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VETERANS' DISABILITY BENEFITS - FEDERAL PREEMPTION
© 1998 National Legal Research Group, Inc.
FLORIDA: Abernethy v. Fishkin, 699 So. 2d 235 (Fla. 1997).
A state court may enforce a final judgment which guarantees a steady monthly payment to a former spouse through an indemnification provision requiring alternative payments to compensate for a reduction in nondisability benefits divided as part of a property settlement agreement.
This case acknowledges that federal law precludes state courts from enforcing a division of veterans' disability benefits. It holds, however, that state courts may enforce a final judgment which guarantees steady monthly payments to a former spouse through an indemnification provision calling for alternative payments to compensate for a reduction in nondisability benefits.
After 15 years of marriage, the husband and wife entered into a marital settlement agreement in 1990. The husband was still on active duty in the United States Air Force at the time. The agreement provided that the wife would receive 25% of the husband's net disposable retired or retainer pay, effective upon retirement. The dissolution judgment, which incorporated the agreement, prohibited the husband from pursuing any course of action which would defeat the wife's right to receive her allotted portion of the husband's full net disposable retired or retainer pay. The judgment required the husband to indemnify the wife for any breach of the provision. Several months later, the husband elected to voluntarily separate from the Air Force and receive benefits under the Voluntary Separation Incentive (VSI) program. The wife succeeded in convincing the trial court and an appeals court that she should receive 25% of the husband's VSI benefits.
The husband subsequently waived portions of his VSI benefits in order to receive veterans' disability benefits. The wife returned to court seeking to enforce the property settlement agreement. The trial court ordered the husband to pay her 25% of the amount he received each month whether such amount was in the form of VSI benefits or veterans' disability benefits.
The husband appealed, asserting that Mansell v. Mansell, 490 U.S. 581 (1989), precluded the trial court from treating as divisible marital property the military retirement pay which he had waived in order to receive veterans' disability benefits. The intermediate appeals court decided that while Mansellprecludes state courts from dividing veterans' disability benefits, it does not prohibit a veteran from assigning in a predivorce settlement agreement a portion of those benefits to his or her spouse in exchange for other property. Also, Mansell does not preclude a court from approving such an agreement, the appeals court held. The Florida Supreme Court held, however, that federal law preempts equitable division of veterans' disability benefits, whether by court order or by settlement agreement. Mansell involved a property settlement agreement that divided disability benefits, and the United States Supreme Court found the Uniformed Services Former Spouses' Protection Act controlling despite the agreement, the court explained.
The Florida Supreme Court went on to hold, however, that the wife was nevertheless entitled to receive payments equal to the amount she was receiving before the husband elected to receive veterans' disability benefits. There were two features of the agreement that rendered it enforceable, the court said. First, the final judgment which incorporated the parties' settlement agreement did not expressly provide for a division of disability benefits as did the settlement agreement at issue in Mansell. At the time of the final judgment, the husband was still on active duty, and he had not received a disability rating so as to be eligible for veterans' disability benefits. Thus, the calculation of the amount of retirement pay awarded to the wife did not impermissibly include the husband's veterans' disability benefits, the court said.
Second, the final judgment contained an indemnification provision which merely enforced the parties' property settlement agreement rather than dividing disability benefits. The indemnification provision clearly indicated the parties' intent to maintain level monthly payments pursuant to their property settlement agreement, the court pointed out. Specifically, the agreement precluded the husband from merging his retirement pay with another pension or from pursuing any course of action which would defeat the wife's right to receive the specified portion of his full net disposable retired or retainer pay. The provision also protected the wife's right to receive the property or the value of the property she had been allocated by requiring the husband to indemnify her if he breached this provision. "Most significantly though, the indemnification provision achieved both of these purposes without requiring that the indemnification funds come from disability benefits." Abernethy v. Fishkin, 699 So. 2d at 240 (citations omitted). The husband could pay the wife with any available assets, and consequently the final judgment did not violate Mansell, the court concluded.
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