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Spencer v. Spencer

Supreme Court of Vermont

June 27, 2014

Donald J. Spencer
Gerda Spencer

Editorial Note:

This Opinion is subject to motion for reargument or formal revision before publication. See V.R.A.P. 40

On Appeal from Superior Court, Windham Unit, Family Division. John P. Wesley, J.

Jean Brewster Giddings and David M. Schultz of Fitts, Olson & Giddings, PLC, Brattleboro, for Plaintiff-Appellant.

Angela J. Prodan of Corum Mabie Cook Prodan Angell & Secrest, PLC, Brattleboro, for Defendant-Appellee.

Present: Reiber, C.J., Dooley, Skoglund, Burgess and Robinson, JJ. ROBINSON, J., dissenting.


Page 335

Skoglund, J.

[¶1] Husband appeals from a decision of the superior court, family division, denying a motion for relief from a divorce-judgment that awarded wife a percentage of his military pension. Husband contends the court abused its discretion in: (1) denying the motion, and (2) failing to hold a hearing on the merits. We reverse.

[¶2] The material facts may be summarized as follows. The parties were married in 1981. In 1998, husband retired from the United States Army after almost twenty-two years of service. About two years later, in November 2000, the parties were divorced in Vermont pursuant to a stipulated judgment. The judgment provided that husband's military pension " shall be shared by the parties as a portion of their marital property" as follows: " [Wife] shall receive 41.8% of [husband's] total army pension as marital property by direct payment of retirement pay in monthly installments by the Defense Finance Accounting Service [DFAS] at the address provided by her. The term 'total army pension' shall be construed to mean 41.8% of [husband'] gross pay received therefrom." The DFAS thereafter garnished wife's share of the pension and paid it directly to her.

[¶3] In 2009, eleven years after husband's retirement and nine years after the parties' divorce, husband was recalled from retirement to serve as a military instructor in the ROTC program at the University of New Hampshire.[1] He was discharged from the military in 2012, after three years in this position. During the three years of husband's recall, his pension benefits were suspended so that neither he nor wife received any benefits.

[¶4] Husband's additional service resulted in an increase in his monthly pension benefit. When contacted by husband, the DFAS indicated that it would continue to pay wife 41.8 percent of the benefit, as provided in the divorce judgment, resulting in an increase in the total amount of her payment.

[¶5] In response, husband filed a motion to amend in the family court, asserting that payment of the " straight percentage" provided in the divorce judgment would result in " over-payments" to wife, and proposing to amend the order to provide as follows: " [Wife] is awarded 41.8% of the disposable military retired pay [husband] would have received had [husband] retired with the rank of MSG/E8 and with 21.83 years (21 years and 10 months, or 262 months) of creditable service on May 31, 1998, by direct payment in monthly installments by the Defense Finance Accounting Service at the address provided by her." The modified language would thus have made it clear that wife's payment was to be calculated based on husband's completed service at the time of the divorce.

[¶6] Wife, in response, moved to dismiss the motion, asserting that the property division in the divorce judgment was final

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and not subject to modification absent evidence of fraud or coercion or other extraordinary circumstances entitling a party to relief under Vermont Rule of Civil Procedure 60(b). She also sought attorney's fees. Husband then filed an additional motion to clarify that, pursuant to Rule 60(b)(6), he was seeking " to modify the final divorce order so as to reflect the parties' intended property division at the time of the divorce." He also filed an opposition to the motion to dismiss, claiming that the parties had not contemplated any additional military service when they agreed to the pension division, and that the requested modification was " to implement the original agreement between the parties." Wife's responsive pleadings asserted that husband had failed to identify any extraordinary circumstances that would warrant reopening or modifying the final judgment.

[¶7] Based on the pleadings, the trial court issued a written decision denying husband's motion. The court concluded that, although wife " may enjoy an inflated share of [husband's] pension" as a result of husband's additional post-divorce service, this did not provide a basis to alter the judgment where the pension provision was otherwise clear and the product of the parties' agreement. The trial court also ruled that the issue was sufficiently " complex and unsettled" that, absent any showing of bad faith on the part of husband, it would deny wife's request for attorney's fees. This appeal by husband followed.

[¶8] It is well settled that relief from a final judgment should be granted only in extraordinary situations to " prevent hardship or injustice." Cliche v. Cliche, 143 Vt. 301, 306, 446 A.2d 314, 316 (1983). We have applied this rule to reject requests for post-divorce modification of military pensions, most recently -- as the trial court here noted -- in Callahan v. Callahan, 2008 VT 94, 184 Vt. 602, 958 A.2d 673 (mem.) and Youngbluth v. Youngbluth, 2010 VT 40, 188 Vt. 53, 6 A.3d 677. Neither decision is particularly apposite here, however. Although the former involved a motion to modify a military pension, the case was resolved on the basis of the untimeliness of husband's motion, and stands for the unexceptional proposition that parties are generally bound by the plain language of their agreement. 184 Vt. 602, 2008 VT 94, ¶ 15, 958 A.2d 673. Youngbluth is also distinguishable, involving a request -- prohibited by federal law -- to conflate pension and disability benefits, and again confirms the general rule that agreements should be enforced according to their terms, and that finality in property settlements is the norm. 188 Vt. 53, 2010 VT 40, ¶ ¶ 8, 26, 6 A.3d 677. Thus, neither case involved the precise question presented here, as to whether a pension division in a divorce decree may be modified to allow the DFAS to distribute wife's portion in conformity with the parties' expectations, based on husband's completed military service at the time of the divorce.

[¶9] The question for decision, therefore, is whether the trial court abused its discretion in declining to determine whether, in fairness and equity, it was appropriate to reform the language of the parties' divorce decree to conform to their expectations. See Callahan, 184 Vt. 602, 2008 VT 94, ¶ 9, 958 A.2d 673 (observing that " [r]ulings on motions for relief from judgment are left to the sound discretion of the trial court" and will not be disturbed absent a showing that the court abused or withheld its discretion). Although, in denying the motion, the trial court here was concerned that the record was unclear as to the origins of the forty-one percent pension allocation to wife, there was no disagreement or uncertainty about the parties' intentions. Wife did not dispute husband's claim that the inclusion of his post-divorce military service

Page 337

would result in wife's " receiv[ing] benefits far in excess of what originally was agreed between [the parties] at the time of the original [d]ivorce [o]rder," or his affidavit stating that there was no expectation of post-divorce military service at the time of the decree. Indeed, wife concedes on appeal that " [i]t is irrelevant as to how the parties in the present matter ultimately reached an agreement that [wife] would receive 41.8%," and acknowledges that application of the plain language of the pension provision would produce an " unexpected outcome." Wife simply argues, as she did below, that the plain language of the divorce agreement trumps those expectations.

[¶10] Thus, this is not a case where -- as the trial court stated -- the parties' intentions about husband's post-divorce service were " inescapably speculative," as one might reasonably conclude in the more typical divorce situation involving the division of a spouse's pension who was still employed at the time of the divorce. There, the pension is marital property but still somewhat inchoate, the time in-service by the spouse holding the pension (the denominator in the so-called coverture fraction) is still in play, and the pension's ultimate value is still unknown. In that case, it may be plausible to infer an intent that the non-employed spouse should benefit from the post-divorce employment because some of the power to produce the added value was acquired during the marriage.

[¶11] But that is not this case. Here, husband had already been retired for several years at the time of the divorce, following twenty-two years of military service. His in-service time was not unknown or still evolving but complete, and there was no expectation by the parties that husband would continue in service -- accruing additional time, promotions, and salary advancements -- some portion of which might be attributable to wife's contributions. On the contrary, it is reasonable to assume here that the pension award to wife -- based on the plain language of the parties' stipulation -- reflected not only their understanding that husband's military service was complete, but also their judgment that the pension award represented ...

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