Leadroot v. Leadroot

KRAUSER, Judge. Appellant, Jacqueline E. Leadroot, appeals from an order of the Circuit Court for Anne Arundel County, claiming that the circuit court’s order constitutes an untimely and therefore improper “revision” of the parties’ Qualified Domestic Relations Order (QDRO). Her former husband, appellee Philip C. Leadroot, disagrees. He asserts that what appellant calls a revision was only a “clarification” of their QDRO; therefore, he claims, it was neither untimely nor improper.

But, while appellee requests that we affirm the circuit court’s “clarification” of the parties’ QDRO, he asks that we reverse the court’s denial of his request for “credit for taxes [he] paid on the pension arrearage.” After considering the parties’ conflicting claims, we conclude that the circuit court’s order did “revise” the QDRO, as ⁶⁷⁴ appellant contends. And because there was no evidence of fraud, mistake, or irregularity, we further conclude that the circuit court’s belated revision of that QDRO was improper and should be reversed. On the other hand, we believe that the circuit court did not err in requiring appellee to pay appellant the pension benefits, withheld by him since his retirement, without crediting him for taxes paid on those benefits. BACKGROUND On February 4, 1974, appellee, as a member of the Uniform Secret Service, began- contributing to the District of Columbia Police and Firemen’s Retirement Relief Fund (D.C. Retirement System).

Nineteen months later, on October 25, 1975, the parties married. During their nineteen-year marriage, the couple had three children. In 1978, appellee was transferred to Chicago to work for the Immigration and Naturalization Service. To pay for the move to Chicago, appellee redeemed the monthly retirement contributions he had made between 1974 and 1978, or as he put it, “cashed in” his retirement for those years.

Five years later, in 1983, he was hired as a criminal investigator. 1 His new position enabled him to participate in the Civil Service Retirement System. In 1991, the parties separated. On April 21, 1993, the Circuit Court for Anne Arundel County granted them a judgment of absolute divorce, and that judgment incorporated a Qualified Domestic Relations Order (“1993 QDRO”). The 1993 QDRO awarded appellant “one-half Qk) of the marital property portion of each of Defendant’s monthly [pension benefit] payments.” It then declared the marital portion shall be a fraction of the Defendant’s full monthly benefit, the numerator of which shall be the number of months of Defendant’s participation in the Plan from ⁶⁷⁵ the date of the parties’ marriage (October 25, 1975) through and including November 18, 1991 and the denominator of which shall be the total number of months of Defendant’s participation in the Plan.

The period of time comprising the numerator ends on November 18, 1991, the termination date agreed upon by the parties. In 1995, appellant filed the QDRO with the Office of Personnel Management (OPM), the federal government’s human resources agency, to ensure that she would receive her portion of the pension when it was distributed. Four years later, unknown to appellant, appellee transferred his retirement funds back into the D.C. Retirement System and on October 5, 1999, appellee repurchased, with his own funds, the four years of government service 2 he had redeemed during the marriage. For the sum of $8,687.87, he “bought back” his months of government service, from February 4, 1974 to February 11, 1978.

By doing this, he significantly increased the total amount of annual pension benefits he would receive from the D.C. Retirement System. 3 The next month, appellee retired and began collecting his pension. ⁶⁷⁶ When appellant learned appellee was retiring, she contacted the OPM to check on the payment of the pension’s benefits. It was then that she learned appellee had transferred his pension to the D.C. Retirement System. When she contacted the D.C. Retirement System, she was informed that the 1993 QDRO was not acceptable in it's present form. To be accepted by that system, she was advised, the QDRO had to be separate from the parties’ judgment of divorce.

To resolve that problem, appellant filed a “Motion for Entry of Judgment and Qualified Domestic Relations Order,” requesting that the circuit court issue a separate QDRO. In that motion, she also requested, among other things, an award of the retirement benefits appellee had withheld since his retirement. On February 6, 2001, the parties filed a “Joint Motion for Entry of Judgment and Qualified Domestic Relations Order,” seeking the issuance of a separate QDRO. Ultimately, the circuit court issued a separate QDRO (2001 QDRO) but reserved ruling on the pension arrearage until a hearing could be held.

The new 2001 QDRO was not substantively different from the original 1993 QDRO with respect to the computation. The 2001 QDRO states: The amount to be paid to the Alternate Payee shall be one-half (/£) of the marital property portion of each of the Employee’s [Mr. Leadroot’s] monthly payments. The marital property portion shall be a fraction of the Employee’s full monthly benefit, the numerator of which shall be the number of months of the Employee’s qualifying participation between October 25, 1975, and November 18, 1991, inclusive, and the denominator of which shall be the total number of months of the Employee’s qualifying participation. (emphasis added).

It did add the word “qualifying” to describe appellee’s participation in the pension plan, but neither party claims that ⁶⁷⁷ the addition of that word changed the meaning of that paragraph. In fact both sides concede in their briefs that no substantive change in the QDRO occurred as a result of the re-issuance of the QDRO in 2001 as a separate document. 4 Moreover, appellee did not request, at that time, any change in the language of the QDRO to reflect his repurchase of the four years that he had “cashed in” when he and appellant moved to Chicago. Six months later, however, appellee filed a motion to modify the QDRO claiming that “the original divorce decree and QDRO had an error as to the marital portion of the retirement benefits which are owing and due” to appellant. He explained that because the parties had “received a complete payout” of his benefits for “the time period from October 25, 1974 through 1978,” and because he had, after the divorce, bought back those months, with his own funds, so that he could retire early, that time period should not be included in the calculation of the marital portion of his retirement benefits.

The circuit court agreed. After a hearing, the circuit court issued a Memorandum Opinion and Order holding that the redeemed months would not be included in the calculation of the marital portion of appellee’s pension benefits because “there was a mutual mistake by the parties in their calculations concerning the pension.” It then found that “the marital percentage of the pension” was 53 percent and that appellant’s portion was 26.5 percent. The exclusion of that time period resulted in a 4.82 percent reduction in appellant’s share of her former husband’s pension benefits, as she would otherwise have received 31.32 percent, and not 26.5 percent, of those benefits. The circuit court further found that appellee owed appellant pension ⁶⁷⁸ payments for the period from December 1999 through May 2001.

The circuit court calculated the pension arrearage based on a percentage of the gross monthly retirement payment rather than the net amount as appellee requested. It explained that it did not have sufficient information to grant appellee’s request that the amount of monies owed appellant be reduced by the amount of income tax appellée had paid on those monies. It further observed that appellee could “amend his tax returns to recoup any overpayments” of federal and state taxes. Challenging the circuit court’s authority to modify a QDRO eight years after its issuance, appellant filed a “Motion to Alter or Amend Memorandum Opinion and Order”.

In another motion, appellee asked the court to reconsider its decision not to “reduce monies owed by [him to appellant] by any federal or state income tax payments,” claiming that he had since learned, contrary to what the circuit court had stated in its opinion, that he could not amend his returns to reflect these overpayments. 5 Both motions were denied and cross-appeals followed. I On appeal, appellant restates the argument she made below. She asserts that by excluding the redeemed months from the computation of the marital portion of appellee’s pension benefits, the circuit court “revised” the parties’ QDRO. That revision, according to appellant, violated Maryland Rule 2-535, which provides in part: (a) Generally. — On motion of any party filed within 30 days after entry of judgment, the court may exercise revisory power and control over the judgment and, if the action was tried before the court, may take any action that it could have taken under Rule 2-534. ⁶⁷⁹ (b) Fraud, Mistake, Irregularity. — On motion of any party filed at any time, the court may exercise revisory power and control over the judgment in case of fraud, mistake, or irregularity.

Because the “revision” occurred more that thirty days after entry of judgment and because, according to appellant, it was not supported by a finding of fraud, mistake, or irregularity, it was the product of judicial error. Appellee does not disagree if in fact the circuit court’s order “revised” the parties’ QDRO. But he insists that it did not. According to appellee, that order “clarified” but did not “revise” the parties’ QDRO.

This, however, was not how he framed the issue below. In the circuit court, appellee moved not to “clarify” but to “alter or amend” the parties’ QDRO, claiming that the “Divorce Decree and the Qualified Domestic Relations Order both have an error as to the marital portion of the retirement benefits which are owing and due” to appellant. The error he maintained there was that the QDRO “has the wrong beginning date.” The numerator of the fraction used to compute the marital property portion of appellee’s pension benefits, he explained, should not include the months redeemed by him during the marriage and later repurchased, with non-marital funds, after the divorce. He therefore asked the circuit court to amend the QDRO so that the numerator would not include those months.

And that is what the circuit court did. Declaring that “there was a mutual mistake by the parties in their calculations concerning the pension,” the circuit court found: [T]he months redeemed by the parties must not be considered as part of the numerator in the fraction but, rather, the formula should be the number of months of the employee’s qualifying participation between February 11, 1978 and November 18, 1991, a total of 165 months, as the numerator, and the denominator being the total number of months of the employee’s qualifying participation, that is, 309 months, which include the redeemed months. ⁶⁸⁰ Explaining why it was including the redeemed months in the denominator while removing those months from the numerator, the circuit court stated that, “[a]lthough it appears to be somewhat contradictory, it should be remembered that after the divorce, [appellee] did repurchase the redeemed months” and “that this time must be part of the [appellee’s] qualifying participation.” And it added that to rule otherwise would grant appellant a “wind fall.” Regardless of what appellee chooses to call it, the circuit court did in fact revise the fraction used to compute the marital portion of appellee’s pension benefits. It did so to correct what it believed to be “a mutual mistake by the parties.” A clarification does not modify; it illuminates. And the circuit court, here, was engaged in more than simply illuminating the fraction at issue; it significantly altered that fraction so that it conformed with what the circuit court believed to be the parties’ expectations.

Using the almost identical formula approved by this Court in Bangs v. Bangs, 59 Md.App. 350 , 475 A.2d 1214 (1984), the QDRO stated that “the numerator ... shall be the number of months of the Employee’s qualifying participation between October 25, 1975, and November 18, 1991, inclusive, and the denominator ... shall be the total number of months of the employee’s qualifying participation.” In other words, the numerator was to include all of the months between the date of the parties’ marriage and the termination date agreed on by the parties. No distinction was made between redeemed and unredeemed months in computing the marital portion of appel-lee’s pension benefits in 1993, when the QDRO was first