Robinette v. Hunsecker

439 Md. 243

96 A.3d 94

Lori A. ROBINETTE

v.Luann HUNSECKER.

No. 90, Sept. Term, 2013.

Court of Appeals of Maryland.

July 18, 2014.

Laura N. Venezia (Conklyn & Associates, Frederick, MD), on brief, for Petitioner.

Brian E. Barkley (Barkley & Kennedy, Chartered, Rockville, MD), on brief, for Respondent.

Argued before BARBERA, C.J., HARRELL, BATTAGLIA, GREENE, ADKINS, McDONALD and ALAN M. WILNER (Retired, specially assigned), JJ.

McDONALD, J.

In this case, a divorcing couple entered into a property settlement agreement that included an allocation of future benefits from the retirement plan sponsored by the husband's employer. In describing the parties' understanding, the agreement used terminology appropriate to retirement plans governed by a federal law—although the husband's plan was exempt from that law—and contemplated, incorrectly, that the divorce judgment itself would effect the division of the retirement plan benefits. Neither party took any action to put into effect the understanding concerning the retirement plan expressed in the property settlement agreement. After the husband remarried, he designated his new wife as his beneficiary under the retirement plan. Upon his death, a dispute arose between the former wife and the second wife concerning the former wife's entitlement to a portion of the retirement plan benefits.

The Circuit Court for Frederick County issued an order that established a constructive trust in favor of the former wife with respect to a portion of the benefits already paid to the second wife and ordered the plan to allocate future benefits between the two women in a similar fashion. The Court of Special Appeals affirmed that decision. And so do we.

Background

Allocation of Retirement Plan Benefits in Divorce

One of the issues that must be resolved in most divorces is the disposition of marital property. A court that grants a divorce has authority to determine which property is marital property, to assess its value, to order the transfer of ownership of certain categories of property, and to grant a monetary award to adjust “the equities and rights of the parties.” Maryland Code, Family Law Article (“FL”), § 8–201 through § 8–205; see Conteh v. Conteh, 392 Md. 436, 437, 897 A.2d 810 (2006). Among the property rights that may be allocated as part of such a proceeding is a spouse's interest in a retirement plan earned during the course of the marriage. See Deering v. Deering, 292 Md. 115, 437 A.2d 883 (1981). In particular, FL § 8–205(a)(2)(i) specifically authorizes a trial court to transfer ownership of an interest in pension and retirement benefits that is marital property. ¹ In lieu of these judicial determinations, a divorcing couple may enter into an agreement for the allocation of their property, including retirement plan benefits. FL § 8–101.

Allocation of retirement plan benefits in the context of a divorce must often take account of the federal Employee Retirement Income Security Act of 1974 (“ERISA”), originally enacted as Pub.L. No. 93–406, 88 Stat. 829. ERISA established various requirements to better protect those covered by retirement plans in private workplaces and broadly preempted contrary state laws. See Rohrbeck v. Rohrbeck, 318 Md. 28, 566 A.2d 767 (1989). Among those requirements, the statute limits the ability of a participant in a retirement plan subject to ERISA to transfer or “alienate” pension benefits. 318 Md. at 30–31, 566 A.2d 767. This restriction would seemingly hinder the transfer of such benefits by a state court in a divorce case or by the divorcing parties in a property settlement agreement that was incorporated in a divorce judgment. Id. at 32, 566 A.2d 767. As amended by the Retirement Equity Act of 1984, Pub.L. No. 98–397, 98 Stat. 1433, however, ERISA allows for an “alternate payee” to receive all or a portion of the benefits payable to a participant pursuant to a court order that satisfies various requirements set forth in the federal statute. Rohrbeck, 318 Md. at 32–36, 566 A.2d 767. Such a court order is called a “qualified domestic relations order” or “QDRO” in ERISA lingo. See29 U.S.C. § 1056(d)(3); 26 U.S.C. § 414(p).

ERISA's requirements broadly apply to most retirement plans and preempt contrary provisions of state law. 29 U.S.C. § 1144(a). But not all retirement plans are regulated by ERISA. Notably, government-sponsored plans are specifically exempt from the federal statute. See29 U.S.C. § 1003(b)(1).

Courts in Maryland have come to use orders similar to QDROs for the allocation of plan benefits between divorcing spouses with respect to retirement plans that are exempt from, and therefore not governed by, ERISA. C. Callahan & T.C. Ries, Fader's Maryland Family Law (5th ed. 2012), § 12–3[c]. Thus, although the concept and acronym are creatures of ERISA, the label “QDRO” may have achieved a broader meaning. As is often the case with a living language, the term has sometimes leapt the boundaries of its formal meaning to encompass generically orders in divorces that distribute retirement plan benefits, much as “xerox copy” became a synonym for “photocopy” regardless of the machine used to produce it, and the verb “google” has come to mean searching the Internet regardless of the search engine being used.²See Dennis v. Fire & Police Employees' Retirement System, 390 Md. 639, 890 A.2d 737 (2006) (discussing a “QDRO” with reference to a government-sponsored retirement plan exempt from ERISA).³

A Marriage, a Divorce, a Re–Marriage, a Death, and a Dispute over Benefits

On June 6, 1981, Respondent Luann Hunsecker (“Ex–Wife”) married Roger Robinette (“Husband”).⁴ During their marriage, Husband was employed by the Montgomery County Public Schools (“MCPS”) and participated in the pension plan available to MCPS employees. The marriage eventually foundered and, in April 1998, Husband and Ex–Wife executed a Voluntary Separation and Property Settlement Agreement (“Agreement”). With respect to the settlement of their respective property rights, the Agreement generally confirmed the parties' prior division of certain categories of property between themselves and specifically allocated other property.⁵ The Agreement provided for Ex–Wife to receive a portion of Husband's pension benefits, including any death benefit, that accrued during the marriage. Specifically, paragraph 8 of the Agreement provided, in relevant part:

8. PENSION. Husband is a participant in a pension plan through his employment with Montgomery County Public Schools. The parties agree that [Ex–Wife] shall be the alternate payee of the aforesaid pension and the parties' judgment of divorce shall be a Qualified Domestic Relations Order as defined by the Retirement Equity Act of 1984, as from time to time amended. [Ex–Wife's] equitable interest in Husband's pension is hereby declared to be fifty percent (50%) of the “marital share” of said pension benefit, the marital share being that fraction of the benefit whose numerator shall be the number of months of the parties' marriage during which the benefits were accumulated, which number shall be determined as of the date of this Agreement, and whose denominator shall be the total number of months during which the benefits were accumulated prior to the time when the payment of such benefits shall commence. [Ex–Wife] shall receive fifty percent (50%) of the aforesaid marital share of any benefits made from the pension to the Husband including any death benefits if, as and when such payments are made.

(emphasis added.) Thus, the Agreement implied that Husband's retirement plan was regulated by ERISA, although it was in fact exempt from ERISA as a government-sponsored plan, and stated that the judgment of divorce itself would serve as a QDRO. The Agreement generally provided that the parties waived any other claims from the date of the marriage to the date of the Agreement and specifically waived any claims under FL §§ 8–201 through 8–205 governing the allocation of marital property in divorce.

On August 3, 1998, the judgment of absolute divorce was entered by the Circuit Court for Frederick County. The judgment provided that the terms of the Agreement would be incorporated, but not merged, into that judgment. Neither Husband nor Ex–Wife obtained a QDRO for submission to MCPS. (Current counsel for both parties appear to agree that, contrary to the statement in the Agreement, the judgment of divorce itself cannot serve as a QDRO).

Nearly two years later, on June 25, 2000, Husband married Petitioner Lori A. Robinette (“Wife”). Husband subsequentlynamed Wife as the beneficiary of record for his pension with the MCPS Employee and Retiree Service Center. He remained employed with MCPS until his death on October 2, 2009. Wife was named as the personal representative of Husband's estate. In December 2009, Wife received an initial payment of $4,112.46 from the pension plan; the future monthly benefit was calculated to be $2,056.23.⁶

On May 12, 2010, Ex–Wife applied to the pension plan for a portion of Husband's death benefits under the retirement plan pursuant to the Agreement. Because the pension plan had never received a QDRO indicating that Ex–Wife was a beneficiary of Husband's death benefits, it rejected Ex–Wife's request for a portion of the benefits.

The Lawsuit

On January 20, 2011, Ex–Wife filed a complaint in the Circuit Court for Frederick County against Wife in which she alleged that Wife had been unjustly enriched in receiving the entire pension and death benefits. Ex–Wife requested an accounting of those benefits, and payment to Ex–Wife of a portion of those benefits. In September 2011, Ex–Wife amended her complaint to add a second count, alleging that Husband had undertaken a contractual obligation to transfer a portion of his pension and death benefits to Ex–Wife and requesting imposition of a constructive trust on a portion of the pension and death benefits that had been received by Wife.

In October 2011, the parties agreed...