Sunday, October 2, 2005

Case Law Developments: Interpreting Contractual Division of Pensions Leaves No Room for Correcting Unjust Divisions

The division of pensions is often one of the most difficult areas of property division for students, and students rarely fully appreciate the difference between property division that is the result of agreement rather than that determined by the court. This case from the Ohio Court of Appeals may be helpful simply because it so clearly shows both the effect of differing valuation methods and the limited role of the court in changing decrees incorporating agreements.

The division method the couple arrived at gave wife one-half the pension benefit accrued as of the date of the divorce.  Wife would have received nearly four times more each month if, rather than placing a value on the pension as of the date of the divorce, the couple had used the Ohio court’s suggested formula – that is, the value of the pension benefit to be divided is determined at retirement by calculating the relative percentage of the pension earned during the marriage.  Nonetheless, because her motion only asked the court to interpret the decree, the court could not change the agreement the parties had made where it was clear.

Jackson v. Hendrickson, 2005 Ohio 5231; 2005 Ohio App. LEXIS 4734 (September 30, 2005)
Opinion on the web at http://www.sconet.state.oh.us/rod/newpdf/2/2005/2005-ohio-5231.pdf (last visited October 2, 2005 bgf)

What makes this opinion especially useful is the dramatic difference four years make in the value of a pension, as well as the court's obvious distress at being unable to do more to correct the injustice of the outcome...

he couple were divorced in 1992. The decree stated, “Wife hereby is awarded one-half of any monthly benefit accrued to Husband in said Retirement Plan through [date of divorce].” Husband retired in 2002 and began receiving pension payments.  He paid Wife ½ the amount of the pension he would have been entitled to had he retired in 1992 ($276.50).  Wife filed a motion asking the court to interpret its decree, arguing that she was entitled to one-half the pension value at the time of Husband's retirement, with allowance being made for the years the pension accrued after the divorce.  Under this scenario, Wife would be paid about $ 1,168 per month.

The appellate court affirmed the trial court’s finding that there was no ambiguity in the couple’s agreement, incorporated into the decree.  The Supreme court of Ohio had previously suggested that in dividing vested pensions that were not yet mature, “The value of this asset would be determined by computing the ratio of the number of years of employment of the employed spouse during the marriage to the total years of his or her employment."  However, the court noted that this formula does not apply if the parties agree on a different calculation and include it in the divorce decree. Wife tried to distinguish these cases by noting that the agreement she made was “a "spur-of-the-moment" hallway settlement that is read into the record and later incorporated into a divorce decree.”  The Court of Appeals rejected her argument, concluding that “the methods of reaching or transcribing agreements are generally irrelevant.”

Judge Grade, concurring, commented that “This is a difficult case, because an injustice has clearly been done.”  He nonetheless noted that there was little recourse for Wife when she had simply asked the court to construe the terms of the 1992 divorce decree which she alleged are ambiguous.  Nonetheless, he suggests to Wife that the order was an “unjust division” and that wife was “shortchanged” such that a motion to “vacate that portion of the divorce decree is therefore in order.”

http://lawprofessors.typepad.com/family_law/2005/10/case_law_develo_1.html

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