Celene I. Bock v. Dale F. Bock , 116 N.E.3d 1124 ( 2018 )

FILED
Dec 20 2018, 5:42 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEYS FOR APPELLANT ATTORNEY FOR APPELLEE
George S. Brasovan George R. Livarchik
Law Office of George S. Brasovan, P.C. Livarchik & Farahmand
Merrillville, Indiana Chesterton, Indiana
Renee M. Ortega
ROK Legal Group, LLC
Crown Point, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Celene I. Bock, December 20, 2018
Appellant-Petitioner, Court of Appeals Case No.
18A-DR-38
v. Appeal from the Lake Superior
Court
Dale F. Bock, The Honorable Elizabeth F.
Appellee-Respondent Tavitas, Judge
The Honorable Thomas P. Hallett,
Magistrate
Trial Court Cause No.
45D03-1512-DR-849
Crone, Judge.
Case Summary
Celene I. Bock (“Wife”) appeals the trial court’s division of property in
proceedings dissolving her marriage to Dale F. Bock (“Husband”). She alleges
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that the trial court erred in including as a marital asset her survivor benefit from
Husband’s pension. She also challenges the valuation of the survivor benefit as
well as the trial court’s equal division of the marital estate. Finding that Wife’s
survivor benefit was properly included and valued and that the trial court acted
within its discretion in equally dividing the marital estate, we affirm.
Facts and Procedural History1
[1] Husband and Wife married in August 1985 and separated in December 2015.
Before the marriage and until his 2005 retirement, Husband was employed at
the Lake County Sheriff’s Department. He had accrued ten years of service on
his Sheriff’s Department pension prior to the marriage and began taking
disbursements in 2005. He made an election for Wife to receive a survivor
benefit (“SBP”) under the pension plan, and the election was irrevocable once
he began taking disbursements. The SBP election resulted in a lower monthly
disbursement under the plan.
[2] In December 2015, Wife filed a verified petition for marital dissolution. The
trial court conducted hearings on three different dates, the last of which was
March 1, 2017, and the parties waived the time limit for issuance of the
dissolution decree. Three weeks later, Wife filed a motion to re-open her case
in chief, and following a hearing, the trial court granted Wife’s motion and
1
In conducting our review, we have found several deviations by both parties from the Indiana Rules of
Appellate Procedure, e.g., including argument in the facts section of the brief, print and spacing issues, and
reliance on outdated rules concerning word count. See Ind. Appellate Rules 43, 44(D). We also observe the
use of improper citation form. See Ind. Appellate Rule 22. We admonish counsel to consult the current
Rules of Appellate Procedure as well as the current edition of The Bluebook, A Uniform System of Citation.
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permitted her to submit additional evidence concerning the value of Husband’s
pension.
[3] In April 2017, Wife sought and was granted permission to file a pension
evaluation and analysis. Both parties filed proposed dissolution decrees, with
Wife seeking to exclude her SBP from the marital estate and requesting fifty-
eight percent of the marital estate and Husband seeking the pre-coverture
portion of his property. Wife filed a motion to strike Husband’s amended
proposed decree, which the trial court denied. On July 20, 2017, the trial court
issued its dissolution decree with findings of fact and conclusions thereon. The
court valued Husband’s pension at $460,211.60, to be divided equally pursuant
to its finding that the parties had failed to prove any grounds for deviating from
the statutory fifty/fifty presumptive split. The court included as marital
property Wife’s SBP, valued at $83,401, and awarded it to her as part of the
property division.
[4] Both parties filed motions to correct error, and Husband sought clarification
and correction of a clerical error in the trial court’s decree and a stay of
execution. The court corrected a clerical error in paragraph 15 2 of its order and
otherwise denied Husband’s motions. Wife withdrew her assertion of error
related to paragraph 15, and the court denied the balance of her motion to
2
The trial court revised paragraph 15 of the dissolution decree to read, in relevant part, “Husband requests
that he be awarded all property acquired prior to the marriage” instead of “Husband requests that he be
awarded all property acquired during the marriage[.]” Appealed Order at 1.
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correct error. Wife now appeals. Additional facts will be provided as
necessary.
Discussion and Decision
Section 1 – The trial court did not err in including Wife’s SBP
interest in the marital estate.
[5] Wife contends that the trial court erred in including the SBP in the marital
estate. Where, as here, the trial court enters findings of fact and conclusions
sua sponte, the specific findings control only with respect to the issues they
cover, and we apply a general judgment standard to all issues on which there
are no findings. In re Marriage of Sutton, 16 N.E.3d 481, 484-85 (Ind. Ct. App.
2014). The findings or judgment will be set aside only if they are clearly
erroneous, meaning that there are no facts or inferences drawn therefrom to
support them. Id. at 485.
[6] Wife admits that, “[u]pon analysis, the [SBP] is vested and is a marital asset.”
Appellant’s Br. at 15. Notwithstanding, she claims that it should have been
excluded from the marital pot.
It is well settled that in a dissolution action, all marital property
goes into the marital pot for division, whether it was owned by
either spouse before the marriage, acquired by either spouse after
the marriage and before final separation of the parties, or
acquired by their joint efforts. Ind. Code § 31-15-7-4(a). For
purposes of dissolution, property means “all the assets of either
party or both parties.” Ind. Code § 31-9-2-98 (emphasis added).
The requirement that all marital assets be placed in the marital
pot is meant to insure that the trial court first determines that
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value before endeavoring to divide property. Indiana’s “one pot”
theory prohibits the exclusion of any asset in which a party has a
vested interest from the scope of the trial court’s power to divide
and award. While the trial court may decide to award a
particular asset solely to one spouse as part of its just and
reasonable property division, it must first include the asset in its
consideration of the marital estate to be divided.
Falatovics v. Falatovics, 15 N.E.3d 108, 110 (Ind. Ct. App. 2014) (citations and
quotation marks omitted).
[7] Wife essentially argues that her SBP must be excluded because it is subject to
complete defeasance if she predeceases Husband and therefore is too
speculative and remote to constitute marital property. She relies on the recent
case of Harrison v. Harrison, in which another panel of this Court affirmed the
trial court’s decision to exclude from the marital estate a wife’s interest in her
family trusts. 88 N.E.3d 232, 235 (Ind. Ct. App. 2017), trans. denied (2018).
The Harrison court emphasized that the wife’s interest was subject to a complete
defeasance if she predeceased her parents and that even during her lifetime, she
was not entitled to any disbursements and would receive a disbursement only
upon a majority vote of the co-trustees. Id.
[8] We find Harrison distinguishable. While Harrison’s discussion of remoteness
and defeasance is instructive, the distinction between the family trusts in that
case and the pension benefits in this case cannot be ignored. Our legislature
and our courts have spoken directly and specifically where the asset at issue is a
present or future interest in a pension plan. Indiana Code Section 31-9-2-98(b)
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includes the following within the definition of property to be included in the
marital estate:
(1) a present right to withdraw pension or retirement benefits;
[and]
(2) the right to receive pension or retirement benefits that are not
forfeited upon termination of employment or that are vested (as
defined in Section 411 of the Internal Revenue Code) but that are
payable after the dissolution of marriage[.]
[9] As previously noted, it is undisputed that Husband’s pension rights vested
during the marriage. In fact, Husband took monthly disbursements for ten
years prior to the dissolution, and his election to provide a SBP benefit for Wife
meant a decrease in his monthly disbursements. As of the date of initial
disbursement, the SBP election became irrevocable. Nevertheless, in
characterizing her interest as defeasible, remote, and speculative, Wife appears
to argue that for her SBP interest to be deemed marital property, it too must be
vested during the marriage, which would be impossible because it would vest
only on Husband’s death.
[10] In Carr v. Carr, another panel of this Court reversed the trial court’s exclusion of
the wife’s SBP interest from the marital estate. 49 N.E.3d 1086, 1087 (Ind. Ct.
App. 2016), trans. denied. There, the Court explained that it is the pension-
earner’s right to the pension, not the SBP designee’s right, that must vest during
the marriage for the property to be considered part of the marital estate. Id. at
1090. The Carr panel further emphasized that the vesting of the pension-
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earner’s interest is not only a necessary condition but also a “sufficient condition
for a right to a benefit to constitute an asset.” Id. at 1089 (emphasis added).
To hold that SBPs are not marital property would be to remove
any incentive a pension-earner would otherwise have to elect the
benefit. By making the election, the pension-earner reduces the
income he or she would have received during his or her lifetime;
if the SBP is not counted in the marital pot, the pension-earner
would clearly benefit financially by not making the election.
Electing a SBP provides value to the other spouse, which the law
acknowledges by counting that value as part of the marital pot.
Id. at 1090-91.
[11] In Leonard v. Leonard, another panel of this Court found the spouses’ reciprocal
SBPs to be marital assets subject to division. 877 N.E.2d 896, 901 (Ind. Ct.
App. 2007). There, the husband had a military pension and the wife had a civil
service pension, both of which included mandatory SBPs. The Leonard panel
found that the trial court had properly included in the marital estate both the
present net value of the pensions and the SBPs and ordered an even split of the
SBP premiums:
The survivor benefit plan is designed to provide financial security
to a designated beneficiary of a military member, payable only
upon the member’s death in the form of an annuity. Upon the
death of the member, all pension rights are extinguished, and the
only means of support available to survivors is in the form of the
survivor benefit plan.
Id. (quoting Smith v. Smith, 438 S.E.2d 582, 584 (W. Va. 1993)).
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[12] Both Carr and Leonard illustrate that present and future pension interests are
properly includable in the marital estate despite the inherently uncertain nature
of both parties’ interests. A pension holder who has vested but has not yet
taken distributions would suffer a complete defeasance if he/she were to die
and would not be entitled to any further benefits if he/she is already taking
distributions. Similarly, the SBP designee receives benefits only if he/she
outlives the pension holder and therefore would suffer a complete defeasance
for predeceasing the pension holder. In other words, where pensions are
involved, both parties’ interests are, to a certain extent, remote and speculative.
At the same time, pension interests often represent a significant portion of the
marital estate, particularly when the parties are older and one or both spouses
have participated in the pension plan(s) for a significant length of time. Our
legislature and our courts have recognized the uniqueness of pension interests
and have determined that they are properly includable in the marital estate.
The trial court did not clearly err in including Wife’s SBP interest in the marital
estate.
Section 2 – Wife has failed to establish clear error in the trial
court’s valuation of her SBP interest.
[13] Wife maintains that the trial court erred in valuing her SBP interest at $83,401.
Valuing a pension requires a court to determine (1) what
evidence must be presented to establish the value of the benefit,
(2) what date must be used to assign a dollar amount to the
benefit, and (3) how much of the benefit’s value was the result of
contributions made after the final separation date.
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Leonard, 877 N.E.2d at 900.
[14] Wife challenges the trial court’s reliance on Husband’s expert witness, Dr.
Jonathan Furdek, in arriving at its valuation of her SBP interest. “A valuation
submitted by one of the parties is competent evidence of the value of property in
a dissolution action and may alone support the trial court's determination in
that regard.” Alexander v. Alexander, 927 N.E.2d 926, 935 (Ind. Ct. App. 2010)
(quoting Houchens v. Boschert, 758 N.E.2d 585, 590 (Ind. Ct. App. 2001), trans.
denied (2002)), trans. denied.
[15] Dr. Furdek, an economist with a PhD from Purdue University, testified
concerning his experience and his methodology used in determining the present
value of a SBP. He explained that he “relied on U.S. Life Expectancy Tables,
the Mortality Tables the United States provides, to determine the life
expectancy of [Husband] and [Wife].” Tr. Vol. 2 at 123. In explaining his
conclusions, he reported, “Essentially what I was able to determine, based on
U.S. Life Tables, is that [Wife] had roughly 4.1 additional years of life
expectancy beyond the life expectancy of [Husband], and so there would be 4.1
years that she would be receiving a survivor benefit.” Id. at 126. He also
indicated that to ascertain the specifics of Husband’s pension plan, he relied on
information contained in an affidavit submitted by the pension plan
administrator, which indicated, among other things, that Husband had already
accepted a 100% survivor option that was irrevocable as of the date he retired.
Respondent’s Ex. C. Dr. Furdek also testified that he considered the amount of
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the pension benefit that Husband was currently receiving as well as a cost of
living adjustment built into the pension.
[16] Dr. Furdek’s lengthy testimony concerning his methodology for arriving at the
present value of the SBP includes the following:
[T]o determine that present value, I need to determine an
appropriate discount factor. The method and the model is (sic)
very standard and very uniform. It’s found in any undergraduate
textbook. It’s the model for calculating present value. What I do
in these cases, however, is I calculate a present value for each and
every year. I don’t just generalize and come up with one interest
rate and project that to the future and then proceed to find a
value. Rather, what I do is, I consult U.S. treasury securities
which is the most widely accepted set of interest rates, minimizes
risks in every sense, as it’s most widely accepted by economists
…. There’s no guess work involved here. There’s no estimating
or projection. I could go into the marketplace and buy U.S.
treasur[y] securities that would provide that yield and would
enable me to payoff that pension if I were in that business. So
those are firm rates that are available and I used a different rate
for each year[.]
Id. at 130-31.
[17] Wife alleges that her SBP interest was valued too high, considering that she
might never receive it at all and that even the actuarial tables show her life
expectancy to exceed Husband’s by only 4.1 years. The trial court addressed
this concern, finding that “[t]he restriction on [Wife’s] right to receive the [SBP]
benefit was considered as a factor in the value of the asset.” Appellant’s App.
Vol. 2 at 15. Wife offers no alternate methodologies or figures and instead
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simply revisits her argument that the SBP should not have been considered
marital property in the first place. The trial court did not clearly err in its
valuation of Wife’s SBP interest.
Section 3 – The trial court acted within its discretion in
dividing the property according to the statutory presumption
favoring an equal division of the marital assets.
[18] Finally, Wife contends that the trial court abused its discretion in dividing the
marital property equally. The division of marital assets lies within the trial
court’s discretion, and as such, we reverse only on a showing that the court has
abused its discretion. Fischer v. Fischer, 68 N.E.3d 603, 608 (Ind. Ct. App.
2017), trans. denied. An abuse of discretion occurs where the trial court’s
decision is clearly against the logic and effect of the facts and circumstances
before it. Id. In conducting our review, we neither reweigh evidence nor
reassess witness credibility; rather, we consider only the evidence most
favorable to the trial court’s disposition. Id.
[19] Indiana Code Section 31-15-7-5 reads,
The court shall presume that an equal division of the marital
property between the parties is just and reasonable. However,
this presumption may be rebutted by a party who presents
relevant evidence, including evidence concerning the following
factors, that an equal division would not be just and reasonable:
(1) The contribution of each spouse to the acquisition of the
property, regardless of whether the contribution was income
producing.
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(2) The extent to which the property was acquired by each
spouse:
(A) before the marriage; or
(B) through inheritance or gift.
(3) The economic circumstances of each spouse at the time the
disposition of the property is to become effective, including the
desirability of awarding the family residence or the right to dwell
in the family residence for such periods as the court considers just
to the spouse having custody of any children.
(4) The conduct of the parties during the marriage as related to
the disposition or dissipation of their property.
[20] Per the statute, a trial court starts with the presumptive fifty/fifty division of
marital assets and then determines whether the presumption has been rebutted
by relevant evidence indicating that an equal division would not be just and
reasonable. Barton v. Barton, 47 N.E.3d 368, 379 (Ind. Ct. App. 2015), trans.
denied (2016). If the court deviates from the presumptive equal division, it must
state its reasons for that deviation in its findings and judgment. Id.
[21] Wife requested that the trial court award her 58% of the marital estate due to
the disparity in the parties’ economic circumstances. While Wife correctly
points out that her weekly wages of $187 are substantially less than Husband’s
$480, both are retired, both are employed only part time, and their weekly
earnings are a small portion of their income, when considered in conjunction
with their social security benefits and equal division of Husband’s pension. The
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court also noted the part-time earnings disparity, but reasoned that due to
Husband’s advanced age of 67, his part-time earnings potential was uncertain,
especially in the field of law enforcement. Appellant’s App. Vol. 2 at 17.
Husband requested all property that he acquired prior to the marriage,
including the pre-coverture portion of his pension. Appealed Order at 1. See
also Appellant’s App. Vol. 2 at 17 (“Husband accrued ten years of service on his
pension prior to the marriage.”). The trial court denied Husband’s request and
divided the entirety of his pension (valued at $460,211) equally without respect
to any contributions by Husband prior to the marriage. Appealed Order at 1;
Appellant’s App. Vol. 2 at 17.
[22] To the extent that Wife cites as unfair Husband’s receipt of the marital
residence, a present enjoyment, in contrast to her SBP, a future defeasible
interest, we will not revisit her argument that the SBP should not have been
included in the marital estate. The trial court was unpersuaded by either party’s
argument concerning property division and found, “Neither party has proven
by a preponderance of the evidence that an equal division of the marital estate
would not be fair and reasonable such that the statute should be rebutted.” Id.
We agree, especially in light of the thirty-year duration of their marriage. The
trial court acted within its discretion in ordering the equal division of the
marital estate. Accordingly, we affirm.
[23] Affirmed.
Najam, J., and Pyle, J., concur.
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