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Hurt v. Jones-Hurt

Court of Special Appeals of Maryland

August 30, 2017


         Circuit Court for Baltimore City Case No. 24D02003910

          Nazarian, Leahy, Friedman, JJ.


          NAZARIAN, J.

         When Verdena Jones-Hurt ("Wife") and Walter Hurt ("Husband"), a veteran, divorced, the Circuit Court for Baltimore City included one-third of Husband's military pension in the marital property award it ordered in Wife's favor. Years after the divorce, Husband was reevaluated for a military service disability benefit and his disability rating increased, which made him eligible for more disability benefits and allowed him to waive a portion of his pension (which is taxable and may be considered marital property) in favor of disability benefits (which are not taxable and may not, as a matter of federal law, be considered marital property). The result was that the federal government paid Husband the same amount of money each month, but Husband retained a greater share of it than the circuit court had awarded him: Wife received one-third of a smaller pension benefit, and Husband kept two-thirds of the smaller pension and all of the disability benefits.

         Wife sought a declaratory judgment seeking, in effect, a ruling that Husband's election had circumvented the divorce judgment and that awarded her the same amount she previously had been receiving. Over the course of three different orders, the court ruled that Wife was entitled to the same overall dollar amount from Husband's total military benefits, notwithstanding the reduction in his pension payout. That result was consistent with three reported decisions of this Court and the greater weight of cases across the country. Husband challenges these decisions and argues, among other things, that our cases were wrongly decided. We need not revisit our earlier decisions ourselves, though, because the Supreme Court of the United States's opinion in Howell v. Howell, 137 S.Ct. 1400 (2017), issued after argument in this case, effectively overrules our precedents and compels us to reverse the judgment of the circuit court.

         I. BACKGROUND

         Husband served in the Army National Guard of Maryland from July 3, 1969 to June 14, 1971 and from May 15, 1985 to October 1, 1987. He suffered three injuries during his time in the service-one during the first period and two during the second. After his first injury, Husband received a ten percent disability rating that entitled him to a Wartime Disability Compensation award pursuant to 38 U.S.C. § 1110. He retired from the Army National Guard in 1998 and later applied for retirement benefits, which would kick in after he turned sixty years old.

         Husband and Wife married in 1972, and divorced on October 26, 2004, via a Judgment of Absolute Divorce issued by the circuit court. Among other things, the judgment awarded Wife alimony of $600 per month for three years and "one-third of the marital share of [Husband]'s pension from the United States Army, the marital share . . . to be calculated from June 3, 1972 to April 1, 2002." Everyone agrees that at the time that it entered the Judgment of Absolute Divorce, the court was not aware that Husband was receiving disability benefits.

         On January 13, 2009, Husband "filed a claim for increased evaluation" of his disability with the Department of Veterans Affairs ("DVA"). While awaiting the DVA's decision, Husband turned sixty years old and began collecting his Army pension as a reservist. See 10 U.S.C. § 12731. Because a retiree may not receive both reservist retirement and disability compensation, see 38 U.S.C. § 5305, Husband's receipt of disability benefits from the DVA automatically reduced his retirement pension from the Department of Defense on a dollar-for-dollar basis. On December 15, 2009, the DVA issued a Rating Decision that increased Husband's monthly disability entitlement and allowed him to receive thirty, rather than ten, percent of his total military benefits as disability benefits rather than pension:[1]

Evaluation of right knee replacement, which is currently 10 percent disabling, is increased to 100 percent effective December 19, 2008. An evaluation of 30 percent is assigned from February 1, 2010[.]

         On October 26, 2011, Wife reopened the case and filed a Complaint for Entry of Qualified Domestic Relations Orders. One of the two orders she sought pertained to Husband's military pension, and would have provided that "any portion of the Service Member's Disposable Retired Pay that he waives in order to receive military disability retired pay . . . in lieu of Disposable Retired Pay shall be added back in, and any deficiency resulting from any such waiver that affects the amount paid directly to [Wife] by the Designated Agent shall be paid to her directly by [Husband]."[2] Husband filed an answer stating that Wife's proposed orders were "seriously inconsistent with the October 26, 2004 order." After a hearing on February 27, 2012, the circuit court denied Wife's Motion for Entry of Qualified Domestic Relations Orders and entered an order to that effect.

         On August 21, 2012, Wife filed a Motion for Declaratory Judgment and Ancillary Relief, requesting that the circuit court determine that she had a valid claim to Husband's pension arrears and that the court enter a Constituted Pension Order that included a provision that "[t]o the extent the Designated Agent is prohibited by law or regulation from paying the entire amount required by this order to [Wife], [Husband] shall personally pay any shortfall to [Wife]." Husband responded that "[t]he order violates federal law and deprives [Husband] of disability benefits for a disability which occurred before the marriage, worsened during the marriage. Such action by the state court is explicitly barred by federal law." The court held a hearing and determined that Wife was entitled to the same division of retirement benefits in the 2004 order:

I agree with both of you. [Husband's counsel], yes, the court can't order retirement benefits and disability benefits for --from your client's military award, but at the same time I agree with [Wife's counsel] in terms of the Allen case and the argument that every person in the military would then file then later disability and then try and cut the spouse off completely or to a certain percentage of the disability.
I don't think that was the intent of the courts. I've looked at the -- and reviewed the judgment of divorce in 2004, and it looks like the court contemplated that [Wife] would receive one-third of all retirement benefits accrued between June 3rd, 1972 and April 2nd, 2002.
To deny her benefits that were originally for -- I'm sorry, to deny her benefits that the court originally intended for her to share today would be contrary to the intent, I believe, of the court based on the court's determination after a hotly contested trial of the testimony and the exhibits.
And of course I'm not going to demand that the military payments be paid directly to [Wife] because it would be in violation of federal law, but in principle not of contract, but out of principle of the intent of the original court that issued the absolute divorce I think and I believe that -- and I'm not in [the 2004 judge]'s head, but I think he was trying to award her one-third of the spouse's, [Husband]'s military retirement.
In terms of some sort of provision, [Wife's counsel], that you're asking the court to put in here that would limit the amount or prevent her from -- that's something in the future, and because there's no number that we have definitive now I hesitate to do that, and of course I think if there is ever a 30 percent, they stay with 30 percent or go higher I'm sure -- and this court does have jurisdiction over the parties -- that you will come back to court and ask for some relief.

         After two days of hearings on April 16 and 17, 2014, the circuit court entered a Constituted Pension Order that awarded Wife "26.57[3] percent of [Husband]'s disposable military retired pay [and] a pro rata share of any post-retirement increases and ...

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