Levin v. Levin

WEANT, Judge. This appeal attacks the correctness of a decision by the Circuit Court for Anne Arundel County, interpreting a provision in. a separation agreement involving alimony payments. The appellant and cross-appellee, Arthur J. Levin (husband), assails a final order, dated 13 September 1983, requiring him to pay the appellee and cross-appellant, Ida D. Levin (wife), $250 a month in alimony, effective 1 June 1982. He tenders five allegations of error in an effort to buttress his position: I. The Chancellor erred in holding that the definition of “income”[,] as used in the separation agreement, included the interest or dividends portion of the retirement fund, which was expressly excepted by the definition.

II

The Chancellor erred in holding that the definition of “income”[,] as used in the separation agreement, included that portion of the retirement “earned” before the effective date of the separation agreement. ³²⁹ III. The Chancellor erred in holding that the parties intended by their agreement to share ex-husband’s retirement benefits.

IV

The Chancellor abused his discretion in awarding, rather than terminating, alimony, in view of the change of circumstances of this case. V. The Chancellor erred in increasing alimony from $200 to $250 per month in order to compensate for his inability to award counsel fees. The wife cross-appeals, questioning: A. Whether an ex-husband’s receipts under his former employer’s pension and retirement plan constitutes “income” as that term is defined in a separation agreement and divorce decree ... as being “wages, salaries, fees, commissions or remuneration for work performed or services rendered.” B. Whether the court abused its discretion in modifying an alimony obligation retroactive to a time period prior to the ex-husband’s petition to modify the alimony obligation, when the ex-husband had in fact received and retained the income and offered no evidence of an inability to pay the existing alimony obligation according to the agreed and court-ordered formula. C. Whether the Court’s original award to an ex-wife of attorneys[’] fees, made upon determination of her petition to enforce an existing alimony order was unauthorized, when the ex-wife’s petition was filed in an existing divorce case that was originally filed in 1972, before the legislative enactment of Maryland Code Art. 16, § 3, but her petition was filed (1982) after the effective date of that statute.

D. Whether the Court’s modification of an alimony order constituted an exercise of discretion arbitrarily used or a judgment so clearly wrong that.it should be disturbed on appeal. E. Whether the trial court adequately complied with Maryland Rule 18 in providing a brief statement of the grounds for its decision. ³³⁰ Because the issues raised by the parties tend to overlap, they will be combined whenever practical in our discussion. On 26 March 1971, the thirty-one year marriage of Arthur J. Levin and Ida D. Levin ended, the coup de grace being administered by judicial decree. The parties’ separation agreement, wherein Arthur agreed to pay Ida as alimony the equivalent of twenty-five percent of his gross 1 “income” as defined in the agreement, was incorporated in the circuit court’s order.

By reason of a previous period of employment with the B’nai B’rith Anti-Defamation League (ADL) the husband acquired certain “vested” rights in a pension plan maintained by his former employer; he would not, however, be eligible to collect those benefits until age sixty-five. No specific reference to the ADL pension was contained in either the parties’ separation agreement or in the court’s order. The husband worked for Potomac Institute, Inc. (Potomac) when the parties separated. At the time the parties entered into their agreement, Potomac did not provide any pension plans for their employees, although the company did plan to implement one eventually.

In 1972, Potomac instituted an “Employees’ Pension and Retirement Benefit Plan.” The husband’s rights in the non-contributory, “defined benefit plan,” made retroactive to 1961 his first year with Potomac, were “vested from the beginning.” Arthur paid alimony conscientiously until his retirement in May, 1982. In a letter dated 1 June 1982, he notified Ida that his retirement terminated all alimony responsibilities. Ida initiated contempt proceedings to enforce payment. Arthur initially denied any further obligations to pay alimony, but subsequently filed a cross-petition to modify or reform the alimony provisions of the original decree.

Following a hearing, the circuit court found that the husband’s pensions ³³¹ constituted “income” within the definition provided in the separation agreement and ordered him to continue paying alimony on a modified basis. In addition, it awarded counsel fees to the wife. Upon the husband’s motion for reconsideration, the court revised its order; it struck the award of counsel fees but increased the modified alimony payments, basing the increase expressly on the court’s inability to impose counsel fees on the husband. It is from this order that the parties appeal.

III./A. It has been said that “nothing stings more deeply than the loss of money.” 2 In the case sub judice, the wife claims the right to share in the husband’s retirement benefits on the basis that his pensions fall within the definition of “income” contained in their separation agreement. Not surprisingly, the husband disagrees. He contends that, when the parties entered into their agreement in 1971, retirement benefits were not generally considered to be salary or earned compensation but were regarded as a form of gratuity. Therefore, he says, the parties did not intend to include pensions in the “income” classification.

The trial court disagreed with both the husband’s characterization of the law regarding retirement benefits and his interpretation of the agreement. After establishing that this case did not involve equitable distribution of pension benefits pursuant to the Marital Property Act, Md.Ann. Code, Cts. & Jud.Proc. Art. §§ 3-6A-01 to 3-6A-08 (1980); Ohm v. Ohm, 49 Md.App. 392 , 431 A.2d 1371 (1981), the trial court found that the husband’s pensions were indeed “income,” as defined in the agreement. In addition, it held that his obligation to pay some portion of that income as alimony continued after his retirement from active employment.

We agree. ³³² “Income,” as defined in the agreement, constitutes “the total monthly income from wages, salaries, fees, commissions, or remuneration for work performed or services rendered, and does not include interest, dividends, gifts, return of capital, inheritance, stock dividends, or income from the sale of tangible assets____” The funds at issue in the case at bar are retirement benefits from two pension accounts received by the husband, $7,742.87 from ADL and $134,369.44 from Potomac. Upon his retirement from Potomac, the husband elected to receive a lump sum payment of $134,369.44, representing the present value of his life annuity. He then invested his total retirement receipts, $142,-112.31 (combined value of both pensions), in a private Individual Retirement Account (IRA). The husband is correct that early authorities disagreed on whether payments, generally in the form of land bounties awarded by governments in return for military service, constituted compensation or “mere gratuities.” See Annot. 94 A.L.R.3d 176 , 190 n. 56 (1979).

Today, however, the clear majority of jurisdictions characterize such benefits as compensation for past, ráther than present or future services; in other words, as a part of an employee’s salary rather than a donation. Ohm, supra, [49 Md.App.] at 396-403, 431 A.2d at 1373-75 ; see generally, 94 A.L.R.3d at 190-93. Although the appellant correctly points out that Ohm discusses the power of the court to distribute pension proceeds equitably pursuant to the Marital Property Act, he is incorrect in his assumption that the court’s rationale in support of its ultimate holding is inapplicable to the dispute presently before us. For cases holding that certain forms of retirement benefits are subject to equitable distribution or a community property award, see cases collected Ohm, supra, [49 Md.App.] at 396, 431 A.2d at 1374 , 94 A.L.R.3d at 190-93.

The courts’ decisions are grounded in the rationale that such benefits constitute a mode of employee compensation, a “deferred compensation or wage substitute,” earned during a given period of employment, rather than a mere gratuity. Ohm, supra, [49 Md.App.] at 397, 431 A.2d ³³³ at 1374. But cf. Daigre v. Daigre, 228 La. 682 , 83 So.2d 900 (1955) wherein a pension was held to be mere gratuity which the company could discontinue at will and therefore, the husband’s separation property, was not subject to division in absence of any allegation or proof indicating that the pension was paid as remuneration for services rendered. A review of these cases adopting this majority definition indicates that this was the general trend in 1971, the year the parties entered into their separation agreement.

We therefore affirm the trial court’s decision that the ADL and Potomac