In Re the Marriage of Jennings

958 P.2d 358, 91 Wash. App. 543

• Court: Court of Appeals of Washington
• Decided: July 10, 1998
• Docket: 20839-3-II
• Status: Published

Opinions

Armstrong, J.

— In this dissolution action, the trial court awarded Karen Jennings one-half of Michael Jennings’ military retirement, but none of his military disability pay. After entry of the dissolution decree, the military determined that Michael’s disability had worsened and, therefore, increased his disability pay, but reduced his retirement. Because this reduced Karen’s share of the retirement from $813.50 to $136 per month, she moved to vacate the decree under CR 60(b)(11). The trial court granted the motion and awarded Karen permanent maintenance in an amount equal to what she would have received if Michael’s disability and retirement payments had not changed. Michael appeals, contending that the trial court abused its discretion in vacating the award under CR 60. We agree and, therefore, reverse.

FACTS

In 1992, the trial court dissolved the marriage of Michael and Karen Jennings, awarding Karen one-half of Michael’s military retirement pay. The court awarded Michael the other half of his military retirement pay and, because it is not divisible under federal law, all of his disability compensation.¹ At the time of the decree, Michael’s military retirement pay was $2,139 per month and his military disability was $318 per month. After deductions, Karen received $813.50 per month as her share of the retirement pay.

After entry of the dissolution decree, the Veteran’s Administration ruled that Michael’s disability had worsened, and his disability status was changed. His military disability compensation rose to $2,285 per month, and his retirement pay was reduced to $272.90 per month.² He also received $1,200 per month in Social Security disability. Because of the change in benefits, Karen’s portion of the retirement was reduced from $813.50 to $136 per month.

Karen moved to vacate the decree under CR 60. The court found that the postdissolution reduction in retirement benefits constituted “extraordinary circumstances” under CR 60(b)(11) and vacated the decree. The court then awarded Karen maintenance in an amount equal to what she would have received under the original decree had Michael’s disability status remained unchanged.

Michael contends that the trial court erred in vacating the original dissolution decree under Civil Rule 60(b)(11). In addition to the specific reasons set forth in sections (1)-(10), CR 60(b)(11) permits the court to vacate for “[a]ny other reason justifying relief from the operation of the judgment.” CR 60(b)(11). This subsection is limited to situations involving “extraordinary circumstances.” In re Marriage of Flannagan, 42 Wn. App. 214, 221, 709 P.2d 1247 (1985). “The circumstances must relate to ‘irregularities which are extraneous to the action of the court or go to the question of the regularity of its proceedings.’ ” Id. at 221 (quoting State v. Keller, 32 Wn. App. 135, 141, 647 P.2d 35 (1982)). A motion to vacate a judgment under CR 60 is directed to the discretion of the trial court, and its decision will be reversed only for an abuse of this discretion. In re Marriage of Shoemaker, 128 Wn.2d 116, 120-21, 904 P.2d 1150 (1995).

But in postdecree challenges to property settlements, the court’s discretion to vacate under CR 60(b)(11) has been limited. Froperty settlements have been reopened under CR 60(b)(11) in only three Washington cases: In re Marriage of Parks, 48 Wn. App. 166, 737 P.2d 1316 (1987); Flannagan, 42 Wn. App. 214; and In re Marriage of Giroux, 41 Wn. App. 315, 704 P.2d 160 (1985). Each case involved the same “extraordinary circumstance,” the retroactive application of the Uniform Services Former Spouses’ Protection Act (USFSPA).³ See Parks, 48 Wn. App. at 169; Flannagan, 42 Wn. App. at 222; Giroux, 41 Wn. App. at 321-22. Congress enacted the USFSPA in response to the U.S. Supreme Court’s decision in McCarty v. McCarty, 453 U.S. 210, 101 S. Ct. 2728, 69 L. Ed. 2d 589 (1981), which held that state courts are prohibited from treating military pensions as community property in dissolution proceedings. Mansell v. Mansell, 490 U.S. 581, 584, 109 S. Ct. 2023, 104 L. Ed. 2d 675 (1989).

In Flannagan, the trial court, following McCarty, awarded two servicemen their entire retirement benefits. After Congress passed the USFSPA, which permits state courts to treat military retirement pay as community property,⁴ the spouses moved to vacate the decrees. Flannagan, 42 Wn. App. at 216-17. We held that the spouses were entitled to relief under CR 60(b)(11) for four reasons: (1) the clear congressional desire of removing all ill effects of McCarty, (2) the speed with which Congress passed the USFSPA; (3) the anomaly of allowing military pensions to be divided before McCarty and after the USFSPA, but not during the short reign of McCarty, and (4) the limited number of decrees that could be reopened following our decision. Flannagan, 42 Wn. App. at 222. But “we emphasize[d] the importance of finality and the limited nature of our deviation from the doctrine.” Id. at 218; accord Parks, 48 Wn. App. at 169.

The remaining cases have denied relief under CR 60(b)(11). In Ross v. Pearson, 31 Wn. App. 609, 610-11, 614, 643 P.2d 928 (1982), we refused to grant relief under CR 60(b)(11) where the dissolution judge failed to allocate the husband’s disability insurance payments and the husband failed to bring a CR 60(b)(1) motion for inadvertence within one year after entry of the decree. In In re Marriage of Burkey, 36 Wn. App. 487, 488-91, 675 P.2d 619 (1984), Division Three held that the trial court abused its discretion in finding that inadequate representation justified vacating the decree under CR 60(b)(11). The court noted that in retrospect the parties’ separation agreement appeared to favor the husband, but concluded that the wife’s inadequate representation did not constitute “manifest injustice” or “unusual circumstances.” Id. at 490-91 & n.2. In In re Marriage of Tang, 57 Wn. App. 648, 654-56, 789 P.2d 118 (1990), Division One refused to grant relief even though the parties’ settlement agreement did not list, value, or characterize their property and left them as tenants in common. The court held that these were not the “unusual situations” contemplated by CR 60(b)(11). Tang, 57 Wn. App. at 656. Division One also held it error to allow modification of a husband’s property payment schedule to the wife because of his emergency financial difficulties in business. In re Marriage of Irwin, 64 Wn. App. 38, 64, 822 P.2d 797 (1992). Similarly, in In re Marriage of Yearout, 41 Wn. App. 897, 898, 902, 707 P.2d 1367 (1985), we held that a husband had not shown “unusual circumstances” where his justification for reducing maintenance was that his income had substantially declined. Although the Yearout case involved the modification of spousal maintenance and not a property settlement, the case is similar to the property settlement cases because the parties incorporated a nonmodifiable separation agreement into their decree of dissolution. Id. at 899.

“We have previously recognized a compelling policy interest favoring finality in property settlements.” Martin v. Martin, 20 Wn. App. 686, 690, 581 P.2d 1085 (1978) (citing Peste v. Peste, 1 Wn. App. 19, 459 P.2d 70 (1969)). In Peste v. Peste, we said, “To permit collateral attacks upon divorce proceedings without any more than a showing of a disparity in the award, would open a Fandora’s Box, affecting subsequent marriages, real property titles and future business endeavors of both spouses. The uncertainties which would result would be devastating.” Id. at 25. In Martin, we refused to retroactively apply our State Supreme Court’s decision in Payne v. Payne, 82 Wn.2d 573, 512 P.2d 736 (1973). Martin, 20 Wn. App. at 689. The Payne decision held that military pensions were property subject to division in a decree of dissolution. Payne, 82 Wn.2d at 574-77. We noted that retroactive application would raise the “specter of countless similar petitions” and would undermine the policy interest of finality. Martin, 20 Wn. . In In re Marriage of Brown, 98 Wn.2d 46, 49, 653 P.2d 602 (1982), the Washington Supreme Court recognized that “in the conflict between the principles of finality in judgments and the validity of judgments, modern judicial development has been to favor finality rather than validity.”

We conclude that to set aside a final dissolution decree pursuant to CR 60(b)(11) a party must show more than a postdecree change in the value of assets. Here, Karen Jennings has shown only that one asset awarded to her has declined substantially in value. This is not an “extraordinary circumstance” within the meaning of CR 60(b)(11).⁵

We reverse and remand to reinstate the final decree.⁶

Bridgewater, A.C.J., concurs.

1 Under the Uniform Services Former Spouses’ Protection Act (USFSPA), state courts may treat “disposable retired or retainer pay” as community property subject to division in dissolution proceedings. 10 U.S.C. § 1408(c)(1); Mansell v. Mansell, 490 U.S. 581, 584, 109 S. Ct. 2023, 104 L. Ed. 2d 675 (1989). But Congress has expressly excluded the disability benefits of retired service members from the definition of “disposable retired or retainer pay.” 10 U.S.C. § 1408(a)(4). Thus, in Mansell, the U.S. Supreme Court held 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.” Mansell, 490 U.S. at 594-95.

2 As the Supreme Court explained in Mansell-.

In order to prevent double dipping, a military retiree may receive disability benefits only to the extent that he waives a corresponding amount of his military retirement pay. [38 U.S.C.] § 3105. Because disability benefits are exempt from federal, state, and local taxation, [38 U.S.C.] § 3101(a), military retirees who waive their retirement pay in favor of disability benefits increase their after-tax income. Not surprisingly, waivers of retirement pay are common.

Id. at 583-84 (footnote omitted).

3 10 U.S.C. § 1408.

4 See 10 U.S.C. § 1408(c)(1); Mansell, 490 U.S. at 584.

5 Karen Jennings argues that our decision today will result in the nullification of property settlements whenever a former soldier’s disability status is changed after entry of the final decree of dissolution. But this need not be the case. As has been recognized in other states, the nonmilitary spouse can protect her asset by requiring the military spouse to indemnify her for any reduction in retirement benefits. See Abernathy v. Fishkin, 699 So. 2d 235, 239-40 (Fla. 1997); Hisgen v. Hisgen, 554 N.W.2d 494, 498 (S.D. 1996); In re Marriage of Strassner, 895 S.W.2d 614, 617, (Mo. Ct. App. 1995); McHugh v. McHugh, 124 Idaho 543, 861 P.2d 113, 155 (Ct. App. 1993); Owen v. Owen, 14 Va. App. 623, 419 S.E.2d 267, 269-70 (1992). Indemnification clauses have been held not to violate the Mansell Court’s prohibition against dividing disability benefits, because the military spouse, who waives retirement benefits to receive increased disability payments, can indemnify the nonmilitary spouse from other available assets. Hisgen, 554 N.W.2d at 498; accord Abernathy, 699 So. 2d at 240; Owen, 419 S.E.2d at 269-70.

6 We do not decide today whether Karen Jennings has other remedies available to enforce the award of her share of Michael Jennings’ military retirement.