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Pelts v. Pelts

Supreme Court of Arkansas

March 16, 2017



          Brent D. Watson, Attorney at Law, PLLC, by: Brent D. Watson, for appellant.

          Scholl Law Firm, P.L.L.C., by: Scott A. Scholl, for appellee.

          SHAWN A. WOMACK, Associate Justice

         Appellant Gregory Pelts appeals the decree of the Lonoke County Circuit Court in his divorce from appellee Shelly Pelts. Gregory argues that the circuit court erred by awarding Shelly a marital portion of whichever military retirement benefit he ends up receiving instead of simply awarding the equivalent of a marital share of the reserve retirement in which he already had a vested interest at the time of his divorce. Gregory also asserts error in the circuit court's decision to require him to select a survivor benefit when he retires. Our court of appeals affirmed the decision of the circuit court. 2016 Ark.App. 75, 482 S.W.3d 345. Appellant petitioned this court for review, which was granted. When we grant a petition for review, we treat the appeal as if it had been originally filed in this court. Fowler v. State, 2010 Ark. 431, 371 S.W.3d 677. Our jurisdiction is pursuant to Arkansas Supreme Court Rule 1-2(e) (2016). For the reasons outlined below, we agree that the circuit court erred on both determinations. We reverse and remand for the circuit court to enter a decree consistent with this opinion.

         I. Facts

         Gregory and Shelly Pelts married in 1990 and divorced in 2014. Gregory has spent his career in the military, including substantial time in both reserve and active-duty roles. At the time of the divorce, he had already accumulated enough service years to be vested in the reserve retirement program, which will begin paying out when he turns 60 years old. If he serves four more years on active duty beyond the time of the divorce, he will become eligible for the active-duty retirement program, which will begin paying immediately from that point. Gregory will be 49 years old at that time. In addition to any differences in benefit levels, obtaining active-duty retirement would result in over a decade of additional retirement payments.

         In the divorce decree, the circuit court granted Shelly a marital portion of Gregory's military retirement. The decree applies to his current expectation of reserve retirement, but also grants the same share of any active-duty retirement he will receive if he ultimately completes the requisite years to move up his retirement date. It also orders Gregory to pay for a survivor-benefit option for Shelly from whatever retirement payments he ends up receiving.

         II. Analysis

         We review divorce cases de novo; we review the division of property in a divorce for clear error. See Skokos v. Skokos, 344 Ark. 420, 425, 40 S.W.3d 768, 771-72 (2001). A finding is clearly erroneous when the reviewing court, on the entire evidence, is left with the definite and firm conviction that a mistake has been committed. Id. (citing Huffman v. Fisher, 343 Ark. 737, 38 S.W.3d 327 (2001)).

         A. Vested Interests

         The expectation of retirement payments is an interest unlike traditional categories of property. Nevertheless, we have held that courts may divide such interests in divorce decrees if they are vested. See, e.g., Day v. Day, 281 Ark. 261, 663 S.W.2d 719 (1984). Whether a retirement interest is vested hinges on several factors, including whether the benefit "cannot be diminished by the [employer] and is not dependent upon . . . continued employment." Id. at 264, 663 S.W.2d at 720. We have also asked whether the interest was "fully distributive upon the date of the . . . divorce." See Hackett v. Hackett, 278 Ark. 82, 84, 643 S.W.2d 560, 562 (1982).

         Applying this analysis to military retirement programs, we have concluded that "[i]f a divorcing spouse has achieved an entitlement to military retirement pay, that entitlement is an asset which may be divided between the parties to the divorce." Christopher v. Christopher, 316 Ark. 215, 216, 871 S.W.2d 398, 399 (1994). Further, when an interest in military retirement pay has vested, the spouse is entitled to any enhancements of that interest at the time the benefits are paid, even when those enhancements occur after the time of divorce. Askins v. Askins, 288 Ark. 333');">288 Ark. 333, 337, 704 S.W.2d 632, 634 (1986).

         The question presented in this case is whether any property interest Gregory has in active duty retirement payments was vested and therefore subject to division at the time of the divorce. Answering this question depends on whether the reserve retirement statutory scheme-in which the parties agree Gregory has a vested interest-is distinct from the active duty retirement scheme. If the schemes are distinct, and Gregory was vested only in the reserve program at the time of the divorce, then the circuit court erred as a matter of law in dividing the unvested interest in active-duty retirement pay. If the schemes are ...

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