Court Opinion

ID: 4426786
Source: CourtListenerOpinion
Date Created: 2019-08-19 20:49:51.62654+00
Date Added: 2024-06-11T14:50:40.274348
License: Public Domain

J-S26018-19

                                   2019 PA Super 246

    GEOFFREY H. JAGO                           :   IN THE SUPERIOR COURT OF
                                               :        PENNSYLVANIA
                       Appellee                :
                                               :
                v.                             :
                                               :
                                               :
    TINA M. JAGO                               :
                                               :
                       Appellant                       No. 32 EDA 2019

                Appeal from the Order Entered November 9, 2018
                 In the Court of Common Pleas of Lehigh County
                   Domestic Relations at No(s): 2018-C-1569

BEFORE:      PANELLA, P.J., GANTMAN, P.J.E., and PELLEGRINI*, J.

OPINION BY GANTMAN, P.J.E.:                            FILED AUGUST 19, 2019

        Appellant, Tina M. Jago (“Wife”), appeals from the order entered in the

Lehigh County Court of Common Pleas, which vacated a qualified domestic

relations order (“QDRO”) the court had previously entered upon joint petition

of Wife and Geoffrey H. Jago (“Husband”) and denied the parties’ amended

joint petition for entry of an amended QDRO.1 We affirm.

        The relevant facts and procedural history of this case are as follows.

The parties married on June 21, 1997, and are still married. Husband is a

participant in a JetBlue Airways Retirement Plan (“Plan”).2 On June 21, 2018,

____________________________________________

1   Husband did not file a notice of appeal, and he is not a party to this appeal.

2 The parties do not dispute and the record makes clear the Employee
Retirement Income Security Act (“ERISA”), 29 U.S.C.A. § 1001 et seq.,
governs this Plan.
____________________________________
* Retired Senior Judge assigned to the Superior Court.
J-S26018-19

the couple filed a “Verified Joint Petition for QDRO.” In the petition, the parties

sought to transfer $400,000.00 from the Plan to an individual retirement

account (“IRA”) in Wife’s name. The petition read, in relevant part, as follows:

         1. [Husband], Plan Participant; and [Wife], Alternate Payee,
         were married on or about June 21, 1997. … There is no
         pending petition for divorce or other family law matter
         before this Honorable Court.

         2. [Husband] and [Wife], as current spouse and qualifying
         Alternate Payee of [Husband], both wish to execute a
         [QDRO]…regarding the [Plan]…. … Said QDRO properly
         distributes the funds pursuant to the mutual requests of the
         parties.

                                   *    *    *

         4. [Husband] has obtained pre-approval of the attached
         QDRO from the [Plan], Plan Administrator. …

         5. The Parties further acknowledge and expressly state that
         the signing of the QDRO is for public records purposes only
         and pursuant to federal law restrictions. Notwithstanding
         any particular language of the joint Petition and/or QDRO,
         the parties do not intend to partition any of the funds
         involved in the QDRO transfer, nor change the classification
         of the community nature of the funds in [Husband]’s name
         into separate property into the name of [Wife].

         6. The parties acknowledge and agree that should any
         portion of this Joint Petition or QDRO be interpreted to have
         changed the classification of the funds transferred; then
         both parties shall immediately sign documentation pursuant
         to Pennsylvania law donating the funds back to the Plan.

(Verified Joint Petition for QDRO, filed 6/21/18; R.R. at 3a-4a). The trial court

approved the proposed QDRO via an order dated June 22, 2018, and docketed

June 25, 2018.

      Subsequently, the parties sought to increase the amount of funds

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transferred from the Plan to Wife’s IRA. In a letter dated September 13, 2018,

the Plan administrator pre-approved a transfer of $700,000.00 conditioned

upon the trial court executing an amended QDRO. On October 2, 2018, the

parties filed an “Amended Verified Joint Petition for QDRO,” seeking to transfer

$700,000.00 from the Plan to Wife’s IRA. The October 2nd proposed QDRO

was nearly identical to the original QDRO; the only significant difference

between the two QDROs was the amount of funds the parties sought to

transfer.   Following a hearing on November 2, 2018, the court denied the

amended QDRO petition and vacated the initial QDRO on November 9, 2018.

In its November 9th order, the court expressly stated the order was final per

Pa.R.A.P. 341(c).

       On December 6, 2018, Wife timely filed a notice of appeal. The court

ordered Wife on December 11, 2018, to file a concise statement of errors

complained of on appeal per Pa.R.A.P. 1925(b); Wife timely complied on

January 2, 2019. On February 8, 2019, this Court issued a rule to show cause

why the November 9, 2018 order is a final, appealable order; Wife filed a

response on February 19, 2019. This Court discharged the rule to show cause

on February 21, 2019, and deferred the matter to the merits panel.3

____________________________________________

3 Rule 341 of appellate procedure defines a final order as one that “disposes
of all claims and of all parties.” Pa.R.A.P. 341(b)(1). “When more than one
claim for relief is presented in an action…the trial court…may enter a final
order as to one or more but fewer than all of the claims…only upon an express
determination that an immediate appeal would facilitate the resolution of the

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       Wife raises three issues for our review:

          WHETHER THE TRIAL COURT ERRED IN FAILING TO
          RECOGNIZE THE PROPOSED ORDER AS “RELATING TO
          CHILD SUPPORT…OR MARITAL PROPERTY RIGHTS TO A
          SPOUSE” UNDER 29 U.S.C.A. [§] 1056[?]

          WHETHER THE TRIAL COURT ERRED IN FAILING TO
          RECOGNIZE THE PROPOSED ORDER AS APPROVED BY THE
          PLAN ADMINISTRATOR AS A QDRO[?]

          WHETHER THE TRIAL COURT ERRED IN REQUIRING A
          PENDING DIVORCE AS A PREREQUISITE TO ENTERING A
          QDRO[?]

(Wife’s Brief at 8).

       In her issues combined, Wife contends a pending divorce or marital

separation is not required for entry of a QDRO.     Wife submits requiring a

divorce decree or a pending domestic relations action as a prerequisite to the

entry of a QDRO elevates form over substance, citing Brown v. Continental

Airlines, 647 F.3d 221 (5th Cir. 2011). Wife claims courts can enter QDROs

in actions other than divorce to recognize the interests of a non-spouse, such

as a child or other dependent. Wife also argues the parties’ QDROs satisfied

all other statutory requirements. Wife insists entry of the amended QDRO is

in accordance with Pennsylvania domestic relations law, as the QDRO concerns

____________________________________________

entire case.” Pa.R.A.P. 341(c). “Such an order becomes appealable when
entered.” Id. Instantly, the November 9, 2018 order disposed of the only
claim the parties’ presented to the court, namely, a joint request for entry of
a QDRO. See Pa.R.A.P. 341(b)(1). Additionally, the court’s November 9th
order specified the order was final and appealable per Rule 341(c). See
Pa.R.A.P. 341(c). Therefore, the November 9, 2018 order is properly before
us for review.

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marital property rights.      Wife concludes this Court should reverse the trial

court’s order that denied the parties’ petition to enter an amended QDRO and

vacated the initial QDRO, and remand for entry of the amended QDRO. We

disagree.

          Chapter 18, Title 29 of the United States Code outlines the regulatory

scope of ERISA.       See generally 29 U.S.C.A. § 1001 et seq.            One of the

principle objectives of ERISA is to protect the interests of plan participants and

beneficiaries. Boggs v. Boggs, 520 U.S. 833, 845, 117 S.Ct. 1754, 1762,

138 L.Ed.2d 45, ___ (1997) (citing 29 U.S.C.A. § 1001(b) and other sections).

ERISA accomplishes this objective through an “anti-alienation” provision,

which prevents a plan participant from granting an interest in the benefits of

the participant’s retirement plan to a non-participant. Id. at 851, 117 S.Ct.

at 1765, 138 L.Ed.2d at ___ (citing 29 U.S.C.A. § 1056(d)(1)). “The purpose

of the proscription, in ERISA, on alienation and assignment of pension funds

is   to    protect   the   participant   from   [the   participant’s]   own   financial

improvidence.” Richardson v. Richardson, 774 A.2d 1267, 1270 (Pa.Super.

2001). ERISA’s anti-alienation provision is compulsory and has few limited

statutory exceptions. Boggs, supra at 851, 117 S.Ct. at 1765, 138 L.Ed.2d

at ___ (citing 29 U.S.C.A. §§ 1056(d)(2), (3)(A)).

          ERISA provides for the entry of a valid QDRO as one exception to

ERISA’s anti-alienation provision. Id. at 846-47, 849, 117 S.Ct. at 1763-64,

138 L.Ed.2d at ___ (noting Congress amended ERISA to create, inter alia,

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QDRO exception to anti-alienation provision when it enacted Retirement

Equity Act of 1984 (“REA”)). “A QDRO is a type of domestic relations order

that creates or recognizes an alternate payee’s right to, or assigns to an

alternate payee the right to, a portion of the benefits payable with respect to

a participant under a plan.” Id. at 846, 117 S.Ct. at 1763, 138 L.Ed.2d at

___ (emphasis added); Smith v. Smith, 5 95 Pa. 80, 85 n.3, 938 A.2d 246,

248 n.3 (2007).     The QDRO provision gave life to one of REA’s central

purposes, specifically “to give enhanced protection to the spouse and

dependent children in the event of divorce or separation….” Boggs, supra at

847, 117 S.Ct. at 1763, 138 L.Ed.2d at ___; Mackey v. Lanier Collection

Agency & Service, Inc., 486 U.S. 825, 838, 108 S.Ct. 2182, 2190, 100

L.Ed.2d 836, ___ (1988) (stating: “The [REA] included several changes in

ERISA which Congress felt were necessary to guarantee that the Nation’s

private retirement-income system provided fair treatment for women.          …

Among the [REA]’s provisions were amendments to ERISA which insured that

[ERISA] could not be used to block the enforcement of ‘[QDROs]’—generally,

court orders providing for child support and alimony payments by ERISA plan

participants”). Outside the REA’s amendments to ERISA, which include the

QDRO provision, “ERISA does not confer beneficiary status on nonparticipants

by reason of their marital or dependent status.” Boggs, supra at 847, 117

S.Ct. at 1763, 138 L.Ed.2d at ___.      “The QDRO provisions protect those

persons who, often as a result of divorce, might not receive the benefits they

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otherwise would have had available during their retirement as a means of

income.” Id. at 854, 117 S.Ct. at 1767, 138 L.Ed.2d at ___. “The QDRO

provisions address the rights of divorced and separated spouses, and their

dependent children, which are the traditional concern of domestic relations

law.” Id. at 849, 117 S.Ct. at 1764, 138 L.Ed.2d at ___.

      Section 1056 of ERISA, which governs and defines QDROs, provides in

relevant part as follows:

         § 1056. Form and payment of benefits

                                 *    *    *

         (d)      Assignment or alienation of plan benefits

         (1)      Each pension plan shall provide that benefits under
         the plan may not be assigned or alienated.

                                 *    *    *

         (3)(A) Paragraph (1) shall apply to the creation,
         assignment or recognition of a right to any benefit payable
         with respect to a participant pursuant to a domestic
         relations order, except that paragraph (1) shall not apply if
         the order is determined to be a qualified domestic order.
         Each pension plan shall provide for the payment of benefits
         in accordance with the applicable requirements of any
         qualified domestic relations order.

         (B)      For purposes of this paragraph—

            (i) the term “qualified domestic relations order”
            means a domestic relations order—

               (I) which 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, and

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              (II) with respect to which the requirements of
              subparagraphs (C) and (D) are met, and

          (ii) the term “domestic relations order” means any
          judgment, decree, or order (including approval of a
          property settlement agreement) which—

              (I) relates to the provision of child support, alimony
              payments, or marital property rights to a spouse,
              former spouse, child, or other dependent of a
              participant, and

              (II) is made pursuant to a State domestic relations
              law (including a community property law).

       (C)       A domestic relations order meets the requirements
       of this subparagraph only if such order clearly specifies—

          (i)   the name and the last known mailing address (if
          any) of the participant and the name and mailing address
          of each alternate payee covered by the order,

          (ii) the amount or percentage of the participant’s
          benefits to be paid by the plan to each such alternate
          payee, or the manner in which such amount or
          percentage is to be determined,

          (iii) the number of payments or period to which such
          order applies, and

          (iv) each plan to which such order applies.

       (D)       A domestic relations order meets the requirements
       of this subparagraph only if such order—

          (i)   does not require a plan to provide any type or form
          of benefit, or any option, not otherwise provided under
          the plan,

          (ii) does not require a plan to provide increased
          benefits (determined on the basis of actuarial value), and

          (iii) does not require the payment of benefits to an

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            alternate payee which are required to be paid to another
            alternate payee under another order previously
            determined to be a qualified domestic relations order.

                                 *     *   *

         (K)      The term “alternate payee” means any spouse,
         former spouse, child, or other dependent of a participant
         who is recognized by a domestic relations order as having a
         right to receive all, or a portion of, the benefits payable
         under a plan with respect to such participant.

                                 *     *   *

29 U.S.C.A. § 1056(d)(1), (3A-D, K).

      Generally, Pennsylvania courts enter QDROs in connection with a

domestic relations matter. See, e.g., Stinner v. Stinner, 520 Pa. 374, 378-

80, 554 A.2d 45, 47-48 (1989); Zehner v. Zehner, 195 A.3d 574, 575-76

(Pa.Super. 2018); Prol v. Prol, 935 A.2d 547, 549 (Pa.Super 2007);

Hayward v. Hayward, 808 A.2d 232, 233-34 (Pa.Super. 2002); Stockton

v. Stockton, 698 A.2d 1334, 1335 (Pa.Super. 1997); Grieve v. Mankey,

679 A.2d 814, 814-15 (Pa.Super. 1996) (discussing QDROs, which trial courts

had approved subsequent to divorce decree in each case). Persuasive cases

from other jurisdictions demonstrate that petitions to enter QDROs derive

from or are adjunct to divorce proceedings, and do not constitute distinct or

independent actions.   See Dorko v. Dorko, __ N.W.2d __, __, 2019 WL

2897592, at *4-*5 (Mich. June 20, 2019) (stating: “A party’s request for entry

of a proposed QDRO does not involve a distinct legal ‘claim.’ … [T]he right to

seek a [QDRO] does not arise from a wrong; instead, that right arises out of

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the divorce judgment itself. … [The] procedural right to entry of the proposed

QDRO [i]s indisputably established by the judgment of divorce”). See also

Johnston v. Johnston, __A. 3d __, __, 2019 WL 2336681, at *7 (Vt. May

10, 2019); Ryan v. Janovsky, 999 N.E.2d 895, 898 (Ind. Ct. App. 2013);

Denaro v. Denaro, 84 A.D.3d 1148, 1149 (N.Y. App. Div. 2011); Jordan v.

Jordan, 147 S.W.3d 255, 262 (Tenn. Ct. App. 2004) (stating consistently that

QDROs are merely procedural devices which are adjunct to entry of divorce

decrees and implement provisions of divorce decrees).

      Instantly, when Wife and Husband filed their joint petitions for entry of

a QDRO, they were legally married.         The couple acknowledged in both

petitions that no divorce action or other family law matter was pending

between Wife and Husband. The trial court entered the first QDRO the parties

sought. Subsequently, the court denied the parties’ petition to amend the

QDRO and vacated the first QDRO as well.         In its opinion, the trial court

explained its rationale as follows:

         In the [c]ourt’s November 9, 2018 Order denying the
         parties’ joint petition, the [c]ourt explained that the parties
         are not currently divorced and are not seeking a divorce at
         this time. [Wife] argued that this fact is irrelevant, and
         pointed to case law precluding ERISA plan administrators
         from refusing to deem a [DRO] as a QDRO based on the
         determination that the underlying divorce is a sham.
         Brown v. Continental Airlines, Inc., 647 F.3d 221 (5th
         Cir. 2011). The [c]ourt explained that the salient distinction
         between Brown and the case at bar is that here, the parties
         are not divorced and have not filed for divorce. While
         Brown instructs that a plan administrator should not look
         into the legitimacy of a divorce, in that case, the parties
         were legally divorced, even if they continued to cohabitate

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       with one another. Id. at 225….

                                *     *      *

       The parties are seeking to take $700,000.00 from
       [Husband]’s [Plan] and shift it to an IRA in [Wife]’s name.
       The parties are married and are not seeking to divorce one
       another. There is not a child or spousal support order in
       place. There is not a domestic relations dispute between
       the parties. While the IRA may yield a higher interest
       payout than any interest [Husband] could earn on the same
       funds through the [Plan], the [c]ourt found that under the
       circumstances of this matter, the entry of a QDRO is
       inappropriate.

       The parties are asking the Court to rubberstamp a domestic
       relations order in the absence of a domestic relations
       dispute. They seek to use that order to obtain a payout of
       benefits to [Wife], who is an alternate payee. Unlike
       Brown, where Continental Airlines’ plan manager was
       directed not to look into whether the parties’ divorce was a
       sham, the parties herein are asking for the entry of an order
       which will enable them to circumvent the express anti-
       alienation provision of [ERISA]. 29 U.S.C.A. § 1056(d)(1).
       While a pending divorce is not absolutely necessary for the
       entry of a QDRO, under the rationale of the exception, the
       complete absence of any support obligation which would
       justify payment under the exception to Section 1056
       appears to undermine [Wife]’s position.

                                *     *      *

       In this case, there is not a factual dispute that the parties
       are continuing to cohabitate with one another and have not
       undergone either a physical or a financial separation from
       one another. The parties indicated an intent to remain
       married, and there is not any evidence from which the
       [c]ourt could glean that they are separated in any
       capacity…. They are not able to reap any benefits from an
       IRA held by [Wife] into which [Husband]’s retirement funds
       would be paid. However, this prohibition is consistent with
       the underlying rationale behind the exception in ERISA.

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            Because the [c]ourt did not find that the entry of a domestic
            relations order is appropriate in this case, the [c]ourt
            properly denied the parties’ joint petitions for the entry of a
            [QDRO].

(Trial Court Opinion, filed January 7, 2019, at 5-8) (some internal citations,

quotations, and emphasis omitted).          The record supports the trial court’s

decision.

      Here, Husband is a participant in an ERISA-governed plan. The parties

initiated this case by filing a joint petition for entry of a QDRO for the sole

purpose of transferring to Wife’s IRA an amount of the Plan benefits, because

Wife has a marital property interest in the Plan. See Brown v. Brown, 669

A.2d 969, 972 (Pa.Super. 1995), aff’d, 544 Pa. 360, 690 A.2d 700 (1997)

(providing retirement pension benefits, vested and non-vested, are marital

property rights subject to equitable distribution upon divorce).              But see

Boggs, supra.        Without the entry of a valid QDRO, the parties’ proposed

transfer violates ERISA’s anti-alienation prohibition. See id.; 29 U.S.C.A. §

1056(d)(1), (3)(A). In their joint petitions and throughout the life of this case,

however, Husband and Wife have expressly acknowledged they are married

with no pending divorce or other family law matter between them; the parties

at no time stated or implied they intended to initiate a support action. Instead,

the parties stated in their petitions they wished the Plan benefits to remain

marital property upon entry of the proposed QDRO. Thus, the record makes

clear there is no current, foreseeable, or desired divorce or domestic relations

matter of any kind between Husband and Wife, which is required for the entry

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of a QDRO under ERISA. See Boggs, supra; Mackey, supra. Under these

circumstances, the parties’ joint petitions are attempts to circumvent ERISA’s

anti-alienation proscription. See Boggs, supra; Mackey, supra. The cited

persuasive authority leads us to conclude a QDRO is a procedural right

derivative of or adjunct to a domestic relations matter, but outside the context

of a domestic relations matter, a QDRO is not a distinct, discrete legal claim.

See Dorko, supra; Johnston, supra; Ryan, supra; Denaro, supra;

Jordan, supra. Accordingly, Wife’s claim that a domestic relations action is

not a prerequisite to entry of a QDRO fails.4

        Based upon the foregoing, we hold that absent a divorce or other

domestic relations matter pending between spouses, they cannot obtain a

QDRO for the sole purpose of moving funds in the participant/spouse’s ERISA

plan out of the plan to the non-participating spouse. Accordingly, we affirm.

        Order affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 8/19/19

____________________________________________

4   Due to our disposition, we will not address Wife’s remaining claims on appeal.

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