Appeals court tackles the fate of military benefits

U.S. Supreme Court decision concerned divorced veteran’s retirement pay

By Dan Heilman
BridgeTower Media Newswires

MINNEAPOLIS — A military veteran recently went to the Minnesota Court of Appeals to assert that federal law makes a District Court’s judgment directing him to pay his ex-wife 40 percent of his disability compensation unenforceable. And thanks in part to a recent U.S. Supreme Court opinion, the appellate court agreed with him.

Mark Steven Mattson married respondent Diana Lynn Berberich in 1992 while he was serving in the Navy. Mattson retired from the military in 2004 and was granted a 70 percent disability rating for injuries suffered during active duty service.

The couple separated in June 2014, and the following October, Berberich filed for divorce in Minnesota. The divorce was finalized in February 2015 via a stipulated decree approved by the District Court. At the time of the divorce, Berberich was employed part-time. Mattson was receiving military retired pay along with military disability compensation.

In divorcing, the couple agreed that Berberich should get temporary and permanent spousal maintenance, but agreed to reserve the issue of spousal maintenance based upon Berberich’s receipt of a share of Mattson’s disability compensation. Their stipulated decree said that Berberich was to receive 40 percent of Mattson’s “gross monthly military retirement pay,” as well as 40 percent of “the gross amount of” Mattson’s military disability compensation.

Once the divorce was final, Mattson made only occasional payments to Berberich, resulting in substantial arrearages. In January 2016, Berberich tried to enforce the terms of the decree, seeking the military retired pay and disability compensation owed under the decree, as well as other relief. Mattson opposed most of her requests, and in July of that year, the Anoka County District Court filed an order directing Mattson to immediately pay to Berberich the military retired pay and disability compensation due and owing pursuant to the decree. The District Court also granted other relief, including attorney fees, and Mattson appealed.


Benefits protected?

The main issue was whether the District Court erred by enforcing a decree that divided military disability compensation as marital property.

The appeals court noted that in the past, Congress sought to protect veterans’ benefits to ensure that they reach veterans. But Congress also protected spouses of veterans by ensuring that they are compensated in divorce. The Uniformed Services Former Spouses’ Protection Act attempted to reconcile those two disparate goals, and the court needed to review whether that act pre-empted state law in this case.

Congress passed the act after the Supreme Court held that the federal laws then governing military retired pay pre-empted state courts from treating military retired pay as community property. The act also set aside a portion of a veteran’s retired pay that could be treated as marital property and is divided between divorcing spouses, specifically saying that state courts “may treat disposable retired pay” as marital property.

The act, however, doesn’t specifically allow for the treatment of disability compensation as marital property, and it specifically excludes from marital property retired pay that is waived in favor of disability compensation.

Subsequent case law has interpreted the Uniformed Services Former Spouses’ Protection Act’s impact on disability compensation in dissolutions. In the 1989 U.S. Supreme Court case Mansell v. Mansell, the court held that the act pre-empted state law, concluding that the act “does not grant state courts the power to treat as property divisible upon divorce military retirement pay that has been waived to receive veterans’ disability benefits.”

The recent U.S. Supreme Court decision Howell v. Howell further swayed the appeals court toward Mark Mattson’s side. That case involved a decree that awarded half of a veteran’s future military retired pay to his former spouse. Years later, the veteran waived a portion of his retired pay in favor of disability compensation, thereby reducing the award to his former spouse, who then sought to enforce the decree in order to restore the amount of her share of the veteran’s retired pay.

An Arizona family court concluded that the original decree had granted the former spouse a “vested” interest in the pre-waiver amount of the veteran’s retired pay, and the Arizona Supreme Court affirmed. But the U.S. Supreme Court reversed, saying that “[a] state court may not order a veteran to indemnify a divorced spouse for the loss in the divorced spouse’s portion of the veteran’s retirement pay caused by the veteran’s waiver of retirement pay to receive service-related disability benefits.”

The Minnesota appellate court agreed, sending the case back to the district level to study the unenforceability of Mattson’s obligation to pay military disability compensation to Berberich, among other issues.

“Federal law pre-empts state courts from dividing a veteran’s military disability compensation as marital property, even where, as here, the parties agreed to the division,” wrote Court of Appeals Judge Lucinda Jesson in her opinion. “Howell … makes clear that state courts ‘cannot “vest” that which (under governing federal law) they lack the authority to give.’”

Mattson’s attorney, Francis H. White III of White Law in Woodbury, agreed that the recent Howell decision helped turn the tide in his client’s favor.

“The District Court was trying to balance the sanctity of the contract and the idea of federal pre-emption,” he said. “The Supreme Court decision found no mechanism to assign disability benefits.”

Berberich’s attorney, Jennifer R. Wellner of Wellner & Isaacson in Circle Pines, declined to discuss the case with a motion hearing on the matter scheduled for later this month.

White said he would likely stay the strategic course when the case goes back to the district level. “We will continue to maintain that disability benefits are not definable as property.”