Opinion ID: 2617612
Heading Depth: 1
Heading Rank: 3

Heading: the divisibility of the pension fund's enhanced value

Text: The husband asserts that only those inmarriage increases in the net worth of his retirement fund, which are attributable to the personal effort, skill or monetary contributions by either spouse, would constitute a divisible conjugal asset. He urges that any enhancement in the net worth of the fund's pre-marital balance, produced (a) by the growth of the fund's investment managed by neither spouse or (b) by appreciation, inflation, changing economic conditions or circumstances beyond the parties' control must be characterized as his separate property, even though the growth in value did actually occur during coverture. [6] The formula he fashions and tenders for determining the non-divisible enhanced value of his separate property (as distinguished from the divisible marital portion) is: (1) multiply the fund's beginning balance ($76,733.75, rounded off to $76,734) [7] at the date of marriage (March 6, 1980) (2) times the average earning of the pension account from 1980 to 1991 (12.36%, rounded off to 12%) and (3) compound annually the interest until the date of separation (April 15, 1990), arriving at a total of $238,324.16 (the non-divisible enhanced value of his separate property), (4) subtract that amount from $317,550.99 (the value of the fund on April 15, 1990) to arrive at a divisible marital asset of $79,226.83. [8] The latter figure, the husband argues, represents the divisible enhanced value of the fund and urges that the distinction between enhanced/separate (nondivisible) and enhanced/martial (divisible) property is consistent with statutory law, 43 O.S. 1991 § 121, [9] and extant jurisprudence. [10] The wife asserts the appellate court correctly determined that the total in-marriage increase in the retirement fund (the growth of the fund) is divisible marital property. She makes no claim to the retirement fund's non-divisible pre-marital balance, apparently conceding on certiorari that it had a value of $76,733.75. [11] The wife claims an equal share of the total in-marriage increase (or enhancement) in the retirement fund for the period between the date of marriage and the trial date. Section 121 [12] requires a fair and equitable division of property acquired during the marriage by the joint industry of the husband and wife. Jointly-acquired property is that which is accumulated by the joint industry of the spouses during the marriage. [13] Separate property includes, inter alio property owned by a spouse before the marriage, which retains its separate status during coverture because it is maintained in an uncommingled state [14] as a spouse's individual property. [15] Where, as here, a spouse brings separate property to the marriage, its increased or enhanced value, produced by investment managed by neither spouse or by appreciation, inflation, changing economic conditions, or circumstances beyond the parties' control, cannot be treated as a divisible marital asset unless, of course, there be proof that the increase resulted from efforts, skills or funds of either spouse. [16] The non-owning spouse's interest in the increased separate estate of the other, when established through efforts, skills or expended funds, stands confined to the enhanced value of that separate property. [17] The burden is upon the non-owning spouse to show that the enhancement is the result of either spouse's endeavors. [18] In May v. May [19] the court fashioned a formula for determining the non-owning spouse's quantum of interest in the other's separate property. The three critical value-assessment elements identified there are: (a) the cost/value of the separate property; (b) the non-divisible in-marriage enhancement caused by inflationary factors or other marketplace forces producing appreciation in price levels (unrelated to efforts of labor); and (c) the increase in value, if measurable by proof, which is due to personal efforts, skills or expended funds of the spouses' labor. The non-owning spouse would be entitled to any quantifiable increase that may be ascribable, not to mere appreciation in value, but purely to efforts of labor and expenditure of funds. It is the latter increase alone that is reachable for an equitable division as a joint spousal interest. The May formula was bottomed on Moyers [20] which holds that enhancement in value of a spouse's separate estate, attributable to personal efforts of labor by the other, constitutes divisible marital property. Carpenter v. Carpenter [21] teaches that a pension which has been  purchased through joint efforts of the spouses to the extent that it has been acquired or [has become] enhanced during the marriage is divisible marital property. [22] Pension rights which result from employment occurring before and after marriage partake of dual (separate and marital) property character. [23] Like any other asset which draws from both sources, [24] the retirement pension fund must be apportioned before the quantum of its conjugal component may be isolated and then divided between the parties. The husband's formula for separating the divisible in-marriage enhanced portion of the retirement fund  by ascertaining the value of his non-divisible separate property (the pre-marital fund balance and its enhanced value) and then subtracting that from the total value of the retirement fund at the cut-off point  is not, under the facts of this case, an unreasonable method for calculating the quantum of his interest. [25] Moreover, the approach he counsels is quite consistent with the marital-property regime laid down in Moyers, [26] Templeton [27] and May. [28] The trilogy teaches that any in-coverture enhancement in a spouse's separate asset, which is effected without any effort on the part of the other spouse does not qualify as divisible marital property. The wife's quest for one-half of the total enhanced value would call upon us to abrogate this State's long-standing regime of equitable distribution and to embrace the community property's concept of acquets and gains. [29] This may not be done sans legislative authority. [30] While we do not disapprove of the computation method pressed by the husband, we recognize that another approach might be just as, or even more, equitable in valuing this conjugal interest. There is always room for nisi prius exercise of discretion to achieve a fair and equitable result. [31] This case is no different. The proceedings to be conducted on remand shall stand confined to the single issue of ascertaining the extent of the marital component in the husband's retirement fund and to the equitable [32] division of that component alone. All other provisions in the trial court's decree shall stand undisturbed. On remand the trial judge is not precluded from utilizing, for value assessment of the marital component in the husband's pension fund, some other appraisal method which is found to be equally, or even more, equitable and consistent with the generally accepted accounting practices.