{ "id": 8898810, "name": "SHARON G. HALSTEAD, Plaintiff v. ROBERT W. HALSTEAD, Defendant", "name_abbreviation": "Halstead v. Halstead", "decision_date": "2004-06-01", "docket_number": "No. COA03-1020", "first_page": "543", "last_page": "550", "citations": [ { "type": "official", "cite": "164 N.C. App. 543" } ], "court": { "name_abbreviation": "N.C. Ct. App.", "id": 14983, "name": "North Carolina Court of Appeals" }, "jurisdiction": { "id": 5, "name_long": "North Carolina", "name": "N.C." }, "cites_to": [ { "cite": "38 U.S.C. \u00a7 5301", "category": "laws:leg_statute", "reporter": "U.S.C.", "opinion_index": -1 }, { "cite": "10 U.S.C. \u00a7 1408", "category": "laws:leg_statute", "reporter": "U.S.C.", "opinion_index": -1 }, { "cite": "831 P.2d 1257", "category": "reporters:state_regional", "reporter": "P.2d", "case_ids": [ 10375400 ], "year": 1992, "pin_cites": [ { "page": "1264" } ], "opinion_index": 0, "case_paths": [ "/p2d/831/1257-01" ] }, { "cite": "568 S.E.2d 283", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 2002, "pin_cites": [ { "page": "286" } ], "opinion_index": 0 }, { "cite": "152 N.C. App. 588", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 9250921 ], "year": 2002, "pin_cites": [ { "page": "594" } ], "opinion_index": 0, "case_paths": [ "/nc-app/152/0588-01" ] }, { "cite": "440 S.E.2d 591", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1994, "pin_cites": [ { "page": "597" }, { "page": "597" } ], "opinion_index": 0 }, { "cite": "113 N.C. App. 725", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8524404 ], "weight": 2, "year": 1994, "pin_cites": [ { "page": "733" }, { "page": "734" } ], "opinion_index": 0, "case_paths": [ "/nc-app/113/0725-01" ] }, { "cite": "490 U.S. 581", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 605033 ], "weight": 21, "year": 1989, "pin_cites": [ { "page": "584" }, { "page": "2026" }, { "page": "682" }, { "page": "588" }, { "page": "2028" }, { "page": "684" }, { "page": "587" }, { "page": "2028" }, { "page": "684" }, { "page": "594-95" }, { "page": "2032" }, { "page": "689" }, { "page": "583-84" }, { "page": "2026" }, { "page": "681-82" }, { "page": "584" }, { "page": "2026" }, { "page": "682" } ], "opinion_index": 0, "case_paths": [ "/us/490/0581-01" ] }, { "cite": "453 U.S. 210", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 11722354 ], "weight": 3, "year": 1981, "opinion_index": 0, "case_paths": [ "/us/453/0210-01" ] }, { "cite": "38 U.S.C. \u00a7 5301", "category": "laws:leg_statute", "reporter": "U.S.C.", "weight": 5, "pin_cites": [ { "page": "et seq." }, { "page": "et seq." }, { "parenthetical": "precluding \"attachment, levy, or seizure by or under any legal or equitable process whatever, either before or after receipt by the beneficiary.\"" }, { "page": "et seq." } ], "opinion_index": 0 }, { "cite": "10 U.S.C. \u00a7 1408", "category": "laws:leg_statute", "reporter": "U.S.C.", "weight": 8, "pin_cites": [ { "page": "(c)(1)" }, { "page": "(a)(4)(B)" } ], "opinion_index": 0 } ], "analysis": { "cardinality": 639, "char_count": 17392, "ocr_confidence": 0.75, "pagerank": { "raw": 8.925012651347006e-08, "percentile": 0.5007187677737196 }, "sha256": "86521bf37169d3085052e612f31cb3cef258e79a10ef99823304384026132ac4", "simhash": "1:e6ea0b3c39cf25fb", "word_count": 2738 }, "last_updated": "2023-07-14T17:15:16.246957+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Judges CALABRIA and STEELMAN concur." ], "parties": [ "SHARON G. HALSTEAD, Plaintiff v. ROBERT W. HALSTEAD, Defendant" ], "opinions": [ { "text": "WYNN, Judge.\nDefendant, Robert W. Halstead, appeals the trial court\u2019s equitable distribution order awarding Plaintiff, Sharon G. Halstead, an unequal distribution of marital assets contending the trial court erroneously awarded Plaintiff a larger percentage of his military retirement benefits in contravention of federal law. We agree and reverse the order below.\nDefendant entered military service on 24 April 1967 and married Plaintiff on 4 October 1969. Twenty-six years later, the parties separated on 26 February 1996. The following year, Defendant retired from the military on 1 May 1997.\nDue to a service-related disability, Defendant received military disability benefits. Federal law, however, precludes the receipt of military disability benefits and military retirement benefits; thus, Defendant elected to waive a portion of his military retirement pay in order to receive military disability pay. Nonetheless, in this case, because Defendant elected to receive disability pay in lieu of retirement benefits, the trial court concluded:\nSince the amount of disability rating is deducted from retirement benefits dollar for dollar, Plaintiff will be effectively deprived of her marital share (44%) of total monthly retirement benefits due to reclassification of retirement benefits to disability benefits. Therefore, the percentage of retirement payable to Plaintiff should be increased and the percentage payable to Defendant should be decreased to account for the partial disability deduction payment made to the Defendant.\nFrom that conclusion, Defendant appeals.\nOn appeal, Defendant argues the trial court erroneously (I) defined military retired pay; (II) awarded Plaintiff an increased percentage of Defendant\u2019s military retirement; and (III) assigned any future disability pay to Plaintiff in direct proportion to the unequal share she received pursuant to the trial court\u2019s order in contravention of 10 U.S.C. \u00a7 1408 and 38 U.S.C. \u00a7 5301 et seq. We agree.\nIn McCarty v. McCarty, 453 U.S. 210, 101 S. Ct. 2728, 69 L. Ed. 2d 589 (1981), the United States Supreme Court held that upon dissolution of a marriage, federal law precluded a state court from dividing military non-disability retired pay pursuant to state community property laws. In direct response to the McCarty decision, the United States Congress enacted the Uniformed Services Former Spouses\u2019 Protection Act, 10 U.S.C. \u00a7 1408, \u201cwhich authorizes state courts to treat \u2018disposable retired or retainer pay\u2019 as community property.\u201d Mansell v. Mansell, 490 U.S. 581, 584, 109 S. Ct. 2023, 2026, 104 L. Ed. 2d 675, 682 (1989). \u201cBecause pre-existing federal law,..., completely pre-empted the application of state community property law to military retirement pay, Congress could overcome the McCarty decision only by enacting an affirmative grant of authority giving the States the power to treat military retirement pay as community property.\u201d Mansell, 490 U.S. at 588, 109 S. Ct. at 2028, 104 L. Ed. 2d at 684. Thus, Congress sought to change the legal landscape created by the McCarty decision by enacting the Uniformed Services Former Spouses\u2019 Protection Act. Mansell, 490 U.S. at 587, 109 S. Ct. at 2028, 104 L. Ed. 2d at 684.\nUnder the Uniformed Services Former Spouses\u2019 Protection Act, state courts are permitted to \u201ctreat \u2018disposable retired or retainer pay\u2019 of a military retiree as marital property. However, because military disability payments are not included within the definition of \u2018disposable retired or retainer pay,\u2019 such disability payments cannot be classified as marital property subject to distribution under state equitable distribution laws.\u201d Bishop v. Bishop, 113 N.C. App. 725, 733, 440 S.E.2d 591, 597 (1994).\nIn this case, the trial court did not classify Defendant\u2019s military disability payments as marital property. Indeed, in Finding of Fact 8, the trial court deducted Defendant\u2019s Veterans Administration disability payment from his gross retirement pay in determining Defendant\u2019s disposable retirement income. However, the trial court then found:\nA portion of Defendant\u2019s gross monthly retirement benefits, currently in the total amount of $3,366.00, of which 88% is considered marital, has been reclassified since [date of separation] to disability benefits. Plaintiff is not entitled by law to any portion of the disability benefits (currently $633.00 per month). Since the amount of disability rating is deducted from retirement benefits dollar for dollar, Plaintiff will be effectively deprived of her marital share (44%) of total monthly retirement benefits due to reclassification of retirement benefits to disability benefits. Therefore, the percentage of retirement payable to Plaintiff should be increased and the percentage payable to Defendant should be decreased to account for the partial disability deduction payment made to the Defendant.\nAlthough Defendant acknowledges that in North Carolina, the payment of disability benefits must be treated as a distributional factor when making an equitable distribution between the parties, he argues that \u201cwhen the payment of disability benefits is the only factor a court considers in providing an unequal distribution of a military retirement and a judge treats the disability benefits by providing a dollar for dollar compensation to the non-military spouse, the disability payments become less a factor and more an acknowledgment that the non-military spouse has an ownership interest in both the military retirement and the disability payments.\u201d We are persuaded by his argument to agree.\nDue to federal preemption, the application of state equitable distribution laws to military retirement and military disability pay is limited to those areas in which Congress has authorized state action. See Mansell, 490 U.S. 581, 109 S. Ct. 2023, 104 L. Ed. 2d 675 (1989). The Uniformed Services Former Spouses\u2019 Protection Act \u201cdoes not grant state courts the power to treat as property divisible upon divorce military retirement pay that has been waived to receive veterans disability benefits.\u201d Mansell, 490 U.S. at 594-95, 109 S. Ct. at 2032, 104 L. Ed. 2d at 689. Although the trial court in this case deducted Defendant\u2019s veterans\u2019 disability benefits from his gross military retirement pay, it then circumvented the mandates of 10 U.S.C. \u00a7 1408 by increasing Plaintiff\u2019s share of Defendant\u2019s military retirement based solely upon Defendant\u2019s election to waive a portion of his military retirement pay based upon the amount of his disability benefits. Indeed, the trial court\u2019s order explicitly states that the reason for increasing Plaintiff\u2019s share arose from Defendant\u2019s election to receive disability benefits in lieu of retirement pay. Such an attempt to circumvent the mandates of 10 U.S.C. \u00a7 1408 can not be sanctioned by this Court.\nIn North Carolina, military disability payments are treated as a distributional factor. Bishop v. Bishop, 113 N.C. App. 725, 734, 440 S.E.2d 591, 597 (1994); see also White v. White, 152 N.C. App. 588, 594, 568 S.E.2d 283, 286 (2002). Similar to North Carolina, the Supreme Court of Alaska has held the federal law did not preclude the consideration of the economic consequences of a decision to waive military retirement pay in order to receive disability pay in determining the equitable distribution of marital assets. In addressing an issue somewhat similar to the one in this case, the Alaska Supreme Court explained:\nWe are aware of the risk that our holding today might lead trial courts to simply shift an amount of property equivalent to the waived retirement pay from the military spouse\u2019s side of the ledger to the other spouse\u2019s side. This is unacceptable. In arriving at an equitable distribution of marital assets, courts should only consider a party\u2019s military disability benefits as they affect the financial circumstances of both parties. Disability benefits should not, either in form or substance, be treated as marital property subject to division upon the dissolution of marriage.\nThis is, however, precisely what happened in the case before us. The trial court\u2019s modification order simply replaced direct federal garnishment of [the husband\u2019s] retirement benefits with a state order to pay. The trial judge even ordered that increases in [the husband\u2019s] retirement pay be passed on to [the wife] without any apparent recognition that James no longer has any retirement pay. The court was clearly trying to regain the status quo as if the Mansell decision did not exist. The effect of the order was to divide retirement benefits that have been waived to receive disability benefits in direct contravention of the holding in Mansell. This simply cannot be done under the Supremacy Clause of the federal constitution.\nClauson v. Clauson, 831 P.2d 1257, 1264 (Alaska 1992). Likewise, in this case, the trial court acknowledged federal law allowed Defendant to waive retirement benefits in order to receive disability benefits and precluded the division of the disability benefits as marital property. Therefore, the trial court accounted for the reduction in retirement income by increasing Plaintiff\u2019s share of the disposable retirement income. We hold that the trial court\u2019s order contravened federal law.\nDefendant also contends the trial court erroneously defined military retirement pay in Conclusion of Law 8, which in pertinent part states:\nIt is intended that the Plaintiff shall receive her full share of the Defendant\u2019s military retired pay as set out herein and without further reduction for civil service income, disability pay or any other reason. Military retired pay is deemed by the Court to include:\na. Retired pay actually paid or to which the Defendant would be entitled based on the length of service of his active duty or reserve service;\nb. All payments paid or payable pursuant to Chapter 38 or Chapter 61, Title 10, UPS Code, before any statutory, regulatory or elective deductions are applied.\nc. All amounts of retired pay waived or forfeited in any manner and for any reason or purpose including any amounts waived to qualify for VA benefits or forfeiture due to the misconduct of the Defendant.\nPursuant to 10 U.S.C. \u00a7 1408(c)(1), a court may treat disposable retired pay \u201ceither as property solely of the member or as property of the member and his spouse in accordance with the law of the jurisdiction of such court.\u201d The provision defines \u201cdisposable retired pay\u201d as \u201cthe total monthly retired pay to which a member is entitled less amounts which\u2014 . . . (B) are deducted from the retired pay of such member as a result of forfeitures of retired pay ordered by a court martial or as a result of a waiver of retired pay required by law in order to receive compensation under title 5 or title 38.\u201d 10 U.S.C. \u00a7 1408(a)(4)(B). Subsection 4(C) addresses the deduction of retirement benefits authorized under Chapter 61 by allowing a percentage of such benefits to be deducted from a member\u2019s total monthly retired pay in order to determine the disposable retired pay.\nAs noted earlier, federal preemption limits state action regarding military retirement pay and military disability pay to those actions authorized by Congress. Thus, the trial court could not substitute its own definition of military retired pay in lieu of the definition of disposable retirement pay as defined by the Congress.\nFinally, Defendant argues the trial court erroneously assigned, dollar-for-dollar, any future diminution in the military retirement based upon reclassification of further amounts of retirement pay as disability pay in contravention of 10 U.S.C. \u00a7 1408 and 38 U.S.C. \u00a7 5301 et seq.\nUnder 38 U.S.C. \u00a7 5301,\npayments of benefits due or to become due under any law administered by the Secretary shall not be assignable except to the extent specifically authorized by law, and such payments made to, or on account of, a beneficiary shall be exempt from taxation, shall be exempt from the claim of creditors, and shall not be liable to attachment, levy, or seizure by or under any legal or equitable process whatever, either before or after receipt by the beneficiary.\nIn its decree, the trial court ordered:\n6. If there is a diminution deduction or cessation of the amounts paid to the Plaintiff pursuant to the next preceding paragraph, and any cost of living increases subsequent to the date that the first payment to the Plaintiff is due and payable pursuant to this order, due to an act or omission of the Defendant, the Defendant shall personally pay to the Plaintiff through the Office of the Clerk of Superior Court of Pasquotank County that amount not paid directly to her by the Defendant Finance and Accounting Service and the Defendant is designated as a constructive trustee in that regard.\n7. If the Defendant receives disability pay or civil service income and this event causes a reduction of the Defendant\u2019s disposable retired pay from the amount set out herein, thus reducing the Plaintiffs share thereof, the Defendant will pay to the Plaintiff through the Office of the Clerk of Superior Court of Pasquotank County each month any amount that is withheld from Plaintiffs share of the Defendant\u2019s military retirement for the above reasons. The monthly payments herein shall be paid to the Plaintiff regardless of her marital status and shall not end at remarriage.\nWe hold that the order requiring Defendant to pay his former wife any amount withheld from her share of Defendant\u2019s military retirement due to future reductions caused by an act or omission, including future waivers of retirement pay, contravenes 38 U.S.C. \u00a7 5301 (precluding \u201cattachment, levy, or seizure by or under any legal or equitable process whatever, either before or after receipt by the beneficiary.\u201d).\nThe policy underlying our holding was well stated by the United States Supreme Court in Mansell: \u201cVeterans who became disabled as a result of military service are eligible for disability benefits . . . calculated according to the seriousness of the disability and the degree to which the veteran\u2019s ability to earn a living has been impaired. . . . In order to prevent double dipping, a military retiree may receive disability benefits only to the extent that he waives a corresponding amount of his military retirement pay. Because disability benefits are exempt from federal, state, and local taxation, military retirees who waive their retirement pay in favor of disability benefits increase their after-tax income. Not surprisingly, waivers of retirement pay are common.\u201d Mansell, 490 U.S. at 583-84, 109 S. Ct. at 2026, 104 L. Ed. 2d at 681-82.\nIn sum, the trial court\u2019s order awarding Plaintiff a greater percentage of Defendant\u2019s disposable retirement pay because Defendant elected to receive disability pay in lieu of a portion of his retirement pay contravenes 10 U.S.C. \u00a7 1408. Furthermore, the order requiring Defendant to pay Plaintiff any amounts withheld from her share of his retirement due to future elections or any acts or omissions on his part causing a reduction in disposable retirement pay violates 38 U.S.C. \u00a7 5301 et seq. Finally, as federal law governs state action regarding military retirement pay or disability benefits, the trial court could not substitute its own definition for disposable retirement pay. Accordingly, the trial court\u2019s order is reversed and this cause is remanded for a new equitable distribution hearing.\nReversed and remanded.\nJudges CALABRIA and STEELMAN concur.\n. The Court in Mansell indicated \u201cthe language of Uniformed Services Former Spouses\u2019 Protection Act covers both community property and equitable distribution States, as does our decision today.\u201d Mansell, 490 U.S. at 584, 109 S. Ct. at 2026, 104 L. Ed. 2d at 682.\n. Although the trial court concluded an unequal distribution in favor of Mrs. Halstead was equitable, Mr. Halstead\u2019s share of the marital estate was $395,136.57 and Mrs. Halstead\u2019s share was $369,596.95.", "type": "majority", "author": "WYNN, Judge." } ], "attorneys": [ "The Twiford, Law Firm, P.C., by Edward A. O\u2019Neal, for plaintiff.", "Frank P. Hiner, IV, for defendant" ], "corrections": "", "head_matter": "SHARON G. HALSTEAD, Plaintiff v. ROBERT W. HALSTEAD, Defendant\nNo. COA03-1020\n(Filed 1 June 2004)\nDivorce\u2014 equitable distribution \u2014 military retirement benefits \u2014 disability\nThe trial court erred in an equitable distribution case by awarding plaintiff wife a larger percentage of defendant husband\u2019s military retirement benefits based on the fact that defendant elected to receive disability pay in lieu of a portion of his retirement pay, because: (1) the Uniformed Services Former Spouses\u2019 Protection Act does not grant state courts the power to treat as property divisible upon divorce military retirement pay that has been waived to receive veterans disability benefits, 10 U.S.C. \u00a7 1408; (2) the trial court could not substitute its own definition of military retired pay in lieu of the definition of disposable retirement pay as defined by Congress since federal law governs state action regarding military retirement pay or disability benefits; and (3) the order requiring defendant to pay his former wife any amount withheld from her share of defendant\u2019s military retirement due to future reductions caused by an act or omission, including future waivers of retirement pay, contravenes 38 U.S.C. \u00a7 5301.\nAppeal by defendant from order entered 2 April 2003 by Judge C. Christopher Bean, District Court, Pasquotank County. Heard in the Court of Appeals 27 April 2004.\nThe Twiford, Law Firm, P.C., by Edward A. O\u2019Neal, for plaintiff.\nFrank P. Hiner, IV, for defendant" }, "file_name": "0543-01", "first_page_order": 575, "last_page_order": 582 }