In the CFL course, you learned a lot about property division, including an increasingly common part of “gray” divorces, retirement pensions. Oftentimes, in appeals cases like the Texas court saw recently with Burnett v. Burnett, a spouse won’t share their pension per the divorce decree, leading to a return to court. In this matter, the ex-wife sought to enforce her ex-husband’s retirement award, claiming she didn’t receive cost of living increases.


Case History

The couple married in 1976; by the time they divorced in 1998, Thomas Burnett had retired from the military. The divorce decree declared that he would receive 40 percent of his military retirement pension and give his wife, Karen, the remaining 60 percent. The trial court awarded her $754.80 of the pension monthly, and 60 percent of all increases “due to cost of living or other reasons if, as, and when received.” Thomas also had to name Karen a beneficiary under the Armed Services Survivor Benefit Plan (SBP).  

After receiving a letter from Karen in 2012 that stated he had underpaid her, Thomas sought a new attorney, who told him he had calculated the retirement payments incorrectly. By mistake, he had given her 60 percent of all of the cost of living adjustments (COLAs) combined. He corrected the calculations and began paying Karen 60 percent of the increases only in the first year he received them.

Karen later petitioned to enforce the retirement award, claiming she had been underpaid. Thomas countered that he had overpaid her and that she failed to pay him for the SBP premiums. She testified that he owed her more than $7,000 and that she had paid the SBP premiums according to the prior ruling.  

Thomas didn’t offer evidence of the overpayment amounts or the SBP premiums he claimed Karen owed him. Karen also testified that she had paid him $138.43 monthly for SBP premiums according to a prior court ruling. Adding those to the back payments, she concluded that Thomas owed her $9,133.77. The court found that Karen should get $754.80 per month as her share of the retirement, and 60 percent of any cost of living increase in the year it was first received. It awarded Thomas $2,617.57, but didn’t state how it arrived at that amount, including the overpayments and SBP premium underpayments. 

Karen appealed, asserting that the divorce decree required Thomas to pay 60 percent of all the retirement increases together. She also argued there wasn’t enough evidence to support the trial court’s finding that she didn’t pay the required SBP premiums. Thomas countered that the trial court’s interpretation of the original award of 60 percent of COLAs only in the year when the increases are first paid was correct


Court of Appeals, Eighth District of Texas Verdict

The appellate court reviewed the findings of fact, and weighed the questions of 1) whether the trial court had enough evidence to make a ruling and 2) whether it erred in applying that judgment.

“The first question implicates traditional legal sufficiency review. Id. Under that standard, ‘[a] legal sufficiency challenge may only be sustained when: (1) the record discloses a complete absence of evidence of a vital fact; (2) the court is barred by rules of law or of evidence from giving weight to the only evidence offered to prove a vital fact; (3) the evidence offered to prove a vital fact is no more than a mere scintilla; or (4) the evidence establishes conclusively the opposite of a vital fact.’” 

In answer to the second question, the appeals court determined that the trial court made an arbitrary or unreasonable decision based on the evidence presented.

The appeals court pointed to a prior case it decided, Smith vs. Burt, which gave the ex-wife a fixed amount of the retirement pension plus a percentage of the accumulated cost of living increases.

“Husband’s interpretation of the award to Wife in this case, like Burt’s interpretation in Smith, ‘is a tortured reading of the divorce decree.’ Id. The decree unambiguously awards to Wife both a fixed dollar amount and a 60 percent interest in ‘all increases in the United States Army disposable retired pay due to cost of living or other reasons, if, as, and when received.’ We recognize that the decree in this case uses the language, ‘if, as, and when received,’ whereas the decree in Smith used the language, ‘to which Burt is entitled.’ That difference in language does not, however, dictate a different result.” 

According to the appeals court, the trial court abused its discretion in finding that Karen was entitled to the pension increases only during the first year. The appeals court also found that the order improperly amended, modified, altered, or changed the substantive division of property in the divorce decree.

The appeals court clarified that the divorce decree provided that Karen is entitled to “60 percent of all accumulated increases.” 

In considering the SBP premium claim, it ruled that Thomas didn’t prove his ex-wife failed to comply with her payment obligation. The evidence showed she deducted her premium obligation from the amount he owed her and paid him $138.43 each month since 2013. There was no record of missing premium payments to support Thomas’s claim. The appeals court stated that the trial court abused discretion by finding Karen hadn’t met her obligation when there was no evidence to back that up. 

The appeals court reversed the ruling entirely. “The divorce decree is clarified as stated above; judgment is rendered that Husband take nothing on his claims; and Wife’s claim for underpayments of the amounts due under the Retirement Award is remanded to the trial court for further proceedings.” 

The CFL course covers how to perform due diligence to divide retirement pension awards and other divorce assets properly. It’s not who you know, it’s what you know about financial matters that gives you an edge over your competitors. Learn how to sharpen your skills to increase your earnings in our free information packet today.

And don’t miss our exclusive webinar, Executive Compensation: Winning Strategies, on October 11 at 4:00 PM EST.

Thomas Field, Esq., of Illinois firm Beermann LLP and AACFL Advisory Board member Jim Godbout, Principal at CliftonLarsonAllen, will discuss executive compensation in divorce proceedings, including stock options and restricted stock units (RSUs). Space is limited – reserve your spot now.



Cases.justia.com. (2019). [online] Available at: https://cases.justia.com/texas/eighth-court-of-appeals/2019-08-15-00339-cv.pdf?ts=1559834360  [Accessed 12 Sep. 2019].