Deborah Lynn Foster v. Ray James Foster ( 2016 )

STATE OF MICHIGAN
COURT OF APPEALS
DEBORAH LYNN FOSTER, UNPUBLISHED
October 13, 2016
Plaintiff/Counter-Defendant-
Appellee,
v No. 324853
Dickinson Circuit Court
RAY JAMES FOSTER, LC No. 07-015064-DM
Defendant/Counter-Plaintiff-
Appellant.
Before: MARKEY, P.J., and MURPHY and RONAYNE KRAUSE, JJ.
PER CURIAM.
Defendant appeals as of right an order holding him in contempt of court for failure to pay
plaintiff in compliance with the parties’ consent divorce judgment that was entered in December
2008. Defendant argues that the contempt order and the divorce judgment itself are
unenforceable because their effect is to require defendant to pay plaintiff a portion of his military
disability benefits as part of the property settlement in violation of federal law. Defendant also
presents arguments regarding alleged problematic factual findings and other legal shortcomings
tied to entry of the divorce judgment. Defendant’s arguments are effectively and ultimately
rooted in the judgment of divorce and its terms; however, he never appealed that judgment, nor
has he moved for relief from that judgment, MCR 2.612. Thus, defendant is engaging in an
improper collateral attack on the divorce judgment. See Kosch v Kosch, 233 Mich. App. 346,
353; 592 NW2d 434 (1999) (the defendant's failure to appeal the original divorce judgment
precluded collateral attack on the merits of the judgment and effectively constituted a stipulation
to its provisions). Indeed, defendant agreed to the very provision in the divorce judgment that he
now assails. Nevertheless, for the reasons set forth below, we also substantively reject
defendant’s arguments. In sum, we affirm.
The parties were married on August 6, 1988, and plaintiff filed for divorce on November
20, 2007. Defendant had served in the military during, and prior to, the marriage, and he retired
from the Army in September 2007. Defendant testified at the divorce hearing, which involved
finalizing the parties’ settlement, that he was receiving both military retirement pay and military
disability benefits based on injuries he had sustained during the war in Iraq. Both parties waived
their rights to seek spousal support and agreed that defendant’s disability benefits were not
subject to division by the court because they were not considered marital property under federal
-1-
law. However, pursuant to the property settlement, plaintiff was awarded 50 percent of
defendant’s retirement pay, or “disposable military retired pay,” as calculated based on
defendant’s creditable military service during the marriage. The parties also agreed to the
inclusion of the following provision in the divorce judgment, which we shall refer to as the
“offset provision:”
If Defendant should ever become disabled, either partially or in whole,
then Plaintiff’s share of Defendant’s entitlement shall be calculated as if
Defendant had not become disabled. Defendant shall be responsible to pay,
directly to Plaintiff, the sum to which she would be entitled if Defendant had not
become disabled. Defendant shall pay this sum to Plaintiff out of his own pocket
and earnings, whether he is paying that sum from his disability pay or otherwise,
even if the military refuses to pay those sums directly to Plaintiff. If the military
merely reduces, but does not entirely stop, direct payment to Plaintiff, Defendant
shall be responsible to pay directly to Plaintiff any decrease in pay that Plaintiff
should have been awarded had Defendant not become disabled, together with any
Cost of Living increases that Plaintiff would have received had Defendant not
become disabled. Failure of Defendant to pay these amounts is punishable
through all contempt powers of the Court.
At the divorce hearing, the trial court questioned the attorneys regarding the language of
the offset provision, noting that it seemed to suggest that defendant was not currently receiving
any disability benefits, which was not the case. Counsel for both parties acknowledged that the
language was awkward, but explained that the intent was simply to address a scenario in which
defendant became entitled to and accepted more disability benefits than currently being received,
inversely diminishing the retirement benefits that were being divided and awarded to plaintiff.
The purpose of the offset provision was to protect plaintiff in such a scenario. The trial court
also discussed the offset provision with defendant in the following exchange:
Court. All right, . . . Mr. Foster, you do acknowledge that if you were to
defer any of your current military retirement pay or convert it to disability pay, or
if your military retirement pay were reduced because the level of your disability
pay was increased, you acknowledge this Court’s ability to enforce payment to
Ms. Foster the level of benefits that she would be entitled [to] presently from your
retirement pay?
Defendant. Yes.
Shortly after the entry of the divorce judgment, defendant became eligible for and began
receiving increased disability benefits, which consequently reduced the amount of his retirement
payments and the amount plaintiff received from defendant’s military retirement pay. This was
the precise circumstance that the parties had contemplated in drafting and agreeing to the offset
provision. However, defendant failed to comply with the divorce judgment by paying plaintiff
the difference between the reduced amount of retirement pay she received and the amount that
she had received at the time of the divorce judgment. A number of show cause and contempt
proceedings took place over several years, leading to the order that defendant now appeals,
wherein the trial court held defendant in contempt for failure to pay plaintiff in compliance with
-2-
the consent divorce judgment. The court ordered him to pay plaintiff $1,000 per month, with
$812 credited as current payments due under the divorce judgment and $188 to be credited
against the arrearage of $34,398 until the arrearage was paid in full.
Defendant’s primary argument on appeal is that the divorce judgment and the trial court’s
order enforcing the judgment were legally invalid because they required him to pay plaintiff a
portion of his disability benefits in violation of federal law. We disagree. Defendant’s argument
entails statutory construction and questions of law in general, which we review de novo on
appeal. Snead v John Carlo, Inc, 294 Mich. App. 343, 354; 813 NW2d 294 (2011).
“Members of the Armed Forces who serve for a specified period, generally at least 20
years, may retire with retired pay.” Mansell v Mansell, 490 U.S. 581, 583; 109 S. Ct. 2023; 104 L
Ed 2d 675 (1989) (citations omitted). And retired or retirement pay is generally subject to
division in state court divorce proceedings under the Uniformed Services Former Spouses’
Protection Act (USFSPA), 10 USC 1408. Id. at 584-585; Megee v Carmine, 290 Mich. App. 551,
562; 802 NW2d 669 (2010). With respect to disability pay, “[m]ilitary veterans in general are
entitled to compensation for service-connected disabilities under 38 USC 1101 et seq.,”
sometimes referred to as “VA disability benefits.” Megee, 290 Mich. App. at 560. Pursuant to 10
USC 1414(a)(1), as effective January 1, 2004, “ ‘a member or former member of the uniformed
services who is entitled for any month to retired pay and who is also entitled for that month to
veterans’ disability compensation for a qualifying service-connected disability . . . is entitled to
be paid both for that month . . . .’ ” Id. at 560-561 (ellipses in Megee). “This concurrent receipt
of military retirement pay and VA disability benefits is commonly referred to as CRDP, which
stands for ‘concurrent retirement and disability pay.’ ” Id. at 561 (citation omitted). Another
form of military disability pay, separate from standard VA disability benefits, is combat-related
special compensation (CRSC), 10 USC 1413a. Id. at 552-553. “To be eligible for CRSC, a
person must be a member of the uniformed services who is entitled to retired pay and who has a
combat-related disability.” Id. at 560, citing 10 USC 1413a(c) (emphasis added). A veteran
who is qualified for CRDP (retirement pay plus VA disability pay) and who is also qualified for
CRSC (combat-related disability pay), may elect to receive CRDP or CRSC, but not both.
Megee, 290 Mich. App. at 561.
According to defendant, he became entitled to receive CRSC, which determination was
apparently made retroactive to a date preceding entry of the divorce judgment. Defendant
elected to receive CRSC, which resulted in a diminution of his retirement pay and plaintiff’s 50
percent award of that pay. See Megee, 290 Mich. App. at 561 (“Plaintiff elected CRSC, which
effectively discontinued his retirement pay that had been subject to the QDRO, halting payments
to defendant.”). The Megee panel observed the following concerning CRSC and the division of
waived retirement pay related to CRSC, i.e., retirement pay that is not being received because of
a CRSC election:
The trial court here effectively divided plaintiff’s CRSC and, although
Mansell did not directly address division of disability pay, the USFSPA clearly
does not allow such a division. Subsection (c)(1) of the USFSPA, 10 USC
1408(c)(1), permits a court to treat only “disposable retired pay” as “property of
the member and his spouse,” and CRSC is “not retired pay,” 10 USC 1413a(g).
Accordingly, the trial court erred by dividing plaintiff’s CRSC and forcing
-3-
plaintiff to pay a portion of his CRSC to defendant. However, on the subject
addressed in Mansell, i.e., dividing waived retirement pay, the Mansell decision
actually supports making plaintiff in the case at bar pay defendant half of the
retirement pay that he would be receiving but for his election to take CRSC. The
Mansell Court concluded that waived retirement pay could not be divided as
property in circumstances in which the pay had been waived in favor of title 38
VA disability benefits, given that the definition of “disposable retired pay” in 10
USC 1408(a)(4)(B) excludes consideration of amounts waived in order to receive
title 5 or title 38 compensation. Under the reasoning and rationale of Mansell,
there would be no prohibition here against considering for division waived
retirement pay under the USFSPA because we are addressing a waiver of title 10
CRSC not mentioned in 10 USC 1408(a)(4)(B). Thus, all of plaintiff’s envisioned
yet waived military-retirement pay can be divided without offending the USFSPA
or Mansell. Accordingly, there is no bar to ordering plaintiff to compensate
defendant in an amount equal to 50 percent of plaintiff’s envisioned retirement
pay as intended under the terms of the divorce judgment after plaintiff made a
unilateral and voluntary postjudgment election to waive his retirement pay in
favor of disability benefits contrary to the terms of the judgment.
***
We hold that a military spouse remains financially responsible to
compensate his or her former spouse in an amount equal to the share of retirement
pay ordered to be distributed to the former spouse as part of a divorce judgment's
property division when the military spouse makes a unilateral and voluntary
postjudgment election to waive the retirement pay in favor of disability benefits
contrary to the terms of the divorce judgment. Conceptually, and consistently with
extensive caselaw from other jurisdictions, we are dividing waived retirement pay
in order to honor the terms and intent of the divorce judgment. Importantly, we
are not ruling that a state court has the authority to divide a military spouse's
CRSC, nor that the military spouse can be ordered by a court to pay the former
spouse using CRSC funds. Rather, the compensation to be paid the former spouse
as his or her share of the property division in lieu of the waived retirement pay
can come from any source the military spouse chooses, but it must be paid to
avoid contempt of court. To be clear, nothing in this opinion should be construed
as precluding a military spouse from using CRSC funds to satisfy the spouse's
obligation if desired. [Megee, 290 Mich. App. at 566-567, 574-575 (footnote
omitted).]
Megee governs and dictates, given the involvement of CRSC, that the offset provision in
the consent divorce judgment is fully enforceable through the trial court’s contempt powers.
Defendant attempts to distinguish Megee on the basis that, because of the retroactive nature of
the CRSC award, he effectively became entitled to and elected CRSC and waived retirement pay
prior to entry of the divorce judgment, whereas Megee concerned a unilateral, postjudgment
election to waive retirement pay and opt for CRSC. Defendant’s argument construes Megee
much too narrowly and misses the broader legal principle that emanates from Megee, which is
that a state divorce court has the authority to divide waived retirement pay, which waiver had
-4-
resulted from a veteran’s decision to elect CRSC, so long as the court does not directly order
payment from CRSC funds.1 Thus, assuming for the sake of argument that defendant’s waiver
of retirement pay and election of CRSC must be treated as having already occurred when the
divorce judgment was entered, the offset provision contemplating the division of waived
retirement benefits was nonetheless valid and enforceable under Megee.
Defendant presents an alternative argument under 38 USC 5301, which regards the
nonassignability and exempt status of veterans’ benefits. Defendant’s argument is woefully
undeveloped and we deem it waived. See Mudge v Macomb Co, 458 Mich. 87, 104-105; 580
NW2d 845 (1998). Moreover, as ruled earlier, the argument reflects an improper collateral
attack on the judgment of divorce. See Kosch, 233 Mich. App. at 353. Finally, 38 USC
5301(a)(1) speaks of precluding the assignment of benefits “except to the extent specifically
authorized by law[.]” As noted above, the USFSPA generally permits the division of disposable
retired pay in state divorce actions, and the instant dispute concerns the division of waived
retirement pay, which the Megee panel held was proper under federal law when the waiver is in
relation to a CRSC election. Megee, 290 Mich. App. at 566-567, 574-575.
Finally, defendant poses arguments regarding alleged mistakes of fact by the trial court,
along with purported fraud and unconscionable advantage, all tied to the procurement of the
divorce judgment. These arguments are an improper and untimely attempt to relitigate the
divorce action that was settled years ago absent appeal, and the arguments are therefore rejected.
We additionally note that defendant’s assertion that the trial court was factually mistaken with
respect to whether defendant was suffering from a disability at the time of the divorce hearing is
belied by the record. The trial court expressly recognized that defendant was currently receiving
disability benefits and sought clarification from the parties concerning the language in the offset
provision that suggested otherwise. In sum, defendant’s arguments are unavailing.
Affirmed. Having fully prevailed on appeal, plaintiff is awarded taxable costs under
MCR 7.219.
/s/ Jane E. Markey
/s/ William B. Murphy
/s/ Amy Ronayne Krause
1
The contempt order does not require payment from CRSC funds, nor do we construe the
divorce judgment’s offset provision as ordering payment from CRSC funds, and any such
construction must be avoided.
-5-