Erb v. Erb

Cook, J.,

dissenting. I respectfully dissent because the judgment of the majority requiring payment from the Ohio Police & Fire Pension Fund (“OPFPF”) to a fund member’s ex-spouse contravenes R.C. 742.47.

Pension benefits accumulated during marriage are marital assets subject to division in a divorce proceeding. Holcomb v. Holcomb (1989), 44 Ohio St.3d 128, 132, 541 N.E.2d 597, 600. Five years ago, we expressly recognized that Ms. Erb retained a marital property interest in the pension benefits accumulated by Mr. Erb during the parties’ marriage. Erb v. Erb (1996), 75 Ohio St.3d 18, 22, 661 *512N.E.2d 175, 179. But while pension benefits are subject to division upon divorce, the trial court’s method of division is less certain. While the trial court must make an equitable division of all marital property, it may not divide a pension in a manner that violates the terms of the pension plan. Id. at 20, 661 N.E.2d at 178. Indeed, in Erb, we vacated a trial court’s order providing for outright distribution of pension funds to Ms. Erb prior to Mr. Erb’s retirement because such payment was not authorized under the terms of the OPFPF. Id. at 21-22, 661 N.E.2d at 178-179.

Following our reversal and remand in Erb, the trial court tried another method of equitably dividing Mr. Erb’s pension. In accordance with the parties’ agreement, the court entered an order designed to operate in the same manner as a qualified domestic relations order (“QDRO”), which is commonly used in dividing benefits from private pensions. Just as it would in a QDRO, the trial court designated Ms. Erb as an alternate payee entitled to receive part of Mr. Erb’s pension benefits directly from the OPFPF. See Hoyt v. Hoyt (1990), 53 Ohio St.3d 177, 179-180, 559 N.E.2d 1292, 1295. The order appears to have been designed to accomplish two objectives: (1) allow Ms. Erb to receive $1,000 per month directly from the OPFPF, and (2) designate Ms. Erb as the distributee of the fund payments for tax purposes. See Sections 402(e)(1)(A) and 414(p), Title 26, U.S.Code. In essence, the trial court’s order obligates OPFPF to pay directly to Ms. Erb a portion of the funds that it would have otherwise paid to Mr. Erb under the terms of his pension.

The majority concludes that the trial court’s method of dividing marital-property OPFPF benefits was valid. Yet the order actually violates R.C. 742.47, which provides:

“Except as provided in sections 742.461, 3111.23, and 3113.21 of the Revised Code, sums of money due or to become due to any person from the Ohio police and fire pension fund are not liable to attachment, garnishment, levy, or seizure under any legal or equitable process, whether such sums remain with the treasurer of the fund or any officer or agent of the board of trustees of the fund, or is in the course of transmission to the person qntitled thereto, but shall inure wholly to the benefit of such person.” (Emphasis added.)

R.C. 742.47 forecloses the trial court from transferring OPFPF benefits directly to Ms. Erb before Mr. Erb ever receives them. The trial court’s order, however, does just that. It effectively operates as an attachment or seizure of money due Mr. Erb, precluding funds from muring wholly to his benefit. The court’s method of dividing Mr. Erb’s pension directly conflicts with R.C. 742.47 and is therefore invalid. See Davis v. Davis (1998), 131 Ohio App.3d 686, 693, 723 N.E.2d 599, 604-605.

*513The majority upholds the trial court’s order, however, with a dubious reading of R.C. 742.47. Emphasizing the statute’s use of the phrase “any person,” the majority concludes that R.C. 742.47 “expressly authorizes” payment from the OPFPF to any person and not simply OPFPF members. But R.C. 742.47 does not authorize payment to anyone. The statute is merely an antialienation provision that prevents seizure by legal or equitable process of funds that a person is due to receive under the terms of the OPFPF. Money due from the fund is exempted from attachment, garnishment, or seizure under any legal process except orders under R.C. 742.461 (restitution for theft offense), 3111.23 (child support withholding), or 3113.21 (spousal support withholding). Significantly, however, the statute contains no such exemption for orders relating to a property division in a divorce action.

The majority bolsters its faulty reading of R.C. 742.47 by noting that the statute’s purpose “is to protect fund benefits from the creditors of persons to whom benefits are due.” (Emphasis sic.) Because Ms. Erb is not a “creditor” of a fund member but, rather, someone with “an outright property interest in the pension itself,” the majority reasons that R.C. 742.47 does not prohibit the OPFPF from paying Ms. Erb directly. But Ms. Erb’s status as an owner of a marital property interest in pension funds, as opposed to being a creditor of a fund member, does not render R.C. 742.47 inapplicable. The statute’s language is not limited to attachments or garnishments arising from a creditor/debtor relationship. Ciavarella v. Ciavarella (Oct. 20, 1999), Columbiana App. No. 98C053, unreported, 1999 WL 979238. To the contrary, the statute applies to “attachment, garnishment, levy, or seizure under any legal or equitable process.” (Emphasis added.) This broad language includes domestic relations orders issued under R.C. 3105.171 that purport to operate as QDROs. See Ricketts v. Ricketts (1996), 109 Ohio App.3d 746, 752, 673 N.E.2d 156, 160. The trial court in this case attached pension funds that OPFPF was obliged to pay to Mr. Erb under R.C. 742.37(C), thereby ordering a transfer of benefits that R.C. 742.47 directly forbids. See Davis, 131 Ohio App.3d at 693, 723 N.E.2d at 604.

The majority exacerbates the misreading of R.C. 742.47 by reaching its ultimate conclusion that Ms. Erb is entitled to direct payment from the OPFPF under the statutory scheme. “As a creature of statute, the [OPFPF] has no authority beyond that which is expressly or impliedly conferred by statute.” Dreger v. Pub. Emp. Retirement Sys. (1987), 34 Ohio St.3d 17, 20-21, 516 N.E.2d 214, 217. The majority finds “implied statutory authority” because “R.C. 3105.171 directs courts to divide marital property, including pension benefits, equitably between the spouses, and R.C. Chapter 742 does not prohibit direct payments to satisfy a former spouse’s property interest in the fund.” But the majority’s finding of “implied statutory authority” contradicts our admonition that the trial court cannot violate terms of the pension plan when dividing a *514pension. Erb, 75 Ohio St.3d at 20, 661 N.E.2d at 178; Hoyt, 53 Ohio St.3d at 181, 559 N.E.2d at 1297. Thus, the trial court’s authority to equitably divide OPFPF benefits in a divorce is necessarily limited by R.C. 742.47, the antialienation provision of the pension plan. That statute, by its very terms, prohibits the direct payment Ms. Erb seeks from the fund.

The majority’s interpretation of R.C. Chapter 742, and R.C. 742.47 in particular, is further undermined by the General Assembly’s apparent recognition of the difficulty trial courts faced when dividing OPFPF pension funds in a divorce. To help alleviate the problem, the General Assembly enacted Sub.H.B. No. 535, which was signed by the Governor on December 14, 2000. Effective January 1, 2002, H.B. 535 amends R.C. 742.47 to exempt orders issued under R.C. 3105.171 from the antialienation provision. Because of this amendment to R.C. 742.47, an order seeking to accomplish what the trial court sought to do in this case will likely be valid after H.B. 535’s effective date (so long as the order meets other statutory requirements). Thus, the General Assembly appears to have intended H.B. 535 to enact a substantive change to the OPFPF and afford persons in Ms. Erb’s position the opportunity to receive payment from the fund under a court-ordered division of marital property.

The majority discounts the significance of H.B. 535 by concluding that the General Assembly’s effort “is simply a clarification of the law as it exists today.” Because numerous courts of appeals had interpreted R.C. 742.47 to prohibit direct payment by the OPFPF to satisfy an ex-spouse’s interest in a member’s pension, the majority reasons that H.B. 535 “reflects the General Assembly’s dissatisfaction with the courts’ incorrect interpretation.” The majority therefore believes that H.B. 535 enacted no substantive change to R.C. Chapter 742. But the majority’s explanation is unavailing. “It is a well-settled canon of interpretation of an amendment to a statute that the Legislature will be deemed to have intended some practical change to existing legislation.” Union Trust Co. v. Hawkins (1929), 121 Ohio St. 159, 180, 167 N.E. 389, 395; see, also, Lynch v. Gallia Cty. Bd. of Commrs. (1997), 79 Ohio St.3d 251, 254, 680 N.E.2d 1222, 1224. In some instances, a change might indeed be nothing more than a rewording of the statute to clarify a previously intended meaning. See Bartlett v. Nationwide Mut. Ins. Co. (1973), 33 Ohio St.2d 50, 54, 62 O.O.2d 406, 409, 294 N.E.2d 665, 668. But the changes enacted by H.B. 535 suggest more than a clarification of existing law.

If the changes to R.C. 742.47 were merely meant as a clarification of existing law, there would be no reason for the General Assembly to set a future effective date of January 1, 2002 for the amendment. It would be curious for the legislature to delay the effective date of a statutory amendment that was meant merely to clarify what the statute already meant. The intent to change existing *515law is further reflected in the preamble to H.B. 535 expressing the General Assembly’s desire “to permit a public retirement program, pursuant to a court order, to make payments to a participant’s former spouse for the purpose of dividing marital property.” The bill’s text therefore suggests that the legislature sought to permit something that was not permitted under the current version of the OPFPF. Finally, the enacted amendment to R.C. 742.47 adds to the statutory text an entirely new category of court orders (ie., orders issued under R.C. 3105.171) that may validly attach, seize, garnish, or levy OPFPF funds notwithstanding the antialienation provision. Had the General Assembly intended the current version of R.C. 742.47 to exempt orders under R.C. 3105.171, it could have easily done so. Instead, the current version of the statute applies the exemption only to orders issued under R.C. 742.461, 3111.23, and 3113.21, leaving R.C. 3105.171 conspicuously absent.

Baker & Hostetler, L.L.P., John J. McGowan, Jr. and James A. Loeb, for appellant. Betty D. Montgomery, Attorney General; Chester, Willcox & Saxbe, L.L.P., Eugene B. Lems and Sarah Daggett Morrison, for appellee.

As the law currently stands, R.C. 742.47 forbids the method of dividing OPFPF benefits that the trial court ordered in this case. The court of appeals was therefore correct to vacate the trial court’s order. The majority’s decision to the contrary is incorrect. I therefore dissent.

Moyer, C.J., and F.E. Sweeney, J., concur in the foregoing dissenting opinion.