Gurganus v. Gurganus

IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA16-163
Filed: 21 February 2017
Onslow County, No. 01 CVD 954
MARY N. GURGANUS, Plaintiff,
v.
CHARLES M. GURGANUS, Defendant.
Appeal by defendant from orders entered 3 September 2015 by Judge William
M. Cameron III in Onslow County District Court. Heard in the Court of Appeals
25 August 2016.
Sullivan & Tanner, P.A., by Mark E. Sullivan and Ashley L. Oldham, for
plaintiff-appellee.
The Lea/Schultz Law Firm, P.C., by James W. Lea III and Paige E. Inman, for
defendant-appellant.
McCULLOUGH, Judge.
Charles M. Gurganus (“defendant”) appeals from summary judgment orders
entered in favor of Mary N. Gurganus (“plaintiff”) concerning the termination of
alimony, plaintiff’s share of defendant’s military retirement benefits, and
maintenance of a Survivor Benefit Plan (“SBP”) to the benefit of plaintiff. For the
following reasons, we affirm.
I. Background
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Opinion of the Court
Plaintiff and defendant were married on 1 April 1978. On 15 March 2001,
plaintiff filed a complaint in Onslow County District Court seeking a divorce from bed
and board on grounds of adultery, constructive abandonment, alcohol abuse, and
other indignities to render plaintiff’s condition intolerable and life burdensome.
Along with the divorce from bed and board, plaintiff sought alimony, custody of their
minor child, child support, possession of the marital residence, attorneys fees, post
separation support, and equitable distribution.
On 2 May 2001, the trial court entered a temporary order requiring “defendant
. . . to pay to plaintiff as postseparation and as support for the minor daughter, the
sum of $3,500.00 per month . . . .” The temporary order was entered nunc pro tunc to
the hearing date, 27 April 2001.
Defendant filed an answer and counterclaim on 29 May 2001, in which
defendant denied the allegations asserted as the bases of plaintiff’s claim for divorce
from bed and board. Defendant also asserted his own claims for a divorce from bed
and board and equitable distribution, while seeking to avoid paying alimony and
attorneys fees. Plaintiff submitted a reply on 22 June 2001.
The matter came on for hearing during the 10 September 2001 term of Onslow
County District Court. Judgment was entered on 5 April 2002, nunc pro tunc
10 September 2001. That judgment granted plaintiff a divorce from bed and board
from defendant, ordered defendant to pay alimony to plaintiff, and equitably
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Opinion of the Court
distributed the marital property with an unequal distribution to the benefit of
plaintiff. As part of the equitable distribution, plaintiff was to receive a percentage
of defendant’s military retirement benefits, including amounts to be paid under
defendant’s SBP. An additional order concerning defendant’s SBP coverage was
entered with the consent of the parties on 8 April 2003.
Following a 31 July 2003 hearing on the court’s own Rule 60(a) motion, an
order was entered on 8 August 2003, nunc pro tunc 31 July 2003, to correct a clerical
mistake in the 5 April 2002 judgment.
Years later after defendant retired from the military, on 7 July 2014, defendant
filed a motion in the cause asserting three claims. First, defendant sought
termination or reduction of alimony because plaintiff would be receiving a percentage
of his military retirement benefits. Second, defendant sought a declaratory judgment
regarding use of the “Seifert Formula” in the 5 April 2002 judgment to calculate
plaintiff’s allotment of defendant’s military retirement benefits contending that
plaintiff should not benefit from his rise in the military ranks and the corresponding
increase in his retirement benefits that was attained due to his active efforts post-
separation. Third, defendant sought to have the expense of the SBP assigned to
plaintiff.
On 23 September 2014, defendant filed a motion to amend his motion in the
cause to add a fourth claim, that his active efforts to rise in the military ranks and
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Opinion of the Court
improve his income and plaintiff’s actions against him to impede his advancement
“constitutes a material and substantial change in circumstances warranting a
modification of the [judgment] pursuant to the case of White v. White, 152 N.C. App.
588, 568 S.E.2d 283 (N.C. Ct. App. 2002), aff’d, 579 S.E.2d 248 (N.C. 2003).”
Discovery then ensued.
On 1 April 2015, plaintiff filed a motion for summary judgment on grounds
that res judicata barred reconsideration of plaintiff’s share of defendant’s retirement
benefits and defendant’s SBP coverage. Plaintiff’s summary judgment motion came
on for hearing in Onslow County District Court before the Honorable William M.
Cameron III on 19 August 2015. On 3 September 2015, the court entered three
separate orders granting summary judgment in favor of plaintiff on each of the three
claims asserted in defendant’s 7 July 2014 motion in the cause. The court determined
there was no basis in the law for granting defendant’s motion in the cause; therefore,
plaintiff was entitled to a percentage of defendant’s retirement benefits as calculated
in the 5 April 2002 judgment and defendant was responsible for the SBP premium as
set forth in the 8 April 2003 order.
Defendant filed notice of appeal from each of the three summary judgment
orders on 22 September 2015.
II. Discussion
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Opinion of the Court
On appeal, defendant argues the trial court erred in entering summary
judgment because genuine issues of material fact exist as to whether purposeful acts
by both parties amount to a substantial change in circumstances that warrants
modification of the 5 April 2002 judgment. Defendant also asserts that the equitable
distribution in the 5 April 2002 judgment is invalid because the trial court lacked
subject matter jurisdiction. We address these issues in reverse order.
1. Jurisdiction
For the first time in the long history of this case, defendant now challenges the
court’s jurisdiction to enter the equitable distribution portion of the 5 April 2002
judgment. While it is clear that this is the first time the trial court’s subject matter
jurisdiction has been challenged in this case, our law is equally clear that issues
challenging subject matter jurisdiction may be raised at any time, even for the first
time on appeal. See Lemmerman v. A.T. Williams Oil Co., 318 N.C. 577, 580, 350
S.E.2d 83, 85 (1986) (“The question of subject matter jurisdiction may be raised at
any time, even in the Supreme Court.”). Thus, the issue is properly before this Court.
“Whether a trial court has subject-matter jurisdiction is a question of law,
reviewed de novo on appeal.” McKoy v. McKoy, 202 N.C. App. 509, 511, 689 S.E.2d
590, 592 (2010). “Subject matter jurisdiction is conferred upon the courts by either
the North Carolina Constitution or by statute.” Harris v. Pembaur, 84 N.C. App. 666,
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Opinion of the Court
667, 353 S.E.2d 673, 675 (1987). Regarding equitable distribution, N.C. Gen. Stat. §
50-21(a) provides, in pertinent part, that:
[a]t any time after a husband and wife begin to live
separate and apart from each other, a claim for equitable
distribution may be filed and adjudicated, either as a
separate civil action, or together with any other action
brought pursuant to Chapter 50 of the General Statutes, or
as a motion in the cause as provided by G.S. 50-11(e) or (f).
N.C. Gen. Stat. § 50-21(a) (2015).
As detailed above, in this case plaintiff filed a complaint for divorce from bed
and board on 15 March 2001 and defendant responded by filing an answer and
counterclaim for a divorce from bed and board on 29 May 2001. In those pleadings,
both plaintiff and defendant prayed that the court equitably distribute the marital
property unequally in their respective favors. Yet, there is no separation date alleged
in those pleadings. The first mention of a separation date in the record is in the
2 May 2001 temporary support order, in which the court found that plaintiff and
defendant “lived together as husband and wife until on or about March 22, 2001 when
the defendant began to move his personal clothing and items from the marital
residence.” The court then found, again, that the parties separated on approximately
22 March 2001 in the 5 April 2002 judgment.
Both parties agree that, under N.C. Gen. Stat. § 50-21(a), the separation of the
parties provides the court with subject matter jurisdiction to adjudicate a claim for
equitable distribution. But defendant claims the court lacked jurisdiction to enter
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Opinion of the Court
the equitable distribution portion of the judgment in this case because neither party
alleged a separation date in their pleadings. Defendant also claims that neither
plaintiff nor his pleadings contained a proper claim for equitable distribution because
it was only mentioned in the prayers for relief and, in both pleadings, was paired with
a claim for divorce from bed and board, indicating the parties had not separated. We
disagree with both of defendant’s arguments.
We first note that this Court has held that “a pleading requesting the court to
enter an order distributing the parties’ assets in an equitable manner is sufficient to
state a claim for equitable distribution.” Coleman v. Coleman, 182 N.C. App. 25, 28,
641 S.E.2d 332, 336 (2007) (citing Hunt v. Hunt, 117 N.C. App. 280, 450 S.E.2d 558
(1994)). Thus, the prayers for relief in both pleadings put the parties on notice that
both sought equitable distribution and those requests were sufficient to state a claim
for equitable distribution. Moreover, the mere fact that the equitable distribution
claims were asserted alongside claims for a divorce from bed and board does not
defeat the equitable distribution claims. Defendant has cited no authority for his
assertion that such claims are improper together and we have found no such
authority. In fact, a review of cases shows that claims for a divorce from bed and
board and equitable distribution are often paired together in pleadings.
Concerning the required separation of the parties as a prerequisite for
jurisdiction to adjudicate an equitable distribution claim, there is no indication in the
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record that the parties were separated at the time plaintiff filed her complaint. The
record does show, however, that the parties separated on or about 22 March 2001,
before defendant filed his answer and counterclaim. Defendant also alleges in his
answer and counterclaim that he commuted weekly to North Carolina from where he
was stationed in Virginia to visit plaintiff and their children until it became clear
that reconciliation was impossible, then defendant stopped making weekly trips.
Therefore, regardless of whether the parties were separated at the time plaintiff filed
the complaint, the record is clear that the parties were separated by the time
defendant asserted his claim for equitable distribution. Therefore the trial court did
have subject matter jurisdiction to equitably distribute the marital property.
2. Summary Judgment
Defendant also challenges the trial court’s grant of summary judgment in favor
of plaintiff on the claims in his 7 July 2014 motion in the cause. Specifically
defendant contends the trial court erred in entering summary judgment with respect
to his claims to alter the plaintiff’s share of his military retirement benefits and to
terminate alimony. We disagree in both instances.
“Our standard of review of an appeal from summary judgment is de novo; such
judgment is appropriate only when the record shows that ‘there is no genuine issue
as to any material fact and that any party is entitled to a judgment as a matter of
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Opinion of the Court
law.’ ” In re Will of Jones, 362 N.C. 569, 573, 669 S.E.2d 572, 576 (2008) (quoting
Forbis v. Neal, 361 N.C. 519, 524, 649 S.E.2d 382, 385 (2007)).
A. Retirement Benefits
Concerning the division of defendant’s military retirement benefits for
purposes of equitable distribution, the Court has previously addressed the
permissible methods of division in Seifert v. Seifert, 319 N.C. 367, 354 S.E.2d 506
(1987). In that case, the issue before the Court was “whether the trial court erred in
deferring, until actual receipt, an anticipated award of military pension and
retirement benefits calculated under a present value valuation method.” Id. at 367,
354 S.E.2d at 507. In deciding that the court did err, the Court concluded that “both
present value and fixed percentage are permissible methods of evaluating pension
and retirement benefits in arriving at an equitable distribution of marital property.”
Id. at 371, 354 S.E.2d at 509. The Court further explained the fixed percentage
method as follows:
Under this method if, after valuing the marital estate, the
court finds a distributive award of retirement benefits
necessary to achieve an equitable distribution, the
nonemployee spouse is awarded a percentage of each
pension check based on the total portion of benefits
attributable to the marriage. The portion of benefits
attributable to the marriage is calculated by multiplying
the net pension benefits by a fraction, the numerator of
which is the period of the employee spouse’s participation
in the plan during the marriage (from the date of marriage
until the date of separation) and the denominator of which
is the total period of participation in the plan. The
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Opinion of the Court
nonemployee spouse receives this award only if and when
the employee spouse begins to receive the benefits.
Under the fixed percentage method, deferral of payment is
possible without unfairly reducing the value of the award.
The present value of the pension or retirement benefits is
not considered in determining the percentage to which the
nonemployee spouse is entitled. Moreover, because the
nonemployee spouse receives a percentage of the benefits
actually paid to the employee spouse, the nonemployee
spouse shares in any growth in the benefits. Yet, the
formula gives the nonemployee spouse a percentage only of
those benefits attributable to the period of the marriage,
and that spouse does not share in benefits based on
contributions made after the date of separation.
Finally, so long as the trial court properly ascertains the
net value of the pension and retirement benefits to
determine what division of the property will be equitable,
application of the fixed percentage method does not . . .
violate the mandate that the court must identify the
marital property, ascertain its net value, and then
equitably distribute it. On the contrary, valuation of these
benefits, together with other marital property, is necessary
to determine the percentage of these benefits that the
nonemployee spouse is equitably entitled to receive.
Id. at 370-71, 354 S.E.2d at 509 (internal citations omitted). Subsequent to Seifert,
the Court’s analysis was codified in N.C. Gen. Stat. § 50-20.1.
In this case, the court used the fixed percentage method to determine the
portion of defendant’s military retirement benefits to allocate to plaintiff. The Court
provided the following formula in the 5 April 2002 judgment: (23 years / total years
of defendant’s service) x 50% = % to be paid to the plaintiff.
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Opinion of the Court
On appeal, defendant recognizes that Seifert controls the division of military
retirement benefits in North Carolina. Yet, defendant claims that he “raises a novel
question of law regarding the application of Seifert to pension division and whether
there should be a narrow set of circumstance that allow modification of an equitable
distribution order if the failure to do so results in manifest unfairness . . . .”
Defendant further claims “[t]he instant case is an example of how while the fixed
percentage method does not unfairly reduce a non-employee spouse’s award, it does,
at times, unfairly inflate the amount received by the non-employee spouse and results
in a grossly different valuation than the present value method of valuation.” Thus,
defendant requests that this Court consider a different method of valuation based on
changes in circumstances. Those changes in circumstances are alleged acts by
plaintiff to thwart defendant’s advancement in the military and defendant’s active
efforts to advance his military career.
Upon review, we are not convinced that the equitable distribution portion of
the judgment should be altered due to the alleged changes in circumstances.
Although defendant admits that the law favors finality of equitable distribution
judgments, defendant relies on this Court’s decision in White v. White, 152 N.C. App.
588, 568 S.E.2d 283 (2002), aff’d per curiam, 357 N.C. 153, 579 S.E.2d 248 (2003), to
argue that this Court has allowed modification of orders based on changes of
circumstances in the past.
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Opinion of the Court
Upon the parties divorce in White, a consent order was entered incorporating
an agreement by the parties for the distribution of the marital property, including
that defendant was entitled to one-half of the plaintiff’s pension accumulated during
the marriage. Id. at 590, 568 S.E.2d at 284. Years later, after the plaintiff retired
and defendant began receiving benefits from plaintiff’s pension, plaintiff applied for
and began receiving disability benefits, which in turn caused the amount of benefits
classified as retired pay to decrease and resulted in a significant decrease in the
amount of benefits available to defendant. Id. at 590-91, 568 S.E.2d at 284. As this
Court explained, “[i]n short, [the] plaintiff unilaterally acted so as to diminish [the]
defendant’s share of [the] plaintiff’s monthly benefits while simultaneously
maintaining his own monthly benefits, as well as increasing his after-tax income.”
Id. at 591, 568 S.E.2d at 284. As a result, the defendant filed a motion in the cause
seeking a modified or amended qualifying order increasing her percentage of
plaintiffs’ retired pay. Id. at 591, 568 S.E.2d at 284. On appeal of the denial of her
motion, this Court held the trial court erred. Id. at 592, 568 S.E.2d at 285.
Upon review of White, we agree with plaintiff’s assertion that White is
distinguishable from the present case. In White, this Court allowed modification
where the plaintiff had, subsequent to the equitable distribution order, elected to
receive disability benefits in place of retired pay and, thereby, diminished the benefits
to be received by the defendant. In that instance, modification was allowed to enforce
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Opinion of the Court
the intent of the original equitable distribution order. In the present case, defendant
attempts to modify plaintiff’s allocation of his military retirement benefits because
those benefits have increased post-separation as a result of his continued military
service; which was foreseeable at the time the court entered the 5 April 2002
judgment. We hold White does not control in this case.
The formula used by the court to calculate the fixed percentage of defendant’s
military retirement benefits to be awarded to plaintiff is exactly the formula set forth
in Seifert and N.C. Gen. Stat. § 50-20.1(d). We decline defendant’s request to consider
a new formula and agree with the trial court that “[t]here is no basis in law for
granting [d]efendant’s motion or amended motion[;]” therefore, “[p]laintiff is entitled
to a share of the [d]efendant’s military retired pay as stated in the April 5, 2002
judgment . . . .”
B. Alimony
On appeal, defendant also argues the trial court erred in entering summary
judgment on his claim to terminate the alimony awarded in the 5 April 2002
judgment. We are not convinced the order sought by defendant is necessary.
The pertinent decretal portions of the judgment required defendant to pay
$2,500.00 per month to plaintiff as alimony and provided for the reduction of alimony
payments as follows:
Further, at such time as plaintiff begins to receive her
portion of the defendant’s military retirement pay, the
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Opinion of the Court
defendant may reduce the amount of alimony he pays by
the actual sum received by the plaintiff from the military
retirement pay such that the plaintiff receives a total of
$2,500.00 per month.
Defendant asserts, and the record shows, that the amount of defendant’s
retirement pay received by plaintiff is greater than the alimony ordered in the
judgment. Therefore, under the terms of the judgment, and without further order of
the court, defendant is entitled to reduce the alimony paid to zero. Because defendant
is no longer required to pay any alimony under the terms of the judgment, an
additional order terminating alimony would be of no consequence. Thus, we hold the
trial court did not err in entering summary judgment.
III. Conclusion
For the reasons discussed above, we hold the trial court had jurisdiction to
equitably distribute the marital property in the 5 April 2002 judgment and did not
later err in granting summary judgment in favor of plaintiff on the claims asserted
in defendant’s 7 July 2014 motion in the cause. The trial court’s orders are affirmed.
AFFIRMED.
Judges HUNTER, Jr., and DIETZ concur.
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