Flynn v. Flynn

491 A.2d 156, 341 Pa. Super. 76, 1985 Pa. Super. LEXIS 6746

• Court: Supreme Court of Pennsylvania
• Decided: March 29, 1985
• Status: Published

Opinions

CIRILLO, Judge:

This is an appeal from an order of the Court of Common Pleas of Lackawanna County entered November 23, 1982, granting a decree in divorce and an award of temporary alimony. The appellant, Mary Flynn, requests that the divorce decree be reversed and that her award of alimony be vacated and remanded for additional consideration.

On January 22, 1981, the appellee, Joseph Flynn, filed a complaint for divorce based upon indignities and irreconcilable differences, which was subsequently amended in May. A supplemental complaint was filed under section 201(d) of the Divorce Code,¹ alleging that the marriage was irretrievably broken and that the parties have lived separate and apart for a period in excess of three years. The appellant filed an answer and counterclaim, denying the aforementioned allegations and requesting that the court issue an order awarding alimony, child support, and the equitable distribution of all marital property.

The matter was assigned to a master who, after having conducted a hearing, concluded that a divorce should be granted and that temporary alimony in the amount of $150 per month for twelve months be awarded to the appellant. On November 23, 1982, the Honorable James M. Munley issued an order adopting the master’s recommendation of the divorce decree, but modifying the award of temporary alimony. Alimony payments were extended for a period of twenty-four months at $75 per month, in lieu of assigning a value to the appellee’s pension fund as part of the marital property. This appeal followed.

On appeal, the appellant contends that the circumstances attendant to her living arrangement in the same household with her husband do not méet the requirements of “separate and apart” of Section 201(d), thereby invalidating the ground upon which the divorce decree was granted. She also contests the method by which the value of her husband’s pension interest was allocated and the amount of the award of alimony as materially insufficient and unsupported by evidence.

In the review of a divorce case, it is the responsibility of the Superior Court to make a de novo evaluation of the record and to determine independently of the master and of the hearing court whether a legal cause of action exists. Vajda v. Vajda, 337 Pa.Super. 573, 487 A.2d 409 (1985); Jones v. Jones, 311 Pa.Super. 407, 457 A.2d 951 (1983). Since the divorce in the matter before us was based upon Section 201(d) of the Divorce Code, we must apply that provision to the facts at hand.

Section 201(d) of the Divorce Code provides in pertinent part:

(d)(1) It shall be lawful for the court to grant a divorce where a party has filed a complaint and an affidavit alleging that the parties have lived separate and apart for a period of at least three years, and that the marriage is irretrievably broken, and

(ii) the respondent denies one or more of the allegations set forth in the affidavit, but after notice and hearing, the court determines that the parties have lived separate and apart for a period of at least three years and that the marriage is irretrievably broken.

The operative language “separate and apart” is defined as the “complete cessation of any and all cohabitation”. 23 P.S. § 104. The term “cohabitation”, however, is not defined in the Code.

In Thomas v. Thomas, 335 Pa.Super. 41, 483 A.2d 945 (1984), we recently addressed the issue of the definition of cohabitation:

“[CJohabitation” means the mutual assumption of those rights and duties attendant to the relationship of husband and wife. The ties that bind two individuals in a marital relationship involve more than sexual intercourse. Thus, we find that instances of sexual relations during a separation period do not, without more, defeat a claim that the parties have lived separate and apart for purposes of Section 201(d).

Id., 335 Pa.Superior Ct. at 47, 483 A.2d at 948. This definition “reflects the public policy of this Commonwealth as declared in the legislative findings and intent outlines in Section 102 of the Divorce Code. Section 102 states that the legislature intended to ‘[e]ncourage and effect reconciliation and settlement of differences between spouses .. Id.

Thus, the gravamen of the phrase “separate and apart” becomes the existence of separate lives not separate roofs. See, e.g., Meyerl v. Meyerl, 21 Pa.D. & C.3d 729 (Allegheny Co., 1981); Amelio v. Amelio, 18 Pa.D & C.3d 673 (Lehigh Co., 1981). This position follows the trend of Pennsylvania case law in which a common residence is not a bar to showing that the parties live separate and apart in order to establish entitlement to support. Wechsler v. Wechsler, 242 Pa.Super. 356, 363 A.2d 1307 (1976); Commonwealth ex rel. DiPadova v. DiPadova, 223 Pa.Super. 403, 302 A.2d 510 (1973). It additionally considers the economic hardship imposed in requiring parties to occupy separate households in order to dissolve their marriage under Section 201(d) and the realities of a marital relationship as extending beyond joint residency. 23 P.S. § 102(a)(1). Cf. Pangallo v. Pangallo, 329 Pa.Super. 25, 477 A.2d 885 (1984).

In the instant matter, it is evident that the parties, though living under the same roof but in separate parts of the house, have ceased all marital relations for a period in excess of three years. Therefore, we find that the parties have met the requirements of “separate and apart” under the Divorce Code. The decree of divorce is affirmed.

Appellant next contends that the interest of her husband’s pension is improperly allocated and further that the award of alimony is materially insufficient and unsupported by evidence. In determining the propriety of property distribution and of alimony, this Court in Ruth v. Ruth, 316 Pa.Super. 282, 462 A.2d 1351 (1983), applied the abuse of discretion standard:

Under the abuse of discretion standard, we are not to usurp the trial court’s duty as finder of fact. Moreover, we do not choose to follow presumptions in the hope of achieving the legislature’s goal of “economic justice”. At oral argument in this case, a suggestion was made by counsel for the parties that this Court adopt “guidelines” or establish “presumptions” to be applied in deciding issues involving property rights under the Code. In view of the legislative guidelines which are set out forthwith, we see no need for this Court to enumerate additional criteria. Rather, we will carefully scrutinize each of the guidelines in determining whether or not the lower court has abused its discretion. This will assure that our review of proceedings under the New Divorce Code be appropriately assiduous.

Id., 316 Pa.Superior Ct. at 287, 462 A.2d at 1353. In applying this standard, we find the allocation of the non-vested pension interest within the award of alimony to be an improper method of distribution.

It is the function of the court to determine whether a property right has been acquired during marriage and whether equity warrants its inclusion in the marital estate. If the property right is deemed includable, the court must allocate the interest fairly, consistent with the legislative intent to effectuate economic justice between the parties. 23 P.S. § 102(a)(6). It is acknowledged in jurisdictions requiring the distribution of marital property that a spouse has a right, co-extensive with that of a wage-earner spouse, to a portion of retirement benefits accrued during marriage. See Malone v. Malone, 587 P.2d 1167 (Alaska 1978); Robert C.S. v. Barbara J.S., 434 A.2d 383 (Del.1981); Bloomer v. Bloomer, 84 Wis.2d 124, 267 N.W.2d 235 (1978); see generally Annot., Pension or Retirement Benefits as Subject to Award or Division by Court in Settlement of Property Rights Between Spouses, 94 A.L.R.3d 176 (1979). Some courts, however, have distinguished the various types of benefits, determining some to constitute marital property subject to distribution while declining to so classify others. See McCandless v. McCandless, 23 Pa.D & C.3d 739 (Butler Co., 1982) in which the court did not order the equitable distribution of a spouse’s pension rights that had not vested at the time of the divorce. See Miller v. Miller, 83 Mich. App. 672, 269 N.W.2d 264 (1978), in which the court characterized vested unmatured pension benefits as marital property, but declined to classify a non-vested retirement annuity. See also Braderman v. Braderman, 339 Pa.Super. , 488 A.2d 613 (1985) (collecting cases). Section 401(e) defines marital property as “all property acquired by either party during the marriage.” Since a pension benefit is an economic resource acquired with funds that would otherwise have been utilized by the parties during their marriage to purchase other assets, it constitutes marital property. This determination is made without regard to the possibly contingent nature of the pension, whether or not it has vested or matured. In our classification of pension interests as marital property, we are persuaded by the analysis of the Superior Court in our sister state in Weir v. Weir, 173 N.J.Super. 130, 133, 413 A.2d 638, 640 (1980):

[T]he fact is that the concept of vesting, though embodied in the [retirement] plan document itself, really has little meaning from the standpoint of the ultimate decision which must be made under [the marital property act]. Our equitable distribution statute requires that property ... acquired during marriage ... be subject to equitable distribution upon divorce. There is no requirement of vesting.

The California Supreme Court in In Re Marriage of Brown, 15 Cal.3d 838, 544 P.2d 561, 126 Cal Rptr. 633 (1976), similarly concluded that non-vested pension interests are a variety of marital property rather than a mere expectancy of gain. Any contingencies, explained Brown, should be taken into account by the hearing court, not when determining whether the plan is includable in the marital estate, but, rather, when allocating the property rights between the parties. Consequently, we conclude that a spouse’s pension rights, to the extent accumulated during the marriage, constitute a form of marital property subject to consideration by the court.

Accordingly, we support the finding of the hearing court in designating the pension of the appellee as marital property. However, we find its allocation within the alimony award to be improper and remand the order for reconsideration.

We recognize that the hearing court is presented with a complex task, exacerbated by the fact that the pension right may be terminated upon discharge, death, or other contingencies. See Deering v. Deering, 292 Md. 115, 437 A.2d 883 (1981); Robert C.S. v. Barbara J.S., 434 A.2d 383 (Del.1981). However, given the very nature of a non-vested pension benefit, i.e., that it is speculative, deferred distribution is the preferred method of effectuating economic justice between the parties and insuring a just settlement of property rights.

In reaching this conclusion, we are mindful of the concerns expressed by Judge Beck in her Concurring and Dissenting Opinion. But at the same time, we have given thoughtful attention to the injustices that may occur were we to adopt the approach she suggests.

We cannot overlook the speculative nature of non-vested pension benefits. In cases involving this type of pension, it is questionable to assume that benefits will ever be received. The Illinois Supreme Court aptly summarized the problem in In re Marriage of Fairchild, 110 Ill.App.3d 470, 475, 66 Ill.Dec. 131, 134, 442 N.E.2d 557, 560 (1982):

The dilemma ... is that while it is unfair to ignore the value of non-vested benefits in the division of marital property, those benefits in some instances being the only significant asset, it is also unfair to effect a present division of the marital property utilizing an actuarial value of those benefits computed in reliance on speculative, albeit actuarily accepted assumptions.

Judge Beck is of the opinion that

the present value of the pension benefit reflects actuarial discounts for contingencies that might prevent realization of the benefit so that the nonemployee-spouse does, to some extent, share the risk of non-payment by receiving an immediate offset of property that may prove less than the worth of the pension benefits ultimately received by the employee-spouse.

At 164.

Actuarial discounts reflect nothing more than estimates of life expectancies and the possibilities of a contingency occurring. These estimates may work well for the insurance industry. However, in situations such as the case sub judice, they do not reflect the realities of what may occur. For example, assume that a court orders immediate offset distribution of a non-vested pension benefit, and that the employee-spouse is awarded the speculative pension benefit while the nonemployee-spouse is awarded the remainder of the marital property. If the employee-spouse were to die the day after distribution, the beneficiaries of the spouse’s estate would effectively be left with nothing.

Admittedly, this scenario illustrates a drastic situation, but it is no less a possibility than those suggested by Judge Beck. Under virtually any conceivable factual scenario in which immediate offset distribution is employed, the employee-spouse is required to bear all the risk of nonpayment. To say that the nonemployee-spouse shares this risk by “receiving an immediate offset of property that may prove less than the worth of the pension benefits ultimately received ...” still does not equalize the risk of nonpayment.

Therefore, by deferring the allocation of benefits until the time of receipt, both parties share the risk that the benefits may not be paid without being denied the opportunity to receive this share of the marital estate. Further, deferred distribution allows the court to divide and distribute those pension benefits actually paid. Moreover, any attempt to defeat the nonemployee-spouse’s right to a portion of the pension entitlements may be adequately dealt with by the trial court pursuant to its grant of “full equity power and jurisdiction.” 23 P.S. § 401(c). Cf. Vajda v. Vajda, supra. We find this method best effectuates economic justice and insures a just settlement of property rights.

The only remaining question is how to implement the deferred distribution. In cases involving a non-vested pension plan where, as we have discussed above, it would be inequitable to assume that benefits will ever be received, the court may resolve this uncertainty by giving the non-pension holding spouse a share of the interest if and when it matures. The court may elect to retain jurisdiction and to divide the benefits upon receipt. See, e.g., In re Marriage of Hobbs, 110 Ill.App.3d 451, 66 Ill.Dec. 203, 442 N.E.2d 629 (1982). Alternatively, the court may elect to assign a percentage to each party of any future payments. See, e.g., Robert C.S. v. Barbara J.S., supra; Blitt v. Blitt, 139 N.J.Super. 213, 353 A.2d 144 (1976). The decision to retain jurisdiction or to assign a percentage distribution is one that we leave to the sound discretion of the trial court.

In the case at bar, we find that appellee’s non-vested pension interest requires the hearing court to apply the method of deferred distribution until the time of receipt.² Accordingly, we vacate the order of alimony and remand for entry of a new decree, in which the pension interest is extracted from the alimony award and considered in equitable distribution consistent with the method set forth in this opinion. Since we are unable to distinguish the award of temporary alimony from that of the adjustment for pension interest, we need not address the appellant’s contention that the award is materially insufficient and unsupported by the evidence.

Affirmed in part, reversed in part and remanded for proceedings consistent with this opinion. Jurisdiction is relinquished.

BECK, J., files a concurring and dissenting opinion.

1 . Act of April 2, 1980, P.L. 63, No. 26, 23 P.S.

2 . We note that the record indicates that appellee’s pension was to vest in 1984. We have no way of knowing whether it did in fact vest. Consequently, on remand, the court must first address this question.

The long delay involved between the filing of this appeal and our decision today brings to mind the sentiments expressed by Judge Beck in her dissenting opinion in Sutliff v. Sutliff, 326 Pa.Super. 496, 474 A.2d 599, 603 (1984) (en banc): "Justice is best served and harm to both parties is minimized by proceeding directly and expeditiously to a final disposition of the entire case ..."