Fulgium v. Fulgium , 240 Md. App. 269 ( 2019 )

Amy Fulgium v. Christopher Fulgium, No. 1753, September Term, 2017. Opinion by
Graeff, J.
UNIFORMED SERVICES FORMER SPOUSES’ PROTECTION ACT;
MARITAL SHARE OF A MILITARY PENSION
Military pensions may be considered divisible marital property “[s]ubject to the
limitations” of 10 U.S.C. § 1408. These limitations include that only “disposable retired
pay” may be considered marital property, and the benefit is frozen at the time of divorce,
as opposed to the time of retirement. Thus, under § 1408(a)(4), when there is a final decree
of divorce prior to the date of the member’s retirement, disposable retired pay is “the
amount of retired pay to which the member would have been entitled using the member’s
retired pay base and years of service on the date of the decree of divorce.” To the extent
this is inconsistent with the formula generally used in Maryland, it preempts state law.
The USFSPA limits what is considered disposable military retirement pay that may
be divided as marital property. It permits distribution only of disposable retired pay, but it
does not require distribution. A state court has discretion whether to divide the disposable
retired pay, and if so, how, in accordance with state law.
The circuit court’s rationale in awarding Ms. Fulgium 15% of Mr. Fulgium’s
disposable retired pay is not entirely clear, but based on the court’s comments, the
percentage of retired pay the court awarded does not appear to be correct. Accordingly,
we must vacate the judgment and remand for further proceedings.
Circuit Court for Prince George’s County
Case No. CAD16-32242
REPORTED
IN THE COURT OF SPECIAL APPEALS
OF MARYLAND
No. 1753
September Term, 2017
______________________________________
AMY FULGIUM
v.
CHRISTOPHER FULGIUM
______________________________________
Meredith,
Graeff,
Raker, Irma. S.
(Senior Judge, Specially Assigned),
JJ.
______________________________________
Opinion by Graeff, J.
______________________________________
Filed: February 27, 2019
This case arises from a divorce action between Amy Fulgium, appellant, and
Christopher Fulgium, appellee. On July 31, 2017, the Circuit Court for Prince George’s
County issued a Judgment of Absolute Divorce and a Constituted Pension Order relating
to Mr. Fulgium’s military retirement benefits.
On appeal, Ms. Fulgium challenges only the award of military retirement benefits.
In that regard, she presents five questions for this Court’s review,1 which we have
consolidated and rephrased, as follows:
1. Did the circuit court err in incorrectly calculating Ms. Fulgium’s
marital share of Mr. Fulgium’s military pension?
1
Ms. Fulgium presents the following five questions for review:
1. Did the Trial Court Err as a Matter of Law by Incorrectly Dividing
the Appellee’s Pension Under Maryland Law?
2. Did the Trial Court Incorrectly Conflate the Mechanism of Payment
of a Military Pension Division with the Actual Award of Military Retirement
Benefits to a Former Spouse Thereby Reducing Appellant’s Share of the
Military Pension?
3. Did the Trial Court Incorrectly Calculate the Formula to be Applied
to the Determination of the Appellant’s Share of the Military Retirement
Benefits?
4. Did the Trial Court Err as a Matter of Law When it Failed to
Consider the Mandatory Factors of Md. Code, Fam. Law § 8-205(b) in
Dividing the Appellee’s Military Pension?
5. Did the Trial Court Err as a Matter of Law by not Entering a
Judgment of Absolute Divorce and Constituted Pension Order that Awarded
COLAs to Appellant’s Share of Appellee’s Military Pension After
Specifically Orally Granting Such COLAs to Appellant’s Share of
Appellee’s Military Pension?
2. Did the circuit court err by not entering a constituted pension order
that awarded cost-of-living adjustments to Ms. Fulgium’s share of Mr.
Fulgium’s military pension?
For the reasons set forth below, we answer the first question in the affirmative, and
therefore, we shall vacate the judgment of the circuit court and remand for further
proceedings.
FACTUAL AND PROCEDURAL BACKGROUND
The Fulgiums were married on July 8, 2005. No children were born during the
marriage. Mr. Fulgium has been an active duty member of the United States Marine Corps
since July 12, 1999.
On May 30, 2017, Mr. and Ms. Fulgium entered into a Partial Marital Settlement
Agreement (the “Agreement”). The Agreement settled all issues regarding the divorce,
with the exception of alimony, Mr. Fulgium’s military pension, and attorney’s fees. The
parties planned to address these issues at a trial on the merits.
Trial began that same day, May 30, 2017. Ms. Fulgium requested “three years of
alimony,” a portion of Mr. Fulgium’s military pension, and attorney’s fees. With respect
to the pension, counsel stated that the Federal Government had changed the way pensions
were dealt with by the military:
[I]t used to be like we do with all other pensions, you have the Bangs formula,
where the number of years that . . . the parties were married . . . over all the
overall time that employee was working for the, for the company. That’s no
longer the case.
What they now decided on a Federal basis is that the bottom number
is frozen as of the time that the parties get divorced, so even though the
pension will continue to grow for Mr. Fulgium, my client’s not entitled to
2
share in that anymore and that’s nothing that this Court decides, it’s just what
the Federal law now is.
Mr. Fulgium asked that the court deny Ms. Fulgium’s claims for alimony and
attorney’s fees. He asked that the court award him the “full amount of his military retired
pay.”
At trial, Mr. Fulgium testified that his marriage to Ms. Fulgium first started to
deteriorate in 2011, when he became aware that she had been involved in “intimate action
with neighbors” while he was deployed. He testified that, although Ms. Fulgium had been
“extremely responsible” when they first got married, she began spending a lot of money
over the course of the marriage, and money he had saved was depleted.
Mr. Fulgium, who was 36 years old at the time of trial, testified that his rank in the
Marines was a “Chief Warrant Officer 2.” According to his W-2 forms for the years 2014,
2015, and 2016, he made $52,950.60, $56,264.45, and $60,195.60, respectively. Mr.
Fulgium had a high school education, and he used his GI bill, in the amount of
approximately $27,000, to help Ms. Fulgium earn her master’s degree.
Ms. Fulgium, who was 31 at the time of trial, was living in California. She testified
that she received her master’s degree in 2014. It took her three years to complete the
degree, and she received 12 months’ credit from the GI bill.
Ms. Fulgium testified regarding her health during the marriage. She had several
medical conditions that required surgery, and Mr. Fulgium helped her after the surgeries.
As of the date of trial, however, Ms. Fulgium was healthy, with no health complications.
3
Ms. Fulgium testified that, in 2016, her annual earnings were $55,582.17. Her monthly
expenses were less than her earnings.
After the evidence was presented, counsel for Mr. Fulgium asked that he receive his
full share of his retired pay. Counsel for Ms. Fulgium requested that she be awarded a
share of the pension “from the date they got married until the date they got divorced.”
On June 27, 2017, the circuit court held a disposition hearing. The court denied
each party’s request for attorney’s fees, and Ms. Fulgium’s request for alimony.
With respect to Mr. Fulgium’s military pension, the court discussed the “National
Defense Authorization Act of fiscal year 2017, known as [N]DAA 17,” which revised “how
pension orders are written and will operate.” The court stated:
In accordance with [N]DAA 17, the hypothetical retired pay
attributable to the rank and years of service of a military member at the time
of the applicable order will be divided rather than a percentage of the total
retirement following the service member’s retirement. So the [c]ourt has
used this with regard to the pension.
The pension benefit to be divided is frozen as of the date of the entry
of this order, which will be if one of you does the order. The only adjustment
will be the cost of living adjustment made under 10 U.S.C. Section
1401(a)(b) between the time of the court order [and] the time of retirement.
In practice, this number is gathered by the highest 3 years of
continuous pay. That’s often the most 3 recent years. This element must be
multiplied with the retired pay multiplier, which is 2.5 times of credi[table]
service at the time of the order.
Here, Mr. Fulgium submitted his W-2 statements for 2014, 2015, and
2016, tax forms reflecting annual compensation of $52,950.60, $56,463.95,
and $60,195.60 respectively. Therefore, on average, Mr. Fulgium earned
$56,536.72 over the past 3 years. He has been enlisted in the Marine Corps
for 215 months, which equals 17.9 years, resulting in a retired pay multiplier
of 0.448. The 17.9 years credited times 2.5 percent when this amount is
multiplied by the highest three, the resulting gross pay amount is $25,300.18.
4
Thus using the formula under [N]DAA 17, which was passed December of
2016[,] [Ms.] Fulgium shall be awarded 15 percent of disposable military
retired pay Mr. Fulgium would have received, had the member retired with
retired base high of $56,536.72, as of today, June 27, 2017.
So as of today—well, this number has to be adjusted because the order
is not ready today. I need to redo this, recalculate this, but as of today’s date,
Mr. Fulgium’s retired base pay is $56,536.72 following 17 years, 19 [sic]
months of credible service. That, to date, Mr. Fulgium’s annual payout in
accordance with that 215 months of service is at an annual rate of $25,300.18.
[Ms.] Fulgium should be awarded marital portion of pension as had accrued
on the date of this order using that formula.
In response to the circuit court’s oral ruling, counsel for Ms. Fulgium asked the
court to clarify whether it awarded Ms. Fulgium 50% of Mr. Fulgium’s disposable military
pay or 15%. The following colloquy between the court and counsel for Ms. Fulgium
ensued:
THE COURT: Fifteen. I did that because of the number. When you
take the number, when I multiplied, it came out to be $16,000; and 50 percent
of that 16, which is the 12 years they were married, the 50 percent of the 16
is $8,000. That $8,000 is 15 percent of the $25,000. That makes sense.
[COUNSEL]: It didn’t, to me.
THE COURT: When you figure it out using the formula, it is different.
But when I figured out the formula, by using the formula I did, I came up
with a number that was $16,000-and-some-odd dollars.
[COUNSEL]: Which was what?
THE COURT: Which was based on his years of service while they
were married. And 50 percent of that $16,000, which would be her pension,
50 percent of that would be $8,000. The $8,000 then from the $25,300.18 -
- I’m sorry. The 15 percent of that is $8,000. So that’s why I said 15 percent
of that $25,000 number. That might have been a convoluted way to say it.
[COUNSEL]: Off the top of my head, wouldn’t $8,000 – if you use
25, wouldn’t that be roughly a third?
THE COURT: No. It’s 50 percent of the 16. The 25,000 is 15 percent.
5
[COUNSEL]: Right.
THE COURT: Oh, you’re saying a third. 32 percent? I think you’re
right. I think I did that wrong.
[COUNSEL]: It would seem to me that –
THE COURT: I think you’re right. That number is incorrect.
The goal is [Ms.] Fulgium will be awarded 15 percent of disposable
military retired pay, [that] Mr. Fulgium would have received, had he retired
with a retired base high of $56,536.72 with his 17 years and 9 months of
creditable service as of today’s date.
The circuit court explained that the 15% was 50% of the 11.11 years they were
married, which was $16,000, and 50% of that “is 8.” The court stated that it would order
“that [Ms.] Fulgium shall be granted the marital portion of Mr. Fulgium’s military pension
in accordance with the National Defense Authorization Act of 2017,” and it requested that
counsel “draft the appropriate military divorce order in accordance with the National
Defense Authorization Act of 2017, for the division of Mr. Fulgium’s military pension.”
With respect to Ms. Fulgium’s entitlement to cost-of-living adjustments (“COLAs”) for
her share of Mr. Fulgium’s military pension, the court stated that it believed that Ms.
Fulgium was entitled to COLA, but “[i]t’s whatever the law says.”
After the circuit court’s oral ruling, the parties could not agree on the terms for the
order dividing military retirement pay. The circuit court requested that each party submit
a proposed order for the court’s review.
6
On July 31, 2017, the court issued the Constituted Pension Order,2 which stated, in
pertinent part, as follows:
4. This Order is intended to qualify under the Uniformed Services
Former Spouses Protection Act (USFSPA), 10 U.S.C. Sec. 1408 et seq., as
amended by the National Defense Authorization Act of 2017 (NDAA), with
all provisions to be interpreted in light of USFSPA, as amended.
* * *
6. (a) The Former Spouse is awarded 15% of the disposable
military retired pay of the Member;
(b) As of the date of the Judgment of Absolute Divorce on July
27, 2017, the Member’s military retired base pay (High-3) was
$4,826.28, and the member had 17 years and 11 months of creditable
service.
(c) Former Spouse is entitled to direct payment from the
military pay center, known as the Defense Finance and Accounting
Service (DFAS), to the extent permitted by law, at the same times as
Member receives his retired pay. In accord with the applicable law
and regulations, payments of the retired pay to Former Spouse shall
terminate upon the death of Member or the death of Former Spouse,
whichever shall occur first.
On August 21, 2017, Ms. Fulgium filed a Motion to Alter or Amend Judgment of
Absolute Divorce and Constituted Pension Order. On October 31, 3017, the circuit court
entered an order denying the motion.
This appeal followed.
The order stated that it was “issued pursuant to the domestic relations law of
2
Maryland and specifically Maryland Family Law Code Sec. 8-205(a).”
7
DISCUSSION
Ms. Fulgium contends that the circuit court misinterpreted federal statutes
addressing military retirement benefits and incorrectly divided Mr. Fulgium’s military
pension. She asserts several contentions in this regard, which will be discussed, infra.
Mr. Fulgium contends that the circuit court correctly applied the federal statutes
addressing military retired pay, and these statutes preempt conflicting state law. He asserts
that, after applying the federal statutes, the court properly exercised its discretion in
awarding Ms. Fulgium less than half of the marital portion of his military retired pay based
on its findings that his contributions “far exceeded” the contributions made by Ms.
Fulgium. He argues that the court “had discretion to award less than an equal marital share,
and it was not required to follow any set formula.”
Before addressing Ms. Fulgium’s specific arguments, we will give some
background on the law regarding military retirement benefits. “Military retired pay is a
federal entitlement that, much like a pension, provides a monthly annuity for life upon
retirement from the armed forces.” Dziamko v. Chuhaj, 193 Md. App. 98, 116, cert denied,
416 Md. 273 (2010). As Judge Nazarian explained for this Court in Hurt v. Jones-Hurt,
233 Md. App. 610, 619 (2017):
Marriage, divorce, and the division of marital property are quintessentially
matters of state law, and pension or retirement benefits normally are
considered marital property at the time of divorce. But military benefits are
creatures of federal law, and the treatment of military benefits in state divorce
proceedings has been a source of federal and state tension for decades.
Prior to June 26, 1981, military pensions were considered to be divisible marital
property in Maryland. Collins v. Collins, 144 Md. App. 399, 421–22 (2002). In 1981, in
8
McCarty v. McCarty, 453 U.S. 210, 232–33 (1981), the United States Supreme Court held
that the federal law “governing military benefits preempted state family law and precluded
those benefits from being treated as community property in state divorce proceedings.”
Hurt, 233 Md. App. at 619–20. The Court of Appeals subsequently held that the rationale
in McCarty applied in Maryland, an equitable distribution state, precluding a court from
dividing military retirement pay as marital property. Hill v. Hill, 291 Md. 615, 620-21
(1981).
In 1982, in response to McCarty, “Congress enacted the Uniform Services Former
Spouses Protection Act” (“USFSPA,” or “the Act”), codified at 10 U.S.C. § 1408. Howell
v. Howell, 137 S.Ct. 1400, 1403 (2017). Accord Andresen v. Andresen, 317 Md. 380, 383
(1989). The purpose of the Act was to place courts in the same position they were in prior
to the McCarty decision with respect to non-disability military retired pay. Andresen, at
383. The Senate report stated that the Act was
intended to remove the federal preemption found to exist by the United States
Supreme Court and permit State and other courts of competent jurisdiction
to apply pertinent state or other laws in determining whether military retired
or retainer pay should be divisible. Nothing in this [Act] requires any
division; it leaves that issue up to the courts applying community property,
equitable distribution or other principles of marital property determination
and distribution.
Id. at 383–84 (quoting Senate Report No. 97-502, July 22, 1982, reprinted in 1982 U.S.
Code Cong. & Admin. News, 1555, 1596, 1611).3
3
The Supreme Court subsequently stated that, “[b]ecause domestic relations are
preeminently matters of state law,” the Court would not find that Congress intended to
preempt state law in this area absent evidence that it was “‘positively required by direct
9
The USFSPA provides: “Subject to the limitations of this section, a court may treat
disposable retired pay payable to a member for pay periods beginning after June 25, 1981,
either as property solely of the member or as property of the member and his spouse in
accordance with the law of the jurisdiction of such court.” 10 U.S.C. § 1408(c)(1). Thus,
“[s]ubject to the limitations” of § 1408, a state court may divide a military pension as
marital property pursuant to Maryland law.
One of the limitations on a court’s ability to divide a military pension is that only
“disposable retired pay” may be considered marital property. Id. The statute defines
“disposable retired pay” as “the total monthly retired pay to which a member is entitled,”
less certain amounts, such as military retirement pay waived to receive disability payments.
10 U.S.C. § 1408(a)(4)(A). 4 By excluding from its “grant of authority the disability-related
enactment.’” Mansell v. Mansell, 490 U.S. 581, 587, 597 (1989) (quoting Hisquierdo v.
Hisquierdo, 439 U.S. 572, 581 (1979)). Accord Hurt v. Jones-Hurt, 233 Md. App. 610,
629 (2017) (quoting Hisquierdo for the same proposition).
4
10 U.S.C. § 1408(a)(4)(A) provides as follows:
4(A) The term “disposable retired pay” means the total monthly
retired pay to which a member is entitled less amounts which—
(i) are owed by that member to the United States for previous
overpayments of retired pay and for recoupments required by law resulting
from entitlement to retired pay;
(ii) are deducted from the retired pay of such member as a result of
forfeitures of retired pay ordered by a court-martial or as a result of a waiver
of retired pay required by law in order to receive compensation under title 5
or title 38;
10
waived portion of military retired pay,” the USFSPA provides a limited grant of power to
divide military retired pay. Howell, 137 S. Ct. at 1404. State courts still are preempted
from treating as divisible marital property military retirement pay waived by the retiree to
receive disability payments. Howell, 137 S. Ct. at 1406; Mansell v. Mansell, 490 U.S. 581,
589 (1989); Hurt, 233 Md. App. at 626. Thus, only a portion of retired pay may be treated
as marital property that can be divided in divorce proceedings.
Another significant limitation was included in the National Defense Authorization
Act for Fiscal Year 2017 (“NDAA17”), signed on December 23, 2016. See Pub.L. 114-
328, 130 Stat. 2164, 2418 (Dec. 23, 2016). This amendment to § 1408 was intended to
modify “the division of military retired pay in a divorce decree to the amount the member
would be entitled based upon the member’s pay grade and years of service at the time of
the divorce rather than at the time of retirement.” S. Rept. 114-255, National Defense
Authorization Act for Fiscal Year 2017, at 168 (114th Congress, 2016); Kristy N. Kamarck,
Cong. Research Serv., RL31663, Military Benefits for Former Spouses: Legislation and
Policy Issues, at 15 (2018) (hereinafter “CRS Report”). Rather than dividing actual retired
pay at the time of retirement, the benefit would be frozen at the time of divorce. The
(iii) in the case of a member entitled to retired pay under chapter 61
of this title, are equal to the amount of retired pay of the member under that
chapter computed using the percentage of the member’s disability on the date
when the member was retired (or the date on which the member’s name was
placed on the temporary disability retired list); or
(iv) are deducted because of an election under chapter 73 of this title
to provide an annuity to a spouse or former spouse to whom payment of a
portion of such member’s retired pay is being made pursuant to a court order
under this section.
11
rationale for using a “date of divorce” method for pension valuation was that a former
spouse would not receive a windfall benefit from promotions and other pay increases that
accrued from the date of divorce to the date of retirement, to which the former spouse made
no contribution. See CRS Report, 15.
The new provision stated, in relevant part, that “the total monthly pay to which a
member is entitled,” i.e., “disposable retired pay,” “shall be the amount of basic pay
payable to the member for the member’s pay grade and years of service at the time of the
court order,” plus cost of living adjustments. 10 U.S.C. § 1408(a)(4)(B). In the National
Defense Authorization Act for Fiscal Year 2018, Congress made technical corrections to
this provision to clear up language problems in the NDAA17. See Pub. L. 115–91, 131
Stat. 1283, 1429 (Dec. 12, 2017); Brentley Tanner & Amelia Kays, Winds of Change: New
Rules for Dividing the Military Pension at Divorce, 30 J. Am. Acad. Matrimonial Law 491,
497 (2017-2018). The current version of the statute provides that, in the situation where
there is a final decree of divorce prior to the date of the member’s retirement, disposable
retirement pay is based on “the amount of retired pay to which the member would have
been entitled using the member’s retired pay base and years of service on the date of the
decree of divorce, dissolution, annulment, or legal separation, as computed under section
1406 or 1407 of this title, whichever is applicable, increased by the sum of specified cost
of living adjustments[.]”5 10 U.S.C. § 1408(a)(4)(B).
5
The amendments “take effect on December 23, 2016, as if enacted immediately
following the enactment of the National Defense Authorization Act for Fiscal Year 2017
(Public Law 114-328) to which such amendments relate.” Pub. L. 115–91, 131 Stat. 1430(Dec. 12, 2017).
12
The USFSPA provides that, under certain circumstances, the nonmilitary spouse
may obtain his or her share of disposable retired pay directly from the federal government,
i.e., the Defense Finance and Accounting Service (“DFAS”). 10 U.S.C. § 1408(d)(1). To
be eligible for direct payment, there must be a court order, incident to a final decree of
divorce or legal separation, providing for the payment of an amount of the disposable
retired pay. § 1408(a)(2)&(d)(1); accord CRS Report, 2. After service on the Secretary of
such an order, “the Secretary shall make payments (subject to the limitations of [§ 1408])
from the disposable retired pay . . . to the spouse or former spouse. Id.
One of the limitations on direct payment is that it is available only when the service
member performed ten or more years of creditable military service while married to his or
her spouse. 10 U.S.C. § 1408(d)(2). See Mansell, 490 U.S. at 585. Accord Dziamko, 193
Md. App. at 119 (direct payment of military pension not possible where parties married
only seven years). Another limitation is that “the Federal Government will not make
community property payments that exceed 50 percent of retired disposable retired or
retainer pay.” Mansell, 490 U.S. at 585. See § 1408(e)(1) (“The total amount of disposable
retired pay of a member payable under all court orders pursuant to subsection (c) may not
exceed 50 percent of such disposable retired pay.”).6
6
There has been debate in the state courts regarding whether § 1408(e)(1) is a cap
on total distribution or only direct pay. See Selitsch v. Selitsch, 492 S.W.3d 677, 684 n.3
(Tenn. Ct. App. 2015) (although the Federal Government may not make payments that
exceed 50 percent of disposable retired pay, the USFSPA does not prohibit the court from
awarding more than 50 percent to a former spouse when making an equitable distribution
in a divorce proceeding); Meyer v. Meyer, 952 So.2d 384, 386 (Ala. Civ. App. 2006) (the
USFSPA “limits to 50 percent the amount” of a member’s pay that DFAS can directly pay
13
In sum, the USFSPA limits what is considered disposable military retirement pay
that may be divided as marital property. It permits distribution only of disposable retired
pay, but it does not require distribution. A state court has discretion whether to divide the
disposable retired pay, and if so, how, in accordance with state law. See CRS Report, 2–
3.
With this background in mind, we address Ms. Fulgium’s specific arguments.
I.
Ms. Fulgium initially contends that the circuit court should have calculated the
division of the military pension using the “if, as, and when” basis set forth in Bangs v.
Bangs, 59 Md. App. 350, 367–68 (1984). She summarizes the Bangs formula as: “the
employee’s total pension benefit at the time of his retirement multiplied by a fraction, the
numerator of which is the employee’s total years of service during marriage and the
denominator of which is the employee’s total years of service at retirement (which is the
so-called ‘marital share’), which is then multiplied by fifty percent (50%), to arrive at the
non-employee’s share of the employee’s pension benefit.” Ms. Fulgium asserts that this
to a former spouse, but this does not constitute an absolute cap on the percent of disposable
retired pay that a court may award). Accord Ex parte Smallwood, 811 So.2d 537, 539 (Ala.
2001) (§ 1408 allows a state trial court to award more than 50% of a retiree’s disposable
military retirement pay.); Deliduka v. Deliduka, 347 N.W.2d 52, 55 (Minn. Ct. App. 1984)
(the Act limits direct government payments to former spouses to 50 percent of disposable
retired pay, such that payments in excess of 50 percent must be made “by the member of
the military to the spouse”). Cf. In re Marriage of Bowman, 972 S.W.2d 635, 639 (Mo.
Ct. App. 1998) (§ 1408(e)(1) “sets a fifty percent cap on retired pay awarded to former
spouses”). Although this issue is not presented in this case, it appears to us that the better
reasoned view is that the 50 percent cap relates only to direct pay.
14
formula cannot be frozen prior to retirement, and therefore, the proper calculation of her
marital share of the military pension is “145 months married/total number of months of
service x 50% x retired pay at benefit commencement.”
Mr. Fulgium contends that the court correctly calculated Ms. Fulgium’s marital
share of Mr. Fulgium’s military pension. He asserts that the federal statute preempts state
law with respect to a marital property award requiring the division of military retired pay,
and the court “correctly applied federal law to the division of [his] “retired military pay.” 7
As indicated, 10 U.S.C. § 1408 permits courts to apply state law in determining
whether military retired pay should be divisible. Andresen, 317 Md. at 383–84. In
Maryland “[a]n interest in a military pension is marital property to the extent it was earned
during the marriage.” Woodson v. Saldana, 165 Md. App. 480, 488 (2005). Pursuant to
FL § 8-205, the court may transfer ownership of a pension or retirement plan from one
party to either or both parties after considering various factors.8 Thus, “[s]ubject to the
7
In support of this contention, Mr. Fulgium cites to the United States Department
of Defense’s Financial Management Regulation, Volume 7B, entitled “Military Pay Policy
and Procedures—Retired Pay” DoD FMR 7000.14–R (“DoD Regs”). This regulation
offers a detailed explanation regarding “how a former spouse can apply for payments from
a military member’s retired pay and how the former spouse’s payments will be
administered.” DoD Regs ¶ 290101.
8
FL § 8-205(b) sets forth the following factors that the court must consider in
determining the terms of transfer of a retirement plan or a monetary award:
(1) the contributions, monetary and nonmonetary, of each party to the well-
being of the family;
(2) the value of all property interests of each party;
(3) the economic circumstances of each party at the time the award is to be
made;
15
limitations” of 10 U.S.C. § 1408(c)(1), a military pension may be distributed under FL §
8-205.
In Dziamko, this Court explained the possible methods of valuing pension benefits
in a divorce proceeding:
First, a trial court could calculate the value of the member’s contributions to
the pension during the marriage, plus interest. Second, the court could
attempt to compute the present value of the pension when it vests. Third, the
court could “‘determine a fixed percentage for [the non-member] of any
future payments [the member] receives under the plan, payable to [the non-
member] as, if, and when paid to [the member].’”
Dziamko, 193 Md. App. at 111 (quoting Deering v. Deering, 292 Md. 115, 129 (1981)).
In Bangs, 59 Md. App. at 368, this Court approved the third option, the “if, as, and
when” method to calculate the marital portion of a pension that was earned both during and
(4) the circumstances that contributed to the estrangement of the parties;
(5) the duration of the marriage;
(6) the age of each party;
(7) the physical and mental condition of each party;
(8) how and when specific marital property or interest in property described
in subsection (a)(2) of this section, was acquired, including the effort
expended by each party in accumulating the marital property or the interest
in property described in subsection (a)(2) of this section, or both;
(9) the contribution by either party of property described in § 8-201(e)(3) of
this subtitle to the acquisition of real property held by the parties as tenants
by the entirety;
(10) any award of alimony and any award or other provision that the court
has made with respect to family use personal property or the family home;
and
(11) any other factor that the court considers necessary or appropriate to
consider in order to arrive at a fair and equitable monetary award or transfer
of an interest in property described in subsection (a)(2) of this section, or
both.
16
outside the marriage. Applying this formula, sometimes referred to as the Bangs formula,
the marital share of a pension is a fraction in which the numerator is number of months of
the marriage and the denominator is “the total number of months during which the pension
accrues from employment to retirement.” Dziamko, 193 Md. App. at 112–16. “The non-
member spouse’s share of the marital portion of the pension is determined by applying an
agreed-upon fixed percentage to it. That fixed percentage then is applied to any future
payments received under the pension plan.” Id. at 112. This formula has been “codified
as the default method in Maryland” under FL § 8-204(b).9 Id. Using the Bangs formula,
Ms. Fulgium states that her marital share should be calculated using the following formula:
“145 months married/total number of months of service x 50% x retired pay at benefit
commencement.”
Ms. Fulgium’s appellate argument, that the “court erred as a matter of law” in not
applying the Bangs formula, fails for several reasons. First, her argument in this Court,
that the circuit court erred because, pursuant to Bangs, the formula cannot be frozen before
retirement, is inconsistent with what she argued below. In argument at trial, and in a
subsequent email submitted to the court regarding the proposed Constituted Pension Order,
counsel for Ms. Fulgium argued that the proper analysis was to use the formula set forth in
the USFSPA, which counsel characterized as the Bangs formula with a modification.
Counsel specifically argued, consistent with the recent amendment, that “the denominator
9
FL § 8-204(b)(1) provides that “[t]he court need not determine the value of a
pension, retirement, profit sharing, or deferred compensation plan, unless a party has given
notice in accordance with paragraph (2) of this subsection that the party objects to a
distribution of retirement benefits on an ‘if, as, and when’ basis.”
17
of the marital portion fraction stops at the time of divorce, since the military member’s
benefit is considered to be ‘frozen’ at this point.”
Under these circumstances, Ms. Fulgium’s contention is not preserved for this
Court’s review. See Md. Rule 8-131(a) (an appellate court ordinarily will not decide an
issue “unless it plainly appears by the record to have been raised in or decided by the trial
court”). Accord Sutton v. FedFirst Fin. Corp., 226 Md. App. 46, 80 n.18 (2015), cert.
denied, 446 Md. 293 (2016) (declining to address an argument that was not made below);
Krause Marine Towing Corp. v. Association of Maryland Pilots, 205 Md. App. 194, 223
(2012) (an argument is not preserved when it is “different from and inconsistent with” the
argument offered to the circuit court).
This Court, however, has discretion under Md. Rule 8-131(a) to address an
unpreserved issue. Jones v. State, 379 Md. 704, 712–14 (2004). Because this case will be
reversed and remanded on other grounds, and because the parties were unable to find any
cases addressing the formula to be used in light of the recent amendments to the USFSPA,
we will address it. See Hartman v. State, 452 Md. 279, 299 (2017) (court may elect to
review an unpreserved issue when there likely will be further proceedings).
The USFSPA, as amended by the NDAA17 in 2016, specifically sets forth the
method of calculation of disposable retired pay when there is a divorce prior to the
member’s retirement. It provides that “disposable retired pay,” in the situation where there
is a final decree of divorce prior to the date of the member’s retirement, is calculated “using
the member’s retired pay base and years of service on the date of the decree of divorce,
dissolution, annulment, or legal separation, as computed under section 1406 or 1407 of this
18
title, whichever is applicable, increased by the sum of ‘cost-of-living adjustments[.]’” 10
U.S.C. § 1408(a)(4)(B)(i). The language in the statute makes clear, and federal regulations
confirm, that when, as here, a divorce occurs after December 23, 2016, and the member
has not yet retired, “[t]he amount of retired pay is limited to that which the member would
have been entitled using the member’s retired pay base and years of service on the date of
the final decree of divorce, dissolution, annulment, or legal separation.” Department of
Defense Financial Management Regulations 7000.14–R (“DoD Regs”) ¶ 290802.
The formula set forth in the USFSPA, to the extent it is inconsistent with the Bangs
formula, preempts state law. See Mansell, 490 U.S. at 587 (Congress preempts state law
when that result is “‘positively required by direct enactment’”) (quoting Hisquierdo v.
Hisquierdo, 439 U.S. 572, 581 (1979)). Accordingly, the circuit court here was required
to apply this analysis in assessing the marital share of military retired pay, where the
divorce became final after December 23, 2016, and before Mr. Fulgium retired. Ms.
Fulgium’s contention to the contrary is without merit.
Moreover, we note that the formula set forth by Ms. Fulgium suggests that the court
was required to give her 50 percent of the pension. That is not correct. Neither FL § 8-
205 or 10 U.S.C. § 1408 mandates any division of a military pension. Whether to award
retirement funds, and if so, how to allocate them, is within the discretion of the trial court.
Long v. Long, 129 Md. App. 554, 574 (2000).
II.
Ms. Fulgium next argues that, even if the formula set forth in the USFSPA controls,
the court incorrectly calculated it. She asserts that, under the USFSPA, the correct formula
19
is the “marital fraction (the numerator of which is [Mr. Fulgium’s] years of service during
marriage and the denominator of which is [Mr. Fulgium’s] total years of service as of the
date of award) x 50%,” which results in the following formula:
145 months married during service/217 months of service to date of divorce
x 50%=33.41%.
Ms. Fulgium argues that the court erred in using an average of Mr. Fulgium’s last 36
months base salary in determining the percentage formula.
Mr. Fulgium argued in his brief that the court “correctly applied federal law to the
division of [his] military retired pay.” At oral argument, however, counsel conceded that
the analysis set forth in the circuit court’s oral opinion was incorrect. Counsel asserted,
however, that the written order, which reached the same conclusion, was made using the
proper analysis. Given the lack of any indication that the court’s written order reflected
anything other than the analysis it set forth in court, we are not persuaded by that argument.
We set forth the court’s ruling in its entirety, supra. This ruling shows that the court
intended to transfer a portion of Mr. Fulgium’s retirement pay to Ms. Fulgium. And it
clearly attempted to follow federal requirements to issue an order that permitted Ms.
Fulgium to receive direct pay from the government when Mr. Fulgium retired. As we will
explain, however, the final step in the analysis was incorrect.
The court properly began by determining Mr. Fulgium’s average salary for the three
years prior to the order. Pursuant to the USFSPA,
in the case of a division of property as part of a final decree of divorce . . .
that becomes final prior to the date of a member’s retirement, the total
monthly retired pay to which the member is entitled shall be—
20
. . . the amount of retired pay to which the member would have been entitled
using the member’s retired pay base and years of service on the date of the
decree of divorce, dissolution, annulment, or legal separation, as computed
under section 1406 or 1407 of this title, whichever is applicable, increased
by the sum of the cost-of-living adjustments[.]
Section 1408(a)(4)(B).10
Section 1407 of the USFSPA, applicable here,11 provides that a member’s retired
pay base “is the person’s high-three average,” which is “the total amount of monthly basic
pay to which the member was entitled for the 36 months (whether or not consecutive) out
of all the months of active service of the member for which the monthly basic pay to which
the member was entitled was the highest, divided by . . . 36.” § 1407(c)(1)(A)-(B).
Applying this analysis, the court found, and the parties do not dispute, that Mr. Fulgium’s
average salary in the three years prior to the order was $56,536.
The court’s analysis up to this point, finding that Mr. Fulgium’s retired pay base
was $56,536.72, was essentially correct. The court’s analysis regarding how to divide that
retirement benefit, however, is not as clear.
As indicated, it is within the court’s discretion, after considering the factors set forth
in FL § 8-205, to determine how to equitably divide a pension or retirement plan. If the
10
As indicated, this statutory provision, which took effect in 2017, applies to cases
“where the former spouse and member were divorced after December 23, 2016, [when] the
court awards the former spouse a division of property, and the member has not yet retired.”
DoD Regs ¶ 290801.
11
Section 1407 applies to people who became members after September 7, 1980.
10 U.S.C. § 1407. As discussed, Mr. Fulgium joined the Marine Corps in 1999. Section
1406 applies to people who became members before September 8, 1980.
21
court intends to issue an order providing for direct pay by the Government, however, the
federal regulations provide that the order must meet certain requirements. The “award
must be expressed as a fixed dollar amount or as a percentage of disposable retired pay.”
DoD Regs ¶ 290601(C). In the situation here, where the divorce occurred “before the
member became entitled to receive military retired pay, the retired pay may be expressed
as a formula or hypothetical retired pay award.” DoD Regs ¶ 290601(E).12
The record indicates that the court intended to give a hypothetical retired pay award.
Such an award is defined as:
Hypothetical retired pay award is an award based on a percentage of retired
pay that is calculated using variables provided in a court order that are
different from the member’s actual retirement variables. The retired pay
calculated using the ordered variables is called the member’s hypothetical
retired pay. A hypothetical award typically attempts to define the property
interest in the retired pay as if the member had retired at the time the court
divided the member’s military retired pay based upon the member’s rank, or
high-3 amount, and years of service accrued to that point in time. Thus, the
former spouse does not benefit from the member’s pay increases due to
promotions or increased service time after the divorce.
DoD Regs ¶ 290213.
The Regulations give further guidance on “Acceptable Hypothetical Retired Pay
Awards,” as follows:
A. A hypothetical retired pay award is a percentage of a retired pay
amount calculated using the standard method to compute retired pay, but
using variables different from those used to calculate the member’s actual
retired pay. It is usually calculated as if the member had become entitled to
receive retired pay at the time the court divided the member’s retired pay.
12
Because “the computation of formula and hypothetical retired pay awards result
in a percentage, they are considered a type of percentage award, and would automatically
receive a proportionate share of the member’s retired pay COLA.” DoD Regs ¶ 290601(E).
22
B. To calculate a hypothetical retired pay award, the designated agent
must first calculate the hypothetical retired pay amount. The hypothetical
retired pay amount is calculated by multiplying the hypothetical retired pay
multiplier times the hypothetical retired pay base. If the initial retired pay
computation is not a multiple of $1, it is rounded down to the next lower
multiple of $1. . . .
C. Retired Pay Multiplier
1. The standard retired pay multiplier is 2.5 percent times the
member’s years of creditable service. . . . In the case of a hypothetical
retired pay award, the hypothetical retired pay multiplier is determined
by multiplying 2.5 percent times the hypothetical years of creditable
service provided in the court order. The resulting percentage is rounded
two decimal places. . . .
* * *
D. Retired Pay Base
* * *
2. . . . is the average of the member’s highest 36 months of basic
pay at retirement (high-3 amount). . . . their average basic pay for the
most recent 36 months prior to the hypothetical retirement date.
E. In order to enable the designated agent to calculate the hypothetical
retired pay amount, the court order must provide:
1. The percentage the former spouse was awarded;
2. The hypothetical years of creditable service . . . ;
3. The hypothetical retired pay base. . . . ; and
4. The hypothetical retirement date.
DoD Regs ¶ 290608.
23
Here, as indicated, the court found, pursuant to DoD Regs ¶ 290608(D), that Mr.
Fulgium’s retired pay base, his average basic pay the prior 36 months, was $56,536.72 per
year.13 Pursuant to 10 U.S.C. § 1409 and DoD Regs ¶ 290608(B)&(C), the court, in
determining Mr. Fulgium’s ultimate retirement pay, calculated a hypothetical retired pay
amount by using the standard retired pay multiplier of 2.5% times Mr. Fulgium’s years of
creditable service. The court, therefore, multiplied 2.5% and 17.9 years (.025 x 17.9 =
.448) and rounded the percentage to 0.45.
The court then, pursuant to DoD Regs ¶ 290608(B), multiplied the hypothetical pay
base of $56,536 by 0.45, the hypothetical retired pay multiplier, to get a hypothetical pay
amount of $25,330. Up to this point, the court’s calculations were, with slight
modifications, correct.14
The next step was to consider the marital share of this amount. The Fulguims were
married for 12 of Mr. Fulgium’s 18 years of service, or 67% of the time. Applying this
13
The court’s order stated, however, that Mr. Fulgium’s monthly base pay was
$4,826.28, or $57,915.36 annually.
14
The court’s oral ruling calculated Mr. Fulgium’s years of creditable service as of
the date of the oral ruling. Pursuant to 10 U.S.C. § 1408(a)(2), however, a “court order”
means a final decree of divorce. The ultimate order calculated Mr. Fulgium’s time of
creditable service as 17 years and 11 months. By our calculations, because Mr. Fulgium
entered the service on July 12, 1999, and the date of the Judgment of Absolute Divorce
was July 30, 2017, Mr. Fulgium’s years of service as of the time of the court order was 18
years, or 216 months. This does not change, however, the hypothetical retired pay
multiplier of 0.45. Multiplying that by $57,915, the pay base included in the court’s order,
results in a hypothetical pay amount of $26,061. The figures for the proper hypothetical
pay amount should be revisited on remand.
24
percentage to the hypothetical pay amount of $26,061 equals $17,461. Dividing that
amount, the marital share, by 50%, which appears to be what the court intended, equals
$8,730.15 That figure of $8,730, however, represents approximately 33% of the
hypothetical pay amount of $26,061, not 15%.
The rationale for the court’s determination that Ms. Fulgium would receive 15% of
Mr. Fulgium’s disposable retired pay is not entirely clear, but based on the court’s
comments, the percentage of retired pay the court awarded does not appear to be correct.
Accordingly, we must vacate the judgment and remand for further proceedings. 16 On
remand, the court shall make clear what percentage of this marital asset Ms. Fulgium
should receive and the basis for its determination.
JUDGMENT OF THE CIRCUIT COURT
FOR PRINCE GEORGE’S COUNTY
VACATED AND REMANDED. COSTS TO
BE PAID BY APPELLANT.
15
Our review of the record does not reflect, as Mr. Fulgium alleges, that the judge
intended to award Ms. Fulgium less than an equal share of the marital portion of the
pension. Rather, as indicated supra, the court made specific reference to giving Ms.
Fulgium 50% of the marital portion of the military pension.
16
With respect to Ms. Fulgium’s contention that the circuit court erred “when it
failed to include any COLAs to [her] marital share of [Mr. Fulgium’s] military pension in
the entered judgment of absolute divorce and constituted pension order” we note that DoD
Regs ¶ 290601 explains, in relevant part: “A retired pay award expressed as a percentage
will automatically receive a proportionate share of the member’s cost-of-living adjustment
(COLA).”
25