In the Matter of Noreen Morgan and Thomas Morgan ( 2023 )

THE STATE OF NEW HAMPSHIRE
SUPREME COURT
In Case No. 2022-0475, In the Matter of Noreen Morgan
and Thomas Morgan, the court on September 12, 2023, issued
the following order:
The court has reviewed the written arguments and the record submitted
on appeal, and has determined to resolve the case by way of this order. See
Sup. Ct. R. 20(2). The respondent, Thomas Morgan, appeals the final decree
entered by the Circuit Court (Curran, J.) in his divorce from the petitioner,
Noreen Morgan. On appeal, he challenges the trial court’s property division,
order to pay insurance, and alimony award. We affirm in part, vacate in part,
and remand.
The trial court has broad discretion in determining matters of property
distribution and alimony when fashioning a final divorce decree. In the Matter
of Gronvaldt & Gronvaldt, 150 N.H. 551, 554 (2004). We review its decision
under our unsustainable exercise of discretion standard. See id. This
standard of review means that we review only whether the record establishes
an objective basis sufficient to sustain the discretionary judgment made, and
we will not disturb the trial court’s determination if it could reasonably have
been made. In the Matter of Kurowski & Kurowski, 161 N.H. 578, 585 (2011).
We will not substitute our judgment for that of the trial court or reweigh
equities. In the Matter of Braunstein & Braunstein, 173 N.H. 38, 47 (2020).
The trial court’s discretion necessarily extends to matters such as
assigning weight to evidence and assessing the credibility and demeanor of
witnesses. In the Matter of Kurowski & Kurowski, 161 N.H. at 585. Conflicts
in the testimony, questions about the credibility of witnesses, and the weight
assigned to testimony are matters for the trial court to resolve. Id. The trial
court’s factual “findings . . . are binding upon this court if supported by the
evidence” and not legally erroneous. Id.On appeal, the respondent first contests the trial court’s equitable
distribution of his retirement benefits. He does not challenge the trial court’s
determination that his retirement benefits constitute property subject to
equitable division. Rather, he argues that the trial court erred by failing to use
the Hodgins formula to divide part of his retirement benefits. See Hodgins v.
Hodgins, 126 N.H. 711 (1985) (superseded on other grounds by RSA 458:16-a,
I (Supp. 2022)).
“The Hodgins formula calculates a percentage to be paid to an employee’s
former spouse by dividing the number of months the employee was employed
during the marriage and before divorce commenced by the total number of
credits the employee will have earned toward the retirement benefit as of the
date benefits commence and awarding half of this amount to each spouse.” In
the Matter of Taber-McCarthy & McCarthy, 160 N.H. 112, 117 (2010). “The
Hodgins formula is designed to help trial courts avoid the problem of valuation
when it is impossible to determine the value of the retirement benefit at the
time of divorce.” Id.The Hodgins formula is used to divide pensions that are defined benefit
plans. See Rothbart v. Rothbart, 141 N.H. 71, 75-77 (1996). More specifically,
the formula provides a method by which the trial court equitably allocates a
percentage of monthly payments to reflect the portion of a benefit earned
during a marriage. Id. at 75. A defined benefit pension is one in which the
benefit is based upon an employee’s years of service and increases in salary,
which may make its future value speculative. See id. at 75-77; see also In the
Matter of Watterworth & Watterworth, 149 N.H. 442, 452 (2003).
The Hodgins formula is not required, however, when the value of the
retirement benefit is ascertainable, such as when the pension is a defined
contribution plan. In the Matter of Watterworth & Watterworth, 149 N.H. at
452. A defined contribution pension “is essentially an annuity funded by
periodic contributions and the interest therefrom. At the employee’s
retirement, the accumulated funds purchase an annuity for the remainder of
the employee’s life.” Id. (quotation and ellipsis omitted). “[A] defined
contribution pension always has an ascertainable cash value, whether or not it
currently can be reached by the employee.” Id. (quotation omitted).
The respondent first challenges the trial court’s distribution of his
National Elevator Pension Plan. He argues that the trial court erred in failing
to apply the Hodgins formula because in 2018, the petitioner agreed to
relinquish her “claim to any death benefit” in the National Elevator Pension
Plan. This agreement, in his view, “created a legality where the amount of the
pension, even after payments began to [the respondent], became
unascertainable.” We disagree.
The record on appeal establishes that the respondent began receiving an
early pension from the National Elevator Pension Plan in February 2019, with a
fixed monthly gross benefit plus a supplemental benefit payable until he
reaches the age of 64. We agree with the respondent that the value of the
pension is unascertainable because the number of pension payments the
respondent will receive, and the amount of each payment, depends on the
duration of the respondent’s life. See In the Matter of Watterworth &
Watterworth, 149 N.H. at 452 (“The Hodgins formula is designed to help trial
courts avoid the problem of valuation when the value of the pension is, by its
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nature, impossible to determine at the time of divorce.” (quotations omitted and
emphasis added)). We disagree, however, with the respondent’s contention
that the trial court failed to apply the Hodgins formula. The trial court applied
the Hodgins formula by awarding the petitioner “one-half of the marital portion
of this account valued as of March 21, 2008 (date of marriage) through the date
this Decree is approved.” See Hodgins, 126 N.H. at 715-16; see also In the
Matter of Costa & Costa, 156 N.H. 323, 330 (2007) (explaining that, when
dividing pension assets in certain circumstances, “the trial court should enter
a decree, per Hodgins, that upon maturity of the pension rights the recipient
will pay a portion of each payment received to his or her former spouse”). The
petitioner’s decision to relinquish her claim to any death benefits is immaterial
to this analysis.
The respondent next contends that the trial court erred in failing to apply
the Hodgins formula “to the distribution of [his] pension and annuity
retirement plan” through his current employer, the Commonwealth of
Massachusetts. It appears that the respondent uses the word “pension” to
refer to both an annuity savings account and a deferred compensation SMART
plan that he receives as a result of his employment with the Commonwealth.
Thus, we confine our review to these two accounts. Regarding both the
annuity savings account and the deferred compensation SMART plan, the trial
court awarded “one-half of the marital portion of this account valued as of
March 21, 2008 (date of marriage) through the date this Decree is approved.”
Because the annuity savings account had an ascertainable value as of the date
of divorce, we disagree with the respondent that the trial court was required to
apply the Hodgins formula to this account, though as noted above it effectively
did so by applying a Hodgins methodology to the annuity’s ascertainable value
as of the date of the divorce. We note that the deferred compensation SMART
plan is unrelated to the respondent’s Massachusetts public employee
retirement plan. See Mass. Gen. Laws Ann. ch. 32, § 3A (West 2011); see also
Mass. Gen. Laws Ann. ch. 29, § 64 (West 2013). Therefore, to the extent that
the respondent argues that the trial court erred in dividing his deferred
compensation SMART plan, we disagree given that the plan also had an
ascertainable value at the time of divorce. See In the Matter of Watterworth &
Watterworth, 149 N.H. at 452.
The respondent also challenges the trial court’s distribution of his
Elevator Constructors Annuity and 401(k) Retirement Account. The
respondent acknowledges that this benefit constitutes a defined contribution
plan with an ascertainable value. Nevertheless, he argues that it is “unjust” to
value this benefit as of the date of the final decree. Instead, he maintains that
the court should have utilized a date in 2014 or 2015 based upon when the
parties separated and when the petitioner stated that she wanted a divorce. In
the alternative, the respondent argues that the trial court should have
considered both the delay of the parties’ divorce proceeding caused by the
response to the COVID-19 public health emergency, as well as the “abnormally
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long” six-month delay between the date of the final hearing and final decree,
noting that the court awarded the petitioner half of his 401(k) earnings during
that period. “Courts are free to exercise their sound discretion to establish an
appropriate valuation date for the equitable distribution of marital assets.” In
the Matter of Watterworth & Watterworth, 149 N.H. at 451. Based upon our
review of the record submitted on appeal, we cannot conclude that valuing the
respondent’s Elevator Constructors Annuity and 401(k) Retirement Account as
of the date of the final decree constituted an unsustainable exercise of
discretion.
The respondent next asserts that the trial court “made a clear error” by
ordering him to pay the “COBRA cost of [the petitioner’s] health, dental, and
vision insurance” for a period of twelve months when more “affordable
insurance was available.” Based upon our review of the record submitted on
appeal, we conclude that the trial court reasonably could have determined that
it was equitable to require the respondent to pay this cost. See In the Matter of
Kurowski & Kurowski, 161 N.H. at 585.
The respondent next challenges the alimony award. The trial court has
broad discretion to award alimony. See In the Matter of Cohen & Richards,
172 N.H. 78, 92 (2019). We review the court’s alimony determination for an
unsustainable exercise of discretion, and we will uphold its factual findings
unless they are unsupported by the evidence. See id. Alimony determinations
are based primarily upon the parties’ income and need. Id. at 83; see RSA
458:19-a (Supp. 2022). On appeal, the respondent does not challenge the trial
court’s determinations that he has the ability to pay and that the petitioner has
a need for alimony. Rather, he challenges only the amount of alimony
awarded.
RSA 458:19-a, II governs the calculation of a term alimony award. It
provides that “[t]he amount of a term alimony order shall be the lesser of the
payee’s reasonable need, or a formula based on 23 percent of the difference
between the parties’ gross incomes at the time the order is created, unless the
court finds that justice requires an adjustment.” RSA 458:19-a, II(a).
Here, the trial court ordered term alimony in the amount of $2,218.50
per month, which represents twenty-three percent of the difference between the
parties’ gross incomes at the time the order was issued. The trial court did not
find that any special circumstances warranted an adjustment to this formula
calculation.
The respondent argues that the trial court’s calculation is wrong, in part
because the court failed to subtract from his gross income the cost of the
petitioner’s health, dental, and vision insurance that the court ordered him to
pay. We agree. When calculating the gross income of the parties for the
purposes of a term alimony award, the court is required to subtract “amounts
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that are ordered and actually paid for” such as the “[c]osts for health insurance
coverage or other specified expenses for the benefit of the other party.” RSA
458:19-a, II(a)(1)(B). Having reviewed the entire record, including the trial
court’s order denying the respondent’s motion for reconsideration, we vacate
the alimony award because the trial court failed to make this deduction and
remand because we cannot determine whether, had it made this deduction, the
trial court would have found that special circumstances warranted an
adjustment to the new formula amount.
In the interests of judicial economy, we address the respondent’s
remaining arguments concerning alimony to the extent that they are likely to
arise on remand. The respondent also argues that the trial court should have
subtracted from his gross income the amount of his National Elevator Pension
Plan that the court ordered he pay to the petitioner, and that the court should
have added that amount to the petitioner’s gross income.
Here, the record reveals that when it calculated the alimony award to the
petitioner, the trial court attributed all of the respondent’s pension benefits to
the respondent as part of his gross income. Under RSA 458:19, V (Supp.
2022), “[g]ross income” for alimony purposes is defined as “all income from any
source, whether earned or unearned, including, but not limited to . . .
pensions.” Accordingly, the respondent’s National Elevator Pension Plan,
which he receives monthly, is unquestionably included as “gross income” for
alimony purposes, which only the respondent received “at the time the order
[was] created.” RSA 458:19-a, II(a).1
Nevertheless, the statute permits the trial court to deviate from the
statutory formula when it “finds that justice requires an adjustment.” Id.
Here, we agree with the respondent to the extent that the trial court should
have considered whether equity or the interests of justice “require[d] an
adjustment” from the statutory formula to avoid double counting the
respondent’s pension income — both as part of the twenty-three percent of his
gross income in the alimony award and as part of the property distribution.
See id. We also agree with the respondent that the trial court did not make any
findings in its alimony determination as to how distributing part of the
respondent’s pension benefits in its property division affected either party’s
ability to provide for his or her own reasonable needs. See RSA 458:19-a, I(a)
(“[T]he court may order term alimony only if it finds . . . [the] party in need
lacks sufficient income, property, or both, including property apportioned in
accordance with RSA 458:16-a . . . .”); see also In the Matter of Cohen &
Richards, 172 N.H. at 83 (“When a party requests alimony, the trial court may
exercise its discretion by ordering an alimony award, considering, inter alia,
the marital property awarded to each party and the parties’ sources of income
and need.”). Accordingly, we instruct the court on remand to consider both of
1 Once received, pension payments to the spouse would also count as income.
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these factors when calculating its alimony award for the petitioner and its
evaluation of the distribution of the marital property.
In conclusion, we uphold the trial court’s: (1) division of the respondent’s
Elevator Constructors Annuity and 401(k) Retirement Account, National
Elevator Pension Plan, Massachusetts annuity savings account, and deferred
compensation SMART Plan; and (2) order requiring the respondent to pay the
“COBRA cost of [the petitioner’s] health, dental, and vision insurance” for a
period of twelve months. We vacate the trial court’s alimony award and
remand for further proceedings consistent with this order.
Affirmed in part; vacated in
part; and remanded.
MACDONALD, C.J., and BASSETT, HANTZ MARCONI, and DONOVAN,
JJ., concurred.
Timothy A. Gudas,
Clerk
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