Supreme Court: Veteran Can’t Be Forced To Indemnify Ex-Spouse When Electing Benefits
A retired Air Force Veteran’s divorce decree awarded his ex-wife 50 percent of the veteran’s future Air Force retirement pay, but thirteen years after the divorce, the veteran was found partially disabled due to an earlier service-related injury, and elected to give up an equal amount ($250 monthly) of retirement pay in order to receive disability pay – thereby reducing the value of his ex-wife’s 50 percent share by 50 percent of $250.
An Arizona family court held that the veteran’s ex-wife was entitled to the pre-waiver amount and ordered the veteran to ensure she received the full 50 percent without regard for the disability election. The Arizona Supreme Court affirmed, finding that the federal law requiring the veteran to make an election of benefits payments did not pre-empt the family court’s order. On May 15, 2017, the United States Supreme Court (noting that it granted certiorari because different state courts had come to different conclusions on the matter) reversed the decision of the Arizona court, and held that a state court “may not order a veteran to indemnify a divorced spouse for the loss in the divorced spouse’s portion of the veteran’s retirement pay caused by the veteran’s waiver of retirement pay to receive service-related disability benefits.”
In reaching its unanimous decision to reverse the Arizona court’s holding, the United States Supreme Court recited the history of judicial precedent and Congressional legislation addressing the issue of whether a veteran’s retirement pay could be considered community property (and therefore divisible between spouses) in a divorce proceeding or divorce decree. After the Court ruled in 1981 that states could not consider any of a veteran’s retirement pay to be a form of community property in McCarty v. McCarty, 453 U.S. 210, 211-215 (1981), Congress passed the Uniformed Services Former Spouses’ Protection Act, 10 U.S.C. § 1408 (“Act”), which states that a State may treat veterans’ “disposable retired pay” as divisible between spouses upon divorce. But as the Court noted in its decision in this case, 10 U.S.C. § 1408(a)(4)(A)(ii) “expressly excluded from its definition of ‘disposable retired pay’ amounts deducted from that pay ‘as a result of a waiver…required by law in order to receive’ disability benefits.”
That new language, the Court observed, was interpreted in Mansell v. Mansell, 490 U.S. 581 (1989). In Mansell, a veteran divorced, and entered into a settlement with his ex-spouse which provided that the veteran would pay 50 percent of his total military retirement pay, including the portion he waived to receive disability benefits. When the divorce decree issued, it incorporated this term. The veteran later moved to modify the decree to omit the portion of the retirement pay from divisibility that he had waived to receive disability benefits, but the California courts refused to do so before the Supreme Court reversed, holding that “federal law forbade” California from “treating the waived portion as community property divisible at divorce.” In Mansell, Justice Thurgood Marshall wrote that federal law “completely pre-empted the application of state community property law to military retirement pay,” and observed that Congress could neutralize that pre-emption by “enacting an affirmative grant of authority giving the States the power to treat military retirement pay as community property.” The Act had done this, the Court observed, but only “to a limited extent” that excluded the “disability-related waived portion of military retirement pay.”
The Court was not convinced by the Arizona Supreme Court distinguishing Mansell on the basis that the waiver had occurred many years after the divorce proceedings, rather than prior to the divorce proceedings in Mansell. The Court stated that “the temporal difference highlights only that [the veteran’s] military retirement pay at the time it came to [the ex-spouse] was subject to later reduction (should [the veteran exercise a waiver to receive disability benefits to which he is entitled).” According to the Court, the “existence of that contingency meant that the value of [the ex-spouse’s] share of military retirement pay was possibly worth less – perhaps less than [the ex-spouse] and others thought – at the time of the divorce.” The Court compared this phenomenon with an ownership interest in property being worth less if it is subject to defeasance or termination upon the occurrence of a later event.
The Court also dismissed the argument made by the ex-spouse and the state Solicitor General that the State could avoid the Mansell precedent by describing the family court order as an order requiring a veteran to “reimburse” or to “indemnify” an ex-spouse, rather than an order requiring a veteran to divide property, describing the difference as “semantic and nothing more.”
For the above stated reasons, the United States Supreme Court reversed the judgment of the Supreme Court of Arizona, and remanded the case for further proceedings.
Read the full case: Howell v. Howell
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