Court Opinion

ID: 4409505
Source: CourtListenerOpinion
Date Created: 2019-06-24 15:04:18.929748+00
Date Added: 2024-06-11T14:52:52.161213
License: Public Domain

MEMORANDUM DECISION

      Pursuant to Ind. Appellate Rule 65(D),                                       FILED
      this Memorandum Decision shall not be                                   Jun 24 2019, 6:15 am
      regarded as precedent or cited before any                                    CLERK
      court except for the purpose of establishing                             Indiana Supreme Court
                                                                                  Court of Appeals
      the defense of res judicata, collateral                                       and Tax Court

      estoppel, or the law of the case.

      ATTORNEY FOR APPELLANT                                   ATTORNEYS FOR APPELLEE
      Angela B. Swenson                                        Shana D. Tesnar
      Swenson & Associates, P.C.                               Christopher J. Evans
      Carmel, Indiana                                          Adler Tesnar & Whalin
                                                               Noblesville, Indiana

                                                   IN THE
             COURT OF APPEALS OF INDIANA

      Marvin Creech,                                           June 24, 2019
      Appellant-Petitioner,                                    Court of Appeals Case No.
                                                               18A-DN-1693
              v.                                               Appeal from the Hamilton
                                                               Superior Court
      Jill Creech,                                             The Honorable J. Richard
      Appellee-Respondent.                                     Campbell, Judge
                                                               Trial Court Cause No.
                                                               29D04-1710-DN-9239

      Mathias, Judge.

[1]   In this dissolution proceeding, Marvin Creech (“Husband”) appeals the

      Hamilton Superior Court’s valuation of his pension and the order to make a

      Court of Appeals of Indiana | Memorandum Decision 18A-DN-1693 | June 24, 2019                    Page 1 of 9
      lump sum equalization payment to Jill Creech (“Wife”). Concluding that the

      trial court acted within its discretion, we affirm.

                                  Facts and Procedural History

[2]   The parties’ nearly thirty-five-year marriage was dissolved on June 18, 2018,

      and their children are emancipated. The issues in this appeal involve the trial

      court’s valuation of Husband’s pension account. Husband, who is employed

      with Carmel Clay Schools, is vested in the Public Employees’ Retirement Fund

      (“PERF”) pension system.

[3]   At the June 1, 2018 dissolution hearing, Wife presented evidence from Dan

      Andrews (“Andrews”), a pension evaluator. Andrews testified that he has

      evaluated over 3100 pensions, including over 400 “state type pensions,” i.e.

      PERF, teacher pensions, and legislator pension plans. Tr. p. 66. Husband

      agreed that Andrews was qualified to evaluate pensions. Tr. pp. 65–66.

[4]   Andrews described the model he used to evaluate Husband’s pension, and

      applying the “Rule of 85,”1 he concluded that the fair market value of the

      pension near the date of filing was $479,419.32. Tr. pp. 73–74. Andrews’s

      report was also admitted into evidence, and it established how Andrews

      calculated the value of Husband’s pension benefit. Ex. Vol. 3, Respondent’s Ex.

      AA.

      1
       Under the Rule of 85, a participant may “draw their pension unreduced anywhere between the age of 55
      and just less than 60 if the total of their years of service and age is equal to 85.” Tr. p. 67.

      Court of Appeals of Indiana | Memorandum Decision 18A-DN-1693 | June 24, 2019                Page 2 of 9
[5]   Husband’s counsel questioned Andrews’s valuation because Husband was not

      eligible to receive pension payments on the date of valuation under the Rule of

      85.2 Andrews explained:

               [I]t’s not significant that it was not met on that date because all
               that had to happen was that the participant had to live 1.5 more
               years in order to achieve that nonreduced early benefit. And the
               fact that he may not have lived to that age has been accounted for
               because each payment is reduced for mortality and also for
               interest.

      Tr. p. 76. Andrews also testified that, on the date of filing, if Husband had

      retired early, he would have been entitled to a reduced monthly pension benefit

      in the amount of $1364. Tr. p. 92. Husband conceded that his pension was a

      marital asset,3 but he wanted to make payments to Wife when he eventually

      began receiving his pension benefits. Tr. p. 100.

[6]   In its decree of dissolution, the trial court equally divided the marital estate and

      made the following finding concerning Husband’s pension:

               Husband disagreed as to the value of his pension but presented
               no expert testimony in that regard. The expert pension evaluator
               valued the pension at $479,419.32. Husband argued that since he
               currently had no right to receive any pension payments, the
               pension should not be a marital asset. But since Husband’s

      2
       Husband was 54.56 years old on the date of valuation and will not qualify to receive his full pension benefit
      under the Rule of 85 until he is 56.1 years old. Tr. pp. 69, 73.
      3
        A spouse’s “present right to withdraw pension or retirement benefits” constitutes property that belongs in
      the marital pot, as does a vested “pension or retirement benefit[ ] . . . payable after the dissolution of
      marriage.” See I.C. § 31-9-2-98(b)(1), (2).

      Court of Appeals of Indiana | Memorandum Decision 18A-DN-1693 | June 24, 2019                      Page 3 of 9
              pension rights are vested, the pension is a marital asset . . .
              Accordingly, the Court rules that the PERF pension is a marital
              asset and that the value is $479,419.32.

      Appellant’s App. pp. 7–8.

[7]   The trial court awarded the pension to Husband. As a result, to effectuate a

      50/50 split of the marital estate, Husband was ordered to make a lump sum

      equalization payment to Wife in the amount of $32,189.44 within 60 days. Id.

      at 10. Husband now appeals.

                                  Value of Husband’s Pension
[8]   Husband argues that the trial court abused its discretion when it found that his

      pension had a value of $479,419.32. We review a trial court’s valuation of an

      asset in a marriage dissolution for an abuse of discretion. Bingley v. Bingley, 935
N.E.2d 152, 154 (Ind. 2010). The trial court does not abuse its discretion where

      the evidence is sufficient and reasonable inferences support the valuation. Morey

      v. Morey, 49 N.E.3d 1065, 1069 (Ind. Ct. App. 2016) (citing In re Marriage of

      Nickels, 834 N.E.2d 1091, 1095 (Ind. Ct. App. 2005)). “Although the facts and

      reasonable inferences might allow for a different conclusion, we will not

      substitute our judgment for that of the trial court.” Id.

[9]   Husband contends that Andrews’s valuation was inaccurate because he used

      the Rule of 85 in calculating the fair market value of the pension, and Husband

      was not yet eligible to receive benefits under that rule. Husband asserts that the

      trial court should have assigned the reduced benefit value that Husband was

      eligible to receive on the date of filing.
      Court of Appeals of Indiana | Memorandum Decision 18A-DN-1693 | June 24, 2019   Page 4 of 9
[10]   First, we observe that Husband agreed that Andrews qualified as an expert on

       the subject of valuing pensions. Tr. pp. 65–66. Moreover, “[a] valuation

       submitted by one of the parties is competent evidence of the value of property in

       a dissolution action and may alone support the trial court’s determination in

       that regard.” Alexander v. Alexander, 927 N.E.2d 926, 935–36 (Ind. Ct. App.

       2010) (quoting Houchens v. Boschert, 758 N.E.2d 585, 590 (Ind. Ct. App. 2001),

       trans. denied), trans. denied.

[11]   To value a pension, the court must “determine (1) what evidence must be

       presented to establish the value of the benefit, (2) what date must be used to

       assign a dollar amount to the benefit, and (3) how much of the benefit’s value

       was the result of contributions made after the final separation date.” Leonard v.

       Leonard, 877 N.E.2d 896, 900 (Ind. Ct. App. 2007) (citing Granzow v. Granzow,

       855 N.E.2d 680, 682–83 (Ind. Ct. App. 2006)). Andrews described how he

       calculated the value of Husband’s pension benefit. He also explained that the

       value was reduced because Husband did not qualify for benefits under the Rule

       of 85 on the date the pension was valued.

[12]   Because the parties did not agree to a value of the pension benefit, the trial

       court was required to value the pension based upon the evidence presented. The

       trial court accepted Andrews’s expert valuation of the pension, which was the

       only evidence admitted during the hearing. Therefore, we conclude that the trial

       court acted within its discretion when it found that Husband’s pension had a

       value of $479,419.32.

       Court of Appeals of Indiana | Memorandum Decision 18A-DN-1693 | June 24, 2019   Page 5 of 9
                                 Lump Sum Equalization Payment

[13]   Husband also argues that the trial court abused its discretion when it ordered

       him to make a lump sum payment to Wife to effectuate an equal division of the

       marital estate. Wife asserts that Husband had sufficient marital assets set over

       to him to provide a lump sum payment to her. Wife also observes that the trial

       court’s division of the marital estate assigned approximately 85% of the marital

       debt to her.

[14]   Husband was awarded the following marital assets: his PERF valued at

       $479,419.32, two trucks valued at $28,032 and $3,026 respectively, a PNC bank

       account with a balance of $5,139.85, and an annuity valued at $24,000.4 The

       trial court also assigned $11,047.84 in marital debt to Husband. The value of

       Husband’s pension is nearly half of the net value of the marital estate as each

       spouse received $496,579.89 in net marital assets.5 To achieve a 50/50 division

       of the marital estate, Husband was ordered to make a lump sum equalization

       payment in the amount of $32,189.44 within 60 days.

       4
        It is not clear from the record why the trial court did not award the annuity to Wife to effectuate an equal
       division of the marital estate. The only evidence in the record concerning the annuity is its value. Also, in her
       proposed division of the marital estate, Wife requested that the trial court award the annuity to Husband.
       5
         A trial court may not divide PERF pension accounts by way of qualified domestic relations order
       (“QDRO”) or otherwise order a party to assign benefit payments to a former spouse. See Everette v. Everette,
       841 N.E.2d 210, 213–214 (Ind. Ct. App. 2006) (concluding that pursuant to Indiana Code § 5-10.3-8-9(a) the
       husband’s PERF account was exempt from levy, sale, garnishment, attachment, or other legal process,
       including a QDRO, but this did not leave the trial court without recourse to evenly divide the marital estate,
       and that distribution to the wife of an equalizing amount of the proceeds from the sale of property could be
       an appropriate mechanism to balance the distribution without violating the PERF statutes).

       Court of Appeals of Indiana | Memorandum Decision 18A-DN-1693 | June 24, 2019                        Page 6 of 9
[15]   Indiana Code section 31-15-7-4(b) gives the dissolution court authority to divide

       the marital property by “setting the property or parts of the property over to one

       (1) of the spouses and requiring either spouse to pay an amount, either in gross

       or in installments, that is just and proper[.]” With regard to the division of

       pension benefits in dissolution proceedings, our court has observed that:

               Courts utilize a number of methods for distributing pension
               benefits, including an immediate offset method, a deferred
               distribution method, or a variation or combination of the
               methods. Under the immediate offset method, the court
               determines the present value of the retirement benefits and
               awards the nonowning spouse his or her share of the benefits in
               an immediate lump sum award of cash or property equal to the
               value of his or her interest. Under the deferred distribution
               method, the court makes no immediate division of the retirement
               benefits but determines the future benefits to which the
               nonowning spouse is entitled. Traditionally, the benefits have
               been stated as a share of the owning spouse’s future benefit, and
               payment can be made directly to the nonowning spouse by the
               plan administrator under certain circumstances or payment can
               be ordered to come directly from the owning spouse.

               Several fact situations may favor the use of an immediate offset
               method, including where the present value of the pension is
               relatively modest, the parties are highly litigious, the separating
               parties are relatively young, and the receiving spouse has
               immediate and substantial financial need. Other fact situations
               may favor a deferred distribution method, including where there
               is not sufficient other tangible property remaining in the marital
               estate so that a present award is possible, there is an unusually
               substantial risk that benefits will never be received, the present
               value of benefits is difficult to compute with reasonable accuracy,
               and both spouses have no other steady source of income for their
               retirement years.

       Court of Appeals of Indiana | Memorandum Decision 18A-DN-1693 | June 24, 2019   Page 7 of 9
               It is also possible to apply both the deferred distribution and
               immediate offset methods in a single case. One such way to
               combine the methods is to order an offsetting cash award payable
               in installments. Such an award can give the benefits of immediate
               offset in a case where there are not sufficient funds available for
               an immediate cash payment. Like the immediate offset method,
               deferred offset awards are limited by the liquid funds available in
               the marital estate. However, the limitation is not as severe as
               with an immediate offset award, because a deferred award is
               spread out over time, but the payor must still have sufficient
               liquid funds to make the installment payments.

       Kendrick v. Kendrick, 44 N.E.3d 721, 726-27 (Ind. Ct. App. 2015), trans. denied

       (internal citations omitted).

[16]   Here, the trial court utilized the immediate offset method, and Husband

       advocates using the deferred distribution method. Using the deferred

       distribution method in this case presents certain challenges because PERF

       pension accounts cannot be divided by way of qualified domestic relations

       order, and the court may not otherwise order a party to assign benefit payments

       to a former spouse. See Everette v. Everette, 841 N.E.2d 210, 213–214 (Ind. Ct.

       App. 2006).

[17]   On the date the dissolution decree was issued, both Husband and Wife were

       gainfully employed, and therefore, their respective retirement accounts were

       continuing to increase in value. Both parties were awarded assets that could be

       reduced to cash fairly easily. Specifically, Husband was awarded a bank

       account and a truck totaling over $8,100. Husband also had almost $20,000

       equity in his other truck. Husband was also awarded his “VALIC profit

       Court of Appeals of Indiana | Memorandum Decision 18A-DN-1693 | June 24, 2019   Page 8 of 9
       sharing” annuity valued at $24,000. Appellant’s App. p. 9. The record does not

       disclose a reason why this annuity could not be assigned to Wife.

[18]   Wife was awarded the parties’ marital residence but was also ordered to pay the

       mortgage on that residence, the most significant marital debt. As a result, Wife

       was ordered to pay nearly 85% of the parties’ marital debt.

[19]   We certainly agree that Husband has limited liquid assets to pay the immediate

       offset equalization judgment to Wife in the amount of $32,189.44. However, he

       does have sufficient assets to pay the equalization judgment. And because he is

       still employed, the value of his pension will continue to grow. For these

       reasons, and recalling the deferential standard of review for division of marital

       property, we cannot conclude that the trial court abused its discretion when it

       ordered Husband to make a lump sum equalization payment to Wife.

                                                 Conclusion
[20]   The trial court’s valuation of Husband’s pension is supported by the evidence

       and is therefore not an abuse of discretion. In addition, the trial court acted

       within its discretion when it ordered Husband to make a lump sum equalization

       payment to Wife.

[21]   Affirmed.

       Vaidik, C.J., and Crone, J., concur.

       Court of Appeals of Indiana | Memorandum Decision 18A-DN-1693 | June 24, 2019   Page 9 of 9