Court Opinion

ID: 2726245
Source: CourtListenerOpinion
Date Created: 2014-09-08 21:00:07.515379+00
Date Added: 2024-06-11T10:03:10.874036
License: Public Domain

FOR PUBLICATION
                                                          Oct 15 2013, 9:13 am

ATTORNEY FOR APPELLANT:                               ATTORNEY FOR APPELLEE:

JEFFRY G. PRICE                                       KATHERINE J. NOEL
Peru, Indiana                                         Noel Law
                                                      Kokomo, Indiana

                            IN THE
                  COURT OF APPEALS OF INDIANA

JUDITH (LUND) PHERSON,                        )
                                              )
     Appellant-Petitioner,                    )
                                              )
            vs.                               )   No. 52A04-1304-DR-180
                                              )
MICHAEL LUND,                                 )
                                              )
     Appellee-Respondent.                     )

                    APPEAL FROM THE MIAMI CIRCUIT COURT
                       The Honorable Timothy P. Spahr, Judge
                          Cause No. 52C01-9107-DR-271

                                   October 15, 2013

                             OPINION - FOR PUBLICATION

BAILEY, Judge
                                       Case Summary

       Judith Lund Pherson (“Wife”) appeals the denial, in substantial part, of her motion to

correct error, which challenged a post-dissolution order in response to a motion by Michael

Lund (“Husband”) for clarification of a pension-fund provision of a property settlement

agreement incorporated into a divorce decree. Wife presents the sole issue of whether the

trial court erroneously modified the property settlement agreement. We affirm.

                               Facts and Procedural History

       The parties were married on June 9, 1979. Their marriage was dissolved on

September 23, 1991. They executed a property settlement agreement in October of 1991

(“the Agreement”); on October 24, 1991, the dissolution court approved the Agreement.

       For several years prior to the marriage and throughout the marriage, Husband had

been employed by Norfolk and Southern Railroad a/k/a Norfolk and Western Railway

Company (“the Railroad”). His employee benefits included non-divisible (income security)

Tier I benefits and divisible Tier II (retirement) benefits. With regard to Husband’s Tier II

benefits, the Agreement provided:

       Husband … is presently entitled to benefits provided under the Railroad
       Retirement Act. Section 14 of the Act as amended provides that the “Tier II
       Component” may be subject to division by a Dissolution of Marriage Decree.
       The Wife shall be awarded and is entitled to one-half of the Husband’s “Tier
       II” portion of benefits subject to division under Section 14 of the Railroad
       Retirement Act as amended, and if available at the time of distribution the
       Railroad Retirement Board will pay directly to the Wife said 50% portion of
       the “Tier II” benefits as set out above.

(App. 24.) On October 28, 1991, the dissolution court entered an order with respect to the

Tier II benefits, providing in pertinent part:

                                                 2
       Judith Lund, Petitioner, is awarded and the Railroad Retirement Board is
       directed to pay an interest in the portion of Michael T. Lund, social security
       number XXX, benefits under the Railroad Retirement Act (45 U.S.C. Section
       231, et seq.) which may be divided as provided by Section 14 of that Act (45
       U.S.C. Section 231m). Judith Lund’s share shall be fifty percent (50%) of the
       Tier II portion of the benefits of Michael T. Lund.

(App. 27.) After the dissolution, Husband continued to work for the Railroad and receive

additional retirement contributions for 18 ½ years.            When Husband retired after

approximately forty-two years of continuous employment, the Railroad Retirement Board

began paying Wife one-half of the total Tier II monthly benefit attributable to those forty-two

years of service.

       Husband sought clarification of the Agreement and the corresponding order, asserting

the position that Wife had, in effect, been receiving non-marital property. Wife sought

dismissal of the motion, contending that a property division agreement, accepted by the

dissolution court, cannot be modified. At the conclusion of a hearing conducted on January

11, 2013, the trial court took the matter under advisement and invited post-hearing written

submissions from the parties.

       On January 26, 2013, the trial court entered an order to “clarify ambiguity” and

“effectuate the parties’ intent.” (App. 18.) In so doing, the trial court specified that the 18 ½

years of pension contributions post-dissolution “had not been earned and did not exist at the

time of final separation” and were not divisible as a marital asset. (App. 17.) Wife filed a

motion to correct error. In response, the trial court entered an order on March 19, 2013,

correcting a typographical error and specifying a coverture fraction. Wife now appeals.

                                               3
                                  Discussion and Decision

       Wife contends that the trial court improperly modified the Agreement and

corresponding dissolution court order. Indiana Code section 31-15-2-17(c) provides: “The

disposition of property settled by an agreement described in subsection (a) and incorporated

and merged into the decree is not subject to subsequent modification by the court, except as

the agreement prescribes or the parties subsequently consent. Indiana Code section 31-15-7-

9.1(a) provides: “The orders concerning property disposition entered under this chapter …

may not be revoked or modified, except in case of fraud.” Accordingly, a court lacks

authority to modify a property settlement agreement or a property division order. Ryan v.

Ryan, 972 N.E.2d 359, 363 (Ind. 2012).

       Notwithstanding the prohibition against modification, a court does not lack authority

to resolve a dispute over the interpretation of a settlement agreement or property division

order. Id. “When a party asks a court to clarify a settlement agreement, the court’s task is

one of contract interpretation. This is because settlement agreements are contractual in

nature and binding if approved by the trial court.” Id. When interpreting a settlement

agreement, we apply the general rules of contract construction; that is, unless the terms of the

contract are ambiguous, they will be given their plain and ordinary meaning. Shorter v.

Shorter, 851 N.E.2d 378, 383 (Ind. Ct. App. 2006).

       “Our Supreme Court has determined that the dissolution court that enters a property

settlement agreement is in the best position to resolve questions of interpretation and

enforcement of that agreement and thus retain[s] jurisdiction to interpret the terms of their

                                               4
property settlement agreements and to enforce them.” Id. This task “remains an exercise in

the construction of the terms of a written contract,” which is a pure question of law, and thus

our standard of review is de novo. Id.

       In pertinent part, the trial court concluded:

       It is clear that property acquired by one spouse in his or her own right after
       final separation should not be considered a marital asset subject to division.
       See I.C. 31-15-7-4(a) and In re Marriage of Osborne, 369 N.E.2d 653, 655
       (Ind. App. 1977). In the case at bar, the Respondent worked at his job, earning
       18 ½ additional years’ worth of Tier II benefits after the parties were divorced.
       That portion of the Tier II benefits normally would not be subject to division
       by the divorce court, since the benefits had not been earned and did not exist at
       the time of final separation.

(App. 17.) As such, the trial court concluded that the pension contributions in the 18 ½ years

since the dissolution were after-acquired property beyond the scope of the settlement

agreement to divide. We agree with the trial court.

       Pursuant to Indiana Code section 31-9-2-98, “property” in actions for dissolution

includes a present right to withdraw pension or retirement benefits, the right to receive

pension or retirement benefits that are vested but payable after the dissolution of marriage,

and the right to receive disposable retired or retainer pay acquired during the marriage that is

or may be payable after the dissolution of marriage. At the time of the dissolution, Husband

had a vested right to pension benefits and thus those benefits were properly divisible.

However, the property subject to division is that owned prior to marriage or acquired after

the marriage but before the final separation of the parties and thus does not include post-

dissolution employer contributions to a retirement fund. See I.C. § 31-15-7-4(a), providing:

                                               5
       In an action for dissolution of marriage under IC 31-15-2-2, the court shall
       divide the property of the parties, whether:

       (1) owned by either spouse before the marriage;

       (2) acquired by either spouse in his or her own right;
           (A)       after the marriage; and
           (B)      before final separation of the parties; or

       (3) acquired by their joint efforts.

(emphasis added.) Accordingly, the Legislature has provided that property acquired by one

spouse in his or her own right after final separation should not be considered a marital asset

subject to division by the dissolution court. In re Marriage of Osborne, 369 N.E.2d 653, 655

(Ind. Ct. App. 1977). In particular, “trial courts are asked to do tasks such as place values on

pensions which have vested in possession only, but for which the amount of benefits has yet

to be determined” but “when trial courts do so they must determine the value of the asset as it

is currently held because trial courts cannot divide future earnings of a party in anticipation

that they will be earned.” Alexander v. Alexander, 927 N.E.2d 926, 939 (Ind. Ct. App.

2010), trans. denied.

       It is true that Indiana law “encourages” divorcing spouses to reach agreements and the

spouses “have more flexibility in crafting their own property settlement agreements than do

divorce courts.” Wilson v. Wilson, 716 N.E.2d 486, 489 (Ind. Ct. App. 1999). Parties may

agree to provisions which a trial court has no statutory authority to order. Id. For example,

Husband and Wife in this case could have agreed to divert Husband’s after-acquired funds to

Wife as alimony or maintenance. However, the Agreement is devoid of any language

suggesting this intent. We agree with the trial court that the Agreement was not intended to

                                               6
divide the future earnings of one spouse. Its sole objective was to divide property acquired

before the date of final separation.

       Wife has strenuously argued that the instant matter is almost identical to a spousal

agreement to divide “any proceeds” of a personal injury claim, addressed in Dusenberry v.

Dusenberry, 625 N.E.2d 458, 463 (Ind. Ct. App. 1993). In Dusenberry, when the wife

petitioned for marital dissolution, the spouses had a pending lawsuit for injuries incurred in

an automobile accident, and they agreed that each would receive one-half of the proceeds

from the claim. Id. at 460. After incurring unanticipated medical expenses, the wife moved

to set aside the property settlement provision related to the lawsuit proceeds and the trial

court granted Indiana Trial Rule 60(B) relief. See id. On appeal, this Court reversed the trial

court order, observing that the cause of action had accrued pre-separation and the parties had

agreed “for the purpose of their settlement to treat the same as if it were a vested marital

asset.” Id. at 462. The Dusenberry Court held that the wife’s petition was “an impermissible

attempt to modify the property settlement agreement.” Id. at 463.

       Although, as recognized by the Dusenberry Court, the dissolution court could not have

divided a contingent interest, the parties had agreed to do so, and their agreement was

enforceable. Wife claims that she and Husband likewise agreed to an equal division of a sum

uncertain. In fact, they had during dissolution proceedings obtained a letter from the

Railroad Retirement Board setting forth the anticipated payment based upon then-accrued

contributions. (Resp. Ex. A.) To the extent that the ultimate value of the Tier II benefits was

unknown at the time of dissolution, it is because of ongoing contributions attributable to the

                                              7
post-dissolution employment and efforts of Husband. Dusenberry is clearly distinguishable,

as there was a singular event, a tort, giving rise to the expectation of payment and such event

took place during the marriage.

          The agreement in this case simply failed to assign a value to the vested pension

exclusive of future contributions. It fell to the trial court to do so. Generally, a dissolution

court may, when valuing a marital asset, select a date between the filing of the dissolution

petition and the date of the final hearing. Eyler v. Eyler, 492 N.E.2d 1071, 1074 (Ind. 1986).

    Here, the valuation date ultimately selected by the trial court to correspond to the 50/50 split

was that most favorable to Wife, the date of the final hearing on property distribution.1 The

coverture fraction reflects this valuation date; we find no error.

                                               Conclusion

          The trial court did not impermissibly modify a property settlement agreement or

decree. Rather, the trial court clarified that the intent of the parties was to divide the marital

property, that is, property acquired before the marriage or after the marriage and before the

final date of separation.

          Affirmed.

MAY, J., and BRADFORD, J., concur.

1
  The marriage of the parties was dissolved on September 23, 1991. The trial court should have selected
this date, the date of final hearing, See I.C. § 31-15-2-10, as the latest date for valuation. However, the
selection of the one-month-later date of the final property order, October 24, 1991, would have a de
minimis effect on the property distribution and we leave it undisturbed.

                                                      8