In re the Marriage of Erlandson ( 2022 )

IN THE COURT OF APPEALS OF IOWA
No. 20-1607
Filed February 16, 2022
IN RE THE MARRIAGE OF GARY E. ERLANDSON
AND SUSAN KAY ERLANDSON
Upon the Petition of
GARY E. ERLANDSON,
Petitioner-Appellee,
And Concerning
SUSAN KAY ERLANDSON,
Respondent-Appellant.
________________________________________________________________
Appeal from the Iowa District Court for Black Hawk County, Melissa
Anderson-Seeber, Judge.
A former wife appeals an adverse summary judgment ruling dismissing her
petition to modify the property and spousal support provisions of her dissolution
decree. AFFIRMED.
Mark R. Hinshaw of The Law Offices of Mark R. Hinshaw, West Des Moines,
for appellant.
Joshua M. Moon of Dutton, Daniels, Hines, Kalkhoff, Cook & Swanson,
P.L.C., Waterloo, for appellee.
Heard by Greer, P.J., Badding, J., and Potterfield, S.J.*
*Senior judge assigned by order pursuant to Iowa Code section 602.9206
(2022).
2
BADDING, Judge.
To paraphrase a Scottish poet, even the best-laid plans often go awry.1 The
plans in this case attempted to give Susan Erlandson an equal share of her former
husband’s military retirement pay at the time of the divorce. Those plans went
awry when, in the years that followed, the military placed Gary Erlandson on the
temporary disability retired list before he reached twenty years of service, thereby
foreclosing Susan from receiving any share of his retirement pay.
To remedy the situation, Susan petitioned to modify the property and
spousal support provisions of the parties’ dissolution decree. The district court
dismissed her petition on summary judgment after concluding it lacked authority to
entertain her claims. We agree and affirm the court’s ruling.
I. Background Facts and Proceedings
Gary and Susan divorced in late 2015 after fifteen years of marriage. Gary
was then a full-time member of the Iowa Army National Guard. In his earlier years
of service, he was deployed overseas twice, including a twenty-two-month tour of
duty in Iraq from 2005 to 2007. He returned from that deployment suffering from
a traumatic brain injury, depression, and post-traumatic stress disorder (PTSD).
His mental and physical health took a toll on the parties’ relationship, and they
eventually separated in 2010.
During their separation, Gary and Susan entered into a “stipulation for
separation,”2 which the district court approved in a “decree for separation.” In their
1 This maxim comes from Robert Burns’s 1785 poem, “To a Mouse.”
2 In the parties’ first appeal, where we affirmed the district court’s property division
and spousal support award, we characterized this stipulation as akin to “a statutory
‘separate maintenance’ decree” authorized by Iowa Code section 598.28 (2010).
3
stipulation, the parties agreed Susan would receive the family home, any “real and
personal property, household goods, and furnishings” then in her possession, and
a “one-half interest in any pension plan, 401K plans and/or any other retirement
plan.” When Gary filed for divorce—three years after the stipulation was
approved—Susan asked the district court to include those terms in its decree
dissolving their marriage. She also made a request for spousal support.
After a trial on Gary’s dissolution petition, the district court granted Susan’s
request for spousal support in a March 30, 2016 decree, awarding her “temporary
alimony of $400 per month until December 31, 2018.” It also honored her request
to incorporate the terms of the previously approved stipulation in its decree. But it
filled in some blanks, one of which concerned Gary’s military retirement pay.
Although the parties agreed Susan would receive “one-half interest in any pension
plan,” they “did not specify when the one-half interest would be determined or
how.” Erlandson, 2017 WL 3283290, at *2. On that issue, the court found:
In July 2001 Gary joined the military on a part-time basis. He
thus is almost a 15-year employee of the military. He will be eligible
to retire after 20 years; however, he would not be eligible to draw
retirement pay until age 60, as a part-time employee, minus the time
that he served in the war zone in Iraq. He became a full-time member
of the military in 2008. If he remains a full-time employee, he would
be eligible to draw a 50 percent pension of his then rank pay in the
year 2028, regardless of his then age. If he does not complete 20
good years of service either as a part-time o[r] full-time military
member, he will draw no pension at all. Because the entirety of
[Gary’s] military pension was earned during the marriage, [Susan]
shall be entitled to receive one-half of that pension, per the Benson
formula, when and if [Gary] becomes eligible to draw retirement pay.
A separate order will be entered to that effect.
In re Marriage of Erlandson, No. 16-0989, 2017 WL 3283290, at *2 (Iowa Ct. App.
Aug. 2, 2017).
4
The separate order addressed the division of Gary’s military pension under
the Uniformed Services Former Spouses Protection Act (USFSPA). See 10 U.S.C.
§ 1408. The order provided that Susan would receive “50% of the Member’s
Disposable Retired Pay or Retainer Pay.”3 For purposes of the order, “military
retirement” was broadly defined to include any retired pay “to which [Gary] would
be entitled for longevity of active duty and/or reserve component military service
and all payments paid or payable under the provisions of Chapter 38 or Chapter
61 of Title 10, United States Codes.” Continuing that definition, the order stated:
It also includes all amounts of retired pay [Gary] actually or
constructively waives or forfeits in any manner and for any reason or
purpose, including but not limited to any waiver made to qualify for
Veterans Administration [VA] benefits [or] any waiver made in order
to qualify for disability retired pay.
In a separate paragraph, the court retained continuing jurisdiction to modify
the
pension division payments or the property division specified herein if
[Gary] should waive military retired pay in favor of disability payments
or take any other action (such as receipt of severance pay, bonus or
an early-out payment) which reduces [Susan’s] share or amount
herein. This retention of jurisdiction is to allow the Court to adjust
[Susan’s] share or amount to the pre-reduction level to reconfigure
the property division or to award compensatory alimony or damages
so as to carry out the original intent of the Court. [Gary] shall
indemnify [Susan] as to any reduction in her payments from what
they would have been based solely on the length of service.
3 After our decision in the first appeal and procedendo had issued, Gary filed an
uncontested motion for entry of a nunc pro tunc order clarifying that his “military
pension should not be divided on a straight 50%-50% basis; rather, it should be
divided ‘per the Benson formula.’” As requested, the district court amended the
original order to provide Susan an unspecified percentage of Gary’s disposable
retired pay to be divided in accordance with the Benson formula.
5
Several years later, the military’s medical evaluation board assessed Gary’s
health and compiled a list of twenty “diagnosed medical conditions.” Based on
those findings, Gary was referred for an informal evaluation by the reviewing
board, which determined he was “physically unfit” for duty due to his
service-related injuries. The reviewing board recommended a 70% disability rating
and placed Gary on the temporary disability retired list “with a re-examination
during February 2020.”4 Gary’s medical board liaison advised him to apply for
disability compensation from the VA because he would receive a higher amount
than if he elected to receive disability payments from the Department of Defense.
Gary followed this advice, and in November 2019, the VA assigned him a 100%
disability rating, entitling Gary to about $3100 per month in benefits.
Meanwhile, Susan filed an application with the Defense Finance and
Accounting Service (DFAS) for payment of a portion of Gary’s retirement pay
pursuant to the USFSPA. But she was notified that because “the entire amount of
the member’s retired/retainer pay is based on disability, . . . there are no funds
available for payment under the USFSPA.”
Susan sought relief by filing an “Application for Modification of Decree of
Dissolution of Marriage” in December 2019 that requested “additional property
and/or additional spousal support.” In her view, the notice from the DFAS
confirmed Gary had waived his military retirement pay to receive disability benefits
so that she would not receive any of his retirement pay now or in the future. From
4 This form of retirement is commonly referred to as “Chapter 61” disability
retirement. Brown v. Brown, 260 So. 3d 851, 855 (Ala. Ct. App. 2018).
6
that premise, she asked the court to exercise its authority under the pension
division order and modify the original property division and spousal support award.
Gary responded with a motion for summary judgment, asserting (1) Susan
was not entitled to modify property division or spousal support because her interest
in his military retirement pay was contingent on him completing twenty years of
military service; (2) disability pay was excluded from division in a dissolution under
the USFSPA; and (3) the district court could not order him to indemnify Susan for
the loss of her share in the retirement pay under Howell v. Howell, 137 S. Ct. 1400,
1406 (2017).
Susan resisted, arguing “Gary was awarded military retired pay under
Chapter 61 of Title 10.” Because he waived that retirement pay in favor of VA
disability compensation, Susan asserted she had a right to modify the property and
spousal support provisions of the dissolution decree under the terms of the pension
division order. In making this argument, Susan clarified that she was not seeking
indemnification as prohibited by Howell, but simply asking the court to enforce its
prior order allowing for modification under the doctrine of res judicata.
Persuaded by Gary’s arguments, the court granted summary judgment and
dismissed the action on the ground that it lacked jurisdiction to grant Susan relief.
While acknowledging that it “specifically retained jurisdiction to review the
dissolution decree pertaining to awarding property should a specific situation
occur,” the court found the circumstances surrounding Gary’s discharge did not
warrant such review. Likewise, the court determined Susan failed to establish a
sufficient change in circumstances to justify modification of her spousal support.
Susan appeals.
7
II. Scope and Standard of Review
“Summary judgment is appropriate only when no genuine issue of material
fact exists and the moving party is entitled to a judgment as a matter of law.” In re
Marriage of Romanelli, 570 N.W.2d 761, 763 (Iowa 1997).
III. Analysis
Though we do not believe it’s necessary to wade too deeply into the
complicated law of military retirement pay, we provide a brief background to give
context to the parties’ positions on appeal.
Under the USFSPA, state courts “may treat disposable retired pay” as
divisible property in a divorce proceeding. 10 U.S.C. § 1408(c)(1). “But the
USFSPA excludes some types of military retirement pay from ‘disposable retired
pay.’” In re Marriage of Tozer, 410 P.3d 835, 837 (Colo. Ct. App. 2017). One such
type is Chapter 61 disability retirement pay, which is what Gary initially received.
10 U.S.C. § 1408(1)(4)(A)(iii). “So, if a veteran’s retired pay consists of Chapter
61 disability retirement, it is not disposable retired pay under the USFSPA, and
thus is not subject to division as marital property.” Tozer, 410 P.3d at 837. In
addition to Chapter 61 benefits, disabled military members may also be eligible to
receive VA disability benefits, like Gary was here. Selitsch v. Selitsch, 492 S.W.3d
677, 684 (Tenn. Ct. App. 2015) (citing 30 U.S.C. § 1101 et seq.). To avoid double-
dipping and to receive non-taxable VA disability compensation, “a former service
member must waive a corresponding portion of his or her retirement pay.” Id.(citation omitted).
In Mansell v. Mansell, 490 U.S. 581, 594 (1989), the United States Supreme
Court held federal law completely preempts state courts from treating waived
8
military retirement pay as divisible marital property. The Court built on this holding
in Howell, where it addressed whether state courts could require a military member
to indemnify a former spouse for the loss caused to the spouse by the member’s
waiver of retirement pay in favor of disability benefits. 137 S. Ct. 1404–05. The
Court ruled the difference between orders dividing waived military retirement pay
and orders requiring reimbursement or indemnification for that waiver was
“semantic and nothing more.” Id. at 1406. While the Court declared “[a]ll such
orders as thus preempted,” it noted
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
military retirement pay might be waived, or, as the petitioner himself
recognizes, take account of reductions in value when it calculates or
recalculates the need for spousal support.
Id.
Against this backdrop, Susan emphasizes that she “is not asking for
indemnification.” Instead, she argues that because Gary “waived his retirement
pay . . . in favor of VA disability benefits, [she] had the right to petition the court for
modification of the property division (and spousal support provision . . . ), under
the reservation of jurisdiction” in the pension division order. The district court
rejected this argument, as do we, though for different reasons.
A. Property Division
The district court began its analysis of the parties’ arguments by
acknowledging that “a modification of an order dividing retirement funds is part of
a property division and therefore not modifiable.” See Iowa Code
§ 598.21(7) (2019). Rather than stopping there, the court noted the pension
division order “specifically retained jurisdiction to review the dissolution decree
9
pertaining to awarding property.” Based on that provision, the court went on to
consider whether Gary’s receipt of disability benefits satisfied the condition
precedent to its retention of jurisdiction to modify the property division, and
concluded it did not.
We do not go so far. Instead, as Gary urges, we find the district court should
have ended its analysis when it acknowledged that property divisions are not
modifiable. Id. This is not to say the court could not interpret and enforce the
terms of its prior decree. See In re Marriage of Morris, 810 N.W.2d 880, 886 (Iowa
2012) (distinguishing a modification claim and a claim based on the court’s
interpretation of a decree). But that is not what Susan asked the court to do. Unlike
the litigant in Morris, who filed an application “asking the court to exercise its
equitable power to enter an order effectuating a provision of the Decree,” id. at
884, Susan petitioned the court to modify the decree to grant her additional
property. “Since Morris, we now have a clear guidance that all property issues
must be incorporated into the decree and the district court may not enter serial
final judgments.” In re Marriage of Tekippe, No. 16-1297, 2017 WL 510985, at *2
(Iowa Ct. App. Feb. 8, 2017) (citing In re Marriage of Thatcher, 864 N.W.2d 533,
538 (Iowa 2015)). The provision in the pension order purporting to retain
jurisdiction to modify the property division in the dissolution decree does not save
Susan because it is not enforceable.5
5 Reprising her argument from the district court, Susan argues it should be
enforced under the doctrine of res judicata. But res judicata requires a “final
judgment on the merits of an action.” In re Marriage of Schebel, No. 02-0335, 2003
WL 1969096, at *2 (Iowa Ct. App. Apr. 30, 2003). The provision retaining
jurisdiction is not in the dissolution decree, which awarded Susan the one-half
interest in Gary’s military retirement pay, but in a supplemental order giving effect
10
We addressed this identical issue in In re Marriage of Carlson, No. 13-1854,
2015 WL 576014, at *6 (Iowa Ct. App. Feb. 11, 2015). The district court had
entered a military pension division order that included a provision allowing it to
retain continuing jurisdiction to modify the property division in a dissolution decree.
Carlson, 2015 WL 576014, at *6. The issue was whether the court could enforce
such a provision based on the military ex-spouse’s decision to reduce his military
retirement pay by receiving VA disability benefits. Id. Citing an older case, In re
Marriage of Gahagen, No. 03-1731, 2004 WL 1813601, at *5 (Iowa Ct. App. Aug.
11, 2004), we reiterated,
Under Iowa law, absent fraud, duress, coercion, mistake, or other
similar grounds which would support modification of an ordinary
judgment, property settlements in dissolution decrees are not subject
to modification. Therefore, relief in situations such as in this case
cannot occur through modification of the decree’s property division.
Id. Relying on that principle, we struck the jurisdiction provision and remanded for
entry of a substituted order. Id. at *7; see also Tekippe, 2017 WL 510985, at *2
(holding that the court could not “exercise its reservation of jurisdiction as set forth
in the decree and order inclusion of a paragraph in the QDRO allowing [the
husband] to name a successor alternate payee” because it would result in
bifurcated property divisions).
to that division. It is thus akin to a qualified domestic relations order (QDRO),
which we have characterized as a procedural device “entered to effectuate the
property division in the dissolution decree.” In re Marriage of Heath-Clark, No. 15-
0525, 2016 WL 2753779, at *3 (Iowa Ct. App. May 11, 2016). Because these
types of orders are not in themselves property settlements, they are not “final
judgments.” Id. As a result, the principles of res judicata do not apply. Cf. Schebel,
2003 WL 1969096, at *2 (applying the doctrine of res judicata to enforce a provision
in a stipulated decree to pay a former spouse 50% of the other spouse’s social
security benefits, in violation of federal law).
11
As in those cases, the district court could not exercise the provision
retaining its jurisdiction for a future property modification action based on Gary’s
post-divorce election to receive disability benefits. Because Susan’s claim as to
the property division depends exclusively on the enforceability of that provision, it
fails as a matter of law. Thus, the court was correct in denying her request to
modify the property division.
B. Spousal Support
After determining that its hands were tied on the property division issue, the
district court turned to whether Susan met her burden of showing a material and
substantial change in circumstances warranting modification of spousal support.
In rejecting her claim, the court explained: “While there has been a significant
change in the lives of the parties with [Gary] being medically discharged from the
military, it is not the change [the court] specifically retained jurisdiction to address
through a modification.” Susan challenges that ruling, arguing “[Gary’s] waiver of
retirement pay in favor of VA disability benefits was exactly the type of change
contemplated that would invoke the district court’s jurisdiction to modify alimony.”
In other words, she raises the same argument she raised on the property division
issue—that the jurisdiction provision solely dictates the outcome. We disagree.
As both parties acknowledge, an award of spousal support may be modified
only when there has been a substantial change in circumstances that is
“essentially permanent, and not within the contemplation of the court at the time of
the decree.” In re Marriage of Sisson, 843 N.W.2d 866, 870–71 (Iowa 2014); see
Iowa Code § 598.21C(1). The only change referenced in Susan’s brief on appeal
is that “[she] is not receiving any of [Gary’s] retirement benefits.” Susan does not
12
develop any supporting argument under the traditional modification standard,
instead relying only on her contention that Gary’s post-divorce election to receive
disability benefits fell within the scope of the pension division order. In doing so,
she essentially concedes the circumstances as they allegedly occurred were
contemplated by the court when the decree was entered, which strikes against one
of the basic principles governing modification actions.
That being said, we recognize there are cases in which the court may
modify a previous award of spousal support without resorting to those principles
because it retained jurisdiction to do so. See In re Marriage of Sjulin, 431 N.W.2d
773, 776 (Iowa 1988) (“While retention of jurisdiction is discouraged, it is not
forbidden.” (internal citation omitted)). But “[o]nly when the decree unequivocally
provides for later trial court review without the necessity of showing a change of
circumstances will we find this was the court’s intent.” Id. Because the pension
division order did not unequivocally provide for later court review without proof of
a change of circumstances, that exception does not excuse Susan’s failure to
make such a showing.
What’s more, Susan needed to do more than show a substantial change in
circumstances to warrant a modification of her spousal support. As Gary points
out, a higher standard of proof applies when, as here, the spousal support award
was for a finite period. Sisson, 843 N.W.2d at 871. By the time Susan brought the
modification action, Gary no longer had an obligation to pay her alimony. See In
re Marriage of Marshall, 394 N.W.2d 392, 393 (Iowa 1986) (recognizing the district
court has discretionary authority to decide whether to reinstate alimony payments
after initial obligation terminated). While the authority of courts to modify spousal
13
support includes the power to reinstate a finite award that has terminated, to do
so, the circumstances must be “‘extraordinary” and “render the original award
grossly unfair.” Sisson, 843 N.W.2d at 871.
The extraordinary circumstances previously found to support this type of
modification have occurred only when the receiving party encounters a serious
intervening health issue and establishes a continuing need for support. See, e.g.,
id. at 875 (extending rehabilitative spousal support payments after former wife’s
cancer diagnosis); In re Marriage of Wessels, 542 N.W.2d 486, 488 (Iowa 1995)
(finding former wife’s “permanent deteriorated” mental health condition constituted
an extraordinary circumstance warranting continuation of alimony); Marshall, 394
N.W.2d at 396–97 (reversing denial of petition to reinstate spousal support based
on receiving spouse’s breast cancer diagnosis and double mastectomy). Those
circumstances are not present here. Susan’s request to modify spousal support
accordingly must be denied.
Because the district court correctly concluded that neither the property
division nor spousal support award were modifiable for the reasons stated above,
we affirm its summary judgment ruling dismissing the modification action.
IV. Appellate Attorney Fees
Gary seeks appellate attorney fees. Because he prevailed, we have
discretion to grant his fee request. See Iowa Code § 598.36. In exercising this
discretion, controlling considerations include the parties’ respective abilities to pay,
whether the party resisting the modification was successful, and whether a party
was obliged to defend the court’s decision on appeal. In re Marriage of Michel,
14
839 N.W.2d 630, 639 (Iowa 2013). Although Gary was successful, we do not
believe an award of appellate attorney fees is warranted.
AFFIRMED.