Jago, G. v. Jago, T. ( 2019 )

J-S26018-19
2019 PA Super 246GEOFFREY H. JAGO : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
Appellee :
:
v. :
:
:
TINA M. JAGO :
:
Appellant No. 32 EDA 2019
Appeal from the Order Entered November 9, 2018
In the Court of Common Pleas of Lehigh County
Domestic Relations at No(s): 2018-C-1569
BEFORE: PANELLA, P.J., GANTMAN, P.J.E., and PELLEGRINI*, J.
OPINION BY GANTMAN, P.J.E.: FILED AUGUST 19, 2019
Appellant, Tina M. Jago (“Wife”), appeals from the order entered in the
Lehigh County Court of Common Pleas, which vacated a qualified domestic
relations order (“QDRO”) the court had previously entered upon joint petition
of Wife and Geoffrey H. Jago (“Husband”) and denied the parties’ amended
joint petition for entry of an amended QDRO.1 We affirm.
The relevant facts and procedural history of this case are as follows.
The parties married on June 21, 1997, and are still married. Husband is a
participant in a JetBlue Airways Retirement Plan (“Plan”).2 On June 21, 2018,
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1 Husband did not file a notice of appeal, and he is not a party to this appeal.
2 The parties do not dispute and the record makes clear the Employee
Retirement Income Security Act (“ERISA”), 29 U.S.C.A. § 1001 et seq.,
governs this Plan.
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* Retired Senior Judge assigned to the Superior Court.
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the couple filed a “Verified Joint Petition for QDRO.” In the petition, the parties
sought to transfer $400,000.00 from the Plan to an individual retirement
account (“IRA”) in Wife’s name. The petition read, in relevant part, as follows:
1. [Husband], Plan Participant; and [Wife], Alternate Payee,
were married on or about June 21, 1997. … There is no
pending petition for divorce or other family law matter
before this Honorable Court.
2. [Husband] and [Wife], as current spouse and qualifying
Alternate Payee of [Husband], both wish to execute a
[QDRO]…regarding the [Plan]…. … Said QDRO properly
distributes the funds pursuant to the mutual requests of the
parties.
* * *
4. [Husband] has obtained pre-approval of the attached
QDRO from the [Plan], Plan Administrator. …
5. The Parties further acknowledge and expressly state that
the signing of the QDRO is for public records purposes only
and pursuant to federal law restrictions. Notwithstanding
any particular language of the joint Petition and/or QDRO,
the parties do not intend to partition any of the funds
involved in the QDRO transfer, nor change the classification
of the community nature of the funds in [Husband]’s name
into separate property into the name of [Wife].
6. The parties acknowledge and agree that should any
portion of this Joint Petition or QDRO be interpreted to have
changed the classification of the funds transferred; then
both parties shall immediately sign documentation pursuant
to Pennsylvania law donating the funds back to the Plan.
(Verified Joint Petition for QDRO, filed 6/21/18; R.R. at 3a-4a). The trial court
approved the proposed QDRO via an order dated June 22, 2018, and docketed
June 25, 2018.
Subsequently, the parties sought to increase the amount of funds
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transferred from the Plan to Wife’s IRA. In a letter dated September 13, 2018,
the Plan administrator pre-approved a transfer of $700,000.00 conditioned
upon the trial court executing an amended QDRO. On October 2, 2018, the
parties filed an “Amended Verified Joint Petition for QDRO,” seeking to transfer
$700,000.00 from the Plan to Wife’s IRA. The October 2nd proposed QDRO
was nearly identical to the original QDRO; the only significant difference
between the two QDROs was the amount of funds the parties sought to
transfer. Following a hearing on November 2, 2018, the court denied the
amended QDRO petition and vacated the initial QDRO on November 9, 2018.
In its November 9th order, the court expressly stated the order was final per
Pa.R.A.P. 341(c).
On December 6, 2018, Wife timely filed a notice of appeal. The court
ordered Wife on December 11, 2018, to file a concise statement of errors
complained of on appeal per Pa.R.A.P. 1925(b); Wife timely complied on
January 2, 2019. On February 8, 2019, this Court issued a rule to show cause
why the November 9, 2018 order is a final, appealable order; Wife filed a
response on February 19, 2019. This Court discharged the rule to show cause
on February 21, 2019, and deferred the matter to the merits panel.3
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3 Rule 341 of appellate procedure defines a final order as one that “disposes
of all claims and of all parties.” Pa.R.A.P. 341(b)(1). “When more than one
claim for relief is presented in an action…the trial court…may enter a final
order as to one or more but fewer than all of the claims…only upon an express
determination that an immediate appeal would facilitate the resolution of the
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Wife raises three issues for our review:
WHETHER THE TRIAL COURT ERRED IN FAILING TO
RECOGNIZE THE PROPOSED ORDER AS “RELATING TO
CHILD SUPPORT…OR MARITAL PROPERTY RIGHTS TO A
SPOUSE” UNDER 29 U.S.C.A. [§] 1056[?]
WHETHER THE TRIAL COURT ERRED IN FAILING TO
RECOGNIZE THE PROPOSED ORDER AS APPROVED BY THE
PLAN ADMINISTRATOR AS A QDRO[?]
WHETHER THE TRIAL COURT ERRED IN REQUIRING A
PENDING DIVORCE AS A PREREQUISITE TO ENTERING A
QDRO[?]
(Wife’s Brief at 8).
In her issues combined, Wife contends a pending divorce or marital
separation is not required for entry of a QDRO. Wife submits requiring a
divorce decree or a pending domestic relations action as a prerequisite to the
entry of a QDRO elevates form over substance, citing Brown v. Continental
Airlines, 647 F.3d 221 (5th Cir. 2011). Wife claims courts can enter QDROs
in actions other than divorce to recognize the interests of a non-spouse, such
as a child or other dependent. Wife also argues the parties’ QDROs satisfied
all other statutory requirements. Wife insists entry of the amended QDRO is
in accordance with Pennsylvania domestic relations law, as the QDRO concerns
____________________________________________
entire case.” Pa.R.A.P. 341(c). “Such an order becomes appealable when
entered.” Id. Instantly, the November 9, 2018 order disposed of the only
claim the parties’ presented to the court, namely, a joint request for entry of
a QDRO. See Pa.R.A.P. 341(b)(1). Additionally, the court’s November 9th
order specified the order was final and appealable per Rule 341(c). See
Pa.R.A.P. 341(c). Therefore, the November 9, 2018 order is properly before
us for review.
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marital property rights. Wife concludes this Court should reverse the trial
court’s order that denied the parties’ petition to enter an amended QDRO and
vacated the initial QDRO, and remand for entry of the amended QDRO. We
disagree.
Chapter 18, Title 29 of the United States Code outlines the regulatory
scope of ERISA. See generally 29 U.S.C.A. § 1001 et seq. One of the
principle objectives of ERISA is to protect the interests of plan participants and
beneficiaries. Boggs v. Boggs, 520 U.S. 833, 845, 117 S.Ct. 1754, 1762,
138 L.Ed.2d 45, ___ (1997) (citing 29 U.S.C.A. § 1001(b) and other sections).
ERISA accomplishes this objective through an “anti-alienation” provision,
which prevents a plan participant from granting an interest in the benefits of
the participant’s retirement plan to a non-participant. Id. at 851, 117 S.Ct.
at 1765, 138 L.Ed.2d at ___ (citing 29 U.S.C.A. § 1056(d)(1)). “The purpose
of the proscription, in ERISA, on alienation and assignment of pension funds
is to protect the participant from [the participant’s] own financial
improvidence.” Richardson v. Richardson, 774 A.2d 1267, 1270 (Pa.Super.
2001). ERISA’s anti-alienation provision is compulsory and has few limited
statutory exceptions. Boggs, supra at 851, 117 S.Ct. at 1765, 138 L.Ed.2d
at ___ (citing 29 U.S.C.A. §§ 1056(d)(2), (3)(A)).
ERISA provides for the entry of a valid QDRO as one exception to
ERISA’s anti-alienation provision. Id. at 846-47, 849, 117 S.Ct. at 1763-64,
138 L.Ed.2d at ___ (noting Congress amended ERISA to create, inter alia,
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QDRO exception to anti-alienation provision when it enacted Retirement
Equity Act of 1984 (“REA”)). “A QDRO is a type of domestic relations order
that creates or recognizes an alternate payee’s right to, or assigns to an
alternate payee the right to, a portion of the benefits payable with respect to
a participant under a plan.” Id. at 846, 117 S.Ct. at 1763, 138 L.Ed.2d at
___ (emphasis added); Smith v. Smith, 5 95 Pa. 80, 85 n.3, 938 A.2d 246,
248 n.3 (2007). The QDRO provision gave life to one of REA’s central
purposes, specifically “to give enhanced protection to the spouse and
dependent children in the event of divorce or separation….” Boggs, supra at
847, 117 S.Ct. at 1763, 138 L.Ed.2d at ___; Mackey v. Lanier Collection
Agency & Service, Inc., 486 U.S. 825, 838, 108 S.Ct. 2182, 2190, 100
L.Ed.2d 836, ___ (1988) (stating: “The [REA] included several changes in
ERISA which Congress felt were necessary to guarantee that the Nation’s
private retirement-income system provided fair treatment for women. …
Among the [REA]’s provisions were amendments to ERISA which insured that
[ERISA] could not be used to block the enforcement of ‘[QDROs]’—generally,
court orders providing for child support and alimony payments by ERISA plan
participants”). Outside the REA’s amendments to ERISA, which include the
QDRO provision, “ERISA does not confer beneficiary status on nonparticipants
by reason of their marital or dependent status.” Boggs, supra at 847, 117
S.Ct. at 1763, 138 L.Ed.2d at ___. “The QDRO provisions protect those
persons who, often as a result of divorce, might not receive the benefits they
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otherwise would have had available during their retirement as a means of
income.” Id. at 854, 117 S.Ct. at 1767, 138 L.Ed.2d at ___. “The QDRO
provisions address the rights of divorced and separated spouses, and their
dependent children, which are the traditional concern of domestic relations
law.” Id. at 849, 117 S.Ct. at 1764, 138 L.Ed.2d at ___.
Section 1056 of ERISA, which governs and defines QDROs, provides in
relevant part as follows:
§ 1056. Form and payment of benefits
* * *
(d) Assignment or alienation of plan benefits
(1) Each pension plan shall provide that benefits under
the plan may not be assigned or alienated.
* * *
(3)(A) Paragraph (1) shall apply to the creation,
assignment or recognition of a right to any benefit payable
with respect to a participant pursuant to a domestic
relations order, except that paragraph (1) shall not apply if
the order is determined to be a qualified domestic order.
Each pension plan shall provide for the payment of benefits
in accordance with the applicable requirements of any
qualified domestic relations order.
(B) For purposes of this paragraph—
(i) the term “qualified domestic relations order”
means a domestic relations order—
(I) 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, and
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(II) with respect to which the requirements of
subparagraphs (C) and (D) are met, and
(ii) the term “domestic relations order” means any
judgment, decree, or order (including approval of a
property settlement agreement) which—
(I) relates to the provision of child support, alimony
payments, or marital property rights to a spouse,
former spouse, child, or other dependent of a
participant, and
(II) is made pursuant to a State domestic relations
law (including a community property law).
(C) A domestic relations order meets the requirements
of this subparagraph only if such order clearly specifies—
(i) the name and the last known mailing address (if
any) of the participant and the name and mailing address
of each alternate payee covered by the order,
(ii) the amount or percentage of the participant’s
benefits to be paid by the plan to each such alternate
payee, or the manner in which such amount or
percentage is to be determined,
(iii) the number of payments or period to which such
order applies, and
(iv) each plan to which such order applies.
(D) A domestic relations order meets the requirements
of this subparagraph only if such order—
(i) does not require a plan to provide any type or form
of benefit, or any option, not otherwise provided under
the plan,
(ii) does not require a plan to provide increased
benefits (determined on the basis of actuarial value), and
(iii) does not require the payment of benefits to an
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alternate payee which are required to be paid to another
alternate payee under another order previously
determined to be a qualified domestic relations order.
* * *
(K) The term “alternate payee” means any spouse,
former spouse, child, or other dependent of a participant
who is recognized by a domestic relations order as having a
right to receive all, or a portion of, the benefits payable
under a plan with respect to such participant.
* * *
29 U.S.C.A. § 1056(d)(1), (3A-D, K).
Generally, Pennsylvania courts enter QDROs in connection with a
domestic relations matter. See, e.g., Stinner v. Stinner, 520 Pa. 374, 378-
80, 554 A.2d 45, 47-48 (1989); Zehner v. Zehner, 195 A.3d 574, 575-76
(Pa.Super. 2018); Prol v. Prol, 935 A.2d 547, 549 (Pa.Super 2007);
Hayward v. Hayward, 808 A.2d 232, 233-34 (Pa.Super. 2002); Stockton
v. Stockton, 698 A.2d 1334, 1335 (Pa.Super. 1997); Grieve v. Mankey,
679 A.2d 814, 814-15 (Pa.Super. 1996) (discussing QDROs, which trial courts
had approved subsequent to divorce decree in each case). Persuasive cases
from other jurisdictions demonstrate that petitions to enter QDROs derive
from or are adjunct to divorce proceedings, and do not constitute distinct or
independent actions. See Dorko v. Dorko, __ N.W.2d __, __, 2019 WL
2897592, at *4-*5 (Mich. June 20, 2019) (stating: “A party’s request for entry
of a proposed QDRO does not involve a distinct legal ‘claim.’ … [T]he right to
seek a [QDRO] does not arise from a wrong; instead, that right arises out of
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the divorce judgment itself. … [The] procedural right to entry of the proposed
QDRO [i]s indisputably established by the judgment of divorce”). See also
Johnston v. Johnston, __A. 3d __, __, 2019 WL 2336681, at *7 (Vt. May
10, 2019); Ryan v. Janovsky, 999 N.E.2d 895, 898 (Ind. Ct. App. 2013);
Denaro v. Denaro, 84 A.D.3d 1148, 1149 (N.Y. App. Div. 2011); Jordan v.
Jordan, 147 S.W.3d 255, 262 (Tenn. Ct. App. 2004) (stating consistently that
QDROs are merely procedural devices which are adjunct to entry of divorce
decrees and implement provisions of divorce decrees).
Instantly, when Wife and Husband filed their joint petitions for entry of
a QDRO, they were legally married. The couple acknowledged in both
petitions that no divorce action or other family law matter was pending
between Wife and Husband. The trial court entered the first QDRO the parties
sought. Subsequently, the court denied the parties’ petition to amend the
QDRO and vacated the first QDRO as well. In its opinion, the trial court
explained its rationale as follows:
In the [c]ourt’s November 9, 2018 Order denying the
parties’ joint petition, the [c]ourt explained that the parties
are not currently divorced and are not seeking a divorce at
this time. [Wife] argued that this fact is irrelevant, and
pointed to case law precluding ERISA plan administrators
from refusing to deem a [DRO] as a QDRO based on the
determination that the underlying divorce is a sham.
Brown v. Continental Airlines, Inc., 647 F.3d 221 (5th
Cir. 2011). The [c]ourt explained that the salient distinction
between Brown and the case at bar is that here, the parties
are not divorced and have not filed for divorce. While
Brown instructs that a plan administrator should not look
into the legitimacy of a divorce, in that case, the parties
were legally divorced, even if they continued to cohabitate
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with one another. Id. at 225….
* * *
The parties are seeking to take $700,000.00 from
[Husband]’s [Plan] and shift it to an IRA in [Wife]’s name.
The parties are married and are not seeking to divorce one
another. There is not a child or spousal support order in
place. There is not a domestic relations dispute between
the parties. While the IRA may yield a higher interest
payout than any interest [Husband] could earn on the same
funds through the [Plan], the [c]ourt found that under the
circumstances of this matter, the entry of a QDRO is
inappropriate.
The parties are asking the Court to rubberstamp a domestic
relations order in the absence of a domestic relations
dispute. They seek to use that order to obtain a payout of
benefits to [Wife], who is an alternate payee. Unlike
Brown, where Continental Airlines’ plan manager was
directed not to look into whether the parties’ divorce was a
sham, the parties herein are asking for the entry of an order
which will enable them to circumvent the express anti-
alienation provision of [ERISA]. 29 U.S.C.A. § 1056(d)(1).
While a pending divorce is not absolutely necessary for the
entry of a QDRO, under the rationale of the exception, the
complete absence of any support obligation which would
justify payment under the exception to Section 1056
appears to undermine [Wife]’s position.
* * *
In this case, there is not a factual dispute that the parties
are continuing to cohabitate with one another and have not
undergone either a physical or a financial separation from
one another. The parties indicated an intent to remain
married, and there is not any evidence from which the
[c]ourt could glean that they are separated in any
capacity…. They are not able to reap any benefits from an
IRA held by [Wife] into which [Husband]’s retirement funds
would be paid. However, this prohibition is consistent with
the underlying rationale behind the exception in ERISA.
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Because the [c]ourt did not find that the entry of a domestic
relations order is appropriate in this case, the [c]ourt
properly denied the parties’ joint petitions for the entry of a
[QDRO].
(Trial Court Opinion, filed January 7, 2019, at 5-8) (some internal citations,
quotations, and emphasis omitted). The record supports the trial court’s
decision.
Here, Husband is a participant in an ERISA-governed plan. The parties
initiated this case by filing a joint petition for entry of a QDRO for the sole
purpose of transferring to Wife’s IRA an amount of the Plan benefits, because
Wife has a marital property interest in the Plan. See Brown v. Brown, 669
A.2d 969, 972 (Pa.Super. 1995), aff’d, 544 Pa. 360, 690 A.2d 700 (1997)
(providing retirement pension benefits, vested and non-vested, are marital
property rights subject to equitable distribution upon divorce). But see
Boggs, supra. Without the entry of a valid QDRO, the parties’ proposed
transfer violates ERISA’s anti-alienation prohibition. See id.; 29 U.S.C.A. §
1056(d)(1), (3)(A). In their joint petitions and throughout the life of this case,
however, Husband and Wife have expressly acknowledged they are married
with no pending divorce or other family law matter between them; the parties
at no time stated or implied they intended to initiate a support action. Instead,
the parties stated in their petitions they wished the Plan benefits to remain
marital property upon entry of the proposed QDRO. Thus, the record makes
clear there is no current, foreseeable, or desired divorce or domestic relations
matter of any kind between Husband and Wife, which is required for the entry
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of a QDRO under ERISA. See Boggs, supra; Mackey, supra. Under these
circumstances, the parties’ joint petitions are attempts to circumvent ERISA’s
anti-alienation proscription. See Boggs, supra; Mackey, supra. The cited
persuasive authority leads us to conclude a QDRO is a procedural right
derivative of or adjunct to a domestic relations matter, but outside the context
of a domestic relations matter, a QDRO is not a distinct, discrete legal claim.
See Dorko, supra; Johnston, supra; Ryan, supra; Denaro, supra;Jordan, supra. Accordingly, Wife’s claim that a domestic relations action is
not a prerequisite to entry of a QDRO fails.4
Based upon the foregoing, we hold that absent a divorce or other
domestic relations matter pending between spouses, they cannot obtain a
QDRO for the sole purpose of moving funds in the participant/spouse’s ERISA
plan out of the plan to the non-participating spouse. Accordingly, we affirm.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 8/19/19
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4 Due to our disposition, we will not address Wife’s remaining claims on appeal.
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