LORI A. ROBINETTE
Argued April 3, 2014.
Circuit Court for Frederick County. Case No. 10-C-11-000169. Certiorari to the Court of Special Appeals (Circuit Court for Frederick County). G. Edward Dwyer, Jr. JUDGE.
ARGUED BY Laura N. Venezia (Conklyn & Associates of Frederick, MD) on brief FOR PETITIONER.
ARGUED BY Brian E. Barkley (Barkley & Kennedy. Chartered of Rockville, MD) on brief FOR RESPONDENT.
ARGUED BEFORE Barbera, C.J., Harrell, Battaglia, Greene, Adkins, McDonald, Wilner, Alan M. (Retired, specially assigned), JJ.
[439 Md. 245] McDonald, J.
In this case, a divorcing couple entered into a property settlement agreement that included an allocation of future benefits from the retirement plan sponsored by the husband's employer. In describing the parties' understanding, the agreement used terminology appropriate to retirement plans governed by a federal law -- although the husband's plan was exempt from that law -- and contemplated, incorrectly, that the divorce judgment itself would effect the division of the retirement plan benefits. Neither party took any action to put into effect the understanding concerning the retirement plan expressed in the property settlement agreement. After the husband remarried, he designated his new wife as his beneficiary under the retirement plan. Upon his death, a dispute arose between the former wife and the second wife concerning the former wife's entitlement to a portion of the retirement plan benefits.
The Circuit Court for Frederick County issued an order that established a constructive trust in favor of the former wife with respect to a portion of the benefits already paid to the second wife and ordered the plan to allocate future benefits between the two women in a similar fashion. The Court of Special Appeals affirmed that decision. And so do we.
Allocation of Retirement Plan Benefits in Divorce
One of the issues that must be resolved in most divorces is the disposition of marital property. A court that grants a divorce has authority to determine which property is marital property, to assess its value, to order the transfer of ownership of certain categories of property, and to grant a monetary award to adjust " the equities and rights of the [439 Md. 246] parties." Maryland Code, Family Law Article (" FL" ), § 8-201 through § 8-205; see Conteh v. Conteh, 392 Md. 436, 437, 897 A.2d 810 (2006). Among the property rights that may be allocated as part of such a proceeding is a spouse's interest in a retirement plan earned during the course of the marriage. See Deering v. Deering, 292 Md. 115, 437 A.2d 883 (1982). In particular, FL § 8-205(a)(2)(i) specifically authorizes a trial court to transfer ownership of an interest in pension and retirement benefits that is marital property. In lieu of these judicial determinations, a divorcing couple may enter into an agreement for the allocation of their property, including retirement plan benefits. FL § 8-101.
Allocation of retirement plan benefits in the context of a divorce must often take account of the federal Employee Retirement Income Security Act of 1974 (" ERISA" ), originally enacted as Pub. L.
No. 93-406, 88 Stat. 829. ERISA established various requirements to better protect those covered by retirement plans in private workplaces and broadly preempted contrary state laws. See Rohrbeck v. Rohrbeck, 318 Md. 28, 566 A.2d 767 (1989). Among those requirements, the statute limits the ability of a participant in a retirement plan subject to ERISA to transfer or " alienate" pension benefits. 318 Md. at 30-31. This restriction would seemingly hinder the transfer of such benefits by a state court in a divorce case or by the divorcing parties in a property settlement agreement that was incorporated in a divorce judgment. Id. at 32. As amended by the Retirement Equity Act of 1984, Pub. L. No. 98-397, 98 Stat. 1433, however, ERISA allows for an " alternate payee" to receive all or a portion of the benefits payable to a participant pursuant to a court order that satisfies various requirements set forth in the federal statute. Rohrbeck, 318 Md. at 32-36. [439 Md. 247] Such a court order is called a " qualified domestic relations order" or " QDRO" in ERISA lingo. See 29 U.S.C. § 1056(d)(3); 26 U.S.C. § 414(p).
ERISA's requirements broadly apply to most retirement plans and preempt contrary provisions of state law. 29 U.S.C. § 1144(a). But not all retirement plans are regulated by ERISA. Notably, government-sponsored plans are specifically exempt from the federal statute. See 29 U.S.C. § 1003(b)(1).
Courts in Maryland have come to use orders similar to QDROs for the allocation of plan benefits between divorcing spouses with respect to retirement plans that are exempt from, and therefore not governed by, ERISA. C. Callahan & T.C. Ries, Fader's Maryland Family Law (5th ed. 2012), § 12-3[c]. Thus, although the concept and acronym are creatures of ERISA, the label " QDRO" may have achieved a broader meaning. As is often the case with a living language, the term has sometimes leapt the boundaries of its formal meaning to encompass generically orders in divorces that distribute retirement plan benefits, much as " xerox copy" became a synonym for " photocopy" regardless of the machine used to produce it, and the verb " google" has come to mean searching the Internet regardless of the search engine being used. See Dennis v. Fire & Police Employees' Retirement System, 390 Md. 639, 890 A.2d 737 (2006) (discussing a " QDRO" with reference to a government-sponsored retirement plan exempt from ERISA).
[439 Md. 248]A Marriage, a Divorce, a Re-Marriage, a Death, and a Dispute over Benefits
On June 6, 1981, Respondent Luann Hunsecker (" Ex-Wife" ) married Roger Robinette (" Husband" ). During their marriage, Husband was employed by the ...