Divorce Settlements

Double Deception

O, what a tangled web we weave when first we practice to deceive.
– Sir Walter Scott

Jamie Snellings may have thought she could get away with it. She was caught with her hand in the cookie jar… and an invisible cookie jar, at that.

Jamie’s Deception

After the 2014 filing for divorce in Hawai’i, she and her husband, Jason Snellings, filed their mandatory disclosure forms with information on their assets and accounts. Then Jason found out that Jamie had moved $65,000 to a new account that she had not disclosed – an invisible account – so he filed for a financial restraining order. Jamie later said, “I wanted the court case to be done and… was scared over the threat of sanctions,” and so she told her lawyer to settle the matter quickly with a consent order.

The attorneys quickly arrived at a stipulated divorce decree, and the parties signed the typed order. It covered divorce and custody, with Jason getting primary custody of the children. The judge orally approved the typed settlement and granted the divorce.

Jason’s Deception

The attorneys started preparing the full and final order, but then Jamie’s attorney wrote to the court with objections. The letter said that Jason had not disclosed to Jamie his impending deployment until the day after the June 3, 2015 hearing on the stipulated divorce decree, “when he also informed Jamie that their two children would live with his parents in Virginia as part of a family care plan he had submitted to his military command. Jamie requested a hearing before the family court.” Snellings v. Snellings, NO. CAAP-16-0000704, 2020 Haw. App. LEXIS 77 (Haw. Ct. App., Feb. 28, 2020) at *3-4.

The trial judge was clearly upset, stating at the initial hearing:

The reason we’re here today is . . . [Jason], you are currently . . . on deployment with the military pursuant to your service and that allegedly you knew about that well in advance of the proceedings in June, but for reasons that I think are manifestly obvious you decided to not reveal that to [Jamie]. [Jamie]’s claim is that that was a material misrepresentation . . . and it would have affected the negotiations between the parties and maybe come up with a different — a different result. And that’s what’s before me.

Id. at *5. It turned out that Jason had taken the children from Hawai’i to Virginia to live with his parents.

What Happened Next

The court ultimately signed the tendered settlement, since it recited accurately the terms upon which the parties had agreed previously. While stating that the conduct didn’t appear to require the filing of a report to the Office of Disciplinary County of the bar, the court decided to impose $5,000 in sanctions – attorney’s fees and costs – on Jason, and it demanded a detailed affidavit from Jamie’s attorney.

Jamie then filed a motion to vacate or modify portions of the settlement, sought modification of the custody terms, and asked the court to enforce a prior order requiring Jason to transfer a vehicle to her. The response from Jason was a motion to dismiss and a request for a stay of proceedings under the Servicemembers Civil Relief Act, 50 U.S.C. § 3932. The court denied the stay request and ordered the children to be returned to Hawai’i, to be placed in Jamie’s sole custody until Jason returned from deployment. Ultimately the court set aside major portions of the stipulated divorce decree on the basis of fraud. It awarded an additional $12,000 to Jamie in attorney’s fees and costs.

The Court’s Concerns

Much would be lost in the exploration of this case if the court’s statements in open court were omitted. A clear sense of why the court was disturbed by Jason’s conduct and where the court was headed can be gleaned from the following remarks to Jason’s attorney:

[F]rankly, the Court has very little trust in terms of your client’s actions in this case thus far…. What the Court is concerned about are the allegations that a fraud was perpetrated on the Court…. That’s what the Court is concerned about, that information pertinent to settlement negotiations and relevant to settlement negotiations was intentionally withheld. [M]y understanding of the case, having reviewed the motion, is that the essence of the fraud claim is that [Jason’s] deployment was not disclosed [to Jamie] prior to the time the agreement [for the stipulated divorce decree] was reached…. The intention was to withhold information to get the agreement he wanted is what it’s — it sounds like you’re telling me.

[JASON’S COUNSEL]: No, I don’t believe that’s the case.

THE COURT: It may have been because he wanted to ensure his children were safe and protected and all of that stuff, but at the heart of it, it sounds like he withheld information because he felt that would benefit his position.

Id. at *9-11.

Pulling Back the Curtain

The facts about deployment and the settlement were revealed out in the Court of Appeals decision. The Court noted that:

Jason received TAD (Temporary Additional Duty) orders to Cuba three months before the settlement was signed. The tour of duty was for nine months.
Despite the pendency of timesharing and custody issues between the parties, Jason didn’t disclose the assignment orders to Jamie when he received them or within a reasonable time thereof.
When the parties signed the settlement on custody and timesharing, Jason still had not revealed to Jamie his TAD orders, which required him to report just three days after the typewritten settlement in court.
The day after the court settlement, Jason told Jamie that he had TAD orders, he was leaving Hawai’i in two days, “and told her that he was sending the children to live with his parents in Virginia for the duration of his TAD.” Id. at *17.
“Thereafter, [Jamie] discovered that on June 2, 2015, [Jason] had notified the children’s schools that the children’s last day of school would be June 3, 2015 and that they were to be permanently released as they were moving to Virginia…. [Jason] had not disclosed this notification to [Jamie] prior to the parties’ June 3, 2015 agreement at Court…. [Jamie] also discovered that on May 26, 2015 [Jason] had arranged for a 16 foot storage pod to be delivered to his address on May 30, 2015…. On June 6, 2015, [Jason] left Hawai’i with both children and dropped them off at his parent’s house in Virginia.” Id. at *17-18.

The Appellate Decision

In affirming the trial court’s rulings on attorney’s fees and costs, the Court of Appeals noted the following specific findings in the trial court’s order regarding Jason’s conduct:

[Jason’s] TAD orders and imminent departure from Hawai’i were material facts that should have been disclosed to [Jamie] and her counsel prior to June 3, 2015. [Jason] did not disclose his TAD orders to [Jamie] until June 4, 2015. [Jason] knowingly and intentionally failed to disclose [to Jamie] his TAD orders and his plans to send the children to Virginia… until June 4, 2015 to induce her to agree to the settlement terms that he wanted.

Id. at *25. The Court upheld the trial court’s other orders in all respects.

Lessons to be Learned

The Snellings case contains several lessons for the family law practitioner and the client. The pointers are not confined simply to cases involving custody and a military family.

“Clean hands” is the first lesson. Be “clean” with the opposing party and the court. Be candid when there are issues of substance which are being overlooked and which could lead to a different result, whether in the courtroom (in a contested case) or in the conference room. Even when the case is being settled “on the courthouse steps,” remember that a lawyer’s duty, as an officer of the court, includes candor to the tribunal. This is not a game of “hide the ball.” A family law matter in court is something that will affect the lives of the parties and the children, perhaps for a long time.

The next lesson involves an unappealed issue, the denial of Jason’s motion for a stay of proceedings under the SCRA, the Servicemembers Civil Relief Act, 50 U.S.C. § 3932. Ordinarily such a motion is granted automatically when the movant sets out the four essential elements of a request: a) a statement as to how his military duties affect his ability to appear, b) a statement as to when he will be available, c) a statement from his commanding officer that the servicemember’s military duties prevent his appearance, and d) the commander’s statement that military leave is not authorized. While the matter did not reach the Court of Appeals, an educated guess is that the denial was based on Jason’s conduct. When a party applying for a stay of proceedings has acted inequitably, most courts will refuse to consider the stay request based on the doctrine of “the sword and the shield.” This doctrine states that the SCRA is intended to be used as a shield to protect the rights of the servicemember, not as a sword to defeat the rights of others. “Fair play” is the key to successful use of the SCRA in slowing down civil proceedings. Bad actors may get bad treatment in court.

A third lesson is: “Good lawyers know the law, but great lawyers know the judge.” Listen to the judge. If there are comments from the bench that affect your case, pay heed and try to follow where the court is leading. In this case the court on numerous occasions pointed out its concerns about the issues of truth, credibility, fraud and the concealment of material facts in order to gain a tactical advantage. These statements are like red flags before a hurricane – heed them and act accordingly. One who doesn’t will often “reap the whirlwind.”

Finally, a lesson which Jason should have been given early in the case is “When you’re in a hole, stop digging.” Disregarding the substantial claims as to his misconduct, Jason kept on filing motions and resisting the court’s clear concerns about his deceptions. Counsel has a duty to warn the intransigent client of the likely consequences of his actions. In the appropriate case, counsel should withdraw when his or her client refuses to bring his conduct into compliance with the court’s rulings and concerns. It was clear from the start how the judge was leaning, and the court’s remarks left little doubt that Jason had “gamed the system” in gaining a settlement without revealing his position. In effect, Jason declared “I won” in a card game and collected all the poker chips on the table without showing his hand. The displeasure of the trial judge and the Court of Appeals regarding such self-dealing is obvious.

* * *

–Mark Sullivan

Can a parent relocate with the children?

A short look at Child Custody Relocation in North Carolina

We are often asked how relocation works in a custody situation, when a parent can relocate, and other relocation related questions. The question is not as simple as it may seem at first blush. There is no specific situation where a parent can relocate every time, or under which a parent will always obtain or maintain primary custody in relocation. So, the question remains, what should a parent consider and how does a parent know when he or she can relocate (or when the other parent would be allowed to relocate)?

View of the Court

The law in North Carolina has long been that the welfare of the child will be the court’s primary consideration. The Shepherd case says that the child’s best interests are the “polar star” to guide the court in any custody determination. See Shepherd v. Shepherd, 273 N.C. 71, 75, 159 S.E.2d 357, 361 (1968).

What are in the child’s best interests? Divorcing parents can certainly disagree over what ‘best’ actually is. Generally speaking, the child’s best interest represent an open door – any witness, communication, testimony, document, expert opinion, or items relevant to what is good, bad, better, or worse for the child or children can be considered. What is a parent to do when faced with a relocation? Case law goes on to provide further guidance. In evaluating a proposed relocation in a child custody case, the court should consider a number of factors, including:

The advantages of the relocation in terms of its capacity to improve the life of the child;
the motives of the custodial parent in seeking the move;
the likelihood that the custodial parent will comply with visitation orders when he or she is no longer subject to the jurisdiction of the courts of North Carolina;
the integrity of the noncustodial parent in resisting the relocation;
and the likelihood that a realistic visitation schedule can be arranged which will preserve and foster the parental relationship with the noncustodial parent.

See Evans v. Evans, 138 N.C. App. 135, 142, 530 S.E.2d 576, 580 (2000) (quoting Ramirez-Barker v. Barker, 107 N.C. App. 71, 80, 418 S.E.2d 675, 680 (1992), disapproved of on other grounds by Pulliam v. Smith, 348 N.C. 616, 501 S.E.2d 898 (1998)); Miller v. Miller, 241 N.C. App. 656, 775 S.E.2d 695 (2015).

It is important to note that the court can decide how much weight it will assign to each factor, and may or may not be swayed by any factor or set of factors. And the court can consider any relevant information or evidence, even if it is not on the above list, if it relates to the child’s welfare.

How does a Court consider these factors?

In North Carolina District Court (where child custody matters should be heard), the judge has broad discretion in a custody case. The Judge has the benefit of seeing the parties in person, hearing witnesses, receiving and reviewing evidence, and hearing the arguments of counsel for each party. Our experience has shown that the court will use this discretion to look at the case that is presented through the aforementioned lens of “child welfare” or “best interests of the child.”

Is it best for the child or children to relocate?

For better or worse, it all depends on the facts and circumstances of your particular case. The court should apply the above factors, and decide what is in the child’s best interests based upon the evidence and arguments presented. There are many factors to be considered in addition to the factors listed above. A short list would include job opportunities, cost of living, opportunities in the new community, taxes, family support available in each community, and more.

What can I do if I want to relocate (or if my ex has relocated)?

Call a lawyer who is experienced in family law and relocation cases. Depending on the situation, an ex parte emergency custody request may be available to you (or the other side!). While not universally true, a relocation case is much more likely to end up in court because there are only two choices – the two places involved. This is a forced situation where one parent must “win” on the location issue. It requires a skilled professional to make the best possible argument for why the parent/child relocation should be granted or denied.

My ex relocated, what can I do?

In addition to filing a lawsuit, there are many strategies which can be considered and employed. Often, we will associate with local co-counsel in the area of relocation to determine the odds of improving one’s custodial position in that jurisdiction. We can consult with professionals, such as forensic psychologists, to assess the case and provide expert testimony. Relocation requires diligent work and attention, and is often complex litigation. You need to formulate a plan with a qualified professional as soon as you can. If you received a court ruling that you consider to be unfavorable, and are still within the appropriate timeframe, you may consider appealing the court’s ruling.

I am (or my spouse is) in the military. How does relocation impact a military divorce case?

First, it is always best to plan for long distances in any custody agreement or order entered by the Judge. We frequently recommend having essentially two custody arrangements: i) if the parties live within a certain mileage radius; and ii) if they live outside of that same radius. This can assist both the servicemember and the spouse by preventing them from having to run to court to modify existing custody arrangements every time there is a new permanent change of station (PCS) or move.

One must bear in mind that the law clearly allows for consideration of activities and conduct in a custody case. This is important when the actions of a parent are as a result of military orders, as opposed to a personal choice to move or relocate.

Modification of existing custody determinations can also be very important to the military family with the somewhat regular relocation of military personnel every three or four years.

For more on this issue, see The Military Divorce Handbook, (Am. Bar Assn., 3^rd Ed. 2019) and the other resources available online written by the principal of our firm, Mark E. Sullivan.

Kris Hilscher practices family law in Raleigh, North Carolina. He works on family law cases, and works with attorneys nationwide as a consultant on military divorce issues in drafting military pension division orders. He can be reached at 919-832-8507 and at law@ncfamilylaw.com.

Estimating Military Retired Pay

*Mr. Sullivan is a retired Army Reserve JAG colonel. He practices family law in Raleigh, North Carolina and is the author of The Military Divorce Handbook (Am. Bar Assn., 3^rd Ed. 2019) and many internet resources on military family law issues. A Fellow of the American Academy of Matrimonial Lawyers, Mr. Sullivan has been a board-certified specialist in family law since 1989. He works with attorneys nationwide as a consultant on military divorce issues in drafting military pension division orders. He can be reached at 919-832-8507 and at law@ncfamilylaw.com.

Introduction

From time to time, our office gets inquiries by phone or e-mail regarding how to estimate the military retired pay of a member of the uniformed services. This term means the “armed forces,” that is, the Army, Navy, Air Force, Marine Corps, and Coast Guard, and also the commissioned corps of the Public Health Service (PHS) and the National Oceanic and Atmospheric Administration (NOAA). The rules for calculating the retired pay of the active-duty “member” one of these service components, technically called “Regular Retirement” pay, are set out in 10 U.S.C. § 1407 and 1409 for the armed services, and at equivalent sections of the U.S. Code for PHS and NOAA officers. Below is a simplified explanation of the rules for calculation.

“What’s the Formula?”

The basic formula for determining one’s retired pay is Retired Pay Base times Retired Pay Multiplier, or RPB X RPM. This can be illustrated as:

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The usual percentage is 2.5%, but it’s 2.0% when a) the servicemember elected to receive a mid-career cash bonus known as CSB/Redux, or when b) the member is in the Blended Retirement System.

High-3 Pay

“High-3 Pay” is the average of the highest three years (not necessarily continuous) of base pay for a member, expressed on a monthly basis.

How to obtain the documents and do the calculations is set out in the Silent Partner infoletter, “Military Pension Division and the Frozen Benefit Rule: Nuts ‘n’ Bolts,” found at nclamp.gov > Publications.
The quick way to estimate this is to take the current pay of the member, obtained from his or her Leave and Earnings Statement, or “LES” (or other equivalent pay statement, such as the “PaySlip” for Coast Guard member), and multiply it times 98%. Thus if Major Jane Doe receives $8,000 per month as her base pay, the estimate for her High-3 Pay would be $8,000 X .98% or $7,840.

The Defense Finance and Accounting Service (DFAS) is the pay center for the Army, Navy, Air Force and Marine Corps. The Department of Defense regulation governing the Privacy Program, DoD 5400.11-R, states that the Defense Department will release the following information regarding a servicemember: date of rank, gross salary, length of military service and Basic Pay Entry Date. Para. C4.2.2.5.2.1, DoD 5400.11-R (May 14, 2007). Other items may also be disclosed.

Years of Service

“Years of service” can be determined by asking Major Jane Doe, if she is your client. Otherwise the figure can be determined by review of her LES (look at the “Pay Date” or “Pay Entry Base Date” as well as the DIEMS, or Date Initially Entered Military Service). The LES may be provided voluntarily by Jane or her attorney, or it may be obtained otherwise through discovery. This information is also available through a request pursuant to DoD 5400.11-R, as noted above. If you know Jane’s pay grade[2] and years of service, you can determine her present base pay by using the pay tables at the DFAS website, https://www.dfas.mil > Military Members.

Pay grade – not rank – is what’s needed for the pay tables. Rank can be confusing: a master sergeant in the Air Force is pay grade E-7, but it’s E-8 in the Army; a Navy captain is pay grade O-6, but a Marine Corps captain is pay grade O-3!

Example of the Calculation

Let’s follow up on the calculations for Major Jane Doe, with the data set out above. Her “estimate” for the High-3 is $7,840, and her Retired Pay Multiplier (assuming that she has just finished serving 20 years) is 20 X 2.5%, or 50%. The combination of these gives $3,920/mo. This is the projected retired pay for Major Doe if she were to retire at the 20-year mark with the above as her High-3 pay.

“Magic Words” – Last Chapter

Published on January 11, 2020

Mark Sullivan

Sullivan & Hilscher Family Law

The final set of “magic words” are ones which belong in every military pension division order, incorporated settlement or divorce decree. These required phrases are set out in the Uniformed Services Former Spouses’ Protection Act (USFSPA), 10 U.S.C. §1408, and in the rules for administration and enforcement of pension division, found at Chapter 29 of Vol. 7b, Dept. of Defense Financial Management Regulation (a.k.a. the DoDFMR).

Compliance with the SCRA

Every pension division instrument must state that there has been compliance with the Servicemembers Civil Relief Act, or SCRA. In general, this means that the rights of the servicemember (such as the right to obtain a stay of proceedings under certain conditions and the bar against default judgments) have been protected. The statute is found at Chapter 50 of Title 50, U.S. Code.

MAGIC WORDS: “The rights of John Doe, the defendant, under the Servicemembers Civil Relief Act, Chapter 50 of Title 50, U.S. Code, have been observed.”

The “10/10 Rule”

Getting direct payments from the retired pay center is important for the former spouse (FS); it means a regular garnishment of retired pay, deposited in the recipient’s bank account around the first of each month. It is important for the retiree as well, since it eliminates the need to write a check to the FS every month and to keep track of COLAs (cost-of-living adjustments) once a year.

The “retired pay center” is DFAS, the Defense Finance and Accounting Service, for those who are retired from the Army, Navy, Air Force and Marine Corps. It’s the Coast Guard Pay & Personnel Center for those retiring from the Coast Guard and the commissioned corps of the Public Health Service (PHS) and the National Oceanic and Atmospheric Administration (NOAA).

According to the USFSPA, the retired pay center cannot garnish retired pay as property division unless it appears from the application for a share of retired pay that the marriage overlaps the creditable service by at least 10 years. Thus it is essential to include this essential language in the pension division instrument.

MAGIC WORDS: “The parties were married to each other for at least 10 years during which the member performed at least 10 years of service creditable in determining the member’s eligibility for retired pay.”

“Disposable” Retired Pay – It’s Disposable

Surprisingly, the phrase “disposable retired pay” is not in the set of “magic words” for the pension order. Although Congress stated in the USFSPA that “disposable retired pay” is all that a state court can divide in military pension division (see 10 U.S.C. §1408 (a)(4)), the rules have made this term irrelevant or, more properly, disposable. All awards of a portion of the military pension are to be construed as dividing the retiree’s “disposable retired pay,” regardless of their wording. So your order will not be rejected for faulty language or the absence of “magic words” if it divides John Doe’s “military pension” or “uniformed services retired pay,” for example.

In the Meantime…

Interim payments must be addressed in the pension division order. That’s because the parties need to know who makes what payments while the order is being processed by the retired pay center. According to the USFSPA (see 10 U.S.C. §1408 (d)(1)), the pay center will begin pension-share payments within 90 days of the retiree’s entitlement to receive retired pay or 90 days from the receipt of an acceptable order, whichever is later. For this reason, the order should specify that the retiree is responsible for payments in the interim. In a case where John Doe is the plaintiff and the military member or retiree, the following phrasing would be useful.

MAGIC WORDS: “Plaintiff will receive payments at the same time as Defendant. The parties acknowledge that DFAS is not required to begin payments to the former spouse until 90 days after receipt of an acceptable order or the start of retired pay, whichever is later. Defendant will be responsible for making these payments each month to Plaintiff until DFAS begins making these payments to her, and during this interim, Defendant will pay Plaintiff directly her full share, unadjusted for taxes.”

Language for the Award – Four Options

Finally, there are “magic words” involved in phrasing the award. The retired pay center will only accept a pension division instrument which specifies the award to the FS in terms of a fixed amount, percentage, formula, or hypothetical amount of retired pay. Examples of each one may be found in these Silent Partner infoletters: “Getting Military Pension Orders Honored by the Retired Pay Center,” and “Military Pension Division: Guidance for Lawyers.” All of the Silent Partner infoletters will be found at www.americanbar.org > Family Law Section > Military Law Committee, and at www.nclamp.gov > Publications.

A Helpful Checklist

Note that “one size fits all” definitely doesn’t apply to military pension division orders. A good practitioner will check and re-check the pension division order to be sure it complies with the regulations and the statute, accomplishes the needs of the client, makes sense, and will be honored by the retired pay center. Here is a checklist that DFAS uses for pension division orders:

DFAS CHECKLIST FOR MILITARY PENSION DIVISION ORDERS

FORMER SPOUSES’ PROTECTION ACT CHECK SHEET
MEMBER’S NAME
SOCIAL SECURITY NUMBER
SERVICE OF APPLICATION (personal, certified or registered mail, return receipt requested)
FINAL DECREE OF DIVORCE, DISSOLUTION OR ANNULMENT OR LEGAL SEPARATION
ISSUED BY A COURT – OR – A COURT ORDERED, RATIFIED OR APPROVED PROPERTY
SETTLEMENT INCIDENT TO SUCH A DECREE
AUTHENTICATED OR CERTIFIED PRIOR TO SERVICE OF PENSION ORDER
MEMBER PROPERLY IDENTIFIED (E.G., NAME, ADDRESS, SSN)
NAME, ADDRESS, AND SSN OF FORMER SPOUSE
ORDER PROVIDES FOR ONE OF THE FOLLOWING: A) PAYMENT OF FIXED MONTHLY AMOUNT OF $________; B) FIXED PERCENTAGE OF ______%; C) FORMULA CALCULATION (must use retirement points in Guard/Reserve case); D) HYPOTHETICAL CALCULATION:
MEMBER’S RIGHTS UNDER THE SERVICEMEMBERS CIVIL RELIEF ACT COMPLIED WITH
JURISDICTION MET
RESIDENCE (NOT DUE TO MILITARY ORDERS)
DOMICILE
CONSENT
ORDER HAS NOT BEEN AMENDED, SUPERSEDED, OR SET ASIDE
ORDER IS FINAL DECREE, NO APPEAL MAY BE TAKEN, NO APPEAL WAS TAKEN WITHIN TIME PERMITTED
FORMER SPOUSE MARRIED TO MEMBER AT LEAST 10 YEARS DURING AT LEAST 10 YEARS OF CREDITABLE SERVICE
PAY ENTRY DATE:
RETIREMENT DATE:
MARRIAGE DATE:
DIVORCE DATE:
IF DIVORCE AFTER 12/23/16 AND MEMBER WAS NOT RECEIVING RETIRED PAY AT DIVORCE, free sex videos ORDER CONTAINS TWO DATA POINTS REQUIRED BY DoDFMR VOL. 7B, CH. 29, §2908: HIGH-3 PAY AT DIVORCE AND TOTAL YEARS OF CREDITABLE SERVICE (FOR RC MEMBER, TOTAL RETIREMENT POINTS) AT DIVORCE

More detailed information and illustrations can be found in Chapter 8 of THE MILITARY DIVORCE HANDBOOK (Am Bar Assn., 3rd Ed. 2019).

Magic Words – Again?

The two prior pieces about the issue of special language in military divorce cases dealt with a) wording to secure the Survivor Benefit Plan for the non-military spouse, and b) wording required by the Frozen Benefit Rule so that the retired pay center would accept the pension division order. This “magic words” installment deals with the all-important issue of jurisdiction. If the court lacks jurisdiction, then your efforts would be wasted. Be sure that the judge makes the right findings.

The issue of jurisdiction under 10 U.S.C. 1408, the Uniformed Services Former Spouses’ Protection Act, is covered at subsection (c)(4) of the statute. Since most cases are settled with a consent order or a separation agreement incorporated into the divorce decree, the likely “magic words” you’ll need to use would be: “The court has jurisdiction to divide the uniformed services retired pay of the defendant, John Doe, due to his consent to the jurisdiction of the court.”

When the case is contested, you’ll have to look elsewhere for a jurisdictional basis for the order dividing military retired pay. The usual base to use is domicile. If your state is the “state of legal residence” of John Doe – that is, his domicile – then the order might state: “The court has jurisdiction to divide the uniformed services retired pay of the defendant, John Doe, due to his domicile in the state of East Virginia.”

Don’t be deceived by “home of record.” That phrase is not intended to mean one’s domicile. It’s only a reference to the place from where John Doe entered the service, and to which his household goods will be shipped upon his discharge. It may be his domicile, but that’s not dead certain. For example, when I entered military service in December 1971 [that so long ago that dinosaurs ruled the earth!], my domicile and my home of record were both Ohio, since I went on active duty from Cleveland. When I was transferred to Ft. Bragg in 1972, both were still Ohio. But in 1976 when I decided to obtain reciprocity admission to the N.C. Bar, I changed my domicile to N.C. (by changing my car title and driver’s license, my bank, my voting records, my personal property tax listing, my state income tax info, etc.), even though my home of record remained Ohio. You can look up the incidents of domicile in a Silent Partner infoletter, “Divorce and Domicile,” at www.americanbar.org > Family Law Section > Military Law Committee, or at www.nclamp.gov > Publications. The infoletter contains a checklist of every conceivable item that would be relevant in a domicile determination.

The last test is rarely used. It involves the exercise of jurisdiction by the court in East Virginia due to John’s residing in that state, but not due to military orders. Thus your order might use the following “magic words” for jurisdiction, assuming that you have the facts to back this up: “The court has jurisdiction to divide the uniformed services retired pay of the defendant, John Doe, due to his residence within the territorial jurisdiction of the court other than because of military assignment.” This test is only used when there is a nearby state boundary, such as the following – John is stationed at Eglin AFB, Florida, but he’s living just across the state line in Gulf Shores, Alabama, to be near his aged parents (and to get rent-free lodging). In that case, Alabama could exercise
jurisdiction over the military pension division, since John’s residing in Alabama is not due to his military assignment in that state.

The rules for military pension division are published by DFAS, the Defense Finance and Accounting Service; they’re found at the Dept. of Defense Financial Management Regulation, Vol. 7b, Chapter 29. The rules state that for a court order to be accepted, it must explicitly state the basis for the court’s exercise of jurisdiction. So don’t just recite the usual “blanket language” of “This court has jurisdiction over the parties and the subject matter of this case” without adding the proposed language set out above.
Anything less than the specific basis for jurisdiction will result in a rejection letter from the retired pay center, whether that’s DFAS (for Army, Navy, Air Force and Marine Corps) or the Coast Guard Pay & Personnel Center (for USCG, and for the commissioned corps of NOAA and PHS).

All of this (and more) can be found in Chapter 8 of THE MILITARY DIVORCE HANDBOOK (Am Bar Assn., 3rd Ed. 2019). The website is: https://www.americanbar.org/products/.

-Mark Sullivan

The Value of Leave

Who hasn’t doubted the value of a vacation day or two during busy times at work? The rest and respite provided by taking leave for a few days can often recharge one’s batteries, as well as make room for family time and duties at home.

But the North Carolina Court of Appeals was thinking of a different “value of leave” when it decided Rathcamp v. Danello on December 4, 2018. In the Rathkamp case, the Court of Appeals (COA) addressed an appeal by both parties to a 2017 equitable distribution order from Mecklenburg County related to the parties’ divorce. One of the issues was valuation and classification of the vacation and sick leave of the former husband.

The ex-wife claimed that the judge had erred in failing to classify, value and divide her former husband’s job-related sick leave or annual leave. The judge made a finding in his order that there was insufficient evidence to allow classification, valuation or distribution of the accrued leave.

What did the former wife have for proof? The COA said that there was a “Statement of Earnings and Leave” that documented the ex-husband’s accrued leave as of 6 days after the date of separation, but there was no proof of its value, only the affidavit of the ex-wife that it was worth $56,218.

The COA noted that the record showed annual leave of 83 hours and sick leave of about 440 hours for the ex-husband; there was no evidence, however, no evidence in the record supported the classification and valuation claimed by the ex-wife. Noting that case law provides that the “… party claiming that property is marital property must also provide evidence by which that property is to be valued by the trial court,” the COA affirmed the trial court’s finding of insufficient evidence, which meant a loss of about $28,000 by the former wife.

What went wrong? The ex-wife should have obtained documents from the former husband’s employer (such as an employee manual) which would have stated whether there was a cash value to accrued sick leave and vacation time. A current or former employee familiar with the policy of the employer could have also given testimony to back up the ex-wife’s assertion of a value of over $56,000. With such a value at stake, it certainly would make sense for the ex-wife and her attorney to spend some time nailing down the means of establishing value for the accrued leave.

The issue is not unique to North Carolina. While half a dozen states have clearly held that vacation time and leave are marital or community property, three states – Illinois, Kentucky and Maryland – have stated that leave may not be distributed as marital property. The Maryland case found that leave was “alternative wages,” not deferred compensation; the appellate court held that accrued leave was less tangible, more difficult to value and more personal than pension and retirement benefits, and thus it was a nonmarital asset.

In some cases, leave can have little or no value. In the Maryland case, for example, the wife would have lost her sick leave (about $11,000) if she terminated employment. It was only good for taking time off for health reasons, not for cashing in the time.

The same is not true, however, for military leave. Servicemembers get 30 days of paid leave each year, accruing at 2.5 days a month. It is worth the same amount as the base pay for each day of leave, and thus one can determine the value of an Army sergeant’s accrued leave by looking at the Leave and Earnings Statement (LES); the row entitled “Leave” will show in the box marked “CR BAL” the number of days of existing leave that have been earned as of that pay period. If the sergeant’s base pay is $4,000 a month, and his or her LES shows 60 for “CR BAL,” then the leave is worth $8,000.

It takes some time to establish the rules for valuing leave. I was tasked with writing a brief for a Colorado attorney who needed to determine the value of the 65 days of leave shown on the LES of the husband, an Army warrant officer. I finally figured out the location of the rules and the statute governing this issue for military cases, and I’ve finished the brief; it will be presented to the court in Colorado Springs in April.

It’s surprising how seldom accrued leave comes up in settlement negotiations. Most of the time the parties seem unaware of the value of this asset. It’s truly “hidden money” for some people who are going through a divorce. In recognition of this potential problem, I wrote an article several years ago entitled “Hidden Money in Military Divorce Cases” which deals with this and other matters which may be overlooked in the divorce process.

The case is: Rathkamp v. Danello, No. COA 17-760, 2018 N.C. App. LEXIS 1190, 2018 WL 6318307 (N.C. Ct. App., Dec. 4, 2018).

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