Opinion ID: 2306415
Heading Depth: 2
Heading Rank: 3

Heading: Application to the McPhee QDRO

Text: [¶ 24] The McPhee QDRO awarded Sharon: a portion of each distribution of service or disability retirement benefits (whether payable to a member or retiree or a beneficiary) and death or survivor benefits (including distribution of the remaining balance of member's or retiree's accumulated contributions paid as a death benefit) if, as, and when such distributions are made as provided by the System's governing laws and rules based on member's or retiree's membership in, credit with, or contributions to the System. (Emphasis added). [10] Sharon contends that the plain meaning of the terms death or survivor benefits are any benefits relating to John that would be distributed after his death. By contrast, the MSRS and Joanne argue that death or survivor benefits are specific statutory terms that refer to benefits that would have been available if John had died prior to receiving any retirement benefits, and do not refer to the surviving spouse benefits now being paid to Joanne. For the reasons that follow, we adopt the position of the MSRS and Joanne. [¶ 25] The applicable statute governing ordinary death benefits leaves no doubt that death or survivor benefits refer to those benefits that are available if a qualifying member dies before the member's service retirement benefit becomes effective. 5 M.R.S. § 17953 (Supp.1993) (describing ordinary death benefits). [11] As an alternative to death benefits, a survivor benefit, as described in subsection 17953(2), may be elected instead. See 5 M.R.S. § 17953(2). Thus, the death or survivor benefits cited in the McPhee QDRO refer to a specific class of benefits that would have been available if John had died before receiving his service retirement benefit. They do not refer to the right of a surviving spouse to receive the continued payment of one-half of a retiree's service retirement benefit upon the death of the retiree. [¶ 26] Under the Special Plan elected by John at his retirement in 1985, the surviving spouse is entitled to a retirement benefit that is 1/2 of the amount being paid at the time of the officer's death. The payment must continue for the remainder of the surviving spouse's lifetime. 5 M.R.S. § 17852(5)(B) (emphasis added). This benefit is not part of the ordinary death benefits or survivor benefits, described in 5 M.R.S. § 17953(1), (2), but rather appears in the provision related to Service Retirement Benefits. See id. At the time John made his election, the terms of the Special Plan specifically indicated that the designation was immutable. Moreover, statutory authority for transferring these particular benefits from the surviving spouse to an alternate beneficiary under this plan was not enacted until 1997, three years after entry of the McPhee QDRO. [12] [¶ 27] As noted by the Board in its decision, the MSRS also has a rule, applicable to the parties, that states in pertinent part: Upon the death of ... the retiree ... the benefit amount to be paid to the survivor will be that required under the option elected by the retiree at retirement, as though no qualified domestic relations order had existed. 12 C.M.R. 94 411 103-7 § 15(B)(1). The MSRS rules also contain an explanatory basis statement, adopted in November 1993, [13] that is directly relevant to the McPhee QDRO: A consequence of these [1993] amendments [to the regulation] is to change the effect of an alternate payee's interest in payments to a named beneficiary other than the alternate payee under an option choice or beneficiary designation made at retirement, where the alternate payee's interest is paid as a portion of a service retirement benefit and the QDRO is post-retirement. Parties whose divorce, retirement, and QDRO are closely related in time need to recognize that the alternate payee's interest as alternate payee in these circumstances does not survive the retiree's death to affect payments to a beneficiary other than the alternate payee. The sequence in which divorce, retirement and a QDRO occur has implications for the apportionment of the parties' interests. Finally, it is important to recall that the purpose of the QDRO statute is to provide a mechanism for the payment of benefits as apportioned by the parties, not to ensure the fairness of the apportionment which it implements. 12 C.M.R. 94 411 103-11 (Basis Statement). [¶ 28] It is thus apparent that even if John and Sharon had specifically stated in their QDRO that they wished to transfer the surviving spouse service retirement benefit to Sharon, there would have been no statutory authority for doing so and the order would not have been qualified. In this regard, and contrary to Sharon's contention, section 17059(6)(A)'s directive that an alternate payee may not be deprived of [a] right or benefit, by a subsequent act or omission is inapplicable. Sharon was never awarded, nor could she have been awarded, the surviving spouse benefit in the QDRO when it was entered in 1994. [¶ 29] Because John had retired before the QDRO was approved, death and survivor benefits were not available, and it is fair to infer that the use of those terms in the QDRO was likely in the nature of boilerplate language. This inference is supported by the terms in the QDRO that precede death and survivor benefits. The preceding language directs that Sharon shall also receive any disability retirement benefits. Pursuant to statute, a member qualifies for a disability retirement benefit if disabled while in service. 5 M.R.S. § 17924(1) (Supp.1993). [14] Neither Sharon nor anyone else could ever have been eligible to be assigned disability retirement benefits for John because he was already retired at the time the QDRO was prepared, just as no person could be assigned death or survivor benefits. [¶ 30] It is apparent that the plain meaning of the terms used in the QDRO might conflict with John and Sharon's intent as reflected in the terms of their buy-out agreement and the original divorce judgment. In our prior opinion we noted, that such an ambiguity might exist, but did not resolve it. Estate of McPhee, 2006 ME 38, ¶ 9 n. 2, 904 A.2d at 403. However, we also recognized that [i]n 2002, when Sharon and John entered into the buy-out agreement, Joanne, John's soon-to-be `surviving spouse,' was destined to receive his survivor pension benefits. Id. ¶ 8, 904 A.2d at 403. We concluded that the buy-out agreement itself was an enforceable contract that allowed Sharon to recover the equivalent amount of the service retirement benefits that Joanne is now receiving from the MSRS. Id. ¶¶ 8-9, 904 A.2d at 403. Thus, the buy-out agreement may have been premised on a mutual mistake by John and Sharon as to the effect their QDRO had had on the benefits that could be paid to Sharon under the Special Plan option. [¶ 31] Although a mutual mistake may explain the conflict between the QDRO and the buy-out agreement, the controlling statutes do not authorize the MSRS to disregard the plain meaning of the terms used in the QDRO based on what the parties to the QDRO might have intended survivor benefits to mean. Within the context of the laws governing the MSRS, the term death or survivor benefits unambiguously refers to the death and survivor benefits authorized in section 5 M.R.S. § 17953. Section 17059(6)(A), as amended, does not direct or authorize the MSRS to look beyond the four corners of a QDRO to determine the underlying intent of the parties. It would defeat the purpose of QDROs to require the MSRS to qualify not only QDROs, but also the related divorce judgment and written agreements. [15] [¶ 32] Sharon also argues that the legislative history of L.D. 1850 establishes that the Legislature intended the amendments to directly address and control her case. We disagree. While it is undisputed that Sharon's former attorney wrote a letter to the chairs of the Joint Standing Committee on Labor concerning Sharon's plight during the period when other parts of the resulting amendments were being considered, the resulting legislation and committee notes do not mention Sharon or her case. The summary of the bill, as reported by the Committee states: In order to clarify that the terms of qualified domestic relations orders must be followed in implementing the laws governing the Maine State Retirement System, this amendment specifies that the rights of a beneficiary or other payee under the laws governing the Maine State Retirement system are subject to the terms of a [QDRO], provides that a [QDRO] is presumed to be in compliance with all applicable requirements and directs the Maine State Retirement System to give effect to the plain meaning of the terms of such an order despite any failure of the order to cite or reference statutory or rule provisions. The amendment makes these changes retroactive to January 1, 1985. L.D. 1850, Statement of Fact (122nd Legis.2006). This summary gives no indication either that the Legislature intended the amendment to address Sharon's case or, more generally, to cause the MSRS to construe the terms in a QDRO divorced from the meaning those terms are ascribed in the statutes and rules that authorize the QDRO and govern its administration. [¶ 33] Because the MSRS properly interpreted the plain meaning of the McPhee QDRO, we conclude that the Superior Court's judgment must be vacated and the Board's decision reinstated. This does not mean, however, that Sharon is necessarily without a remedy. A divorce court has continuing jurisdiction to clarify ambiguities and discrepancies in its judgments and orders concerning the distribution of retirement benefits. See Jed-Harbage, 2003 ME 74, ¶ 10, 825 A.2d at 352; Greenwood, 2000 ME 37, ¶ 9, 746 A.2d at 360. A substantial discrepancy concerning the distribution of retirement benefits between a judgment and the QDRO implementing the judgment constitutes an ambiguity that may justify the exercise of the court's post-judgment clarification authority. That authority includes, where appropriate, the modification of the QDRO to conform to the intent of the court's judgments. See Eller v. Bolton, 168 Md.App. 96, 895 A.2d 382, 392, 395 (2006) (recognizing the authority of the trial court to amend a QDRO where the court had expressly retained jurisdiction over the QDRO and the enforcement of the QDRO would frustrate the parties' intent as expressed in the consent judgment); Ozment v. Ozment, 11 P.3d 635, 639-40 (Okla.Civ.App.2000). [¶ 34] In Estate of McPhee, we held that the buy-out agreement required John to fulfill his earlier agreement, expressed in the divorce judgment, that Sharon would receive the post-death benefits that, following his death, have been paid by the MSRS to Joanne: Inasmuch as its terms are unambiguous, the buy-out agreement may be interpreted as a matter of law. Regardless of any ambiguity between the divorce judgment and the QDRO, the buy-out agreement requires John to fulfill his obligation under paragraph five of the divorce judgment. Joanne, as personal representative of John's estate, is, therefore, obligated to pay Sharon an amount equal to the amount she is presently receiving from the MSRS. Estate of McPhee, 2006 ME 38, ¶ 9, 904 A.2d at 403 (footnote omitted). [¶ 35] The buy-out agreement was entered into in 2002, well after the Legislature's amendment of section 17852(5) in 1997 adding a new subsection (C) that permits the surviving spouse benefit to be awarded in whole or in part to another person by a QDRO. See P.L.1997, ch. 396, § 2 (effective Sept. 19, 1997) (codified at 5 M.R.S. § 17852(5)(C) (2008)). Accordingly, because (1) it is established that the buy-out agreement entitles Sharon to receive the surviving spouse benefit, and (2) at the time the buy-out agreement was completed, Maine law recognized that the surviving spouse benefit could be awarded to Sharon through a QDRO, then (3) Sharon may, upon proper motion, seek from the divorce court an amended QDRO that prospectively directs the MSRS to pay the surviving spouse benefit directly to her in lieu of the payments the MSRS is currently paying to Joanne. [16] In the event Sharon initiates proceedings before the District Court, Joanne will have the right to defend the same. [17] We offer no opinion regarding the appropriate outcome of any future proceedings. The entry is: Judgment of the Superior Court vacated. Case remanded for entry of judgment affirming the decision of the Maine State Retirement System Board of Trustees.