Court Opinion

ID: 9522751
Source: CourtListenerOpinion
Date Created: 2023-08-07 02:32:03.677796+00
Date Added: 2024-06-11T13:03:50.561188
License: Public Domain

Johnson, J.,
¶29. concurring. I write separately to emphasize that though the procedural posture of this case dictates the result reached by the majority, a motion under Rule 60(b) may provide a vehicle for relief where a spouse has been intentionally misled during a divorce proceeding as to a veteran’s intentions with *74regard to application for disability benefits. Indeed, the troubling facts of this case — including the timing of the divorce order and husband’s application for disability benefits as well as husband’s testimony during the divorce proceedings that he had “no health problems” — indicate that had the legal issues been properly raised, wife may have had a remedy. I agree with the majority, however, that a remedy for the unfairness wrought by husband’s unilateral decision to convert his military retirement benefits to disability benefits cannot be to merely put in place a new property distribution under the guise of enforcement.
¶ 30. This case arises from what appears to be a contentious and much-litigated property distribution following husband and wife’s divorce. The parties were married in October 1989 and separated in October 2003. Husband entered the military in 1980 and was in military service primarily with the Marine Corps, up until his retirement in July 2005. Throughout the marriage, the couple moved on a regular basis to accommodate husband’s military assignments. In addition, husband was frequently away from the family home and spent months at a time away at sea or deployed to foreign assignments. While husband was away, wife managed the household and was the primary caretaker for the parties’ two sons. Until 2002, wife was employed outside the home only for brief periods and only on a part-time basis. The divorce proceedings occurred in the spring of 2005; all parties were aware, however, that husband would be required to retire from the military on July 1, 2005. Over his twenty-two years of military service, husband accrued a defined benefit retirement plan and was thus eligible to receive monthly retirement benefits beginning on July 1, 2005. These retirement benefits were treated as marital property for purposes of the divorce settlement.
¶ 31. In the property distribution order, the trial court noted that because wife was awarded a larger share of the marital estate, rather than award wife a full fifty percent of the marital share of husband’s defined benefit pension, it was more equitable that wife receive thirty-five percent. The court noted that such a figure “will provide some retirement cushion for [wife] but ensures that [husband] will have available the majority of the funds that he worked so hard to earn.” The court also noted that “[t]he pension is a significant benefit because it is payable now and will continue to be paid until [husband] dies.” In addition to the property distribution, the court awarded a limited amount of *75spousal support to wife. It based the spousal support award, in part, on its assumption that wife would be entitled to approximately $700 per month as her share of husband’s military retirement benefits.
¶ 32. The final divorce and property distribution order was issued on October 14, 2005, and husband applied for disability benefits on November 9, 2005. On April 3, 2006, husband was found to be thirty percent disabled and was approved for partial disability benefits. The main subject of the current dispute is over the effect that husband’s subsequent waiver of thirty percent of his military retirement benefits in favor of disability benefits has on the final property distribution.6 Wife argues that her award of thirty-five percent of husband’s retirement benefits translated into a certain dollar amount ($700 per month) and that dollar amount should be enforced regardless of husband’s conversion of thirty percent of the retirement benefits into disability benefits.
¶ 33. I agree with the majority that effecting the type of modification wife argues for here simply by calling it “enforcement” is an affront to the finality of property distributions and an end-around to the Supreme Court’s holding in Mansell v. Mansell, 490 U.S. 581 (1989). Such a holding, however, does not preclude vacating a property distribution under Vermont Rule of Civil Procedure 60(b)(3) on the basis of fraud. Here, wife did indeed bring a Rule 60(b) motion, and the trial court arguably should have addressed this motion, rather than recharacterizing it as a motion for enforcement. Even framed as a Rule 60(b) motion, however, wife’s motion is problematic in its characterization of the issue as a “post judgment ehange[] in circumstances” necessitating an equitable adjustment of the nonexempt portion of a retired servieemember’s pension. The theory under which wife brought this action characterized husband’s waiver of retirement benefits in favor of disability benefits as newly discovered evidence. Thus, she did not argue that husband perpetrated a fraud at the divorce proceeding by failing to disclose his intentions to apply for disability benefits; indeed, her theory appears to have been just the opposite, arguing instead that the application for disability benefits was unanticipated by both parties at the time of the *76divorce proceedings. Though the trial court hints at the possibility that husband made false representations during the divorce proceedings, it is not a theory advocated by wife’s counsel either at the trial court or on appeal.7
¶ 34. In enacting the Uniformed Services Former Spouses’ Protection Act (USFSPA), Congress recognized the unique circumstances of the military family, including the sacrifices made by military spouses, and sought to protect the economic security of those spouses upon divorce. Mansell, 490 U.S. at 602 (O’Connor, J., dissenting). Military wives in particular are often faced with a daunting prospect following divorce because “ ‘frequent ehange-ofstation moves and the special pressures placed on the military spouse as a homemaker make it extremely difficult to pursue a career affording economic security, job skills and pension protection.’ ” Id. (quoting S. Rep. No. 97-502, at 6 (1982) as reprinted in 1982 U.S.C.C.A.N. 1596, 1601). Thus, Congress sought to remedy the “dire plight” of many military wives following divorce by recognizing that the military pension was often the most important asset in a military marriage and allowing it to be distributed as marital property at divorce. Id.
¶ 35. As the majority states, ante, ¶ 12, the Supreme Court’s decision in Mansell interprets the USFSPA quite narrowly and accordingly limits the property assets state courts may equitably divide at divorce. 490 U.S. at 583. Over a vigorous dissent, the Court noted that 10 U.S.C. § 1408(a) presented “one of those rare instances where Congress has directly and specifically legislated in the area of domestic relations.” Id. at 587. The Court concluded that though § 1408(c)(1) affirmatively grants state courts the *77power to divide military retirement benefits, because Congress explicitly removed the amount of pay waived by retirees for disability benefits from the definition of retirement benefits, such disability benefits could not be divided as property at divorce. Id. at 589.
¶ 36. Justice O’Connor, joined in her dissent by Justice Blackmun, roundly criticized the “harsh reality” of the Court’s holding. Id. at 585 (O’Connor, J., dissenting). The dissent emphasized that the purpose of the USFSPA was to provide greater protection to military spouses:
To read the statute as permitting a military retiree to pocket 30 percent, 50 percent, even 80 percent of gross retirement pay by converting it into disability benefits and thereby to avoid his obligations under state community property law, however, is to distort beyond recognition and to thwart the main purpose of the statute, which is to recognize the sacrifices made by military spouses and to protect their economic security in the face of a divorce.
Id. at 601-02. Twenty years later, Congress has not yet heeded Justice O’Connor’s call to “address the inequity created by the Court.” Id. at 604. The existing law, simply put, is that military retirement benefits are divisible marital property upon divorce, and veterans’ disability benefits are not. State courts, however, are not without power to remedy situations in which a divorce judgment is premised on fraudulent representations by a military retiree with regard to his decision to waive retirement in favor of disability benefits.
¶ 37. Though property settlements following divorce are final, they may be modified in circumstances indicating “fraud or coercion, that would warrant relief from a judgment generally.” Boisselle v. Boisselle, 162 Vt. 240, 242, 648 A.2d 388, 389 (1994); accord V.R.C.P. 60(b)(3) (providing relief from judgment based on “fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party”); Gavala v. Claassen, 2003 VT 16, ¶ 1, 175 Vt. 487, 819 A.2d 760 (mem.) (upholding trial court’s grant of Rule 60(b)(3) motion based on party’s false claims that he was Pennsylvania resident to avoid Massachusetts jurisdiction over child support obligation); Bardill Land & Lumber, Inc. v. Davis, 135 Vt. 81, 82, 370 A.2d 212, *78213-14 (1977) (concluding that where defendant, in answering pretrial interrogatories, filed false answer to specific inquiry as to material information, trial court erroneously denied plaintiff’s Rule 60(b)(3) motion for relief from judgment); Terwilliger v. Terwilliger, 64 S.W.3d 816, 818 (Ky. 2002) (concluding that “by filing a settlement agreement with knowingly undervalued marital assets, [the husband] used the proceedings as a tool to defraud his wife” and justified reopening the property division); Ray v. Ray, 647 S.E.2d 237, 241 (S.C. 2007) (concluding that a party’s concealment of marital assets and intentional delay of a payment from an investment, coupled with a showing that party “acted with an intent to deceive or defraud the court” justified relief under Rule 60(b)(3) (quotation omitted)).
¶ 38. To put this type of Rule 60(b)(3) motion in context, if a spouse represents to the court that he is in excellent health and that he expects to receive military retirement benefits, while at the same time he is secretly applying for disability benefits, these actions could be characterized as fraudulent, and if proven by clear and convincing evidence, could justify vacating a property settlement. Indeed, and as evidenced by the settlement here, because a property distribution is often also the basis for other awards, including amounts awarded in spousal support, a fraudulent misrepresentation as to pension assets could upset the equity of the entire settlement.
¶ 39. Moreover, though a court may not divide the portion of a military retiree’s benefits waived in favor of disability benefits, it may take into account this waiver as an equitable consideration in fashioning a fair settlement agreement. See Repash v. Repash, 148 Vt. 70, 72-73, 528 A.2d 744, 745 (1987) (concluding that though attaching, levying, or seizing a retiree’s veterans’ disability benefits is strictly prohibited by federal law, such benefits “may be considered for alimony or spousal maintenance payments”); see also Davis v. Davis, 777 S.W.2d 230, 232 (Ky. 1989) (concluding that though courts are prohibited from dividing veterans’ disability benefits as marital property, “if an inequity arises in an individual case, the trial court can resolve the problem ... by making an appropriate award of spousal support and/or marital property”); White v. White, 568 S.E.2d 283, 286 (N.C. Ct. App. 2002) (“[N]either Mansell nor the FSPA prohibits a state court from considering a former spouse’s federal disability payments (replacing a corresponding amount of retired pay) when configuring the *79distribution of marital property upon divorce.”); Rothwell v. Rothwell, 775 S.W.2d 888, 891 (Tex. App. 1989) (finding no error where husband’s veterans’ disability benefit was considered in dividing income between the spouses, but no disability benefit was actually awarded to wife); cf. Depot v. Depot, 2006 ME 25, ¶ 15, 893 A.2d 995 (despite federal law prohibiting Social Security disability benefits from being considered marital property for distribution purposes at divorce, “[n]either the letter nor purpose of [federal law prohibiting attachment of Social Security benefits] compel courts to ignore expected annual Social Security benefit payments when undertaking their responsibility to equitably divide marital property”); Mahoney v. Mahoney, 681 N.E.2d 852, 856 (Mass. 1997) (noting that though Social Security old age benefits may not be included as part of the marital estate, “a judge may consider a spouse’s anticipated Social Security benefits as one factor, among others, in making an equitable distribution of the distributable marital assets”).
¶ 40. Failing to remedy a property distribution secured by fraudulent representations as to a party’s plans to apply for disability benefits allows a military retiree to use the illusive potential of retirement benefits to secure a windfall when he converts such retirement benefits to disability benefits at the earliest opportunity. Allowing a party to a divorce to prevail on such a scheme sets up the nonmilitary spouse for financial hardship. The same purpose underlying the USFSPA — protection of military spouses who have sacrificed careers in the mainstream economy in support of their spouses’ military careers — dictates that courts take care to ensure that a divorce proceeding that includes distribution of military retirement benefits is not based on fraud.

 The divorce order became final following this Court’s decision in Youngbluth v. Youngbluth (Youngbluth I), No. 2006-083, 2007 WL 5318595, at *3 (Mar. Term 2007) (unpub. mem.).

 Despite a claim for fraud not being properly before it, in its post-judgment order, the trial court noted:
What complicates this ease is that [husband] was found eligible for partial veteran’s disability benefits on April 28, 2006, shortly after the Final Order. Although the disability qualification process must have been well underway when the divorce was tried — husband says it took nine months — the possibility of this occurrence evidently was not made known to the trial judge and consequently was not within the contemplation of the Final Order.
. . . [Husband’s] failure to be candid with the trial court about his plan to have pay reclassified, underway at the time of trial, is not suggestive of good faith and indicates a longstanding plan merely to evade equitable settlement because he did not agree with it.