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Guerrero v. Guerrero

Supreme Court of Alaska

September 18, 2015

PAMELA LEA GUERRERO, Appellant,
v.
JUAN JOSE GUERRERO, Appellee

Appeal from the Superior Court of the State of Alaska, Third Judicial District, Anchorage, Catherine M. Easter, Judge. Superior Court No. 3AN-09-05651 CI.

Michael Gershel, Anchorage, for Appellant.

Guy Gautreau, Anchorage, for Appellee.

Before: Fabe, Chief Justice, Winfree, Stowers, Maassen, and Bolger, Justices.

OPINION

Page 433

WINFREE, Justice.

I. INTRODUCTION

A husband and wife dissolved their marriage, agreeing that the wife would receive the marital home and a portion of the husband's military retirement benefits and that the wife would remove the husband from the marital home mortgage. Two years later the wife sought a qualified retirement order to effectuate the property distribution. Following a protracted dispute over the wife's entitlement to the retirement and the wife's failure to remove the husband's name from the marital home mortgage, the superior court refused to issue a qualified order because the husband's " retirement pay consist[ed] entirely of VA disability compensation and retirement [pay] for physical disability" and under federal law the disability compensation is not divisible marital property. The superior court also ordered the wife to remove the husband's name from the mortgage within 60 days. When the wife did not comply the court forced the home's sale. The superior court then awarded the husband prevailing

Page 434

party attorney's fees under Alaska Civil Rule 82.

The wife appeals, primarily challenging the superior court's refusal to divide the military retirement and the court's forced home sale. Although we affirm those decisions, we reverse the accompanying refusal to reopen the marital property division and remand for further proceedings. We therefore also vacate the superior court's prevailing party determination and attorney's fees award.

II. FACTS AND PROCEEDINGS

Juan and Pamela Guerrero married in 1997, divorced in 2005, remarried in 2006, and dissolved their second marriage in 2009. During the marriages Juan was a uniformed service member -- he served in the Marines from August 1988 through August 1992 and in the Army between November 1993 and January 2012.

In March 2009 Juan and Pamela -- each appearing pro se -- petitioned for dissolution of their marriage. The petition included agreements that Juan must " allocate fifty percent (half) of his military retirement benefits to Pamela . . . due to 13 total years contributed to the marriage" and that Pamela would be awarded their home. In May Pamela and Juan appeared in court before a master. Pamela agreed to refinance the marital home within 18 months to remove Juan from the home's mortgage. They stated that they were satisfied with the property distribution and agreed that " 50 percent of [Juan's] military retirement benefits during the 13 total years of marriage will be awarded to [Pamela]." The master clarified that even though they had divorced and then remarried, they agreed that Pamela would receive half of the marital portion of Juan's military retirement over the duration of both marriages. In June the superior court granted the dissolution, finding " [t]he written agreements between the petitioners concerning . . . division of property, including retirement benefits, and allocations of obligations are just."

In July 2011 Pamela, appearing pro se, sought a qualified order to distribute Juan's military retirement. Juan, also appearing pro se, asserted that (1) the parties' dissolution agreement failed to take into account that the second marriage was only 41 months, and (2) Pamela had failed to refinance the marital home mortgage as required by the dissolution agreement. Pamela responded that she was unable to refinance or sell the marital home " due to the housing market" and that the master " did take into consideration the temporary break in marriage."

In November Juan received a letter notifying him that he was retired from the Army for permanent physical disability effective January 2012 -- Juan had sustained serious combat-related injuries in Iraq in 2007, and as a result of those injuries Juan's lower right leg had been amputated in September 2010. In December Juan's lawyer entered his appearance. Shortly thereafter Pamela moved for documentation of Juan's military disability rating, explaining: " [Pamela's] retirement award is contingent on [Juan's] disability rating. Paperwork must be sent to [the Defense Financing and Accounting Service (DFAS)] in order for [Pamela] to receive retirement benefits."

In January 2012 Pamela moved for Juan to directly pay her for her share of his military retirement benefits because " DFAS is not required to begin payments to the former spouse until ninety (90) days after receipt of an acceptable order or the start of retired pay." Juan opposed, arguing " the remedy which [Pamela] is here requesting, is that [Juan] pay [Pamela] her share of the retirement benefits prior to his receiving those benefits. This is simply without merit. [Juan] cannot split marital proceeds which he has not yet received." (Emphasis in original.) Juan explained that Pamela " doesn't require a court order for any of these issues. Rather, all she has to do is file a [form] with DFAS once this court issues its final orders and she can receive her ordered funds directly from DFAS."

The master ordered Juan to provide " any documents evidencing the status of his disability rating with the United States Military." Juan's documents included an Army order stating " [y]ou are released from assignment and duty because of physical disability

Page 435

incurred while entitled to basic pay and under conditions that permit your retirement for permanent physical disability." The Army order characterized Juan's disability as 70% and noted that the statute authorizing retirement was " 1201." [1]

Pamela's lawyer entered an appearance in February. Responding to Pamela's discovery requests, Juan provided his retiree account statement from DFAS. The statement noted that Juan's monthly gross pay was $4,449, his monthly Veterans Affairs (VA) waiver was $1,424, Juan was exempted from taxes due to his disability status, and Juan's monthly concurrent retirement disability pay was $1,789.

In April the master held a hearing. The parties' lawyers explained that they had been working on dividing Juan's military retirement using a qualified military retirement order (QMRO), but that they could not agree on indemnification language that arguably " could be interpreted to allow someone to come back and get disability pay when someone's retired pay is reduced." Pamela's lawyer also expressed confusion about Juan's retirement, explaining:

[W]e don't know what [Juan] is getting. We don't know when he's getting it. We don't know how it's composed. I asked [Juan's lawyer] -- and with all due respect to [Juan's lawyer], it seems it was confusing to him as well. So I think [Juan] on the record can set us straight as to what he's getting, what it comprises and, frankly, if he intends to take any of this disposable retirement pay and turn it into disability pay . . . .

The parties also stated their positions on the marital home: Juan's lawyer asserted that Pamela " was ordered to sell the home. She had 18 months from May of '09 and that was never done." Pamela's lawyer argued that Pamela " was not ordered to sell the house, she was ordered to refinance the house and there [were] a number of things that were preventing the refinance all directly from [Juan]. Specifically, he did not give her a quitclaim deed so the house couldn't be refinanced without that."

Pamela asserted that when the parties agreed to dissolve the marriage she understood that Juan's retirement would be split 50/50. Pamela explained that she had a QMRO prepared by an expert and that she hoped the court would sign the order and submit it to DFAS. Pamela also noted that at the time of the hearing she did not know how long Juan had been receiving retirement benefits, how much he was receiving, and from what source. Finally, Pamela asserted that she was unable to sell or refinance the marital home.

Juan responded that Pamela had failed to remove his name from the marital home mortgage within the 18 months required by the dissolution order. Juan asserted that he received basically nothing in the dissolution agreement. Juan also explained that he received a 70% Army medical retirement ($4,445 monthly) and a 100% VA retirement benefit ($3,213 monthly). Juan stated that approximately $1,450 was waived from his Army medical retirement but that he would eventually receive that money from the VA. Juan's lawyer explained that the VA disability pay was not divisible by a QMRO but that 100% of the Army retirement was divisible. And Juan explained that his 70% Army disability rating entitled him to 70% of his $6,444 base pay but that if he had retired based on years of service alone and without the disability he would only have been entitled to 50% of his base pay. Thus Juan asserted that only 50% of his base pay was divisible under a QMRO.

After the hearing the parties submitted competing QMRO's. Pamela's QMRO included a provision providing:

If the Service Member takes actions that reduce[] his disposable retired pay and thereby reduces payments to the Former Spouse by the Designated Agent, the Service Member shall make direct payments to the Former Spouse in an amount sufficient to compensate the Former Spouse for such reduction immediately upon notice

Page 436

of such reduction, and shall also make up any arrearages in installments not less in amount or longer in term than the period over which the arrearages accrued.

Juan's QMRO did not contain this provision, and he argued:

At the time of the dissolution, it was never agreed to by Juan that any changes in his disability pay would automatically be translated into additional pay for Pamela. It was never negotiated, is a new argument, and it is not conceded to now. In fact, Pamela already will receive a greater percentage of Juan's retirement pay since his disability raised his retirement pay amount from the normal 50% of base pay, to 70% of base pay.

In July 2012 Pamela, once again pro se, submitted notice to the court alleging that Juan " unilaterally converted all remaining disposable retirement pay to disability following the April 24th hearing." Pamela supported her assertion with a letter from DFAS explaining that " [t]he entire amount of [Juan's] retired/retainer pay is based on disability, thus there are no funds available for payment." In response Juan claimed that he took " no such action to convert or change any portion of his military benefits."

In November 2012 the parties again appeared before the master. The master explained that he was confused because Juan's retirement order stated that Juan's disability rating was 70% but the letter Pamela received from DFAS explained that Juan was " a hundred percent disabled." Juan explained that the Army rated him at 70% disability and that the VA rated him at 100% disability. Juan further explained the Army rating meant that the Army had concluded Juan was entitled to 70% of his " base pay at the time of medical retirement" and that the VA rating meant that Juan qualified for " whatever the amount is that they give for a hundred percent." And Juan asserted that all of the money he received, from the Army and from the VA, was disability pay. Pamela insisted that Juan had elected to waive retired pay and that this decision prevented DFAS from sending her a portion of Juan's retirement.

The master issued a report recommending that the superior court require Pamela to refinance the marital home and deny her motion to divide the retirement. The master explained that Juan's retirement " is completely classified as disability pay. Disability pay is not dividable by the court as it is not a marital asset."

Pamela objected to the master's report and subsequently moved for permanent alimony and survivor benefits. The superior court issued an order treating Pamela's motion as " a motion for [Alaska Civil Rule] 60(b)(6) relief from judgment." The court explained that the parties had intended to split Juan's retirement, but because Juan's retirement pay was entirely disability pay it was not subject to division. The court found that the retirement pay was a fundamental underlying assumption of the dissolution that had been destroyed. The court also found that the property division was poorly thought out, that the dissolution was not reached with the help of counsel, and that the retirement was the parties' principal asset. The court therefore granted Rule 60(b)(6) relief from the original property distribution and ordered the parties to submit briefing to help the court equitably divide their marital property.

Pamela argued that Juan chose a disability retirement and unilaterally destroyed the portion they had agreed she would receive. Pamela requested that the court consider issuing a qualified order or awarding her permanent alimony. Pamela also argued that the dissolution agreement required only that she refinance, it did not require that she sell the marital home. Pamela further asserted she was unable to refinance the home because she did not receive adequate child support, the home had no equity upon dissolution, and selling the home would " force both parties to incur ...


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