Published: Opinion Affirming in Part, Reversing in Part and Remanding
This opinion addresses the combined appeal and cross-appeal from Shelby Family Court orders modifying the division of Richard’s military retired pay between Richard and his former spouse, Kathy.
There are three issues. First, did the family court abuse its discretion in utilizing CR 60.02(f) to reopen the order dividing the parties’ marital property? Second, did the family court abuse its discretion in modifying the language in a previous order concerning division of Richard’s military retired pay? Third, did the family court abuse its discretion by granting Kathy’s CR 59.05 motion by adding language to the order which designated Richard’s disability benefits as marital property and then dividing it between the parties? As to the first two questions, the Court of Appeals found no abuse of discretion, but found that the family court did abuse its discretion as to the last issue.
On June 18, 1997, the family court entered a limited decree dissolving the parties’ twenty-five year marriage, reserving judgment on property issues, which were referred to the Shelby County Domestic Relations Commissioner. The DRC submitted Findings of Fact, Conclusions of Law and Recommendations on May 21, 1998.
Richard earned the right to military retired pay based on thirty years of service and the DRC found that 21 years and 9 months of service accumulated during the marriage and was marital property to be divided equally between the parties. Both parties filed exceptions, which the family court overruled on September 28, 1999. Thereafter, the court conducted a hearing on supplemental exceptions. On November 6, 2000, the court entered an order resolving all outstanding issues including a provision that Kathy receive 50% of Richard’s pension.
Kathy submitted Form 2293 to the Defense Financial & Accounting Service (DFAS), an “Application for Former Spousal Payment of Retired Pay” requesting 50% of Richard’s disposable retired pay per month. Kathy’s completion of the form as she did disregarded the distinction between marital and nonmarital portions of Richard’s military retired pay. As a result, she received 50% of the retired pay Richard earned while not married to Kathy, a benefit to which she was not entitled.
At retirement, Richard was entitled to $4400.00 per month, so based on the form Kathy submitted, they each began to receive $2200.00. Richard sought military disability benefits and the VA determined he was 40% disabled and entitled to receive $568.00 per month. Federal regulations require offset of military retired benefits by disability benefits so Richard’s non-disability military retired pay was reduced from $4400.00 to $3832.00, divided equally between Kathy and Richard.
In July, 1970 Richard filed a motion requesting family court to direct that Kathy only receive 50% of the portion of his disposable military retired pay attributable to the marriage, and on November 17, 2008 the family court so ordered. On November 26, 2008 Kathy filed a motion pursuant to CR 59.05 to alter, amend, or vacate the November 17, 2008 order on the grounds that the family court improperly modified the 1999 Property Order with respect to division of Richard’s military retired pay. She also filed a motion requesting a new trial under CR 59.01 and a motion for additional findings under CR 52.02. Her CR 59 motion asked the family court to amend its November 17, 2008 order to require DFAS to take Richard’s disability income into account when dividing his military retired pay.
An abuse of discretion standard of review is applied to a family court’s rulings on CR 59.05 and CR 60.02 motions. The test for abuse of discretion is whether the judge’s decision was arbitrary, unreasonable, unfair, or unsupported by sound legal principles.
Although the family court did not specify under which rule it was modifying the 1999 Property Order, the Court of Appeals treated Richard’s motion and the family court’s corresponding order as brought pursuant to CR 60.02. Because information provided to DFAS was incomplete, DFAS paid Kathy a greater proportion of Richard’s military retired pay than that to which she was entitled. The Court of Appeals found that DFAS’s misinterpretation of the 1999 Property Order was a sufficient basis for granting CR 60.02(f) relief to allow the family court to adjust the order’s language to meet DFAS ‘s specific requirements. The Court of Appeals also found no abuse of discretion when the family court modified the language of the 1999 Property Order pursuant to CR 60.02(f).
The Court of Appeals next considered the family court’s granting Kathy’s CR 59.05 motion and adding language directing DFAS to take into account Richard’s disability pay when dividing his military retired pay. Because a retiree’s disposable retired pay is lower when he receives disability payments, the retiree’s former spouse’s portion of the retiree’s retired pay is also reduced. The Court of Appeals acknowledged the potential inequities which may result when a retiree elects to receive disability payments, but noted that both federal and state law prohibits treatment of a retiree’s disability payments as marital property. The family court’s order erroneously converted Richard’s disability benefits from nonmarital property into marital property in violation of federal law. Further, the Court of Appeals stated that while a CR 59.05 motion may be used to challenge a CR 60.02(f) order, it may not be used to collaterally attack the original judgment.
The Shelby Family Court did not abuse its discretion in reopening and modifying the 1999 Property Order pursuant to CR 60.02(f) but it did abuse its discretion by requiring DFAS to consider Richard’s disability payments in dividing his military retired pay. Accordingly this matter was affirmed in part, reversed in part, and remanded for additional proceedings consistent with this opinion.