Boulds v. Nielsen , 323 P.3d 58 ( 2014 )

Notice: This opinion is subject to correction before publication in the P ACIFIC R EPORTER .
Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts,
303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email
corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
RAYMOND BOULDS, )
) Supreme Court No. S-14887
Appellant, )
) Superior Court No. 3PA-09-01717 CI
v. )
) OPINION
ELENA NIELSEN, )
) No. 6901 - April 25, 2014
Appellee. )
)
Appeal from the Superior Court of the State of Alaska, Third
Judicial District, Palmer, Vanessa White, Judge.
Appearances: Kenneth J. Goldman, Law Office of
Kenneth J. Goldman, P.C., Palmer, for Appellant.
Marguerite Humm, Alaska Legal Services Corporation,
Anchorage, for Appellee.
Before: Fabe, Chief Justice, Winfree, Stowers, Maassen, and
Bolger, Justices.
WINFREE, Justice.
I. INTRODUCTION
Raymond Boulds and Elena Nielsen were unmarried cohabitants for 16
years and raised children together. hen their relationship ended, they litigated child
W
custody and property ownership. The superior court determined which tangible personal
property was domestic partnership property and divided that property equally between
the parties. The superior court also considered three employment benefits that Boulds
accumulated during his relationship with Nielsen: an insurance death benefit, a 401(k)
retirement account, and a union pension. The court determined that the insurance death
benefit and the 401(k) retirement account were not domestic partnership assets and
belonged to Boulds alone. But the court determined that the union pension was a
domestic partnership asset and was subject to division. Because Boulds appealed to this
court, the superior court has not yet issued an order dividing the union pension.
Boulds argues that federal law prohibits dividing his union pension with a
non-spouse, and that the superior court misapplied Alaska law by examining only
Boulds’s own initial intent to share the union pension with Nielsen for the benefit of their
children. We conclude that federal law does not bar Nielsen from receiving a share of
the union pension and that the superior court did not err in determining Nielsen was
entitled to half of the union pension under Alaska law. We therefore affirm the superior
court’s decision and remand for the final division of the union pension.
II. FACTS AND PROCEEDINGS
Raymond Boulds and Elena Nielsen began cohabiting in 1993 and
separated in 2009; they never married. Boulds and Nielsen have three children together.
Boulds also raised Nielsen’s son from a prior relationship as his own child. During their
relationship, Boulds worked on the North Slope and Nielsen was a stay-at-home mother.
Although Nielsen worked as a waitress when the parties met, she began receiving
disability income in 1996. This money was spent on the household and children. Boulds
claimed Nielsen as a dependent on his taxes for at least some of the years they were
together.
During the relationship Boulds accumulated three employment benefits
through his employer: an insurance death benefit, a 401(k) retirement account, and a
union pension governed by the federal Employee Retirement Income Security Act
-2- 6901
(ERISA).1 When Boulds was first hired by his employer, he listed Nielsen as his
intended pre-retirement death beneficiary for the union pension, even though the form
specified that only a spouse, child, parent, or sibling could be listed. Boulds’s employer
told him approximately one year later that he could not list a cohabitant. He then listed
his children as the beneficiaries.
After the relationship ended the parties engaged in a series of child custody
and property division proceedings. Trial was held on several days from December 2010
to June 2012. The superior court entered findings of fact and conclusions of law on
August 30, 2012, incorporating its July 28, 2011 oral property division. The court
determined that the employment death benefit and 401(k) account were Boulds’s
separate property and that the union pension was partnership property. The court divided
the domestic partnership assets equally, but has not yet issued an order dividing the
union pension.
III. DISCUSSION
Boulds argues that the superior court erred in determining that Nielsen was
entitled to part of his union pension for two reasons: (1) ERISA prohibits division of a
federal retirement account with a non-spouse;2 and (2) the court erred by determining
1
29 U.S.C. §§ 1001-1461 (2006). ERISA governs payment of federal
pension plans to individuals other than the pension holder (termed “alternate payees”),
id. § 1056(d)(3)(A), and defines a “qualified domestic relations order” as “creat[ing] or
recogniz[ing] the existence of an alternate payee’s right to . . . receive all or a portion of
the benefits payable with respect to a participant under a plan,” id. § 1056(d)(3)(B)(i).
An “alternate payee” is defined as “any spouse, former spouse, child, or other dependent
of a participant who is recognized by a domestic relations order as having a right to
receive . . . the benefits.” Id. § 1056(d)(3)(K).
2
ERISA’s effect on division of a retirement account is a question of law we
review de novo. Madonna v. Tamarack Air, Ltd., 298 P.3d 875, 878 (Alaska 2013)
(continued...)
-3- 6901
that the parties intended the union pension to be a partnership asset.3 We conclude
neither argument has merit.
A. ERISA
ERISA prohibits assignments of pensions except pursuant to a qualified
domestic relations order (QDRO).4 ERISA defines a QDRO as a domestic relations
order that “creates or recognizes the existence of an alternate payee’s right to, or assigns
to an alternate payee the right to, receive all or a portion of the benefits payable with
respect to a participant under a plan,”5 and that fulfills several other requirements which
are not disputed in this appeal.6 A domestic relations order “[r]elates to the provision of
. . . marital property rights to a spouse, former spouse, child, or other dependent of a
2
(...continued)
(citing Curran v. Progressive Nw. Ins. Co., 29 P.3d 829, 831 (Alaska 2001)) (statutory
interpretation reviewed de novo). “[W]e adopt the rule of law that is most persuasive in
light of precedent, reason, and policy.” Wood v. Collins, 812 P.2d 951, 955 n.5 (Alaska
1991) (quoting Langdon v. Champion, 745 P.2d 1371, 1372 n. 2 (Alaska 1987) (internal
quotation marks omitted)).
3
“When two people reside together in an intimate relationship, the property
they acquire while cohabiting should be distributed according to the parties’ express or
implied intent.” Jaymot v. Skillings-Donat, 216 P.3d 534, 544 (Alaska 2009) (citing
Bishop v. Clark, 54 P.3d 804, 811 (Alaska 2002)). We determine the parties’ intent by
applying law to facts, a de novo review. Id. (citing Bishop, 54 P.3d at 810-11, 811 n.11).
In the absence of an express agreement, we “ ‘closely examine the facts in evidence to
determine what the parties implicitly agreed upon.’ ” Id. (quoting Bishop, 54 P.3d at
811).
4
29 U.S.C. § 1056(d)(1), (3).
5
Id. § 1056(d)(3)(B)(i)(I).
6
See id. § 1056(d)(3)(B)(i)(II), (d)(3)(C)-(D).
-4- 6901
participant.”7 “Alternate payee” as used in the definition of a QDRO is identical to the
categories of recipients listed in the domestic relations order definition.8
Boulds argues that the superior court lacked authority to award any of the
union pension to Nielsen because “it is illegal under ERISA,” which Boulds argues
preempts state law.9 We assume Boulds is contending that cohabitants cannot hold
“marital property” and that Nielsen does not qualify under the enumerated domestic
relations order recipient categories. Boulds is incorrect. The superior court did not err
when it divided the union pension between cohabitants under Alaska law, and this
outcome is not inconsistent with ERISA.10
The Court of Appeals for the Ninth Circuit examined a similar situation in
Owens v. Auto Machinists Pension Trust, which concerned an unmarried couple who had
7
Id. § 1056(d)(3)(B)(ii)(I).
8
See id. § 1056(d)(3)(K) (alternate payee is “any spouse, former spouse,
child, or other dependent of a participant”). Given this, Boulds apparently only disputes
whether the QDRO will satisfy the prerequisite definition of a domestic relations order.
9
Boulds also argues that the division is not permitted under Alaska law
because authority for courts to divide pensions comes from AS 25.24.160(a)(4) and is
strictly limited to dividing pensions between formerly married couples. We made clear
in Bishop that AS 25.24.160(a)(4) applies only to married couples, and does not apply
to cohabiting couples. 54 P.3d at 812. But in Reed v. Parrish we upheld a trial court’s
determination that many assets, including a retirement account, were domestic
partnership assets. 286 P.3d 1054,1057-58 (Alaska 2012). There is no reason under
Alaska law to hold that the union pension is not subject to distribution under domestic
partnership law.
10
We are not quick to find preemption. In Clauson v. Clauson we cautioned
against using federal law too freely, noting that the U.S. Supreme Court “has refused to
override state law unless preemption is ‘positively required by direct [federal] enactment’
or the particular law does ‘major damage’ to ‘clear and substantial’ federal interests.”
831 P.2d 1257, 1262-63 (Alaska 1992) (alteration in original) (quoting Hisquierdo v.
Hisquierdo, 439 U.S. 572, 581 (1979)).
-5- 6901
cohabited for 30 years.11 A Washington state court determined that the woman should
receive half of the man’s monthly payments from an ERISA-covered pension acquired
during the relationship.12 When the woman sought her portion, the pension fund
administrator notified her that because the couple had not been married, the trial court’s
order was not enforceable under ERISA.13 The woman filed and prevailed on a declatory
judgment action in federal district court, and the plan administrator appealed to the Ninth
Circuit.14
The Ninth Circuit started its analysis by noting that ERISA only recognizes
orders that relate to “marital property rights” and concern an “alternate payee,” which
is defined to include an “other dependent.”15 The case therefore turned on the meaning
of “marital property rights” and whether the woman was an “other dependent.” The
court reasoned that because federal law does not define “marital property rights,” the
court must apply Washington law to define the term.16 The court concluded that
“Washington recognizes quasi-marital relationships for purposes of property division.”17
11
551 F.3d 1138, 1139-40 (9th Cir. 2009).
12
Id. at 1141.
13
Id.
14
Id. at 1141-42.
15
Id. at 1144-46; see 29 U.S.C. § 1056(d)(3)(B)(i)(I) (QDRO “recognizes the
existence of an alternate payee’s right”); id. § 1056((d)(3)(B)(ii)(I) (domestic relations
order relates to “marital property rights”); id. § 1056(d)(3)(K) (alternate payee includes
“other dependent”).
16
Owens, 551 F.3d at 1144-46.
17
Id. at 1145 (citing In re Marriage of Pennington, 14 P.3d 764, 769 (Wash.
2000)); see also Connell v. Francisco, 898 P.2d 831, 834-37 (Wash. 1995) (en banc).
-6- 6901
It explained that Washington acknowledges that these quasi-marital relationships occur
when the relationship is stable, cohabitative, and both parties know they are not lawfully
married.18 Washington limits property division between cohabitants to what would have
been possible “ ‘had the parties been married.’ ”19 The Ninth Circuit concluded that
because Washington allows property to be distributed after a cohabitative relationship
ends, the state provides “marital property rights” to cohabitants.20 Under Washington
law, the pension was a “marital property right.”21
Next, the court looked to the Internal Revenue Service’s definition of an
“other dependent” to determine whether the woman was an “other dependent” under
ERISA.22 The Internal Revenue Code defines “other dependant” to include “[a]n
individual (other than . . . the spouse . . . of the taxpayer) who, for the taxable year of the
taxpayer, has the same principal place of abode as the taxpayer and is a member of the
taxpayer’s household.”23 The Ninth Circuit held that the woman was an “other
dependent” as defined by the IRS, and therefore an “alternate payee” under ERISA.24
We adopt the Ninth Circuit’s reasoning. First, we ask whether Alaska
provides a “marital property right” to cohabitants. Alaska, like Washington, provides
18
Id.
19
Id. (quoting Connell, 898 P.3d at 836).
20
Id. at 1146. 21
Id. at 1145.
22
Id. at 1146.
23
I.R.C. § 152(d)(2)(H) (2012).
24
Owens, 551 F.3d at 1147.
-7- 6901
for marital-like property distribution following a cohabitative relationship.25 Whether
Nielsen and Boulds’s relationship satisfies the requirements necessary for their property
to be “marital” for ERISA’s purposes under Alaska law is addressed below. We then ask
whether Nielsen falls into one of the qualifying classes of payees under ERISA. Boulds
claimed Nielsen as a dependent on his taxes and they shared a residence; Nielsen
therefore qualifies as an “other dependant” under I.R.C. § 152(d)(2)(H), one of the
classes of alternate payees permitted under ERISA.26 Boulds’s argument that an order
dividing the union pension cannot meet the requirements of 29 U.S.C. § 1056(d)(3)(B)
therefore fails. Federal law does not preclude distribution of part of the union pension
to Nielsen, provided Nielsen is entitled to it under Alaska law. We now address this
question.
B. The Parties’ Intent
We made clear in Bishop v. Clark that the first step in dividing an
unmarried couple’s property is to examine the couple’s intent.27 We quoted our adoption
of the Oregon Supreme Court’s standard that “ ‘a division of property accumulated
during a period of cohabitation must be begun by inquiring into the intent of the parties,
and if an intent can be found, it should control that property distribution.’ ”28 We
summarized the types of evidence courts have reviewed when determining explicit and
implicit intent:
25
See, e.g., Bishop v. Clark, 54 P.3d 804, 811 (Alaska 2002); Wood v. Collins,
812 P.2d 951, 956 (Alaska 1991).
26
29 U.S.C. § 1056(d)(3)(B)(i)(I); id. § 1056(d)(3)(B)(ii)(I), id.
§ 1056(d)(3)(K).
27
54 P.3d at 811.
28
Bishop, 54 P.3d at 811 (quoting Wood, 812 P.2d at 956 (quoting Beal v.
Beal, 577 P.2d 507, 510 (Or. 1978) (en banc))).
-8- 6901
In determining the intent of cohabiting parties, courts
consider, among other factors, whether the parties have
(1) made joint financial arrangements such as joint savings or
checking accounts, or jointly titled property; (2) filed joint
tax returns; (3) held themselves out as husband and wife;
(4) contributed to the payment of household expenses;
(5) contributed to the improvement and maintenance of the
disputed property; and (6) participated in a joint business
venture. Whether they have raised children together or
incurred joint debts is also important.[29]
In the present case, the superior court expressly applied Bishop to determine
the parties’ intent with respect to various assets and debts. The court held that the union
pension was intended to be a partnership asset and thus subject to division between
Boulds and Nielsen. Specifically, the court explained:
Mr. Boulds did, at one point in time during the relationship,
list Ms. Nielsen as his beneficiary for this policy. That . . . is
significant evidence to this Court of his intent to hold that
asset as a partnership asset. Now Mr. Boulds has testified
that that was not his intent, that his intent was merely . . . to
list Ms. Nielsen so that when she received the benefit, she
could use it for the benefit of the children.
And I heard that testimony, but it doesn’t really change
my analysis because that testimony tells me that he
considered her to be a trusted partner in that he would trust
her to use the benefit for the benefit of their children. And so
that demonstrates to me that there was an intent for them to
work together toward a mutual goal, a [meritorious] goal, the
protection of their children, the financial protection of their
children. And so I find that Ms. Nielsen has met her burden
of proof to establish that the [union pension] is a partnership
asset.
29
Id. at 811 (citations omitted).
-9- 6901
Boulds contends that the superior court misapplied Bishop by considering only his intent,
when case law requires that both parties’ intent be examined. In Boulds’s view the
required intent is “akin to a ‘meeting of the minds’ in contract theory.” Boulds makes
much of the fact that Nielsen was uninvolved in the couple’s financial decisions, Nielsen
did not contribute directly to the union pension, and listing Nielsen as a beneficiary to
the union pension “was a unilateral act which Nielsen only became aware [of] after it
was done according to her testimony.” We reject Boulds’s assertion that evidence of
Nielsen’s intent or knowledge with respect to the particulars of the parties’ financial
situation is necessary to determining intent under Bishop.
Our holding in Reed v. Parrish is instructive.30 There we explained that
“the [Bishop] factors are not exclusive; they reflect the factual circumstances of the
case.”31 Today we further clarify that the intent of the cohabiting parties as articulated
in Bishop does not mean that each party’s intent necessarily must be analyzed separately
for every individual piece of property.32 In some cases, the parties’ intent with respect
to all or broad classes of property will be easy to infer based on evidence that “the parties
formed a domestic partnership and intended to share in the fruits of their relationship as
though married, justifying an equal division of their property.”33 We emphasize that
simply living together is not sufficient to demonstrate intent to share property as though
married, and, moreover, that parties who intend to share some property do not
30
286 P.3d 1054 (Alaska 2012).
31
Id. at 1058 (citation omitted).
32
When we have focused on a single asset it was because the parties have
disputed only one asset. See, e.g., Tolan v. Kimball, 33 P.3d 1152, 1154-56 (Alaska
2001) (examining whether parties intended house to be partnership asset).
33
Reed, 286 P.3d at 1057.
-10- 6901
presumptively intend to share all property — even when the Bishop factors tilt heavily
toward finding partnership property, other evidence may show that the parties had no
such intent for particular pieces of property. But when the parties have demonstrated
through their actions that they intend to share their property in a marriage-like
relationship, a court does not need to find specific intent by each cohabitant as to each
piece of property.
The superior court’s determination that the parties intended to share the
union pension as if they were married, like they shared their other property, was not in
error. There was testimony that the parties wore wedding and engagement rings at
various times. The court heard undisputed testimony that Boulds supported Nielsen
financially. Boulds claimed Nielsen as a dependent on his taxes for at least some of the
years they were together. Boulds worked outside the home, while Nielsen worked inside
the home raising their children. Boulds apparently took on much of the financial
responsibility for the couple, while Nielsen saw to other matters. Boulds listed Nielsen
as his intended pre-retirement death beneficiary until he was told she could not be
listed.34 The superior court concluded that the couple had a common goal of using the
pension fund to finance raising the children. Ample evidence “support[s] a finding that
34
Our holding does not rest on the fact that Nielsen was listed as a
beneficiary; there was ample evidence before the superior court that the parties intended
to share the union pension under Bishop, even if Boulds had never listed Nielsen as his
beneficiary. We note that under this analysis, Boulds’s 401(k) account actually may
have been partnership property as well. The superior court concluded that the 401(k)
was Boulds’s alone because there was no evidence in the record that he had ever listed
Nielsen as a beneficiary. Such a listing is not necessary when there is sufficient evidence
showing that under the Bishop factors the couple intended to share property. But
because the ownership of the 401(k) account was not cross-appealed, we do not reach
this question.
-11- 6901
the parties were in a domestic partnership and intended to share property as though
married.”35
Boulds also implies that the superior court erred when it held that the
parties intended to share the union pension without making specific findings supporting
each of the Bishop factors. Such specific findings are not necessary. We will remand
for additional fact-finding when “there are not sufficient findings to allow our review of
. . . the parties’ intent.”36 But that is not the case here. The superior court made
sufficient findings of intent for our review; it applied Bishop and concluded that the
parties intended to share the union pension. The superior court’s analysis was correct.
IV. CONCLUSION
We AFFIRM the superior court’s determination that Nielsen is entitled to
half of Boulds’s union pension and we REMAND for the superior court to determine
payment.37
35
Reed, 286 P.3d at 1057.
36
Jaymot v. Skillings-Donat, 216 P.3d 534, 546 (Alaska 2009).
37
If there is concern that the pension administrator will refuse to honor the
domestic relations order even in light of Owens v. Auto Machinists Pension Trust, 551
F.3d 1138, 1147 (9th Cir. 2009), discussed supra pp.5-8, the court may require an
equalization payment from Boulds to Nielsen reflecting the present value of her share of
the union pension.
-12- 6901