In re the Marriage of: Otho C. Buxton, III, Respondent, vs. Constance B. Buxton, Appellant.

In re the Marriage of: Otho C. Buxton, III, Respondent, vs. Constance B. Buxton, Appellant. A05-1961, Court of Appeals Unpublished, August 15, 2006.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2004).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A05-1961

In re the Marriage of: Otho C. Buxton, III,

Respondent,

 

vs.

 

Constance B. Buxton,

Appellant.

 

Filed August 15, 2006

Affirmed Ross, Judge

 

Grant County District Court

File No. F8-89-225

 

 

Robert V. Dalager, Fluegel, Helseth, McLaughlin, Anderson & Brutlag, Chartered, 215 Atlantic Avenue, P.O. Box 527, Morris, MN 56267 (for respondent)

 

Michael A. Feist, First National Bank Building, 332 Minnesota Street, Suite W-1610, St. Paul, MN 55101 (for appellant)

 

Mike Hatch, Attorney General, 1800 Bremer Tower, 445 Minnesota Street, St. Paul, MN 55101; Office of Attorney General

 

 

 

Considered and decided by Shumaker, Presiding Judge; Kalitowski, Judge; and Ross, Judge. U N P U B L I S H E D   O P I N I O N

ROSS, Judge

            Appellant Constance B. Buxton challenges the district court's order concluding that she is not entitled to one-half the value of respondent Otho C. Buxton III's accumulated pension contributions as of the date of the petition for dissolution of the parties' marriage, plus interest, and that she is not entitled to spousal maintenance beyond Otho's life.  We affirm. 

FACTS

This case concerns the treatment of retirement benefits that vested during the 28-year marriage of Constance B. Buxton and Otho Buxton III.  The marriage was dissolved by judgment and decree in 1990.  At the time of dissolution, Otho was a vested member of the Public Employees Retirement Association of Minnesota (PERA).  Paragraph 27 of the dissolution decree's findings of fact addresses the PERA account:

[Otho's] accumulated PERA salary deductions, with interest, as of [the date of the petition for dissolution], were [approximately $81,000].  Because the actual retirement benefits . . . are uncertain until retirement, the Court reserves jurisdiction to divide the marital portion of [Otho's] PERA benefits upon his retirement.  The benefits shall be divided in the following manner:  [Constance] shall receive, fifty percent (50%) of [the marital] portion of the actual monthly retirement benefit. 

 

By paragraph 11 of the order's conclusions of law, the district court "reserves jurisdiction to divide the marital portion of [Otho's] PERA benefits upon his retirement."  The dissolution decree awarded Constance $1,200 in monthly permanent maintenance, adding that "[s]uch payments shall terminate only upon the death or the remarriage of [Constance]."  The decree stated that "[Otho] shall maintain a life insurance policy with [Constance] as beneficiary, for the benefit of [Constance] guaranteeing the payment of said permanent maintenance, in the minimum amount of $50,000." 

            About five months later, Otho married Judith Buxton in April 1991. 

            Constance and Otho both appealed the district court's order, which this court affirmed in its entirety.  Buxton v. Buxton, No. C3-91-148, 1991 WL 166045 at *2 (Minn. App. Sept. 3, 1991).  In the decision, we specifically rejected Constance's argument that "the trial court erred in not requiring [Otho] to name [her] as the beneficiary for survivor benefits under [his PERA] pension plan."  Id. at *2. 

            In October 1991, a PERA administrator informed Constance by letter that her interest in Otho's PERA benefits was not protected because the dissolution decree did not order immediate implementation of the pension-plan distribution formula set out in paragraph 27 of the decree's findings of fact.  The letter declared that "[u]nless an amended decree is filed with instructions that PERA is to divide the pension, our office will make no payment to [Constance]." 

            Constance's counsel prepared a draft Stipulation for Amended Judgment and mailed it to Otho's counsel with a letter stating, "My client [Constance] is now willing to waive her right to ask for any survivor annuity benefits pursuant to the PERA plan, but we will insist that the PERA formula be adopted and instituted by the Court immediately so that [Constance's] interest in such plan is protected." 

            In April 1992, the district court adopted the stipulation and issued an amended judgment, which characterized the parties' agreement regarding the survivor benefits:

[Otho] has now agreed to execute the previous proposed Stipulation for Amended Judgment concerning implementation of the pension plan distribution formula as adopted and approved by the Court in paragraph 27 of the Findings of Fact and paragraph 11 of the Conclusions of Law of the original Judgment.  The parties have agreed to make one modification indicating that survivor benefits are not required as a part of implementation of the pension plan distribution formula. 

 

(Emphasis added).  The stipulation also defined the parties' limited rights and duties regarding Otho's PERA benefits:

If [Otho], his beneficiaries, or a surviving spouse submit a valid application for any benefit under the pension plan as administered by the [PERA], including but not limited to retirement, death or disability benefits, the payments shall be divided by use of [the formula described in the original decree]. 

 

. . . .

 

[Constance's] benefit under the PERA plan, as established by the . . . formula, is the amount to be paid to her by PERA out of any benefits paid to [Otho] under such plan, whether such benefits be retirement, death or disability payments.  This provision shall not, however, be construed to provide to [Constance] any joint and survivor annuity benefits, nor to require [Otho] to elect joint and survivor annuity benefits for the benefit of [Constance]. 

 

. . . .

 

Assignment.  A sum equal to the amount determined as [Constance's] benefit shall be assigned irrevocably to, and for the sole benefit of, [Constance].  After this assignment of said amount to [Constance], [Otho] shall have no remaining right, title, or claim to the portion so assigned.  [Constance] shall have no further rights or claims to any other assets or benefits of [Otho] in the plan.

 

(Emphasis added).

            In January 2002, Otho was diagnosed with an inoperable brain tumor and advised that he should expect to live only six to twelve months.  He applied for disability benefits under his PERA account and moved the district court for an order terminating or reducing his spousal maintenance obligation.  PERA sent Constance a letter explaining that, pursuant to the terms of the dissolution decree, she was entitled to a portion of Otho's disability benefits during his lifetime and that her portion of those benefits would "cease upon his death."  Otho designated his new wife, Judith Buxton, the joint survivor annuitant of his PERA benefits.

            In March 2002, Constance moved the district court for an order (1) amending the provisions of the original dissolution decree so as to name her as the joint survivor annuitant of Otho's PERA benefit, (2) requiring Otho or his agents to change Otho's PERA benefits election so as to name her the joint survivor annuitant of Otho's PERA account, or (3) imposing a constructive trust, for her benefit, on Otho's current and future PERA payments, accounts, and benefits.  In an affidavit submitted with the motion, Constance complained about the ten-year-old original judgment:

[I] cannot now explain why in 1992 the original judgment and decree was amended by providing that the division of the pension was not to be construed to provide me the joint and survivor annuity benefits nor to require [Otho] to elect a joint and survivor annuity benefit for my benefit.

 

Constance also requested that the court order Otho to pay spousal-maintenance arrearages and continue to pay her maintenance after his death "as provided in the parties' judgment and decree."  Constance asked that the judgment award her one-half the value of Otho's accumulated PERA salary deductions as of the date of the petition for dissolution (approximately $40,500), plus interest. 

            The district court denied Constance's motion to amend the decree, reasoning that "[t]he issue of the survivor benefits has been litigated, appealed, and has been the subject of a negotiated settlement."  The court found that "[r]egardless of the trial court's reservation of jurisdiction, [Constance and Otho] and the trial and appellate courts understood that the trial court did not award [Constance] survivor benefits to [Otho's] PERA plan."  It further found that "[Constance's] claim to ignorance or confusion regarding the benefits is disingenuous."  The district court did not rule on Constance's request for a judgment for her marital interest in Otho's accumulated PERA pension contributions.  It reserved its ruling on Constance's requests for maintenance arrears and ongoing maintenance pending an evidentiary hearing. 

            Otho died on June 30, 2002.  A probate action followed in district court.  Constance and Judith Buxton presented competing claims to the proceeds of Otho's $50,000 life-insurance policy.  The matter was litigated in federal district court and Constance prevailed. 

            In February 2005, Constance moved the probate court for summary judgment against Otho's estate.  She requested a judgment for the value of one half of Otho's marital PERA pension contributions (approximately $40,500) plus interest, a judgment for maintenance arrears, and a judgment requiring Otho's estate to form a trust in order to pay her permanent spousal maintenance until her death.  The probate court deferred determination of Constance's motion pending resolution by the district court (which was presiding over the dissolution proceeding) of the parties' 2002 motions related to Otho's ongoing maintenance obligations. 

            In May 2005, Constance brought a motion in the dissolution action requesting the district court to clarify whether the June 2002 order denying her request to amend the decree (by granting her survivor benefits) also denied her request for "a judgment for the value of the pension property right awarded to her in the decree and in the subsequent amendment."  In a memorandum accompanying the motion, Constance acknowledged that she had waived a survivor annuity, but she argued that "[w]aiver of the survivor annuity does not . . . extinguish the property right irrevocably assigned to [her] pursuant to the amended decree [which provides that a] ‘sum equal to the amount determined as [Constance's] benefit shall be assigned irrevocably to, and for the sole benefit of, [Constance].'"  The May 2005 motion also requested an order directing that Constance receive spousal maintenance from Otho's estate until her death. 

            In a July 2005 order, the district court denied Constance's motion for a judgment conferring an interest in Otho's PERA pension.  The court rejected Constance's claim "that she was awarded [approximately $40,000] (one-half of the pension on the valuation date) in the 1992 amendment to the decree and that she should receive a judgment for [that amount plus interest]."  The court concluded that "[t]he 1990 decree and 1992 amendments only guaranteed Constance Buxton a constant percentage share of any payments made to Otho Buxton for retirement or disability." 

The court acknowledged that there is "language in the 1992 Stipulation for Amended Judgment seemingly awarding Constance Buxton a specific dollar amount in addition to the fixed percentage of all payments," but it determined that despite this ambiguity, the original and amended decrees did not award Constance the "present cash value" of Otho's pension but "reserve[d] jurisdiction over the division of the pension until [Otho's] retirement."  The court then explained the limits on its authority:

Due to Otho Buxton's death prior to retirement, there were no retirement benefits to divide.  Constance Buxton correctly states that she is not getting her share out of the marital estate.  Unfortunately, the only property the Court reserved jurisdiction to divide were the retirement benefits.  The Court cannot award Constance Buxton other property in lieu of the retirement benefits. 

 

The court also held that "[t]he spousal maintenance obligation of Otho Buxton was extinguished upon his death with the exception of the life insurance proceeds which have been disbursed to Constance Buxton."  In this appeal, Constance challenges the district court's refusal to award her a share of the PERA benefits.

D E C I S I O N

            Constance contends that because the district court reserved jurisdiction in the original decree to equitably divide the marital portion of Otho's PERA benefits upon his retirement, and because the intended division "fail[ed]" when Otho died before retirement, equity now requires that she collect from Otho's estateeither by means of a cash award or a constructive trustan amount equal to one-half the cash value of Otho's marital pension contributions plus interest.  Because the district court correctly determined finality in the parties' property-division judgment, we reject this argument.

The district court considered the original decree and denied Constance's claim of right to an interest in Otho's marital pension contributions.  Because the only property over which it had reserved jurisdiction, and to which Constance was "clearly entitled" under the original judgment, was Otho's retirement benefits, the district court concluded that awarding Constance other marital property in lieu of those benefits would impermissibly modify the judgment's property-division provisions and frustrate the intent of the original decree.

We begin by framing our review of the district court's division of pension-plan benefits.  Public-pension-plan benefits and rights acquired during marriage are marital property.  Minn. Stat. § 518.54, subd. 5 (2004).  "District courts have broad discretion over the division of marital property and appellate courts will not alter a district court's property division absent a clear abuse of discretion or an erroneous application of the law."  Sirek v. Sirek, 693 N.W.2d 896, 898 (Minn. App. 2005).  A district court abuses its discretion regarding a property division if its decision is "against logic and the facts on [the] record."  Rutten v. Rutten, 347 N.W.2d 47, 50 (Minn. 1984).  Appellate courts "will affirm the [district] court's division of property if it had an acceptable basis in fact and principle even though [the appellate court] might have taken a different approach."  Antone v. Antone, 645 N.W.2d 96, 100 (Minn. 2002).

We also note that we afford significant deference to the district court's interpretation of the judgment and decree.  "A [district] court's construction of its own decree is given great weight on appeal."  Johnson v. Johnson, 627 N.W.2d 359, 363 (Minn. App. 2001), review denied (Minn. Aug. 15, 2001).  "[T]he fact that the judgment was ordered by a predecessor does not limit action of a successor judge on the motion for clarification."  Mikoda v. Mikoda, 413 N.W.2d 238, 241 (Minn. App. 1987), review denied (Minn. Dec. 22, 1987).

We see no error in the district court's interpretation here.  In interpreting the original decree, the district court specifically observed that the original judgment divided Otho's pension under the "reserved jurisdiction" method of pension distribution, and not under the fixed sum or "present cash value" method.  The parties do not dispute this finding.  Under the "present cash value method," the district court "award[s] the employee spouse the pension and assign[s] the non-employee spouse assets of a value equal to a portion of the present value of the benefits."  DuBois v. DuBois, 335 N.W.2d 503, 505 (Minn. 1983).  Under the "reserved jurisdiction method," the court "reserve[s] jurisdiction until retirement and divide[s] the actual monetary benefit if and when received."  Id. (emphasis added); see also Taylor v. Taylor, 329 N.W.2d 795, 799 (Minn. 1983) (stating that the reserved-jurisdiction "method requires the determination of a fixed percentage for the non-employee spouse of any future payments the employee receives under the plan, payable when paid to the employee").  The supreme court has explained the rationale for reserved jurisdiction in this setting:

The advantage of reserving jurisdiction over the pension rights and effecting a division of the actual monetary benefits if and when they accrue is that this approach allocates equally between the parties the risk that the pension benefits may never be paid and enables the court to better determine the actual proportion of the benefits that were derived from the marriage.

 

DuBois, 335 N.W.2d at 505.  As was true here, cases in which the district court reserves jurisdiction over the pension rights typically involve "the designation of future benefits as a fixed percentage of the pension payments."  McGowan v. McGowan, 532 N.W.2d 258, 260 (Minn. App. 1995).

            The district court relied on Minnesota Statutes § 518.64, subdivision 2(e) (2004), and refused to modify Constance's original property award from an interest in a fixed percentage of future benefits to an interest in the cash value of Otho's pension contributions at the time of dissolution.  Section 518.64, subdivision 2(e), provides that "all divisions of real and personal property . . . shall be final, and may be revoked or modified only where the court finds the existence of conditions that justify reopening a judgment under the laws of this State."  See also Ulrich v. Ulrich, 400 N.W.2d 213, 218 (Minn. App. 1987) ("[P]roperty divisions are final and not subject to modification except where they are the result of mistake or fraud."). 

There are exceptions to this rule that property divisions in dissolution judgments are final. "[W]here the terms of a judgment are ambiguous or indefinite, upon a party's motion, the court that ordered the judgment may clarify or interpret it."  Hanson v. Hanson, 379 N.W.2d 230, 232 (Minn. App. 1985).  Such a clarification does not result in a judgment different from the original.  Rather, it "serves only to express accurately the thoughts which the original judgment intended to convey."  Id.  The appellant in Hanson challenged as an impermissible modification the district court's amended judgment converting the award of various personal property in the original judgment and decree to a cash award.  Id. at 231.  This court affirmed on the ground that the amended judgment was a simple clarification.  Id. at 232.  It held that the district court's order did not affect the division of personal property, but instead it "changes the form of respondent's interest from goods to cash in order to fairly implement the decree."  Id. at 233.  The Hanson court reasoned that "[n]either party received more or less than each received under the original judgment and decree."  Id.

In addition to clarification, a district court may modify the original decree when modification "does not affect the essential provisions of the original judgment on the substantive rights of either party."  McGowan, 532 N.W.2d at 260.  In McGowan, the original judgment "awarded [wife] one half of the anticipated marital portion of [husband's] pension, stated as a fixed monthly sum to be paid when [husband] reached age 65," his presumed age of retirement.  Id. at 259.  When husband retired at age 56, he refused to pay wife her share, arguing that she had to wait until he turned 65.  Id.  His actual payments were also higher than anticipated in the original decree.  Id.  The district court modified the original decree to require that wife begin receiving her marital share of the pension immediately.  Id.  The court also "recalculated [wife's] entitlement, employing the same 50 per cent computation evidently employed in [the original decree]."  Id. 

This court affirmed, ruling that the modification did no more than effectuate the original decree's intent "to equitably divide the marital share of the pension equally between the parties."  Id. at 260.  The court wrote that "the trial court's modification of the original decree does not affect the essential provisions of the original judgment on the substantive rights of either party.  Both are still entitled to one half of the marital portion of the pension just as anticipated by the original decree."  Id. (internal citations omitted).

Relying on McGowan, Constance argues that because the dissolution decree contemplated an equal division of Otho's PERA benefits, amending the decree's terms to permit her to collect her portion of the cash value of Otho's pension contributions would constitute a permissible clarification, and not a prohibited modification, of the decree's property division.  She contends that where a district court reserves jurisdiction to equally divide future pension benefits, and where those benefits never materialize,

[n]othing precludes the [district] court from later dividing a pension pursuant to the ‘present value' method where assets exist to satisfy the division and the interest in specific property fails.  Neither party receives more or less than that to which he or she is entitled pursuant to the original judgment and decree.

 

She also claims that the judgment granted her "property rights" in the pension, and that "if the pension were divided pursuant to the ‘present value' method the property right awarded [her] is one half of the [approximately $81,000] accumulated salary deductions made during [the parties'] marriage."  Constance's argument that the original decree should be amended fails for three reasons. 

First, although it is indisputable that the district court originally reserved jurisdiction to equitably divide the pension benefits, those benefits were never distributed to either party.  Under the original judgment, Otho and Constance were entitled to equal shares of the distributed retirement benefits.  As the district court observed, "[d]ue to Otho Buxton's death prior to retirement, there were no retirement benefits to divide."  Because neither Otho nor his estate received any retirement benefits, equity did not compel the district court to award Constance compensation for not having received those benefits either.  And because Otho never received the benefits to which he was entitled under the original judgment, Constance is incorrect that if she collects the "present value" of her share of the pension, "neither party [will] receive[] more or less than that to which he or she is entitled pursuant to the original judgment and decree."  Under her proposed solution, Constance would in fact receive funds in lieu of benefits that were never distributed to Otho, thereby frustrating the decree's intent that the parties receive equal benefit distributions.

            Second, contrary to her argument, the relief Constance is requesting (the receipt of a lump-sum award of her portion of the pension's cash value in lieu of a portion of the retirement benefits contemplated in the decree) would require a prohibited modification of the original judgment's essential provisions.  The original judgment reserved jurisdiction to ensure that the parties would share Otho's distributed marital retirement benefits equally.  That reservation of jurisdiction is neither a current assignment of actual property rights nor a guarantee that the benefits in question will ever be distributed.  See DuBois, 335 N.W.2d at 505 (observing that an advantage of the "reserved jurisdiction" method of pension division is that it only divides "the actual monetary benefits if and when they accrue [and] allocates equally between the parties the risk that the pension benefits may never be paid") (emphases added).  The court did not originally award the pension pursuant to a "present cash value" approach.

And because the reservation of jurisdiction to distribute Otho's retirement benefits was not an actual distribution of those benefits (which never accrued), the modification Constance requests is distinct from that approved in McGowan.  There, the benefits had accrued and were being paid.  532 N.W.2d at 259.  This court held that the district court could modify the original decree to ensure that each party would receive one half of the marital portion of the pension, as the decree expressly intended.  Id. at 261.  By contrast, the original decree here, as interpreted by the district court in its July 2005 order, did not divide the pension by a present-value approach, and it expressly reserved jurisdiction to ensure equitable distribution of the benefits once Otho retired.  Constance is therefore not seeking to implement the property division contemplated in the decree, that is, an equitable division of the retirement benefits.  She is instead arguing that equity justifies disregarding the decree's intent and awarding her property not awarded to her in the original decree.  We cannot agree, and we hold that the district court did not abuse its discretion in rejecting this modification as prohibited by statute.  See Minn. Stat. § 518.64, subd. 2(e).

Third, even were Constance entitled to modification of the original judgment and division of the pension according to the "present value" method, she provides no basis for her estimate of the pension's "present value," which she asserts is the sum of Otho's marital pension contributions, plus interest.  "‘[P]resent value' is a term of art with a specific meaning."  Johnson, 627 N.W.2d at 362.  The supreme court has defined the term:

Present value is the sum which a person would take now in return for giving up the right to receive an unknown number of monthly checks in the future.  The present value is discounted by various actuarial calculations to reflect contingencies affecting the eventual payout, including discounts for mortality, inflation, interest, probability of vesting and probability of continued employment.

 

DuBois, 335 N.W.2d at 506.  There is no indication in the record that either party ever presented actuarial or other evidence concerning the correct calculation of the pension's present value.  Constance offers no legal support for her assertion that the present value should be based on the cash value of Otho's marital pension contributions plus interest.

            We acknowledge the appeal of Constance's fairness argument.  Otho's death before retirement prevented her from deriving any benefit from her portion of his marital pension contributions.  But she specifically and concededly chose to waive her survivor benefits.  Whether or not she did so in order to increase her prospective monthly retirement benefits, as Otho's estate argues, it is the case that there is a certain risk associated with choosing a reserved-jurisdiction approach to pension division.  Because the PERA provisions themselves were not inequitable or unfair, however, the fact that the parties chose a benefit-division option that ultimately failed to produce benefits cannot mandate  a radical modification of the decree 16 years after the fact.

            We hold that the modification requested by Constance would substantively, and radically, affect the parties' rights as provided in the decree and is therefore prohibited by Minnesota Statutes  § 518.64, subdivision 2(e).

            Constance also challenges the district court's conclusion that Otho's spousal maintenance obligation terminated upon his death, arguing that she should receive lifetime maintenance funded with assets from the estate or with Judith Buxton's PERA survivor benefits.  We disagree, based on the terms of the decree.  The decree provided that the maintenance payments "shall terminate only upon the death or the remarriage of [Constance]."  The law provides that, "Unless otherwise agreed in writing or expressly provided in the decree, the obligation to pay future maintenance is terminated upon the death of either party or the remarriage of the party receiving maintenance."  Minn. Stat. § 518.64, subd. 3 (2004).  This court has required more than an indication that maintenance would continue until an obligee's death:

[A]n expression such as "so long as obligee shall live" does not, without more, expressly provide for maintenance after the obligor's death.  In order for a decree to expressly provide for maintenance subsequent to obligor's death, the decree must provide funding for the maintenance such as an insurance policy or a lien on property.

 

Witt v. Witt, 350 N.W.2d 380, 382 (Minn. App. 1984). 

The decree here does not impose on Otho a post-death obligation to Constance.  It required Otho to maintain a $50,000 life-insurance policy with Constance as beneficiary "guaranteeing the payment" of Otho's maintenance obligation.  Following Otho's death, Constance received the policy's proceeds.  We see no legal or record support for the proposition that the decree requires that Constance continue to receive maintenance from the estate or from Judith Buxton after the life-insurance proceeds are exhausted.  Also, because maintenance is an award of payments "from the future income or earnings" of one spouse, Minn. Stat. § 518.54, subd. 3 (2004), the district court could not properly order Otho's estate, which has no apparent income or earnings, to make maintenance payments.  We conclude that Constance is not entitled to ongoing maintenance funded with assets from the estate or with Judith Buxton's PERA survivor benefits.

            Affirmed.