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HomeMy WebLinkAbout99-6426 CivilBEVERLY E. CHARRON, Plaintiff Vo LEO D. CHARRON, Defendant · IN THE COURT OF COMMON PLEAS OF · CUMBERLAND COUNTY, PENNSYLVANIA · CIVIL ACTION - LAW · No. 99-6426 CIVIL TERM · IN DIVORCE IN RE: DEFENDANT'S MOTION FOR DECLARATORY JUDGMENT BEFORE HOFFER, P.J., OLER and HESS, JJ. ORDER OF COURT AND NOW, this 18th day of May, 2001, upon consideration of Defendant's motion for declaratory judgment and the briefs submitted, and for the reasons stated in the accompanying opinion, Defendant's motion is granted, and the IRA accounts at issue are declared not subject to equitable distribution. BY THE COURT, J~Vestey O[~r~r., Samuel L. Andes, Esq. 525 North Twelfth Street Lemoyne, PA 17043 Attorney for Plaintiff LeRoy Smigel, Esq. 2917 North Front Street Harrisburg, PA 17110-1223 Attorney for Defendant BEVERLY E. CHARRON, Plaintiff Vo LEO D. CHARRON, Defendant : IN THE COURT OF COMMON PLEAS OF : CUMBERLAND COUNTY, PENNSYLVANIA : : CIVIL ACTION - LAW : :No. 99-6426 CIVIL TERM : IN DIVORCE IN RE: DEFENDANT'S MOTION FOR DECLARATORY JUDGMENT BEFORE HOFFER, P.J., OLER and HESS, JJ. OPINION and ORDER OF COURT This divorce action was commenced in 1999. For disposition at this time is a motion of Defendant for a declaratory judgment with respect to the effect of a certain antenuptial agreement. STATEMENT OF FACTS On January 5, 1984, in contemplation of their marriage, the parties entered into an antenuptial agreement, which provided for the property rights of each party in the event of divorce,l The agreement contained a choice-of-law provision, and the parties elected the application of Maryland law in the event of a dispute.2 Paragraph three of the agreement provided that In the event of a divorce each of the parties hereby disclaims and relinquishes all right, title and interest in any and all retirement benefits, pensions, and/or annuities of whatsoever nature, including, but not limited to Federal, Military and/or VA retirement benefits, that the other is currently entitled, or may become entitled to receive.3 ~ Defendant's Motion for Declaratory Judgment, Exhibit A, filed February 9, 2001; Plaintiff's Answer to Motion for Declaratory Judgment, filed March 21,2001. 2 Defendant's Motion for Declaratory Judgment, Exhibit A. 3Id. In October of 1999, Plaintiff filed a complaint in divorce requesting, inter alia, equitable distribution of marital property.4 In February of 2001, Defendant filed a motion for a declaratory judgment, requesting that this court declare the rights and status of the parties with regard to equitable distribution.5 At issue on the motion are several individual retirement accounts (IRAs), owned by Defendant, which include funds transferred from Defendant's 401(k) accounts with prior employers.6 The accounts include a Member's First IRA, a USAA IRA, and an American Express IRA.7 Also at issue are several retirement accounts owned by Plaintiff, including a Member's First IRA, a Copeland account, and T. Rowe Price Trust Company accounts.8 Defendant asserts that the accounts are excluded from equitable distribution based on paragraph three of the agreement.9 Plaintiff, on the other hand, asserts that the accounts are not excluded from equitable distribution,l° In support of her argument, Plaintiff contends that the accounts should not be excluded because the language of the agreement lacks the specificity required by Falise v. Falise~ to 4 Complaint in Divorce, filed October 21, 1999. 5 See Defendant's Motion for Declaratory Judgment. 6 Id., paras. 11-12. 7/d., para. 11. aid. 9 See Defendant's Motion for Declaratory Judgment. ~o See Plaintiff's Answer to Motion for Declaratory Judgment. ~ 493 A.2d 385 (Md. Ct. Spec. App. 1985). 2 exclude property from the scope of the Maryland Property Act,~2 or alternatively because the express language of the agreement does not include IRAs.13 Briefs on Defendant's motion were submitted by counsel, and oral argument was held on March 28, 2001. At the argument, neither counsel challenged the validity of the antenuptial agreement, and both agreed that the language of the agreement should be interpreted by the court without development of a parol evidence record. The issues to be decided are 1) whether the language of paragraph three of the parties' antenuptial agreement contains the degree of specificity required by Falise to exclude property from the Marital Property Act, and 2) if so, whether the express language of the agreement includes IRAs. DISCUSSION Marital property defined. Section 8-201 (e)(1) of the Maryland Family Law Code defines marital property as "the property, however titled, acquired by 1 or both parties during the marriage.''~4 Subsection (e)(3)(iii), however, provides that marital property does not include any property "excluded by valid agreement." Specificity of the agreement. The Maryland Court of Special Appeals has held that, to exclude property "by valid agreement" under subsection (e)(3)(iii), the parties must "specifically provide that the subject property must be considered 'non marital' or in some other terms specifically exclude the property from the scope of the Marital Property Act." Falise v. Falise, 493 A.2d 385, 389 (Md. Ct. Spec. App. 1985) (emphasis added). In Falise, the parties entered into a separation agreement whereby they relinquished "all rights, title, interest and ~2 See Plaintiff's Brief To Oppose Defendant's Motion for Declaratory Judgment, dated March 21, 2001. ~3 Plaintiff's Answer to Motion for Declaratory Judgment, para. 13. 14 Md. Code Ann., Fam. Law § 8-201 (2001). claims which said 'parties might now have or may hereafter have ... in and to any property, real or personal, that either of said parties may own or hereafter acquire .... "Id. at 388. The Court of Special Appeals declined to give effect to the agreement stating, "We doubt that the subject agreement could affect the status of something which is neither an interest in real or personal property, i.e., marital property." Id. The court also reasoned that the parties could not release a right that they did not have and could not have reasonably anticipated at the time of the agreement. Id. at 389. Following its holding in Falise, the Court of Special Appeals declined to give effect to an alleged oral settlement agreement that basically provided that "what is hers is hers and what is mine is mine." Golden v. Golden, 695 A.2d 1231, 1237 (Md. Ct. Spec. App.), cert. denied, 702 A.2d 290 (Md. 1997). The Court of Special Appeals stated that such an agreement, "no matter how often repeated, could [n]ever contain the degree of specificity required by Falise .... "Id. at 1237. In Herget v. Herget, 573 A.2d 798 (Md. 1990), however, the Court of Appeals declined to expand the holding of the Court of Special Appeals in Falise. In Herget, the parties entered into a very general antenuptial agreement.~5 The The agreement provided that the parties: waive, relinquish and bar ... all ... rights and interests which [they] ... may become entitled to, except as in this Agreement provided, with respect to any property, real or personal, now owned or hereafter acquired by the other party. Paragraph two and three of the agreement provided that the parties: release[d] and surrender[d] any and all claims [they] may have, now, or at the time of any termination of the proposed marriage between the parties ... in any estate or property of [the other party] now owned or hereafter acquired by [them] ... and all other rights and interests of every kind therein that shall arise out of the relation of the parties .... Finally, paragraph four provided that the parties: waive[d] and release[d] unto the other party ... all of [their] respective rights, interests and claims in and to said property of the other, to the end that neither of the parties shall obtain any right or interest to or in any property of the other by virtue of their marriage .... Id. at 799. 4 Court of Appeals, in giving effect to the general language contained in the agreement, stated, "We reject the notion that the parties in the case before us were incapable of releasing a right that did not then exist. We also reject the argument that general language cannot effect a full release of a specific right, even a right that is unknown at the time the agreement is drawn" Id. at 473. Plaintiff relies on Falise and its progeny to support her contention that paragraph three of the agreement sub judice lacks the requisite specificity to exclude property from the Marital Property Act. However, this court is of the opinion that the language contained in paragraph three of the agreement contained the degree of specificity required by Maryland law. The language contained in paragraph three, which includes "retirement benefits, pensions, and/or annuities," is clearly specific enough under the decision of the Court of Appeals in Herget. The language contained in the Herget agreement, which the court gave effect to, was remarkably general in comparison to the specific language of paragraph three of the agreement of the parties herein. Furthermore, the court is of the opinion that the language of paragraph three also contained the degree of specificity required by the decision of the Court of Special Appeals in Falise. Both Falise and Golden are distinguishable from this case in that the agreements under consideration therein were extremely general, waiving the parties' rights to any and all present and future property, whereas the parties in the present case specifically provided that paragraph three applied only to "retirement benefits, pensions, and/or annuities." Golden can be further distinguished on the ground that the alleged understanding at issue had not been defined by a writing, whereas here the parties entered into a valid written contract. Consequently, the court is of the view that paragraph three was sufficient to "specifically exclude the property [i.e. retirement benefits, pensions, and/or annuities] from the scope of the Marital Property Act" under Falise and its progeny. Scope of the agreement. Because the language of the agreement has been found to contain the degree of specificity required to exclude property from Maryland's Marital Property Act, the court must now examine whether the express language of the agreement includes the specific types of property at issue in this case, 401 (k)s and IRAs. An antenuptial agreement is a contract, subject to the general rules of contract interpretation. Herget v. Herget, 573 A.2d 798, 800 (Md. 1988). Furthermore, it is well settled that where an agreement is unambiguous Maryland follows the objective law of contracts; the intent of the parties is in a sense irrelevant, for it is presumed that they meant what they expressed. PaineWebber, Inc. v. East, 768 A.2d 1029, 1032 (Md. 2001). The procedure for interpreting such agreements under Maryland law is prescribed as follows: [U]nder the objective law of contracts, a court, in construing an agreement, must first determine from the language of the agreement itself, what a reasonable person in the position of the parties would have meant at the time it was effectuated. Where the language of the contract is unambiguous, its plain meaning will be given effect. Herget, 573 A.2d at 800. The interpretation of an unambiguous agreement is a question of law. PaineWebber, Inc., 768 A.2d at 1032. Plaintiff contends that the term "retirement benefits" has been judicially defined in Ohm v. Ohm, 431 A.2d 1371, 1374 (Md. Ct. Spec. App. 1981), as "deferred compensation or wage substitute[s]," and that, as a result, the term does not include 401(k)s or IRAs. Plaintiff's reliance on Ohm is misplaced due to the fact that the issue in Ohm is wholly unrelated to the issue in the case sub judice. The issue in Ohm was whether "retirement benefits" constitute marital property. Here, there is no question as to whether "retirement benefits," 401(k)s, or IRAs constitute marital property; instead, the question is whether the 401(k)s and IRAs are excluded from the Marital Property Act by the express language of the parties' antenuptial agreement. There was no agreement at issue in Ohm, and, therefore, 6 the holdings of the Court of Special Appeals in Ohm are not pertinent to the determination in this case. The court is of the view that a reasonable person in the position of the parties would have considered both 401(k) plans as well as individual retirement accounts as falling within the classification of "retirement benefits." The Code of Maryland Regulations supports this interpretation with respect to 401(k) plans? Black's Law Dictionary also defines "401(k) plan" as "[a] retirement ... plan" Furthermore, the court is of the view that the phrase IRA, i.e. individual retirement account, given its plain meaning, would also fall within the category of "retirement benefits." Consequently, the 401(k)s and IRAs at issue are excluded by valid agreement from the Marital Property Act under Section 8- 201(e)(3)(iii) of the Maryland Family Law Code and are not subject to equitable distribution. For these reasons, the following order will be entered: ORDER OF COURT AND NOW, this 18th day of May, 2001, upon consideration of Defendant's motion for declaratory judgment and the briefs submitted, and for the reasons stated in the accompanying opinion, Defendant's motion is granted, and the IRA accounts at issue are declared not subject to equitable distribution. BY THE COURT, /s/J. Wesley Oler, Jr. J. Wesley Oler, Jr., J. ~6 See Md. Regs. Code tit. 07, § 07.14.05 B(5) (Supp. 2001) ("[r]etirement benefits through a recognized quality plan such as 401(k) .... "). Samuel L. Andes, Esq. 525 North Twelfth Street Lemoyne, PA 17043 Attorney for Plaintiff LeRoy Smigel, Esq. 2917 North Front Street Harrisburg, PA 17110-1223 Attorney for Defendant