Thayer v. Thayer , 817 Utah Adv. Rep. 17 ( 2016 )

2016 UT App 146THE UTAH COURT OF APPEALS
DIANE J. THAYER,
Appellant,
v.
RICHARD W. THAYER,
Appellee.
Opinion
No. 20140179-CA
Filed July 14, 2016
Fourth District Court, Provo Department
The Honorable Fred D. Howard
The Honorable Samuel D. McVey
No. 124401228
Paige Bigelow, Attorney for Appellant
Douglas B. Thayer and Jordan K. Cameron,
Attorneys for Appellee
JUDGE STEPHEN L. ROTH authored this Opinion, in which JUDGE J.
FREDERIC VOROS JR. and SENIOR JUDGE RUSSELL W. BENCH
concurred. 1
ROTH, Judge:
¶1 Diane J. Thayer (Wife) appeals the district court’s order
regarding the division of Richard W. Thayer’s (Husband)
retirement pay. We reverse and remand for further proceedings.
1. Senior Judge Russell W. Bench sat by special assignment as
authorized by law. See generally Utah R. Jud. Admin. 11-201(6).
Thayer v. Thayer
BACKGROUND
¶2 Husband and Wife married in April 1978. The parties’
stipulated decree of divorce was entered in September 2013.
During the marriage, both parties earned retirement pay through
their employers. Wife has a pension plan through her
employment as a teacher in Alaska and should become eligible
in the future to receive a pension from her employment as a
teacher in Utah. Husband has a pension plan through his
employment with the United States Public Health Service
Commissioned Corps (USPHS).
I. The Divorce Decree
¶3 At the time of the divorce, Wife was “not yet receiving
payments from the Alaska Teacher Pension,” and accordingly,
the decree stipulated that the “monthly compensation . . . of the
Alaska Teacher Pension should be divided equally between
[Husband and Wife].” The decree defined “monthly
compensation” as “gross retirement pay less authorized
deductions, including amounts properly deducted for federal,
state, or local taxes and disability benefits.” The parties
stipulated to identical language regarding the portion of Wife’s
Utah teacher pension to be equally divided, if she becomes
eligible to receive a pension.
¶4 With respect to Husband’s pension through USPHS, the
stipulated decree provided,
All of [Husband’s] years of employment with
USPHS accrued during the marriage, and
[Husband] is currently receiving the payments of
the retirement benefits from the USPHS Pension.
The “disposable retired pay” amount of the USPHS
pension benefit shall be divided equally pursuant
20140179-CA 2 2016 UT App 146Thayer v. Thayer
to Johnson v. Johnson, 2012 UT App 22[,] and 10
U.S.C.A. § 104(a)(4)(C).[ 2] “Disposable retired pay”
is defined as gross retirement pay less authorized
deductions, including amounts properly deducted
for federal, state, or local taxes and disability
benefits.
Commencing with the June 2013 pension
compensation, [Wife] is awarded fifty-percent
(50%) of the disposable retired pay. The U.S. Office
of Personnel will calculate the “disposable retired
pay” per existing regulations, and both parties will
be responsible for reporting their complete income
and paying taxes on their income. Neither party
assumes liability for the other party’s tax
obligation. The United States Office of Personnel
Management is directed to pay [Wife’s] share
directly to [Wife].
¶5 Anticipating the possibility of delays in implementing the
payment plan with USPHS, the decree also provided an interim
payment mechanism:
Commencing with the June 2013, pension
compensation, until the time that the division of
the USPHS Pension is implemented, [Husband]
2. The reference to section 104(a)(4)(C) of the Uniformed Services
Former Spouses’ Protection Act (the USFSPA) in the stipulated
decree appears to be a typographical error, as the section
number of the USFSPA is 1408, not 104. Indeed, it appears that
section 104 of title 10 in the United States Code does not exist. As
neither party contests the applicability of the USFSPA to the
division of Husband’s retirement pay, we refer to section 1408,
not 104, from this point forward.
20140179-CA 3 2016 UT App 146Thayer v. Thayer
shall pay [Wife] the monthly sum of $2,389.93.
Payment shall be due within ten (10) days of
[Husband] receiving any retirement distribution.
[Husband] shall not pay [Wife] directly once the
plan administrator implements the division of the
USPHS Pension.
A. Wife’s Pensions
¶6 Following the entry of the divorce decree, Husband
proposed a qualified domestic relations order that would require
the plan administrator to pay Husband one half of each of Wife’s
gross pension payments. Wife objected, contending that the
decree defined the amount to be paid to Husband as “gross
retirement pay less authorized deductions,” such as taxes and
disability, and that only her net payments should be subject to
division. Husband responded that there were no “authorized
deductions” from her pay under applicable law. In particular, he
argued that Wife was not disabled and that both Alaska’s and
Utah’s retirement systems are required by law to divide pension
payments prior to tax deductions.
¶7 The district court sided with Husband, ruling that “the
divisible amount is [Wife’s] ‘gross retirement pay.’” The court
reasoned that “the decree of divorce identified possible
deductions (for example, taxes and disability benefits) that may
be made before the division of the retirement benefit, so long as
those deductions are authorized.” (Emphasis in original.)
However, the court determined that “there are no authorized
deductions that may be taken before the assets are divided
between the parties.” In particular, it found that neither the
Alaska nor the Utah retirement systems “permit[ted] the tax
deductions prior to the division of gross retirement pay” and
that Wife “does not receive disability benefits that would be
available for deductions.” Neither party contests this ruling on
appeal.
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B. Husband’s Pension
¶8 Wife submitted to the Personnel Center in charge of
administering Husband’s pension a request that she be paid
monthly the portion of Husband’s retirement pay awarded to
her in the decree. In December 2013, the Personnel Center
advised Wife that “[a]bsent a successful objection from your
former spouse . . . , your direct payment will begin on February
1, 2014.” The Personnel Center estimated that she would receive
each month the sum of $3,455.02, which was fifty percent of
Husband’s “disposable retired pay,” as calculated by the
Personnel Center.
¶9 However, in January 2014, Husband objected to the
Personnel Center’s proposed division of his retired pay.
Husband asserted that the Personnel Center’s proposal was not
consistent with the decree of divorce because the proposed
payout to Wife did not calculate Husband’s disposable retired
pay according to Johnson and 10 U.S.C. section 1408(a)(4)(C) of
the Uniformed Services Former Spouses’ Protection Act (the
USFSPA), as the decree required. He argued that Johnson and the
statute required that federal, state, and local taxes and disability
benefits be subtracted to arrive at his disposable retired pay and
that the Personnel Center’s proposed calculation instead
improperly divided his gross pay.
¶10 As a result of Husband’s objection, the Personnel Center
notified Wife that it “disapprove[d] [her] request for division of
[Husband’s] retired pay.” It explained to Wife that Johnson, the
case the divorce decree referenced as a guide for the division of
Husband’s retirement pay and a source for the definition of
“disposable retired pay,” “cite[d] federal law as it existed prior
to 1990 and not as it exists today” and that under current federal
law, while “[d]isability payments are excluded,” “[t]axes are not
excluded from gross retired pay to arrive at disposable retired
pay.” The Personnel Center noted, as well, that its
20140179-CA 5 2016 UT App 146Thayer v. Thayer
“implementing regulations . . . also contain the definition of
disposable retired pay” and that under that definition, “[t]axes
are not excluded for divorces that occurred on or after February
3, 1991.” As a consequence, the Personnel Center disapproved
Wife’s request “[b]ecause of the conflict between [the] Decree
and [current federal law], and based on [Husband’s] objection to
[the Personnel Center’s] proposed implementation.”
¶11 Wife then submitted a proposed military retired pay
division order that provided that she be “awarded fifty percent
(50%) of [Husband’s] disposable military retired pay.” Husband
objected—this time to the district court—on the same ground
that he had objected to the Personnel Center’s proposed division,
namely, that Wife’s proposal did not incorporate the stipulation
in the divorce decree that Husband’s disposable retired pay be
“divided equally pursuant to Johnson v. Johnson, 2012 UT App
22[,] and 10 U.S.C.A. § [1408](a)(4)(C).” In this regard, he argued
that the court in Johnson “defined the ‘authorized’ deductions for
a military pension as federal and state taxes and held that it was
not authorized to ‘treat gross [military] retirement pay as marital
property divisible upon divorce.’” (Alteration in original)
(quoting Johnson v. Johnson, 2012 UT App 22, ¶ 23, 270 P.3d 556,
aff’d in part, rev’d in part, 2014 UT 21, 330 P.3d 704). As a result,
according to Husband, “Utah Courts only have authority to
divide [his] net retirement income” and the Personnel Center’s
proposed disbursal of $3,455.02 per month to Wife was “actually
50% of [Husband’s] gross retirement pay,” not fifty percent of
his net pay. He asserted that even if the division the parties had
agreed upon was inconsistent with current federal law or the
Personnel Center’s implementing regulations, the parties had
“specifically recognized, discussed, and agreed to the
applicability of Johnson to [Husband’s] military retirement
account” and that “Johnson cannot . . . be arbitrarily removed
from the Decree.” Husband further argued that the decree itself
“provides for the remedy” in the event that the Personnel Center
could not implement the division, in the form of the $2,389.93
20140179-CA 6 2016 UT App 146Thayer v. Thayer
per month designated as the interim payment Husband was to
make “until the time that the division of the USPHS Pension is
implemented.”
¶12 In response, Wife argued that Johnson does not stand for
the proposition that military retirement income may only be
divided net of tax deductions. Rather, she pointed out, as had
the Personnel Center, that Johnson involved a pre-1991 divorce
and applied a federal statute and regulations “which at the time
did deduct taxes prior to division.” She argued that rather than
adopting a specific formula, Johnson “stands for the proposition
that Utah law cannot order a division of Federal retirement that
exceeds federal regulations.” Thus, the Personnel Center’s
original proposed division of Husband’s retired pay was “in
keeping with Johnson” because it had “calculated the division of
the USPHS Pension per existing Federal regulations.”
¶13 The district court sustained Husband’s objection, stating
that it was “persuaded by the arguments and authorities of
[Husband] on the subject and adopts and incorporates them.”
The court directed Husband to “prepare an order consistent”
with its ruling. Husband submitted his proposed order, and after
Wife objected and a hearing was held, the court entered its final
order affirming that Husband’s retirement pay should be
divided “pursuant to Johnson v. Johnson, 2012 UT App 22[,] and
10 U.S.C.A. § [1408](a)(4)(C),” as provided in the decree. In
reaching this decision, the court interpreted Johnson as Husband
had urged—ruling that the case had definitively established
federal and state taxes as “authorized” deductions from federal
retirement pay and thus barred the court from treating
Husband’s gross retirement pay as “‘marital property divisible
upon divorce.’” (Quoting Johnson, 2012 UT App 22, ¶ 23.) The
court noted that the parties had “specifically recognized and
agreed to the applicability of the pension division language in
Johnson to [Husband’s] USPHS Pension” and that, consequently,
20140179-CA 7 2016 UT App 146Thayer v. Thayer
it “only ha[d] authority to order the division of the net amount
of [Husband’s] USPHS Pension.”
¶14 Wife appeals from this order.
ISSUES AND STANDARDS OF REVIEW
¶15 Wife argues, first, that the district court incorrectly
interpreted Johnson v. Johnson, 2012 UT App 22, 270 P.3d 556, aff’d
in part, rev’d in part, 2014 UT 21, 330 P.3d 704, as mandating that
Utah courts divide federal pensions on a net basis, and second,
that the district court incorrectly interpreted portions of the
parties’ divorce decree. We review interpretations of case law for
correctness. See Daniels v. Gamma West Brachytherapy, LLC, 2009
UT 66, ¶ 46, 221 P.3d 256; see also Gardner v. Gardner, 2012 UT
App 374, ¶ 14, 294 P.3d 600 (interpreting a decree of divorce for
correctness).
¶16 Wife also argues that she is entitled to an award of
attorney fees incurred by enforcing the provisions of the decree
both below and on appeal, pursuant to section 30-3-3(2) of the
Utah Code. Section 30-3-3(2) permits a court to award attorney
fees related to “any action to enforce . . . division of property in a
domestic case,” “in its discretion,” so long as the party seeking
an award of fees “substantially prevailed upon the claim or
defense.” Utah Code Ann. § 30-3-3(2) (LexisNexis 2013). See
generally Connell v. Connell, 2010 UT App 139, ¶¶ 27–32, 233 P.3d
836.
ANALYSIS
¶17 Husband and Wife entered into a stipulated divorce
decree. We have recognized that even in the context of a divorce,
parties are generally bound by their stipulations. See Bayles v.
Bayles, 1999 UT App 128, ¶ 15, 981 P.2d 403 (“Stipulations
20140179-CA 8 2016 UT App 146Thayer v. Thayer
entered into in contemplation of a divorce ‘are conclusive and
binding on the parties unless, upon timely notice and for good
cause shown, relief is granted therefrom.’” (quoting Maxwell v.
Maxwell, 796 P.2d 403, 406 (Utah Ct. App. 1990))). We have also
previously held that parties may be bound to the stipulations
they enter into regarding division of military retirement pay. See
Maxwell, 796 P.2d at 406–07. Accordingly, we interpret the
parties’ decree “according to established rules of contract
interpretation.” Mitchell v. Mitchell, 2011 UT App 41, ¶ 5, 248
P.3d 65 (citation and internal quotation marks omitted).
The underlying purpose in . . . interpreting a
contract is to ascertain the intentions of the parties
to the contract. To ascertain the parties’ intentions,
we look to the plain meaning of the contractual
language, and we consider each contract
provision . . . in relation to all of the others, with a
view toward giving effect to all and ignoring
none.”
Osguthorpe v. Wolf Mountain Resorts, LC, 2013 UT 12, ¶ 10, 322
P.3d 620 (second omission in original) (citations and internal
quotation marks omitted). Nevertheless, “[t]he overriding
consideration [in divorce proceedings] is that the ultimate
division be equitable—that property be fairly divided between
the parties”—and as a result, “the ability of parties to contract is
constrained to some extent” by principles of equity. See Granger
v. Granger, 2016 UT App 117, ¶ 15 (first alteration in original)
(citation and internal quotation marks omitted).
¶18 The parties in this case stipulated that Husband’s military
retirement pay was to be “divided equally pursuant to Johnson v.
Johnson, 2012 UT App 22[,] and 10 U.S.C.A. § [1408](a)(4)(C).”
The base amount to be divided was the “disposable retired pay,”
which the parties defined “as gross retirement pay less
20140179-CA 9 2016 UT App 146Thayer v. Thayer
authorized deductions, including amounts properly deducted
for federal, state, or local taxes and disability benefits.”
¶19 Husband and Wife disagree about the district court’s
justification for ordering that Husband’s retirement pay be
divided on a net basis. Wife argues that the district court’s
interpretation of the decree is necessarily dependent on its
interpretation of Johnson; because the district court determined
that Johnson stood for the proposition that a state court is
authorized to divide military retirement pay only on a net basis,
it interpreted the decree to include the same limitation.
Husband, on the other hand, argues that the district court did
not interpret Johnson at all. Instead, he argues that the parties
themselves interpreted Johnson by incorporating it into the
decree and that by doing so, the parties “adopted the express
definition of ‘disposable retired pay’ set forth in Johnson,” which
he characterizes as requiring division of disposable retired pay
on a net basis. Thus, he contends that the district court merely
adopted the interpretation to which the parties themselves had
agreed.
¶20 We conclude that the district court incorrectly interpreted
the decree to require that Husband’s retirement pay be divided
on a net basis. First, we conclude that the district court
incorrectly interpreted Johnson as mandating that military
retirement pay be divided on a net basis. 3 Johnson stands for an
3. Although, as discussed above, Husband argues that the
district court did not interpret Johnson at all, the district court’s
final order does not support this contention. The court focused
its analysis of how the decree was meant to divide Husband’s
pension payments on language in the pension provision stating
that the pension was to be “divided equally pursuant to Johnson
v. Johnson . . . and . . . section [1408](a)(4)(C).” And the court’s
ultimate determination that Wife was entitled to one half of each
(continued…)
20140179-CA 10 2016 UT App 146Thayer v. Thayer
approach to dividing military retirement pay based on the
USFSPA’s definition of “disposable retired pay” in force at the
time of the award rather than on the specific mathematical
calculation of that division Johnson applied in the particular
circumstances of that case. See 10 U.S.C. § 1408(a)(4) (2012). Next,
we conclude that the parties’ agreement as a whole requires that
Husband’s retirement pay be divided according to the USFSPA’s
current definition of “disposable retired pay,” which does not
authorize deductions for taxes.
I. District Court’s Decision Regarding Military Retirement Pay
Division
¶21 The parties have presented competing interpretations of
Johnson on appeal—one that comports with the version of the
USFSPA applicable when their decree was entered and one that
does not. When the parties’ decree was entered, the USFSPA’s
definition of “disposable retired pay” did not permit deductions
for federal, state, or local taxes; 4 however, the divorce decree in
(…continued)
net payment, not gross, was explicitly based on the court’s
interpretation of that case: “Johnson defines the ‘authorized’
deductions for military pension as federal and state taxes and
holds that the Court is not authorized to ‘treat gross [military]
retirement pay as marital property divisible upon divorce.’”
(Alteration in original) (quoting Johnson v. Johnson, 2012 UT App
22, ¶ 23, 270 P.3d 556, aff’d in part, rev’d in part, 2014 UT 21, 330
P.3d 704).
4. At the time the parties’ decree was entered, disposable retired
pay was defined as follows:
(4) The term “disposable retired pay” means the
total monthly retired pay to which a member is
entitled less amounts which –
(continued…)
20140179-CA 11 2016 UT App 146Thayer v. Thayer
Johnson was entered in 1984, and at that time, the USFSPA’s
definition of “disposable retired pay” required deduction of
federal, state, and local taxes prior to division. 5 Compare
(…continued)
(A) are owed by that member to the United
States for previous overpayments of retired pay
and for recoupments required by law resulting
from entitlement to retired pay;
(B) are deducted from the retired pay of such
member as a result of forfeitures of retired pay
ordered by a court-martial or as a result of a
waiver of retired pay required by law in order
to receive compensation under title 5 or title 38;
(C) in the case of a member entitled to retired
pay under chapter 61 of this title, are equal to
the amount of retired pay of the member under
that chapter computed using the percentage of
the member’s disability on the date when the
member was retired (or the date on which the
member’s name was placed on the temporary
disability retired list); or
(D) are deducted because of an election under
chapter 73 of this title to provide an annuity to a
spouse or former spouse to whom payment of a
portion of such member’s retired pay is being
made pursuant to a court order under this
section.
10 U.S.C. § 1408(a)(4) (2012).
5. By contrast, “disposable retired pay” in 1984 was defined as
follows:
(4) ‘Disposable retired or retainer pay’ means the
total monthly retired or retainer pay to which a member
is entitled (other than the retired pay of a member
(continued…)
20140179-CA 12 2016 UT App 146Thayer v. Thayer
(…continued)
retired for disability under chapter 61 of this title)
less amounts which—
(A) are owed by that member to the United
States;
(B) are required by law to be and are deducted
from the retired or retainer pay of such
member, including fines and forfeitures
ordered by courts-martial, Federal employment
taxes, and amounts waived in order to receive
compensation under title 5 or title 38;
(C) are properly withheld for Federal, State, or local
income tax purposes, if the withholding of such
amounts is authorized or required by law and
to the extent such amounts withheld are not
greater than would be authorized if such
member claimed all dependents to which he
was entitled;
(D) are withheld under section 3402(i) of the
Internal Revenue Code of 1954 (26 U.S.C.
3402(i)) if such member presents evidence of a
tax obligation which supports such
withholding;
(E) are deducted as Government life insurance
premiums (not including amounts deducted for
supplemental coverage); or
(F) are deducted because of an election under
chapter 73 of this title to provide an annuity to a
spouse or former spouse to whom payment of a
portion of such member’s retired or retainer
pay is being made pursuant to a court order
under this section.
Uniformed Services Former Spouses’ Protection Act, Pub. L. No.
97-252, § 1408(a)(4), 96 Stat. 730, 730–31 (1982) (emphasis added),
(continued…)
20140179-CA 13 2016 UT App 146Thayer v. Thayer
Uniformed Services Former Spouses’ Protection Act, Pub. L. No.
97-252, § 1408(a)(4)(C), 96 Stat. 730, 730–31 (1982) (providing that
disposable retired pay “means the total monthly retired or
retainer pay to which a member is entitled . . . less amounts
which . . . are properly withheld for Federal, State, or local
income tax purposes”), with 10 U.S.C. § 1408(a)(4) (2012)
(defining “disposable retired pay” without an authorized
deduction for federal, state and local taxes). Wife argues that in
Johnson we held that “state courts must comply with the federal
mandate in dividing retirement benefits governed by [the]
USFSPA and, in particular, [that] state courts are bound by the
definition of ‘disposable retired pay’ set forth in [the] USFSPA.”
She asserts that Johnson merely applied the definition of
“disposable retired pay” in the statute at the time and that
Johnson’s holding did not amount to “an absolute prohibition
against” the calculation of the marital share based on “gross
retirement pay.”
¶22 Husband counters that the parties incorporated the exact
calculation of disposable retired pay that was applicable in
Johnson—gross retirement pay net of state and federal taxes—in
their own agreement, regardless of the fact that Johnson’s
definition of disposable retired pay no longer accords with
federal law, which now does not authorize a deduction for state
or federal taxes. He argues that the fact that Johnson applied an
older version of title 10, section 1408 of the United States Code
“is immaterial” because the parties’ decree adopted the express
definition of “disposable retired pay” set forth in Johnson and
thus calculated the division on a net basis. Husband then
characterizes the decree as requiring that his pension be divided
according to Johnson and the USFSPA conjunctively, which,
(…continued)
https://www.gpo.gov/fdsys/pkg/STATUTE-96/pdf/STATUTE-96-
Pg718.pdf [https://perma.cc/TD9F-EK4M].
20140179-CA 14 2016 UT App 146Thayer v. Thayer
according to him, means that the disposable retired pay
calculation retains the older statute’s net-of-taxes concept as
recognized in Johnson, while importing from the current version
of the statute only the “express deduction for disability benefits.”
In other words, Husband claims he is entitled to a liberal
interpretation of the USFSPA that incorporates portions of both
the original and the amended version because the parties agreed
to that result.
¶23 We agree with Wife. We begin our analysis with a
discussion of pertinent cases that preceded Johnson to provide
context, and we then discuss Johnson itself. Finally, we consider
the parties’ agreement as set out in their decree of divorce.
A. Federal Case Law Before Johnson
¶24 Before Johnson, the United States Supreme Court had
decided two important cases related to the division of military
retirement pay that bear on our interpretation of Johnson—
McCarty v. McCarty, 453 U.S. 210 (1981), and Mansell v. Mansell,
490 U.S. 581 (1989). In McCarty, a couple divorced in California,
and the husband challenged the state court’s decision to divide
his military retirement pay according to California’s community
property laws. 453 U.S. at 218. At the time, federal law provided
that “[a] regular or reserve commissioned officer of the United
States Army who retires after 20 years of service is entitled to
retired pay” and characterized the entitlement as accruing only
to the retiree. Id. at 211–12, 232. As a result, the United States
Supreme Court held that federal law “preclude[d] a state court
from dividing military nondisability retired pay pursuant to
state community property laws,” because such an intrusion by
the state “injure[d] the objectives of the federal program.” Id. at
221, 227, 231–35. While the Court “recognize[d] that the plight of
an ex-spouse of a retired service member is often a serious one,”
id. at 235, it noted that “in no area has the Court accorded
Congress greater deference than in the conduct and control of
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military affairs,” id. at 236. Accordingly, the Court left it to
Congress to address any hardship on the military spouse arising
from the retired pay restriction. Id.¶25 In response to McCarty, Congress enacted the USFSPA.
Pub. L. No. 97-252, 96 Stat. 730 (1982). Section 1408 of the
USFSPA authorized state courts to treat a divorcing spouse’s
military retired pay as divisible marital property, but only that
portion it specifically defined as “disposable retired pay.” Id.; see
also Toone v. Toone, 952 P.2d 112, 113–14 (Utah Ct. App. 1998)
(discussing the holding in McCarty and the subsequent
enactment of the USFSPA). Seven years later, the Supreme Court
decided Mansell, where it addressed the question of whether, by
enacting the USFSPA, Congress “reject[ed] . . . McCarty’s holding
that state law is pre-empted . . . [and] restor[ed] to state courts all
pre-McCarty authority” or, instead, whether the USFSPA was
“only a partial rejection of the McCarty rule that federal law
preempts state law regarding military retirement pay.” Mansell,
490 U.S. at 588. The Court determined that while the USFSPA
“affirmatively grants state courts the power to divide military
retirement pay, . . . its language is both precise and limited.” Id.The Court concluded that although “state courts have been
granted the authority to treat disposable retired pay as community
property[,] they have not been granted the authority to treat total
retired pay as community property.” Id. at 589 (emphases added).
Rather, by providing that only “disposable retired or retainer
pay,” as defined in the statute, could be divided as community
property, Congress intended to narrow the prior statute’s
complete preemption on the authority of state courts to make
orders regarding division of military retirement pay but not to
eliminate it entirely.
¶26 In sum, a state court purporting to treat military
retirement pay as divisible marital property must follow federal
law in doing so. See id. (“Thus, under the [USFSPA’s] plain and
precise language, state courts have been granted the authority to
20140179-CA 16 2016 UT App 146Thayer v. Thayer
treat disposable retired pay as community property; they have
not been granted the authority to treat total retired pay as
community property.”). And federal law permits a state court to
divide only the portion of the military retirement pay designated
by the USFSPA as disposable retired pay, which it defines in
“both [a] precise and limited” way. Id. at 588. Thus, while a state
court has authority to order division of a party’s disposable
retired pay in a divorce proceeding, it does not have authority to
depart from the “precise and limited” definition of disposable
retired pay provided in the USFSPA when doing so.
¶27 Mansell’s holding is significant to our analysis of the
present case for two reasons. First, it established that federal law
imposes certain limits on the authority of a state court to
designate military retirement pay as marital property and divide
it between the spouses. Second, it held that, in order to comply
with federal law when dividing an ex-spouse’s disposable
retired pay, a state court must hew to the USFSPA’s definition of
that term; in other words, disposable retired pay in the context of
military retirement pay is a specialized term that carries the
distinct meaning Congress has ascribed to it.
B. Johnson v. Johnson
¶28 Before Johnson v. Johnson, 2012 UT App 22, 270 P.3d 556,
aff’d in part, rev’d in part, 2014 UT 21, 330 P.3d 704, we applied
Mansell’s holding in Maxwell v. Maxwell, 796 P.2d 403 (Utah Ct.
App. 1990). In Maxwell, the husband challenged the trial court’s
enforcement of a stipulated provision in the parties’ divorce
decree that awarded to the wife half of the total military
retirement benefits the husband accrued during the parties’
marriage. Id. at 404. Although we affirmed on other grounds, we
noted that Mansell “did not restore authority to states to
determine questions of divisibility as to all types of military
pay.” Id. at 405. Instead, “Mansell concluded that the [USFSPA]
only granted state courts discretion to divide disposable retired
20140179-CA 17 2016 UT App 146Thayer v. Thayer
pay,” which the USFSPA defined as “gross retirement pay less
authorized deductions, including amounts properly deducted
for federal, state, or local taxes.” Id. (citations and internal
quotation marks omitted). We held that “it is clear that under
Mansell . . . [the] USFSPA does not authorize state courts to treat
gross retirement pay as marital property divisible upon
divorce.” Id. at 405–06. Thus, at the time Johnson was decided, we
had already acknowledged that federal law carefully prescribes
a state court’s authority to divide military retirement benefits in
a divorce proceeding.
¶29 Johnson required us to construe the application of the
USFSPA to the division of military pension benefits in the
context of a 1984 divorce decree. See Johnson, 2012 UT App 22,
¶ 2. At the time of the decree, the husband was still on active
service, and the decree awarded the wife half of the husband’s
future military retirement pay. Id. Over twenty years later, the
husband had retired from the military and the parties asked the
trial court to resolve their dispute over the specifics of how the
pension benefits for which husband had now become eligible
were to be divided. Id. ¶¶ 4–5. The court calculated the wife’s
share “based on [the husband’s] gross monthly retirement
benefit without first deducting federal, state, and local taxes.” Id.
¶ 5. The husband challenged this calculation, arguing that the
USFSPA’s definition of disposable retired pay required that
taxes be deducted before allocating to the wife her portion. Id.
¶ 7. We agreed with the husband and reversed the trial court’s
ruling, remanding for the “the [trial] court to recalculate [the
wife’s] portion of the retirement benefit” by applying any
authorized deductions, including taxes. Id. ¶ 23.
¶30 In resolving this issue, we reiterated Mansell’s holding
that a state court may only treat the disposable retired pay
portion of a military retirement pension as divisible property in
accordance with the USFSPA. Id. ¶ 22. We then referred to the
USFSPA’s definition of “disposable retired pay” to determine
20140179-CA 18 2016 UT App 146Thayer v. Thayer
whether the trial court’s order comported with the USFSPA. Id.We noted that the USFSPA specifically defined “‘disposable
retired pay’” to require certain “‘authorized deductions’” before
division of the pension and that those deductions included
“‘amounts properly deducted for federal, state, or local taxes.’”
Id. (quoting Maxwell, 796 P.2d at 405). As a consequence, we
reversed the trial court’s order because it provided for division
of the husband’s monthly pension benefit without first making
the deductions required by the USFSPA, and we remanded for
the court to recalculate the wife’s portion net of those
deductions. Id. ¶ 23.
¶31 Thus, in Johnson, we ultimately reversed because the trial
court had ordered a division of the husband’s military
retirement benefits that did not take into account the
“authorized deductions” required by the USFSPA, which at the
time included federal, state, and local taxes. However, contrary
to Husband’s arguments in the present case, we did not
delineate or mandate any precise calculation of disposable
retired pay. We did not, for example, hold that the USFSPA
requires that divisions of military retirement pay must be
calculated net of taxes. Rather, we simply held that the USFSPA
defined “disposable retired pay” as “gross retirement pay less
authorized deductions” and that the trial court had failed to hew
to requirements of the USFSPA when it purported to divide the
husband’s gross military retirement pay as marital property
without including the authorized deductions the USFSPA
specified. Id. Indeed, we remanded for the trial court to
determine the wife’s specific portion by calculating it according
to the requirements of the USFSPA; we did not provide the court
any specific calculation for the division, list the exact deductions
the USFSPA had “authorized,” or suggest that it is inherently
proper under the USFSPA to always deduct taxes from the gross
retirement benefit. See id.
20140179-CA 19 2016 UT App 146Thayer v. Thayer
¶32 As a result, Johnson does not stand for any particular
mathematical calculation of military retired pay, as Husband
urges and as the district court determined here. Instead, Johnson
stands for the general principle that when dividing military
retirement pay as marital property, district courts must apply
the precise definition of “disposable retired pay” found in the
applicable version of the USFSPA, including “authorized”
deductions, when calculating an ex-spouse’s portion and making
a division order. Because the Johnson court applied the version of
the USFSPA in effect at the time of the parties’ divorce, 6 it used
the definition of “disposable retired pay” that was then in force.
But that did not fix that specific formula as the basis for
calculating disposable retired pay forevermore; rather, the
formula is determined by the applicable version of federal law,
and the USFSPA has been amended significantly since the
circumstances Johnson addressed. See supra ¶ 21 notes 4 and 5.
Thus, we conclude that the parties’ inclusion of Johnson in their
stipulated decree does not itself require that Husband’s
retirement benefits be divided on a net basis.
II. The Parties’ Decree
¶33 Our conclusion regarding Johnson does not completely
resolve the dispute between the parties, however. The parties’
central disagreement is whether they intended that Wife be
6. The issue of which version of the USFSPA was applicable—
whether the version in effect at the time of divorce or at the time
of retirement—was not addressed in Johnson. Rather, the court
viewed the USFSPA through the lens of Maxwell, quoting not the
text of the USFSPA itself, but Maxwell’s recitation of the text of
the USFSPA. The Johnson opinion gives no indication that the
court knowingly selected one version of the USFSPA over
another or was even aware that the USFSPA had been amended
after Maxwell was decided.
20140179-CA 20 2016 UT App 146Thayer v. Thayer
awarded one half of an amount different from (and less than)
Husband’s disposable retired pay as currently defined by the
USFSPA, that is, an equal portion of Husband’s net retirement
benefit rather than an equal portion before deduction of taxes as
the current version of the USFSPA provides. At the time the
parties’ decree was entered, the USFSPA did not authorize
deductions for taxes prior to division of disposable retired pay
(and had not authorized such deductions for over twenty years).
See supra ¶ 21 notes 4 and 5. Further, as it had from its inception,
the USFSPA provided “a direct payment mechanism which
authorize[d] the appropriate military financial center to pay
directly to former military spouses who qualify under the
[USFSPA], the court ordered apportioned share of a former
spouse’s retirement benefits.” See Maxwell, 796 P.2d at 405; see
also 10 U.S.C. § 1408(d)(1) (2012). This mechanism permitted the
appropriate federal financial center to “make payments (subject
to the limitations of this section) from the disposable retired pay
of the member to the spouse or former spouse,” but only “in an
amount sufficient to satisfy . . . the amount of disposable retired
pay specifically provided for in the court order.” See 10 U.S.C.
§ 1408(d)(1). The USFSPA also specified that “[t]he total amount
of the disposable retired pay of a member payable under all
court orders pursuant to subsection (c) may not exceed 50
percent of such disposable retired pay.” See id. § 1408(e)(1).
¶34 Based on the decree’s pension provisions as a whole, we
conclude that the parties intended that Wife receive half of
Husband’s disposable retired pay as defined under the current
version of the USFSPA and that the district court should have
divided Husband’s retirement pay accordingly, rather than on a
net basis. See Lee v. Barnes, 1999 UT App 126, ¶ 11, 977 P.2d 550(explaining that “[c]ontracts should be read as a whole, in an
attempt to harmonize and give effect to all of the contract
provisions” (citation and internal quotation marks omitted)).
20140179-CA 21 2016 UT App 146Thayer v. Thayer
¶35 Here, the parties themselves characterized as marital
property the exact portion of Husband’s retirement benefit that
the USFSPA has designated as divisible by state courts—the
disposable retired pay. See 10 U.S.C. § 1408(c)(1) (“Subject to the
limitations of this section, a court may treat disposable retired
pay payable to a member for pay periods beginning after June
25, 1981, either as property solely of the member or as property
of the member and his spouse in accordance with the law of the
jurisdiction of such court.”); accord Maxwell, 796 P.2d at 405.
Husband and Wife agreed that Husband’s military retirement
pay was marital property to be equally divided and that the
portion of Husband’s military retirement benefit to be “divided
equally” was the disposable retired pay itself: Wife was to be
awarded “fifty-percent (50%) of the disposable retired pay.”
They then defined “disposable retired pay” as “gross retirement
pay less authorized deductions, including amounts properly
deducted for federal, state, or local taxes and disability benefits.”
Under the current version of the USFSPA, however, taxes are not
“properly deducted” from gross retirement pay. The question
arises then whether, as Husband asserts, the decree’s language
indicates the parties’ intent to depart from the applicable
definition of disposable retired pay as the basis for Wife’s share
of Husband’s military retirement pay and award her an equal
share of net rather than gross pay. A reasonable interpretation of
the provision as a whole does not support such an approach.
¶36 First, the parties seem to have included the reference to
Johnson in this provision, as well as Johnson’s characterization of
disposable retired pay, as a source of guidance on the meaning
and application of that term without understanding that Johnson
ultimately applied a definition of disposable retired pay that had
not been in force for decades. Johnson, as discussed above, did
not itself “define” the authorized deductions in a particular way.
Instead, the decision is properly read to mean that a state court’s
division of military retirement pay must conform to the
USFSPA’s requirements, including the definition of “disposable
20140179-CA 22 2016 UT App 146Thayer v. Thayer
retired pay” and its proper and authorized deductions. See supra
¶¶ 28–32. As a result, the inclusion of a reference to Johnson in
the decree, rather than enshrining a specific definition of
disposable retired pay, seems more reasonably interpreted as a
commitment to look to the applicable version of the USFSPA to
determine which specific deductions are authorized and then
calculate Wife’s share accordingly. See McNeil Eng’g & Land
Surveying, LLC v. Bennett, 2011 UT App 423, ¶ 17, 268 P.3d 854(explaining that a “[contract] interpretation which gives a
reasonable, lawful, and effective meaning to all the terms is
preferred to an interpretation which leaves a part unreasonable,
unlawful, or of no effect” (citation and internal quotation marks
omitted)); cf. Munford v. Lee Servicing Co., 2000 UT App 108, ¶ 18,
999 P.2d 23 (“Provisions which are apparently conflicting are to
be reconciled and harmonized, if possible, by reasonable
interpretation so that the entire agreement can be given effect.”
(citation and internal quotation marks omitted)). Put another
way, nothing in Johnson or the parties’ decree suggests that in
incorporating the term “disposable retired pay” in their
stipulation, the parties intended to define that term in a manner
inconsistent with current federal law. Thus, the reference in their
decree to Johnson, accompanied by a reference to the USFSPA
itself, is reasonably interpreted as a way (albeit somewhat
ineffective) of expressing the parties’ intent to divide Husband’s
retirement pay as the USFSPA required, not as a commitment to
apply the obsolete definition of disposable retired pay utilized in
Johnson in preference to the definition applicable at the time of
the parties’ stipulation.
¶37 Second, the parties agreed that Wife was to receive her
portion of Husband’s pension in accordance with the exact
disbursal mechanism provided by the USFSPA, a mechanism
that depended on the USFSPA’s then-current definition of
disposable retired pay. The decree provided that “[c]ommencing
with the June 2013, pension compensation, [Wife] is awarded
fifty-percent (50%) of the disposable retired pay” and directed
20140179-CA 23 2016 UT App 146Thayer v. Thayer
the Personnel Center to both “calculate the ‘disposable retired
pay’ per existing regulations” and “pay [Wife’s] share directly to
[Wife].” The Personnel Center, however, rejected Wife’s request
for direct payment because neither the statute nor its
implementing regulations allowed direct payment calculated on
any basis other than the current definition of disposable retired
pay, which was not net of taxes; the Personnel Center noted that
applicable regulations had not permitted it to deduct taxes since
1991. Further, the parties agreed that until “the [Personnel
Center’s] plan administrator implements the division of
[Husband’s] pension,” Husband was required to pay Wife a
fixed “monthly sum of $2,389.93.” Husband argues that this
provision is intended as an alternative mechanism for payment if
the Personnel Center is unable to make direct payments. But by
its terms, this provision anticipates that the Personnel Center
will calculate and disburse Wife’s portion as the decree required.
And the provision for payment by Husband in the meantime by
its terms operates merely as a stop-gap mechanism, so that Wife
would receive some portion of Husband’s retirement pay until
the Personnel Center began direct payment. See Glenn v. Reese,
2009 UT 80, ¶ 10, 225 P.3d 185 (explaining that when we
interpret a contract, we will “consider each contract provision . . .
in relation to all of the others, with a view toward giving effect to
all and ignoring none” (omission in original) (citation and
internal quotation marks omitted)); McNeil, 2011 UT App 423,
¶ 17 (explaining that “[w]hen interpreting a contract we attempt
to give effect to each provision, and we look for a reading
that . . . avoids rendering any provision meaningless” (citations
and internal quotation marks omitted)). Thus, this provision is
clearly not intended as a permanent alternative to direct pay;
rather, the provision for direct payment reinforces the notion
that the parties intended that Wife be paid her share in
accordance with the USFSPA and “existing regulations,”
something only possible if the division is based on the USFSPA’s
operative definition of “disposable retired pay.”
20140179-CA 24 2016 UT App 146Thayer v. Thayer
¶38 Third, this interpretation comports with the district
court’s interpretation of the portions of the decree regarding the
division of Wife’s pensions, an interpretation which neither party
has contested on appeal. See G.G.A., Inc. v. Leventis, 773 P.2d 841,
845 (Utah Ct. App. 1989) (“In interpreting a contract, we
determine what the parties intended by examining the entire
contract and all of its parts in relation to each other, giving an
objective and reasonable construction to the contract as a
whole.”). Before the district court resolved the dispute over
whether the division of Husband’s pension should be calculated
on a net basis, the court considered the parties’ dispute about
whether payments from Wife’s retirement accounts should be
calculated on a net basis. The decree provided that Wife’s
“monthly compensation” retirement payments from the Alaska
and Utah pension systems were to be divided equally, with the
“monthly compensation” defined as “gross retirement pay less
authorized deductions, including amounts properly deducted
for federal, state, or local taxes and disability benefits”—the
same words the parties used to define Husband’s disposable
retired pay, the basis for dividing his military retirement
payments. But regarding Wife’s retirement accounts, the district
court determined that “the decree of divorce [only] identified
possible deductions . . . that may be made before division of
[Wife’s] retirement benefit, so long as those deductions are
authorized and may otherwise be properly deducted” and that
neither Alaska’s nor Utah’s pension systems “permit[ted] the tax
deductions prior to the division of gross retirement pay.”
Accordingly, the court concluded that the divisible amount of
Wife’s Alaska and Utah pensions was the gross payment, not the
net. This interpretation is entirely consistent with our own
interpretation of identical language in the decree respecting
division of Husband’s military retirement; like the retirement
plans in Alaska and Utah, deductions for taxes were “possible”
but ultimately not “authorized”—and therefore not “properly
deducted”—under the applicable version of the USFSPA. See
Encon Utah, LLC v. Fluor Ames Kraemer, LLC, 2009 UT 7, ¶ 28, 210
20140179-CA 25 2016 UT App 146Thayer v. Thayer
P.3d 263 (“In interpreting a contract, we look for a reading that
harmonizes the provisions and avoids rendering any provision
meaningless.”). Moreover, the fact that the court interpreted
identical language in the provisions of the decree dividing
Husband’s and Wife’s pension benefits so differently strongly
suggests that the difference in outcome regarding Husband’s
pension stemmed from the parties’ and the court’s
misinterpretation of Johnson, not from any intent to actually
divide the respective pension payments differently.
¶39 Finally, it is not insignificant that our interpretation of the
parties’ agreement produces a more equitable result. See Johnson
v. Johnson, 2014 UT 21, ¶ 25, 330 P.3d 704 (“[A] former spouse is
entitled to an equitable distribution of an employee spouse’s
retirement or pension benefits that accrue[] in whole or in part
during the marriage.” (second alteration in original) (citation
and internal quotation marks omitted)). At oral argument,
Husband conceded that he was taking the position on appeal
that his own pension be divided on a net basis even though he
had successfully argued below that Wife’s pensions be divided
on a gross basis—a result that, on its face appeared inequitable.
He asserted, however, that this result was justified because it
was what the parties had agreed to. But while parties in a
divorce proceeding may stipulate to certain terms regarding the
division of marital property, their freedom to contract is
constrained by the principles of equity. See Granger v. Granger,
2016 UT App 117, ¶ 15 (“[I]n divorce cases, the ability of parties
to contract is constrained to some extent by the equitable nature
of the proceedings . . . .”). Our conclusion that the parties’
agreement bound them to the specific definition of “disposable
retired pay” included in the USFSPA rather than being governed
by an obsolete definition allegedly articulated in Johnson puts
Husband and Wife on an equal footing in the division of their
respective retirement benefits by requiring that their respective
monthly payments be divided before taxes are deducted, as both
federal and state laws contemplate.
20140179-CA 26 2016 UT App 146Thayer v. Thayer
III. Attorney Fees
¶40 Wife requests an award of the attorney fees that she has
incurred to enforce the divorce decree on appeal and in the
district court below. Utah Code section 30-3-3(2) provides,
In any action to enforce an order of . . . division of
property in a domestic case, the court may award
costs and attorney fees upon determining that the
party substantially prevailed upon the claim or
defense. The court, in its discretion, may award no
fees or limited fees against a party if the court finds
the party is impecunious or enters in the record the
reason for not awarding fees.
Utah Code Ann. § 30-3-3(2) (LexisNexis 2013). “[A]n attorney
fees award granted under section 30-3-3(2) [is] within the wide
discretion of the trial court . . . .” Hall v. Hall, 2013 UT App 280,
¶ 28, 316 P.3d 970; Lyngle v. Lyngle, 831 P.2d 1027, 1030 (Utah Ct.
App. 1992) (“In an action to enforce the provisions of a divorce
decree, an award of attorney fees is based solely upon the trial
court’s discretion, regardless of the financial need of the moving
party.”). We also note that we have previously determined that
an action to have a court interpret the divorce decree, as we have
done in this appeal, is properly characterized as an action to
enforce the decree under section 30-3-3(2). See Osborne v. Osborne,
2011 UT App 150, ¶¶ 8, 10, 260 P.3d 202; Moon v. Moon, 1999 UT
App 12, ¶¶ 18, 33, 973 P.2d 431; Lyngle, 831 P.2d at 1030. And
“[t]he guiding factor in fee awards under subsection (2) is
whether the party seeking an award of fees substantially
prevailed on the claim.” Connell v. Connell, 2010 UT App 139,
¶¶ 28–30, 32, 233 P.3d 836 (further explaining that the purpose of
awarding attorney fees under section 30-3-3(2) is to “allow the
moving party to collect fees unnecessarily incurred due to the
other party’s recalcitrance,” and ordering that “[i]f the trial court
in its discretion orders payment of reasonable attorney fees
20140179-CA 27 2016 UT App 146Thayer v. Thayer
pursuant to subsection (2) [on remand], its order should be
supported by a finding that [the wife] substantially prevailed on
the motions for which she seeks attorney fees”).
¶41 “In divorce actions, we will generally award attorney fees
on appeal to the prevailing party if the trial court awarded
attorney fees and the receiving party prevails on the main issues
on appeal.” Oliekan v. Oliekan, 2006 UT App 405, ¶ 32, 147 P.3d
464. Here, while Wife was not the prevailing party below, she
has succeeded on appeal in obtaining a reversal of the district
court’s order. Therefore, Wife has ultimately substantially
prevailed both on appeal and in the district court. The district
court on remand should evaluate Wife’s “request for attorney
fees upon entering judgment at the conclusion of those
proceedings.” See Cantrell v. Cantrell, 2013 UT App 296, ¶ 22 n.6,
323 P.3d 586. If the court awards attorney fees at that point, the
award should also include Wife’s attorney fees reasonably
incurred for enforcing the decree on appeal. See Davis v. Davis,
2011 UT App 311, ¶ 23, 263 P.3d 520 (“Generally, when the trial
court awards [or should have awarded] fees in a domestic action
to the party who then substantially prevails on appeal, fees will
also be awarded to that party on appeal.” (alteration in original)
(citation and internal quotation marks omitted)); see also
Williamson v. Williamson, 1999 UT App 219, ¶ 14, 983 P.2d 1103(directing the trial court that if it awards the wife attorney fees
on remand, where she prevailed on appeal, it should “also . . .
hear evidence regarding her reasonable attorney fees on appeal
and . . . order [the husband] to pay those fees”).
CONCLUSION
¶42 We conclude that the district court’s order that Husband’s
military pension be divided on a net basis was an error where
the order was based on a misinterpretation of Johnson v. Johnson,
2012 UT App 22, 270 P.3d 556, aff’d in part, rev’d in part, 2014 UT
21, 330 P.3d 704, and a misunderstanding of the requirements of
20140179-CA 28 2016 UT App 146Thayer v. Thayer
military retirement pay division under federal law. The parties
themselves based the division of Husband’s pay on his
disposable retired pay, stipulated that the pension would be
divided according to Johnson and the USFSPA, and did not
indicate what deductions they regarded as “authorized.” Thus,
by stipulating that Husband’s disposable retired pay was the
amount to be equally divided, the parties incorporated the
specialized definition of that term, including its authorized
deductions, under federal law. And because the USFSPA’s
definition of “disposable retired pay” in effect at the time of the
parties’ divorce in 2013 did not authorize taxes as deductions
(and had not for nearly twenty-five years), we conclude that the
district court erred. Therefore, we remand for further
proceedings consistent with this opinion. 7
¶43 In addition, we direct the district court on remand to
determine, under Utah Code section 30-3-3(2), whether to award
Wife the attorney fees she has incurred to enforce the parties’
decree. Because Wife has substantially prevailed on appeal, if the
district court awards Wife attorney fees for enforcing the parties’
decree below, we direct the court to also award Wife the
attorney fees she incurred for enforcing the decree on appeal.
7. On remand, the district court should also award Wife the
difference between the amount she has been paid under the
stop-gap provision in the decree and the amount she should
have received by direct payment from the Personnel Center from
the time the Personnel Center approved her first payment
request.
20140179-CA 29 2016 UT App 146