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Self v. Self

Alabama Court of Civil Appeals

May 10, 2019

David Michael Self
v.
Sharon Kay Self

          Appeal from Calhoun Circuit Court (DR-01-184.01)

          EDWARDS, JUDGE.

         David Michael Self ("the former husband") appeals from a May 18, 2018, judgment entered by the Calhoun Circuit Court ("the trial court") granting a petition filed by Sharon Kay Self ("the former wife") regarding her entitlement to a portion of the former husband's retirement benefit under the Teachers' Retirement System of Alabama ("the teacher-retirement benefit"), including a portion of the teacher-retirement benefit that was paid into an account pursuant to the Deferred Retirement Option Plan ("the DROP") described in Ala. Code 1975, § 16-25-150 et seq.

         Facts and Procedural History

         The former husband was employed at Jacksonville State University, where he began working in November 1984 and continued working until he retired on January 31, 2016. After almost 32 years of marriage, the former husband and the former wife were divorced pursuant to a divorce judgment entered by the trial court on July 27, 2001 ("the divorce judgment"). The divorce judgment incorporated a settlement agreement between the parties ("the settlement agreement") that included the following provisions regarding the former husband's payment of periodic alimony to the former wife and the division of the former husband's retirement benefits:

"6. The [former] [h]usband shall pay the [former] [w]ife the sum of $350.00 per month in periodic alimony beginning August 1, 2001, and on the first of each month thereafter until such time as the [former] [w]ife remarries, dies or begins receiving the [former] [h]usband's Social Security benefits. In the event the [former] [h]usband files a petition in the bankruptcy court, the amount of his obligation for periodic alimony to the [former] [w]ife shall increase to $450.00 per month. At such time as the [former] [w]ife begins receiving a check each month on the [former] [h]usband's teacher retirement, the [former] [h]usband's obligation to pay periodic alimony to the [former] [w]ife shall decrease to $115.00 per month....
"....
"12. The [former] [w]ife is to receive one-half (½) of the [former] [h]usband's teacher retirement after deduction of taxes, one-half (½) of the TIAA-CREF account, and thirty-five percent (35%) of the [former] [h]usband's Social Security benefits. The [former] [h]usband will be permitted to claim at least one deduction or more; however, no excessive taxes will be withheld. The [former] [w]ife shall be named the non-revocable beneficiary of said named retirement accounts. In the event the [former] [h]usband elects to remarry, the [former] [w]ife ... shall receive seventy-five percent (75%) of his teacher retirement and his then current wife shall receive no more than twenty-five (25%) of his retirement upon his death before retirement. The [former] [h]usband shall be required to elect teacher retirement with a survivor beneficiary."[1]

         In 2009, after the former husband was eligible to retire, he elected to remain employed at Jacksonville State University and to participate in the DROP. It is undisputed that the DROP did not exist when the divorce judgment was entered. See Act No. 2002-23, Ala. Acts 2002 (creating the DROP). The former husband participated in the DROP from September 1, 2009, through July 31, 2014, after which he remained employed at Jacksonville State University until January 2016, when he retired.[2] During the former husband's participation in the DROP, monthly payments of the teacher-retirement benefit were paid into a DROP account ("the DROP account"), where they accumulated and earned interest until the former husband retired. See discussion, infra. Based on an election made by the former husband, on March 31, 2016, the funds in the DROP account, which totaled $140, 846.86 -- including monthly payments of the teacher-retirement benefit, additional contributions made by the former husband during his participation in the DROP, and interest earned on those monthly payments and additional contributions -- were rolled over into the RSA-1 Deferred Compensation Plan, a tax-deferred plan managed by the Retirement Systems of Alabama.[3] It was undisputed that the former husband had not informed the former wife of his participation in the DROP and that the former wife has received none of the teacher-retirement benefit that was deposited into the DROP account.

         On April 12, 2016, the former wife filed a petition in the trial court, alleging that the former husband had failed to pay her her share of the teacher-retirement benefit as required by the divorce judgment. The former wife requested that the trial court enter an order finding the former husband in civil contempt and criminal contempt, awarding the former wife a judgment against the former husband "for all the unpaid portions of the [former wife's] one-half share of the teacher[-]retirement [benefit]," and awarding her attorney's fees and costs. The former wife subsequently amended her petition to add claims seeking a purported periodic-alimony arrearage and seeking unpaid portions of the former wife's share of the former husband's Social Security benefits.

         The former husband filed an answer to the former wife's petition, as amended. The former husband admitted that the former wife was entitled "to receive one-half of the ... teacher retirement [benefit] after deduction of taxes," but, he added, that award should be based on "the value of [the teacher-retirement benefit] at the time of the divorce." Also, the former husband alleged that his periodic-alimony obligation had terminated when the former wife began receiving a portion of his monthly Social Security benefits in January 2016 and that the former wife's portion of his Social Security benefits should be based on the value of that benefit at the time of the entry of the divorce judgment.

         On October 18, 2017, the trial court held an ore tenus proceeding on the former wife's petition. Testimony at trial focused on the periodic-alimony adjustments described in paragraph 6 of the settlement agreement, whether the former wife's entitlement to her portion of the teacher-retirement benefit under paragraph 12 of the settlement agreement had been triggered by the former husband's participation in the DROP, and the date for determining the value of the wife's portion of the teacher-retirement benefit. At the close of the proceeding, the trial court requested posttrial briefs addressing, among other things, whether the teacher-retirement-benefit provisions in paragraph 12 of the settlement agreement were a property settlement.

         The former husband and the former wife filed posttrial briefs. In their posttrial briefs, the parties agreed that paragraph 12 of the settlement agreement was a property settlement.[4] However, the former wife contended that she was entitled to one-half of the teacher-retirement benefit based on the present value of that benefit; the former husband contended that the amount of the teacher-retirement-benefit award to the former wife should be valued as of the "time of the divorce." The former husband also contended that, to the extent the settlement agreement was ambiguous as to the value of the teacher-retirement benefit to be used, it should be construed against the former wife because the settlement agreement had been drafted by the former wife's counsel.

         On December 12, 2017, the trial court entered an order making certain findings of fact and conclusions of law but noting that the court was unable to calculate the exact amount of the teacher-retirement benefit that the former husband must pay to the former wife. The December 2017 order required the parties to hire a mutually agreed upon accountant to assist with the teacher-retirement-benefit calculation or to submit names of accountants (from which the trial court could choose) to assist with the teacher-retirement-benefit calculation. The December 2017 order set the case for a hearing to be held on January 29, 2018, to review the accountant's calculation.

         On December 21, 2017, the parties filed a notice with the trial court identifying Tim Wilson, a certified public accountant, as the accountant to assist with the teacher-retirement-benefit calculation. Thereafter, the parties filed a joint motion to continue the hearing scheduled for January 29, 2018. The trial court then scheduled a conference with the attorneys to be held on March 22, 2018.

         On March 22, 2018, after the scheduled conference, the trial court entered an order amending the December 2017 order. The March 2018 order again noted that the trial court was unable to calculate the amount of the teacher-retirement benefit that the former husband must pay to the former wife. Likewise, the March 2018 order retained the provision for an accountant to assist with the teacher-retirement-benefit calculation.[5] The March 2018 order set a review conference to be held on April 6, 2018.

         On April 6, 2018, a few hours before the scheduled conference, the former husband filed a submission that purportedly reflected the periodic-alimony payments he had made to the former wife and his calculations regarding the amount of the teacher-retirement benefit to which the former wife was entitled. Based on the former husband's calculation, he owed the former wife $344.46 as of March 2018 and she was entitled to $322.62 per month of the teacher-retirement benefit (one-half of $847.54 less purported deductions for taxes and health insurance) and $369.60 per month of his Social Security benefits on a going-forward basis.

         On April 6, 2018, the trial court entered a second amended order regarding the former wife's petition. The April 2018 order, which noted that the former husband had filed for bankruptcy after the divorce judgment was entered, states, in pertinent part:

"[T]hree issues were addressed that had not previously been argued with the Court;
"Issue One: When does [periodic] alimony terminate?
"Paragraph Six of the [settlement] agreement states that alimony terminates at such time as the [former] [w]ife remarries, dies or begins receiving the [former] [h]usband's Social Security benefits. The [former] [w]ife began receiving the [former] [h]usband's Social Security benefits in January of 2016. Therefore the Court finds that the [former] [h]usband's alimony obligation to the [former] [w]ife terminated in January of 2016.
"Issue Two: How much alimony is owed by the Husband once he entered the DROP program?
"Paragraph Six of the parties' agreement states: At such time as the [former] [w]ife begins receiving a check each month on the [former] [h]usband's teacher retirement, the [former] [h]usband's obligation to pay periodic alimony to the [former] [w]ife shall decrease to $115.00 per month.
"The [former] [h]usband entered into the DROP program in September of 2009; however, the [former] [h]usband did not begin paying a check to the [former] [w]ife each month on his teacher retirement until January 2016. The [former] [h]usband argues that his alimony reduced to $115.00 when he entered into the DROP program. The [former] [w]ife argues that his alimony did not reduce to $115.00 until he began paying a retirement check to her each month.
"Based on the strict language of the parties' agreement, the Court finds that the [former] [h]usband's alimony obligation in the amount of $450.00 per month continued until the [former] [w]ife began receiving a check each month on the ... teacher[-]retirement [benefit] in January of 2016.
"Issue Three: The parties' [settlement] agreement stated that [the former] [h]usband was entitled to deduct taxes and at least one deduction from the amount the [former] [w]ife is eligible to receive from [the teacher-retirement benefit] each month. The question posed is since no taxes nor deductions were made from the amount deposited into the ... DROP account, is the [former] [h]usband entitled to deduct taxes and insurance from the amount the [former] [w]ife is eligible to receive?
"Paragraph Twelve reads: 'The [former] [w]ife is to receive one half (½) of the [former] [h]usband's teacher retirement after deduction of taxes, one half the TIAA-CREF account, and thirty-five (35%) of the [former] [h]usband's Social Security benefits. The [former] [h]usband will be permitted to claim at least one deduction or more; however, no excessive taxes will be withheld.'
"The ... DROP account is tax deferred so no taxes were withheld from the funds deposited into the ... DROP account. The deduction for medical insurance was paid from the [former] [h]usband's ongoing employment and not from the funds deposited into [the] DROP account. Based upon a strict reading of the ... [settlement] agreement the Court finds that [the former] [h]usband is entitled to deduct taxes (even though said taxes are deferred) from the funds deposited into [the] DROP [account, ] but he is not entitled to deduct the medical insurance premium from said funds since said premium was paid from his employment income as opposed to [the teacher-retirement benefit]."

         The April 2018 order noted that the settlement agreement "was prepared by the [former wife's] attorney with input from the [former husband's] attorney."[6] The April 2018 order continued:

"5. The parties stipulated to the admittance of several documents [at the October 2017 hearing]:
"a. [The former husband's exhibit] 1 is a document from Social Security showing the [former husband] would earn from Social Security at age 62 $1, 106 per month had he stopped working in 2002.
"b. [The former husband's exhibit] 2 is a document from The Retirement Systems of Alabama which showed that the [former husband] would have earned $847.54 had he retired in 2001 with a partial survivor beneficiary election.
"6. The parties further stipulated that the [former husband] was enrolled in the DROP program from September 2009 through July 2014 and $1, 770.00 [per month] was deposited into the ... DROP account from September 2009 through July 2014.[7]
"7. Upon retirement the funds in the ... DROP account were rolled into a retirement fund for tax purposes.
"8. The [former husband] paid the [former wife] the sum of $450.00 per month in alimony from the time of the divorce through January of 2016. The [former husband] did not pay the [former wife] any sums from retirement during said time.
"9. The [former husband] began paying the [former wife] the sum of $890.00 per month effective January 2016. The [former husband] continued to pay the [former wife] the sum of $890.00 per month through November of 2016. The [former husband] paid nothing to the [former wife] in December of 2016 and effective January 2017 the [former husband] began paying the [former wife] the sum of $500.00 per month. Said $500.00 monthly payment has continued each month through the trial of this action.
"10. The only deductions the [former husband] currently takes from [the teacher-]retirement [benefit] are income taxes and health insurance."

         The April 2018 order states that the former husband was entitled to deduct health-insurance premiums from the teacher-retirement benefit paid to the former wife if those premiums were paid from that benefit. Also, the April 2018 order states that the value of the teacher-retirement benefit to which the former wife was entitled was the value of that benefit as it "existed at the time of the divorce." However, the April 2018 order further provided that the former wife was entitled to receive her portion of the teacher-retirement benefit that had been deposited in the DROP account beginning in September 2009. The trial court summarized its conclusions as follows:

"18. The Court therefore finds that the [former wife] is entitled to receive $450.00 per month [as periodic alimony] through August 2009.
"19. Effective September 2009 the [former wife] is entitled to receive:
"a. $450.00 per month in [periodic] alimony and
"b. One half of $847.54 ([the former husband's] exhibit 2) after deduction of taxes.

         "20. Effective January of 2016 when the [former husband] stopped working and began receiving Social Security benefits the [former wife] is entitled to receive:

"a. One half of $847.54 ([the former husband's] exhibit 2) after deduction of taxes and insurance (if paid from the retirement at this time), and
"b. $387.10 which is 35% of the [former husband's] Social Security benefits as set forth in [the former husband's] exhibit 1."

         The April 2018 order again noted that the trial court was unable to calculate the amount of the teacher-retirement-benefit arrearage that the former husband must pay to the former wife, and the order retained the provision for an accountant to assist with the teacher-retirement-benefit calculation. The April 2018 order set the case for a final hearing to be held on May 17, 2018.

         At the May 17, 2018, hearing, the trial court stated that it had indicated at the April 2018 conference that it "would accept the stipulation as to a calculation of figures should the parties so elect as opposed to presenting an accountant to testify regarding the figures." The former wife then proposed the introduction of two exhibits reflecting her calculations regarding the former husband's purported arrearage, plus postjudgment interest. The former wife's proffered exhibits used, as a starting point for the teacher-retirement-benefit calculation, the stipulated amount of the former husband's teacher-retirement benefit discussed in the April 2018 order, namely $847.54. Also, the former wife's proffered exhibit 1 -- a spreadsheet reflecting monthly payment, arrearage, and interest tallies from September 2009 through April 2018 --reflects that the former husband had paid the former wife $450 per month as periodic alimony from September 2009 until he retired in January 2016; the spreadsheet reflects that no payments were made from or credited to the teacher-retirement benefit for that period. Also, the arrearage calculation included adjustments for the varying payments made by the former husband after January 2016, as described in paragraph 9 of the April 2018 order. According to the former wife's proffered exhibit 2, which summarizes and explains the basis for her calculations in proffered exhibit 1, the former husband owed her $33, 178.32 as arrearage for her share of the teacher-retirement benefit and $15, 548.00 for postjudgment interest on that arrearage.[8]

         Counsel for the former husband objected to the introduction into evidence of the former wife's proffered exhibits: "[The former husband's] objection to the [former wife's] spreadsheet, [exhibit] 1, Your Honor, is that it does not take into account the moneys that [the former husband] did pay from the time he went into the DROP ... in September '09 up until the time that he actually started receiving retirement money in February of 2016. There's no offset ...." The trial court then asked the former husband's counsel whether he wanted the former wife's counsel to testify regarding the calculations presented on the former wife's proffered exhibits, and the following colloquy occurred:

"[FORMER HUSBAND'S COUNSEL]: Wouldn't that be kind of unusual, an attorney being a witness?
"[FORMER WIFE'S COUNSEL]: Judge, we would proffer that the numbers in there are certainly from what has been presented and to be calculated by interest and categories and very well laid out.
"[FORMER HUSBAND'S COUNSEL]: And I don't doubt [the former wife's counsel's] thoroughness in doing it. Our objection to it is, it's -- really, the legal argument we discussed in chambers, which I'll represent wasn't on the ...

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