Heyda v. Heyda
93 ALPERT, Judge. This is an appeal from a so-designated “Qualified Domestic Relations Order” 1 entered by the Circuit Court for Montgomery County. In their divorce proceedings, appellant, Charles Heyda, husband, and appellee, Ivana B. Heyda, wife, entered into a stipulation, which was placed on the record. The stipulation provided (1) that wife was to receive “survivorship” benefits in Charles’ Civil Service Retirement System plan, and (2) that wife’s interest in husband’s pension and “survivorship” benefits was to be computed using the so-called Bangs’ formula.
The lower court, in interpreting the stipulation, but in contravention of federal regulations, granted wife (1) an interest in a Former Spouse Survivor Annuity, and (2) a conditional interest in an Insurable Interest Annuity. Also, the lower court did not properly apply the Bangs’ formula. Finally, after reviewing the applicable (and recently enacted) federal regulations, we hold that the format of the trial court’s order would be unacceptable to the Office of Personnel Management. Accordingly, we reverse and remand.
BACKGROUND On July 5, 1969, Charles Heyda [“Charles”] married Ivana B. Heyda [“Ivana”]. At all times relevant to this litigation — including throughout the entirety of his marriage to Ivana — Charles was (and remains to this day) a civilian employee of the United States government. As a federal employee, Charles is covered by the federal Civil Service Retirement System [“CSRS”]; the CSRS, in turn, is administered by the federal Office of Personnel Management 94 [“OPM”]. The monthly annuity to which Charles, as a retired CSRS participant 2 , will be entitled is based upon his number of years of federal government service and his earnings.
Federal law permits state divorce courts to treat certain pension and retirement rights as marital property, 5 U.S.C.A. § 8345 (j), and, correspondingly, Maryland has specifically authorized its trial courts to implement a monetary award by transferring a portion of a party’s pension or retirement plan to his or her spouse. See Md.Code (1984, 1991 RepLVol.), § 8-205(a) of the Family Law Article. Eventually Ivana sued Charles for divorce. The parties, with and through the assistance of counsel, negotiated and stipulated a property settlement; one of the terms of this stipulation concerned transferring a portion of Charles’s federal pension, with survivorship benefits, to Ivana.
On August 15, 1989, the parties came before the Circuit Court for Montgomery County (Paul A. McGuckian, J.) to place their stipulation on the record. Louis J. Fiechtner, Esquire, represented Ivana at the hearing; Steven J. Bienstock, Esquire, represented Charles. The colloquy that is relevant to the case sub judice (in that it concerned Ivana’s interest in Charles’s pension benefits) was admittedly brief, to wit: MR. FIECHTNER: * * * There is also a pension with the federal government of Mr. Heyda.
Mr. Heyda has agreed to a division of the pension of 50% to his wife with survivorship benefits. A domestic relations order dividing that pension, suitable for an if, as or when division, will be prepared and submitted to Counsel for his review and then ultimately submitted to the Court. Mr. Heyda would waive any claims to Mrs. Heyda’s pension, if — well, waive any claims to any pension rights she may have. 95 MR. BIENSTOCK: The 50 percent is to be computed during — for the duration of the marriage, from the marriage date until— MR.
FIECHTNER: Under the bank’s [sic] formula 3 . MR. BIENSTOCK: — divorce, under the standard formula. The— THE COURT: When is it due?
MR. BIENSTOCK: If, as and when. MR. FIECHTNER: And with survivorship rights. 4c * * * * * MR.
BIENSTOCK: In addition, Your Honor, just to summarize, other than what is specified in [the testimony above], it is our understanding that Mrs. Heyda seeks nothing from Mr. Heyda and Mr. Heyda seeks nothing from Mrs. Heyda; that this is the totality of the agreement between the parties. * * * * (Emphasis and footnote added.) With respect to these pension issues, there is no other testimony that reflects the parties’ intent. Nor does the record reflect an exchange of correspondence between the parties’ counsel to guide the court as to the parties’ intent. The above colloquy represents the totality of facts upon which the lower court had to base (1) its determination as to the parties’ intended meaning of “survivorship rights” and “survivorship benefits,” and (2) its determination as to the applicability of the Bangs’ formula. On January 18, 1990, the court inter alia granted Ivana an absolute divorce from Charles.
As part of that judgment, the lower court ordered that the provisions of the stipulation of the parties read into the record in open Court before the Honorable Judge Paul McGuckian on August 15, 1989, a transcript of which was introduced and admitted into evidence before 96 the Master on January 9, 1990 as Plaintiff’s Exhibit # 2, be and the same are hereby incorporated, but not merged, in this judgment to the extent that the Court has jurisdiction, and it is further * * * * ORDERED that this Court hereby reserves jurisdiction to enter a Qualified Domestic Relations Order to effect pension distributions pursuant to the agreement of the parties[.] 4 * * * * (Footnote added.) On June 28, 1991, Ivana filed a Motion for Entry of Qualified Domestic Relations Order. This motion was intended to implement the foregoing stipulation relative to Ivana’s interest in Charles’ pension distributions. Charles opposed the way Ivana had implemented the parties’ agreement, however, and correspondingly requested a hearing to resolve the issue. On September 19, 1991, the Circuit Court for Montgomery County heard arguments from the parties concerning four areas of the proposed “QDRO” that were then in dispute.
Of these four areas, only two are at issue presently: (1) What did the parties intend when they agreed to provide Ivana with “survivorship benefits,” and (2) Exactly how should Ivana’s “survivorship annuity” be calculated? Unfortunately, these two simply phrased, disputed issues must be resolved through the complex world of federal governmental organizational law and its corresponding OPM regulations. We shall reserve our discussion concerning the legal aspects of these issues for section A of this opinion, below. For our present purposes, however, it is 97 sufficient to note that, pursuant to the aforementioned September 19, 1991 hearing, the lower court adopted Ivana’s view of things; correspondingly, in its “QDRO” dated September 24, 1991, the circuit court inter alia ordered: [I]n the ... event that [Charles] shall predecease [Ivana], [she] shall receive a Former Spouse [Survivor] Annuity, as defined in 5 C.F.R. Section 831.603; provided however, that in the event that [Ivana] is otherwise entitled to a Former Spouse [Survivor] Annuity pursuant to this paragraph ..., but is precluded from receiving a Former Spouse [Survivor] Annuity because she remarries prior to attaining age 55, it is hereby agreed that (i) [Ivana] shall be entitled to receive an Insurable Interest Annuity, as defined in 5 C.F.R. Section 831.603, and (ii) [Charles] hereby covenants and agrees that, upon the written request of [Ivana], he shall take whatever actions are needed to convert the Former spouse [survivor] annuity entitlement to an Insurable Interest Annuity.
Nothing herein shall be construed to require [Charles] to pay for two types of survivor benefits at the same time for the benefit of [Ivana]. The Former spouse [survivor] annuity or the Insurable Interest Annuity, as the case may be, shall provide for payments equal to 55% of [Charles’] “self-only annuity” immediately prior to [Charles’] death, ... or, in the event that [Charles] dies prior to the commencement of such payments, 55% of the payments to which [Charles] would have been entitled if he had retired on the date of his death. Charles now appeals from this “QDRO.” Specifically, he has asked us to address two questions: I. Where the parties entered into a stipulation providing for Ivana to receive “survivorship” benefits in Charles’ Civil Service Retirement System plan, did the lower court err in awarding Ivana both a Former Spouse Survivor Annuity and an Insurable Interest Annuity? 98 II. Where the parties agreed that the formula for allocating Charles’ retirement and survivor annuity benefits would be in accordance with the case of Bangs v. Bangs, 59 Md.App. 350 [ 475 A.2d 1214 ] (1984), did the lower court err in failing to apply the Bangs’ formula to the survivor annuity benefit computation?
LAW A. Former Spouse Survivor Annuities v. Insurable Interest Annuities Charles and Ivana placed their stipulation on record during the aforementioned August 15, 1989 hearing. Therefore, we start with the basic factual proposition that the lower court was asked to interpret the terms of this stipulation. As we stated in Bentz v. Mutual Fire, Marine & Inland Ins. Co., 83 Md.App. 524 , 575 A.2d 795 (1990), [t]he cardinal rule in the construction and interpretation of contracts is that effect must be given to the intention of the parties, unless it is inconsistent with some established principle of law.
All other rules of construction are simply in aid of that “cardinal rule.” Id. at 538 , 575 A.2d 795 (citations omitted). Moreover, as Charles properly contends, the parties to an agreement are deemed to have contracted with knowledge of existing law — in this case, the law concerning federal governmental pensions — and that (unless expressly rejected as inapplicable) such law becomes a part of the contract as though it were expressly referred to and incorporated into the agreement. See, e.g., Shell Oil v. Ryckman, 43 Md.App. 1, 8-9 , 403 A.2d 379 (1979). As indicated above, the two simply phrased, disputed issues in this case must be resolved through the complex world of federal governmental organizational law and its corresponding OPM regulations (hereinafter, the “regulations”).
As the record before us is silent as to whether the parties wished to reject this law as inapplicable, we therefore hold that such law applies to the agreement sub judice. 99 Accordingly, we may now phrase our present task more succinctly: we must determine whether the trial court erred as a matter of fact-finding when, in light of applicable law, that court found that Charles and Ivana had intended (1) to construe the phrase “survivorship rights” to include both a Former Spouse Survivor Annuity and an Insurable Interest Annuity, and (2) not to calculate Ivana’s survivorship annuity pursuant to the Bangs’ formula. We therefore begin our analysis by laying some intellectual and definitional groundwork vis-a-vis Charles’ federal government retirement benefits. The regulatory computation of Charles’ retirement benefits begins with his so-called “self-only annuity.” The regulations define a self-only annuity as “the recurring payment to a retiree who has elected not to provide a survivor annuity to anyone.” 5 C.F.R. § 831.1703 . A self-only annuity may be distinguished from a “gross annuity,” which the regulations define as “the amount of a self-only annuity less only the applicable survivor reduction, but before any other reduction.” Id.
(emphasis added). Therefore the mathematical relationship between a self-only annuity and a gross annuity is simple: a self-only annuity minus the applicable survivor reduction equals a gross annuity. As is relevant here, there are two types of “survivorship” annuities that incur “survivor reductions” so as correspondingly to reduce a retiree’s self-only annuity: these are the so-called “former spouse survivor annuity” 5 and the so-called “insurable interest annuity.” We shall discuss them respectively. The most basic type of survivorship annuity is the former spouse survivor annuity.
The regulations define a former spouse survivor annuity as “a recurring benefit under 100 CSRS that is payable to a former spouse after the employee’s, Member’s or retiree’s death.” Id. § 831.603. For our purposes, there are two significant “features” of a former spouse survivor annuity. First, federal statutory law, and the regulations promulgated pursuant thereto, expressly authorize a state trial court to order payment of a former spouse survivor annuity. See, e.g., 5 U.S.C.A. § 8341 (h)(1) (“[A] former spouse of a deceased employee ... is entitled to a [former spouse survivor annuity] if and to the extent expressly provided for ... in the terms of any decree of divorce or annulment or any court order or court-approved property settlement agreement incident to such decree”).
See also id. § 8345(j); 5 C.F.R. 831.1704. Second, former spouse survivor annuity payments terminate under certain specified conditions. Specifically, a former spouse survivor annuity “shall terminate ... no later than the last day of the month before the former spouse remarries before becoming 55 years of age[, or when the former spouse dies].” 5 U.S.C.A. § 8341 (h)(3)(B)(i). The following regulations reinforce Congress’s intentions concerning the termination of former spouse survivor annuities: A former spouse survivor annuity or eligibility for a future former spouse survivor annuity terminates on the last day of the month before the month in which the former spouse remarries before attaining age 55. 5 C.F.R. § 831.625 (b).
If present or future entitlement to a former spouse survivor annuity is terminated because of remarriage of the recipient or potential recipient, the entitlement is permanently extinguished. An annulment of the remarriage does not reinstate the entitlement. Id. § 831.625(d). OPM will terminate a recurring payment of or a future interest in survivor annuity benefits to a former spouse whenever ... the former spouse dies [or] remarriesf.] Id. § 841.908(b)(2).
A/current or former spouse survivor annuity under this súbpart terminates on the last day of the month before 101 the current or former spouse remarries before age 55 or dies. Id. § 843.304(b). The parties hereto agree that the “QDRO” in the instant case properly provides that Ivana will receive a portion of Charles’ retirement benefits from the date of his retirement until his death. After Charles’ death, however, pursuant to both the “QDRO” and
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