McLellan v. McLellan

COURT OF APPEALS OF VIRGINIA

Present: Judges Elder, Annunziata and Frank
Argued at Alexandria, Virginia

JAMES WALTER McLELLAN
OPINION BY
v. Record No. 1956-99-4 JUDGE ROBERT P. FRANK
SEPTEMBER 5, 2000
CLAUDIA MARIE McLELLAN

FROM THE CIRCUIT COURT OF THE CITY OF WINCHESTER
John E. Wetsel, Jr., Judge

Alexander R. Iden (Massie, Inger & Iden,
P.C., on brief), for appellant.

Nate L. Adams, III (Adams & Kellas, P.C., on
brief), for appellee.

James Walter McLellan (husband) appeals the chancellor's

denial of his motion to reinstate this matter on the court's

docket. On appeal, he contends the chancellor erred in: 1)

refusing to vacate a provision of the 1995 divorce decree

awarding Claudia Marie McLellan (wife) a portion of husband's

military disability retirement pay pursuant to the terms of

their property settlement agreement and 2) denying his motion to

reinstate without hearing evidence. We hold that the chancellor

did not err and affirm the judgment.

I. BACKGROUND

The parties were married on June 24, 1961, and separated on

November 1, 1993. Husband was released from active duty with

the United States Marine Corps on May 31, 1978, by virtue of a
permanent physical disability and began receiving disability

retirement pay in addition to regular retirement pay. Thus,

when the September 28, 1995 property settlement agreement

(agreement) was executed, husband was receiving the disability

retirement pay.

Husband filed a bill of complaint for divorce in the

Circuit Court of the City of Winchester on January 25, 1995,

requesting a "no-fault" divorce and incorporation of the

agreement into the final decree. Each party was represented by

counsel during the negotiation and execution of the agreement.

The final decree was entered on October 18, 1995, and

incorporated the agreement, specifically noting the military

retirement pay:

2(A) DIVISION OF HUSBAND'S MILITARY
RETIREMENT PAY. Pursuant to the
aforementioned Separation and Custody
Agreement, the parties have agreed to divide
the Complainant's military retirement pay as
a marital asset. The Wife will receive 42%
of the Husband's retirement pay pursuant to
the terms in the Separation and Custody
Agreement.

Husband endorsed the final decree, "Seen and Agreed."

Paragraph 7 of the agreement, entitled "Military Retirement

Pension and Benefits," provides as follows:

(a) Retirement Pay: The Husband
currently receives a monthly military
retirement pay which the parties agree
constitutes marital property under Virginia
law, Va. Code Ann. § 20-107.2 [sic] (1950,
as amended). The parties agree that the
military retired pay shall be divided so

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 that the Wife receives 42% of the Husband's
monthly retirement pay, plus such pro rata
cost of living adjustments as may in the
future be given under federal law. Said
percentage of the monthly payment currently
totals $699.00. Husband agrees to cause to
be entered a Qualified Domestic Relations
Order or equivalent whereby payments are
made directly to the Wife at his expense.
The Husband shall make all efforts to ensure
such an Order is entered and accepted, by
the pay authority within 60 days of the
execution of this Agreement. Until such
time as an appropriate Order is entered and
accepted, the Husband shall pay directly to
Wife the sum representing her 42% interest
plus any pro rata accrued cost of living
adjustments.

Neither party submitted a qualified domestic relations

order (QDRO) to the court for entry, and husband made direct

payments to wife as set forth in the agreement.

On July 6, 1999, husband filed a motion to reinstate this

cause on the docket of the Circuit Court of the City of

Winchester. In his motion, he requested that the trial court

vacate the provision of the divorce decree awarding wife a

portion of husband's military pay based on the trial court’s

original lack of subject matter jurisdiction.

Husband alleged in his motion that he had been released

from active duty from the United States Marine Corps on May 31,

1978, by reason of permanent physical disability and that his

retirement pay is permanent disability retirement pay.

On July 23, 1999, the trial court entered an order denying

husband's motion. In its order, the trial court opined,

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"[W]hile the court cannot order the equitable distribution of

[husband's military disability retirement] the parties could

agree to it in a separation agreement as they did in this case."

II. ANALYSIS

Husband contends the trial court erred by refusing to grant

his motion to vacate the provision of the parties' agreement

awarding wife a share of his military disability retirement pay

and by refusing to reinstate the matter without hearing

evidence.

Husband correctly asserts that, under the provisions of the

United States Code governing the computation of retired military

pay, "disposable retired pay" does not include his disability

retirement pay. See 10 U.S.C.A. § 1408(a)(4)(C). Husband

contends that, under federal law, the trial court lacked subject

matter jurisdiction to award wife a portion of his military

disability retirement pay, despite the provisions of the

parties' agreement. We disagree.

A. Subject Matter Jurisdiction

The Supreme Court of Virginia has ruled that "subject

matter jurisdiction is the authority granted to a court by

constitution or by statute to adjudicate a class of cases or

controversies." Earley v. Landsidle, 257 Va. 365, 371, 514

S.E.2d 153, 156 (1999) (citations omitted). Moreover, the

parties cannot confer subject matter jurisdiction on the court

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by agreement. See Morrison v. Bestler, 239 Va. 166, 169-70, 387

S.E.2d 753, 755 (1990) (citation omitted).

Code § 20-109.1 authorizes a trial court to affirm, ratify

and incorporate by reference in its decree a property settlement

agreement. See Code § 20-109.1. Code § 20-107.3 authorizes a

trial court to determine and divide marital property, including

retirement funds, and to make a monetary award. See Code

§ 20-107.3.

Furthermore, the relevant provisions of federal law do not

divest the trial court of subject matter jurisdiction. For

instance, under the relevant federal law, even an order that

purports to award more than authorized by law "shall not be

considered to be irregular on its face solely for that reason."

10 U.S.C.A. § 1408(e)(5).

In this case, the trial court clearly had subject matter

jurisdiction over the parties' divorce and the equitable

distribution of their marital property. Therefore, we find no

error in the trial court's determination that it had subject

matter jurisdiction.

B. Disability Retirement Payments

Husband contends that federal law preempts state law in the

area of federal military disability benefits and that the trial

court had no power to order a division of husband's benefits,

despite the provisions of the agreement. We disagree.

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 In Owen v. Owen, 14 Va. App. 623, 419 S.E.2d 267 (1992), we

recited the historical evolution of this issue:

[T]he Supreme Court held that federal
law preempted state court division of
military retirement pay. McCarty v.
McCarty, 453 U.S. 210, 232, 101 S. Ct. 2728,
2741, 69 L.Ed.2d 589 (1981). In response to
the McCarty decision, Congress passed the
Uniformed Services Former Spouses'
Protection Act, 10 U.S.C. § 1408
(hereinafter "the Act"). In 1989, the
Supreme Court interpreted the Act as
granting state courts the power to divide
military retirement pay, but specifically
held that the Act does not grant state
courts the power to divide military
retirement pay that has been waived to
receive veterans' disability benefits.
Mansell v. Mansell, 490 U.S. 581, 594-95,
109 S. Ct. 2023, 2031, 104 L.Ed.2d 675
(1989).
This Court applied the Mansell ruling
in Lambert v. Lambert, 10 Va. App. 623, 395
S.E.2d 207 (1990), stating that "Mansell
firmly established the principle that [the
Act] preempts the application of state
community property or equitable distribution
laws to military retirement pay that is
waived by a retiree in order to receive
veterans' disability benefits." Id. at 627,
395 S.E.2d at 209. This Court went on to
hold that "[w]hen military disability
benefits are received in lieu of retirement
pay, or veterans' disability benefits
administered by the V.A. are received
according to the required waiver of an equal
amount of military retirement pay, the
benefits are not subject to division by the
state courts under the Act." Id.

Id. at 626, 419 S.E.2d 269.

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 Owen controls. 1 In Owen, we addressed the narrow issue of

whether the parties may use a property settlement agreement to

guarantee a certain level of income by providing for alternative

payments to the wife. See id. We answered in the affirmative,

noting that "such an arrangement does not offend the federal

prohibition against a direct assignment of military disability

pay . . . ." Id.

We wrote, "[F]ederal law does not prevent a husband and

wife from entering into an agreement to provide a set level of

payments, the amount of which is determined by considering

disability benefits as well as retirement benefits." Id. at

628, 419 S.E.2d at 270.

In numerous cases, we have distinguished between a direct

assignment of benefits by the government and direct payment by

the payee to the former spouse. In Holmes v. Holmes, 7 Va. App.

472, 375 S.E.2d 387 (1988), we said:

The judge did not specify that the
payments had to come from the husband's
excluded disability benefits. Contrary to

1
In Owen, the husband agreed to indemnify the wife if the
husband took any action to defeat wife's right to share in the
pension benefits. See Owen, 14 Va. App. at 625, 419 S.E.2d at
268. At the time the property settlement agreement was
executed, the husband was not receiving any disability pay. See
id. We held that the indemnity provision insured that the wife
would receive a steady stream of money. See id. at 627, 419
S.E.2d at 269. The indemnity agreement did not specify a source
of funds. See id. at 627, 419 S.E.2d at 270. We do not read
Owen to require such an indemnity agreement as a requirement for
such a ruling. It is simply an evidentiary consideration to
determine if the parties agreed to a certain level of income and
not limit the source of the funds.

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 the husband's contention, the source of the
payments need not come from his exempt
disability pay; the husband is free to
satisfy his obligations to his former wife
by using other available assets.

Id. at 485, 375 S.E.2d at 395.

In Cook v. Cook, 18 Va. App. 726, 446 S.E.2d 894 (1994), we

wrote:

While § 10 U.S.C. 1408(d)(2) prevents
direct payment to the divorced wife, it was
not error for the trial court to declare
husband's military pension to be marital
property and award wife seventeen percent of
that pension upon his receipt of pension
payments, notwithstanding that husband and
wife were married for less than ten years.

Id. at 731, 446 S.E.2d at 896.

"Property settlement and support agreements are subject to

the same rules of construction and interpretation applicable to

contracts generally." Fry v. Schwarting, 4 Va. App. 173, 180,

355 S.E.2d 342, 346 (1987) (citation omitted). On appeal, when

the sole issue is the meaning and effect of the terms of the

contract, that issue "is a question of law which can readily be

ascertained by this court." Id. (citation omitted).

"Because a separation agreement is a contract and must be

construed as such . . . the intent of the parties as expressed

in the contract controls. Where the agreement is plain and

unambiguous in its terms, the rights of the parties are to be

determined from the terms of the agreement." Gayler v. Gayler,

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20 Va. App. 83, 86, 455 S.E.2d 278, 280 (1995) (citations

omitted).

At the time the parties entered into their agreement,

husband was already retired and receiving military disability

retirement benefits. It is clear from the agreement that

husband clearly intended for wife to receive forty-two percent

of his entire retirement pay. The parties drew no distinction

between disability and regular retirement pay. Further, the

parties anticipated that a direct assignment might be

problematic. While the husband agreed to submit a QDRO within

sixty days for a direct assignment, the parties agreed to direct

payment from husband to wife until the QDRO was entered and

accepted. No such order was ever presented to the trial court

for entry, and it appears both parties were comfortable with

direct pay because husband never submitted the order and wife

never sought such an order. In fact, husband made direct

payments for over three years. We may infer that both parties

were satisfied with husband receiving the retirement payments

and then paying wife from whatever source he chose.

We, therefore, read paragraph 7(a) of the agreement to

provide a set level of payments, the amount of which is

determined by considering disability payments as well as

husband's regular retirement payments. Therefore, we find no

error in the trial court's denial of husband's motion to vacate.

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 C. Evidentiary Hearing

Husband contends the trial court erred by refusing to

conduct an evidentiary hearing on his motion to vacate. Whether

husband's motion raised a question of fact that required the

submission of evidence was a matter left to the discretion of

the trial court. We will not disturb the trial court's exercise

of that discretion on appeal absence abuse. See Rowe v. Rowe,

24 Va. App. 123, 144-45, 480 S.E.2d 760, 770 (1997). The trial

court ruled it could address husband's motion to vacate without

the submission of additional evidence, based upon the provisions

of the final decree of divorce and the parties' agreement

incorporated therein. 2 On review, we find that the trial court

did not abuse its discretion in making such determination.

We, therefore, affirm the decision of the trial court.

Affirmed.

2
On our review of the record, we see nothing that would
indicate the taking of evidence was necessary to resolve the
issue. The agreement was unambiguous, and no parol evidence
would be admissible. See Renner Plumbing, Heating and Air
Conditioning, Inc. v. Renner, 225 Va. 508, 515, 303 S.E.2d 894,
898 (1983).

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