The opinion
If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
revision until final publication in the Michigan Appeals Reports.
STATE OF MICHIGAN
COURT OF APPEALS
KENNETH GRAY, UNPUBLISHED
June 25, 2020
Plaintiff-Appellee,
v No. 344636
St. Joseph Circuit Court
JACQUELINE GRAY, LC No. 16-001081-DO
Defendant-Appellant.
Before: O’BRIEN, P.J., and RONAYNE KRAUSE and GADOLA, JJ.
PER CURIAM.
Defendant, Jacqueline Gray, appeals by delayed leave granted the order of the trial court
determining that the parties’ Consent Judgment of Divorce did not award her a surviving spouse’s
annuity as part of her share of plaintiff Kenneth Gray’s pension benefit. We affirm.
I. FACTUAL BACKGROUND
This appeal involves the division of plaintiff’s pension benefits as part of a judgment of
divorce. The parties married in 1992, and in 2016 plaintiff filed for divorce. During mediation,
the parties agreed to a settlement concerning the distribution of their marital property, including
the division of the parties’ benefits in their respective pensions. During the hearing in which the
terms of the settlement were placed on the record, the parties acknowledged that plaintiff had a
federal pension through his employer, but they apparently did not fully investigate or appreciate
the particular benefits of the pension plan. During the hearing, the mediator remarked that
defendant was “going to get the marital share of that pension . . . and any other pension benefits
that [plaintiff] has . . . .” Plaintiff’s counsel agreed that “whatever pension and retirement benefits
[plaintiff] has for this employment that he’s had during the marriage, [defendant] would be entitled
to her marital share of it.” Plaintiff’s counsel also remarked that “if it turns out that there is some
other kind of benefit associated with that pension or retirement benefit, such as a cost of living
increase, or something like that, [defendant] would be entitled to her pro rata share of any and all
other benefits provided by the plan associated with her marital portion of that benefit.”
Defendant’s counsel responded that the parties did not know the specifics of plaintiff’s pension,
and the parties engaged in the following dialogue:
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The Court: [Counsel], do you have anything to add to that?
[Defendant’s Counsel]: The only—the only thing that I want to add to that
is that I want to make sure that, in terms of this pension, this—this federal pension,
that, basically, she gets—she’s entitled to all the bells and whistles that are in that
pension, her share of those. That’s all I want to say. There’s a lot of bells and
whistles that we don’t even know about, because . . .
The Court: You mean any—anything that would be out there for a former
spouse . . .
[Defendant’s Counsel]: We want it.
The Court: . . . she’s entitled to, whether you’ve articulated it here today
or not.
[Defendant’s Counsel]: That’s correct.
[Plaintiff’s Counsel]: To the extent of her pro rata share.
[Defendant’s Counsel]: Yes.
The Court: Right.
[Plaintiff’s Counsel]: Yeah.
The Court: Right. Anything that the plan would permit, she’s entitled to.
[Defendant’s Counsel]: We don’t have a copy of the plan. We have no idea
as to what . . .
The Court: Right.
[Defendant’s Counsel]: . . . the bells and whistles are.
[Mediator]: In fact, Your Honor, that was—may I—may I have one more
say?
The Court: Yes, please go ahead.
[Mediator]: Perhaps [defendant’s counsel] is not interested in this, but
because of the fact that it’s the Federal Government, apparently, it’s very difficult
for anybody to disclose information.
***
The Court: Got it.
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[Mediator]: So we talked about—and I thought we agreed that [defendant’s
counsel] would be—it would be a provision of the judgment that [defendant’s
counsel] can prepare a letter to send to [plaintiff’s counsel] for receipt by [plaintiff],
who can take it to his employer with some questions that he has, or some requests
for information.
Because it’s our understanding that, pretty much, [plaintiff] is the only one
that can get that information. And he’s talking about, for instance, a copy of the
plan, so they know when [defendant] is able to take—take a pension, any other
benefits that might be available. And I think the parties have agreed to that.
[Defendant’s Counsel]: Thank you.
At the conclusion of the hearing, the trial court ordered the parties to submit a final order reflecting
the settlement terms. The trial court thereafter entered the Consent Judgment of Divorce stipulated
to by the parties, which stated in relevant part:
SPOUSAL SUPPORT
Beginning the first day of the month following the month in which Plaintiff
receives $32,000.000 from Defendant Jacqueline Gray, spousal support in the
amount of $1,000.00 per month is awarded to Defendant/Wife from
Plaintiff/Husband. The spousal support is non-modifiable in term, scope or
amount, and shall terminate on the earlier of:
a) Defendant’s death or remarriage; or
b) Defendant being eligible to start drawing on Plaintiff Kenneth
Gray’s pension and retirement benefits from his employer.
The parties hereby (1) waive and forgo their statutory right to petition the court for
modification and (2) agree that the alimony provision is final, binding, and non-
modifiable. Staple v Staple, 241 Mich App 562, 581 (2000). For tax purposes,
spousal support is includable for Defendant and deductible for Plaintiff.
It is further Ordered and Adjudged that so long as Plaintiff/Husband’s
employer provides him life insurance as a benefit, and if he has an outstanding
spousal support obligation to Defendant/Wife, then he shall name Defendant/Wife
as the beneficiary up to the remaining amount of his spousal support obligation.
Once Plaintiff’s spousal support obligation has ended, i.e. including but not limited
to, upon his retirement, he shall no longer be required to list Defendant as a
beneficiary. Plaintiff will provide proof of this designation upon reasonable
request.
* * *
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PENSION, ANNUITY AND RETIREMENT BENEFITS
Plaintiff has affirmatively represented that he maintains an interest in a Civil
Service Retirement System with his employer, Logistic Information Services,
BFBD, and Defendant is awarded an interest in this plan effective of April 30, 2017
to be divided by way of a coverture fraction, as follows: one half (50%) times (X)
a fraction, the numerator of which fraction is 295 months [the number of months of
marriage], and the denominator of the fraction being 447 months (the months of
credited service time that Plaintiff has been an employee until April 2017, which is
447 months); the result of this computation is that Defendant will be entitled to
.33% (thirty-three percent) [sic] share of the Plaintiff’s Plan benefit determined as
of April 30, 2017 (i.e., Plaintiff will be entitled to all of the benefits attributed to
his credited service time after April 30, 2017). Defendant shall be entitled to her
prorated share of any and all other ancillary benefits associated with said Plan. If
Defendant predeceases Plaintiff, then her benefit is to be paid to her estate, or if
none, then to the children of the parties’ marriage. Plaintiff may not take a refund
of employee contributions. The QDRO/EDRO shall be prepared by Defendant’s
attorney and Defendant shall bear all the fees and costs associated with same.
IT IS FURTHER ORDERED AND ADJUDGED that, except as otherwise
stated herein, each party shall have as their sole and separate property, to hold free
and clear of any right, claims, title or interest of the other, any and all benefit, right,
title or interest they may have in any IRA, pension, profit sharing, annuity,
employment, or retirement benefits, rights, or accounts, whether or not vested; any
ownership, benefit, right, claim, title, or interest which either of the parties may
now have or may have had in any pension, annuity, or retirement benefits or
account and any other interest in any pension, annuity, or retirement benefits or
account of the other party, including, but not limited to spouse’s rights, shall be
extinguished, and that the parties shall in the future hold any and all such pension,
annuity, or retirement benefits or account attributable to their employment free and
clear from any right, title, or interest which the other party now has or may have
had therein, by virtue of being the owner, beneficiary, contingent beneficiary or
otherwise.
Defendant thereafter submitted a proposed COAP,1 that provided that defendant was to be
awarded “a portion of the maximum possible Former Spouse Survivor Annuity under the CSRS,
1
The parties and the trial court used the terms Court Order Acceptable for Processing (COAP) and
qualified domestic relationship order (QDRO) interchangeably. As this Court has previously
discussed, retirement plans must comply with the federal Employee Retirement Income Security
Act (ERISA) of 1974, 29 USC 1001 et seq., which precluded pension plan participants from
assigning or alienating their benefits under plans that were subject to the act. Roth v Roth, 201
Mich App 563, 567; 506 NW2d 900 (1993), citing 29 USC 1056(d)(1) and 26 USC 401(a)(13).
ERISA also contained a preemption provision, designed to establish the regulation of pension
plans as an exclusively federal concern. Roth, 201 Mich App at 567; Pilot Life Ins Co v Dedeaux,
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with such portion to be computed using a base amount equal to the amount of the Employee’s
Gross Monthly Annuity being divided between the parties. . . .” Plaintiff objected, arguing that it
did not comport with the parties’ settlement agreement. Plaintiff maintained that during the
negotiations and after, it was specifically discussed and understood by both parties that plaintiff’s
pension and retirement benefit did not provide for a survivor annuity for defendant. Plaintiff
argued that defendant was “attempting to charge [plaintiff] 10% off the top of his retirement benefit
for [defendant] to be able to create a ‘surviving former spouse annuity’, which is not anything the
parties agreed to, and in fact is contrary to their agreement, because it would reduce [plaintiff’s]
portion of his retirement benefit from 67% to 57% on his benefit accrued until April 30, 2017, and
from 100% to 90% on benefit accrued after that date, and charge him with a portion of the
administrative fees and costs needed to effectuate that annuity change for her benefit.” Plaintiff
argued that although survivor’s spouse annuity benefits are “available” under plaintiff’s plan, it
was not elected as part of plaintiff’s plan at the time of the divorce.
At the hearing on plaintiff’s objection to defendant’s proposed COAP, the trial court recited
the parties’ agreement and understanding previously set forth on the record. The trial court
recognized that the parties never specifically agreed “because nobody even knew what plan
[plaintiff] had at the time [they] put the settlement on the record.” Plaintiff’s counsel argued that
the parties had exchanged information during settlement negotiations explicitly acknowledging
that under federal law, survivor’s spouse benefits needed to be specifically and expressly
addressed. Plaintiff’s counsel maintained that “a surviving spouse annuity was not a regular part
of [plaintiff’s] plan” and that such a benefit “would be a separate and distinct benefit,” and that the
parties agreed to a specific coverture fracture to proportionately distribute plaintiff’s pension based
on the length of the marriage in relation to the length of plaintiff’s employment and history of
contributing to his pension, which agreement would be frustrated if plaintiff had to forfeit
additional monies to pay for the surviving spouse annuity.2
By contrast, defendant’s counsel contended that MCL 552.101(4) governed and provided
that defendant was entitled to surviving spouse benefits as a component of a pension plan unless
expressly excluded by the judgment of divorce. At the conclusion of the hearing, the trial court
held:
Okay, all right. Well, no matter how many times you say it, I think it is part of any
pension plan as a survivor benefit. So you can say it a dozen times that it’s not. I
481 US 41, 46; 107 S Ct 1549; 95 L Ed 2d 39 (1987). In 1984, however, Congress enacted the
Retirement Equity Act, which provided an exception to the restriction on assigning or alienating
one’s benefits by allowing QDROs. A QDRO “ ‘creates or recognizes the existence of an
alternative 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 the plan . . . .’ ” Moore v Moore, 266 Mich
App 96, 100 n 5; 700 NW2d 414 (2005), quoting 29 USC 1056(d)(3)(B)(i)(I). QDROs are thus
exempt from ERISA’s preemption provisions and may be used to distribute funds to a payee who
is not a named beneficiary under a retirement plan. Moore, 266 Mich App at 100 n 5.
2
Plaintiff’s counsel also informed the trial court that plaintiff had since retired. His last payment
was December 29, 2017.
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think it is. The statute indicates it is. That doesn’t resolve the question. Getting
into an argument about whether it does or doesn’t really isn’t the point, it’s what
was agreed to by the parties.
And the parties agreed to her taking a proportionate share of the pension,
and until that began, he would pay her $1,000 a month as spousal support. There
is no mention in the transcript as to what would happen if he predeceased her, in
terms of that. So other than [defendant’s counsel] saying he wants all the bells and
whistles related to the pension plan and sending it out for the QDRO and coming
back with that, I don’t know.
I—I think it would have been a lot clearer, since you were all aware of the
survivor benefit issue, since you had the report and other, just to say, “This does
not include any survivor benefit. It will terminate.”
* * *
Since [the Consent Judgment of Divorce] doesn’t contemplate what would
happen if she were to die before, and it doesn’t contemplate what would happen if
he died before, and it doesn’t mention survivor benefits, I think the Judgment makes
it clear that they were not contemplated. The survivor benefits were not
contemplated.
You made specific findings as to the fractions that would be used, and
there’s no mention in here of survivor benefits that would be obtained, so, in that
sense that they were known about and not described, I’m going to find that you’re
bound by the Judgment that was entered. The percentages are as they are.
And, although I think it’s unfortunate that the record’s not clearer, I think
the Judgment of Divorce clears it up, in that you agreed to these percentages, and—
and so, therefore, I’ll indicate there is no issue as a survivor benefit in—
contemplated in the Judgment. It doesn’t contemplate that it would continue after
his death. It contemplates that it would end at his death.
So, with that, I’ll indicate that I’m going to enter the order indicating that
there shall be no survivor benefit in the QDRO, and you can argue it at the next
level, okay?
I agree that it would have been a lot better if you’d have put it in there. And
I don’t agree with you that the assessment is that it’s not part of every federal
pension. It—it’s in there as part of a federal pension. I just don’t think it was
contemplated by the defense, and the cost of it, and so, therefore, I’ll indicate that
I’m not going to order it in the QDRO. All right. That’s the final decision. Thank
you everyone.
The trial court thereafter entered its order holding that defendant was not awarded a
surviving spouse’s annuity as part of plaintiff’s CSRS pension benefit, and that the parties are
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bound by the stipulated Consent Judgment of Divorce, and by the percentages of the pension
benefit awarded as stated in the Consent Judgment. Defendant now appeals.
II. ANALYSIS
A. MCL 552.101(4)
Defendant first contends that she is statutorily entitled to surviving spouse annuity benefits
because MCL 552.101(4) provides that surviving spouse annuity benefits are automatically
included with the assignment of any rights to the opposing party’s pension unless the judgment of
divorce expressly states that such benefits are not included. We disagree.
We review de novo a trial court’s decision interpreting a divorce judgment and a
qualifying domestic relations order (QDRO), and also review de novo questions of statutory
interpretation. Hudson v Hudson, 314 Mich App 28, 33; 885 NW2d 652 (2016). We interpret a
judgment of divorce as we would a contract, determining the intent of the parties from the plain
and ordinary meaning of the language used. Id. at 38.
MCL 552.101(4) provides:
For any divorce or separate maintenance action filed on or after September
1, 2006, if a judgment of divorce or judgment of separate maintenance provides for
the assignment of any rights in and to any pension, annuity, or retirement benefits,
a proportionate share of all components of the pension, annuity, or retirement
benefits shall be included in the assignment unless the judgment of divorce or
judgment of separate maintenance expressly excludes 1 or more components.
Components include, but are not limited to, supplements, subsidies, early
retirement benefits, postretirement benefit increases, surviving spouse benefits, and
death benefits. This subsection applies regardless of the characterization of the
pension, annuity, or retirement benefit as regular retirement, early retirement,
disability retirement, death benefit, or any other characterization or classification,
unless the judgment of divorce or judgment of separate maintenance expressly
excludes a particular characterization or classification. [Emphasis added.]
The parties agree that the Consent Judgment of Divorce is silent concerning an award of
surviving spouse benefits. However, defendant argues that under MCL 552.101(4), any
assignment of pension benefits necessarily includes all available “components” of a plan
(including surviving spouse annuity benefits), regardless of whether the agreement expressly
mentions them, so long as the agreement does not expressly exclude the assignment of the
particular component. Defendant explains that although the Consent Judgment of Divorce did not
specifically address surviving spouse benefits, under the plain language of MCL 552.101(4),
because such benefits are considered “components” that “shall be included in the assignment”
unless expressly excluded by the judgment of divorce, she should receive surviving spouse benefits
“along with her assigned 33% interest” in plaintiff’s pension.
This Court addressed the application of MCL 552.101(4) under similar circumstances in
Hudson, 314 Mich App 28. In that case, the parties entered into a consent judgment of divorce in
which they agreed to divide each party’s respective pension, with the husband receiving 39.5% of
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the wife’s state pension, and the wife receiving 50% of the husband’s federal pension. Id. at 30.
A standardized state pension form permitted the husband to elect between a single life annuity
payable over the wife’s lifetime and a single life annuity payable over the husband’s lifetime. Id.
at 30-32. The husband chose the option to receive payments over his own lifetime. Id. at 32. The
wife objected to the husband’s proposed QDRO, arguing that defendant’s election violated the
judgment of divorce because it unfairly granted the husband rights in her pension that were not
available for her in his pension. Id. at 32.
This Court rejected the husband’s argument that MCL 552.101(4) entitled him to choose
the option of a single life annuity to be paid over the course of his lifetime, determining that the
annuity options in the form QDRO merely provided a mechanism of payment of the retirement
benefit. The Court concluded that “the option . . . to choose the terms and conditions of payment
is not a ‘component’ as that term is defined in MCL 552.101(5).3” Id. at 36. This Court then held
that
MCL 552.101(5) does not simply state that all components are included. It states
that ‘a proportionate share of all components’ is included. The choice under [the
QDRO] is not something that can be divided proportionally. That is, defendant
cannot be given 39.5% of the choice to which he is entitled. If the choice of options
under [the QDRO] constitutes a ‘component,’ then the words ‘a proportionate share
of’ become surplusage and nugatory. [citation omitted]
***
In sum, MCL 552.101(5) has no applicability to the question whether defendant has
the right to elect, under . . . the [QDRO], the terms and conditions of the benefits
he will receive. [Hudson, 314 Mich App at 36.]
We are bound by this Court’s holding in Hudson. Here, as in Hudson, defendant cannot
be given 33% of the option (a survivor’s annuity) she wishes to exercise, and the statute does not
apply to the question concerning her right to elect the form of payment of the benefit she will
receive under the Consent Judgment. Defendant’s argument that the statute compels a
determination that she is entitled to elect an annuity option as a “component” of plaintiff’s pension,
when the consent judgment of divorce entitled her merely to a percentage of the pension benefit,
is foreclosed for the reasons this Court articulated in Hudson. See id.
B. THE CONSENT JUDGMENT
Defendant also contends that the trial court clearly erred when it considered the parties’
intent in drafting the Consent Judgment because the contractual language was unambiguous, and
the unambiguous language of the Consent Judgment entitles her to elect to receive an annuity
because it is an “ancillary benefit” of plaintiff’s pension plan. Defendant also contends that even
assuming the language of the Consent Judgment were ambiguous, the parties’ intended defendant
3
MCL 552.101 was amended by 2016 PA 378, effective March 22, 2017, resulting in the text of
former MCL 552.101(5) now being located at MCL 552.101(4).
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to have surviving spouse annuity benefits. We disagree, and conclude that the plain language of
the Consent Judgment makes clear that the parties did not intend that defendant be able to take this
benefit in the form of an annuity payable over her lifetime.
“A judgment of divorce should be interpreted as a court would interpret a contract, i.e., the
intent of the parties should be determined from the plain and ordinary meaning of the language
used.” Hudson, 314 Mich App at 38 (citation omitted). Our primary obligation when interpreting
a contract is to determine and honor the intent of the parties; we discern the parties’ intent from
the contractual language as a whole, according the language its plain and ordinary meaning.
Kendzierski v Macomb Co, 503 Mich 296, 311; 931 NW2d 604 (2019). A contract is not subject
to judicial interpretation unless it is ambiguous, Rory v Continental Ins Co, 473 Mich 457, 468;
703 NW2d 23 (2005), which occurs when provisions irreconcilably conflict or when a term is
equally susceptible of more than one meaning. Kendzierski, 503 Mich at 311. Courts may not
impose an ambiguity on clear contract language. Grosse Pointe Park v. Mich Muni Liability &
Prop Pool, 473 Mich 188, 198; 702 NW2d 106 (2005).
In this case, the Consent Judgment does not specifically define what the parties intended
when using the phrase “ancillary benefits associated with said Plan.” However, the context makes
clear that it did not include an annuity payable over defendant’s lifetime. In its ruling from the
bench, the trial court observed that the Consent Judgment makes no mention of what would happen
if plaintiff predeceases defendant, such as provision for continued payments after plaintiff’s death,
which suggests that the parties contemplated that the benefit would terminate upon plaintiff’s
death. The trial court further noted that the use of a coverture fraction and the failure to specifically
mention an annuity suggests that the parties did not intend to provide a survivor benefit in the form
of an annuity.
There are, however, even stronger indications in the language of the Consent Judgment
that the parties did not intend to include an option for an annuity payable over defendant’s lifetime.
Although the trial court opined that the Consent Judgment made no provision for what is to occur
if defendant predeceases plaintiff, the Consent Judgment in fact states: “If Defendant predeceases
Plaintiff, then her benefit is to be paid to her estate, or if none, then to the children of the parties’
marriage.” If the parties had contemplated a surviving spouse annuity there would have been no
need for the language in the Consent Judgment providing what is to occur with defendant’s benefits
were she to predecease her former husband. That is, the premise of defendant’s request for a
surviving spouse annuity is that the benefit would be awarded not for the length of her former
husband’s lifetime, but instead for the duration of her lifetime. An annuity benefit of the type
defendant seeks would necessarily terminate upon her death, in the normal manner of an annuity.
And if an annuity had been intended as one of two or more options for appellant to choose, the
language concerning appellant’s early demise would have specified that it would apply only if
appellant elected her coverture fraction of appellee’s pension. We decline to read the Consent
Judgment in the manner suggested by defendant because it would render this language surplusage
or nugatory. See Hudson, 314 Mich App at 34.
Additionally, there is disclaimer language in the Consent Judgment that strongly suggests
defendant affirmatively waived any interest in a survivor’s annuity. The Consent Judgment
provides:
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IT IS FURTHER ORDERED AND ADJUDGED that, except as otherwise stated
herein, each party shall have as their sole and separate property, to hold free and
clear of any right, claims, title or interest of the other, any and all benefit, right, title
or interest they may have in any IRA, pension, profit sharing, annuity, employment,
or retirement benefits, rights, or accounts, whether or not vested; any ownership,
benefit, right, claim, title, or interest which either of the parties may now have or
may have had in any pension, annuity, or retirement benefits or account and any
other interest in any pension, annuity, or retirement benefits or account of the other
party, including, but not limited to spouse’s rights, shall be extinguished, and that
the parties shall in the future hold any and all such pension, annuity, or retirement
benefits or account attributable to their employment free and clear from any right,
title, or interest which the other party now has or may have had therein, by virtue
of being the owner, beneficiary, contingent beneficiary or otherwise.
According to this language, unless a benefit is expressly provided for (“except as otherwise
stated herein”) each of the parties disclaims any interest in it. Specifically, with respect to an
annuity, any interest that one of the parties may have had respecting such a benefit held by the
other is “extinguished” unless expressly provided for. This language indicates that the parties
knew how to address an annuity benefit. Had they intended for defendant to receive an annuity
they easily could have said so; the fact they did not suggests that defendant waived her interest in
such a benefit and that the Consent Judgment extinguished it.
Having concluded that the statute does not provide defendant the option of a survivor’s
annuity, and that the Consent Judgment makes clear that the parties intended that she receive a
coverture fraction payable over plaintiff’s lifetime, we affirm.
/s/ Colleen A. O’Brien
/s/ Michael F. Gadola
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