NO. 94-521
IN THE SUPREME COURT OF THE STATE OF MONTANA
1995
IN RE MARRIAGE OF
KATHY DARLENE BLAIR,
APPEAL FROM: District Court of the Eighth Judicial District,
In and for the County of Cascade,
The Honorable Thomas M. McKittrick, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Marcia Birkenbuel, Great Falls, Montana
For Respondent:
James D. Elshoff, Great Falls, Montana
Submitted on Briefs: March 2, 1995
Decided: May 18, 1995
Filed:
Cl&k
Justice Fred J. Weber delivered the Opinion of the Court
This is an appeal from a decision of the Eighth Judicial
District Court, Cascade County, granting Kathy Darlene Blair's
motion requesting she be awarded her percentage interest in Stephen
J. Blair's military Special Separation Benefits. We affirm.
We restate the issues on appeal:
I. Did the District Court err when it found payments received
by a member of the military under the Special Separation Benefits
program an item of marital property or retirement benefits subject
to division by the dissolution court?
II. Did the District Court lose jurisdiction to change the
property settlement provisions of the Decree when it failed to rule
on the motion within forty-five days from the time it was filed?
III. Was the District Court's decision barred by res
judicata?
IV. Did the District Court err when it did not order Stephen
Blair to reimburse Kathy Blair for attorney fees?
The parties were married in 1980, and their marriage was
dissolved by the District Court in 1993. The parties agreed to and
signed a marital property settlement which the court found not
unconscionable. The court divided the marital estate as the
parties suggested. Part of the division was that Kathy Blair
(Kathy) would receive a share of Stephen Blair's (Stephen) future
net disposable military retirement pay. Her share would be based
on a percentage using the number of years they were married
(twelve) and the actual number of years Stephen served on active
2
duty. At that time, it was assumed Stephen would retire from the
military after twenty years of active duty.
In 1994, Stephen was accepted into the Special Separation
Benefits program (SSB) pursuant to 10 U.S.C. 5 1174a. He
voluntarily separated from his military service on October I, 1994,
and agreed to serve in the Ready Reserve for a minimum of three
years. He received separation pay based on years of service and
current base pay. Stephen completed fifteen years of active
service.
On March 24, 1994, Kathy filed a motion entitled Motion for an
Order Modifying Decree as to Retirement Benefits. On May 6, 1994,
she filed a motion to divide the retirement benefits Stephen
received from the SSB program. The District Court held a hearing
on the motions on May 6, 1994, and awarded Kathy a percentage
interest of Stephen's separation pay.
Stephen appeals from the District Court's September 21, 1994
decision.
1.
Did the District Court err when it found payments received by
a member of the military under the Special Separation Benefits
program an item of marital property or retirement benefits subject
to division by the dissolution court?
Stephen argues that military retirement and SSB are defined by
two different statutes and are two distinct groups of military
entitlement. He then argues that 10 U.S.C. 5 1408 specifically
authorizes the division of military retirement pay as a marital
3
asset in a proceeding for dissolution, but 10 U.S.C. 5 1174a does
not contain any language authorizing the division of SSB pay in a
dissolution proceeding.
Stephen refers to McCarty v. McCarty (19811, 453 U.S. 210, 101
s.ct. 2728, 69 L.Ed.2d 589, in which the U.S. Supreme Court
emphasized that the decision as to the availability of retirement
pay to a spouse is left to Congress alone. After the McCartv
ruling, Congress enacted the Uniformed Services Former Spouses'
Protection Act (Spouses' Protection Act), 10 U.S.C. s 1408. This
act authorizes a dissolution court's division of "disposable
retired or retainer pay."
Stephen argues that his separation pay is not an early
retirement benefit. He states that he is no longer eligible for
military retirement because he terminated his active duty status
prior to the number of years of service required for retirement,
and that he received special separation pay in return for serving
in the military's Ready Reserve for at least three years following
his separation from active duty.
Stephen also refers to Manse11 v. Manse11 (1989), 490 U.S.
581, 109 S.Ct. 2023, 104 L.Ed.2d 675, in which the U.S. Supreme
Court ruled that state courts could not treat the portion of
military retirement waived in order to receive Veteran's
Administration disability benefits as marital property devisable
under the Spouses' Protection Act. Stephen concludes, under
McCartv and Mansell, state courts do not have authority to divide
SSB pay as a marital asset unless Congress specifically authorizes
4
such a division.
Kathy argues that the benefits provided under 10 U.S.C. 5
1174a are clearly for purposes of retirement. She states that the
SSB program is known as the "Early Out Program." She points out
that SSB benefits are awarded based on years served of active duty
the same as other retirement benefits.
Kathy refers to Elsie v. Aspen (D.D.C.1993), 841 F.Supp. 439,
440, which found that SSB benefits provide incentive payments as
inducements "to elect early retirement." In addition, Kathy
includes a copy of a brochure disseminated by the Department of
Defense describing the voluntary separation incentives and what
they mean to eligible military members. On page six of the
brochure, in a question/answer format, it states:
What happens to VSI or SSB if I become retirement-
eligible?
Essentially, you pay it back from your retirement pay.
Kathy stresses the point that if a member voluntarily separates
from active duty and then re-enlists, his or her retirement pay,
not the current wages, would be tapped for reimbursement. Kathy
then refers to the District Court in Cascade County which has twice
ruled that SSB benefits are marital property and subject to
division upon receipt. In re the Marriage of Daws, BDR 91-626,
decided on July 1, 1992; and, In re the Marriage of Plunkett, BDR
90-520, decided on September 8, 1992.
The District Court found that Stephen and Kathy, prior to
dissolution, negotiated the terms and freely entered into a
Property Settlement Agreement stating "[Kathy] was awarded a share
5
of [Stephen's] future net disposable military retirement pay, to be
calculated based upon [Stephen's] actual number of years of service
at the time of retirement."
The District Court then likened SSB payments to military
pensions because they are both based on longevity of service. The
court stated that military pensions have long been declared in
Montana to be a marital asset divisible upon dissolution;
therefore, SSB payments are also divisible. Stephen and Kathy were
married twelve of the fifteen years of his active service. Since
a portion of Stephen's separation benefits accrued during his
marriage to Kathy, the court concluded that portion is divisible by
the court upon dissolution.
Our standard of review of the District Court's conclusions of
law is to determine if the District Court's interpretation of the
law is correct. Steer, Inc. v. Department of Revenue (1990), 245
Mont. 470, 474-475, 803 P.2d 601, 603-604.
Stephen relies on McCartv and Manse11 for the principle that
federal law preempts state law in the treatment of military
retirement. In McCartv, the U.S. Supreme Court held that the
husband's military retirement pay was not subject to California's
community property laws; and, therefore, could not be attached to
satisfy a property settlement incident to the dissolution of
marriage absent congressional authority to do so. McCarty, 453
U.S. at 228-232, 101 S.Ct. at 2739-2741, 69 L.Ed.Zd at 603-605.
However, in response to McCartv, Congress enacted Title 10 U.S.C.
§ 1408, known as the Former Spouses' Protection Act. This act
6
provided the congressional authority the Supreme Court found
absent.
Further, the Court's reasoning, in Mansell, is contrary to
Stephen's analysis. There, the Court reiterated its prior holding
that state law preempts federal law in all domestic relations
unless Congress positively enacts it. Mansell, 490 U.S. at 587,
109 S.Ct. at 2028, 104 L.Ed.2d at 684. Congress expressly excluded
VA disability benefits received in lieu of military retirement from
division by the state dissolution court. 10 U.S.C. §
1048(a) (4) (B). No such expression was enacted for military
retirement waived to receive special separation benefits under 10
U.S.C. § 1174(a). The holding in Manse11 clearly sets forth
limitations on the holding in McCarty as applied to this case.
Further, we note the Department of Defense's statement
concerning a dissolution court's ability to divide SSB payments.
Page six of the Department's brochure states:
How will state courts treat VSI/SSB in a divorce
settlement?
The treatment of VSI or SSB is not dictated by Federal
law. It will be up to the state courts to rule on the
divisibility of these incentives.
We also note that a federal district court has stated:
The VSI/SSB program provides, to those members who
qualify, incentive payments and medical and veterans
benefits as inducements to elect early retirement.
Elzie, 841 F.Supp. at 440.
Like retirement, Stephen's eligibility for the SSB program was
based on the number of years he served in active duty. 10 U.S.C. §
1174a(c). As with retirement pay, Stephen's separation pay was
7
calculated according to the number of years he was in active
service. 10 U.S.C 5 1174a(b) (2) (A). Stephen could have remained
on active duty for five more years and received retirement pay.
Instead, he chose voluntary separation from the military and
received his compensation at an earlier date. For the reasons we
have stated, we characterize separation pay received under the
Special Separation Benefits program (10 U.S.C. s 1174a) as an
election for early retirement.
We hold that payments received by a member of the military
under the Special Separation Benefits program are an item of
marital property subject to division by the dissolution court.
--
II.
Did the District Court lose jurisdiction to change the
property settlement provisions of the Decree when it failed to rule
on the motion within forty-five days from the time it was filed?
Stephen states that under Rule 60(c), M.R.Civ.P., a motion for
relief must be determined within the forty-five day period set out
in Rule 59(d), M.R.Civ.P.; and that if the court fails to rule, the
motion shall be deemed denied. He points out that the District
Court did not rule upon Kathy's motion to modify the Decree within
the 45 day period and was, therefore, beyond its jurisdiction.
Kathy emphasizes that her intention was not to modify the
Decree as was stated in the title of the original petition but
rather to enforce the same. Kathy cites § l-3-219, MCA: "The law
respects form less than substance." She argues that the substance
of her motion clearly was for the District Court to force Stephen
8
to pay to Kathy her share of his retirement benefits, albeit early,
as their original agreement stated. She argues, further, that the
property settlement agreement provided for enforcement remedies;
therefore, the District Court's jurisdiction continued in order to
enforce the Decree.
The District Court found Stephen's actions in denying Kathy
part of his separation pay to be unconscionable. Based on that
unconscionability, the court reopened the Decree and ordered that
Stephen pay to Kathy her percentage interest in his SSB pay.
Although we agree with the result of the District Court's
conclusion, we note that the court mischaracterized the motion it
had before it when it "reopened the Decree based on
unconscionability." The motion was, in substance, a motion to
clarify the terms of the agreement and to subsequently enforce
them. We have held that the power inherent in every court to
enforce its judgments and decrees "is not to be limited by the time
limits in Rules 59 and 60, M.R.Civ.P." Smith v. Foss (1978), 177
Mont. 443, 447, 582 P.2d 329, 331. We conclude that the District
Court was correct in treating the SSB program as early retirement
divisible under its original Decree. We hold that the District
Court did not lose its jurisdiction because it failed to rule on
Kathy's motion in excess of forty-five days.
III.
Was the District Court's decision barred by res judicata?
On April 28, 1993, the District Court found that the "MARITAL
SETTLEMENT AGREEMENT signed by the parties is equitable and not
9
unconscionable, and should be incorporated into the decree of
dissolution of marriage." Here ( the District Court concluded
"[Stephen] has voluntarilv and unilaterally upset that division,
which has resulted in a substantial detriment to the reasonable
future expectations of [Kathy] and which will give [Stephen] an
immediate and substantial windfall." (Emphasis added.) The court
then found the result of Stephen's actions to be unconscionable.
Stephen points to the Commissioner's Notes to 5 40-4-201, MCA,
(Separation agreements) which says, "The court's determination, in
the decree, that the terms are not unconscionable, under the
ordinary rules of res judicata, will prevent a later successful
claim of unconscionability." Stephen states further that case law
clearly supports the application of the doctrine of res judicata to
bar the reopening of a judgment on the grounds of unconscionability
after a previous finding of a lack of unconscionability is made,
and the agreement merged in the Decree. See Hopper v. Hopper
(1979), 183 Mont. 543, 601 P.2d 29.
Stephen then lists the four criteria necessary to establish
res judicata as set forth in Hopper.
(1) The parties or their privies must be the same;
(2) The subject matter of the action must be the same;
(3) The issues must be the same, and must relate to the same
subject matter; and
(4) The capacities of the persons must be the same in
reference to the subject-matter and to the issues before
them.
Stephen argues that the four criteria are met, so the doctrine of
res judicata barred a finding of unconscionability.
10
Kathy argues again that the District Court did not modify the
Decree and did not reverse any findings. It enforced the division
of Stephen's "net disposable military retirement pay." She
contends that it was Stephen, through his announcement that he
intended to retire early and deprive Kathy of her vested
expectation interest in the future marital property, who attempted
to modify the Decree/Property Settlement Agreement; thus, all the
law cited by Stephen pertaining to the applicability of the
doctrine of res judicata applies equally to him.
We state again that the motion was, in substance, a motion to
enforce the Decree, not to modify the same. The District Court
looked to unconscionability in order to reopen and then to modify
the Decree under Marriage of Laskey (1992), 252 Mont. 369, 829 P.Zd
935. In its conclusion, the District Court did not reverse its
original finding of the settlement agreement as to
unconscionability, but found Stephen's attempt to "voluntarily and
unilaterally upset" that agreement was unconscionable.
Stephen is correct in that the parties, the subject matter,
and the capacities of the parties are the same as those under the
original Decree. However, the most important of the four criteria
for res judicata is the identity of issues which is not present
here. In re the Marriage of Harris (1980), 189 Mont. 509, 513, 616
P.2d 1099, 1101.
In the first case, the issue was how to divide the marital
assets. The District Court incorporated Stephen's and Kathy's
Property Settlement Agreement into its order dividing the marital
11
property as they suggested. Here, the issue differs in that the
court was asked to determine whether or not payments Stephen
received upon voluntarily separating from the military were the
equivalent of "net disposable military retirement pay" under the
Property Settlement Agreement per its original terms. This issue
was not addressed in the Property Settlement Agreement nor in the
Decree. On its face, the Decree did not identify whether or not
voluntary separation pay was a form of net disposable military
retirement pay. We conclude that the doctrine of res judicata does
not apply where the issues were not previously addressed.
We hold that the District Court's decision was not barred by
res judicata.
IV.
Did the District Court err when it did not order Stephen Blair
to reimburse Kathy Blair for attorney fees?
Kathy did not address this issue in her motions nor at the
hearing. We will not address issues raised for the first time on
appeal. Hislop v. Cady (19931, 261 Mont. 243, 250, 862 P.2d 388,
392. The issue of attorney fees was not raised at the District
Court level and, therefore, can not be raised here.
Affirmed.
We Concur:
12
Justices
13
Justice W. William Leaphart, specially concurring.
I concur in issues 2 and 4 of the majority opinion and
specially concur in issues 1 and 3. I write separately for two
reasons. The first is that I believe there is greater support than
that mentioned in the majority opinion for the proposition that
Special Separation Benefits (SSB) may be properly included in any
marital estate. The second is that another appellate court in a
similar case reviewed and upheld a trial court's order to enforce
the decree based on the parties' property settlement agreement.
First, an Arizona appellate court has determined that SSB
payments may be included in the marital estate. In re Marriage of
Crawford (Ariz. Ct. App. 1994), 884 P.2d 210. In Marriaqe of
Crawford, the court noted that there is legislative history to
support the inclusion of SSB benefits in the marital estate.
Specifically, the court stated:
We find more relevant a 1990 House Report predating the
enactment of the SSB program which in relation to the
congressionally mandated "force drawdown" recommended "a
comprehensive package of transition benefits to assist
separating personnel and their families,'t H.R.Rep. No.
665, 101st tong., 2d Sess. (1990) (emphasis added),
suggesting that equitable division of SSB benefits is not
inconsistent with congressional intent.
Marriaqe of Crawford, 884 P.2d at 212. The Crawford court also
recognized, as does the majority opinion, that the Department of
Defense pamphlet regarding SSB payments indicated that state courts
would determine the divisibility of such payments.
Next, in a case similar to this one, a Florida appellate court
determined that a property settlement agreement should be enforced
14
through the payment of early separation benefits. In Abernethy v.
Fishkin (Fla. Dist. Ct. App. 1994), 638 So.2d 160, the husband and
wife had entered into a property settlement agreement which
provided that the wife would receive 25% of the husband's military
pension. The husband elected to leave the military before his
retirement vested and was paid benefits under the Voluntary
Separation Incentive Program (VSI). Abernethv, 638 So.Zd at 161.
The VSI and SSB programs are quite similar in that both provide
qualifying military personnel who are voluntarily leaving the
service before their retirement vests a payment, or payments,
primarily based on the individual's ending salary and years of
service.
The Abernethv court first cited Marriaqe of Crawford in
determining that the trial court had correctly concluded that the
husband's VSI benefits were subject to division. Abernethv, 638
So.Zd at 162. The court went on to state that even assuming
Congress had not authorized state courts to distribute these
benefits, it would affirm the trial court's order enforcing the
parties' property settlement agreement. Specifically, the court
stated:
the trial court's order does not purport to assign or
award VSI benefits to the wife. Instead, the order
merely requires the husband to pay to the wife 25% of
every VSI payment immediately upon its receipt in order
to insure the wife a steady monthly payment pursuant to
the terms of the parties' property settlement agreement.
Abernethv, 638 So.2d at 163.
In the present case, Kathy and Stephen entered into a proper:ty
settlement agreement in which the parties agreed to a formula for
15
the division of Stephen's military retirement pay. Similar to the
trial court's order discussed in Abernethv, the District Court's
order in this case does not purport to assign Stephen's SSB
benefits to Kathy, but orders him to pay her 40% (the percentage
arrived at through the calculation agreed on in the property
settlement agreement) of these monies immediately after he receives
them.
As the Arizona court recognized in Marriage of Crawford,
federal law does not preclude state courts from dividing SSB
benefits in a dissolution proceeding. However, even assuming
arsuendo, that it does, the fact is that Stephen, in the property
settlement agreement, voluntarily agreed to divide his "net
disposable military retirement pay." The property settlement
agreement did not tie the phrase to any federal statute or program.
1n my opinion, the phrase "net disposable military retirement pay"
is broad enough to encompass Stephen's voluntary early retirement
under the SSB program. The District Court merely required Stephen
to do that which he agreed to and that which the decree required.
16
Justice Karla M. Gray, dissenting.
I respectfully dissent from the Court's opinion. The
threshold and dispositive question in this case is whether the
doctrine of res judicata bars the District Court from determining
that the parties' property settlement agreement was unconscionable.
Because that question must be answered in the affirmative, I would
reverse the District Court.
The marriage of Steve and Kathy Blair was dissolved via
findings of fact, conclusions of law and decree of dissolution
entered by the District Court on April 28, 1993. The court
expressly concluded that Steve and Kathy's Marital Settlement
Agreement was not unconscionable and incorporated that Agreement
into the decree of dissolution. One of the provisions of the
Agreement was that Kathy would receive a share of Steve's future
net disposable military retirement pay, calculated as set forth
therein.
Approximately seventeen months after the decree of
dissolution, the District Court concluded, in essence, that the
Agreement was unconscionable. Notwithstanding its determination
that Steve's military separation benefits were not "military
retirement pay" covered by the Agreement, it reopened the decree to
change the terms of the Agreement in order to provide Kathy with a
share of Steve's military separation benefits. I conclude that,
because of its earlier conscionability conclusion, the doctrine of
res judicata barred the court from making an unconscionability
determination.
17
The criteria necessary to establish res judicata are well-
established in Montana:
1. The parties or their privies must be the same;
2. The subject matter of the action must be the same;
3. The issues must be the same and relate to the same subject
matter; and
4. The capacities of the persons must be the same in
reference to the subject matter and issues before them. Hopper v.
Hopper (1979), 183 Mont. 543, 557, 601 P.2d 29, 36 (citation
omitted).
Here, Kathy does not respond to the res judicata issue and,
thereby, does not directly controvert it. Nor, on the basis of the
record before us, could she present a persuasive argument that the
criteria necessary for the application of the doctrine of res
judicata are not met here. There is no question but that the
parties to the action are the same and that the subject matter--the
conscionability, or lack thereof, of the Agreement--is the same.
Likewise, the issues are the same, as are the capacities of Steve
and Kathy in relation to the subject matter and the issues.
Hopper addressed the precise issue now before us: whether or
not the district court had jurisdiction to determine the
conscionability of the property settlement agreement which it had
earlier, in the decree of dissolution, found to be not
unconscionable. We affirmed the district court's conclusion that
a subsequent conscionability determination was prevented by the
doctrine of res judicata. Hopper, 601 P.2d at 36. The same result
18
is compelled here.
In its determination to reach the result it seeks in this
case, the Court mischaracterizes the nature of Kathy's motion in
the District Court in order to recharacterize the District Court's
statement that it had "reopened the Decree based on
unconscionability." This Court's statement that the motion was one
to clarify the terms of the agreement and, thereafter, merely to
enforce it, is nonsense. Kathy's motion was a Motion for Order
Modifying the Decree as to Retirement Benefits and it is this
motion that the District Court granted, based on its
unconscionability determination. The Court attempts to buttress
its recharacterization of this case by concluding that the District
Court "was correct in treating the SSB program as early retirement
under its original Decree." The problem with this Court's
"conclusion" is that the District Court did not treat the SSB
program as early retirement under its original decree; had it done
SO, it would not have been necessary to "reopen the Decree."
The salient facts are these: The parties' Agreement entitled
Kathy to a share of Steve's military retirement pay. No
alternative provision was made to deal with Steve's separation from
the military prior to retiring, even though Kathy testified that
she understood during settlement negotiations that Steve might
leave the military prior to completing the full term of military
service necessary to be eligible for retirement. The Agreement
expressly stated that its purpose was "to provide for the equitable
and fair division of the property of the parties," and that it
19
constituted full and final settlement based upon full disclosure of
property and income. The Agreement, by its terms, "shall not be
modifiable." This was the Agreement the District Court determined
to be not unconscionable when it incorporated the Agreement into
the decree of dissolution.
I would reverse the District Court's determination that
unconscionability permitted it to reopen the decree and modify the
terms of the Agreement to give Kathy a share of Steve's military
separation benefits. The unconscionability determination is barred
by the doctrine of res judicata, as is clear from Hopper and from
the Commissioners' Note to g 40-4-201, MCA, which states that "the
court's determination, in the decree, that the terms [of the
agreement] are not unconscionable, under the ordinary rules of res
adjudicata, will prevent a later successful claim of
unconscionability." In remaking this case to reach a particular
result, this Court undermines the purpose, importance and
legislatively-intended finality of property settlement agreements
voluntarily entered into by the parties, found conscionable by the
court and incorporated in the decree; the Court also creates both
unnecessary and incorrect inconsistency in its own cases. I cannot
agree. I dissent.
20
Justice James C. Nelson and Justice Terry N. Trieweiler join
in the foregoing dissent of Justice Karla M. Gray
21
Marriage of Blair v. Blair
Court: Montana Supreme Court
Date filed: 1995-05-18
Citations: 894 P.2d 958, 271 Mont. 196, 52 State Rptr. 401
Copy CitationsCombined Opinion