Sullivan v. Sullivan

892 So. 2d 134, 2004 WL 3035579
CourtLouisiana Court of Appeal
DecidedDecember 30, 2004
Docket2004-334
StatusPublished
Cited by1 cases

This text of 892 So. 2d 134 (Sullivan v. Sullivan) is published on Counsel Stack Legal Research, covering Louisiana Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Sullivan v. Sullivan, 892 So. 2d 134, 2004 WL 3035579 (La. Ct. App. 2004).

Opinion

892 So.2d 134 (2004)

Paige B. SULLIVAN
v.
Charles P. SULLIVAN.

No. 2004-334.

Court of Appeal of Louisiana, Third Circuit.

December 30, 2004.
Rehearing Denied February 16, 2005.

Jack W. Caskey, Lake Charles, LA, for Plaintiff/Appellee — Paige B. Sullivan.

James E. Hopkins, Sulphur, LA, for Defendant/Appellant — Charles P. Sullivan.

Court composed of ULYSSES GENE THIBODEAUX, Chief Judge, BILLIE COLOMBARO WOODARD, and OSWALD A. DECUIR, Judges.

WOODARD, Judge.

In this community property case, the dispute involves the valuation of retirement funds in the former husband's Deferred Retirement Option Plan (DROP) account, which he rolled over into a Merrill Lynch IRA account without giving his former wife her interest in those funds. She repeatedly attempted to collect her share of the funds, during which time they greatly diminished in value. The husband appeals the trial court's judgment, which valued the funds as of the date he withdrew them from the DROP account and which awarded interest from the date his wife filed a request to establish her share of the funds. Finding no error in the trial court's judgment, we affirm.

*135 * * *

Mr. Charles Sullivan and Mrs. Paige Sullivan married in 1964, divorced in 1988, and partitioned their community property in 1990. The partition judgment, inter alia, ordered that each party had an interest in "any retirement plan, and in any annuity or lump sum payment paid to either party" in accordance with the formula established in Sims v. Sims.[1] Both parties worked for the Calcasieu Parish School Board (CPSB), Mrs. Sullivan as a teacher and Mr. Sullivan as a principal. In June 1995, Mr. Sullivan retired and entered into DROP.

"The DROP program is an optional method of retiring whereby an employee changes his status in the state retirement system from `active member' to `retiree' but continues to work at his regular job while he accumulates money in an individual DROP account based on the amount he would have received as a monthly retirement benefit had he in fact retired."[2] An employee may participate in DROP for up to three years.

Mr. Sullivan's retirement funds went into that account, drawing interest over the three year period. On September 15, 1999, he withdrew $92,354.47 of the $108,541.45 in the account and rolled it into an individual retirement account (IRA). After repeated amicable demands, Mrs. Sullivan filed a rule to establish her share in his retirement benefits. The parties stipulated that Mrs. Sullivan's interest in his retirement benefits under the Sims formula was 31 percent. However, Mr. Sullivan argued that the DROP funds should not be included because they were his separate property. The trial court agreed with him. However, this court reversed its judgment because it was contrary to our supreme court's holding in Bailey v. Bailey.[3]

On April 30, 2002, Mrs. Sullivan filed a "Rule to Require Defendant to Pay Percent of DROP Account." The court heard the rule on June 30, 2002. By the time of the June 30, 2002 hearing on the Rule, the IRA funds had diminished in value to $60,978.24. Mr. Sullivan urges us to value the DROP funds as of this date. Conversely, Mrs. Sullivan urges, and the trial court found, that the funds should be valued as of September 15, 1999, when the husband made his first withdrawal from the account. Mr. Sullivan appeals. Thus, the central question before us is at what point in time the DROP funds should be valued.

VALUATION DATE

Louisiana Revised Statutes 9:2801(4)(a) mandates that the court "value the assets as of the time of trial on the merits, determine the liabilities, and adjudicate the claims of the parties." (Emphasis added.) However, "[u]se of the `fixed percentage' method [such as the Sims formula] does not require valuation of the pension."[4]

Our supreme court in Sims v. Sims[5] discussed the unique situation pension plans which have not matured at the date of dissolution create, stating:

[T]he community interest in the retirement plan has no immediate redeemable cash value. Until the employee is separated from the service, dies, or becomes disabled, no value can be fixed upon his right to receive an annuity or *136 upon lump-sum payments or other benefits to be paid on his account.
Nevertheless, ... the wife is entitled to a declaration at this time of the interest attributable to the community of any such payments, if and when they become due in the future. (Emphasis added.)

Accordingly, the supreme court in Sims articulated a formula to be used in calculating retirement plan benefits which had not matured at the time of partition. As a general rule, the percentage is based on a fraction arrived at by dividing the length of time worked under the plan during the marriage by the total length of time worked towards earning the pension. The non-employee spouse is entitled to the above percentage of any future payments the employee spouse receives under the plan, payable as, if, and when payable to the pensioner.[6] Accordingly, when a court partitions retirement benefits using the fixed percentage method, it does so in lieu of determining its value.[7]

The Sims formula is a method, but not the exclusive one, a court may use to partition retirement benefits.[8] Alternatively, a court may assign a present cash value to the benefits at the time of dissolution and award the non-employee spouse a lump sum or property of equivalent value or use a variation of the Sims formula as the specific circumstances require.[9] Any such decision constitutes the partition of the benefits. The supreme court fashioned the Sims formula to obviate the need for a supplemental partition at the time the benefits come due.[10] Once a court adjudges partition according to the Sims formula, the only remaining step is to apply the formula at the time of the employee spouse's separation from employment when the benefits come due.[11] Because the formula establishes the non-employee spouse's portion at the same time benefits are paid to the employee spouse, there is no need for the court to assign a value to the benefits.[12] The employer is instructed to pay the non-employee spouse's portion directly to him or her, usually pursuant to a Qualified Domestic Relations Order (QDRO).[13]

The problem in the instant case arises because Teacher's Retirement System of Louisiana (TRSL) does not accept QDROs and, instead of cooperating with Mrs. Sullivan in executing an acceptable division order, Mr. Sullivan began withdrawing the funds, including his former spouse's portion. But for his refusal to execute a division order, there would never have been a need to place a total value on the funds.

This court has previously determined that "the funds deposited into Mr. Sullivan's DROP account are directly attributable to Mr. Sullivan's employment and retirement contributions prior to the termination of the community and, thus, are part of his retirement benefits."[14] (Emphasis added.) Clearly, then, the DROP account funds were included in the 1990 partition judgment of "any retirement plan, and in any annuity or lump sum payment paid to either party." The only *137 remaining step was to apply the Sims formula at the time the benefits were payable or paid to Mr. Sullivan.

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Cite This Page — Counsel Stack

Bluebook (online)
892 So. 2d 134, 2004 WL 3035579, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sullivan-v-sullivan-lactapp-2004.