Opinion
16-P-89
05-23-2017
Birthe LANDER v. Frits LANDER.
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
Frits Lander (husband), appeals from a Probate and Family Court judgment on a complaint for equitable relief that ordered him to (1) pay Birthe Lander (wife), an amount equal to 41.89 percent of his gross pension benefit, and (2) change the beneficiaries of his life insurance policy to give the wife a one-third interest in the death benefit. We affirm in part and reverse in part.
Background. In April, 2007, the parties executed a separation agreement which survived entry of the judgment of divorce nisi, and remained an independent contract. The agreement provided that the wife would receive a portion of the husband's State pension by means of a Qualified Domestic Relations Order (QDRO). The parties prepared, and the judge allowed, a QDRO requiring the husband to pay the wife 41.89 percent of the husband's pension upon his retirement, which included a survivorship interest. The parties acknowledge that pursuant to the QDRO, if the husband were to remarry, the wife's right to the survivorship benefit could be superseded by the rights of the husband's new spouse. The husband was sixty-four years old when the parties divorced. He did not retire at age sixty-five as the wife purportedly anticipated, and had still not retired as of the filing of this appeal. Neither the separation agreement nor the QDRO require the husband to retire by a certain date, or at all.
The agreement provided the following: "The Wife has a vested interest in her Social Security Plan. The Husband has a vested interest in a Pension Plan with Commonwealth of Massachusetts. The parties agree to divide the current value of their retirement plans equally, as follows: by executing appropriate QDROs to effectuate any necessary transfer, by Ed Foley, cost to be shared equally, any transfer to include an appropriate survivorship benefit for the wife, namely State Retirement Option 'C'."
The husband remarried in 2013. By operation of law, in the event that the husband dies prior to retiring, the husband's new spouse has the right to elect to receive the pension benefits upon the husband's death. See G. L. c. 32, § 12(2)(d ). Consequently, the wife will then no longer receive the bargained-for share of the husband's pension upon his retirement. The wife filed a complaint for modification and for declaratory judgment seeking an order that the husband shall "pay alimony from his current income to represent the [wife's] marital coverture share of his Pension." After a nonevidentiary hearing, the judge entered a declaratory judgment that the husband has no obligation to retire under the terms of the separation agreement, and that "the separation agreement's explicit language provides that [the wife] only had a right to collect 41.89% of his pension if and when [the husband] retired or died without remarrying." The judge concluded that the wife had "not demonstrated a material change in circumstances that meets the 'something more' standard" that would allow the court to modify the agreement. The judge did not address "equitable arguments regarding the construction of the parties' agreement." The wife did not appeal from this judgment.
Thereafter, the wife filed a complaint seeking equitable relief, alleging counts for (1) constructive trust, (2) unjust enrichment, and (3) breach of contract. The wife alleged that, "[b]y remarrying, without retiring, [the husband], has breached his fiduciary duty to [Wife], and impermissibly altered the Parties' Separation Agreement" and demanded $510,457.98 as a division of assets. The wife further demanded that the husband maintain a life insurance policy naming the wife as beneficiary to secure the $510,457.98 until either the husband paid the amount in full or retired.
After a nonevidentiary hearing, the judge issued a judgment, accompanied by a "Rationale for Judgment" (collectively "the equity judgment") wherein she concluded that the wife "had a reasonable expectation" that the husband would retire "when he became of usual retirement age," and that the husband "breached his legal obligation to select option 'C' for [the wife]." She concluded that, while the court is "unable to order [the husband] to retire," it can attempt to place the wife "in a position that she would be in had [the husband] performed as he is contractually obligated to do." She ordered the husband to pay to the wife an amount equal to 41.89 percent of his gross pension benefits, subsequently set in the court's "Supplemental Judgment" at $1,443.31 per month. The equity judgment also ordered the husband to change the beneficiaries of his life insurance policy through his employer so as to give the wife a one-third interest in the death benefit.
The same judge heard both the complaint for modification/declaratory judgment and the equity complaint.
The husband now appeals, arguing that the judge (1) exceeded her equitable authority, (2) altered the effect of a statute, (3) erred in finding that the wife had a reasonable expectation that he would retire, (4) unconstitutionally restrained the husband's right to marry, and (5) erred in failing to consider the relative financial situations of the parties. The husband further argues that the wife omitted facts that were necessary for the judge to consider, and that the order does not satisfy the equity standards for restitution or unjust enrichment.
This court heard argument on behalf of the husband only. See Mass.R.A.P. 22(e), 365 Mass. 870 (1974) ("If the appellee fails to appear to present argument, the appellate court will hear argument on behalf of the appellant, if present"). The court had the benefit of a brief from each party, but the wife did not appear for oral argument.
Discussion. The equity judgment and the supplemental judgment do not specify the basis for the relief granted, and it is not obvious from the record which of the wife's prayers for relief serve as the basis therefor. We address each potential basis in turn.
Contract claim. The husband's continued employment and subsequent remarriage cannot fairly be cast as contractual breaches of the separation agreement and QDRO, as neither "prohibit[s], bar[s], or limit[s]" his ability to continue working or to remarry. See Foster v. Hurley, 444 Mass. 157, 168 (2005). The judge concluded that the wife had a reasonable expectation that the husband would retire when he became of "usual retirement age." However, this assertion is unsupported by the record. Indeed, in the declaratory judgment action, the judge had previously determined that the assumption that the husband would retire was "wholly the [wife's]" and she relied on it "at her own peril." The record is devoid of evidence that the husband was obligated to retire at age sixty-five or at all.
Similarly, the separation agreement and the QDRO do not prevent the husband from remarrying, nor could they. In fact, the QDRO anticipates such a possibility in detailing that the statutory right of a new spouse to claim the husband's pension death benefit may supersede that of the wife. The parties agreed to these terms and had the opportunity, if they so desired, to address these possibilities. This they failed to do and, accordingly, the husband cannot be held responsible for the effect his choices to remarry and to continue to work would have on the wife's pension benefits.
The QDRO states: "In the event that the [Husband] should die prior to retiring and receiving his retirement benefit, [Husband] hereby designates [Wife] as the beneficiary for a death benefit.... [Husband] and [Wife] acknowledge that if [Husband] remarries, the surviving spouse may have the statutory right to elect a member-survivor allowance that will supersede [Wife's] rights under this paragraph."
Accordingly, the judge's desire to put the wife in the position she would have been in had the husband "performed as he is contractually obligated to do" is legally untenable. The husband has not breached the agreement. The wife's count for breach of contract is not supported by the evidence and cannot serve as the basis for the relief granted.
Constructive trust/unjust enrichment. Constructive trusts generally function to prevent unjust enrichment as a result of wrongful conduct or breach of duty. Sutton v. Valois, 66 Mass. App. Ct. 258, 266 (2006), quoting from Barry v. Covich, 332 Mass. 338, 342 (1955) (applied in cases of fraud, breach of fiduciary relationships, or other "significant wrongdoing"). A person has been unjustly enriched if he has retained "money or property of another against the fundamental principles of justice or equity and good conscience." Santagate v. Tower, 64 Mass. App. Ct. 324, 329 (2005) (quotation omitted). Unjust enrichment requires something more than a benefit. Rather, "[t]he benefit must be unjust, a quality that turns on the reasonable expectations of the parties." Global Investors Agent Corp. v. National Fire Ins. Co. of Hartford, 76 Mass. App. Ct. 812, 826 (2010), quoting from Community Builders, Inc. v. Indian Motorcycle Assocs., Inc., 44 Mass. App. Ct. 537, 560 (1998).
Here, the wife generally alleged that the husband breached a fiduciary duty: "[The husband] has breached his fiduciary duty owed to [the wife] pursuant to the Parties' Separation Agreement by remarrying and refusing to retire," extinguishing the wife's ability to collect on the husband's pension and altering the terms of the contract "without any substitute consideration." She further alleged that as parties to the separation agreement, the husband and wife stand as fiduciaries to one another, and have a continuing duty to exercise "the highest standards of good faith and fair dealing" in the performance of their obligations under the separation agreement. Krapf v. Krapf, 439 Mass. 97, 103 (2003). See Nile v. Nile, 432 Mass. 390, 398–399 (2000) (breach of implied covenant of good faith and fair dealing does not require showing of bad faith; lack of good faith may be inferred by considering totality of circumstances). The equity judgment does not identify what duty the husband is alleged to have breached. While the judge relied on Monahan v. Monahan, 85 Mass. App. Ct. 1101 (2014), an unpublished decision of a panel of this court, to conclude that there had been a breach of the duty to exercise the utmost good faith and fair dealing, she did not cite to any material in the record to support this conclusion. Neither Monahan nor Krapf is analogous to this case, and therefore we are unable to draw any such conclusion on the basis of the record before us.
Conclusion. We do not opine as to what relief, if any, the wife may be entitled. The record does not support a finding that the husband has breached the terms of the separation agreement or the QDRO. The record does not permit us to assess whether the husband has breached his continuing duty of good faith and fair dealing and has been unjustly enriched as a result, and whether a constructive trust in favor of the wife is appropriate. Accordingly, we remand for further proceedings and findings on these issues.
We leave it to the judge of the Probate and Family Court to determine the scope of any proceedings and considerations therein.
We vacate paragraphs one and two of the equity judgment and paragraph one of the supplemental judgment. We affirm paragraphs three and four of the equity judgment which order the husband to add the wife as a beneficiary to his life insurance policy to receive one-third of his death benefit. We vacate so much of paragraph two of the supplemental judgment as is inconsistent with this memorandum and order.
The husband, through counsel, stated at oral argument that the relief ordered in paragraph 3 was appropriate and had no objection to adding the wife as a beneficiary.
Paragraph two of the supplemental judgment states that "[a]ll other provisions of the [equity] [j]udgment ... are incorporated herein by reference."
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So ordered.
Vacated in part, affirmed in part, and remanded.