Court Opinion

ID: 4398924
Source: CourtListenerOpinion
Date Created: 2019-05-21 17:01:51.883463+00
Date Added: 2024-06-11T12:19:52.866622
License: Public Domain

IN THE

    SUPREME COURT OF THE STATE OF ARIZONA
                         IN RE THE MARRIAGE OF
                          SHELLY RAE BARRON,
                            Petitioner/Appellee,

                                    v.

                          PAUL ROGER BARRON,
                           Respondent/Appellant.

                           No. CV-18-0234-PR
                           Filed May 21, 2019

            Appeal from the Superior Court in Yuma County
           The Honorable Stephen J. Rouff, Judge Pro Tempore
                       No. S1400DO201501132
               VACATED IN PART AND REMANDED

                     Opinion of the Court of Appeals
                              Division One
                         796 Ariz. Adv. Rep. 31
                           Filed July 31, 2018
                         VACATED IN PART

COUNSEL:

Mary K. Boyte Henderson (argued), Mary Katherine Boyte, P.C., Yuma,
Attorney for Shelly Rae Barron

S. Alan Cook, S. Alan Cook, P.C., Phoenix; Keith Berkshire (argued), Kristi
Reardon, Erica Gadberry, Berkshire Law Office, PLLC, Tempe; Richard G.
Maxon, Tempe; Theodore C. Jarvi, Tempe, Attorneys for Paul Roger Barron

CHIEF JUSTICE BALES authored the opinion of the Court, in which VICE
CHIEF JUSTICE BRUTINEL and JUSTICES TIMMER, BOLICK, GOULD,
LOPEZ, and PELANDER (RETIRED) joined.
                          BARRON V. BARRON
                           Opinion of the Court

CHIEF JUSTICE BALES, opinion of the Court:

¶1            In this divorce case, we hold that federal law does not permit
a state court to order a military spouse to pay the equivalent of military
retirement benefits to a former spouse if the military spouse continues to
work past an eligible retirement date.

                                     I.

¶2             Paul Barron (“Husband”) and Shelly Rae Barron (“Wife”)
married in 2004, when Husband was an active duty member of the United
States Marine Corps. When they divorced in 2017, Husband was still an
active duty service member. As part of the dissolution proceedings, the
superior court found that Husband could retire in 2023 after twenty years
of military service and divided the parties’ assets, including Husband’s
military retirement pay (“MRP”), assuming Husband would apply for and
collect retirement as soon as he became eligible.

¶3           The dissolution decree provided that Wife was entitled to 29%
of the MRP. The trial judge also ordered Husband, if he chose to work
beyond his retirement-eligibility date, to begin making payments to Wife
equivalent to what she would have received as her share of the MRP had
he retired.

¶4             On appeal, Husband argued that the court improperly
ordered him to indemnify Wife if he chose to remain in the military on
active duty status. Barron v. Barron, 796 Ariz. Adv. Rep. 31, 35 ¶ 24 (Ariz.
App. July 31, 2018). The court of appeals agreed and reversed, reasoning
that federal law precludes such indemnification. Id at 37 ¶ 30.

¶5            We granted review because division of military retirement
benefits is a recurring legal issue of statewide importance. We have
jurisdiction under article 6, section 5(3) of the Arizona Constitution.

                                    II.

¶6            Military members may be eligible to retire and receive MRP
after serving for a certain length of time, typically twenty years or more.
See Howell v. Howell, 137 S. Ct. 1400, 1402-03 (2017). Although some states
had divided MRP upon divorce, in 1981 the United States Supreme Court

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                           BARRON V. BARRON
                            Opinion of the Court

held that such orders were preempted because they created a “conflict
between the terms of the federal retirement statutes and the [state]
community property right.” McCarty v. McCarty, 453 U.S. 210, 232, 235
(1981).

¶7            In response, Congress passed the Uniformed Services Former
Spouses Protection Act (“USFSPA”), 10 U.S.C. § 1408, which provides the
“precise and limited” authority to treat certain military retirement benefits
as divisible property upon divorce. See Mansell v. Mansell, 490 U.S. 581,
588-89 (1989). The USFSPA grants states the authority to divide “disposable
retired pay” in divorce proceedings. 10 U.S.C. § 1408(c). Thus, since the
enactment of the USFSPA, state courts have been able “to treat disposable
retired pay as community property.” Mansell, 490 U.S. at 589.

¶8             Even before passage of the USFSPA, Arizona generally
treated military retirement assets as community property, divisible upon
divorce, like any other retirement asset. See, e.g., Van Loan v. Van Loan, 116
Ariz. 272, 274 (1977). Since the USFSPA’s enactment, Arizona has chosen
to treat MRP as community property. See Edsall v. Superior Court, 143 Ariz.
240, 242 (1984).

¶9              Wife argues that the indemnification order in this case was
proper under Koelsch v. Koelsch, 148 Ariz. 176 (1986). In that case, we
considered “how and when a non-employee spouse’s community property
interest in an employee spouse’s matured retirement benefit plan is to be
paid when the employee wants to continue working, thus delaying receipt
of the retirement benefits.” Id. at 180. As applied to benefits that are
“matured and payable,” id. at 183, we held that “the court can order that
the non-employee spouse be paid a monthly amount equal to his or her
share of the benefit which would be received if the employee spouse were
to retire,” id. at 185.

¶10            Although we treat MRP as community property, and Koelsch
permits an indemnification order under state law for public retirement
benefits when a spouse elects to keep working instead of retiring, Arizona
may only divide MRP to the extent permitted by federal law. See Howell,
137 S. Ct. at 1403-04. Thus, we must first examine the authority granted by
Congress.

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                           BARRON V. BARRON
                            Opinion of the Court

¶11            On that issue, Howell is instructive. That case involved a
former spouse whose MRP payments were reduced years after the
dissolution decree because the retired military spouse elected to waive
MRP to receive disability benefits. Id. at 1402. The trial court ordered the
military spouse to indemnify the former spouse for her vested rights in the
MRP. In re Marriage of Howell, 238 Ariz. 407, 408-09 ¶¶ 1-5 (2015), rev’d,
Howell, 137 S. Ct. 1400. Relying on the USFSPA and United States Supreme
Court precedent, we concluded that although a trial court could not, at the
time of the decree or thereafter, divide MRP that a military spouse has
waived to obtain disability benefits, the court could require the military
member to reimburse his former spouse for a post-decree reduction in the
benefits she received as a result of his electing to receive disability benefits
in lieu of MRP. Id. at 409-10 ¶¶ 10-15.

¶12           The Supreme Court reversed. Howell, 137 S. Ct. at 1406. Like
us, the Court recognized that, in allowing states to treat MRP as community
property, “Congress excluded from its grant of authority the disability-
related waived portion of military retirement pay.” Id. at 1404. The Court
also noted that it had previously held that “federal law completely pre-
empts the States from treating waived military retirement pay as divisible
community property,” which was “just what the Arizona family court did
here.” Id. at 1405. Although the divorce decree gave the non-military
spouse a right to half of MRP, the Court held that such an interest “is, at
most, contingent, depending for its amount on a subsequent condition: [the
military spouse’s] possible waiver of that pay.” Id. at 1405-06. Thus, under
Howell, a state court can divide MRP only to the extent it is disposable
retired pay, as defined by § 1408(a)(4)(A), and a state court may not enter
orders that “displace the federal rule and stand as an obstacle to the
accomplishment and execution of the purposes and objectives of
Congress.” 137 S. Ct. at 1406.

¶13            The grant of authority to divide MRP under the USFSPA
“does not authorize any court to order a member to apply for retirement or
retire at a particular time in order to effectuate any payment under this
section.” § 1408(c)(3). Here, the court of appeals relied on this provision to
hold that a court cannot order a service member to indemnify the non-
military former spouse if the service member chooses to work past an
eligible retirement date. See Barron, 796 Ariz. Adv. Rep. at 36 ¶ 27. The
court also read Howell as prohibiting the equitable remedy under Koelsch of
ordering indemnification payments. Id. at 36–37 ¶¶ 28–30.

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                           BARRON V. BARRON
                            Opinion of the Court

¶14           We agree with the court of appeals’ observation that
§ 1408(c)(3) would have little effect if a court, instead of ordering a service
member to retire, could simply order a member to begin making payments
as if he or she had retired. However, we focus our attention on the
definition of “disposable retired pay,” which is the relevant benefit that
Congress has authorized state courts to divide as part of dissolution
proceedings. Federal law does not permit states to divide MRP but rather
grants them the authority to “treat disposable retired pay” as community
property. § 1408(c)(1) (emphasis added). “Disposable retired pay,” in turn,
is defined as “the total monthly retired pay to which a member is entitled.”
§ 1408(a)(4)(A) (emphasis added).

¶15               We read “entitled” to mean a member has applied and been
approved for military retirement benefits. Although Congress did not
define “entitled,” our interpretation effectuates its intent in passing the
USFSPA. The legislative history reveals Congress’s intent that a military
member must retire to become “entitled” to MRP. See S. Rep. No. 97-502,
at 17 (1982) (“[I]t is not enough that the member has sufficient years of
service so that the member could, if the member so desired,
retire . . . . Rather, the member must have actually retired from the
uniformed service or entered some other status in which the member is
actually entitled to receive retired or retainer pay.”). The Department of
Defense’s regulations also support this interpretation of “entitled.” See 7B
Department of Defense, DoD 7000.14-R, Military Pay Policy and Procedures –
Retired Pay 29-6 (2018) (defining entitlement as “the legal right of a military
member to receive military retired pay” and differentiating “members who
actually receive retired pay” from “those who qualify by completing the
required years of service”).

¶16           Moreover, the grant of authority for states to treat disposable
retired pay as community property only applies to “disposable retired pay
payable to a member.” § 1408(c)(1) (emphasis added). Unlike the employee
spouse’s retirement plan in Koelsch, military retirement based on years of
service is discretionary, and thus a member’s interest in MRP is neither
vested nor mature until the member retires and benefits are approved. See,
e.g., 10 U.S.C. § 8323 (granting permissive, not mandatory, authority to
retire an officer after twenty years of service). Pay that may never be
received, and the grant of which is discretionary, is not “payable” to a
member. To the same effect, the legislative history states that “the
provisions of section 1408 only will permit payments [to a former spouse]

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                            BARRON V. BARRON
                             Opinion of the Court

to be made from a member’s or former member’s ‘retired or retainer pay,’”
S. Rep. No. 97-502, at 15, rather than from active duty pay or prospective
retirement pay.

¶17            Finally, § 1408(c)(3) would be meaningless if “entitled” means
“eligible” as Wife argues. If a member were “entitled” to disposable retired
pay before retiring, then Congress would have had no reason to explicitly
note that courts cannot force retirement in order to effectuate payments
under the USFSPA. Although the USFSPA contemplates that a court may
order the division of disposable retired pay in advance of retirement, the
statutory scheme does not contemplate implementation of that order until
the member actually retires. See § 1408(d)(1) (“In the case of a member not
entitled to receive retired pay on the date of the effective service of the court
order, such payments shall begin not later than 90 days after the date on
which the member first becomes entitled to receive retired pay.”).

¶18           Because the USFSPA only permits state courts to divide
“disposable retired pay,” and no entitlement to MRP exists until the
member retires and is approved to receive such benefits, state courts cannot
order service members to make MRP-based payments to former spouses
before retirement.

                                      III.

¶19           Here, at the time of the dissolution, Husband had not applied
for, had not been approved to receive, and was not receiving MRP. The
dissolution decree provided for a payment to Wife of her share of
Husband’s MRP starting when Husband purportedly would be eligible to
retire. This part of the decree was in error.

¶20            Before a military spouse retires, a court remains free to enter
orders awarding a former spouse his or her share of MRP, but such orders
cannot require payment until the military spouse retires. See, e.g.,
§ 1408(a)(4)(B) (freezing benefits for decrees finalized before retirement);
§ 1408(d)(1) (contemplating orders served on the Secretary before entitled
to payment). Notably, in Howell, the United States Supreme Court observed
that a state “remains free to take account of the contingency that some
military retirement pay might be waived, or . . . take account of reductions
in value when it calculates or recalculates the need for spousal support.”
Howell, 137 S. Ct. at 1406. We express no view, however, on whether or how

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                          BARRON V. BARRON
                           Opinion of the Court

the court on remand should make any adjustments based on MRP-related
contingencies.

¶21           For the foregoing reasons, we vacate paragraphs 24 through
30 of the court of appeals’ opinion, we vacate the portion of the decree
providing for a Koelsch order, and we remand the case to the superior court
for further proceedings. We deny Wife’s request for attorney fees and grant
Husband’s request for costs upon compliance with Arizona Rule of Civil
Appellate Procedure 21.

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