Lesko v. Lesko , 184 Mich. App. 395 ( 1990 )

Holbrook, Jr., P.J.

(dissenting). I respectfully dissent from that portion of the majority opinion which holds that plaintiff’s accrued vacation time and sick leave are a divisible marital asset.

In arriving at this result, the majority relies upon the reasoning utilized by the Alaska Supreme Court in Schober v Schober, 692 P2d 267 (Alas, 1984). Mr. Schober, an Alaska state trooper, had over four hundred hours of accrued, but unused, personal leave. Pursuant to his contract with the state, the leave could be used as paid vacation or converted to cash. As much as sixty hours of unused leave could be converted to cash each year; the remainder could' be converted to cash when his employment terminated. In holding that the unused leave time was a divisible marital asset, the Alaska court said that the right to a paid vacation constitutes deferred wages for services rendered and the right vests as the labor is rendered. The court concluded the right is similar to pension or retirement benefits and was another form of deferred compensation. Therefore, the court said, the interest in the "unused leave was not an expectancy, but a chose in action, a form of property.” Id., p 268.

I am not persuaded, however, that accrued vacation and sick time warrants the same treatment as a pension or retirement benefit. The usual purpose for granting employees vacation time is "to allow the employee to relax, rest and restore his or her energy so that he or she may continue to perform all required functions or duties with ability, efficiency and dispatch. In short, it is a matter of policy, to secure continued good performance and to maintain a good and satisfactory relationship.” 16 Callaghan’s Michigan Civil Jurisprudence, Master & Servant, § 24, p 352. Much the same can be said about the policy of providing paid absences during times of employee illness. A pension or retirement benefit, on the other hand, is deferred compensation for services rendered established to attract more competent workers, induce better and more continued service and to avoid the expense of labor turnover. 16 Callaghan’s Michigan Civil Jurisprudence, Master & Servant, § 22, p 347.

Paid vacation and sick leave is in reality an alternative form of wages inasmuch as it replaces wages on days when the worker does not work. MEA/AFSCME Local 519 v City of Sioux Falls, 423 NW2d 164, 166-167 (SD, 1988). It need not be liquidated by the payment of cash; it is usually dissipated when the person entitled to do so takes the vacation time or utilizes his or her sick leave. Thus, it is far from being as tangible as a pension or retirement benefit is.

Over and above this dissimilarity to a pension or retirement benefit is the entire question of valuation. If Mr. Lesko reaches retirement without ever having used his accrued sick leave or vacation time, and that seems somewhat unlikely, chances are he will receive compensation for this accrued time at his then current rate of pay, the true value of this "asset.” What that rate may be at that point in time is impossible to predict today. Would it be equitable, though, to value this accrued time at this future rate of pay even if it could be predicted? I think not since this would represent a postdissolution valuation of a marital asset.

For the settlement to be truly equitable to both parties and to achieve the majority’s goal of a true division of an "asset” acquired during the course of this marriage, the time would have to be valued pursuant to the rate of pay Mr. Lesko was earning at the time the leave time was accrued. If valued in this manner, will a first-in, first-out approach be taken or a last-in, first-out approach be followed? If a first-in, first-out approach is taken, any time Mr. Lesko would have earned during his employment prior to the marriage must be excluded from the equation. This is particularly true of the sick time computation since he could only be paid for 89 of his 220 accrued days upon retirement and any sick time earned in the two years prior to the marriage should, equitably, be excluded from these 89 days.

In Schober, supra, the valuation of the time was much clearer. Mr. Schober, at his option, could have converted up to sixty hours per year to cash, thus providing a ready guide for valuation. Whether Schober made it to retirement with his four hundred hours intact is of little importance since he had the right to receive payment for up to sixty hours per year and chose not to do so. Mr. Lesko on the other hand had no such option; the only way he will ever receive compensation for this accrued time is to never utilize any of his leave time between today and his retirement at some point in the future.

Accordingly, I would not hold that accrued sick leave and vacation time is a marital asset to be divided in a property settlement. I would reverse the decision of the trial court awarding defendant a portion of plaintiffs accrued sick leave and vacation time and remand for entry of a property settlement excluding this figure.