Page 432
[Copyrighted Material Omitted]
Page 433
Appeal
from Calhoun Circuit Court (DR-01-184.01).
Wendy
Ghee Draper, Anniston, for appellant.
Elma
Rose Walton, Anniston, for appellee.
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
Page 434
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
Page 435
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
Page 436
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.
Page 437
"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:
Page 438
"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 ...