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Menake v. Menake

February 22, 2002

ROBERT MENAKE, PLAINTIFF-RESPONDENT/ CROSS-APPELLANT
v.
JANICE MENAKE, DEFENDANT-APPELLANT/ CROSS-RESPONDENT



On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Morris County, FM-23892-90.

Before Judges Conley, Lefelt and Lisa.

The opinion of the court was delivered by: Conley, P.J.A.D.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted February 6, 2002

This is an appeal arising from a post-matrimonial dispute over defendant's entitlement to a portion of plaintiff's defined-benefit pension that he has with the New York State and Local Retirement System as a result of his employment with the Port Authority of New York and New Jersey. It is a dispute that has spanned eight years with four different judges and numerous court applications and orders, two different Qualified Domestic Relations Orders (QDRO) and several recalculations by the New York State and Local Retirement System. It is the formula for the calculation of defendant's share of plaintiff's pension in the second of the two QDROs that prompts this appeal. By order entered April 1, 1996, defendant's share was to be determined by a formula which consisted of the "[n]umber of months of marriage of the parties while in the retirement systems divided by total number of months in retirement systems multiplied by 50%. . . . " In contrast, a March 27, 2000, order directed that defendant's share be determined by a formula which consisted of "50% of the hypothetical retirement allowance, computed using final average salary as of May 14, 1990, and the service credit accrued between July 9, 1973, and May 14, 1990." The latter dates reflect the duration of the parties' marriage to the date of the filing of the divorce complaint. The differences in these two formulas is significant. Indeed, because the Retirement System had made a number of payments to defendant under the first order, the effect of the March 27, 2000, order was a recalculation, which resulted in a $93,809.92 overpayment. In order to repay this amount, defendant will receive no pension benefits until July 30, 2012. We reverse and remand for further proceedings.

We do not recite the tortured procedural course this dispute has taken before finding its way here. Only several salient facts need be considered. The first is that when the judgment of divorce was entered on August 21, 1992, plaintiff was not then retired. Defendant was awarded fifty percent of his pension, with distribution deferred until his retirement. Thus, although at the time defendant had an expert who had arrived at a "present-day" value for the purposes of a buy-out calculation, the judge chose not to accept that valuation and, instead, opted for deferred distribution of fifty percent of that marital asset. The final judgment of divorce, therefore, provided in part as to plaintiff's pension:

Plaintiff's pension, which has not yet been liquidated, shall be the subject of a qualified domestic relations order with fifty percent to plaintiff and fifty percent to defendant. The amount to be distributed by way of a qualified domestic relation order shall be from the period when plaintiff commenced his employment until the divorce complaint was filed, plus accumulated interest thereon.

Defendant, then, was awarded a deferred share of plaintiff's pension, to begin upon plaintiff's retirement. The formula for determining that deferred share would, by now, seem to be fairly well-accepted in our equitable distribution jurisprudence, at least where, as here, the spouse participates in a defined-benefit plan.*fn1

That formula utilizes what is frequently referred to as the "coverture fraction." Risoldi v. Risoldi, 320 N.J. Super. 524, 543 (App. Div.), certif. denied, 161 N.J. 335 (1999); Reinbold v. Reinbold, 311 N.J. Super. 460, 466-67 (App. Div. 1998). See Whitfield v. Whitfield, 222 N.J. Super. 36, 48 (App. Div. 1987). We explained the process in Whitfield:

The spouse's percentage share is ascertained through a two-step process. The first step is to factor out that portion of the pension attributable to the marriage. This factoring involves the application of a fraction. The numerator of the fraction is the period of pension plan participation during the marriage and the denominator is the total period of plan participation necessary to the receipt of benefits. This sounds more complicated than it is. In this case the includable fraction is 16/20ths--the number of years the parties were married during which defendant accrued pension credits over the total number of years necessary for the pension to be received. The second step is to determine the percentage to which the spouse is entitled applying the standards established in Painter [v. Painter, 65 N.J. 196 (1974)]. Here, the figure to be applied if and when the pension is received would be expressed as follows: spouse's entitlement = X% of 16/20ths of the pension. [Id. at 48.]

We further explained the calculation to be used when there occurs a deferred distribution in Reinbold v. Reinbold, supra, 311 N.J. Super. 460:

In such a scheme the actual numerator of the coverture fraction is fixed (here at 28 years, the period of the marriage during which defendant worked for Sandoz up to the filing of the complaint). The denominator is also fixed at the number of years in all that defendant will have worked as of retirement. Obviously, the number itself cannot be supplied until retirement. The longer the employee spouse works, the larger the denominator, thus reducing the non-employee spouse's percentage share and assuring the employee spouse the benefits of his or her post-divorce labors. In general, "the non-employee spouse will receive a decreasing percentage of an increasing benefit." William M. Troyan, Pension Evaluation and Equitable Distribution, 10 Fam. L. Rep. 3001, 3007 (1983). Thus, in this case, as the parties agree, if defendant had actually worked 35 years until age 62, plaintiff would have been entitled to

28 (employment during coverture) x Benefit x 50% 35 (years actually worked) [Id. 466-67 (emphasis added).]

Here, as we have said, this is a deferred distribution case. For reasons that the record does not reflect, a QDRO was not entered simultaneously or shortly after the final judgment of divorce, even though that judgment called for a QDRO. It is for that reason, we presume, that when plaintiff retired in May 1994 and began to receive his pension, defendant's deferred distribution was not activated as a QDRO is necessary for the retirement system to distribute a portion of a retiree's benefit to another. 29 U.S.C.A. ยง 1056(d)(3)(A) and (B); Risoldi v. Risoldi, supra, 320 N.J. Super. at 532. When, finally, the first QDRO, dated April 1, 1996, was entered, it referred to a formula "devised in the case of Majauskas v. Majauskas, 6[1] N.Y.2d 481, 474 N.Y.S.2d 699 . . . ." described as "[n]umber of months of marriage of the parties while in the retirement systems divided by total number of months in retirement systems multiplied by 50% equals [defendant's ...


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