Case Title: TUBBS v. STATE OF OKLAHOMA, EX REL. TEACHERS' RETIREMENT SYSTEM

Citation: 

Docket Number: 95968

State: oklahoma

Court: Oklahoma Supreme Court

Date: 2002-10-15T00:00:00Z

Document:
TUBBS v. STATE OF OKLAHOMA, EX REL. TEACHERS' RETIREMENT SYSTEM  TUBBS v. STATE OF OKLAHOMA, EX REL. TEACHERS' RETIREMENT SYSTEM 2002 OK 79 57 P3d 571 Case Number: 95968 Decided: 10/15/2002 Mandate Issued: 11/15/2002 STATE OF OKLAHOMA, ex rel., THE TEACHERS' RETIREMENT SYSTEM OF OKLAHOMA, Defendant/Appellee. [57 P.3d 571] APPEAL FROM THE DISTRICT COURT OF OKLAHOMA COUNTY ¶0 After Plaintiff's divorce he requested that the Oklahoma Teacher's Retirement System implement an order of the District Court of Comanche County. His request was refused, and the Board of Trustees of the retirement system subsequently denied his protest. Plaintiff appealed the Board's order to the District Court of Oklahoma County. That court, the Honorable Carolyn R. Ricks presiding, found no error in the administrative proceedings, and issued an order affirming the order of the Board of Trustees. Plaintiff appealed and we retained the appeal. We hold that the District Court of Comanche County possessed authority to award Tubbs the amount deducted from his retirement benefit to pay for a survivor's benefit to his ex-spouse, that the Teachers' Retirement System improperly denied Tubbs' protest, and that the District Court of Oklahoma County erroneously affirmed the Board's decision. JUDGMENT OF THE DISTRICT COURT REVERSED AND CAUSE REMANDED TO THE DISTRICT COURT WITH DIRECTIONS TO ENTER JUDGMENT Joe B. Reeves, Lawton, for Appellant John McCormick, Asst. Attorney General, Oklahoma City, for Appellee Lydia Lee, Oklahoma City, for Amicus Curiae, Oklahoma Public Employees Retirement System SUMMERS, J. ¶1 The plaintiff, Tubbs, retired as a school teacher and subsequently was divorced. In dividing the marital property the divorce court entered an order concerning Tubbs' retirement benefits that the Teachers' Retirement System declined to follow. He appealed to the District Court of Oklahoma County, which affirmed the Board's order, and then appealed to this Court. We conclude that the Teachers' Retirement System erred in not following the divorce court''s order, and direct that the District Court render judgment for Tubbs upon remand. ¶2 Tubbs' career with the Lawton Public Schools lasted from August 1967 until May 1996. He was a member of the Oklahoma Teachers' Retirement System. He married in 1989, and upon his retirement in 1996 he named his wife as beneficiary of certain retirement benefits. By designating his wife as a beneficiary the sum of $107.04 per month was deducted from his monthly retirement benefit. ¶3 Tubbs and his wife were divorced by a decree of the District Court of Comanche County on March 3, 2000. All right title and interest in and to plaintiff's retirement and pension benefits from the Oklahoma State Teachers Retirement System; and provided further that any survivor benefits previously designated for the defendant are hereby terminated by this decree under the provisions of 15 O.S. 178 (A) and Oklahoma Retirement System Rule 715:10-9-7; O.R. at 132. A few weeks after the decree the District Court of Comanche County issued "a qualified domestic order." The Member is awarded all right, title and interest in and to member's retirement and pension benefits from the Oklahoma State Teachers Retirement System and all benefits previously designated for the defendant are hereby terminated under the provisions of 15 O.S. 178 (A) and Oklahoma Teacher Retirement System Rule 715:10-9-7 and § 17-109(B)(5)(c). O.R. at 137. The Teachers' Retirement System (TRS), through its Executive Secretary, declined to follow the order of the District Court. Tubbs protested the decision and requested a hearing. ¶4 The hearing officer issued proposed findings of fact and conclusions of law. ¶5 Tubbs then appealed the decision of the Board to the District Court of Oklahoma County. The District Court found no error in the administrative proceedings, and issued an order affirming the order of the Board of Trustees. Tubbs appealed the order of the District Court to this Court, and we retained the appeal. ¶6 The parties in effect urge and counter-urge two propositions. The first would have us determine whether a statute enacted in 1987, 15 O.S. 1991 § 178 (A) causes or does not cause certain Teachers' Retirement benefits to be extinguished in the event of divorce. The second is whether a district court has the power to award the value of a spouse''s survivor's annuity benefit to the other spouse, a member of the Teachers' Retirement System, in a divorce. We answer the second proposition in the affirmative. For that reason, we need not concern ourselves further with the applicability of section 178(A), and whether it applies in the absence of the death of the party to a contract providing death benefits. ¶7 In May of 1996 when Tubbs retired he was required to select one of five retirement plans. They were: The Maximum Retirement Plan, Retirement Option 1, Retirement Option 2, Retirement Option 3, or Retirement Option 4. ¶8 The value of the survivor's benefit in the Teachers' Retirement System is capable of calculation when the teacher retires. Indeed, the System is required to make this calculation when determining the amount subtracted from the member's monthly benefit for the purpose of funding the survivor''s benefit for an Option 3 plan. The reduction in the monthly payment, while not as great as the Option 2 plan, still requires a substantial reduction because two people are protected for the life of both individuals. The actual reduction is based on actuarial tables developed for this purpose and approved by the Board of Trustees. The age of the spouse is an important factor in computing this benefit. O.A.C. 715:10-15-10(4) (1996). Thus, after the member's retirement the member's spouse possesses an easily identifiable and calculable economic interest in the member's Option 3 plan. Is the survivor's interest a type of property that a district court may divide between the parties to a divorce? We believe it is, as we now explain. ¶9 A district court possesses power in a divorce proceeding to divide the marital estate. Larman v. Larman, ¶10 The Teachers' Retirement System relies upon Ozment v. Ozment, A retiree elects a retirement option. A retiree''s election of a retirement option is irrevocable. Thus, a district court is without power to alter an irrevocable option. The Retirement System would equate a retiree's power to elect an option with a district court''s power to make division of marital property. With this we do not agree, as will be explained. ¶11 The statutory authority, 70 O.S.Supp.1999 § 17-109 , states that a district court may issue a qualified domestic order. A qualified domestic order for the purpose of the Teachers' Retirement System is: [57 P.3d 575] . . . an order issued by a district court of this state pursuant to the domestic relation laws of the State of Oklahoma which relates to the provision of marital property rights to a spouse or former spouse of a member or provision of support for a minor child or children and which creates or recognizes the existence of the right of an alternate payee, or assigns to an alternate payee the right, to receive a portion of the benefits payable with respect to a member of the Retirement System." 70 O.S.Supp.1999 § 17-109 (B)(2), emphasis added. ¶12 Whenever a divorce occurs, either before or after retirement, a district court possesses the power to award the respective spouses the property to which each of them is entitled. Pension benefits accumulated during the marriage as jointly acquired property are subject to equitable division in a divorce. Jackson v. Jackson, ¶13 A district court's determination of respective property interests in retirement benefits, however, is guided and limited by statute. These limitations are included in the statute setting forth the district court's statutory authority to create alternate payees and divide retirement benefits. For example, § 17-109 states that A qualified domestic order meets the requirements of this subsection only if such order: a. does not require the Retirement System to provide any type or form of benefit, or any option not otherwise provided under state law as relates to the Retirement System, b. does not require the Retirement System to provide increased benefits, 70 O.S.Supp.1995 § 17-109 (6)(a) &(b). The Teachers' Retirement System in our case today urges that a District Court may not issue a qualified domestic order after a member's retirement date that alters the survivor''s benefit because such would provide an option not granted by state law, i.e., a change in the irrevocable selection previously made by Tubbs. ¶14 This characterization by the Teachers' Retirement System is incorrect. Tubbs is currently paying $107.04 monthly by a deduction from his Option 3 retirement benefit to the Teachers' Retirement System to fund the survivor's benefit, a property interest possessed by his spouse. The order of the District Court of Comanche County requires this deduction to stop. The Teachers' Retirement System has not put forward any evidence that the $107.04 deduction was calculated in some manner that its cessation would result in making Tubbs' monthly benefit in excess of the actuarial value of his retirement allowance. ¶15 The Retirement System argues that selection of a retirement plan is irrevocable, and thus a district court cannot change a survivor's benefit. In support of this anti-revocation argument the system relies upon language in 70 O.S. § 17-105 (8)(c) that was first added to that statute approximately two years after Tubbs retired. Option 3. A member receives a reduced retirement allowance for life. Upon the death of the member one-half (½) of the retirement allowance paid the member shall be continued throughout the life of the designated beneficiary, who must be a spouse. A written designation of a beneficiary must be duly acknowledged and filed with the Board of Trustees at the time of the member''s retirement; or 70 O.S.Supp.1995 § 17-105 (8)(c). At the time of the divorce decree, in March of 2000, the 1999 version of the statute was in effect and stated: Option 3. A member receives a reduced retirement allowance for life. Upon the death of the member one-half (1/2) of the retirement allowance paid the member shall be continued throughout the life of the designated beneficiary. A written designation of a beneficiary must be duly acknowledged and filed with the Board of Trustees at the time of the member's retirement and cannot be changed after the effective date of the member''s retirement; or 70 O.S.Supp.1999 § 17-105 (8)(c), (emphasis added). Assuming, but not deciding, that the 1999 version applies to Tubbs, this language does not mean that the selected option cannot be changed under any circumstance. For example, that same statute states, in both its 1995 and 1999 versions, that the Option 2 or Option 3 plan selected by a retiree would be changed to a different plan when a retiree''s spouse predeceased the retiree. If the named beneficiary under Option 2 or 3 dies at any time after the member''s retirement date, but before the death of the member, the member shall return to the retirement benefit, including any post retirement benefit increase the member would have received had the member not selected Option 2 or 3 of this subsection. 70 O.S.Supp.1999 § 17-105 (8)(c). The language of Option 3 is that the "designation of a beneficiary . . . cannot be changed," but this language must be read to allow a change in beneficiary when this or other statutes relating to theses retirement options authorize such a change. For example, § 17-105(8)(c) ¶16 The Teachers' Retirement System makes an appeal to its status as an administrative agency interpreting state statute. The record does not reflect any evidence of longstanding agency policy that § 17-109 limits a district court's authority to award the monthly deduction for a survivor's benefit to the member paying the deduction. Thus, as we said in Globe Life and Acc. Ins. Co. v. Oklahoma Tax Commission, ¶17 A district court possesses the power to adjudicate all of the property rights held by the spouses in the retirement benefit, [57 P.3d 578] whether those benefits are currently paid to the member or to the spouse at some future date. 70 O.S.Supp.1999 § 17-109 . Both types of interests are valued by the Teachers' Retirement System when a member retires, and may be awarded by a court to the member or spouse owning such interests at the time of the post-retirement divorce. ¶18 An administrative order is subject to reversal if an appealing party's substantial rights are prejudiced because the agency's decision is entered in excess of statutory authority or jurisdiction, or if an order is entered based on an error of law, or if the agency's findings are clearly erroneous in view of the reliable, material, probative and substantial competent evidence in the record. City of Tulsa v. State ex rel. Public Employees Relations Bd., ¶19 That part of the judgment of the District Court of Oklahoma County affirming the final Order of the Board of Trustees of the Oklahoma Teachers' Retirement System is reversed, and the matter is remanded to that court with directions to enter judgment for the Plaintiff Tubbs, and directing the Board to enter an Order consistent with the provisions of the Decree of Divorce previously entered by the District Court of Comanche County. ¶20 HARGRAVE, C.J., WATT, V.C.J., HODGES, LAVENDER, KAUGER, SUMMERS, BOUDREAU, WINCHESTER, JJ. - Concur ¶21 OPALA, J. - Concurs in part, dissents in part [57 P.3d 579] FOOT