If you are like most family law practitioners, you probably use the advanced financial knowledge and skills you gained from your CFL Designation for Divorce Practitioners on a daily basis when drafting your clients’ property settlements and spousal support agreements. But life is life. No matter how fair and equitable your property settlements are, your client and his or her former spouse may encounter changed circumstances that they both agree requires a modification. Then what?
Such was the situation in the recent Vermont Supreme Court case of Sandra L. Penland (Warren) v. John W. Warren, Jr. Here a divorced couple filed a joint motion to modify their property division order after their divorce decree had become absolute. The court, however, declined to modify, stating that it did not have jurisdiction to modify its divorce order after the fact, the property settlement agreement in question having been incorporated into the divorce order
When the Warrens divorced in 2011, they agreed that each of them would receive 50 percent of John’s pension from the Vermont Teachers Retirement System. John duly transferred the one-half interest to Sandra via a Qualified Domestic Relations Order (QDRO) that their attorneys had drafted.
In 2017, however, John’s health began to deteriorate and he ultimately received a medical diagnosis that not only precluded his continued employment, but also shortened his life expectancy. Naturally this meant that Sandra would lose her 50 percent of John’s pension if he predeceased her, thereby failing to receive the full value of her interest as contemplated by the final divorce order.
Evidently the couple remained on friendly post-divorce terms, because they filed the joint petition for modification. Under their new agreement, undoubtedly drafted once again by their attorneys, John agreed to obtain an actuarial valuation of the remainder of his pension and pay Sandra 50 percent of it in a lump sum out of his share of his mother’s trust. In exchange, Sandra agreed to restore the full value of John’s pension to him so that he would receive his full pension income.
When the family court declined to grant the couple’s joint motion for modification, suggesting that they form an independent contractual arrangement instead, John appealed, with Sandra’s full approval and support, alleging that the court had abused its discretion in denying the requested relief. John further alleged that Vermont Civil Rule of Procedure 60(b)(6) allowed for such a post-decree modification as necessary to “prevent hardship and injustices to the parties.”
Supreme Court decision
The Vermont Supreme Court noted that Rule 60(b) allows a court to “relieve a party. . .from a final judgment, order, or proceeding” for several reasons, including mistake and fraud. Rule 60(b)(6) providing for “any other reason justifying relief from the operation of the judgment” is available only where the other criteria do not apply.
While the Court declined to decide whether or not the trial court should grant the Warrens’ requested relief, it did find that the trial court had jurisdiction to do so. It therefore remanded for appropriate court action. It noted, however, that this was not a case where one party was seeking to continue litigation past its ending point. It also noted that the Warrens could not create an adequate contractual remedy due to the fact that John’s pension funds were tied to his life and disbursed through a QDRO. The Court also advised the trial court to “consider the parties’ mutual need for the change.”
The moral to this story is that you should never be stymied by a court’s refusal to exercise its jurisdiction in a post-divorce matter. Often an appeal on your client’s behalf is more than justified. For more information on how gaining your CFL Designation for Divorce Practitioners gives you the financial knowledge and skills you need to attract additional high-asset clients, plus other benefits of AACFL membership, please visit this page of our website.