COURT OF APPEALS OF VIRGINIA
Present: Judges Elder, Humphreys and Senior Judge Annunziata
Argued at Richmond, Virginia
KENT CUSACK
OPINION BY
v. Record No. 0325-08-4 JUDGE LARRY G. ELDER
JANUARY 20, 2009
DEBORAH CUSACK
FROM THE CIRCUIT COURT OF STAFFORD COUNTY
Gordon F. Willis, Judge
Ronald Robinson (Robinson Law Office, PLLC, on briefs), for
appellant.
(A. Lewis Lowery, Jr.; Rinehart, Lowery, Strentz & Butler, P.L.C.,
on brief), for appellee. Appellee submitting on brief.
Kent Cusack (husband) appeals from an equitable distribution award directing payment
to Deborah Cusack (wife) of a portion of his military retirement benefits. On appeal, husband
contends the court erred in directing that wife receive a portion of the marital share of those
retirement benefits commencing on the date of husband’s retirement, which occurred after the
parties separated but almost a year before wife filed her bill of complaint for divorce and over
two years prior to the equitable distribution evidentiary hearing. Husband contends the trial
court also erred in directing that, to the extent the designated agent was prohibited by law or
regulation from paying wife the entire amount required by the court’s order, husband was
personally responsible for paying wife any shortfall. We reverse that portion of the final decree
ordering that payments of wife’s share of husband’s military pension were to commence on
May 31, 2005, but hold the trial court had authority to order husband responsible for any
payments due but not payable directly from the pension. We deny wife’s request for attorney’s
fees and costs on appeal, and we remand for further proceedings consistent with this opinion.
I. BACKGROUND
Husband entered the United States Army in 1979 and married wife in 1992. Wife had
two children from a previous marriage, who resided with the couple throughout their marriage,
and the parties had two children together, both of whom had serious medical conditions and
required multiple surgeries. The couple separated on August 7, 2004, when husband was
arrested for numerous counts of child pornography and unlawful videotaping of a minor
stemming from an incident involving one of his stepchildren. Husband was released on bond
after his arrest and obtained his own apartment.
Although husband had been a lieutenant colonel for approximately four years prior to his
arrest, he faced the risk of the complete loss of his retirement as a result of the criminal charges
against him. He therefore elected to retire from the last grade in which he had “served
honorably,” the lower rank of major, effective May 31, 2005. Husband’s gross retirement pay as
a major was approximately $3,200, substantially less than the approximately $9,600 per month
he had grossed while serving as a lieutenant colonel. The marital share of husband’s retirement
was 58%, which would yield a gross marital share of approximately $1,860 per month.
On August 19, 2005, husband pleaded guilty to numerous criminal charges and began
serving an active sentence of 36 months.
On March 26, 2006, wife filed a bill of complaint for divorce. At the evidentiary hearing
held on October 26, 2007, husband admitted his fault in the breakup of the marriage and
stipulated that wife was entitled to 50% of the marital share of his military retirement.
Wife testified that from August 2004 through February 2005, husband paid her $1,000
per month for support. Husband testified he also paid the mortgage and other bills averaging
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about $5,000 per month. Husband testified that in February 2005, the court ordered him to pay
total spousal and child support of $5,400 per month, at which time he ceased paying the
mortgage. When husband retired effective May 31, 2005, his gross income decreased to
approximately $3,200, and a “[n]ew court order was entered in August of 2005 [requiring him to
pay wife] $1,901” per month in support. Before husband was able to have an order entered
decreasing his support payment, he accrued a support arrearage of $7,000 or $8,000 in back
support, which he paid, along with numerous other expenses, by withdrawing the entire balance
of his $95,000 IRA account. Wife testified that, to her knowledge, the only funds husband had
received during his incarceration were his military retirement benefits. No evidence in the
record indicated whether husband earned any additional income between his retirement on May
31, 2005, and his incarceration in August 2005.
At the time of the evidentiary hearing on October 26, 2007, the support order for $1,901
remained in effect, and husband was paying support in that amount. Husband testified he was
also paying $230 per month for wife’s survivor benefit plan and $200 per month for life
insurance for himself and wife.
On December 6, 2007, the trial court issued a letter opinion detailing its consideration of
the Code § 20-107.3(E) equitable distribution factors, noting husband’s negative nonmonetary
contributions, misconduct causing the dissolution of the marriage, and dissipation of “substantial
marital assets” for a non-marital purpose—“to pay for his bond and attorney fees arising from his
criminal charges, to which he ultimately plead guilty.” Considering the Code § 20-107.3(E)
factors, including “how each party utilized marital property post-separation,” the court directed
that the marital property be divided as follows:
A. [Wife] is entitled to receive 50% of the marital share of
[husband’s] military retirement as permitted under VA. Code
§ 20-107.3(G)(1). . . .
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B. [Wife] has already received pendente lite, $90,000 of the net
proceeds from the sale of the marital residence and the Court finds
that she has appropriately utilized these funds towards paying
family expenses and debts that arose during the pendency of this
divorce action. The balance of said proceeds, totaling $106,340.57
shall be distributed 80% to [wife] and 20% to [husband]. In
making this division the Court has taken into consideration
[husband’s] withdrawal and use of his IRA funds and [wife’s]
withdrawal and use of her IRA funds. . . .
The court noted wife’s expenditure of $22,763.15 in attorney’s fees and husband’s expenditure
of $26,100 in attorney’s fees, and ordered husband to pay $20,000 toward wife’s fees and costs,
which was roughly equal to husband’s share of equity in the home.
The court’s final order incorporated the letter opinion and provided as follows:
[Wife] if [sic] entitled to receive 50% of the marital share of
[husband’s] military retirement as permitted under Virginia Code
Section 20-107.3(G)(1), commencing at the date [husband]
retired, May 31, 2005. She is further entitled to a continuation of
the Survivor Benefit Annuity previously selected by [husband],
which cost shall be paid from the gross proceeds of the retirement.
(Emphasis added.) In the related qualified domestic relations order (QDRO) entered to effect
division of husband’s military retirement, the court provided that “[t]o the extent the Designated
Agent is prohibited by law or regulation from paying the entire amount required by this order to
[wife], [husband] shall personally pay any shortfall to [wife].” Husband objected to the trial
court’s “grant of retroactive military retirement payments (between date of retirement and date of
equitable distribution trial)” and to the requirement that husband make up any shortfall, and he
noted this appeal.
II. ANALYSIS
A. RETROACTIVE PAYMENTS OF THE
MARITAL SHARE OF PENSION BENEFITS
When reviewing a trial court’s decision on appeal, we view the evidence in the light most
favorable to the prevailing party. Wright v. Wright, 38 Va. App. 394, 398, 564 S.E.2d 702, 704
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(2002). An appellate court will not reverse a trial court’s equitable distribution “unless it appears
from the record that the chancellor has abused his discretion, that he has not considered or has
misapplied one of the statutory mandates, or that the evidence fails to support the findings of fact
underlying his resolution of the conflict in the equities.” Robinette v. Robinette, 10 Va. App.
480, 486, 393 S.E.2d 629, 633 (1990).
Husband contends the court erred in directing that wife receive the agreed upon 50%
portion of the marital share of his military retirement benefits commencing on the date of his
retirement, which occurred after the parties separated but almost a year before wife filed her bill
of complaint for divorce and over two years prior to the equitable distribution evidentiary
hearing. We agree.
General principles for the valuation and division of property in equitable distribution
proceedings also apply to the valuation and division of retirement benefits, including the
principle that “[t]he court shall determine the value of any such property as of the date of the
evidentiary hearing on the evaluation issue.” Code § 20-107.3(A); see McGinniss v. McGinniss,
49 Va. App. 180, 188-89, 638 S.E.2d 697, 701 (2006) (implicitly applying this principle to the
deferred distribution of retirement benefits in a case in which the owning spouse retired after the
equitable distribution evidentiary hearing, holding the court erred in “‘excluding from the marital
share the income earned by pre- and post-marital contributions to the pension’” because “the
delay in payment to wife of her marital share of husband’s pension until he retired and became
eligible to receive his pension ‘diminishe[d] the marital share in relation to the number of years
that pre- and post-marital contributions [were] made’” (quoting Mann v. Mann, 22 Va. App. 459,
465, 470 S.E.2d 605, 607-08 (2006))). This approach comports with “[t]he developing rule” in a
majority of jurisdictions that have considered the issue. 2 Brett R. Turner, Equitable Distribution
of Property § 6:32, at 204 (3d ed. 2005) (noting the general rule that “the court cannot order that
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payments begin before the date of classification”). The rationale for this rule is that the entirety
of “payments received from a marital property pension” before the date of classification of
property in an equitable distribution proceeding—i.e., ordinarily the date of the evidentiary
hearing pursuant to Code § 20-107.3(A)—“are no different from salary or any other type of
marital property payments received by a spouse before the date of the property division order.”
2 Turner, supra, at 204. They “were marital property when they were received,” id., and, thus,
ordinary rules regarding how to treat them in the equitable distribution apply, cf. Robinette, 10
Va. App. at 485, 393 S.E.2d at 632-33 (holding that where funds were “pension and retirement
benefits” as contemplated by Code § 20-107.3(G) when paid to husband, by the time the court
made its monetary award, the funds were under husband’s unrestricted control and had lost their
character as “pension and retirement benefits” for purposes of the statutory provision limiting the
court to awarding the non-owning spouse no more than 50% of such benefits). See generally 2
Turner, supra, at 204-05 (suggesting that “[n]one of the past cases” on retroactivity of payments
for the marital share of pensions “have analyzed this issue particularly clearly” and that “[f]uture
cases should resolve the retroactive payment issue by applying a dissipation of assets analysis”).
“We have previously held that [using] marital funds . . . for living expenses . . . and other
necessities of life while the parties are separated [is proper and] do[es] not constitute [improper]
dissipation” of marital assets for which the other spouse may be entitled to credit. Anderson v.
Anderson, 29 Va. App. 673, 695, 514 S.E.2d 369, 380 (1999).
Here, wife advanced no argument that husband dissipated the retirement funds he
received prior to the evidentiary hearing, and the trial court made no such finding. It was
undisputed that husband’s gross military retirement was approximately $3,200 per month, from
which the trial court ruled wife was entitled to “a continuation of the Survivor Benefit Annuity
previously elected by [husband], which cost shall be paid from the gross proceeds of the
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retirement.” The record indicated that the cost of the survivor annuity was $230 per month,
leaving adjusted gross monthly retirement pay of $2,970. Husband testified without objection
that he paid an additional $200 per month for life insurance for him and wife, a reasonable
expenditure given that the parties had two minor children with significant medical problems,
which left pre-tax retirement income of $2,770. The record also established that for the first two
months after husband began receiving his retirement pay, he was under an outstanding award to
pay wife $5,400 per month, a sum roughly twice the amount of his remaining gross monthly
retirement income at that time, leaving no marital funds for him to dissipate during that time.
For the remaining period of approximately twenty-seven months, husband was under an award to
pay wife monthly support of $1,901. Given wife’s concession that husband had no income other
than his military pension while incarcerated, the evidence established the remainder of husband’s
pension during each of these twenty-seven months, before taxes, was $869. Thus, wife received
approximately 70% of husband’s monthly retirement benefit during that twenty-seven-month
period, and wife neither alleged nor offered any evidence that husband dissipated any of the 30%
of the pension payments remaining for him each month between the time of his retirement and
the equitable distribution evidentiary hearing on October 26, 2007.
The trial court, by contrast, made an express finding of dissipation as to another marital
asset—husband’s $95,000 IRA. The court indicated these IRA funds were marital property and
that husband withdrew them all during the separation and used some of them to reimburse his
sister for money she had loaned him to “pay his bond and pay his attorney.” It also held that
“[husband’s] misconduct and criminal behavior . . . resulted in the dissipation of marital assets
and their being expended for non-marital purposes,” “[s]pecifically . . . [the use of] substantial
marital assets . . . to pay for [husband’s] bond and attorney fees arising from his criminal
charges.” Finally, in awarding 80% of the equity in the marital residence to wife and 20% to
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husband, the court indicated it “[took] into consideration [husband’s] withdrawal and use of his
IRA funds.” The trial court made no similar finding of dissipation related to the $869 gross
income remaining from husband’s pension each month.
Accordingly, we hold the trial court erred in ordering that wife was to receive her share
of husband’s military retirement “commencing at the date [husband] retired, May 31, 2005.” On
the facts of this case, the date of commencement should instead have been October 26, 2007, the
date of the evidentiary hearing. We hold the court did not err, however, in providing in the
related QDRO of May 5, 2008, that husband was responsible for any shortfall to the extent the
designated agent was “prohibited by law or regulation from paying it.” The QDRO was not
entered until May 5, 2008, and provided to the designated agent sometime thereafter, whereas
wife was entitled to her share of each payment made after October 26, 2007, over six months
earlier. See Irwin v. Irwin, 47 Va. App. 287, 295 n.5, 297, 623 S.E.2d 438, 442 n.5, 443 (2005)
(holding that where “wife waived any claim in one-half of the pension payment prior to the date
of the final decree,” “[t]he court’s refusal to require husband to pay wife directly her one-half
share of the monthly pension payment while the QDRO was pending was an abuse of discretion
upon a finding that she was due payment from the final decree date”). To hold husband could
not be required to make payments the designated agent could not make would deprive wife of
payments to which she is entitled by statute and would encourage husband, as the owning
spouse, to delay voluntary execution of documents related to the QDRO. See id. at 297, 623
S.E.2d at 443 (“Delays in the approval and entering of the QDRO cannot operate to deny wife
her property right in the pension.”); 2 Turner, supra, at 206 (discussing non-owning spouse’s
entitlement to recoup payments from the owning spouse where retirement occurs after divorce
but direct payments from the plan to the non-owning spouse do not begin in a timely fashion).
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B. WIFE’S REQUEST FOR ATTORNEY’S FEES
Wife requests an award of attorney’s fees and costs incurred on appeal. We decline that
request. Husband’s appeal addressed “appropriate and substantial issues,” Estate of Hackler v.
Hackler, 44 Va. App. 51, 75, 602 S.E.2d 426, 438 (2004), and husband has, in fact, prevailed on
the narrow issue presented. Although the trial court found that husband’s criminal wrongdoing
was the cause of the divorce and a drastic decline in the income of both parties, wife received the
bulk of the remaining marital assets in the equitable distribution, and husband was required to
spend all but a few thousand dollars of his share of that award to pay $20,000 of wife’s
approximately $23,000 worth of attorney’s fees in the trial court. Thus, we conclude it is
appropriate for wife to bear her own fees and costs incurred in this appeal.
III.
For these reasons, we reverse that portion of the final decree ordering that payments of
wife’s share of husband’s military pension were to commence on May 31, 2005, but hold the
trial court had authority to order husband responsible for any payments due but not payable
directly from the pension. We deny wife’s request for attorney’s fees and costs on appeal, and
we remand for further proceedings consistent with this opinion.
Reversed and remanded.
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