Much of the material reported in this blog comes from appellate cases; mostly Pennsylvania, but sometimes federal cases and decisions from other states. And, sometimes I will pass over a case only to see it reported by someone else in a different context. That happened this week when I paged through a local newspaper my wife gets, The Montrose Independent.
The Independent has been published in Susquehanna County since 1816, 207 years. One of its regular contributors is Susquehanna County’s only judge, Jason Legg. Like me, Judge Legg reads and writes about the decisions from Pennsylvania’s appellate courts in a way intended for consumption by the county’s 38,000 residents (that’s 46 per square mile). His reporting encompasses all areas of the law because he’s the only commissioned judge in the county. So, he is the criminal, civil, family, juvenile and Orphans’ Court division. In an age of relentless specialization of the law, Judge Legg still plays “all positions.”
Judge Legg reported last week on Dinnena v. Dinnena, a case decided by the Pennsylvania Superior Court on August 9 based upon a Luzerne County case. The material facts are simple. A man enters the military in 1987 and marries in 1992. The parties separated in 2002. When he left the military husband had served 30 years. The math shows he was married to Petra (the appellee) for roughly one-third of his service. His, is a federal pension based on his years of service in the military. These are defined benefit pensions, where the servicemember is paid a monthly benefit premised upon the length of service and the rank/payscale during his service.
In this divorce case a fairly common event occurred. To take a case to trial today typically involves running a gauntlet of settlement conferences and it appears that somewhere along the way a settlement was reached and read orally onto the record before a court reporter. What’s unusual about this case is that the military pension was essentially the only asset acquired/enhanced during the decade of the Dinnena marriage.
During the recitation of the terms of the divorce settlement Petra’s counsel stated:
“Wife to receive 45% of husband’s military pension as of his retirement date.”
Husband agreed to that statement in the context of a whole range of language that goes into settling a divorce.
The settlement was reached in 2006. Husband retired in 2017. At this point a dispute erupted which prompted former husband to seek declaratory relief interpreting what was meant by 45% of his retirement. He properly noted that his pension accrued over 30 years and his marriage to wife was not more than 1/3 of the years of service. As he saw the world, if the retirement was $3,000 a month the marital portion was $1,000 a month and 45% of that would be $450 a month. His reasoning was sound, but his agreement entered on the record says 45% of pension as of retirement date. 45% of $3,000 is $1,350 a month. The difference of $900 a month is BIG. His life expectancy is 82.5. So, he can anticipate a pension of 390 months. Under his view of life Petra would get $175,500. Under Petra’s view that sum is estimated at $526,500. The difference is just over $350,000. Real money by any measure.
The Luzerne County Court looked at husband’s petition and applied the law of contracts. That law says you don’t interpret a contract based on what the parties intended unless there is a clear ambiguity in what was written. The Court looked at the language and asked: “What’s ambiguous about 45% of the pension as of the retirement date?” The husband responded, in essence: “That interpretation is flagrantly inconsistent with the divorce statute; my former wife’s entitlement by law is not more than a percentage of the benefit that accrued during our decade lone marriage. Her interpretation takes in my military service a decade before we married and a decade later.” The trial court’s response was: “I understand that, but your agreement does not contain any of those limitations. It says 45% of pension at retirement. Unless you show me how those words are ambiguous I have no legal option but to enforce the clear language you or your lawyer uttered in 2006 when you settled your case.”
Words matter or as the Romans would have put it Pacta sunt Servanda (Agreements are kept). The Superior Court correctly affirmed the trial court and two lessons come out of this. The first is that you need to be very careful what words are used in forming a marital settlement agreement. And it is always risky to simply read an agreement of this kind into the record where you as client can’t actually focus on reading what you have agreed to. There is always pressure at settlement conferences or on the eve of trial to just get the agreement “done.” But this case illustrates that even in a single asset case, failure to attend to detail cost the husband 3x what he seems to have thought he agreed to.* The second issue is that where a military pension is involved, clients really should consult with lawyers or pension experts who fully understand how the military retirement system works. Most pensions are regulated by ERISA and its amendment the Retirement Equity Act (REA). But those laws deal with private employers and not state or federal agencies. These retirements are often far and away the largest assets in a divorce case and even good lawyers can miss some of the details related to how these plans work. In geographic locations like California, Texas or Washington DC, where there are lots of active service personnel, divorce attorneys deal with these issues everyday because there are scads of military installations nearby. But for the rest of the cosmos, many lawyers seem to think that federal pensions are just like private employer arrangements. They aren’t. And you need to know that.
*As often occurs in appellate cases, we don’t have all the facts, but it does seem somewhat odd that if the marital portion of the pension was so small (1/3) a wife of 10 years would only get 45% of the only asset in the case. But then, most military employees retire after 20 years of service.