November 16, 2012
CLARA R. VERRENGIO-OLIVO, PLAINTIFF-RESPONDENT,
DAVID E. DONOVAN, DEFENDANT-APPELLANT.
On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Sussex County, Docket No. FM-19-181-05.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted December 5, 2011 -
Before Judges A. A. Rodriguez and Ashrafi.
Defendant ex-husband David Donovan appeals from an order of the Family Part requiring that a Qualified Domestic Relations Order (QDRO) be re-evaluated and revised to divide his pension equally with plaintiff ex-wife Clara Verrengio-Olivo. He contends that his ex-wife is not entitled to additional pension benefits he acquired after the divorce. We affirm the Family Part's order.
The parties married in 1986 and divorced twenty years later. They did not retain attorneys to represent them when they obtained the judgment of divorce dated May 16, 2006. They placed an oral property settlement agreement on the record before a judge. They agreed that husband would buy out wife's interest in the marital home for $50,000. The judge confirmed that wife was waiving any claim to alimony. With respect to pension rights, the wife testified: "he'll give me half of his 401K and half of his pension," which was from the Police and Firemen's Retirement System. After the hearing, the court prepared and executed the judgment of divorce. Relevant to this appeal, the judgment stated: "plaintiff [wife] shall receive half of defendant's [husband's] 401K and Pension benefits and waives her rights to any alimony payable to her . . . ."
A year after the divorce, wife moved for modification of the judgment based on changed circumstances, and she also requested that the court compel husband to provide a QDRO in conformity with the judgment to address the division of his future pension benefits. By order of May 14, 2007, the Family Part directed husband "to provide proof of the Qualified Domestic Relations Order . . ." within twenty days "to reflect that payments to the alternate payee [wife] shall commence upon [husband's] retirement."
Despite the court's order, husband did not provide an acceptable QDRO for another year and a half. When an attorney on his behalf finally presented a proposed QDRO, wife did not object, and it was signed by the Family Part judge on November 13, 2008.*fn1 The QDRO stated that fifty percent of pension benefits payable to husband as of October 17, 2005, would be payable to wife beginning on May 1, 2014. Although the record before us is not explicit as to the relevance of those two dates, we presume October 17, 2005, is the date on which the complaint for divorce was filed - thus designating the end of the marital relationship - and May 1, 2014, was the anticipated date of husband's retirement. The QDRO also stated that any pension loans to husband would not affect wife's fifty percent share. The QDRO calculated her anticipated share of husband's pension benefit to be $1,268.19 per month.
After the QDRO was executed, husband borrowed from his share of the pension and purchased back three years of service from the beginning period of his employment for which he had not previously received creditable service. With the three additional years, he had twenty-five years of creditable service, which made him eligible for retirement at a higher benefit. He applied for and obtained early retirement in 2010 and began collecting a pension, which wife claims amounts to $6,257 per month.
When wife learned that husband was collecting his pension, she engaged an attorney and moved in the Family Part for her fifty percent share. Husband responded that early retirement was made possible by his post-marital acquisition of additional pension rights and that she had no valid claim to his pension benefits until May 2014, as stated in the executed QDRO. A Family Part judge considered the parties' submissions and arguments, and he reviewed the 2006 judgment of divorce and the 2007 post-judgment order. The judge stated that he had executed the 2008 QDRO in error, without adequate attention to the requirements of the judgment of divorce and the parties' settlement agreement. He determined that wife was entitled to fifty percent of husband's pension from the date of his retirement, whenever that might occur and whatever additional pension rights he may have acquired after the marriage ended.
The judge issued an order on March 18, 2011, that wife must fund the cost of a pension evaluator to determine her share of benefits received by husband since his retirement in December 2010, at the same time giving him a credit for purchasing the additional pension rights; that both parties must pay the cost of an accountant to calculate and adjust the tax consequences of modifying the QDRO; and, as interim relief to wife pending those calculations, husband must pay $2,000 per month to wife until adjustments can be made based on the experts' calculations. Finally, the court ordered that husband make a one-time payment of $500 toward wife's attorney's fees for the motion. The Family Part judge stayed his order pending appeal.
Husband argues on appeal that wife is only entitled to equitable distribution of the pension rights acquired during the marriage, the so-called coverture fraction of husband's pension - in other words, fifty percent of the portion of the pension rights accumulated during the marriage as compared to fifty percent of the entirety of husband's pension.*fn2 Husband also argues that wife has no right to collect pension benefits before May 1, 2014, because his opportunity to retire early was a result of his post-marital acquisition of additional benefits with his own funds and not with a marital asset subject to equitable distribution. See Painter v. Painter, 65 N.J. 196, 218 (1974) ("[F]or the purposes of determining what property will be eligible for distribution the period of acquisition should be deemed to terminate the day the complaint is filed."); Faulkner v. Faulkner, 361 N.J. Super. 158, 165 (App. Div.) ("Generally, the coverture fraction is the appropriate tool to utilize in attempting to determine an appropriate allocation of spouses' respective interests in a pension."), certif. denied, 178 N.J. 28 (2003); Menake v. Menake, 348 N.J. Super. 442, 454 (App. Div. 2002) (discussing the use of the coverture fraction to "carve out the marital value of" a pension).
We agree with the Family Part judge that the clear, albeit simple, language used by the parties to set forth their agreement made no reference to a coverture fraction and instead stated only that wife had a right to fifty percent of benefits at the time of husband's retirement. Most significant, the parties' agreement is clear that both spouses receive pension benefits at the same time, when husband retires. The fact that husband agreed to grant to wife pension rights he might accumulate after termination of the marriage is neither an irrational understanding of the parties' agreement nor unjustified in circumstances where wife waived her right to claim alimony after a marriage of substantial duration.
As an alternative argument, husband contends that wife's motion to modify the QDRO should have been denied as untimely pursuant to Rule 4:50-2, which fixes a one-year time limit for a motion to modify a judgment or order pursuant to Rule 4:50-1(a), (b), or (c). We agree with the Family Part judge that wife's belated application was permissible pursuant to Rule 4:50-1(f), which does not have a time limitation.
The Family Part may modify an order pertaining to equitable distribution under Rule 4:50-1(f) if circumstances are shown demonstrating that the dependent spouse's expectations of receiving a retirement income have been altered by the supporting spouse's post-divorce actions. See Moore v. Moore, 376 N.J. Super. 246, 251 (App. Div.), certif. denied, 185 N.J. 37 (2005). Here, wife waived alimony and sold her interest in the marital home with the understanding that she would receive half of husband's pension when he began receiving it. There was no discussion at the time of the divorce judgment regarding any coverture fraction or other diminishment of that sum. The Family Part judge did not abuse his equitable and discretionary authority in concluding that Rule 4:50-1(f) empowered him to modify the QDRO despite the passage of more than one year since its entry.
Finally, husband argues that the doctrine of laches should have been applied because wife failed to object to the 2008 QDRO when it was presented to the court for execution and husband relied on its entry in determining to take early retirement. Although wife's failure to note the terms of the QDRO before its execution may have lulled husband into relying on its validity, husband had agreed to provide an equal share of his pension benefits to wife and the QDRO does not do so. Furthermore, he had been ordered in May 2007 "to revise [the proposed QDRO] to reflect that payments to the alternate payee [wife] shall commence upon defendant's [husband's] retirement." That order was specific with respect to the requirements of a QDRO, but husband failed to abide by it. He is as responsible as wife for the execution of a QDRO that did not comply with the court's directives.
We find no error in the Family Part devising an equitable remedy to effectuate the parties' agreement at the time of the divorce. The stay of the Family Part's March 18, 2011 order is hereby dissolved, and the parties shall comply with its terms.