In the

Supreme Court of the United States

JOHN HOWELL Petitioner,

v.

SANDRA HOWELL, Respondent.

 

BRIEF OF RESPONDENT, Sandra Howell

QUESTION PRESENTED

Petitioner and Respondent agreed prior to divorce that Respondent was entitled to fifty percent of Peti­tioner's military retirement pay, and the decree so awarded. Petitioner later elected to receive veterans' disability benefits and waived an equal amount of retirement pay, consequently reducing Respondent's vested interest. Does the Uniformed Services Former Spouses' Protection Act preempt the state court's en­forcement or modification of a stipulated decree in or­der to indemnify Respondent and avoid depriving her of vested property without due process?

STATUTES INVOLVED

In addition to the provisions set out in the Brief of Petitioner, the following is also involved.

10 U.S.C. 1408(e)(6)

Nothing in this section shall be construed to relieve a member of liability for the payment of alimony, child support, or other payments required by a court order on the grounds that payments made out of dispos­able retired pay under this section have been made in the maximum amount permitted un­der paragraph (1) or subparagraph (B) of par­agraph (4). Any such unsatisfied obligation of a member may be enforced by any means available under law other than the means provided under this section in any case in which the maximum amount permitted under paragraph (1) has been paid and under sec­tion 459 of the Social Security Act in any case in which the maximum amount permitted under subparagraph (B) of paragraph (4) has been paid.

STATEMENT OF THE CASE

Petitioner John Howell and Respondent Sandra Howell resided and divorced in Arizona. Arizona is a community property state.

At the time of their divorce they contemplated that John's retirement was imminent.

Accordingly, they agreed to equally divide John's forth­coming military retirement pay (MRP). Their agree­ment provided:

[Sandra] is entitled to and is awarded as her sole and separate property FIFTY PER­CENT (50%) of [John's] military retirement when it begins through a direct pay order.

The Decree of Dissolution of Marriage entered on April 16, 1991 tracks the settlement agreement verba­tim:

[Sandra] is entitled to and is awarded as her sole and separate property FIFTY PER­CENT (50%) of [John's] military retirement when it begins through a direct pay order.

Sandra's apparent financial need entitled her to receive spousal maintenance from John. The Decree or­dered him to pay maintenance until he retired and she began receiving her share of the community property MRP.

John retired from the Air Force in 1992 after a twenty-year career. Payment of MRP be­gan in 1992.

In 2004, John voluntarily petitioned for Veterans Administration disability benefits. He received a retroactive disability rating of twenty percent in 2005. Because federal law prohibits duplication of MRP and disability benefits, John elected to waive MRP in an amount equal to his disability benefits of approxi­mately $250 per month. Conse­quently, the amount of Sandra's share of MRP was reduced by one-half of the amount John waived.

In 2013, Sandra moved to enforce the Decree's award of MRP and John moved to dismiss that motion. John agreed that Sandra had a vested interest in fifty percent of the MRP, and acknowledged he could not, under Arizona case law, unilaterally di­vest Sandra's interest in the MRP.

John did not argue the intent of his agreement with Sandra to share his MRP equally. Specifically, he did not argue that the agreement allowed him to uni­laterally reduce the dollar amount of Sandra's vested interest.

John argued, instead, that a post-decree enact­ment, A.R.S. 25-318.01,overruled prior case law by prohibiting the modification of a property division to indemnify a veteran's spouse for a reduction in MRP related to the veteran's receipt of disability benefits.

In ruling on the motions, the family court found:

      Sandra "had a vested property right in 50% of [John's] military retirement."

      "[Sandra] was dependent on and expect­ing this money."

      A.R.S. 25-318.01 cannot be applied ret­roactively to vested property rights.

      John "had an obligation to pay [Sandra] 50% of the military retirement as ordered in the decree."

      John "violated the decree by unilaterally decreasing the retirement pay in favor of disability pay."

      "[John] owed [Sandra] 50% of the military retirement regardless of the disability rating as his election unilaterally alters a vested property right."

Accordingly, John's motion to dismiss was denied, as was his motion for reconsideration.

After an evidentiary hearing to determine the amount John owed to Sandra, the family court "Or­dered that [John] is responsible for ensuring [Sandra] receive her full 50% of the military retirement without regard for the disability." That order did not direct how John was to comply. Specifically, it did not order him to pay from his disability benefits. John apparently did not make a record regarding his income and assets from which he could pay Sandra.

On appeal, John argued for the first time that the Uniformed Services Former Spouses' Protection Act (USFSPA) preempted the family court's authority to order him to indemnify Sandra. The Arizona Court of Appeals deemed the issue waived.

The Arizona Supreme Court, however, considered it.

Observing that "Sandra was awarded fifty percent of the MRP years before John unilaterally elected to receive disability pay in lieu of a portion of MRP" and that the "Order did not divide the MRP subject to the VA waiver, order John to rescind the waiver, or direct him to pay any amount to Sandra from his disability pay," the Arizona Supreme Court concluded that "the family court did not violate the USFSPA or Mansell be­cause it did not treat the MRP subject to the VA waiver as divisible property."

Citing Mansell's recognition that "domestic rela­tions are preeminently matters of state law," and the corresponding requirement for positive evidence of preemption by direct enactment, the Arizona Supreme Court concluded:

Nothing in the USFSPA directly prohib­its a state court from ordering a veteran who makes a post-decree VA waiver to reimburse the ex-spouse for reducing his or her share of MRP. Absent such direct prohibition, we de­cline to find federal prohibition.

The Arizona Supreme Court therefore held "that federal law does not preempt the family court's author­ity to order a retired veteran to indemnify an ex-spouse for a reduction in MRP caused by a post-decree waiver of MRP made to obtain disability benefits."

Lastly, the Arizona Supreme Court ruled "Sandra had a vested right to receive future distributions of her share of MRP unencumbered by any adjustments ini­tiated by John." In that circumstance, the inapplicability of A.R.S. 25-318.01 was affirmed. The Arizona Supreme Court held that the statute "can­not be applied to prohibit the court from entering an indemnification order in these circumstances if the ex­-spouse's share of MRP vested as a property right be­fore the statute's enactment." Otherwise, the statute would "diminish Sandra's vested property right in violation of the due process guarantee."

SUMMARY OF ARGUMENT

This Court held in McCarty v. McCarty, that MRP was the personal entitlement of the service member and therefore not divisible upon divorce. The USFSPA was enacted to "reverse" McCarty by authorizing the States to treat MRP accord­ing to state law, and thereby protect the former spouses of service members. As defined in the USFSPA, divisi­ble MRP excludes MRP that has been waived in order to receive veteran's disability benefits. Accordingly, this Court held in Mansell v. Mansell, "that the Former Spouses' Protection Act does not grant states the power to treat as property divisi­ble upon divorce military retirement pay that has been waived to receive veterans' disability benefits."

In Arizona, MRP is community property. It is a form of deferred compensation earned during marriage and divisible upon divorce. When it is divided, whether by agreement or not, Arizona law provides that the family court's decree creates a vested property right to future payments that a veteran cannot later unilater­ally and negatively affect.

John and Sandra Howell agreed to divide his MRP equally, and their divorce decree so ordered. Thirteen years later, John voluntarily sought to receive disabil­ity benefits. After an evaluation determined him to be twenty percent disabled, he elected to accept disability benefits. Doing so reduced his MRP dollar-for-dollar, and thereby reduced the payments to Sandra. On Sandra's motion to enforce the decree, the family court "Ordered that [John] is responsible for ensuring [San­dra] receive her full 50% of the military retirement without regard for the disability." But, as the Arizona Supreme Court observed, the "Order did not divide the MRP subject to the VA waiver, order John to rescind the waiver, or direct him to pay any amount to Sandra from his disability pay."

The regulation of domestic relations has tradition­ally been left to the States. There is therefore a pre­sumption against pre-emption of state laws governing domestic relations. When Congress enacted the USFSPA, it did not expressly pre-empt the application of state law to the division of MRP. Instead, it explicitly autho­rized the division of MRP according to state law. It must therefore be presumed that state law regarding agreements to divide MRP, the nature of the property interest created by an agreed or decreed division of MRP, and the enforcement or modification of decrees for the division of MRP is not pre-empted.

The issuance of a family court order requiring a veteran to indemnify a former spouse for a reduction in vested MRP after the veteran waives MRP to receive disability benefits, especially when the parties had agreed to the division of MRP, does not conflict with the purposes and objectives of the USFSPA. The pri­mary purpose of the USFSPA to protect former spouses of veterans receiving MRP is actually furthered by such an order. And the order does not do "major dam­age" to any "clear and substantial" federal interest. In­deed, the only applicable federal interest - providing for the retired member - is not damaged because Con­gress has expressly authorized the division of MRP.

Finally, Mansell is not controlling and the indem­nification order herein does not violate its holding. The MRP divided in Mansell included MRP that had al­ready been waived to receive disability benefits. In other words, the spouse in Mansell had not acquired a vested interest in the waived MRP before the waiver.

 

CONCLUSION

The Arizona Supreme Courts decision is correct and should be affirmed.