Terms of Marital Dissolution Agreement Disputed in Chattanooga, Tennessee Divorce: Heisig v. Heisig

December 7, 2022 K.O. Herston 0 Comments

Facts: In its Final Decree of Divorce, the trial court incorporated the parties’ marital dissolution agreement (“MDA”) that awarded Wife $130,000 from Husband’s 401(k) while awarding “the remaining balance” to Husband. The MDA directed Wife’s counsel to prepare the qualified domestic relations order (“QDRO”).

One year after the trial court approved the MDA, Wife’s attorney prepared a QDRO that included an award of earnings on the $130,000.

Husband’s counsel objected because the proposed QDRO awarded Wife the benefit of any gains or losses on the $130,000 since the parties’ divorce over one year earlier.

The trial court signed Husband’s proposed QDRO almost two years after the divorce but awarded Wife $2839.16 as interest. Wife was not awarded the market gains that accrued from her portion of the retirement account after the divorce.

Wife appealed.

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

After the parties’ divorce, Wife’s attorney was slow to get the QDRO prepared, entered, and sent to the plan administrator. During this time, Husband’s 401(k) significantly increased in value. Wife argued she should receive the market gains in the 401(k) account because of her $130,000 being in the account during that period.

This was a simple case of contract interpretation. Husband argued the MDA was clear and that declining to award gains or losses on the $130,000 award is the most natural reading of the MDA because to award gains on $130,000 would obviously not be to award $130,000.

The Court agreed:

The MDA specifically states that, after Wife receives her $130,000, an unspecified “remaining balance” goes to Husband. What he gets may fluctuate, but what she gets will stay fixed at $130,000 and would not change in response to market fluctuations.

Upon our review, the [Final] Decree and MDA in this case are unambiguous. The [Final] Decree awarded a specific dollar figure to Wife from the 401(k): $130,000. The court intended to award a fixed sum from the account. The specific language used—a grant of a specific sum—unambiguously means subsequent market gains or losses have no relevance to Wife’s award. Awarding a fixed sum to Wife meant that, to Wife’s benefit, she avoided the risk of the market dropping between the date of the [Final] Decree and the date of the distribution. Wife has failed to demonstrate that the QDRO entered by the trial court was an erroneous interpretation of the [Final] Decree.

Before the $130,000 was actually distributed from Husband’s 401(k), it was not owned by Wife and could not be viewed as Wife’s asset. Accordingly, the gains in Husband’s 401(k) between the date of the [Final] Decree, and its ultimate division by the plan administrator, were not gains “generated” by Wife’s assets.

Upon Wife agreeing to a fixed sum, she received the comfort and security of avoiding risk of potential loss. The terms of a property division in a final judgment cannot be amended by a subsequent agreement, such as a QDRO. To the extent a QDRO modifies the division of marital property, it is unenforceable and must be vacated.

The Court affirmed the trial court’s judgment.

K.O.’s Comment: Compare this case with Mpoyi v. Mpoyi, where the wife was awarded 30% of the husband’s 401(k) “as of the date of the divorce” and Wife’s attorney didn’t draft the QDRO until eight years (!!!) after the divorce. Husband argued Wife should receive 30% of the value on the date of divorce instead of 30% of the value eight years later. The Court of Appeals held that despite the “as of the date of the divorce” language in the judgment, “[i]t is implicit in the division of the retirement account that the parties will bear potential earnings or losses in the account until the division can be carried out through a QDRO.” The key difference is the wife in Mpoyi was awarded a fixed percentage instead of a fixed sum. Also, Mpoyi is a memorandum opinion that is not available as citable authority in this case or any other. Why? Your guess is as good as mine.

Heisig v. Heisig (Tennessee Court of Appeals, Eastern Section, November 29, 2022).

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Terms of Marital Dissolution Agreement Disputed in Chattanooga, Tennessee Divorce: Heisig v. Heisig was last modified: December 1st, 2022 by K.O. Herston

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