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HomeMy WebLinkAbout1999-5129 Civil Y ASMIN ERNE, Plaintiff IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA vs. CIVIL ACTION - LAW 99-5129 CIVIL ROCCO T. ERNE, Defendant IN DIVORCE IN RE: OPINION PURSUANT TO RULE 1925 The defendant has appealed from our September 2,2004, order in which we sought to give effect to a marital settlement agreement of the parties. This order directed actuarial expert Harry Leister to prepare a domestic relations order which would provide to the plaintiff her interest in the defendant's pension. To the extent that the QDRO would not provide direct payments to the plaintiff, the defendant was directed to make up the difference and pay to the plaintiff additional amounts previously agreed upon. The defendant asserts that the prior agreement of the parties cannot be made effective. He claims that the so-called VA waiver portion of his military pension is not marital property and the earlier valuation of his pension was erroneous and the result of a mutual mistake of the parties. The parties were divorced in Cumberland County on March 10, 2004. Prior thereto they had entered an agreement in the office of the divorce master. The agreement read in pertinent part: It is agreed that Defendant in full satisfaction of his obligations to Plaintiff in this matter shall cause a QDRO to be fashioned with the assistance of Harry M. Leister, Jr., so that the sum of$139,500 will be paid to Plaintiff from the military pension referred above in the manner as recommended by Mr. Leister. It is anticipated that this will be in the form of a percentage of the monthly pension payment being allocated to Plaintiff. . .. The present value selected in this equitable distribution of the pension is $301,937 and the present value of the survivor benefit is $31,949 which will be 99-5129 CIVIL selected in the calculation and preparation of the QDRO. The agreement of the parties dated July 24,2003, divided the defendant's pension in the context of a settlement involving all the assets of the parties. Mr. Erne's pension was not divided by order of court. This is important in light of federal case law having to do with the VA waiver. Exercising a VA waiver lowers the amount of disposable retired pay to which a military member may be entitled by deducting from a retirement any amounts waived in order to receive comparable monies by way of disability benefits. As noted in Mansell v. Mansell, 490 U. S. 581, 583, 104 L.Ed.2d 675,682, 109 S.Ct. 2023 (1989): In order to prevent double dipping, a military retiree may receive disability benefits only to the extent that he waives a corresponding amount of his military retirement pay ... because disability benefits are exempt from federal, state, and local taxation, ... military retirees who waive their retirement pay in favor of disability benefits increase their after-tax income. Not surprisingly, waivers of retirement pay are common. In this case, the amount of the waiver was increased shortly before the time of the settlement agreement. As the defendant correctly observes, Mansell stands for the proposition that the VA waiver portion of a military pension is not subject to division by a court. That case does not, however, say that the parties themselves cannot divide a pension in any manner they wish. In fact, appellate authority in this state appears to support the right of the parties to make such a division. The case of Adams v. Adams, 725 A.2d 824 (Pa. Super. 1999) arose in Cumberland County. There the parties had entered into an agreement whereby the wife would receive fifty percent of the husband's disposable retired pay reduced only by the pro-rated cost of providing surviving spouse benefit plan insurance protection to the wife. Judge Bayley, of this court, 2 99-5129 CIVIL required the husband to pay the full amount of his eligible military retirement pay as calculated without deduction for the veteran's disability pay offset. There was no appeal from that decision. The matter came before the Superior Court when the husband again sought a reduction where he voluntarily elected to reduce his military retirement pay rather than his salary to meet a federal dual pay-cap mandate. In other words, the husband chose to receive salary in lieu of his pension and argued that the wife should bear the burden of the concomitant reduction in the pension amount. The husband argued that the trial court, by enforcing the earlier agreement, was now attempting to attach post-separation earnings of the husband. The Superior Court said: The trial court is not attaching post-separation earnings of Husband. It merely is enforcing the terms of the agreement in which he bound himself to pay Wife a specified percentage of his military pension without any reduction or offset other than the one designated. Husband chose to reduce his military pension to satisfy the limitation on income imposed by the dual compensation law. This reduction of his monthly military retirement pay was not contemplated by the agreement, and he chose this option rather than reducing his current compensation. Further, as noted previously, he chose to receive his salary in lieu of his pension. Therefore, the trial court correctly concluded that there is no basis in the agreement to reduce his eligible retirement pay since this reduction was not made to fund one-half of the surviving spouse's insurance plan benefit. In the instant case, the parties agreed that the plaintiff would be paid a set amount from the defendant's pension. The present value of the pension was set by agreement. The defendant argues, however, that the valuations agreed upon involved a mutual mistake of fact. The record of our most recent hearing in this case does not support such an assertion. Correspondence to Mr. Leister, seeking the pension valuation, specifically raised the issue of V A waiver. The valuation itself was received weeks prior to the hearing before the divorce master. Mr. Leister 3 99-5129 CIVIL testified at the hearing before the undersigned that he had correctly valued the pension and that the figure used by the parties was accurate. In order to obtain reformation of a contract because of a mutual mistake, the party seeking reformation is required to show the existence of a mutual mistake by evidence that is clear, precise, and convincing. Smith v. Thomas Jefferson University Hospital, 621 A.2d 1030 (Pa.Super. 1993). A mutual mistake of fact has not been demonstrated in this case. In the meantime, the plaintiff has otherwise acted on the agreement of the parties. For example, she was required to refinance the marital home so that the defendant was no longer liable with respect to it. This she has done. To now frustrate the agreement because the defendant voluntarily increased his VA waiver in the months before the hearing is not a result which the law or the facts will support. November ,2004 Kevin A. Hess, 1. Carol 1. Lindsay, Esquire F or the Plaintiff LeRoy Smigel, Esquire Ann Levin, Esquire F or the Defendant :rlm 4