Hammond v. Hammond

680 S.W.3d 269

Katy Elizabeth HAMMOND

v.William George HAMMOND

Court of Appeals of Tennessee, Middle Section, AT NASHVILLE.

Assigned on Briefs May 1, 2023

FILED August 22, 2023

Appeal from the Circuit Court for Montgomery County, No. CC-2018-CV-1635, Kathryn Wall Olita, Judge

Justin Matthew Hilliard, Clarksville, Tennessee, for the appellant, William George Hammond.

Amy C. Bates, Clarksville, Tennessee, for the appellee, Katy Elizabeth Hammond.

OPINION

Kristi M. Davis, J., delivered the opinion of the Court, in which Andy D. Bennett, J., and J. Steven Stafford, P.J., W.S., joined.

A husband and wife entered into a marital dissolution agreement in 2019. Part of the agreement provided that once the husband retired from the United States Army, he would pay the wife alimony in futuro in an amount equal to the amount of military retirement to which the wife was entitled under the agreement. In 2021, the wife filed a motion for contempt alleging, inter alia, that the husband was not complying with the alimony requirements. The husband argued that the parties’ agreement was unenforceable because it is pre-empted by federal law. Following a hearing, the trial court found that the husband had failed to comply with the agreement but that the contempt was not willful. The husband appeals. Discerning no error, we affirm. We also grant the wife’s request for her appellate attorney’s fees.

Background

This is a post-divorce dispute over military retired pay and military disability benefits. William George Hammond ("Husband") and Katy Elizabeth Hammond ("Wife") married in 2003 in North Carolina and separated in 2018 while living in Clarksville, Tennessee. Wife filed a complaint for divorce on August 17, 2018, alleging irreconcilable differences and inappropriate marital conduct as grounds. She also sought temporary support from Husband, who at the time was a member of the United States Army. The parties attended mediation and agreed to a property settlement and alimony arrangement. The parties both signed a marital dissolution agreement ("MDA") on October 11, 2018. As relevant to the issues on appeal, the MDA provides:

A. MILITARY RETIREMENT.

i. Award of Retirement. The Wife (the "Former Spouse") is awarded a percentage of the Husband’s (the "Service Member") gross disposable military retired pay, including the same percentage of the gross amount of any future cost of living adjustments (the "award" as used in this Paragraph). The award is computed by multiplying 50% times a fraction, the numerator of which is 183 months of marriage during the Service Member’s creditable military service, divided by the Service Member’s 240 months of total creditable military service. The award is computed as if the Service-Member Spouse were to retire upon the date of divorce with a retired pay base at the rank of E-7 and over eighteen (18) years of credi[table] service.

ii. Definition of Military Retired Pay. Under this Agreement and any court order incorporating it, "military retirement," "disposable military retired pay," or "military retired pay" is defined as "disposable military retired pay" under 18 U.S.C. 1408(a)(1) (2018).

iii. These parties were married on 07/04/2003 and were married to each other for at least fifteen (15) years during which the Service Member performed at least fifteen (15) years of creditable military service. The Service Member’s name is William George Hammond, Social Security Number: XXX-XX-[XXXX], and is a member of the United States Army. The Former Spouse’s name is Katy Elizabeth Hammond, Social Security Number: XXX-XX-[XXXX]. The Service-Member’s High-3 at the time of the parties’ divorce is $4,436.80.

iv. Continuing Exclusive Jurisdiction to Enforce. The Court shall retain jurisdiction to enforce this Paragraph and the military retirement benefits awarded herein, including but not limited to: the re-characterization thereof as a designation of civil service or other retirement benefits; to make an award of alimony in the sum of benefits payable—including any future cost of living adjustments—if the Service-Member Spouse fails to comply with this Paragraph by, inter alia, applying for a disability award, filing for Bankruptcy, applying for military or civilian regulations or restrictions that interfere with payments to the Receiving Spouse under this Paragraph.

Husband also agreed to alimony in the MDA:

A. SPOUSAL SUPPORT. The Husband will pay to the Wife transitional alimony in the amount of $1,578.00. Each payment shall be due and payable to the Wife on the first day of each month, beginning on November 1, 2018. The Husband shall continue paying such transitional alimony until he is discharged from the United States Army. The Husband may set off any payments made by him towards the Wife’s car note and insurance on the parties’ 2014 Jeep Cherokee Latitude against his spousal support obligation under this Paragraph.

B. ALIMONY IN FUTURO. Beginning upon the Husband’s retirement from the U.S. Army, he will pay to the Wife alimony in future in an amount equal to the Wife’s portion of the Husband’s military retired pay as calculated under this Agreement. This award shall not be affected by either party’s remarriage or cohabitation with a member of the opposite sex, nor is this award modifiable based upon a material change of circumstances, except as necessary to account for the Husband’s conversion of military retired pay to disability payments. Both parties acknowledge that this Paragraph is intended solely to protect the Wife’s portion of the Husband’s military retired pay in light of the Supreme Court’s holding in Howell v. Howell. Therefore, the Husband’s spousal support obligation under this Paragraph shall be set off, dollar-for-dollar, by any amounts the Wife actually receives of her portion of the Husband’s military retired pay, as calculated under this Agreement, either from the Defense Finance and Accounting Service (DFAS) or from the Husband directly. Furthermore, the Husband’s spousal support obligation under this Paragraph is expressly conditioned upon the Husband’s willfully and voluntarily taking any action or making any election that reduces or eliminates the Wife’s portion of military retired pay he would have received but for such willful and voluntary actions.

A final hearing was held on June 10, 2019, at which time the trial court entered the final decree of divorce incorporating the MDA. Husband retired from the Army effective May 31, 2020. A statement from October of 2020 shows that during this time, Husband’s gross retired pay was $2,332 per month. According to Husband, he began the process "of getting examined by the VA¹ to determine eligibility for disability" soon after he retired.

On March 15, 2021, Wife filed a petition for civil contempt, citing the MDA and noting that Husband was supposed to begin paying Wife alimony in futuro upon his retirement from the military and had not done so. The VA assessed Husband at one-hundred percent disability and notified him that effective December 31, 2021, he would begin receiving "service-connected disability compensation." Husband answered the petition for contempt on May 10, 2022,² arguing that

Wife has failed to state a claim upon which relief may be granted. Because federal law preempts any state court’s division of veteran’s disability benefits, the Final Decree is unenforceable to the extent it imposes an obligation upon the Husband to indemnify the Wife against a reduction of his military retired pay caused by his obtaining VA disability benefits.

A hearing was held on May 17, 2022, at which both Husband and Wife testified. On July 8, 2022, the trial court entered an order concluding that Husband was in violation of the MDA and owed Wife an arrearage of $8,478.65 in unpaid alimony in futuro. The trial court did not hold Husband in contempt, concluding that his failure was not willful, and crediting Husband’s "testimony regarding his confusion and difficulty in determining the exact amount owed in light of the offsets he was entitled to" under the MDA. The trial court also awarded Wife her attorney’s fees as the prevailing party and ordered Wife’s counsel to submit an affidavit within thirty days. Wife’s counsel submitted her affidavit, and the trial court entered a final order on August 12, 2022, finding Wife’s requested fees of $6,507.20 reasonable. Husband timely appealed to this Court.

Issues

Husband raises a single issue on appeal:

Whether the alimony in futuro provision in the parties’ MDA violates federal law by specifically circumventing the ruling in Howell v. Howell.

In her posture as appellee, Wife also posits that she is entitled to attorney’s fees incurred on appeal.

Discussion

[1] The central issue in this appeal is whether the alimony in futuro provision in the parties’ MDA is unenforceable under federal law. "MDAs are essentially contracts, and we construe them as such." Vlach v. Vlach, 556 S.W.3d 219, 222 (Tenn. Ct. App. 2017) (citing Bogan v. Bogan, 60 S.W.3d 721, 730 (Tenn. 2001)); see also Long v. McAllister-Long, 221 S.W.3d 1, 8 (Tenn. Ct. App. 2006) ("These agreements are contractual in the sense that they are the product of the parties’ negotiation and agreement.").

[2] Some background regarding military retirement pay and service-connected disability pay is necessary to understand the issue raised. "Members of the United States Army may retire after a specified period of service and receive ‘retired pay.’ 10 U.S.C. §§ 3911-3929 (Supp. 2016). The monthly amount of retired pay is based upon years of service and rank. Id. §§ 3926, 3991." Vlach, 556 S.W.3d at 223. While military pay is an area generally pre-empted by federal law, a state court "may treat disposable retired pay … either as property solely of the member or as property of the member and his spouse in accordance with the law of the jurisdiction of such court." 10 U.S.C. § 1408(c)(1); see also Vlach, 556 S.W.3d at 223-24 ("The Former Spouses’ Protection Act...