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Ghrist v. Ghrist

Court of Appeals of Texas, Third District, Austin
May 11, 2007
No. 03-05-00769-CV (Tex. App. May. 11, 2007)

Summary

holding res judicata did not bar ex-husband from raising defense that federal law preempts and bars enforcement of provision that prohibited ex-husband from waiving military retirement to obtain VA disability benefits

Summary of this case from Jackson v. Jackson

Opinion

No. 03-05-00769-CV.

Filed: May 11, 2007.

Appealed from the District Court of Travis County, 147th Judicial District No. 378,930, Honorable Lora J. Livingston, Judge Presiding.

Affirmed.

Before Justices PATTERSON, PEMBERTON and WALDROP.

Dissenting Opinion by Justice Patterson.


MEMORANDUM OPINION


This appeal concerns the enforceability of an agreed divorce decree. Roy Ghrist is retired from the United States Air Force. Mary Ghrist is Roy's ex-spouse. The parties were divorced in 1985 and agreed to a property division that included a 50-50 split of Roy's monthly Air Force "retirement" payments. The decree also contained a provision that "[a]ny election of benefits by Roy A. Ghrist shall not reduce the amount or the percentage of the retirement awarded to Mary S. Ghrist."

Because the parties share the same surname, we will refer to them by their first names.

The portions of the decree relating to Roy's military "retirement" are reproduced in the Appendix.

It is undisputed that in 1989, Roy waived a portion of his Air Force "retirement" in order to receive an equal amount of disability benefit payments from the Veteran's Administration. See 38 U.S.C.A. ?3105 (West 1982 Supp. 1985) (current version at 38 U.S.C.A. ?5305 (West 2002)). Mary asserts that this change had the effect of unilaterally reducing the amounts she received each month from Roy's "retirement." See Mansell v. Mansell, 490 U.S. 581, 583, 584-93 (1989); Ex parte Burson, 615 S.W.2d 192, 194-96 (Tex. 1981). In 2003, Mary filed a petition for enforcement in which she alleged that "[c]ontrary to the Decree, [Roy] has failed to pay [Mary] any portion [of] the disability pay from the United States Air Force, and, after making an election to receive his disability pay from the Veteran's Administration, [Roy] has failed to pay [Mary] any portion of said disability pay." She relied on two chief contentions: (1) the "retirement" the parties had agreed to divide 50-50 in the decree included both Air Force retirement pay and Air Force disability pay, see 10 U.S.C. §§ 1201, 1401 (1982 Supp. 1985); and (2) the election-of-benefits clause referenced above prohibited Roy from avoiding his obligation to pay her half of his Air Force disability retirement benefits by waiving a portion of his Air Force retirement to receive VA disability benefits. Mary prayed that the district court order Roy "to pay [her], monthly as said sums are received, fifty percent of the net amount of [Roy's] retirement and disability pay from the United States Air Force and United States Veteran's Administration."

Mary suggests that Roy made this waiver in response to Mansell v. Mansell, 490 U.S. 581, 583, 584-93 (1989), which was decided that same year.

Roy answered, asserting the affirmative defenses of estoppel and limitations, emphasizing that 18 years had elapsed since the divorce and almost 15 years had passed since Roy waived a portion of his Air Force "retirement" to receive VA disability benefits. Roy also asserted a plea in bar arguing that the district court had no jurisdiction to directly or indirectly apportion military retirement pay that has been waived to receive VA disability benefits or to prohibit such waivers. See Mansell, 490 U.S. at 594-95; Ex parte Burson, 615 S.W.2d at 196; Limbaugh v. Limbaugh, 71 S.W.3d 1, 14 (Tex.App.-Waco 2002, no pet.).

In April 2004, a hearing was held on Mary's petition for enforcement. Only argument was presented, and no evidence was introduced. Mary agreed that Roy couldn't be prohibited from "elect[ing] to take the VA disability," but maintained that "the judgment prohibits him from reducing the amount she received by any such election. . . . The decree contemplates that he would pay over to her one half of this net amount. That's what we're asking that he be ordered to do. I don't care if he gets it from [the] VA." Responding to Roy's plea in bar, Mary urged that Roy was attempting an impermissible collateral attack on the long-final divorce decree that was barred by res judicata. See Berry v. Berry, 786 S.W.2d 762, 763 (Tex. 1990); Jones v. Jones, 900 S.W.2d 786, 788 (Tex.App.-San Antonio 1995, writ denied).

In August 2005, the district court signed an order denying Mary's petition for enforcement as a matter of law. It subsequently made findings of fact and conclusions of law. The court found that under "the formula for division of the military retirement contained in the Decree . . . it is apparent that [Mary] has lost money and will continue to lose money each month which she otherwise would receive as her one-half interest in [Roy's] military retirement directly due to his post-divorce receipt of a portion of this retirement benefit in the form of disability payments from the Veteran's Administration rather than continuing to receive all of his retirement monies from the United State Air Force itself." However, the court concluded that enforcement of the decree against Roy "as it relates to military disability benefits is barred," that Mary "may not enforce a claim for money lost based on military retirement monies paid to [Roy] by the Veteran's Administration due to his disability," that Roy "may not be penalized nor held in contempt for receiving some of his retirement benefits as disability rather than all his retirement funds from the Air Force," and that "[m]ilitary disability funds paid as part of military retirement are not divisible."

Mary appeals. She brings two related issues disputing whether Roy can collaterally attack the divorce decree by opposing its enforcement where the decree is final and where the parties contractually agreed to it. On appeal, Roy re-urges his arguments that the district court had no jurisdiction to award Mary, directly or indirectly, half of his VA disability benefits or to effectively prohibit him from waiving Air Force retirement to obtain those benefits. However, he also disputes Mary's construction of the decree, urging that the instrument manifests the parties' intent to award Mary 50% of only his "disposable retired pay." Under the Uniformed Services Former Spouses Protection Act (USFSPA), which was in effect at the time the decree was entered, state courts may treat only "disposable retired pay" as community property subject to division. 10 U.S.C.A. ?1408 (West 1982 Supp. 1985). The USFSPA defines "disposable retired pay" as the total monthly retired pay to which a member is entitled, excluding, among other things, amounts withheld for taxes, retired pay waived to receive VA disability benefits, and any military disability retirement. Id. ?1408(a)(4) (West 1982 Supp. 1985). Thus, in Roy's view, the "retirement" that Mary was awarded did not include his disability payments (whether in the form of Air Force disability retirement or VA disability benefits). Accordingly, Roy's waiver of Air Force retirement to receive VA disability could not have violated the decree's requirement that "[a]ny election of benefits . . . not reduce the amount or the percentage of the retirement awarded to Mary S. Ghrist."

Roy further suggests that his waiver of Air Force retirement to receive VA disability benefits was not an "election of benefits" under the meaning of the decree. He maintains that under chapter 73 of title 10, he could "elect" to accept reduced retirement pay in exchange for an annuity to Mary. 10 U.S.C.A. ?1431 (West 1982 Supp. 1985). Under the USFSPA, this is termed " an election under chapter 73 of this title" and the amount of the reduction in retired pay is excluded from the "disposable retired pay" that state courts can treat as community property. 10 U.S.C. ?nbsp;1408(a)(4)(F) (West 1982 Supp. 1985) (emphasis added). Significantly, within the same subsection, Congress used different terminology to describe "amounts waived in order to receive" VA disability benefits. Id. ?1408(a)(4)(B) (emphasis added). According to Roy, this statutory context demonstrates that his obligation under the decree's election-of-remedies provision was merely to ensure that any spousal annuity he might later elect to provide Mary not be less than the amount of "disposable retired pay" she otherwise would receive — not, as she urges, to limit his right to waive Air Force retirement to obtain VA disability benefits.

At this procedural juncture, the parties' dispute concerning the proper construction of the divorce decree is not properly before us. As demonstrated by the district court's findings of fact and conclusions of law, the final order on appeal denying Mary's petition for enforcement judgment was founded solely upon Roy's plea in bar. Consistent with this procedural context, Roy did not join issue below with Mary's construction of the divorce decree, but relied solely on his contentions that the relief Mary requested is preempted and barred by federal law. We will accordingly consider only those grounds as support for the district court's order — and these grounds, as we hold below, are sufficient. For the same reasons, we do not reach whether we must consider extrinsic evidence concerning the circumstances of the divorce decree that Mary introduced at the hearing on entry of judgment, or any implications of such evidence for our construction of the decree.

We agree with the district court that the relief Mary requests is barred by federal law because she seeks directly or indirectly to obtain a portion of Roy's VA disability benefits, or to effectively prevent him from waiving his military retirement to obtain such benefits. Mansell, 490 U.S. at 594-595; Ex parte Burson, 615 S.W.2d at 194-96; Loria v. Loria, 189 S.W.3d 797, 798-99 (Tex.App.-Houston [1st Dist.] 2006, no pet.); Limbaugh, 71 S.W.3d at 14. Res judicata does not bar Roy from raising this defense to enforcement. Ex parte Burson also involved a collateral attack in which a serviceman relied on his right to unilaterally waive military retirement to receive VA disability benefits as a defense to the enforcement of a divorce decree that purported to pay his ex-spouse a specified portion of his military retirement. Ex parte Burson, 615 S.W.2d at 194-96. The supreme court also relied on the fact that federal law explicitly makes VA disability benefits (unlike military retirement benefits) non-divisible and non-alienable, suggesting that this federal limitation would preempt any state res judicata principles that might otherwise apply and/or would render void any state court order that purported to directly or indirectly award such benefits. Ex parte Burson, 615 S.W.2d at 196 n. 4 (citing Hisquierto v. Hisquierto, 439 U.S. 572 (1979)); see 38 U.S.C.A. ?3105. None of the cases on which Mary relies in support of her res judicata argument address the implications of the federal anti-alienability provisions that govern VA disability benefits. Unless and until the Texas Supreme Court instructs us otherwise, we must continue to follow Ex parte Burson and, accordingly, we affirm the district court's order. See Petco Animal Supplies, Inc. v. Schuster, 144 S.W.3d 554, 565 (Tex.App.-Austin 2004, no pet.).

APPENDIX Excerpts from the divorce decree relating to Roy's military "retirement":

The Court finds that, through the service of Roy A. Ghrist in the United States Air Force, United States Military Retirement . . . has been acquired during the marriage. . . .

Petitioner [Roy] and Respondent [Mary] were married on March 15, 1958, and their marriage lasted for 10 years or more, during which time Roy A. Ghrist served 10 or more years of creditable service toward retirement.

The Court finds that Roy A. Ghrist now receives a monthly retirement benefit of $ 772.00 gross and $ 625.00 disposable. The Court further finds that the community interest in the monthly retirement benefit is fifty percent (50%). The Court further finds that Respondent's fifty percent (50%) community interest is now equal to a monthly retirement benefit of $ 327.38. The Court further finds that costs-of-living increases are made to the present retirement periodically and, in all probability, those costs-of-living related increases will occur in the future.

Roy A. Ghrist's rights under the Soldier's and Sailor's Civil Relief Act . . . were observed.

It is ORDERED and DECREED that Mary S. Ghrist shall have judgment against and recover from Roy A. Ghrist fifty percent (50%) of the present, disposable and future military retirement received each month by Roy A. Ghrist computing said amount by deducting from his "gross",withholding only, to reach his "net." Any election of benefits by Roy A. Ghrist shall not reduce the amount or the percentage of the retirement awarded to Mary A. Ghrist.

It is further ORDERED and DECREED that Roy A. Ghrist is hereby designated a constructive trustee for the benefit of Mary A. Ghrist for the purpose of receiving the retirement awarded to Roy A. Ghrist, and Roy A. Ghrist is ORDERED and DECREED to pay the amount thereof awarded in this decree to Mary S. Ghrist within three days after receipt of same by Roy A. Ghrist.

It is further ORDERED and DECREED that, upon receipt thereof, Roy A. Ghrist shall deliver by negotiable instrument the allocated portion of each such retirement benefit payment to Mary S. Ghrist by mail to her home address within three days of receipt. All payments made directly to Mary S. Ghrist by the United States Government shall be a credit against this obligation.

The Court further finds at various times each year the United States Government furnishes a military retiree a Retired Pay Account Statement showing the gross amount of the retirement pay and the deductions being taken therefrom at the request of the military retiree. It is therefore ORDERED and DECREED that Roy A. Ghrist shall, if, as, and when received by him, deliver to Mary A. Ghrist a legible copy of each Retired Pay Account Statement received by him from the United States Government by mail to her home address within five (5) days from receipt of same until such Retired Pay Accounts Statements are sent directly to her by the United States Government.

(Emphasis in original).


DISSENTING OPINION

Ex parte Burson is indeed a pathmarking precedent on a state court's authority to enforce a divorce decree by requiring payment of VA disability benefits. See 615 S.W.2d 192 (Tex. 1981) (orig. proceeding). The majority erroneously concludes that this case is just like Burson and holds that the result must be the same. But the majority is mistaken in supposing that Burson controls the outcome here. In Burson the enforcement order at issue required the former service member to pay a portion of his VA disability pay to his former spouse. Such an order is impermissible under federal law. See 38 U.S.C. ?5301(a) (Supp. III 2003). In this case, we are presented with a divorce decree that, depending on its interpretation, may or may not necessitate an impermissible enforcement order. Thus, disposing of the case before ascertaining the appropriate interpretation of the decree is premature. For this reason, I would reverse the trial court's order and remand for further proceedings to ascertain the intent of the parties and to then determine whether the decree is enforceable. Accordingly, I respectfully dissent.

BACKGROUND

During the Ghrists' marriage, Roy served 18 years in the U.S. Air Force, retiring in 1975. Shortly after his retirement, it was determined that Roy was 40% disabled, making him eligible to receive disability pay, which is non-taxable. In 1976, while still married, Roy waived a portion of his military retirement pay as required by statute to receive VA disability pay. See 38 U.S.C. ?5305 (2000). He thereafter received two checks each month — one from the Air Force for his retirement pay and one from the VA for his disability pay. At some point later, but prior to the parties' divorce, Roy cancelled the waiver of military pay and thereafter received only one check each month from the Air Force that included both his military retirement pay and his disability pay.

There was a reference at the hearing on the petition for enforcement that Roy's disability rating had increased to 60%. The record does not, however, disclose the nature of Roy's disability.

When the Ghrists divorced in 1985, they executed an agreed divorce decree. The divorce became final, and neither party timely perfected an appeal. The relevant portion of the decree states that:

The Court finds that Roy A. Ghrist now receives a monthly retirement benefit of $ 772.00 gross and $ 625.00 disposable. The Court further finds that the community interest in the monthly retirement benefit is fifty percent (50%). The Court further finds that Respondent's [Mary] fifty percent (50%) community interest is now equal to a monthly retirement benefit of $ 327.38. The Court further finds that costs-of-living related increases are made to the present retirement periodically and, in all probability, those costs-of-living related increases will occur in the future.

. . . .

It is ORDERED and DECREED that Mary S. Ghrist shall have judgment against and recover from Roy A. Ghrist fifty percent (50%) of the present disposable and future military retirement received each month by Roy A. Ghrist computing said amount by deducting from his "gross",withholding only, to reach his "net". Any election of benefits by Roy A. Ghrist shall not reduce the amount or the percentage of the retirement awarded to Mary S. Ghrist.

(Emphasis in italics added.) The decree also designates Roy as a constructive trustee for Mary's benefit with respect to the retirement.

Shortly after the divorce, Mary began receiving payments directly from the Air Force of the 50% awarded to her. See 10 U.S.C. ?1408(d)(1) (2000) (providing for direct payment). Thereafter, Roy again waived a portion of his military retirement pay to receive VA disability pay. He therefore returned to receiving his disability pay from the VA and his retirement pay from the Air Force. The change reduced the amount he received from the Air Force, in turn reducing the amount that Mary received each month.

In 2003, approximately 15 years after Roy's post-divorce waiver of retirement pay, Mary filed a petition for enforcement of the divorce decree. The trial court denied the petition and made the following finding of fact:

Applying the formula for division of the military retirement contained in the Decree signed by this Court in 1985, it is apparent that Petitioner [Mary] has lost money and will continue to lose money each month which she would otherwise receive as her one-half interest in Respondent's [Roy] military retirement directly due to his post-divorce receipt of a portion of this retirement benefits in the form of disability payments from the Veteran's Administration rather than continuing to receive all of his retirement monies from the United States Air Force itself.

Despite finding that Mary's payment was reduced, the court concluded that enforcement of the decree as it relates to military disability benefits is barred by federal statute and federal and state case law. The court further concluded that Mary could not enforce a claim to recover the amount by which her payments had been reduced based on military retirement monies paid to Roy by the VA for his disability.

ANALYSIS

On appeal, Mary urges that the trial court erred in determining it could not enforce the agreed divorce decree. Relying on federal and state case law holding that federal statutes preempt state courts from awarding VA disability benefits, Roy counters that enforcement of the decree impermissibly penalizes him for electing to receive VA benefits. Mary also argues that, even if the decree improperly awarded VA disability benefits, Roy may not now collaterally attack the agreement because it has become a final, unappealed judgment.

The majority concludes that, because the Texas Supreme Court did not bar the collateral attack in Burson, Roy is not barred from collaterally attacking the agreed divorce decree in this case. I disagree, and begin with a discussion of federal preemption to supply the context for my conclusion.

Federal preemption of VA disability benefits

Both the United States Supreme Court and the Texas Supreme Court have held, using different rationales, that federal preemption of VA disability benefits prevents a trial court from dividing such benefits upon divorce as community property. See Mansell v. Mansell, 490 U.S. 581 (1989); Burson, 615 S.W.2d 192; Ex parte Johnson, 591 S.W.2d 453 (Tex. 1979) (orig. proceeding). The trial court concluded — as does the majority — that Mansell and Burson prohibited enforcement of the Ghrists' divorce decree as a matter of law.

In Mansell, the California Court of Appeal had rejected a retired service member's request to modify a divorce decree provision that awarded his former wife 50% of his total military retirement pay, including a portion he had waived to receive VA disability benefits. 490 U.S. at 586-87. The former service member argued that the Uniformed Services Former Spouses' Protection Act (USFSPA) precluded the trial court from treating his VA disability benefits as community property. Id. at 586. Congress enacted the USFSPA in direct response to the Supreme Court's earlier decision in McCarty v. McCarty, 453 U.S. 210 (1981), which determined that federal law preempted state courts from considering any military retirement benefits as community property. Mansell, 490 U.S. at 587-88.

The USFSPA explicitly permits state courts to treat "disposable retired pay" as community property. 10 U.S.C. ?1408(c)(1) (2000). "Disposable retired pay" is defined as "the total monthly retired pay to which a member is entitled" minus certain deductions, including amounts waived in order to receive compensation under title 38, which covers veterans' benefits. Id. ?1408(a)(4) (2000). The Supreme Court reasoned that, because pre-existing federal law, as construed in McCarty, had preempted application of state community property law to military retirement pay, only an affirmative grant of authority from Congress could restore the states' authority to treat military retirement pay as community property. Mansell, 490 U.S. at 588. The Court therefore interpreted the USFSPA as abrogating federal preemption only as to "disposable retired pay." Id. at 589. Thus, the USFSPA does not grant state courts the power to award any of the items deducted from gross retired pay such as VA disability benefits. See id. at 594-95.

In Burson, a retired service member, after his divorce, waived all of his Air Force disability retirement pay in exchange for VA disability benefits. 615 S.W.2d at 193. When he subsequently failed to make payments to his former wife, she commenced contempt proceedings to enforce their divorce decree, which had ordered him to pay her a portion of his Air Force disability retirement pay each month. Id. The trial court held him in contempt and committed him to jail. Id. The supreme court, in a habeas corpus proceeding, ordered that the service member be discharged, concluding that federal law preempted state courts from ordering payment of VA disability benefits. Id. In reaching this conclusion, the court relied on 38 U.S.C. ?3101(a), which has been redesignated without substantive change as 38 U.S.C. ?5301(a) and now reads in part:

Nonassignability and exempt status of benefits

Payments of benefits due or to become due under any law administered by the Secretary [of Veterans Affairs] shall not be assignable except to the extent specifically authorized by law, and such payments made to, or on account of, a beneficiary shall be exempt from taxation, shall be exempt from the claim of creditors, and shall not be liable to attachment, levy, or seizure by or under any legal or equitable process whatever, either before or after receipt by the beneficiary.

38 U.S.C. ?5301(a). The court held that VA benefits "are not divisible or assignable. They are not property." Burson, 615 S.W.2d at 194. The court further held that "a divorce decree cannot prohibit [the service member] from doing that which the federal law properly gave him the right to do." Id. at 196. In addition, the court stated that "[f]ederal preemption of veterans benefits for disability does not leave room for their defeat, either by implication or indirection." Id. Thus, a Texas court cannot expressly or impliedly prohibit a retired service member from unilaterally waiving some or all of his military retirement pay in exchange for VA disability benefits. Id.; Limbaugh v. Limbaugh, 71 S.W.3d 1, 17 (Tex.App.-Waco 2002, no pet.).

The Supreme Court observed in Mansell that, because it decided the USFSPA precluded treating VA disability benefits as community property, it need not address whether this nonassignability provision independently protects such pay. See Mansell v. Mansell, 490 U.S. 581, 587 n. 6 (1989).

In support of Roy's contention that federal law bars enforcement of the divorce decree, he cites Limbaugh, 71 S.W.3d at 17, and Freeman v. Freeman, 133 S.W.3d 277, 280 (Tex.App.-San Antonio 2003, no pet.), both of which held provisions related to VA disability benefits invalid. In Limbaugh, the Waco court held that a provision requiring the service member to make up the difference in payment amount if he elected to receive VA disability pay was invalid because it prohibited the service member "from doing that which the federal law properly gave him a right to do." 71 S.W.3d at 18 (quoting Burson, 615 S.W.2d at 196). In Freeman, the San Antonio court held that a provision preventing the service member from electing to receive VA disability benefits was invalid for the same reason. 133 S.W.3d at 280 (citing Burson, 615 S.W.2d at 196; Limbaugh, 71 S.W.3d at 17). Both Limbaugh and Freeman, however, involved direct appeals of divorce decrees, whereas the case before us involves a collateral attack on a final, unappealed divorce decree; thus, neither case is controlling here.

Limbaugh and Freeman are further distinguishable because they involved language included in the divorce decree by the court and not by agreement of the parties. Ordinarily, parties may place in an agreed divorce decree provisions that could not have been ordered by the trial court if it had divided the property, and the judgment agreed to by the parties is binding on them. Baxter v. Ruddle, 794 S.W.2d 761, 763 (Tex. 1990) (agreement awarded portion of gross military retirement pay including post-divorce increases); Boyett v. Boyett, 799 S.W.2d 360, 363 (Tex.App.-Houston [14th Dist.] 1990, no writ) (agreement awarded portion of husband's separate property to wife); Traylor v. Traylor, 789 S.W.2d 701, 702-03 (Tex.App.-Texarkana 1990, no pet.) (agreement required husband to maintain medical insurance on wife); see also Francis v. Francis, 412 S.W.2d 29, 33 (Tex. 1967) (even before family code provided for limited awards of spousal maintenance, parties' contract for spousal support payments did not violate public policy against court-ordered alimony).

Collateral attack

As with other final, unappealed judgments which are regular upon their face, divorce judgments are not vulnerable to collateral attack. Berry v. Berry, 786 S.W.2d 672, 673 (Tex. 1990). Only a void judgment may be collaterally attacked. Browning v. Placke, 698 S.W.2d 362, 363 (Tex. 1985). A judgment is void only when the court rendering judgment "had no jurisdiction of the parties, no jurisdiction of the subject matter, no jurisdiction to enter the judgment, or no capacity to act as a court." Cook v. Cameron, 733 S.W.2d 137, 140 (Tex. 1987). All errors other than jurisdictional errors render the judgment merely voidable and must be attacked within prescribed time limits. Id.

Because Mansell recognizes preemption of state community property laws in the area of VA disability benefits under the USFSPA (10 U.S.C. ?1408) and Burson does so independently under 38 U.S.C. ?5301(a), the issue of collateral attack must be examined under both statutes.

1. The USFSPA

The field of domestic relations is generally a matter of state law, and when Congress passes general legislation, it rarely intends to displace state law in that particular area. Mansell, 490 U.S. at 587 (citing Rose v. Rose, 481 U.S. 619, 628 (1987) and Hisquierdo v. Hisquierdo, 439 U.S. 572, 581 (1979)). When state family law has come into conflict with a federal statute, the Supreme Court has limited review under the Supremacy Clause to a determination of whether Congress has "positively required by direct enactment" that state law be preempted. Hisquierdo, 439 U.S. at 581 (citing Wetmore v. Markoe, 196 U.S. 68, 77 (1904)). Before a state law governing domestic relations will be overridden, it must do "major damage" to "clear and substantial" federal interests. Id. (quoting United States v. Yazell, 382 U.S. 341, 352 (1966)).

Whether federal law preempts state community property laws is a different question from whether the USFSPA preempts the common law doctrine of res judicata. Trahan v. Trahan, 894 S.W.2d 113, 117 (Tex.App.-Austin 1995, writ denied), cert. denied, 517 U.S. 1155 (1996). In Mansell, the Supreme Court addressed the issue of federal preemption of state community property laws, but also observed that it had no jurisdiction to decide whether the doctrine of res judicata applied because that was a matter of state law. 490 U.S. at 586 n. 5.

The Texas Supreme Court has rejected collateral attacks on divorce decrees that violated the USFSPA by awarding more than "disposable retired pay." See, e.g., Baxter v. Ruddle, 794 S.W.2d 761, 762 (Tex. 1990) (decree awarded portion of gross military retirement pay); Berry, 786 S.W.2d at 673 (decree awarded portion of gross military disability retirement pay); Cook, 733 S.W.2d at 140 (decree awarded portion of gross military retirement pay). Each case involved a divorce decree that had become final prior to the USFSPA's 1981 effective date.

In Berry, the 1980 divorce decree ordered the service member to pay 25% of his gross military disability retirement pay to his former wife, which he failed to do. 786 S.W.2d at 673. Pursuant to an agreed order on contempt and enforcement motions, the trial court mandated payment; however, the service member then elected to receive his disability pay from the VA and reduced his payments to his former wife. Id. The wife filed a motion to enforce the prior order, but the trial court overruled the motion, and the court of appeals affirmed. Id. Even though the Berrys' divorce decree became final before the effective date of the USFSPA, the appellate court held that the USFSPA prevented state courts from treating military retirement pay that had been waived to receive VA disability benefits as property divisible on divorce. Id. The court reasoned that retroactive application of the USFSPA was required because Mansell permitted modification of a property settlement agreement that had become final. Id. The supreme court reversed and remanded the case to the trial court, observing that the Mansell decision turned on the California court's determination that it was appropriate under California law to reopen the final settlement order, and that Mansell does not require a similar result under Texas law. Id. at 673 (citing Mansell, 490 U.S. at 586 n. 5).

Because of Berry's procedural posture, the court addressed only the application of res judicata in the context of the USFSPA; it did not address enforcement, section 5301 of Title 38 of the U.S. Code, or Burson. See Berry v. Berry, 786 S.W.2d 672, 673 (Tex. 1990).

The divorce decree in Berry became final before the USFSPA's 1981 effective date, while the Ghrists' decree became final in 1985. Roy argues that Berry is distinguishable because the question the supreme court specifically addressed was whether the USFSPA applied retroactively to a divorce decree that was final before the USFSPA's enactment. See id. at 672. The language in Berry, however, is broader; the court states that "[b]ecause the final judgment is voidable as opposed to void, the rule of res judicata would apply." Id. at 673. In a similar case, the San Antonio court relied on Berry to prevent a collateral attack on a 1988 divorce decree. Jones v. Jones, 900 S.W.2d 786, 787 (Tex.App.-San Antonio 1995, writ denied); see also Baker v. Donovan, 199 S.W.3d 577, 580 (Tex.App.-Houston [1st Dist.] 2006, pet. denied) (op. on reh'g) (preventing collateral attack on 1987 decree). In Jones, a consent decree provided that the former wife was entitled to 25% of the "monthly amount that a retired Major with 20 years service will receive on the date [the service member] begins to receive his retirement." (Emphasis added.) After the divorce, the service member retired, received a 40% disability rating, and elected to receive disability in lieu of a portion of his retirement. Id. The trial court entered a judgment enforcing the decree in favor of the former wife. Id. The appellate court affirmed the judgment, holding that the retired service member could not collaterally attack the final, unappealed decree. Id. at 788. Based on Berry and Jones, I conclude that federal preemption under the USFSPA does not prevent a state court from enforcing a final, unappealed divorce decree awarding military retirement pay, even when there has been a post-divorce waiver of retirement pay in exchange for VA disability benefits.

2. Section 5301(a)

The Texas Supreme Court has also considered the issue of collateral attack in the context of 38 U.S.C. ?5301(a). In Burson, the supreme court allowed a collateral attack, but did not explicitly state that the judgment was void. 615 S.W.2d at 194. The court specifically addressed collateral attack, observing that an award of retirement pay cannot be collaterally attacked, but distinguishing VA benefits because federal preemption exists:

A district court, under our decisions, has the power to enforce a decree ordering a spouse to make payments out of the Air Force disability retirement pay. If there is no appeal from the divorce court's division of property, that decree may not be collaterally attacked.

The important fact which distinguishes this case from those cited above is that Burson, after the divorce decree, made an election to forego his Air Force disability benefits and to receive instead the disability benefits from the Veterans Administration. Veterans Administration benefits, unlike Air Force disability benefits, are not divisible or assignable. They are not property.

Military disability retirement pay and Veterans Administration benefits are established by different statutory schemes. The statutes control the property characterization of each and the fact of, or lack of, federal preemption of each.

Id. at 194-95 (citations and footnotes omitted).

The Burson case actually involved two judgments — the original divorce decree and the trial court's order enforcing the divorce decree. Id. at 193. The divorce decree awarded only a set amount from the service member's "Air Force disability check." Id. In the language quoted above, the court recognized that a district court could enforce a decree ordering payments out of Air Force disability retirement pay and that the decree would not be subject to collateral attack. Id. at 194. Because the Burson decree awarded only Air Force disability, it is clear that the judgment at issue was the trial court's order of enforcement. The supreme court stated that:

Burson argues that the district court cannot order him to pay over to [his former wife] any portion of the Veterans Administration disability benefits because the supremacy clause of the United States Constitution preempts this area from the purview of state courts. We agree. We, therefore, grant the writ of habeas corpus and order Burson discharged.

Id. at 193. An enforcement order that expressly requires payment of VA disability benefits, or that impliedly requires payment of such benefits because they are the only income or asset available to satisfy the order, would violate section 5301(a), which states that VA disability benefits "shall not be liable to attachment, levy, or seizure by or under any legal or equitable process whatever, either before or after receipt by the beneficiary." 38 U.S.C. ?5301(a). Such an order would be void because the court had no jurisdiction to enter the judgment, and therefore would be subject to collateral attack. See Cook, 733 S.W.2d at 140. This explains why the Burson court permitted the collateral attack.

The legislative history of this provision "recognizes two purposes: to 'avoid the possibility of the Veterans' Administration . . . being placed in the position of a collection agency' and to 'prevent the deprivation and depletion of the means of subsistence of veterans dependent upon these benefits as the main source of their income." Rose v. Rose, 481 U.S. 619, 630 (1987) (citing S. Rep. No. 94-1243, pp. 147-148 (1976)).
The Supreme Court has held that this statute does not prevent a court from using VA disability benefits to enforce a child support order because the statute's legislative history showed that the benefits "compensate for impaired earning capacity and are intended to 'provide reasonable and adequate compensation for veterans and their families.'" Id. In Rose, however, the court distinguished support obligations such as child support and alimony from divisions of property. Id. at 631-32 ("[I]n reaching what was clearly an alternative holding in Wissner [ v. Wissner, 338 U.S. 655 (1950)] that community property division of insurance proceeds would constitute a 'seizure' in violation of a provision against 'attachment, levy, or seizure,' the Court was careful to identify a possible exception for alimony and child support cases. The suggested basis for this exception was that family support obligations are deeply rooted moral responsibilities, while the community property concept is more akin to an amoral business relationship."); id. at 632 n. 6 ("We construed these amendments to 'expressly override' the anti-attachment provision for support claims, finding it 'logical to conclude that Congress . . . thought that a family's need for support could justify garnishment, even though it deflected other federal benefit programs from their intended goals, but that community property claims, which are not based on need, could not do so.'" (quoting Hisquierdo v. Hisquierdo, 439 U.S. 572, 587 (1979))).

Cases where collateral attacks have been sustained on the theory that the judgment is void because the court lacked jurisdiction to enter the particular judgment involve error that "is quite serious and strikes at the very power of the court to render the judgment." Austin Indep. Sch. Dist. v. Sierra Club, 495 S.W.2d 878, 882 (Tex. 1973). The mere fact that an action by a court is contrary to a statute, constitutional provision, or rule of civil or appellate procedure makes the judgment only voidable or erroneous, absent one of the "rare circumstances" that makes a judgment void. Mapco, Inc. v. Forrest, 795 S.W.2d 700, 703 (Tex. 1990). Section 5301(a), however, clearly evidences Congress's intent to strike at the very power of a court to render judgment, and therefore an order of enforcement awarding VA disability benefits is one of the rare circumstances where a particular judgment is void. Thus, as the supreme court in Burson recognized, section 5301(a) acts as a limit on a court's power to enforce even a final, unappealed divorce decree.

The Ghrists' situation is similar to that in Burson. As in Burson, the parties' divorce decree was enforceable when entered into, became final, and was not appealed. Also, as in Burson, there was a post-divorce waiver of military retirement pay in exchange for VA disability pay and an attempt to enforce the original decree. At this point, however, the two cases take divergent paths. In Burson, the trial court attempted to enforce the original decree by requiring the former service member to make payments from his VA disability pay. It was this method of enforcement that the supreme court held invalid. In this case, however, the trial court has not attempted to enforce the decree. As discussed below, the Ghrists' divorce decree, depending on its interpretation, may or may not necessitate an impermissible enforcement order. Without additional proceedings in the trial court, it is premature to conclude the Ghrists' decree is unenforceable.

In summary, under both the USFSPA and 38 U.S.C. ?5301(a), a court may enforce a final, unappealed divorce decree awarding military retirement pay even though there has been a waiver of retirement pay to receive VA disability benefits. However, the court's power to enforce the decree is limited by section 5301(a), and the court therefore may not expressly or impliedly require the payment of VA disability benefits. Having made this determination, the next step is to consider whether the Ghrists' divorce decree is capable of enforcement as written.

In Baker v. Donovan, the Houston court of appeals did not discuss section 5301; however, the enforcement order it upheld did not require the service member to pay any portion of his VA disability benefits. 199 S.W.3d 577 (Tex.App.-Houston [1st Dist.] 2006, pet. denied) (op. on reh'g). After the parties' divorce, the service member retired and began receiving $ 5000 per month, which included $ 1069 designated as VA disability pay. Id. at 578. On the former spouse's petition for enforcement and clarification of the parties' agreed divorce decree, the trial court ordered that the service member pay his former spouse $ 387.87 each month from his disposable military retirement pay. Id. at 578-79. On appeal, the service member argued that the trial court erred because it failed to take into account his VA disability pay and, thus, failed to reduce the retirement pay by the amount of disability. Id. at 579. The court disagreed, holding that the decree could not be collaterally attacked and that any modification of the decree could only be considered upon the timely filing of a motion to modify. Id. at 580.
Similarly, courts from other states have upheld final, unappealed divorce decrees agreed to by the parties where the agreements could be enforced without reference to VA disability benefits. See, e.g., Danielson v. Evans, 36 P.3d 749, 760-61 (Ariz.Ct.App. 2006) (contempt order enforcing agreed divorce decree did not violate federal law where court order did not require payment from VA disability pay and former service member failed to show that VA pay was his only source for making such payment); Abernethy v. Fishkin, 699 So. 2d 235, 240 (Fla. 1997) ("[W]hile federal law prohibits the division of disability benefits, it does not prohibit spouses from entering into a property settlement agreement that awards the non-military spouse a set portion of the military spouse's retirement pay. Nor does it preclude indemnification provisions ensuring such payments, so long as veterans' disability benefits are not the source of such payments."); In re Marriage of Nielsen, 792 N.E.2d 844, 849 (Ill.App.Ct. 2003) (trial court impermissibly enforced divorce decree by requiring payment from disability benefits; cause was remanded to determine if former service member was free to satisfy his obligation with assets other than his disability benefits); Scheidel v. Scheidel, 4 P.3d 670, 674 (N.M.Ct.App. 2000) ("[F]ederal law does not prohibit state courts from enforcing indemnity provisions which ensure the payment of a minimum sum to a non-military spouse as his or her share of a community pension, provided that veterans' disability benefits are not specified as the source of such payments.").

Interpretation and enforcement of the divorce decree

The Ghrists dispute the proper interpretation of their divorce decree. A marital property settlement agreement that is incorporated into a final divorce decree is treated as a contract, and its legal force and meaning are governed by the law of contracts. McGoodwin v. McGoodwin, 671 S.W.2d 880, 882 (Tex. 1984). In construing a contract, the primary concern of the court is to ascertain and give effect to the true intention of the parties as they expressed that intent in the instrument. Gulf Ins. Co. v. Burns Motors, Inc., 22 S.W.3d 417, 423 (Tex. 2000); Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983). Whether a contract is ambiguous is a question of law for the court to decide by looking at the contract as a whole in light of the circumstances present when the parties entered the contract. Coker, 650 S.W.2d at 394. Contract language is accorded its plain, grammatical meaning unless it definitely appears that the intention of the parties would thereby be defeated. Lyons v. Montgomery, 701 S.W.2d 641, 643 (Tex. 1985). If the written instrument's language can be given a certain or definite legal meaning or interpretation, then it is not ambiguous. Buys v. Buys, 924 S.W.2d 369, 372 (Tex. 1996) (citing Coker, 650 S.W.2d at 393). A contract is ambiguous when its meaning is uncertain and doubtful or it is reasonably susceptible to more than one meaning. Coker, 650 S.W.2d at 393.

The plain language of the Ghrists' agreed divorce decree does not explicitly award a portion of VA disability benefits. Instead, the agreement addresses the division of Roy's "retirement benefit." It awards Mary 50% of the retirement benefit and further provides that "[a]ny election of benefits" by Roy "shall not reduce the amount or percentage of the retirement awarded" to Mary. (Emphasis added.)

Roy argues that the agreement's use of the term "disposable" twice in discussing retirement indicates that Mary's award was limited to "disposable retired pay" as defined in the USFSPA, which omits amounts waived in order to receive VA disability benefits. See 10 U.S.C. ?1408(a)(4). The agreement, however, does not explicitly adopt the statutory definition. Furthermore, in awarding Mary 50% of the "present disposable and future military retirement," the agreement states that "said amount" is computed by "deducting from [Roy's] 'gross',withholding only, to reach his 'net'." The inclusion of this provision is inconsistent with an intent to adopt the statutory definition.

The first inquiry is whether the phrase "election of benefits" has a plain, grammatical meaning that is unambiguous and, if so, whether that meaning encompasses Roy's waiver of part of his military retirement pay. VA disability payments are commonly referred to as benefits. See, e.g., 38 U.S.C. ?5301; Mansell, 490 U.S. at 583. Title 38 of the U.S. Code, which addresses such payments, is titled "Veterans' Benefits." An "election" is defined as "[t]he exercise of choice; esp., the act of choosing from several possible rights or remedies in a way that precludes the use of other rights or remedies." Black's Law Dictionary 536 (7th ed. 1999). Because it was determined that Roy was disabled, he had the option of waiving retirement pay to receive VA disability pay, and he chose to exercise that option. Burson also characterizes this choice as an election. 615 S.W.2d at 196 ("[F]ederal law empowered Burson to make an election."). Thus, the phrase "election of benefits" has a plain, grammatical meaning and includes Roy's waiver of retirement pay to receive VA disability benefits. This interpretation is reinforced by looking at the circumstances present when the parties entered the contract, see Coker, 650 S.W.2d at 394, namely that during the marriage Roy had initially waived retirement pay to receive VA disability benefits, making it likely that both parties were aware of the possibility and effect of such an option. It is clear therefore that the plain language of the decree encompassed a potential future waiver of VA benefits by Roy.

What is unclear, however, is what the parties contemplated would be the effect of a waiver of retirement pay. The decree states that any election of benefits "shall not reduce the amount or percentage of the retirement awarded." At the hearing on the motion to enter and the motion to reconsider, there was no testimony addressing the parties' intent as to that provision. The language can be interpreted as allowing Roy to make certain elections of benefits, but not any election that would reduce the amount of retirement. If interpreted in this way, even though included in a final, unappealed judgment, such a provision could not be enforced because it requires a court to prevent Roy from "doing that which the federal law properly gave him a right to do." See Burson, 615 S.W.2d at 196. However, the language also can be interpreted as a voluntary commitment by Roy to provide a continuous stream of income to Mary by allowing for alternative payments if his retirement benefits are reduced by his election. If this is what the parties intended, then a court could enforce their agreement to the extent income or assets exist apart from VA disability benefits to satisfy the judgment. Without testimony regarding the parties' intent, the decree could be subject to either of these interpretations and perhaps others. Because the decree is reasonably susceptible to more than one meaning, it is ambiguous. See Coker, 650 S.W.2d at 393.

A court may render further orders to enforce the division of property made in a divorce decree to assist in the implementation of or to clarify the prior order; however, the court may not amend, modify, alter or change the division of property made in the divorce decree. Tex. Fam. Code Ann. §§ 9.006(a), .007(a) (West 2006). In Mary's petition for enforcement, she requested that, "if the Court finds that any part of the order sought to be enforced is not specific enough to be enforced by contempt, the Court enter a clarifying order restating the terms of the order, decree, or judgment in a manner specific enough to allow enforcement by contempt." Because the Ghrists' agreed divorce decree is ambiguous, the trial court must ascertain the parties' intent before it may determine the extent to which the award of retirement benefits is enforceable.

A Houston court of appeals has held that, when the parties did not address VA disability benefits in the decree, it would be an impermissible modification of the original decree for the court to take the benefits into account during a clarification. Baker v. Donovan, 199 S.W.3d 577, 580 (Tex.App.-Houston [1st Dist.] 2006, pet. denied) (op. on reh'g).

CONCLUSION

The parties' divorce decree is ambiguous and subject to both enforceable and unenforceable interpretations. As such, it is premature to conclude that enforcement of the decree would require an impermissible order. Because the trial court determined that as a matter of law it could not enforce the Ghrists' divorce decree, the court did not ascertain the parties' intent regarding the effect of the "election of benefits" provision in the decree. I would therefore reverse the trial court's order and remand this case to the trial court to make such a finding. I respectfully dissent.


Summaries of

Ghrist v. Ghrist

Court of Appeals of Texas, Third District, Austin
May 11, 2007
No. 03-05-00769-CV (Tex. App. May. 11, 2007)

holding res judicata did not bar ex-husband from raising defense that federal law preempts and bars enforcement of provision that prohibited ex-husband from waiving military retirement to obtain VA disability benefits

Summary of this case from Jackson v. Jackson
Case details for

Ghrist v. Ghrist

Case Details

Full title:Mary Ghrist, Appellant v. Roy Ghrist, Appellee

Court:Court of Appeals of Texas, Third District, Austin

Date published: May 11, 2007

Citations

No. 03-05-00769-CV (Tex. App. May. 11, 2007)

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