Harrington v. Ford ( 2015 )


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  • [Cite as Harrington v. Ford, 2015-Ohio-3571.]
    IN THE COURT OF APPEALS OF OHIO
    TENTH APPELLATE DISTRICT
    Freda J. Ford n.k.a. Harrington,                  :
    Plaintiff-Appellee,               :              No. 14AP-954
    (C.P.C. No. 92DR-4702)
    v.                                                :
    (REGULAR CALENDAR)
    Harold M. Ford,                                   :
    Defendant-Appellant.              :
    D E C I S I O N
    Rendered on September 1, 2015
    Strip, Hoppers, Leithart, McGrath & Terlecky, Co., LPA, and
    Joel R. Campbell, for appellee.
    Barry W. Epstein, for appellant.
    APPEAL from the Franklin County Court of Common Pleas,
    Division of Domestic Relations
    LUPER SCHUSTER, J.
    {¶ 1} Defendant-appellant, Harold M. Ford, appeals from a judgment of the
    Franklin County Court of Common Pleas, Division of Domestic Relations, directing
    plaintiff-appellee, Freda J. Ford n.k.a. Harrington ("Harrington"), to prepare an
    appropriate court order regarding the division of Ford's retirement benefits in connection
    with the parties' divorce. For the reasons that follow, we affirm in part and reverse in
    part.
    I. Facts and Procedural History
    {¶ 2} The parties in this matter were married on August 24, 1974, and divorced on
    October 22, 1993, by way of an agreed judgment entry—decree of divorce (the "decree").
    As pertinent here, the decree contains the following paragraph:
    No. 14AP-954                                                                            2
    The husband and the wife agree that Defendant's [Ford's]
    Civil Service Retirement System and USAF/OANG
    Retirement, if any, shall be divided equally between the
    parties. Defendant shall transfer one half of his said
    retirement accounts to Plaintiff [Harrington] by execution of
    the appropriate order or document. The court shall retain
    jurisdiction to execute an appropriate Qualified Domestic
    Relations Order or other order to provide allocation of one
    half of said funds to Plaintiff as of October 22, 1993.
    (Decree, 6.) Another paragraph of the decree required Harrington to pay $7,000 to Ford
    upon her sale of the marital residence. No qualified domestic relations order ("QDRO")
    or other order providing for the allocation of Harrington's portion of Ford's retirement
    account was entered by the trial court following the filing of the decree.
    {¶ 3} In 1997 the parties executed an agreed judgment entry which, among other
    things, ordered Ford to cooperate to effectuate the QDRO. Ford, a participant in the Civil
    Service Retirement System ("CSRS"), retired from federal government work in February
    2009 without a QDRO or other order in place providing for the allocation of Harrington's
    portion of his retirement account. Ford began to receive monthly retirement payments in
    March 2009. After Ford's retirement, QDRO Consultants Company, LLC, prepared a
    draft court order acceptable for processing ("COAP"). The draft COAP provided that
    Harrington would have received an amount equal to 24.75 percent of Ford's monthly
    benefit under the CSRS plan. Ford did not approve the draft COAP and it was thus not
    signed and filed by the trial court. In January 2011, Harrington filed a motion requesting
    a court order effectuating the transfer of a portion of Ford's retirement account as set
    forth in the decree. In July 2012, Ford filed a motion for contempt, alleging Harrington
    failed to comply with the requirement that she transfer $7,000 upon the sale of the
    marital residence.
    {¶ 4} Both the motion relating to the retirement account and the motion for
    contempt were heard by a magistrate of the trial court on August 28, 2012. In March
    2014, the magistrate issued a decision on the motions. In September 2014, the magistrate
    issued an amended decision, attaching expert reports provided by the parties, which were
    not included with the original decision. As to the division of Ford's retirement account,
    the magistrate determined Harrington is entitled to $27,503.88, or one-half of the value
    No. 14AP-954                                                                                              3
    of Ford's retirement account as of October 22, 1993, the date of divorce. The magistrate
    also found Harrington to be in contempt for failing to provide Ford with $7,000.00 upon
    the sale of the marital property, and, thus, ordered Harrington to pay Ford the $7,000.00
    as an offset to the $27,503.88 owed to Harrington.
    {¶ 5} Harrington filed objections to the magistrate's amended decision, and Ford
    filed a memorandum in opposition to Harrington's objections. Without further hearing,
    the trial court issued a decision on Harrington's objections on October 20, 2014. As to the
    division of Ford's retirement account, the trial court analyzed the proper characterization
    and treatment of Ford's retirement benefits.                 The trial court found the magistrate
    correctly determined the "frozen coverture method" applies, but the magistrate did not
    properly apply that method in this matter. (Oct. 20, 2014 Entry, 4.) The trial court
    determined Harrington is entitled to monthly benefit payments from Ford's retirement
    plan administrator in the amount of $633.46 as of August 1, 2013, the benefit of any cost
    of living adjustments that may occur in the future, and an additional $190.27 per month
    to compensate Harrington for monthly benefits already due but not yet paid. Lastly, the
    trial court agreed with the magistrate's finding of contempt and, based on this finding,
    determined that Ford shall keep Harrington's portion of the monthly retirement benefit
    payments received between January 1 and November 1, 2014, which totaled
    approximately $7,000.00 The trial court directed Harrington to prepare an appropriate
    order dividing the retirement benefits consistent with its decision.
    {¶ 6} Ford filed a notice of appeal, and Harrington filed a notice of cross-appeal.1
    II. Assignments of Error
    {¶ 7} Ford assigns the following errors for our review:
    [1.] The trial court failed to adhere to a proper standard of
    review for property division in a divorce and thus erred by
    modifying the divorce decree in violation of R.C. 3105.171(I).
    [2.] The trial court erred by ordering a decision contrary to
    Hoyt v. Hoyt [
    53 Ohio St. 3d 177
    , 178 (1990)] when it failed to
    reach a reasonable result and failed to disentangle the parties'
    economic partnership, even after 20 years.
    1   Harrington subsequently filed a motion to withdraw her notice of cross-appeal which this court granted.
    No. 14AP-954                                                                               4
    [3.] The trial court erred by granting [Harrington] an
    inequitable order contrary to evidence and the decree of
    divorce.
    III. Discussion
    {¶ 8} Because they are interrelated, we will address Ford's three assignments of
    error together. In his first assignment of error, Ford argues the trial court erroneously
    modified the original order of division of marital property as set forth in the decree.
    Ford's second assignment of error alleges the trial court's decision does not reach a
    reasonable result and fails to disentangle the parties' economic partnership. Lastly, Ford
    argues the trial court's decision is inequitable. Collectively, Ford's assignments of error
    allege the trial court erroneously modified the decree by awarding Harrington monthly
    payments that, based on his life expectancy, far exceed the amount originally awarded in
    the decree.
    {¶ 9} In divorce proceedings, a trial court must classify property as marital or
    separate property. R.C. 3105.171(B). Pension and retirement benefits earned during a
    marriage are marital assets. R.C. 3105.171; Cameron v. Cameron, 10th Dist. No. 12AP-
    349, 2012-Ohio-6258, ¶ 9; Hoyt v. Hoyt, 
    53 Ohio St. 3d 177
    , 178 (1990). A pension that
    the participant spouse holds will not necessarily be subject to direct division between the
    participant spouse and the nonparticipant spouse, but it will be " 'subject to evaluation
    and consideration in making an equitable distribution of both parties' marital assets.' "
    Cameron at ¶ 9, quoting Hoyt at 180. When distributing retirement benefits in a divorce,
    a trial court must apply its discretion based on the circumstances of the case; the status of
    the parties; the nature, terms, and conditions of the retirement plan; and the
    reasonableness of the result. Erb v. Erb, 
    75 Ohio St. 3d 18
    , 20 (1996); Hoyt at 179. The
    trial court must attempt to accomplish two goals: (1) preserve the optimum value of the
    retirement asset so that each party can procure the most benefit and (2) disentangle the
    parties' economic affairs to bring finality to the marriage. 
    Id. at 179.
           {¶ 10} A trial court's decision regarding the division of marital property is reviewed
    under the abuse of discretion standard. See, e.g., Thompson v. Thompson, 196 Ohio
    App.3d 764, 2011-Ohio-6286, ¶ 27 (10th Dist.). A trial court abuses its discretion when it
    acts in an unreasonable, arbitrary or unconscionable manner. Blakemore v. Blakemore, 5
    No. 14AP-954                                                                                
    5 Ohio St. 3d 217
    , 219 (1983).       There is no abuse of discretion where there is some
    competent, credible evidence supporting the trial court's decision. Ross v. Ross, 64 Ohio
    St.2d 203 (1980).
    {¶ 11} After a trial court issues a divorce decree, it lacks jurisdiction to modify or
    amend the marital property division, including the division of a pension fund, unless the
    parties expressly consent in writing to the modification. R.C. 3105.171(I); Cameron at
    ¶ 10. But a trial court retains "full power" to enforce the provisions incorporated into a
    divorce decree. 
    Id. To effectuate
    and enforce a divorce decree's division of a pension, a
    domestic relations court must enter an order such as a QDRO, a division of property
    order, or similar device. 
    Id. at ¶
    12. As long as such a device is consistent with the decree,
    it is not a modification of the decree. 
    Id., citing State
    ex rel. Sullivan v. Ramsey, 124 Ohio
    St.3d 355, 2010-Ohio-252, ¶ 19. Thus, when the parties "dispute, in good faith, the
    meaning of a provision in a decree, or if the provision is ambiguous, the trial court has the
    power to hear the matter, to resolve the dispute, and to enforce the decree." Robins v.
    Robins, 10th Dist. No. 04AP-1152, 2005-Ohio-4969, ¶ 13. The trial court has the power to
    clarify and construe its original decree if necessary, or simply enforce the decree as
    written if no ambiguity exists. Cameron at ¶ 11.
    {¶ 12} Retirement plans are generally classified as either a defined-benefit plan or
    a defined-contribution plan. Thompson at ¶ 29. Pursuant to a defined-benefit plan, the
    member or participant's benefit is defined by a plan formula that provides for the
    payment of a monthly check for life upon the member's retirement. 
    Id. at ¶
    29. "Unlike a
    defined-contribution plan, the amount of a member's contribution (if any) to a defined-
    benefit plan plays no role in the computation of the value of the benefit." 
    Id. The actual
    value of a defined-benefit plan that is the subject of a court's equitable distribution can be
    determined only by future contingencies such as the participant's age, highest salary at
    retirement, and pension service credits at retirement. Id.; Pruitt v. Pruitt, 8th Dist. No.
    84335, 2005-Ohio-4424, ¶ 53. Pursuant to a defined-contribution plan, such as a 401(k)
    plan, profit-sharing plan, money-purchase plan, thrift plan, or employee stock-option
    plan, the employee and/or employer contributes to the employee's account and the value
    of the plan is the account balance. Hoyt at 181, fn. 11.
    No. 14AP-954                                                                              6
    {¶ 13} Eligibility to receive pension benefits depends on whether the benefits are
    vested and mature. Thompson at ¶ 30. Pension benefits vest once the employee has been
    employed for a predetermined number of years, and vested pension benefits are not
    subject to forfeiture even if the employee leaves the employer. 
    Id. at ¶
    30. Pension
    benefits are mature when the plan provides for distribution and payments are currently
    due and payable to the employee. 
    Id. at ¶
    31, citing Erb at 20. Conversely, pension
    benefits are not mature when payment is delayed until some future date. Erb at 20. A
    trial court's division of pension benefits, effectuated by a QDRO or similar order, must not
    violate terms of the plan. 
    Id. {¶ 14}
    Regarding the method of dividing Ford's retirement account, the parties
    agree that the decree unambiguously requires the division of Ford's pension using the
    frozen coverture method and not the traditional coverture method. Pursuant to the
    traditional coverture method, the non-participant spouse benefits from the increase in the
    value of his or her unmatured proportionate share after divorce that is attributable to the
    continued participation of the other spouse in the retirement plan. See Thompson at ¶ 39.
    As the participant spouse continues to work beyond the date of divorce, the amount of the
    monthly benefit to be received at retirement continues to grow because of the increase in
    years of service and likely increases in salary. 
    Id. at ¶
    34. In contrast to the traditional
    coverture method, application of the frozen coverture method "freezes" the salary and
    years worked of the participant spouse for the purpose of determining the monthly
    retirement benefit payable at maturity. In this way, the frozen coverture method captures
    the "value of the participant spouse's retirement account had he or she retired on the
    same day the parties divorced, using the then-present base pay and years of service."
    Cameron at ¶ 17.
    {¶ 15} Ford's employment with the federal government was covered under the
    Civil Service Retirement Act, 5 U.S.C. 8331 et seq., which established the CSRS. The
    CSRS is administered by the United States Office of Personnel Management. 5 U.S.C.
    8347(a). Federal regulations grant state courts exclusive jurisdiction over all disputes
    regarding court orders awarding benefits under the CSRS to former spouses. 5 C.F.R.
    838.122(e). "A court order acceptable for processing (COAP) is required by federal
    regulations in order for OPM to distribute, as provided for in a state court decree of
    No. 14AP-954                                                                                 7
    divorce, a marital share of a party's CSRS pension to a person other than the federal
    employee." Plachy v. Plachy, 
    652 S.E.2d 555
    , 556 (Ga.2007), fn. 1, citing 5 U.S.C.
    8345(j)(1); 5 C.F.R. 838.101, 838.303 to 838.306. Retirement benefits under the CSRS
    are generally received as monthly annuity payments.            5 U.S.C. 8311(2).     In some
    circumstances, a former spouse may receive a survivor annuity, but a former spouse is
    generally precluded from receiving a survivor annuity if he or she is remarried before
    reaching 55 years of age.      See 5 U.S.C. 8341 (governing CSRS survivor annuities).
    Additionally, if the total annuity paid to a participant prior to his or her death is less than
    the amount contributed to the CSRS by the participant, the difference is paid out to a
    designated beneficiary or other person as set forth by statute. 5 U.S.C. 8342(c) and (e).
    {¶ 16} In this appeal, there is no dispute that the CSRS is a defined-benefit plan,
    and that, on the date of the divorce, Ford's benefits thereunder were vested, but not
    mature. There is also no dispute Harrington would not be entitled to any former spouse
    survivor annuity payments because she remarried before reaching 55 years old.
    Moreover, as noted above, both parties agree the decree unambiguously requires the
    division of Ford's CSRS pension using the frozen coverture method. The dispute in this
    appeal, however, centers on whether the trial court's decision, directing Harrington to
    prepare an appropriate court order dividing Ford's CSRS pension, properly applied the
    retirement benefits division provision of the decree. Thus, the disagreement resolves to
    whether the trial court properly applied the frozen coverture method to determine the
    amount Harrington should receive from the Office of Personnel Management based on
    her marital portion of Ford's CSRS pension.
    {¶ 17} Ford argues Harrington is only entitled to one-half the value of his
    retirement benefits as of October 22, 1993, the date of divorce. Ford contends that, as of
    October 22, 1993, the value of his retirement benefits was $30,083.05, which was the
    amount of retirement contributions deducted from Ford's pay until 1993, according to the
    Office of Personnel Management. This contention demonstrates a misunderstanding of
    the characteristics of a defined-benefit plan. Because Ford's retirement contributions
    went into a defined-benefit plan, the amount of his contributions did not determine the
    value of the benefit he would receive upon retirement. See Thompson at ¶ 29. The value
    of the pension is determined by accounting for variables such as the member's age, years
    No. 14AP-954                                                                              8
    of service, and salary.   
    Id. Thus, Ford's
    reliance on the amount of his retirement
    contributions as of October 1993 is unpersuasive.
    {¶ 18} In the alternative, Ford asserts that the value of his CSRS account as of
    October 22, 1993, was at most $55,007.76, which was the estimated value placed on
    Ford's pension as of October 22, 1993 by Harrington's expert. Ford argues Harrington is
    only entitled to one-half of that amount. The magistrate agreed with this logic and
    awarded Harrington one-half of the estimated value of Ford's pension as of October 22,
    1993, $27,503.88, reduced by the $7,000.00 owed to Ford in relation to the sale of the
    marital residence. The trial court rejected this approach as being inconsistent with
    application of the frozen coverture method mandated by the decree. We find the trial
    court's ruling on this issue to be reasonable and consistent with applicable law and the
    expert reports provided by the parties.
    {¶ 19} Harrington's expert, Pension Evaluators, a division of QDRO Consultants,
    determined Ford's accrued annual pension, as of October 22, 1993, to be $14,429.40,
    based on his years of service and final average salary as of that date. That is, if Ford had
    stopped working for the federal government on October 22, 1993, he would have been
    entitled to receive $14,429.40 per year, or $1,202.45 per month, when the pension
    matured. See Cameron. To determine the value of the pension as of October 22, 1993,
    Pension Evaluators multiplied $14,429.40 by the applicable present value of deferred
    annuity factor, 3.8122. In this manner, Pension Evaluators determined the "estimated
    value" of Ford's pension to be $55,007.76 as of October 22, 1993. However, Pension
    Evaluators also determined that one-half of the "frozen benefit," or $1,202.45 per month,
    is $601.23. This monthly payment amount constitutes Harrington's marital portion of the
    unmatured benefit that had accrued as of the date of the divorce.
    {¶ 20} As part of the proceedings before the magistrate, Ford submitted a report of
    his expert, Al Minor & Associates, Inc. Al Minor & Assoc. opined that the "divorce decree
    back in 1993 indicated that half of [Ford's] accrued pension at the date of divorce should
    be paid to [Harrington] at the time that [Ford] actually retired." (Al Minor & Assoc.
    Report, 1.) Al Minor & Assoc. acknowledged that Pension Evaluators determined the
    "accrued pension" to be $14,429.40 per year. Al Minor & Assoc. additionally stated,
    "[Harrington] would be entitled to half of that, which would amount to $601.23 per
    No. 14AP-954                                                                                9
    month." (Al Minor & Assoc. Report, 1.) Thus, Ford's expert did not dispute Pension
    Evaluators' frozen benefit calculation. Thus, the undisputed evidence before the trial
    court indicated that if Ford had stopped working on October 22, 1993, one-half of the
    benefit to which he would have been entitled to, upon the benefit maturing, would have
    been $601.23.
    {¶ 21} The trial court's decision is consistent with the reports of the parties'
    experts, and it recognizes that the decree provided that Harrington was entitled to one-
    half of the future monthly benefit already accrued as of the date of divorce. As set forth
    above, unlike the traditional coverture method, the frozen coverture method "freezes" the
    accrued, but unmatured, retirement benefits as of the date of divorce. That is, under the
    frozen coverture method, the value of the future monthly benefit is frozen because it does
    not gain value from years served after the divorce or increases in salaries after the divorce.
    Moreover, even Ford's own expert's report recognized the decree required an equal
    division of the accrued rights to future payments from CSRS; Ford's expert did not opine
    that Ford should pay Harrington one-half of the value of the pension as of the date of the
    divorce. The monthly benefit awarded to Harrington by the trial court is based on the
    calculation of her share of Ford's retirement account as if Ford had retired from federal
    government service on the date of divorce. See Cameron. Considering the reports of the
    parties' experts, and applicable case law, we find the trial court reasonably applied the
    frozen coverture method in determining Harrington's rightful portion of Ford's CSRS
    monthly annuity payments.
    {¶ 22} We next address the trial court's decision to add $190.27 per month to the
    payments Harrington will receive going forward, as a means to compensate her for the
    missed payments. Accounting for cost of living increases, Ford's expert, Al Minor &
    Assoc., determined that, as of December 1, 2013, the value of Harrington's missed
    payments was $39,808.00 . Al Minor & Assoc. reasoned that, by using actuarial tables,
    this amount could be allocated over the life expectancy of Ford to compensate Harrington
    for the delay in her receiving payments. To this end, Al Minor & Assoc. further stated that
    Harrington's monthly benefit of $633.46 ($601.23 plus cost of living increases in 2012
    and 2013) could be increased by $190.27 to account for her missed payments. However,
    Al Minor & Assoc. noted that tacking on the additional amount to the monthly payment to
    No. 14AP-954                                                                          10
    Harrington assumes Ford survives as predicted by actuarial tables, and that Harrington
    survives to receive the payments. The trial court concurred with this approach and
    determined that $190.27 should be added to the base payment of $633.46 to compensate
    Harrington for the delay in her not receiving any payments since Ford began receiving
    monthly annuity payments; but, the trial court did not establish an end-date for the
    additional $190.27 per month.
    {¶ 23} Although the additional amount of $190.27 per month was intended to
    compensate Harrington for the monthly payments she should have received once Ford
    began to receive monthly annuity payments, the payment of this additional amount
    should not extend indefinitely. Unlike the unknown duration of future annuity payments
    to the parties, the amount already paid to Ford is known. Harrington is entitled to a
    certain share of that amount. Based on the trial court's decision, should Ford survive
    beyond the time predicted in actuarial tables, the additional amount paid to Harrington
    would inequitably go beyond that needed to compensate Harrington for the missed
    payments. Attempting to address that scenario, Harrington asserts that if this court or
    the trial court later determines that the additional $190.27 per month paid to Harrington
    should be limited to the monthly payments over the next 17 years, an order could be
    issued to amend the COAP to return to the base payment amount if both parties are still
    living at that time. (Harrington's Brief, 13-14.)
    {¶ 24} We view Harrington's suggested remedy to be inadequate. The repayment
    of the missed payments to Harrington should be limited to ensure Harrington will only be
    compensated for the value of the missed payments. At the same time, however, the trial
    court's order should ensure that Harrington will be fully compensated for those missed
    payments if Ford does not survive as predicted by the actuarial tables. Harrington's
    payments from CSRS will cease when Ford dies because she has no right to a former
    spouse survivor annuity. Additionally, even if the total annuity payments to Ford do not
    meet or exceed his contributions to CSRS upon his death, there is no suggestion by the
    parties that Harrington would be entitled to any of the payout should she survive him.
    Thus, based on the trial court's decision, if Ford does not survive as predicted by the
    actuarial tables, Harrington will not be fully compensated for the missed payments.
    No. 14AP-954                                                                             11
    Accordingly, this matter must be remanded to the trial court to ensure certainty and
    fairness in the manner in which Harrington is compensated for the missed payments.
    {¶ 25} For these reasons, Ford's first, second, and third assignments of error are
    overruled in part, and sustained in part.
    IV. Conclusion
    {¶ 26} Having overruled in part, and sustained in part, Ford's first, second, and
    third assignments of error, the judgment of the Franklin County Court of Common Pleas,
    Division of Domestic Relations, is affirmed in part and reversed in part. This matter is
    remanded to that court for the limited purpose of readdressing Ford's obligation to fully
    compensate Harrington for the missed payments.
    Judgment affirmed in part and reversed in part;
    cause remanded with instructions.
    BROWN, P.J., and SADLER, J., concur.
    

Document Info

Docket Number: 14AP-954

Judges: Luper Schuster

Filed Date: 9/1/2015

Precedential Status: Precedential

Modified Date: 4/17/2021