STATE OF MICHIGAN

IN THE SUPREME COURT DEBORAH LYNN FOSTER, Plaintiff/Appellee,

v

RAY JAMES FOSTER Defendant / Appellant.

______________________________________________________________________________

APPLICATION FOR LEAVE TO APPEAL

NOTICE OF HEARING ______________________________________________________________________________ Respectfully submitted by: Carson J. Tucker (P62209) Attorney for Petitioner 117 N. First St., Suite 111 Ann Arbor, MI 48104 (734) 629-5870 cjtucker@lexfori.org

SCT Docket No. COA Docket No. 324853 Circuit Court No. 07-15064-DM

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TABLE OF CONTENTS INDEX OF ATTACHMENTS …………………………………………………………………………..iii

TABLE OF AUTHORITIES .................................................................................................................... iii STATEMENT OF ORDER BEING APPEALED .................................................................................. ix QUESTIONS PRESENTED .......................................................................................................................x STATEMENT OF THE CASE ...................................................................................................................1

1. Introduction ..........................................................................................................................................1 2. Statutory Framework ...........................................................................................................................6 3. Material Facts and Proceedings Below ...............................................................................................7 4. Petitioner’s Appeal ..............................................................................................................................9 5. The Court of Appeals Opinion ...........................................................................................................12

GROUNDS FOR APPEAL .......................................................................................................................14 1. The Issues Presented in this Appeal Involve Legal Principles of Major Significance to Michigan

and National Jurisprudence ...............................................................................................................14 2. The Court of Appeals Decision is Erroneous and Will Cause Material Injustice .............................16 3. Practical Realities of Post-Service Life for the Combat Veteran ......................................................16

ARGUMENT AND ANALYSIS ...............................................................................................................19 ARGUMENT I. ..........................................................................................................................................19

1. Summary ............................................................................................................................................19 2. Issue Preservation ..............................................................................................................................20 3. Standard of Review ............................................................................................................................21 4. Controlling Law .................................................................................................................................21 a. Congress has Plenary Authority Over Disposition of Military Benefits ............................................21 b. Congress Plenary Authority Means the Supremacy Clause Preempts State Authority Over

Disposition of Military Benefits Provided by Congress .....................................................................23 c. Plenary Federal Preemption Still Prevails But for the Limited Congressional Cession of Authority

Over Disposable Retired Pay in the USFSPA ...................................................................................26

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5. Analysis ..............................................................................................................................................27 6. Conclusion .........................................................................................................................................30

ARGUMENT II. .........................................................................................................................................35 1. Summary .............................................................................................................................................35 2. Issue Preservation ...............................................................................................................................36 3. Standard of Review ............................................................................................................................37 4. Controlling Law .................................................................................................................................37 5. Analysis ..............................................................................................................................................39

ARGUMENT III. .......................................................................................................................................41 1. Summary ............................................................................................................................................41 2. Preservation .......................................................................................................................................41 3. Standard of Review ............................................................................................................................42 4. Controlling Law ..................................................................................................................................42 5. Analysis ..............................................................................................................................................43

RELIEF REQUESTED .............................................................................................................................45

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INDEX OF ATTACHMENTS ATTACHMENT A – Foster v Foster, Unpublished Opinion of Michigan Court of Appeals,

Issued October 13, 2016 (Docket . 324853)

ATTACHMENT B – December 3, 2008 Consent Judgment of Divorce

ATTACHMENT C – November 6, 2014 Order of Contempt

ATTACHMENT D – June 27, 2014 Bond

ATTACHMENT E – Petition for Writ of Certiorari in Merrill v Merill, Supreme Court Case No. 15-1139

ATTACHMENT F – Solicitor General Brief in Howell v Howell, Supreme Court Case No. 15-1031

ATTACHMENT G – HB 4170 (Proposed) and Legislative Analysis of September 2016

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TABLE OF AUTHORITIES

Cases American Training Serv’s, Inc v Veterans Admin, 434 F Supp 988 (DNJ 1977) ................................................................................................... 37, 41 Ameritech Mich v PSC (In re MCI), 460 Mich 396; 596 NW2d 164 (1999) .................................................................................... 37, 42 Arbuckle v GM, LLC, 499 Mich 521; 885 NW2d 232 (2016) .................................................................................... 21, 23 Barker v Kansas, 503 US 594; 112 S Ct 1619; 188 L Ed 2d 243 (1992) ............................................................ 25, 26 Barr v Payne, 298 Mich 85; 298 NW 460 (1941) ................................................................................................ 11 Biondo v Biondo, 291 Mich App 720; 809 NW2d 397 (2011) ................................................................................... xi Buchanan v Alexander, 4 How 20 (1845) ........................................................................................................................... 27 Dahnke-Walker Milling Co v Bondurant, 257 US 282; 42 S Ct 106; 66 L Ed 239 (1921) ............................................................................. 21 Diaz v Provena Hosp, 817 NE2d 206; 352 Ill App 3d 1165 (2004) ................................................................................. 41 Ex parte Johnson, 591 SW2d 453 (Tex 1979) ............................................................................................................ 39 Finch v LVNV Funding, LLC, 212 Md App 748; 71 A3d 193 (2013) .......................................................................................... 42 Free v Bland, 369 US 663; 82 S Ct 1089; 8 L Ed 2d 180 (1962) ........................................................................ 24 Gibbons v Ogden, 9 Wheat 1; 22 US 1; 6 L Ed 23 (1824) ......................................................................................... 24 Halstead v Halstead, 164 NC App 543; 596 SE2d 353 (2004) .................................................................................. xi, 39

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Harris v Reed, 489 US 255; 109 S Ct 1038; 103 L Ed 2d 308 (1989) .................................................................. 37 Hines v Davidowitz, 312 US 52; 61 S Ct 399; 85 L Ed 581 (1941) ............................................................................... 24 Hisquierdo v Hisquierdo, 439 US 572; 99 S Ct 802; 59 L Ed 2d 1 (1979) ..................................................................... passim In re Marriage of Carlson, No. 13-1854, 2015 Iowa App. LEXIS 79 (Ct. App. Feb. 11, 2015) ............................................. 38 In re Marriage of Costo, 156 Cal App 3d 781; 203 Cal Rptr 85 (1984) .............................................................................. 39 In re Marriage of Hapaniewski, 107 Ill App 3d 848; 63 Ill Dec 535, 438 NE2d 466 (1982) .......................................................... 39 In re Marriage of Howell, 434 NW2d 629 (Iowa 1989) ......................................................................................................... 38 In re Marriage of Perkins, 107 Wash App 313; 26 P3d 989 (2001) ........................................................................................ 44 In re Marriage of Pierce, 26 Kan App 2d 236; 982 P2d 995 (1999) ...................................................................................... xi Japan Line, Ltd v County of Los Angeles, 441 US 434; 99 S Ct 1813; 60 L Ed 2d 336 (1979) ...................................................................... 21 Kelley v Kelley, 248 Va 295; 449 SE2d 55 (1994) ................................................................................................. 42 King v. King, 149 Mich App 495; 386 NW2d 562 (1986) ..................................................................... vii, viii, 19 Kosch v Kosch, 233 Mich App 346; 592 NW 2d 434 (1999) ................................................................................. 43 Mallard v Burkart, 95 So3d 1264 (Miss. 2012) ......................................................................................................... 1, 3 Mansell v Mansell, 490 US 581; 109 S Ct 2023; 104 L Ed 2d 675 (1989) ........................................................... passim

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Marriage of Jennings, 91 Wash App 543; 958 P2d 358 (1998) ......................................................................................... xi Marriage of Strong v. Strong, 2000 MT 178; 300 Mont 331; 8 P3d 763 (2000) .......................................................................... 31 Martin v. Hunter’s Lessee, 14 U.S. 304; 4 L. Ed. 97 (1816) .................................................................................................... 34 Matter of Marriage of Reinauer, 946 SW2d 853 (Tex App 1997) ..................................................................................................... xi McCarty v McCarty, 453 US 210; 101 S Ct 2728; 69 L Ed 2d 589 (1981) ............................................................. passim McCulloch v Maryland, 17 US 316, 4 Wheat 316, 436, 4 L Ed 579 (1819) ....................................................................... 30 Megee v Carmine, 290 Mich App 551; 802 NW2d 669 (2010) ................................................................. ix, 12, 21, 36 Mich Canners & Freezers Ass’n v Agric Mktg & Bargaining Bd, 467 US 461; 104 S Ct 2518; 81 L Ed 2d 399 (1984) .............................................................. vii, 23 Midlantic Nat’l Bank v New Jersey Dep’t of Envt’l Protection, 474 US 494 (1986) ........................................................................................................................ 31 Murphy v Murphy, 302 Ark 157; 787 SW2d 684 (1990) ............................................................................................. 38 Nelson v Nelson, 2003 Ok Civ App 105; 83 P.3d 889 (2003) .............................................................................. 4, 28 Norskog v Pfiel, 755 NE2d 1; 197 Ill 2d 60 (2001) ................................................................................................. 41 Oneok, Inc v Learjet, Inc, 135 S Ct 1591; 191 L Ed 2d 511 (2015) ................................................................................. vii, 23 Orloff v Willoughby, 345 US 83; 73 S Ct 534; 97 L Ed 842 (1953) ............................................................................... 22 Porter v Aetna Cas. & Sur Co, 370 US 159; 82 S. Ct. 1231; 8 L. Ed. 2d 407 (1962) .............................................................. 37, 40

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Retail Clerks Int’l Ass’n v Schermerhorn, 375 US 96; 84 S Ct 219; 11 L Ed 2d 179 (1963) .......................................................................... 23 Rickman v. Rickman, 124 Ariz 507, 605 P2d 909 (1980) ................................................................................................ 39 Ridgway v Ridgway, 454 US 46; 102 S Ct 49; 70 L Ed 2d 39 (1981) ................................................................ 25, 37, 43 Rostker v Goldberg, 453 US 57; 101 S Ct 2646; 69 L Ed 2d 478 (1981) ................................................................ 22, 25 Rumsfeld v Forum for Acad & Inst’l Rights, Inc, 547 US 47; 126 S Ct 1297; 164 L Ed 2d 156 (2006) .................................................................... 22 Toth v Quarles, 350 US 11; 76 S Ct 1; 100 L Ed 8 (1955) ..................................................................................... 22 Trans Alaska Pipeline Rate Cases, 436 US 631 (1978) ........................................................................................................................ 32 United States v O’Brien, 391 US 367; 88 S Ct 1673; 20 L Ed 2d 672 (1968) ...................................................................... 22 United States v. Tyler, 105 US 244 (1882) ........................................................................................................................ 25 Wissner v Wissner, 338 US 655; 70 S Ct 398; 94 L Ed 424 (1950) ............................................................................. 24 Yates v Aiken, 484 US 211; 108 S Ct 534; 98 L Ed 2d 548 (1988) ...................................................................... 36 Youngbluth v Youngbluth, 188 Vt 53; 6 A3d 677 (2010) .......................................................................................................... 2 Statutes 10 USC 1201 ................................................................................................................................... 6 10 USC 1408 .......................................................................................................................... passim 10 USC 1413a ........................................................................................................................ passim 10 USC 3911 ................................................................................................................................... 6 10 USC 6321 ................................................................................................................................... 6

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10 USC 8911 ................................................................................................................................... 6 38 USC 1110 ................................................................................................................................... 6 38 USC 1155 ................................................................................................................................... 6 38 USC 5301 .......................................................................................................................... passim 42 USC 659 ......................................................................................................................... 7, 15, 34 Act of Mar. 18, 1818, ch. 19, § 1, 3 Stat. 410 ............................................................................... 23 Act of Sept. 29, 1789, ch. 24, 1 Stat. 95 ....................................................................................... 23

Other Authorities DoD 7000.14, Financial Management Regulation, vol. B, ch. 63, p. 63-5, § 630104 (2013) ........ 6 Kamarck, Military Retirement: Background and Recent Developments, Congressional Research

Service (September 12, 2016) ..................................................................................................... 6 Larry D. White, The Uniformed Services Former Spouses Protection Act: How Military

Members are at the Mercy of Unrestrained State Courts, 9 Roger Williams U L Rev 289, 292 (2003) ........................................................................................................................................ 33

Marshal S. Willick, Military Retirement Benefits in Divorce, A Lawyer’s Guide to Valuation and

Distribution, Family Law Section of the American Bar Association (1998) ............. 1, 3, 17, 26 Resolution of August 26, 1 J. OF CONG. 454 (1776) ..................................................................... 22 Rombauer, Marital Status and Eligibility for Federal Statutory Income Benefits: A Historical

Survey, 52 WASH. L. REV. 227 (1977) ............................................................................... 22, 23 S. Rep. No. 1480, 90th Cong., 2d Sess., 6 (1968) ......................................................................... 33

Rules MCR 7.303(B)(1) ........................................................................................................................... vi MCR 7.305 ..................................................................................................................................... vi Constitutional Provisions US Const, art I, § 8........................................................................................................................ 22 US Const, art VI, cl 2 .............................................................................................................. vii, 23

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STATEMENT OF ORDER BEING APPEALED

Pursuant to MCR 7.305, Petitioner appeals the October 13, 2016 decision of the Court of

Appeals. (ATTACHMENT A, Foster v. Foster, Unpublished Decision of the Michigan Court of

Appeals, dated October 13, 2016 (Docket No. 324853) (Markey, PJ; Murphy and Krause, JJ).

This Court may exercise jurisdiction over Petitioner’s application pursuant to MCR

7.303(B)(1).

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QUESTIONS PRESENTED

I.

The Supremacy Clause provides: “This Constitution, and the Laws of the United States

which shall be made in pursuance thereof…shall be the supreme Law of the Land; and the

Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State

to the Contrary notwithstanding.” US Const, art VI, cl 2. Federal law preempts state law where

Congress has intended to foreclose any state regulation in the subject matter regardless of

whether state law is consistent or inconsistent with federal standards. Oneok, Inc v Learjet, Inc,

135 S Ct 1591, 1594; 191 L Ed 2d 511 (2015). See also Mich Canners & Freezers Ass’n v Agric

Mktg & Bargaining Bd, 467 US 461, 469; 104 S Ct 2518; 81 L Ed 2d 399 (1984) (internal

citations omitted), accord Hisquierdo v Hisquierdo, 439 US 572, 582-83; 99 S Ct 802; 59 L Ed

2d 1 (1979).

In McCarty v McCarty, 453 US 210, 223; 101 S Ct 2728; 69 L Ed 2d 589 (1981), the Court

ruled Congress had completely preempted state law from treating veterans’ benefits as marital

property in state divorce proceedings. In this unique field, the Court explained, Congress had

historically intended all military benefits to be property of the servicemember. Id. at 228.

In 1982, Congress recognized a limited exception to federal preemption in the Uniformed

Services Former Spouses’ Protection Act (USFSPA), 10 USC 1408. See Mansell v Mansell, 490

US 581, 587-95; 109 S Ct 2023; 104 L Ed 2d 675 (1989), accord King v. King, 149 Mich App

495, 499-500; 386 NW2d 562 (1986). The USFSPA allowed state courts to treat only a portion

of veterans’ benefits (disposable military retirement pay) as property subject to division under

the respective states’ pre-existing community or equitable property laws. 10 USC 1408(c)(1);

Mansell, 490 US at 594-95. All other military benefits (non-disposable retirement benefits

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(defined in 10 USC 1408(a)(4)(B) and (c)(1)), disability benefits, and special compensation

incident to military service remained federally protected veterans’ benefits. With respect to the

latter, state courts are simply “without power to treat [them] as property divisible upon divorce.”

10 USC 1408(a)(4)(B); Mansell, supra at 588-89; King, 149 Mich App at 499-500.

The trial court order in this case treated Petitioner’s non-disposable, combat-related special

compensation (CRSC) veterans’ disability benefits as disposable retirement pay by ordering that

Respondent’s entitlement “be calculated as if [Petitioner] had not become disabled”; that

Petitioner was “responsible to pay, directly to [Respondent], the sum to which she would be

entitled if [Petitioner] had not become disabled”; that Petitioner was to “pay this sum…out of his

own pocket and earnings, whether he is paying that sum from his disability pay or otherwise”;

“that [Petitioner] shall be responsible to pay directly to [Respondent] any decrease in pay that

[Respondent] should have been awarded had [Petitioner] not become disabled”; and that

“[f]ailure of [Petitioner] to pay these amounts is punishable through all contempt powers of the

Court”. (ATTACHMENT B, pp. 4-5).

Petitioner, a decorated combat veteran who is 100 percent disabled, 100 percent

unemployable and suffering from PTSD due to injuries received during combat while serving

two tours as an infantry platoon leader in Iraq, was held in contempt of court because he was

unable to pay his former spouse when her marital share of Petitioner’s disposable retired pay

(divisible under the USFSPA, 10 USC 1408(a)(4)(B) and (c)(1)) was reduced by operation of

law because of Petitioner’s receipt of CRSC (non-divisible, non-disposable pay under 10 USC

1413a(g)). (ATTACHMENT C, November 6, 2014 Order of Contempt). A security bond

assuring Petitioner’s payments is in place and Petitioner’s mother’s home is the collateral.

(ATTACHMENT D).

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While the Michigan Court of Appeals has previously approved post-divorce “indemnity

agreements” like the one at issue here, which consider (or otherwise treat) non-disposable

veterans’ disability benefits as marital property, and has declared Michigan has “join[ed] those

jurisdictions providing relief to the non-military spouse”, see Megee v Carmine, 290 Mich App

551, 574; 802 NW2d 669 (2010), this Court has not, unlike many of the highest appellate courts

in other states, addressed this issue. State courts are in fact split on whether they may achieve

indirectly what they are barred by federal law from doing directly.

The Question Presented to the Court under these circumstances is:

Did the Court of Appeals err in ruling Michigan state courts may circumvent the dictates of the Supremacy Clause as expressed in the USFSPA and the Supreme Court’s historical recognition of total preemption in the area of federal veterans’ benefits over state law regarding disposition of martial property in divorce proceedings by ordering Petitioner, a 100% disabled and 100% unemployable combat veteran whose only source of income is federally protected, non-disposable, non-assignable combat-related special compensation benefits, to nonetheless pay these monies over to his former spouse in a property distribution in divorce proceedings as if he was not disabled?

Petitioner Answers: Yes. Respondent Answers: No. The Court of Appeals Answers: No. (Attachment A, pp. 4-5).

II. Title 38 USC 5301(a)(1) states:

Payments of benefits due or to become due under any law administered by the Secretary [of Veterans Affairs] shall not be assignable except to the extent specifically authorized by law, and such payments made to, or on account of, a beneficiary…shall not be liable to attachment, levy, or seizure by or under any legal or equitable process whatever, either before or after receipt by the beneficiary….” (emphasis added).

Section (a)(3)(A) further provides:

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This paragraph is intended to clarify that, in any case where a beneficiary entitled to compensation…enters into an agreement with another person under which agreement such other person acquires for consideration the right to receive such benefit by payment of such compensation…such agreement shall be deemed to be an assignment and is prohibited.” (emphasis added).

Finally, (a)(3)(C) provides:

Any agreement or arrangement for collateral for security for an agreement that is prohibited under subparagraph (A) is also prohibited and is void from its inception.” (emphasis added).

Combat-related special compensation (CRSC) benefits under 10 USC 1413a are authorized by

the Secretary of Veterans Affairs (VA) to be paid to former servicemembers for their service-

connected disabilities incurred during combat and wartime service. 10 USC 1413a. These

benefits are not retired pay. 10 USC 1413a(g). Therefore, they are not disposable pay subject to

marital property divisions by state courts under the USFSPA.

Petitioner contents the 2008 Order (and all subsequent contempt orders) require him to pay

over his CRSC funds to Respondent in contravention of the plain language of 38 USC 5301.

The United States Supreme Court reserved decision on this very issue in Mansell, 590 US at

587, n 6, stating “[b]ecause we decide that the [USFSPA] precludes States from treating as

community property retirement pay waived to receive veterans’ disability benefits, we need not

decide whether the anti-attachment clause, [38 USC] § 3101 [(subsequently recodified as §

5301)], independently protects such pay.” Since that 1989 decision, state courts are divided on

the applicability of this provision to non-disposable, non-assignable pay in property settlements

consequent to divorce. Michigan has not addressed this issue.

The Court of Appeals ruled since the USFSPA did not preclude the trial court’s order, 38

USC 5301 did not apply to prohibit an order forcing Petitioner to use his CRSC benefits to make

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up for that portion of his military retired pay waived to receive those benefits. (Attachment A, p.

5).

The second Question Presented to the Court under these circumstances is:

Does the plain language of 38 USC 5301 prohibit enforcement of the trial court’s orders that Petitioner pay and continue to pay his non-disposable veterans benefits in contravention of 10 USC 1408 and 10 USC 1413a?

Petitioner Answers: Yes. Respondent Answers: No. Court of Appeals Answers: No. (Attachment A, p. 5).

III.

State courts are also divided over whether an order forcing a servicemember to part with non-

disposable pay under 10 USC 1408 and in contravention of 38 USC 5301 is void as contrary to

federal law. Those courts that follow the mandate of Mansell, i.e., that federal law continues to

preempt all state court authority over non-disposable veterans’ benefits, have ruled that such

orders are void to the extent they authorize payments of non-disposable monies to the former

spouse. See, e.g., In re Marriage of Pierce, 26 Kan App 2d 236, 242-43; 982 P2d 995 (1999);

Marriage of Jennings, 91 Wash App 543; 958 P2d 358 (1998); Matter of Marriage of Reinauer,

946 SW2d 853 (Tex App 1997); Halstead v Halstead, 164 NC App 543, 550; 596 SE2d 353

(2004).

The Michigan Court of Appeals, addressing the nearly identical question with respect to

federal social security benefits has ruled, consistent with the reasoning in these cases, that orders

forcing dispossession of such federal benefits may be challenged and reversed as ultra vires of

the state court’s authority. See Biondo v Biondo, 291 Mich App 720, 727; 809 NW2d 397 (2011)

(“the Supremacy Clause preempts state laws regarding the division of marital property only to

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the extent they are inconsistent with 42 USC 407(a) [the anti-assignment provision of the Social

Security Act]” and reversing such order where the trial court and parties “incorrectly deemed

social security benefits marital property to be equally divided with the rest of the marital estate”).

The Court of Appeals ruled Petitioner was collaterally estopped from challenging the trial

court’s orders under either of Petitioner’s theories of lack of jurisdiction and authority over his

veterans’ benefits or mistake of law and fact. The Question Presented by these circumstances is:

Was Petitioner barred from asserting that since federal law preempted a state court’s authority over a portion of his military veterans’ benefits, he could challenge the trial court’s orders obligating him to continue paying Respondent these benefits?

Petitioner Answers: No. Respondent Answers: Yes. Court of Appeals Answer: Yes. (Attachment A, p. 5).

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STATEMENT OF THE CASE

1. Introduction If federal law preempts state court authority to divide federal military benefits, but for the

exception of “disposable” veterans’ benefits identified in the Uniform Services Former Spouses

Protection Act (USFSPA), 10 USC 1408,1 can state courts nonetheless fashion creative solutions

to avoid this prohibition and consider or treat other non-disposable veterans’ benefits as property

in divorce proceedings? This is the overarching question in this case. Despite tergiversation

among state courts across the country, the answer is “No.”

To understand why this is the answer, the Court must address the three questions presented.

Depending on which side of this primary question a state falls, various answers have been

posited. No clear majority appears to exist. See, e.g., Mallard v Burkart, 95 So3d 1264, 1271

(Miss. 2012) (noting there is a split of authority with no clear majority, but holding post-Mansell,

1 Despite the various types of benefits available to military veterans (military retirement pay, disability pay, and special compensation (like the combat-related special compensation (CRSC) benefits awarded to Petitioner in this case), there are only two “types” of benefits at issue: (1) disposable retired pay and (2) all other non-disposable veterans’ benefits. The plain language of the USFSPA allows state courts jurisdiction over and authority to divide only “disposable” retired pay. 10 USC 1408(a)(4)(B) and (c)(1). The statute excludes from consideration military retired pay that is “waived” to receive veterans’ disability benefits, and, by default, all other veterans’ benefits not characterized by the USFSPA as “disposable” retired pay. Mansell, 490 US at 587-89. Waivers are effectuated by a servicemember’s choice to accept disability pay in lieu of retired pay, or by operation of law from an award to the servicemember of special compensation benefits (like the combat-related special compensation (CRSC) benefits awarded to Petitioner here). See 10 USC 1413a. Only “disposable” retired pay may be “divided” by state courts in marital property distributions consequent to divorce. All other veterans’ benefits remain off limits. Mansell, supra at 589 (“under the [USFSPA’s] plain and precise language state courts have been granted the authority to treat disposable retired pay as community property; they have not been granted the authority to treat total retired pay as community property”). See also Marshal S. Willick, Military Retirement Benefits in Divorce, A Lawyer’s Guide to Valuation and Distribution, Family Law Section of the American Bar Association (1998), p. 30 (explaining that even though Congress amended the USFSPA in 1990, it did nothing to alter Mansell’s broad ruling “that the subject-matter jurisdiction of the state divorce courts is limited to division of the disposable retired pay of members.”) (emphasis added).

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state courts are prohibited from ordering a division of veterans’ disability benefits received by

the servicemember due to his waiver, post-divorce, of previously divisible “disposable”

retirement pay under the USFSPA), accord Youngbluth v Youngbluth, 188 Vt 53, 61-62; 6 A3d

677 (2010) (same).

However, despite attempts by some state courts to circumvent the effect of complete

preemption of state law in matters of federal veterans’ benefits, the answer is clear from the

Supreme Court’s decision in Mansell and the plain language of the USFSPA. First, Mansell ruled

that McCarty v McCarty, 453 US 210; 101 S Ct 2728; 69 L Ed 2d 589 (1981), had not been

abrogated by the USFSPA, leaving in place the long-standing general rule that state court

authority over veterans’ benefit is entirely preempted by federal law. Mansell, 490 US at 588-89.

As explained by the Court in McCarty, and by close examination of the cases relied on in that

decision, this federal preemption stems from the Supremacy Clause and Congress’ constitutional

authority under the Armed Forces Clauses in matters pertaining to national defense and

maintenance and support of the military. Mansell clarified this blanket preemption was lifted by

Congress in the USFSPA with respect only to disposable military retirement pay. Id. at 589.

Thus, only a portion of veterans’ benefits, a statutorily defined “disposable” portion of retired

pay, may be treated or considered by state courts in marital property divisions consequent to

divorce. All other benefits remain outside of state courts’ authority to be considered as “marital

property.”

Unfortunately, between enactment of the USFSPA in 1982 and the 1989 decision in Mansell,

some state courts regarded the USFSPA as Congressional abrogation of McCarty’s absolute

preemption of their authority over veterans’ benefits. As explained in this application, this is not

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the case.2 Yet, state courts have propagated this error and, as a consequence, they have continued

to improperly consider non-disposable veterans’ benefits in property divisions consequent to

divorce in direct contravention of the USFSPA and Supreme Court jurisprudence.

Second, Mansell reaffirmed the McCarty court’s ruling that state courts may not consider or

treat non-disposable veterans’ benefits indirectly, as much as they are preempted from doing so

directly. Mansell, supra at 588-589, 595; McCarty, supra at 228 and n 22 (“[military r]etired pay

cannot be attached to satisfy a property settlement” and “the injunction against attachment is not

to be circumvented by an offsetting award”). This means that constructive trusts, indemnity

agreements, anticipatory clauses, “implied” or “express” contracts, “settlements” and any other

number of “creative” mechanisms designed to replace or substitute for the reduction in funds

paid to the former spouse under an existing divorce decree due to the veteran’s post-judgment

receipt of non-disposable benefits are contrary to federal law and are therefore of no force and

effect. See, e.g., Mallard, 95 So3d at 1272 (noting federal law preempts state law and state courts

are precluded from ordering a distribution of military disability benefits contrary to federal law

and stating “[w]hile some state courts may have established ‘creative solutions’ around the literal

meaning of the Mansell holding…[it] applies even though the ‘harsh reality of this holding is

that former spouses…can, without their consent, be denied a fair share of their ex-spouse’s

military retirement pay simply because [the military spouse] elects to increase his after-tax

income by converting a portion of that pay into disability benefits’”) (quoting Mansell, 490 U.S.

at 595 (O’Connor, J., dissenting)).

In the instant case, the Court of Appeals ruled, consistent with states that have ignored

Mansell’s clear mandate3 (or those which have blatantly admitted to adopting Justice O’Connor’s 2 Willick, supra (noting that Mansell ruled that “the [USFSPA] did not constitute a total repudiation of the preemption found by the court to exist in McCarty.”).

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dissent),4 that the trial court was not preempted by federal law from “considering” non-

disposable veterans’ benefits to “indemnify” Petitioner’s former spouse when his disposable

military retirement pay was reduced in proportion to his receipt of CRSC, i.e., non-disposable

veterans’ benefits.5 See 10 USC 1408(a)(4)(B) and (c)(1); 10 USC 1413a(g) (“[CRSC p]ayments

under this section are not retirement pay”); and Mansell, supra at 589 (“under the [USFSPA’s]

plain and precise language state courts have been granted the authority to treat disposable retired

pay as community property; they have not been granted the authority to treat total retired pay as

community property”).

The issue of post-divorce reductions in the former spouse’s share has yet to be addressed by

this Court. The United States Supreme Court is currently considering petitions in two cases, one

of which contains elements nearly identical in all respects to the facts of this case.

(ATTACHMENT E, Petition for Writ of Certiorari in Merrill v Merill, Supreme Court Case No.

15-1139).6

3 490 US at 583-595. Justice Marshall wrote the majority opinion and was joined by Chief Justice Rehnquist, and Justices Brennan, White, Stevens, Scalia and Kennedy. 4 490 US at 595-604 (joined only by Justice Blackmun). 5 See, e.g., Nelson v Nelson, 2003 Ok Civ App 105, ¶¶ 7-8, 83 P.3d 889 (2003) (stating while “[u]ndeniably, veterans’ disability benefits are the separate property of the veteran…courts of several states have agreed with Justice O’Connor’s position and have taken equitable action to protect former spouses faced with a reduction in payments due to a reduction in military retirement pay.” 6 This case was distributed for the November 22, 2016 conference. A nearly identical case, Howell v. Howell is also pending and was distributed for the same conference. Supreme Court Case No. 15-1031. In this latter case, at the Court’s request, the current Solicitor General filed a brief in which it sides with state courts’ independent authority over non-disposable veterans’ benefits. See ATTACHMENT F. Interestingly, the Solicitor General filed a similar brief supporting the states in Mansell (at the petition stage), but then filed a brief at the merits stage supporting federal preemption of state court authority over federally protected veterans’ benefits (other than that portion of disposable benefits as defined in 10 USC 1408(a)(4)(B) and (c)(1)). See https://www.justice.gov/sites/default/files/osg/briefs/1988/01/01/sg880388.txt.

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Petitioner contends, consistent with Mansell and the USFSPA, that all military veterans’

benefits that are not within the definition of disposable retirement pay under the USFSPA remain

protected by federal law. Mansell, 490 US at 588-89 (stating “pre-existing federal law, as

construed by this Court, completely preempted the application of state community property law

to military retirement pay” and the USFSPA only gave state courts “authority to treat disposable

retirement pay as community property”). Since the CRSC benefits he was awarded under 10

USC 1413a are not considered disposable retirement benefits under 10 USC 1408(a)(4)(B) and

(c)(1), and 10 USC 1413a(g), the trial court’s order requiring him to use these benefits to “make

up” the amount in disposable benefits he was entitled to forego as a result of the award was error.

Another issue that has yet to be addressed by the United States Supreme Court, but which has

been addressed by state courts, also with varying results, is whether 38 USC 5301, the anti-

attachment provision applicable to veterans’ benefits applies to prohibit, or otherwise nullify,

state court orders to the extent they purport to divide non-disposable funds in contravention of

the USFSPA. Petitioner argued that the plain language of this statute and the case law

interpreting it prohibited state court orders forcing payment, i.e., dispossession, of these funds in

marital property awards consequent to divorce.

Finally, state courts are also split on whether orders dividing property can be reopened to

adjust or otherwise correct a ruling contrary to federal law. However, the great weight of

authority is that orders that are contrary to federal law are void, at least to the extent that they are

inconsistent with federal law. What this means is that such orders can be challenged at any time,

including by way of contempt orders based on those orders.

6

2. Statutory Framework Under Federal law, military members who retire after serving for a minimum period

(generally twenty years) receive a lifetime pension award. See Mansell v. Mansell, 490 U.S. at

583. See also 10 USC 3911, et seq. (Army); 10 USC 6321, et seq. (Navy and Marine Corps); 10

USC 8911, et seq. (Air Force). See also McCarty, 453 U.S. at 213-215.

Veterans who suffer from service-connected disabilities are entitled to receive separate

disability benefits. See 38 USC 1110, 1131 and 10 USC 1413a. The Veteran’s Administration

(“VA”) calculates the amount of disability benefits based on a scale, expressed in percentages,

reflecting “the average impairments of earning capacity resulting from such injuries in civil

occupations.” 38 USC 1155. See also Kamarck, Military Retirement: Background and Recent

Developments, Congressional Research Service (September 12, 2016), p. 9.7 Eligibility for

disability pay is based on having a permanent and stable disability rated at 30% or more by the

Department of Defense (DOD). 10 USC 1201(b)(3)(B); Kamarck, supra.

In 2003, Congress enacted 10 USC 1413a, authorizing payment of Combat-Related Special

Compensation (CRSC). CRSC is not military retirement pay and is not subject to the provisions

of the USFSPA; thus, CRSC benefits are automatically excluded from being considered any

portion of “disposable” retired pay that might be considered or treated as property in a divorce.

See 10 USC 1408(a)(4)(B) and (c)(1); 10 USC 1413a(g) (“[p]ayments under this section are not

retirement pay”); 38 USC 5301 (payments authorized by the secretary of the VA are not

assignable, and not subject to any legal process). See also DoD 7000.14, Financial Management

Regulation, vol. B, ch. 63, p. 63-5, § 630104 (2013). CRSC is only subject to a Treasury offset to

7 Available at: https://www.fas.org/sgp/crs/misc/RL34751.pdf.

7

recover debt owed to the United States and garnishment for child support or alimony. Id., see

also 42 USC 659.

To be eligible for CRSC the servicemember must be “entitled to retired pay” and have “a

combat-related disability”. 10 USC 1413a(c). “Combat-related disability” is defined as “a

disability that is compensable under the laws administered by the Secretary of Veterans Affairs

and that “is attributable to an injury for which the member was awarded the Purple Heart” or

“was incurred…as a direct result of armed conflict”; “while engaged in hazardous service”; “in

the performance of duty under conditions simulating war”; “or through an instrumentality of

war.” 10 USC 1413a(e)(1) through (D).

Servicemembers who are entitled veterans’ disability pay or CRSC, in lieu of military

retirement pay, give up the right to the latter to receive the former. CRSC is tax free and non-

assignable. Since the amount of disposable retired pay waived to receive CRSC benefits is also

considered non-disposable, non-assignable income, this amount is supposed to be excluded from

consideration in an equitable distribution of property upon divorce of the servicemember and his

or her spouse. See 10 USC 1408(a)(4)(B) and (c)(1); 10 USC 1413a(g); and Mansell, 490 US at

587-94. Therefore, the Defense Finance and Accounting Service (DFAS) will not pay these

funds to a veteran’s former spouse pursuant to a court order, but rather will pay it directly to the

military veteran. When this occurs post-divorce, it automatically reduces that portion of

disposable retired pay previously paid to the former spouse under a divorce decree ordering a

division of marital property.

3. Material Facts and Proceedings Below Petitioner served two tours of duty in Iraq as a platoon leader for a combat infantry unit. He

suffered a traumatic brain injury (TBI) during his second tour of duty when his unit was

8

ambushed and his convoy was blown up by several improvised explosive devices (IED’s).

Petitioner also suffers from severe PTSD, and other mental and physical injuries as a result of his

career in the military. Therefore, Petitioner qualified for CRSC. He applied for it during his

retirement in 2007 (and before the 2008 judgment of divorce). It was awarded to him

retroactively to November 1, 2007. See Brief on Appeal, Attachment F. He did not begin

receiving payments for it until 2010, at which time DFAS reduced the amount of disposable

retired pay being directly paid to Respondent.

In the instant case, Petitioner already had a service-connected disability, and was receiving

concurrent retired and disability pay (CRDP) (a combination of MRP and NDP) when the trial

court approved the marital property settlement. In fact, even before the 2008 judgment, the trial

court acknowledged Petitioner was 80 percent disabled and unable to work. (See Brief on

Appeal, Attachment D, Trial Court’s Opinion Regarding Temporary Spousal Support, April 24,

2008, p. 3 (stating “[t]he Defendant is, according to his own testimony, 80 percent disabled and

receives military disability pay. While his testimony indicates some intent and desire to go back

to work, his present ability to do so seems doubtful at best. Overall, the Court finds that the

Plaintiff probably has some limited capacity for greater earning and the Defendant presently has

no untapped earning potential and is in fact unable to work.”)).

A consent judgment of divorce was entered on December 3, 2008. The judgment did not

award spousal support to either party. Under Section VI, entitled “Property Settlement” there is a

section regarding “Pension and Retirement Benefits”. The property settlement awarded

Respondent 50% of Petitioner’s “disposable military retired pay”. (Attachment B, p. 4).

However, it then goes on to state:

If [Petitioner] should ever become disabled, either partially or in whole, then [Respondent’s] share of [Petitioner’s] entitlement shall be calculated as if

9

[Petitioner] had not become disabled. [Petitioner] shall be responsible to pay, directly to [Respondent], the sum to which she would be entitled if [Petitioner] had not become disabled. [Petitioner] shall pay this sum to [Respondent] out of his own pocket and earnings, whether he is paying that sum from his disability pay or otherwise,8 even if the military refuses to pay those sums directly to [Respondent]. If the military merely reduces, but does not entirely stop, direct payment to [Respondent], [Petitioner] shall be responsible to pay directly to [Respondent] any decrease in pay that [Respondent] should have been awarded had [Petitioner] not become disabled….[Id. at 4-5.]

The November 6, 2014 order from which this appeal was ultimately prosecuted was a

culmination of prior orders holding Petitioner in contempt for a failure to pay the difference

between what his spouse had been receiving under this agreement, and the amount she started to

receive after Appellant’s retirement pay was reduced by DFAS due to his qualification and

receipt of non-disposable, non-assignable CRSC pay under 10 USC 1413a.

4. Petitioner’s Appeal Petitioner appealed arguing that the 2008 Order and all subsequent contempt orders violated

the Supremacy Clause by forcing him to pay non-disposable, non-assignable funds to

Respondent in division of marital property, and were therefore preempted by federal law. Brief

on Appeal, Questions Presented, pp. iv, Argument I, pp. 5-10; Argument II, pp. 11-12; and Reply

Brief, pp. 1-3 (citing USFSPA, 10 USC 1408, 38 USC 5301; McCarty, supra; Mansell, supra,

and King, supra).

8 By the time Petitioner began receiving his non-disposable disability pay through the CRSC program, he 100 percent disabled and 100 percent unemployable. He had no ability to contribute any money or earnings outside of his military benefits. The trial court acknowledged this even before the 2008 judgment of divorce was entered. See Brief on Appeal, Attachment D, Opinion, p. 3 (stating “[t]he Defendant is…80 percent disabled and receives military disability pay. While his testimony indicates some intent and desire to go back to work, his present ability to do so seems doubtful at best. Overall, the Court finds that the Plaintiff probably has some limited capacity for greater earning and the Defendant presently has no untapped earning potential and is in fact unable to work.”).

10

Petitioner also argued the plain language of 38 USC 5301 applied to the 2008 Order and all

subsequent contempt orders rendering them void and of no effect because they constituted

prohibited assignments of federally protected monies within the meaning of that provision and

the case law interpreting it. Petitioner specifically argued that “[t]he continuing jurisdiction

exercised by the district court up to and including the November 6, 2014 order, was based upon

assignments and liabilities in contravention of 38 USC 5301(a)(1) and (a)(3)(A).” Brief on

Appeal, Table of Contents, Argument and Analysis, section I and section II, page ii; Questions

Presented I, II, and III, pages v and vi; Argument I, pages 5 through 8; and Argument II, pages

11 through 14. Petitioner expounded upon these arguments in his Reply brief. See Petitioner’s

Reply, November 3, 2015, pages 1 through 5, and footnote 1.

Petitioner further argued that monies that had been paid by him, and that are continuing to be

paid monthly to Respondent constitute funds that are “benefits due or to become due under any

law administered by the Secretary [of Veteran’s Affairs]” and are therefore not assignable under

any authorized law, and are exempt and not otherwise “liable to attachment, levy, or seizure by

or under any legal or equitable process whatever, either before or after receipt by the

beneficiary” within the meaning of this provision. See 38 USC 5301(a)(1) and (3)(A). According

to Petitioner the 2008 Order was void because it required payment of monies that were not

legally assignable (see Attachment B, pp. 4-5 (“[Petitioner]…shall pay this sum [to Respondent]

out of his own pocket and earnings, whether he is paying that sum from his disability pay or

otherwise, even if the military refuses to pay those sums directly to [Respondent]”), and which

were otherwise exempt from liability “to attachment, levy, or seizure by or under any legal or

equitable process whatever, either before or after receipt by the beneficiary” under state and

federal law, including, inter alia, 38 USC 5301(a)(1) and (a)(3)(A).

11

Therefore, Petitioner continued, every subsequent order of the trial court, including the

November 6, 2014 contempt order constituted an ongoing and continuing violation of 38 USC

5301. Petitioner further argued that the 2008 Order constituted an agreement to assign non-

assignable disability pay in contravention of 38 USC 5301(a)(3)(A). Brief on Appeal, Issue I, p.

5; Issue II, pp. 5-10; Reply Brief, pp. 1-5 and n 1.

Finally, Petitioner argued that where a person is ignorant or mistaken with respect to his own

antecedent and existing private legal rights, interests, or estates, and enters some transaction the

legal scope and operation of which he correctly apprehends and understands, for the purpose of

affecting such assumed rights, interests, or estates, equity will grant relief, defensive or

affirmative, treating the mistake as analogous to, if not identical with, a mistake of fact.” Brief on

Appeal, pp. 15-17, citing, inter alia, Barr v Payne, 298 Mich 85, 89-90; 298 NW 460 (1941).

Petitioner also argued Michigan has recognized the rule that a judgment ordering payment of

benefits based on incorrect or otherwise erroneous information (“mistake of fact”) may be set

aside in equity. Id. at 15-16.

In this regard Petitioner specifically asked the Court of Appeals “to nullify that part of the

consent judgment of divorce in 2008 that is in direct violation of federal law, and to expressly

hold that such violation continues and is continuing as long as [Petitioner] is being required to

pay the monies both previously paid and in arrears that are prohibited by federal law from being

distributed in a property distribution agreement to [Respondent].” Id. at 18. Petitioner also

submitted he was “entitled to recoupment and/or reimbursement of the monies wrongfully paid

over to [Respondent], and those monies representing same which are alleged to be in arrears.”

Petitioner requested the Court of Appeals to “remand the matter to the trial court only for the

express and limited purpose of an accounting and determination of the amounts that have been

12

overpaid.” Petitioner also specifically requested annulation of “any process, bond, contempt

order, and the like that is burdening [Petitioner] and his family.”9

5. The Court of Appeals Opinion The Court of Appeals ruled the trial court’s order did not violate the USFSPA by requiring

Petitioner to pay out of his own pocket to make up for the Respondent’s reduction for the post-

judgment reduction that occurred when Petitioner began receiving non-disposable, non-

assignable CRSC benefits. (Attachment A, pp. 4-5).

The panel rejected Petitioner’s argument that since Mansell ruled federal law preempted state

law as to state court’s authority and jurisdiction to order disposition of non-disposable, non-

assignable assets under the USFSPA and 38 USC 5301, respectively, the 2008 order was void

and could be challenged and set aside. Id. Despite stating that Petitioner could not “collaterally”

attack the 2008 judgment, the Court of Appeals went on to address the merits of Petitioner’s

federal statutory and common-law arguments. Id.

As to the applicability of the USFSPA, the Court of Appeals ruled that consistent with Megee

v Carmine, 290 Mich App 551; 802 NW2d 669 (2010), which Petitioner contends is an improper

statement of federal law concerning disposition of non-disposable veterans’ benefits in marital

property awards, the trial court had the authority to order Petitioner to make up what was

reduced in payments by DFAS to Respondent based on Petitioner’s receipt of CRSC payments

when and if that occurred. In this regard, the panel stated:

9 Based on the November 6, 2014 contempt order, a bond was issued and continues to exist to assure payment by Petitioner of the ostensible arrears. (ATTACHMENT D). The security for the bond the home of Petitioner’s mother. Id. See 38 USC 5301(a)(3)(C) (“[a]ny agreement or arrangement for collateral for security for an agreement that is prohibited under subparagraph (A) is also prohibited and is void from its inception”). This bond constitutes a direct violation of 38 USC 5301(a)(3)(C).

13

[Petitioner’s] argument construes Megee much too narrowly and misses the broader legal principle that emanates from Megee, which is that a state divorce court has the authority to divide waived retirement pay, which waiver had resulted from a veteran’s decision to elect CRSC, so long as the court does not directly order payment from CRSC funds. [emphasis added]

Petitioner seeks leave to appeal this decision.

14

GROUNDS FOR APPEAL

1. The Issues Presented in this Appeal Involve Legal Principles of Major Significance to Michigan and National Jurisprudence

This case presents issues of utmost importance to Michigan’s jurisprudence. Every dispute

of this kind begins with a state court’s order affecting a servicemember’s federally protected

property rights and, necessarily the needs of his family. Without guidance from this Court,

inferior state courts will continue to render decisions dependent on the divergent views of other

state courts. A firm decision will clarify the extent of authority of Michigan trial courts under

this important federal statutory framework.

As noted in the current petition before the United States Supreme Court in Merrill v Merrill,

Supreme Court Case No. 15-1139 (ATTACHMENT E, pp. 9-18), state courts are divided on

whether federal law preempts states from indemnifying former spouses by ordering

servicemembers to make up the difference in waived retired pay with non-disposable veterans’

disability benefits.

This Court can offer important perspective to the national debate concerning the issue

presented in this petition. Clarifying the rule of law in Michigan, and outlining the limits of state

courts and the federal government will also assist lawyers and the clients who depend on them to

make informed decisions. This Court has the opportunity to assist in “prevent[ing] the vagaries

of state law from disrupting the national scheme, and guarantee[] a national uniformity that

enhances the effectiveness of congressional policy.” Hisquierdo, 439 U.S. at 584.

The Michigan Legislature is considering statutory amendments to address the authority of

state courts over non-disposable veterans’ disability benefits. See ATTACHMENT G. That

effort would benefit from a fresh and careful explanation of the parameters of state authority vis-

15

à-vis disposition of veterans’ benefits in property divisions consequent to divorce, as well as with

respect to alimony (spousal support) and child support awards.

Also, as noted by the petition filed in the Merrill case, state legislative measures are arising

because of the lack of clarity and uniformity among the states. This exercise is an extreme step

which threatens to further confound what should be national uniformity in a traditionally federal

area of law. See ATTACHMENT E, pp. 19-20.

Federal law, including the USFSPA, 38 USC 5301 and 42 USC 659, inter alia, already

address state court authority in each of these three areas, i.e., martial property divisions, spousal

support (or alimony), and child support. Notwithstanding that federal law preempts state court

authority over all non-disposable and non-assignable veterans’ benefits, it is nonetheless

important to recognize and reaffirm the national balance struck by Congress in addressing and

measuring the needs of military veterans and their spouses, former spouses, and dependents.

The application of the USFSPA as well as 38 USC 5301 are both squarely presented in this

case. As the facts and lower court rulings demonstrate, the effects of the post-divorce reduction

in disposable retired pay created the very issues that have been decided in divergent ways by

state courts across the country.

Finally, this case presents an opportunity for this Court to affirm the application of the plain

and unambiguous language of federal statutory law. Petitioner argued federal law completely

preempted the trial court’s order requiring him to part with non-disposable veterans’ benefits.

These arguments were based first and foremost on the application of the plain and unambiguous

language of these provisions.

The USFSPA, as confirmed by the Court in Mansell, plainly excludes from state court

consideration all benefits that are not “disposable retired pay.”

16

Moreover, 10 USC 1413a, the statute authorizing the CRSC veterans’ benefits that Petitioner

was awarded are not included at all within the scope of “disposable” and therefore, distributable

assets in marital property divisions consequent to divorce. See 10 USC 1413a(g).

This case also presents an opportunity to address the issue of whether the plain language of

38 USC 5301 applies. While this issue was left open by the Mansell Court in 1989, it does not

appear to be anywhere near resolution among the states. Nonetheless, the case law that has

addressed this provision’s applicability appears to prohibit the disposition ordered by the trial

court in this case.

2. The Court of Appeals Decision is Erroneous and Will Cause Material Injustice If Petitioner’s interpretation of the plain language of these federal statutes is correct, then the

Court of Appeals committed error in its interpretation and application of these provisions. That is

error that this Court is constitutionally empowered to correct for the benefit of the people of

Michigan.

Petitioner and all other servicemembers in the state of Michigan (as well as their spouses and

former spouses) deserve clarity in the law so that state courts will follow and apply dispositions

of marital assets in accord with federal law and state law, and in keeping with Congressional

intent about the necessity for ensuring servicemembers are properly cared for when they are

disabled during combat or retire after a lifetime of service. It is important that the Congressional

goals and purposes embodied in these federal programs are accorded the proper degree of

deference.

3. Practical Realities of Post-Service Life for the Combat Veteran Practical considerations also warrant this Court’s review. With continued uncertainty in the

law, wounded and disabled veterans returning from combat, some, like Petitioner, suffering from

17

severe and debilitating PTSD, have few resources to defend against divorce proceedings.

Willick, supra at 31 (stating “[i]t appears to be a truism that enlisted members, at least, simply do

not accumulate much in the way of cash or tangible property during military service”). The

reality is disabled veterans who find themselves in Petitioner’s position are already severely

challenged in their day-to-day lives.

Disabled, retired, and likely unable to work (or certainly to make the same income they had

while on active duty), veterans are often unable to mount a competent defense. This is especially

true in this area of the law, where there is a large volume of conflicting state case law addressing

nuanced factual circumstances, with varied and wide ranging outcomes dependent on complex

and intertwined issues of federal and state law. Veterans in this situation often find themselves

paying most or all of their income (both disposable and non-disposable), to attorneys, courts, and

for fines exacted by temporary and final orders. In the most severe cases, veterans are rendered

homeless, thrown in jail, and ultimately dependent on the government for rehabilitation and care.

Suffering from PTSD and other physical and mental injuries, the prospect of recovery and a

return to normalcy is even more unlikely when they are faced with court orders, arrest warrants,

bonds, and contempt proceedings as Petitioner has been in this case. A combination of local

courts, family “friend of the court” agencies, and extraordinary bureaucracies are mobilized and

deployed against these returning veterans, many of whom are still struggling through the fog of

war.

The reason for disability ratings for military veterans, married or single, is to gauge that

veterans’ prospects for competing in the job market after military service. The disability benefit

is designed to replace the veteran’s lost ability to compete and to work. It is a personal benefit,

not one designed to be transferred to dependents. Any diversion of these otherwise non-

18

disposable, non-attachable, non-assignable monies away from the veteran to his or her former

spouse has the potential to permanently stack the deck against the veteran attempting to

reintegrate into the civilian world.

19

ARGUMENT AND ANALYSIS

ARGUMENT I. 1. Summary

But for a limited exception in the USFSPA, federal law continues to completely preempt

state court authority to consider or treat non-disposable military pay in property settlements

consequent to divorce. In McCarty v McCarty, 453 US 210, 223; 101 S Ct 2728; 69 L Ed 2d 589

(1981), the Court held federal law preempted state law from treating military retirement pay as

marital property in divorce proceedings. The Court explained the history of military benefits,

and concluded that such payments were personal property of the servicemember consequent to

his or her service and in recognition of reduced future earning capacity. In this area of the law,

McCarty ruled, Congress intended all military benefits to be the property of servicemembers. Id.

at 228.

In response to McCarty, Congress recognized a limited exception to allow states to treat as

property military and disability benefits with the passage of the Uniform Servicemembers

Former Spouses’ Protection Act (USFSPA), 10 USC 1408. See also Mansell v Mansell, 490 US

581 587-95; 109 S Ct 2023; 104 L Ed 2d 675 (1989), accord King v. King, 149 Mich App 495,

498-99; 386 NW2d 562 (1986).

The USFSPA gave state courts authority to treat “disposable” military retirement pay as a

benefit subject to division in marital property settlement agreements. 10 USC 1408(c)(1);

Mansell, supra at 595. Such disposable pay does not include amounts waived to receive

disability pay. Therefore, state courts are “without power to treat as property divisible upon

divorce military retirement pay that has been waived to receive veterans’ disability benefits.” 10

USC 1408(a)(4)(B); Mansell, supra.

20

Federal law continues to prohibit state courts from considering (either directly or indirectly) a

former servicemember’s non-disposable retirement and disability benefits marital property

settlement agreements. Id. Military retirement pay waived to receive disability is off limits;

disability pay is off limits; and special compensation is also excluded from disposable retired

pay, and therefore, it too is off limits. See 10 USC 1408(c)(1); 10 USC 1413a(g).

While this Court has yet to address this issue, sporadic and confusing decisions by the

Michigan Court of Appeals (including that of the panel in the instant case (Judges Markey,

Murphy and Krause)) appear to fall into the first group: in other words, absent a ruling from this

Court exercising its constitutional authority as the arbiter of the law, the rule in Michigan is its

trial courts can continue to ignore the United States Supreme Court’s directive in Mansell and

Congress’ limited exception to full federal preemption in the USFSPA and “consider” or “treat”

non-disposable, non-assignable veterans benefits as “marital property”. Even though the

Michigan Court of Appeals has said that Mansell and the USFSPA means that such benefits may

not be considered, it nonetheless believes Michigan state courts can ignore the explicit

prohibition of Mansell by ordering a servicemember to nonetheless use his non-disposable pay to

make up for what may not be considered. These inventions act to frustrate the purpose and

objectives of Congress in providing retirement and disability pay to the nation’s servicemembers.

2. Issue Preservation Petitioner raised the federal preemption argument in his original docketing statement, his

brief on appeal, and his reply brief. See Petitioner’s Docketing Statement, filed 4/2/2015; Brief

on Appeal, Questions Presented, pp. iv, Argument I, pp. 5-10; Argument II, pp. 11-12; and Reply

Brief, pp. 1-3.

In response, the Court of Appeals ruled:

21

[A] state divorce court has the authority to divide waived retirement pay, which waiver had resulted from a veteran’s decision to elect CSRC [non-disposable veteran’s benefits, see 10 USC 1413a(g)], so long as the court does not directly order payment from CRSC funds [and] the offset provision contemplating the division of waived retirement benefits was…valid and enforceable under Megee[ v Carmine, 290 Mich App 551, 566-67, 574-75 (2010)]. [ATTACHMENT A, Slip Op. at 4-5 (emphasis added).]

Appeal is proper where an appellant does not “simply claim a right or immunity under the

Constitution of the United States, but distinctly insisted that as to the transaction in question

the…[rule or law] was void, and therefore unenforceable.” See McCarty, 453 us at 219-20, and

n 12, citing Dahnke-Walker Milling Co v Bondurant, 257 US 282; 42 S Ct 106; 66 L Ed 239

(1921) and Japan Line, Ltd v County of Los Angeles, 441 US 434, 440-41; 99 S Ct 1813; 60 L

Ed 2d 336 (1979).

3. Standard of Review The question presented requires this Court to address the applicability of federal preemption

by Congress over state authority with respect to federal veterans’ benefits. The question also

requires the Court to interpret a federal statute an. Such questions are reviewed de novo. See

Arbuckle v GM, LLC, 499 Mich 521, 532-33; 885 NW2d 232 (2016).

4. Controlling Law While the plain and unambiguous language of the USFSPA is the ultimate guide for

application to this issue, and it is to that principle Petitioner ultimately returns for the answer, an

explanation of the unique history of federal preemption with regard to military benefits over state

court authority in the area of domestic relations and divorce is necessary.

a. Congress has Plenary Authority Over Disposition of Military Benefits

The Armed Forces Clauses of the Constitution grant Congress the power to “provide for the

common Defence,” “[t]o raise and support Armies,” and “[t]o provide and maintain a Navy.” US

22

Const, art I, § 8, cls 1, 12-14. “[I]t is the primary business of armies and navies to fight or be

ready to fight wars should the occasion arise.” Toth v Quarles, 350 US 11, 17; 76 S Ct 1; 100 L

Ed 8 (1955). See also Orloff v Willoughby, 345 US 83, 94; 73 S Ct 534; 97 L Ed 842 (1953).

This responsibility rests exclusively with Congress and the President. Rostker v Goldberg, 453

US 57, 70-71; 101 S Ct 2646; 69 L Ed 2d 478 (1981).

Therefore, Congress’ power in this area “is broad and sweeping.” United States v O’Brien,

391 US 367, 377; 88 S Ct 1673; 20 L Ed 2d 672 (1968). No authority will be assumed in general

matters of the common defense, unless Congress itself cedes such authority, or exceeds its

constitutional limitations in exercising it. Rumsfeld v Forum for Acad & Inst’l Rights, Inc, 547

US 47, 58; 126 S Ct 1297; 164 L Ed 2d 156 (2006).

“[J]udicial deference…is at is apogee” with respect to Congress’ authority under these

clauses to raise, support, and maintain the armed forces, and to make rules and regulations for

their governance. Rostker, 453 US at 70. This is so because “[t]he military constitutes a

specialized community governed by a separate discipline from that of the civilian. Orderly

government requires that the judiciary be…scrupulous not to interfere with legitimate Army

matters….” Orloff, 345 US at 93-94.

Veterans’ benefits legislation (and therefore recognition of such benefits) preceded other

social welfare measures in the United States by more than a century and have continued

unabated. See Rombauer, Marital Status and Eligibility for Federal Statutory Income Benefits:

A Historical Survey, 52 WASH. L. REV. 227, 228 (1977). The First Congress in 1776 provided

for monthly payments up to half pay for officers, soldiers and seaman disabled in the line of

duty. Id. at 228-29, citing Resolution of August 26, 1 J. OF CONG. 454 (1776). In 1789, under

the new Constitution, Congress provided for continuance of these payments to disabled veterans

23

for service-connected disabilities incurred in the Revolutionary War. Act of Sept. 29, 1789, ch.

24, 1 Stat. 95. “Monthly payments to veterans for service-connected disabilities have since been

provided for veterans of all our country’s wars and conflicts as well as for veterans with

peacetime service. Rombauer, supra at 229.

Service-related retirement and pension benefits without regard to disability or service-related

impairments were not recognized until 1818. Act of Mar. 18, 1818, ch. 19, § 1, 3 Stat. 410.

Thus began the tradition of providing for veterans, and their survivors, on the basis of period of

service and need, old-age, or non-service-related disability or death. Rombauer, supra at 229.

b. Congress Plenary Authority Means the Supremacy Clause Preempts State Authority Over Disposition of Military Benefits Provided by Congress

The Supremacy Clause provides: “This Constitution, and the Laws of the United States

which shall be made in pursuance thereof…shall be the supreme Law of the Land; and the

Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State

to the Contrary notwithstanding.” US Const, art VI, cl 2. For purposes of this appeal, federal law

preempts state law where Congress has intended to foreclose any state regulation in the subject

matter regardless of whether state law is consistent or inconsistent with the federal standards.

Oneok, Inc v Learjet, Inc, 135 S Ct 1591, 1594; 191 L Ed 2d 511 (2015). See also Mich Canners

& Freezers Ass’n v Agric Mktg & Bargaining Bd, 467 US 461, 469; 104 S Ct 2518; 81 L Ed 2d

399 (1984) (internal citations omitted), accord Hisquierdo v Hisquierdo, 439 US 572, 582-83; 99

S Ct 802; 59 L Ed 2d 1 (1979). As recently noted by this Court, “‘[t]he purpose of Congress is

the ultimate touchstone’ in every preemption case” and “Congress may indicate its preemptive

intent in two ways: “explicitly . . . in a statute's language” or, by implication, through a statute's

"structure and purpose." Arbuckle v GM, LLC, 499 Mich 521, 532; 885 NW2d 232 (2016), citing

Retail Clerks Int’l Ass’n v Schermerhorn, 375 US 96, 103; 84 S Ct 219; 11 L Ed 2d 179 (1963).

24

Preemption occurs where the state court’s order obstructs “the accomplishment and execution of

the full purposes and objectives of an Act of Congress.” Hines v Davidowitz, 312 US 52, 67; 61

S Ct 399; 85 L Ed 581 (1941). This latter type of preemption is extant in this case.

Therefore, notwithstanding the ordinarily limited application of federal law in the field of

state domestic relations, see McCarty v McCarty, 453 U.S. 210, 220 (1981); Hisquierdo v

Hisquierdo, 439 U.S. 572, 581 (1979), it is no surprise based on Congress’ plenary authority

over and the deference it is accorded in matters of military affairs, that the Supreme Court has

not hesitated to protect, under the Supremacy Clause, veterans’ rights and expectancies

established by Congress against the operation of state law, or to prevent the frustration and

erosion by state courts of the congressional policies embodied in statutory law providing for their

care and maintenance. See McCarty, supra; Hisquierdo, supra. Cf. Wissner v Wissner, 338 US

655, 660; 70 S Ct 398; 94 L Ed 424 (1950) (holding no vested rights under state community

property law to life insurance proceeds authorized by Congress as a benefit of military service

and state court order diverting half of the life insurance benefits to servicemember’s spouse as

opposed to his designated beneficiary, his mother, was prohibited by federal law establishing the

benefit for the designated beneficiary and also holding such a diversionary court order was

barred by the federal anti-attachment provision which was the predecessor of 38 USC 5301).

In such matters, then, the relative importance to the State of its own laws is immaterial when

there is a conflict with a valid federal law, for the Framers of our Constitution provided that the

latter must prevail. Free v Bland, 369 US 663, 666; 82 S Ct 1089; 8 L Ed 2d 180 (1962). This

principle was made clear by Chief Justice Marshall when he stated that any State law, however

clearly within a State’s acknowledged power, which interferes with or is contrary to federal law,

must yield. Gibbons v Ogden, 9 Wheat 1, 210-11; 22 US 1; 6 L Ed 23 (1824).

25

While the Court has recognized “[state] family and family-property law must do ‘major

damage’ to ‘clear and substantial’ federal interests before the Supremacy Clause will demand

that state law be overridden, a state divorce decree, like other law governing the economic

aspects of domestic relations, must give way to clearly conflicting federal enactments.” Ridgway

v Ridgway, 454 US 46, 55; 102 S Ct 49; 70 L Ed 2d 39 (1981). The principle “is but a necessary

consequence of the Supremacy Clause of our National Constitution.” Id.

It would be “blinking reality” to say that deference to Congress’ authority over military

affairs, and the maintenance and support of the armed forces through installation of military

retirement and disability benefits for our nation’s veterans are not implicated by the present case.

Rostker, supra at 68-69. In this area, there are no “facile degrees” of deference, for it is absolute.

Id. at 69. The Supreme Court itself has noted the “imposing number of cases” in which this

preemptive principle has prevailed in matters of state law concerning divorce and distribution of

marital property. Id. at 70. See also Barker v Kansas, 503 US 594, 602-03; 112 S Ct 1619; 188 L

Ed 2d 243 (1992), citing McCarty, supra, and United States v Tyler, 105 US 244; 26 L Ed 985;

15 Otto 244 (1882).

Indeed, the Supreme Court has consistently and historically treated military retirement pay

(and disability pay incurred as a result of military service) as a personal and current entitlement

of the servicemember exempt from state law treatment as community property. In United States

v. Tyler, 105 US 244 (1882), the Court explained military retirement pay is, in part, continued

compensation at a reduced rate, because even though veterans retired, they were still subject to

military orders and discipline. The Court stated:

It is impossible to hold that men who are by statute declared to be a part of the army, who may wear its uniform, whose names shall be borne upon its register, who may be assigned by their superior officers to specified duties by detail as other officers are, who are subject to the rules and articles of war, and may be

26

tried, not by a jury, as other citizens are, but by a military court-martial for any breach of those rules, and who may finally be dismissed on such trial form the service in disgrace, are still not in the military service. 105 US at 246.

Thus, in Barker, supra, the Court reiterated that because Congress had historically treated

military retired pay “to be in part current compensation for those risks and restrictions

suggest[ed] that States must tread with caution in this area, lest they disrupt the federal scheme.”

503 US at 602 (emphasis in original), citing McCarty, at 224, n 16. Indeed, the Court in Barker

stated the holding in McCarty was that application of state community property law conflicted

with the federal military retirement scheme. Barker, 503 US at 603 (noting that after McCarty

the USFSPA gave the states the option of treating disposable retired pay only (as defined by 10

USC 1408(a)(B)(4)), either as property solely of the member or as property of the member and

his spouse in accordance with the law of the jurisdiction of such court).

c. Plenary Federal Preemption Still Prevails But for the Limited Congressional Cession of Authority Over Disposable Retired Pay in the USFSPA

McCarty established that there was and always had been total preemption of state authority in

the field of military retirement pay and benefits. See Mansell, supra at 588 (per McCarty, “pre-

existing federal law, as construed by this Court, completely preempted the application of state

community property law to military retirement pay”). Mansell went on to affirm that rather than

“restoring to state courts all pre-McCarty authority”, the USFSPA rather only partially rejected

“the McCarty rule that federal law preempts state law regarding military retirement pay.”

Mansell, supra at 588, and 588-591. See also Marshal S. Willick, Military Retirement Benefits in

Divorce, A Lawyer’s Guide to Valuation and Distribution, Family Law Section of the American

Bar Association (1998), p. 30 (noting that Mansell ruled that “the [USFSPA] did not constitute a

total repudiation of the preemption found by the court to exist in McCarty.”).

27

5. Analysis The McCarty Court explained why preemption prohibited “offsetting”, i.e., indirect, awards

as much so as direct orders to divide the federally protected benefits. Rejecting the argument

that the prohibition applied only to avoid garnishment actions against the government, as

opposed to the servicemember, the Court stated rather that the thrust was not on the burdensome

nature of garnishment actions, but rather that the “funds of the government are specifically

appropriated to certain national objects, and if such appropriations may be diverted and defeated

by state process or otherwise, the functions of the government may be suspended.” McCarty, 453

US at 229, n 23 (emphasis added), quoting Buchanan v Alexander, 4 How 20 (1845).

Mansell also rejected the “garnishment” argument. However, in a much more significant

way, it completely foreclosed any future arguments that state courts had equitable powers to

make substitutionary and anticipatory decrees forcing an end run around the prohibition in the

USFSPA (like the 2008 Order in the instant case).

Like the appellee in McCarty, the former military spouse in Mansell attempted to once again

restrict interpretation of the USFSPA to being one that prohibited state law orders that affected

the federal government’s direct pay mechanism. Mansell, supra at 589. Relying on a “savings

clause” in the USFSPA the appellee argued the act was a “garnishment statute designed solely to

set out the circumstances under which, pursuant to court order, the Federal Government will

make direct payments to a former spouse.” According to this view, 10 USC 1408(a)(4)(B)

defines “[d]isposable retired or retainer pay” only because payments under the federal direct

payments mechanism are limited to amounts defined by that term. Id. This “garnishment”

argument, noted the Court, relied heavily on the acts “savings clause”, which provides:

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

28

on the grounds that payments made out of disposable retired or retainer pay under this section have been made in the maximum amount permitted under [the direct payments mechanism]. 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…[the direct payments mechanism] has been paid.” [Id. at 589-590, quoting 10 USC 1408(e)(6) (emphasis in original).]

With respect to this clause, appellee argued that because “[it] expressly contemplates ‘other

payments’ in excess of those made under the direct payments mechanism, the Act does ‘not

attempt to tell the state courts what they may or may not do with the underlying property’”.

Rejecting this, the Court provided the answer that continues to be rejected (or baldly

ignored)10 by those state courts that believe, like the Court of Appeals in the instant case, and the

published Court of Appeals decision it relied on, Megee v. Carmine, 290 Mich App 551, 566-67,

574-75 (2010), that state courts may do indirectly, i.e., force the servicemember to make up that

portion of the waived retired pay with non-disposable pay, what they clearly cannot do directly

by virtue of the prohibition in 10 USC 1408(c)(1) against dividing non-disposable retired pay,

defined by § 1408(a)(4) as excluding “military retirement pay” waived in order to receive

veterans’ disability payments and (a)(4). The Court confirmed: “[T]he savings clause serves the

limited purpose of defeating any inference that the federal direct payment mechanism displaced

the authority of state courts to divide and garnish property not covered by the mechanism.” Id. at

590.

Simply put, “to prohibit garnishment is to prohibit division of property.” Id. That property

which cannot be “considered” consists of all military benefits which are excluded. All military

10 Nelson v Nelson, 2003 Ok Civ App 105, ¶¶ 7-8, 83 P.3d 889 (2003) (stating while “[u]ndeniably, veterans’ disability benefits are the separate property of the veteran…courts of several states have agreed with Justice O’Connor’s position and have taken equitable action to protect former spouses faced with a reduction in payments due to a reduction in military retirement pay.”

29

benefits (including disability pay and special compensation like the CRSC pay here) is

absolutely excluded per McCarty, and it is still excluded (aside from that limited portion of

“disposable” retired pay set out in the USFSPA, 10 USC 1408(a)(4)(B) and (c)(1)) from a state

court’s authority to consider these funds in dividing property or to in any way “treat” them as

property divisible consequent to a divorce. McCarty, 229 and n 23; Mansell 588, 590, and,

generally 589-592.

The total ban on state courts to so consider all non-disposable military benefits in property

distributions is confirmed by the remaining subsections of 1408(c). Mansell, supra at 590. 10

USC 1408(c)(2), (c)(3), and (c)(4) impose “substantive limits” on state courts powers to divide

military retirement pay; (c)(2) prevents a former spouse from transferring, selling or otherwise

disposing of her community interest in the property; (c)(3) prohibits a state court from forcing a

servicemember from retiring so that the former spouse can immediately begin receiving her

statutory portion; and (c)(4) prevents spouses from “forum shopping” for a state with more

favourable divorce laws.

In Mansell, the Court concluded: “Because each of these provisions preempts state law, the

argument that the Act has no preemptive effect of its own must fail. Significantly, Congress

placed each of these substantive restrictions on state courts in the same section of the Act as §

1408(c)(1). We think it unlikely that every subsection of § 1408(c), except § 1408(c)(1) was

intended to preempt state law.”

It is absurd to conclude it is acceptable to force an already disabled servicemember to make

up the difference in amounts waived where receipt of the benefits on which the waiver is based is

due to the veteran’s disabilities and incapacity to work. Here, as acknowledged by the trial court

even before the 2008 Order, Petitioner was unable to work and therefore had no other means of

30

income through gainful employment. (See Brief on Appeal, Attachment D, Trial Court’s Opinion

Regarding Temporary Spousal Support, April 24, 2008, p. 3 (stating “[t]he Defendant is,

according to his own testimony, 80 percent disabled and receives military disability pay. While

his testimony indicates some intent and desire to go back to work, his present ability to do so

seems doubtful at best. Overall, the Court finds that the Plaintiff probably has some limited

capacity for greater earning and the Defendant presently has no untapped earning potential and is

in fact unable to work.”)).

6. Conclusion McCarty is still good law. Thus, federal law continues to preempt state courts from ordering

(directly or indirectly) servicemembers to pay non-disposable veterans’ benefits in marital

property divisions consequent to divorce. State court orders that purport to do this are prohibited

and outside of the state court’s authority. In other words, such orders can be challenged to the

extent they dispossess the servicemember of these funds.

McCarty’s rule, and the history of federal preemption that preceded it, was not eclipsed by

the USFSPA. There is no confusion surrounding the term preemption. In McCulloch v Maryland,

17 US 316, 4 Wheat 316, 436, 4 L Ed 579 (1819), Chief Justice Marshall made it clear that the

“states have no power, by taxation or otherwise, to retard, impede, burden or in any manner

control the operation of the constitutional laws enacted by Congress to carry into execution the

powers vested in the general government.” Here, those “powers” include Congress’ express

powers under the Armed Forces Clauses to manage uniform provisions for the maintenance and

support of our nation’s veterans.

The majority in Mansell rejected Justice O’Connor’s reasoning, because her view rejected

the pre-existing full field federal preemption of state law in this area. With the benefit of over a

31

decade of post-Mansell state case law grappling with this divisive issue, the Montana Supreme

Court neatly presented it as follows: Did the USFSPA enact a limited exception to the full-field

federal preemptive rule that prohibited state courts from dividing federal veterans benefits in

community and martial property divisions in divorce proceedings or did the USFSPA instead

overrule McCarty completely, to alter the pre-existing federal military retirement law so as to

eliminate the preemptive effect of McCarty and restore the states authority to issue divorce

decrees affecting military retirement pay consistent with state law? Marriage of Strong v. Strong,

2000 MT 178, ¶¶ 25-27, 300 Mont 331; 8 P3d 763 (2000). The Court held that in enacting both

the USFSPA and 38 U.S.C. § 5301(a), Congress has positively required by direct enactment that

state courts be preempted from including VA disability benefits in a marital estate. Id. To allow

inclusion of VA disability benefits in a marital estate would do major damage to clear and

substantial federal objectives. Id., citing Hisquierdo, 439 US at 581.

Despite post-Mansell tergiversations of state courts on whether the USFSPA was a limited

exception to preemption, or constituted a total repeal of McCarty, which would mean, ostensibly,

that state courts could then craft their own remedies affecting military retirement pay in property

distributions pursuant to divorce, the Supreme Court’s statement Mansell was clear on this issue:

[P]re-existing federal law, as construed by this Court, completely preempted the application of state community property law to military retirement pay[.] Congress could overcome the McCarty decision only by enacting an affirmative grant of authority giving the States the power to treat military retirement pay as community property. Cf. Midlantic Nat’l Bank v New Jersey Dep’t of Envt’l Protection, 474 US 494, 501 (1986)….

Noting that the parties differed sharply on the “scope of Congress’ modification of McCarty”,

the Court rejected the view that the USFSPA completely eradicated federal preemption of state

authority over treatment of veterans’ military benefits as property in divorce proceedings. The

Court found this by turning to the clearest of indicators, stating:

32

[W]e begin with the language of the statute. [The former spouse] faces a formidable obstacle in the language of the Former Spouses’ Protection Act. Section 1408(c)(1) of the Act affirmatively grants state courts the power to divide military retirement pay, yet its language is both precise and limited. It provides that “a court may treat disposable retired pay or retainer pay…either as property solely of the member or as property of the member and his spouse in accordance with the law of the jurisdiction of such court.” § 1408

***

In the face of such plain and precise statutory language [the former spouse] faces a daunting standard. She cannot prevail without clear evidence that reading the language literally would thwart the obvious purposes of the Act. See, e.g., Trans Alaska Pipeline Rate Cases, 436 US 631, 643 (1978). The legislative history does to indicate the reason for Congress’ decision to shelter from community property law that portion of military retirement pay waived to receive veterans’ disability payments. But the absence of legislative history on this decision is immaterial in light of the plain and precise language of the statute; Congress is not required to build a record in the legislative history to defend its policy choices. [Mansell, 490 US at 588-592.]

Finally, the Court fully understood the inequity that may result in certain cases,

stating:

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 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. [Id. at 594.]

With respect to these unique, and important, military veterans’ benefits (retirement pay,

disability pay, and “special compensation”), benefits vested in the servicemember by the federal

government as a result of his or her federal service, federal law has always preempted, and

therefore prohibited state courts from directly or indirectly ordering, considering or treating them

as equitable or community property to be divided consequent to divorce. The Supremacy Clause

33

dictates the states’ authority, even in the area of domestic relations, is occluded. Mansell, 490 US

at 587.

As expressed in McCarty, the objective of the federal military benefits scheme is to provide

for the servicemember as a consequence of his or her service to the country, and to ensure

military sustainability and recognize the reduced capacities of those injured and affected by a

career serving in the demanding roles assumed by our volunteer force of soldiers, sailors, and

marines. See McCarty, 453 US at 223-24 and n. 16. The military retirement system does not

even contain a limited “community property concept” and “[h]istorically, military retired pay has

been a personal entitlement payable to the retired member himself as long as he lives.” Id.,

quoting S. Rep. No. 1480, 90th Cong., 2d Sess., 6 (1968). What has changed?

Moreover, if this is the case with ordinary retirement pay, then it most certainly is with any

other type of federally bestowed benefit designed to replace the servicemembers current

incapacities occasioned by his or her experiences with the violence of war and the grinding

nature of daily military service for a sustained numbers of years. Indeed, as one commentator has

put it, “the status of the military retiree, and the lack of choice over assignments during the

course of a military career, are factors unique to the military retirement system, which deserve

special consideration in divorce actions.” Larry D. White, The Uniformed Services Former

Spouses Protection Act: How Military Members are at the Mercy of Unrestrained State Courts, 9

Roger Williams U L Rev 289, 292 (2003).

McCarty clearly followed this reasoning, and, at the Court’s invitation, Congress lifted but a

sliver of the preemptiive federal law in this area to allow division of disposable military retired

pay. 10 USC 1408(c)(1).

34

Mansell then clarified that federal preemption was total, and that indeed the USFSPA was

both “precise” and “limited” in its exceptions to this absolute. And, Mansell ruled that outside of

this narrow statutory exception state courts do not have authority to “treat military retirement pay

as community property and to enforce a former spouse’s rights to such pay through remedies

other than direct payments from the Federal Government”. Id. at 587. (emphasis added).

The state court order in the instant case was of the ilk of those “anticipatory” indemnification

provisions which force the servicemember to part with that portion of his non-disposable pay in

direct contravention of the USFSPA and explicitly rejected by Mansell. A state court order that

either directly or indirectly forces an encroachment into these benefits is simply prohibited. The

conclusion when considering the Constitution’s vesting of legislative authority in Congress over

the military and the Supremacy Clause confirm what McCarty and then, Mansell teach: federal

military benefits schemes preempt state authority over domestic relations. There is an exception

to the USFSPA and the non-assignability provision of 38 USC 5301 built in to the statutes

themselves for child support and spousal support orders. 42 USC 659. But that is it. This case

concerns only the marital property disposition. With respect to the latter, state law must yield. As

the Supreme Court has stated:

Judges of equal learning and integrity, in different states, might differently interpret a statute, or a treaty of the United States, or even the constitution itself: If there were no revising authority to control these jarring and discordant judgments, and harmonize them into uniformity, the laws, the treaties, and the constitution of the United States would be different in different states, and might, perhaps, never have precisely the same construction, obligation, or efficacy, in any two states. The public mischiefs that would attend such a state of things would be truly deplorable; and it cannot be believed that they could have escaped the enlightened convention which formed the constitution. What, indeed, might then have been only prophecy, has now become fact; and the appellate jurisdiction must continue to be the only adequate remedy for such evils. [Martin v. Hunter’s Lessee, 14 U.S. 304, 348, 4 L. Ed. 97 (1816).]

35

The 2008 Judgment clearly violated the Supremacy Clause, as interpreted, and applied in

McCarty, the USFSPA, and then Mansell because it did indirectly, (if not directly) that which is

expressly prohibited.

A secondary argument, but one that is no less significant, is that state courts have absolutely

no authority over disposition of CRSC benefits since they explicitly fall outside the scope of any

identified “benefits”, disposable or non-disposable in the USFSPA. See 10 USC 1413a(g).

The Legislation creating CRSC as a new type of disability benefit was enacted by Congress

and became effective in 2003, after the USFSPA. The statute governing CRSC provides for a

military retiree “who elects benefits under this section” to receive “a monthly amount for the

combat-related disability of the retiree.” 10 USC 1413a(a). The statute provides that CRSC

payments “are not retired pay.” 10 USC 1413a(g).

Electing CRSC benefits has the effect of waiving retired pay. But, these particular benefits

are not the type of disposable, or non-disposable disability benefits identified in the USFSPA.

They are separate and independent “special compensation” benefits. As such, the pre-USFSPA

rule of McCarty, that federal law in this area completely preempts state law matters of property

distribution in divorce proceedings means these benefits are not divisible upon or after divorce at

all. They cannot be considered, treated, or otherwise used to even out a reduction in disposable

pay under the waiver provisions of the USFSPA.

ARGUMENT II.

1. Summary 38 USC 5301 prohibits state courts from ordering a servicemember to part with

nondisposable disability pay in lieu of amounts waived to receive such pay.

36

2. Issue Preservation Bafflingly, the Court of Appeals ruled that Petitioner’s argument that 38 USC 5301 was

inapplicable was inadequate and had been waived. ATTACHMENT A, p. 5. Petitioner made

these arguments in his Docketing Statement filed with the Court of Appeals on April 2, 2015; in

his Brief on Appeal in his first, second, and third questions presented, and in the first and second

argument sections (see July 1, 2015 Brief on Appeal, Table of Contents, Argument and Analysis,

section I and section II, page ii; Questions Presented I, II, and III, pages v and vi; Argument I,

pages 5 through 8; and Argument II, pages 11 through 14. Petitioner expounded upon these

arguments in his Reply brief. See Petitioner’s Reply, November 3, 2015, pages 1 through 5, and

footnote 1.

Moreover, despite this clearly erroneous statement, the panel went on to address the merits of

all of Petitioner’s arguments. ATTACHMENT A, p. 5 (stating “38 USC 5301(a)(1) speaks of

precluding the assignment of benefits ‘except to the extent specifically authorized by law[.]’ As

noted above, the USFSPA generally permits the division of disposable retired pay in state

divorce actions, and the instant dispute concerns the division of waived retirement pay, which the

Megee panel held was proper under federal law when the waiver is in relation to a CRSC

election. Megee, 290 Mich App at 566-567, 574-575.”)

Where a court has considered the merits of the federal claim, it has a duty to grant the relief

that federal law requires. Yates v Aiken, 484 US 211, 218; 108 S Ct 534; 98 L Ed 2d 548 (1988).

“[I]f it fairly appears that the state court rested its decision primarily on federal law,” subsequent

Courts, including the United States Supreme Court may reach the federal question on review

unless the state court’s opinion contains a “‘plain statement that [its] decision rests upon

adequate and independent state grounds.’” Harris v Reed, 489 US 255, 261; 109 S Ct 1038; 103

37

L Ed 2d 308 (1989), quoting Michigan v Long, 463 US 1032; 103 S Ct 3469; 77 L Ed 2d 1201

(1983).

3. Standard of Review Statutory interpretation is a question of law, which this Court will review de novo. Ameritech

Mich v PSC (In re MCI), 460 Mich 396, 413; 596 NW2d 164 (1999).

4. Controlling Law The Supreme Court has stated 38 USC 5301 is to be liberally construed to protect funds

granted by Congress “for maintenance and support for beneficiaries thereof” and such funds

“remain inviolate.” Porter v Aetna Cas. & Sur Co, 370 US 159, 162; 82 S. Ct. 1231; 8 L. Ed. 2d

407 (1962). Since 1873 it has been the policy of the Congress to exempt veterans' benefits from

creditor actions as well as from taxation. Id. at 160. Such payments are exempt “either before or

after receipt by the beneficiary”. Id. As such, “[t]he monies which are paid are preserved by

statute for the sole use of the veteran, ‘regardless of the technicalities of title and other

formalities.’” American Training Serv’s, Inc v Veterans Admin, 434 F Supp 988, 995-96 (DNJ

1977), citing Porter, supra. Thus, “[a]ny legal formulation or arrangement which could dilute or

evade the literal and historical thrust of the statute's protective provisions must be viewed with

appropriate caution. Id.

“[A]nti-attachment provisions generally…ensure[] that the benefits actually reach the

beneficiary[; they] preempt[] all state law that stands in its way[; they] protect[] the benefits from

legal process ‘[notwithstanding] any other law...of any State’[; they] prevent[] the vagaries of

state law from disrupting the national scheme, and guarantee[] a national uniformity that

enhances the effectiveness of congressional policy.” Ridgway, 454 US at 61, quoting Hisquierdo,

439 US at 584.

38

Second, the statute precludes any legal process from ordering the servicemember to pay

(directly or indirectly) funds authorized by the Secretary of Veterans affairs. 38 USC 5301. The

plain language of this federal statutory provision clearly applies to the state court order in this

case because CRSC benefits, the only benefits other than disposable retired pay Petitioner

receives, are authorize by the VA secretary. As explained by another Court, veterans’ disability

benefits are statutorily exempt from all claims other than claims of the United States, and are not

divisible or assignable. In re Marriage of Carlson, No. 13-1854, 2015 Iowa App. LEXIS 79, at

*12-13 (Ct. App. Feb. 11, 2015). While this type of disability payment may be considered in the

equitable granting of alimony or support, we do not consider it marital property. See also

In re Marriage of Howell, 434 NW2d 629, 632-33 (Iowa 1989).

While the Supreme Court in Mansell specifically reserved11 this question, the plain language

of 38 USC 5301, federal and state case law interpreting it, indicates the orders forcing Petitioner

to pay his CRSC benefits to his wife are indeed prohibited (and therefore voided) by this federal

statute.

In Mansell, the Supreme Court held open the possibility that 38 U.S.C. § 5301, the anti-

attachment clause “independently protects” non-disposable pay from the effects of state court

orders. Here, Petitioner argued that 38 USC 5301 barred the requirement he continue to pay the

benefits under the 2008 Order in violation of the federal law. Although the Mansell majority

declined to decide whether the statute “independently protects” VA disability pay from inclusion

in a marital estate, several state courts both before and after Mansell have reached such a

conclusion. See, e.g., Murphy v Murphy, 302 Ark 157; 787 SW2d 684 (1990); In re Marriage of

Howell 434 NW2d 629 (Iowa 1989); In re Marriage of Costo, 156 Cal App 3d 781; 203 Cal Rptr

11 Mansell, 490 U.S. at 587 n. 6.

39

85 (1984); In re Marriage of Hapaniewski, 107 Ill App 3d 848; 63 Ill Dec 535, 438 NE2d 466

(1982); Rickman v. Rickman, 124 Ariz 507, 605 P2d 909 (1980); Ex parte Johnson, 591 SW2d

453 (Tex 1979); Halstead v Halstead, 164 NC App 543, 550; 596 SE2d 353 (2004) (holding

order requiring veteran to pay former spouse any amounts withheld from her share of his

retirement due to future elections or any acts or omissions on his part causing a reduction in

disposable retirement pay violated 38 USC 5301 and the trial court could not substitute its own

definition for disposable retirement pay).

These cases, among others, establish the general proposition that awarding VA disability pay

upon dissolution amounts to a “seizure” or “assignment” of those benefits in contravention of 38

USC 5301.

5. Analysis Petitioner argued that the monies he was ordered to pay included non-assignable, non-

attachable monies in contravention of 38 USC 5301. Petitioner argued the plain language of this

provision prohibited a state court order requiring him to pay such benefits that were due or to

become due. Petitioner explained this statutory language as applied prohibited any court order

that required him to be dispossessed of these monies on a continuing and ongoing basis.

Specifically, Petitioner asserted that monies paid, and continuing to be paid, as reflected in

calculations and amounts presented in the trial court’s order of November 6, 2014, which are not

spousal support or child support, but which was the result of a purported marital property

settlement, and which included and continued to include funds that are “benefits due or to

become due under any law administered by the Secretary [of Veteran’s Affairs]” were not

disposable, not assignable, and not otherwise available under any authorized law, and were

therefore exempt and not “liable to attachment, levy, or seizure by or under any legal or equitable

40

process whatever, either before or after receipt by the beneficiary.” See 38 USC 5301 (emphasis

added); 10 USC § 1408(c)(1) (disability pay is not to be treated as disposable retired or retainer

pay (except in instances of child support or spousal support), neither of which are at issue here);

and 10 USC 1413a(g) CRSC pay is “not retirement pay”.

The trial court’s 2008 Order and the contempt orders that followed violated the plain

language of the anti-attachment provision 38 USC 5301. The statute applies to “any legal or

equitable process whatever”. Subsection (a)(1) clearly states that “payments of benefits due or to

become due…shall not be assignable except to the extent specifically authorized by law…and

shall not be liable to attachment, levy, or seizure by or under any legal or equitable process

whatever, either before or after receipt by the beneficiary…. Thus, in the instant case, as

applied, the benefits to which Appellant was already entitled, and which were received by him

(in other words, not diverted or attempted to be diverted from the Secretary of Veterans Affairs

directly to Appellee) are not assignable and cannot be the subject to any legal or equitable

process whatever.

Second, the statute applies to payments that are “due or to become due” evidencing the

ongoing effect of the prohibition. It would therefore prohibit subsequent attempts to force a

dispossession of the funds from the servicemember.

Third, it applies whether the monies have or have not yet been received by the beneficiary

dispensing with any notion that once received by the beneficiary they can be partitioned “either

before or after receipt by the beneficiary.” In other words, it is of no moment that the funds have

been paid to the veteran. They are still not subject to process. See Porter v Aetna Cas & Sur Co,

370 US 159, 162; 82 S Ct 1231, 1233; 8 L Ed. 2d 407 (1962). As such, “[t]he monies which are

paid are preserved by statute for the sole use of the veteran, ‘regardless of the technicalities of

41

title and other formalities.’” American Training Serv’s, Inc v Veterans Admin, 434 F Supp 988,

995-96 (DNJ 1977), citing Porter, supra. Thus, “[a]ny legal formulation or arrangement which

could dilute or evade the literal and historical thrust of the statute’s protective provisions must be

viewed with appropriate caution. Id.

Further supporting Petitioner’s appeal subsection 5301(a)(3)(A) the prohibition against

attachment applies to “agreements” between the beneficiary entered into with other persons

under which agreement the other person acquires the right to receive any such benefits.

Finally, the statute applies to prohibit bonds and other security from being imposed to ensure

payment of such protected monies. As noted, a bond was placed by the trial court’s order of

contempt and the collateral is Petitioner’s mother’s home. This appears to be in direct

contravention of 38 USC 5301.

ARGUMENT III.

1. Summary A state court order is void to the extent it orders the servicemember to part with federally

protected non-disposable funds, or considers or treats such funds as part of the marital property

to be distributed as part of a property settlement agreement consequent to divorce and this Court

has authority to reverse or otherwise modify such an order.

2. Preservation “Review of [a] contempt finding necessarily requires review of the orders upon which it is

based.” Diaz v Provena Hosp, 817 NE2d 206, 211; 352 Ill App 3d 1165 (2004), citing Norskog v

Pfiel, 755 NE2d 1; 197 Ill 2d 60 (2001). It follows “if the order upon which a judgment of

contempt was based is void, then the contempt judgment cannot be sustained upon review.” Id.

42

Indeed, trial courts lack authority to enter orders that violate federal law and a subsequent

contempt order subsequently entered for a failure to follow the violative order cannot stand. Id.

Petitioner argued the 2008 order was void. Petitioner also argued the trial court’s authority

was limited to only disposable retirement pay. Finally, Petitioner cited those Michigan cases that

hold an order based on a mistake of law or fact may be set aside, even after the time for

challenging it has passed.

Petitioner further argued that because 38 USC 5301 imposes a “continuing” prohibition on

court orders and authority over federally protected, non-disposable funds, the Court of Appeals

had authority to reverse or otherwise modify the contempt orders requiring Petitition to continue

to pay federally protected, non-disposable monies to his former spouse.

The Court of Appeals addressed the merits of Petitioner’s arguments.

3. Standard of Review Petitioner argued that the trial court’s 2008 Order and all subsequent contempt orders

violated federal law and were therefore void to the extent they forced Petitioner to part with

federally protected benefits. These arguments were based on the interpretation and application of

the controlling federal statutes, and are therefore reviewable de novo. Ameritech Mich v PSC (In

re MCI), 460 Mich 396, 413; 596 NW2d 164 (1999).

4. Controlling Law It is well established that a void judgment may be attacked and vacated in any court at any

time, directly or collaterally. Kelley v Kelley, 248 Va 295, 299; 449 SE2d 55 (1994) (finding a

waiver of child support in a marriage dissolution agreement void as against public policy). See

also Finch v LVNV Funding, LLC, 212 Md App 748, 769; 71 A3d 193 (2013).

43

Federal decisions interpreting federal law are generally binding on state courts. Ridgway v.

Ridgway, 454 U.S. 46, 102 S. Ct. 49, 70 L. Ed. 2d 39 (1981). The latter case involved an attempt

by a state court to embody in a divorce decree a provision requiring the serviceman to keep his

children beneficiaries of his service life insurance policy. When the serviceman subsequently

remarried, he ignored the state court’s order and changed the beneficiary. After his death, the

first wife sought to recover the proceeds of the policy for the benefit of the children. This effort

failed. Pointing out that applicable federal law gave the serviceman the absolute right to

designate beneficiaries, the Supreme Court said:

The relative importance to the State of its own law is not material when there is a conflict with a valid federal law, for the framers of our constitution provided that the federal law must prevail…. And, specifically, a state divorce decree, like other law governing the economic aspects of domestic relations, must give way to clearly conflicting enactments (citing McCarty and Hisquierdo). [Ridgway, 102 S Ct at 55.]

Whatever construction one desires to place on Ridgway, it is clear the Supreme Court in that

case refused to give anything resembling res judicata effect to the previous final state court

decree. See Ex parte Hovermale, 636 SW2d 828, 843 (Tex. App. 1982).

If this were not the case, state courts (especially those at lower levels) could routinely

circumvent federal policy and impede the operation of federal law with no recourse by those

affected. Thus, any attempt by state courts to impede the operation of the federal laws governing

the military retirement program must be considered a nullity and subject to collateral attack. Id.

5. Analysis The Court of Appeals concluded Petitioner engaged in an improper collateral attack on the

2008 judgment. Citing Kosch v Kosch, 233 Mich App 346, 353; 592 NW 2d 434 (1999).

However, Kosch is inapplicable because there the order was not challenged on the basis the trial

44

court lacked judicial authority to enter it because federal law preempted the specific subject

matter. There was no contention, as here, that the original judgment was void to the extent it was

contrary to preemptive federal law.

Here, Petitioner argues the judgment was void because a portion of it was preempted prima

facie by 10 USC 1408, the provisions of the USFSPA that forbid a disposition of non-disposable

veteran’s benefits, and those benefits are also not liable in any legal process whatever to

dispositions other than to the servicemember. 38 USC 5301.

Courts that have directly addressed this issue, i.e., whether a trial court order violating the

provisions of the USFSPA is void, allow a subsequent collateral or direct attack. See, e.g., In re

Marriage of Perkins, 107 Wash App 313, 318-19, 326-27; 26 P3d 989 (2001) (stating “[b]ecause

the trial court divided and distributed the veterans’ disability pension in violation of federal law

[citing Hisquierdo, McCarty, the USFSPA, and Mansell], we reverse and vacate the property,

debt, and maintenance parts of the dissolution decree”). In Perkins, supra, the issue was

“whether the USFSPA allows a state dissolution court to divide and distribute disability benefits

by awarding maintenance in its original decree.” Id. at 327 and n 57. The Court reasoned when

“disability benefits replace future compensation (e.g., post-dissolution [disposable and therefore

divisible] wages), they are not distributable at a dissolution trial” and such “[f]uture

compensation is not distributable because it is not on hand at trial, so when disability benefits

replace such compensation, they are treated in the same fashion. Id at 317.

45

RELIEF REQUESTED Petitioner respectfully requests the Court to grant his application for leave to appeal, or

grant other relief as justice requires.

Respectfully submitted by: _________________________

Carson J. Tucker (P62209) Attorney for Petitioner 117 N. First St., Suite 111 Ann Arbor, MI 48104 (734) 629-5870 Dated: November 28, 2016

ATTACHMENT A

Foster v Foster, Unpublished Opinion of the Michigan Court of Appeals, issued October

13, 2016 (Docket No. 324853)

-1-

S T A T E O F M I C H I G A N

C O U R T O F A P P E A L S DEBORAH LYNN FOSTER, Plaintiff/Counter-Defendant-

Appellee,

UNPUBLISHED October 13, 2016

v No. 324853 Dickinson Circuit Court

RAY JAMES FOSTER,

LC No. 07-015064-DM

Defendant/Counter-Plaintiff-Appellant.

Before: MARKEY, P.J., and MURPHY and RONAYNE KRAUSE, JJ. PER CURIAM.

Defendant appeals as of right an order holding him in contempt of court for failure to pay plaintiff in compliance with the parties’ consent divorce judgment that was entered in December 2008. Defendant argues that the contempt order and the divorce judgment itself are unenforceable because their effect is to require defendant to pay plaintiff a portion of his military disability benefits as part of the property settlement in violation of federal law. Defendant also presents arguments regarding alleged problematic factual findings and other legal shortcomings tied to entry of the divorce judgment. Defendant’s arguments are effectively and ultimately rooted in the judgment of divorce and its terms; however, he never appealed that judgment, nor has he moved for relief from that judgment, MCR 2.612. Thus, defendant is engaging in an improper collateral attack on the divorce judgment. See Kosch v Kosch, 233 Mich App 346, 353; 592 NW2d 434 (1999) (the defendant's failure to appeal the original divorce judgment precluded collateral attack on the merits of the judgment and effectively constituted a stipulation to its provisions). Indeed, defendant agreed to the very provision in the divorce judgment that he now assails. Nevertheless, for the reasons set forth below, we also substantively reject defendant’s arguments. In sum, we affirm.

The parties were married on August 6, 1988, and plaintiff filed for divorce on November 20, 2007. Defendant had served in the military during, and prior to, the marriage, and he retired from the Army in September 2007. Defendant testified at the divorce hearing, which involved finalizing the parties’ settlement, that he was receiving both military retirement pay and military disability benefits based on injuries he had sustained during the war in Iraq. Both parties waived their rights to seek spousal support and agreed that defendant’s disability benefits were not subject to division by the court because they were not considered marital property under federal

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law. However, pursuant to the property settlement, plaintiff was awarded 50 percent of defendant’s retirement pay, or “disposable military retired pay,” as calculated based on defendant’s creditable military service during the marriage. The parties also agreed to the inclusion of the following provision in the divorce judgment, which we shall refer to as the “offset provision:”

If Defendant should ever become disabled, either partially or in whole, then Plaintiff’s share of Defendant’s entitlement shall be calculated as if Defendant had not become disabled. Defendant shall be responsible to pay, directly to Plaintiff, the sum to which she would be entitled if Defendant had not become disabled. Defendant shall pay this sum to Plaintiff out of his own pocket and earnings, whether he is paying that sum from his disability pay or otherwise, even if the military refuses to pay those sums directly to Plaintiff. If the military merely reduces, but does not entirely stop, direct payment to Plaintiff, Defendant shall be responsible to pay directly to Plaintiff any decrease in pay that Plaintiff should have been awarded had Defendant not become disabled, together with any Cost of Living increases that Plaintiff would have received had Defendant not become disabled. Failure of Defendant to pay these amounts is punishable through all contempt powers of the Court.

At the divorce hearing, the trial court questioned the attorneys regarding the language of the offset provision, noting that it seemed to suggest that defendant was not currently receiving any disability benefits, which was not the case. Counsel for both parties acknowledged that the language was awkward, but explained that the intent was simply to address a scenario in which defendant became entitled to and accepted more disability benefits than currently being received, inversely diminishing the retirement benefits that were being divided and awarded to plaintiff. The purpose of the offset provision was to protect plaintiff in such a scenario. The trial court also discussed the offset provision with defendant in the following exchange:

Court. All right, . . . Mr. Foster, you do acknowledge that if you were to defer any of your current military retirement pay or convert it to disability pay, or if your military retirement pay were reduced because the level of your disability pay was increased, you acknowledge this Court’s ability to enforce payment to Ms. Foster the level of benefits that she would be entitled [to] presently from your retirement pay?

Defendant. Yes.

Shortly after the entry of the divorce judgment, defendant became eligible for and began receiving increased disability benefits, which consequently reduced the amount of his retirement payments and the amount plaintiff received from defendant’s military retirement pay. This was the precise circumstance that the parties had contemplated in drafting and agreeing to the offset provision. However, defendant failed to comply with the divorce judgment by paying plaintiff the difference between the reduced amount of retirement pay she received and the amount that she had received at the time of the divorce judgment. A number of show cause and contempt proceedings took place over several years, leading to the order that defendant now appeals, wherein the trial court held defendant in contempt for failure to pay plaintiff in compliance with

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the consent divorce judgment. The court ordered him to pay plaintiff $1,000 per month, with $812 credited as current payments due under the divorce judgment and $188 to be credited against the arrearage of $34,398 until the arrearage was paid in full.

Defendant’s primary argument on appeal is that the divorce judgment and the trial court’s order enforcing the judgment were legally invalid because they required him to pay plaintiff a portion of his disability benefits in violation of federal law. We disagree. Defendant’s argument entails statutory construction and questions of law in general, which we review de novo on appeal. Snead v John Carlo, Inc, 294 Mich App 343, 354; 813 NW2d 294 (2011).

“Members of the Armed Forces who serve for a specified period, generally at least 20 years, may retire with retired pay.” Mansell v Mansell, 490 US 581, 583; 109 S Ct 2023; 104 L Ed 2d 675 (1989) (citations omitted). And retired or retirement pay is generally subject to division in state court divorce proceedings under the Uniformed Services Former Spouses’ Protection Act (USFSPA), 10 USC 1408. Id. at 584-585; Megee v Carmine, 290 Mich App 551, 562; 802 NW2d 669 (2010). With respect to disability pay, “[m]ilitary veterans in general are entitled to compensation for service-connected disabilities under 38 USC 1101 et seq.,” sometimes referred to as “VA disability benefits.” Megee, 290 Mich App at 560. Pursuant to 10 USC 1414(a)(1), as effective January 1, 2004, “ ‘a member or former member of the uniformed services who is entitled for any month to retired pay and who is also entitled for that month to veterans’ disability compensation for a qualifying service-connected disability . . . is entitled to be paid both for that month . . . .’ ” Id. at 560-561 (ellipses in Megee). “This concurrent receipt of military retirement pay and VA disability benefits is commonly referred to as CRDP, which stands for ‘concurrent retirement and disability pay.’ ” Id. at 561 (citation omitted). Another form of military disability pay, separate from standard VA disability benefits, is combat-related special compensation (CRSC), 10 USC 1413a. Id. at 552-553. “To be eligible for CRSC, a person must be a member of the uniformed services who is entitled to retired pay and who has a combat-related disability.” Id. at 560, citing 10 USC 1413a(c) (emphasis added). A veteran who is qualified for CRDP (retirement pay plus VA disability pay) and who is also qualified for CRSC (combat-related disability pay), may elect to receive CRDP or CRSC, but not both. Megee, 290 Mich App at 561.

According to defendant, he became entitled to receive CRSC, which determination was apparently made retroactive to a date preceding entry of the divorce judgment. Defendant elected to receive CRSC, which resulted in a diminution of his retirement pay and plaintiff’s 50 percent award of that pay. See Megee, 290 Mich App at 561 (“Plaintiff elected CRSC, which effectively discontinued his retirement pay that had been subject to the QDRO, halting payments to defendant.”). The Megee panel observed the following concerning CRSC and the division of waived retirement pay related to CRSC, i.e., retirement pay that is not being received because of a CRSC election:

The trial court here effectively divided plaintiff’s CRSC and, although Mansell did not directly address division of disability pay, the USFSPA clearly does not allow such a division. Subsection (c)(1) of the USFSPA, 10 USC 1408(c)(1), permits a court to treat only “disposable retired pay” as “property of the member and his spouse,” and CRSC is “not retired pay,” 10 USC 1413a(g). Accordingly, the trial court erred by dividing plaintiff’s CRSC and forcing

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plaintiff to pay a portion of his CRSC to defendant. However, on the subject addressed in Mansell, i.e., dividing waived retirement pay, the Mansell decision actually supports making plaintiff in the case at bar pay defendant half of the retirement pay that he would be receiving but for his election to take CRSC. The Mansell Court concluded that waived retirement pay could not be divided as property in circumstances in which the pay had been waived in favor of title 38 VA disability benefits, given that the definition of “disposable retired pay” in 10 USC 1408(a)(4)(B) excludes consideration of amounts waived in order to receive title 5 or title 38 compensation. Under the reasoning and rationale of Mansell, there would be no prohibition here against considering for division waived retirement pay under the USFSPA because we are addressing a waiver of title 10 CRSC not mentioned in 10 USC 1408(a)(4)(B). Thus, all of plaintiff’s envisioned yet waived military-retirement pay can be divided without offending the USFSPA or Mansell. Accordingly, there is no bar to ordering plaintiff to compensate defendant in an amount equal to 50 percent of plaintiff’s envisioned retirement pay as intended under the terms of the divorce judgment after plaintiff made a unilateral and voluntary postjudgment election to waive his retirement pay in favor of disability benefits contrary to the terms of the judgment.

* * *

We hold that a military spouse remains financially responsible to compensate his or her former spouse in an amount equal to the share of retirement pay ordered to be distributed to the former spouse as part of a divorce judgment's property division when the military spouse makes a unilateral and voluntary postjudgment election to waive the retirement pay in favor of disability benefits contrary to the terms of the divorce judgment. Conceptually, and consistently with extensive caselaw from other jurisdictions, we are dividing waived retirement pay in order to honor the terms and intent of the divorce judgment. Importantly, we are not ruling that a state court has the authority to divide a military spouse's CRSC, nor that the military spouse can be ordered by a court to pay the former spouse using CRSC funds. Rather, the compensation to be paid the former spouse as his or her share of the property division in lieu of the waived retirement pay can come from any source the military spouse chooses, but it must be paid to avoid contempt of court. To be clear, nothing in this opinion should be construed as precluding a military spouse from using CRSC funds to satisfy the spouse's obligation if desired. [Megee, 290 Mich App at 566-567, 574-575 (footnote omitted).]

Megee governs and dictates, given the involvement of CRSC, that the offset provision in the consent divorce judgment is fully enforceable through the trial court’s contempt powers. Defendant attempts to distinguish Megee on the basis that, because of the retroactive nature of the CRSC award, he effectively became entitled to and elected CRSC and waived retirement pay prior to entry of the divorce judgment, whereas Megee concerned a unilateral, postjudgment election to waive retirement pay and opt for CRSC. Defendant’s argument construes Megee much too narrowly and misses the broader legal principle that emanates from Megee, which is that a state divorce court has the authority to divide waived retirement pay, which waiver had

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resulted from a veteran’s decision to elect CRSC, so long as the court does not directly order payment from CRSC funds.1 Thus, assuming for the sake of argument that defendant’s waiver of retirement pay and election of CRSC must be treated as having already occurred when the divorce judgment was entered, the offset provision contemplating the division of waived retirement benefits was nonetheless valid and enforceable under Megee.

Defendant presents an alternative argument under 38 USC 5301, which regards the nonassignability and exempt status of veterans’ benefits. Defendant’s argument is woefully undeveloped and we deem it waived. See Mudge v Macomb Co, 458 Mich 87, 104-105; 580 NW2d 845 (1998). Moreover, as ruled earlier, the argument reflects an improper collateral attack on the judgment of divorce. See Kosch, 233 Mich App at 353. Finally, 38 USC 5301(a)(1) speaks of precluding the assignment of benefits “except to the extent specifically authorized by law[.]” As noted above, the USFSPA generally permits the division of disposable retired pay in state divorce actions, and the instant dispute concerns the division of waived retirement pay, which the Megee panel held was proper under federal law when the waiver is in relation to a CRSC election. Megee, 290 Mich App at 566-567, 574-575.

Finally, defendant poses arguments regarding alleged mistakes of fact by the trial court, along with purported fraud and unconscionable advantage, all tied to the procurement of the divorce judgment. These arguments are an improper and untimely attempt to relitigate the divorce action that was settled years ago absent appeal, and the arguments are therefore rejected. We additionally note that defendant’s assertion that the trial court was factually mistaken with respect to whether defendant was suffering from a disability at the time of the divorce hearing is belied by the record. The trial court expressly recognized that defendant was currently receiving disability benefits and sought clarification from the parties concerning the language in the offset provision that suggested otherwise. In sum, defendant’s arguments are unavailing.

Affirmed. Having fully prevailed on appeal, plaintiff is awarded taxable costs under MCR 7.219.

/s/ Jane E. Markey /s/ William B. Murphy

/s/ Amy Ronayne Krause

1 The contempt order does not require payment from CRSC funds, nor do we construe the divorce judgment’s offset provision as ordering payment from CRSC funds, and any such construction must be avoided.

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ATTACHMENT B

Consent Judgment of Divorce, Foster v. Foster, Case No. 07-15064-DM

(December 3, 2008)

+r\e*:Wsa,WSTATE OF MICI-EGAN

IN THE +1.'T CIRCUIT COTIRT FOR T}IE COI,NTY OF DICKINSONFA]VIILY DTYISION

,E [n*E',;liP;o

\ -. .r. lt ..A,i?t f \: t t-; -! f,l I

1',' 1,ti' i;i.IL.Uii t",Ui."r

DEBORAH LYNN FOSTE&

Plaintff,

v.

RAY IAMES FOSTE&

Mikael G. Halner (P34040)

File No. 07-15064-DMHon. Thomas D.Slagle

RYANLAWOFFICESAttomevs for Plaintiff3o7 Easi'C" Stueet-P.O' Box 638

IronMountairuMI 49801Goii nq.ssa}- Fax tsool vr+aaaz O}a\ n+zaB} vax r9,06i, rz+zeez

coNsENT TUDGMENT OF DIVOR-CE

fn a session of said Courtin the Courthouse in theCity othon Mountain,

Dickinsorr County, State of Michiganon Deeember 3,2008

Present Honorable Thomas D. Slagle

Plaintiff filed a Complaint for Divorce and Defendant filed an Answer. Plaintiffar:neared with her attorneyl Mikael G. Hahner of RYAN LAW OFFICES and Defendantuib"*"a wiih his attorney, Michael P. Celello of Mouw & Celello, P.C. Proofs weredf; ;th regard to the afegations irr.th" lompfaint for Divorce. The Court is satisfied

the material"factual allegaEons in the Comi:laint are true; that the jurisdictionaletlments have been met, t[at Plaintiff is not pregnan$ and there has been a breakdorvn;f th; *uoiug" relationship to the extent fhat the objects of matrimony have been

destroyed and-the marriage iannot be preserved.

This Court having jurisdic[on of the parties, the marital stafus, the property of

tt-t" p*ti*+ being f"fy ,'iirised in the premisls and upon consideration of the facts and

evidence;

L00 East "C'1 St.- P.O. Box7L7IronMourtairu MI 49801

Defendant.

Michael P. Celello (P56694MOLIW & CELELLO, P.C,

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IT IS ORDERED:

I. ABSOTUTE DIVORCE

That the marriage between Deborah Ly* Foster and Ray James Foster is herebydissolved and the partils are divorced from thebonds of matrimony.

II. CHILD BORN DTIRING THE MARRIAGE

One child was born to the parties during their marriage to ea-ch other. Thechild's narne and date of birth is: Melissa Marie Foster, born March 8, L990. Shegraduated from high sdrool in May of 2008.

III. TIEALTH INSURANCE FOR CHILD .ASSIGNMENT OF GI BENEFITS

By virfue of the Defendanfs years of service in the armed forces of the UnitedStates, the parties child may be eligible to receive medical, dental, vision eare at no costto either of the parties through the Veteran's Adminiskation if she is determined to bean eligible dependant of a retired veteran.

The Defendant agrees to take all reasonable and necessary steps to assist thepurry's child in obtaining any of the medical, dental or vision benefits she is eligible torecelve.

Neither ptrty shall be obligated to pay any costs th9 ctrild incurs in obtaining anymedical, dental of vision treatrnent or as a result of the child participating in anyprograms oflering any medical dental or visionbenefits.

Defendant agrees to assign and fuansfer to the parties child Melissa Marie FosteraII of the benefits that he is eligible to receive under the "Post 9lLL GI Bill" that can bekansferred to a dependant when the "Post 9111GI8ilI" takes effect o,n August 7,2AA9.The parties agree and acknowledge that the benefits availabie to the Defendant aregreater than the benefits that can be transferred to a dependant of an eligibleparticipant. To the extent benefits cannot be assigned under the "Post 911'J, GIBill'those benefits remain awarded to the Defendant as his separate property.

Defendant agrees to perform all acts necessary and to cooperate with MelissaMarie Foster to effecfuate and complete the assignment and transfer of the "Post 9 111,

GI8i11" benefits in a timeiy manner.

IV. TAX DEDUCTIONS/EXEMPTIONS/CREDITS

Plaintiff shall be entitled to daim the parfies' child Melissa Marie Foster, date ofbirth March & 1980, as her dependent each and every year for the purposes of local,state and federal income taxes.

2

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V. SPOUSAT SUPPORT

Neither Plaintiff nor Defendant shall be entitled to spousal support and any righteither ptrty has to seek spousal supportin the future is wailed and fblever ba:red.

Plaintiff-agrees and acknowledges that she is waiving and foregoing any rightshe has r:nder the law to request that Defendantpay her spousal support.

Defendant agrees and acknowledges that he is waiving and foregoing any righthe has under the law to request that Plaintiff pay him spousal support.

Notwithstanding their r_espective waivers of their stafutory rights to seek futurespousal support, by sigmng this ]udgment each party ackno#ledfes that it is theirintent that there be no deviation from their agreemehl, that neither of them shall requestspousal support from, nor be obligated to pay spousal support to the other in thefuture.

VI. PROPERTY SETTLEMENT

_ The parties have accumulated marital assets and liabilities during their marriage

to each other. The parties have agreed to divide their marital assets as fo"llows:

Personal Property

Each paSty shall receive the items of personal property that are currently in theirpossession as their separate property free and dear of anj, claim by the other.

Real Propertv

Plaintiff shall receive the marital home at1029 Cox Street, Quinnesec, Mchigan.Plaintiff shall be responsible for paying any indebtedness associated. with -herow.1er9!]p and use of the ploperq/ indirding but not limited to: mortgage payments,utility bills, homeowners and casualty insura+ce premiums, properby tai p-ayindnts andany maintenance or repair costs. Plaintiff shall make reasbnible-efforts [o have theryortgage hgl"dgr release the Defendant from being obligated on the mortgage. In thealternativg Plaintiff shall make reasonable efforts [o refinance the current irdrtgage onthe marital home within ninety (90) days from the date this ]udgment is enteied'andfiled.

The Defendant shall execute a deed relinquishing his interestin the maritat homeuPon being provided with proof that Ptainfiff has rEfinanced the obligation or themortgage lender has released him from being obligated on the mortgage o1 th" maritalhome.

Vehicles

gui"tiff shall be awarded the vehicle cur:rently in her possession. That vehicle isa 1999 Buick Century and a 1994 Pontiac Grand Prix. The igg+ Pontiac Grand Prix iscurrentiy being used by the parties' child, Melissa Marie Foster. Plaintiff shalt be solely

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responsibleforpaying"*I"1-"3?icenseandregistrationfees'insuranceandlormaintenance or opeiating costs urrooui.?*iti.,"y "?t"clebeing

awarded to her'

Defend'arrtshallbeawardedl]revehicleslqlf.Tflyinhispossession.Thosevehicles are lees

^iisoq qito* ' ylit"N:i;; '40sx-;"a

zoos' Harlev-Davidson

m o torcy cle' . D erend'-#t'r''rr u u'''"1 d+ illlli{i11 Fi; s afli lo ansJi cens e an d

reeistration t"ur, rr,r*.ance and/or mfintenan"" o' opu'*tiig ftsts'associated with any

""?tiJ" t"i"g awarded to him'

BankAccounts

Plainuffshallbeawarded.anymoniesln-lnyclreckingo.'E*i,qll.countsinanyfinancial institutiois o, i*"*t tent iccounts, whi& are solely in her name'

Defendant shall be awarded' any monies in any checking or savings accounts in

any financial insUiitions or investme;i ";;;"ds, whidr are solely in his name'

Eachpartybyvirtueofemploymentheld.duringthemarriagehasparticipatedina pension or retirenierLt plan sporusor-ed by their employer'

Plaintiff is awarded one hundred percent 00a%)of anv interest she has acquired

in anv retirement and pension r:r,"rilvii;;;;i';i ,^; l;Ployment she has held

dffin; her marriage to the Detendant'

Plaintiffisaward.edfiftypercent(50%)ot*ymilitaryretirementbenefitsthe

tHTfi 3e[#ffiH#;#:Tf#:1#i1;:'d*tt';iti'thearmedrorcesortheThe Plaintiff is awarded a percent age ::the Defend.ant,s disposable military

retired ?

uy, t? y,?:;il;+ t; ***ii**gJi:{*i*ffi ffii&3ilTru $;

ffiffiJr,'.:j##r:*H,Iffi lEfi:3,;;;i;g;il'U'i"*d;;;btJ;*6"'ol*8"tt''of seditarrle militarii##d, pi.r"urir#ildi*; trtir poru"" of Defendanf s mititary

I"ilu""1r.""i, t[;th"'t with Cost of Livinginceases'

Beginning.December 1, 2008.until the Plainti* htt J#ffi-f.fi:::-f, H:oortion of the t"tit"*""t benefits she is eligible to'rec

befendant ,hril p;;Pi;i"dii-G ,*"""t-;]"th" retirement benefits she is entitled to

wirhin ten (10) a*Vi'frorfrr1'"i;1] il;;ilr his retirement benefit check'

If Defendant should ever become d.isable-d, either partially_or-in whole, then

plaintiff,s share .iil?;"#;"it ""tiliJ*"J;h'Ii;; "**rutta as ii Defendant had not

become disabled. ';J;;; rt rU q" ."sponsible to Pay' directlv to Plaintiff' the sum to

which she would be entitled if-Def";;#; h;;;;t 6""o*"-J#"Uled' Defendant shall

oav this sum to plahtiff our of hi, ";;;;cket and "**ft;;;|"ft"i1:ls

paying that

irri,, f.o* his disability pay o. othu#;J;;;;1f i[" 1t't'ta"rv refuses to ply those sums

directly to rlaintiifl-if ift6 military #;tly t"a"t* u"i aZ"t not entir-ely stop' direct

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Da\runent to Plaintiff, Defendant shall be responsible to p-aydirectly-to Plaintiff any

[;il;;;t";;y th;i'Ptaintiff should have bden awarded had Defendant not become

iir"rr"+ i;f"ti1.;ifl. ;t-a6t -oI EtTs. increases that Plaintiff would have received

had Defenaur,t r,oi'Ue.r"i" disabled. Ffilure of Defendant to pay these amounts is

funishable through all contemptpowers of the Court'

Defend.ant did not eafn any interest in any othgt pension or retirement benefits

as a result of any ".;;lit*y;;pity*;nthe heli during this mar:riage to the Plaintiff'

Defendant intend.s on canceling the survivors benefit cov.erage,lvhich currently

lists Plaintiff as a u*utia*y that he"is currently paying for-with military retirementpav. To the extent il;;;ile;thri *"r".rrud _to pVy for that coverage are restored

iJ'fr" riiiit^ril;;ri.;;it # thu pa"ties intention that those tunds are to be included in

Defend.ants mifitary"pl;rir";riJ-ai"ia"a uetween the parties in accordance with the

formula set forth above.

VII. HEALTH INSLIRANCE FOR THE PARTIES

plaintiff is currently covered und.er a policy of health insurancepro,vjd.ed by her

emplover. Neither party ihatt Ue under any obligation to provide any he-alq ulsurance

;.IJJs;'f;;1h;;ffiixi"' th" divorce 6".o,i"s final.^ Eu:h,pqf shall be solelv

responiible for p"tirrg all premiums, costs or fees associated with obtaining and

*rirtri"irg healfh iosirance coverage for themselves in the future.

VI[. DEBTS AND LIABITITIES

plaintiff shall be responsible for paying the foilowing debts and liabilities:

A. Any debt, obligation, lien_or gther encumbrance owed on ariy prop.e+yUeii,g award.ed"to her in this Judgment of Divorce,, except for any.debtoblifations, lien or other

"rrcuilb.ut.ce which has-been.specifically

pr"fia"a f* il; different fashion under the terms and conditibns of this

|udgment of Divorce,

B. Plaintiff sha1l be responsi.ble for payment oi any-debts incurred by herufi"f rh" filed for divorce on No'vdmber 20, 2(iA7 except for any.debt,obligation, lien or other encumbrance,_ which has-been-.specificallyprofia"a fili" a different fashion under the terms and conditions of this

Judgment of Divorce'C. A[ Imounts currently owed on all credit cards in her narne.

D. Any medical, dental, or ocular -exPe-nses she has incurred for herself,

which have not been paid by ,rry health insurance provider.

E. The consolidation loans at the Iron Mountain-Kingsford CommunityFederal CreditUnion.

F. Plaintiff agrees to indemnify and.ho-ld Defendant harmless from the

payment oluny and all debts iet forth above'

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Defendant shall be responsible for paying the foltowing debts and liabilities:

A. Any debt, obligation lien or other encumbrance owed on any propslrybeiirg ;;dA% him in this Judgment of Divorce, except far arry-debl;tl#;;;tri"" or other

"r,"oribrunce which has been specifically

pro-auJfo" in a different fashion under the tertrs and conditibns of this

Judgment of Divorce.

B. Defendant shall be responsible for payment oi a1y^{ebts incu:red uy.ryTurter piainfrff filed for divorce on l$ovember 20,2007 except for any debt

"ffrgr[r;Iii"r o1 other encumbrance, which has been specificallypro*d"Jior in a different fashion under the terms and conditibns of this

Judgment of Divorce.

C. All amounts eurrenfly owed on all creditcards inhis name.

D. Any medical, dental, or ocular expe-nses he has incurred for himself,- *hich have not been paid by any heilth insurance provider.

E. Defendant agrees to indemnify and hold Plaintiff harrLless from the

payment of any and alt debts set forth above'

Ix, DISCLOSTIRE OF ASSETS AND LIABILITIES

All property, personal, real or mixed of any tlge or nafure whatsoever, whether

tangible oJ i"tr^git;tE;il ,11 othq assets ur *"[ u6 ihe debts accumulat"d *Trlg-t_:-riiug" are ad&essed by this Igdgment of Divorce. Both parties Jqeleselt

th{-theyh;;;;;h i"ilturJ *."rutely diseiosed all of the marital assets, debts and liabilitiesiiiCn-*- u.q.iit"a, accumulated or incurred during their rnar:riage to each other'

X. PROVISION IN LIEU OF DOWER

The property division of thq Judgment of Divorce shall.fully s.ltisfy all claims ofdower urd'otliur .iui*" which either p:rrty may have against the other, excepting for

"Ufig"A""r "oJ *"rur-ratons containeh in"this iy{S*.uttt and both.parties}ereto are

foreier ba6ed fro* u"y dower interest or their clairis in any ptopet4r, which the other

party has an interest in, owns or acquires hereafter'

XI. STATUTORY INSURANCE PROVISION

Except as set forth herein the rights of either party as a beneficiary otherwise inand to anv policv or contract of life inJurance, endowment or annuity insurance on the

tife oithe'oth"r,'*. hereby extinguished and qny such contracts or policies of insurance

shall hereafter be iiv"ii" i" tli" estate of the party who owns it, or to such other

p;;;;;l"rtit Uf." as that party may hereaftlr d"ersignate as the beneficiary of any

i*rr.un"" policy. This provirion rhull not-extinguish Plaintiff" lg_h] to receive any

*itit*y sr.t rirr6r f"""fii ,r i;"t ; the Defenduit it paying for thit benefit from his

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military retirement benefits and Plaintiff is listed as the beneficiary of the survivorbenefits.

)OI. ATTORNEY FEES

Each party shall be solely responsible for paying the litigation costs andattomey's fees they incured while the above captioned litigation was pending.

X[I. EXECUTION OF DOCUMENTS

The parties shall promptly execute and deliver to each other any documentrequired to-carry out the terms of this Judgment of Divorce. A certified copy of thisJudgment may be recorded or filed with the Register of Deeds, Seeretary of Statg or anyother agency necessary to effectuate this ]udgment.

)flv. PROBATE PROVISION

The rights of each of the parties hereto as defined by the Probate Code and anysubsequent amendments thereto, in and to the estate and property of the other, arehereby extinguished and waived by virtue o{ the property settlement order hereinunless otherwise specificaily preserved by this ]udgment and all benefits whidr wouldotherwise pass to either pafty by intestate succession or by virtue of the provisions ofany Will executed prior to this Judgment of Divorce are hereby abolished, waived andforever extinguished.

XV. BANKRUPTCY

The parties intend and the Court specifically finds that the provisions in this]udgment are for the support of each of the parties. Further, the parties intend, and theCourt specifically finds that the parties' assumption of debts and hold harmlessobligations are for the support of each other. Accordinglp those obligations areintended by the parties to be non-dischargeable in bankruptcy. The parties eachwarrant that neither of them has a presentintention of filing for barftruptcy.

XyI. CONTINUING.TURISDICTION

IT IS FURTHER ORDERED AND ADJLIDGED that this Court shall retainjurisdiction over this cause of action and the parties hereto and shall supervisecompletion of the provisions of this Judgment of Divorce.

XV[. TERMINATION OF ORDERS

Any orders entered during the pendency of these proceedings are herebyterminated upon execution and Clerk s entry of this ]udgment of Divorce.

XVIIL IIJDGMENT DISPOSES OF ALL CLAIMS

This ]udgment disposes of the last pending claims of the parties and closes the case.

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Date: December 3,2008

Date: December e 2008

Date: December e 2008

Date: December 3,2008

Date: December 3,2008

Attor:ney for Pl aintiff

=z^ro

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ATTACHMENT C

Contempt Order, Foster v. Foster, Case No. 07-15064-DM (November 6, 2014)

STATE OF MICHIGANIN THE 41st CIRCUIT COURT FOR THE COUNTY OF DICKINSON

FAMTTY DTV|STON

DEBORAH LYNN FOSTE&

Pl ai nti ff/ C o unte r- D efen d ant,

v

RAY IAMES FOSTE&

D efe ndant/ C o unte r- Plai nti ff.

Mikael G, Hahner (P34040JHAHNER LAW OFFICES, P.C.

Attorneys for Plaintiff321 S. StephensonAve. -POBox827Iron Mountain, MI 4980L(906)828-1408 Fax (906) 828-1410

File No. 07-15054-DM

Honorable Thomas D. Slagle

Michael B. Gawecki (P71598)LAW OFFICES OF MICHAEL BRUCE

GAWECKIAttorneys for DefendantP.O. Box 1190Okemos, MI48805

At a session of saidthe Courthouse in the of lron Mountain,

tlNnoc NosNlxclo

l$g $. ffiCounty of Dickinson, of Michigan on

2014o31lJ puB g3Al333U

Present: Honorable fthomas D. SlagleFamily Couryt f udge

A hearing having been held on Plaintiffs Motion to Have Defendant show cause as to

why he shouldn't be held in contemp! the partie! having appeared with counsel, argument

having been held and the Court being fully advi in the premises thereof,

that:IT IS HEREBY ORDERED AND ADIUDG

Defendant is in contempt for failure to Plaintifft@ryI

r'f\ COr,-rf,) t rrC-{ad(".v|udgment of Divorce

entered on December 3, 2008.

Page 1 of

.+\ +*-

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t if hedisabili! pay or co

she would hdas increased,

to Plaintiff

t the time the rms of the Co t fudgment of Div were placedrecord on cember nhe

re to defer any ofh litaryretirem or if the amounmdisability pay ld have the ability

orce paymen been entitled tory rem B of the

Decem 3, 2008 tra script of the proceedings held on that dateattached.)

fendant military d\^ bility pay

enti f Divorce iamount cause tlilevel of his

Out of every $1,000.00 paymen]t, $1BB.1B will be credited against thearrearage and the remaining $B[.1.82 will be credited for the paymentdue und'er'the fudgment of Divo4ce.

The total arrearage of $34,397.B3 and the monthly payment amountowed under the |udgment of Divorce in the amount of $811.82 shallremain owing until all of the payments have been made and the

+f:2wt''-'"*:1""d.:*1f "#sffi'-uqfPi'ru:"tqpqlr#'itd*;Defendant's request for sanctions is denied for the reasons stated onthe record on September 22,2014.

take placJ o., at "

1Bm day of Decem ber,2074 at

If Ray fames Foster is in complifnce with this Court's Order, Ray famesFoster and Counsel(s) may appeflr by telephone conference.

At said next hearing on the 1Bt{ day of December,2OL4, if Ray famesFoster is complying with this Orfder, then Honorable Thomas D. Slagle

may use his discretion to modify the bond over Ray fames Foster.

Page 2 ofl3

his -63i

his I

.-0k

paywas

a",*?' \'-"Y''

3. Defendant is to continue payiris Plaintiff the sum of $1,000.00 permonth by the 7tn day of every /pronth beginning on ]uly 7,2014, untilthe arrearage is paid in full.

4.

5.

6.

7.

B.

A review hearing willB:15 a.m.

to

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,L'.^ ' h ,.Date: Oeteber Q',201,4

rable Thomasamily Court |udge

Page 3 of3

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ATTACHMENT D

Bond Order, Foster v. Foster, Case No. 07-15064-DM (June 27 2014)

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ATTACHMENT E

Merrill v Merrill, Petition for Writ of Certiorari to the Supreme Court of

Arizona, Supreme Court Case No. 15-1139

No. _____

IN THE

Supreme Court of the United States __________

ROBERT MERRILL,

Petitioner,

v.

DIANE MERRILL,

Respondent. __________

On Petition for a Writ of Certiorari

to the Arizona Supreme Court

__________

PETITION FOR A WRIT OF CERTIORARI

__________

KEITH BERKSHIRE

Counsel of Record For Petitioner MAXWELL MAHONEY

BERKSHIRE LAW OFFICE

5050 N. 40th St., Suite 340

Phoenix, AZ 85018

(602) 396-7669

Keith@BerkshireLawOffice.com

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QUESTION PRESENTED

In Mansell v. Mansell, 490 U.S. 581 (1989), this

Court held that, according to the Uniformed Services

Former Spouses' Protection Act, 10 U.S.C. 1408

(1982 ed. and Supp. V), a state court does not have

jurisdiction to indemnify a former spouse if a retiree

waives military retired pay in order to receive

veterans' disability benefits, prior to a divorce.

Despite Mansell, the Arizona Supreme Court found

that a military retiree must indemnify his ex-spouse

for a post-divorce waiver of military retired pay to

receive disability benefits. Did the Arizona Supreme

Court err in circumventing Mansell under the guise

that post-divorce waivers of retired pay are different

than pre-divorce waivers?

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TABLE OF CONTENTS

QUESTION PRESENTED.......................................... i

TABLE OF AUTHORITIES ...................................... iv

PETITION FOR WRIT OF CERTIORARI ................ 1

OPINIONS BELOW ................................................... 1

JURISDICTION ......................................................... 1

STATUTES INVOLVED ............................................ 1

STATEMENT OF THE CASE ................................... 4

A. Statutory Framework ............................... 5

B. Proceedings Below ..................................... 7

REASONS FOR GRANTING THE WRIT ................. 9

I. 37 Separate State Courts Have

Addressed The Issue Presented And

They Are Split As To The Outcome. ................ 9

A. 12 States, Including The Supreme

Courts Of Vermont, Mississippi,

Alabama, Alaska, and Nebraska,

Interpret Mansell and USFSPA To

Preclude Indemnification Due To

Federal Preemption. ................................... 9

B. 25 states, including the Supreme

Courts of Arizona, Maine,

Massachusetts, Rhode Island and

Tennessee Hold That the USFSPA

Does Not Apply to Post Divorce

Waivers. .................................................... 15

II. Due to Persisting Ambiguity on This

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Issue, State Legislatures Have Begun

To Secondarily Codify Existing Federal

Law Preventing Indemnification of

MRP Waivers ................................................. 19

III. This Case Presents A Recurring Issue

Of National Importance. ............................... 20

IV. This Case Offers Clear Facts To Apply

Federal Preemption. ...................................... 21

V. The Arizona Supreme Court’s Decision

below is an Incorrect Application of

Mansell. .......................................................... 22

NOTICE OF OTHER SIMILAR PETITION ........... 25

CONCLUSION ......................................................... 25

Appendix A

Merrill v. Merrill, 362, P.3d 1034 (Ariz.

2015) .................................................................... 1a

Appendix B

Merrill v. Merrill, 1 Ca-CV 2014-0649, 2014

WL 7237678 (Ariz. Ct. App. December 18,

2014) .................................................................. 10a

Appendix C

Merrill v. Merrill, Case No. DR. 1991-

92542, slip op. (Ariz. Super. Ct. Aug. 8.

2013) .................................................................. 25a

Appendix D

Decree of Dissolution of Marriage, Merrill

v. Merrill, Case No. DR. 1991-92542, slip

op. (Ariz. Super. Ct. Aug. 10, 1993) .................. 27a

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iv

TABLE OF AUTHORITIES

CASES

Bandini v. Bandini, 935 N.E.2d 253 (Ind.

Ct. App. 2010) ........................................... 18

Black v. Black, 842 A.2d 1280 (Me. 2004) .......... 17

Blann v. Blann, 971 So.2d 135 (Fla. Dist.

Ct. App. 2007) ........................................... 18

Copas v. Copas, 359 S.W.3d 471 (Ky. Ct.

App. 2012) ................................................. 13

Clauson v. Clauson, 831 P.2d 1257 (Alaska

1992) ................................................... 10, 24

Dexter v. Dexter, 661 A.2d 171 (Md. Ct.

Spec. App. 1995) ....................................... 18

Gatfield v. Gatfield, 682 N.W.2d 632 (Minn.

Ct. App. 2004) ........................................... 18

Gillin v. Gillin, 307 S.W.3d 395 (Tex. Ct.

App. 2009) ................................................. 13

Halstead v. Halstead, 596 S.E.2d 353 (N.C.

Ct. App. 2004) ........................................... 13

Hisgen v. Hisgen, 554 N.W.2d 494 (S.D.

1996) ......................................................... 22

Hodge v. Hodge, 197 P.3d 511 (Okla. Civ.

App. 2008) ................................................. 18

In re Marriage of Gahagen, 690 N.W.2d

695 (Iowa Ct. App. 2004) .......................... 18

In re Marriage of Hayes, 208 P.3d 1046

(Ore. Ct. App. 2009) ................................. 18

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In re Marriage of Howell, 361 P.3d 936

(Ariz. 2015) ......................................... 21, 25

In re Marriage of Krempin, 83 Cal. Rptr.

2d 134 (Cal. Ct. App. 1999) ...................... 18

In re Marriage of Neilsen and Magrini, 792

N.E.2d 844 (Ill. App. Ct. 2003) ................ 18

In re Marriage of Pierce, 982 P.2d 995

(Kan. Ct. App. 1999) ................................. 14

In re Marriage of Strassner, 895 S.W.2d

614 (Mo. Ct. App. 1995) ........................... 18

In re Marrigae of Warkocz, 141 P.3d 926

(Colo. App. 2006) ...................................... 18

Johnson v. Johnson, 37 S.W.3d 892 (Tenn.

2001) ................................................... 15, 16

Kramer v. Kramer, 567 N.W.2d 100 (Neb.

1997) ................................................... 10, 11

Krapf v. Krapf, 786 N.E.2d 318 (Mass.

2003) ......................................................... 16

Mansell v. Mansell, 490 U.S. 581 (1989)..... passim

McCarty v. McCarty, 453 U.S. 210 (1981) ... 16, 20

McGee v. Carmine, 802 N.W.2d 669 (Mich.

Ct. App. 2010) ........................................... 18

McHugh v. McHugh, 861 P.2d 113 (Idaho

Ct. App. 1993) ........................................... 18

Merrill v. Merrill, 362 P.3d 1034 (2015) .............. 1

Morgan v. Morgan, 249 S.W.3d 226 (Mo.

Ct. App. 2008) ........................................... 13

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Mallard v. Burkart, 95 So. 3d 1264 (Miss.

2012) ................................................... 12, 13

Owen v. Owen, 419 S.E.2d 267 (Va. Ct.

App. 1992) ................................................. 18

Perez v. Perez, 110 P.3d 409 (Haw. Ct.

App. 2005) ................................................. 18

Price v. Price, 480 S.E.2d 92 (S.C. Ct. App.

1996) ......................................................... 18

Resare v. Resare, 908 A.2d 1006 (R.I. 2006) ...... 17

Scheidel v. Scheidel, 4 P.3d 670 (N.M. Ct.

App. 2000 .................................................. 18

Shelton v. Shelton, 78 P.3d 507 (Nev. 2003) ...... 18

Surratt v. Surratt, 148 S.W.3d 761 (Ark.

Ct. App. 2004) ........................................... 18

Tirado v. Tirado, 530 S.E.2d 128 (S.C. Ct.

App. 2000) ................................................. 13

Whitfield v. Whitfield, 862 A.2d 1187 (N.J.

Super. Ct. App. Div. 2004) ....................... 18

Wright v. Wright, 594 So.2d 1139 (La. Ct.

App. 1992) ................................................. 14

Youngbluth v. Youngbluth, 6 A.3d 677 (Vt.

2010) ................................................... 11, 12

STATUTES

10 U.S.C. § 1408 ............................................ 1, 4, 6

10 U.S.C. § 1408(c)(1)........................................ 1, 6

10 U.S.C. § 1408(a)(4) ................................... 1, 2, 7

10 U.S.C. § 1413a(g) .............................................. 3

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10 U.S.C. § 1413a .......................................... 4, 5, 7

28 U.S.C. § 1257 .................................................... 1

38 U.S.C. § 1110 .................................................... 5

38 U.S.C. § 1131 .................................................... 5

38 U.S.C. § 1155 .................................................... 5

38 U.S.C. § 3505 .................................................... 2

38 U.S.C. § 5304(a)(1) ................................... 2, 6, 8

38 U.S.C. § 5305 .................................................... 6

A.R.S. § 25-318.01 ........................................... 8, 19

Cal. Civ. Proc. Code § 483.031 (West 2010) ....... 19

Nev. Rev. Stat. § 125.210(3) (West 2015) ........... 19

Okla. Stat. tit. 43, § 121(C) – (G) (2015) ............ 19

Wyo. Stat. Ann. § 20-2-114 (1977) ...................... 19

23 Pa. Con. Stat. Ann. § 3501(a)(6) (West

2005) ......................................................... 19

OTHER AUTHORITIES

U.S. Dep’t of Defense, Office of the Actuary,

Statistical Report on the Military Retirement System: Fiscal Year 2014, at 18 (2015) (“DOD Report”) .......... 20

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PETITION FOR WRIT OF CERTIORARI

Robert Merrill petitions for a writ of certiorari to

review the judgment of the Arizona Supreme Court.

OPINIONS BELOW

The decision of the Arizona Supreme Court (Pet.

App. 1a) is reported at 362 P.3d 1034. The decision of

the Arizona Court of Appeals (Pet. App. 10a) is

unreported but is available at 2014 WL 7237678. The

decision of the Arizona Superior Court (Pet. App.

25a) is unreported.

JURISDICTION

The judgment of the Arizona Supreme Court was

entered on December 15, 2015. This Court has

jurisdiction under 28 U.S.C. § 1257.

STATUTES INVOLVED

The Uniformed Services Former Spouses’

Protection Act, Pub. L. No. 97-252, 96 Stat. 730

(1982), is codified at 10 U.S.C. § 1408. 10 U.S.C.

§ 1408(c)(1) provides:

Subject to the limitations of this section, a

court may treat disposable retired pay payable

to a member for pay periods beginning after

June 25, 1981, either as property solely of the

member or as property of the member and his

spouse in accordance with the law of the

jurisdiction of such court.

10 U.S.C. § 1408(a)(4) provides, in pertinent part:

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The term “disposable retired pay” means the

total monthly retired pay to which a member

is entitled less amounts which--

. . .

(B) are deducted from the retired pay of

such member as a result of forfeitures of

retired pay ordered by a court-marital or as

a result of a waiver of retired pay required

by law in order to receive compensation

under title 5 or title 38;

. . .

38 U.S.C. § 5304(a)(1) provides, in pertinent part:

Except . . . to the extent that retirement pay is

waived under other provisions of law, not more

than one award of pension, compensation,

emergency officers’, regular, or reserve

retirement pay . . . shall be made concurrently

to any person based on such person’s own

service . . . .

38 U.S.C. § 3505 provides, in pertinent part:

. . . [A]ny person who is receiving pay

pursuant to any provision of law providing

retired or retirement pay to persons in the

Armed Forces, . . . and who would be eligible

to receive pension or compensation under the

laws administered by the Secretary [of

Veterans Affairs] if such person were not

receiving such retired or retirement pay, shall

be entitled to receive such pension or

compensation upon the filing by such person

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with the department by which such retired or

retirement pay is paid of a waiver of so much

of such person’s retired or retirement pay as is

equal in amount to such pension or

compensation.

. . .

10 U.S.C. § 1413a provides, in pertinent part:

(g) Status of Payments

Payments made under this section are not

retired pay.

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STATEMENT OF THE CASE

This case revolves around the jurisdiction of state

courts’ to compensate former spouses for post-divorce

waivers of military retired pay waived in favor of

military disability benefits. If available to them, due

to a service related disability, many veterans elect to

take military disability benefits rather than military

retired pay, resulting in a dollar-for dollar waiver of

military retired pay for military disability benefits.

This creates issues if a former spouse was awarded a

portion of the veteran’s military retired pay in a

divorce. In Mansell v. Mansell, 490 U.S. 581 (1989),

this Court held that the Uniformed Services Former

Spouses’ Protection Act (USFSPA) and 10 U.S.C.

§ 1408, permits the division of military retired pay

by state courts, in divorce proceedings, but prohibits

the division of military disability benefits. Because

this Court has not addressed a post-divorce waiver of

military retired pay in favor of military disability

benefits, state courts and legislatures have been left

to their own devices in interpreting federal law. This

has created variable outcomes across the nation,

which can only be rectified by this Court.

In the decision below, after the VA increased

Petitioner’s disability rating, Petitioner elected to

receive disability benefits, and was therefore

required to waive military retired pay. Additionally,

Petitioner received an additional benefit, as his

injuries were incurred in combat, thus allowing him

to qualify for a benefit established by Congress in

2002, of Combat Related Special Compensation

(“CRSC”). See 10 U.S.C. § 1413a (2006 & Supp.

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2008). Due to receipts of disability benefits,

Petitioner was required to waive a dollar-for-dollar

portion of his retired pay, 50% of which was awarded

to Respondent. This resulted in a decrease of value

of Respondent’s portion of Petitioner’s retired pay

awarded to her in the parties’ Decree. Respondent

filed an action seeking modification of the Decree,

arguing that Petitioner must indemnify Respondent

for any decrease in her portion of retired pay. The

Arizona Supreme Court agreed with the trial court,

finding that Respondent is entitled to

indemnification against Petitioner’s election to waive

a portion of retired pay in favor of disability benefits,

under a theory she had a vested right in the retired

pay. The Arizona Supreme Court also specifically

found that USFSPA and Mansell did not preclude

indemnification for post-divorce waivers of retired

pay in favor of disability benefits.

A. Statutory Framework

Under Federal law, military members who retire

after serving for a minimum period (generally twenty

years) receive a lifetime pension award. E.g., Mansell, 490 U.S. at 583. This pension is referred to

as Military Retired Pay (“MRP”). Secondarily, for

veterans who suffer from service-connected

disabilities, those members are entitled to receive

disability benefits. See 38 U.S.C. §§ 1110, 1131; 10

U.S.C. § 1413a. The Veteran’s Administration (“VA”)

calculates the amount of disability benefits on a scale

reflecting “the average impairments of earning

capacity resulting from such injuries in civil

occupations.” 38 U.S.C. § 1155.

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To receive disability benefits, retired veterans

entitled to MRP must waive an equivalent portion of

his or her MRP. See 38 U.S.C. §§ 5304(a)(1), 5305.

Most eligible veterans elect to receive disability

benefits because disability benefits are exempt from

federal, state, and local taxation, unlike MRP. See Mansell, 490 U.S. at 583-84.

This Court first addressed MRP, in McCarty v. McCarty, 453 U.S. 210 (1981), when this Court held

that federal law did not give state court jurisdiction

to divide MRP in divorce proceedings. This Court

held that under the specific language of the then

existing federal law, Congress conferred MRP to

veterans as a “personal entitlement” of service. Id. at 232. This Court specifically stated that only

Congress could change the law to allow state courts

to have jurisdiction to divide MRP. Id. at 235-36.

Due to public sentiment, Congress acted quickly

in response to McCarty, and passed the Uniformed

Services Former Spouses’ Protection Act

(“USFSPA”), Pub. L. No. 97-252, 96 Stat. 730 (1982)

(codified at 10 U.S.C. § 1408). The USFSPA

specifically granted state court the ability to treat

MRP as divisible property, but also specifically

excluded the ability to divide any portion of MRP

that is waived in order to obtain disability benefits.

The Act states that “a court may treat disposable retired pay payable to a member . . . either as

property solely of the member or as property of the

member and his spouse . . . .” 10 U.S.C. § 1408(c)(1)

(emphasis added). The Act defines “disposable

retired pay” to exclude “amounts which . . . are

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deducted from the retired pay of such member . . . as

a result of a waiver of retired pay required by law in

order to receive [disability] compensation.” Id. § 1408(a)(4).

Seven years later, in Mansell v. Mansell, this

Court addressed the issue of a pre-divorce waiver of

MRP in favor of receipt of disability benefits. This

Court confirmed 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.” 490

U.S. 581, 594-95 (1989). The Mansell court

explained that the USFSPA specifically granted to

the states the authority to divided “disposable retired

pay,” which did not include disability benefits. Id. at

592-94.

Subsequently, in 2002, Congress enacted CRSC

under Title 10 of the United States Code. CRSC

allows veterans injured in combat to receive an

additional benefit. See 10 U.S.C. § 1413a (2006 &

Supp. 2008). A veteran can only qualify for CRSC if

they: (1) sustained injuries in combat; (2) have a VA

disability rating of at least 10%; and (3) waived MRP

in favor of disability pay.

B. Proceedings Below

Petitioner Robert Merrill and Respondent Diane

Merrill divorced in 1993. The dissolution decree

issued by the Arizona Superior Court specifically

awarded Respondent 50% of Petitioner’s military

retirement pay. Pet. App. 32a – 33a.

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In 2004, the Veterans Administration (VA)

reclassified Petitioner at a 100 percent disabled

rating and found him eligible to receive disability

benefits and CRSC. In order to obtain these benefits,

Petitioner was required to waive an equal portion of

his MRP. See 38 U.S.C. § 5304(a)(1). After the

waiver, the MRP payments to both Petitioner and

Respondent declined.

In 2010, Respondent filed to modify the Decree

seeking indemnification from Petitioner due to the

reduction of her portion of the MRP. The case was

litigated and appealed once under Arizona’s newly

created statute, A.R.S. § 25-318.01, and remanded to

the trial court for further proceedings. After a

judgment was entered at the trial court, Petitioner

appealed again. Pet. App. 25a. The case was

eventually appealed to the Arizona Supreme Court.

Pet. App. 1a. In the Arizona Supreme Court,

Petitioner argued that the USFSPA, as construed in

Mansell, denies state courts the authority to award a

former spouse an interest in the waived portion of a

veteran’s MRP.

The Supreme Court relying on an earlier case,

summarily dismissed the notion on federal

preemption, stating: “We recently held that neither federal law nor § 25-318.01 precludes the family court from ordering a retired veteran to indemnify an ex-spouse for a reduction in the latter’s share of MRP caused by a post-decree waiver of MRP made to obtain Department of Veterans Affairs (“VA”) disability benefits pursuant to 38 U.S.C. chapter 11.” Id. at 2a. (Emphasis Added.)

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REASONS FOR GRANTING THE WRIT

I. 37 Separate State Courts Have Addressed The

Issue Presented And They Are Split As To The

Outcome.

70% of the states have ruled on the issue

presented. And the one item that every state agrees

on for this issue, is that this Court has never

addressed Mansell’s application to post-divorce

waivers of MRP. Of the 37 states that have

addressed the issue, the leading precedent in 12

states is that Mansell applies to both pre and post-

divorce waivers of MRP, thus precluding

indemnification. The precedent in the other 25

states is state courts can force retirees to indemnify a

former spouse for post-divorce waivers of MRP.

These state interpretations are in direct conflict with

each other regarding the meaning of the USFSPA

and Mansell. This Court should grant review to

resolve this established conflict on an unquestionable

issue of federal law.

A. 12 States, Including The Supreme

Courts Of Vermont, Mississippi,

Alabama, Alaska, and Nebraska,

Interpret Mansell and USFSPA To

Preclude Indemnification Due To

Federal Preemption.

Of the 12 states that have found Mansell applies

to pre and post-divorce waivers of MRP, five of those

decisions come from state supreme courts.

The first state supreme court to deal with the

issue after Mansell was decided in 1989, was the

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Alaska Supreme Court, three years later, in Clauson v. Clauson, 831 P.2d 1257 (Alaska 1992). In

Clauson, the parties were divorced in 1984 and

Husband was a retiree receiving MRP. Id. at 1259.

The parties’ divorce decree awarded Wife “13/40 of

[Husband’s] current military pension and increases

therein.” Id. Four years later, in 1990, Husband

waived MRP in favor of disability benefits. Id. Wife

filed a motion to modify the divorce decree, and the

family court entered an order requiring Husband to

pay to Wife the monthly sum she was previously

receiving in MRP prior to his waiver. Id.

The Alaska Supreme Court vacated the order,

holding that Mansell barred state courts from

compensating former spouses for waivers of MRP to

receive disability benefits. Id. at 1261. It noted

specifically that under Mansell, “[d]isability benefits

should not, either in form or substance, be treated as

marital property subject to division upon the

dissolution of marriage.” Id.

The Clauson court concluded that was “precisely

what happened in the case” at hand, because the

court imposed a new obligation on Husband to

replace the amount of MRP he waived. Accordingly,

the order sought to “regain the status quo as if the

Mansell decision did not exist,” and its “effect . . .

was to divide retirement benefits that have been

waived to receive disability benefits in direct

contravention of the holding in Mansell.” Id.

A few years after the Alaska Supreme Court

decision, the Nebraska Supreme Court in Kramer v. Kramer, 567 N.W.2d 100 (Neb. 1997) dealt with the

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same issue. In Kramer, the parties were divorced in

1993, and Husband had already retired from the Air

Force and was receiving MRP. The final divorce

decree awarded Wife 49% of Husband’s military

retirement. Id. at 105. Approximately a year later

the VA determined that Husband was eligible for

disability compensation retroactive to his application

in 1992. Husband therefore waived a portion of his

MRP in favor of disability benefits, retroactive to

1992. Id.

The Nebraska court embraced both the rule and

the reasoning of the Alaska Supreme Court in Clauson, stating that the “holding does not permit

the district court to treat service-connected disability

benefits as divisible marital property in form or

substance.” Id. at 113 (citing Clauson, 831 P.2d

1257). The court insisted that lower courts heed this

“significant limitation” on their power to order

“redistribution” in response to a post-divorce

conversion to disability compensation. Id. at 111.

Similarly, the Vermont Supreme Court, in

Youngbluth v. Youngbluth, 6 A.3d 677 (Vt. 2010),

held that Mansell applies to both pre and post-

divorce waivers of MRP. In that case the parties

were divorced in 2005, shortly after Husband retired

from the Marine Corps. The parties divorce decree

awarded Wife “19.81% of [Husband’s] monthly

retirement benefits.” Id. at 679. Soon after the

divorce, Husband’s disability rating was increased by

the VA, resulting in a waiver of MRP in favor of

disability benefits. The MRP payments both parties

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received were reduced, causing Wife to file to modify

the decree in family court.

On review, the Vermont Supreme Court held that

that USFSPA barred the family court from

increasing Wife’s share of the MRP to compensate for

Husband’s disability-based waiver. In doing so, the

Vermont Supreme Court also noted the division in

the states on the issue. Id. at 684, 687. The

Vermont Supreme Court further commented that

other states, who ruled contrary, were specifically

trying to find ways around this Court’s decision in

Mansell. Id.

The Mississippi Supreme Court was the most

recent state supreme court to address the issue prior

to the case at hand, in Mallard v. Burkart, 95 So. 3d

1264 (Miss. 2012). In that case the parties were

divorced in 2001, while Husband was active duty Air

Force. Wife was awarded 40% of Husband’s

“disposable military retired pay” in their divorce

decree. Id. at 1267. Two years later, the VA

determined that Husband was entitled to disability

benefits, thus reducing his MRP, and the payment

received by Wife. Id. Wife then filed to modify the

decree alleging that Husband interfered with her

right to receive her percentage on MRP. Id.

The Mississippi Supreme Court denied

indemnification and noted the split of authority

across the country, similarly to Vermont Supreme

Court. Id. at 1271. The court concluded that the

date of the waiver of MRP, in favor of disability

benefits, was irrelevant, as state courts lacked

jurisdiction under the USFSPA, and Mansell, to

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compensate a former spouse in any way for MRP

waivers. Id. at 1273.

In addition to the five state supreme courts that

have held Mansell and USFSPA preclude

indemnification, another seven states’ appellate

courts have ruled similarly. As these states have

discretionary review to their highest court, the sheer

number of appellate decisions shows the breadth of

the divide among the states.

Specifically, the following cases have agreed with

the above cited cases, in that Mansell and USFSPA

preclude pre and post-divorce indemnification due to

waiver of MRP. See Copas v. Copas, 359 S.W.3d 471

(Ky. Ct. App. 2012) (“We are cognizant of the

potential inequities which may result when a retiree

elects to receive disability payments, thereby

reducing the net amount of retired pay the retiree's

former spouse receives.8 Nonetheless, the current

state of the law, both federal and in this

Commonwealth, clearly prohibits a court from

treating a retiree's disability payments as marital

property.” (internal citation omitted)); Gillin v. Gillin, 307 S.W.3d 395 (Tex. Ct. App. 2009) (USFSPA

restricts the trial court from ordering veteran to

waive retirement pay for disability benefits; former

spouse will receive nothing if retirement pay reduced

to zero); Morgan v. Morgan, 249 S.W.3d 226 (Mo. Ct.

App. 2008) (trial court precluded from modifying

decree to award more MRP due to waiver.); Halstead v. Halstead, 596 S.E.2d 353 (N.C. Ct. App. 2004)

(Mansell prohibits increase in percentage of former

spouse’s share of retirement pay, and order requiring

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veteran to reimburse former spouse for waived

retirement pay violates 38 U.S.C. § 5301); Tirado v. Tirado, 530 S.E.2d 128 (S.C. Ct. App. 2000) (Former

spouse barred from reimbursement for retirement

pay waived for disability.); In re Marriage of Pierce, 982 P.2d 995 (Kan. Ct. App. 1999) (“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

[husband] to change the payments back to

retirement benefits, and it cannot order him to pay

his disability benefits to [wife]. We conclude the

court may not do indirectly what it cannot do

directly.”); Wright v. Wright, 594 So.2d 1139 (La. Ct.

App. 1992) (court cannot order division or

indemnification of disability received due to waiver

of MRP after divorce.).

Presently, almost 30 years later, the divide

among the states on this issue is fully entrenched.

And there is nothing more to be gained by any more

lower court rulings. It is now up to this Court to

finally resolve the issue of whether Mansell and the

USFSPA federally preempt post-divorce waivers of

MRP for disability benefits.

The order issued by the Arizona Supreme Court is

specifically contrary to the orders in the cases above,

and therefore violates federal law, requiring review.

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B. 25 states, including the Supreme Courts

of Arizona, Maine, Massachusetts,

Rhode Island and Tennessee Hold That

the USFSPA Does Not Apply to Post

Divorce Waivers.

The Arizona Supreme Court decision below is the

most recent in a line of cases that hold directly

contrary to the cases above. In the Opinion issued

below the Arizona Supreme Court held that the

USFSPA and Mansell do not apply to post-divorce

waivers of MRP. The rationale to get around

Mansell, which is similar in all 25 states, is that the

divorce allocation of MRP creates a vested right in

the amount of the payment. Five of the 25 decisions,

are from those states’ supreme courts.

The first state supreme court to rule on the

issues was the Supreme Court of Tennessee in

Johnson v. Johnson, 37 S.W.3d 892 (Tenn. 2001).

There, the parties were divorced in 1996, while

Husband was an active-duty member of the Marine

Corps. Id. at 894. The divorce decree awarded Wife

50% of Husband’s retirement benefits. Id. Both

parties began to receive MRP when Husband retired,

up until Husband waived a portion of his MRP in

order to receive disability benefits, thereby reducing

the MRP payments to both parties. Id. Wife

petitioned to modify the divorce decree to increase

her payments, which the Supreme Court construed

as a motion to enforce the original decree. Id. at 895-

96.

The Tennessee Supreme Court agreed with Wife

and reasoned that she had a “vested right” in the

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expected value of the MRP at the time of the divorce,

which could not be “unilaterally diminished by an act

of the military spouse.” Id. at 897-88. The court also

held that Mansell did not prevent indemnification

claims. Id. at 898. The court reasoned that the

divorce decree would not require Husband to pay

part of his disability payment, but rather indemnify

Wife for the loss. Id.

Next, the Supreme Judicial Court of

Massachusetts dealt with the same issue in Krapf v. Krapf, 786 N.E.2d 318 (Mass. 2003). The parties

divorce judgment awarded 50% of Husband’s Army

pension to Wife. Id at 319. After the decree was

entered, the VA determined that Husband suffered

from post-traumatic stress disorder, awarded him

disability pay, for which he waived MRP. Id. at 320-

21. Wife sued Husband and the Supreme Judicial

Court sided with Wife, finding that Husband

breached the agreement “by converting his and

Wife’s military retirement benefits to VA disability

benefits for his own benefit.” Id. at 324. The court

also concluded that Mansell and the USFSPA did not

preclude an indemnification order, for post-divorce

waivers. Id. at 326. In doing so, the court

acknowledged that Mansell “does not permit State

courts ‘to treat as property divisible upon divorce

military retirement pay that has been waived to

receive veterans’ disability benefits.’” Id. (quoting

Mansell, 490 U.S. at 595). But in an attempt to

circumvent Mansell, found that the judgment simply

awarded Wife her vested interest in the decree. Id.

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Similarly, in Black v. Black, 842 A.2d 1280 (Me.

2004), the Supreme Judicial Court of Maine agreed

with the other states finding that vested rights can

supersede federal law. The parties’ divorce judgment

Wife was awarded 50% of the retired pay. Id. at

1282. Seven years later, after the VA increased

disability percentage, Husband waived MRP in favor

of disability benefits. Id. Wife sued, and the

Supreme Judicial Court noted that “[s]ince Mansell, jurisdictions have divided on the question of whether

the USFSPA limits the authority of state courts to

grant relief when, as here, a postjudgment

conversion of retirement pay to disability pay divests

the share of retirement pay allocated to a former

spouse in an earlier divorce judgment.” Id. at 1284.

The court used specific language from Mansell that

stated the bar to an award was only “upon divorce”

and not post-divorce. Id. at 1284-85 (emphasis in

original). The court concluded that indemnification

of post-divorce waivers are not barred by Mansell. Id.

The Rhode Island Supreme Court concurred with

the above in Resare v. Resare, 908 A.2d 1006 (R.I.

2006). In yet another remarkably similar fact

pattern, Wife was awarded 35% of Husband’s retired

pay. Id. at 1007-08 & n.2. Years after the divorce,

upon Husband’s conversion of MRP to disability

benefits, Wife sued and eventually the Rhode Island

Supreme Court agreed with Wife’s argument. The

Court found that Wife was entitled to 35% of the

MRP irrespective of Husband’s waiver, finding that

pre and post-divorce waivers are different. Id. at

1009-10.

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Beyond the highest courts in these states, another

20 states intermediate appellate court have ruled

similarly. See Bandini v. Bandini, 935 N.E.2d 253

(Ind. Ct. App. 2010); McGee v. Carmine, 802 N.W.2d

669 (Mich. Ct. App. 2010); In re Marriage of Hayes,

208 P.3d 1046 (Ore. Ct. App. 2009); Hodge v. Hodge,

197 P.3d 511 (Okla. Civ. App. 2008); Blann v. Blann,

971 So.2d 135 (Fla. Dist. Ct. App. 2007); In re Marrigae of Warkocz, 141 P.3d 926 (Colo. App. 2006);

Perez v. Perez, 110 P.3d 409 (Haw. Ct. App. 2005); In re Marriage of Gahagen, 690 N.W.2d 695 (Iowa Ct.

App. 2004); Gatfield v. Gatfield, 682 N.W.2d 632

(Minn. Ct. App. 2004); Surratt v. Surratt, 148 S.W.3d

761 (Ark. Ct. App. 2004); Whitfield v. Whitfield, 862

A.2d 1187 (N.J. Super. Ct. App. Div. 2004); In re Marriage of Neilsen and Magrini, 792 N.E.2d 844

(Ill. App. Ct. 2003); Shelton v. Shelton, 78 P.3d 507

(Nev. 2003); Scheidel v. Scheidel, 4 P.3d 670 (N.M.

Ct. App. 2000; In re Marriage of Krempin, 83 Cal.

Rptr. 2d 134 (Cal. Ct. App. 1999); Price v. Price, 480

S.E.2d 92 (S.C. Ct. App. 1996); Dexter v. Dexter, 661

A.2d 171 (Md. Ct. Spec. App. 1995); In re Marriage of Strassner, 895 S.W.2d 614 (Mo. Ct. App. 1995);

McHugh v. McHugh, 861 P.2d 113 (Idaho Ct. App.

1993); Owen v. Owen, 419 S.E.2d 267 (Va. Ct. App.

1992).

The highest courts of Maine, Massachusetts,

Rhode Island, and Tennessee, as well as Arizona all

hold that while a state court does not have

jurisdiction to divide MRP waived for disability

benefits pre-divorce, somehow there is jurisdiction to

do the exact same action, post-divorce.

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II. Due to Persisting Ambiguity on This Issue,

State Legislatures Have Begun To Secondarily

Codify Existing Federal Law Preventing

Indemnification of MRP Waivers.

Without a decision from the Court, state

legislatures have gone to the extreme step of writing

state laws that mirror the holding of Mansell. The

statute at issue in Merrill was Arizona’s attempt to

do exactly that under Arizona Revised Statute

(“A.R.S.”) § 25-318.01 (2014). Section 25-318.01’s

language mirrors this Court’s holding from Mansell:

The Arizona legislature’s intent behind

enacting A.R.S. § 25-318.01 (2014) was to prohibit

the division of military disability payments obtained

through a waiver of military retirement pay.

Other states have pursued similar statutes to

A.R.S § 25-318.01. For example,

Cal. Civ. Proc. Code § 483.031 (West 2010)

Nev. Rev. Stat. § 125.210(3) (West 2015)

Okla. Stat. tit. 43, § 121(C) – (G) (2015)

Wyo. Stat. Ann. § 20-2-114 (1977)

On the other hand, other states are creating statutes

specifically contrary to Mansell. For example,

Pennsylvania’s 23 Pa. Con. Stat. Ann. § 3501(a)(6)

(West 2005) provides that:

Veterans' benefits exempt from

attachment, levy or seizure pursuant to

the act of September 2, 1958 (Public

Law 85-857, 72 Stat. 1229)1, as

amended, except for those benefits

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received by a veteran where the veteran

has waived a portion of his military

retirement pay in order to receive

veterans' compensation.

This discrepancy in both case law and statutes

is concerning and a ground why this Court should

accept this Petition. This Court needs to act to stop

any further split between the states.

III. This Case Presents A Recurring Issue Of

National Importance.

This Court’s review is appropriate and necessary

because the issue presented has already been dealt

with by 37 states. And given the amount of recent

litigation on the issue, as shown by the dates of those

opinions, it will undoubtedly continue to occur in the

future. The issue is also of crucial importance to the

more than one million current and over two million

retired service members in the United States

military and their spouses. U.S. Dep’t of Defense,

Office of the Actuary, Statistical Report on the Military Retirement System: Fiscal Year 2014, at 18

(2015) (“DOD Report”). An opinion by this Court on

this issue will fill in the national divide on the

apparent ambiguity regarding Mansell’s post-divorce

application, and will provide guidance to the states

on how to properly divide MRP and disability

benefits. This will further grant the nearly three

million current or retired service members—and

their spouses—some nationwide consistency in

application because, as McCarty noted, service

members are not free to choose their place of

residence. See McCarty, 453 U.S. at 234.

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As noted above, this issue is frequently and solely

raised in state courts. Importantly, and absent from

the cases detailed above, it is unknown how many

trial court cases address this issue but simply are not

appealed. The importance of resolving this issue and

providing clarity, therefore, is paramount.

IV. This Case Offers Clear Facts To Apply Federal

Preemption.

This case presents an ideal opportunity for this

Court to provide state courts with clarity regarding

the division of military disability benefits. First, the

issue before this Court is one of interpreting federal

law. The Arizona Supreme Court decided that

federal law specifically did not apply to post-divorce

waivers of MRP, allowing a direct and concise

application of federal law, citing to a prior decision in

In re Marriage of Howell, which states: “Under these circumstances, 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.” In Re Marriage of Howell, 361 P.3d 936, 939 (Ariz.

2015).

Thus, the Arizona Supreme Court’s decision in

Merrill is a direct challenge to Mansell’s application

to post-divorce waivers of MRP in favor of disability

benefits—a federal issue. As such, this case presents

the optimum opportunity for this Court to provide

finality to the question of whether Merrill applies to

post-divorce waivers of MRP for military disability

benefits.

Second, the Decree at question only addresses an

award of 50% of the MRP, and does not contain many

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of the additional provisions that may be dealt with

under state law. For example, the Supreme Court of

South Dakota upheld a provision in a decree

requiring indemnification, as the divorce decree in

that situation specifically required indemnification if

MRP was waived to receive disability benefits. See

Hisgen v. Hisgen, 554 N.W.2d 494 (S.D. 1996). Here,

the decree only deals with awarding MRP, which

allows for clarity of ruling.

The simple facts of this case are also the model

situation for other cases longing for guidance on the

issue presented here. The similarities this case

shares with those other cases and the fact that the

issue remains open to interpretation of federal law,

provides this Court with an optimum opportunity to

both efficiently clarify this issue and provide

guidance on a nationwide scale.

As this case contains the central question that

defines the split of authority in its clearest form,

stripped of any extraneous factual complications, it

offers an unusually good vehicle and warrants this

Court’s review.

V. The Arizona Supreme Court’s Decision below

is an Incorrect Application of Mansell.

This Court in Mansell was direct in its analysis of

USFSPA. Specifically, Mansell precluded state

courts from dividing military disability benefits

finding that according to USFSPA’s “plain and

precise language, state courts have been granted the

authority to treat disposable retired pay as

community property; they have not been granted the authority to treat total retired pay as community

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property.” Mansell, 490 U.S. at 589 (emphasis

added). Further, Mansell held that USFSPA

“impose[s] new substantive limits on state courts'

power to divide military retirement pay.” Id. at 590.

Most importantly, however, was the Mansell court’s

strong desire to read USFSPA strictly, regardless of

the outcome:

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.

Id. at 594. This statement anticipated the post-

divorce waiver of MRP, holding that regardless of the

fact scenario, the USFSPA must be read literally.

This is bolstered by Justice O’Conner’s dissent,

wherein she expressed concern for a post-divorce

waiver of MRP:

former spouses . . . can, without their

consent, be denied a fair share of their

ex-spouse’s military retirement pay

simply because he elects to increase his

after-tax income by converting a portion

of that pay into disability benefits.

Id. at 595 (O’Connor, J., dissenting).

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Despite Mansell’s clarity and the foresight that

the decision would apply to post-divorce waivers of

MRP, the Arizona Supreme Court declined to read

Mansell as instructed by this Court. Rather, the

Arizona Supreme Court—and many other state

courts—sought an end-run around Mansell through

the use of equities and legal fiction. Specifically, the

Arizona Supreme Court found it inequitable to follow

the strict reading of USFSPA suggested by Mansell and created an indemnification fiction that vested

rights supersede Mansell. Essentially, the Arizona

Supreme Court—and numerous other state courts—

reasoned that it is authorized to require the veteran

to “indemnify” the ex-spouse in the exact difference

of the waived MRP, so long as the court does not

require that the veteran pay the indemnification

amount from their disability benefits. This is a

thinly veiled award of the veteran’s disability

benefits, which violates Mansell and the USFSPA.

It is also exactly what the Alaska Supreme Court

discussed in Clausen, finding that, “[d]isability

benefits should not, either in form or substance, be

treated as marital property subject to division upon

the dissolution of marriage.” Clauson, 831 P.2d at

1261. While an indemnification theory is not the

exact form, it is the exact substance barred by

Mansell.

This was reversible error.

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NOTICE OF OTHER SIMILAR PETITION

Petitioner provides notice that another similar

Petition for Writ of Certiorari was filed with this

Court on February 16, 2016 under docket number

15-1031. That case was also the result of an Arizona

Supreme Court decision in In Re Marriage of Howell, 361 P.3d 936 (Ariz. 2015). Should the Court desire to

accept that Petition, then Petitioner requests that

the Court stay this matter until resolution of that

matter.

CONCLUSION

Due to the significant division of the states, on an

issue of federal jurisdiction and preemption, Robert

Merrill respectfully requests that this petition for

writ of certiorari be granted.

Respectfully submitted,

KEITH BERKSHIRE

COUNSEL OF RECORD MAXWELL MAHONEY

BERKSHIRE LAW OFFICE

5050 N. 40th St.,

Suite 340

Phoenix, AZ 85018

(602) 396-7669

Keith@BerkshireLawOffice.com

March 14th, 2016

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ATTACHMENT F

Brief Amicus Curiae of the Solicitor General of the United States in Howell v. Howell, Supreme Court Case No. 15-1031

No. 15-1031

In the Supreme Court of the United States

JOHN HOWELL, PETITIONER v.

SANDRA HOWELL

ON PETITION FOR A WRIT OF CERTIORARI TO THE SUPREME COURT OF ARIZONA

BRIEF FOR THE UNITED STATES AS AMICUS CURIAE

IAN HEATH GERSHENGORN

Acting Solicitor General Counsel of Record

BENJAMIN C. MIZER Principal Deputy Assistant

Attorney General MALCOLM L. STEWART

Deputy Solicitor General ILANA H. EISENSTEIN

Assistant to the Solicitor General

ALISA B. KLEIN KATHERINE TWOMEY ALLEN

Attorneys Department of Justice Washington, D.C. 20530-0001 SupremeCtBriefs@usdoj.gov (202) 514-2217

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(I)

QUESTION PRESENTED

When the parties divorced and their property was divided, petitioner agreed that, going forward, he would pay respondent 50% of his military retirement pay each month. Petitioner later waived a portion of his retirement pay in favor of veteran’s disability be-nefits, resulting in a reduction of the monthly pay-ments made to respondent. The family court ordered petitioner to indemnify respondent for the amount of that reduction. The question presented is as follows:

Whether the state court’s order violated the Uni-formed Services Former Spouses’ Protection Act, 10 U.S.C. 1408, as interpreted in Mansell v. Mansell, 490 U.S. 581 (1989).

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(III)

TABLE OF CONTENTS

Page

Interest of the United States....................................................... 1 Statement ...................................................................................... 1 Discussion ...................................................................................... 7

A. The USFSPA does not preempt a state-court indemnification order that is based on a former spouse’s state-law vested right to a share of a veteran’s military retirement pay ................................... 8

B. State courts of last resort have divided on the question whether indemnification orders like the one at issue here are preempted by the USFSPA ........................................................................... 11

Conclusion ................................................................................... 22

TABLE OF AUTHORITIES

Cases:

Abernethy v. Fishkin, 699 So. 2d 235 (Fla. 1997) ............... 12 Billeck, Ex parte, 777 So. 2d 105 (Ala. 2000) .......... 16, 17, 20 Black v. Black, 842 A.2d 1280 (Me. 2004) ............................ 11 Clauson v. Clauson, 831 P.2d 1257 (Alaska

1992) ......................................................................... 17, 18, 19 Glover v. Ranney, 314 P.3d 535 (Alaska 2013) ............. 12, 18 Hisgen v. Hisgen, 554 N.W.2d 494 (S.D. 1996) .................. 12 Hisquierdo v. Hisquierdo, 439 U.S. 572 (1979) .................. 10 Johnson v. Johnson, 37 S.W.3d 892 (Tenn. 2001) .............. 12 Koelsch v. Koelsch, 713 P.2d 1234 (Ariz. 1986) ..................... 7 Kramer v. Kramer, 567 N.W.2d 100 (Neb. 1997) ............... 19 Krapf v. Krapf, 786 N.E.2d 318 (Mass. 2003) ..................... 11 Mallard v. Burkart, 95 So. 3d 1264 (Miss. 2012) .... 13, 14, 20 Mansell v. Mansell, 490 U.S. 581 (1989) .................... passim McCarty v. McCarty, 453 U.S. 210 (1981) ............................ 2

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IV

Cases—Continued: Page

Padot v. Padot, 891 So. 2d 1079 (Fla. Dist. Ct. App. 2004), cert. denied, 549 U.S. 1110 (2007) .......................... 21

Resare v. Resare, 908 A.2d 1006 (R.I. 2006) ....................... 11 Shelton v. Shelton, 78 P.3d 507 (Nev. 2003),

cert. denied, 541 U.S. 960 (2004) ....................................... 11 Wetmore v. Markoe, 196 U.S. 68 (1904) .............................. 10 Womack v. Womack, 818 S.W.2d 958 (Ark. 1991) .............. 19 Young v. Lowery, 221 P.3d 1006 (Alaska 2009) .................. 12 Youngbluth v. Youngbluth, 6 A.3d 677

(Vt. 2010) ............................................................ 14, 15, 16, 20

Constitution, statutes and rule:

Ariz. Const. Art. 2, § 4 ............................................................. 6 Uniformed Services Former Spouses’ Protection Act,

10 U.S.C. 1408 ....................................................................... 2 10 U.S.C. 1408(a)(4)(B) (1988) .......................................... 8 10 U.S.C. 1408(a)(4)(B) ..................................................... 2 10 U.S.C. 1408(c)(1) (1988) ............................................... 8 10 U.S.C. 1408(c)(1) ........................................................... 2

10 U.S.C. 3911 et seq. ............................................................... 1 10 U.S.C. 6321 et seq. ............................................................... 1 10 U.S.C. 8911 et seq. ............................................................... 1 38 U.S.C. 1110 .......................................................................... 1 38 U.S.C. 1131 .......................................................................... 1 38 U.S.C. 3101(a) (1988) .......................................................... 3 38 U.S.C. 5301(a) ..................................................................... 2 38 U.S.C. 5301(a)(1) ................................................................. 3 38 U.S.C. 5305 .......................................................................... 2 Ariz. Rev. Stat. Ann. (Supp. 2015):

§ 25-318.01 ........................................................ 4, 5, 6, 7, 20 § 25-318.01(2) ................................................................... 21

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V

Rule—Continued: Page

Sup. Ct. R. 10(b) ..................................................................... 13

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(1)

In the Supreme Court of the United States

No. 15-1031 JOHN HOWELL, PETITIONER

v. SANDRA HOWELL

ON PETITION FOR A WRIT OF CERTIORARI TO THE SUPREME COURT OF ARIZONA

BRIEF FOR THE UNITED STATES AS AMICUS CURIAE

INTEREST OF THE UNITED STATES

This brief is filed in response to the Court’s order inviting the Solicitor General to express the views of the United States. In the view of the United States, the petition for a writ of certiorari should be granted.

STATEMENT

1. a. This case concerns two types of veterans’ benefits: retirement pay and disability benefits. Members of the military who have served the requi-site number of years may retire and receive retire-ment pay. 10 U.S.C. 3911 et seq. (U.S. Army); 10 U.S.C. 6321 et seq. (U.S. Navy and U.S. Marine Corps); 10 U.S.C. 8911 et seq. (U.S. Air Force). In addition, veter-ans who become partially or totally disabled as a re-sult of their military service may be eligible for disa-bility benefits. 38 U.S.C. 1110 (wartime disability); 38 U.S.C. 1131 (peacetime disability). In general, howev-er, a military retiree may receive disability benefits

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only to the extent that he or she waives a correspond-ing amount of retirement pay. 38 U.S.C. 5305. Such waivers are common because disability benefits, un-like retirement pay, are exempt from taxation. 38 U.S.C. 5301(a); see Mansell v. Mansell, 490 U.S. 581, 583-584 (1989).

b. In McCarty v. McCarty, 453 U.S. 210 (1981), this Court held that federal law preempts state courts from treating a service member’s retirement pay as community property divisible between a service mem-ber and a former spouse upon divorce. Id. at 232-235.

Congress responded to McCarty by enacting the Uniformed Services Former Spouses’ Protection Act (USFSPA), 10 U.S.C. 1408. The USFSPA authorizes a state court to “treat disposable retired pay * * * either as property solely of the member or as property of the member and his spouse in accordance with the law of the jurisdiction of such court.” 10 U.S.C. 1408(c)(1). The statute defines “disposable retired pay” as “the total monthly retired pay to which a member is entitled,” less certain amounts, including the amount waived “in order to receive compensation under * * * title 38”—i.e., the amount waived to receive disability benefits. 10 U.S.C. 1408(a)(4)(B).

In Mansell, this Court construed the USFSPA to foreclose state courts from treating as community property the portion of military retirement pay that a veteran has waived in order to receive disability bene-fits. See 490 U.S. at 588-589. The veteran in Mansell had waived a portion of his retirement pay, and had begun to receive disability benefits, before the parties were divorced. See id. at 585. The settlement agree-ment between the parties specifically provided for the

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division of the former military member’s “total mili-tary retirement pay, including that portion of retire-ment pay waived so that [he] could receive disability benefits.” Id. at 586.

While recognizing that “domestic relations are preeminently matters of state law,” and that Congress “rarely intends to displace state authority in this ar-ea,” the Court found that the case before it “pre-sent[ed] one of those rare instances where Congress has directly and specifically legislated in the area of domestic relations.” Mansell, 490 U.S. at 587. The Court held that, under the USFSPA’s “plain and pre-cise language, state courts have been granted the authority to treat disposable retired pay as communi-ty property,” but “have not been granted the authori-ty to treat total retired pay as community property.” Id. at 589 (emphases added). The Court concluded 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 re-ceive veterans’ disability benefits.” Id. at 594-595.1

1 The veteran in Mansell argued that the state court’s division of

his total retired pay violated not only the USFSPA, but also the anti-attachment provision applicable to veterans’ disability bene-fits. Under that provision, disability benefits “shall not be assigna-ble except to the extent specifically authorized by law, and * * * shall be exempt from the claim of creditors, and shall not be liable to attachment, levy, or seizure by or under any legal or equitable process whatever, either before or after receipt by the benefi-ciary.” 38 U.S.C. 5301(a)(1) (formerly 38 U.S.C. 3101(a) (1988)). In light of its holding that the USFSPA precludes the division of retirement pay waived in favor of disability benefits, the Court in Mansell found it unnecessary to address whether the anti-attachment provision would independently preclude such a divi-

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2. In 1991, petitioner John Howell and respondent Sandra Howell divorced. Pet. App. 2a. “Pursuant to the parties’ agreement,” the decree of dissolution issued by the family court provided that “[respondent] is entitled to and is awarded as her sole and separate property FIFTY PERCENT (50%) of [petitioner’s] military retirement when it begins through a direct pay order.” Id. at 2a, 41a. The following year, peti-tioner retired from the Air Force, and the parties began to receive military retirement pay. Id. at 2a-3a. In 2005, petitioner qualified for a 20% disability rating that resulted from a service-connected shoulder inju-ry, and he elected to waive a corresponding portion of his military retirement pay in order to receive disabil-ity benefits. Id. at 3a. That waiver had the effect of reducing respondent’s monthly share of petitioner’s retirement pay by approximately $125 per month. Ibid.; see id. at 33a.

Respondent asked the family court to enforce the decree’s division of military retirement pay, and she sought an arrearage for the reduced amounts she had received. Pet. App. 31a-32a. Petitioner moved to dismiss on the basis of Arizona Revised Statute Anno-tated § 25-318.01 (Supp. 2015), which was enacted in 2010 and provides that a court making a disposition of property shall not “[i]ndemnify the veteran’s spouse or former spouse for any prejudgment or postjudg-ment waiver or reduction in military retired or retain-er pay related to receipt of the disability benefits.” Pet. App. 31a-32a. The family court granted respond-ent’s motion to enforce, holding that she had a vested property right in 50% of the original military retire- sion. See 490 U.S. at 587 n.6. The anti-attachment provision is not at issue in this case.

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ment-pay amount, and that petitioner had “violated the decree by unilaterally decreasing the retirement pay in favor of disability.” Id. at 36a; see id. at 34a-36a.

3. The Court of Appeals of Arizona, Division 2, af-firmed the family court’s order on the ground that Arizona Revised Statute Annotated § 25-318.01 (Supp. 2015) does not apply to post-decree enforcement pro-ceedings. Pet. App. 15a-21a.2

4. The Supreme Court of Arizona affirmed, albeit on different state-law grounds than the court of ap-peals. Pet. App. 1a-14a.

a. The Supreme Court of Arizona first addressed petitioner’s contention that the USFSPA preempts the family court’s indemnification order. The court held that federal law would prohibit the family court from dividing military retirement pay “that has been waived to obtain disability benefits either at the time of the decree or thereafter.” Pet. App. 7a. The court explained, however, that although the family court’s indemnification order had the effect of “diminish[ing] the overall income increase [petitioner] received when he elected [to waive retirement pay,]” the indemnifica-tion order did not treat petitioner’s disability pay “as divisible property” and did not “order [petitioner] to rescind the waiver, or direct him to pay any amount to

2 Petitioner did not raise a federal preemption defense in the

trial court, raising this argument for the first time in the Court of Appeals of Arizona. Pet. App. 20a-21a. The court of appeals declined to consider the argument on the ground that it had been waived below. Ibid. The Supreme Court of Arizona, however, decided as a matter of discretion to entertain and resolve petition-er’s argument that the USFSPA preempted the family court’s indemnification order. Id. at 5a.

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[respondent] from his disability pay.” Id. at 7a-8a. The court concluded that “[n]othing in the USFSPA directly prohibits a state court from ordering a veter-an who makes a post-decree VA waiver to reimburse the ex-spouse for reducing his or her share of [mili-tary retirement pay].” Id. at 8a.

b. The Supreme Court of Arizona then addressed the question whether the family court’s indemnifica-tion order was precluded by Section 25-318.01. Pet. App. 8a-14a. The court found that Section 25-318.01 applies to the modification, but not the enforcement, of existing dissolution decrees. Id. at 10a. The court held that the indemnification order in this case “modi-fies rather than enforces the dissolution decree’s property disposition terms, and § 25-318.01 therefore applies,” because the 1991 dissolution decree “did not require [petitioner] to indemnify [respondent] for her loss of [military retirement pay].” Ibid.

The Supreme Court of Arizona further held, how-ever, that application of Arizona Revised Statute An-notated § 25-318.01 (Supp. 2015) to prevent modifica-tion of the divorce decree at issue here, which was entered before Section 25-318.01’s enactment, would violate the due process provision of the Arizona Con-stitution, Ariz. Const. Art. 2, § 4, because it would deprive respondent of a vested property right. Pet. App. 11a-14a. The court explained that, although the 1991 divorce decree did not expressly require indem-nification, its effect under Arizona law was to “create[] an immediate right to future payment of fifty percent of the [military retirement pay], including cost-of-living increases, earned during the marriage.” Id. at 13a. The court stated that, under Arizona law, “[o]ne spouse cannot invoke a condition solely within his or

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her control to defeat the community interest of the other spouse.” Ibid. (citing Koelsch v. Koelsch, 713 P.2d 1234, 1239 (Ariz. 1986)). The court found that, “[b]y electing the VA waiver, [petitioner] did precisely that by essentially converting [respondent’s military retirement pay] share,” and that the family court’s indemnification order “restored [respondent’s] share of community assets.” Ibid. The Supreme Court of Arizona concluded that “the family court correctly refused to apply § 25-318.01 to these facts” because “application of § 25-318.01 to prohibit the court from remedying the deprivation would diminish [respond-ent’s] vested property right in violation of the [Arizo-na constitution’s] due process guarantee.” Id. at 14a.

DISCUSSION

The Supreme Court of Arizona upheld a family-court order that required petitioner to indemnify respondent for the economic loss that respondent suffered when petitioner waived a portion of his mili-tary retirement pay in order to receive disability ben-efits. Petitioner contends (Pet. 33-37) that the court’s decision violates the USFSPA, as interpreted by this Court in Mansell v. Mansell, 490 U.S. 581 (1989). He further asserts (Pet. 11-27) that state courts are di-vided on the question whether the USFSPA preempts state-court indemnification orders in these circum-stances.

The Supreme Court of Arizona correctly rejected petitioner’s contention that the USFSPA barred the family court from requiring petitioner to indemnify respondent. The USFSPA does not preclude a state court from ordering indemnification of a former spouse who, under the applicable state law, obtained a vested interest to military retirement pay and later

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sought to avoid a reduction in her share due to the veteran’s post-divorce waiver of retirement pay in favor of disability benefits. We agree with petitioner, however, that state supreme courts have expressed sufficiently divergent views on this issue that the Court’s review is warranted to clarify the USFSPA’s preemptive scope. The petition for a writ of certiorari therefore should be granted.

A. The USFSPA Does Not Preempt A State-Court Indem-nification Order That Is Based On A Former Spouse’s State-Law Vested Right To A Share Of A Veteran’s Military Retirement Pay

At the time the parties in Mansell were divorced, the veteran spouse had already retired from the mili-tary and had waived a portion of his retirement pay in order to receive disability benefits. See 490 U.S. at 585. The divorce decree provided that the veteran would pay his ex-wife “50 percent of his total military retirement pay, including that portion of retirement pay waived so that [the veteran] could receive disabil-ity.” Id. at 586. The Court held that the USFSPA prohibits state courts from “treat[ing] as property divisible upon divorce military retirement pay that has been waived to receive veterans’ disability benefits.” Id. at 595. The Court explained that the USFSPA authorizes a State to treat only “disposable retired * * * pay” as community property, while “specifically defin[ing]” that term to exclude retirement pay waived in favor of disability benefits. Id. at 588-589 (quoting 10 U.S.C. 1408(a)(4)(B) and (c)(1) (1988)).

In this case, by contrast, petitioner’s waiver of re-tirement pay occurred well after the divorce decree and division of marital property. The parties were divorced in 1991; petitioner retired from the military

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in 1992; and petitioner waived a portion of his retire-ment pay in 2005. See Pet. App. 2a-3a. Neither the original dissolution decree (which long predated peti-tioner’s waiver of retirement pay and election of disa-bility benefits) nor the 2014 indemnification order purported to treat petitioner’s waived retirement pay as community property.

Rather, in requiring petitioner to indemnify re-spondent for the economic loss that respondent had suffered as a result of the waiver, the family court and the Supreme Court of Arizona both explained that the original dissolution decree had given respondent a vested right to 50% of petitioner’s full retirement benefits; that petitioner had violated his state-law obligations by unilaterally decreasing the amount to which respondent was entitled; and that an indemnifi-cation order was an appropriate remedy for that breach. See Pet. App. 35a-37a (family-court decision); id. at 12a-14a (Supreme Court of Arizona decision). The USFSPA did not prohibit that remedy because the indemnification order “did not divide the [military retirement pay] subject to the VA waiver, order [peti-tioner] to rescind the waiver, or direct him to pay any amount to [respondent] from his disability pay.” Id. at 7a. As the Supreme Court of Arizona recognized, “[n]othing 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 [military retirement pay].” Id. at 8a.

Petitioner argues (Pet. 33-34) that the indemnifica-tion order in this case had substantially the same economic effect as an order that treated waived re-tirement pay as divisible community property, and

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that the indemnification order must therefore be preempted as well. The Mansell Court recognized, however, that “domestic relations are preeminently matters of state law,” that Congress “rarely intends to displace state authority in this area” when it passes general legislation, and that this Court therefore “will not find pre-emption absent evidence that it is ‘posi-tively required by direct enactment.’  ” 490 U.S. at 587 (quoting Hisquierdo v. Hisquierdo, 439 U.S. 572, 581 (1979), in turn quoting Wetmore v. Markoe, 196 U.S. 68, 77 (1904)). The Court concluded that Mansell “present[ed] one of those rare instances where Con-gress has directly and specifically legislated in the area of domestic relations,” ibid., because the USFSPA directly addresses the authority of state courts to treat military retirement pay as community property and specifically excludes from that authori-zation “military retirement pay waived in order to receive veterans’ disability payments,” id. at 589. By contrast, the USFSPA does not “directly and specifi-cally” address the interpretation and enforcement of property-settlement agreements that are entered before any waiver has occurred and that guarantee the former spouse a fixed proportion of military retire-ment pay.

There is also no indication that the money petition-er was ordered to pay would come out of his disability benefits. The family court did not “direct [petitioner] to pay any amount to [respondent] from his disability pay.” Pet. App. 7a. And while “requiring [petitioner] to reimburse [respondent] diminishes the overall income increase he received when he elected the VA waiver,” id. at 7a-8a, petitioner was still receiving approximately $610 per month in disposable retire-

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ment pay and was ordered to pay respondent only an additional $127.50 per month (adjusted for cost of living). Id. at 3a.

B. State Courts Of Last Resort Have Divided On The Question Whether Indemnification Orders Like The One At Issue Here Are Preempted By The USFSPA

A number of state courts of last resort have ad-dressed fact patterns similar to the circumstances here, where the divorce decree entitled a veteran’s ex-spouse to a specified percentage of the veteran’s mili-tary retirement pay, the veteran thereafter waived a portion of his retirement pay in order to obtain disa-bility benefits, and the ex-spouse sought compensation for the economic loss she suffered as a result of that waiver. The highest courts of six States—Maine, Massachusetts, Nevada, Rhode Island, South Dakota, and Tennessee—have approved indemnification or-ders in those circumstances, rejecting arguments that such orders were preempted by the USFSPA.3 The

3 See, e.g., Black v. Black, 842 A.2d 1280, 1285 (Me. 2004) (“[T]he

USFSPA does not limit the authority of a state court to grant post-judgment relief when military retirement pay previously divided by a divorce judgment is converted to disability pay.”); Krapf v. Krapf, 786 N.E.2d 318, 326 (Mass. 2003) (“The judgment in this case does not divide the defendant’s * * * disability benefits in contravention of the Mansell decision; the judgment merely en-forced the defendant’s contractual obligation to his former wife, which he may satisfy from any of his resources.”); Shelton v. Shelton, 78 P.3d 507, 509 (Nev. 2003) (“Although states cannot divide disability payments as community property, states are not preempted * * * from enforcing contracts [that divide retire-ment benefits] * * * , even when disability pay is involved.”), cert. denied, 541 U.S. 960 (2004); Resare v. Resare, 908 A.2d 1006, 1010 (R.I. 2006) (“[T]he Family Court did not in any way divide [the veteran’s] disability benefit in contravention of Mansell, but

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highest courts of two other States (Alaska and Flori-da) have held that, if the original divorce decree con-tains an indemnification provision or directs the vet-eran not to take unilateral action that reduces his spouse’s share of retirement benefits, that provision is valid and enforceable through an indemnification order if the veteran subsequently waives military retirement pay.4

simply held [the veteran] to the terms of the original [property settlement agreement].”); Hisgen v. Hisgen, 554 N.W.2d 494, 498 (S.D. 1996) (Mansell “does not preclude state courts from inter-preting divorce settlements to allow a spouse to receive property or money equivalent to [the agreed-upon percentage of] a veter-an’s retirement entitlement[s]” if the veteran subsequently waives a portion of the entitlements in favor of disability pay.); Johnson v. Johnson, 37 S.W.3d 892, 897-898 (Tenn. 2001) (“[W]hen a[] [marital dissolution agreement] divides military retirement benefits, the non-military spouse obtains a vested interest in his or her portion of those benefits as of the date of the court’s decree. * * * [A]n act of the military spouse [that unilaterally diminishes the vested interest] * * * constitutes an impermissible modification of a division of marital property.”).

4 See Glover v. Ranney, 314 P.3d 535, 543 (Alaska 2013) (holding that the trial court in entering a divorce decree “may expressly order [a service member] not to reduce his disposable retired pay and require [the service member] to indemnify [a former spouse] for any amounts by which her payments are reduced below the amount set on the date [an] amended qualified order is entered.”) (brackets in original) (quoting Young v. Lowery, 221 P.3d 1006, 1012-1013 (Alaska 2009)); Abernethy v. Fishkin, 699 So. 2d 235, 240 (Fla. 1997) (“[W]hile federal law prohibits the division of disability benefits, it does not prohibit spouses from entering into a property settlement agreement that awards the non-military spouse a set portion of the military spouse’s retirement pay” and includes an “indemnification provision[] ensuring such pay-ments.”).

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Petitioner contends (Reply Br. 2-9, Pet. 16-27) that the Supreme Court of Arizona’s decision conflicts with decisions of the supreme courts of Vermont (Pet. 17-18), Mississippi (Pet. 18-20), Alabama (Pet. 20-21); Alaska (Pet. 21-22), and Nebraska (Pet. 23-25). Only the Supreme Court of Mississippi has explicitly re-jected the “vested rights” rationale for post-waiver indemnification that the courts below invoked in this case. Those decisions appear, however, to adopt a view of the USFSPA’s preemptive scope that is signif-icantly broader than that applied by the Supreme Court of Arizona in this case, and by other state courts of last resort. This Court’s review is warranted in light of the disuniformity among state supreme courts and the frequency with which USFSPA preemption issues arise.5

1. In Mallard v. Burkart, 95 So. 3d 1264 (Miss. 2012), the divorce decree awarded the non-veteran spouse a specified percentage (40%) of the veteran’s “disposable military retired pay,” the veteran subse-quently waived a portion of his retirement pay in order to receive disability benefits, and the non-veteran spouse sought relief in the trial court. Id. at 1266-1267. “[T]he chancellor held that [the veteran] unilaterally had breached the settlement by going on disability and denying any portion of the disability benefits to [his ex-wife].” Id. at 1267. The chancellor

5 Petitioner also observes (Pet. 26 & n.6) that state intermediate

appellate courts are divided on the propriety of indemnification orders in circumstances like those presented here. Such a division, standing alone, is not ordinarily a sufficient ground for this Court’s review. See Sup. Ct. R. 10(b). The existence of these decisions, however, provides further evidence that the question presented here recurs with significant frequency.

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further held that the ex-wife’s “interest in [the veter-an’s] total retirement pay, including his disability benefits, had vested at the time of the entry of the final judgment of divorce.” Id. at 1268. The chancel-lor ordered the veteran to pay his ex-wife “the differ-ence between what [the ex-wife] would have received had [the veteran] not gone on disability and what she actually had received, plus six percent interest.” Ibid.

The trial court in Mallard thus awarded indemnifi-cation to the non-veteran spouse on the same vested-rights rationale that the Supreme Court of Arizona relied on in this case. The Supreme Court of Missis-sippi reversed, holding that the trial court’s order was in substance an impermissible attempt to order distri-bution of the veteran’s disability benefits. See Mal-lard, 95 So. 3d at 1268-1273. In so holding, the court relied unambiguously on the preemptive force of the USFSPA. See id. at 1268 (framing the dispositive issue as “whether federal law preempts state law”); id. at 1273 (reversing the chancellor’s indemnification order on the ground that “[f]ederal law preempts state law”). The decision in Mallard thus squarely conflicts with the Supreme Court of Arizona’s ruling in this case.

2. Youngbluth v. Youngbluth, 6 A.3d 677 (Vt. 2010), involved a similar sequence of events, in which the division-of-property agreement granted the wife a 19.81% share of her veteran husband’s military “re-tirement pay.” Id. at 679. The husband subsequently waived a portion of his military retirement pay in favor of disability benefits, thus reducing the monthly amount his former wife received. Ibid. At the wife’s request, the trial court then increased the wife’s share of her husband’s retirement pay “from 19.81% to

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22.4%, based upon expert testimony that 22.4% of the smaller number would equate to the roughly $700 monthly payment that the trial court had in mind when it decided the initial allocation.” Id. at 680.

The Supreme Court of Vermont held that this in-crease was impermissible. The court explained that, “[g]iven that Mansell held that state courts are with-out power to divide disability benefits in a property division order,” the original division-of-property or-der’s reference to “retirement pay” “cannot be read to have granted wife an interest in husband’s disability benefits.” Youngbluth, 6 A.3d at 683. In holding that the trial court could not increase the wife’s percentage of the veteran’s retirement pay in order to offset the economic effect of the waiver, the Supreme Court of Vermont relied in part on principles of USFSPA preemption, see id. at 684-685 & n.2, 687, and in part on state-law decisions emphasizing the need for finali-ty of judgments, see id. at 686.

The Supreme Court of Vermont did not suggest that, but for the USFSPA’s preemptive effect, Ver-mont law would have barred the veteran from taking unilateral action that reduced the value of his former wife’s 19.81% share. The difference in outcomes be-tween this case and Youngbluth therefore might plau-sibly be attributed to the Supreme Court of Arizona’s reliance on a state-law rule that may have no analogue in the law of Vermont. Compare Pet. App. 13a (hold-ing that, under Arizona law, “[o]ne spouse cannot invoke a condition solely within his or her control to defeat the community interest of the other spouse”), with Youngbluth, 6 A.3d at 686 (suggesting that a similar argument “ignore[s] the critical point that finality is about ending litigation,” and stating that the

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veteran husband in that case “was well within his rights to apply for disability benefits”). But the opin-ion in Youngbluth also suggests that the USFSPA would have preempted the application of any such state-law rule in the specific context of a post-divorce waiver of military retirement pay. Thus, the Supreme Court of Vermont stated that, under Mansell, non-veteran former spouses “can, without their consent, be denied a fair share of their ex-spouse’s military re-tirement pay simply because [the military service-member] elects to increase his after-tax income by converting a portion of that pay into disability bene-fits.” Id. at 684 (brackets in original) (quoting Man-sell, 490 U.S. at 595 (O’Connor, J., dissenting)). And the Court’s reliance on federal preemption principles is underscored by its statement that, “[r]ather than joining those courts that have found creative solutions around Mansell, we recognize that * * * a decision by the United States Supreme Court on a matter of fed-eral law is binding upon the state courts.” Id. at 684-685 (citation and internal quotation marks omitted).

3. In Ex parte Billeck, 777 So. 2d 105 (Ala. 2000), the veteran had agreed in the divorce settlement to pay his ex-wife alimony in the amount of “his monthly U.S. Army retirement check.” Id. at 106 (citation omitted). Ten years later, the veteran waived a por-tion of his retirement pay in favor of disability bene-fits. Id. at 107. The family court “ordered the hus-band to pay the wife ‘all of his military retirement pay received as a result of his United States Army mili-tary service from whatever source, be it defined as military retirement pay or VA disability.’ ” Id. at 109.

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The Supreme Court of Alabama held that the fami-ly court’s order was inconsistent with the USFSPA. Billeck, 777 So. 2d at 108-109. The court stated:

The Mansell decision and [Section] 1408 clearly manifest the intent of the federal law that a retir-ee’s veteran’s disability benefits be protected from division or assignment. Alabama courts and other state courts have circumvented the mandates of the Mansell decision and [Section] 1408 by allowing trial courts to consider veteran’s disability benefits in awarding alimony.

Id. at 108. The trial court’s order in Billeck, which expressly directed the veteran to pay over his disabil-ity benefits (rather than simply to indemnify his ex-wife for the economic loss caused by his partial waiver of military retirement pay), would be improper even under the Supreme Court of Arizona’s view of USFSPA preemption. See Pet. App. 7a (“We agree that the family court cannot divide [military retire-ment pay] that has been waived to obtain disability benefits either at the time of the decree or thereaf-ter.”). But the Supreme Court of Alabama’s determi-nation that a veteran’s receipt of disability benefits cannot even be considered in determining an appro-priate alimony award reflects a particularly expansive view of USFSPA preemption.

4. In Clauson v. Clauson, 831 P.2d 1257 (Alaska 1992), divorcing spouses entered into a stipulated property settlement under which the wife was to re-ceive 13/40 of her husband’s military pension. Id. at 1259. The veteran subsequently “elected to waive all of his military retirement pension in order to receive disability benefits.” Ibid. Based on that change in circumstances, his ex-wife sought a modification of the

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divorce decree, and the trial court ordered her ex-husband to pay her the same amount ($168 per month) that she had been receiving before the waiver oc-curred. See id. at 1259-1260.

The Supreme Court of Alaska held that, although the USFSPA precludes state courts from dividing veterans’ disability benefits between divorced spous-es, see Clauson, 831 P.2d at 1262, it does not preclude state courts from taking a veteran’s waiver of retire-ment pay into account in determining what division of property or level of spousal support is appropriate, see id. at 1262-1264. The court further held, however, that it would be “unacceptable” for “trial courts to simply shift an amount of property equivalent to the waived retirement pay from the military spouse’s side of the ledger to the other spouse’s side,” an approach that the court viewed as substantially equivalent to dividing the disability benefits themselves. Id. at 1264. That reasoning seems inconsistent with the indemnification remedy approved by the Supreme Court of Arizona in this case, the purpose and effect of which was to place respondent in the same economic position she would have occupied if no waiver of mili-tary retirement pay had occurred.

More recently, however, the Supreme Court of Alaska upheld a trial-court order, entered as part of a divorce decree, that required a veteran to indemnify his former spouse “for any subsequent unilateral actions to decrease the total monthly pension payout amounts,” including a waiver of retirement pay. Glov-er v. Ranney, 314 P.3d 535, 543 (2013); see note 4, supra. The court thus indicated that a veteran who waives military retirement pay may be required to compensate his former spouse for the precise amount

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of her resulting economic loss, so long as such an obligation was made part of the original divorce de-cree. See notes 7-9, infra.

5. In Kramer v. Kramer, 567 N.W.2d 100 (Neb. 1997), the divorce decree awarded the wife a percent-age of the veteran-husband’s military pension. Id. at 105. Several years later, the husband waived a por-tion of his military retirement pay in order to receive disability benefits, ibid., and his ex-wife sought in-creased alimony to compensate for the reduction of her share of the military retirement pay, id. at 106.

The Supreme Court of Nebraska held that the hus-band’s “waiver of retirement pension benefits” effect-ed a “substantial and material change in the relative economic circumstances of the parties which would justify an increase in the amount of alimony which the husband is obligated to pay the wife in the absence of evidence that her income from other sources has in-creased.” Kramer, 567 N.W.2d at 113.6 Relying on the Supreme Court of Alaska’s decision in Clauson, however, the court stated that its “holding does not permit the district court to treat service-connected disability benefits as divisible marital property in form or substance.” Ibid. That caveat appears to endorse the Clauson court’s view that, although a trial court may consider the economic effects of a veteran’s waiver in deciding whether to modify a divorce decree, it may not “simply shift an amount of property equiva-lent to the waived retirement pay from the military spouse’s side of the ledger to the other spouse’s side.” Id. at 111 (quoting Clauson, 831 P.2d at 1264).

6 Accord Womack v. Womack, 818 S.W.2d 958, 959 (Ark. 1991) (trial court may “t[ake] note of the [veteran spouse’s] disability benefits” in making an award of alimony).

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6. State supreme courts have thus adopted a varie-ty of responses to the question whether a disposition-of-property order issued at the time of divorce may subsequently be modified to account for the economic impact of a veteran’s post-divorce waiver of military retirement pay and election of disability benefits. The Supreme Court of Alabama has held that such a waiver cannot even be considered in determining whether modification of the decree is appropriate. Some courts have overturned or cautioned against modification orders that would restore to the non-veteran spouse the precise level of monthly payments that she had received before the waiver occurred. 7 And several other courts, including the Supreme Court of Arizona in this case, have approved indemni-fication remedies that are specifically designed to place the non-veteran spouse in the economic position she would have occupied but for the veteran’s waiver of military retirement pay.8

7 Some state courts that have disapproved the use of after-the-fact indemnification-type remedies have reserved the question whether the USFSPA preemption analysis might be different if the trial court had included an indemnification provision as part of the original divorce decree. See Youngbluth, 6 A.3d at 687, 689; see also Billeck, 777 So. 2d at 109; Mallard, 95 So. 3d at 1272 (quoting Youngbluth).

8 In Arizona, the issue presented has been resolved by Arizona Revised Statute Annotated § 25-318.01 (Supp. 2015) for divorce decrees entered after that statute’s enactment date in 2010. That provision prohibits, as a matter of state law, a division of property agreement that would “[i]ndemnify the veteran’s spouse or former spouse for any prejudgment or postjudgment waiver or reduction in military retired or retainer pay related to receipt of the disabil-ity benefits.” Ariz. Rev. Stat. Ann. § 25-318.01(2) (Supp. 2015). Accordingly, the specific reasoning of the Supreme Court of Arizona is of diminishing prospective importance. The question

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Although those divergent approaches may result in part from variations among the property-law and family-law regimes of different States, they appear largely to reflect conflicting views of the USFSPA’s preemptive scope. This Court’s review is warranted to clarify the extent to which disposition-of-property and spousal-support requirements may be modified to address the economic consequences of post-divorce waivers of military retirement pay. To be sure, state courts have employed a variety of mechanisms to address the economic impact on non-veteran spouses of veterans’ post-divorce waivers of retirement pay, and the Court’s decision in this case might not defini-tively resolve the legality of all such mechanisms. But the basic problem in this case recurs with sufficient frequency, and the method by which the courts below addressed it is a sufficiently common one, that this Court’s resolution of the question presented here would provide helpful guidance concerning the scope of USFSPA preemption.9 presented, however, remains one of recurring importance nationwide.

9 In Padot v. Padot, 891 So. 2d 1079 (Fla. Dist. Ct. App. 2004), cert. denied, 549 U.S. 1110 (2007), the Court invited the Solicitor General to file a brief expressing the views of the United States, and the government recommended that the petition be denied. In Padot, the trial court had issued a Supplemental Order, in connec-tion with the initial disposition of marital property, directing that “neither party shall take any action to reduce the other party’s interest in the * * * retire[ment] pay.” Id. at 1081. When the veteran spouse subsequently waived a portion of his military retirement pay in order to receive disability benefits, the trial court enforced the Supplemental Order by directing the veteran to pay his former wife the monthly amount she would have received if no waiver had occurred. See ibid. The state intermediate appel-late court held that the USFSPA did not preclude that relief. See

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CONCLUSION

The petition for a writ of certiorari should be granted.

Respectfully submitted.

IAN HEATH GERSHENGORN

Acting Solicitor General BENJAMIN C. MIZER

Principal Deputy Assistant Attorney General

MALCOLM L. STEWART Deputy Solicitor General

ILANA H. EISENSTEIN Assistant to the Solicitor

General ALISA B. KLEIN KATHERINE TWOMEY ALLEN

Attorneys

OCTOBER 2016

id. at 1081-1084. The government’s amicus brief in this Court argued that this holding was correct and that no conflict among state courts of last resort existed on the question. See U.S. Br. at 7-16, Padot v. Padot, 549 U.S. 1110 (2007) (No. 05-1076).

The government’s view that a writ of certiorari should be granted in this case is not inconsistent with the analysis of the pertinent case law in our Padot brief. The decisions of the Supreme Courts of Vermont and Mississippi in Youngbluth and Mallard post-date the filing of the government’s brief in Padot. In addition, state supreme courts that have disapproved the use of after-the-fact indemnification-type remedies have reserved the question whether inclusion of an indemnification provision as part of the original divorce decree might alter the preemption analysis. See note 7, supra. We are aware of no state-court decision that has construed the USFSPA to preclude enforcement of a Padot-like provision entered at the time of a divorce decree. See Pet. 31 (distinguishing cases involving such a provision from the question presented here). By contrast, state supreme courts have reached inconsistent conclusions on the question whether indemnification may be or-dered in response to a veteran’s post-divorce waiver of retirement pay if the original decree contained no such provision.

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ATTACHMENT G

Michigan House of Representatives, Proposed HB 4170 and Legislative Analysis

of September 12, 2016

00061'15 LTB

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HOUSE BILL No. 4170 February 10, 2015, Introduced by Reps. Franz, Cole, Glenn and Bumstead and referred to the

Committee on Judiciary. A bill to amend 1846 RS 84, entitled "Of divorce," by amending section 18 (MCL 552.18), as amended by 1991 PA 86.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT: Sec. 18. (1) Any EXCEPT AS PROVIDED IN SUBSECTION (4), ANY 1 rights in and to vested pension, annuity, or retirement benefits, 2 or accumulated contributions in any pension, annuity, or retirement 3 system, payable to or on behalf of a party on account of service 4 credit accrued by the party during marriage shall be considered 5 part of the marital estate subject to award by the court under this 6 chapter. 7 (2) Any EXCEPT AS PROVIDED IN SUBSECTION (4), ANY rights or 8 contingent rights in and to unvested pension, annuity, or 9 retirement benefits payable to or on behalf of a party on account 10

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00061'15 Final Page LTB

of service credit accrued by the party during marriage may be 1 considered part of the marital estate subject to award by the court 2 under this chapter where just and equitable. 3 (3) Upon motion of a party or upon consent of the parties, an 4 order of the court under this section entered before the effective 5 date of the amendatory act that added this subsection JULY 18, 1991 6 shall be amended to satisfy the requirements of an eligible 7 domestic relations order and to effectuate the intent of the 8 parties or the ruling of the court. As used in this subsection, 9 "eligible domestic relations order" means a domestic relations 10 order that is an eligible domestic relations order under the 11 eligible domestic relations order act, 1991 PA 46, MCL 38.1701 TO 12 38.1711. 13 (4) A VETERAN'S DISABILITY COMPENSATION FOR ANY SERVICE- 14 CONNECTED DISABILITY UNDER A PROGRAM OR LAW ADMINISTERED BY THE 15 UNITED STATES DEPARTMENT OF VETERANS AFFAIRS OR VETERANS 16 ADMINISTRATION IS EXEMPT FROM THE MARITAL ESTATE WHEN DETERMINING 17 PROPERTY DISPOSITION OR SUPPORT OBLIGATIONS, EXCEPT COMPENSATION 18 THAT IS AWARDED TO THE VETERAN FOR THE SUPPORT OF HIS OR HER 19 CHILDREN. A VETERAN SHALL DISCLOSE TO THE COURT ANY COMPENSATION 20 RECEIVED FROM THE UNITED STATES DEPARTMENT OF VETERANS AFFAIRS OR 21 VETERANS ADMINISTRATION FOR THE SUPPORT OF HIS OR HER DEPENDENTS. 22

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Legislative Analysis

House Fiscal Agency Page 1 of 1

Phone: (517) 373-8080

http://www.house.mi.gov/hfa

Analysis available at

http://www.legislature.mi.gov

MARITAL ESTATE IN DIVORCE:

EXEMPT VETERANS DISABILITY COMPENSATION

House Bill 4170 as introduced

Sponsor: Rep. Ray A. Franz

Committee: Judiciary

Revised on 9-12-16

REVISED SUMMARY:

House Bill 4170 would amend the Divorce Act to specify that a veteran's disability

compensation for any service-connected disability under a program or law administered by

the US Department of Veterans Affairs (DVA) or Veterans Administration is exempt from

the marital estate when determining property disposition and/or support obligations–except

compensation that is awarded to the veteran for the support of his or her children. A veteran

would be required to disclose to the court any compensation received from the DVA or

Veterans Administration.

(According to the DVA, disability compensation is a monthly tax-free benefit paid to

veterans who are at least 10 percent disabled because of injuries or diseases that were

incurred in or aggravated during active duty, active duty for training, or inactive duty

training. A disability can apply to physical conditions as well as a mental condition such

as post-traumatic stress disorder, or PTSD. The amount granted is based on several factors,

including the degree of the disability; if the veteran has dependents, an additional

allowance may be added if the combined disability is rated 30% or greater. Compensation

may be reduced if the veteran also receives military retirement pay, disability severance

pay, or separation incentive payments.)

MCL 552.18

FISCAL IMPACT:

The bill would have no fiscal implications for the state or local units of government.

Legislative Analyst: Susan Stutzky

Fiscal Analyst: Bethany Wicksall

■ This analysis was prepared by nonpartisan House Fiscal Agency staff for use by House members in their

deliberations, and does not constitute an official statement of legislative intent.

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