Court Opinion

ID: 3151509
Source: CourtListenerOpinion
Date Created: 2015-11-03 14:05:24.790849+00
Date Added: 2024-06-11T11:55:35.036645
License: Public Domain

STATE OF MINNESOTA
                              IN COURT OF APPEALS
                                    A15-0163

                                 In re the Marriage of:

                              James Allen Ertl, petitioner,
                                     Appellant,

                                           vs.

                                  Diane Martha Ertl,
                                     Respondent.

                               Filed November 2, 2015
                               Reversed and remanded
                                    Reilly, Judge

                             Dakota County District Court
                              File No. 19AV-FA-11-491

Kay Nord Hunt, Lommen Abdo, P.A., Minneapolis, Minnesota; and

John R. Schulz, McGrann Shea Carnival Straughn & Lamb, Chartered, Minneapolis,
Minnesota (for appellant)

Andrew V. Moran, Eagan, Minnesota (for respondent)

      Considered and decided by Reilly, Presiding Judge; Schellhas, Judge; and

Stoneburner, Judge.*

                                   SYLLABUS

      1.     Parties’ written agreement to limit division of property in marriage-

dissolution action to husband’s “retirement benefits” is narrowly construed and does not

*
 Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to
Minn. Const. art. VI, § 10.
include a presumptive award of “disability benefits” unless clearly set out in the

dissolution judgment.

      2.     A district court deprives a litigant of due process of law by modifying a

marriage-dissolution judgment and decree without providing litigant with notice or a

meaningful opportunity to respond.

                                     OPINION

REILLY, Judge

      In this post-dissolution dispute regarding whether the husband’s disability benefits

are included in the parties’ agreement to divide “retirement assets,” appellant-husband

James Allen Ertl (husband) challenges the district court’s division of his disability

benefits and the district court’s award of additional funds from husband’s retirement

account to respondent-wife Diane Martha Ertl (wife). Because we determine that the

district court erred both by ruling that “disability payments” are indistinguishable from

“retirement assets,” and by awarding additional funds to wife without affording husband

notice and an opportunity to respond, we reverse and remand.

                                        FACTS

      Husband and wife were married in August 1980 and separated in November 2010.

In May 2011, the parties divorced pursuant to a stipulated judgment and decree (the

Judgment). Husband and wife were each 53 years of age at the time of the Judgment.

Husband was employed by Independent School District 196 (ISD 196) as a teacher at the

time of the divorce. The Judgment divides husband’s Teachers Retirement Association

                                           2
(TRA) retirement benefits valued at $2,769 per month, and his Fidelity 403(b) account,

valued at $151,679. The Judgment further provided:

                    The parties have agreed to divide [husband’s] TRA
             benefits as of December 31, 2010. It is the intent of the
             parties to exclude [husband’s] “Rule of 90” benefits from the
             calculation of TRA benefits that are being awarded to [wife].
             If [husband] is able to work continuously as a teacher and
             accumulate additional benefits that qualify him for the “Rule
             of 90” benefit payments, the parties have agreed to amend the
             Judgment and Decree and have the Court award and transfer
             to [wife] an additional $20,000 from [husband’s] share of his
             Fidelity 403(b) divided account as additional property
             settlement to [wife].

      The Judgment provides for division of the retirement accounts as follows:

             [Husband’s] Ameriprise TSA account shall be divided
             between the parties. From this account, [wife] is awarded
             one-half of balance, plus any earnings on the amount, less any
             losses on the amount, from December 31, 2010 to the date of
             distribution or rollover to [wife]. . . . Each party shall receive
             his or her interest pursuant to a Qualified Domestic Relations
             Order[.]

             [Husband’s] Fidelity 403(b) account shall be divided between
             the parties. From this account, [wife] is awarded $20,000,
             plus any earnings on the amount, less any losses on the
             amount, from December 31, 2010 to the date of distribution
             or rollover to [wife]. Thereafter, [wife] is awarded one-half of
             the remaining balance as of December 31, 2010, plus any
             earnings on the amount, less any losses on the amount, from
             December 31, 2010 to the date of distribution or rollover to
             [wife]. . . . Each party shall receive his or her interest
             pursuant to a Qualified Domestic Relations Order[.]

             If [husband] is able to work continuously as a teacher and
             accumulate additional benefits that qualify him for the “Rule
             of 90” benefit payments, the Judgment and Decree shall be
             amended and the Court shall award and transfer to [wife] an
             additional $20,000 from [husband’s] share of [his] Fidelity

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              403(b) divided account as additional property settlement to
              [wife] . . . .

              [Husband’s] TRA retirement benefits shall be divided
              between the parties. [Wife] is awarded a fifty percent (50%)
              interest in these benefits determined as of December 31,
              2010, deferred; [wife’s] award of benefits shall include cost
              of living or other increases on her portion of the benefits
              awarded . . . . Each party shall receive his or her interest
              pursuant to a Qualified Domestic Relations Order[.]

       In May 2011, the parties signed a Qualified Domestic Relations Order (QDRO)

and Judgment to Divide Public Pension Benefits.1 The QDRO provides that husband

“shall assign and [wife] is awarded any and all benefits from [husband’s TRA].” The

parties agreed that:

                      [T]he State of Minnesota [TRA] will pay benefits to
              [wife] as follows: [wife] is awarded fifty percent (50%)
              interest in [husband’s] benefits determined as of
              December 31, 2010, deferred; [wife’s] award of benefits shall
              include cost of living or other increases on her portion of the
              benefits awarded. Any benefits accumulated thereafter shall
              be the property of [husband] and [wife] shall have no interest
              in the same.

       The parties reserved the issue of spousal maintenance until after the sale of the

parties’ homestead. Following that event, the parties stipulated to entry of an order

amending the Judgment providing that husband would pay temporary spousal

maintenance to wife of $500 per month until wife died or remarried, husband died, or

1
  Under the Employee Retirement Income Security Act (ERISA), a QDRO “creates or
recognizes the existence of an alternate payee’s right to, or assigns to an alternate payee
the right to, receive all or a portion of the benefits payable with respect to a participant
under a plan,” which meets certain specificity and substantive requirements. Langston v.
Wilson McShane Corp., 828 N.W.2d 109, 113-14 (Minn. 2013) (quoting 29 U.S.C.
§ 1056(d)(3)), cert. denied, 134 S. Ct. 212 (2013).

                                             4
husband was terminated from his employment or “commences receipt of monthly

retirement benefits from [his TRA] defined benefit pension plan, whichever occurs first.”

       Husband applied for disability benefits in October 2013 and received notice from

TRA in June 2014 that his application to receive a “total and permanent disability

benefit” had been approved. Husband’s disability benefits began accruing on March 1,

2014. TRA divided husband’s disability retirement benefit with wife according to the

terms of the QDRO, stating that benefits would be paid to wife in the amount of

$2,090.37 per month, and to husband in the amount of $2,572.78 per month, for a total

benefit of $4,663.15. Disability benefits would continue until husband reaches 65 years

of age, at which point TRA would consider husband to be “in retirement status and the

election of a retirement annuity plan will become effective.”

       Husband thereafter moved to modify spousal maintenance by “amending and

clarifying Conclusion of Law No. 7 to clarify that the division of [husband’s TRA]

retirement benefits shall not include a division of disability benefits received by

[husband] before retirement[.]” Husband filed an amended motion in November 2014,

seeking to conform the QDRO to Conclusion of Law No. 7 and claiming that the QDRO

wrongfully awarded a portion of his TRA disability-benefit interest to wife. The district

court denied husband’s motion by order dated December 2, 2014, ruling that the parties

contemplated dividing husband’s TRA benefits equally without distinguishing between

husband’s disability benefits and his retirement benefits. The district court stated:

                    The language of the QDRO is consistent with the plain
              and ordinary meaning of [the Judgment], which when read as
              a whole, calls for the division of the TRA benefits. This

                                             5
              language is not reasonably susceptible to the interpretation
              that it does not include disability benefits. Construing [the
              Judgment] as a whole and interpreting TRA benefits
              according to its plain and ordinary meaning, the term TRA
              benefits includes both retirement and disability benefits.

       The district court reasoned that to accept husband’s interpretation “would impact

[wife’s] substantive rights and would undermine the financial equity of the parties’

stipulated agreement.” The district court reiterated that the Judgment is “unambiguous”

that the TRA benefits to be divided between husband and wife includes husband’s

disability benefits.

       The district court sua sponte found that husband “achieved the ‘Rule of 90’ as of

March 2, 2014,” and, “therefore, pursuant to [the Judgment], [wife] is awarded an

additional $20,000 from [husband’s] share of the Fidelity 403(b) account.”2

       This appeal followed.

                                          ISSUES

       1.     Did the district court err in determining that the parties’ stipulated judgment

and decree in a marriage-dissolution action required division of husband’s disability

benefits?

       2.     Did the district court err when it sua sponte awarded wife an additional

$20,000 from husband’s retirement account depriving husband of his due-process rights?

2
 Achieving the “Rule of 90” means that husband was 56.4 years old and had 33.6 years
of teaching service, for a total of 90 years, entitling him to retire and become eligible for
certain benefits. The district court found that husband “accumulated the additional
benefits that qualified him for the ‘Rule of 90’ benefits.

                                             6
                                       ANALYSIS

                                             I.

       The first issue we address is whether the district court erred in concluding that

husband’s disability benefits are subject to division pursuant to the terms of the parties’

stipulated agreement. “The district court has broad discretion when dividing marital

property in a dissolution action and will not be reversed absent an abuse of that

discretion.” Gottsacker v. Gottsacker, 664 N.W.2d 848, 852 (Minn. 2003) (citation

omitted). However, the interpretation of stipulations in a dissolution judgment is a

question of law subject to de novo review and we do not defer to the district court’s

interpretation of a stipulated provision in a dissolution decree. Grachek v. Grachek, 750
N.W.2d 328, 330-31 (Minn. App. 2008) (citing Anderson v. Archer, 510 N.W.2d 1, 3

(Minn. App. 1993)). The determination of whether disability funds are income or marital

property is a question of law reviewed de novo. Swanson v. Swanson, 583 N.W.2d 15, 17

(Minn. App. 1998), review denied (Minn. Oct. 20, 1998).

       The Judgment entered in May 2011 provided that “[Husband’s] TRA retirement

benefits shall be divided between the parties. [Wife] is awarded a fifty percent (50%)

interest in these benefits determined as of December 31, 2010[.]” The parties agreed in

the QDRO that husband “shall assign and [wife] is awarded any and all benefits from

[husband’s TRA]” and further stated that “the State of Minnesota [TRA] will pay benefits

to [wife] as follows: [wife] is awarded fifty percent (50%) interest in [husband’s] benefits

determined as of December 31, 2010.”

                                             7
      Husband argues that the district court committed reversible error by concluding

that a 50% interest in husband’s “retirement benefits” includes a 50% interest in his

disability benefits. Husband argues that the Judgment grants wife “only the right to

receive a fraction of [husband’s] TRA retirement benefits, not disability benefits.” In

response, wife argues that the Judgment and QDRO broadly grant “any and all benefits”

from husband’s TRA account and did not expressly preclude or limit division of

husband’s TRA disability benefits.

      Stipulated judgments, such as the Judgment and QDRO at issue in this case, are

“accorded the sanctity of binding contracts,” Shirk v. Shirk, 561 N.W.2d 519, 521 (Minn.

1997), and we therefore construe a stipulation using the ordinary rules of contract

interpretation. Blonigen v. Blonigen, 621 N.W.2d 276, 281 (Minn. App. 2001), review

denied (Minn. Mar. 13, 2001). “We review the language of a contract to determine the

intent of the parties.” Caldas v. Affordable Granite & Stone, Inc., 820 N.W.2d 826, 832

(Minn. 2012). When the language of a contract is clear and unambiguous, we construe it

according to its plain meaning. Starr v. Starr, 312 Minn. 561, 562-63, 251 N.W.2d 341,

342 (1977).   A writing is ambiguous if it is reasonably subject to more than one

interpretation. Halverson v. Halverson, 381 N.W.2d 69, 71 (Minn. App. 1986). Whether

a contract is ambiguous is a question of law reviewed de novo. Id.

      The Judgment reflects the parties’ agreement to divide husband’s TRA retirement

benefits between the parties, with wife receiving a 50% interest.     Despite the clear

language of the Judgment expressly limiting wife’s award to 50% of husband’s

retirement benefits, the district court ruled that the language in the Judgment and the

                                           8
QDRO unambiguously provided that “the TRA benefits to be divided between the parties

include [husband’s] disability benefits.” We determine, based upon our de novo review,

that the district court erred. The parties clearly expressed their intent to limit wife’s

award to 50% of husband’s “retirement benefits” and the district court erred by failing to

give effect to the plain and ordinary meaning of the stipulated terms in the Judgment. See

Nelson v. Nelson, 806 N.W.2d 870, 872 (Minn. App. 2011) (“In interpreting a contract,

the language is to be given its plain and ordinary meaning.”); see also Chergosky v.

Crosstown Bell, Inc., 463 N.W.2d 522, 525-26 (Minn. 1990) (presuming that parties

intended the language used to have effect and cautioning courts against interpreting

contracts so as to render a provision meaningless); Hunt v. IBM Mid Am. Employees Fed.

Credit Union, 384 N.W.2d 853, 856 (Minn. 1986) (“[T]he construction of a writing

which is unambiguous is for the court, particularly when the intention of the parties is to

be gained wholly from the writing.” (citation omitted)).

       The case of VanderLeest v. VanderLeest, 352 N.W.2d 54 (Minn. App. 1984), is

instructive. The VanderLeest parties stipulated that wife would be entitled to an interest

in husband’s vested pension plan. VanderLeest, 352 N.W.2d at 56. The issue was

whether wife was also entitled to receive one-half of husband’s monthly disability

payments. Id. Husband argued at the appellate level that the stipulated judgment should

be construed so as to prevent wife from receiving any interest in his disability benefits.

Id. This court rejected husband’s argument, reasoning that the provision was not limited

to “any retirement benefit,” but more broadly encompassed an interest in husband’s

“pension plan.” Id. at 56-57. Because husband’s monthly disability benefit was “a

                                            9
benefit received by [husband] by reason of his overall pension plan,” the court

determined that it fell within the scope of the provision and wife was therefore entitled to

a 50% interest in husband’s disability benefits. Id.

          The clear distinction between VanderLeest and the present case is that

VanderLeest involved the division of pension benefits, whereas the parties in this case

chose to contractually limit wife’s interest to husband’s “retirement benefits.” Id.; see

also Walswick-Boutwell v. Boutwell, 663 N.W.2d 20, 23-24 (Minn. App. 2003)

(affirming district court’s award of a portion of husband’s disability annuity to wife as

marital property under Public Employees Retirement Association pension plan based on

finding that pension benefits included both disability benefits and retirement benefits),

review denied (Minn. Aug. 19, 2003). Our interpretation of the terms in the Judgment

and QDRO “harmonizes both the law and the facts of the case,” Stewart v. Stewart, 400
N.W.2d 157, 159 (Minn. App. 1987), and preserves the “sanctity” of the parties’

stipulated judgment by limiting wife’s property award to husband’s retirement benefits

(and $20,000 from his Fidelity account if he reaches the Rule of 90). Shirk, 561 N.W.2d

at 521.

          We therefore hold that the district court erred by modifying the parties’

unambiguous stipulation. See Stieler v. Stieler, 244 Minn. 312, 319, 70 N.W.2d 127, 131

(1955) (ruling that a proper clarification of a judgment “involves neither an amendment

of its terms nor a challenge to its validity”); see also Gunderson v. Alliance of Computer

Prof’ls, Inc., 628 N.W.2d 173, 186 (Minn. App. 2001), review granted (Minn. July 24,

2001) and appeal dismissed (Minn. Aug. 17, 2001) (holding that to the extent a written

                                            10
agreement specifically states the terms of the parties’ bargain, it should be honored);

Swanson, 583 N.W.2d at 18 (determining, in absence of stipulation providing otherwise,

that nonvested pensions are included within definition of marital property and disability

annuity may be divisible).      Our conclusion is consistent with decisions in other

jurisdictions, which rule that the absence of a reference to “disability benefits” in a

stipulated marriage-dissolution judgment and decree precludes an award.3 We therefore

reverse the district court’s award of 50% of husband’s disability benefits to wife and

3
   See, e.g., Trustees of Dir. Guild of Am.-Producer Pension Benefits Plans v. Tise, 234
F.3d 415, 421 (9th Cir.) opinion amended on denial of reh’g, 255 F.3d 661 (9th Cir.
2000) (stating that QDRO “only renders enforceable an already-existing interest”); In re
Marriage of Hansen, 62 P.3d 1066, 1068 (Colo. App. 2002) (holding that disability
benefits paid to husband prior to age 65 were not marital assets, but benefits paid after
age 65 were marital assets); Gaffney v. Gaffney, 965 So. 2d 1217, 1221 (Fla. Dist. Ct.
App. 2007) (“Only the retirement portion [of a disability pension] is subject to equitable
distribution [in a divorce proceeding].”); Blaine v. Blaine, 872 So. 2d 383, 384-85 (Fla.
Dist. Ct. App. 2004) (reversing and remanding QDRO award that conflicted with final
judgment of dissolution); In re Marriage of Davis, 678 N.E.2d 68, 70 (Ill. App. Ct. 1997)
(finding that where stipulated divorce agreement provided for division of husband’s
retirement plan, but made “no reference” to disability benefits, “[t]he absence of any
reference to disability or disability benefits suggests that the parties did not contemplate
such benefits at the time they entered the agreement”); McCoy v. Feinman, 785 N.E.2d
714, 721 (N.Y. 2002) (“A proper QDRO obtained pursuant to a stipulation of settlement
can convey only those rights to which the parties stipulated as a basis for the judgment.
. . . [A] court errs in granting a domestic relations order encompassing rights not provided
in the underlying stipulation . . . or a QDRO more expansive than an underlying written
separation agreement.” (citations omitted)); Montero v. McFarland, 895 N.Y.S.2d 257,
259 (App. Div. 2010) (“A QDRO based upon a settlement can only convey those rights
agreed to by the parties; a court may not grant a QDRO with terms that differ from the
terms of the stipulation of settlement.”); Shanks v. Treadway, 110 S.W.3d 444, 449 (Tex.
2003) (holding trial court has “no authority to enter an order altering or modifying the
original disposition of property”).

                                            11
remand for an award that conforms to the plain language of the parties’ stipulated

marriage-dissolution judgment.4

                                             II.

       The next issue is whether the district court committed reversible error by sua

sponte awarding wife an additional share of husband’s Fidelity 403(b) dividend account,

thereby depriving husband an opportunity to address this issue. “Whether due process is

required in a particular case is a question of law, which we review de novo.” C.O. v.

Doe, 757 N.W.2d 343, 349 (Minn. 2008).

       The Judgment provided that wife would receive an additional $20,000 award from

husband’s Fidelity 403(b) dividend account if husband qualified for “Rule of 90” benefit

payments. In its December 2, 2014 order denying husband’s motion to modify the

QDRO, the district court determined that appellant “achieved the ‘Rule of 90’ as of

March 2, 2014,” and awarded wife an additional $20,000. The district court found that

husband “was 56.4 years old and had 33.6 years of teaching service, for a total of 90

years and was therefore eligible to retire and eligible for the ‘Rule of 90’ benefits.”

       There was no motion before the district court to award wife an additional $20,000

distribution from husband’s dividend account because he reached the “Rule of 90.” “Due

process requires that a hearing be “‘fair, practicable, and reasonable.’”          Haefele v.

Haefele, 621 N.W.2d 758, 764 (Minn. App. 2001) (citation omitted). Although the

district court stated in its order that wife presented a motion to amend the Judgment, no

4
  We note that wife remains in the same position to which the parties agreed. She will
continue to receive $500 per month in spousal maintenance until husband turns 65 years
old, at which time she will receive 50% of his TRA retirement benefits.

                                             12
such motion appears in the record. Without a motion to amend the Judgment, husband

had no opportunity to meaningfully respond to wife’s request, and “[n]otice and hearing

are the fundamental aspects of due process.” Id.

       Moreover, the appellate record does not provide an adequate factual basis to

support the district court’s finding that husband qualified for “Rule of 90” benefits. A

district court’s factual findings must be supported by evidence in the record. County of

Scott v. Johnston, 841 N.W.2d 357, 363 (Minn. App. 2013). We will reverse a district

court’s findings when they are “not reasonably supported by the evidence as a whole.”

Magnuson v. Cossette, 707 N.W.2d 738, 744 (Minn. App. 2006). Because the record

does not contain sufficient evidence that husband “had 33.6 years of teaching service”

entitling him to “Rule of 90” benefits, as found by the district court, we must reverse.5

                                     DECISION

       The district court erred by equating “disability benefits” with “retirement

benefits,” because the Judgment plainly refers only to “retirement benefits.”               We

therefore reverse and remand to the district court for issuance and implementation of an

amended QDRO that conforms to the parties’ judgment. Further, we reverse the district

court’s award of $20,000 to wife based on its sua sponte ruling that husband reached the

“Rule of 90.”

       Reversed and remanded.

5
 We express no opinion about how the district court should rule if a proper motion is
before it.

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