Court Opinion

ID: 2788939
Source: CourtListenerOpinion
Date Created: 2015-03-24 22:04:21.450424+00
Date Added: 2024-06-11T11:08:26.447532
License: Public Domain

March 24 2015

                                          DA 14-0455
                                                                                        Case Number: DA 14-0455

                  IN THE SUPREME COURT OF THE STATE OF MONTANA

                                          2015 MT 90

IN RE THE MARRIAGE OF:
BRENDA JEANETTE CADENA,
f/k/a Brenda Jeanette Fries,

              Petitioner and Appellee,

         v.

KEVIN JOHN FRIES,

              Respondent and Appellant.

APPEAL FROM:           District Court of the Thirteenth Judicial District,
                       In and For the County of Yellowstone, Cause No. DR 99-1328
                       Honorable Michael G. Moses, Presiding Judge

COUNSEL OF RECORD:

                For Appellant:

                       Kathryn S. Syth, LaRance & Syth, PC; Billings, Montana

                For Appellee:

                       Jeff A. Turner, Towe, Ball, Mackey, Sommerfeld & Turner, PLLP;
                       Billings, Montana

                                                   Submitted on Briefs: February 25, 2015
                                                              Decided: March 24, 2015

Filed:

                       __________________________________________
                                         Clerk
Justice Michael E Wheat delivered the Opinion of the Court.

¶1    Kevin John Fries (Fries) appeals from the qualified domestic relations order

(QDRO) of the Montana Thirteenth Judicial District Court, Yellowstone County. We

affirm, order that Cadena is entitled to reasonable attorney fees on appeal, and remand for

determination of those fees.

                                         ISSUES

¶2    We review the following issues:

       1. Did the District Court err in its application of the law regarding division of
Fries’ pension?

      2. Is either party entitled to attorney fees?

                 FACTUAL AND PROCEDURAL BACKGROUND

¶3    Brenda Cadena (Cadena) and Fries married on June 7, 1980. The marriage was

dissolved by an order of the District Court on March 13, 2000. The order approved a

settlement agreement that Cadena and Fries entered into on February 29, 2000. In the

settlement agreement, Cadena and Fries had, among other things, agreed that Fries’

Western Conference of Teamsters pension would be “equally divided between [them] as

of the date of entry of a final decree of dissolution of marriage.” The District Court

found that the agreement was “fair and equitable” and “not unconscionable.”

¶4    Neither party further addressed the division of the pension until Cadena filed a

proposed QDRO on November 12, 2013. The pension had not fully vested or begun to

pay out benefits by this time. In the agreement, Cadena proposed to divide the pension as

follows:

                                             2
      4. DESIGNATION OF ALTERNATE PAYEE’S SEPARATE
      PERCENTAGE INTEREST IN PARTICIPANT’S BENEFITS.
             (a) The Court finds that [Fries] has earned Plan benefits that are
      community/marital property of [Fries] and [Cadena].
             (b) The Court awards [Cadena] a separate interest in [Fries’] Plan
      benefits equal to 50% of the marital property portion of [Fries’] normal
      retirement benefit accrued to the effective date of [Cadena]’s Plan benefits
      (“Alternate Payee’s Separate Percentage Interest”). The effective date of
      [Cadena]’s Plan benefits is hereinafter referred to as “Alternate Payee’s
      Benefit Commencement Date.”
             (c) Alternate Payee’s Separate Percentage Interest in [Fries’] Plan
      benefits shall be determined using the following formula: 50% multiplied
      by [Fries’] total hours of benefit service under the Plan earned from the date
      of marriage to the date of dissolution divided by [Fries’] total hours of
      benefit service earned up to Alternate Payee’[s] Benefits Commencement
      Date.

Cadena also proposed a number of provisions specifying alternate division schemes in

case of Fries’ death or Cadena’s death. These alternate schemes are not relevant to this

appeal.

¶5    Fries objected to Cadena’s proposed QDRO, and he submitted a proposed order of

his own. It was largely identical to Cadena’s proposed order. The differences relevant to

this appeal are underlined in the following excerpt from Fries’ proposed order:

      4. DESIGNATION OF ALTERNATE PAYEE’S SEPARATE
      PERCENTAGE INTEREST IN PARTICIPANT’S BENEFITS.
             (a) The Court finds that [Fries] has earned Plan benefits that are
      community/marital property of [Fries] and [Cadena].
             (b) The Court awards [Cadena] a separate interest in [Fries’] Plan
      benefits equal to 50% of the marital portion of [Fries’] normal retirement
      benefit accrued to the effective date of [Cadena]’s Plan Benefits (“Alternate
      Payee’s Separate Percentage Interest”). The effective date of [Cadena]’s
      Benefits is March 13, 2000.
             (c) Alternate Payee’s Separate Percentage Interest in [Fries’] Plan
      benefits, [Cadena] shall be entitled to receive a portion of the monthly
      benefit that would be payable to [Fries] at normal retirement age, which is
      equal to fifty percent (50%) of [Fries’] vested benefit in the Plan, accrued

                                            3
       as of March 13, 2000, calculated as if [Fries] had separated from service on
       that date with a vested benefit under the Plan.

¶6     Following briefing, the District Court issued a QDRO identical to Cadena’s

proposed order, with the exception of a typographical change that is not relevant to this

appeal. Fries appeals from the QDRO.

                               STANDARDS OF REVIEW

¶7     The construction and interpretation of a dissolution agreement is a question of law

that we review for correctness. In re Marriage of Bushnell, 2014 MT 130, ¶ 8, 375 Mont.
125, 328 P.3d 608. We review a district court’s conclusions of law regarding a division

of marital assets to determine whether they are correct. Bushnell, ¶ 7. We review a

district court’s award of attorney fees to determine whether the court abused its

discretion. In re Marriage of Mease, 2004 MT 59, ¶ 57, 320 Mont. 229, 92 P.3d 1148.

                                       DISCUSSION

¶8     1. Did the District Court err in its application of the law regarding division of
Fries’ pension?

¶9     The parties agree that the language of the settlement agreement as adopted by the

dissolution order controls the division of the pension. Accordingly, they agree that each

of them is entitled to half of the value of the pension at the time of dissolution. Each also

agrees that his or her part of the pension at dissolution is to be paid to him or her as a

portion of each scheduled benefit payment once such payments begin.1 The parties

disagree, however, about how to determine their respective shares of each payment so

1
  As the parties agree that their portions of the pension at dissolution should be paid to them
when pension benefit payments begin, we do not address whether this payment timing is
required by the settlement agreement.
                                                4
that the deferred payments reflect an equal division of the value of the pension at

dissolution.    Each of them claims that their proposed method is supported by the

language of the settlement agreement.

¶10    It is well established that retirement benefits are part of the marital estate. See,

e.g., Rolfe v. Rolfe, 234 Mont. 294, 296, 766 P.2d 223, 225 (1988). In separations or

marital dissolutions, parties may enter into written agreements disposing of marital

estates.       Section 40-4-201(1), MCA; Bushnell, ¶ 9.           Absent a finding of

unconscionability, the District Court must divide property in a manner consistent with the

terms of such an agreement. Sections 40-4-201(3) and -201(4), MCA; Bushnell, ¶ 14.

Here, the settlement agreement specifies that “[Fries’] Teamster Retirement shall be

equally divided between the parties as of the date of entry of a final decree of dissolution

of marriage.” The District Court found that this was not unconscionable and neither

party contests this finding. It is therefore our role to determine whether the District

Court’s QDRO gives effect to this language. See Bushnell, ¶¶ 9, 14.

¶11    Fries contends that equal division at the time of dissolution, as required by the

settlement agreement, requires division of each anticipated monthly benefit payment with

respect to the vested value of the pension at the time dissolution was ordered. Put

another way, he argues that Cadena should receive portions of the benefit payments based

on the value of the benefit payments the couple would have been entitled to had Fries

ended his employment on the date of their dissolution. The District Court rejected this

approach because it claimed that it is not one of the methods of pension valuation that

this Court has recognized. The District Court reasoned, as Cadena now argues, that this
                                             5
Court has recognized two methods for valuing a pension, and that only the “time rule

method” is appropriate in this case.

¶12    Cadena and the District Court are correct in noting that we have recognized two

pension valuation methods.      In re Marriage of Swanson, 2004 MT 124, ¶¶ 21, 26,

321 Mont. 250, 90 P.3d 418. Where the value of a pension is apportioned and distributed

at the time of dissolution, we have required the use of the “lump sum method.” This

method requires valuation of the plan based on the present value of expected future

payments.    Swanson, ¶ 22; see In re Marriage of Hochhalter, 2001 MT 268, ¶ 32,

307 Mont. 261, 37 P.3d 665. Where, on the other hand, the spouses will each receive a

portion of anticipated monthly payments that have not yet begun, we have required the

parties to use the time rule method. This method divides any future monthly payments in

proportion to the quotient of the time employed during marriage and the total time

employed before retirement. Swanson, ¶ 23; Rolfe, 234 Mont. at 298, 766 P.2d at 226.

¶13    While we have required district courts to use one of these two valuation methods

when equitably dividing a pension that is part of the marital estate, we have not

foreclosed the use of other valuation methods when parties divide a marital estate by

agreement. See, e.g., In re Marriage of Spawn, 2011 MT 284, ¶¶ 10-12, 362 Mont. 457,

269 P.3d 887 (considering valuation methods in the context of equitable distribution);

Swanson, ¶¶ 21, 26 (same); Rolfe, 234 Mont. at 300, 766 P.2d at 227 (same). Instead, the

parties are limited only to whatever conscionable methods they can agree upon. See

§ 40-4-201, MCA; Bushnell, ¶ 14 (holding that absent unconscionable terms, a settlement

agreement controls division of property in a dissolution); cf. Kortum-Managhan v.
                                           6
Herbergers NBGL, 2009 MT 79, ¶ 45, 349 Mont. 475, 204 P.3d 693 (“every individual

enjoys the fundamental freedom to contract, which allows parties to craft terms

governing their private conduct”). Thus, the District Court and Cadena are incorrect

when they concluded that Fries’ proposed valuation method must be rejected because it

was not one of the two accepted equitable division valuation methods.

¶14    Instead, Fries’ method must be rejected because it does not give effect to the terms

of the settlement agreement. That is, it would not result in equal division of the pension

at the time of dissolution. There are three conceptual components to the value of the

pension, given that the pension has yet to fully vest or to begin paying benefits and that

the value of the pension is to be divided at one time and paid in the future. First, there is

the vested monetary value of the pension at dissolution, based on the employer and

employee contributions and any growth – from interest or otherwise – to the date of

dissolution. Second, there is interest that may accrue on the value of the pension between

dissolution and when benefit payments are made. See Spawn, ¶ 15; Rolfe, 234 Mont. at

298-99, 766 P.2d at 226. Third, there is potential for growth or loss in value that is

attributable to sources other than interest. This may include, for example, growth from

increased contributions or losses due to termination or early retirement. See Spawn, ¶ 13;

Rolfe, 234 Mont. at 298, 766 P.2d at 226.

¶15    Here, Fries’ proposed method would at most divide the first component, while

apportioning the second and third to Fries alone. Fries argues that this gives effect to the

settlement agreement, equally dividing the pension at dissolution. He implies that the

settlement agreement’s language “as of the date of entry of a final decree of dissolution
                                             7
of marriage” means that the parties intended to forego division of the second and third

conceptual components, as they concern potential future increases and decreases in value

not attributable to pre-dissolution employment and not otherwise part of the pension’s

value at dissolution. This is incorrect.

¶16    Equal division of an amount to be paid in deferred installments requires equal

division of any interest that may accrue during deferral. Each “spouse is entitled to

increases or accruals on her [portion] because of the delay in receiving those payments.”

Rolfe, 234 Mont. at 298, 766 P.2d at 226; accord 1 Barth H. Goldberg, Valuation of

Divorce Assets, § 9:14, 910 (rev. ed. 2005). Given the time value of money, the value of

half the vested portion of the pension at dissolution, paid at some point in the future is, in

reality, less than the value of the same amount paid at dissolution. Thus, by apportioning

half the vested value of the pension at dissolution to Cadena and specifying that the same

amount is to be paid when monthly benefit payments begin, Fries’ method excludes

Cadena from the interest on her share and apportions something less than half of the

value of the pension at dissolution to Cadena. Only by apportioning interest accrued

during deferral to each spouse can the pension at dissolution be equally divided at one

time and paid at a time in the future.

¶17    Equal division of a pension to be paid in deferred installments also requires equal

division of any gains or losses occurring during deferral that are not solely attributable to

the merits of one spouse. See Rolfe, 234 Mont. at 298, 766 P.2d at 226. There is some

value to the pension at dissolution that is not represented by the vested monetary value at

that time. There can be some risk of loss due, for example, to early retirement or
                                              8
termination of the employee spouse following dissolution. This negatively impacts the

value of each spouse’s share. Additionally, there is a possibility of gain attributable to

sources other than interest, like the vesting of employer contributions and increased

contributions due to non-merit pay raises. This positively impacts the value of each

spouse’s share. Such gains are also at least partially attributable to and cumulative of

employment services performed before dissolution.           See Rolfe, 234 Mont. at 298,

766 P.2d at 226; see also Goldberg, Valuation of Divorce Assets at § 9:5, 806; Susan J.

Prather, Comment, Characterization, Valuation, and Distribution of Pensions at Divorce,

15 J. Am. Acad. Matrim. Law. 443, 459 (1998) (“[T]he greater-value later years would

not have been possible without the lesser-value earlier years. We cannot say the years

after the marriage were more valuable than the years during the marriage.”). Neither the

post-dissolution potential for loss or gain is represented in the vested monetary value of

the pension at dissolution, yet each is part of the value of the pension at dissolution. Only

by apportioning this post-dissolution potential to each spouse can the value of the pension

at dissolution be equally divided and paid at a point in the future.

¶18    Fries’ proposed method would only divide the vested value of the pension at the

time of dissolution. It would not divide the interest or potential post-dissolution losses or

gains earned during deferral. As such, Fries’ proposed method would not equally divide

the pension as of the dissolution, as required by the settlement agreement.            Thus,

although it did so for the wrong reasons, the District Court was correct in rejecting Fries’

proposed method.

                                              9
¶19    Similarly, the District Court correctly adopted Cadena’s proposed method, but it

did so for the wrong reasons. As expressed in the passage quoted above, Cadena’s

proposed method can be described by the following equation:

                                   1 Marriage Employment Time
       Cadena s Payment Share =      ∗                        ∗ Total Payment.
                                   2   Total Employment Time

This is the time rule method, as we have adopted it in Rolfe and successive cases. See

Swanson, ¶ 23; Rolfe, 234 Mont. at 298, 766 P.2d at 226. Because the time rule method

is the accepted equitable division valuation method for dividing deferred benefits, the

District Court adopted Cadena’s proposed method.           This reasoning was incorrect.

Adoption was correct, though, since Cadena’s method gives effect to the language of the

settlement agreement by equally dividing all three conceptual components of the pension.

Under the time rule method, “the extent of the marital interest is determined as of the date

of the dissolution.” Spawn, ¶ 15 (quoting Rolfe, 234 Mont. at 298, 766 P.2d at 226).

However, the method necessarily takes interest and other post-dissolution gains or losses

into account because “the benefit factors to be applied . . . are those in effect at

retirement.” Spawn, ¶ 15 (quoting Rolfe, 234 Mont. at 298, 766 P.2d at 226). Because

Cadena’s proposed method gives effect to the settlement agreement – equally dividing

the pension as of the date of dissolution and paying each spouse their share of this

division at some point in the future – the District Court was correct to adopt it in its

QDRO.

                                            10
¶20    2. Is either party entitled to attorney fees?

¶21    The District Court, after hearing arguments from each party, decided not to award

attorney fees to either party. The parties agree that this was an abuse of discretion since

the settlement agreement required the District Court to award attorney fees to the party

prevailing in this action. The parties disagree, however, about to whom fees should be

awarded as each contends that he or she is the prevailing party.

¶22    Section 40-4-110(1), MCA, provides that a court may, at its discretion, order

either party to pay attorney fees related to maintaining or defending a dissolution

proceeding. Where, however, a settlement agreement provides for payment of attorney

fees, that agreement will control over § 40-4-110(1), MCA. Mease, ¶ 57. Here, the

settlement agreement entered by Fries and Cadena states:

       Each party agrees to be solely responsible for his or her attorney fees,
       appraisal costs, and any other charges associated in any manner with this
       proceeding. However, should any action, other than to modify child
       support, be commenced in the future to enforce, modify or interpret any
       provision contained herein, the Court, as costs of suit, shall award
       reasonable attorney fees and costs [to] the prevailing party.

The present appeal and the underlying action concerned interpretation and enforcement

of the settlement agreement. Thus, by the plain language of the agreement, the prevailing

party is entitled to attorney fees.

¶23    Fries is not the prevailing party in this case. See Hart v. Hart, 2011 MT 102,

¶¶ 28-29, 360 Mont. 308, 258 P.3d 389. He, therefore, is not entitled to attorney fees.

The District Court was correct when it decided not to award attorney fees in his favor.

                                             11
¶24   Recognizing this, Cadena argues that she was the prevailing party and that she is

entitled to fees. However, Fries notes that this court cannot award fees in favor of

Cadena because she did not raise this issue in a cross-appeal. We agree.

¶25   We have held that an appellee cannot independently raise the issue of attorney fees

in the absence of a cross-appeal or, for that matter, any “matters separate and distinct

from those sought to be reviewed by the appellant.” Laudert v. Richland Cnty. Sheriff’s

Dep’t, 2000 MT 218, ¶ 46, 301 Mont. 114, 7 P.3d 386 (quoting Johnson v. Tindall,

195 Mont. 165, 169, 635 P.2d 266, 268 (1981)); accord Rouse v. Anaconda-Deer Lodge

Cnty., 250 Mont. 1, 9, 817 P.2d 690, 695 (1991); Robertson v. Robertson, 180 Mont. 226,

232, 590 P.2d 113, 116-17 (1978). We have also stated that “a party must cross-appeal if

the party seeks to change any part of the judgment below,” City of Missoula v. Robertson,

2000 MT 52, ¶ 19, 298 Mont. 419, 998 P.2d 144 (2000), and that “[a] respondent who

has not cross-appealed may not seek a determination of the amount involved more

favorable to him than that made by the court below.”          Johnson, 195 Mont. at 169,

635 P.2d at 268. While the issue of attorney fees was raised on appeal by Fries, Cadena

may only argue against an award in Fries’ favor in the absence of a cross-appeal.

Seeking an award of fees in favor of herself would require Cadena to “seek[] to

change . . . part of the judgment below” and “seek a determination . . . more favorable to

[her].” This is not allowed in the absence of a properly filed cross-appeal. City of

Missoula, ¶ 19; Johnson, 195 Mont. at 169, 635 P.2d at 268.

¶26   While we cannot consider whether Cadena is entitled to attorney fees incurred in

the District Court, a cross-appeal is not necessary for this Court to award attorney fees
                                           12
incurred on appeal. See Chamberlin v. Puckett Constr., 277 Mont. 198, 210, 921 P.2d
1237, 1244 (1996). Cadena is the party prevailing in this appeal. Pursuant to the

settlement agreement, she is entitled to reasonable attorney fees on appeal.        Before

attorney fees can be awarded, however, there must be some proof introduced into the

record concerning the amount and reasonableness of the fees. Mease, ¶ 58. We therefore

order that Cadena is entitled to reasonable attorney fees on appeal and remand to the

District Court for determination of those fees.

                                     CONCLUSION

¶27    Cadena’s proposed method of distributing the pension accurately reflected the

division required by the settlement agreement. For this reason, the District Court was

correct to adopt Cadena’s proposed QDRO. It was also correct not to award attorney fees

in favor of Fries. For these reasons, we affirm. As the prevailing party in this appeal and

pursuant to the settlement agreement, Cadena is entitled to reasonable attorney fees on

appeal. We remand to the District Court for determination of those fees.

                                                  /S/ MICHAEL E WHEAT

We Concur:

/S/ MIKE McGRATH
/S/ PATRICIA COTTER
/S/ JIM RICE
/S/ BETH BAKER

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