This case arises from a divorce action between Amy Fulgium, appellant, and Christopher Fulgium, appellee. On July 31, 2017, the Circuit Court for Prince George's County issued a Judgment of Absolute Divorce and a Constituted Pension Order relating to Mr. Fulgium's military retirement benefits.
On appeal, Ms. Fulgium challenges only the award of military retirement benefits. In that regard, she presents five questions for this Court's review,
For the reasons set forth below, we answer the first question in the affirmative, and therefore, we shall vacate the judgment of the circuit court and remand for further proceedings.
FACTUAL AND PROCEDURAL BACKGROUND
The Fulgiums were married on July 8, 2005. No children were born during the marriage. Mr. Fulgium has been an active duty member of the United States Marine Corps since July 12, 1999.
On May 30, 2017, Mr. and Ms. Fulgium entered into a Partial Marital Settlement Agreement (the "Agreement"). The Agreement settled all issues regarding the divorce, with the exception of alimony, Mr. Fulgium's military pension, and attorney's fees. The parties planned to address these issues at a trial on the merits.
Trial began that same day, May 30, 2017. Ms. Fulgium requested "three years of alimony," a portion of Mr. Fulgium's military pension, and attorney's fees. With respect to the pension, counsel stated that the Federal Government had changed the way pensions were dealt with by the military:
Mr. Fulgium asked that the court deny Ms. Fulgium's claims for alimony and attorney's fees. He asked that the court award him the "full amount of his military retired pay."
At trial, Mr. Fulgium testified that his marriage to Ms. Fulgium first started to deteriorate in 2011, when he became aware that she had been involved in "intimate action with neighbors" while he was deployed. He testified that, although Ms. Fulgium had been "extremely responsible" when they first got married, she began spending a lot of money over the course of the marriage, and money he had saved was depleted.
Mr. Fulgium, who was 36 years old at the time of trial, testified that his rank in the Marines was a "Chief Warrant Officer 2." According to his W-2 forms for the years 2014, 2015, and 2016, he made $ 52,950.60, $ 56,264.45, and $ 60,195.60, respectively. Mr. Fulgium had a high school education, and he used his GI bill, in the amount of approximately $ 27,000, to help Ms. Fulgium earn her master's degree.
Ms. Fulgium, who was 31 at the time of trial, was living in California. She testified that she received her master's degree in 2014. It took her three years to complete the degree, and she received 12 months' credit from the GI bill.
Ms. Fulgium testified regarding her health during the marriage. She had several medical conditions that required surgery, and Mr. Fulgium helped her after the surgeries. As of the date of trial, however, Ms. Fulgium was healthy, with no health complications. Ms. Fulgium testified that, in 2016, her annual earnings were $ 55,582.17. Her monthly expenses were less than her earnings.
After the evidence was presented, counsel for Mr. Fulgium asked that he receive his full share of his retired pay. Counsel for Ms. Fulgium requested that she be awarded a share of the pension "from the date they got married until the date they got divorced."
On June 27, 2017, the circuit court held a disposition hearing. The court denied each party's request for attorney's fees, and Ms. Fulgium's request for alimony.
With respect to Mr. Fulgium's military pension, the court discussed the "National Defense Authorization Act of fiscal year 2017, known as [N]DAA 17," which revised "how pension orders are written and will operate." The court stated:
In response to the circuit court's oral ruling, counsel for Ms. Fulgium asked the court to clarify whether it awarded Ms. Fulgium 50% of Mr. Fulgium's disposable military pay or 15%. The following colloquy between the court and counsel for Ms. Fulgium ensued:
The circuit court explained that the 15% was 50% of the 11.11 years they were
After the circuit court's oral ruling, the parties could not agree on the terms for the order dividing military retirement pay. The circuit court requested that each party submit a proposed order for the court's review.
On July 31, 2017, the court issued the Constituted Pension Order,
On August 21, 2017, Ms. Fulgium filed a Motion to Alter or Amend Judgment of Absolute Divorce and Constituted Pension Order. On October 31, 3017, the circuit court entered an order denying the motion.
This appeal followed.
Ms. Fulgium contends that the circuit court misinterpreted federal statutes addressing military retirement benefits and incorrectly divided Mr. Fulgium's military pension. She asserts several contentions in this regard, which will be discussed, infra.
Mr. Fulgium contends that the circuit court correctly applied the federal statutes addressing military retired pay, and these statutes preempt conflicting state law. He asserts that, after applying the federal statutes, the court properly exercised its discretion in awarding Ms. Fulgium less than half of the marital portion of his military retired pay based on its findings that his contributions "far exceeded" the contributions made by Ms. Fulgium. He argues that the court "had discretion to award less than an equal marital share,
Before addressing Ms. Fulgium's specific arguments, we will give some background on the law regarding military retirement benefits. "Military retired pay is a federal entitlement that, much like a pension, provides a monthly annuity for life upon retirement from the armed forces." Dziamko v. Chuhaj, 193 Md.App. 98, 116, 996 A.2d 893, cert denied, 416 Md. 273, 6 A.3d 905 (2010). As Judge Nazarian explained for this Court in Hurt v. Jones-Hurt, 233 Md.App. 610, 619, 168 A.3d 992 (2017):
Prior to June 26, 1981, military pensions were considered to be divisible marital property in Maryland. Collins v. Collins, 144 Md.App. 395, 421-22, 798 A.2d 1155 (2002). In 1981, in McCarty v. McCarty, 453 U.S. 210, 232-33, 101 S.Ct. 2728, 69 L.Ed.2d 589 (1981), the United States Supreme Court held that the federal law "governing military benefits preempted state family law and precluded those benefits from being treated as community property in state divorce proceedings." Hurt, 233 Md. App. at 619-20, 168 A.3d 992. The Court of Appeals subsequently held that the rationale in McCarty applied in Maryland, an equitable distribution state, precluding a court from dividing military retirement pay as marital property. Hill v. Hill, 291 Md. 615, 620-21, 436 A.2d 67 (1981).
In 1982, in response to McCarty, "Congress enacted the Uniform Services Former Spouses Protection Act" ("USFSPA," or "the Act"), codified at 10 U.S.C. § 1408. Howell v. Howell, ___ U.S. ___, 137 S.Ct. 1400, 1403, 197 L.Ed.2d 781 (2017). Accord Andresen v. Andresen, 317 Md. 380, 383, 564 A.2d 399 (1989). The purpose of the Act was to place courts in the same position they were in prior to the McCarty decision with respect to non-disability military retired pay. Andresen, at 383, 564 A.2d 399. The Senate report stated that the Act was
Id. at 383-84, 564 A.2d 399 (quoting Senate Report No. 97-502, July 22, 1982, reprinted in 1982 U.S. Code Cong. & Admin. News, 1555, 1596, 1611).
The USFSPA provides: "Subject to the limitations of this section, a court may treat disposable retired pay payable to a member for pay periods beginning after
One of the limitations on a court's ability to divide a military pension is that only "disposable retired pay" may be considered marital property. Id. The statute defines "disposable retired pay" as "the total monthly retired pay to which a member is entitled," less certain amounts, such as military retirement pay waived to receive disability payments. 10 U.S.C. § 1408(a)(4)(A).
Another significant limitation was included in the National Defense Authorization Act for Fiscal Year 2017 ("NDAA17"), signed on December 23, 2016. See Pub.L. 114-328, 130 Stat. 2164, 2418 (Dec. 23, 2016). This amendment to § 1408 was intended to modify "the division of military retired pay in a divorce decree to the amount the member would be entitled based upon the member's pay grade and years of service at the time of the divorce rather than at the time of retirement." S. Rept. 114-255, National Defense Authorization Act for Fiscal Year 2017, at 168 (114th Congress, 2016); Kristy N. Kamarck, Cong. Research Serv., RL31663, Military Benefits for Former Spouses: Legislation and Policy Issues, at 15 (2018) (hereinafter "CRS Report"). Rather than dividing actual retired pay at the time of retirement, the benefit would be frozen at the time of divorce. The rationale for using a "date of divorce" method for pension valuation was that a former spouse would not receive a windfall benefit from promotions and other pay increases that accrued from the date of divorce to the date of retirement, to which the former spouse made no contribution. See CRS Report, 15.
The new provision stated, in relevant part, that "the total monthly pay to which a member is entitled," i.e., "disposable retired pay," "shall be the amount of basic
The USFSPA provides that, under certain circumstances, the nonmilitary spouse may obtain his or her share of disposable retired pay directly from the federal government, i.e., the Defense Finance and Accounting Service ("DFAS"). 10 U.S.C. § 1408(d)(1). To be eligible for direct payment, there must be a court order, incident to a final decree of divorce or legal separation, providing for the payment of an amount of the disposable retired pay. § 1408(a)(2) & (d)(1); accord CRS Report, 2. After service on the Secretary of such an order, "the Secretary shall make payments (subject to the limitations of [§ 1408]) from the disposable retired pay... to the spouse or former spouse." Id.
One of the limitations on direct payment is that it is available only when the service member performed ten or more years of creditable military service while married to his or her spouse. 10 U.S.C. § 1408(d)(2). See Mansell, 490 U.S. at 585, 109 S.Ct. 2023. Accord Dziamko, 193 Md. App. at 119, 996 A.2d 893 (direct payment of military pension not possible where parties married only seven years). Another limitation is that "the Federal Government will not make community property payments that exceed 50 percent of retired disposable retired or retainer pay." Mansell, 490 U.S. at 585, 109 S.Ct. 2023. See § 1408(e)(1) ("The total amount of disposable retired pay of a member payable under all court orders pursuant to subsection (c) may not exceed 50 percent of such disposable retired pay.").
With this background in mind, we address Ms. Fulgium's specific arguments.
Ms. Fulgium initially contends that the circuit court should have calculated the division of the military pension using the "if, as, and when" basis set forth in Bangs v. Bangs, 59 Md.App. 350, 367-68, 475 A.2d 1214 (1984). She summarizes the Bangs formula as: "the employee's total pension benefit at the time of his retirement multiplied by a fraction, the numerator of which is the employee's total years of service during marriage and the denominator of which is the employee's total years of service at retirement (which is the so-called `marital share'), which is then multiplied by fifty percent (50%), to arrive at the non-employee's share of the employee's pension benefit." Ms. Fulgium asserts that this formula cannot be frozen prior to retirement, and therefore, the proper calculation of her marital share of the military pension is "145 months married/total number of months of service × 50% × retired pay at benefit commencement."
Mr. Fulgium contends that the court correctly calculated Ms. Fulgium's marital share of Mr. Fulgium's military pension. He asserts that the federal statute preempts state law with respect to a marital property award requiring the division of military retired pay, and the court "correctly applied federal law to the division of [his] "retired military pay."
As indicated, 10 U.S.C. § 1408 permits courts to apply state law in determining whether military retired pay should be divisible. Andresen, 317 Md. at 383-84, 564 A.2d 399. In Maryland "[a]n interest in a military pension is marital property to the extent it was earned during the marriage." Woodson v. Saldana, 165 Md.App. 480, 488, 885 A.2d 907 (2005). Pursuant to FL § 8-205, the court may transfer ownership of a pension or retirement plan from one party to either or both parties after considering various factors.
In Dziamko, this Court explained the possible methods of valuing pension benefits in a divorce proceeding:
In Bangs, 59 Md. App. at 368, 475 A.2d 1214, this Court approved the third option, the "if, as, and when" method to calculate the marital portion of a pension that was earned both during and outside the marriage. Applying this formula, sometimes referred to as the Bangs formula, the marital share of a pension is a fraction in which the numerator is number of months of the marriage and the denominator is "the total number of months during which the pension accrues from employment to retirement." Dziamko, 193 Md. App. at 112-16, 996 A.2d 893. "The non-member spouse's share of the marital portion of the pension is determined by applying an agreed-upon fixed percentage to it. That fixed percentage then is applied to any future payments received under the pension plan." Id. at 112, 996 A.2d 893. This formula has been "codified as the default method in Maryland" under FL § 8-204(b).
Ms. Fulgium's appellate argument, that the "court erred as a matter of law" in not applying the Bangs formula, fails for several reasons. First, her argument in this Court, that the circuit court erred because, pursuant to Bangs, the formula cannot be frozen before retirement, is inconsistent with what she argued below. In argument at trial, and in a subsequent email submitted to the court regarding the proposed Constituted Pension Order, counsel for Ms. Fulgium argued that the proper analysis was to use the formula set forth in the USFSPA, which counsel characterized as the Bangs formula with a modification. Counsel specifically argued, consistent
Under these circumstances, Ms. Fulgium's contention is not preserved for this Court's review. See Md. Rule 8-131(a) (an appellate court ordinarily will not decide an issue "unless it plainly appears by the record to have been raised in or decided by the trial court"). Accord Sutton v. FedFirst Fin. Corp., 226 Md.App. 46, 80 n.18, 126 A.3d 765 (2015), cert. denied, 446 Md. 293, 132 A.3d 195 (2016) (declining to address an argument that was not made below); Krause Marine Towing Corp. v. Association of Maryland Pilots, 205 Md.App. 194, 223, 44 A.3d 1043 (2012) (an argument is not preserved when it is "different from and inconsistent with" the argument offered to the circuit court).
This Court, however, has discretion under Md. Rule 8-131(a) to address an unpreserved issue. Jones v. State, 379 Md. 704, 712-14, 843 A.2d 778 (2004). Because this case will be reversed and remanded on other grounds, and because the parties were unable to find any cases addressing the formula to be used in light of the recent amendments to the USFSPA, we will address it. See Hartman v. State, 452 Md. 279, 299, 156 A.3d 886 (2017) (court may elect to review an unpreserved issue when there likely will be further proceedings).
The USFSPA, as amended by the NDAA17 in 2016, specifically sets forth the method of calculation of disposable retired pay when there is a divorce prior to the member's retirement. It provides that "disposable retired pay," in the situation where there is a final decree of divorce prior to the date of the member's retirement, is calculated "using the member's retired pay base and years of service on the date of the decree of divorce, dissolution, annulment, or legal separation, as computed under section 1406 or 1407 of this title, whichever is applicable, increased by the sum of `cost-of-living adjustments[.]'" 10 U.S.C. § 1408(a)(4)(B)(i). The language in the statute makes clear, and federal regulations confirm, that when, as here, a divorce occurs after December 23, 2016, and the member has not yet retired, "[t]he amount of retired pay is limited to that which the member would have been entitled using the member's retired pay base and years of service on the date of the final decree of divorce, dissolution, annulment, or legal separation." Department of Defense Financial Management Regulations 7000.14-R ("DoD Regs") ¶ 290802.
The formula set forth in the USFSPA, to the extent it is inconsistent with the Bangs formula, preempts state law. See Mansell, 490 U.S. at 587, 109 S.Ct. 2023 (Congress preempts state law when that result is "`positively required by direct enactment'") (quoting Hisquierdo v. Hisquierdo, 439 U.S. 572, 581, 99 S.Ct. 802, 59 L.Ed.2d 1 (1979)). Accordingly, the circuit court here was required to apply this analysis in assessing the marital share of military retired pay, where the divorce became final after December 23, 2016, and before Mr. Fulgium retired. Ms. Fulgium's contention to the contrary is without merit.
Moreover, we note that the formula set forth by Ms. Fulgium suggests that the court was required to give her 50 percent of the pension. That is not correct. Neither FL § 8-205 or 10 U.S.C. § 1408 mandates any division of a military pension. Whether to award retirement funds, and if so, how to allocate them, is within the discretion of the trial court. Long v. Long, 129 Md.App. 554, 574, 743 A.2d 281 (2000).
Ms. Fulgium next argues that, even if the formula set forth in the USFSPA controls, the court incorrectly calculated it. She asserts that, under the USFSPA, the correct formula is the "marital fraction (the numerator of which is [Mr. Fulgium's] years of service during marriage and the denominator of which is [Mr. Fulgium's] total years of service as of the date of award) × 50%," which results in the following formula:
Ms. Fulgium argues that the court erred in using an average of Mr. Fulgium's last 36 months base salary in determining the percentage formula.
Mr. Fulgium argued in his brief that the court "correctly applied federal law to the division of [his] military retired pay." At oral argument, however, counsel conceded that the analysis set forth in the circuit court's oral opinion was incorrect. Counsel asserted, however, that the written order, which reached the same conclusion, was made using the proper analysis. Given the lack of any indication that the court's written order reflected anything other than the analysis it set forth in court, we are not persuaded by that argument.
We set forth the court's ruling in its entirety, supra. This ruling shows that the court intended to transfer a portion of Mr. Fulgium's retirement pay to Ms. Fulgium. And it clearly attempted to follow federal requirements to issue an order that permitted Ms. Fulgium to receive direct pay from the government when Mr. Fulgium retired. As we will explain, however, the final step in the analysis was incorrect.
The court properly began by determining Mr. Fulgium's average salary for the three years prior to the order. Pursuant to the USFSPA,
Section 1407 of the USFSPA, applicable here,
As indicated, it is within the court's discretion, after considering the factors set forth in FL § 8-205, to determine how to equitably divide a pension or retirement plan. If the court intends to issue an order providing for direct pay by the Government, however, the federal regulations provide that the order must meet certain requirements. The "award must be expressed as a fixed dollar amount or as a percentage of disposable retired pay." DoD Regs ¶ 290601(C). In the situation here, where the divorce occurred "before the member became entitled to receive military retired pay, the retired pay may be expressed as a formula or hypothetical retired pay award." DoD Regs ¶ 290601(E).
The record indicates that the court intended to give a hypothetical retired pay award. Such an award is defined as:
DoD Regs ¶ 290213.
The Regulations give further guidance on "Acceptable Hypothetical Retired Pay Awards," as follows:
DoD Regs ¶ 290608.
Here, as indicated, the court found, pursuant to DoD Regs ¶ 290608(D), that Mr. Fulgium's retired pay base, his average basic pay the prior 36 months, was $ 56,536.72 per year.
The court then, pursuant to DoD Regs ¶ 290608(B), multiplied the hypothetical pay base of $ 56,536 by 0.45, the hypothetical retired pay multiplier, to get a hypothetical pay amount of $ 25,330. Up to this point, the court's calculations were, with slight modifications, correct.
The next step was to consider the marital share of this amount. The Fulguims were married for 12 of Mr. Fulgium's 18 years of service, or 67% of the time. Applying this percentage to the hypothetical pay amount of $ 26,061 equals $ 17,461. Dividing that amount, the marital share, by 50%, which appears to be what the court intended, equals $ 8,730.
The rationale for the court's determination that Ms. Fulgium would receive 15% of Mr. Fulgium's disposable retired pay is not entirely clear, but based on the court's comments, the percentage of retired pay the court awarded does not appear to be correct. Accordingly, we must vacate the judgment and remand for further proceedings.
1. Did the Trial Court Err as a Matter of Law by Incorrectly Dividing the Appellee's Pension Under Maryland Law?
2. Did the Trial Court Incorrectly Conflate the Mechanism of Payment of a Military Pension Division with the Actual Award of Military Retirement Benefits to a Former Spouse Thereby Reducing Appellant's Share of the Military Pension?
3. Did the Trial Court Incorrectly Calculate the Formula to be Applied to the Determination of the Appellant's Share of the Military Retirement Benefits?
4. Did the Trial Court Err as a Matter of Law When it Failed to Consider the Mandatory Factors of Md. Code, Fam. Law § 8-205(b) in Dividing the Appellee's Military Pension?
5. Did the Trial Court Err as a Matter of Law by not Entering a Judgment of Absolute Divorce and Constituted Pension Order that Awarded COLAs to Appellant's Share of Appellee's Military Pension After Specifically Orally Granting Such COLAs to Appellant's Share of Appellee's Military Pension?
4(A) The term "disposable retired pay" means the total monthly retired pay to which a member is entitled less amounts which—
(i) are owed by that member to the United States for previous overpayments of retired pay and for recoupments required by law resulting from entitlement to retired pay;
(ii) are deducted from the retired pay of such member as a result of forfeitures of retired pay ordered by a court-martial or as a result of a waiver of retired pay required by law in order to receive compensation under title 5 or title 38;
(iii) in the case of a member entitled to retired pay under chapter 61 of this title, are equal to the amount of retired pay of the member under that chapter computed using the percentage of the member's disability on the date when the member was retired (or the date on which the member's name was placed on the temporary disability retired list); or
(iv) are deducted because of an election under chapter 73 of this title to provide an annuity to a spouse or former spouse to whom payment of a portion of such member's retired pay is being made pursuant to a court order under this section.