member by reason of (A) his residence, other than because of military assignments, in the territorial jurisdiction of the court, (B) his domicile in the territorial jurisdiction of the court, or (C) his consent to the jurisdiction of the court."

Obviously, the statute requires that this case be heard in South Carolina and 10 U.S.C. § 1408(c)(1) further requires the state court to deal with the property "in accordance with the law of the jurisdiction of such court." When the statutes are read together, the substantive law which must be applied is the law of the state where the action is brought. See Eichor, supra; see also Mansell v. Mansell, 490 U.S. 581, 109 S.Ct. 2023, 104 L.Ed.2d 675 (1989) (wherein the Supreme Court noted that the limitation on residence for the retired member was to prevent forum shopping). We must then address the merits of Mrs. Terry's appeal against the mandates of South Carolina law.

Terms of the Agreement

Terry argues that the family court erred in not interpreting the terms of the agreement as a reservation of the property rights in Captain Lee's retirement. We disagree. The property settlement agreement provides in relevant part:

[i]f it should hereafter be determined by a Court of competent jurisdiction that either of us is now possessed of any property not set forth in this agreement or that one of us has made without the consent of the other any gift or transfer of community property, each of us hereby covenants and agrees to pay the other upon request an amount equal to one-half of the fair market value of such property.

Each of us warrants to the other that neither of us is now possessed with any property of any kind or description whatever other than the property specifically listed in this agreement, or in any addenda thereto, and that neither of us has made without the knowledge of the other any gift or transfer of any property within the last two years.

[ROA at pp. 21-26].

In addition to these clauses, the parties agreed that their intention was to create "a final and complete division of all of our property ...," and in a later paragraph the agreement also provided that the parties understood that "by this agreement we intend to settle all aspects of our marital property rights." [ROA at pp. 21-26]. At the time of this agreement, Captain Lee's retirement was not a property right subject to consideration by any court.

The first case to address this issue in the United States Supreme Court held that federal law barred the division of military retirement as a property right. McCarty v. McCarty, 453 U.S. 210, 101 S.Ct. 2728, 69 L.Ed.2d 589 (1981). This controversial decision was later the catalyst which gave rise to enactment of the USFSPA in February 1983. The federal legislation left the division of retirement as property up to the discretion of the states. In South Carolina, the acceptance of military retirement as a property interest remained dormant until the Court of Appeals' decision in Martin, supra. Meanwhile, the courts of California were far more aggressive and many older divorces were re-opened to address retirement divisions. See Casas v. Thompson, 42 Cal.3d 131, 720 P.2d 921, 228 Cal.Rptr. 33 (1986).

Because the California courts did not comport with the intent of Congress when the USFSPA was passed, ² an amendment to the legislation was enacted in 1990. ³ This amendment to 10 U.S.C. § 1408(c)(1) provides:

[a] court may not treat retired pay as property in any proceeding to divide or to partition any amount of retired pay of a member as the property of the member and the member's ... former spouse if a final Decree of Divorce, dissolution, annulment or legal separation ... affecting the member and the member's ... former spouse (A) was issued before June 25, 1981, and (B) did not treat (or reserve jurisdiction to treat) [the] amount of retired pay of the member as property of the member and the member's ... former spouse.

[Emphasis added].

Terry argues that the property settlement agreement specifically reserved her rights in accordance with the statutory mandate of the 1990 amendment to the USFSPA. This argument ignores the plain language of the statute. On the present facts, the final divorce decree was entered in 1968, some thirteen years before the date provided as a retroactive date in the amendment. This thirteen-year gap places Terry outside the class of people entitled to relief under the statute. Maintaining that the agreement reserved a right does not aid Terry's position because the statute uses the conjunctive term "and" when it combines the date with the specific reservation requirement. Simply stated, the statute requires compliance with both the retroactive date and a reservation of right. Mrs. Terry's divorce falls outside the retroactive date and now cannot support an action even assuming arguendo that she reserved her rights in Captain Lee's retirement.

Moreover, the language of the agreement itself contextually supports Lee's argument that the clause was drafted to preclude fraud or other hidden property schemes. At the time of the agreement, it certainly was not the intent or in the contemplation of the parties that military retirement could be subject to division as property, especially since it was clearly barred by federal law prior to the enactment of the USFSPA.

Federal Preemption

The family court also held that federal law barred any action by Nancy Terry. We agree since the language of the statute plainly demonstrates that she is outside the specifically mentioned class of beneficiaries....