Urbaniak v. Urbaniak ( 2011 )

#25850-a-JKK
2011 S.D. 83IN THE SUPREME COURT
OF THE
STATE OF SOUTH DAKOTA
****
JULIE A. URBANIAK, Plaintiff and Appellee,
v.
ROBERT I. URBANIAK, Defendant and Appellant.
****
APPEAL FROM THE CIRCUIT COURT OF
THE SEVENTH JUDICIAL CIRCUIT
PENNINGTON COUNTY, SOUTH DAKOTA
****
THE HONORABLE JOHN J. DELANEY
Judge
****
PATRICIA A. MEYERS
Rapid City, South Dakota Attorney for plaintiff
and appellee.
RENA M. HYMANS
Sturgis, South Dakota Attorney for defendant
and appellant.
****
CONSIDERED ON BRIEFS
ON OCTOBER 03, 2011
OPINION FILED 12/07/11
#25850
KONENKAMP, Justice
[¶1.] Upon issuing a divorce decree, the trial court awarded Julie A.
Urbaniak $500 per month in alimony for eight years and attorney’s fees. In
granting the alimony, the court considered Robert I. “Ike” Urbaniak’s social security
and military disability payments, but did not order attachment of those benefits.
Ike appeals, arguing that the trial court erred in considering his disability benefits
in determining alimony. He also contends that the court abused its discretion in
awarding Julie alimony and attorney’s fees and costs. We affirm.
Background
[¶2.] Ike joined the Army in 1989. In a motor vehicle accident while
stationed in Egypt, he suffered a wrist injury and post-traumatic stress disorder.
He was honorably discharged in 1996. Julie and Ike married in 2002. During the
first year, both worked and contributed all their earnings to the marriage.
Thereafter, Ike was unemployed and Julie supported the couple with her earnings.
Throughout the marriage, Ike periodically struggled with drug and alcohol abuse.
[¶3.] Ike and Julie purchased and remodeled a home in 2003. Julie paid for
most of the remodeling costs with money she inherited from her family. Ike and
Julie attempted to have children for two or three years. But Julie eventually
discovered that Ike was unable to have children. She was not aware of this when
they married.
[¶4.] Ike has a high school education. He attended college but never
obtained a degree. In 2006, the Department of Veterans Affairs (VA) designated Ike
-1-
#25850
as one-hundred percent disabled. Julie had assisted him in applying for VA
disability benefits, hiring an attorney, and serving as Ike’s protective payee.
[¶5.] Ike receives $984 per month in social security disability benefits and
$2,823 per month in VA disability benefits. He also received $20,000 in social
security back pay, which the couple used to pay credit card and other debts in order
to qualify for a loan. Ike was not eligible for military retirement benefits because he
served less than twenty years. As protective payee, Julie managed all household
finances and monitored Ike’s medication intake. Toward the end of the marriage,
Julie also performed most of the household chores.
[¶6.] Ike has several mental and physical health problems. He twice
overdosed on pain medications. His family, including Julie, suspected that Ike was
frequently overmedicating. Ike was obsessive compulsive, constantly monitoring
Julie’s location when she was not at home. Without informing Julie, Ike often
cancelled or failed to attend therapy sessions, medical appointments, and individual
counseling. Julie tried to introduce Ike to new hobbies and common interests
without success.
[¶7.] Julie has a high school education and is employed as a cafeteria
worker, earning $12.42 per hour, forty hours per week. She also has a retirement
fund currently worth $18,053.26. Julie is in good health.
[¶8.] After seven years of marriage, Julie sued for divorce in 2009. Their
relationship had deteriorated. Both Ike and Julie had become verbally abusive to
each other. Julie discovered that Ike had an online girlfriend. He insisted that
Julie was mishandling his money as protective payee. Ike continuously threatened
-2-
#25850
to lock Julie out of the house and, on one occasion, choked her during an argument.
He also threatened to kill her on several occasions.
[¶9.] At the time of the divorce, Julie was forty years old and Ike was thirty-
nine. They had no children. Julie earned about $1,500 per month and Ike received
$3,807 per month in disability payments. He had no other income, and his
disability benefits would decrease by about $150 per month after the divorce
became final.
[¶10.] Following a trial, the circuit court divided the marital property and
debt. Julie was awarded $500 per month in alimony for eight years, subject to
termination on her death or remarriage. The court considered Ike’s receipt of
disability benefits in making this decision, but noted that the alimony award was
not to be construed as an attachment of any disability payments. The court also
awarded Julie $5,792.12 in costs and attorney’s fees, considering the complex
nature of the legal issues and Ike’s misconduct during the marriage. Ike appeals,
arguing that the trial court erroneously considered his disability benefits in
determining alimony. He also asserts that the court abused its discretion in
awarding Julie alimony and costs and attorney’s fees.
VA Disability Benefits
[¶11.] Ike maintains that the trial court erred in considering his VA disability
benefits in awarding alimony. He contends that the United States Supreme Court’s
decision in Mansell v. Mansell, 490 U.S. 581, 109 S. Ct. 2023, 104 L. Ed. 2d 675(1989) controls this legal question. He points out that he served in the military and
incurred his service-connected disability before he married Julie. Ike does not have
-3-
#25850
direct access to the bank account where his disability benefits are deposited. Only
his current payee (Jeff Denison of U.S. Bank) has direct control of the benefits.
[¶12.] Julie concedes that the benefits may not be levied, seized, or attached,
but notes that the circuit court merely considered Ike’s receipt of military disability
benefits. Julie contends that federal law does not preclude a court’s consideration of
such benefits as a source of income relevant to Ike’s ability to pay alimony.
[¶13.] We review decisions on alimony for an abuse of discretion. Billion v.
Billion, 1996 S.D. 101, ¶ 14, 553 N.W.2d 226, 230. But we review questions of law
bearing on an alimony award de novo. Oman v. Oman, 2005 S.D. 88, ¶ 4, 702
N.W.2d 11, 12. Military retirement pay and military disability benefits have
significant differences. Retirement benefits are for military service members who
serve for a specific period, usually twenty years or more. See., e.g., 10 U.S.C. § 3911(Army); 10 U.S.C. § 6323 (Navy and Marine Corps). The amount of retirement pay
a veteran is eligible for is determined according to the number of years served and
the rank achieved. 10 U.S.C. § 1401.
[¶14.] On the other hand, a military service member who becomes disabled as
a result of military service is eligible for disability benefits. 38 U.S.C. § 1131(peacetime disability benefits). The amount of disability benefits a veteran is
eligible for is determined according to the seriousness of the disability and the
degree to which the veteran’s ability to earn a living has been impaired. 38 U.S.C.
§§ 1134 and1114. Disability benefits are not assignable and are exempt from
attachment, levy, seizure, and taxation. 38 U.S.C. § 5301(a)(1) (emphasis added). A
military retiree who is also disabled may receive disability benefits (and incur tax-
-4-
#25850
exempt status) only if he or she waives a corresponding amount of military
retirement pay. 38 U.S.C. § 5304; 38 C.F.R. § 3.750.
[¶15.] In 1981, the United States Supreme Court held that federal law
precluded state courts from treating military retirement pay as community property
in divorce proceedings. McCarty v. McCarty, 453 U.S. 210, 223, 101 S. Ct. 2728,
2736, 69 L. Ed. 2d 589 (1981) (emphasis added), superseded by statute, 10 U.S.C. §
1408. According to the McCarty Court, Congress intended all military retirement
benefits to go directly to military service members and not to their former spouses.
Id. at 228 (emphasis added). In direct response to the McCarty decision, Congress
passed the Uniform Services Former Spouses’ Protection Act (USFSPA), which
authorizes state courts to treat retirement pay as community property. 10 U.S.C. §
1408(c)(1). The USFSPA did not include disability benefits in the definition of
disposable retirement benefits. See 10 U.S.C. § 1408(a)(4)(B).
[¶16.] In 1989 the United States Supreme Court interpreted the USFSPA.
See Mansell, 490 U.S. 581, 109 S. Ct. 2023. The Mansell decision acknowledged the
USFSPA’s affirmative grant of authority to treat retirement pay as community
property. Id. at 588. But the Court held that state courts may not treat military
retirement pay waived by retirees in order to receive veterans’ disability benefits as
divisible property. Id. at 594-95. The Court did not extend its holding to military
disability benefits received by service members who are not also eligible for
retirement pay. See id. Furthermore, the Mansell Court addressed the division of
benefits as marital property subject to division and not specifically the use or
consideration of benefits for spousal support. See id. at 588-90, 594-95.
-5-
#25850
[¶17.] In this case, Ike receives $2,823 in VA disability benefits each month.
He was not eligible for military retirement pay (and therefore had not waived
retirement pay in order to receive disability benefits) because Ike served less than
twenty years in the Army. Thus, despite Ike’s argument otherwise, the Mansell
decision does not apply here.1
[¶18.] Ike’s disability benefits are exempt from attachment, levy, seizure, and
taxation. 38 U.S.C. § 5301(a)(1). The trial court was therefore unable to attach
Ike’s disability benefits to pay an alimony award. Yet the court did not attach Ike’s
benefits but instead considered them in determining alimony. In both its
conclusions of law and its order, the court specifically indicated that the alimony
award should not be construed as an attachment of any disability benefits. The
court reasoned that although federal law prohibits attachment of Ike’s military
disability benefits, the law does not dictate what happens to the money once it is in
Ike’s possession and does not prevent a court from ordering a service member to
make alimony payments (without ordering that the payments come from a specific
source).
1. Ike also claims that this Court’s decision in Hisgen v. Hisgen, 1996 S.D. 122,
554 N.W.2d 494 is applicable. However, like the Mansell decision, Hisgen
addressed the divisibility of military disability benefits received after waiving
a corresponding portion of retirement pay (i.e., the service member in that
case was eligible for both retirement pay and disability benefits). Hisgen,
1996 S.D. 122, ¶¶ 2, 6, 554 N.W.2d at 495-96. Furthermore, the husband and
wife in Hisgen signed a property settlement agreement, and this agreement
affected this Court’s analysis of the case. Id. ¶ 10. Thus, the Hisgen decision
does not directly answer the issue before us here.
-6-
#25850
[¶19.] An “overwhelming majority of courts” have held that VA disability
payments may be considered as income in awarding spousal support. In re
Marriage of Morales, 214 P.3d 81, 85 (Or. Ct. App. 2009). These courts conclude
that federal law does not prohibit an award of alimony against a spouse receiving
military disability pay and, once alimony is awarded, federal law will not relieve the
paying spouse from paying such alimony obligations, even if most of the veteran’s
income consists of military disability benefits.2 In contrast, one court has found
that the Mansell decision and 10 U.S.C. § 1408 protect VA disability benefits from
consideration in an alimony determination. See Ex parte Billeck, 777 So. 2d 105,
108-09 (Ala. 2000). In Billeck, the Alabama Supreme Court acknowledged the
substantial disagreement with its position, but concluded that “other state courts
have circumvented the mandates of the Mansell decision and § 1408 by allowing
trial courts to consider veteran’s disability benefits in awarding alimony.” Id at
108.3
2. See, e.g., Clauson v. Clauson, 831 P.2d 1257, 1263 n.9, 1264 (Alaska 1992);
Murphy v. Murphy, 787 S.W.2d 684, 685 (Ark. 1990); Allen v. Allen, 650 So.
2d 1019, 1020 (Fla. Dist. Ct. App. 1994); Jones v. Jones, 780 P.2d 581, 584
(Haw. 1989); In re Marriage of Howell, 434 N.W.2d 629, 632-33 (Iowa 1989);
Davis v. Davis, 777 S.W.2d 230, 232 (Ky. 1989); Riley v. Riley, 571 A.2d 1261,
1266 (Md. 1990); Steiner v. Steiner, 788 So. 2d 771, 778-79 (Miss. 2001);
Morales, 214 P.3d at 85-86; Parker v. Parker, 484 A.2d 168, 169-70 (Pa.
Super Ct. 1984); Repash v. Repash, 528 A.2d 744, 746 (Vt. 1987); Weberg v.
Weberg, 463 N.W.2d 382, 384 (Wis. Ct. App. 1990).
3. But even Billeck gives no succor to Ike’s position. That case is
distinguishable because Billeck, like Mansell and unlike this case, involved a
retired member of the armed services actually receiving veteran’s disability
benefits in lieu of military-retirement pay. Cf. Miller v. Miller, 10 So. 3d 570,
575 (Ala. Civ. App. 2008).
-7-
#25850
[¶20.] Billeck takes a broad reading of Mansell. But a narrow interpretation
is more in step with the criterion the United States Supreme Court uses in
reviewing whether federal law preempts state domestic relations law. The Supreme
Court in Mansell noted its reluctance to find federal preemption of state domestic
relations law, stating, “[b]ecause domestic relations are preeminently matters of
state law, we have consistently recognized that Congress, when it passes general
legislation, rarely intends to displace state authority in this area.” Mansell, 490
U.S. at 587, 109 S. Ct. at 2028 (citations omitted). “Thus we have held that we will
not find preemption absent evidence that it is ‘positively required by direct
enactment.’” Id. (quotation omitted). To date there has been no direct enactment
prohibiting what the circuit court did here. Accordingly, we concur with the better
view and adopt the rationale from the majority of jurisdictions that have found that
no federal law demonstrates a clear intent to prohibit state courts from considering
VA disability benefits when deciding alimony.
Social Security Disability Benefits
[¶21.] Ike argues that the trial court erred in considering his social security
disability benefits in awarding alimony. He asserts that federal law prohibits the
levy, attachment, or seizure of social security benefits, yet concedes that there is
also an exception for alimony and child support. Ike believes it is significant that
his social security benefits are placed with a payee who testified that Ike may be
financially unable to cover an alimony award. He also contends that Julie already
benefited from his social security payments because the couple spent a substantial
-8-
#25850
amount of back-pay in a very short time with little to show for it. Ike claims Julie
did not account for where this money went.
[¶22.] In response, Julie maintains that federal law provides an exception
that allows attachment of social security benefits for alimony. Julie also contends
that she accounted for the social security back-pay when she testified that they used
the money to pay off credit cards and other debts so that they could qualify for a VA
loan for a new home.
[¶23.] Generally, social security benefits are not assignable or “subject to
execution, levy, attachment, garnishment, or other legal process[.]” 42 U.S.C. §
407(a). Notwithstanding this rule, however, social security benefits are subject to
“any . . . legal process brought[] by a State agency . . . to provide child support or
alimony.” 42 U.S.C. § 659(a).
[¶24.] Ike receives $984 per month in social security disability benefits. The
circuit court did not attach the benefits but merely considered them in determining
whether Julie was entitled to alimony. Given that Ike’s social security disability
benefits are subject to garnishment for alimony under federal law, the court did not
err in merely considering the benefits in determining whether an alimony award
was appropriate.
Alimony
[¶25.] Ike argues that the trial court abused its discretion when it granted
Julie $500 per month in alimony for eight years because Julie did not demonstrate
her need for alimony or Ike’s ability to pay it. Ike contends that the marriage was
relatively short, that he is disabled and unable to earn a living, and that he received
-9-
#25850
much of the marital debt under the court’s property distribution. Ike also contends
that Julie is healthy, able to earn a living, and received little debt in the property
distribution. Ike acknowledges that he was found to be at fault in the termination
of the marriage, but points out that the divorce was granted upon the ground of
irreconcilable differences.
[¶26.] Julie responds that she earns approximately $1,500 per month while
Ike receives $3,807 per month in VA and social security disability payments. She
also points out that Ike received the marital home and that she received debt under
the court’s property distribution. In addition, Julie notes that Ike was at fault in
the termination of the marriage because Ike deceived Julie regarding his inability
to have children, initiated a relationship with another woman before they were
divorced, and was verbally and emotionally abusive.
[¶27.] “Where a divorce is granted, the court may compel one party to make
such suitable allowance to the other party for support during the life of that other
party or for a shorter period . . . having regard to the circumstances of the parties
represented[.]” SDCL 25-4-41. “General alimony is intended to assist the recipient
in providing for food, clothing, housing, and other necessities.” Lovejoy v. Lovejoy,
2010 S.D. 39, ¶ 7, 782 N.W.2d 669, 672. Trial courts consider the following factors
when determining whether alimony is warranted:
(1) the length of the marriage; (2) each party’s earning capacity;
(3) their financial conditions after the property division; (4) each
party’s age, health, and physical condition; (5) their station in
life or social standing; and (6) the relative fault in the
termination of the marriage.
-10-
#25850
Id. “A party requesting alimony has the burden of proving a need for support and
that a former spouse has sufficient means and abilities to provide for part or all of
that need.” Schabauer v. Schabauer, 2003 S.D. 146, ¶ 6, 673 N.W.2d 274, 276.
[¶28.] The circuit court entered detailed findings and conclusions on the
factors relevant to an alimony award. Both Ike and Julie are similar in age and
social standing. The marriage was relatively short. Julie is able bodied and
currently earns about $1,500 per month. Ike is disabled but receives $3,807 per
month in VA and social security disability payments. During the marriage, Julie
contributed all her earnings and performed many of the household duties and
carried out all financial responsibilities. Ike conceded his fault in the termination of
the marriage. Julie had frequently attempted to save the marriage. Considering
these facts, we cannot say that the circuit court abused its discretion in finding that
Julie demonstrated a need for and Ike’s ability to pay alimony.
Attorney’s Fees
[¶29.] Ike argues that the trial court abused its discretion when it ordered
him to pay Julie’s attorney’s fees and costs in the amount of $5,792.12. Ike points
out that the trial lasted only one day and that, other than the disability benefits
question, the legal issues were not complex.
[¶30.] Julie maintains that the question whether Ike’s disability benefits may
be considered was a challenging legal issue that required briefing. Julie also argues
that Ike’s monthly income through disability payments is more than Julie’s monthly
income. Julie concedes, however, that the value of the property was small, the
pleadings were standard, and the trial was one day.
-11-
#25850
[¶31.] A trial court may award attorney’s fees in cases involving divorce,
support, or alimony. SDCL 15-17-38. We generally use a two-step analysis in
reviewing an award of attorney’s fees:
First, the court must determine what constitutes a reasonable
attorney’s fee. This requires consideration of (1) the amount and
value of the property involved, (2) the intricacy and importance
of the litigation, (3) the labor and time involved, (4) the skill
required to draw the pleadings and try the case, (5) the
discovery utilized, (6) whether there were complicated legal
problems, (7) the time required for the trial, and (8) whether
briefs were required. Second, it must determine the necessity
for such fee. That is, what portion of that fee, if any, should be
allowed as costs to be paid by the opposing party. This requires
consideration of the parties’ relative worth, income, liquidity,
and whether either party unreasonably increased the time spent
on the case.
Edinger v. Edinger, 2006 S.D. 103, ¶ 17, 724 N.W.2d 852, 858.
[¶32.] The trial court found that Julie incurred substantial attorney’s fees.
As to the reasonableness of those fees, the court also found that the case involved
complex legal issues that required briefing. In addition, the court found that Julie
had few resources and less income to cover her attorney’s fees. The court also noted
Ike’s misconduct and its impact on the marriage. On this record, we cannot say
that the trial court abused its discretion in awarding Julie attorney’s fees.
[¶33.] Julie also seeks an award of appellate attorney’s fees and expenses in
the amount of $6,694.32. Considering the above factors, we award $3,000.
[¶34.] Affirmed.
[¶35.] GILBERTSON, Chief Justice, and ZINTER, SEVERSON, and
WILBUR, Justices, concur.
-12-