Case Title: Kilgore v. Kilgore

Citation: 135 Nev. Adv. Op. No. 47

Docket Number: 73977

State: nevada

Court: Nevada Supreme Court

Date: 2019-10-03T00:00:00Z

Document:
435 Nev, Advance Opinion 47
IN THE SUPREME COURT OF THE STATE OF NEVADA

RICHARD KILGORE, No. 73977
Appellant/Cross-Respondent,

ve FILED
ELENI KILGORE,

Respondent/Cross-Appellant. OCT 03 2019

Appeal and cross-appeal from orders resélving a motion to
allocate omitted assets and modifying a divorce decree as it relates to PERS
retirement benefits. Eighth Judicial District Court, Family Court Division,
Clark County; Cheryl B. Moss, Judge.

Affirmed.

Law Office of Betsy Allen and Betsy Allen, Las Vegas,
for Appellant/Cross-Respondent.

Page Law Office and Fred Page, Las Vegas,
for Respondent/Cross-Appellant.

BEFORE PICKERING, PARRAGUIRRE and CADISH, JJ.

OPINION
By the Court, PARRAGUIRRE, J.

In this appeal, we review the district court's distribution of
community property upon Richard Kilgore and Eleni Kilgore’s divorce.
Specifically, we consider whether the district court abused its discretion or
otherwise erred when it concluded that Eleni was entitled to her community

(a-HroUl

 
property share of Richard's pension benefits even though Richard had not
yet retired, reduced this amount to judgment, and ordered Richard to pay
Eleni a monthly amount it deemed fair. We also consider whether the
district court erred when it concluded that Richard's vacation and sick pay
were omitted from the divorce decree and thereafter divided them equally
between Richard and Eleni.

We hold that a district court has significant discretion when
determining whether to grant or deny a non-employee spouse's request for
pension payments before the employee spouse has retired and conclude that
the district court did not abuse that discretion here. Further, the district
court did not err in considering the omitted assets and dividing them
equally between the parties

FACTS

Richard Kilgore and Eleni Kilgore were married in December
1992. During their marriage, both worked for Clark County—Richard as a
marshal and Eleni as a teacher—and received retirement benefits through
the Nevada Public Employees’ Retirement System (PERS). They divorced
in March 2013, and the divorce decree provided for the division of each
party's PERS benefits in accordance with applicable caselaw.! ‘The decree
did not address vacation or sick pay earned and accrued during the
marriage.

In March 2015, Eleni moved the district court to compel Richard
to begin paying her share of his PERS benefits because he had become
eligible for retirement. She also requested a one-half interest in Richard's

*Phe divorce decree also resolved child custody, visitation, and
support issues involving Richard's and Eleni’s three minor children, none of
which are disputed in this appeal.

 

 
vacation and sick pay earned and accrued during their marriage, noting
that such assets were omitted from the divorce decree. In June 2015, the
court temporarily denied Eleni’s request for payment because Richard had
been terminated from his position as a marshal and earned no other income.
‘The court also deferred resolving the vacation and sick pay issue.

Also in June 2015, the district court entered a qualified
domestic relations order (QDRO) dividing Richard's PERS benefits and a
QDRO dividing Eleni’s PERS benefits. The QDRO dividing Richard’s PERS
benefits recognized Richard as the participant in PERS and Eleni as the
alternate payee. It “assign{ed] to Eleni{] the right to receive a portion of
the benefits payable to a plan Participant” “at the first possible date.”

Richard was reinstated as a marshal in January 2016. Shortly
thereafter, the district court ordered him to start paying Eleni $1,200 per
month toward her share of his PERS benefits. Richard argued that he
planned to work until his PERS account reached full maturity and should
not be obligated to pay until he retires. Over the course of 2016 and 2017,
the court held a series of evidentiary hearings and status checks to resolve
the dispute, and spent a significant amount of time reviewing Richard's
financial situation.

In July 2017, the district court concluded that because Richard
was eligible to retire in 2011, Eleni was entitled to her share of Richard’s
PERS benefits even though he had not yet retired. It acknowledged,
however, that PERS would not pay Eleni anything until Richard retired. It
therefore calculated the amount Richard owed to Eleni, retroactive to the
date of Eleni’s motion in March 2015, and reduced that sum to judgment,

collectible by any lawful means. Having extensively reviewed Richard's
financial situation, it ordered Richard to pay Eleni $350 per month toward

 

 
the judgment, instead of the $2,455 per month it calculated Eleni would
have received from PERS had Richard retired? The district court also
ordered Richard to pay Eleni for vacation and sick pay that he earned
during their marriage.’ Richard’s timely appeal and Eleni’s cross-appeal
followed.
DISCUSSION

Richard challenges the district court’s finding that Eleni is
entitled to PERS benefits even though he has not yet retired. On cross-
appeal, Eleni challenges the district court's reduction of monthly payments.
Richard also challenges the district court's ruling on vacation and sick pay.

‘This appeal requires review of the district court's distribution
of community property and its factual findings and conclusions of law. We
review the district court's distribution of Richard's PERS benefits and
vacation and sick pay deferentially for an abuse of discretion. See Wolff v.
Wolff, 112 Nev. 1355, 1359, 929 P.24 916, 919 (1996). “This court's rationale
for not substituting its own judgment for that of the district court, absent

*Specifically, the district court concluded, in part, as follows:

For the relevant time period established at
trial for the PERS retirement benefits in Richard's
name that should have been paid to Eleni, the total
accrued and owing to Eleni is $54,003.62 principal
plus $2,572.14 of prejudgment interest for a grand
total of $56,575.76. Said amount is reduced to
judgment and collectible by any lawful means.
However, execution on Richard’s paychecks is,
stayed and Richard shall pay Eleni $350.00 per
month from January 2017 forward into
her. . . bank account.

8The district court calculated that this amount was one-half of
$8,635.70 minus taxes.

 

 
0 Ae

 

an abuse of discretion, is that the district court has a better opportunity to
observe parties and evaluate the situation.” Id. Further, we review a
district court's factual findings deferentially and will not set them aside
unless they are clearly erroneous or not supported by substantial evidence.
Ogawa v. Ogawa, 125 Nev. 660, 668, 221 P.3d 699, 704 (2009). Conclusions
of law, however, we review de novo. Dewey v. Redev. Agency of Reno, 119
Nev. 87, 93, 64 P.3d 1070, 1075 (2003).

The district court’s distribution of Richard’s PERS benefits

Richard's primary argument on appeal is that the district court,
erred when it ordered him to begin paying Eleni PERS benefits even though
he had not yet retired. He argues that an employee spouse who chooses to
work past the date of first eligibility in order to maximize a PERS account
should not be compelled to pay the non-employee spouse anything until
retirement,

Eleni responds that Richard was first eligible to retire in 2011,
and therefore the district court appropriately ordered Richard to start
payment upon her request. Nonetheless, she argues on cross-appeal that
the district court erred when it ordered Richard to pay her only $350 per
month, She argues that, under the QDRO, she is entitled to the full amount.
of benefits she would have received from PERS had Richard retired.
Finally, she argues that the district court’s refusal to compel Richard to pay
the full monthly amount of his PERS benefits amounts to an unequal
distribution of property in violation of NRS 125.150(1Xb).

We have long held that “retirement benefits earned during the
marriage are community property.” Walsh v. Walsh, 103 Nev. 287, 288, 738
P.24 117, 117 (1987). In Gemma v. Gemma, we clarified that “ItJhis is so
even though the retirement benefits are not vested.” 105 Nev. 458, 461, 778
P.24 429, 430 (1989). We therefore held that a non-employee spouse may

5

 

 
elect to receive a community property share of pension benefits when the
employee spouse is first eligible to retire, regardless of when the employee
spouse chooses to retire. Id. at 464, 778 P.2d at 432 (upholding the district
court's determination that the non-employee spouse was entitled to receive
her interest in the employee spouse's retirement pension, even though he
continued to work and his pension rights had not fully vested). We further
held that because pension benefits are a community asset, an employee
spouse should not be able to “defeat the non-employee spouse's interest in
the community property by relying on a condition solely within the
employee spouse's control,” i.e., the retirement date. Id. at 463-64, 778 P.2d
at 432 (quoting In re Marriage of Luciano, 164 Cal. Rptr. 93, 95 (Ct. App.
1980)). Thus, under Gemma, a district court has discretion to order pension
payments at the employee spouse's first eligibility for retirement, even if
the employee spouse has not yet retired.

NRS 286.510 provides the date at which an employee spouse is
first eligible to retire without suffering a reduction of benefits. First
eligibility varies depending on an employee spouse's effective date of
membership in PERS, profession, number of years served, and age.
Whether the employee spouse's PERS account has fully matured is not a
factor provided in NRS 286.510 for determination of first eligibility.

In accordance with Gemma and NRS 286.510, the district court
here determined that Richard, who served as a marshal for over 20 years,
‘was first eligible to retire when he turned 50 years old in 2011, even though
his PERS account had not reached full maturity. See NRS 286.510(2\(a)
(A police officer or firefighter with at least 20 years of service is eligible to
retire at age 50 with an unreduced pension.). It therefore concluded that

Eleni was entitled to payment any time after 2011. In order to start

 

 

 
receiving payment, Henson v. Henson requires that the non-employee
spouse “file a motion in the district court requesting immediate payment of
his or her portion of the employee spouse's pension benefits.” 130 Nev. 814,
823, 334 P.3d 933, 939 (2014), Eleni filed a motion requesting payment in
March 2015. Accordingly, the district court did not err when it concluded
that Eleni was entitled to her community property share of Richard's PERS
benefits dating back to March 2015.

‘The more difficult question, however, is whether the district
court abused its discretion when it reduced the amount of PERS benefits
owed to Eleni to judgment and ordered Richard to pay Eleni only $350 per
month toward that judgment, To answer this question, we consider Gemma
in light of NRS 125.155, which was enacted six years after Gemma’s
publication.

NRS 125.155 governs the valuation and distribution of PERS
benefits. It provides, in relevant part, as follows:

The court may, in making a disposition of a pension
or retirement benefit provided by the Public
Employees’ Retirement System or the Judicial
Retirement Plan, order that the benefit not be paid
before the date on which the participating party
retires.

RS 125.155(2) (emphasis added). By using permissive language, the

Legislature unambiguously provided district courts with the discretion to

deny a non-employee spouse's request for pension payments before the

employee spouse's retirement.‘ Implicit in the power to deny a non-

“Because NRS 125.155’s meaning is clear from its plain language, we
need not rely on its legislative history. Loomis v. Whitehead, 124 Nev. 65,
69, 183 P.3d 890, 892 (2008). We note, however, that the Legislature
enacted NRS 125.155 to correct the assumption that Gemma mandates a

 

 

 
employee spouse's pension payments is the lesser power to reduce such
payments. We therefore hold that while Gemma permits a district court to
order pension payments at first eligibility, it does not mandate such an
order, NRS 125.155 clarifies that a district court may deny or reduce such
payments if the employee spouse has not yet retired.

Under this framework, a district court has diseretion when
determining how, and to what extent, to accommodate a non-employee
spouse's request for pension payments before the employee spouse's
retirement. We caution that NRS 125.155(2)'s broad grant of discretion is,
not unlimited. Overriding principles of equity and fairness govern a district
court's exercise of discretion. See, eg., NRS 125.150(1Xb) (A court must
‘make an equal disposition of community property except where “it deems
just” upon finding “a compelling reason to” make an unequal disposition.)
Further, Gemma and its progeny provide clear guidelines that a district
court must follow when exercising that discretion. See Gemma, 105 Nev. at
459, 778 P.2d at 430 (requiring that a non-employee spouse wait until the
‘employee spouse is first eligible to retire before requesting PERS benefits);
see also Henson, 130 Nev. at 823, 334 P.3d at 939 (requiring a non-employee
spouse to file a formal motion requesting immediate receipt of PERS
benefits); Sertic v. Sertic, 111 Nev. 1192, 1194, 901 P.2d 148, 149 (1995)
(affirming that a district court may order distribution of PERS benefits at,
and not before, the employee spouse's first eligibility to retire).

district court to order public employees, specifically police officers and
firefighters, to start pension payments upon first eligibility. Hearing on
AB. 292 before the Senate Judiciary Comm., 68th Leg. (Nev., June 26,
1995) (explaining the disparate treatment of police officers and firefighters
under Gemma because of their early retirement eligibility and discussing
the need for legislative clarity in light of Gemma).

 

 
oe Ae

 

With these holdings in mind, we conclude that the district court,
acted within its discretion when it reduced the sum that Richard owed Eleni
to judgment and ordered Richard to pay a monthly amount it deemed fair.
After determining that Eleni was entitled to her community property share
of Richard’s PERS benefits dating back to March 2015, the district court
calculated the total amount owed to Eleni for past PERS payments. In
accordance with established law, the court calculated that Eleni would have
received $2,455 per month from PERS had Richard retired. It then
determined that the outstanding amount owed to Eleni from March 2015
until early 2017, the date of the last proceeding on this matter, was
$56,575.76. We discern no abuse of discretion or error in the district court's
calculations

Next, having established that the amount owed to Eleni was
$56,575.76, the district court reduced this amount to judgment, collectible
by any lawful means. In similar contexts, we have affirmed that a district
court has discretion to enter a judgment for support arrearages in a divorce
proceeding. See Libro v. Walls, 103 Nev. 540, 541, 746 P.2d 632, 633 (1987)
(holding that “lelntry of judgment for support arrearages under NRS
125.180 is discretionary”). We have also held that within that authority lies
the discretion to schedule payments of the judgment “in any manner the
district court deems proper under the circumstances.” Reed v. Reed, 88 Nev.
329, 331, 497 P.2d 896, 897 (1972) (upholding the district court’s order
enforcing its judgment for child support arrearages at a rate not exceeding
‘$50 per month).

Neither Richard nor Eleni challenge the district court's calculation
of the community's share of PERS benefits.

 
om

 

Here, the district court held numerous hearings and status
checks to ensure a fair arrangement under the circumstances of Richard's
and Eleni's divorce. It extensively analyzed Richard's financial obligations,
including $1,500 monthly child support payments to Eleni, as well as basic
living expenses ranging from car insurance to the cost of yard maintenance.
The district court found that if Richard were required to pay Eleni $2,455
per month in addition to his current obligations, he would be unable to
afford basic living expenses and forced into early retirement, which it
acknowledged is contrary to publie policy. It also found that if this amount
were garnished from Richard’s paycheck, Richard would be left with less
than half of his paycheck, which it acknowledged violates garnishment
laws.

‘The district court calculated that Eleni, in contrast, enjoyed a
net income, after expenses, of over $1,000 per month. Nonetheless, it
determined that Eleni was entitled to her community property interest in
Richard's PERS benefits. After balancing these competing interests, the
court stayed any collection on the judgment from Richard's paycheck, and
instead ordered Richard to pay Eleni a reduced rate of $350 per month
toward the judgment. Because the district court based its distribution of
community property on substantial evidence, which is extensively
documented in the record, we conclude that it did not abuse its discretion.
We further conclude that the court appropriately balanced the public policy

10

 

 
 

om

 

and community property interests involved in this ease and thus defer to its
sound judgment.

We recognize that by enforcing its judgment in this manner, the
district court provided for the distribution of Richard's PERS benefits in a
manner not expressly authorized in the QDRO.’ Importantly, however, the
district court “retain{ed] jurisdiction to enter such further orders as are
necessary to enforce the award of benefits as specified lin the QDROI.” See
Gemma, 105 Nev. at 462, 778 P.2d at 432 (holding that a court may modify
or adjust division of pension benefits if it “specifically retains jurisdiction”).
After closely analyzing Richard's expenses, the court determined that it was
necessary to order payments on the judgment at a reduced monthly rate.
In doing so, the district court did not modify Eleni’s community property
interest in Richard's PERS benefits, and she is still entitled to the full
amount owed to her for the specified period. The district court thus
accommodated Richard’s current financial situation while ensuring that
Eleni would eventually receive the full amount awarded to her in the
judgment.* We conclude that this was necessary, fair, and equitable.

We are therefore unpersuaded by Richard's argument that in
exercising its discretion, the district court unfairly penalized Richard and
deterred continued employment.

"The QDRO provides, in relevant part, that if Richard does not retire
upon first eligibility, he must pay Eleni “the sum required by this Order, no
later than the fifth day of each month,” until PERS payments commence. It
does not provide specific guidance as to how a district court should execute
and enforce such payments, nor do statutes or caselaw.

*Because the order did not change Eleni’s community property

interest in Richard's PERS benefits, and because neither party disputed the
district court’s division of Richard’s PERS benefits in the divorce decree, we

sy

 

 
 

Accordingly, we hold that the district court did not abuse its
discretion or err when it calculated the amount of PERS benefits owed to
Eleni for the specified period, reduced that amount to judgment, and
ordered Richard to pay Eleni a monthly amount it deemed fair.” We note,
however, that the district court's order accounts for PERS benefits owed to
Eleni only “[flor the relevant time period established at trial,” i.e., March
2016 until early 2017. To receive payment for PERS benefits owed after
that period, Eleni will need to seek relief from the district court. We leave
the ongoing distribution of Richard’s PERS benefits to the district court,
which expressly retained jurisdiction over this matter.
The district court's division of Richard’s vacation and sick pay

Finally, Richard argues that the district court erred when, four
years after the divorce decree, it equally divided the vacation and sick pay
he earned and accrued during the marriage. He argues that because Eleni
could have raised this issue at the time of the divoree, res judicata precluded
division of this property. Richard also argues that vacation and sick pay
are not community property because they amount to future wages, and are
thus earned after divorce, We disagree.

are unpersuaded by Eleni’s argument that the order resulted in the unequal
distribution of community property.

 

We are unpersuaded by Richard's remaining arguments.
Specifically, we conclude that the district court did not abuse its discretion
when it refused to offset Richard's payments with his future interest in
Eleni’s PERS benefits. Richard is not yet entitled to his share of Eleni’s
PERS benefits because Eleni is not eligible to retire under NRS 286.510 and
Gemma. Therefore, any offset would be premature under existing law. We
also decline Richard's invitation to expand our existing caselaw to require
such an offset. Because district courts have broad discretion in divorce
proceedings, we will not mandate such an offset and risk interfering with
the district court’s delicate balancing of interests.

12

 

 
om ae

 

Richard relies on Doan v. Wilkerson, 130 Nev. 449, 456, 327
P.3d 498, 503 (2014), in which this court barred an appellant from seeking
division of a community asset that was mistakenly left out of the divorce
decree, absent a showing of extraordinary circumstances justifying
equitable relief. NRS 125.150(3), however, expressly abrogates our holding
in Doan, See Hearing on A.B. 362 Before the Assembly Judiciary Comm.,
8th Leg. (Nev., April 1, 2015) (acknowledging that in Doan, the court could
not provide relief to the appellant for a mistakenly omitted asset, and
explaining that Assembly Bill 362, now codified as NRS 125.150(3), was
intended to provide such a remedy).

NRS 125.150(3) provides, in relevant part, as follows:

A party may file a postjudgment motion in any
action for divorce, annulment or separate
maintenance to obtain adjudication of any
community property or liability omitted from the
decree or judgment as the result of fraud or
mistake. A motion pursuant to this subsection
must be filed within 3 years after the discovery by
the aggrieved party of the facts constituting the
fraud or mistake. The court has continuing
jurisdiction to hear such a motion and shall equally
divide the omitted community property or liability
between the parties ....

‘Thus, under NRS 125.1503), a party can seek adjudication of an asset

mistakenly omitted from the divorce decree within three years of

discovering the mistake.

Eleni moved the district court to adjudicate the vacation and
sick pay as omitted assets in June 2015, roughly two years after the decree
of divorce, arguing that they were omitted by mistake. At a hearing
conducted in December 2016, Richard admitted that the parties did not

discuss his vacation or sick pay during the divoree proceedings. Based on

13

 
this and other trial testimony, the district court found that the vacation and
sick pay were omitted assets under NRS 125.150(3) and concluded that
Eleni was therefore entitled to file a post-judgment motion for distribution.
Because the district court's findings are supported by substantial evidence
and consistent with current law, we discern no abuse of discretion or error.
We further conclude that the district court did not abuse its
discretion when it equally divided the vacation and sick pay earned and
accrued during the marriage. Vacation and sick pay are forms of deferred
compensation. If the work is performed during the marriage, compensation
for that work belongs to the community. We find support for this conclusion
in other community property jurisdictions. See, eg., Suastez v. Plastic
Dress-Up Co., 647 P.2d 122, 125 (Cal. 1982) (“This court, too, has adopted
the view that vacation pay is simply a form of deferred compensation.”);
Arnold v. Arnold, 77 P.3d 285, 290 (N.M. Ct. App. 2003) (“The district
court properly determined Husband’s unused vacation leave and unused
sick leave to be community property and divisible upon divorce.”).
Nonetheless, Richard argues that because he will ultimately
receive payment for unused vacation and sick days after the marriage, it is
his separate property. This argument belies the substantial body of caselaw
that characterizes vacation and sick pay as deferred compensation. See
‘Suastez, 647 P.2d at 126 (listing cases). Moreover, it ignores the underlying
presumption that benefits earned during a marriage are community
property, regardless of when they are realized. See Arnold, 77 P.3d at 290

("The essence of leave is that it is a benefit of employment and, whether
considered a benefit in addition to salary, or somehow an aspect of salary,
it has independent value.”).

 

 
‘Therefore, we hold that vacation and sick pay earned and
accrued during a marriage are community property and subject to equal
division under NRS 125.150(1)(b). Thus, the district court did not abuse its
discretion when it characterized Richard's vacation and sick pay earned and

accrued during the marriage as omitted assets under NRS 125.10(3) and

distributed them equally.
Accordingly, we affirm the district court's orders in all respects.

Ceowe—

Parraguirre