Federal Retirement Benefits Examined in Memphis, Tennessee Postdivorce Dispute: Parsons v. Parsons

January 6, 2020 K.O. Herston 0 Comments

Facts: Husband was employed by the federal government as an air-traffic controller. Seven months before the divorce, Husband retired at the mandatory retirement age of 56. Besides his civil service retirement benefit, he was to receive a monthly supplement from the Federal Employees Retirement System (FERS) of $1370 until he turned 62 and became eligible for Social Security. This FERS Supplement is subject to an earnings test, however. To maintain eligibility for the FERS Supplement, Husband’s income could not exceed $15,120 per year.

The parties’ Marital Dissolution Agreement(MDA) said:

Wife is entitled to 50% of Husband’s FERS Supplement under the Civil Service Retirement System. The United States Office of Personnel Management is directed to pay Wife’s share directly to Wife. Wife shall be treated as the surviving spouse to the extent necessary to ensure Wife’s receipt of her portion of the pension and FERS benefits in the event of Husband’s death. Wife will receive a proportionate share of any cost-of-living increases made by the annuity and/or FERS Supplement.

After discovering that Husband’s income of $52,000 exceeded the FERS cap of $15,120, Wife petitioned to hold Husband in civil contempt for failing to provide her 50% share of his FERS Supplement.

Tennessee divorce

Wife admitted she knew Husband’s FERS Supplement could terminate if he earned more than $15,120.

The trial court ruled Husband was not in contempt because there was no order requiring Husband to compensate Wife should the FERS Supplement terminate.

Wife appealed.

On Appeal: The Court of Appeals affirmed the trial court.

FERS Supplement. After acknowledging that Husband’s FERS Supplement is marital property, the Court turned to the language of the parties’ MDA:

Although the MDA clearly and unambiguously provides that [Wife] is entitled to 50% of the FERS Supplement, the MDA is silent concerning [Husband’s] obligation should the FERS Supplement terminate. Furthermore, there is no language in the MDA that precludes [Husband] seeking employment or earning more than the exempt amount of earnings. Despite her knowledge that the FERS Supplement could terminate if [Husband’s] earnings exceeded the exempt amount of earnings, the parties did not include any contractual terms to ensure [Wife] against such contingency. As stated by the trial court in its ruling (incorporated into its final order):

The parties very easily could have included a contingency clause that would have required Husband to make up the difference of the loss to Wife in the event her portion of the FERS Supplement should be terminated.

This, the parties did not do. Under the circumstances, the terms of the Marital Dissolution Agreement as incorporated in the Final Decree are clear. There is no requirement that Husband make up the difference lost by Wife in terms of the FERS Supplement benefit.

We agree. The language in the MDA is clear and unambiguous, and this Court gives effect to the language as expressed in the contract, and nothing more. Furthermore, we will neither modify a contract, nor impose obligations or rights on the parties, for which they have not bargained.

Attorney’s fees. The parties’ MDA also provides:

Should either party incur any expense or legal fees in a successful effort to enforce or defend this Marital Dissolution Agreement, in whole or in part, the Court SHALL award reasonable attorney fees and suit expenses to the party seeking to enforce this Agreement. No breach, waiver, failure to seek strict compliance, or default of any of the terms of this Agreement shall constitute a waiver of any subsequent breach or default of any of the terms of this agreement.

The trial court denied each party’s request for attorney’s fees stating that neither party was the “prevailing party,” and there were no “winners [or] losers in this case.”

The Court disagreed:

Here, the trial court denied [Wife’s] petition for contempt and breach of contract concerning the FERS Supplement. . . . Accordingly, [Husband] was definitively the prevailing party at trial. Likewise, [Husband] is the prevailing party on appeal. As such, under the plain language of the MDA, he is entitled to his reasonable attorney’s fees and expenses at both the trial level and on appeal. Therefore, we remand the case for determination of [Husband’s] reasonable attorney’s fees and costs and for entry of judgment in his favor on same.

The Court reversed the trial court’s denial of Husband’s request for attorney’s fees and affirmed the dismissal of Wife’s petition for civil contempt.

Parsons v. Parsons (Tennessee Court of Appeals, Western Section, December 12, 2019).

Federal Retirement Benefits Examined in Memphis, Tennessee Postdivorce Dispute: Parsons v. Parsons was last modified: December 30th, 2019 by K.O. Herston

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