RONALD A MEGEE V JOAN C CARMINE
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STATE OF MICHIGAN
COURT OF APPEALS
RONALD A. MEGEE,
FOR PUBLICATION
November 16, 2010
9:00 a.m.
Plaintiff-Appellant,
v
No. 292207
Macomb Circuit Court
LC No. 1988-003172-DM
JOAN C. CARMINE, f/k/a JOAN C. MEGEE,
Defendant-Appellee.
Before: MURPHY, C.J., and METER and SHAPIRO, JJ.
MURPHY, C.J.
Plaintiff appeals by leave granted the trial court’s order that directed him to act as trustee
for the benefit of defendant with respect to half of plaintiff’s monthly combat-related special
compensation (CRSC), 10 USC 1413a, which funds were then to be delivered to defendant. We
reverse and remand.
I. OVERVIEW
Pursuant to a judgment of divorce entered in September 1989, defendant was awarded 50
percent of plaintiff’s Navy disposable retirement pay as part of the property division, and the
judgment incorporated a Qualified Domestic Relations Order (QDRO) to enforce that provision.
The QDRO acknowledged the 50-percent division of plaintiff’s disposable retirement pay, also
referred to therein as his pension, and it prevented plaintiff from making another benefit election
“that would otherwise reduce the monthly pension allotment without the written consent [of
defendant].” According to defendant, she began receiving her share of plaintiff’s retirement
pay in January 2008, although plaintiff claims that defendant had been receiving her share of his
retirement pay since 1994. In 2008, plaintiff was officially diagnosed by the government, for
purposes of entitlement to disability benefits, as being disabled as a result of combat-related
activities and exposure to Agent Orange in Vietnam. He was declared eligible to elect CRSC,
but such an election would require plaintiff to waive further receipt of his retirement pay.
Plaintiff elected to receive CRSC, resulting in termination of his retirement pay and thus the
cessation of funds flowing to defendant under the QDRO. Defendant filed a motion to enforce
the divorce judgment and QDRO, and the trial court entered the challenged order that effectively
forces plaintiff to pay defendant half of his CRSC.
We hold that a military spouse remains financially responsible to compensate his or her
former spouse in an amount equal to the share of retirement pay ordered to be distributed to the
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former spouse as part of a divorce judgment’s property division, where the military spouse
makes a unilateral and voluntary postjudgment election to waive the retirement pay in favor of
disability benefits contrary to the terms of the divorce judgment. Conceptually, and consistent
with extensive case law from other jurisdictions, we are dividing “waived” retirement pay in
order to honor the terms and intent of the divorce judgment. Importantly, we are not ruling that a
state court has the authority to divide a military spouse’s CRSC, nor that the military spouse can
be ordered by a court to pay the former spouse using CRSC funds. Rather, the compensation to
be paid the former spouse as his or her share of the property division in lieu of the waived
retirement pay can come from any source the military spouse chooses, but it must be paid to
avoid contempt of court. To be clear, nothing in this opinion should be construed as precluding a
military spouse from using CRSC funds to satisfy the spouse’s obligation if desired. In these
situations, because the ordered “replacement” compensation must relate to the military spouse’s
retirement-pay obligation and not the disability pay now being received, and because the military
spouse, having made the election, will no longer actually be receiving the retirement pay, it may
be necessary on occasion to determine/review whether any adjustments to the retirement pay
would have been made had the military spouse continued receiving the retirement pay.
Accordingly, although we agree with the trial court that plaintiff must compensate
defendant, we reverse the trial court’s ruling because its order required plaintiff to pay defendant
from CRSC funds and required plaintiff to pay an amount equal to half of his CRSC and not half
of his envisioned retirement pay. We remand for entry of an order requiring plaintiff to
compensate defendant with monthly payments, from any source or combination of sources
chosen, in an amount equal to 50 percent of his retirement pay that he would be receiving but for
his election to waive the retirement pay in favor of disability benefits.
II. FACTUAL AND PROCEDURAL BACKGROUND
The parties were married in June of 1966 and had two children who were born in 1968
and 1971. Plaintiff is a veteran who served in the Navy from September 1966 to June 1970 and
then again from March 1974 to June 1994. He engaged in combat-related activities and was
exposed to Agent Orange while serving in Vietnam. On July 26, 1988, plaintiff filed a complaint
for divorce, and subsequently defendant filed a counterclaim for divorce. On September 12,
1989, a judgment of divorce was entered and, although not titled a consent judgment, it is clear
from the record that it was entered with the consent of the parties; there was no trial. The
divorce judgment dissolved the marriage, awarded defendant $100 per week in periodic spousal
support for five years, or until death or remarriage, whichever occurred first, ordered plaintiff to
pay child support arrearages at the rate of $25 per week until the balance was paid in full, and the
judgment divided the parties’ property. The property settlement portion of the judgment
indicated that defendant was awarded a mortgagee’s interest in a parcel of property located in
Georgia, that plaintiff was ordered to pay all joint marital debts previously incurred, that plaintiff
was awarded the entire interest in a vacation resort membership, that defendant was awarded two
motor vehicles, that the parties were awarded their own personal property that was in their
possession, and that certain bonds were to be divided 60 to 40 percent, with defendant taking the
larger share. The judgment further provided:
IT IS FURTHER ORDERED AND ADJUDGED that JOAN C. MEGEE
shall be awarded 50% interest in RONALD A. MEGEE’S U.S. Navy disposable
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retirement or retainer pay at such time as he receives it. The parties approve and
incorporate by reference a [QDRO] attached as Exhibit A of this Judgment of
Divorce.
With respect to the QDRO referenced in the divorce judgment, it provided, in pertinent
part, as follows:
The parties agree and the Court orders that JOAN C. MEGEE shall
receive fifty (50%) percent of RONALD A. MEGEE’S Navy disposable
retirement or retainer pay as property settlement when he begins receiving the
same.
***
RONALD A. MEGEE shall make no other benefit election included but
not limited to an annuity or survivorship option that would otherwise reduce the
monthly pension allotment without the written consent of JOAN A. MEGEE.
***
The parties agree that their mutual intent is to provide JOAN A. MEGEE
with fifty (50%) percent of RONALD A. MEGEE’s disposable retirement or
retainer pay.
According to military records contained in the lower court file, plaintiff ceased working
at his job in May 2004.1 The military was in possession of a record from the Social Security
Administration (SSA) indicating that the SSA had characterized plaintiff as being disabled since
February 2005. Plaintiff suffers from post-traumatic stress disorder (PTSD), peripheral
neuropathy of the lower extremities (left and right side), and diabetes mellitus. The Department
of Veterans Affairs (VA), pursuant to a decision in August 2008, determined that “[t]he effective
date of individual unemployability [was] June 30, 2006,” for purposes of entitlement to VA
combat-related disability pay, which is different than CRSC, as discussed below. The VA
document indicates that plaintiff sought but was denied VA disability benefits in 2007, but the
2008 assessment found a “clear and unmistakable error” in the 2007 decision relative to ratings
or percentages that the VA ascribes for each service-connected disability based on severity and
which impact the decision to award benefits.
Also in 2008, the Secretary of the Navy’s Combat-Related Special Compensation Board
(Board) approved plaintiff’s application for CRSC, predicated in part on the VA’s finding of a
compensable disability, along with the Board’s own independent findings that plaintiff’s PTSD,
neuropathies, and diabetes all resulted from either direct engagement in an armed conflict or
1
Plaintiff was no longer in the military at this point in time, and the record does not contain any
information on the nature of plaintiff’s job that he stepped down from in May of 2004.
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through an instrumentality of war, here exposure to Agent Orange. The retroactive effective date
for plaintiff’s entitlement to CRSC was January 2008. As will be explained below in our review
of the United States Code, plaintiff could not legally receive, in combination, his disposable
retirement pay, VA disability benefits, and CRSC. Rather, he had to elect either retirement pay
coupled with VA disability benefits, or choose CRSC standing on its own. While there is a lack
of documentary evidence on the subject, there is no dispute that plaintiff elected CRSC,
effectively discontinuing receipt of his retirement pay and defendant’s share of that pay.
Defendant argued below that she began receiving her assigned share of plaintiff’s
retirement pay in January 2008 and received it through August 1, 2008, at which time she ceased
receiving anything. Plaintiff claimed that defendant started receiving her 50-percent share of his
disposable retirement pay in June 1994, not January 2008. The dispute on this matter was never
addressed below, but we do note that plaintiff’s military service ended in June 1994.
Defendant filed a motion to enforce the divorce judgment and QDRO in February 2009,
asserting that plaintiff had elected, in violation of the judgment and QDRO, to receive disability
benefits, i.e., CRSC, instead of his retirement pay. Defendant requested that the trial court order
plaintiff to withdraw his election to receive CRSC in place of retirement pay or, in the
alternative, order plaintiff to act as a trustee relative to 50 percent of his benefits, given the clear
intent to provide for an equal division as reflected in the divorce judgment and QDRO, and then
order him to deliver the funds to defendant. In response, plaintiff admitted to currently receiving
CRSC, but countered that CRSC is not disposable retirement pay and that, for purposes of the
divorce judgment and QDRO, his election did not need defendant’s approval because the
approval provision only pertained to elections relative to variations under the broad umbrella of
disposable retirement pay, not a disability-related election. Plaintiff maintained that, once he
became eligible for and selected CRSC by reason of his injuries sustained in service to his
country, the disposable retirement pay subject to the QDRO was no longer subject to division.
Relying on Mansell v Mansell, 490 US 581; 109 S Ct 2023; 104 L Ed 2d 675 (1989), plaintiff
further contended that federal law precluded the court from ordering him to give any of his
CRSC to defendant, which, admittedly, left defendant with nothing.
Finding it to be the fair thing to do, given the clear intent in the divorce judgment and
QDRO that defendant receive half of plaintiff’s pension, the trial court ordered plaintiff to act as
trustee for the benefit of defendant with respect to half of plaintiff’s benefits and to then deliver
those funds to defendant. The ruling essentially ordered plaintiff to turn over half of his CRSC
to defendant.
On plaintiff’s motion for reconsideration, the trial court, in denying the motion, found
that it had not committed a palpable error. The court further ruled that Mansell was inapplicable
because there the disability benefits were already being received when the judgment of divorce
was entered and the instant action entailed a postjudgment election of disability benefits and
waiver of retirement pay.
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III. ANALYSIS
A. Standard of Review
We review de novo questions of law, Oakland Co Bd of Co Rd Comm’rs v Michigan
Prop & Cas Guaranty Ass’n, 456 Mich 590, 610; 575 NW2d 751 (1998), including issues of
statutory construction, Feyz v Mercy Mem Hosp, 475 Mich 663, 672; 719 NW2d 1 (2006), and
we find that interpretation of the divorce judgment and QDRO is also a question of law, thereby
necessitating de novo review.
B. United States Code
There are a number of pertinent federal statutes that we shall initially review prior to
engaging in a discussion of the issues presented.
Members of the Navy who serve for a specified period, generally at least 20 years, are
entitled to retire and to receive retirement pay. 10 USC 6321 et seq. Military veterans in general
are entitled to compensation for service-connected disabilities under 38 USC 1101 et seq., which
we have referred to in this opinion as VA disability benefits. Further, CRSC is available to an
“eligible combat-related disabled uniformed services retiree who elects [such] benefits.” 10
USC 1413a(a). CRSC is “not retired pay.” 10 USC 1413a(g). To be eligible for CRSC, a
person must be a member of the uniformed services who is entitled to retired pay and who has a
combat-related disability. 10 USC 1413a(c). A combat-related disability is defined as follows:
In this section, the term “combat-related disability” means a disability that
is compensable under the laws administered by the Secretary of Veterans Affairs
and that -(1) is attributable to an injury for which the member was awarded the
Purple Heart; or
(2) was incurred (as determined under criteria prescribed by the Secretary
of Defense) -(A) as a direct result of armed conflict;
(B) while engaged in hazardous service;
(C) in the performance of duty under conditions simulating war; or
(D) through an instrumentality of war.
Plaintiff qualified for the three different forms of benefits discussed above – disposable
retirement pay, VA disability benefits, and CRSC.
Pursuant to 10 USC 1414(a)(1), and effective January 1, 2004, “a member or former
member of the uniformed services who is entitled for any month to retired pay and who is also
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entitled for that month to veterans’ disability compensation for a qualifying service-connected
disability . . . is entitled to be paid both for that month.” This concurrent receipt of military
retirement pay and VA disability benefits is commonly referred to as CRDP, which stands for
“concurrent retirement and disability pay.” See Jackson v Jackson, 319 SW3d 76, 77 (Tex App,
2010). Because plaintiff was eligible for retirement pay and VA disability benefits, CRDP was
an available option for plaintiff. A person who is qualified for CRDP and who is also qualified
for CRSC, such as plaintiff, may elect to receive CRDP or CRSC, “but not both.” 10 USC
1414(d)(1); see also 10 USC 1413a(f) (indicating that CRSC and CRDP must be coordinated
under § 1414[d]). During an annual open enrollment period, a person has the “right to make an
election to change” from CRDP to CRSC or “the reverse, as the case may be.” 10 USC
1414(d)(2). Plaintiff elected CRSC, which effectively discontinued his retirement pay that had
been subject to the QDRO, halting payments to defendant.
The Uniformed Services Former Spouses’ Protection Act (USFSPA), 10 USC 1408,
generally governs the distribution of a spouse’s military retirement pay to a former spouse
pursuant to a court order, including state court final decrees of divorce issued in accordance with
the state’s laws and providing for the division of property expressed as a percentage of
disposable retirement pay. 10 USC 1408(a)(1)(A) and (2). Section § 1408(c) provides in
pertinent part:
(1) Subject to the limitations of this section, a court may treat disposable
retired pay payable to a member for pay periods beginning after June 25, 1981,
either as property solely of the member or as property of the member and his
spouse in accordance with the law of the jurisdiction of such court. . . .
Accordingly, disposable retired or retirement pay2 can be treated by a court as joint
property and thus subject to division in a state court divorce decree. As used in the USFSPA, the
term “disposable retired pay” is defined, in relevant part, as “the total monthly retired pay to
which a member is entitled less amounts which . . . are deducted from the retired pay of such
member . . . as a result of a waiver of retired pay required by law in order to receive
compensation under title 5 or title 38.” 10 USC 1408(a)(4)(B). We note that, while VA
disability benefits are provided for in Title 38, the right to CRSC is found in Title 10, not Title 5
or 38. As will be explained below in our analysis of Mansell, which involved a waiver of
retirement pay in favor of Title 38 VA disability benefits,3 the fact that CRSC is a Title 10
2
We shall interchangeably use the terms “disposable retirement pay” and “disposable retired
pay” for purposes of this opinion.
3
As indicated earlier, 10 USC 1414(a)(1), post-Mansell, now permits a member or former
member to receive his or her full retirement pay and VA disability benefits without reduction in
the retirement pay when VA disability benefits are chosen. Compare Mansell, 490 US at 583 n 1
(“if a military retiree is eligible for $1,500 a month in retirement pay and $500 a month in
disability benefits, he must waive $500 of retirement pay before he can receive any disability
benefits”).
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benefit is of some significance. Finally, the total amount of the disposable retirement pay of a
military spouse that a court orders payable to the other spouse “may not exceed 50 percent of
such disposable retire[ment] pay.” 10 USC 1408(e).
With these provisions in mind, we now proceed to our discussion of the issues presented
on appeal.
C. Discussion
We begin by first holding that, contrary to plaintiff’s contention, his unilateral decision to
elect CRSC was contrary to the terms and intent of the QDRO and therefore the divorce
judgment, given that the judgment incorporated by reference the QDRO. The clear language in
the judgment and QDRO required a 50-percent division of plaintiff’s disposable retirement pay,
and plaintiff was barred from making any “other benefit election . . . that would otherwise reduce
the monthly pension allotment without [defendant’s] written consent[.]” Plaintiff elected a
benefit other than retirement pay when he elected CRSC to the exclusion of retirement pay, the
election reduced and indeed eliminated defendant’s monthly share of plaintiff’s retirement pay,
and there is no claim that defendant gave written or any consent for plaintiff to make the CRSC
election. The parties had also agreed that their mutual intent was to provide defendant with 50
percent of plaintiff’s retirement pay. The decision to elect CRSC and to waive in its entirety the
retirement pay is inconsistent with the declared mutual intent. The question becomes one of
remedy.
We find that the issue properly framed is whether a military spouse remains financially
responsible to compensate his or her former spouse in an amount equal to the share of retirement
pay ordered to be distributed to the former spouse as part of a divorce judgment’s property
division, where the military spouse makes a unilateral and voluntary postjudgment election to
waive the retirement pay in favor of disability benefits contrary to the terms of the divorce
judgment.
In Mansell, a United States Supreme Court case, the husband, who had been in the
military, was receiving retirement pay along with, pursuant to a waiver of a portion of the
retirement pay, VA disability benefits. He was receiving both benefits at the time of the divorce.
Pursuant to a property settlement that was incorporated into the divorce decree, the husband
agreed to pay his now former wife 50 percent of his total military retirement pay, including that
portion of retirement pay that he had waived in order to receive disability benefits. The husband
then requested the trial court to modify the divorce decree by removing the provision requiring
him to share his total retirement pay with his wife; he did not want to pay her a sum equal to half
of the waived retirement pay. The trial court denied the request. The case made its way through
the California appellate courts, with the husband arguing that the USFSPA and the statute
protecting his disability benefits precluded the trial court from treating as community property
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that portion of his retirement pay that had been waived in favor of disability benefits. Mansell,
490 US at 585-587.4
The Mansell Court stated that it was being called upon to decide whether state courts,
consistent with the USFSPA, “may treat as property divisible upon divorce military retirement
pay waived by the retiree in order to receive veterans’ disability benefits.” Id. at 583. The Court
held that state courts lacked the authority to make such a division, thereby ruling in favor of the
husband. Id. The Court found that the USFSPA was specifically enacted by Congress to change
pre-existing federal law that had completely preempted the application of state law to military
retirement pay. Id. at 587-588. The Mansell Court stated that the USFSPA granted state courts
the authority to divide military retirement pay as property, but the definitional section of the
USFSPA relative to the term “disposable retired pay” specifically and clearly excluded military
retirement pay that had been waived in order to receive VA disability payments, which is a
benefit found in Title 38. Id. at 588-589. The USFSPA’s definitional section relied on and
quoted by the Court was 10 USC 1408(a)(4)(b), which, as indicated above, excludes from
consideration as disposable retired pay amounts waived pursuant to law “in order to receive
compensation under title 5 or title 38.” Mansell, 490 US at 589 n 9. Once again, CRSC is
compensation received under Title 10, and plaintiff here did not waive his right to retirement pay
in order to receive compensation under Title 5 or 38, but rather to receive Title 10 compensation.
The Mansell Court ruled that, although the USFSPA now granted authority to state courts
to divide as property a military spouse’s disposable retirement pay in general, states continued to
be federally preempted from dividing as property disposable retirement pay that had been waived
in order to receive VA disability benefits. Mansell, 490 US at 590-592. The Court ultimately
held:
Thus, the legislative history, read as a whole, indicates that Congress
intended both to create new benefits for former spouses and to place limits on
state courts designed to protect military retirees. Our task is to interpret the statute
as best we can, not to second-guess the wisdom of the congressional policy
choice. . . . Given Congress' mixed purposes, the legislative history does not
clearly support Mrs. Mansell's view that giving effect to the plain and precise
language of the statute would thwart the obvious purposes of the Act.
We realize that reading the statute literally may inflict economic harm on
many former spouses. But we decline to misread the statute in order to reach a
sympathetic result when such a reading requires us to do violence to the plain
language of the statute and to ignore much of the legislative history. Congress
chose the language that requires us to decide as we do, and Congress is free to
change it.
4
Although addressing a case from a community property state, the Court noted that its decision
was equally applicable to equitable distribution states, which would include Michigan. Mansell,
490 US at 584 n 2.
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For the reasons stated above, we hold that the Former Spouses' Protection
Act does not grant state courts the power to treat as property divisible upon
divorce military retirement pay that has been waived to receive veterans' disability
benefits. [Id. at 594-595.]
We glean from Mansell some important, if not subtle, points. First, Mansell did not
entail an attempted division or distribution of the husband’s VA disability benefits; rather, it
concerned payments to the wife in an amount equal to half of the husband’s total retirement pay,
even though a portion of that pay was no longer being received by the husband, considering that
he had waived receipt of that portion in favor of VA disability benefits. Here, the trial court
effectively divided plaintiff’s CRSC and, although Mansell did not directly address division of
disability pay, the USFSPA clearly does not allow such a division. Subsection (c) of the
USFSPA permits a court to treat only “disposable retired pay” as “property of the member and
his spouse,” and CRSC is “not retired pay,” 10 USC 1413a(g). Accordingly, the trial court erred
in dividing plaintiff’s CRSC and in forcing plaintiff to pay a portion of his CRSC to defendant.
However, on the subject addressed in Mansell, i.e., dividing waived retirement pay, the Mansell
decision actually supports making plaintiff in the case at bar pay defendant half of the retirement
pay that he would be receiving but for his election to take CRSC.5 The Mansell Court found that
waived retirement pay could not be divided as property in circumstances where the pay had been
waived in favor of Title 38 VA disability benefits, given that the definition of “disposable retired
pay” in 10 US 1408(a)(4)(B) excludes consideration of amounts waived in order to receive Title
5 or Title 38 compensation. Under the reasoning and rationale in Mansell, there would be no
prohibition here against considering for division waived retirement pay under the USFSPA, as
we are addressing a waiver of Title 10 CRSC not mentioned in §1408(a)(4)(B). Thus, all of
plaintiff’s envisioned yet waived military retirement pay can be divided without offending the
USFSPA or Mansell. Accordingly, there is no bar to ordering plaintiff to compensate defendant
in an amount equal to 50 percent of plaintiff’s envisioned retirement pay as intended under the
terms of the divorce judgment after plaintiff made a unilateral and voluntary postjudgment
election to waive his retirement pay in favor of disability benefits contrary to the terms of the
judgment.
Moreover, even aside from the Title 10 – Title 38 distinction, our holding is consistent
with appellate court rulings from many other states on the issue. In reviewing these cases, we
shall not provide too much in way of details regarding the underlying facts because, for the most
part, they are essentially the same as those that transpired here, i.e., postjudgment waivers of
retirement pay in exchange for disability benefits that leave the non-military, former spouse with
5
We recognize that it sounds a bit odd to speak of making a party pay half of monies not actually
being received; however, conceptually it is analogous to imputing income to a party in the
context of a child or spousal support matter and then ordering that party to make a payment
based on income not actually being received. See Moore v Moore, 242 Mich App 652, 655; 619
NW2d 723 (2000) (when a party voluntarily reduces his or her income, a court may impute
income to that party in order to arrive at an appropriate spousal support award).
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reduced or no funds despite a divorce decree or settlement calling for the division of the military
spouse’s retirement pay. We do note that most of these cases involved VA disability benefits
and not CRSC, which makes the case for a division of retirement pay waived in favor of CRSC
even more compelling considering that Mansell and the USFSPA could be viewed as being
somewhat problematic with respect to retirement pay waived in favor of Title 38 VA disability
benefits. Also, a number of these cases did not involve judgment language, as is present here,
requiring approval from the former spouse before the military spouse could make a different
election, and plaintiff here consented to the preapproval condition, yet did not honor it. Indeed, a
consent judgment is in the nature of a contract. Laffin v Laffin, 280 Mich App 513, 517; 760
NW2d 738 (2008).
In Bandini v Bandini, __ NE2d __, issued October 8, 2010 (Ind App, Docket No. 49A041001-DR-26), slip op at 10, the Indiana Court of Appeals, in a CRSC case, stated that Mansell
and the USFSPA do “not preclude state courts from requiring a military spouse to compensate a
former spouse when the latter’s share of retirement pay is reduced by the military spouse’s
unilateral post-dissolution waiver of retirement pay in favor of disability benefits.” The court
held “that a military spouse may not, by a post-decree waiver of retirement pay in favor of
disability benefits or CRSC, unilaterally and voluntarily reduce the benefits awarded the former
spouse in a dissolution decree.” Id. at 11. The Indiana appellate court found that the trial court
had properly ordered the military spouse (husband) to compensate his former wife for the
reduction in her share of retirement pay that was caused by the husband’s CRSC election. Id.
Consistent with our ruling, the Indiana court warned, “Because Husband is free to compensate
Wife from any of his available assets, the trial court’s order on remand need not and should not
specify his CRSC benefit as the source of this compensation.” Id. at n 10 (emphasis added).
One of the reasons the court gave for distinguishing Mansell was that Mansell was addressing a
pre-dissolution waiver of retirement pay and the Supreme Court did not “imply that a postdissolution waiver need be treated the same way.” Id. at 10.
In Resare v Resare, 908 A2d 1006 (RI, 2006), the family court, after first emphasizing
that it was not ordering the division of any disability benefits, ordered the military spouse to pay
a sum equal to the 35 percent of the gross pension that would have been in effect had the military
spouse not unilaterally modified the stipulated property division with a pension waiver. The
Rhode Island Supreme Court, affirming the family court’s ruling, held that the lower court had
properly entered its order predicated on breach-of-contract principles. Id. at 1010.
In Hadrych v Hadrych, 140 NM 829, 833; 149 P3d 593 (2006), the New Mexico Court of
Appeals, indicating that it was adopting the majority view, held that the lower court had properly
ordered the military spouse to compensate the other former spouse for the reduction in retirement
benefits that occurred when the military spouse converted them to disability benefits. The lower
court’s ruling had not identified the disability benefits as being the source for the ordered
compensation, leaving it to the military spouse to determine how to pay the compensation and to
utilize whatever assets chosen to satisfy the obligation. Id. The appellate court stated that it was
critical that “the court order [did] not specifically require that disability benefits provide the
source of the funds paid to the non-military spouse.” Id. (citation and internal quotations
omitted).
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In In re Marriage of Warkocz, 141 P3d 926, 928 (Colo App, 2006), the Colorado Court
of Appeals agreed with the non-military spouse “that the trial court erred in failing to award her
the amount she would have received from husband’s military pay had he not applied for, and
received, disability benefits.” The court held that, consistent with public policy and decisions in
other jurisdictions, a trial court is not precluded from equitably enforcing a separation agreement.
Id. at 930. The court stated that neither the USFSPA nor United States Supreme Court precedent
requires “courts to completely ignore the economic consequences of a military retiree’s decision
to waive retirement pay in order to collect disability pay.” Id.
In Black v Black, 842 A2d 1280, 1284-1285 (Maine, 2004), the Supreme Judicial Court
of Maine held that Mansell and USFSPA do not limit the authority of state courts “to grant
postjudgment relief when military retirement pay previously divided by a divorce judgment is
converted to disability pay, so long as the relief awarded does not itself attempt to divide
disability pay as marital property.”
In Shelton v Shelton, 119 Nev 492, 496-498; 78 P3d 507 (2003), the Nevada Supreme
Court held that a military spouse was contractually obligated under a divorce settlement
agreement to continue paying his former wife $577 per month, even though the agreement
indicated that the payment represented half of the military retirement pension and the military
spouse had waived that pension in order to receive disability benefits.
We agree with the following sentiments expressed by the Superior Court of New Jersey,
Appellate Division, in Whitfield v Whitfield, 373 NJ Super 573, 582-583; 862 A2d 1187 (2004):
It is important to emphasize the procedural posture of this case. The issue
is one of enforcement of a prior equitable distribution award, not a present
division of assets. Wife does not seek to divide her former husband's disability
benefits in violation of Mansell. Nor does she seek a greater percentage of her
husband's military pension than she originally received at the time of his
retirement pursuant to court order. Moreover, wife does not seek to alter the terms
of her veteran-spouse's retirement plan or to compel the Department of Defense to
make direct payments to her in excess of those permitted by federal law. The
remedy she seeks, and that to which she is entitled, is an enforcement of the
original order which was in effect before her former husband retired and
unilaterally elected the waiver. [The trial court] appropriately accomplished that
result by requiring husband to make up the shortfall in his former wife's equitable
distribution award occasioned by his actions.
The trial court's determination does not hinder husband's receipt of
veterans' disability benefits. Nor does it impinge upon federal statutory rights
husband has under the USFSPA or violate the doctrine of pre-emption. Rather, the
determination is whether under our state law the trial court has the authority to
interpret and enforce a judicial decree entered prior to the retiree's unilateral
election of a method of payment that has tax advantages to him and adverse
consequences to his former wife. We conclude that our court does have that
authority. This was an appropriate remedy to avoid the inequities that would be
imposed on a spouse who had no control over, but suffered the consequences of,
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the other's unilateral election to switch retirement benefits to tax-free disability
benefits.
In In re Marriage of Krempin, 70 Cal App 4th 1008, 1015; 83 Cal Rptr 2d 134 (1999),
the California Court of Appeals noted that out-of-state precedents had reached “nearly universal”
consensus that equitable action to compensate the non-military spouse is appropriate, on one
theory or another, when that spouse’s share of retirement pay is reduced by the military spouse’s
postjudgment waiver of retirement pay.
In Danielson v Evans, 201 Ariz App 401, 407-409; 36 P3d 749 (2001), the Arizona Court
of Appeals upheld an order that required the military spouse to pay his former wife the difference
between the value of the retirement pay as it was envisioned at the time of the divorce and the
reduced amount that she actually received after a waiver.
In Krapf v Krapf, 439 Mass 97, 105-108; 786 NE2d 318 (2003), the Massachusetts
Supreme Judicial Court held, under theories of breach of duty of good faith and fair dealing, that
it was proper to order the military spouse to pay his former wife an amount equal to the military
retirement pay she would have received under a settlement agreement had the husband not
waived the pay in favor of disability benefits. The court stated that there was no violation of
Mansell or the USFSPA when the order at issue “merely enforced the defendant’s contractual
obligation to his former wife, which he may satisfy from any of his resources.” Id. at 108.
In In re Marriage of Neilsen & Magrini, 341 Ill App 3d 863, 869-870; 792 NE2d 844
(2003), the Illinois Court of Appeals ruled:
[W]e believe that a party's vested interest in a military pension cannot be
unilaterally diminished by an act of a military spouse, and we apply this principle
to the present case. Here, the parties agreed that Susan would receive “25% of the
gross retired or retainer pay due Mark.” It is clear that the parties intended that
Susan would receive a percentage of Mark's total retirement pay and not just his
disposable retired or retainer pay. The parties' intent was incorporated into the
judgment for dissolution. Mark retired and the judgment for dissolution was
implemented. However, Mark thereafter decided to accept an increased amount of
disability benefits. This resulted in a reduction of Mark's disposable retired or
retainer pay. This accordingly reduced Susan's entitlement. Mark certainly had a
legal right to receive disability benefits, but his doing so caused a diminution in
the amount of his retirement pay that Susan had been receiving for over three
years. Mark's decision frustrated the parties' intent and the trial court's judgment
for dissolution. Indeed, to allow Mark to unilaterally diminish Susan's interest in
his military pension would constitute an impermissible modification of a division
of marital property. As such, we affirm the trial court's order of November 3,
2000, in which it ruled that Susan was entitled to an amount equal to 25% of
Mark's military pension as it existed on the date he retired. Because the trial
court's November 3, 2000, order does not directly assign Mark's military disability
pay, it does not offend the United States Supreme Court's ruling in Mansell.
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In Johnson v Johnson, 37 SW3d 892, 897-898 (Tenn, 2001), the Tennessee Supreme
Court held that a marital dissolution agreement that divides military retirement benefits gives the
non-military spouse a vested interest in his or her portion of the benefits, which cannot thereafter
be unilaterally diminished by an act of the military spouse, given that such an act would
constitute an impermissible modification and violation of the agreement. The court remanded
the case for entry of an order providing the non-military spouse with a monthly payment equal to
her share of the waived retirement pay without dividing the military spouse’s disability pay. Id.
at 898.
Next, we wish to touch on two recent Texas cases addressing CRSC and waivers of
retirement pay. In Sharp v Sharp, 314 SW3d 22 (Tex App, 2010), the Texas Court of Appeals
addressed a waiver of retirement pay in exchange for CRSC, and it rejected the non-military
spouse’s motion to enforce and clarify the divorce judgment. However, it appears that the
argument posed by the non-military spouse was simply that CRSC constituted military
retirement pay for purposes of the judgment. And the appellate court merely held that CRSC is
not retirement pay and thus the judgment did not divide CRSC that might have become payable
at a later date. Id. at 25. The non-military spouse was essentially seeking a portion of the CRSC.
We agree, as noted above, that CRSC is not retirement pay and is not subject to division;
however, our analysis is couched in terms of dividing waived retirement pay and ordering
replacement compensation, which matters the Sharp panel did not address. Indeed, Mansell and
the litany of cases distinguishing Mansell are not even mentioned in Sharp.
In Jackson, 319 SW3d 76 (2010), the Texas Court of Appeals addressed a situation in
which the military spouse (husband) had been appointed as trustee in a divorce judgment with
respect to his ex-wife’s interest in his disposable retirement pay, and he later became eligible for
VA disability benefits and then CRSC, which he elected to receive. As in Sharp, the Jackson
panel found that only retirement pay was subject to division, and it further ruled that the military
spouse had no fiduciary obligation in regard to the CRSC. Id. at 81. The Jackson case like the
Sharp case was examining the issue from the perspective of dividing and awarding the CRSC
funds and not the approach that we and numerous other jurisdictions have chosen. And again,
we agree that CRSC is not subject to division.
While there are a few cases ruling differently, see, e.g., In re Marriage of Pierce, 26 Kan
App 2d 236, 240; 982 P2d 995 (1999) (finding no relief available for ex-wife after former
husband waived his military retirement pay in favor of disability benefits), the overwhelming
weight of the case law from other jurisdictions supports our resolution of this appeal. By this
opinion, Michigan now joins those jurisdictions providing relief to the non-military spouse.
IV. CONCLUSION
We hold that a military spouse remains financially responsible to compensate his or her
former spouse in an amount equal to the share of retirement pay ordered to be distributed to the
former spouse as part of a divorce judgment’s property division, where the military spouse
makes a unilateral and voluntary postjudgment election to waive the retirement pay in favor of
disability benefits contrary to the terms of the divorce judgment. Conceptually, and consistent
with extensive case law from other jurisdictions, we are dividing “waived” retirement pay in
order to honor the terms and intent of the divorce judgment. Importantly, we are not ruling that a
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state court has the authority to divide a military spouse’s CRSC, nor that the military spouse can
be ordered by a court to pay the former spouse using CRSC funds. Rather, the compensation to
be paid the former spouse as his or her share of the property division in lieu of the waived
retirement pay can come from any source the military spouse chooses, but it must be paid to
avoid contempt of court. To be clear, nothing in this opinion should be construed as precluding a
military spouse from using CRSC funds to satisfy the spouse’s obligation if desired. In these
situations, because the ordered “replacement” compensation must relate to the military spouse’s
retirement-pay obligation and not the disability pay now being received, and because the military
spouse, having made the election, will no longer actually be receiving the retirement pay, it may
be necessary on occasion to determine/review whether any adjustments to the retirement pay
would have been made had the military spouse continued receiving the retirement pay.
Accordingly, although we agree with the trial court that plaintiff must compensate
defendant, we reverse the trial court’s ruling because its order required plaintiff to pay defendant
from CRSC funds and required plaintiff to pay an amount equal to half of his CRSC and not half
of his envisioned retirement pay. We remand for entry of an order requiring plaintiff to
compensate defendant with monthly payments, from any source or combination of sources
chosen, in an amount equal to 50 percent of his retirement pay that he would be receiving but for
his election to waive the retirement pay in favor of disability benefits.
Reversed and remanded for proceedings consistent with this opinion. We do not retain
jurisdiction.
/s/ William B. Murphy
/s/ Patrick M. Meter
/s/ Douglas B. Shapiro
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