Dexter v. Dexter

In Dexter v. Dexter, 105 Md. App. 678, 661 A.2d 171, cert. denied, 341 Md. 27, 668 A.2d 36 (1995), the husband and wife entered into a settlement agreement, which was incorporated into their divorce decree. 105 Md. App. at 679. The parties agreed that the wife would receive 47.5% of the husband's military pension on an if, as, and when basis. Id. Shortly after the husband retired, "he voluntarily waived his rights to the Army retirement benefits, thus terminating and cutting off all of his Army retirement benefits and appellee's as well," to qualify for greater veterans' disability benefits. Id. at 680; see also 10 U.S.C. 1408(a)(4)(B). In an action brought by the wife, the trial court found that the husband had breached the parties' separation agreement. Dexter, 105 Md. App. at 682-84. The trial court "rendered judgment for past sums that would have been received had the husband not unilaterally violated the terms of the agreement by waiving and rejecting the retirement benefits after they had accrued and vested and were being received by both parties." Id. at 684. The Court affirmed the trial court's ruling, holding that under Maryland contract law where, as in the case sub judice, the parties enter into an agreement that one spouse will receive a percentage of pension benefits, on a periodic basis, when they become payable, and when, as here, they are already payable and being paid, the pensioned party may not hinder the ability of the party's spouse to receive the payments she has bargained for, by voluntarily rejecting, waiving, or terminating the pension benefits. We hold that the voluntary waiver of the husband's Army retirement pension was under Maryland law a breach of contract, for which the measure of past damages is the amount the receiving spouse would have received had the husband not committed the breach. . . Id. at 686. In Dexter v. Dexter, the parties entered into an agreement upon their divorce regarding military retirement benefits that was incorporated into their divorce decree. The agreement entitled the Wife to "'forty-seven and a half percent (47.5%) of the Husband's military pension . . . on a monthly basis "as, if, and when" it is paid by the Department of the Army to the Husband.'" Id. at 679. Shortly after Husband was placed on retirement, he voluntarily waived his rights to Army retirement benefits in order to qualify for greater benefits through the Veterans Administration ("VA"). Id. at 680. The statute providing for VA benefits prohibits division of the benefits to a former spouse; thus, in waiving the Army benefits, the Husband effectively deprived the Wife of any benefits. Id. The trial court ruled that, under the parties' agreement, the Husband could not pursue the VA benefits and at the same time deprive the Wife of the benefits she bargained for under the agreement. Id. at 683. The Court affirmed the trial court and held that each party had an obligation to take reasonable steps to bring the agreement to fruition. Id. at 684. In sum in Dexter v. Dexter, the parties entered into an agreement that was incorporated in the Judgment of Divorce. In relevant part, the Judgment of Divorce ordered "that pursuant to the agreement of the parties, forty-seven and a half percent (47.5%) of the husband military retirement is awarded to the wife on a monthly basis 'as, if, and when' it is paid by the Department of the Army to the husband." Id. at 679. After the Judgment of Divorce, the husband voluntarily waived retirement benefits in order to receive VA disability benefits. Consequently, the Department of Defense ceased payment of retirement benefits to the wife because the husband had waived his right to such benefits. The wife sought relief in the trial court, which ultimately granted her a sum of money that would have been received but for the husband's waiver, under principles of contract law. Elaborating, the judge concluded, "I do not feel that that steps on the toes of the Federal Government and their preemptive rights. I feel that this is a permissible if not indeed a required act on the part of the State to interpret and enforce agreements that are submitted to the court by consent and approved by the court." Id. at 684. On appeal, the Court analyzed the preemption issue and affirmed the trial court's decision holding that: "In his written order, the trial judge did not order appellant to pay the wife a percentage of his disability pay received from the VA. The trial court found, in contract, and applying contract principles that, under the agreement, each party had an obligation to take reasonable steps to bring the agreement to 'fruition.' We agree. The trial court then rendered judgment for past sums that would have been received had appellant not unilaterally violated the terms of the agreement by waiving and rejecting the retirement benefits after they had accrued and vested and were being received by both parties." Id. at 684. Thus, the decision hinged on the fact that the "inability of the wife to receive the benefits she bargained for is caused not by any federal statute or case law, but by the husband's rejection, by waiver, of the retirement benefits that he had agreed were to be partially hers." Id.