Virginia Lawyers Weekly VA Lawyers Weekly
Where the parties agreed that appellant could not reduce appellee’s share of his military pension by electing to receive disability pay instead of retired pay, appellant’s later election to receive disability pay and Combat-Related Special Compensation, which reduced appellee’s share, cannot be undone with a Virginia Circuit Court’s order.
Federal law preempts state law with respect to military pension matters.
Overview
Jody Randolph and Kerry Sheehy’s property settlement provide that Sheehy would receive half of Randolph’s “disposable military retired pay.” The agreement also provided that Randolph could not reduce his retirement pay by electing to receive disability pay and Combat-Related Special Compensation (CRSC).
The agreement also had an indemnity clause requiring Randolph to reimburse Sheehy if he reduced his retired pay. Two years later, Randolph reduced Kerry’s share of his retired pay by electing to receive disability pay and CRSC.
“After Sheehy petitioned for a rule to show cause, Randolph ultimately indemnified her under their agreement. Still, the court issued an order requiring Randolph to revoke the CRSC election. We find the court was without authority to issue such an order.”
The trial court asked “Randolph to ‘ascertain if he is able to place an irrevocable allotment’ from the Defense Financing and Accounting Service (‘DFAS’) that would permanently revoke his entitlement to CRSC ‘to ensure [Sheehy] shall receive her full Court awarded military retirement benefit’ in the future.
“The court also ordered Randolph to pay $11,650, plus interest, toward Sheehy’s attorney fees.
“At a June 2021 hearing, Randolph explained that while he could not place an irrevocable allotment through DFAS, he did set up an allotment through which he kept reimbursing Sheehy for the shortfall in what she was owed under the agreement’s indemnification provision.
“Sheehy agreed that the allotment had continued to cover the full balance of what she was owed. In June 2021, Randolph also requested that the circuit court enter an order allowing an interlocutory appeal of its ruling that Randolph must revoke his CRSC, which the court denied.”
At a later hearing, the court ordered Randolph to “revoke the Combat Related Special Compensation election at this earliest opportunity” and “maintain the allotment that was established to reimburse” Sheehy. The court further ordered Randolph to pay an additional $5,729 for Sheehy’s attorney fees.”
At the final hearing in January 2022, “[t]he court entered a final order dismissing the show cause petition, finding Randolph not in contempt. The order also required Randolph to ‘revoke the Combat Related Special Compensation election at his earliest opportunity,’ which he had done the month before. By separate order the same day, the court ordered Randolph to pay $5,000 more in attorney fees.”
Preemption
“Randolph argues that the court abused its discretion by ordering him to revoke his CRSC because the court lacked jurisdiction to do so. …
Federal law is clear that CRSC payments ‘are not retired pay.’ … Because the [Uniformed Services Former Spouses Protection Act] USFSPA allows courts to divide only ‘disposable retired pay’ as marital property, federal law preempts a state court from treating CRSC payments as marital property.
“And just as federal law preempts a state court from ordering a retired veteran to compensate a former spouse for waived retired pay, federal law preempts a state court from ordering a retired veteran to give up compensation to which he is statutorily entitled. That this significantly impacts the veteran’s former spouse does not alter a state court’s authority.”
Attorney fees
“Randolph also challenges the amount of attorney fees awarded in this case. … Sheehy filed a show cause petition seeking to hold Randolph to the terms of their property settlement agreement.
“The agreement included a general attorney fee clause requiring ‘the losing party’ to pay reasonable fees in any proceeding to enforce or prevent the breach of any provision.
“As Randolph was not held in contempt below, and we have vacated the court’s order requiring him to revoke his CRSC, he is not the losing party. …
“The parties agreed that the arrearage Randolph owed Sheehy was $9,603.18. Randolph fully paid that amount in February 2021 after the first of four hearings below, resolving the dispute between them, as confirmed during the second hearing.
“The final two hearings were held at the request of the court to examine whether Randolph could make an irrevocable election against ever receiving CRSC and to decide whether to hold Randolph in contempt. During those hearings, Randolph maintained his continuous objection to the court’s authority to force him to revoke his election to receive CRSC, and he twice asked the court to certify the issue to allow for interlocutory review.
“We reverse the $22,240.57 attorney fee award … and remand for reconsideration of a reasonable amount of attorney fees given this opinion vacating the January 27, 2022 order.
Randolph v. Sheehy, Record No. 0277-22-1, Jan. 10, 2022. CAV (published opinion) (Lorish). From the Circuit Court of the City of Virginia Beach (Mahan). Emily K. Miller for appellant. LeeAnne C. Schocklin for appellee. VLW 023-7-005, 12 pp.
