In re Heath-Clark

884 N.W.2d 225 (Table)

In re the MARRIAGE OF Julia HEATH–CLARK AND Richard Alan CLARK

Upon the Petition of Julia Heath–Clark, Petitioner–Appellee,

and

Concerning Richard Alan Clark, Respondent–Appellant.

No. 15–0525.

Court of Appeals of Iowa.

May 11, 2016.

Kodi A. Brotherson of Becker & Brotherson Law Offices, Sac City, for appellant.

Thomas P. Graves of Graves Law Firm, P.C., Clive, for appellee.

Heard by DANILSON, C.J., and MULLINS and McDONALD, JJ.

McDONALD, Judge.

Richard Clark appeals from the district court's denial of his petition for a declaratory order and his application for an order nunc pro tunc to amend the parties' qualified domestic relations order (QDRO). Richard maintains the QDRO should be amended to reflect the intent of the parties at the time they entered the dissolution decree. Specifically, he contends the Iowa Public Employees' Retirement System (“IPERS”) calculates retirement benefits in a way neither party expected or intended and, as a result, Julia Clark receives more of his retirement benefit than intended.

I.

Richard and Julia married on May 24, 1970. They dissolved their marriage by stipulated decree on September 23, 2002. In pertinent part, the decree provides:

IT IS FURTHER ORDERED, ADJUDGED AND DECREED that [Julia] shall receive a percentage of [Richard's] IPERS asset as set forth in the Qualified Domestic Relations Order which shall be entered subsequent to the entry of this Decree. In regards to the IPERS benefit of [Richard] to be received by [Julia], when the member elects a payment option for IPERS benefits pursuant to any Qualified Domestic Relations Order, that member shall select fifty percent (50%) of the payment option for the contingent annuitant/alternate payee. The alternate payee shall not now or in the future designate a successor alternate payee. This Court shall retain jurisdiction for the filing and implementation of the Qualified Domestic Relations Order.

The same day, a QDRO was entered to divide Richard's IPERS benefits. The QDRO provides:

IPERS is directed to pay benefits to the Alternate Payee as a marital property settlement under the following formula: fifty percent (50%) of the gross monthly or lump sum benefit payable at the date of distribution to the Member multiplied by the “service factor.” The numerator of the service factor is the number of quarters covered during the marriage period of May 24, 1970 through the 23rd day of September, 2002, (the date of the filing of the Decree of Dissolution of Marriage), and the denominator is the Member's total quarters of service covered by IPERS and used in calculating the Member's benefit.

On May 19, 2014, Richard filed a petition for declaratory judgment and/or order nunc pro tunc, claiming the service factor was too large and, as a result, Julia was receiving a greater percentage of his IPERS benefit. Richard claimed the service factor was too large because IPERS caps the number of quarters used in calculating the member's benefit (the denominator) at 140, or thirty-five years, even though Richard worked 165 quarters of service covered by IPERS. He asked the district court to “affirmatively declare that the denominator in the ... formula fraction is [165],¹ the total number of quarters [Richard] worked in IPERS-covered employment.” Additionally, Richard asked the district court to enter an order nunc pro tunc “correcting the error in the Qualified Domestic Relations Order.”

On July 17, 2014, Julia filed a motion for summary judgment and a resistance to Richard's petition. In it, Julia asserted declaratory relief was not proper because there was not a “legal issue between [Richard and her] which can be resolved between the parties.... He has brought this matter against the wrong party with whom he does not have an actual issue of controversy.” Julia also asserted an order nunc pro tunc was not appropriate because the QDRO correctly expressed judicial intention as set forth in the decree. Lastly, Julia maintained the IPERS rule limiting the denominator to 140 quarters was “appropriate under Iowa jurisprudence.”

The matter came to trial on September 19, 2014. The general counsel for IPERS testified the maximum number of quarters that could be used in calculating the member's benefit was 140. During cross-examination, IPERS' general counsel testified that, while the denominator of the fraction was set at 140 by statute, IPERS had no position about what percentage was to be used against the service factor and that it would accept a number other than fifty percent if that was what the judge determined to be appropriate.

The district court filed its order denying Richard's petition for declaratory judgment and application for order nunc pro tunc on December 4, 2014. In it, the court stated:

In considering the intention of the court from 2002, the court in 2014 uses the decree, the QDRO, and the transcript from the hearing on May 29, 2002 to determine the intent of the court's order. There is no indication that the court had any intent other than to put into place the agreement of the parties. The parties entered a stipulation of their agreement on the record on the date of trial.... It is clear that the parties agreed to divide Richard's IPERS benefits pursuant to the Benson formula—the Benson formula was referenced on the transcript and the QDRO uses a formula consistent with Benson.

....

While the Benson formula is clearly favored by the Iowa Supreme Court and was implemented by the parties and the court in the 2002 decree and QDRO, the Benson court did not fully define the denominator portion of the service factor fraction. The Benson decision does not answer the interpretation issue raised here.....

The weight of the evidence, as shown by the two orders and the transcript, shows that the parties and the court did not consider the precise issue whether the service factor fraction could include years of service beyond 35 years at the time the decree and QDRO were entered....

In the absence of language in the decree, QDRO, or stipulation showing an intent to the contrary, the court views the language used in the QDRO as deferring to IPERS.

Richard appeals.

II.

Our review of an equitable action is de novo. See Iowa R.App. P. 6.907. “We review the construction of a dissolution decree as a matter of law.” In re Marriage of Goodman, 690 N.W.2d 279, 282 (Iowa 2004) ; but see In re Marriage of Veit, 797 N.W.2d 562, 564 (Iowa 2011) (applying de novo review in determining whether QDRO fulfilled terms of dissolution decree); In re Marriage of Brown, 776 N.W.2d 644, 647 (Iowa 2009) (reviewing de novo whether district court properly interpreted dissolution decree); In re Marriage of Pals, 714 N.W.2d 644, 646 (Iowa 2006) (reviewing de novo the court's ruling in an equitable “proceeding to modify or implement a marriage dissolution decree subsequent to its entry”).

III.

A.

Before we can examine the merits of Richard's appeal, we must address Julia's jurisdictional argument. She maintains the court lacked jurisdiction to amend the QDRO. Julia claims Richard's petition for a declaratory judgment and/or order nunc pro tunc to amend the QDRO was untimely because he did not appeal the QDRO pursuant to Iowa Rule of Appellate Procedure 6.101(1)(b), nor did he file a petition to vacate or modify judgment pursuant to Iowa Rule of Civil Procedure 1.1013. If Richard were requesting a modification of the property division, we would agree because a property division generally is not modifiable. See In re Marriage of Morris, 810 N.W.2d 880, 886 (Iowa 2012) ; see also Iowa Code § 598.21(7) (2013). But Richard's request is not for modification of the property division. He is asking the QDRO be modified to conform to the property division as set forth in the decree.

Normally, a property disposition that includes the division of retirement benefits proceeds in two steps. First, a dissolution of marriage decree—a substantive order that equitably divides and assigns the parties' property—is entered. See Brown, 776 N.W.2d at 647–48 (discussing finality of decrees, property division, and QDROs). Second, for the division of retirement benefits to be implemented, a QDRO is entered directing the plan administrator to make certain specified payments to the ex-spouse.² See id.; see also Breslin v. Synnott, 54 A.3d 525, 527 (Vt.2012) (citing 2 B. Turner, Equitable Division of Property § 6:20, at 113 (3d ed.2005)).

A QDRO is defined in relevant part by [ERISA] as a domestic relations order “which creates or recognizes the existence of an alternate payee's right to, or assigns to an alternate payee the right to, receive all or a portion of the benefits payable with respect to a participant under a plan.” 29 U.S.C. § 1056(d)(3)(B)(i)(I). In order for the QDRO to be qualified—for the Q to be added to the DRO—certain requirements must be met. See id . § 1056(d)(3)(C)-(D). Once the plan administrator qualifies the QDRO, payments are made in accordance with the requirements contained in the QDRO. Id. § 1056(d)(3)(A). It is from this statutory scheme and general description of QDRO practice that we draw the conclusion that a QDRO is characterized properly as a procedural device that enforces an underlying substantive order. See Kremenitzer v. Kremenitzer, [838 A.2d 1026, 1028 (Conn.Ct.App.2004) ] (explaining that a QDRO is vehicle for enforcing court judgment); see also Turner, § 6:20, at 113–14 (noting “strong general rule” that QDRO is not substantive order, but rather “procedural device [ ] for enforcing the terms of the underlying substantive order ”).

Breslin, 54 A.3d at 527–28.

We too draw the conclusion that a QDRO is characterized properly as a procedural device required by federal law and entered to effectuate the property division made in the dissolution decree. We conclude the QDRO is not a “final judgment” subject to the variety of deadlines imposed to challenge a final judgment. See Veit, 797 N.W.2d at 564 (“[T]he QDRO is not itself a property settlement, but is...