Allen v. Allen

DAVIS, J. Appellant, Horace M. Allen and appellee, Carolyn Elaine Allen, after reaching an agreement, were granted a judgment of absolute divorce on May 26, 1995 that provided for appellee to be named as the alternative payee of the pension/retirement plans of appellant. The amount was to be determined by the formula as set forth in Bangs v. Bangs, 59 Md.App. 350 , 475 A.2d 1214 (1984), via a separate order. Appellee filed a Motion for Entry of Constituted Pension Order and Qualifying Court Order on February 2, 2006, to which appellant did not respond. On February 28, 2006, the motion was granted and the Circuit Court for Harford County entered a Constituted Pension Order relative to appellant’s military retirement and a Qualified Court Order relative to a civil service retirement.

Appellant thereafter filed a pro se Motion to Reconsider that appellee answered on April 13, 2006. The Circuit Court for Harford County conducted a hearing, sub curia, on September 22, 2006 and, on October 3, 2006, ¹⁴⁷ appellee filed a Motion for Determination of Arrearages and for Judgment Against [appellant], which appellant subsequently answered. The court entered an order granting appellee’s Motion for Determination of Arrearages and Judgment against appellant in the amount of $75,810.97, plus interest at the post-judgment rate and ordered appellant to pay counsel fees in the amount of $1,500. Appellant noted an appeal on November 20, 2006 and, on December 26, 2006, filed a Motion for Stay of Enforcement of Judgment Pursuant to Maryland Rule 8-422 and Request for Hearing, to which appellee responded on January 4, 2007.

The court granted the Motion for Stay on February 1, 2007, on the condition that appellant file an appeal bond in the total judgment amount plus counsel fees within ten days of the date of the Order. The November 1, 2006 Order granting appellee’s Motion for Determination of Arrearages and Judgment and the resulting judgment against appellant give rise to the instant appeal, in which appellant presents the following issue for our review. Whether the circuit court erred in granting appellee’s Motion for Determination of Arrearages and for Judgment [against] appellant. FACTUAL BACKGROUND Appellant served in the United States Army from October 1973 until December 2005 and, at the time of the 1995 divorce, appellant was enlisted in the Army Reserve.

Appellant was placed on disability due to an anxiety disorder in 2003, resulting in a temporary disability status effective October 30, 2003. At commencement of his disability status, appellant’s disability rating was thirty percent, which was subsequently reduced to ten percent and appellant appealed that determination, but his appeal was denied. On December 28, 2005, appellant was discharged from the military because of a permanent physical disability and appellant did not inform appellee of his status. Appellant received $76,410 during his period of temporary disability and, upon his Honorable Discharge, a lump sum payment of $140,192.77 in disability severance. ¹⁴⁸ On October 20, 2005, appellee’s counsel initiated correspondence with appellant and requested an updated “Chronological Statement of Points” for the purpose of drafting a constituted pension order, but appellant did not provide the requested information.

The Defense Financing and Accounting Service (DFAS) sent appellee correspondence that indicated that no amount of funds received by appellant were available for payment under the Uniformed Services Former Spouses’ Protection Act (USFSPA or the Act) 1 because the entire amount was based upon appellant’s disability. Appellee thereafter filed her Motion for Determination of Arrearages and for Judgment against appellant that the court granted on November 1, 2006. Additional facts will be provided, hereafter, as warranted. LEGAL ANALYSIS We review the legal rulings of a trial court de novo.

Sweeney v. Savings First Mortgage, LLC, 388 Md. 319, 326 , 879 A.2d 1037 (2005). As to factual findings, the Court of Appeals has recently opined that, [w]hen there is a conflict in the evidence, an appellate court will give great deference to a hearing judge’s first-level factual and credibility determinations. See, e.g., [State v.] Nieves, 383 Md. [573] at 581-582, 861 A.2d at 67 [ (2004) ], Laney [v. State], 379 Md. [522] at 533-534, 842 A.2d at 779-780 [ (2004) ]. Findings of fact and credibility determinations are to be made by trial courts, not appellate courts.

See State v. Green, 375 Md. 595, 607 , 826 A.2d 486, 493 (2003). Longshore v. State, 399 Md. 486, 520 , 924 A.2d 1129 (2007). Appellant grounds his appeal in the contention that the USFSPA precludes a state court, within the context of a ¹⁴⁹ divorce proceeding, from dividing disability pay pursuant to state property laws because the USFSPA authorizes that only disposable retired or retainer pay 2 be counted as marital property for equitable distribution. Appellant characterizes the funds he received from the military as disability payments that commenced solely because of his disability and not because he had retired and, thus, the circuit court did not have the authority to divide disability benefits and award appellee a portion thereof via judgment.

In so arguing, appellant contends that Mansell v. Mansell, 490 U.S. 581 , 109 S.Ct. 2023 , 104 L.Ed.2d 675 (1989) is dispositive of the instant case. In Mansell , a retired Air Force officer and his wife divorced and, pursuant to an agreement, Mr. Mansell was to pay his wife fifty percent of his total military retirement pay, including a portion he had waived in order to receive veterans’ disability benefits. Mansell, 490 U.S. at 585-86 , 109 S.Ct. at 2027 . He thereafter requested that the Superior Court remove that provision requiring him to share his total retirement pay and the Superior Court denied his request.

Id. at 586 , 109 S.Ct. at 2027 . Appellant cites 10 U.S.C. § 1408 (a)(4)(C) and (E) 3 for the proposition that among ¹⁵⁰ amounts intended to be deducted from total pay “are any amounts related to disability payments.” In appellant’s view, the Court expressly limited the language of the USFSPA when it provided that certain military retirement pay could be treated as marital property by State law, but it specifically excluded disability pay. Mansell, 490 U.S. at 588-89 , 109 S.Ct. at 2028-29 . Appellee argues that appellant erroneously asserts that his retirement benefits, received as a result of his disability, are not subject to the terms of the judgment of divorce and that the judgment and federal law limit appellee to a share only of retirement received as a result of retirement based on longevity.

Appellee’s argument is two-fold, i.e., that appellant’s disability retirement benefits are subject to the terms of the parties’ divorce judgment or they are paid to appellant in lieu of any retirement or pension benefits and are the functional equivalent of those benefits. According to appellee, the Order is a contract, the terms of which may only be enforced by—and not rewritten by—a court. Further, because the parties did not define “pension/retirement plans,” the term is ambiguous and, thus, appellant may not interpret its meaning because the test is what a reasonable person would believe it to mean. In determining what type of pay appellant received from the military, we look to appellant’s DD-214.

Appellant’s DD-214 states that the “Type of Separation” was “Retirement” and the reason for the separation is stated as “Disability, Temporary.” Appellee’s counsel was informed by letter that the entire amount of appellant’s “retired/retainer pay [was] based on disability” and, thus, there were no funds payable under the USFSPA. ¹⁵¹ Next, we look to correspondence in the record from the “Defense Finance and Accounting Service Retired and Annuity Pay” to appellee’s counsel. In the letter dated August 17, 2006, from an “M. Dobrzanski, Retired Pay Operations,” appellant is described as having been placed on “Temporary Disability” of “30%” on October 6, 2003. 4 Enclosed in the letter was a complete listing of appellant’s pay account from October 6, 2003 “until his removal from Temporary Disability with Severance Pay” on December 28, 2005, when he was “authorized severance pay.” The letter indicates that his severance payment was issued electronically on January 10, 2006 in the amount of $105,144.28, with taxes withheld. Thereafter, appellant was issued a payment of $35,048.49 on March 27, 2006, because he was tax exempt. The law is well settled in Maryland that a pension constitutes marital property.

Lookingbill v. Lookingbill, 301 Md. 283, 286 , 483 A.2d 1 (1984) (citing Deering v. Deering, 292 Md. 115 , 437 A.2d 883 (1981)). The Lookingbill Court noted that the major distinction between the pension at issue in that case and the Deering pension was that the Deering pension was a service plan 5 while the plan at issue in Lookingbill was disability related. Lookingbill, 301 Md. at 288-89 , 483 A.2d 1 . The Court of Appeals held that pension payments “are actually partial consideration for past employment whether the maturity of the pension is contingent upon age and service or upon disability.” Id. at 289 , 483 A.2d 1 (holding that a disability plan is like a service plan in that it is property within the meaning of the Marital Property Act).

The Court further noted that, in Illinois and New Jersey, states with property distribution statutes similar to Maryland, disability payments are determined to be deferred compensation and are treated no differently than ordinary pension payments. Id. at 290 n. ¹⁵² 3, 483 A.2d 1 . The Lookingbill Court, however, determined that the circuit court erred in valuing the disability pension because the allowance that the husband was receiving was different than that which was contemplated when the service pension was valued. Lookingbill, 301 Md. at 291 , 483 A.2d 1 .

In remanding the case for redetermination, the Court outlined the alternatives available for the court to use in determining the value of the disability pension and reiterated that, under an as, if and when paid computation, it was “unnecessary to determine the value of the pension fund at all.” Id. at 292-93 , 483 A.2d 1 . As stated in footnote one, supra, the Supreme Court held that federal statutes prevented state courts from treating military retirement pay as community property. See Mansell, 490 U.S. at 584 , 109 S.Ct. at 2026 (citing McCarty v.