White v. White

• Decision Date: 26 February 1987
• Docket Number: No. 8675,8675
• Citation: 734 P.2d 1283,1987 NMCA 32,105 N.M. 600
• Parties: Laury W. WHITE, Petitioner-Appellant and Cross-Appellee, v. Philip J. WHITE, Respondent-Appellee and Cross-Appellant.
• Court: Court of Appeals of New Mexico

Page 1283

734 P.2d 1283

105 N.M. 600

Laury W. WHITE, Petitioner-Appellant and Cross-Appellee, v. Philip J. WHITE, Respondent-Appellee and Cross-Appellant.

No. 8675.

Court of Appeals of New Mexico.

Feb. 26, 1987.

[105 N.M. 601] Martin E. Threet, B. Paula Kavanagh, Threet & King, Albuquerque, for petitioner-appellant and cross-appellee.

Ann Steinmetz, Albuquerque, for respondent-appellee and cross-appellant.

OPINION

GARCIA, Judge.

Both petitioner and respondent appeal from a final decree of dissolution of marriage. Petitioner (wife) raises the following issues: 1) whether the trial court erred in failing to provide a dollar equalization for the community personal property divided by stipulation; 2) whether the trial court's analysis in determining the dollar figure of wife's interest in certain retirement pay was proper; 3) whether the trial court's award of child support was erroneous; 4) whether the trial court's determination as to the separate character of certain property was supported by substantial evidence; 5) whether the trial court erred in failing to award wife a share of the community income from the date of filing the petition for dissolution of marriage to the date of entry of the final decree; 6) whether the trial court erred in refusing to find a community debt to wife's mother; 7) whether the trial court erred in failing to find that Sandia Airways was a community asset, or in the alternative, that the community was entitled to reimbursement for the value of husband's services in establishing, promoting and maintaining the corporation; and 8) whether the trial court abused its discretion in its award of attorney fees.

On cross-appeal, respondent (husband) raises the following issues: 1) whether the Uniformed Services Former Spouses' Protection Act requires that the parties be married for ten years during the active service of the military spouse before that spouse's retirement pay can be considered community property; 2) whether the trial court erred in holding that the residence of the parties was community property; 3) whether child support should be based on net monthly income; 4) whether the award of custody of the minor child was in error; 5) whether the trial court's award of attorney fees to wife was proper; and, 6) whether the trial court erred in failing to account for $1,500 husband was ordered to pay wife as an advance on her community property distribution. We affirm in part and reverse and remand in part.

FACTS

There are numerous issues advanced by the parties, and a full factual recitation of each would be unduly lengthy. Many of the parties' contentions may be resolved summarily. Accordingly, we limit our discussion to the salient facts.

We note that the Honorable Rozier Sanchez tried the case and entered findings. Thereafter, the Honorable Anne Kass signed the judgment and heard and ruled on post-judgment motions.

DISCUSSION

WIFE'S ISSUES

ISSUE NO. 1: Equalization of Division of Property

Prior to trial, the parties agreed to divide their personal property. They executed a partial marital settlement agreement apportioning the bulk of their personalty without assigning any fixed value to the items of property. The trial court divided the remaining assets equally between the parties. Wife contends that the full value of husband's award, including the items divided by stipulation, greatly exceeds the value of her share of the property. This issue is without merit. In the absence of fraud, a stipulation entered into a divorce case is enforceable. Harkins v. Harkins, 101 N.M. 296, 681 P.2d 722 (1984); Barker v. Barker, 93 N.M. 198, 598 P.2d 1158 (1979). The stipulation entered into by the parties in this case was clear and unambiguous. No valuations or conditions of set-off were discussed within the four corners of the document. For that reason, the trial court need not have provided a dollar equalization to correct an inequity that resulted from the community personalty distribution to which the parties stipulated.

ISSUE NO. 2: Military Retirement

Husband is retired from the military and draws retirement benefits. He was married to wife for eight of his 27 years of military service. The court determined that wife was entitled to half of 8/27ths of husband's non-disability retirement benefits. The parties do not challenge the court's retirement equation, but dispute whether wife's share should be based on husband's gross or net disposable pay. Husband's deductions totaled $583.00, and included items such as federal tax, life insurance, disability retirement, allotment and a survivors' benefit plan.

Wife convincingly argues that division of net benefits, rather than gross, places her at a significant economic disadvantage. For example, she notes that the methodology utilized by the trial court allows husband to deduct federal withholding prior to figuring wife's share of retirement. Since the amount wife will receive is a deductible amount to husband and yet taxable to her, she in effect pays two sets of federal taxes: a portion based on the amount withheld from husband's retirement check and taxes on the amount she receives individually. Wife urges us to find that the trial court erred in basing the award of her community property share of husband's military retirement pay on net rather than gross benefits.

In dividing the interests of the parties in the community property, the court is required to consider the tax consequences of its allocation of property. Cunningham v. Cunningham, 96 N.M. 529, 632 P.2d 1167 (1981). This is true unless the tax consequences are speculative. See Mattox v. Mattox, 105 N.M. 479, 734 P.2d 259 (Ct.App.1987).

Husband contends on appeal that under the Federal Uniform Services Former Spouses' Protection Act (FUSFSPA), New Mexico trial courts can declare a community property interest in only a portion of military retirement pay: that part defined as disposable. See U.S.C. Sec. 1408(C)(1) (1982). In particular, he relies on the language of Section 1408(c)(1), which states: "[s]ubject to the limitations of this section, a court may treat disposable retired or retainer pay * * * as property of the member and his spouse in accordance with the law of the jurisdiction * * *"

While this is an issue of first impression in New Mexico, we are impressed with the equitable approach taken in a similar case by the California Supreme Court. In Casas v. Thompson, 42 Cal.3d 131, 228 Cal.Rptr. 33, 720 P.2d 921 (1986) (en banc), the court sought to avoid the unfair and disparate treatment that affects the non-military spouse when the division of retirement pay is based on net rather than gross benefits. There, the court said in part:

Assuming we reject his other arguments, Max [military husband] relies on Section 1408(a)(4) and (c)(1) to argue that California can only declare a community property interest in a portion of his retirement pay; that part which is defined as "disposable." In essence, the "disposable" retirement pay is the gross pay less statutorily specified deductions which, except for the retiree's individual withholding tax liability, are under the direct or indirect control of the retiree, and will significantly vary among retirees with the same gross retirement pay * * *

We find Max's proposition illogical. Applying his theory, former spouses whose community property interests were acquired over exactly the same time period, whose military retiree spouses receive exactly the same gross retirement benefits, are subject to receiving different sums if, for example, their respective spouses are in different tax brackets, or if one understates his dependents, or if one commits torts against the government or incurs other indebtednesses to it for which the ex-spouse bears no liability. We can conceive of no legitimate governmental interest, nor has Max suggested any, which would rationally support such disparate treatment.

Id., 228 Cal.Rptr. at 40-41, 720 P.2d at 928-929.

We also agree with the California Supreme Court's analysis of husband's argument that FUSFSPA limits the New Mexico trial courts in dividing military pay. In Casas v. Thompson, that court concluded that the statute was not intended and did not operate to affect the characterization of retirement pay; the court concluded, and we agree, that characterization of retirement pay is a state law question. See also Austin v. Austin, 103 N.M. 457, 709 P.2d 179 (1985). The court in Casas analyzed Section 1408(c)(1) as follows:

We read section 1408(c)(1) as being aimed at an entirely different proposition. Direct payments were not available to ex-spouses for judgments awarding marital property interests against military retirement pay before the enactment of FUSFSPA. Section 1408 is primarily devoted to establishing a scheme to permit the ex-spouse to "garnish" retirement pay and, at the same time, to afford the military retiree similar protections previously given other retired federal employees by limiting the amount of funds subject to garnishment.

228 Cal.Rptr. at 43-44, 720 P.2d at 931-32.

For these reasons, we conclude that FUSFSPA is not inconsistent with a division of gross, rather than disposable, military retirement pay. See also Bullock v. Bullock, 354 N.W.2d 904 (N.D.1984); Deliduka v. Deliduka, 347 N.W.2d 52 (Minn.App.1984). Because the characterization of military retirement pay is a state law question, and because the trial court apparently understood FUSFSPA limited its division of retirement pay, we will remand to permit the trial court to reconsider the division of respondent's military retirement pay.

By adopting California's equitable approach, we do not mean to foreclose a trial court from authorizing appropriate deductions when the failure to do so would work an injustice or would be inequitable. For example, it would be unfair to disallow a deduction for sums withheld from the military retiree's benefits for an IRS tax lien imposed against the...