Gross v. Wilson

          Appeal from the Superior Court No. 1JU-12-00783 CI of the State of Alaska, First Judicial District, Juneau, Louis J. Menendez, Judge.

          Joseph W. Geldhof, Law Office of Joseph W. Geldhof, Juneau, for Appellant.

          Dawn Alexia Wilson, pro se, Juneau, Appellee.

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

          OPINION

          STOWERS, CHIEF JUSTICE.

         I. INTRODUCTION

         Robert Gross and Dawn Wilson married in August 1992, and Gross filed for divorce in August 2012. The parties resolved the issues raised in the divorce action in a written settlement agreement incorporated into a divorce decree in March 2014. The final agreement provided that Wilson was to receive an amount equal to 50% of the military retirement and Veterans Administration (VA) disability pay that Gross received for his service in the United States Coast Guard (USCG). A little over a year later Gross reduced his monthly payment to Wilson by an amount equal to 50% of his disability payments, and Wilson filed a motion for enforcement of the terms of the settlement agreement. Gross opposed the motion, arguing that the Uniformed Services Former Spouses' Protection Act (USFSPA)^[1] exempts VA payments from allocation during divorce as marital property; he also argued that he had misunderstood the agreement. The superior court ordered Gross to resume payments pursuant to the agreement and to pay arrearages. Gross appeals. We affirm the superior court's order because Gross had no procedural basis for bringing a collateral attack on his divorce decree.

         II. FACTS AND PROCEEDINGS

         A. Facts

         Gross enlisted in the USCG in February 1987. Gross and Wilson married in August 1992, and they have four children. Gross filed for divorce in August 2012. In a November 2013 hearing before a magistrate, after a full day of mediation with retired Superior Court Judge Patricia A. Collins, the parties and their attorneys reached an agreement; both attorneys and Judge Collins described on record how the parties planned to address Gross's military retirement benefits. Both attorneys explained that Gross's retirement payments, including disability payments, would be divided 50/50 between the parties. Judge Collins also articulated the parties' understanding and agreement:

[T]he final language of the agreement that the parties anticipate submitting to the court will provide that, in the future, should Mr. Gross elect to take any action that might reduce what would otherwise be retirement benefits for which Ms. Wilson would have a claim, he will be responsible for reimbursing her. As Your Honor may know, disability payments are viewed as separate, not marital property, by the federal government; but [the] divorce court, in its equitable jurisdiction, can ensure that there's fairness. The parties today tried to reach a fair result, such that they have, in essence, agreed to divide the retirement, which includes disability, which is received in lieu of what would have otherwise been retirement, on a 50-50 basis.

         At a second hearing, held in December 2013, Gross indicated through his attorney that he was prepared to go forward as long as the property settlement agreement reached with Judge Collins's assistance in November was not reopened. When Gross was given an opportunity to comment, he responded, "I'm good."

         The court issued a Judgment and Decree of Divorce in March 2014. The divorce decree incorporated the parties' Child Custody, Child Support and Property Settlement Agreement signed on the same day. When the settlement agreement was placed on the record, both Gross and Wilson testified that they were familiar with the terms of the agreement and were satisfied with it. Paragraph 11 of the settlement agreement required Gross to pay Wilson $888.22 per month based on his USCG retirement program:

[Wilson] shall receive 50% of the total USCG military retirement monthly pay (sometimes referred to as the aggregate of the retirement and disability pay) that [Gross] receives from the USCG after the SBP premium for the survivor benefit covering [Wilson] has been paid .... The parties understand that the USCG will directly pay [Wilson] 50% of what it defines as the "disposable retirement pay (DRP)." However, this DRP figure does not include the VA compensation/disability monies received by [Gross]. [Gross] therefore agrees to pay to [Wilson] on the first day of each and every month throughout his lifetime an amount, over and above the 50% portion of the DRP paid to her by the USCG, sufficient to accomplish [Wilson's] receipt of fifty percent (50%) of the total USCG monthly military retirement pay (including the VA Comp. and/ or disability portions) reduced only by payment of the SBP premium. ... If [Gross] or the USCG does anything that results in a reduction of [Wilson's] above-described share of the military retirement, [Gross] will reimburse [Wilson] for the reduction.^[2]

         B. Proceedings

         In May 2015 Wilson, now proceeding pro se, filed a motion for enforcement of the terms of the March 2014 settlement agreement. She stated that Gross had made appropriate retirement payments pursuant to the parties' settlement agreement until May 2015, but that he then unilaterally reduced the amount of monthly retirement benefits by $170, citing statutes pertaining to the division of disability pay. Gross opposed the motion and filed a cross-motion for an order denying enforcement of the "claim" for disability, stating that it would be a violation of the USFSPA because that statute "exempts [VA] payments from allocation during divorce as marital property." Gross also attached an affidavit declaring that he did not know how paragraph 11 was included in the settlement agreement and that he had not understood the settlement agreement to divide disability payments.

         The court referred the cross-motions to a superior court special master. Neither party requested an evidentiary hearing, and after oral argument the master issued his report and recommendation to the superior court. The master recommended that Wilson's motion be granted and Gross's denied. Gross filed objections to the report, and the superior court issued an order granting Wilson's motion to enforce.

         First, the superior court found that "[n]owhere in [Wilson's] motion or in the record of the case is it stated [Gross] was required to make payments from his disability retirement pay to [Wilson]." The court explained that what it "understood from what is contained in the record of the hearings ... is that the parties negotiated a settlement agreement that did not include [Gross's] disability retirement pay as a direct source for [Gross's] monthly payments to [Wilson]." The court also found there was no order directing that the USCG pay Wilson from Gross's disability pay, nor was there any statement that Wilson was to receive any portion of Gross's disability pay. The court reasoned that Gross's aggregate disability and retirement pay was but a means through which the parties arrived at a fair payment amount as part of what they agreed was a fair and equitable allocation of assets and debt.

         Second, the superior court found that the United States Supreme Court's decision in Mansell v. Manse^[3] regarding the USFSPA and our decision in Clauson v. Clauson^[4] did not preclude enforcement of the retirement provision in the parties' settlement agreement. While acknowledging that those cases hold that state courts do not have any power to "equitably divide veterans' disability benefits received in place of waived retirement pay, "^[5] the court reasoned that the master's recommendation simply enforced a contractual obligation requiring Gross to pay Wilson a specific amount from any of his resources. Moreover, the court concluded that, even if the payments originated from Gross's disability pay, nothing in the USFSPA or Mansell prevents a veteran from voluntarily contracting to pay a former spouse a sum of money that may originate from disability payments.

         Third, the court found Gross's assertions that he was taken by surprise when he learned the contents of paragraph 11 "both hard to accept and inconsistent with the settlement agreement," on-record affirmations by the parties, clear statements by both counsel and Judge Collins at the November 2013 hearing, and Gross's attorney's reaffirmation of the settlement agreement at the December 2013 hearing. Thus, the court concluded that Gross was well aware of the contents of paragraph 11, including its indemnification provision requiring him to reimburse Wilson if he took any action that would reduce payments to Wilson.

         Finally, the court noted that Gross had offered no basis under Alaska Civil Rule 60(b) for bringing a collateral attack seeking to set aside the property settlement more than a year after it was filed and after both parties testified affirming the agreement. The superior court ordered Gross to resume monthly payments to Wilson pursuant to the agreement, and it ordered the parties to submit further briefing on the amount of arrearages owed to Wilson. Gross appeals.

         III. STANDARD OF REVIEW

         We review a trial court's response to a motion to enforce a divorce decree, as well as most decisions on a request for relief from final judgments, under the abuse of discretion standard.^[6] "We will find an abuse of discretion only if the trial court's decision was 'manifestly unreasonable.' "^[7] However, we review de novo whether a party is entitled to relief from judgment under Alaska Civil Rule 60(b)(4) "because the validity of a judgment is strictly a question of law."^[8] "[T]he intent of the parties when entering a contract is a question of fact and is thus reviewed under the clearly erroneous standard."^[9] But "[w]e review a trial court's rulings on questions of law, and the application of law to fact, de novo and adopt the rule of law that is most persuasive in light of precedent, reason, and policy."^[10]

         IV. DISCUSSION

         The USFSPA governs how state courts may treat military retirement and disability payments received by veterans.^[11] The statute was passed in response to the Supreme Court's decision in McCarty v. McCarty, which held that federal statutes then governing military retirement pay prevented state courts from treating military retirement pay as community property.^[12] The USFSPA grants some, but not all, power back to the states, and it provides that a state may treat as community property, and divide at divorce, a military veteran's disposable retirement pay.^[13] But the act exempts from this grant of authority any amount the government deducts as a result of a waiver that the veteran must make to receive disability benefits.^[14] In other words, an eligible veteran can voluntarily shift a portion of retirement pay to disability pay, and this portion is not divisible upon divorce. Because disability pay, in contrast to retirement pay, is not taxed, ^[15] many veterans choose to do so.^[16] Gross was receiving nondivisible disability benefits from the VA at the time of his divorce.

         In Mansell v. Mansell the Supreme Court held that "the [USFSPA] does not grant state courts the power to treat as property divisible upon divorce military retirement pay that has been waived to receive veterans' disability benefits."^[17] We applied Mansell in Clauson v. Clauson, holding that "state courts [do not] have any power ... to equitably divide veterans' disability benefits received in place of waived retirement pay."^[18] But we subsequently held that superior courts are permitted to order indemnification for any reduction caused by a service member in divisible retirement payments to a former spouse, such as a reduction due to voluntary waiver of retirement pay in exchange for disability pay.^[19]

         Gross argues that the superior court's decision ordering him to pay Wilson a portion of his disability payments was erroneous for three reasons. First, he did not believe he was agreeing to divide his disability payments or indemnify Wilson for a reduction in payments caused by something other than waiving retirement benefits in exchange for disability benefits. Second, the USFSPA precluded the court's division of disability payments in his divorce, and the division of those payments is therefore unenforceable. And third, the superior court was allowed to require indemnification only for a reduction in Wilson's portion of his retirement pay caused by voluntarily waiving retirement pay in exchange for disability benefits, which he did not do.

         Gross does not address the superior court's conclusion that he had no procedural basis under Rule 60(b) for seeking to set aside the settlement agreement. Because we find no legal or factual error or abuse of discretion in the superior court's reasoning on this issue, we affirm the court's enforcement order.

         A. The Superior Court Did Not Abuse Its Discretion By Denying Gross's Cross-Motion To Deny Enforcement.

         In a divorce proceeding where marital property has been divided, a divorce decree incorporating a property division constitutes a final judgment.^[20] "Other than a Civil Rule 77(k) motion for reconsideration, which must be made within ten days of the court's order, an Alaska Civil Rule 60(b) motion provides the only available means for seeking relief from a final judgment of property division."^[21] In this case Gross filed a "cross-motion for order denying enforcement of claim for disability payments," which the superior court treated as a Rule 60(b) motion for relief. Because a Rule 60(b) motion was the only available means for seeking relief from the property division, the superior court was correct in doing so. Rule 60(b) permits relief only for specified reasons:

(1) mistake, inadvertence, surprise or excusable neglect;

(2) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b);

(3) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party;

(4) the judgment is void;

(5) the judgment has been satisfied, released, or discharged, or a prior judgment upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the ...