Virginia Family Law Appeals

Recker v. Recker: PENSIONS – "GROSS RETIREMENT ANNUITY" – LATER DEDUCTION FOR SECOND – MARRIAGE SBP.

There should be no surprises for anyone in the Court of Appeals Civil-Service retirement decision at 20 VLW 1530 (5/09/06).  A decree gave a wife 50% of husband's "gross retirement annuity benefits (prior to any deduction therefrom)."  When the ex-wife got less than that because before retirement his second wife didn't consent to doing without a survivor-benefit-plan election, the Court didn't have to get into a lot of OMB taxonomics and terminologies to divine that this order meant exactly what it said, and no matter what OMB felt like saying, husband's obligation was exactly that.  Husband's argument that the SBP deduction was not actually a reduction (given that OMB apparently did not show the reduction on his paycheck stubs) was rejected, as was his argument that all he did was remarry and he shouldn't be punished for that.  The trial judge when ordering him to pay up had full authority to do so under Code § 20-107.3(K)(4), to effectuate the intent of the 1996 Final Decree.

SUPPORT ENFORCEMENT — PAST REMEDIES — RETROACTIVITY — ORDER AGAINST PENSION — QDRO STATUS.

Support arrearages can be satisfied in many ways today, especially when there is a large judgment for the arrearage, but a wife who obtained a judgment in the year 1985 for $84,000 alimony arrearages from her 1973 divorce decree cannot have the Circuit Court re-open the divorce case and enter a QDRO so as to take the arrearages out of husband’s pension.  (Neither the pension nor §20-107.3 existed in 1973.)  This would substantively modify the terms of the old final decree, violating the 21-Day Rule, and accordingly it does not qualify as a QDRO under ERISA, 29 USC §§1001 et seq.  The opinion apparently does not deal with using an ordinary garnishment order and other collective remedies to enforce this arrearage.  The Court of Appeals in this case, Hoy v. Hoy, 29 Va. App.115, 510 S.E.2d 253, 13 VLW 1026 (2/2/99), points out expressly that cases from other states have very little value in this regard.

PENSIONS – QDRO – THRIFT SAVINGS PLAN – REMEDY FOR FEDERAL AGENCY VIOLATIONS OF QDRO.

An opinion that would provide encouraging reassurance to attorneys who carefully draft QDRO provisions, but still see unintended results because of federal agency payment policies and regulations contradicting them was provided by the Court of Appeals opinion in Overcash v. Overcash, 20 VLW 1095 (1/24/06), except that it’s unpublished, and thus perhaps more subject to contradiction by later opinions than a published one would be. The separation agreement and incorporating decree clearly and unambiguously said that the parties would equally divide the marital share of the husband’s Thrift Savings Plan. The later QDRO said that the marital share would be the TSP value as of the July 1, 2000 marital separation date. The QDRO added that the wife would get earnings (and losses) on her share from that date to the date of actual distribution to her. Understandably, the federal government thus ended up giving the wife more than 50% of the July 1, 2000 value. The Court of Appeals realizes that the QDRO contradicted, or added something new to the divorce decree, and that made it all right for the trial court to correct itself by issuing a further decree curbing and undoing the excesses of the QDRO.

PENSIONS – MALPRACTICE TRAPS – DRAFTING – SEPARATION AGREEMENTS.

When a separation agreement says that the parties will evenly split the retired husband’s pension payments, that means (unless the separation agreement was carefully-drafted enough to say something else) that she gets that right immediately, even if it takes several months for the lawyers to get the QDRO approved by the plan administrator, the Court of Appeals held in Irwin v. Irwin, 47 Va. App.287, 623 S.E.2d 438, 20 VLW 947 (12/28/05).

PENSIONS – QDRO – LATE-QDRO STATUTE - RULE 1:1.

The question whether the late-QDRO statute, §20-107.3K(4), applies or whether instead parties should be told that they are too late and the 21-day rule prohibits a QDRO, seems to come up with unnerving frequency. In Turner v. Turner, 47 Va. App. 76, 622 S.E.2d 263 (11/22/05), the Court of Appeals ended up holding that the late- QDRO statute applies, and the later order did not unlawfully create a new substantive right for the wife that she had not had by virtue of the original decree. The late QDRO was, as contemplated by the statute, a merely administrative act to give effect to the original decree’s pension-share award.

PENSIONS – SURVIVOR BENEFITS – VIRGINIA RETIREMENT SYSTEM STATUTES – NO SBP ELECTION.

A very unusual case about Survivor Benefits Plans (SBP), especially in the state government’s Virginia Retirement System (VRS), brings the courts up against some very basic truths about creation and administration of these benefit systems, under Virginia statutes, as they affect the living and the dead. A couple married in 1964 and the husband began state employment in 1971, designating his wife as death-benefits beneficiary. But in 1992 he gave his employers a beneficiary-change form making his adult son the primary beneficiary of accumulated retirement benefits. He and his wife had permanently separated in 1990. When he retired in 1992 and applied for his benefits, he lied on the form, saying his marital status was “divorced,” and selected the “Basic Benefit” retirement option which deducts no survivor benefits. This couple never filed for divorce nor entered into a separation agreement. After his death, the widow sued VRS for her benefits. The problems are obvious, since no fund had been created from which she could be paid. The law is that the dead retiree’s selection of a retirement payment option cannot be overridden, no matter what. Wife’s argument was that if she had been given the notice that §51.1-165.1 requires, she could have protected her interests by filing for divorce. This obviously brings up the fatal concept “speculative.” The Court of Appeals says that nothing in that statute gives a spouse a vested interest or an enforceable interest in a retired person’s retirement benefits. The VRS or the trial court would have had to speculate about what she would have received in a divorce case, and, by drawing upon a non-existent fund, dip into monies that the system holds in trust for other employees. This man’s retirement account ceased to exist when he died. Code §51.1-124.4(A) provides two limited exceptions to the principle that an employee’s benefit-option selection can’t be reversed. One is for the enforcement of a spousal support obligation and the other is following a court order that results from the division or transfer of retirement-fund assets held to be marital property in an equitable distribution proceeding. These do not apply here. Shropshire v. Virginia Retirement System, 48 Va. App. 436, 632 S.E.2d 601, 21 VLW 264 (7/25/06).

PENSIONS – REDUCTION TO PRESENT VALUE AND IF/AS/WHEN AWARD.

The Court of Appeals has always been troubled by pension-division awards that limit the non-employee spouse to a separation-date present value, but limit her enjoyment of the money to a future payout. If she’s limited to a present value, she must get a present (i.e., lump sum) award, the Court again holds in McGinniss v. McGinniss, 638 S.E.2d 697, 49 Va.App. 180 32 VLW 932 (12/28/06).

Pension waiver in agreement

SEPARATION AGREEMENTS – DRAFTING AND INTERPRETATION – AMBIGUITY – WAIVER – PENSIONS. It's difficult to say whether a recent unpublished case interpreting a separation agreement, Monahan v. Monahan, 16 VLW 380 (9/11/01) stands for anything or not, but for those who have been collecting case law on this issue since pension-waiver-contest cases started coming out of the woodwork after the Court of Appeals' declaration that a waiver of everything isn't a waiver of a government pension share, it shows one kind of case that will result in (apparently) an upheld waiver.

SEPARATION AGREEMENTS — PENSIONS — WAIVER OF RIGHTS.

Surprise! Those lawyers who have believed for many years that a separation agreement that makes a "full and complete settlement" of the couple's property rights, and waives everything else, cuts off a wife's right to seek a share of the foreign service pension were wrong about that. The Court of Appeals says that if you want to affect in any way a "former spouse's" right to division of a federal pension, you must secure agreement to wording that "expressly provides" for a waiver and relinquishment of that right as such. The Court of Appeals finds this principle from the wording of the federal statute, 22 USC § 4060 (b) (1) (A). The general waiver of all property rights appears to be a waiver only of those rights that a spouse then has, and the Court of Appeals has decided that it really goes only to inheritance rights and rights of after-acquired property, unless it comes up with a way of expressly saying otherwise. The Court therefore reverses, in Nicholson v. Nicholson, ___Va. App.___, SE2d___ , 10 VLW 598 (10/31/95), a circuit court holding that the general waiver in a written separation agreement reached the federal pension.

PENSIONS — SEPARATION AGREEMENTS — INTERPRETATION OF ERISA.

The Federal District Court for the Eastern District of Virginia Norfolk Division, got a chance to construe ERISA in the case of a divorced wife who thought she was getting a big benefit under a separation agreement clause providing she would be designated a “beneficiary” of her husband’s pension and profit sharing plan, but then found out otherwise. Carpenter v. Carroll, Pinto, Inc., ___ F. Supp.2d ___, 20 VLW 194 (EDVA 6/24/05).