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Wilson v. Wilson

Court of Special Appeals of Maryland

July 1, 2015

MARVIN WILSON
v.
SYLVIA WILSON

Meredith, Woodward, Friedman, JJ.

OPINION

Woodward, J.

In an Opinion, Judgment of Divorce, and Order of Court ("Judgment of Divorce") dated July 30, 2009, the Circuit Court for Prince George's County granted an absolute divorce to appellant, Marvin Wilson, from appellee, Sylvia Wilson. In the Judgment of Divorce, the court noted, among other things, that on July 21, 2009, the parties recited on the record an agreement on all property issues, which "included a division of the parties' pension interests." On August 6, 2009, the United States Air Force ("the Air Force"), appellant's employer, notified appellant that he would be placed on temporary disability retirement on October 28, 2009. On January 21, 2010, the court entered a Marital Property Consent Order reflecting the parties' July 2009 agreement, and ordering that each party shall receive fifty percent of the marital share of the other party's retirement and pension benefits.

Appellant was placed on permanent disability retirement on April 3, 2011. On July 23, 2013, the Air Force sent a letter to appellant's attorney, stating that it could not pay appellee her portion of appellant's retired pay, because the entire amount of such pay was based on appellant's disability, which by law cannot be paid to a former spouse. After a hearing on March 26, 2014, the trial court issued an order on April 30, 2014, finding that appellant had breached the parties' agreement, and ordering appellant to pay to appellee arrears in the amount of $63, 543, representing appellee's portion of appellant's retirement benefits from May 2011 through March 2014.

On appeal, appellant presents four questions for our review, which we have rephrased and condensed into two:[1]

1. Did the trial court err in determining that appellant breached the parties' property settlement agreement by failing to pay appellee her portion of appellant's military disability retirement benefits?
2. Did the trial court err or abuse its discretion in determining the amount of arrears arising out of appellant's breach of the parties' property settlement agreement?

We answer both questions in the negative and, accordingly, affirm the judgment of the circuit court.

BACKGROUND

Appellant and appellee were married on February 11, 1989. Their son, Mitchell, was born on July 28, 1997. The parties separated in October 2006. On August 25, 2008, appellee filed a complaint for absolute divorce in the circuit court. On February 19, 2009, appellant filed a counter-complaint for absolute divorce, custody, and other relief.

On June 1, 2009, the Air Force's Physical Evaluation Board ("the PEB") made its Findings and Recommended Disposition, in which it found that appellant's "medical condition prevents [him] from reasonably performing the duties of [his] office, grade, rank, or rating. Since the condition has not yet stabilized, the Informal Physical Evaluation Board finds [appellant] unfit and recommends temporary retirement with a disability rating of 60% . . . ."

On July 21, 2009, the trial court conducted a trial on alimony, child support, and attorneys' fees. On July 30, 2009, the court issued its Judgment of Divorce, in which it incorporated the agreements of the parties and resolved all remaining issues arising out of their marriage. The court noted in the Judgment of Divorce that, at the trial on July 21, 2009, the "parties recited on the record an agreement on all the property issues in this case. That agreement, among its terms, included a division of the parties' pension interests. A separate consent order will be submitted which includes those terms."

On August 6, 2009, the Air Force issued a Special Order to appellant, stating that "effective 27 Oct 09 you are relieved from active duty, above organization and station of assignment. Effective 28 Oct 29 you are placed on the temporary disability retired list [("the TDRL")] in the grade of Capt per AFI 36-3212 with compensable percentage for physical disability at 060 percent." On November 16, 2009, the Defense Financing and Accounting Service ("DFAS") informed appellant via letter that his "retired pay" would be computed using his 60% disability rating, as applied to his active duty base pay at the time that he retired.

On January 21, 2010, the trial court issued a Marital Property Consent Order ("the Consent Order"), in which it noted that the parties had "reached an agreement regarding the division of marital property." The court ordered, among other things, "that [appellee] shall be awarded an interest in [appellant's] military pension fund, including the Survivor Benefit Plan. [Appellee's] share shall be fifty percent (50%) of the 'marital property portion' of [appellant's] monthly pension."

On December 29, 2010, appellee, at that time pro se, filed a Motion for Modification and/or for Contempt, alleging, among other matters, that appellant had not divided his military pension.

On January 28, 2011, the PEB issued a recommendation to remove appellant from the TDRL and place him on permanent disability retirement. The notice to appellant stated that he "may agree with the PEB recommendation, disagree and request a formal hearing of the case, or disagree and submit a written rebuttal in lieu of a formal hearing, " and that appellant had until February 22, 2011 to make his decision, or else his agreement would be assumed Appellant signed the form on February 22, 2011, concurring with the recommended findings. On March 14, 2011, the Air Force Physical Disability Division, Directorate of Personnel Services wrote a letter to appellant, stating that Air Force officials had directed appellant's removal from the TDRL, placing him on permanent retirement with a compensable disability rating of 60%, effective April 3, 2011.

On June 30, 2011, the trial court held a hearing on appellee's motion for contempt. On July 6, 2011, the court issued an Opinion and Order of Court finding that appellant was not in contempt with regard to dividing his military pension, because

[appellee's] right to a portion of [appellant's] retired pay (as opposed to disability) would not commence until May 1, 2011. While [appellee] is entitled to 50% of [appellant's] retired pay beginning May 1, 2011 her failure to receive that to date is due to the lack of appropriate pension order's being submitted it [sic] to the military in a timely fashion. It is hoped that she will secure the services of an attorney to prepare the appropriate order and submit it to DFAS as quickly as possible. In any event, the Court herein will find that she [is] entitled to 50% of the retired pay portion of [appellant's] pension beginning May 1, 2011. For child support guideline calculations, based on the parties' testimony, the Court will assume that she will be receiving approximately $1, 400.00 beginning and accounting from May 1, 2011.

(Emphasis added).

On August 27, 2012, appellant filed a Motion to Enter Pension Orders (Request for Hearing). In his motion, appellant noted that "[d]espite repeated requests by [appellant] of [appellee] for approval of said Orders, no such approval has been forthcoming. As a result no Orders dividing said benefits have been signed by this Court." On May 23, 2013, after holding a hearing on appellant's motion, the court signed appellant's proposed Constituted Pension Order/Military Retired Pay Division Order ("the Constituted Pension Order") and set a disposition hearing for September 12, 2013, to determine the amount of arrears that appellant owed to appellee. Thereafter, appellant submitted the Constituted Pension Order to DFAS.

Prior to the September hearing, on July 23, 2013, DFAS sent a letter to appellant's attorney stating that it had received appellant's "application for payment of a portion of the retired/retainer pay" to appellee, but that the "application cannot be approved for the following reason: The entire amount of [appellant's] retired/retainer pay is based on disability, thus there are no funds available for payment under the [Uniformed Services Former Spouses' Protection Act]."

On August 22, 2013, appellant filed a motion to postpone the September 12, 2013 hearing, because, among other things, appellant's counsel wanted to conduct discovery to determine how and why DFAS determined that all of appellant's retirement pay was based on his disability, and thus there were no funds available for payment directly to appellee. The court granted the motion, and after several further continuances, reset the disposition hearing for March 26, 2014.

On March 26, 2014, the trial court held a hearing to take evidence on the issue of the arrears owed to appellee and why DFAS had rejected the Constituted Pension Order. At the hearing, appellant filed his Trial Memorandum Regarding Military Pension Order, requesting that the court find that his retired military pay "is not divisible pursuant to the parties' Marital Property Consent Order." The court then afforded appellee, now represented by counsel, an opportunity to write a memorandum for the court in response to appellant's memorandum. Appellee filed her Military Retirement/Pension Trial Memorandum on April 16, 2014, in which she requested that the court "[f]ind that she is entitled, under the parties['] agreement and the January 21, 2010 Marital Property Consent Order of this Court, to Fifty (50%) Percent of [appellant's] military retirement pay, regardless of what form it takes or is taking."

On April 30, 2014, the trial court issued a Memorandum and Order of Court, which states in relevant part:

Having reviewed the previously issued Court Orders, the pleadings, the parties' trial memorandum, and the testimony, the Court finds that [appellee] should have received payments as follows:

May 2011-November 2011

7 months x $3, 546

$24, 822

December 2011-November 2012

12 months x $3, 638

$43, 656

December 2012-March 201[4]

16 months x $3, [663][2]

$58, 608

Total: $127, 086 /2

$63, 543

Based on the judgment of divorce, this Court finds that on July 21, 2009 the parties agreed to a division of the parties' pension interests. There is no evidence to suggest that at the time the parties entered into their agreement, [appellant] was barred by federal law from agreeing to split his pension benefits with [appellee]. While it is true that the Marital Property Consent Order was not entered until January 21, 2010, for all legal purposes it was a binding contract at the time the parties entered into it on the record on July 21, 2009. In the parties' July 30, 2009 Judgment of Divorce (docket #35), the Court stated:
"The matter was heard on July 21, 2009, the parties recited on the record an agreement on all the property issues in this case. The agreement, among its terms, included a division of the parties' pension interests. A separate consent order will be submitted which includes those terms."
In fact, [appellee] refused to sign the Consent Order (see docket #43). Notwithstanding her refusal, the Court entered the Order because it was placed on the record some six months before submission of the Consent Order.
This Court agrees with [appellee] that [appellant] incorrectly relies on Dapp [v. Dapp, 211 Md.App. 323 (2013)] (see footnote 1 of [appellee's] Trial Memorandum). As of July 21, 2009, [appellant] agreed to assign 50% of the martial [sic] property portion of [appellant's] military pension to [appellee]. The date of the agreement to split the parties' pension interests was prior to both [appellant's] August 6, 2009 notification that effective October 28, 2009 he would be placed on the temporary retired list as well as [appellant's] March 14, 2011 notice of permanent retirement with a compensable disability rating of 60%. While [appellant] alleges that on June 1, 2009, the Findings and Recommended Disposition of USAF Physical Education Board found him 60% disabled with recommended temporary retirement, contrary to [appellant's] accretion [sic], there is nothing in the record to support his contention that either he or [appellee] knew about the disability recommendations on [the] July 21, 2009 contract date.
The holdings in Allen [v. Allen, 178 Md.App. 145, cert. denied, 405 Md. 63 (2008)] and Dexter [v. Dexter, 105 Md.App. 678, cert. denied, 341 Md. 27 (1995)] make clear that where parties enter into an agreement or contract to transfer portions of their retirement pay, the Court will uphold the contract even if the retirement pay is a disability payment. The Court will require the husband to pay sums from general assets based on receipt of the disability benefit, in order to prevent the frustration of the parties' original agreement. Dapp is not controlling because at the time of the agreement, [appellant] was not prohibited by law from assigning the pension payment. The agreement was not void at the time it was made and the anticipated military retirement benefits were divisible and assignable at the time of the agreement. Citing various contract provisions, the Dexter decision applied contract principles and stated, "each party has an obligation to take reasonable steps to bring the agreement to 'fruition'" (see Dexter v. Dexter 105 Md.App. 378) and, "the law will imply an obligation to act in good faith."
Here, [appellant] has breached the parties' contract and has not taken any steps to fulfill his contractual obligations. In accepting [appellee's] retirement benefits, he agreed to transfer 50% of the marital portion of his military retirement payment to [appellee]. By concurring in the disability findings (see [appellant's] 2-22-11 concurrence), he was aware that he would forfeit his retirement pay. He exchanged one type of retirement pay for another. That does not relieve him of his contract to share 50% with [appellee]. The measure of past damages is the amount [appellee] would have received had [appellant] not breached his commitment.
Accordingly, it is, by the Circuit Court for Prince George's County, Maryland, this 30th day of April, 2014,
ORDERED, that [appellant] shall pay to [appellee] the sum of $63, 543.00 as payment for [appellee's] pension interest from May 2011 through March 2014; and it is further,
ORDERED, that payment shall be made to [appellee] within Ninety (90) days from the entry of this ...

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