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Claffey v. Claffey

May 19, 2003


On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Monmouth County, Docket No. FM-13-466-99-B.

Before Judges Kestin, Fall and Weissbard.

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


Submitted: January 29, 2003

This matrimonial appeal illustrates the special problems posed by the equitable distribution of a defined benefit pension plan where there are no available survivor benefits, and the pensioner spouse has a significant alimony obligation to the non-pensioner spouse. Plaintiff Dale Eagan Claffey appeals from certain provisions of the final judgment of divorce, as later modified during a limited remand, that provide security for the potential termination of her deferred-distribution share of the defined benefit pension plan of defendant Daniel Claffey in the New Jersey Police and Firemen's Retirement System (PFRS). Plaintiff also appeals from the manner of distribution of her equitable share in defendant's deferred compensation fund. The following factual and procedural history is relevant to our resolution of the issues posed in this appeal.

The parties were married on October 1, 1983. No children were born of the marriage; however, plaintiff had three children from her prior marriage and defendant had five children from his prior marriage. On September 10, 1998, plaintiff filed a complaint for divorce, alleging acts of extreme cruelty.

Trial of the divorce action commenced in the Family Part on January 19, 2000. However, prior to completion of trial, the parties reached an agreement concerning alimony that was ultimately embodied in an order entered on March 7, 2000, under which defendant agreed to pay to plaintiff the sum of $450 each week in permanent alimony, based upon plaintiff's 1999 gross earnings of $15,147.23 and defendant's 1999 gross earnings of $81,943.92. The order provided that alimony would terminate, inter alia, upon the death of defendant.

The trial continued on the remaining issues and concluded on January 27, 2000. The trial judge issued a written decision on those issues on June 19, 2000. *fn1 Although a form of final judgment purportedly incorporating the court's rulings was submitted to the court for entry, the parties were unable to agree on its form. On September 28, 2000, the court conducted a hearing concerning the wording of the final judgment focusing on those portions of the court's decision providing security for the continued support of plaintiff in the event of defendant's death, and the equitable distribution of defendant's pension. It is the interrelationship of those two issues that forms the main thrust of this appeal. In addressing those issues at the September 28, 2000 hearing, the trial judge stated, in pertinent part:

I understand [plaintiff counsel's] arguments. The framing of that portion of the decision was not a mistake. At least it was not a mistake as far as what I intended. Whether it's a mistake under that law is a different issue.

. . . I'm relying upon the [pension] appraiser's report.

And basically, I used the report which was . . . P-20. *fn2 My specific intent was to do exactly what that says. And it may be a mixing of apples and oranges, but that's what my intent was because as I understood it based on the testimony before me, [plaintiff's] equitable distribution [portion] of [defendant's] pension was that $171,000 figure approximately.

Everyone recognized it could not be immediately . . . distributed. I also took into consideration all the other testimony as far as financial ability to provide more security.

The issue as to whether or not, in effect, the failure to choose a survivorship benefit under the pension, should be held against [defendant]. And also the issues with regard to his wanting to, in addition to all of his obligations under the court's decision, also provide for his five . . . children in the event of his demise particularly his one son, Joseph, who has substantial problems that we need not go into right now.

And I took all of that into consideration in making my decision that she would, in effect, receive the value of the pension as set out in P-20, and that because of the inability to pay it out immediately, that that would be based on the arguments of counsel, QDRO'd recognizing that there is no survivorship benefit, it's a double-edged sword.

If he were to die a week after retirement, she would not receive any further pension payments. If he lived ten years beyond the tables for life expectancy, and the $171,000 is paid out prior to that time, then in effect, yes, an argument could be made that she received less than she wanted to or thought she was entitled to.

But that portion of the decision was not a mistake. The ruling was that she was entitled to $171,000 and I was concerned about protecting that sum in fashioning the additional security. Based on that decision, the language was also added for the possibility of a reduction in that security as the payments are made out.

That was my intent. It wasn't a mistake. I think it's appropriate if a higher court determines that that's not the way pensions are to be dealt with, then so be it. And then we'll have to look at it again. . . .

At the September 28, 2000 hearing, counsel for the parties agreed to obtain additional information from the pension expert concerning the availability of benefits in the event of defendant's death prior to retirement, and to arrange for preparation of an appropriate form of a qualified domestic relations order (QDRO). However, thereafter, the parties were still unable to agree to the form of final judgment.

On June 29, 2001, the court conducted a further hearing and made certain rulings concerning the security and pension issues, and the distribution of defendant's deferred compensation plan. With respect to the pension, the judge stated, in pertinent part:

. . . [Counsel for defendant] submitted . . . his proposed form of judgment. [Counsel for plaintiff] objected to it[.] . . . There was an additional letter from [counsel for plaintiff] . . . wherein he referred to a recent Appellate Division decision, [Linek v. Korbeil, 333 N.J. Super. 464 (App. Div. 2000)], and argued again, as he had throughout the entire trial and the post trial hearing and correspondence going back and forth that the court's calculation of the value of [plaintiff's] interest in [defen-dant's] retirement was incorrect. After having received that letter, having read the case, having received [counsel for defendant's] response in his letter . . . , I held a telephone conference call . . . , and as a result of that conference call, I came to the conclusion that [counsel for plaintiff] was correct . . . , and that I would have to change the portion of the court's decision on the calculation of [the] present value of that pension benefit. And instead, in complying with Linek, which incorporated the older Supreme Court decision [Kikkert v. Kikkert, 88 N.J. 4 (1981)], [I] determined that the awarding of $171,113.33 was inappropriate. That what I had to do was award one-half of the coverture fraction of the defendant's pension.

* * * * The balance of the changes [in the final judgment], again, deal with [counsel for plaintiff's] argument for the security since [defendant] has not retired. They don't know when he's going to retire. And . . . [i]f he were to die prior to retiring, since there is no survivor benefit, [plaintiff] would get nothing.

There was an ongoing dispute about whether or not [a] certain form of security and how much security should be put in place. I disagree again with [counsel for plaintiff] for all the reasons previously placed on the record. That there should be permanent life insurance or some other form of security.

I recognize that the vehicle that I set up at the time of making my decision of the $171,000 life insurance prior to his retirement should remain. The language in the judgment indicates he shall be required to maintain life insurance in the minimum initial sum of $170,000 upon his retirement naming plaintiff wife as the beneficiary.

I'm just adding in that, since we know that Mr. Troyan is going to have to recalculate things, the following additional language so that it will be, "or such other sum calculated by William Troyan if it can be to protect the value of plaintiff's share of defendant's pension."

So that basically if, as a result of the court's decision of the fifty percent of the coverture value of the defendant's pension, it turns out that it's more than $170,000 that can be calculated, there should be appropriate insurance coverage for that.

The parties had agreed that until retirement there would be $171,000. After, there would be an initial sum of $170,000, and then we got into the reduction procedure when payments were made. I recognize in light of not being able to make a fixed present value determination, the scheme that I put in place doesn't work as well. But I think it's better than nothing.

I disagree with the fact that there should be a specific life insurance benefit payable to [plaintiff] in the full amount of $170,000 at any time after his death. I recognize that no one really can calculate what that value is because we don't know how long [defendant] will live; how long the pension payments will be made.

If someone could calculate that specifically, I would consider the reduction procedure that I put into place. But I'm satisfied that that gives [plaintiff] some protection on the benefit that she would receive taking into consideration that the bottom line is that if he dies, there is no further benefit and based on the decisions that I made during the course of the trial, in the opinion and my disagreement with [counsel for plaintiff], that there would have to be ...

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