The opinion
J-A34026-15
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
CARLA S. GROTHEY N/K/A CARLA S. IN THE SUPERIOR COURT OF
MEYER PENNSYLVANIA
Appellant
v.
THOMAS E. GROTHEY
Appellee No. 619 MDA 2015
Appeal from the Order Entered March 19, 2015
In the Court of Common Pleas of York County
Civil Division at No(s): 2001-FC-002436-15
BEFORE: PANELLA, J., OTT, J., and JENKINS, J.
MEMORANDUM BY OTT, J.: FILED MARCH 11, 2016
Carla S. Grothey n/k/a Carla S. Meyer (“Wife”) appeals from the
qualified domestic relations order (QDRO) entered on March 19, 2015, in the
York County Court of Common Pleas, which was drafted by her ex-husband,
Thomas E. Grothey (“Husband”). Wife complains the court erred in adopting
Husband’s QDRO because it was incorrectly drafted. Based on the following,
we are constrained to reverse and remand.
The facts and procedural history are as follows. The parties both
agree they were married on February 14, 1987, separated on September 1,
2001, and divorced on January 14, 2004. Husband is a trooper for the
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Pennsylvania State Police,1 and participated in a deferred compensation plan
as well as a defined retirement plan/pension as a member of the
Commonwealth of Pennsylvania’s State Employees’ Retirement System
(“SERS”).
Prior to finalizing the divorce, a January 5, 2004, hearing was
conducted to address the equitable distribution of the parties’ marital
property. Pertinent to this appeal, the parties agreed that Wife would be
rewarded 65% of the marital portion with respect to Husband’s deferred
compensation plan and the defined pension plan.2 Husband would also pay
the expenses associated with the preparation of the QDROs for these two
plans.
In November of 2013, Husband informed Wife that he intended to
retire in February of 2014. His counsel prepared the QDROs but Wife did not
sign the order. On February 12, 2014, Husband filed a petition for special
relief/petition for enforcement of marriage settlement agreement, requesting
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1
At the time of separation, Husband had been employed as a state trooper
for 8.62 years and his salary was $54,674.81. N.T., 2/18/2015, at 7.
Because it appears the trial court did not make a specific finding
regarding the number of years of service, we do find some discrepancy in
the record. In Wife’s proposed QDRO, she alleges Husband worked for
8.6830 years. See Wife’s Domestic Relations Order, 3/19/2015, at 2. In
Husband’s Brief, he claims 8.71 years of service. See Husband’s Brief at 17.
2
The plans were set forth in two separate QDROs.
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the court direct Wife to sign both QDROs. Subsequently, on April 16, 2014,
with the consent of both parties, Husband then filed a praecipe to withdraw
his petition for special relief without prejudice.
On August 19, 2014, Wife then filed a petition for special relief for
enforcement of marriage settlement agreement and contempt. Husband
responded to Wife’s petition on October 1, 2014. A hearing was held on
October 2, 2014.
After the hearing, on November 14, 2014, the court entered the
following decision:
At issue are two Qualified Domestic Relations Orders (QDROs).
One relates to a defined compensation plan and the other to a
defined benefits plan. The parties entered into a settlement
agreement January 5, 2004 as found in the transcript of
proceedings of the same date. At page 3 of the transcript is
stated: that “the parties agree that Wife shall be awarded 65%,
$14,100.00, which we agree is the marital portion of the
deferred compensation plan. Counsel for Wife shall prepare a
Qualified Domestic Relations Order which transfers the sum to
Wife”. With regard to the state employee retirement of Husband
the following is stated: “the parties agree that Wife shall be
awarded 65% of the martial portion of the plan. The parties
agree that the date of marriage is February 14 of 1987 and that
the date of separation to be used for purposes of calculating the
amount is September 1, 2001. The parties agree that Husband
shall pay the expenses associated with the preparation of the
Qualified Domestic Relations Order.”
Former Wife presently argues the agreement should be
interpreted utilizing 2005 amendments to the [D]ivorce [C]ode,
[S]ection 3501(c)(Defined benefits retirement plans). This
section however, only applied to proceedings pending on or after
the effective date. We conclude this case was no longer pending
since it had been resolved by agreement on January 5, 2004.
Husband has argued new [Section] 3501(c) was the legislature’s
effort to supplement the Supreme Court’s holding in Berrington
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v. Berrington, 534 Pa. 393, 633 A.2d 589 (1993). Therefore,
since the amendment does not apply, Berrington controls and
retirement benefits awarded to the non-participant spouse must
be based only on the participant-spouse’s salary at the date of
separation. We agree. Husband however, goes on to argue for
a Cornbleth[3] adjustment to calculate Wife’s final figure. Such
adjustment is not included in the terms of the agreement as
stated. Therefore, since the agreement is silent on this
adjustment, we do not believe Cornbleth automatically applies.
Indeed, we believe directing that Cornbleth be used effects an
impermissible modification of the parties[’] agreement.
We then come to the deferred compensation plan. There
is no question Wife was awarded 65% calculated to a particular
figure of $14,100.00. The parties agreed and agree that is what
she was to receive. She has not received such to date. Wife’s
counsel was to prepare an Order to transfer the sum to Wife.
There is evidence that a QDRO was prepared and signed by the
parties in early 2014. Such apparently was provided to
[Husband’s prior counsel] on or about March 5, 2014. It appears
that th[e] QDRO was not submitted to the Court nor apparently
to the plan administrator. That document was not submitted in
evidence in the instant proceedings. While it is tempting to say
that document, signed presently by the parties effects a
modification of the original agreement, such is not in evidence
and counsel have made no such argument. Based on the clear
statement of the agreement, being Wife’s counsel was to
prepare the document, and such was not done and further the
agreement itself provided no interest or accumulated benefit for
any delay, we decline to add interest or other increases of value
to the specific amount of $14,100.00 agreed to.
Decision, 11/14/2014, at 1-3. That same day, the court entered the
following order:
[W]e do ORDER and DIRECT that the parties execute [a] QDRO
regarding the defined benefit plan using the Berrington standard,
participant’s salary at date of separation being September 1,
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3
Cornbleth v. Cornbleth, 580 A.2d 369 (Pa. Super. 1990), appeal denied,
585 A.2d 468 (Pa. 1991).
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2001 as agreed, with no Cornbleth offset. The parties have 30
days to submit such to the Court for approval as may be
necessary. With regard to the deferred compensation plan, the
parties shall execute a QDRO transfer[r]ing former Wife’s
interest of $14,100.00 to her. The parties have 30 days to
submit such [to] the Court for approval as may be necessary.
Order, 11/14/2014.
On November 20, 2014, the trial court signed a QDRO for the deferred
compensation plan after execution by the parties. However, the parties
continued to dispute the form of the defined benefits plan QDRO to be
submitted. On February 10, 2015, Husband filed a petition for special relief
seeking clarification of the order. In the petition, he indicated both parties
submitted prospective QDROs to each other, and alleged the following:
Wife believes that she is entitled to 75% of Husband’s benefit as
of the date of separation and Husband believes that Wife is
entitled to 50% of Husband’s benefit as of the date of
separation. Husband bases his position on the fact that Wife is
only entitled to her proportionate share based on Husband’s
normal retirement age, rather than the actual date of retirement.
Husband’s Petition for Special Relief in the Nature of Clarification,
2/10/2015, at ¶ 12.
Wife responded, in pertinent part:
It is admitted that Defendant/Former Husband’s counsel
submitted a Domestic Relations Order to Plaintiff’s counsel for
Plaintiff/Former Wife’s signature on or about December 3, 2014.
It is denied that the Court’s Order could be interpreted in the
manner that Defendant/Former Husband is proposing. To the
contrary, the Court’s decision and Order clearly state that the
law at the time governs and that the [QDRO] would be prepared
in accordance with the Berrington standard (Participant’s salary
at date of separation). The case law is clear on that issue. The
pension enhancement based on Defendant/Former Husband’s
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years of service is marital and is not a contribution made by
Former Husband after separation. See Brown v. Brown, 447 Pa.
Super. 424, 669 A.2d 969 (1995), affirmed, Brown v. Brown,
547 Pa. 260, 690 A.2d 700 (1997), citing, Berrington v.
Berrington, 534 Pa. 393, 633 A.2d 589 (1993).
Wife’s Answer to Petition for Special Relief in the Nature of Clarification,
2/17/2015, at 2, ¶ 10.
A hearing was held on February 18, 2015, to address the matter. The
court then invited both parties to submit their proposed QDROs. On March
19, 2015, the court entered an order, selecting Husband’s QDRO as effecting
the original agreement.4 Wife filed this timely appeal.5
Wife raises the following issues for our review:
1. Whether the lower court committed an error of law and/or
abuse of discretion in adopting the Domestic Relations
Order on March 19, 2015 submitted by Former
Husband/Participant in the SERS pension which provides
for a specific dollar amount to the Alternate Payee/Former
Wife?
2. Whether the lower court committed an error of law and/or
abuse of discretion in failing to adopt the Domestic
Relations Order proposed by the Former Wife/Alternate
Payee herein which provides for Former Wife/Alternate
Payee’s share of the SERS pension to be calculated in
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4
The same day, the court entered an order, refusing Wife’s proposed QDRO
but erred in noting, “Alternative Payee’s [Wife] Order accepted and signed”.
The court indicated this was a scrivener’s error and it should have simply
said “Alternative Order” accepted. See Trial Court Opinion, 5/6/2015, at 2.
5
On April 10, 2015, the trial court ordered Wife to file a concise statement
of errors complained of on appeal pursuant to Pa.R.A.P. 1925(b). Wife filed
a concise statement on April 21, 2015. The trial court issued an opinion
pursuant to Pa.R.A.P. 1925(a) on May 6, 2015.
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accordance with the Berrington standard utilizing the
Participant’s salary at the date of separation?
Wife’s Brief at 11.
Based on the nature of Wife’s claims, we can address them together.
First, Wife argues the court failed by not utilizing the Berrington standard
and coverture fraction6 because it provided for a specific dollar amount to be
paid to her of $616.12 per month. Id. at 15. Wife states:
[Berrington] provides a historical standard of determining the
marital portion of a pension utilizing a coverture fraction of time
contributed to the plan during the marriage over the total time
the participant is in the pension plan times the accrued pension
payable based upon the participant’s salary as of the date of
separation and then times the percentage share awarded to the
alternate payee (in this case 65% to Former Wife). Berrington
also made clear that until the participant in the plan retires there
is no method of calculating Wife’s share. The Order proposed by
the Former Husband provides for a specific dollar amount rather
than the Berrington coverture fraction formula and therefore,
clearly violates the Decision and Order of Court entered
November 14, 2014 in this matter.
Id. at 15-16 (citations omitted). Second, Wife alleges her QDRO is correct
under Berrington because “the coverture fraction is multiplied by the
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6
The coverture fraction is
that portion of the value of the pension that is attributable to the
marriage. The numerator of the fraction is the total period of
the time the employee spouse was a participant in the plan from
the date of marriage until the date of separation, and the
denominator is the total period of participation in the plan.
Meyer v. Meyer, 749 A.2d 917, 919 n.1 (Pa. 2000), quoting Berrington,
633 A.2d at 591 n.5.
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member’s retirement benefit on the effective date of the member’s
retirement but calculated using the member’s final average salary as of
September 1, 2001 and that 65% of the martial property component is
allocated to the Alternate Payee[, Wife].” Id. at 17. Relying on Brown,
supra, Wife contends the “Berrington standard of the coverture fraction
times the final benefit presuming the Participant’s salary as of the date of
separation is applied in the same fashion with a state policeman’s pension.”
Id. Moreover, she states the “coverture fraction utilizes the enumerator
[sic] as years earned from February 14, 1987 to the date of separation of
September 1, 2001 with the denominator being the total amount of the
member’s service as defined by [the] SERS on the effective date of
member’s retirement.” Id.
“We review the propriety of an equitable distribution order under an
abuse of discretion standard.” Lazaar v. Lazaar, 804 A.2d 1234, 1236 (Pa.
Super. 2002).
We have stated that an abuse of discretion is not found lightly,
but upon a showing of clear and convincing evidence. Under the
abuse of discretion standard, the appellate court does not usurp
the trial court’s duty as factfinder. An abuse of discretion will be
found by this court if the trial court failed to follow proper legal
procedures or misapplied the law.
Paulone v. Paulone, 649 A.2d 691, 692 (Pa. Super. 1994) (citations
omitted).
Moreover,
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In Pennsylvania, we enforce property settlement agreements
between husband and wife in accordance with the same rules
applying to contract interpretation. A court may construe or
interpret a consent decree as it would a contract, but it has
neither the power nor the authority to modify or vary the decree
unless there has been fraud, accident or mistake…. It is well-
established that the paramount goal of contract interpretation is
to ascertain and give effect to the parties’ intent. When the trier
of fact has determined the intent of the parties to a contract, an
appellate court will defer to that determination if it is supported
by the evidence. Further, where […] the words of a contract are
clear and unambiguous, the intent of the parties is to be
ascertained from the express language of the agreement itself.
Bianchi v. Bianchi, 859 A.2d 511, 515 (Pa. Super. 2004) (internal citations
omitted).
Pennsylvania’s Divorce Code provides that marital property includes
“property acquired by either party during the marriage.” 23 Pa.C.S. §
3501(a). “Generally, increases in retirement benefits occurring after
separation are not considered marital property.” Meyer, 749 A.2d at 919;
see also 23 Pa.C.S. § 3501(a). Therefore, the Code excludes “[p]roperty
acquired after final separation until the date of divorce, except for property
acquired in exchange for marital assets.” 23 Pa.C.S. § 3501(a)(4).
In Berrington, the “issue presented [wa]s whether the non-employee
spouse’s share in a deferred distribution of a pension should be based upon
the salary which the employee-spouse earned at the date of separation or
upon the amount earned at some post-separation retirement date.”
Berrington, 633 A.2d at 590. The trial court “determined that the marital
share should be based on the employee’s pension to be received at the time
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the pension plan enters pay status.” Id.7 A panel of this Court reversed,
“holding that the amount to be awarded the non-employee spouse should be
based on the employee’s salary at the date of separation, but augmented by
growth in the pension fund based on factors other than the employer’s or
employee’s contributions to the fund after the date of separation.” Id.
(citation omitted).
On review, the Pennsylvania Supreme Court determined the trial
court’s method of calculation was incorrect because “although the pension
benefit would be reduced by the coverture fraction, the reduction would be
applied to a pension that was partially produced by increased post-
separation contributions.” Id. at 592. As such, in affirming this Court’s
decision, the Supreme Court held:
[I]n a deferred distribution of a defined benefit pension, the
spouse not participating may not be awarded any portion of the
participant-spouse’s retirement benefits which are based on
post-separation salary increases, incentive awards or years of
service. Any retirement benefits awarded to the non-participant
spouse must be based only on the participant-spouse’s salary at
the date of separation. However, should there be increases in
retirement benefits payable to the employee spouse between the
date of marital separation and the date the non-participant
spouse begins receiving benefits which are not attributable to
the efforts or contributions of the participant-spouse, any such
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7
The trial court relied on LaBuda, supra, which “determined that the
marital share of husband’s pension was calculated by creating a fraction
representing the number of years husband was in the pension plan as of the
date of marital separation divided by the total number of years in the plan
(‘the coverature [sic] fraction”)[.]” Berrington, 633 A.2d at 591.
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increased benefits may be shared by the non-participant spouse
based upon his or her proportionate share of the marital estate.
Id. at 594.8, 9
Subsequently, in Brown, supra, the Pennsylvania Supreme Court
revisited the pension formula matter. In Brown, the divorcing husband was
a Pennsylvania state police officer.
On the date of separation the husband was guaranteed the right
to retire at 50% of his highest salary after twenty years of
service and 75% of his highest salary after twenty-five years of
service. On the date of separation, July 6, 1989, the husband
had 16.3 years of service and earned $ 37,383.00 per year. At
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8
The Berrington Court indicated it could not complete the math in that
case because it did not know what husband’s retirement benefit would be,
even if it was based on his salary at the time of separation, “since the plan’s
formula may change or there may be other non-employee factors affecting
its value.” Id. at 593.
9
It merits mention that in 2004, Berrington was superseded by an
amendment to the Domestic Relations Code, 23 Pa.C.S. § 3501(c), in which
the Legislature sought “to reverse Berrington v Berrington, 534 Pa. 393,
633 A.2d 589 (1993), to adopt a coverture fraction methodology along the
lines of Holland v. Holland, 403 Pa. Super. 116, [588] A.2d 58 (1991), and
to include all postseparation enhancements except for postseparation
monetary contributions by the employee spouse in the value of the pension.”
23 Pa.C.S. § 3501(c), cmt. Section 3501(c) was enacted on November 29,
2004 and became effective 60 days later. See also Smith v. Smith, 938
A.2d 246 (Pa. 2007).
“Although [Section 3501(c)] originally was applicable only to equitable
distribution proceedings commenced on or after the effective date of January
28, 2005, the legislature later declared that ‘the provisions of 23 Pa. C.S. §
3501(c) shall apply to all equitable distribution proceedings pending on or
after the effective date of this section.’ Act of June 15, 2005, P.L. 7, No. 4,
effective immediately.” Id. at 258 n. 16. Here, the parties’ divorce was
finalized on January 5, 2004. Accordingly, the amendment does not apply to
the present matter.
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the time of this appeal, husband was still employed with the
Pennsylvania state police and had over twenty-two years of
service.
Brown v. Brown, 690 A.2d 700, 700-701 (Pa. 1997) (footnote omitted).
The trial court “held that wife was not entitled to share in increases in
husband’s pension due to a change in the pension benefit formula after
twenty-five years of service because ‘years of service’ was excluded from
marital property by this court in Berrington[.]” Brown, 690 A.2d at 701.
A panel of this Court “vacated the trial court’s order, holding that wife was
entitled to share in husband’s pension as calculated at the applicable rate of
50% or 75% depending on his years of service.” Id.
The Supreme Court affirmed this Court’s decision, explaining:
[W]e agree with the wife’s position that she is entitled to
share in the increased twenty-five year benefits as is set out in
her formula.
First, if husband remains employed twenty-five years, the
salary increases he has received between separation and
retirement will not be reached by wife, for her retirement share
is calculated on his salary at separation. Second, whether
husband remains employed twenty years or twenty-five years,
the effort expended by him in remaining employed is protected
from encroachment by the wife by the coverture fraction: as the
number of years worked increases the coverture fraction
increases from 16/20 to 16/25, thus making the marital share
available to the wife smaller as time increases and protecting his
increased effort from encroachment. And once this increased
effort is protected, that is all that is required by Berrington.
The fact that husband’s pension is calculated at twenty years at
50% of his salary and at twenty-five years at 75% of his salary
is unrelated to his post-separation ‘efforts or contributions,’ and
thus, may be shared by the wife.
Id. at 702.
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Turning to the present matter, the order purporting to distribute the
pension in this case, as drafted by Husband and adopted by the court,
provided, in pertinent part, as follows:
The portion of the retirement benefits to be assigned to the
Alternate Payee are defined as follows: Alternate Payee’s share
of Member’s retirement benefit shall be Six Hundred Sixteen and
12/100 ($616.12) Dollars per month. Alternate Payee shall also
be entitled to her proportionate share of any cost of living
adjustments granted to retirees.
Domestic Relations Order, 3/19/2015, at ¶ 11.
In response, Wife’s proposed QDRO contains the following relevant
provisions:
6. (a) The martial property component of Member’s retirement
benefit equals (1) the coverture fraction multiplied by (2) the
Member’s retirement benefit on the effective date of Member’s
retirement, but calculated using the Member’s final average
salary as of September 1, 2001.
(b) The coverture fraction is a fraction with a value less than or
equal to one. The numerator is 8.6830 years of service earned
from February 14, 1987 (the date of marriage) to September 1,
2001 (the date of separation). The denominator is the total
amount of Member’s service, as defined by SERS, on the
effective date of Member’s retirement.
(c) 65.00% of the marital property component of Member’s
retirement benefit is to be allocated to the Alternate Payee as
her equitable distribution portion of this marital asset.
Wife’s Domestic Relations Order, 3/19/2015, at 2.
In its Rule 1925(a) opinion, the trial court concisely explained its
rationale for adopting Husband’s QDRO:
We have again looked at the QDRO’s submitted. We
believe we have signed the correct one, but if we have not, that
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can be corrected by using Wife’s submission. More importantly,
we believe we were correct in our interpretation of the
underlying agreement reached back in 2004. Frankly, we cannot
comprehend given our decision why there are two different
QDRO’s submitted.
Trial Court Opinion, 5/6/2015, at 3. We disagree.
In Husband’s brief, he explains how his expert witness, Daniel E.
McGarry, Jr., a financial consultant, arrived at the amount of $616.12.
Husband states that his benefit accrual rate of 2.5% was multiplied by years
of credited service (8.71 years), which was then multiplied by his final
average salary at the date of separation ($54,675.00). Husband’s Brief at
17. Husband avers that number is an annual retirement benefit
($11,905.48), which is then divided by 12 months, resulting in the monthly
retirement allowance ($992.12). Id. at 17-18. Husband claims the number
of years of marriage (8.29 years) is divided by the number of years he was a
participant in the plan from the date of marriage to the date of separation
(8.68), which produces the coverture fraction (.96). Id. at 18. The monthly
allowance is then multiplied by the coverture fraction, resulting in an amount
of $952.44. Id. Husband then claims that number should actually be
$947.88 because of “the rounding of certain figures.” Id. Husband states
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that number is then multiplied by Wife’s share of marital assets (65%),
which produces the amount of $616.12. Id.10
We find Husband’s formula fails to properly apply Berrington and
Brown for several reasons. First, Husband’s calculation fails to incorporate
that Wife is entitled to share in the increased 20 or 25-year pension benefit
that Husband will receive at the time of retirement as it “appears to be
unrelated ‘to the efforts or contributions of the participant-spouse[.]”
Brown, 690 A.2d at 702.11 Therefore, pursuant to Brown, Husband’s
salary at the date of separation should have first been multiplied by the
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10
At the October 2, 2014, hearing, McGarry explained his calculation as
follows:
Based on the methodology that was used in effect at the
point in time based on the case laws that were already
mentioned in the hearing so far, the way it’s calculated would
have been to take the years of marriage and employed and
divide them by the years employed to determine the coverture
fraction in that situation. And then by using interest rates and a
present value methodology, you would determine what the
present value was at that point in time.
The coverture fraction can also be applied to the benefit
that he had accrued at that point in time as of – I think I did it
as of 12/31/2001, which I believe I had a statement which
showed what that value was around that time as to what his
earnings had been.
N.T., 10/2/2014, at 76.
11
Unlike his argument before the trial court, it appears Husband’s
calculation provides for a 25% benefit instead of a 75% benefit rate.
Husband’s Brief at 17.
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guaranteed benefit, which appears to be 50 or 75%, based on the
employment years. Id. at 701. Second, Husband’s coverture fraction does
not represent his years of service at the time of separation divided by the
total number of years of service. Rather, his denominator is limited to the
number of years he was employed while married to Wife. Berrington, 633
A.2d at 591 n.5. Third, contrary to Brown, Husband does not multiply the
coverture fraction to the resulting number from the salary and guaranteed
benefit amount. Brown, 690 A.2d at 701. Instead, Husband multiplies the
benefit rate by the number of years of credited service at the time of
separation by the salary at the time of separation, and then subsequently
applies the coverture fraction.
Accordingly, we conclude the court erred in adopting Husband’s QDRO
with respect to the defined pension plan as it does not adhere to the dictates
of Berrington and Brown. Therefore, we vacate the order entering
Husband’s QDRO and remand the matter for further proceedings, including
the entry of a proper QDRO.
Order vacated. Case remanded for further proceedings. Jurisdiction
relinquished.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 3/11/2016
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