Title: Baggs v. Baggs
Citation: 2016 OK 117
Docket Number: 
State: Oklahoma
Issuer: Oklahoma Supreme Court
Date: November 15, 2016

Baggs v. Baggs Annotate this Case Justia Opinion Summary Petitioner-appellant and wife, Jennifer Baggs filed for divorce from her firefighter husband, respondent-appellee, Steven Baggs. As part of the firefighter retirement plan, the husband was vested in what was known as a DROP or Plan B option created specifically for Oklahoma Firefighters. Plan B was an alternative option for firefighters' pensions available when a vested firefighter retired. It was not funded until the firefighter chose the Plan B retirement alternative. Petitioner sought any portion of the Plan B which would be attributable to the years in which she and the husband were married, in the event he chose Plan B when he retired, after the divorce was granted. The trial court declined to divide the Plan B option as marital property and the Court of Civil Appeals affirmed. After review, the Supreme Court held that, in the event the Plan B option was chosen by a vested former spouse when the firefighter retires, it was divisible to the extent that any funds deposited into it were attributable to the marital years. Read more Want to stay in the know about new opinions from the Oklahoma Supreme Court? Sign up for free summaries delivered directly to your inbox. Learn More › You already receive new opinion summaries from Oklahoma Supreme Court. Did you know we offer summary newsletters for even more practice areas and jurisdictions? Explore them here . BAGGS v. BAGGS 2016 OK 117 Case Number: 111780 Decided: 11/15/2016 THE SUPREME COURT OF THE STATE OF OKLAHOMA NOTICE: THIS OPINION HAS NOT BEEN RELEASED FOR PUBLICATION. UNTIL RELEASED, IT IS SUBJECT TO REVISION OR WITHDRAWAL. IN RE THE MARRIAGE OF: JENNIFER D. BAGGS, Petitioner/Appellant, v. STEVEN J. BAGGS, Respondent/Appellee. APPEAL FROM THE DISTRICT COURT OF CANADIAN COUNTY Honorable Gary D. McCurdy, Trial Judge ¶0 The petitioner/appellant, Jennifer D. Baggs (wife), filed for divorce from her firefighter husband, the respondent/appellee, Steven J. Baggs (husband). As part of the firefighter retirement plan, the husband was vested in what is known as a DROP or Plan B option created specifically for Oklahoma Firefighters pursuant to 11 O.S. 2011 §49-100 et seq. Plan B is an alternative option for firefighters' pensions available when a vested firefighter retires. It is not funded until the firefighter chooses the Plan B retirement alternative. The wife sought any portion of the Plan B which would be attributable to the years in which she and the husband were married, in the event he chooses Plan B when he retires, after the divorce is granted. The trial court declined to divide the Plan B option as marital property and the Court of Civil Appeals affirmed. We hold that, in the event the Plan B option is chosen by a vested former spouse when the firefighter retires, it is divisible to the extent that any funds deposited into it are attributable to the marital years. CERTIORARI PREVIOUSLY GRANTED; COURT OF CIVIL APPEALS VACATED IN PART; TRIAL COURT REVERSED; CAUSE REMANDED WITH INSTRUCTIONS. Ann Hadrava, Edward Goldman, Oklahoma City, Oklahoma, for Petitioner/Appellant. Sherman A. Reed, Edmond, Oklahoma, for Respondent/Appellee. KAUGER, J.: ¶1 The first impression issue on appeal is whether a firefighter's alternative DROP/Plan B retirement option is divisible in a divorce, even though the option may or may not be chosen by the firefighter at retirement?1 We hold that in the event the Plan B option is chosen by the firefighter upon retirement, it is divisible to the extent any funds were deposited into it attributable to the marital years. FACTS ¶2 The petitioner/appellant, Jennifer D. Baggs (wife) married the respondent/appellee, Steven J. Baggs (husband) on October 17, 1995. The couple had two children together, a daughter and a son.2 After approximately the first 18 months of marriage, the wife did not work outside the home during the marriage. Rather, she "ran the home," took care of the finances and the children, and home schooled the children. The husband had been employed with the Oklahoma City Fire Department for approximately five years prior to the marriage, and he continued to work there throughout the marriage. He also worked a secondary job as an adjunct instructor at Oklahoma State University (OSU) in Oklahoma City for nearly a decade during the marriage, and he intermittently did yard and handyman work for extra money as well. ¶3 The wife filed for divorce in the District Court of Canadian County, Oklahoma on July 8, 2011. In August of 2011, the wife started nursing school at OSU in Oklahoma City in an attempt to become a registered nurse by 2016. She paid for school with loans and grants. The judge held a trial on July 27, 2012. At the beginning of the trial, counsel for the wife informed the court that the parties had reached an agreement regarding custody of the children, and the husband's 457 deferred compensation retirement account. Both parties agreed to joint custody of both children, with the father primary joint custodial residential parent of the girl, the mother primary joint custodial residential parent of the boy, and each parent having standard visitation of the child who was not in their primary custody. The counsel also noted that court had already signed a Qualified Domestic Relations Order (QDRO) regarding the deferred compensation account, and that it had already been submitted to the Oklahoma City Fire Department pension board. ¶4 The parties also agreed that the wife would be awarded the marital residence, and that she had already redeemed it from foreclosure by paying nearly $16,000.00 which she borrowed from family members. The remainder of the trial concerned alimony, child support, real property and personal property division, and other financial issues, as well as discussion of the value of the husband's pension with the Fire Department. In addition to his deferred compensation plan in which the parties had reached a division settlement, the husband, when he chooses to retire, will have the option to make an election between a traditional pension retirement and what is known as a Plan B or Deferred Retirement Option Plan (DROP/Plan B) which we detail forthcoming. ¶5 The wife sought any portion of the Plan B which might be attributable to the marital years, in the event the husband later decides to chose this retirement option after the divorce is granted. On April 24, 2013, the trial court issued the decree of dissolution of marriage, and awarded the wife ½ of the husbands retirement benefits, but declined to award any interest in a DROP/Plan B option stating: The Court herein declines to order Respondent to change the current form of the fund since this Court believes that it should not make investment decisions for the Parties, but it is empowered to equitably divide the marital assets as they currently exist. ¶6 The Court of Civil Appeals affirmed the trial court in so far as the Plan B issue was concerned and modified the trial court's property division. Regarding the Plan B, the appellate court relied on Ballinger v. Ballinger, 2014 OK CIV APP 92, 340 P.3d 644, a strikingly similar case in which the court determined that the Plan B retirement option available to a spouse post divorce is not divisible. The wife appealed on March 2, 2016. We granted certiorari on September 20, 2016, to address the first impression question of the divisibility of the DROP/Plan B option. IN THE EVENT THE PLAN B OPTION IS CHOSEN BY A FIREFIGHTER UPON RETIREMENT, IT IS DIVISIBLE TO THE EXTENT ANY FUNDS WERE DEPOSITED INTO IT ATTRIBUTABLE TO THE MARITAL YEARS. ¶7 The wife argues that: 1) the husband became vested during their marriage to be eligible to elect the Plan B when he retires; 2) if he does elect Plan B, it will then be funded and a portion of those funds are attributable to the pension he accrued during the marriage; and 3) because it was partially accrued during the marriage, it is at least partially marital property. She also argues that the fact that Plan B is a contingency that the husband has yet to enroll in is irrelevant, and does not cause the loss of its marital character. The husband argues that because there is no Plan B account in existence as of the date of the parties divorce, there can be no distribution to the wife. He insists that there is no reason to require a court to speculate about a contingent future distribution of a non-existent retirement benefit. A. The DROP (Deferred Retirement Option Plan)/ Plan B. ¶8 Title 11 O.S. 2011 §§49-100.1 - 143.6. govern the Oklahoma Firefighters Pension and Retirement System (the System).3 The eligible retirement date for a member of the System is the date in which the member completes 20 years of credited service or 22 years of credited service plus attainment of the age 50, depending on whether the member's start date is before or after November 1, 2013.4 Under the traditional path to retirement, any firefighter who reaches the retirement date and retires from service, is paid a monthly pension equal to their accrued retirement benefit.5 ¶9 An alternative to the traditional route is that a member may elect to participate in what is known as the DROP or commonly called Plan B. Under the DROP plan, in lieu of terminating employment and accepting the traditional retirement pension,6 an eligible member may elect to defer the receipts of benefits under the plan and continue working, but not continue to increase their years of credible service.7 Eligibility under this plan is also 20 years of credible service or 22 years, if employment was on or after November 1, 2013.8 The duration of participation may not to exceed five years and, at the conclusion of participation, employment terminates.9 ¶10 When the member participates in the DROP, the contributions of the member cease, but the employer contributions continue and interest are credited to the DROP account.10 The monthly traditional retirement benefits that would have been payable had the firefighter chosen to retire on the date they join the DROP plan are deposited into the DROP account.11 This is the first time the DROP account is funded. ¶11 At the end of the DROP period (not more than five years), the participant may then receive a lump-sum payment from the account equal to the payments which were made into the account.12 In other words, once a firefighter is vested in the pension system, he or she will also be eligible to elect the DROP plan when the firefighter retires. The day the firefighter does elect the DROP plan, their pension payments would be calculated and deposited monthly into the DROP account as long as the firefighter continues to work for up to 60 months maximum. Employer contributions and interest are also credited to the account. Upon leaving employment, the firefighter would then receive both a lump-sum payment, and a monthly pension payment (calculated as if they had retired on the day they elected to participate in the DROP plan.)13 ¶12 Enrolling in the DROP is merely another way for firefighters to begin receiving pension benefits. The advantage of not opting to do the DROP would be a higher pension benefit based on a longer number of credible service years. On the other hand, the advantage of opting to do the DROP, would be receiving a lump-sump payment, and continuing to receive a salary for a few extra years, even though ultimately, the monthly pension benefit would be lower than if they had started collecting traditional retirement benefits. B. Retirement Benefits May be Divisible Marital Property Even if They Rest on a Contingency Such as Plan B. ¶13 A district court possesses power in a divorce proceeding to divide the marital estate.14 Title 43 O.S. 2011 §121 requires a fair and just division of jointly acquired property upon divorce.15 While §121 has specific provisions for military retirement, it does not generally address any pensions much less "contingent" type pensions such as the Plan B.16 ¶14 Generally, a pension right burdened with a conjugal interest is a type of marital asset divided between the parties to a divorce.17 We have said that "absent a specific statutory exception. . . a trial court may consider the pension as jointly acquired, make a grant of that property to one spouse and then make a compensating award to the other spouse."18 The contingent nature of a pension is irrelevant. For example, in Carpenter v. Carpenter, 1983 OK 2, 657 P.2d 646 , we addressed pensions acquired through spousal efforts during the marriage and determined them to be divisible marital property under the predecessor to 43 O.S. 2011 §121.19 ¶15 Carpenter concerned the divorce of a couple who had been married for thirty-six years. At the time of the divorce, the husband had a pension and a profit sharing plan, in which he was a participant, with benefits paying upon his death, disability or retirement. The trial court held that the profit sharing plan was divisible marital property. The Court affirmed, stating: ¶23 In addressing this issue, we do not deem it significant whether the pension is "vested" in the sense that it is now due and owing, whether it is conditional or contingent upon continued employment for a prescribed period or terminable upon the occurrence nor non-occurrence of some future event. (See In Re Marriage of Brown, 15 Cal. 3d 838 , 126 Cal. Rptr. 633, 544 P.2d 561 (1976); Hutchins v. Hutchins, 71 Mich. App. 361, 248 N.W.2d 272 (1977).) In any of these events, it is a valuable right which has been purchased through joint efforts of the spouses to the extent that it has been acquired or enhanced during the marriage, and as such becomes jointly acquired property during the marriage. DeRevere v. DeRevere, 5 Wash. App. 741, 491 P.2d 249 (1971).20 ¶24 The practical problems inherent in "dividing" a pension which is unmatured or contingent at the time of a divorce are resolved within the language of 12 O.S. 1981 § 1278 itself. It must be divided between the parties "as may appear just and reasonable, by a division of the property in kind, or by setting the same apart to one of the parties, and requiring the other thereof to pay such sum as may be just and proper to effect a fair and just division thereof." ¶16 The Oklahoma Firefighter Pension and Retirement System, 11 O.S. 2011 §49-126 expressly addresses the divisibility of firefighter pensions as marital property. It provides for qualified domestic orders, and recognizes former spouses as alternative payees to pension benefits which have been determined to be marital property.21 Included within its provisions is the express recognition that the DROP/Plan B retirement option is divisible marital property to the extent any benefits which are deposited into it were accumulated during the marriage. Title 11 O.S. 2011 §49-126(9) provides: The alternate payee [former spouse] shall have a right to receive benefits payable to a member of the System under the Oklahoma Firefighters Deferred Option plan provided for pursuant to Section 49-106.1 of this title, but only to the extent such benefits have been credited or paid into the member's Oklahoma Firefighters Deferred Option Plan account during the term of the marriage. Clearly, the Plan B retirement option is divisible marital property because when it is chosen, it is then partially funded with a portion of retirement funds which are attributable to the marital years. The technicality here is simply that it cannot be divided until, at some point in the future, it is chosen, even if that choice occurs post-divorce. ¶17 Other courts have unanimously determined, under similar DROP systems to Oklahoma's, that a spouse is entitled to a portion of that part of their ex-spouse's retirement benefits which are attributable to the marital estate, even if the ex-spouse elects the retirement option deferred plan after the divorce.22 The only case which does not fall in line with these other courts and our prior caselaw is the Oklahoma Court of Civil Appeals case of Ballinger v. Ballinger, 2014 OK CIV APP 92, 340 P.3d 644, which has facts strickingly similar to this cause. To the extent Ballinger can be read to preclude equitable division of a DROP retirement plan, it is hereby overruled. ¶18 Implicit in the rationale of Carpenter v. Carpenter, 1983 OK 2, 657 P.2d 646 , is the idea that pensions, contingent upon the occurrence or non-occurrence of some future event, are valuable rights if the contingency has been acquired through joint efforts of the spouses -- to the extent that it has been acquired or enhanced during the marriage, and as such becomes jointly acquired property during the marriage. Pursuant to 11 O.S. 2011 §49-126(9), supra, firefighter DROP benefits were contemplated by the Legislature as being divisible marital property. ¶19 Firefighter pension rights are vested when a firefighter retires or could retire because the firefighter is eligible for pension benefits.23 In this cause, the firefighter husband had worked as a firefighter for five years prior to the marriage and an additional sixteen years during the marriage giving him the minimal twenty years necessary, by the time the divorce was filed, to vest in his pension benefits and to vest in his ability to select the Plan B option upon retirement. Although the Plan B is not immediately divisible because it has not yet been funded, or selected, if it is chosen upon his retirement, the former wife is entitled to any portions thereof which were accrued during the marriage. While this calculation may not be easy to make, it is not impossible, nor is its difficulty a reason to deny to the wife what is fair, just and reasonable. Accordingly, the cause is reversed and remanded to the trial court to enter a final divorce decree which protects the wife's interest in the Plan B retirement option should the husband chose to retire and select this option upon his retirement. CONCLUSION ¶20 A district court possesses power in a divorce proceeding to divide the marital estate.24 Title 43 O.S. 2011 §121 requires a fair and just division of jointly acquired property upon divorce.25 Generally, a pension right burdened with a conjugal interest is a type of marital asset divided between the parties to a divorce.26 ¶21 Under the rationale of Carpenter v. Carpenter, 1983 OK 2, 657 P.2d 646 , pensions contingent upon the occurrence or non-occurrence of some future event, are valuable rights if the contingency has been acquired through joint efforts of the spouses during the marriage, and as such becomes jointly acquired property during the marriage. Pursuant to 11 O.S. 2011 §49-126(9), supra, firefighter DROP benefits were contemplated by the Legislature as being divisible marital property. Consequently, the cause is reversed and remanded to the trial court to enter a final divorce decree which protects the wife's interest in the Plan B retirement option should the husband chose to retire and select this option upon his retirement. CERTIORARI PREVIOUSLY GRANTED; COURT OF CIVIL APPEALS VACATED IN PART; TRIAL COURT REVERSED; CAUSE REMANDED WITH INSTRUCTIONS. ALL JUSTICES CONCUR. FOOT