As a family law attorney, you likely have frequent occasions to represent clients seeking enforcement of their out-of-state divorce decrees and child and spousal support orders. While your CFL Designation for Divorce Practitioners gives you the advanced financial knowledge necessary to analyze their often complex orders, including such things as QDROs, you nevertheless need to determine whether or not your state will enforce those orders.

The Texas Supreme Court recently addressed this issue in Dalton v. Dalton. Here a high net worth Oklahoma couple entered into a separation agreement that included Mr. Dalton’s payment to Mrs. Dalton of $6,060.25 in monthly “support alimony.” When the Daltons separated, the Oklahoma court approved their separation agreement and granted Mrs. Dalton a 50 percent interest in Mr. Dalton’s 401(k) and profit-sharing plans to secure his obligations.

Trial Court Proceedings

Although the Daltons separated in Oklahoma, they did not divorce. Rather, Mr. Dalton filed for divorce in Texas after both he and Mrs. Dalton separately moved there. Mrs. Dalton counter-filed and filed the Oklahoma order with the Texas court, alleging that Mr. Dalton was already behind on his support payments. The trial court found that Texas could enforce the Oklahoma order since it was “a final judgment entitled to full faith and credit by the Texas Courts.” The court therefore issued its final divorce decree, held Mr. Dalton in contempt and issued both a garnishment order and its own QDRO granting Mrs. Dalton an additional interest in Mr. Dalton’s retirement accounts.

Subsequent to their divorce, Mr. Dalton remained in arrears and Mrs. Dalton petitioned for post-divorce relief. The court again found Mr. Dalton in contempt, awarded Mrs. Dalton a $269,665.19 judgment against him, and instituted an additional QDRO to enforce his spousal alimony obligations. Mr. Dalton lost his appeal and the Texas Supreme Court granted his Petition for Review. The Court overruled the appellate court and voided both the trial court’s wage-withholding order and its post-divorce QDRO.

Garnishment Issue

The Court found that while the U.S. Constitution’s full faith and credit clause required Texas to recognize Oklahoma’s order as a final judgment, it did not require Texas to “adopt the practices of other states regarding the time, manner, and mechanisms for enforcing judgments.” Specifically, the Texas Constitution prohibits garnishment for personal service “except for the enforcement of court-ordered” child support payments or “spousal maintenance.” Chapter 8 of the Texas Family Code expressly provides for enforcement of such wage-withholding orders only if the obligation qualifies as “spousal maintenance.”

The Court held that the Oklahoma order “neither orders spousal maintenance nor approves an agreement to pay spousal maintenance.” It reasoned that Chapter 8 requires a court to deem a spousal maintenance recipient eligible therefor, and that “neither the Texas trial court nor the Oklahoma court found … that Carol was eligible for spousal maintenance under Chapter 8.”

QDRO Issue

The Court used a similar line of reasoning to void the trial court’s post-divorce QDRO. It conceded that the Employee Retirement Income Security Act (ERISA) “supersede[s] any and all State laws insofar as they may now or hereafter relate to any employee benefit plan.” It noted, however, that “the only power ERISA grants to a pension plan administrator is the power to review an existing order to determine whether it is a qualified domestic relations order under the Act.” Here the trial court’s post-divorce QDRO constituted a new QUDRO, not the review of an existing one.

Consequently, the Court ruled that “[N]either Carol nor the trial court identified any Texas law authorizing the order [for the post-judgment QDRO].” Specifically, it ruled that the Oklahoma order validly divided Mr. Dalton’s retirement plans between the parties, but that the trial court’s post-judgment QDRO did not seek to modify or clarify its original QDRO. Rather, it established an entirely new QDRO having nothing to do with Mr. Dalton’s original court-ordered “support alimony” and the QDRO associated therewith.

While your state’s case law may not have dealt with the issues raised in the Dalton case, your state’s laws will determine whether or not your clients’ out-of-state spousal support orders can be enforced in your jurisdiction.

For more information on financial issues you need to be aware of, how gaining your CFL Designation for Divorce Practitioners will give you the financial knowledge and skills you need to attract additional high-asset clients, and the other benefits of AACFL membership, please visit this page of our website.