Court Opinion

ID: 3198632
Source: CourtListenerOpinion
Date Created: 2016-04-27 23:08:45.420129+00
Date Added: 2024-06-11T14:22:56.862511
License: Public Domain

J-A02043-16

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

THOMAS E. BORTZ,                            :     IN THE SUPERIOR COURT OF
                                            :          PENNSYLVANIA
                          Appellant         :
                                            :
                    v.                      :
                                            :
STACIE L. BORTZ                             :
                                            :     No. 1147 MDA 2015

                   Appeal from the Order Entered June 23, 2015
          in the Court of Common Pleas of Lycoming County Civil Division
                           at No(s): FC-2012-021531-D1

BEFORE: PANELLA, STABILE, and FITZGERALD,* JJ.

MEMORANDUM BY FITZGERALD, J.:                          FILED APRIL 27, 2016

        Appellant, Thomas E. Bortz (“Husband”), appeals from the order

entered in the Lycoming County Court of Common Pleas. Husband contends

the Qualified Domestic Relations Order (“QDRO”) regarding his City of

Williamsport Police Pension Plan is not consistent with his and Appellee’s,

Stacie L. Bortz’s (“Wife”), Marriage Settlement Agreement (“MSA”).1        We

affirm.

        At the hearing on the Petition for Contempt/Petition for Enforcement of

Property Settlement Agreement filed by Wife on April 17, 2015, the parties

stipulated, inter alia, to the following facts:   “[T]hey entered into a [MSA]

*
    Former Justice specially assigned to the Superior Court.
1
  The MSA is also referred to as a Property Settlement Agreement.          For
consistency, we refer to it as a MSA.
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dated December 5, 2013.”2 R.R. at 25a. “[T]hey hired Jonathan Cramer of

Conrad Siegal to prepare the   QDROs, the three (3) QDROs referenced in

that [MSA].” Id.   “[T]hey obtained drafts of the three (3) QDROs from Mr.

Cramer and . . . the plan administrators of each of the three (3) pension

plans approved the [QDROs] as drafted by Jonathan Cramer.” Id. at 25a-

26a. Wife signed the QDROs. Id. at 26a. Husband has not executed the

QDROs. Id. “The parties agree that they were married on December 18,

2004 and they separate[d] on October 24, 2012.”         Id. at 29a.    They

stipulated that the agreement was “that the martial portion would be divided

55/45.” Id. at 32a.

     The MSA provided, inter alia, as follows:

        16. Employment Benefits.        The parties hereto have
        reached agreement regarding the retaining of and
        distribution of their respective employment benefits as
        follows:

                                *    *    *

        B. Wife’s retirement. The parties agree that all of the
        marital portion of Wife’s retirement account(s) and/or
        pension plan(s) through her employment with Lycoming
        County shall be divided between the parties such that Wife
        will receive Fifty-Five Percent (55%) of the martial portion
        and Husband will receive Forty-Five (45%) of the martial
        portion pursuant to current law.          For purposes of
        determining the marital portion, the parties agree that
        they were married on December 18, 2004, and they
        separated on October 24th, 2012. In the event the parties
        need to prepare a [QDRO] for purposes of dividing Wife’s

2
 See R.R. at 5a-15a. For convenience, we refer to the reproduced record
where applicable.

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         retirement account(s) and/or pension plan(s), they agree
         to hire a third party to prepare the necessary paperwork
         and will equally share the expense associated therewith.

         C. Husband’s Retirement. The parties have agreed to
         divide all of the marital portion of Husband’s retirement
         account(s) and/or pension plan(s) through his employment
         with the City of Williamsport in such a manner that Wife
         shall receive Fifty-Five(55%) of the marital portion and
         Husband will receive Forty-Five Percent (45%) of the
         marital portion pursuant to current law. For purposes of
         determining the marital portion, the parties agree that
         they were married on December 18, 2004, and they
         separated on October 24th, 2012. In the event the parties
         need to prepare a [QDRO] for purposes of dividing
         Husband’s Retirement Account(s) and/or pension plan(s),
         they agree to hire a third party to prepare the necessary
         paperwork and will equally share the expense associated
         therewith.

         D. Husband’s Deferred Compensation Account. The
         parties agree to divide the marital portion of Husband’s
         deferred compensation account such that Wife will receive
         Fifty-Five Percent (55%) of the partial portion of the
         account and Husband will receive Forty-Five Percent (45%)
         of the marital portion of the account pursuant to current
         law. For purposes of determining the marital portion, the
         parties agree that they were married on December 18,
         2004, and they separated on October 24th, 2012. In the
         event the parties need to prepare a [QDRO] for purposes
         of dividing Husband’s Deferred Compensation Account,
         they agree to hire a third party to prepare the necessary
         paperwork and will equally share the expense associated
         therewith.

MSA, 12/5/13, at 12a-13a.

      Paragraph 7 of the QDRO which applies to Husband’s City of

Williamsport, PA Pension Plan states, in pertinent part, as follows:

         7. This [Q]DRO assigns to [Wife], an amount equal to
         55.0% of the marital portion of [Husband’s] accrued
         retirement benefit under the Plan as of [Husband’s] date of

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          retirement. The marital portion of [Husband’s] accrued
          retirement benefit equals the monthly retirement benefit,
          payable in the normal form of payment for [Husband’s]
          lifetime, multiplied by a fraction equal to 7.85 years (the
          period from December 18, 2004, date of marriage, until
          October 24, 2012, date of separation) divided by the years
          of credited benefit service (including any partial year
          credited) earned by [Husband] as of the date his benefit
          accruals cease. If any cost-of-living increase or other
          increase is applied to the pension payable to [Husband],
          the same increase shall apply to [Wife’s] share, but only to
          the extent permitted by the Plan and state law.

Trial Ct. Order and Op., 6/23/15, at 44a-45a (quotation marks omitted).3

     On June 23, 2015, the trial court entered an order providing, inter alia,

that “Husband is hereby ORDERED and DIRECTED to sign the Domestic

Relations Order in regard to his City of Williamsport Police Pension Plan as

drafted by Conrad Siegel . . . .” Id. at 51a. This appeal followed. Appellant

filed a court-ordered Pa.R.A.P. 1925(b) statement of errors complained of on

appeal.   The trial court filed a Pa.R.A.P. 1925(a) opinion relying upon its

order and opinion of June 23, 2015.

     Husband raises the following issues for our review:

          I. Did the Trial Court err and/or commit an abuse of
          discretion in finding that the language of Paragraph 16 B.
          through D. in the parties’ [MSA] is clear and unambiguous?

          II. Did the Trial Court err and/or commit an abuse of
          discretion in its decision of June 23, 2015, regarding the
          parties’ [MSA] relative to equitable distribution, and
          specifically in finding that the [QDRO] regarding [ ]
          Husband’s City of Williamsport Police Pension Plan, as

3
 The Domestic Relations Order was docketed July 17, 2015.         See R.R. at
53a-56a.

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         drafted by Conrad Siegel, is consistent with the terms of
         the parties’ [MSA] dated December 5, 2013?

Husband’s Brief at 4.

      Husband contends that the language in the MSA agreement, viz.,

“pursuant to current law,” in paragraph 16 B. through D. is ambiguous. Id.

at 14.   He claims that the phrase refers to contract law and not to “the

statutory law [viz., 23 Pa.C.S. § 3501(c)(1),] regarding the division of

defined benefit retirement plan.”    Id.    Based upon this Court’s holding in

Bianchi v. Bianchi, 859 A.2d 511 (Pa. Super. 2004), Husband contends

Wife “cannot benefit from post-separation increases in [Husband’s] pension .

. . .” if they are attributable to his “efforts and/or contributions.” Id. at 17-

19. Husband states that the QDROS “are legally incorrect as they include,

as a benefit to Wife, post separation monetary contributions made by the

efforts and/or contributions of Husband . . . .” Id. at 19.

      We address Husband’s issues together because they are interrelated.

In conducting our review of the court’s holding as to the MSA, we are guided

by the following principles:

            Because contract interpretation is a question of law,
            this Court is not bound by the trial court’s
            interpretation.       Our standard of review over
            questions of law is de novo and to the extent
            necessary, the scope of our review is plenary as the
            appellate court may review the entire record in
            making its decision. However, we are bound by the
            trial court’s credibility determinations.

            . . . On appeal from an order interpreting a marital
            settlement agreement, we must decide whether the

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            trial court committed an error of law or abused its
            discretion.

Kraisinger v. Kraisinger, 928 A.2d 333, 339 (Pa. Super. 2007) (citations

omitted).

     The Pennsylvania Supreme Court in Smith v. Smith, 938 A.2d 246

(Pa. 2007) held, inter alia, that “courts . . . should allocate the pension

between its marital and nonmarital portions solely by use of a coverture

fraction” pursuant to 23 Pa.C.S. § 3501(c) (quotation marks omitted). Id.

at 259.

             In 2004, . . . the legislature attempted to address the
          confusion in our law by adding a subsection to the Divorce
          Code regarding the distribution of defined benefit
          pensions. In relevant part, § 3501(c) provides:

            (c) Defined benefit retirement plans.-Notwithstanding
            subsections (a) [General Rule regarding marital
            property], (a.1) [Measuring and determining the
            increase in value of non-marital property] and (b)
            [Presumption that all property acquired during the
            marriage is marital]:

               (1) In the case of the marital portion of a defined
               benefit retirement plan being distributed by means of
               a deferred distribution, the defined benefit plan shall
               be allocated between its marital and nonmarital
               portions solely by use of a coverture fraction. The
               denominator of the coverture fraction shall be the
               number of months the employee spouse worked to
               earn the total benefit and the numerator shall be the
               number of such months during which the parties
               were married and not finally separated. The benefit
               to which the coverture fraction is applied shall include
               all   postseparation     enhancements      except     for
               enhancements arising from postseparation monetary
               contributions made by the employee spouse,
               including the gain or loss on such contributions.

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                               *     *    *

       23 Pa.C.S. § 3501 (emphasis omitted).

       Significantly, in its official comments, the legislature
       specifically addressed this Court’s prior holdings regarding
       the distribution of defined benefit pensions, criticizing the
       lead opinion in Berrington [v. Berrington, 633 A.2d 589
       (Pa. 1993)], which valued the pension utilizing the salary
       at the time of separation, and commending the analysis
       offered in Gordon by Justices Flaherty, Cappy, and
       Newman, and by the Superior Court in Holland v.
       Holland, [ ] 588 A.2d 58 ([Pa. Super.] 1991).

          New subsection (c) seeks to reverse Berrington [ ]
          to adopt a coverture fraction methodology along the
          lines of Holland [ ] and to include all
          postseparation        enhancements      except    for
          postseparation monetary contributions by the
          employee spouse in the value of the pension.
          The new language codifies the result reached by
          Justices Flaherty, Cappy and Newman regarding the
          postseparation retirement enhancements in Gordon
          v. Gordon, [ ] 681 A.2d 732 ([Pa.] 1996) (3-3
          decision on this issue, affirming the Superior Court’s
          exclusion of the enhancements from the marital
          estate). Three early retirement inducements were at
          issue in Gordon. The justices listed above opined
          that since no present efforts or contributions of the
          employee spouse were required to receive the
          supplemental      retirement   income    and    bonus
          inducements, they were includable in the marital
          estate. The third inducement was an annuity paid
          for partially by the employee spouse and partially by
          the employer. Justices Flaherty, Cappy and Newman
          would have included the portion of the annuity paid
          for by the employer in the marital estate.

       23 Pa.C.S. § 3501(c), cmt.

          As we must defer to the legislature as the policy making
       body, we conclude that the holding in Berrington no
       longer controls regarding the use of the salary at time of

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        separation.     Instead, we honor the legislature’s
        unequivocal intention to utilize the coverture fraction to
        provide economic justice between the parties, as discussed
        by the Superior Court in Holland:

           A delayed distribution of pension benefits requires
           the non-employed spouse to wait until some
           indefinite time in the future to receive the marital
           share. To compensate for this postponement of
           benefit, that spouse is permitted to enjoy increases
           in value occasioned by continued employment of the
           worker. Also, the employed spouse increases the
           non-marital share of the benefits since continuing
           service enlarges the denominator.      Further, later
           year wage increases are a product of experience and
           longevity which were developed during the marriage.
           The [employee-spouse] . . . can look forward to the
           benefits which accrue from a vested pension. His
           former spouse is entitled to share in any increase in
           value of the marital share which may occur by [the
           employee-spouse’s] continued employment.

        Holland, 588 A.2d at 60. Accordingly, rather than using
        the salary at the time of separation, courts instead should
        allocate the pension “between its marital and nonmarital
        portions solely by use of a coverture fraction.” 23 Pa.C.S.
        § 3501(c).       Thus, the non-employee spouse “is
        permitted to enjoy increases in value occasioned by
        continued employment of the worker.” Holland, 588
A.2d at 60. In the simplest of cases, the determination of
        the marital portion of a defined benefit pension will entail a
        straightforward application of the coverture fraction to the
        final total value of the pension, even though the value has
        increased due to years of postseparation employment.

Id. at 257-59 (emphases added and footnote omitted).

     In the case sub judice, the trial court opined:

        The [c]ourt finds that the language of Paragraph 16B.
        through D. in the parties’ [MSA] is clear and unambiguous.
        The parties agree that Wife would receive 55% of the
        marital portion and Husband would receive 45% pursuant
        to current law. At the time the parties executed the

                                    -8-
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           [MSA,] the current law regarding the division of defined
           benefit retirement plans was outlined at 23 Pa.C.S.A. §
           3501(c)(1) . . . .

Trial Ct. Order and Op. at 46a.

      In the instant case, the QDRO employed the coverture fraction.          It

stated:

           The marital portion of [Husband’s] accrued retirement
           benefit equals the monthly retirement benefit, payable in
           the normal form of payment for [Husband’s] lifetime,
           multiplied by a fraction equal to 7.85 years (the period
           from December 18, 2004, date of marriage, until October
           24, 2012, date of separation) divided by the years of
           credited benefit service (including any partial year
           credited) earned by [Husband] as of the date his benefit
           accruals cease.

R.R. at 45a. This was consistent with the MSA which provided, inter alia, as

follows:

           The parties have agreed to divide all of the marital portion
           of Husband’s retirement account(s) and/or pension plan(s)
           through his employment with the city of Williamsport in
           such a manner that Wife shall receive Fifty-Five (55%) of
           the marital portion and Husband will receive Forty-Five
           Percent (45%) of the marital portion pursuant to current
           law. For purposes of determining the marital portion, the
           parties agree that they were married on December 18,
           2004, and they separated on October 24th, 2012.

R.R. at 12a-13a.

      Husband’s argument that the MSA is ambiguous as to the reference to

“current law” is unavailing.    Section 3501(c)(1) is the applicable “current

law” in the instant case.       See Smith, 938 A.2d at 258-59.            As the

Pennsylvania Supreme Court held in Smith, we are bound by the

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“legislature’s unequivocal intention to utilize the coverture fraction to provide

economic justice between the parties . . . .”           See id. at 258. “[R]ather

than using the salary at the time of separation, courts instead should

allocate the pension ‘between its marital and nonmarital portions solely by

use of a coverture fraction.’” Id. at 259 (citation omitted). Therefore, Wife

“is   permitted   to   enjoy   increases   in   value   occasioned   by   continued

employment of” Husband postseparation. See id. at 259. The QDRO in the

instant case utilizes the coverture fraction. See id. at 258. Therefore, we

affirm the order of the trial court.

       Order affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 4/27/2016

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