1 In 1982, Congress adopted the

Uniformed Ser

vices For

mer Spouses’ Protecti

on Act, c odifi

ed at 10 U. S.C. § 1408, in response to McCa rty v. McC arty, 453 U.S. 210, 101 S. Ct. 2728 (1981), which h eld that Federal

law pre-empted the applica tion of state com munity prop erty law to military re tirement pay.



### IN THE COURT OF APPEALS OF TENNESSEE

AT NASHVILLE April 15, 1999 Sessi

on JANICE CAROLINE (SHERRILL) HILLY ER v. CHARLES LEE HILLYER Appeal from the Circuit Court for Montgomery County No. C3-805 James E. Walton, Judge

No. M1998-00942-COA-R3-CV - Filed March 13, 2001

The issues in this post-divorce case arise because the former husband’s waiver of military retirement pay in order to receive disability benefits cut off the former wife’s receipt of her portion of the retirement

pay which had been awarded to her in the distribution of mari tal property . The former wife filed a contempt petition, seeking to reinstate her portion of the benefits. The trial court, relying on Gilliland v. Stanley , an unpub lish ed opi nion f rom th is cou rt, de nied h er mot ion fo r cont empt. In light of ou r Supreme Court’s holding in Johnson v. Johnson , 37 S.W.3d 892 (Tenn. 2001), we reverse and remand.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court

Reversed and Remanded
P ATRICIA J. C OTTRELL , J., delivered the opinion of the court, in which W ILLI AM C. K OCH , J R ., and W ILLI AM B. C AIN , JJ., joined.
Christine Zellar Church, Clarksville, Tennessee, for the appellant, Janice Caroline (Sherrill) Hillyer. Mark A. Rassas, Clarksville, Tennessee, for the appellee, Charles Lee Hilly er. OPINION
This appeal involves issues relating to military re

tirement pay. Federal law a uthorizes state courts to treat

the “disposable retired pay [of a service member] . .. either as property solely of the member or as property of the member and his spouse,” 10 U.S .C. § 1408( c)(1), 1 thus allowing division of such retirement benefits as marital property upon the dissolution of a marriag e. However, “disposable

retired pay” does not include amounts deducted from that pay as a result of

a waiver of2 Ironically, after prevail ing befor e the U.S. Supreme Court , Mr. Mansell

got no rel

ief f rom his divorce decre

e. On remand, the California C ourt of Ap peals held th at Mr. M ansell had, b y signing the pro perty settlement agre ement, waived his right to assert that the court ha s exceede d its jurisdiction by awardin g that portion of his disability benefits to Ms. M ansell. In re Ma rriage of M ansell , 265 Cal. Rptr. 227, 234 (Ct. App. 1989).

3 Because later st

atements of t

he trial court indicat

ed that it attempted to se

t the ali mony at the same amount as the anticipated r etirement be nefits awarde d to Wife, we as sume that 40% of Husban d’s retiremen t pay was app roximately $400 per month.

4 Federal law provi

ded a mechanism by which a former spouse of a military ret iree could receive his or her share of the re tire ment pay

direct ly f rom the mili tary . 10 U.S. C. § 1408 (d); see also M ansell , 490 U.S. at 585, 109 S. Ct. at 2027. An election t

o receive d isability benefit s reduces the amount o f retirement pa y by the amo unt of the disab ility payment, thereby automatically reducing the direct pay

ment to the f

ormer spouse. Johnson v. Johns on , 37 S.W.3d 892, 894 (Tenn. 2001). -2- retired pay . . . in order to receive compensation under .

. . title 38 [disability pay].” 10 U.S.C. § 1408 (a)(4)(B). In order to receive disability pay , a former service member must waive a corresponding portion of his or her retirement pay. 38 U.S.C. § 5305. Disability pay is exempt from federal,state a nd local ta xation, and this exemption provides an incentive for a former service member to make the waiver which othe rwise would have

no economic impac

t. Mansell v. Mansel

l , 490 U.S. 591, 583-84, 109 S. Ct. 2023, 2026 (1989).
At the time the case before us was argued,the law was settled that state courts cannot treat disability pay as marital property subject to division upon divorce. Mansell , 490 U.S. at 594-95, 109 S. Ct. at 2032 (state court could not treat that portionof husband’s total retirement pay which was disability pay as marital property in its division of property at the time of divorce). 2 However, it remained unsettled whether a post-divorce waiver of retirement pay in exchange for a corresponding amount of disability

pay could r

educe a former

spouse’s previou

s award, as marit

al property

, of a portion of the milita

ry retirem ent pay. Tha

t is the issue prese

nted by the f

acts of this appea

l.
Janice Caroline Sherrill Hillyer (“Wife”) was awarded a divorce from Charles Lee Hilly er (“Husband”) in 1986. The trial court awarded her $400 per month as alimony for “a period of five (5) years or un

til the Defendant

’ s re tirement from military service, whichever event occurs first.” The court also awarded

Wife, as part of her share of marital property, “forty per cent (40%) of the Defendant’s gross military retirement benefits.” A short time after the divorce, Husband retired from the military and

Wife began rec

eiving her 40% o

f his retirement

pay. 3 Shortly thereafter, Husband became 100% disabled

from heart disea

se and opted to re

ceive veterans ’ disability b enefitsrather than ret ire men t pa y. As a

result of Husband’s waiver of retirement benefits, Wife no longer received any portion of Husband’s income based on his military ser vice. 4
In 1988, after

the payments based on Husband’s military servic e stopped, Wife filed a

motion for contempt and sanctions or, alterna tively, for m odification of the final decree. In a 19895 The trial court’s order, which should have accompanied the memorandum opinion an d was to be pr

epared by the wife’s then co unsel, was not e ntered until mu ch later. W ife has since retain ed new co unsel.

6 See Smith v. S mith , No. M 1998-0 0937-C OA-R3 -CV, 20 01 W L 2425 62 (Te nn. Ct. App. Mar. 13, 2001) (no Tenn. R. App. P. 11 application filed). -3- memorandum

opinion, 5 the trial court rejected Wife’s motion for contemp t, but stated that it w

ould mo difythe divorce decre e to provide for th

e continuation of t

he $400 monthly

alimony pay

ments for the five year period following the divorce notwithstanding Husband’ s retirement, and award her a judgment for “arrearages.” In so doing, th

e trial court fas

hioned a short-te

rm solution, but did

not addressthe issue of whether Wife was entitl ed to her previously awarded share of Husband’s retirement

benefits. Hu sband paid the judgment and the alimony as ordered. When the modified alimony award terminated, Husband stopped pay ing anything to Wife.
In 1996, Wife filed a second contempt petition, arguing that the designation of Husband’s retirement

pay as disab

ility benefi

ts deprived her of the payments ordered under the orig inal divorce decreeby reassigning her port ion to Husband, who ref used to reimburse

her. The petition a

lso sought judgment on the arrearages Husband had not paid. A hearing was h

eld on April 28, 1998 , at which Husband made the following

stipulations:
That in 198 8, he s uffer ed, on two se parat e occa sions , two s epara te hea rt att acks. In 1993, he u nderwent bypass surgery , 1995, he was diagnosed with congestive heart failure, in 1996, he became on the lis t as a heart transplant candidate. He is now receiving one hundred percent (100%) VA disability. He did not subm i t an application for this. When he was in St. Thomas, it is apparently their procedure, they mailed hisrecords, since he is a veteran, to the VA and the VA desi

gnated him as one hundred percent (100%) disabled. He receives no military retirem ent pay. The only monies th

at he receiv

es is hi s VA disability

and he has no other

income from other sourc

es. Relying on Gilliland v. Stanley , No. 3258, 1997 WL 180587 (Tenn. Ct. App. Apr. 16, 1997) (no Tenn. R. App. P. 11 a

pplication filed) , an unpublished ca se from this court, the trial court denied the relief soug

ht on June 2, 1998. Wife commenced this ap

peal.
I. Shortly after argume

nt of this case, this

court heard arg

ument in another case involving the sameissue and was informed that several other cases involving the issue were in various stages of litigation or app

eal. 6 A few months later, theWestern Section of this court releas

ed its opinion in Johnson v. Johnson , No. 02A01-9901-CV-00015, 1999 WL 713574 (T enn. Ct. App. Sept. 14, 1999), andheld that

relief was not av

ailable under Tenn. R. Civ.

P. 60.02 to a former

wife whose monthly share of the former hus

band’s military

retirement bene

fits was reduced by $181.00 per month by his waiver of a portion of his retirement pay for disability benefits. The Supreme

Court of Tennessee-4-

then g ranted per mission to appeal in Johnson and has now issued its opinion which guides our decision in the case before us. Johnson v. Johnson , 37 S.W.3d 892 (Tenn. 2001).
In Johnson , the parties ente red into a written

marital dissoluti

on ag reement (MDA) which awarded the wife “$1,845.00 per month as support” until the husband retire d, at whi ch time she would “receive one-

half of all militar

y retireme

nt benefits

due” the husband. Johnson , 37 S.W.3d at 894. After the husband’s retirement, the wife received $1,446 per month, half of the husband’s retirement

pay, for about a year. The husband “later elected, pursuant to federal law, to receive a portion of his retirement pay in the form of tax-free disability be nefits. His re tirem ent pay was reduced by the amount of those disability benefits to avoid double pay ment. . . .” Id. As a result, the wife’s share of the retirement pay was also reduced. The wife petitioned the court to modify the final decree, asking that the husband be ordered to pay alimony in the same amount her paymen

ts hadbeen reduced, o

r in the alternati

ve, tomodify the judgment pursuant to Tenn. R. Civ. P. 60.02(5) (a party may be relieved from judgment for “any other rea son justifying relief”). Id. The trial court andthis court denied r

elief to the wife, holding

that Gilliland

v. Stanley , which denied relief to the form e r spouse under ver

y similar cir

cumstances, con

trolled. The Supre

me Court grante

d Ms. Johnson’s application to appeal, and reversed.
The Supreme Court noted, that while alimony awards may be modified u nder certain circumstances,

“court orders di

strib uting marita

l property are not subject to modification.” Id . at 895. The Court then held that military retirement pay is marital property subject to distribution and that the payment

s to Ms. Johnson were peri odi c di str ibu tio ns o f ma rit al p rop ert y rat her t han ali mon y. As such, the division of

retirement pay

was not su

bjec t to later modification. Id . Rather than deciding that this conclusion precluded relie

f to Ms. Johnson, the Court determined that it had the opposite effect

. We are of theopinion, however, that Ms. Johnson’s characterization of her petition as one seeking “modifi catio n” is incorrect. The whole of her argument and the remedy she seeks indicat

e that she desire

s no more than that w

hich she origina

lly received at the time

of Mr. Johnson’s retirement: one half of the military retired pay he was entitled to receive at the time of his retirement. .

. . [Her argument] alleges that the parties agr

eed to a course o

f action, that the

trial court order ed that action, and that Mr. Johnson has failed to perform as ordered.
Id. at 895-96.
The Court looked to the terms of the M D A, and determined that “all military retirement benefits” was not defined in the document, but found the phrase to be unambiguous. Id. at 896. The Courtfound that “all

military re

tirement benefit

s” has a usual, natural, a

nd ordinary

meaning, “all amounts to which the retiree would ordinarily be entitled as a result of retirement from the military.” Id. Accordingly, the Court held that “Ms. Johnson’s interest in those ‘re tirementbenefits’ vested as of the date of entry of the court’s decree and could not be unilaterally altered .” Id. at 897.7 In re Ma rriage of G addis , 957 P.2d 1010 (Ariz. Ct. App. 199 7).
8 Towner v. Towner , 858 S.W.2d 888 (Tenn. 1993). -5- It further held:
That rule of law, however, is the very reason Ms. Johnson

prevails in this case. Once Ms. Johnson obtained a vested interest in Mr. Johnson’s “retirement benefits,” Mr. Johnson was prohibitedfrom taking any action to frustrate Ms. Johnson’s receipt of her vested interest. “Nothing in the [USFSPA] suggests that a court’s final award of a community pr

operty inte

rest must [or may

] be altered when

th e mi litary retiree obtains [disability benefits].” Gaddis, 957 P.2d at 1013. 7 Mr. John son’s failure to compensate

Ms. Johnson to the extent of her ve sted interest in his

retirement bene

fits constituted a unilateral modification of the MDA and the div

orce decree in

violation of Towner. 8
We hold that when an MDAdivides military re tirement benefit

s, the non-military spouse has a vested interest in his or her portion of those benefits as of the date of

the court’s decree. That vestedinterest cannot thereafter be unilaterally diminished by an act of the military spouse. Such an act constitutes an impermissible modification of a division of marital property and a violation of the court decree incorporating the MDA.
In so holding, we are undeterred by the United States Suprem e Court ’s ruling in Mansell v. Mansell , 490 U.S. 581 (1989). Mansell held that the USFSPA “does not grant state courts the power to t reat as property divisible upon divorce military retirement

pay that has been waived to rec ei ve veterans’ disability benefits.” The trial court’s decree did not divide Mr. Johnson’s disability benefits in violation of Mansell

. Id. at 897-898 (citations omitted).
The Court remanded

the case to the trial court with instructions that thetrial court “enforce its decree to provide Ms. Johnson with the agreed upon monthly payment . . . without dividing Mr. Johnson’s disability pay,” having al re ady determined that Ms. Johnson’s vested interest in half of Mr. Johnson’s retirement pay entitled her to $1,446.00 per month. Id. at 898.
II.
The case before us differsfrom Johnson in one respect: the Hillyers did not have an MDA. Ms. Hillyer’s r

ig h t to a share of Mr. Hillyer’s retirement pay arises from the order of the court entered as part of their divorce proceedings in 1986. The fact that the Hillyers did not have an MDA9 We note that the case relied upon by the Suprem e Court, In re Ma rriage of G addis , involved a court ordered property d ivision rather tha n an agreem ent by the par ties. Gadd is , 957 P.2d at 1010.

10 Judicial mo dification ma y be availab le under T enn. R. Civ. P . 60.02 in limited circumstances, but “the bar for attai ning reli ef is set very high. ” Johnson , 37 S.W.3d at 395 n .2.
11 We are unpersuade

d by Mr. Hillyer’s attempts to characteri ze the waiver of his reti rement pay in exchange ford isabili

ty benef its as something other than his unilateral act. Having failed to retract the waiver o r to otherwise disavowthe benefit

s of the subs

tituti on of the disabi

lity pay , he cannot seek to be relieved of

its co nse quences on the basis he did not “act. ” We n ote that, pursuant to 3 8 U.S.C . § 5305 , Husban d was only ab le to receive th e disability be nefits “upon the filing . . . of a waiver of so much of [his] ret ired or retirement pay as is equal i n amount to suc h pension or compensation.” Fu

rther, he ha

s failed t o pay his former spouse the money t hat she stopped receiving dire ctly from the military, certainly a voluntary and unilateral act on his part. In Johnson , the Supreme Court distinguis hed other effects on the amounts rec eived, notin

g, “of course,

normal fluctuations in t he value of military

retir ement benef

its not occasioned by the ac

ts of t he parti es cannot

consti tute a u nilat eral depri

vation of a vested inte rest. See Ga ddis , 957 P.2d at 1011 (describing fl

uctuation i

n militar y spouse’ s gross retirem ent pay). But cf. Pierce , 982 P.2d at 999 (likening retirementbenefits diminished by the uni lateral act of mili

tary spouse to a marital asset that ha s simply “decli ned in value”).” Johnson , 37 S.W.3d at 397 n .4.

-6- does not affect the application of Johnson to this case. 9 The conclusion re ached by th

e Supreme Courtin Joh nson is b ased to a large extent on the princi

ple that a distribut

ion of marital prop

erty cannot be later modified by

one of the partie

s. 10 This principle applies because the property division became a judgment of the court. Towner v. Towner , 858 S.W.2d 888, 890 (Tenn. 1993)

. Thus, it is the incorporatio

n of the MDA into

the court order which

made it nonmodifiable. Id .; Penland v. Penland , 521 S.W.2d 222, 224 (Tenn. 1975). The Supre me Court’s language in Johnson affirms this reasoning, “the divorce de cree’s apporti

onme nt of that marital prope rty is not subje

ct to modification.” Johnson , 37 S.W.3d at895. Similarly, the court’s primary holding in Johnson makes the absence of an MDA irrelevant: “We further hold that Ms. Johnson’s interest in those “retirement benefits” vested as of

the date of the court’s decree and could not be unilaterally a ltered.” Id. at 897. The Court further held that an act of a military former spouse

which reduces or eliminates a vested interest of the non-militar

y former sp

ouse in retiremen

t pay “cons

titute s an impermissible modification of a division of marital property and a violation of the court decree incorporating the MDA.” Id . It is just as much an impermissible modification and violation of the court decree where the division of property was ordered by the court without an MDA. 11
III.
Like Ms. Johnson, Ms. Hillyer brought this action “in order to recoup the loss . . . of support, ” in the for m of deferred distribution of marital property, that resulted from her former spouse’s election to receive disability benefits and his failure to directly make up that loss. We hold that at the entry of the divorce decree Ms. Hilly er obtained

a vested right to

forty per cent (40%) of Mr. Hillyer’s “gross military re tirement benefits” and is entitled to enforce that decree.
Acco rdi ngly, we reverse the trial court’s denial of relief to Ms. Hi

llyer and r emand this case to the trial court for proce edings necessa

ry and appr

opriate, consiste

nt with this opinion, to enforce-7-

its 198 6 de cree dis tri but ing m ari tal pro pert y, i ncluding conside ration of the amou

nt his monthly obligation to her as well as her request for arrearages. Husband shall be credite

d with such amounts as he paid in alimony in accordance with the trial court's order e xtending the duration of the alimony obligation. As the Supreme Court directed in Johnson , such enforcement shall be accomplished withoutdividing Mr. Hillyer’s disability pay . We interpret that instruction as only limitingthe trial court’s ability to order direct payments to Ms. Hilly er from the payor

of Mr. Hillyer's benefits, which we understand to be the Veterans Administration.
Costs are taxed to the ap pellee, Charles L

ee Hillyer

, for which execut

ion may issue

if nece ssa ry.

___________________________________ PATRICIA J. COTTRELL, JUDGE