Opinion ID: 2435790
Heading Depth: 1
Heading Rank: 3

Heading: the residuary clause

Text: The court of appeals held that, as a matter of state law, the residuary clause did not reach the military retirement. The court further concluded that as a pure partition action, Alene's suit was prohibited by the 1990 amendment because the residuary clause does not treat the military retirement benefits. We reject the court of appeals' first holding. Consequently, we reach a somewhat different issue on the construction and application of the federal amendment.
The rules of contract law govern the construction of a property settlement agreement incorporated into a divorce decree. If the agreement is worded so that we can give it a certain or definite legal meaning, it is not ambiguous and we construe it as a matter of law. Coker v. Coker, 650 S.W.2d 391, 393 (Tex.1983). Here the residuary clause is clear and unambiguous. It unambiguously includes the community property part of Norbert's military (and Civil Service) retirement benefits. Under Texas law when the parties divorced, a divorce decree's property settlement provisions could divide or assign the community portion of the retirement benefits. Under the terms of the residuary clause, Norbert surrendered [his] community interests in this retirement benefits property because the words used unambiguously include them. See Partin v. de Cordova, 464 S.W.2d 956, 957 (Tex.Civ.App.Eastland 1971, writ ref'd); see also Phillips v. Parrish, 814 S.W.2d 501, 503 (Tex.App. Houston [1st Dist.] 1991, writ denied).
In concluding that the Buys' residuary clause did not reach military retirement benefits, the court of appeals divided the reported cases into two inconsistent lines. The court then chose to follow the line it construed as requiring express mention of military retirement somewhere in the settlement agreement. We conclude the court of appeals erred in analyzing residuary clause opinions of other courts of appeals, as well as its own prior opinions. The court of appeals' analysis looked only at whether an opinion held that a residuary clause covered retirement benefits. The court of appeals did not differentiate the cases based on the different provisions in the residuary clauses, particularly whether the language of the specific residuary clauses at issue necessarily included retirement benefits. As examples, the court of appeals relied on Dunn v. Dunn, 703 S.W.2d 317 (Tex.App. San Antonio 1985, writ ref'd n.r.e.); Yeo v. Yeo, 581 S.W.2d 734 (Tex.Civ.App.San Antonio 1979, writ ref'd n.r.e.); and Dessommes v. Dessommes, 505 S.W.2d 673 (Tex.Civ. App.Dallas 1973, writ ref'd n.r.e.). Each of these cases had a residuary clause referring to property in possession of the party. In these cases, the main holding was that retirement benefits were intangible and not possessed by the party whose employer granted them in his or her name. The residuary clauses did not unambiguously cover retirement benefits. In contrast, the courts in Tharp v. Tharp, 772 S.W.2d 467 (Tex.App.Dallas 1989, no writ), and Jacobs v. Cude, 641 S.W.2d 258 (Tex.App.Houston [14th Dist.] 1982, writ ref'd n.r.e.), considered broad residuary clauses without the possession language or a similar limitation. In those cases, the courts of appeals held the divorce judgments effective to convey the retirement benefits not otherwise specifically mentioned. Both opinions and commentary have elaborated on this distinction between possession residuary clauses and other clauses. See, e.g., Phillips v. Parrish, 814 S.W.2d at 504; Dunn, 703 S.W.2d at 319; William Reppy, Jr., The 1990 U.S.F.S.P.A. Amendment: No Bar to Recognition of Tenancy in Common Interests Created by Pre-McCarty Divorces That Fail to Divide Military Retirement Benefits, 29 Idaho L. Rev. 941, 971 n. 81 (1992). The court of appeals erred in its conclusion that cases such as Dunn , Yeo , and Dessommes held that a residuary clause could never divide military retirement benefits without specifically mentioning them.
Because we hold that the residuary clause was effective to award the community retirement benefits to Alene, our evaluation of how the 1990 amendment applies differs greatly from the court of appeals' analysis. The community part of the unaccrued and unmatured military retirement benefits were subject to division as a marital property asset. Under state law, Alene owns the retirement benefits because of the property settlement contract incorporated into the divorce judgment. For the 1990 amendment to the Former Spouses' Protection Act to mean that the divorce judgment did not treat the military retirement, Congress would have had to intend that residuary clauses legally effective under state law were nullified by the amendment about military retirement benefits. Put another way, Congress would have had to intend that military retirement benefits the divorce decree already gave to a party years ago under applicable state law were taken away by enactment of the statute. Nothing on the face of the federal statute requires such a result. The statute's language just as easily leads to the conclusion that a state court judgment effective to award community military retirement treats military retirement. Construing the statute to take away the existing award would violate a primary principle of federal statutory constructionthat in construing federal statutes courts should strive to leave state family law unaltered. As the Supreme Court stated: On the rare occasion when state family law has come into conflict with a federal statute, this Court has limited review under the Supremacy Clause to a determination whether Congress has positively required by direct enactment that state law is preempted. A mere conflict in words is not sufficient. State family and family-property law must do major damage to clear and substantial federal interests before the Supremacy Clause will demand that state law be overridden.... The pertinent questions are whether the right as asserted conflicts with the express terms of federal law and whether its consequences sufficiently injure the objectives of the federal program to require nonrecognition. Hisquierdo v. Hisquierdo, 439 U.S. 572, 581, 583, 99 S.Ct. 802, 808, 809, 59 L.Ed.2d 1 (1979)(internal quotations and citations omitted). We may harmonize the statute with state law by enforcing the divorce judgment's award of military retirement benefits, giving effect to a property settlement agreement incorporated into an existing judgment, and acknowledging that the legislative history expressly sanctions the result. The legislative purpose was to preclude reopening a final divorce judgment. Here we do not reopen a divorce decree, but allow Alene to enforce the award made to her under the decree. We conclude that the residuary clause of the divorce decree treats military retirement benefits within the meaning of 10 U.S.C. § 1408(c)(1).
In the trial court, Norbert Buys argued that the 1990 amendment deprived the court of jurisdiction because it did not mention military retirement, and therefore, under his analysis did not treat it. He filed a motion to dismiss, a second motion to dismiss and plea to the jurisdiction, and an amended second motion to dismiss and plea to the jurisdiction, all of which presented different shades of his jurisdictional argument. Norbert also pled and argued the statute as a defensive matter. He offered it as a ground for summary judgment and a conclusive defense in his motion for new trial. The diversity of language about the statute perhaps explains his positions. However, we find his position unpersuasive. We acknowledge that language from opinions from other jurisdictions suggests or states that a divorce decree before June 25, 1981 must expressly mention military retirement benefits to treat them under section 1408(c)(1). We may distinguish all these cases because none of them considered an unambiguous residuary clause effective under state law to award the military retirement benefits. Further, by examining the factual context of each case, we conclude that the broad language was meant to apply only to the factual contexts at issue, and therefore not to a legally effective residuary clause. We review the factual contexts of several of these cases. In Kemp v. United States Department of Defense, 857 F.Supp. 32, 33 (W.D.La.1994), the court emphasized that the state court judgment of divorce did not contain any reference to Mr. Kemp's military retirement pay. In Kemp , the court concluded that the divorce decree did not treat military retirement. The factual context, however, was that there was a 1978 divorce judgment (without a residuary clause) followed by two subsequent partition actions in 1990 and 1992, the latter actions being to divide the military retirement benefits. In essence, the facts show a pure subsequent partition action. The Kemp opinion cited Dunham v. Dunham, 602 So.2d 1139 (La.App. 1st Cir.), writ denied, 605 So.2d 1375 (La.1992), on what federal law required. The facts in Dunham (marriage 1959, divorce 1974 with no residuary clause or specific mention of military retirement, partition suit for military retirement benefits 1990) make it clear, however, that Dunham also was a pure partition suit to reopen the property division to reach the military retirement benefits. See Dunham, 602 So.2d at 1140, 1142-43. Likewise, in Johnson v. Johnson, 605 So.2d 1157, 1161 (La.App. 2d Cir.), writ denied, 608 So.2d 152 (La.1992), the court wrote that section 1408(c)(1) required specific treatment of military retirement benefits in the divorce judgment. The factual context, in contrast, was a 1976 divorce with a property settlement agreement that did not mention military retirement benefits and did not have an unambiguous residuary clause sufficient to award military retirement benefits under state law. Again, the court essentially dealt with a pure partition suit rather than a suit enforcing an award under the divorce judgment. The court confronted a different construction issue in Terry v. Lee, 314 S.C. 420, 445 S.E.2d 435 (1994). The parties' 1968 California divorce judgment had a provision that if a court of competent jurisdiction later should determine that a party was possessed of community property unknown to the party or not specified in the property settlement, then the party agreed to pay the other party one-half of the fair market value of such property upon request. Terry, 445 S.E.2d at 436-37. The court concluded that the provision did not treat the military retirement benefits because at the time of the divorce the benefits were not divisible property under McCarty , and hence were not included as marital property contemplated by the provision. Terry, 445 S.E.2d at 437-38. A similar argument asking the appellate court to strain to find military retirement benefits treated under a general order was presented in White v. White, 623 So.2d 31 (La.App. 1st Cir.1993). The 1967 divorce did not partition the community property of the parties, and made no mention of military retirement benefits. The former wife argued that the entry of a permanent injunction when the parties legally separated enjoining the former husband from alienating, disposing or mortgaging the community property was enough to treat or reserve jurisdiction to treat military retirement benefits under section 1408(c)(1). White, 623 So.2d at 33. The court concluded, The clear wording of this federal preemption statute requires a specific treatment of military retirement benefits in the division of the community or a specific reservation of jurisdiction to treat military retirement benefits as community property. White, 623 So.2d at 34. The court further suggested that any reservation of military benefits should include a fractional amount. White, 623 So.2d at 34. In context, the White holding is that a broad reference to community property in an injunctive order is not enough to reserve treatment of military retirement benefits. White does not compel the conclusion that a broad residuary clause in the divorce decree which is actually effective to award the military retirement benefits is not treatment under the 1990 federal amendment. Opinions considering post-divorce suits to divide retirement rights equitably as marital property subject to division after a final divorce decree, with no claim that the divorce decree or its property settlement awarded the military retirement to a party, simply do not apply. Cf. Johnson v. Johnson, 824 P.2d 1381, 1382 (Alaska 1992)(pure post-divorce equitable suit in which divorce property settlement provisions did not specify husband's military retirement benefits in any way); Hollyfield v. Hollyfield, 618 So.2d 1303, 1304-05 (Miss.1993)(pure post-divorce equitable suit in which military retirement benefits were not mentioned in the [divorce] judgment, so decree neither treated, nor reserved jurisdiction to treat military retired pay); Mings v. Mings, 841 S.W.2d 267, 268 (Mo.App.1992)(equitable action for division of alleged marital property in which military retirement was not awarded by divorce decree); Mote v. Corser, 810 S.W.2d 122 (Mo.App.1991)(divorce decree did not award or mention military retirement such that pure equitable claims in later partition suit were not enough to meet federal requirements). We do not hold that the residuary clause is only broad enough to embrace the one-half of the community interest the trial court awarded Alene. Because she limited the request for relief in her application for writ of error to the retirement benefit sums the trial court awarded, we do not consider the issue whether the clause conveyed greater interests. Similarly, we do not imply that the residuary clause touches only one-half of the community part of the Civil Service retirement. Because the clause covers the trial court sum, we reach the same result as the court of appeals judgment on Civil Service benefits. Also, we do not consider and express no opinion on whether the 1990 amendment preempts a community property state court's ability to partition tenancy in common military retirement benefits earned during marriage but not awarded in the final divorce decree. Compare Walton v. Lee, 888 S.W.2d 604 (Tex.App.Beaumont 1994, writ denied), with Knowles v. Knowles, 811 S.W.2d 709 (Tex.App.Tyler 1991, no writ); see also Reppy, The 1990 U.S.F.S.P.A. Amendment, 29 Idaho L. Rev. at 961.