Opinion ID: 1715069
Heading Depth: 1
Heading Rank: 2

Heading: wife's application for modification of alimony

Text: In an appellate court's review of a ruling on a general demurrer, the court is required to accept as true all the facts which are well pled and the proper and reasonable inferences of law and fact which may be drawn therefrom, but not the conclusions of the pleader. Talbot v. Douglas County, 249 Neb. 620, 544 N.W.2d 839 (1996); Fox v. Metromail of Delaware, 249 Neb. 610, 544 N.W.2d 833 (1996). In determining whether a cause of action has been stated, the petition is to be construed liberally. If as so construed the petition states a cause of action, the demurrer should be overruled. Talbot, supra . Neb.Rev.Stat. § 42-365 (Reissue 1993) provides that [u]nless amounts have accrued prior to the date of service of process on a petition to modify, orders for alimony may be modified or revoked for good cause shown.... Good cause means a material and substantial change in circumstances and depends upon the circumstances of each case. Creager v. Creager, 219 Neb. 760, 366 N.W.2d 414 (1985). The determination of good cause necessary for modification of a dissolution decree is a matter of discretion for the trial court, and its decision will be reviewed on appeal de novo on the record and will be reversed upon an abuse of discretion. See, Adrian v. Adrian, 249 Neb. 53, 541 N.W.2d 388 (1995); Chamberlin v. Chamberlin, 206 Neb. 808, 295 N.W.2d 391 (1980). The legal sufficiency of the wife's amended application to modify decree depends entirely upon whether the USFSPA as interpreted in Mansell v. Mansell, 490 U.S. 581, 109 S.Ct. 2023, 104 L.Ed.2d 675 (1989), precluded the district court from considering a former spouse's military disability benefits and corresponding waiver of retirement pension benefits in determining whether there had been a material change in circumstances justifying modification of the decree. We have not ruled directly on this question, but it has been addressed by other state courts. Particularly instructive is the decision in Clauson v. Clauson, 831 P.2d 1257 (Alaska 1992), which both parties cite in their briefs. In that case, the veteran was awarded disability benefits 4 years after the decree of dissolution. The statutory waiver of a corresponding portion of his retirement pension resulted in the elimination of a monthly payment in the amount of $168 which the veteran's former spouse had been awarded as her share of the retirement pension. The former spouse filed an application seeking modification of the decree based upon a material change in circumstances, and the trial court granted the application and required the veteran to pay his former spouse $168 per month retroactive to the date of the veteran's waiver. On appeal, the Supreme Court of Alaska observed: [E]quities clearly reside with [the former wife]. In reality, she is not even seeking to modify the divorce decree. [The former husband] did that, unilaterally and extrajudicially, when he decided to waive his retirement pension in order to collect disability benefits. [The former wife] is merely trying to reestablish the status quo through her motion [to modify the parties' divorce decree]. Id. at 1261. After concluding that Mansell unequivocally prevented state courts from awarding a veteran's disability benefits received in place of waived retirement benefits to a former spouse, the Clauson court focused upon the issue of whether federal law also precludes [state] courts from considering the economic impact that a waiver of military retirement pay and corresponding receipt of disability pay has on the parties to a divorce. 831 P.2d at 1262. Noting that such benefits would be relevant to the equitable division of marital property under Alaska law in the absence of federal preemption, the court examined cases articulating the scope of federal preemption of state domestic relations law and concluded that neither the USFSPA nor Supreme Court decisions, including Mansell, preempted state courts from considering, when equitably allocating property upon divorce, the economic consequences of a decision to waive military retirement pay in order to receive disability pay. 831 P.2d at 1264. See, also, In re Marriage of Weberg v. Weberg, 158 Wis.2d 540, 463 N.W.2d 382 (Wis.App.1990). Although the Clauson court found that the wife's loss of her interest in military retirement benefits was not insignificant and likely justifies a redistribution of the parties' marital property, 831 P.2d at 1261, it imposed a significant limitation on that redistribution, stating: We are aware of the risk that our holding today might lead trial courts to simply shift an amount of property equivalent to the waived retirement pay from the military spouse's side of the ledger to the other spouse's side. This is unacceptable. In arriving at an equitable distribution of marital assets, courts should only consider a party's military disability benefits as they affect the financial circumstances of both parties. Disability benefits should not, either in form or substance, be treated as marital property subject to division upon the dissolution of marriage. ... The [lower] court was clearly trying to regain the status quo as if the Mansell decision did not exist. The effect of the order was to divide retirement benefits that have been waived to receive disability benefits in direct contravention of the holding in Mansell. This simply cannot be done under the Supremacy Clause of the federal constitution. 831 P.2d at 1264. The court therefore vacated the lower court's order and remanded for further proceedings consistent with its opinion. In Torwich v. Torwich, 282 N.J.Super. 524, 660 A.2d 1214 (1995), the former wife of a military retiree sought modification of the decree of dissolution when her fixed percentage share of the retirement pension decreased in value from $249 per month to $97 per month as a result of his waiver of retirement benefits in order to receive disability benefits. The court determined that this had a substantial adverse impact on [the former wife's] equitable distribution. Id. at 529, 660 A.2d at 1216. The court specifically held that while Mansell v. Mansell, 490 U.S. 581, 109 S.Ct. 2023, 104 L.Ed.2d 675 (1989), prohibits distribution of retirement pay waived by the veteran in order to receive disability benefits, that does not mean that other adjustments to the judgment cannot be made when such disability payments commence and reduce one spouse's receipts from his or her share of the other spouse's pension or retirement benefits. 282 N.J.Super. at 529, 660 A.2d at 1216. Thus, the court ordered the dissolution judgment to be reconsidered to perfect an equitable distribution. Id. In Vitko v. Vitko, 524 N.W.2d 102 (N.D. 1994), a former husband challenged a lower court judgment distributing the marital estate, contending that he acquired much of his property with his military disability payments and that, therefore, the property should not be included in the marital estate subject to distribution. The trial court had expressly excluded the former husband's disability benefits from the equitable property distribution. However, citing Clauson v. Clauson, 831 P.2d 1257 (Alaska 1992), the trial court considered the former husband's disability income `so as to determine the financial circumstances of each party to the divorce.' 524 N.W.2d at 104. On appeal, the North Dakota Supreme Court determined that `when making property distributions or awarding alimony the trial court may consider military disability retirement pay as future income ... relevant to a determination of the parties' ultimate economic circumstances.'  Id. at 103 (quoting In re Marriage of Kraft, 119 Wash.2d 438, 832 P.2d 871 (1992)). Moreover, in discussing Mansell, the court concluded that we need not give a broader preemptive effect to the Mansell holding than the Mansell court itself recognized in the `precise and limited' language of a particular federal statute. Id. at 103-04. In the end, the North Dakota Supreme Court held that the trial court's distribution of the parties' marital property was not clearly erroneous. The rationale that benefits exempt from distribution under federal law may nevertheless be taken into consideration in assessing the relative financial condition of the parties in a dissolution action was applied by this court in Pyke v. Pyke, 212 Neb. 114, 321 N.W.2d 906 (1982), decided prior to enactment of the USFSPA. We held in that case that although military retirement pensions could not be included in the marital estate under the Supreme Court's decision in McCarty v. McCarty, 453 U.S. 210, 101 S.Ct. 2728, 69 L.Ed.2d 589 (1981), the district court could nevertheless consider the fact that the retiree would have the pension as a source of income for his own maintenance and support in determining whether he should pay alimony to his former spouse and if so, the amount of such alimony. Similarly, in Creager v. Creager, 219 Neb. 760, 366 N.W.2d 414 (1985), we observed that increases in a military retiree's pension and disability benefits could be considered by the district court in determining whether he was entitled to modification of an alimony award because of his loss of employment. The purpose of alimony is to provide for the continued maintenance or support of one party by the other when the relative economic circumstances make it appropriate. Reichert v. Reichert, 246 Neb. 31, 516 N.W.2d 600 (1994). In this case, the relative economic circumstances of the husband and the wife have been altered significantly by the award of service-connected disability benefits to the husband. The wife's economic circumstances have deteriorated through no fault of her own, since the monthly amount which she receives from the retirement pension has been significantly decreased, and she now has the added economic burden of satisfying the judgment in the husband's favor, which we affirm today. The husband's economic circumstances have improved, since his income has remained stable and a portion of it is now exempt from taxation. We hold that while a Nebraska court may not include service-connected disability benefits awarded to a military retiree as a part of a marital estate under Mansell v. Mansell, 490 U.S. 581, 109 S.Ct. 2023, 104 L.Ed.2d 675 (1989), it may consider such benefits and the corresponding waiver of retirement pension benefits required by federal law in determining whether there has been a material change in circumstances which would justify modification of an alimony award to a former spouse who was previously awarded a fixed percentage of the retirement pension benefits. We, therefore, conclude that the district court erred in sustaining the husband's demurrer and dismissing the wife's amended application to modify decree. We further conclude that there has been a substantial and material change in the relative economic circumstances of the parties which would justify an increase in the amount of alimony which the husband is obligated to pay the wife in the absence of evidence that her income from other sources has increased. However, we are unable to resolve the matter on appeal because the record before us does not contain evidence disclosing the current and projected future amounts of the husband's retirement pension and service-connected disability benefits, or other information which may be relevant to the current economic circumstances of the parties. We, therefore, remand case No. S-96-629 to the district court for further proceedings consistent with this opinion. On remand, we instruct the district court to consider the husband's military disability benefits only to the extent receipt of the benefits affect the relative financial circumstances of the parties. We note, as did the court in Clauson v. Clauson, 831 P.2d 1257 (Alaska 1992), that our holding does not permit the district court to treat service-connected disability benefits as divisible marital property in form or substance. JUDGMENT IN NO. S-95-728 AFFIRMED AS MODIFIED. JUDGMENT IN NO. S-96-629 REVERSED, AND CAUSE REMANDED FOR FURTHER PROCEEDINGS.