Opinion
No. C0-98-1748.
Filed May 18, 1999.
Appeal from the District Court, Hennepin County, File No. 201792.
Judith L. Mason, (for appellant)
Susan Rhode, Thomas M. Hughes, (for respondent)
Considered and decided by Peterson, Presiding Judge, Davies, Judge, and Halbrooks, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (1998).
UNPUBLISHED OPINION
Appellant Karen Daum appeals the district court's order adopting respondent Edward Daum's proposed qualified domestic relations order, which calculates appellant's share of respondent's civil service retirement system (CSRS) benefits on the date of dissolution rather than the date of respondent's retirement. We hold the language in the parties' dissolution decree unambiguously requires a present value calculation of respondent's CSRS benefits as of the date of the stipulated dissolution decree and affirm as to that issue. However, because we find a lack of information resulted in an error in the district court's calculation of respondent's CSRS benefits, we reverse and remand for further findings of fact and a recalculation of respondent's CSRS benefits.
FACTS
Appellant and respondent were married on December 28, 1968. Prior to the parties' marriage, respondent served in the United States military for approximately three years and two months. Sometime in 1968, he began working for the United States Small Business Administration. As a civil service employee with the SBA, respondent contributed to his CSRS accounts and did not pay social security taxes. Appellant was employed at various times throughout the marriage and paid social security taxes.
On January 5, 1995, the parties entered into a stipulation dissolving their marriage. On February 7, 1995, a judgment and decree was entered based on the parties' stipulation. Conclusion of law number 14 in the judgment and decree provided for the division of the parties' retirement benefits, including respondent's CSRS benefits. The decree states in relevant part:
* * * Respondent's Civil Service Retirement pension benefits accrued between December 28, 1968 and January 5, 1995, shall be divided equally between the parties, subject to an offset against petitioner's monthly benefit in a sum equal to one-half of the social security benefit she would be entitled to as of January 5, 1995. Said pension division and social security benefit offset shall be addressed by separate Qualified Domestic Relations Order to be submitted to the court.
Conclusion of law number 20 requires each party to execute and deliver any documents necessary to effectuate the provisions of the dissolution decree.
In approximately September 1997, respondent obtained an estimate of his CSRS benefits from the SBA's human resources department and determined the division of the benefits between the parties. He subsequently prepared a qualified domestic relations order, including an order regarding federal benefits acceptable for processing and stipulation. Because of his service in the military and work as a civil servant, respondent falls under a provision in the Civil Services Retirement System called the "Catch 62." Individuals who served in the military after December 31, 1956, and became members of the CSRS before October 1, 1982, may include the period of their military service in computing their annuity under the CSRS until they reach age 62. 5 C.F.R. § 831.301 (1998). However, after they reach age 62, individuals who have at least 40 quarters of social security coverage must pay back a deposit for each year of military service or their military service may not be used in calculating their credited time under the CSRS. Id. If at the age of 62, the individual does not have 40 quarters of social security coverage, the military service would be included in the CSRS annuity computation. Id .
The date from which the CSRS annuity is calculated is the "service computation date." The service computation date includes both military service and civil service.
When the SBA Human Resources Department calculated respondent's estimated retirement benefits, it used a service computation date of June 5, 1968, and assumed a retirement date of January 5, 1995. It specifically indicated this time period included respondent's military service of 3 years, 1 month, and 27 days. It credited respondent with 6 months and 11 days of sick leave and arrived at a total of 27 years, 1 month, and 12 days of CSRS service credit. It then subtracted respondent's military service from the CSRS service credit because of the "catch 62" assumption that at age 62 respondent would have at least 40 quarters of social security coverage and would not pay back the military deposit. Thus, the SBA determined respondent's CSRS benefits on a period of 23 years, 11 months, and 15 days of service and found his gross monthly annuity would be $2,816. Appellant disagreed with the determination of the retirement benefits, particularly subtracting the number of years of respondent's military service from the total number of years he accrued CSRS benefits. The parties exchanged correspondence but failed to resolve the issue.
On June 1, 1998, respondent brought a motion asking the district court to enter his proposed court order regarding federal benefits acceptable for processing. Appellant opposed respondent's motion and asked the court to enter a qualified domestic relations order applying the formula set out in Janssen v. Janssen , 331 N.W.2d 752 (Minn. 1983), to respondent's benefits when they are received. Appellant also asked the court to require respondent to pay the cost of hiring a pension expert to prepare the qualified domestic relations order.
Janssen holds nonvested unmatured pensions can be divided in a dissolution by awarding each spouse a percentage of the pension to be paid if and when the pension becomes payable. "The marital interest in each payment will be a fraction of that payment, the numerator of the fraction being the number of years * * * of marriage during which benefits were being accumulated, the denominator being the total number of years * * * during which benefits were accumulated prior to when paid." Janssen , 331 N.W.2d at 756 (quotation omitted).
On June 18, 1998, the district court heard the parties' motions. It held the language of the judgment and decree was clear and did not contemplate use of the Janssen -type formula for division of respondent's CSRS benefits. It stated the judgment and decree contemplates a specific sum from respondent's civil service retirement benefit to be calculated as of January 5, 1995, and there was sufficient and reliable information to calculate appellant's share of the benefit as of that date. The court found appellant's accrued social security benefit as of January 5, 1995, was $800, and respondent's civil service benefit as of January 5, 1995, was $2,816. Thus, appellant's one-half was equal to $1,408. This amount was reduced by the social security offset, leaving appellant a monthly annuity benefit of $1,008.
On appeal, appellant contends the district court should retain jurisdiction over the qualified domestic relations order until the parties retire and calculate the parties' benefits at that time; respondent's retirement benefits cannot be calculated accurately before he retires because they are based on underlying assumptions that may change before respondent retires; and there is an error in the calculation of respondent's estimated retirement benefits.
DECISION 1. Date for determination of pension benefits
Stipulated dissolution decrees are treated as binding contracts. Tomscak v. Tomscak , 352 N.W.2d 464, 466 (Minn.App. 1984). Whether the provisions of a dissolution decree are ambiguous is a question of law. Anderson v. Archer , 510 N.W.2d 1, 3 (Minn.App. 1993).
We conclude the district court correctly held the stipulated language unambiguously required determination of respondent's CSRS benefits as of January 5, 1995, the date of the stipulated dissolution. The parties specifically stipulated to equally divide respondent's pension benefits accrued from the time of the marriage to the time of the dissolution decree. There is no evidence they intended to make this division when respondent retires. If they had intended a future division or a Janssen -type formula for division, they could have included language in the decree specifying appellant would receive a fixed percentage of respondent's future CSRS benefits upon respondent's retirement.
2. Speculative nature of the benefits
Appellant contends respondent's retirement benefits are too speculative to be divided at the time of the dissolution. Specifically, she asserts it is uncertain whether respondent will be eligible for social security and will elect to pay back the deposit necessary for the inclusion of his military pension in the calculation of his CSRS benefits.
The parties stipulated to using the present-value method of pension valuation, and the language of the stipulation evinces the parties' intent to use that method. Appellant cannot now overturn the parties' stipulation by arguing the present value method is inappropriate because the parties' retirement benefits are too speculative.
Moreover, the only uncertainty in determining the present value of respondent's CSRS benefits is whether respondent's military service years will be included in the calculation. Because respondent served in the military prior to the parties' marriage, whether he receives credit for his military service or not will have no bearing on appellant's portion of his CSRS benefits. See Minn. Stat. § 518.54, subd. 5(b) (1998) (property acquired before the marriage is nonmarital). Thus, the present value of the CSRS benefits is not too speculative to be calculated.
3. Error in calculation of benefits
On appeal, appellant contends there is an error in the number of years the SBA used to calculate respondent's CSRS benefits. Appellant asserts respondent completed approximately three years of military service before they were married in December 1968. He also began his job with the SBA shortly before their marriage in 1968. Using January 5, 1995, as his retirement date, his years of CSRS credit must be greater than the 27 years, 1 month, and 12 days calculated by the SBA.
Respondent argues that appellant did not raise the alleged error in the SBA's calculation at the district court. He, therefore, contends this court may not consider the issue. Thiele v. Stich , 425 N.W.2d 580, 583-84 (Minn. 1988).
While appellant did not raise the specific calculation error, she recognized a problem existed in the determination of her portion of respondent's benefits and brought this to the district court's attention. She requested the court to authorize appointment of a pension expert to resolve the issue. She also raised the issue of whether respondent's military service should be considered in determining his civil service retirement benefits. Additionally, respondent's motion for implementation of the proposed qualified domestic relations order required the court to determine the correct value of respondent's benefits at the time of dissolution. Under these circumstances, we find the issue of the calculation error was before the district court.
We must next consider whether there was an error in the determination of respondent's CSRS benefits. Based on the information in the record, it appears there is an error in the computation of respondent's years of service credit. According to respondent's November 9, 1994 prehearing statement, he had been employed by the SBA for 26 years. This would indicate he began his employment with the SBA in 1968. Also, the district court order indicates he completed his three years of military service prior to his employment with the SBA. Thus, his total years of military and civil service should be almost 30 years, not 27 years as calculated by the SBA. Subtracting respondent's three years of military service, leaves approximately 27 years, not 23 years, 11 months, and 15 days.
Despite the appearance of a calculation error, it cannot be completely verified because of the inadequacy of the information in the record. Neither party provided evidence of the dates of respondent's military service or the date he began working for the SBA. There is also no explanation of how the SBA arrived at the service computation date of June 5, 1968. Without this information, we are unable to accurately assess the computation of respondent's CSRS benefits.
We, therefore, remand this case for further findings of fact and a determination of the present value of respondent's CSRS benefits. In making its determination, the district court may wish to exercise its discretion to appoint an expert to value the pension benefits as provided in Minn. Stat. § 518.582, subd. 1 (1998).