ABA response to the
National Defense Authorization Act for 1998 § 643
Notes

¹ As I have authored both this response, on behalf of the State Bar of Nevada Family Law Section, and the formal American Bar Association Family Law Section response, much of the text of the two submissions is the same, as ABA policy is to secure the right of the Nevada statutory and case law to govern relations between its citizens. However, the Nevada response includes various state-specific matters, and the ABA response includes additional matters of ABA policy.

² Proposed Amendments to the Uniformed Services Former Spouses Protection Act, 1990: Hearings on H.R. 3776, H.R. 2277, H.R. 2300, and H.R. 572 Before the Subcomm. on Military Personnel and Compensation of the House Comm. on Armed Services, 101st Cong., 2nd Sess. (1990) (Statement of Marshal S. Willick, Chairman of Subcommittee on Federal and Military Pension Legislation, Committee on Federal Legislation and Procedures, Section of Family Law, on Behalf of the American Bar Association, April 4, 1990).

³ See A LAWYER'S GUIDE TO MILITARY RETIREMENT AND BENEFITS IN DIVORCE (ABA 1998).

⁴ McCarty v. McCarty, 453 U.S. 210, 101 S. Ct. 2728 (1981).

⁵ See 1993-1994 ABA Policy and Procedures Handbook at 202 (ABA 1993), noting 1979 and 1982 resolutions approved by the House of Delegates of the ABA.

⁶ See, e.g., Wolff v. Wolff, 112 Nev. 1355, 929 P.2d 916 (1996).

⁷ 1990 Statement, supra fn.1, at 5.

⁸ The "smaller" federal plans (for example, foreign service and CIA) have not gathered much commentary or review from public or private organizations, or from commentators in professional journals. This is, presumably, because of the relatively small numbers of persons affected by those plans; it is believed that there are very few divorces per year in which these plans are at issue. From a limited review, however, it appears that several of the plans may have some anachronistic provisions rooted in public policies more reflective of the 1950s than of modern jurisprudence. Accordingly, it is submitted that the results of this study, and particularly any effort to create a "grand unification" of federal retirement systems, be made to encompass those smaller plans as well.

⁹ Reports by the General Accounting Office and Congressional Research Service in 1984 and 1989 found that court orders purporting to divide military retirement benefits on a "50/50" basis actually effected a split of "55.4%/44.6%" to "58.4%/41.6%" B always in favor of the former military member B after the impact of tax withholdings was considered. CRS Report For Congress: "Military Benefits for Former Spouses: Legislation and Policy Issues," March 20, 1989.\

¹⁰ Pub. L. No. 102-190, Div. A, Title X, Part E, § 1061(a)(7), 105 Stat. 1472 (Dec. 5, 1991); this was part of the Defense Authorization Act).

¹¹ Pub. L. No. 103-160, Div. A, Title V, Subtitle E, § 555(a), (b), Title XI, Subtitle H, § 1182(a)(2), 107 Stat. 1666, 1771 (Nov. 30, 1993); again, part of the Defense Authorization Act).

¹² See In re McElroy, 905 P.2d 1016 (Colo. Ct. App. 1995); In re Shevlin, 903 P.2d 1227 (Colo. Ct. App. 1995); Kulscar v. Kulscar, 896 P.2d 1206 (Okla. Ct. App. 1995); In re Crawford, 884 P.2d 210 (Ariz. Ct. App. 1994); Marsh v. Wallace, 924 S.W.2d 423 (Tex. Ct. App. 1996); Abernathy v. Fishkin, 638 So. 2d 160 (Fla. Ct. App. 1994); Blair v. Blair, 894 P.2d 958 (Mont. 1995); Fisher v. Fisher, 462 S.E.2d 303 (S.C. Ct. App. 1995).

¹³ In a military case, an order dividing retired pay as the property of the member and the former spouse will only be honored by the military if the issuing court exercised personal jurisdiction over the member by reason of: (1) residence in the territorial jurisdiction of the court (other than by military assignment); (2) domicile in the territorial jurisdiction of the court; or (3) consent to the jurisdiction of the court. 10 U.S.C. § 1408(c)(4). These limitations override state long-arm rules, and must be satisfied in addition to any state law jurisdictional requirements. Cases lacking such jurisdiction can go forward, but they will not result in enforceable orders.

¹⁴ In most places, making a general appearance usually constitutes "consent" to trial of the entire action, but one case from San Diego, California, indicates that a service member may "un-consent" to court jurisdiction over the retirement issue alone, thus requiring a separate trial over that one issue in some other state. See Tucker v. Tucker, 277 Cal. Rptr. 403 (Ct. App. 1991).

¹⁵ The jurisdictional caution is even more applicable in partition cases. According to most courts that have ruled on the question, the jurisdictional test is to be applied in the present (i.e., when the current action is commenced) as opposed to considering what jurisdiction was established during the original divorce. Oddly, the federal courts have been willing to permit state-court long-arm jurisdiction where state courts themselves find they cannot exercise it. See, e.g.,Tarvin v. Tarvin, Kovacich v. Kovacich, 705 S.W.2d 281 (Tex. Ct. App. 1986); 187 Cal. App. 3d 56, 232 Cal. Rptr. 13 (Cal. Ct. App. 1986); Messner v. District Court, 104 Nev. 759, 766 P.2d 1320 (1988); contra, Lewis v. Lewis, 695 F. Supp. 1089 (D. Nev. 1988); Delrie v. Harris, 962 F. Supp. 931 (D.W. La. 1997).

¹⁶ See Barker v. Kansas, 503 U.S. 594, 112 S. Ct. 1619 (1992). Previously, the Court had ruled that a state could not tax federal Civil Service retirees if it did not also tax recipients of state retirement benefits. See Davis v. Michigan Dept. of Treasury, 489 U.S. 803, 109 S. Ct. 1500 (1989). The Supreme Court found that there were no "significant differences between the two classes [federal and state]" of retirement benefits and of beneficiaries. Id., 489 U.S. at 816, as quoted in Barker v. Kansas, supra, 503 U.S. at 598. The Court observed that military retirement benefits are treated as deferred compensation for purposes of determining deductibility of individual retirement account (IRA) contributions. Id. at 604. Discussing the relevant factors, the Court concluded: "For purposes of 4 U.S.C. § 111, military retirement benefits are to be considered deferred pay for past services."

¹⁷ Proposed Amendments to the Uniformed Services Former Spouses Protection Act, 1990: Hearings on H.R. 3776, H.R. 2277, H.R. 2300, and H.R. 572 Before the Subcomm. on Military Personnel and Compensation of the House Comm. on Armed Services, 101st Cong., 2nd Sess. (1990) (Statement of Marshal S. Willick, Chairman of Subcommittee on Federal and Military Pension Legislation, Committee on Federal Legislation and Procedures, Section of Family Law, on Behalf of the American Bar Association, April 4, 1990).

¹⁸ At least one state, however, has embraced the analysis that would be mandated on the states under the "rank-at-divorce" proposal. In Grier v. Grier, 731 S.W.2d 931 (Tex. 1987), the Supreme Court of Texas considered a declaratory judgment action brought by the husband in Texas eight years after the parties divorced. The husband was a Major at divorce, but he had already been placed on a promotion list for Lieutenant Colonel (which rank he pinned on eight months after the divorce). The court, without doing or considering the mathematics, held that granting the former spouse a percentage of the retired pay based on the rank ultimately attained by the member would "impermissibly invade" the member's separate property. One justice, concurring and dissenting, would have held the applicable rank to be that of Lieutenant Colonel.

¹⁹ See, e.g., Casas v. Thompson, 720 P.2d 921 (Cal. 1986), cert. denied, 479 U.S. 1012 (1987).

²⁰ 106 Nev. 856, 802 P.2d 1264 (1990) (retirement under state public employees retirement system).

²¹ Sertic v. Sertic, 111 Nev. 1192, 901 P.2d 148 (1995) (CSRS retirement).

²² Stouffer v. Stouffer, 10 Haw. App. 267, 867 P.2d 226 (1994).

²³ 545 N.W.2d 252 (Iowa 1996).

²⁴ The Iowa court apparently did not even consider the possibility of having the wife's interest begin being paid at first eligibility for employment, "freezing" it at that point and letting the husband enjoy all accumulations after that time. Presumably, this is because that possibility was not litigated at the trial level.

²⁵ Several state courts have held that the interest of a former spouse in military retired pay is realized at vesting (i.e., after 20 years of creditable service), theoretical-ly entitling the spouse to collect a portion of what the member could get at that time irrespective of whether the member actually retires. See In re Marriage of Luciano, 164 Cal. Rptr. 93 (Ct. App. 1980); In re Marriage of Gillmore, 629 P.2d 1 (Cal. 1981); In re Marriage of Scott, 202 Cal. Rptr. 716 (Ct. App. 1984); Gemma v. Gemma, 105 Nev. 458, 778 P.2d 429 (1989); Koelsch v. Koelsch, 713 P.2d 1234 (Ariz. 1986); Ruggles v. Ruggles, 860 P.2d 182 (N.M. 1993); Balderson v. Balderson, 896 P.2d 956 (Idaho 1994); Blake v. Blake, 807 P.2d 1211 (Colo. Ct. App. 1990).

²⁶ Commonly known as ERISA, enacted as Pub. L. No. 98-397 (1974). ²⁷ Commonly known as the REA, and enacted as Pub. L. No. 98-397 (1984). ²⁸ The theory behind such orders is that the employee (member) spouse should not be able to decide when benefits that are due and payable to the spouse will actually commence B that "The employee spouse cannot by election defeat the nonemployee spouse's interest in the community property by relying on a condition within the employee spouse's control." In re Marriage of Luciano, 164 Cal. Rptr. 93, 95 (Ct. App. 1980). A spouse making such an election should also receive the imputed cost of living adjustments that would have accrued if the member had retired, but the former spouse would not share in any actual later increases in rank, or benefit from additional years in service. ²⁹ This was the single item agreed upon by all those testifying at the 1990 House Armed Services hearings on the USFSPA (the lobbyists for the members' organizations, the spouses= organizations, and the representatives of the Department of Defense and the American Bar Association), but no action was taken by the committee to implement the change at that time. ³⁰ As with the retirement benefits themselves, if the current "derivative rights" model is abandoned in favor of an ERISA-like division of the benefits themselves, then the member's life or death becomes irrelevant to the benefits payable to the former spouse. If an ERISA model is adopted, then upon divorce the former spouse would get an actuarially-adjusted lifetime interest, like the member. ³¹ The most obvious of these is the loss of survivorship benefits upon remarriage of a former spouse. As with the military system, this provision confuses the concepts of property and alimony, is contrary to the public policy of encouraging marriage, and is unduly paternalistic and sexist. All "loss-of-benefits-upon-remarriage" penalties in federal retirement system statutes should be eliminated.

³² For example, where it is wished for the member to pay the premium, but the former spouse is receiving 50% of the benefit.

³³ In re Marriage of Mansell, 265 Cal. Rptr. 227 (Ct. App. 1989), on remand from 490 U.S. 581, 109 S. Ct. 2023 (1989).

³⁴ See Toupal v. Toupal, 790 P.2d 1055 (N.M. 1990); Berry v. Berry, 786 S.W.2d 672 (Tex. 1990); Maxwell v. Maxwell, 796 P.2d 403 (Utah App. 1990); MacMeeken v. MacMeeken, 117 B.R. 642 (1990) (Bankr. D. Kan 1990).

³⁵ See In re Marriage of McGhee, 131 Cal. App. 3d 408, 182 Cal. Rptr. 456 (Ct. App. 1982) (compensation by means of alimony, as set out in agreement between parties, used by dissolution court when member halted flow of military retirement benefits to former spouse after McCarty decision; court termed use of such "back-up" clauses to be making the property award "supportified"); In re Marriage of Sheldon, 124 Cal. App. 3d 371, 177 Cal. Rptr. 380 (Ct. App. 1981) (noting "close relationship between the amount of a property division and the entitlement, if any, of a spouse to spousal support"); In re Marriage of Mastropaolo, 213 Cal. Rptr. 26 (Ct. App. 1985)("conditionally" reversing an alimony award "on condition" that the court's affirmance of the retirement division became final); Austin (Scott) v. Austin, Mich. Ct. App. No. 92-15818 (unpublished intermediate court opinion), rev. den., 546 N.W.2d 255 (Mich. 1996) (alimony, previously reserved, but only until remarriage, instituted for wife in lieu of pension share lost because of member's transfer to VA disability status; court approval given to post-remarriage alimony where the alimony compensates for distribution of a pension earned during marriage, under Arnholt v. Arnholt, 343 N.W.2d 214 (Mich. Ct. App. 1983) (non-military case)).

³⁶ See In re Strassner, 895 S.W.2d 614 (Mo. Ct. App. 1995). See also Owen v. Owen, 419 S.E.2d 267 (Va. Ct. App. 1992) (explicit indemnification; husband's subsequent disability retirement and reduction in retired pay to wife required husband to pay subtracted sums to wife and did not violate Mansell in any way); Dexter v. Dexter, 661 A.2d 171 (Md. App. 1995) (implicit indemnification; wife entitled to benefit of bargain reached at divorce); McHugh v. McHugh, 861 P.2d 113 (Idaho Ct. App. 1993).

³⁷ See, e.g., Kaminski v. Kaminski, 1995 WL 106497 (Del. Chanc. Ct. 1995). In that case, the member had promised in his stipulated divorce decree to name his daughter from his first marriage as his irrevocable beneficiary. When he died leaving his second wife as sole beneficiary, the first wife's action seeking a constructive trust for the daughter was dismissed. The court said that the "narrow exception" for fraud was restricted to "extreme factual situations" unlike simple breach of contract.