In re Sanders

64 N.E.3d 45

407 Ill.Dec. 667

In re MARRIAGE OF Stella SANDERS, Petitioner–Appellant, and William Sanders, III, Respondent–Appellee.

No. 1–14–3681.

Appellate Court of Illinois, First District, Second Division.

Sept. 20, 2016.

Barclay Law Group, P.C., of Chicago (Lester L. Barclay and Rafael Taylor, of counsel), for appellant.

Bradford & Gordon, LLC, of Chicago (Mitchell B. Gordon and Maria A. Citino, of counsel), for appellee.

OPINION

Justice PIERCE delivered the judgment of the court, with opinion.

¶ 1 Petitioner Stella Sanders appeals from the circuit court's order denying her motion to reconsider a prior order denying Stella's petition to recalculate her monthly benefits from her ex-husband's retirement fund. Stella argues the circuit court erred in denying her petition where a recalculation of her monthly benefits was warranted and the proper calculation is a "reserved jurisdiction approach" discussed in In re Marriage of Hunt, 78 Ill.App.3d 653, 34 Ill.Dec. 55, 397 N.E.2d 511 (1979) (Hunt formula). We affirm.

¶ 2 BACKGROUND

¶ 3 On August 31, 1994, the circuit court entered a judgment dissolving William and Stella Sanders' 26–year marriage. The judgment reserved the issue of the division of William's pension. On July 11, 1996, after a trial before Judge James G. Donegan, a supplemental judgment for dissolution was entered, finding the "pension of the Respondent through his employment with the United States Government is all marital property up until August 31, 1994," and that:

"[t]he Petitioner is awarded one-half of [William's] pension benefits accrued as of August 31, 1994, said benefits to be divided pursuant to the same formula in assessing or ordering Qualified Domestic Relations Orders (QDRO), to wit: 50% of the accrued benefits for the period November 1, 1968 to August 31, 1994. Payment of said benefit shall commence when the pension goes into pay status."

¶ 4 In 2012, William retired from the Environmental Protection Agency (EPA) after 43 years of employment. William's pension is held by the Civil Service Retirement System and administered by the federal government's Office of Personnel Management (OPM). After his retirement, OPM sent William interim monthly annuity payments in the net amount of $3828.34 pending calculation of his full monthly benefits.

¶ 5 Sometime in 2012, Stella learned of William's retirement and "filed a request for the marital portion of the annuity payments" with the OPM. This request included a copy of the July 1996 court order. On September 6, 2012, OPM responded in a letter stating that "[b]y court order your marital share of your former spouse's retirement benefit is 50% of 322 months of service during the marriage divided by 532 months of Federal service or 30.26% of your spouse's retirement benefit. The marital share times your former spouse's gross annuity benefit of $8936 provides for a $2,704.03 monthly payment to you." Beginning October 1, 2012, OPM issued Stella monthly distributions of $2,704.03.

¶ 6 William requested an audit and review of the above calculations. On May 29, 2013, OPM issued a "Correction" stating:

"By court order your former spouse's marital share of your retirement benefit is 50% of 303 months of service during the marriage divided by 44 years 4 months of Federal service or 28.478% of your retirement benefit as of August 31, 1994. The marital shares times your gross annuity benefit of $3567 provides for a $1,015.52 monthly payment to your former spouse not the $2704.03 erroneously awarded. * * *

Your former spouse was due an annuity payment of $8,227.72 and was paid $21,891.80, an overpayment of $13,664.08 which we will refund to you in one time [sic ] payment from your former spouse's monthly annuity benefit."

¶ 7 The parties do not dispute that OPM correctly revised the number of months of service during the marriage (303), the total number of months in service (532), the resultant fraction (303/532) or the revised marital share (1/2 (303/532) = 28.478%).

¶ 8 After receipt of the 2013 letter, Stella filed this postdecree "petition for payment of retirement benefits" in the circuit court of Cook County, contesting the reduction in her monthly payments. Stella argued that absent an order from the circuit court directing OPM to make corrections, OPM should be prohibited from correcting its own mistakes. Stella also argued that the 1996 supplemental judgment order is ambiguous because it does not state the exact amount of William's pension at the time the order was entered; therefore, the proper calculation for her monthly pension award is a "reserved jurisdiction approach" as discussed in In re Marriage of Hunt, 78 Ill.App.3d 653, 34 Ill.Dec. 55, 397 N.E.2d 511 (1979). In Stella's petition she sought an order directing (1) William to provide documentation supporting the calculation of his gross annuity benefits since he retired, (2) William to provide documentation of Stella's marital share of his benefits since he retired, (3) William to reimburse Stella for any amounts of her share of his pension benefits that she has not received, and (4) an award of attorney fees.

¶ 9 In response, William argued that his retirement plan is a federal government plan exempt from the previsions of Employee Retirement Income Security Act of 1974 (ERISA) (29 U.S.C. § 1001 et seq. (2006) ) and managed by the OPM; according to OPM regulations Stella was required to follow procedures to apply for pension benefits; OPM's September 2012 letter miscalculated Stella's benefits based on 322 months of service during marriage where the marriage lasted only 303 months; therefore, OPM properly recalculated Stella's benefits; Stella has been provided the documentation she seeks; and, in the alternative, the 1996 judgment order is not ambiguous, and thus, the Hunt formula is not the proper calculation for Stella's monthly pension benefits.

¶ 10 After the hearing, on July 9, 2014, the circuit court entered a written order denying Stella's petition. The court found that "both parties stipulate that the fund at issue is a defined benefit plan and that the OPM properly calculated both the length of the parties' marriage and the length of WILLIAM's total service in determining his interest in the Plan," but what the parties dispute "is the gross monthly amount to which the calculation should be applied; i.e. whether the amount is that which WILLIAM would have received if he had retired on the date of dissolution, or the gross monthly amount he would receive on the date of his retirement." The circuit court held that a nonparticipant spouse's interest is designated by federal law according to OPM regulations, which define "prorata share" as "one-half of the fraction whose numerator is the number of months of Federal civilian and military service that the employee performed during the marriage and whose denominator is the total number of months of Federal civilian and military service performed by the employee,' " and this formula "mirrors Judge Donegan's findings and order in the Supplemental Judgment." The court also found that because William's benefits plan is a public plan exempt from ERISA, the Hunt formula is not applicable.

¶ 11 Stella filed a motion to reconsider, arguing that the court failed to address OPM's two letters to Stella that listed different amounts for William's gross annuity benefits and that OPM did not provide supporting documents to explain their calculation. Stella argued that, if the trial court had considered these issues the court would have been required to grant her petition. On October 29, 2014, the circuit court denied Stella's motion finding that "[ (1) ] there has been no misapplication of existing law; (2) no new law presented to the court; and (3) no new facts available which require the court to reconsider" its July 2014 order. This timely appeal followed.

¶ 12 ANALYSIS

¶ 13 On appeal, Stella argues that the circuit court erred in denying her motion to reconsider¹ in that OPM was not authorized to recalculate her pension benefits and the 1996 court order lacked detail as to the present value of William's pension; therefore, the calculation of her pension benefits should be made according to the Hunt formula. Because Stella argues that the circuit court erred in the application of existing law, our review is de novo. Kyles v. Maryville Academy, 359 Ill.App.3d 423, 433, 295 Ill.Dec. 860, 834 N.E.2d 441 (2005).

¶ 14 William's response on appeal is that federal law mandates the proper means to review an OPM pension calculation is through the federal administrative system starting with the Merit System Protection Board (MSPB). In the alternative, he argues that the 1996 judgment order does not lack detail, and therefore, the Hunt formula is not the proper means to calculate Stella's monthly pension benefits.

¶ 15 Retirement benefits for federal employees are administered by one of two systems, either the Civil Service Retirement System (CSRS) (5 U.S.C. §§ 8331 –8351 (2006)) or the Federal Employees' Retirement System (FERS) (5 U.S.C. §§ 8401 –8479 (2006) ). CSRS retirement benefits, like William's, are determined by the OPM. The formula used to compute his monthly annuity payment is established by federal law and based on his years of service and salary history. 5 U.S.C. § 8339 (2006). The OPM is required to "comply with court orders, decrees, or court-approved property settlement agreements in connection with divorces * * * that award a portion of the former employee's * * * retirement benefits or a survivor annuity to a former spouse." 5 C.F.R. § 838.101(a)(1) (2012). OPM "must honor the clear instructions of the court" (5 C.F.R § 838.101(a)(2) (2012) ) provided they are "specific and unambiguous" (id. ).

¶ 16 CSRS has a three-part review process to resolve retirement benefits claims and disputes. Ayrault v. Pena, 60 F.3d 346, 348 (7th Cir.1995). "First, Congress has designated the OPM to administer the CSRS and FERS, and to adjudicate all claims arising under...