January 16, 2019
appeal from Superior Court of New Jersey, Chancery Division,
Family Part, Mercer County, Docket No. FM-11-0224-97.
Perry Davis argued the cause for appellant/cross-respondent.
L. Felsenfeld argued the cause for respondent/cross-appellant
(Felsenfeld & Clopton, PC, attorneys; Howard L.
Felsenfeld, on the briefs).
Judges Alvarez, Nugent, and Mawla.
Frank Fattore appeals from a February 25, 2017 order, which
required him to indemnify plaintiff Margaret Fattore for the
loss of her share of equitable distribution of
defendant's military pension, which was waived as a
result of his receipt of disability benefits. Plaintiff
cross-appeals and asserts the trial court should have granted
her request for alimony to replace the value of her lost
pension benefit. Pursuant to the United States Supreme Court
decision in Howell v. Howell, U.S., 137 S.Ct. 1400
(2017), we hold a trial court may not indemnify a payee
spouse when the payor spouse waives a military pension and
receives veteran disability retirement benefits. However, a
court is free to treat the pension waiver as a change in
circumstances and may award the payee alimony or modify it.
We reverse and remand the trial court's order for further
proceedings consistent with this opinion.
following facts are taken from the record. The parties were
divorced in 1997, following a thirty-five-year marriage. At
the time, both parties were fifty-five years of age. The
terms of the parties' divorce were memorialized in a
six-page consent dual final judgment of divorce.
judgment included a mutual alimony waiver, which reads as
follows: "Plaintiff and defendant each hereby waive
alimony as to the other party now and in the future." As
to equitable distribution, the judgment provided defendant
would retain the former marital residence located in
Hamilton, and the mortgage obligation associated with it, and
pay plaintiff $55, 000 as her share of the equity. The
parties agreed to retain all bank accounts, automobiles, and
credit card debt in his or her own name without a credit,
offset, or liability to the other.
judgment also divided the parties' pensions. Plaintiff,
who had been employed as an operating room nurse in a
hospital, had earned a modest pension. The parties agreed
defendant had a fifty percent interest in the marital
coverture portion of her pension, which had "been offset
against the equity in the marital home." Defendant was
serving full time in the Army National Guard when the divorce
occurred and had also accumulated a pension. The parties'
judgment divided the marital coverture portion of the
military pension equally as follows:
Plaintiff shall be entitled to receive fifty percent . . . of
defendant's military pension which was accumulated during
the marriage . . . via a [q]ualified [d]omestic [r]elations
[o]rder [QDRO] to be prepared by attorneys for plaintiff.
Plaintiff shall not be entitled to any post-judgment,
pre-retirement cost of living increases related to said
A QDRO of defendant's military pension was completed in
1999. Defendant continued to serve in the Army, following the
divorce, until he became disabled in 2002. At the time,
defendant was able to collect his pension and disability
benefits without any impact upon the pension payout.
Defendant also received social security benefits. At some
point, defendant opted for disability benefits, which he
could receive tax free.
record reflects plaintiff never contacted defendant to
inquire whether the pension was in pay status and defendant
assumed she had received her share of the benefit. Although
the parties share children and grandchildren, they had little
communication during the intervening years since the divorce.
In 2010, plaintiff contacted the office of the Army charged
with administering the pension to inquire why she had not
receive any payments. The response was as follows:
Please be advised that a portion of [defendant's] pay is
based on disability. Therefore, it cannot be divided under
the USFSPA [Uniformed Services Former Spouses Protection Act,
10 U.S.C. §1408]. The disability amount is used as an
authorized deduction. In this case, when the disability
amount is deducted from his gross pay along with the survivor
benefit portion, there's nothing left for the community
2016, plaintiff filed a motion to compel defendant to
compensate her for her share of the military pension. The
court conducted a plenary hearing over two days and
considered the parties' testimony. The trial judge made
oral findings and signed the February 25, 2017 order.
judge accepted defendant's testimony his disability
forced him to retire. She found defendant's monthly
income to be as follows: military disability retirement
$3400; VA disability benefits $3100; and social security
$1800. Only the social security was taxable. The judge also
noted defendant had remarried and his wife was gainfully
employed. The judge credited defendant's testimony he did
not intentionally seek to deprive plaintiff of her share of
the pension, by seeking disability benefits because neither
he nor plaintiff knew of the applicable federal law.
Nevertheless, she found the circumstances worked an unfair
result. The judge stated:
[D]efendant took an incredibly unreasonable position, in
that, looking at the statute per se, a QDRO could not be
implemented whereby . . . plaintiff could no longer receive
her [fifty] percent of the coverture value of . . .
defendant's military pay, because now it's been
converted to [one-hundred] percent non-taxable VA benefits
that are exempt.
That doesn't mean that she loses the interest. Even . . .
defendant, when questioned . . . by this [c]ourt . . .
didn't think it was fair, and neither does the [c]ourt.
trial judge also rejected defendant's argument plaintiff
had "sat on her rights" and was barred from seeking
relief, because plaintiff had "limited funds" and
could not hire counsel in 2010. The judge noted plaintiff had
retired in 2013, and had to move out of Mercer County because
her social security and pension totaled $22, 848 per year.
According to plaintiff's testimony, a condominium she had
purchased in a more affordable area had lost nearly one-half
of its value. The judge noted plaintiff had a "bare
bones budget" of $39, 540 per year, which still exceeded
her income and required she sell assets to meet her needs.
Conversely, the judge found defendant had "tax free
income of over $80, 000 per year" and "his budget
is only $74, 436 [per year]." These figures did not
include his wife's earnings.
result, the judge appointed a pension appraiser "to
determine the value of plaintiff's coverture interest in
. . . defendant's pension at the time the parties
executed their . . . judgment of divorce." The judge
[i]n the interim, . . . defendant shall pay directly to . . .
plaintiff the sum of $1800 per month, to be paid in a lump
sum by the first of every month . . . . This payment is not
to be considered an alimony payment as suggested by
[plaintiff's counsel], [although] that could be a course
that this [c]ourt could take but, rather, it's an
equitable distribution payment and, ...