In Re the Marriage of Julia Heath-Clark and Richard Alan Clark Upon the Petition of Julia Heath-Clark, and Concerning Richard Alan Clark ( 2016 )

IN THE COURT OF APPEALS OF IOWA
No. 15-0525
Filed May 11, 2016
IN RE THE MARRIAGE OF JULIA HEATH-CLARK
AND RICHARD ALAN CLARK
Upon the Petition of
JULIA HEATH-CLARK,
Petitioner-Appellee,
And Concerning
RICHARD ALAN CLARK,
Respondent-Appellant.
________________________________________________________________
Appeal from the Iowa District Court for Polk County, Jeffrey D. Farrell,
Judge.
Husband appeals from the district court’s denial of his petition for a
declaratory order and his application for an order nunc pro tunc to amend the
parties’ qualified domestic relations order. AFFIRMED.
Kodi A. Brotherson of Becker & Brotherson Law Offices, Sac City, for
appellant.
Thomas P. Graves of Graves Law Firm, P.C., Clive, for appellee.
Heard by Danilson, C.J., and Mullins and McDonald, JJ.
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MCDONALD, Judge.
Richard Clark appeals from the district court’s denial of his petition for a
declaratory order and his application for an order nunc pro tunc to amend the
parties’ qualified domestic relations order (QDRO). Richard maintains the QDRO
should be amended to reflect the intent of the parties at the time they entered the
dissolution decree. Specifically, he contends the Iowa Public Employees’
Retirement System (“IPERS”) calculates retirement benefits in a way neither
party expected or intended and, as a result, Julia Clark receives more of his
retirement benefit than intended.
I.
Richard and Julia married on May 24, 1970. They dissolved their
marriage by stipulated decree on September 23, 2002. In pertinent part, the
decree provides:
IT IS FURTHER ORDERED, ADJUDGED AND DECREED that
[Julia] shall receive a percentage of [Richard’s] IPERS asset as set
forth in the Qualified Domestic Relations Order which shall be
entered subsequent to the entry of this Decree. In regards to the
IPERS benefit of [Richard] to be received by [Julia], when the
member elects a payment option for IPERS benefits pursuant to
any Qualified Domestic Relations Order, that member shall select
fifty percent (50%) of the payment option for the contingent
annuitant/alternate payee. The alternate payee shall not now or in
the future designate a successor alternate payee. This Court shall
retain jurisdiction for the filing and implementation of the Qualified
Domestic Relations Order.
The same day, a QDRO was entered to divide Richard’s IPERS benefits. The
QDRO provides:
IPERS is directed to pay benefits to the Alternate Payee as a
marital property settlement under the following formula: fifty percent
(50%) of the gross monthly or lump sum benefit payable at the date
of distribution to the Member multiplied by the “service factor.” The
3
numerator of the service factor is the number of quarters covered
during the marriage period of May 24, 1970 through the 23rd day of
September, 2002, (the date of the filing of the Decree of Dissolution
of Marriage), and the denominator is the Member’s total quarters of
service covered by IPERS and used in calculating the Member’s
benefit.
On May 19, 2014, Richard filed a petition for declaratory judgment and/or
order nunc pro tunc, claiming the service factor was too large and, as a result,
Julia was receiving a greater percentage of his IPERS benefit. Richard claimed
the service factor was too large because IPERS caps the number of quarters
used in calculating the member’s benefit (the denominator) at 140, or thirty-five
years, even though Richard worked 165 quarters of service covered by IPERS.
He asked the district court to “affirmatively declare that the denominator in the
. . . formula fraction is [165],1 the total number of quarters [Richard] worked in
IPERS-covered employment.” Additionally, Richard asked the district court to
enter an order nunc pro tunc “correcting the error in the Qualified Domestic
Relations Order.”
On July 17, 2014, Julia filed a motion for summary judgment and a
resistance to Richard’s petition. In it, Julia asserted declaratory relief was not
proper because there was not a “legal issue between [Richard and her] which
can be resolved between the parties. . . . He has brought this matter against the
wrong party with whom he does not have an actual issue of controversy.” Julia
also asserted an order nunc pro tunc was not appropriate because the QDRO
correctly expressed judicial intention as set forth in the decree. Lastly, Julia
1
At the time of the petition, Richard had worked 164 quarters. He ultimately completed
another quarter of work before retiring.
4
maintained the IPERS rule limiting the denominator to 140 quarters was
“appropriate under Iowa jurisprudence.”
The matter came to trial on September 19, 2014. The general counsel for
IPERS testified the maximum number of quarters that could be used in
calculating the member’s benefit was 140. During cross-examination, IPERS’
general counsel testified that, while the denominator of the fraction was set at
140 by statute, IPERS had no position about what percentage was to be used
against the service factor and that it would accept a number other than fifty
percent if that was what the judge determined to be appropriate.
The district court filed its order denying Richard’s petition for declaratory
judgment and application for order nunc pro tunc on December 4, 2014. In it, the
court stated:
In considering the intention of the court from 2002, the court
in 2014 uses the decree, the QDRO, and the transcript from the
hearing on May 29, 2002 to determine the intent of the court’s
order. There is no indication that the court had any intent other
than to put into place the agreement of the parties. The parties
entered a stipulation of their agreement on the record on the date of
trial . . . . It is clear that the parties agreed to divide Richard’s
IPERS benefits pursuant to the Benson formula – the Benson
formula was referenced on the transcript and the QDRO uses a
formula consistent with Benson.
....
While the Benson formula is clearly favored by the Iowa
Supreme Court and was implemented by the parties and the court
in the 2002 decree and QDRO, the Benson court did not fully define
the denominator portion of the service factor fraction. The Benson
decision does not answer the interpretation issue raised here. . . . .
The weight of the evidence, as shown by the two orders and
the transcript, shows that the parties and the court did not consider
the precise issue whether the service factor fraction could include
years of service beyond 35 years at the time the decree and QDRO
were entered. . . .
5
In the absence of language in the decree, QDRO, or
stipulation showing an intent to the contrary, the court views the
language used in the QDRO as deferring to IPERS.
Richard appeals.
II.
Our review of an equitable action is de novo. See Iowa R. App. P. 6.907.
“We review the construction of a dissolution decree as a matter of law.” In re
Marriage of Goodman, 690 N.W.2d 279, 282 (Iowa 2004); but see In re Marriage
of Veit, 797 N.W.2d 562, 564 (Iowa 2011) (applying de novo review in
determining whether QDRO fulfilled terms of dissolution decree); In re Marriage
of Brown, 776 N.W.2d 644, 647 (Iowa 2009) (reviewing de novo whether district
court properly interpreted dissolution decree); In re Marriage of Pals, 714 N.W.2d
644, 646 (Iowa 2006) (reviewing de novo the court’s ruling in an equitable
“proceeding to modify or implement a marriage dissolution decree subsequent to
its entry”).
III.
A.
Before we can examine the merits of Richard’s appeal, we must address
Julia’s jurisdictional argument. She maintains the court lacked jurisdiction to
amend the QDRO. Julia claims Richard’s petition for a declaratory judgment
and/or order nunc pro tunc to amend the QDRO was untimely because he did not
appeal the QDRO pursuant to Iowa Rule of Appellate Procedure 6.101(1)(b), nor
did he file a petition to vacate or modify judgment pursuant to Iowa Rule of Civil
Procedure 1.1013. If Richard were requesting a modification of the property
division, we would agree because a property division generally is not modifiable.
6
See In re Marriage of Morris, 810 N.W.2d 880, 886 (Iowa 2012); see also Iowa
Code § 598.21(7) (2013). But Richard’s request is not for modification of the
property division. He is asking the QDRO be modified to conform to the property
division as set forth in the decree.
Normally, a property disposition that includes the division of retirement
benefits proceeds in two steps. First, a dissolution of marriage decree—a
substantive order that equitably divides and assigns the parties’ property—is
entered. See Brown, 776 N.W.2d at 647–48 (discussing finality of decrees,
property division, and QDROs). Second, for the division of retirement benefits to
be implemented, a QDRO is entered directing the plan administrator to make
certain specified payments to the ex-spouse.2 See id.; see also Breslin v.
Synnott, 54 A.3d 525, 527 (Vt. 2012) (citing 2 B. Turner, Equitable Division of
Property § 6:20, at 113 (3d ed. 2005)).
A QDRO is defined in relevant part by [ERISA] as a
domestic relations order “which creates or recognizes the existence
of an alternate payee’s right to, or assigns to an alternate payee the
right to, receive all or a portion of the benefits payable with respect
to a participant under a plan.” 29 U.S.C. § 1056(d)(3)(B)(i)(I). In
order for the QDRO to be qualified—for the Q to be added to the
DRO—certain requirements must be met. See id. § 1056(d)(3)(C)-
(D). Once the plan administrator qualifies the QDRO, payments
are made in accordance with the requirements contained in the
QDRO. Id. § 1056(d)(3)(A). It is from this statutory scheme and
general description of QDRO practice that we draw the conclusion
that a QDRO is characterized properly as a procedural device that
enforces an underlying substantive order. See Kremenitzer v.
Kremenitzer, [838 A.2d 1026, 1028 (Conn. Ct. App. 2004)]
2
“Because of certain anti-alienation restrictions in the Employee Retirement Income
Security Act (ERISA) and the federal tax code, a QDRO must be filed for every pension
division undertaken pursuant to a divorce.” Brown, 776 N.W.2d at 647–48 (citing
Rohrbeck v. Rohrbeck, 566 A.2d 767, 768–71 (Md. 1989)). “ERISA does not require a
QDRO to be a part of the actual judgment in a case.” In re Marriage of Bruns, 535
N.W.2d 157, 162 (Iowa Ct. App. 1995) (citing Baird v. Baird, 843 S.W.2d 388, 392 (Mo.
Ct. App. 1992), and Rohrbeck, 566 A.2d at 771).
7
(explaining that a QDRO is vehicle for enforcing court judgment);
see also Turner, § 6:20, at 113–14 (noting “strong general rule” that
QDRO is not substantive order, but rather “procedural device[ ] for
enforcing the terms of the underlying substantive order”).
Breslin, 54 A.3d at 527–28.
We too draw the conclusion that a QDRO is characterized properly as a
procedural device required by federal law and entered to effectuate the property
division made in the dissolution decree. We conclude the QDRO is not a “final
judgment” subject to the variety of deadlines imposed to challenge a final
judgment. See Veit, 797 N.W.2d at 564 (“[T]he QDRO is not itself a property
settlement, but is merely a method of effectuating the property division contained
in a dissolution decree and may be modified later without affecting the finality of
the underlying decree.”). Additionally, a district court retains authority to interpret
and enforce its prior decree. See Morris, 810 N.W.2d at 886. We are therefore
not persuaded by Julia’s argument that the court lacks jurisdiction to amend the
QDRO to reflect the property division set forth in the decree accurately.
B.
“A stipulation and settlement in a dissolution proceeding is a contract
between the parties.” In re Marriage of Jones, 653 N.W.2d 589, 593 (Iowa
2002). However, the parties' stipulation is not binding on the court, “as the court
has the responsibility to determine whether the provisions upon which the parties
have agreed constitute an appropriate and legally approved method of disposing
of the contested issues.” Id. Consequently, once the court enters a decree
adopting the stipulation, “[t]he decree, not the stipulation, determines what rights
the parties have.” Id. at 594. “Therefore, in ascertaining the rights of the parties
8
after final judgment, it is the intent of the district court that is relevant, not the
intent of the parties.” Id.
The district court found, and the parties agree, that the intent of the
decretal court was to put the parties’ agreement into effect. The parties agreed
at the time of the stipulation that they would use the Benson formula to divide
Richard’s defined benefit plan. Thus, the inquiry is whether the decree and the
QDRO implement the Benson formula or whether the QDRO must be modified to
reflect the decretal court’s intent. See id.
We first discuss the Benson formula. In In re Marriage of Benson, 545
N.W.2d 252 (Iowa 1996), the court discussed the valuation and division of a
defined benefit plan for the purposes of marital property settlement. The court
identified two methods of valuing and dividing the property. “One method is to
determine the present value of the benefits and allocate a share to the
pensioner's spouse (the present-value method).” Benson, 545 N.W.2d at 255.
The second method “is to award the spouse a percentage of the pension,
payable when benefits become matured (the percentage method).” Id. “A
straight percentage method divides the member’s lump sum or gross monthly
benefit according to a percentage determined by the parties.” Faber v. Herman,
731 N.W.2d 1, 8 (Iowa 2007). “A service factor percentage method divides the
pension according to a percentage multiplied by a factor based on the member’s
service during the marriage and the member’s total service.” Id. The present
case involves the service factor percentage method of valuation and division.
The Benson court set forth the formula as follows:
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A fraction is first computed, the numerator being the number of
years during the marriage [benefits accrued] under the pension
plan . . . and the denominator being the total number of years. . .
benefits accrued prior to maturity (i.e., receipt of payments upon
retirement). This fraction represents the percentage of [the]
pension attributable to the parties' joint marital efforts. This figure is
then multiplied by [the spouse's] share of the marital assets (fifty
percent). Finally this second figure is multiplied by [the] total
accrued monthly benefit upon maturity (retirement) to calculate [the
spouse's] share.
Benson, 545 N.W.2d at 255.
Having set forth the Benson formula we turn to the language of the decree
and QDRO to determine whether it divided Richard’s IPERS benefit in accord
with the Benson formula. A dissolution decree is construed like any other written
instrument. In re Marriage of Lawson, 409 N.W.2d 181, 182 (Iowa 1987).
The decree should be construed in accordance with its evident
intention. Indeed the determinative factor is the intention of the
court as gathered from all parts of the decree. Effect is to be given
to that which is clearly implied as well as to that which is expressed.
Of course, in determining this intent, we take the decree by its four
corners and try to ascertain from it the intent as disclosed by the
various provisions of the decree.
In re Marriage of Goodman, 690 N.W.2d 279, 283 (Iowa 2004). In construing a
dissolution decree, we give force and effect to every word, if possible, in order to
give the decree a consistent, effective and reasonable meaning in its entirety.
Lawson, 409 N.W.2d at 182–83.
We conclude the plain language of the decree and QDRO expresses the
decretal court’s intent to use the Benson formula and correctly sets forth the
Benson formula. The QDRO provides:
IPERS is directed to pay benefits to the Alternate Payee as a
marital property settlement under the following formula: fifty percent
(50%) of the gross monthly or lump sum benefit payable at the date
of distribution to the Member multiplied by the “service factor.” The
10
numerator of the service factor is the number of quarters covered
during the marriage period of May 24, 1970 through the 23rd day of
September, 2002, (the date of the filing of the Decree of Dissolution
of Marriage), and the denominator is the Member’s total quarters of
service covered by IPERS and used in calculating the Member’s
benefit.
There is little else that needs to be said. The district court reached the same
conclusion, stating, “It is clear that the parties agreed to divide Richard’s IPERS
benefits pursuant to the Benson formula—the Benson formula was referenced on
the transcript and QDRO uses a formula consistent with Benson.”
Nonetheless, Richard maintains the QDRO should be amended because
the parties meant to use the total number of covered quarters worked as the
denominator in the fraction. He cites Julia’s testimony from the 2002 hearing as
support. Julia testified as follows:
Q: Rich has a rather substantial IPERS benefit, that is, he
has worked for the City of Des Moines for 29 years of service? A:
Yes, that’s correct.
Q: Now, it’s your understanding that the agreement is that
whenever Rich retires or dies or leaves the City of Des Moines or
makes a claim for his IPERS benefit, under his eligibility, that you
will receive an amount equal to 29 years, that’s over a period of
time that transpires to that date that the IPERS is paid? A: That’s
correct.
Q: And that, say, for example, at age 62 it was 29 years of
service over 37.5 years of actual service, on that date that Rich
would become eligible at 62? A: That is correct.
Richard contends this “clearly indicates Julia and her attorney understood the
denominator used to determine her monthly share of Richard’s IPERS benefit
would be the total years Richard worked in IPERS-covered employment and
would not be limited to 140 quarters or any other number.”
Richard’s argument regarding the parties’ purported intent is largely
immaterial to the issue. IPERS uses “a percentage of earnings per year of
11
service formula, which provides a benefit that is related to the employee's
earnings and length of service.” In re Marriage of Sullins, 715 N.W.2d 242, 249
(Iowa 2006). Richard concedes the decretal court intended to use the Benson
formula. The Benson formula is used to value and divide the portion of the
defined benefit accrued during the parties’ marriage “in relation to the total years
of benefits accrued at maturity.” Benson, 545 N.W.2d at 255 (emphasis added).
The court reemphasized the denominator is “the total number of years . . .
benefits accrued prior to maturity (i.e., receipt of payments upon retirement).”
There is a distinction between total number of covered quarters worked and the
total number of covered quarters in which additional benefit accrues. See
McDonald v. Pension Plan of NYSA-ILA Pension Fund, 320 F.3d 151, 156 (2d
Cir. 2003) (providing “accrued benefits” are those benefits earned); Hoover v.
Cumberland, Maryland Area Teamsters Pension Fund, 756 F.2d 977, 981–82
(3d Cir. 1985) (providing an “accrued benefit” represents the interest in a
retirement benefit earned each year). Iowa Code section 97B.49A(1)(a) and
Iowa Administrative Code rule 495–16.2(3)(m) provide a covered member does
not accrue additional benefit beyond 140 quarters of covered service. The legal
distinction between the total number of covered quarters worked and the total
number of covered quarters in which additional benefits accrue is reflected in the
plain language of the QDRO. The QDRO provides the denominator “is the
Member’s total quarters of service covered by IPERS and used in calculating the
Member’s benefit.” Richard’s interpretation of the decree and QDRO render the
phrase “and used in calculating the Member’s benefit” without meaning. His
interpretation cannot contradict the plain language of the decree and QDRO.
12
Richard also seems to contend that the administrative rule limiting the
denominator to 140 quarters of covered service should not control over the
parties’ agreement. As set forth above, the argument fails because the decretal
court intended to use the Benson formula and because the Benson formula uses
only covered quarters in which additional benefit accrues. The argument fails for
an additional reason. Richard appears to misapprehend the purpose of the
Benson formula and the purpose of the administrative rule. The purpose of the
formula is to determine the percentage of the benefit accrued during the marriage
for the purpose of determining the marital share of the benefit to be paid upon
maturity. The administrative rule reflects the maximum number of covered
service quarters resulting in the accrual of additional benefit; a covered employee
accrues no additional service benefit after 140 quarters of covered service.
There is thus no reason to include in the denominator quarters of covered service
that do not add value to the property at issue. Other courts have reached the
same conclusion. See, e.g., Marriage of Henkle, 234 Cal. Rptr. 351, 352 (Cal.
Ct. App. 1987) (reversing property division where denominator was set at 32 to
reflect total years of service and remanding to the district court to use 30 as the
denominator where the final two years of the covered employee’s service did not
count toward service credit); Halverson v. Halverson, 589 So. 2d 1153, 1155 (La.
Ct. App. 1991) (affirming district court order limiting denominator to the number of
years resulting in service credit and stating, “We conclude the trial court was
correct in finding that 25 years was the maximum amount of creditable service
Mr. Halverson could earn under the plan. Although the dollar amount of his
13
retirement benefits may increase if his salary increases, the total proportion to
which he is entitled cannot increase because it is at the maximum now, 60%.”).
Richard next contends Julia inequitably received additional benefit
because his earnings increased over time due to promotions and raises he
received after surpassing 140 quarters of covered service without a
corresponding fractional reduction in Julia’s marital share for his quarters of
service beyond the 140-quarter cap. There is nothing inequitable in the
application of the Benson formula under these circumstances. First, Richard
concedes the parties intended to use the service factor percentage method to
divide his pension. There is nothing inequitable in enforcing the bargained-for
agreement. Second, the argument was rejected by the Benson court. The court
explained, because of the way contributions are managed within a defined
benefit plan, Richard’s benefit increased due to the plan’s use of Julia’s property
left within the plan that might otherwise have been distributed to her at the time of
the dissolution:
During the time from [dissolution] to retirement . . . the entire
fund—comprised of the employee spouse’s separate property
interests and the nonemployee spouse’s separate property
interests—continues to establish its earnings profile over time.
Since these separate property interests are combined until
retirement, the plan administrator can invest [both] the employee
spouse’s [and the nonemployee spouse's] separate property in the
fund. This “added” investment value increases the fund’s earning
power, which in turn is used (and may be necessary) to create the
employee’s future “defined” benefit . . . . The “defined” benefit
received by the employee spouse is made possible ... in part by the
use of the nonemployee spouse’s separate property interest in the
fund. The entire amount of earnings attributable to the
nonemployee spouse’s separate property interest remains within
the fund, committed to create the “defined” benefit. [If] [t]he
nonemployee spouse receives only his [or her] value as calculated
and “frozen” on the date of [dissolution], [it] allows the employee
14
spouse to reap the benefits of the earnings attributable to the
nonemployee spouse’s separate property interest in the fund. The
actual earnings attributable to the nonemployee spouse’s separate
property interest cannot be awarded to the nonemployee spouse,
as a separate value, because they are needed to generate the
value of the ultimate “defined” benefit. [I]t seems inequitable for a
. . . court to “freeze” the value of the nonemployee's interests in the
pension benefits at [dissolution] and prohibit that spouse from
realizing any investment income generated from his [or her]
separate property interest.
Benson, 545 N.W.2d at 257 (quoting Steven R. Brown, An Interdisciplinary
Analysis of the Division of Pension Benefits in Divorce and Post-Judgment
Partition Actions: Cures for the Inequities in Berry v. Berry, 39 Baylor L. Rev.
1131, 1188–89 (1987)).
Numerous courts have considered and rejected the same argument that
Richard makes here—that it is inequitable to allow the non-employee spouse to
collect a percentage of the defined benefit due to increased earnings—for the
same or similar rationale set forth in Benson. See Hartley v. Hartley, 205 P.3d
342, 349–50 (Alaska 2009) (recognizing the “marital foundation” approach and
concluding it is equitable to allow the former spouse to share in the increased
benefit); Halverson, 589 So. 2d at 1155; In re White, 809 A.2d 1286, 1290 (N.H.
2002) (stating the court’s goal in applying the service percentage “formula is
equitable, though not necessarily equal, property distribution” and rejecting
argument the non-employee spouse is inequitably receiving the benefit of post-
marital salary increases); Thompson v. Thompson, 965 N.E.2d 377, 386 (Ohio
Ct. App. 2011) (rejecting equitable argument and concluding the service
percentage method “does not deprive the member spouse of her separate
15
property or otherwise unfairly disadvantage the member spouse”); see also In re
Marriage of Hunt, 909 P.2d 525, 533–34 (Colo. 1995) (collecting cases).
IV.
The plain language of the decree and qualified domestic relations order
expresses the decretal court’s intent to use the service percentage method for
dividing Richard’s IPERS benefit. The decree and QDRO correctly sets forth the
service percentage formula as expresses in Benson. The application of the
Benson formula is equitable under the circumstances. For these reasons, we
affirm the judgment of the district court.
AFFIRMED.
Mullins, J., concurs; Danilson, C.J., dissents.
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DANILSON, Chief Judge. (dissenting)
I respectfully dissent. I view the majority opinion as effectuating a
modification of the Benson formula3 for dividing the pension benefits of long-term
IPERS employees. Here, Julia stands to gain and Richard to lose about $600
per month in pension benefits.
Richard’s Iowa Public Employees Retirement System (IPERS) account
was a marital asset and, for purposes of an equitable distribution, was divided
between the parties. Here, the decree and Qualified Domestic Relations Order
(QDRO) must be interpreted to determine the proper division of the account.
IPERS administrative rules must yield to the property rights of each party. And if
not, then an order could be entered to require Julia to pay, on a monthly basis, to
Richard the overpayment of benefits so that each party may receive the amount
awarded to them by the decree.
The purpose of the hearing held in district court on May 29, 2002, was to
present testimony of the parties’ settlement “on the record for the basis for entry
of this decree,” according to the decree. Several subsequent hearings were held
before the decree was entered on September 23, 2002.
The parties’ dispute on appeal now centers upon the proper interpretation
of the decree and the QDRO entered in connection with Richard’s IPERS
account. The decree provides only that “the petitioner shall receive a percentage
of the respondent’s IPERS asset as set forth in the [QDRO] which shall be
entered subsequent to the entry of the decree.” Because the decree, in essence,
incorporates the language in the QDRO, it must be concluded the QDRO was not
3
See In re Marriage of Benson, 545 N.W.2d 252, 255-56 (Iowa 1996).
17
supplemental or collateral to the decree, but rather a part of the underlying
decree. Cf. In Re Marriage of Brown, 776 N.W.2d 644, 648-49 (Iowa 2009)
(concluding a QDRO is supplemental if it intends to enforce the earlier decree
dividing the parties’ property). We are faced with interpreting a decree that
includes the incorporated language of the QDRO, not a modification of an earlier-
entered decree.
The district court clearly determined the parties intended—and the
decretal court shared the same intent4—to divide Richard’s IPERS benefits
pursuant to the Benson formula in concluding:
In considering the intention of the court from 2002, the court in
2014 uses the decree, the QDRO, and the transcript from the
hearing on May 29, 2002, to determine the intent of the court’s
order. There is no indication that the court had any intent other
than to put into place the agreement of the parties. The parties
entered a stipulation of their agreement on the record on the date of
trial. They followed up by presenting a proposed decree and
proposed QDRO. The portion of the decree that addresses
Richard’s IPERS benefits expressly incorporated the terms of the
QDRO, which set out the division of IPERS in more detail. The
QDRO was also referenced in the stipulation. It is clear that the
parties agreed to divide Richard’s IPERS benefits pursuant to the
Benson formula—the Benson formula was referenced on the
transcript and the QDRO uses a formula consistent with Benson.
Accordingly, if Benson answers the question at issue here, then
Benson should so apply.
I agree.
The district court then concluded the Benson court did not fully define the
denominator portion of the service factor fraction. Ultimately, the district court
determined the parties and the decretal court did not “consider the precise issue
whether the service factor fraction could include years of service beyond 35
4
The intent of the parties is irrelevant unless it is shared by the court. See In re
Marriage of Morrris, 810 N.W.2d 880, 886 n.2 (Iowa 2012).
18
years at the time the decree and QDRO were entered,” and without language to
the contrary, the language in the QDRO defers to IPERS.
I disagree with the district court that the Benson court did not fully define
the denominator. I acknowledge the majority in Benson described the
denominator as “the total number of years” the “benefits accrued prior to maturity
(i.e., receipt of payments upon retirement),” see 545 N.W.2d at 255, and this
description could lend itself to some confusion where contributions are no longer
required, but the employee has not yet retired and begun receiving benefits.
Moreover, the confusion is compounded by other case law using different
terminology to describe the denominator. See In re Marriage of Sullins, 715
N.W.2d 242, 250 (Iowa 2006) (“[T]he denominator is the total number of years of
benefit accrual.”); In re Marriage of Mott, 444 N.W.2d 507, 511 (Iowa 1989)
(stating the denominator is the total number of years employee “worked and
accumulated pension benefits”).
However it is quite clear, the dissent in Benson was concerned about the
denominator being the date of retirement by its various references to retirement.
See 545 N.W.2d at 258-61 (Lavorato, J., dissenting) (Larson and Ternus, JJ.,
joining). The dissent noted, “[S]etting the value of the pension benefit at the time
the employee spouse retires does violence to the principle that marriage partners
are entitled to a just and equitable share of the property accumulated through
their joint efforts.” Id. at 261 (first emphasis added). And again noted, “Setting
the value of the pension benefit at the time the employee spouse retires can also
prove to be unfair.” Id. (emphasis added).
 19
The dissent in Benson argued that allowing the non-covered spouse to
benefit from post-dissolution increases in pension benefits was contrary to the
principle that only the property accumulated through their joint efforts should be
divided. Id. If the denominator was determined at the time contributions ceased
and the covered employee could have retired, the dissent would have had an
even stronger argument. Yet, this is the position taken by the majority in this
case. Clearly, the Benson formula incorporates a denominator fixed generally by
the date of retirement but specifically when he or she “actually receives or begins
to draw benefits.” Id. at 256.
Two factors determine the amount of benefits—the number of quarters
worked and the highest five years of income. See Iowa Code §§ 97B.1A
(defining “final average covered wage”); .49A (calculation of monthly allowance);
Sullins, 715 N.W.2d at 250. If the denominator’s increase stops when Richard
could have retired, then Julia’s share should be calculated as if Richard had
retired and begun receiving benefits. Instead, under the majority’s approach,
Julia stands to benefit from any raises Richard received in his last five years or
so of employment, but Richard is forced to use a denominator fixed when he was
eligible to retire and before he ever was receiving benefits.
The district court and the majority attempt to support their conclusion of
such an inequitable resolution by interpreting the QDRO and applying IPERS’
administrative rules. I submit the QDRO, and therefore the decree, are
ambiguous, and should be interpreted consistent with the decretal court’s intent
and in the only fair and reasonable manner as described above. Our rules of
interpretation and construction have been aptly stated in In re Marriage of
20
Lawson, 409 N.W.2d 181,182 (Iowa 1987), and Berryhill v. Berrryhill, 428 N.W.2d
647, 653-55 (Iowa 1988), and need not be restated here.
Before discussing the interpretation of the decree, I must address Julia’s
argument that this action must be dismissed because IPERS is not a party.
Here, the parties clearly dispute the proper interpretation of the language
contained in the QDRO and incorporated into the decree. The dispute relates to
the proper percentage of Richard’s IPERS benefits each party was entitled to
receive under the property settlement. On this issue, IPERS has no standing.
Further, “the existence of another remedy does not preclude a judgment for
declaratory relief.” Iowa R. Civ. P. 1.1101. There is a substantial controversy
between the parties who have adverse interests. See Greenbriar Group, L.L.C.
v. Elkco Props., Inc., 854 N.W.2d 46, 51 (Iowa Ct. App. 2014). If the judgment is
not accepted by IPERS then subsequent legal proceedings may be initiated
against IPERS, or a separate order could be sought and entered to effectuate the
judgment. Such an order could require Julia to pay Richard on a monthly basis
the difference between what she is receiving from IPERS and what our judgment
provides she is entitled to receive.
Here, the language in the QDRO and as incorporated into the decree
includes two divergent sentences when defining the fraction to apply in dividing
Richard’s benefits. The first sentence provides, “IPERS is directed to pay
benefits to the Alternate payee as a marital property settlement under the
following formula: fifty percent (50%) of the gross monthly or lump sum benefit at
the date of distribution to the Member multiplied by the ‘service factor.’”
(emphasis added). Under our supreme court’s definition, “A service factor
21
percentage method divides the pension according to a percentage multiplied by a
factor based on the member’s service during the marriage and the member’s
total service.” Faber v. Herman, 731 N.W.2d 1, 8 (Iowa 2007). The phrase,
“member’s total service” clearly means what it says, and includes the time until
Richard retired and began receiving benefits consistent with the Benson formula.
I concede the second sentence is more troublesome and causes the
ambiguity in these proceedings. The second sentence describes the numerator
and then states, “and the denominator is the Member’s total quarters of service
covered by IPERS and used in calculating the Member’s benefits.” However, the
QDRO makes no reference to a maximum number of quarters that may be used
in calculating the member’s benefits. There is also no reference to statutory or
regulatory authority to supplant the language other than language later in the
order that says the parties intend the order to be a QDRO under federal law, and
“Iowa Code section 97B.39 and the administrative rules.”
Subsequent to the entry of this order, specifically in February 2015, an
administrative-rule change explicitly provided that the denominator of a fractional
share per a QDRO could not exceed 140 quarters. Iowa Admin. Code r. 495-
16.2(3)(m). At one juncture, but also subsequent to the entry of the order, the
number was 120 quarters. Property divisions are generally not modifiable.
Morris, 810 N.W.2d at 886. Yet by administrative rule, IPERS facilitates a
modification of the parties’ property distribution and rights, each and every time
the denominator is revised.5
5
IPERS is obligated to comply “with the provisions of a marital property order requiring
the selection of a particular benefit option, designated beneficiary, or contingent
22
Because IPERS is not a party to this action and this is a declaratory
judgment action, all that can be done is to declare the parties’ rights. I would
reverse and remand with directions that the parties’ shares of Richard’s IPERS
benefits be determined by the Benson formula, and the denominator of Julia’s
fractional share be determined by Richard’s total years of service (i.e., ending
when he retired and began to receive benefits).6 Further litigation may be
necessary to implement or facilitate such a declaration of rights. This
interpretation of the terms of the QDRO as incorporated in the decree is
consistent with the decretal court’s intent and the parties’ intent at the time the
decree was entered. It is also consistent with the Benson formula and with the
laws and rules in effect at the time the decree was entered. Any modification of
the Benson formula should be deferred to the supreme court. And, finally, it is
fair and just with respect to both parties.
annuitant if the selection is otherwise authorized by this chapter and the member has not
received payment of the member’s first retirement allowance.” Iowa Code § 97B.39.
The administrative rule requires the denominator of the Benson formula to be fixed at
140 quarters notwithstanding the fact that the “alternate payee,” the former spouse, was
not a covered “employee” as defined in Iowa Code section 97B(8). Iowa Admin. Code r.
495-16.2(3)(m). Ironically, according to the testimony of the IPERS representative at the
hearing in these proceedings, the representative acknowledged that IPERS accepts a
percentage established in a decree as a proper method to divide benefits. However, if
the division is expressed as a fraction, IPERS determines the denominator if it exceeds
140 quarters. The difference in the shares is significant depending on the denominator
used, as noted in Richard’s exhibit H. Upon a pure Benson formula calculation, Julia’s
share is $3913.46 a month, but if the formula is modified as IPERS calculates, Julia’s
share is $4612.29 a month.
6
The record made in these proceedings is somewhat murky as Julia filed a motion for
summary judgment, which was granted by the district court’s order filed December 4,
2014. However, the same order also provided that the petition for declaratory order and
application for order nunc pro tunc were denied. Subsequently, an amended order was
entered acknowledging that Julia’s motion for summary judgment had been orally denied
prior to the trial on the merits of the petition.