Division of Military and Veteran’s Disability Benefits by Court Order
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The core holding of Mansell is that state courts cannot treat veteranís or military disability benefits as marital or community property in an initial divorce case. The state courts clearly respect that holding. E.g., Robinson v. Robinson, 647 So. 2d 160 (Fla. 1st Dist. Ct. App. 1994); In re Murphy, 261 Mont. 363, 862 P.2d 1143 (1993); Bishop v. Bishop, 113 N.C. App. 725, 440 S.E.2d 591 (1994); Avery v. Avery, 2002 WL 360296 (Ohio Ct. App. 2d Dist. 2002); Carney v. Carney, 449 Pa. Super. 179, 673 A.2d 367 (1996).

Mansell reaches a fundamentally unfair result, because a spouse who receives disability benefits must waive his right to receive military retirement benefits. (Receipt of benefits for partial disability results in only a partial waiver.) But Mansell itself admitted this unfairness, holding that it was an issue for Congress. Until and unless Congress acts, the unfortunate reality is that if a spouse elects disability benefits before the divorce, the other spouseís right to receive retirement benefits can be curtailed or even eliminated.

Congressional action is not inconceivable; indeed, there has been a proposal made in recent years to eliminate the rule that receipt of disability benefits requires a waiver of retirement benefits, and instead to award disabled service members both types of benefits. This proposal would cure a long-standing problem in the law on division of federal benefits at divorce. It has apparently stalled, however, on grounds that the federal government cannot afford to pay disabled spouses both benefits.

Res Judicata. Under Mansell, a state court order dividing veteranís or military disability benefits is clearly erroneous. But if such an order becomes final, is the order void? The answer is clearly "no." In Mansell, the parties were divorced in California, and the California order actually divided the husbandís disability benefits. Some years later, the husband suddenly awoke to the possibility of federal preemption, and moved to set aside the judgment. The California state courts initially assumed that the judgment could be reopened. They nevertheless denied relief, on grounds that federal law permitted the division of disability benefits. The Supreme Court reversed this judgment in its reported decision, but its decision was based upon Californiaís assumption that res judicata did not prevent reopening of the judgment. "Whether the doctrine of res judicata, as applied in California, should have barred the reopening [the judgment] is a matter of state law over which we have no jurisdiction." 490 U.S. at 586 n.5.

On remand, however, the California court did not reopen the judgment. Instead, it revisited its earlier assumption that res judicata did not apply. It held that while the judgment might be erroneous, it was not void, and therefore could not be reopened. Mansell v. Mansell, 216 Cal. App. 3d 937, 265 Cal. Rptr. 227 (1989). The husband understandably filed a second petition for certiorari, because the California court had reached the exact same result which the Supreme Court had just rejected. But the Supreme Court refused to hear the case a second time. Mansell v. Mansell, 111 S. Ct. 237 (1990). The Courtís action shows that Mansell is only a rule of substantive federal law, not a rule of subject-matter jurisdiction. Decisions which violate Mansell are only erroneous; they are not void.

There is also a second path for reaching this result. Mansell did not create a new rule of federal preemption; instead, it held that the rule of preemption applied to all military benefits in McCarty v. McCarty, 453 U.S. 210 (1981), had been reversed by statute only as to retirement benefits. Res judicata was clearly a defense to the preeemption rule of McCarty. California expressly so held in In re Sheldon, 124 Cal. App. 3d 371, 177 Cal. Rptr. 380 (1981). The case was appealed to the United States Supreme Court, which dismissed the appeal for want of a substantial federal question. Sheldon v. Sheldon, 456 U.S. 941 (1982). Dismissal for want of a substantial federal question is an adjudication on the merits. Evans v. Evans, 75 Md. App. 364, 541 A.2d 648 (1988); White v. White, 731 F.2d 1440, 1443 (9th Cir. 1984). Thus, precedent at the United States Supreme Court level establishes that res judicata is a defense to McCarty. Since Mansell merely reaffirmed that Congress did not overrule McCarty with respect to disability benefits, res judicata must likewise be a defense to Mansell.

For additional decisions holding that disability benefits can be divided on a theory of res judicata, see In re Zrubek, 149 B.R. 631 (Bankr. D. Mont. 1993); Ford v. Ford, 30 Ark. App. 147, 783 S.W.2d 879, 882 n.1 (1990); Evans v. Evans, 75 Md. App. 364, 541 A.2d 648 (1988); Trahan v. Trahan, 894 S.W.2d 113 (Tex. App. 1995); and Maxwell v. Maxwell, 796 P.2d 403 (Utah Ct. App. 1990). For cases holding that Mansell is not a rule of subject-matter jurisdiction, without actually applying res judicata on the facts, see In re Curtis, 7 Cal. App. 4th 1, 9 Cal. Rptr. 2d 145 (1992); McLellan v. McLellan, 33 Va. App. 376, 533 S.E.2d 635 (2000); Judkins v. Judkins, 113 N.C. App. 734, 441 S.E.2d 139 (1994); and Wagner v. Wagner, 564 Pa. 448, 768 A.2d 1112 (2001).

A few misguided cases persist in holding that judgments which violate Mansell are void for lack of jurisdiction. See In re Marriage of Akins, 932 P.2d 863 (Colo. Ct. App. 1997); Ryan v. Ryan, 257 Neb. 682, 600 N.W.2d 739 (1999). If this were the law, the Supreme Court would have heard and reversed the second California decision in Mansell. None of these cases show any awareness of the history of the Mansell litigation after the reported Supreme Court decision.

Offsetting Award. While Mansell held that disability benefits cannot be treated as marital or community property, it did not consider whether disability benefits can be treated as a factor in dividing other assets. The general rule with regard to preempted benefits is that federal law cannot be avoided with an offsetting award. "[I]t is clear that the injunction against attachment is not to be circumvented by the simple expedient of an offsetting award." McCarty v. McCarty, 453 U.S. 210, 230 n.22 (1981). For state court cases prohibiting an offset, see Clauson v. Clauson, 831 P.2d 1257 (Alaska 1992); Jones v. Jones, 7 Haw. App. 496, 780 P.2d 58 (1989); In re Strong, 300 Mont. 331, 8 P.3d 763 (2000); and In re Kraft, 119 Wash. 2d 438, 832 P.2d 871 (1992). But see La. Rev. Stat. Ann. 9:2801.1 (where federal preemption excludes one spouseís benefits, an identical amount of community property in favor of the other spouse is to be excluded from division; arguably inconsistent with the above passage from McCarty).

Division Factor. Nothing in federal law, however, prevents state courts from considering disability benefits in dividing other assets. State courts uniformly hold that such consideration is not barred by Mansell. See Bottiggi v. Wall, 54 Mass. App. Ct. 430, 765 N.E.2d 819 (2002); In re Strong, 300 Mont. 331, 8 P.3d 763 (2000); In re Murphy, 261 Mont. 363, 862 P.2d 1143 (1993); Bishop v. Bishop, 113 N.C. App. 725, 440 S.E.2d 591 (1994); Vitko v. Vitko, 524 N.W.2d 102 (N.D. 1994).

Spousal Support. Likewise, consideration of disability benefits as a source for alimony is consistent with Mansell. Thus, where disability is elected before the divorce, disability benefits are income for purposes of support. See Womack v. Womack, 307 Ark. 269, 818 S.W.2d 958 (1991); In re Marriage of Bahr, ___ Kan. App. 2d ___, 32 P.3d 1212 (2001); Riley v. Riley, 82 Md. App. 400, 571 A.2d 1261 (1990); Weberg v. Weberg, 158 Wis. 2d 540, 463 N.W.2d 382 (Ct. App. 1990). Where disability has not been elected at divorce, but an election is pending or otherwise seems likely, the court may reserve jurisdiction to make an award of support after the election is final. See Collins v. Collins, 144 Md. App. 395, 798 A.2d 1155 (2002).

Where disability is elected after the divorce, the election of disability is a sufficient changed circumstance to permit an increase in alimony. See Kramer v. Kramer, 252 Neb. 526, 567 N.W.2d 100 (1997); In re Marriage of Murphy, 151 Or. App. 649, 950 P.2d 377 (1997); In re Marriage of Jennings, 138 Wash. 2d 612, 980 P.2d 1248 (1999).

Can a state court avoid Mansell by making a direct offset and calling it alimony? Two Florida decisions permit this. Robinson v. Robinson, 647 So. 2d 160 (Fla. 1st Dist. Ct. App. 1994); Longanecker v. Longanecker, 782 So. 2d 406 (Fla. 2d Dist. Ct. App. 2001). Conversely, a Washington State case held that an award of alimony exactly equal to the wifeís equitable share of the preempted disability benefits was an impermissible direct offset. See Perkins v. Perkins, 107 Wash. App. 313, 26 P.3d 989 (2001). The court noted that the trial court could still upon remand treat the disability benefits as a source for alimony, so the objectionable feature was clearly only the amount of the award, and not the basic concept of treating disability benefits as a source for alimony. The authorís sense is that the Supreme Court would probably agree with Perkins. To permit a direct offset, merely because it is labeled as alimony, would create an enormous loophole in the Mansell holding.

Reopening the Judgment. A New Jersey court held that the election of disability benefits after the divorce was a sufficient basis for reopening the entire judgment and redividing the marital property. Torwich v. Torwich, 282 N.J. Super. 524, 660 A.2d 1214 (App. Div. 1995). Other states have generally found reopening to be excessive, as the harm caused by the election of disability can be sufficiently addressed through other means. See White v. White, ___ N.C. App. ___, 568 S.E.2d 283 (2002); Jennings v. Jennings, 138 Wash. 2d 612, 980 P.2d 1248 (1999).

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