Court Opinion

ID: 4257541
Source: CourtListenerOpinion
Date Created: 2018-03-23 09:12:02.351221+00
Date Added: 2024-06-11T14:45:53.115667
License: Public Domain

STATE OF MICHIGAN

                            COURT OF APPEALS

DEBORAH LYNN FOSTER,                                              UNPUBLISHED
                                                                  March 22, 2018
               Plaintiff/Counter-Defendant-
               Appellee,

v                                                                 No. 324853
                                                                  Dickinson Circuit Court
RAY JAMES FOSTER,                                                 LC No. 07-015064-DM

               Defendant/Counter-Plaintiff-
               Appellant.

                                          ON REMAND

Before: MARKEY, P.J., and MURPHY and RONAYNE KRAUSE, JJ.

PER CURIAM.

       Defendant appealed an order holding him in contempt of court for failing to comply with
the parties’ 2008 consent divorce judgment. We previously affirmed that ruling. Foster v
Foster, unpublished opinion per curiam of the Court of Appeals, issued October 13, 2016
(Docket No. 324853). The case is once again before us after our Supreme Court entered the
following order with respect to defendant’s application for leave to appeal:

               Pursuant to MCR 7.305(H)(1), in lieu of granting leave to appeal, we
       vacate the judgment of the Court of Appeals and we remand this case to the Court
       of Appeals for reconsideration in light of Howell v Howell, __ US __; 137 S. Ct.
400; 197 L. Ed. 2d 781 (2017). [501 Mich. 917.]

On reconsideration, we again affirm the trial court’s ruling.

       Given that the Supreme Court vacated the earlier opinion in its entirety, and in order to
provide context for our discussion and analysis of Howell, we shall first set forth most of the
previous opinion:

               Defendant appeals as of right an order holding him in contempt of court
       for failure to pay plaintiff in compliance with the parties’ consent divorce
       judgment that was entered in December 2008. Defendant argues that the
       contempt order and the divorce judgment itself are unenforceable because their

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effect is to require defendant to pay plaintiff a portion of his military disability
benefits as part of the property settlement in violation of federal law. Defendant
also presents arguments regarding alleged problematic factual findings and other
legal shortcomings tied to entry of the divorce judgment. Defendant’s arguments
are effectively and ultimately rooted in the judgment of divorce and its terms;
however, he never appealed that judgment, nor has he moved for relief from that
judgment, MCR 2.612. Thus, defendant is engaging in an improper collateral
attack on the divorce judgment. See Kosch v Kosch, 233 Mich. App. 346, 353; 592
NW2d 434 (1999) (the defendant's failure to appeal the original divorce judgment
precluded collateral attack on the merits of the judgment and effectively
constituted a stipulation to its provisions). Indeed, defendant agreed to the very
provision in the divorce judgment that he now assails. Nevertheless, for the
reasons set forth below, we also substantively reject defendant’s arguments. . . . .

         The parties were married on August 6, 1988, and plaintiff filed for divorce
on November 20, 2007. Defendant had served in the military during, and prior to,
the marriage, and he retired from the Army in September 2007. Defendant
testified at the divorce hearing, which involved finalizing the parties’ settlement,
that he was receiving both military retirement pay and military disability benefits
based on injuries he had sustained during the war in Iraq. Both parties waived
their rights to seek spousal support and agreed that defendant’s disability benefits
were not subject to division by the court because they were not considered marital
property under federal law. However, pursuant to the property settlement,
plaintiff was awarded 50 percent of defendant’s retirement pay, or “disposable
military retired pay,” as calculated based on defendant’s creditable military
service during the marriage. The parties also agreed to the inclusion of the
following provision in the divorce judgment, which we shall refer to as the “offset
provision:”

        “If Defendant should ever become disabled, either partially or in whole,
then Plaintiff’s share of Defendant’s entitlement shall be calculated as if
Defendant had not become disabled. Defendant shall be responsible to pay,
directly to Plaintiff, the sum to which she would be entitled if Defendant had not
become disabled. Defendant shall pay this sum to Plaintiff out of his own pocket
and earnings, whether he is paying that sum from his disability pay or otherwise,
even if the military refuses to pay those sums directly to Plaintiff. If the military
merely reduces, but does not entirely stop, direct payment to Plaintiff, Defendant
shall be responsible to pay directly to Plaintiff any decrease in pay that Plaintiff
should have been awarded had Defendant not become disabled, together with any
Cost of Living increases that Plaintiff would have received had Defendant not
become disabled. Failure of Defendant to pay these amounts is punishable
through all contempt powers of the Court.”

       At the divorce hearing, the trial court questioned the attorneys regarding
the language of the offset provision, noting that it seemed to suggest that
defendant was not currently receiving any disability benefits, which was not the
case. Counsel for both parties acknowledged that the language was awkward, but
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explained that the intent was simply to address a scenario in which defendant
became entitled to and accepted more disability benefits than currently being
received, inversely diminishing the retirement benefits that were being divided
and awarded to plaintiff. The purpose of the offset provision was to protect
plaintiff in such a scenario. The trial court also discussed the offset provision
with defendant in the following exchange:

        Court. “All right, . . . Mr. Foster, you do acknowledge that if you were to
defer any of your current military retirement pay or convert it to disability pay, or
if your military retirement pay were reduced because the level of your disability
pay was increased, you acknowledge this Court’s ability to enforce payment to
Ms. Foster the level of benefits that she would be entitled [to] presently from your
retirement pay?

       Defendant. Yes.”

        Shortly after the entry of the divorce judgment, defendant became eligible
for and began receiving increased disability benefits, which consequently reduced
the amount of his retirement payments and the amount plaintiff received from
defendant’s military retirement pay. This was the precise circumstance that the
parties had contemplated in drafting and agreeing to the offset provision.
However, defendant failed to comply with the divorce judgment by paying
plaintiff the difference between the reduced amount of retirement pay she
received and the amount that she had received at the time of the divorce
judgment. A number of show cause and contempt proceedings took place over
several years, leading to the order that defendant now appeals, wherein the trial
court held defendant in contempt for failure to pay plaintiff in compliance with
the consent divorce judgment. The court ordered him to pay plaintiff $1,000 per
month, with $812 credited as current payments due under the divorce judgment
and $188 to be credited against the arrearage of $34,398 until the arrearage was
paid in full.

        Defendant’s primary argument on appeal is that the divorce judgment and
the trial court’s order enforcing the judgment were legally invalid because they
required him to pay plaintiff a portion of his disability benefits in violation of
federal law. We disagree. Defendant’s argument entails statutory construction
and questions of law in general, which we review de novo on appeal. Snead v
John Carlo, Inc, 294 Mich. App. 343, 354; 813 NW2d 294 (2011).

        “Members of the Armed Forces who serve for a specified period,
generally at least 20 years, may retire with retired pay.” Mansell v Mansell, 490
U.S. 581, 583; 109 S. Ct. 2023; 104 L. Ed. 2d 675 (1989) (citations omitted). And
retired or retirement pay is generally subject to division in state court divorce
proceedings under the Uniformed Services Former Spouses’ Protection Act
(USFSPA), 10 USC 1408. Id. at 584-585; Megee v Carmine, 290 Mich. App. 551,
562; 802 NW2d 669 (2010). With respect to disability pay, “[m]ilitary veterans
in general are entitled to compensation for service-connected disabilities under 38

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USC 1101 et seq.,” sometimes referred to as “VA disability benefits.” Megee,
290 Mich. App. at 560. Pursuant to 10 USC 1414(a)(1), as effective January 1,
2004, “ ‘a member or former member of the uniformed services who is entitled
for any month to retired pay and who is also entitled for that month to veterans’
disability compensation for a qualifying service-connected disability . . . is
entitled to be paid both for that month . . . .’ ” Id. at 560-561 (ellipses in Megee).
“This concurrent receipt of military retirement pay and VA disability benefits is
commonly referred to as CRDP, which stands for ‘concurrent retirement and
disability pay.’ ” Id. at 561 (citation omitted). Another form of military disability
pay, separate from standard VA disability benefits, is combat-related special
compensation (CRSC), 10 USC 1413a. Id. at 552-553. “To be eligible for
CRSC, a person must be a member of the uniformed services who is entitled to
retired pay and who has a combat-related disability.” Id. at 560, citing 10 USC
1413a(c) (emphasis added). A veteran who is qualified for CRDP (retirement
pay plus VA disability pay) and who is also qualified for CRSC (combat-related
disability pay), may elect to receive CRDP or CRSC, but not both. Megee, 290
Mich. App. at 561.

       According to defendant, he became entitled to receive CRSC, which
determination was apparently made retroactive to a date preceding entry of the
divorce judgment. Defendant elected to receive CRSC, which resulted in a
diminution of his retirement pay and plaintiff’s 50 percent award of that pay. See
Megee, 290 Mich. App. at 561 (“Plaintiff elected CRSC, which effectively
discontinued his retirement pay that had been subject to the QDRO, halting
payments to defendant.”). The Megee panel observed the following concerning
CRSC and the division of waived retirement pay related to CRSC, i.e., retirement
pay that is not being received because of a CRSC election:

        “The trial court here effectively divided plaintiff’s CRSC and, although
Mansell did not directly address division of disability pay, the USFSPA clearly
does not allow such a division. Subsection (c)(1) of the USFSPA, 10 USC
1408(c)(1), permits a court to treat only “disposable retired pay” as “property of
the member and his spouse,” and CRSC is “not retired pay,” 10 USC 1413a(g).
Accordingly, the trial court erred by dividing plaintiff’s CRSC and forcing
plaintiff to pay a portion of his CRSC to defendant. However, on the subject
addressed in Mansell, i.e., dividing waived retirement pay, the Mansell decision
actually supports making plaintiff in the case at bar pay defendant half of the
retirement pay that he would be receiving but for his election to take CRSC. The
Mansell Court concluded that waived retirement pay could not be divided as
property in circumstances in which the pay had been waived in favor of title 38
VA disability benefits, given that the definition of “disposable retired pay” in 10
USC 1408(a)(4)(B) excludes consideration of amounts waived in order to receive
title 5 or title 38 compensation. Under the reasoning and rationale of Mansell,
there would be no prohibition here against considering for division waived
retirement pay under the USFSPA because we are addressing a waiver of title 10
CRSC not mentioned in 10 USC 1408(a)(4)(B). Thus, all of plaintiff’s envisioned

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yet waived military-retirement pay can be divided without offending the USFSPA
or Mansell. Accordingly, there is no bar to ordering plaintiff to compensate
defendant in an amount equal to 50 percent of plaintiff’s envisioned retirement
pay as intended under the terms of the divorce judgment after plaintiff made a
unilateral and voluntary postjudgment election to waive his retirement pay in
favor of disability benefits contrary to the terms of the judgment.

                                        ***

        We hold that a military spouse remains financially responsible to
compensate his or her former spouse in an amount equal to the share of retirement
pay ordered to be distributed to the former spouse as part of a divorce judgment's
property division when the military spouse makes a unilateral and voluntary
postjudgment election to waive the retirement pay in favor of disability benefits
contrary to the terms of the divorce judgment. Conceptually, and consistently with
extensive caselaw from other jurisdictions, we are dividing waived retirement pay
in order to honor the terms and intent of the divorce judgment. Importantly, we
are not ruling that a state court has the authority to divide a military spouse's
CRSC, nor that the military spouse can be ordered by a court to pay the former
spouse using CRSC funds. Rather, the compensation to be paid the former spouse
as his or her share of the property division in lieu of the waived retirement pay
can come from any source the military spouse chooses, but it must be paid to
avoid contempt of court. To be clear, nothing in this opinion should be construed
as precluding a military spouse from using CRSC funds to satisfy the spouse's
obligation if desired. [Megee, 290 Mich. App. at 566-567, 574-575 (footnote
omitted).]”

        Megee governs and dictates, given the involvement of CRSC, that the
offset provision in the consent divorce judgment is fully enforceable through the
trial court’s contempt powers. Defendant attempts to distinguish Megee on the
basis that, because of the retroactive nature of the CRSC award, he effectively
became entitled to and elected CRSC and waived retirement pay prior to entry of
the divorce judgment, whereas Megee concerned a unilateral, postjudgment
election to waive retirement pay and opt for CRSC. Defendant’s argument
construes Megee much too narrowly and misses the broader legal principle that
emanates from Megee, which is that a state divorce court has the authority to
divide waived retirement pay, which waiver had resulted from a veteran’s
decision to elect CRSC, so long as the court does not directly order payment from
CRSC funds.1 Thus, assuming for the sake of argument that defendant’s waiver
of retirement pay and election of CRSC must be treated as having already

1
  The contempt order does not require payment from CRSC funds, nor do we
construe the divorce judgment’s offset provision as ordering payment from CRSC
funds, and any such construction must be avoided.

                                       -5-
       occurred when the divorce judgment was entered, the offset provision
       contemplating the division of waived retirement benefits was nonetheless valid
       and enforceable under Megee.

               Defendant presents an alternative argument under 38 USC 5301, which
       regards the nonassignability and exempt status of veterans’ benefits. Defendant’s
       argument is woefully undeveloped and we deem it waived. See Mudge v Macomb
       Co, 458 Mich. 87, 104-105; 580 NW2d 845 (1998). Moreover, as ruled earlier,
       the argument reflects an improper collateral attack on the judgment of divorce.
       See Kosch, 233 Mich. App. at 353. Finally, 38 USC 5301(a)(1) speaks of
       precluding the assignment of benefits “except to the extent specifically authorized
       by law[.]” As noted above, the USFSPA generally permits the division of
       disposable retired pay in state divorce actions, and the instant dispute concerns the
       division of waived retirement pay, which the Megee panel held was proper under
       federal law when the waiver is in relation to a CRSC election. Megee, 290 Mich
       App at 566-567, 574-575.

                Finally, defendant poses arguments regarding alleged mistakes of fact by
       the trial court, along with purported fraud and unconscionable advantage, all tied
       to the procurement of the divorce judgment. These arguments are an improper
       and untimely attempt to relitigate the divorce action that was settled years ago
       absent appeal, and the arguments are therefore rejected. We additionally note that
       defendant’s assertion that the trial court was factually mistaken with respect to
       whether defendant was suffering from a disability at the time of the divorce
       hearing is belied by the record. The trial court expressly recognized that
       defendant was currently receiving disability benefits and sought clarification from
       the parties concerning the language in the offset provision that suggested
       otherwise. In sum, defendant’s arguments are unavailing. . . . . [Foster, unpub op
       at 1 to 5 (alterations in original opinion).]

        Now, we turn our attention to our Supreme Court’s remand order and the decision in
Howell issued by the United States Supreme Court. In Howell, 137 S. Ct. at 1402, the Court
stated and ruled:

               A federal statute provides that a State may treat as community property,
       and divide at divorce, a military veteran's retirement pay. See 10 USC 1408(c)(1).
       The statute, however, exempts from this grant of permission any amount that the
       Government deducts “as a result of a waiver” that the veteran must make “in
       order to receive” disability benefits. § 1408(a)(4)(B).[2] We have held that a State
       cannot treat as community property, and divide at divorce, this portion (the
       waived portion) of the veteran's retirement pay.

2
 The language in 10 USC 1408(a)(4)(B) is now found in 10 USC 1408(a)(4)(A)(ii). See Howell,
137 S. Ct. at 1403.

                                               -6-
               In this case a State treated as community property and awarded to a
       veteran's spouse upon divorce a portion of the veteran's total retirement pay. Long
       after the divorce, the veteran waived a share of the retirement pay in order to
       receive nontaxable disability benefits from the Federal Government instead. Can
       the State subsequently increase, pro rata, the amount the divorced spouse receives
       each month from the veteran's retirement pay in order to indemnify the divorced
       spouse for the loss caused by the veteran's waiver? The question is complicated,
       but the answer is not. Our cases and the statute make clear that the answer to the
       indemnification question is “no.” [Citation omitted.]

       The Howell Court also made clear that characterizing an order as merely requiring
reimbursement or indemnification could not avoid the rule, as “[t]he difference is semantic and
nothing more.” Howell, 137 S. Ct. at 1406.

         Howell involved general service-connected disability benefits, and the Supreme Court’s
opinion rested squarely on the language in former 10 USC 1408(a)(4)(B), which provided and
still provides in 10 USC 1408(a)(4)(A)(ii), that “disposable retired pay” means a member’s total
monthly retired pay less amounts that “are deducted from the retired pay . . . as a result of a
waiver of retired pay required by law in order to receive compensation under title 5 or title 38[.]”
Howell, 137 S. Ct. at 1402-1404. CRSC (combat-related special disability pay), at issue in this
appeal, is compensation under Title 10, not Title 5 or Title 38 as referenced when arriving at
“disposable retired pay.” In our earlier opinion, we relied on this Court’s opinion in Megee, 290
Mich. App. 551, which distinguished CRSC from general service-connected disability pay found
in title 38 on the basis that the panel was addressing a waiver of retirement pay in favor of title
10 CRSC compensation. Given that CRSC is at issue in the instant case, that Howell did not
concern or analyze a waiver of retirement pay in favor of CRSC disability pay, and that Megee is
on point and remains binding precedent, MCR 7.215(J)(1), we again affirm the trial court’s
ruling.

       Affirmed. We decline to award taxable costs under MCR 7.219.

                                                             /s/ Jane E. Markey
                                                             /s/ William B. Murphy
                                                             /s/ Amy Ronayne Krause

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