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Payments ordered from concealed pension

Where wife had a vested interest in husband’s pension, which was discovered in his bankruptcy proceeding 10 years after the final divorce order, the circuit court correctly ordered him to make retroactive payments to wife from the time he began drawing from the pension.

Overview

The parties divorced in 2005. Wife was to receive support of $650 per month for 10 years. The separation and property agreement provided that wife would received one-half the marital share in husband’s pension from ABC, Inc. In February 2015, wife moved to modify the support award due a partially disabling injury. The motion also claimed husband was withholding information that prevented wife from preparing a qualified domestic relations order to divide the pension per the agreement. She further alleged husband was drawing $2,700 per month from his pension but none of it was being distributed to her.

Wife filed a petition for a rule to show cause in May 2015. The matter was stayed after husband filed for bankruptcy. Wife filed a bankruptcy claim for $34,000 in support arrearages and $85,000 for her unpaid share of the marital pension. The bankruptcy court lifted the automatic stay so wife could pursue her pension claim in state court. The support claim was treated as a priority claim in the bankruptcy proceeding.

When state court litigation resumed, wife sought to reform the agreement. She explained that she learned in the bankruptcy proceeding that husband was not entitled to an ABC, Inc. pension and he instead began drawing payments from a Director’s Guild of America pension in October 2011.

The trial court eventually dismissed the rule to show cause and then “granted the reformation, finding that husband ‘intentionally misled’ wife into believing there would be an ABC, Inc. pension in order to keep his DGA pension for himself. It ordered husband to pay wife her portion of the pension payments retroactive to October 2011 – when he began drawing from his DGA pension – which amounted to $70,074. The trial court ordered husband to pay $200 per month towards this arrearage, in recognition of his limited financial resources.”

The court also awarded wife attorney’s fees and modified her support award to $1,000 per month for seven years.

Pension

Husband did not appeal the trial court’s reformation of the property agreement to apply its provisions to the DGS pension “in lieu of the non-existent ABC, Inc. pension.” Thus, wife has a vested one-half interest in the marital share of the DGA pension. He does not claim that the reformed agreement cannot be applied retroactively.

“Instead, husband argues only that nothing in the Agreement makes him personally responsible for paying wife her marital share of his pension proceeds. Husband asserts that, because he is not personally responsible for the payments, there is no basis in the Agreement to require him to repay to wife her marital share of the payments he has been receiving since October 2011.

“The plain language of the Agreement refutes husband’s assertion. The Agreement provides that ‘Husband shall … perform such acts as may be necessary or required so that Wife shall receive her share of the gross monthly annuity.’ Thus, the Agreement does provide a basis for the trial court to order retroactive payments.

“Furthermore, husband’s argument that the Agreement did not make him personally liable is foreclosed by this Court’s precedent. This Court has repeatedly affirmed a trial court’s power to retroactively order one spouse to make payments to the other when pension payments are not distributed as required under a property settlement agreement. …

“Once the trial court determined that wife was not receiving the pension payments she had a vested right to receive, it was empowered to modify its order to effectuate those payments.”

Fees

Husband argues that the trial court incorrectly awarded wife attorney’s fees. “The Agreement provides that ‘in the event either Party shall be compelled to bring suit to enforce the terms of this Agreement, the prevailing Party in such enforcement action shall be due the reasonable attorneys’ fees and costs of such enforcement litigation.’ …

“Husband argues that the only enforcement action was the rule to show cause, which was dismissed. Therefore, husband contends that there was no basis to award wife attorney’s fees. Furthermore, … husband contends that he prevailed on the enforcement action because the rule to show cause was dismissed. Therefore, husband argues, the trial court also erred in denying him attorney’s fees. …

“Wife’s attempt to effectuate her vested right under the Agreement to 50% of the marital share of husband’s pension was plainly an enforcement action. … Husband’s focus on the procedural mechanism that brings an issue before a court is misplaced. … [T]he key distinction is whether the action was brought because one party is in default of their obligations. Accordingly, enforcement actions are not limited to rules to show cause.”

Affirmed.

Ferry v. Beard, Record No. 1134-19-4, Feb. 4, 2020. CAV (Huff) from Fairfax Cir. Ct. (Smith). Andrew Hoffman for appellant, Lily A. Saffer for appellee. VLW 020-7-020, 10 pp. Unpublished.

VLW 020-7-020

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