Mitchell Robert Gottfried v. Marie Annette Gottfried ( 2011 )

Affirmed and Memorandum Opinion filed October 25, 2011.
In The
Fourteenth Court of Appeals
NO. 14-10-00645-CV
MITCHELL ROBERT GOTTFRIED, Appellant
V.
MARIE ANNETTE GOTTFRIED, Appellee
On Appeal from the County Court at Law
Waller County, Texas
Trial Court Cause No. 03-11-17060
MEMORANDUM OPINION
Mitchell Gottfried petitioned the trial court to clarify a final decree of divorce and
qualified domestic relations order addressing the portion of Mitchell‘s retirement benefits
to be paid to his ex-wife, Marie Gottfried. In two issues, Mitchell argues that the trial
court erred by (1) denying his motion to clarify the final decree and order; and (2)
awarding attorney‘s fees to Marie. We affirm.
BACKGROUND
Mitchell and Marie have married and divorced each other twice. The first
marriage lasted from 1984 to 1995. Their second marriage lasted from 1996 to 2007.
Mitchell has worked as a teacher since 1979 and has accrued retirement benefits
administered by the Teacher Retirement System of Texas (TRS).
The second divorce was tried before a jury, and the jury rendered an $80,000
verdict in Marie‘s favor. The jury found that Mitchell committed fraud and a breach of
fiduciary duty. Before the trial court signed a judgment on the verdict, Mitchell and
Marie recited a Rule 11 agreement in open court concerning the division of community
property. This agreement included the portion of Mitchell‘s retirement account that
accrued during the second marriage. The trial court signed an agreed final decree of
divorce on June 26, 2007. On the same day, the court also signed a domestic relations
order directed to the TRS explaining the disbursement of benefits to Marie, the alternate
payee. See Tex. Gov‘t Code Ann. § 804.001(4) (Vernon 2004). The TRS notified the
parties on September 10, 2007 that it approved the domestic relations order as a qualified
domestic relations order (QDRO). See id. § 804.003. The relevant portions of the final
decree and QDRO are reprinted respectively in Appendix A and Appendix B of this
opinion.
Mitchell later communicated with the TRS about the QDRO‘s effect on his
retirement benefits. The TRS informed Mitchell that the QDRO awarded Marie 100
percent of his retirement benefits accrued during the second marriage, and there was no
cap on the amount of these benefits. The TRS applied the formula found in the QDRO
and provided Mitchell with an illustration of the QDRO‘s effect on his retirement
benefits.1
1
The TRS reviewed the QDRO from the first marriage and the QDRO from the second marriage.
The TRS noted that the QDRO from the second marriage awarded Marie 100 percent of the benefits
accruing from 1996 to 2007; it did not award 100 percent of Mitchell‘s benefits from the time he began
teaching in 1979. The TRS estimated that the QDRO from the second marriage effectively would award
Marie 41.2658 percent of Mitchell‘s total monthly retirement benefit payment. Combined with the
QDRO from the first marriage, Marie would receive 51.4859 percent of Mitchell‘s total monthly
retirement benefit payment, and Mitchell would receive the remainder. These calculations presumed that
Mitchell would retire before an increase in his average salary or service credit and would choose a
standard service retirement annuity with no partial lump sum distribution.
2
Mitchell petitioned the trial court to clarify the 2007 decree and QDRO,
contending that the TRS benefits awarded to Marie in connection with the second
marriage were intended to be capped at $25,000 pursuant to the parties‘ Rule 11
agreement.2 After a bench trial, the court signed a final judgment denying the motion;
the court concluded that the decree was unambiguous and did not limit the amount of the
TRS benefits from the second marriage to $25,000. The court also awarded $4,000 in
trial attorney‘s fees and additional appellate attorney‘s fees to Marie.
ANALYSIS
I. Clarification of a Final Decree of Divorce and QDRO
In his first issue, Mitchell argues that the trial court erred by denying his motion to
clarify the 2007 decree because (1) the decree unambiguously included a $25,000 cap on
the award of retirement benefits in connection with the second marriage; or (2) the decree
was ambiguous, and the record shows that the parties intended to impose a $25,000 cap
on the award. Mitchell also argues that the trial court erred by not clarifying the QDRO
because the QDRO (1) is ambiguous and cannot be implemented correctly by the TRS;
and (2) improperly altered the substantive division of property contained in the decree.
We conclude the decree unambiguously did not include a $25,000 cap on the
award of retirement benefits; the QDRO can be implemented by the TRS; and the QDRO
did not alter the substantive division of property contained in the decree.
An agreed final decree of divorce is a consent judgment and treated as a contract
between the parties. See McKnight v. Trogdon-McKnight, 132 S.W.3d 126, 130–31 (Tex.
App.—Houston [14th Dist.] 2004, no pet.); Zeolla v. Zeolla, 15 S.W.3d 239, 242 (Tex.
App.—Houston [14th Dist.] 2000, pet. denied). After a trial court enters the decree, the
court has continuing jurisdiction to issue orders ―to assist in the implementation of or to
2
The parties agree on appeal that Mitchell‘s petition or motion was one to ―clarify‖ both the
decree and the QDRO, although Mitchell sought in his written petition ―to clarify and enforce the division
of property under the final decree of divorce and to withdraw and void prior domestic relations order.‖
3
clarify the prior order.‖ Tex. Fam. Code Ann. § 9.007(a) (Vernon 2006); see id. § 9.002.
Such an order may not ―amend, modify, alter, or change the division of property made or
approved in the decree of divorce.‖ Id. § 9.007(a). This prohibition applies to a QDRO
because a QDRO is a type of post-decree enforcement or clarification order. See Quijano
v. Quijano, Nos. 14-09-01074-CV, 14-10-00567-CV, __ S.W.3d __, 2011 WL 3197709,
at *6 (Tex. App.—Houston [14th Dist.] July 28, 2011, no pet. h.); Gainous v. Gainous,
219 S.W.3d 97, 107 (Tex. App.—Houston [1st Dist.] 2006, pet. denied) (op. on reh‘g).
An order clarifying the decree may be necessary if the decree is ambiguous so that
the division of property is not specific enough to be enforceable by contempt. See
McKnight, 132 S.W.3d at 130 (citing Tex. Fam. Code Ann. § 9.008(b) (Vernon 2006)).
If the decree is unambiguous, we must adhere to the literal language used; we do not look
at ―what the trial court should have done but, if possible, what the court actually did.‖
Shanks v. Treadway, 110 S.W.3d 444, 447 (Tex. 2003). Whether a decree is ambiguous
is a question of law we decide de novo. McKnight, 132 S.W.3d at 131; see Shanks, 110
S.W.3d at 447.
A QDRO is proper if it is consistent with the decree‘s unambiguous property
division. Reiss v. Reiss, 118 S.W.3d 439, 442 (Tex. 2003). A clarified or amended
QDRO may be necessary if a retirement plan administrator rejects the prior QDRO,3 or
―to correct the order or clarify the terms of the order to effectuate the division of property
ordered by the court.‖ Tex. Fam. Code Ann. § 9.1045 (Vernon 2006); see Ganious, 219
S.W.3d at 108, 111 (trial court should have issued a clarifying QDRO because prior
QDRO did not effectuate division of property consistent with decree and, thus, was void);
McCaig v. McCaig, No. 12-06-00374-CV, 2007 WL 1765845, at *3 (Tex. App.—Tyler
June 20, 2007, pet. denied) (mem. op.) (same).
3
See McKnight, 132 S.W.3d at 132 (citing Tex. Fam. Code Ann. § 9.104 (Vernon 2006)) (trial
court erred by entering amended QDROs because there was ―nothing in the record to indicate that the
amended QDROs were necessary, i.e., that the QDROs were submitted to and rejected by the plan
administrator‖); accord Mullins v. Mullins, 202 S.W.3d 869, 874 (Tex. App.—Dallas 2006, pet. denied).
4
A. The Decree Is Not Ambiguous
The decree in this case awards to Mitchell as his separate property the amount of
his TRS benefits ―after payment to Marie‖ of one of three possible awards. The first two
possible awards are designated in the decree under the Arabic numeral ―1‖ and further
delineated by letters ―A‖ and ―B.‖ Under part 1.A, Marie would receive a ―lump sum
distribution of $25,000.00 if Mitchell R. Gottfried retires on or before January 31, 2007
(the earliest possible retirement date).‖ Under part 1.B, if a ―net $25,000.00 is not
available,‖ Marie would receive ―monthly distribution payments‖ from the TRS ―until the
net distributions total $25,000.00.‖ The decree then states in a suspended paragraph, ―or
if Mitchell Gottfried does not retire at the earliest possible retirement date,‖ and continues
with Arabic numeral ―2.‖ Under part 2, Marie would receive ―100% of the accrued
benefit of Mitchell Gottfried which accrued during the period‖ of the marriage. Part 2
does not specifically limit the award to $25,000.
The parties agree that Mitchell did not retire on or before January 31, 2007, which
is identified in the decree as ―the earliest possible retirement date.‖ Thus, parts 1.A and
1.B of the decree do not apply; only part 2 applies. Part 2 unambiguously awards Marie
100 percent of the benefit accrued during the second marriage without any limit on the
ultimate amount awarded. This is the only reasonable interpretation of the decree, and
the decree is specific enough to be enforceable by contempt.
Mitchell‘s request to impose a $25,000 cap on the award would be an
impermissible collateral attack on the decree. See Hagen v. Hagen, 282 S.W.3d 899, 902
(Tex. 2009) (citing Tex. Fam. Code Ann. § 9.007(a)) (―Attempting to obtain an order that
alters or modifies a divorce decree‘s property division is an impermissible collateral
attack.‖). The trial court correctly concluded that the decree should not be amended.
B. The QDRO Is Not Ambiguous, and It Can Be Implemented by the TRS
Mitchell argues that the QDRO is ambiguous and cannot be implemented properly
by the TRS because the TRS stated that there was no $25,000 cap on the amount of
5
benefits awarded. Like the decree, the QDRO establishes three possible awards. The
first two possible awards apply only if Mitchell‘s ―effective retirement date is on or
before January 31, 2007,‖ and they include a cap of $25,000. The third possible award
— which applies if Mitchell‘s ―effective date of retirement is not on or before January 31,
2007‖ — gives Marie a ―portion of the distribution of benefits or total accumulated
contributions.‖ Marie‘s portion is calculated by multiplying ―100% of the participant‘s
benefit distribution‖ by a fraction used to determine the portion of benefits awarded that
accrued during the marriage.
Mitchell argues that the formula contained in the QDRO for awarding benefits to
Marie is ―complex and confusing, and it is seemingly impossible to use the formula to
ascertain any specific dollar amount to pay Marie from Mitchell‘s account. Nor does the
formula make it possible to compute a percentage of Mitchell‘s TRS account payments
that will be paid to Marie.‖ We disagree; so does the TRS.
Mitchell‘s Exhibit 1 at trial is a letter from the TRS dated July 22, 2008. The
letter illustrates for Mitchell the effects of the QDRO and provides calculations — with
dollar amounts — to show how his retirement benefits will be distributed under the
QDRO. The letter shows that Marie would be awarded $1,379.56 per month out of
Mitchell‘s $3,343.11 monthly distribution under the QDRO in this case. The TRS
―calculated the awarded community property interest under this QDRO as 41.2658%.‖
Bill Hagen, who had experience in preparing QDROs and working with TRS
administrators, testified that the TRS letter was an illustration showing that the TRS
could apply the formula from the QDRO.4
Accordingly, we conclude that the QDRO is not ambiguous, and the record
evidence shows that it can be implemented by the TRS. Nothing in the record suggests
4
Indeed, the QDRO formula tracks the model domestic relations order available on the TRS
website. See Teacher Retirement System of Texas (TRS) Model Domestic Relations Order Dividing
Retirement Plan Benefits (July 2005), http://www.trs.state.tx.us/benefits/documents/
qdro_model_intro.pdf.
6
that an amended QDRO is necessary in this case. See McKnight, 132 S.W.3d at 132.
The trial court correctly denied Mitchell‘s motion to clarify the QDRO.
C. The QDRO Does Not Alter the Substantive Division of Property
Contained in the Decree
Mitchell‘s argument that the QDRO alters the substantive division of property
fails because it is based on his assumption that the final decree included a $25,000 cap on
the award of retirement benefits if — as is the undisputed fact here — Mitchell retires
after January 31, 2007. As we concluded above, the decree unambiguously contains no
such limitation. The QDRO is proper in this case because it implements the decree
without altering the substantive division of property. See Reiss, 118 S.W.3d at 442.
Thus, the trial court correctly denied Mitchell‘s motion.5
Mitchell‘s first issue is overruled.
II. Attorney’s Fees
In his second issue, Mitchell argues the trial court had ―no reasonable basis‖ to
award $4,000 in attorney‘s fees to Marie because Mitchell was merely following the
court‘s order. Mitchell contends, ―The Court‘s order stated that if a problem with the
[Q]DRO arose, the ‗parties shall immediately petition the Court for reformation of the
order.‘‖
We disagree with Mitchell‘s interpretation of the trial court‘s order, which stated
that the parties shall petition the court for reformation of the order if ―the [TRS]
determines at any time that changes in the law, the administration of the Plan, or any
other circumstances make it impossible to calculate the portion of a distribution awarded
to [Marie] by this order and so notifies the parties.‖ There is no evidence in the record to
suggest that the TRS notified the parties it could not calculate the portion of a distribution
5
To the extent Mitchell complains about the provision of 8.25 percent interest in part a.2 of the
QDRO, we note that this provision is irrelevant because Mitchell did not retire on or before January 31,
2007. Any complaint about this provision is moot.
7
awarded to Marie. To the contrary, the TRS provided Mitchell with an illustrative
calculation of the portion of the distribution awarded to Marie. Mitchell simply disagrees
with the TRS‘s calculation.
Further, although Marie requested attorney‘s fees under theories for which there is
doubtful legal or factual basis in this case,6 the Family Code nonetheless authorizes
attorney‘s fees. Under the Family Code, a trial court ―may award reasonable attorney‘s
fees‖ in a proceeding to clarify a decree or QDRO. See Tex. Fam. Code Ann. § 9.014
(Vernon Supp. 2009) (decree); id. § 9.106 (QDRO); see also, e.g., McKnight, 132 S.W.3d
at 132. We review the trial court‘s decision to award attorney‘s fees for an abuse of
discretion. McKnight, 132 S.W.3d at 132; Schneider v. Schneider, 5 S.W.3d 925, 930
(Tex. App.—Austin 1999, no pet.). The reasonableness of the amount of fees is not
disputed. Given that Mitchell‘s request to clarify the decree and QDRO was denied, and
the bench trial lasted several days on issues largely determinable by referencing the
unambiguous decree and QDRO, we conclude that the trial court did not abuse its
discretion by awarding attorney‘s fees to Marie. See Schneider, 5 S.W.3d at 930.7
Mitchell‘s second issue is overruled.
6
Marie requested attorney‘s fees as sanctions and for breach of contract under Chapter 38 of the
Civil Practice and Remedies Code.
7
Marie‘s request for attorney‘s fees under a different statute does not preclude an award of fees
under the Family Code. See, e.g., Alford v. Marino, No. 14-04-00912-CV, 2005 WL 3310114, at *7–8 &
n.7 (Tex. App.—Houston [14th Dist.] Dec. 8, 2005, no pet.) (mem. op.) (affirming attorney‘s fees award,
even though the plaintiff requested fees only under Chapter 38 of the Civil Practice and Remedies Code,
because the plaintiff pleaded facts that would have entitled her to fees under Section 668 of the Probate
Code); Mitchell v. LaFlamme, 60 S.W.3d 123, 130 (Tex. App.—Houston [14th Dist.] 2000, no pet.)
(affirming attorney‘s fees award, even though the plaintiff only requested fees under the Declaratory
Judgment Act and Uniform Condominium Act, because the petition included facts that would authorize
fees under section 5.006(a) of the Property Code); see also Morrell Masonry Supply, Inc. v. Scott Griffin
& Assocs., Inc., No. 01-09-01147-CV, 2011 WL 2089677, at *8–9 (Tex. App.—Houston [1st Dist.] May
19, 2011, no pet.) (mem. op.) (citing Mitchell, 60 S.W.3d 123) (―The Fourteenth Court of Appeals has
held that a party‘s pleading facts that entitle it to attorney‘s fees under a particular statute and a general
request for attorney‘s fees can support an award of attorney‘s fees under a different, unpleaded statute;‖
affirming award of attorney‘s fees because the plaintiff pleaded facts entitling it to attorney‘s fees and the
defendant could not claim surprise because its own pleadings sought attorney‘s fees under the proper
statute).
8
CONCLUSION
Having overruled all of Mitchell‘s issues, we affirm the trial court‘s judgment.
/s/ William J. Boyce
Justice
Panel consists of Justices Brown, Boyce, and McCally.
9
APPENDIX A: FINAL DECREE
IT IS ORDERED AND DECREED that the husband, Mitchell Robert
Gottfried, is awarded the following as his sole and separate property, and
the wife is divested of all right, title, interest, and claim in and to that
property:
* * *
H-5. The balance of Mitchell Robert Gottfried‘s retirement benefits in
Teacher Retirement System arising out of Mitchell Robert Gottfried‘s
employment with various school districts from the date of the marriage to
the date this decree is executed, after payment to Marie Annette Gottfried
of:
1. A. A net lump sum distribution of $25,000.00, if Mitchell
R. Gottfried retires on or before January 31, 2007 (the
earliest possible retirement date), under the rule that
allows for normal retirement when the participant‘s
age and service totals 80, or
B. if a net $25,000.00 is not available, then the net (after
tax) monthly retirement payments from Teacher‘s
Retirement System, which would otherwise be payable
to Mitchell Robert Gottfried, until the net distributions
total $25,000.00. All distributions shall be reported as
distributions to Mitchell Robert Gottfried, and taxes
reported in the name of Mitchell Robert Gottfried;
or if Mitchell Gottfried does not retire at the earliest possible
retirement date,
2. 100% of the accrued benefit of Mitchell Gottfried which
accrued during the period beginning September 27, 1996 (the
date of marriage), and ending on the date this decree is
signed; together with any interest, dividends, gains, or losses
on that amount arising since the date this decree is signed and
more particularly defined in a Qualified Domestic Relations
Order signed by the Court on the day this Final Decree of
Divorce is signed.
10
APPENDIX B: DOMESTIC RELATIONS ORDER
a. If the participant's effective retirement date is on or before January 31,
2007,
1. The alternate payee shall receive a one time single sum
payment of $25,000.00 net after tax withholding; or
2. In the alternative, if the participant elects not to receive a
single sum payment, or if such single sum payment is not
sufficient to provide $25,000.00 net payment after tax
withholding, then the alternate payee shall receive 100% of
all net (after tax withholding) periodic retirement payments
until the total of all such periodic payments equals
$25,000.00, with the unpaid balance increased at an interest
rate of 8.25% per annum from January 31, 2007 until the date
of last payment. Each periodic unpaid balance shall be
determined by increasing the previous periodic unpaid
balance by the periodic equivalent of 8.25% interest per
annum and reducing the unpaid balance after it has been
improved by interest by the net period retirement payment
made by the plan to the alternate payee. In this instance, and
all distributions should be reported as distributions to the
participant not the alternate payee, and all taxes withheld
reported in the name and social security number of the
participant, not the alternate payee; OR
b. If Participant‘s effective date of retirement is not on or before January
31, 2007, Alternate Payee is awarded and shall receive from the Plan, a
portion of each distribution of service retirement benefits or disability
retirement benefits (whether payable to Participant or a beneficiary) and
death or survivor benefits (including distribution of the remaining balance
of Participant‘s accumulated contributions paid as a death benefit) if, as,
and when such distributions are made as provided by the Plan‘s governing
laws and rules based on Participant‘s membership in, credit with, or
contributions to the Plan. Alternatively, in lieu of these benefits, Alternate
Payee is awarded and shall receive from the Plan, a portion of the
distribution of Participant‘s total accumulated contributions to the Plan if,
as, and when such distribution is made as provided by the Plan‘s governing
laws and rules. The term ―accumulated contributions‖ as used in this order
is defined by section 821.001(1) of the Texas Government Code or its
successor statute.
11
The portion of the distribution of benefits or total accumulated
contributions that is awarded and that is to be paid to Alternate Payee, shall
be determined by multiplying the distribution by a fraction, which will be
determined as set forth below:
Multiply 100% of the participant‘s benefit distribution, by a fraction,
the NUMERATOR of which is the amount of a standard service retirement
annuity unreduced for early retirement calculated under the retirement law
and rules in effect on the effective date of this order but using only service
and salary credit that TRS determines has been acquired by Participant
between September 27, 1996 and the effective date of this order and
maintained with the System as of the effective date of this order, even if
Participant has not yet reached normal retirement age, the service credit is
less than the minimum required to be eligible to receive a service retirement
annuity, and the average salary must be calculated with fewer salary years
than specified by applicable laws and rules and the DENOMINATOR of
which is, for distributions made after the retirement of Participant, the
amount of a standard service retirement annuity unreduced for early
retirement calculated under the laws and rules in effect at the time of
Participant‘s latest effective date of retirement and based on Participant‘s
membership in, credit with, or contributions to the System as of
Participant‘s latest effective date of retirement.
For distributions made prior to the retirement of Participant, the
DENOMINATOR is the amount of a standard service retirement annuity,
unreduced for early retirement, that would have been used to calculate the
service retirement benefit payable if Participant had retired at the end of the
month in which the distribution is authorized to be made. For the purpose
of determining the amount of a normal age standard service retirement
annuity that would have been used to calculate the benefit payable if
Participant had retired, the Plan may calculate the annuity by using the
service credit acquired and maintained by Participant, even if it is less than
the minimum required to be eligible to receive a service retirement annuity,
and by using an average salary, even if it must calculated with fewer salary
years than specified by applicable laws and rules. For the purpose of
calculating the denominator, a distribution made after Participant has
retired but later has resumed membership in the System and has not yet
retired is considered to be a distribution made prior to retirement. The term
―standard service retirement annuity‖ as used in this order is defined by
section 824.203 of the Texas Government Code or its successor statute.
12