Bortz, T. v. Bortz, S. ( 2016 )

J-A02043-16
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
THOMAS E. BORTZ, : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
Appellant :
:
v. :
:
STACIE L. BORTZ :
: No. 1147 MDA 2015
Appeal from the Order Entered June 23, 2015
in the Court of Common Pleas of Lycoming County Civil Division
at No(s): FC-2012-021531-D1
BEFORE: PANELLA, STABILE, and FITZGERALD,* JJ.
MEMORANDUM BY FITZGERALD, J.: FILED APRIL 27, 2016
Appellant, Thomas E. Bortz (“Husband”), appeals from the order
entered in the Lycoming County Court of Common Pleas. Husband contends
the Qualified Domestic Relations Order (“QDRO”) regarding his City of
Williamsport Police Pension Plan is not consistent with his and Appellee’s,
Stacie L. Bortz’s (“Wife”), Marriage Settlement Agreement (“MSA”).1 We
affirm.
At the hearing on the Petition for Contempt/Petition for Enforcement of
Property Settlement Agreement filed by Wife on April 17, 2015, the parties
stipulated, inter alia, to the following facts: “[T]hey entered into a [MSA]
*
Former Justice specially assigned to the Superior Court.
1
The MSA is also referred to as a Property Settlement Agreement. For
consistency, we refer to it as a MSA.
J-A02043-16
dated December 5, 2013.”2 R.R. at 25a. “[T]hey hired Jonathan Cramer of
Conrad Siegal to prepare the QDROs, the three (3) QDROs referenced in
that [MSA].” Id. “[T]hey obtained drafts of the three (3) QDROs from Mr.
Cramer and . . . the plan administrators of each of the three (3) pension
plans approved the [QDROs] as drafted by Jonathan Cramer.” Id. at 25a-
26a. Wife signed the QDROs. Id. at 26a. Husband has not executed the
QDROs. Id. “The parties agree that they were married on December 18,
2004 and they separate[d] on October 24, 2012.” Id. at 29a. They
stipulated that the agreement was “that the martial portion would be divided
55/45.” Id. at 32a.
The MSA provided, inter alia, as follows:
16. Employment Benefits. The parties hereto have
reached agreement regarding the retaining of and
distribution of their respective employment benefits as
follows:
* * *
B. Wife’s retirement. The parties agree that all of the
marital portion of Wife’s retirement account(s) and/or
pension plan(s) through her employment with Lycoming
County shall be divided between the parties such that Wife
will receive Fifty-Five Percent (55%) of the martial portion
and Husband will receive Forty-Five (45%) of the martial
portion pursuant to current law. For purposes of
determining the marital portion, the parties agree that
they were married on December 18, 2004, and they
separated on October 24th, 2012. In the event the parties
need to prepare a [QDRO] for purposes of dividing Wife’s
2
See R.R. at 5a-15a. For convenience, we refer to the reproduced record
where applicable.
-2-
J-A02043-16
retirement account(s) and/or pension plan(s), they agree
to hire a third party to prepare the necessary paperwork
and will equally share the expense associated therewith.
C. Husband’s Retirement. The parties have agreed to
divide all of the marital portion of Husband’s retirement
account(s) and/or pension plan(s) through his employment
with the City of Williamsport in such a manner that Wife
shall receive Fifty-Five(55%) of the marital portion and
Husband will receive Forty-Five Percent (45%) of the
marital portion pursuant to current law. For purposes of
determining the marital portion, the parties agree that
they were married on December 18, 2004, and they
separated on October 24th, 2012. In the event the parties
need to prepare a [QDRO] for purposes of dividing
Husband’s Retirement Account(s) and/or pension plan(s),
they agree to hire a third party to prepare the necessary
paperwork and will equally share the expense associated
therewith.
D. Husband’s Deferred Compensation Account. The
parties agree to divide the marital portion of Husband’s
deferred compensation account such that Wife will receive
Fifty-Five Percent (55%) of the partial portion of the
account and Husband will receive Forty-Five Percent (45%)
of the marital portion of the account pursuant to current
law. For purposes of determining the marital portion, the
parties agree that they were married on December 18,
2004, and they separated on October 24th, 2012. In the
event the parties need to prepare a [QDRO] for purposes
of dividing Husband’s Deferred Compensation Account,
they agree to hire a third party to prepare the necessary
paperwork and will equally share the expense associated
therewith.
MSA, 12/5/13, at 12a-13a.
Paragraph 7 of the QDRO which applies to Husband’s City of
Williamsport, PA Pension Plan states, in pertinent part, as follows:
7. This [Q]DRO assigns to [Wife], an amount equal to
55.0% of the marital portion of [Husband’s] accrued
retirement benefit under the Plan as of [Husband’s] date of
-3-
J-A02043-16
retirement. The marital portion of [Husband’s] accrued
retirement benefit equals the monthly retirement benefit,
payable in the normal form of payment for [Husband’s]
lifetime, multiplied by a fraction equal to 7.85 years (the
period from December 18, 2004, date of marriage, until
October 24, 2012, date of separation) divided by the years
of credited benefit service (including any partial year
credited) earned by [Husband] as of the date his benefit
accruals cease. If any cost-of-living increase or other
increase is applied to the pension payable to [Husband],
the same increase shall apply to [Wife’s] share, but only to
the extent permitted by the Plan and state law.
Trial Ct. Order and Op., 6/23/15, at 44a-45a (quotation marks omitted).3
On June 23, 2015, the trial court entered an order providing, inter alia,
that “Husband is hereby ORDERED and DIRECTED to sign the Domestic
Relations Order in regard to his City of Williamsport Police Pension Plan as
drafted by Conrad Siegel . . . .” Id. at 51a. This appeal followed. Appellant
filed a court-ordered Pa.R.A.P. 1925(b) statement of errors complained of on
appeal. The trial court filed a Pa.R.A.P. 1925(a) opinion relying upon its
order and opinion of June 23, 2015.
Husband raises the following issues for our review:
I. Did the Trial Court err and/or commit an abuse of
discretion in finding that the language of Paragraph 16 B.
through D. in the parties’ [MSA] is clear and unambiguous?
II. Did the Trial Court err and/or commit an abuse of
discretion in its decision of June 23, 2015, regarding the
parties’ [MSA] relative to equitable distribution, and
specifically in finding that the [QDRO] regarding [ ]
Husband’s City of Williamsport Police Pension Plan, as
3
The Domestic Relations Order was docketed July 17, 2015. See R.R. at
53a-56a.
-4-
J-A02043-16
drafted by Conrad Siegel, is consistent with the terms of
the parties’ [MSA] dated December 5, 2013?
Husband’s Brief at 4.
Husband contends that the language in the MSA agreement, viz.,
“pursuant to current law,” in paragraph 16 B. through D. is ambiguous. Id.
at 14. He claims that the phrase refers to contract law and not to “the
statutory law [viz., 23 Pa.C.S. § 3501(c)(1),] regarding the division of
defined benefit retirement plan.” Id. Based upon this Court’s holding in
Bianchi v. Bianchi, 859 A.2d 511 (Pa. Super. 2004), Husband contends
Wife “cannot benefit from post-separation increases in [Husband’s] pension .
. . .” if they are attributable to his “efforts and/or contributions.” Id. at 17-
19. Husband states that the QDROS “are legally incorrect as they include,
as a benefit to Wife, post separation monetary contributions made by the
efforts and/or contributions of Husband . . . .” Id. at 19.
We address Husband’s issues together because they are interrelated.
In conducting our review of the court’s holding as to the MSA, we are guided
by the following principles:
Because contract interpretation is a question of law,
this Court is not bound by the trial court’s
interpretation. Our standard of review over
questions of law is de novo and to the extent
necessary, the scope of our review is plenary as the
appellate court may review the entire record in
making its decision. However, we are bound by the
trial court’s credibility determinations.
. . . On appeal from an order interpreting a marital
settlement agreement, we must decide whether the
-5-
J-A02043-16
trial court committed an error of law or abused its
discretion.
Kraisinger v. Kraisinger, 928 A.2d 333, 339 (Pa. Super. 2007) (citations
omitted).
The Pennsylvania Supreme Court in Smith v. Smith, 938 A.2d 246
(Pa. 2007) held, inter alia, that “courts . . . should allocate the pension
between its marital and nonmarital portions solely by use of a coverture
fraction” pursuant to 23 Pa.C.S. § 3501(c) (quotation marks omitted). Id.
at 259.
In 2004, . . . the legislature attempted to address the
confusion in our law by adding a subsection to the Divorce
Code regarding the distribution of defined benefit
pensions. In relevant part, § 3501(c) provides:
(c) Defined benefit retirement plans.-Notwithstanding
subsections (a) [General Rule regarding marital
property], (a.1) [Measuring and determining the
increase in value of non-marital property] and (b)
[Presumption that all property acquired during the
marriage is marital]:
(1) In the case of the marital portion of a defined
benefit retirement plan being distributed by means of
a deferred distribution, the defined benefit plan shall
be allocated between its marital and nonmarital
portions solely by use of a coverture fraction. The
denominator of the coverture fraction shall be the
number of months the employee spouse worked to
earn the total benefit and the numerator shall be the
number of such months during which the parties
were married and not finally separated. The benefit
to which the coverture fraction is applied shall include
all postseparation enhancements except for
enhancements arising from postseparation monetary
contributions made by the employee spouse,
including the gain or loss on such contributions.
-6-
J-A02043-16
* * *
23 Pa.C.S. § 3501 (emphasis omitted).
Significantly, in its official comments, the legislature
specifically addressed this Court’s prior holdings regarding
the distribution of defined benefit pensions, criticizing the
lead opinion in Berrington [v. Berrington, 633 A.2d 589
(Pa. 1993)], which valued the pension utilizing the salary
at the time of separation, and commending the analysis
offered in Gordon by Justices Flaherty, Cappy, and
Newman, and by the Superior Court in Holland v.
Holland, [ ] 588 A.2d 58 ([Pa. Super.] 1991).
New subsection (c) seeks to reverse Berrington [ ]
to adopt a coverture fraction methodology along the
lines of Holland [ ] and to include all
postseparation enhancements except for
postseparation monetary contributions by the
employee spouse in the value of the pension.
The new language codifies the result reached by
Justices Flaherty, Cappy and Newman regarding the
postseparation retirement enhancements in Gordon
v. Gordon, [ ] 681 A.2d 732 ([Pa.] 1996) (3-3
decision on this issue, affirming the Superior Court’s
exclusion of the enhancements from the marital
estate). Three early retirement inducements were at
issue in Gordon. The justices listed above opined
that since no present efforts or contributions of the
employee spouse were required to receive the
supplemental retirement income and bonus
inducements, they were includable in the marital
estate. The third inducement was an annuity paid
for partially by the employee spouse and partially by
the employer. Justices Flaherty, Cappy and Newman
would have included the portion of the annuity paid
for by the employer in the marital estate.
23 Pa.C.S. § 3501(c), cmt.
As we must defer to the legislature as the policy making
body, we conclude that the holding in Berrington no
longer controls regarding the use of the salary at time of
-7-
J-A02043-16
separation. Instead, we honor the legislature’s
unequivocal intention to utilize the coverture fraction to
provide economic justice between the parties, as discussed
by the Superior Court in Holland:
A delayed distribution of pension benefits requires
the non-employed spouse to wait until some
indefinite time in the future to receive the marital
share. To compensate for this postponement of
benefit, that spouse is permitted to enjoy increases
in value occasioned by continued employment of the
worker. Also, the employed spouse increases the
non-marital share of the benefits since continuing
service enlarges the denominator. Further, later
year wage increases are a product of experience and
longevity which were developed during the marriage.
The [employee-spouse] . . . can look forward to the
benefits which accrue from a vested pension. His
former spouse is entitled to share in any increase in
value of the marital share which may occur by [the
employee-spouse’s] continued employment.
Holland, 588 A.2d at 60. Accordingly, rather than using
the salary at the time of separation, courts instead should
allocate the pension “between its marital and nonmarital
portions solely by use of a coverture fraction.” 23 Pa.C.S.
§ 3501(c). Thus, the non-employee spouse “is
permitted to enjoy increases in value occasioned by
continued employment of the worker.” Holland, 588
A.2d at 60. In the simplest of cases, the determination of
the marital portion of a defined benefit pension will entail a
straightforward application of the coverture fraction to the
final total value of the pension, even though the value has
increased due to years of postseparation employment.
Id. at 257-59 (emphases added and footnote omitted).
In the case sub judice, the trial court opined:
The [c]ourt finds that the language of Paragraph 16B.
through D. in the parties’ [MSA] is clear and unambiguous.
The parties agree that Wife would receive 55% of the
marital portion and Husband would receive 45% pursuant
to current law. At the time the parties executed the
-8-
J-A02043-16
[MSA,] the current law regarding the division of defined
benefit retirement plans was outlined at 23 Pa.C.S.A. §
3501(c)(1) . . . .
Trial Ct. Order and Op. at 46a.
In the instant case, the QDRO employed the coverture fraction. It
stated:
The marital portion of [Husband’s] accrued retirement
benefit equals the monthly retirement benefit, payable in
the normal form of payment for [Husband’s] lifetime,
multiplied by a fraction equal to 7.85 years (the period
from December 18, 2004, date of marriage, until October
24, 2012, date of separation) divided by the years of
credited benefit service (including any partial year
credited) earned by [Husband] as of the date his benefit
accruals cease.
R.R. at 45a. This was consistent with the MSA which provided, inter alia, as
follows:
The parties have agreed to divide all of the marital portion
of Husband’s retirement account(s) and/or pension plan(s)
through his employment with the city of Williamsport in
such a manner that Wife shall receive Fifty-Five (55%) of
the marital portion and Husband will receive Forty-Five
Percent (45%) of the marital portion pursuant to current
law. For purposes of determining the marital portion, the
parties agree that they were married on December 18,
2004, and they separated on October 24th, 2012.
R.R. at 12a-13a.
Husband’s argument that the MSA is ambiguous as to the reference to
“current law” is unavailing. Section 3501(c)(1) is the applicable “current
law” in the instant case. See Smith, 938 A.2d at 258-59. As the
Pennsylvania Supreme Court held in Smith, we are bound by the
-9-
J-A02043-16
“legislature’s unequivocal intention to utilize the coverture fraction to provide
economic justice between the parties . . . .” See id. at 258. “[R]ather
than using the salary at the time of separation, courts instead should
allocate the pension ‘between its marital and nonmarital portions solely by
use of a coverture fraction.’” Id. at 259 (citation omitted). Therefore, Wife
“is permitted to enjoy increases in value occasioned by continued
employment of” Husband postseparation. See id. at 259. The QDRO in the
instant case utilizes the coverture fraction. See id. at 258. Therefore, we
affirm the order of the trial court.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 4/27/2016
- 10 -