NO. 94-521

IN THE SUPREME COURT OF THE STATE OF MONTANA

1995

IN RE MARRIAGE OF

KATHY DARLENE BLAIR,

APPEAL FROM: District Court of the Eighth Judicial District,

In and for the County of Cascade,

The Honorable Thomas M. McKittrick, Judge presiding.

COUNSEL OF RECORD:

For Appellant:

Marcia Birkenbuel, Great Falls, Montana

For Respondent:

James D. Elshoff, Great Falls, Montana

Filed:

Submitted on Briefs: March 2, 1995

Decided: May 18, 1995

Cl&k
Justice Fred J. Weber delivered the Opinion of the Court

This is an appeal from a decision of the Eighth Judicial

District Court, Cascade County, granting Kathy Darlene Blair's

motion requesting she be awarded her percentage interest in Stephen

J. Blair's military Special Separation Benefits. We affirm.

We restate the issues on appeal:

I. Did the District Court err when it found payments received

by a member of the military under the Special Separation Benefits

program an item of marital property or retirement benefits subject

to division by the dissolution court?

II. Did the District Court lose jurisdiction to change the

property settlement provisions of the Decree when it failed to rule

on the motion within forty-five days from the time it was filed?

III. Was the District Court's decision barred by res

judicata?

IV. Did the District Court err when it did not order Stephen

Blair to reimburse Kathy Blair for attorney fees?

The parties were married in 1980, and their marriage was

dissolved by the District Court in 1993. The parties agreed to and

signed a marital property settlement which the court found not

unconscionable. The court divided the marital estate as the

parties suggested. Part of the division was that Kathy Blair

(Kathy) would receive a share of Stephen Blair's (Stephen) future

net disposable military retirement pay. Her share would be based

on a percentage using the number of years they were married

(twelve) and the actual number of years Stephen served on active

2
duty. At that time, it was assumed Stephen would retire from the

military after twenty years of active duty.

In 1994, Stephen was accepted into the Special Separation

Benefits program (SSB) pursuant to 10 U.S.C. 5 1174a. He

voluntarily separated from his military service on October I, 1994,

and agreed to serve in the Ready Reserve for a minimum of three

years. He received separation pay based on years of service and

current base pay. Stephen completed fifteen years of active

service.

On March 24, 1994, Kathy filed a motion entitled Motion for an

Order Modifying Decree as to Retirement Benefits. On May 6, 1994,

she filed a motion to divide the retirement benefits Stephen

received from the SSB program. The District Court held a hearing

on the motions on May 6, 1994, and awarded Kathy a percentage

interest of Stephen's separation pay.

Stephen appeals from the District Court's September 21, 1994

decision.

1.

Did the District Court err when it found payments received by

a member of the military under the Special Separation Benefits

program an item of marital property or retirement benefits subject

to division by the dissolution court?

Stephen argues that military retirement and SSB are defined by

two different statutes and are two distinct groups of military

entitlement. He then argues that 10 U.S.C. 5 1408 specifically

authorizes the division of military retirement pay as a marital

3
asset in a proceeding for dissolution, but 10 U.S.C. 5 1174a does

not contain any language authorizing the division of SSB pay in a

dissolution proceeding.

Stephen refers to McCarty v. McCarty (19811, 453 U.S. 210, 101

s.ct. 2728, 69 L.Ed.2d 589, in which the U.S. Supreme Court

emphasized that the decision as to the availability of retirement

pay to a spouse is left to Congress alone. After the McCartv

ruling, Congress enacted the Uniformed Services Former Spouses'

Protection Act (Spouses' Protection Act), 10 U.S.C. s 1408. This

act authorizes a dissolution court's division of "disposable

retired or retainer pay."

Stephen argues that his separation pay is not an early

retirement benefit. He states that he is no longer eligible for

military retirement because he terminated his active duty status

prior to the number of years of service required for retirement,

and that he received special separation pay in return for serving

in the military's Ready Reserve for at least three years following

his separation from active duty.

Stephen also refers to Manse11 v. Manse11 (1989), 490 U.S.

581, 109 S.Ct. 2023, 104 L.Ed.2d 675, in which the U.S. Supreme

Court ruled that state courts could not treat the portion of

military retirement waived in order to receive Veteran's

Administration disability benefits as marital property devisable

under the Spouses' Protection Act. Stephen concludes, under

McCartv and Mansell, state courts do not have authority to divide

SSB pay as a marital asset unless Congress specifically authorizes

4
such a division.

Kathy argues that the benefits provided under 10 U.S.C. 5

1174a are clearly for purposes of retirement. She states that the

SSB program is known as the "Early Out Program." She points out

that SSB benefits are awarded based on years served of active duty

the same as other retirement benefits.

Kathy refers to Elsie v. Aspen (D.D.C.1993), 841 F.Supp. 439,

440, which found that SSB benefits provide incentive payments as

inducements "to elect early retirement." In addition, Kathy

includes a copy of a brochure disseminated by the Department of

Defense describing the voluntary separation incentives and what

they mean to eligible military members. On page six of the

brochure, in a question/answer format, it states:

What happens to VSI or SSB if I become retirementeligible?

Essentially, you pay it back from your retirement pay.

Kathy stresses the point that if a member voluntarily separates

from active duty and then re-enlists, his or her retirement pay,

not the current wages, would be tapped for reimbursement. Kathy

then refers to the District Court in Cascade County which has twice

ruled that SSB benefits are marital property and subject to

division upon receipt. In re the Marriage of Daws, BDR 91-626,

decided on July 1, 1992; and, In re the Marriage of Plunkett, BDR

90-520, decided on September 8, 1992.

The District Court found that Stephen and Kathy, prior to

dissolution, negotiated the terms and freely entered into a

Property Settlement Agreement stating "[Kathy] was awarded a share

5
of [Stephen's] future net disposable military retirement pay, to be

calculated based upon [Stephen's] actual number of years of service

at the time of retirement."

The District Court then likened SSB payments to military

pensions because they are both based on longevity of service. The

court stated that military pensions have long been declared in

Montana to be a marital asset divisible upon dissolution;

therefore, SSB payments are also divisible. Stephen and Kathy were

married twelve of the fifteen years of his active service. Since

a portion of Stephen's separation benefits accrued during his

marriage to Kathy, the court concluded that portion is divisible by

the court upon dissolution.

Our standard of review of the District Court's conclusions of

law is to determine if the District Court's interpretation of the

law is correct. Steer, Inc. v. Department of Revenue (1990), 245

Mont. 470, 474-475, 803 P.2d 601, 603-604.

Stephen relies on McCartv and Manse11 for the principle that

federal law preempts state law in the treatment of military

retirement. In McCartv, the U.S. Supreme Court held that the

husband's military retirement pay was not subject to California's

community property laws; and, therefore, could not be attached to

satisfy a property settlement incident to the dissolution of

marriage absent congressional authority to do so. McCarty, 453

U.S. at 228-232, 101 S.Ct. at 2739-2741, 69 L.Ed.Zd at 603-605.

However, in response to McCartv, Congress enacted Title 10 U.S.C.

§ 1408, known as the Former Spouses' Protection Act. This act

6
provided the congressional authority the Supreme Court found

absent.

Further, the Court's reasoning, in Mansell, is contrary to

Stephen's analysis. There, the Court reiterated its prior holding

that state law preempts federal law in all domestic relations

unless Congress positively enacts it. Mansell, 490 U.S. at 587,

109 S.Ct. at 2028, 104 L.Ed.2d at 684. Congress expressly excluded

VA disability benefits received in lieu of military retirement from

division by the state dissolution court. 10 U.S.C. §

1048(a) (4) (B). No such expression was enacted for military

retirement waived to receive special separation benefits under 10

U.S.C. § 1174(a). The holding in Manse11 clearly sets forth

limitations on the holding in McCarty as applied to this case.

Further, we note the Department of Defense's statement

concerning a dissolution court's ability to divide SSB payments.

Page six of the Department's brochure states:

How will state courts treat VSI/SSB in a divorce

settlement?

The treatment of VSI or SSB is not dictated by Federal

law. It will be up to the state courts to rule on the

divisibility of these incentives.

We also note that a federal district court has stated:

The VSI/SSB program provides, to those members who

qualify, incentive payments and medical and veterans

benefits as inducements to elect early retirement.

Elzie, 841 F.Supp. at 440.

Like retirement, Stephen's eligibility for the SSB program was

based on the number of years he served in active duty. 10 U.S.C. §

1174a(c). As with retirement pay, Stephen's separation pay was

7
calculated according to the number of years he was in active

service. 10 U.S.C 5 1174a(b) (2) (A). Stephen could have remained

on active duty for five more years and received retirement pay.

Instead, he chose voluntary separation from the military and

received his compensation at an earlier date. For the reasons we

have stated, we characterize separation pay received under the

Special Separation Benefits program (10 U.S.C. s 1174a) as an

election for early retirement.

We hold that payments received by a member of the military

under the Special Separation Benefits program are an item of

marital property subject to division by the dissolution court.

--

II.

Did the District Court lose jurisdiction to change the

property settlement provisions of the Decree when it failed to rule

on the motion within forty-five days from the time it was filed?

Stephen states that under Rule 60(c), M.R.Civ.P., a motion for

relief must be determined within the forty-five day period set out

in Rule 59(d), M.R.Civ.P.; and that if the court fails to rule, the

motion shall be deemed denied. He points out that the District

Court did not rule upon Kathy's motion to modify the Decree within

the 45 day period and was, therefore, beyond its jurisdiction.

Kathy emphasizes that her intention was not to modify the

Decree as was stated in the title of the original petition but

rather to enforce the same. Kathy cites § l-3-219, MCA: "The law

respects form less than substance." She argues that the substance

of her motion clearly was for the District Court to force Stephen

8
to pay to Kathy her share of his retirement benefits, albeit early,

as their original agreement stated. She argues, further, that the

property settlement agreement provided for enforcement remedies;

therefore, the District Court's jurisdiction continued in order to

enforce the Decree.

The District Court found Stephen's actions in denying Kathy

part of his separation pay to be unconscionable. Based on that

unconscionability, the court reopened the Decree and ordered that

Stephen pay to Kathy her percentage interest in his SSB pay.

Although we agree with the result of the District Court's

conclusion, we note that the court mischaracterized the motion it

had before it when it "reopened the Decree based on

unconscionability." The motion was, in substance, a motion to

clarify the terms of the agreement and to subsequently enforce

them. We have held that the power inherent in every court to

enforce its judgments and decrees "is not to be limited by the time

limits in Rules 59 and 60, M.R.Civ.P." Smith v. Foss (1978), 177

Mont. 443, 447, 582 P.2d 329, 331. We conclude that the District

Court was correct in treating the SSB program as early retirement

divisible under its original Decree. We hold that the District

Court did not lose its jurisdiction because it failed to rule on

Kathy's motion in excess of forty-five days.

III.

Was the District Court's decision barred by res judicata?

On April 28, 1993, the District Court found that the "MARITAL

SETTLEMENT AGREEMENT signed by the parties is equitable and not

9
unconscionable, and should be incorporated into the decree of

dissolution of marriage." Here ( the District Court concluded

"[Stephen] has voluntarilv and unilaterally upset that division,

which has resulted in a substantial detriment to the reasonable

future expectations of [Kathy] and which will give [Stephen] an

immediate and substantial windfall." (Emphasis added.) The court

then found the result of Stephen's actions to be unconscionable.

Stephen points to the Commissioner's Notes to 5 40-4-201, MCA,

(Separation agreements) which says, "The court's determination, in

the decree, that the terms are not unconscionable, under the

ordinary rules of res judicata, will prevent a later successful

claim of unconscionability." Stephen states further that case law

clearly supports the application of the doctrine of res judicata to

bar the reopening of a judgment on the grounds of unconscionability

after a previous finding of a lack of unconscionability is made,

and the agreement merged in the Decree. See Hopper v. Hopper

(1979), 183 Mont. 543, 601 P.2d 29.

Stephen then lists the four criteria necessary to establish

res judicata as set forth in Hopper.

(1) The parties or their privies must be the same;

(2) The subject matter of the action must be the same;

(3) The issues must be the same, and must relate to the same

subject matter; and

(4) The capacities of the persons must be the same in

reference to the subject-matter and to the issues before

them.

Stephen argues that the four criteria are met, so the doctrine of

res judicata barred a finding of unconscionability.

10
Kathy argues again that the District Court did not modify the

Decree and did not reverse any findings. It enforced the division

of Stephen's "net disposable military retirement pay." She

contends that it was Stephen, through his announcement that he

intended to retire early and deprive Kathy of her vested

expectation interest in the future marital property, who attempted

to modify the Decree/Property Settlement Agreement; thus, all the

law cited by Stephen pertaining to the applicability of the

doctrine of res judicata applies equally to him.

We state again that the motion was, in substance, a motion to

enforce the Decree, not to modify the same. The District Court

looked to unconscionability in order to reopen and then to modify

the Decree under Marriage of Laskey (1992), 252 Mont. 369, 829 P.Zd

935. In its conclusion, the District Court did not reverse its

original finding of the settlement agreement as to

unconscionability, but found Stephen's attempt to "voluntarily and

unilaterally upset" that agreement was unconscionable.

Stephen is correct in that the parties, the subject matter,

and the capacities of the parties are the same as those under the

original Decree. However, the most important of the four criteria

for res judicata is the identity of issues which is not present

here. In re the Marriage of Harris (1980), 189 Mont. 509, 513, 616

P.2d 1099, 1101.

In the first case, the issue was how to divide the marital

assets. The District Court incorporated Stephen's and Kathy's

Property Settlement Agreement into its order dividing the marital

1 1
property as they suggested. Here, the issue differs in that the

court was asked to determine whether or not payments Stephen

received upon voluntarily separating from the military were the

equivalent of "net disposable military retirement pay" under the

Property Settlement Agreement per its original terms. This issue

was not addressed in the Property Settlement Agreement nor in the

Decree. On its face, the Decree did not identify whether or not

voluntary separation pay was a form of net disposable military

retirement pay. We conclude that the doctrine of res judicata does

not apply where the issues were not previously addressed.

We hold that the District Court's decision was not barred by

res judicata.

IV.

Did the District Court err when it did not order Stephen Blair

to reimburse Kathy Blair for attorney fees?

Kathy did not address this issue in her motions nor at the

hearing. We will not address issues raised for the first time on

appeal. Hislop v. Cady (19931, 261 Mont. 243, 250, 862 P.2d 388,

392. The issue of attorney fees was not raised at the District

Court level and, therefore, can not be raised here.

Affirmed.

We Concur:

12
Justices

13
Justice W. William Leaphart, specially concurring.

I concur in issues 2 and 4 of the majority opinion and

specially concur in issues 1 and 3. I write separately for two

reasons. The first is that I believe there is greater support than

that mentioned in the majority opinion for the proposition that

Special Separation Benefits (SSB) may be properly included in any

marital estate. The second is that another appellate court in a

similar case reviewed and upheld a trial court's order to enforce

the decree based on the parties' property settlement agreement.

First, an Arizona appellate court has determined that SSB

payments may be included in the marital estate. In re Marriage of

Crawford (Ariz. Ct. App. 1994), 884 P.2d 210. In Marriaqe of

Crawford, the court noted that there is legislative history to

support the inclusion of SSB benefits in the marital estate.

Specifically, the court stated:

We find more relevant a 1990 House Report predating the

enactment of the SSB program which in relation to the

congressionally mandated "force drawdown" recommended "a

comprehensive package of transition benefits to assist

separating personnel and their families,'t H.R.Rep. No.

665, 101st tong., 2d Sess. (1990) (emphasis added),

suggesting that equitable division of SSB benefits is not

inconsistent with congressional intent.

Marriaqe of Crawford, 884 P.2d at 212. The Crawford court also

recognized, as does the majority opinion, that the Department of

Defense pamphlet regarding SSB payments indicated that state courts

would determine the divisibility of such payments.

Next, in a case similar to this one, a Florida appellate court

determined that a property settlement agreement should be enforced

14
through the payment of early separation benefits. In Abernethy v.

Fishkin (Fla. Dist. Ct. App. 1994), 638 So.2d 160, the husband and

wife had entered into a property settlement agreement which

provided that the wife would receive 25% of the husband's military

pension. The husband elected to leave the military before his

retirement vested and was paid benefits under the Voluntary

Separation Incentive Program (VSI). Abernethv, 638 So.Zd at 161.

The VSI and SSB programs are quite similar in that both provide

qualifying military personnel who are voluntarily leaving the

service before their retirement vests a payment, or payments,

primarily based on the individual's ending salary and years of

service.

The Abernethv court first cited Marriaqe of Crawford in

determining that the trial court had correctly concluded that the

husband's VSI benefits were subject to division. Abernethv, 638

So.Zd at 162. The court went on to state that even assuming

Congress had not authorized state courts to distribute these

benefits, it would affirm the trial court's order enforcing the

parties' property settlement agreement. Specifically, the court

stated:

the trial court's order does not purport to assign or

award VSI benefits to the wife. Instead, the order

merely requires the husband to pay to the wife 25% of

every VSI payment immediately upon its receipt in order

to insure the wife a steady monthly payment pursuant to

the terms of the parties' property settlement agreement.

Abernethv, 638 So.2d at 163.

In the present case, Kathy and Stephen entered into a proper:ty

settlement agreement in which the parties agreed to a formula for

15
the division of Stephen's military retirement pay. Similar to the

trial court's order discussed in Abernethv, the District Court's

order in this case does not purport to assign Stephen's SSB

benefits to Kathy, but orders him to pay her 40% (the percentage

arrived at through the calculation agreed on in the property

settlement agreement) of these monies immediately after he receives

them.

As the Arizona court recognized in Marriage of Crawford,

federal law does not preclude state courts from dividing SSB

benefits in a dissolution proceeding. However, even assuming

arsuendo, that it does, the fact is that Stephen, in the property

settlement agreement, voluntarily agreed to divide his "net

disposable military retirement pay." The property settlement

agreement did not tie the phrase to any federal statute or program.

1n my opinion, the phrase "net disposable military retirement pay"

is broad enough to encompass Stephen's voluntary early retirement

under the SSB program. The District Court merely required Stephen

to do that which he agreed to and that which the decree required.

16
Justice Karla M. Gray, dissenting.

I respectfully dissent from the Court's opinion. The

threshold and dispositive question in this case is whether the

doctrine of res judicata bars the District Court from determining

that the parties' property settlement agreement was unconscionable.

Because that question must be answered in the affirmative, I would

reverse the District Court.

The marriage of Steve and Kathy Blair was dissolved via

findings of fact, conclusions of law and decree of dissolution

entered by the District Court on April 28, 1993. The court

expressly concluded that Steve and Kathy's Marital Settlement

Agreement was not unconscionable and incorporated that Agreement

into the decree of dissolution. One of the provisions of the

Agreement was that Kathy would receive a share of Steve's future

net disposable military retirement pay, calculated as set forth

therein.

Approximately seventeen months after the decree of

dissolution, the District Court concluded, in essence, that the

Agreement was unconscionable. Notwithstanding its determination

that Steve's military separation benefits were not "military

retirement pay" covered by the Agreement, it reopened the decree to

change the terms of the Agreement in order to provide Kathy with a

share of Steve's military separation benefits. I conclude that,

because of its earlier conscionability conclusion, the doctrine of

res judicata barred the court from making an unconscionability

determination.

17
The criteria necessary to establish res judicata are wellestablished in Montana:

1 . The parties or their privies must be the same;

2 . The subject matter of the action must be the same;

3. The issues must be the same and relate to the same subject

matter; and

4 . The capacities of the persons must be the same in

reference to the subject matter and issues before them. Hopper v.

Hopper (1979), 183 Mont. 543, 557, 601 P.2d 29, 36 (citation

omitted).

Here, Kathy does not respond to the res judicata issue and,

thereby, does not directly controvert it. Nor, on the basis of the

record before us, could she present a persuasive argument that the

criteria necessary for the application of the doctrine of res

judicata are not met here. There is no question but that the

parties to the action are the same and that the subject matter--the

conscionability, or lack thereof, of the Agreement--is the same.

Likewise, the issues are the same, as are the capacities of Steve

and Kathy in relation to the subject matter and the issues.

Hopper addressed the precise issue now before us: whether or

not the district court had jurisdiction to determine the

conscionability of the property settlement agreement which it had

earlier, in the decree of dissolution, found to be not

unconscionable. We affirmed the district court's conclusion that

a subsequent conscionability determination was prevented by the

doctrine of res judicata. Hopper, 601 P.2d at 36. The same result

18
is compelled here.

In its determination to reach the result it seeks in this

case, the Court mischaracterizes the nature of Kathy's motion in

the District Court in order to recharacterize the District Court's

statement that it had "reopened the Decree based on

unconscionability." This Court's statement that the motion was one

to clarify the terms of the agreement and, thereafter, merely to

enforce it, is nonsense. Kathy's motion was a Motion for Order

Modifying the Decree as to Retirement Benefits and it is this

motion that the District Court granted, based on its

unconscionability determination. The Court attempts to buttress

its recharacterization of this case by concluding that the District

Court "was correct in treating the SSB program as early retirement

under its original Decree." The problem with this Court's

"conclusion" is that the District Court did not treat the SSB

program as early retirement under its original decree; had it done

SO, it would not have been necessary to "reopen the Decree."

The salient facts are these: The parties' Agreement entitled

Kathy to a share of Steve's military retirement pay. N o

alternative provision was made to deal with Steve's separation from

the military prior to retiring, even though Kathy testified that

she understood during settlement negotiations that Steve might

leave the military prior to completing the full term of military

service necessary to be eligible for retirement. The Agreement

expressly stated that its purpose was "to provide for the equitable

and fair division of the property of the parties," and that it

19
constituted full and final settlement based upon full disclosure of

property and income. The Agreement, by its terms, "shall not be

modifiable." This was the Agreement the District Court determined

to be not unconscionable when it incorporated the Agreement into

the decree of dissolution.

I would reverse the District Court's determination that

unconscionability permitted it to reopen the decree and modify the

terms of the Agreement to give Kathy a share of Steve's military

separation benefits. The unconscionability determination is barred

by the doctrine of res judicata, as is clear from Hopper and from

the Commissioners' Note to g 40-4-201, MCA, which states that "the

court's determination, in the decree, that the terms [of the

agreement] are not unconscionable, under the ordinary rules of res

adjudicata, will prevent a later successful claim of

unconscionability." In remaking this case to reach a particular

result, this Court undermines the purpose, importance and

legislatively-intended finality of property settlement agreements

voluntarily entered into by the parties, found conscionable by the

court and incorporated in the decree; the Court also creates both

unnecessary and incorrect inconsistency in its own cases. I cannot

agree. I dissent.

20
Justice James C. Nelson and Justice Terry N. Trieweiler join

in the foregoing dissent of Justice Karla M. Gray

21