In re Marriage of Babin
In re Marriage of Babin
Opinion
*709 Nickey Nickles Babin and Roslyn Marie Babin originally reached a mediated property settlement agreement in their divorce, but issues arose between the parties after mediation was complete. The district court granted the parties' divorce, but litigation continued regarding the division of property and spousal maintenance. Even though Nickey had agreed to give 43% of *710 his military disability benefits to Roslyn as part of the settlement agreement, he later argued that federal preemption prohibited the district court from dividing military disability benefits in a divorce. The district court ruled that the mediation agreement was plain and unambiguous and adopted the mediation agreement as its order. Nickey appeals from the district court's order approving a division of his military disability benefits. We concur with Nickey that the district court lacked jurisdiction to divide his military disability pay because of federal preemption, even though a property settlement agreement allowing for the division of disability pay had been reached through mediation. We thus reverse the district court's orders approving the settlement and remand the case for further proceedings.
FACTS
Nickey and Roslyn were married in March 1994. During all but the last few months of the marriage, Nickey was an active duty member of the United States Army. He retired on August 1, 2016.
Roslyn filed a petition for separate maintenance on September 1, 2016. In response, Nickey filed an answer and a counter-petition for divorce. Ultimately the parties agreed to treat the matter as a divorce action.
*987 The parties entered into mediation in November 2016. At the end of mediation, the parties signed a handwritten document dated November 29, 2016, memorializing the primary terms of a property settlement agreement. In pertinent part, the document provided: "4. Military retirement, disability and any back pay divided 43% to Wife and 57% to Husband. Start 12-1-16."
The district court granted Nickey and Roslyn a decree of divorce on December 22, 2016, but the division of property was continued for a later time for two reasons: (1) Nickey was proposing an alternative to the settlement agreement's provisions for life insurance and (2) Nickey claimed that Roslyn's purchase of a new vehicle was either contrary to the agreement, or the parties did not have a "meeting of the minds" when they provided for Roslyn's postdivorce transportation in the agreement.
Nickey filed his proposed formal findings for the district court *711 on February 2, 2017. At a hearing on the proposed findings held on February 6, 2017, Nickey came forward with another objection to the agreement. In this new argument, Nickey claimed that he did not agree to allocate 43% of his disability pay to Roslyn. In his proposed formal settlement agreement, the language indicated Roslyn was to be awarded a 43% share of his "disposable military retired pay" without reference to disability payments. This was calculated to be $1,237.52 based on a net disposable retirement pay of $2,877.95. Even though it was not detailed in the mediation document, Nickey proposed that any later reduction in disposable military retired pay by a Veterans Administration (VA) disability waiver be made up to Roslyn by paying her an increase in maintenance to offset the actual amount of her loss incurred as a result of a VA waiver.
The district court reserved the issue regarding Nickey's military disability pay based on his claim that he did not agree to the division of his disability pay. The court indicated that it did not have the ability to divide Nickey's military disability pay without his consent. The issue of the division of the disability pay and/or how it would affect the allocation of other assets including maintenance payments was to be separately briefed and set for a hearing on February 28, 2017.
In her brief, Roslyn points out that Nickey had expressly agreed to allocate 43% of his military disability benefits to her at mediation on November 29, 2016. Roslyn argued that if Nickey was going to abrogate the agreement, the court should increase the agreement's provision for $800 per month in spousal maintenance to a maintenance payment in the range of $2,000 to $3,490 per month. In response, Nickey argued the court had no jurisdiction over his disability pay and the court could not consider disability pay when making an allocation of marital property. Nickey acknowledged, however, that the court could consider disability pay when making an award for maintenance. Even so, Nickey asked the court to decrease the agreement's provision for maintenance from $800 per month to a payment ranging from $626 to $688 per month, with a possible temporary award of $900 per month for a period of six months.
*712 On February 28, 2017, the district court held an evidentiary hearing. After receiving the evidence and hearing arguments, the court ruled that the mediation agreement was plain and unambiguous and it adopted the agreement as its order. The court specifically found that Nickey had voluntarily agreed to pay Roslyn 43% of his military disability pay.
On March 14, 2017, Nickey objected to Roslyn's proposed journal entry memorializing the February 28, 2017 hearing under Supreme Court Rule 170 (2019 Kan. S. Ct. R. 222). Three days later, on March 17, 2017, Nickey also filed a motion for reconsideration.
The journal entry of the district court's original decision was subsequently filed on April 5, 2017. In its written decision, the district court ruled that Nickey had agreed that Roslyn should receive 43% of his disability benefits in the mediation agreement, which should be enforced. The court also ruled that Roslyn would receive spousal maintenance in the amount of $800 per month as stated in the agreement. However, *988 the district court did not specifically address Nickey's March 17 motion for reconsideration of its ruling.
Subsequently, the district court did hold a hearing on the motion for reconsideration on April 24, 2017. The court denied the motion and directed Roslyn's counsel to draw the journal entry. This was not done by her counsel, resulting in a troublesome gap in the record which was not cured until a journal entry was finally settled nearly 10 months later, after Roslyn obtained new counsel.
The next substantive event in the case occurred over eight months later. On December 29, 2017, Nickey filed a motion for relief from judgment based in part on the United States Supreme Court's holding in
Howell v. Howell
, 581 U.S. ----,
*713 Nickey filed a timely notice of appeal from the district court's rulings.
ANALYSIS
Divisibility of military disability benefits
Nickey first argues that the district court erred by awarding 43% of his military disability benefits to Roslyn. Nickey claims that under federal law his military disability benefits are not divisible marital property subject to the jurisdiction of the Kansas courts even in the event that the recipient spouse agreed to the division.
The primary issue is whether federal law preempts enforcement of the portion of the parties' property division that divides Nickey's disability compensation. The matter of division of military pay is an issue of federal preemption and jurisdiction. Whether jurisdiction exists is a question of law over which our review is unlimited.
Kansas Medical Mut. Ins. Co. v. Svaty
,
Under
Congress sought to protect veterans' benefits to ensure that they provide support for veterans, with the goal of encouraging participation in the military. See
McCarty v. McCarty
,
Congress passed the Act after the United States Supreme Court held that the federal laws then governing military retired pay preempted state courts from treating military retired pay as community property.
Mansell
,
The Act "presents one of those rare instances where Congress has directly and specifically legislated in the area of domestic relations," an area of the law generally left to the states.
Seven years after the passage of the Act, the United States Supreme Court interpreted the Act in a case involving a marriage dissolution decree that effectively divided a veteran's disability compensation as part of a property settlement.
*715
Mansell
,
The Mansell Court noted the harsh result its ruling would have on some former spouses of veterans:
"We realize that reading the statute literally may inflict economic harm on many former spouses. But we decline to misread the statute in order to reach a sympathetic result when such a reading requires us to do violence to the plain language of the statute and to ignore much of the legislative history. Congress chose the language that requires us to decide as we do, and Congress is free to change it."490 U.S. at 594 ,109 S.Ct. 2023 .
The Act classifies military retirement pay as disposable retired or retainer pay, but the statute does not include military disability benefits within the definition of disposable retired or retainer pay. Thus military disability benefits cannot be classified as marital property subject to division and are instead treated as the retiree's separate property. See
In re Marriage of Pierce
,
In
Pierce
, the parties prepared a property settlement agreement that gave the nonmilitary spouse a certain percentage of the military retirement benefit. But the agreement did not specify that the spouse would obtain a certain amount of money per month or that the military retirement pay could not be converted to disability pay. At a later date, the military spouse had his retirement pay fully converted to disability benefits, denying the other spouse any
*716
retirement benefits. The former spouse filed a motion which would have modified or amended the original property settlement agreement, which was
*990
denied by the district court. She then appealed to the Court of Appeals.
" Mansell makes it perfectly clear that the state trial courts have no jurisdiction over disability benefits received by a veteran. The trial court in this case cannot order Douglas to change the payments back to retirement benefits, and it cannot order him to pay his disability benefits to Priscilla. We conclude the court may not do indirectly what it cannot do directly." Pierce ,26 Kan. App. 2d at 240 ,982 P.2d 995 .
The Court of Appeals noted there was no relief possible for the nonmilitary spouse in the case because the agreements and orders did not forbid the change in benefits or indemnify her for the same.
Similarly, in
In re Marriage of Martin
, No. 106,912,
*717
Since
Mansell
resulted in a harsh result for some former spouses of veterans, throughout the years many state courts have found ways to distinguish the facts of cases from those in
Mansell
. For example, the Virginia Court of Appeals determined that an agreement to provide a certain percentage of retirement pay to a former spouse-along with an indemnification provision-allowed the district court to enforce the agreement by ordering payment from other sources other than disability pay. See
Owen v. Owen
,
In response to the state courts' differing interpretations of
Mansell
, the United States Supreme Court readdressed the preemptive effect of the Act in
Howell
,
The United States Supreme Court reversed the Arizona court, holding that a state court may not order a veteran to indemnify a divorced spouse for the loss in the divorced spouse's portion of the
*718
veteran's retirement pay caused by the veteran's waiver of retirement pay to receive service-related disability benefits.
Although
Howell
involved a divorce decree and not a property settlement agreement, the Supreme Court expressly stated that it was abrogating several cases dealing with property settlement agreements. And significantly, the Court impliedly endorsed
Mansell
and its restriction on using a property settlement agreement to divide pay. The Court overruled cases relying on the sanctity of contract to escape federal preemption.
Roslyn's contentions rely almost exclusively on contractual arguments. She asserts that Nickey agreed to give her 43% of his disability benefits as part of a mediation agreement, and he could voluntarily allocate a portion of his disability payments to her. She asserts it is "no more objectionable than it would be if he decided to use that disability payment to buy groceries and gas at the local convenience store." Roslyn asserts that "[o]nly if the holding in Howell is construed so as to prevent a service member from spending his or her disability pay as he or she deems fit, would the action of the trial court below be subject to reversal." Although creative, we believe this argument does not follow the intent of Congress, which is to ensure that the disability benefit goes to the support of the veteran, not to the support of others.
We are convinced that the division of Nickey's disability compensation-even through a mediated settlement agreement-is simply not permitted by federal law. The district court lacked jurisdiction to order such a division of benefits, especially over Nickey's objection to the division of property. The district court's ruling that Nickey contracted away his right to his full disability pay must be reversed.
The Act does not allow for the treatment of disability
*719
compensation as marital property, and it specifically excludes from marital property those amounts of retired pay that are waived in favor of disability compensation.
The possibility of indirect relief
For his second argument, Nickey asserts that this court has no authority to indirectly divide his military disability benefits. Nickey appears to be seeking an advisory opinion by raising this issue, as there is no asserted error by the district court that can be reviewed by this court. However, for the guidance of the district court on remand, we believe some analysis may be appropriate.
Because federal law precludes state courts from dividing military disability compensation as marital property, the portion of the judgment dividing Nickey's disability compensation is unenforceable. The question is whether we should merely vacate that portion of the property division or if remand is appropriate for the district court to reconsider the equitable division of property.
In
In re Marriage of Bahr
,
"We recognize, as we recognized in Mansell , the hardship that congressional preemption can sometimes work on divorcing spouses. [Citation omitted.] But we note that a family court, when it first determines the value of a family's assets, remains free to take into account of the contingency that some military retirement pay may be waived, or, as the petitioner himself recognizes, take account of *720 reductions in value when it calculates or recalculates the need for spousal support. [Citations omitted.]" Howell ,137 S.Ct. at 1406 .
So there is nothing in the federal law that prevents state courts from considering disability pay in dividing other assets.
We note that in his proposed findings to the district court Nickey recognized that there might be a reduction in regular military pension benefits if the VA granted him a disability waiver, and in fact proposed that "the actual reduction of any portion of [Roslyn's] 43% share shall be ... denominated as maintenance payable by [Nickey] to [Roslyn]." On appeal, Nickey now asserts that the district court's award of spousal maintenance cannot be reconsidered because Roslyn did not file a cross-appeal. But spousal maintenance was reserved by the court to be considered as part of its ruling on the division of disability benefits. Because the district court's order is being vacated, we hold that the district court is free to reconsider the award of spousal maintenance on remand.
Here, the district court erroneously ruled it could enforce the settlement agreement regarding Nickey's disability payments. In so ruling, it chose the agreed-upon amount of maintenance of $800 per month. On remand, the district court is free to reconsider its ruling on spousal maintenance in its determination of an equitable division of property. See
In re Marriage of Bahr
,
Reversed and remanded with directions.
Case-law data current through December 31, 2025. Source: CourtListener bulk data.