Batcher v. Wilkie ( 2020 )

Case: 19-2116 Document: 38 Page: 1 Filed: 09/11/2020
United States Court of Appeals
for the Federal Circuit
______________________
JOHN J. BATCHER,
Claimant-Appellant
v.
ROBERT WILKIE, SECRETARY OF VETERANS
AFFAIRS,
Respondent-Appellee
______________________
2019-2116
______________________
Appeal from the United States Court of Appeals for
Veterans Claims in No. 16-638, Chief Judge Margaret C.
Bartley, Judge William S. Greenberg, Judge Joseph L.
Toth.
______________________
Decided: September 11, 2020
______________________
KATHERINE A. HELM, Dechert LLP, New York, NY, ar-
gued for claimant-appellant. Also argued by LUKE REILLY,
Philadelphia, PA.
JOSHUA E. KURLAND, Commercial Litigation Branch,
Civil Division, United States Department of Justice, Wash-
ington, DC, argued for respondent-appellee. Also repre-
sented by ETHAN P. DAVIS, CLAUDIA BURKE, ROBERT
EDWARD KIRSCHMAN, JR.; MEGHAN ALPHONSO, Y. KEN LEE,
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2 BATCHER v. WILKIE
Office of General Counsel, United States Department of
Veterans Affairs, Washington, DC.
______________________
Before DYK, CLEVENGER, and HUGHES, Circuit Judges.
HUGHES, Circuit Judge.
This case is about apportionment of a veteran’s disabil-
ity compensation benefits. The veteran, John J. Batcher,
appeals a decision of the U.S. Court of Appeals for Veterans
Claims upholding the Board of Veterans’ Appeals’ grant of
such apportionment to his now ex-wife, Roberta Batcher,
under 38 U.S.C. § 5307 and its implementing regulations.
Mr. Batcher contends that by affirming this apportion-
ment, the Veterans Court decision improperly superseded
a preexisting state-court-sanctioned separation agreement
absolving Mr. Batcher of all spousal maintenance obliga-
tions. Because Mr. Batcher’s preclusion, preemption, and
statutory construction arguments lack merit, we affirm.
I
A
Section 5307 of title 38 entitles certain dependents of
veterans to “apportionment” of any compensation the vet-
eran is receiving from the Department of Veterans Af-
fairs (VA). 38 U.S.C. § 5307. With apportionment, the
dependent(s) directly receive a portion of the veteran’s com-
pensation, which would otherwise go entirely to the vet-
eran. As relevant here, § 5307 permits the VA Secretary to
prescribe regulations for apportioning benefits “if the vet-
eran is not living with the veteran’s spouse.” Id.
§ 5307(a)(2). As authorized, VA has prescribed two types
of apportionment: general apportionment and special ap-
portionment. 38 C.F.R. §§ 3.450, 3.451. General appor-
tionment is available “[i]f the veteran is not residing with
his or her spouse . . . and the veteran is not reasonably dis-
charging his or her responsibility for the spouse’s . . .
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BATCHER v. WILKIE 3
support.” 38 C.F.R. § 3.450(a)(1)(ii). Special apportion-
ment, on the other hand, turns not on the veteran’s degree
of support but on the dependent’s showing of hardship.
“[W]here hardship is shown to exist,” compensation may be
“specially apportioned . . . on the basis of the facts in the
individual case as long as it does not cause undue hardship
to the other persons in interest.” Id. § 3.451. This appeal
stems from the Board granting Ms. Batcher entitlement to
special apportionment of Mr. Batcher’s VA disability com-
pensation benefits for the period when the two were still
married but living separately.
B
1
Mr. Batcher served on active duty in the U.S. Army in
the 1960s. In 1972, Mr. and Ms. Batcher married. Almost
thirty years later, in 2001, they separated. In 2002,
Mr. Batcher brought a Divorce Action in the Supreme
Court of New York, Suffolk County (hereinafter “New York
court”), which he later converted to a Separation Action. In
March 2005, the New York court issued a Judgment of Sep-
aration ordering various stipulated terms, including that
Mr. Batcher would pay Ms. Batcher $300 per month in
spousal maintenance.
In September 2006, VA first granted Mr. Batcher ser-
vice connection for various disabilities for which he began
receiving monthly disability compensation. The following
month, prompted in part by a contempt motion
Ms. Batcher filed, the New York court held a hearing
where both parties appeared with counsel. The court noted
that the parties had reached a proposed settlement, which
Ms. Batcher’s counsel proceeded to read into the record
(hereinafter “the 2006 Stipulation”). As relevant, the 2006
Stipulation read:
In settlement of the motions pending before the
Court the parties stipulate and agree as follows:
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4 BATCHER v. WILKIE
On or before but in no case later than Decem-
ber 6, 2006 [Mr. Batcher] shall pay to [Ms. Batcher]
the sum of $7,000 . . . .
In consideration therefore, all maintenance
and health insurance and obligations owing from
the plaintiff [Mr. Batcher] to [Ms. Batcher] shall
cease.
J.A. 489. The New York court asked whether the $7,000
payment “would resolve the past maintenance, which is
due and owing and future maintenance.” J.A. 490.
Ms. Batcher’s counsel confirmed this was correct, and the
parties also confirmed that the 2006 Stipulation would
modify the 2005 Judgment of Separation, “resolv[ing] the
issues with respect to maintenance.” J.A. 492. After Mr.
and Ms. Batcher’s allocutions, the New York court “so-or-
dered” the 2006 Stipulation. Shortly thereafter,
Mr. Batcher paid Ms. Batcher the agreed-to $7,000.
Several years later, in December 2010, following
Mr. Batcher’s relocation, a Pennsylvania state court issued
a Divorce Decree formally divorcing the Batchers.
2
Meanwhile, in April 2008, Ms. Batcher had filed a VA
claim for apportionment of Mr. Batcher’s disability com-
pensation benefits. VA notified Mr. Batcher and requested
his financial information in order to assess whether appor-
tionment would cause him undue hardship. Mr. Batcher
responded, objecting to apportionment solely on the
grounds that the 2006 Stipulation “precluded
[Ms. Batcher] from making any and all future claims for
maintenance or support against [him].” J.A. 580.
In August 2009, the VA regional office denied
Ms. Batcher’s claim for apportionment—despite her
demonstrated financial need—based on the 2006 Stipula-
tion. The regional office reasoned that by entering the 2006
Stipulation, Ms. Batcher had “voluntarily renounced any
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BATCHER v. WILKIE 5
maintenance or support from [Mr. Batcher] including fu-
ture claims.” J.A. 555, 558. Ms. Batcher filed a Notice of
Disagreement. The regional office maintained its denial of
apportionment in June 2010, stating again that the 2006
Stipulation and $7,000 payment resolved all past and fu-
ture maintenance obligations. Ms. Batcher then appealed
to the Board of Veterans’ Appeals.
In December 2015, after first remanding for the re-
gional office to comply with certain procedural require-
ments, the Board granted Ms. Batcher special
apportionment from the date of her claim until the date of
her divorce—that is, from April 2008 to December 2010.
The Board recounted the various state court proceedings
and found that there was “inadequate objective evidence”
to determine whether Mr. Batcher was reasonably dis-
charging his support responsibility during the claim period
for purposes of general apportionment under 38 C.F.R.
§ 3.450. J.A. 26–28. But the Board found that the evidence
did support special apportionment under 38 C.F.R. § 3.451because Ms. Batcher had shown a hardship—with ex-
penses exceeding her income and reported periods of home-
lessness—and Mr. Batcher had not shown any hardship of
his own, having failed to provide any financial information
when he had the opportunity. With these criteria met, the
Board granted Ms. Batcher entitlement to special appor-
tionment of Mr. Batcher’s disability compensation for the
period up to the couple’s divorce. Mr. Batcher appealed
that decision to the Veterans Court. 1
1 Because the allowance of Ms. Batcher’s claim
would result in a decreased benefit to Mr. Batcher,
Mr. Batcher was able to appeal this “simultaneously con-
tested claim.” See J.A. 25; see also 38 C.F.R. §§ 20.3(l) (def-
inition), 19.100–19.102 (notice of appeal rights).
Ms. Batcher was notified of the appeal but did not move to
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6 BATCHER v. WILKIE
A divided panel of the Veterans Court affirmed the
Board’s decision to grant apportionment. Batcher v. Wilkie,
31 Vet. App. 138 (2019). Mr. Batcher argued only that
Ms. Batcher had waived her right to seek apportionment
by entering the New York court-ordered 2006 Stipulation
and accepting the $7,000 lump sum payment in lieu of fu-
ture maintenance payments. Id. at 144. The panel major-
ity disagreed, holding that “a domestic relations separation
agreement sanctioned by a state court . . . plays no role in
VA’s determination of entitlement to special apportion-
ment.” Id. at 140. “To the extent that such an agreement
purports to preclude a veteran’s spouse from seeking ap-
portionment of a veteran’s VA benefits, the veteran’s rem-
edy to make himself or herself whole lies with the state
court.” Id. The Veterans Court reasoned that “[w]hether
Ms. Batcher contracted away her right to file a claim for
special apportionment in exchange for adequate considera-
tion from Mr. Batcher . . . is a matter of contract law best
decided by a state court.” Id. at 144. Thus, Mr. Batcher’s
remedy lay in state court where he could sue for breach of
contract or seek modification of the separation agree-
ment—not with VA. Id. at 145.
Dissenting Judge Greenberg would have held that
Ms. Batcher was not entitled to apportionment because she
became Mr. Batcher’s ex-spouse before the Board decided
the claim, and the apportionment statute does not apply to
ex-spouses. Id. at 146. Further, he felt that Ms. Batcher
should not have been permitted to obtain a “modification of
a properly entered state sanctioned contract . . . by the mis-
use of a VA order.” Id. at 147.
intervene at the Veterans Court. Batcher v. Wilkie, 31 Vet.
App. 138, 142 n.5 (2019).
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BATCHER v. WILKIE 7
The Veterans Court entered judgment against
Mr. Batcher on May 20, 2019. Mr. Batcher timely appealed
to this court. We have jurisdiction under 38 U.S.C. § 7292.
II
“Our jurisdiction to review Veterans Court decisions is
limited by statute.” Sullivan v. McDonald, 815 F.3d 786,
788 (Fed. Cir. 2016). We review de novo the Veterans
Court’s interpretation of statutes and constitutional provi-
sions. Wanner v. Principi, 370 F.3d 1124, 1128 (Fed. Cir.
2004). And we “may set aside any regulation or interpre-
tation thereof if we find it: (1) arbitrary, capricious, an
abuse of discretion, or otherwise not in accordance with
law; (2) contrary to constitutional right, power, privilege,
or immunity; (3) in excess of statutory jurisdiction, author-
ity, or limitations, or in violation of a statutory right; or
(4) without observance of procedure required by law.” Sul-
livan, 815 F.3d at 789 (citing 38 U.S.C. § 7292(d)(1)).
We agree with the Veterans Court’s framing of the cen-
tral issue as “whether and to what extent a separation
agreement sanctioned by a state court during divorce pro-
ceedings affects a spouse’s entitlement to special appor-
tionment of a veteran’s VA benefits.” Batcher, 31 Vet. App.
at 140. And we also agree with its answer: not at all. 2 Id.
Mr. Batcher’s three challenges to that conclusion are una-
vailing.
A
Mr. Batcher first argues that the Veterans Court’s “re-
fusal to consider [the 2006 Stipulation] to forego apportion-
ment of [his] benefits is barred by res judicata.”
2 We have no occasion to consider whether an ex-
press waiver by the beneficiary of the right to special ap-
portionment could be or must be enforced by VA as a
matter of federal law.
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8 BATCHER v. WILKIE
Appellant’s Br. 12 (capitalization altered to sentence case).
Mr. Batcher clarifies in his reply brief that in fact he is as-
serting a more general argument that the Veterans Court
“ignored the preclusive effect” of the 2006 Stipulation. Re-
ply Br. 15 n.6. The gist of Mr. Batcher’s preclusion argu-
ment is that Ms. Batcher should have been denied special
apportionment because of the 2006 Stipulation. This argu-
ment, lacking foundation in any particular preclusion doc-
trine, falls flat.
First, contrary to Mr. Batcher’s repeated assertions,
the Veterans Court did not “refuse[] to consider” the 2006
Stipulation. Appellant’s Br. 12, 13, 19. It explicitly identi-
fied Mr. Batcher’s argument as centering on the Board’s
purported error in failing to consider the effect of the 2006
Stipulation. Batcher, 31 Vet. App. at 142. The Veterans
Court simply (and correctly, we hold) rejected his argument
that Ms. Batcher waived her right to seek apportionment
when she entered the 2006 Stipulation.
The 2006 Stipulation does not warrant the preclusive
effect Mr. Batcher would give it primarily because that
state-court-ordered stipulation did not extinguish
Ms. Batcher’s independent right to claim apportionment of
federal benefits to which she was entitled, i.e., a portion of
Mr. Batcher’s VA disability compensation. By its terms,
the 2006 Stipulation refers only to releasing “all mainte-
nance . . . and obligations owing from the plaintiff
[Mr. Batcher] to [Ms. Batcher].” J.A. 489 (emphasis
added). Apportioned VA benefits, by definition, cannot be
owed from Mr. Batcher. Rather, they are a federal benefit
available from VA to any qualifying dependent of a veteran.
While apportionment was only an option for Ms. Batcher
because of her relationship to Mr. Batcher, she was inde-
pendently entitled to seek this federal benefit from VA. See
Belton v. Principi, 17 Vet. App. 209, 211 (2003) (“Although
arising from a veteran’s benefits, an apportionment is an
entity legally separate from those benefits. Thus, when
veterans’ dependents file on their own behalf for an
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BATCHER v. WILKIE 9
apportionment, they seek to exercise their right to an ap-
portionment.’’ (internal quotation marks omitted)).
Notably, ever since Mr. Batcher began receiving VA
disability compensation benefits, his monthly payments
have included an additional amount specifically because he
reported having a spouse. E.g., J.A. 140, 669, 719 (specify-
ing that each payment “includes an additional amount for
your spouse”); see 38 U.S.C. § 1115 (entitling veterans with
a sufficient disability rating to additional compensation for
dependents). Those benefits were not meant to support
Mr. Batcher alone, so it follows that Ms. Batcher should
have a federal mechanism by which to claim a portion of
those benefits while “not living with” her husband. See
38 U.S.C. § 5307(a)(2).
As the Veterans Court concluded, Ms. Batcher satisfied
all of the criteria for special apportionment. Batcher,
31 Vet. App. at 144. As a veteran’s spouse (at the time of
her claim) who suffered hardship during the relevant pe-
riod while living apart from the veteran, and with no evi-
dence that apportionment would unduly harm others,
Ms. Batcher was entitled to apportionment. See 38 U.S.C.
§ 5307(a)(2); 38 C.F.R. § 3.451. With this showing,
Ms. Batcher was owed a portion of Mr. Batcher’s disability
compensation from VA. The 2006 Stipulation—to which
VA, of course, was not a party—does not change that, not-
withstanding the VA regional office’s contrary belief.
To the extent that Mr. Batcher believes Ms. Batcher
has breached the terms of the 2006 Stipulation, or believes
a modification of those terms is now warranted following
Ms. Batcher’s apportionment, his remedy lies in state
court—not in this court, or with VA. 3
3 We disagree in one respect with the Veterans
Court’s reasoning related to Mr. Batcher’s waiver/preclu-
sion argument. The Veterans Court observed that two
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10 BATCHER v. WILKIE
B
Next, Mr. Batcher argues that the Veterans Court’s de-
cision impermissibly preempts New York state domestic re-
lations law. This preemption argument fails for reasons
similar to those undermining his preclusion argument: this
is a federal agency adjudication of a claim for federal ben-
efits, which does not conflict with any state domestic rela-
tions law.
All three types of preemption “work in the same way:
Congress enacts a law that imposes restrictions or confers
rights on private actors; a state law confers rights or im-
poses restrictions that conflict with the federal law,” and—
in most areas other than domestic relations—“therefore
the federal law takes precedence and the state law is
preempted.” Murphy v. Nat’l Collegiate Athletic Ass’n,
138 S. Ct. 1461, 1480 (2018) (discussing “conflict,” “ex-
press,” and “field” preemption). But, as Mr. Batcher is
quick to point out, there is a “presumption against pre-
emption of state laws governing domestic relations.”
orders entered by the New York court after the 2006 Stip-
ulation “appear to belie” Mr. Batcher’s assertion that
Ms. Batcher waived her right to seek apportionment.
Batcher, 31 Vet. App. at 144 n.8. But these orders to re-
lease to Ms. Batcher half of Mr. Batcher’s retirement funds
and half of his military retired pay benefits did not relate
to ongoing maintenance obligations. The December 2006
retired pay order was expressly “[t]o accommodate the
marital property distribution,” J.A. 505; and the October
2007 order was a continuation of efforts to execute the re-
tirement funds distribution originally agreed to in the 2005
Judgment of Separation, see J.A. 484. Thus, neither sheds
light on how the parties or the New York court viewed the
2006 Stipulation’s release of maintenance obligations. And
our rejection of Mr. Batcher’s preclusion argument here
does not turn on the existence of these later orders.
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BATCHER v. WILKIE 11
Hillman v. Maretta, 569 U.S. 483, 490 (2013) (internal quo-
tation marks omitted). And “[b]efore a state law governing
domestic relations will be overridden, it must do major
damage to clear and substantial federal interests.” Rose v.
Rose, 481 U.S. 619, 625 (1987) (internal quotation marks
omitted).
But the anti-preemption principles embodied in this
presumption only come into play if the asserted federal and
state laws actually conflict. See, e.g., Murphy, 138 S. Ct.
at 1480 (requiring a state law that “conflict[s] with the fed-
eral law”); Rose, 481 U.S. at 625 (stating the rule for “when
state family law has come into conflict with a federal stat-
ute” (emphasis added)). In the domestic relations context,
this conflict typically manifests as a state law or state court
order requiring a certain disposition of a veteran’s federal
benefits payments. See generally Howell v. Howell, 137
S. Ct. 1400 (2017) (reversing a state court order requiring
a veteran to reimburse his former spouse for the decrease
in military retirement pay caused by the veteran’s post-di-
vorce waiver of his retired pay); Rose, 481 U.S. 619 (affirm-
ing a state court holding a veteran in contempt for failing
to pay child support owed under a state law authorizing the
award of VA disability benefits as child support).
We see no similar conflict here. In ordering the
2006 Stipulation, the New York court did not address the
division of Mr. Batcher’s freshly acquired VA disability
benefits. Mr. Batcher argues that those benefits must have
been contemplated as part of the “maintenance” obliga-
tions Ms. Batcher agreed to release, but it is undisputed
that the New York court did not expressly order any dis-
posal or division of the VA disability benefits. Without any
particular New York state law being invoked as applying
to the VA benefits at issue, the only supposed conflict
Mr. Batcher has identified is that the Veterans Court’s de-
cision allows a federal statute to preempt the “principle of
New York state law” that “parties in a separation or divorce
proceeding are free to contractually determine the division
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12 BATCHER v. WILKIE
of a veteran’s disability benefits.” Appellant’s Br. 25. Even
assuming preemption can rest on a conflict with such a
nebulous “principle” of state law, the Supreme Court has
already rejected the idea that separating couples contract-
ing in this area can rely on a fixed amount of future VA
benefits. See Howell, 137 S. Ct. at 1405 (“State courts can-
not ‘vest’ that which (under governing federal law) they
lack the authority to give.”); id. at 1406 (holding state court
order preempted but noting that “a family court, when it
first determines the value of a family’s assets, remains free
to take account of the contingency that some [federal bene-
fits] might be waived, or . . . take account of reductions in
value when it calculates or recalculates the need for
spousal support”). Given the ever-present possibility that
the parties’ federal benefits might shift, we fail to see how
the Veterans Court’s decision here impairs the parties’
ability to contract.
C
Finally, Mr. Batcher argues that the Veterans Court
erroneously applied 38 U.S.C. § 5307 and its implementing
regulations to apportion benefits to Ms. Batcher, who he
says was no longer his “spouse” at the time she filed her
apportionment claim, because by then the two were legally
separated. See id. § 5307(a)(2) (permitting apportionment
“if the veteran is not living with the veteran’s spouse”). To
the extent this argument has been preserved, 4 we reject it
as well.
4 Mr. Batcher never seems to have challenged
whether Ms. Batcher, as a factual matter, met the statu-
tory and regulatory criteria for seeking apportionment—
including that she was his spouse. See J.A. 580, 596 (re-
sponding to notice of request for apportionment); Batcher,
31 Vet. App. at 144 (noting that “Mr. Batcher does not
challenge any of the Board’s specific findings regarding
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BATCHER v. WILKIE 13
Mr. Batcher presents no authority, and we know of
none, to support his position that the Batchers’ legal sepa-
ration under the 2005 Judgment of Separation “turned
Ms. Batcher from a ‘spouse’ into a ‘former spouse.’” Appel-
lant’s Br. 27. Title 38 defines “spouse” as “a person of the
opposite sex who is a wife or husband.” 38 U.S.C.
§ 101(31). 5 And “[i]n determining whether or not a person
is or was the spouse of a veteran, their marriage shall be
proven as valid” for the purposes of veterans’ benefits “ac-
cording to the law of the place where the parties resided at
the time of the marriage.” 38 U.S.C. § 103(c); see 38 C.F.R.
§ 3.1(j).
Under New York law, a judgment of separation does
not dissolve the marriage; it simply marks the end of the
couple’s cohabitation and may modify certain spousal obli-
gations. Compare N.Y. Dom. Rel. Law § 170 (McKinney)
(authorizing “[a]n action for divorce . . . to procure a judg-
ment divorcing the parties and dissolving the marriage”
(emphasis added)), with N.Y. Dom. Rel. Law § 200 (McKin-
ney) (authorizing an action “to procure a judgment
Ms. Batcher’s entitlement to special apportionment”). But
because the Veterans Court’s dissenting opinion focused on
this statutory interpretation question, we will briefly ad-
dress it.
5 As Mr. Batcher points out, the Supreme Court has
indeed declared a similar definition unconstitutional for
discriminating against legally married same-sex couples.
See United States v. Windsor, 570 U.S. 744, 752, 775 (2013)
(invalidating 1 U.S.C. § 7’s (Defense of Marriage Act) defi-
nition of “spouse” as “refer[ring] only to a person of the op-
posite sex who is a husband or a wife”). But, contrary to
Mr. Batcher’s assertion, that ruling did not render totally
inoperative statutory definitions like § 101(31) that can
still be applied in a way that does not offend the Constitu-
tion, i.e., without the “opposite sex” restriction.
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14 BATCHER v. WILKIE
separating the parties from bed and board, forever, or for a
limited time”); see People ex rel. Comm’rs of Pub. Charities
& Corr. v. Cullen, 47 N.E. 894, 895 (N.Y. 1897) (noting that
a decree of separation “did not dissolve the marriage,” and
the “parties still remained husband and wife in the eye of
the law,” although the “duties and obligations of the mar-
riage relation were radically affected and wholly changed”).
If anything, then, the 2005 Judgment of Separation simply
corroborates Ms. Batcher’s eligibility for apportionment,
proving that the two were not living together when she
filed her claim in 2008. It did not change Ms. Batcher’s le-
gal status as Mr. Batcher’s spouse—a fact that Mr. Batcher
apparently recognized, given that he later sought and ob-
tained a divorce decree in 2010.
Mr. Batcher’s argument in this court—based on
Ms. Batcher’s status at the time of filing her claim—di-
verges somewhat from Judge Greenberg’s reasoning in dis-
sent, which depended on Mr. and Ms. Batcher having
legally divorced before the Board acted on the apportion-
ment claim in 2015. See Batcher, 31 Vet. App. at 146. Such
reasoning would needlessly punish claimants who are eli-
gible for benefits at the time they apply but whose claim
then enters a lengthy period of Board review over which
they lack any control. The Veterans Court correctly
deemed Ms. Batcher eligible for apportionment as
Mr. Batcher’s “spouse” from the time she filed her claim to
the date of the Divorce Decree.
III
We have considered Mr. Batcher’s remaining argu-
ments and find them unpersuasive. For the foregoing rea-
sons, the judgment of the Veterans Court is affirmed.
AFFIRMED