Dugan v. Childers

Present: All the Justices

BOBBIE M. DUGAN
OPINION BY
v. Record No. 000023 CHIEF JUSTICE HARRY L. CARRICO
January 12, 2001
HELEN I. CHILDERS

FROM THE CIRCUIT COURT OF FAIRFAX COUNTY
Henry E. Hudson, Judge

In this equity proceeding, Bobbie M. Dugan (Bobbie), former

spouse of Marvin E. Childers (Marvin), a retired member of the

United States Army, seeks to impose a constructive trust upon

survivor benefits received by Helen I. Childers (Helen),

Marvin's surviving spouse. From a final decree granting summary

judgment in favor of Helen, we awarded Bobbie this appeal.

It appears from the record that Bobbie and Marvin were

married July 29, 1951. He retired from the United States Army

on July 28, 1975, naming Bobbie as the recipient of his

retirement benefits in the event he predeceased her. They

separated November 15, 1986, and were divorced by final decree

of the Circuit Court of Fairfax County entered December 28,

1987.

The divorce decree incorporated, ratified, and confirmed a

property settlement agreement Bobbie and Marvin entered into on

December 4, 1986. The agreement stipulated that Bobbie was

entitled to one-half of Marvin's retirement benefits. Marvin

agreed he would assign to Bobbie one-half of his income from the
benefits and would notify "the Army Retirement for this

purpose." He also agreed to assign and nominate Bobbie "as his

beneficiary for the purposes of survivor benefits under the

terms of his military retirement."

Marvin married Helen in "approximately May, 1994." Shortly

thereafter, he changed his retirement benefits to name Helen as

the survivor beneficiary.

On September 27, 1996, the Circuit Court of Fairfax County

found Marvin guilty of civil contempt. He was directed to

change his survivor beneficiary from Helen to Bobbie.

Later in 1996, Marvin was hospitalized with cancer. He

died July 27, 1997, without having changed his survivor

beneficiary from Helen to Bobbie. Helen has been receiving

survivor benefits since Marvin's death.

Several provisions of federal statutory law are pertinent

to disposition of this appeal. Under the Survivor Benefit Plan

(SBP) established by 10 U.S.C. §§ 1447-1455, a military retiree,

following entry of a final decree of divorce, may elect to

provide an annuity to a former spouse. 10 U.S.C.

§ 1448(b)(3)(A)(II). The election must be in writing, signed by

the person making the election, and received by the secretary of

the appropriate branch of the military service within one year

after the date of the decree of divorce. 10 U.S.C.

§ 1448(b)(3)(A)(II)(iii).

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 When a military retiree, incident to a divorce proceeding,

enters into a written agreement to elect to provide an annuity

to a former spouse and the agreement is incorporated into a

court order or the retiree is required by a court order to make

such an election but fails or refuses to do so, 10 U.S.C. § 1450

(f)(3) becomes applicable. In such a situation, the retiree is

deemed to have made the election, provided the secretary of the

appropriate branch of the military service receives from the

former spouse a written request, together with a copy of the

court order, that such an election be deemed to have been made.

10 U.S.C. § 1450(f)(3)(A)(i) and (ii). Importantly, the request

from the former spouse must be received by "the Secretary

concerned" within one year of the date of the court order. 10

U.S.C. § 1450(f)(3)(C).

Finally, 10 U.S.C. § 1450 includes what Helen refers to as

a "non-alienation" provision. In relevant part, this provision

states that "an annuity under this section is not assignable or

subject to execution, levy, attachment, garnishment, or other

legal process." 10 U.S.C. § 1450(i).

Bobbie concedes that neither she "nor anyone on her behalf

notified the Army of the provisions of the agreement within one

year of the entry of the divorce decree in order for her to

qualify as the 'Deemed Spouse' under the provisions of 10 U.S.C.

§ 1450." Bobbie also concedes that the material facts were not

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in dispute when the trial court considered Helen's motion for

summary judgment.

In the hearing on the motion, Helen argued that the federal

law expressed in 10 U.S.C. § 1450 preempts state law on the

subject of a former spouse's entitlement to the survivor

benefits of a military retiree and that Bobbie's failure timely

to request a deemed election barred her recovery on a theory of

constructive trust. The trial court held state law was

preempted and Bobbie was barred from recovery.

Bobbie disagrees and argues that state law, rather than

federal law, generally controls in the area of domestic

relations. As a result, Bobbie opines, when Marvin failed to

name her as his survivor beneficiary after he had been held in

contempt for failing to designate her, he lost the right to name

any other survivor beneficiary.

Bobbie cites two of this Court’s prior decisions as

examples of the “balance” she says we have recognized in “these

sorts of claims." See Jones v. Harrison, 250 Va. 64, 458 S.E.2d

766 (1995) (husband's undertaking in property settlement and

support agreement to provide certain life insurance benefits for

children of former marriage sufficient to impose constructive

trust on proceeds in hands of surviving spouse named as

beneficiary in replacement policies); Southerland v.

Southerland, 249 Va. 584, 457 S.E.2d 375 (1995) (wife's release

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in property settlement agreement of all right, title, and

interest in property of husband effective to relinquish any

interest she may have had arising from his life insurance

contract despite fact he had not removed her as beneficiary

before his death.

Neither Southerland nor Jones is apposite. Both relate to

property settlement agreements involving private insurance

contracts; neither involves the provisions of a survivors'

benefit plan governed by federal law and neither presents a

question of federal preemption of state law.

Concerning preemption in general, the Supreme Court has

said that “[i]f Congress evidences an intent to occupy a given

field, any state law falling within that field is pre-empted.”

Silkwood v. Kerr-McGee Corp., 464 U.S. 238, 248 (1984). With

respect to domestic relations law, the Court has said that

“state interests . . . in the field of family and family-

property arrangements . . . should be overridden . . . only

where clear and substantial interests of the National Government

. . . will suffer major damage if the state law is applied.”

United States v. Yazell, 382 U.S. 341, 352 (1966). “The

pertinent questions are whether the right as asserted conflicts

with the express terms of federal law and whether its

consequences sufficiently injure the objectives of the federal

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program to require nonrecognition.” Hisquierdo v. Hisquierdo,

439 U.S. 572, 583 (1979).

This Court has not previously considered the question

whether 10 U.S.C. § 1450 preempts the law of this Commonwealth

on the subject of a former spouse’s entitlement to the

survivor’s benefits of a military retiree. Nor is there an

abundance of authority elsewhere.

The Court of Appeals of Georgia considered the question in

King v. King, 483 S.E.2d 379 (Ga. App. 1997), where the trial

court had imposed a constructive trust on annuity benefits being

paid to the surviving spouse of a military retiree in a factual

situation virtually identical to the scenario at hand. The

Georgia court reversed, observing that while, under state law,

“the SBP annuity was marital property subject to equitable

distribution by the trial court[,] . . . the right to claim

entitlement to an SBP annuity is also governed by and subject to

conditions set forth in the SBP at 10 U.S.C. §§ 1447-1455.” 483

S.E.2d at 382. The court then held as follows:

The right to the annuity asserted by [the former
spouse] pursuant to the divorce decree clearly conflicts
with the express provisions of the SBP under which [the
military retiree’s] surviving spouse is the beneficiary of
the annuity. In providing the means by which former
spouses may become entitled to SBP annuity benefits,
Congress enacted plain and precise statutory language
placing conditions and limits on that right and made clear
that any annuity benefits paid in compliance with the
provisions of the SBP are not subject to legal process.
Since the provisions of the SBP unambiguously preclude the

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 rights asserted under the divorce decree, we further
conclude that the consequences of enforcing the conflicting
state law principles sufficiently injures the objectives of
the SBP so that federal law preempts the authority of state
law.

Id. at 383.

The Court of Appeals of South Carolina, in another factual

situation on all fours with the present case, has also

considered the question whether 10 U.S.C. § 1450 preempts state

law on the subject of a former spouse’s entitlement to the

survivor’s benefits of a military retiree. In denying the

prayer of a former spouse for the imposition of a constructive

trust, the court stated in Silva v. Silva, 509 S.E.2d 483 (S.C.

App. 1998), that it found “the reasoning of the Georgia court

[in King] persuasive” and concluded “that the provisions of the

SBP make clear Congress’s intention to occupy the field under

these particular circumstances.” 509 S.E.2d at 485. 1

We also find the reasoning of the Georgia court persuasive.

However, we would stress several points discussed in the portion

of the court’s opinion quoted above. First, the court stated

that “[i]n providing the means by which former spouses may

become entitled to SBP annuity benefits, Congress enacted plain

1
Bobbie argues King and Silva are distinguishable because in
neither case was the military retiree found in contempt of court
while, here, Marvin was found in contempt. However, this is a
distinction without a difference. Whether a military retiree is
found in contempt of court for failing to notify the appropriate

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and precise statutory language placing conditions and limits on

that right.” 483 S.E.2d at 383. In this situation, the

following rule becomes applicable:

When a special limitation is part of the statute creating
the substantive right, the limitation is not merely a
procedural requirement, but a part of the newly created
substantive cause of action. The special limitation is a
condition precedent to maintaining the claim and failure to
comply with it bars the claim.

Sabre Constr. Corp. v. County of Fairfax, 256 Va. 68, 72, 501

S.E.2d 144, 147 (1998)(citation omitted). Hence, when Bobbie

failed to notify the Army of the provisions of her property

settlement agreement within one year of the date of her divorce

decree, her claim for survivor’s benefits was barred and could

not form the basis for the imposition of a constructive trust.

Second, the Georgia court stated that “[i]n providing the

means by which former spouses may become entitled to SBP annuity

benefits, Congress . . . made clear that any annuity benefits

paid in compliance with the provisions of the SBP are not

subject to legal process.” 483 S.E.2d at 383. The reference to

“legal process” comes, of course, from what Helen terms the

“non-alienation” provision of 10 U.S.C. § 1450, which states

that “an annuity under this section is not . . . subject to

execution, levy, attachment, garnishment, or other legal

process.” 10 U.S.C. § 1450(i).

secretary has nothing to with whether state law is preempted in

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 The “non-alienation” provision would be sufficient alone to

require a finding of preemption in this case. Explaining the

effect of a similar provision contained in the Railroad

Retirement Act, the Supreme Court said “[i]t pre-empts all state

law that stands in its way,” protecting “the benefits from [the]

legal process” of any state. Hisquierdo, 439 U.S. at 584.

Clearly, the term “other legal process” contained in 10

U.S.C. § 1450(i) encompasses the imposition of a constructive

trust upon annuity benefits. A constructive trust is just as

effective in thwarting the purposes of an annuity as an

execution, levy, attachment, or garnishment, and the “non-

alienation” provision is intended to protect federal annuity

benefits from all such legal processes.

Finally, the Georgia court concluded that “the consequences

of enforcing the conflicting state law principles sufficiently

injure[s] the objectives of the SBP so that federal law preempts

the authority of state law.” 483 S.E.2d at 383. We think this

conclusion is amply supported. To award Bobbie the survivor’s

benefits she seeks would seriously conflict with and effectively

cancel both the “plain and precise” one-year limitation Congress

placed on a former spouse’s right to claim the benefits and the

clear prohibition against subjecting an annuity to legal

process.

a given case.

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 Bobbie submits, however, that “[o]ther state courts have

held that under certain circumstances, the provisions of 10

U.S.C. § 1450 do not preempt state law.” Bobbie cites Kenny v.

Kenny, 627 A.2d 426 (Conn. 1993), and Balderson v. Balderson,

896 P.2d 956 (Idaho 1995). But neither case considered 10

U.S.C. § 1450 or an SBP. Indeed, neither opinion even mentions

§ 1450 or an SBP.

Kenny and Balderson both dealt with 10 U.S.C. § 1408, which

embodies the Uniformed Services Former Spouses’ Protection Act

(USFSPA), enacted by Congress in 1982 in response to the Supreme

Court’s decision in McCarty v. McCarty, 453 U.S. 210 (1981). In

McCarty, the Supreme Court held that California’s community

property law was preempted because "the application of community

property law conflicts with the federal military retirement

scheme," id. at 223, and "the application of community property

principles to military retired pay threatens grave harm to

‘clear and substantial' federal interests," id. at 232.

With the enactment of the USFSPA, "any court of competent

jurisdiction," including a court of competent jurisdiction "of

any State," 10 U.S.C. § 1408(a)(1)(A), may now "treat disposable

retired pay . . . either as property solely of the member or as

property of the member and his spouse in accordance with the law

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of the jurisdiction of such court," 10 U.S.C. § 1408(c). 2

However, as the Georgia court pointed out in King, “nothing in

the [US]FSPA or subsequent amendments grants the same power to

the states with respect to the award of annuity benefits for

former spouses under the SBP.” 483 S.E.2d at 382-83. Hence,

Kenny and Balderson do not support Bobbie’s position that the

provisions of 10 U.S.C. § 1450 do not preempt state law.

For the reasons assigned, we will affirm the judgment of

the trial court.

Affirmed.

2
Under Va. Code § 20-107.3(G)(1), “[t]he court may direct
payment of a percentage of the marital share of any pension,
profit-sharing or deferred compensation plan or retirement
benefits, whether vested or nonvested, which constitutes marital
property and whether payable in a lump sum or over a period of
time.”

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