Friday, September 19, 2014

Trial Court, Fire Up Your Calculator

Meyncke v. Meyncke, 2013 VT 82

By Elizabeth Kruska

There’s kind of a whole lot going on in this case. Husband and Wife got divorced in 2007. The Court split the property evenly, including Husband’s 401(k). The Court also ordered that Husband pay Wife $6390 per month for 13 years. That’s a million dollars. If I had a million dollars I’d buy you a fur coat. (But not a real fur coat. That’s cruel.)

The thing about 401(k)s is that you can’t just break them in half, like a cookie. There are potential tax problems, so if they’re not divided appropriately, someone could get really jammed up with a tax problem. If parties are going to split up retirement accounts in a divorce, they have to file what’s called a qualified domestic relations order (QDRO, pronounced “quadro”).

The divorce order was final on October 26, 2007, and in the order the court required Husband to file a QDRO. As of November 9, 2007 (10 days under the rule for computation of time), husband hadn’t filed that yet. Wife, on the other hand, filed a motion to alter or amend the final order. That order kicked around the court for a while, and on December 28, the judge ordered the parties to get together and make a QDRO. The motion was denied on January 25.

Well, they didn’t do that. January 15, 2008, Wife filed her own QDRO. Husband didn’t object to it, but asked that a debt incurred as a result of a loan taken against the 401(k) be included in the calculation. The court scheduled a hearing on this for March 11. Between January and March, though, Wife filed an appeal to the SCOV. This created a problem: the file was gone (from trial court to SCOV) and it made it so there was a stay to the divorce order. Although Wife filed a motion to get the stay lifted so she could sell the marital house, neither of them got the stay lifted to file the QDRO.

Husband lost his job in late 2007, and his 401(k) took a huge tumble in value. He did get a new job in April 2008. Because he wasn’t working, he couldn’t pay maintenance, and moved to amend the maintenance award. The court denied that in October 2008. Wife filed to have him held in contempt, which the court granted. Husband didn’t pay up as ordered, so the court did a wage-withholding order. Then Wife moved to have him held in contempt again, which the court ultimately granted in August 2010, and ordered him to pay just over $100,000 to purge the contempt. Husband had moved to Missouri, so Wife registered the judgment there in May 2011.

Wife filed a motion in May 2012 to enforce the August 2010 order, and to ask Husband to do the QDRO (you know, the one ordered 5 years before) giving her half of the retirement accounts as valued at the date of the original final order. Husband paid $138,729 to Wife in July 2012 for back maintenance, and signed a settlement release. Wife agreed the August 2010 order was “resolved and settled.”

The court then orders in October 2012now five years after the original final orderthat the QDRO should divide the accounts equally subject to appreciation or depreciation between the time of the order and distribution. The court also ordered more maintenance arrears and interest and, for good measure, $5000 in attorney fees.

Wife appeals five issues: (1) that the QDRO should have divided the retirement accounts with the value as of the date of the final order; (2) that there should’ve been an evidentiary hearing to determine the right amounts, not just to let Husband do it; (3) that prior payments were credited toward current maintenance arrears instead of prior maintenance interest arrears; (4) that there was a $1893 prior maintenance payment credited against maintenance; (5) that her child support arrears could be offset against his maintenance arrears.

Husband counters by saying he paid what he was supposed to pay; the July 2012 settlement was full and final so it should have vacated the August 2010 order, and that they each agreed they’d pay their own legal fees.

SCOV disposes of the evidentiary hearing issue. Wife didn’t ask for one in her May 2012 filing, so the court didn’t have one.

As for the QDRO, the court decides Wife gets half. Not half at the time of the order, just half. If the Court had meant for it to be half as of the time of the final order, the Court would have ordered that. Although there was some discussion about it on the record during the 2007 hearing, the first time Wife ever raises the issue is before SCOV in this appeal. SCOV reads the 2007 discussion as about being about what the parties wanted to do with the accounts, not how they’d be valued.

Eighteen paragraphs into the opinion, the SCOV tells us that the bottom line is that Wife gets half, not a sum certain. Since the order is ambiguous and doesn’t say who should bear the appreciation or depreciation, and there have been lots of delays, it just gets divided in half.

Then SCOV nicely suggests the trial court give the parties “firm deadlines” for filing the QDRO. One gets the sense that SCOV’s patience for this case is, perhaps, a little thin.

But wait! There’s more! Now we get to talk about maintenance. I like to call this section, “So Much Arithmetic.” I’m skipping a lot of that and getting to the meaty part of the matter.

There’s a long history to the maintenance award. The court ordered the $6390 per month payment along with a 2% cost of living adjustment every year in November. Husband was always in arrears. In 2012 he paid Wife the $138,729, and called it a final settlement, which Wife also agreed to. SCOV says the August 2010 judgment didn’t tell Husband what to do in the future; it just determined how much he owed up to that point.

Then there was a mathematical error having to do with the cost of living adjustment. SCOV says this needs to go back to the trial court to hash out what part of Husband’s 2012 payment was actually an overpayment and where that should get credited.

The Court also says that there was the July 2012 settlement that resolved the August 2010 order. That took care of the issue through that point, but didn’t say anything about the future. Husband is still on the hook for maintenance and arrearages from August 2010 forward. Although, the mathematical error mentioned above might have an impact on this calculation, too, so the trial court is going to have to figure that out.

Husband had also paid some other maintenance payments and also a $1893 payment somewhere along the way. SCOV also asks the trial court to hash out where those payments should be credited.

SCOV then tackles the question of attorney fees. In the July 2012 settlement, the parties agreed to bear their own fees. But, the trial court awarded Wife $5000, which Husband argues is wrong, since the parties agreed in their July 2012 stipulation that each bore their own costs. SCOV says the trial court wasn’t wrong, because the July 2012 stipulation was about the August 2010 order only, and not about other attorney fees in the grand scheme of the case. But, they send this back to the trial court, also.

Finally, apparently Husband had custody of the child or children, and Wife was to have been paying child support to him (this isn’t totally clear). Husband asked for a child support offset against his maintenance arrears, and Wife didn’t agree. SCOV says the trial court can also hash this out. The child is an adult now, so the child support obligation had elapsed, and Wife was to pay directly to Husband, not to the State. SCOV doesn’t see any reason the trial court can’t add this calculation into the mix.

To sum up: there needs to be a QDRO dividing the retirement accounts in half, and the parties equally share the depreciation. The July 2012 settlement resolved the maintenance issue only up to August 2010, and beyond that Husband still has to pay, including Wife’s post-2010 attorney fees. There’s a remand to the trial court to hash out all the calculations regarding the cost of living adjustments, interest, the $1893 payment, and the child support offset.

So, hopefully the trial court has a fresh battery in the ol’ calculator, because a there’s going to be a whole lot of calculating going on.

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