Supreme Court sends second divorce settlement case back to Arizona

For the second time in a week, the U.S. Supreme Court ordered Arizona’s high court to reconsider a divorce settlement case that involved a military pension, saying service-related disability benefits cannot claimed by an ex-spouse. (Photo by Nathan O’Neal/Cronkite News)

WASHINGTON – The U.S. Supreme Court on Monday ordered the Arizona Supreme Court to reconsider its ruling in a divorce settlement between a retired member of the military and his ex-wife, the second time in a week it has done so.

The action by the justices followed their ruling last Monday in a sister case from Arizona, in which the high court said the state was wrong to order a veteran to compensate his ex-wife for money lost when he converted part of his pension to disability benefits.

The opinion by Justice Stephen Breyer acknowledged “the hardship” that the ruling could impose on ex-spouses who may have counted on a certain amount of pension, but that Congress specifically put disability benefits off limits in divorce settlement.

That case pitted Air Force veteran John Howell against his ex-wife, Sandra. The second case, which the court Monday ordered returned to Arizona for reconsideration in light of its ruling in the Howells’ case, was a nearly identical fight between military retiree Robert and Diane Merrill.

In both cases, the wives got a share of the husband’s military pension as part of their divorce settlement, as allowed under the Uniformed Services Former Spouses’ Protection Act of 1982. But that law specifically protects a veteran’s disability payments from being part of a divorce settlement – which the Supreme Court upheld in a 1989 case known as Mansell.

Both Howell and Merrill, however, gave up a portion of their pension in order to get a tax-free disability payment related to their military service. That had the effect of reducing the income of their ex-wives.

Arizona’s Supreme Court ruled that the husbands were obligated to compensate their former wives for the lost income, but the U.S. Supreme Court disagreed, saying states did not have the power to order what Congress prohibited.

“State courts cannot ‘vest’ that which (under governing federal law) they lack the authority to give,” Breyer wrote in the Howell decision. “We recognize, as we recognized in Mansell, the hardship that congressional pre-emption can sometimes work on divorcing spouses.”

Charles Wirken, an attorney for Sandra Howell, said they were disappointed “to say the least” and taken aback by the decision that he said would put military spouses at a disadvantage.

“The solution that the court proposes … is to say to family courts, ‘At the time of a divorce the court is free to take into account the contingency that some military retirement pay might be waived later,'” Wirken said. “That is of no help to the many, many former spouses that are already divorced, such as Mrs. Howell.”

Wirken said that a veteran taking disability benefits in lieu of part of his pension, “would be better off economically because he’s getting more dollars than he got before and some of those dollars are tax-free,” he said.

“It does nothing for the wife and it puts the husband in the driver’s seat. The husband can unilaterally waive without any consequences,” he said.

But Keith Berkshire, an attorney for Robert Merrill, said that when a service member “takes disability pay, since they have to give up part of their pension, their ex-spouse (will) lose part of the pension money,”

Berkshire said a Supreme Court ruling was needed because states had split on the question.

“The issue on it was whether there was federal supremacy. It was a pretty even split in the states that had dealt with it,” Berkshire said.

“This was basically the next step in a series of cases over the past 25 years on this issue. This was the next logical step that we figured that they’d have to take,” he said.

Wirken said that the court’s decision put his client, whose divorce went through in 1991, at a disadvantage.

“It throws out the solution of indemnification in favor of different solution,” Wirken said. “The time for that solution passed this woman by 27 years ago.”