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Fern v. United States

Decided: July 16, 1990.

ALBERT JOHN FERN, JR., JOHN T. FLANNAGAN, ROBERT JEFFREY, DONNALD KOPPENHAVER, JAMES H. POWELL, ROBERT LOUIS STIRM, MAX E. THOMPSON, JACK TRAHAN AND DAVID E. WALENTOWSKI, PLAINTIFFS-APPELLANTS,
v.
THE UNITED STATES, DEFENDANT-APPELLEE



Appealed from U.S. Claims Court; Judge Lydon.

Nies, Chief Judge*fn* Newman and Archer, Circuit Judges. Newman, Circuit Judge, concurs in the result.

Nies

NIES, Chief Judge.

This appeal is from the final judgment of the United States Claims Court, Fern v. United States, 15 Cl. Ct. 580 (1988) (Lydon, J.), dismissing a complaint which sought just compensation under the Fifth Amendment to the United States Constitution arising from or as a result of the enactment of the Uniform Services Former Spouses Protection Act, Pub. L. No. 97-252, 96 Stat. 718 (1985) (codified at 10 U.S.C. ยง 1408(c)(1) (1988)) (hereinafter "the Act" or "FSPA"). Appellants are retired members of the armed forces each of whom receive retired pay by reason of at least 20 years of satisfactory active duty service in the military. Each appellant seeks compensation from the United States for the portion of retired pay which his former spouse has been awarded pursuant to a divorce decree. Appellants attribute their deprivation of part of their retired pay to the change made by FSPA in federal law. On cross-motions for summary judgment, the Claims Court held that FSPA did not effect a "taking" by the United States of appellants' property for public use within the meaning of the Fifth Amendment. We affirm.

I

Background

This appeal requires consideration of the interplay between the divorce laws of certain community property states and the federal statutes relating to military retired pay. The parties do not distinguish between specific state community property laws and, therefore, we will simply refer to California law.*fn1

California treats property acquired during marriage as community property. When a couple divorces in that state, community and quasi-community property is divided equally between the spouses while each spouse retains full ownership of any separate property. In California, pension benefits are deemed property and, to the extent accrued during marriage, such property belongs to both spouses, as community or quasi-community property. California has applied these principles to military retired pay benefits the same as to any pension benefits and, upon divorce, has divided the benefits between the spouses, pro tanto. See McCarty v. McCarty, 453 U.S. 210, 216-18, 69 L. Ed. 2d 589, 101 S. Ct. 2728 (1981); In re Marriage of Fithian, 10 Cal. 3d 592, 111 Cal. Rptr. 369, 517 P.2d 449 (in bank), cert. denied, 419 U.S. 825, 42 L. Ed. 2d 48, 95 S. Ct. 41 (1974); cf. Cearley v. Cearley, 544 S.W.2d 661 (Tex. 1976). In Fithian, the Supreme Court of California rejected the argument that, by federal statute, military retired pay had to be treated as the separate property of the retiree notwithstanding that community property laws of a particular state generally required division of pension benefits. At the same time, Alaska, another state which also treats pension benefits as marital property, took the view that federal law regarding military retired pay did preempt state law, and prevented an award of any part of military retired pay to the ex-spouse of the service member. See Cose v. Cose, 592 P.2d 1230, 1232 (Alaska 1979). In McCarty, the Supreme Court resolved this conflict, holding that the federal statutes then governing military retired pay preempted state law and prevented state courts from treating military retired pay as marital property.

In direct response to the McCarty decision, Congress enacted FSPA which, in section 1408(c)(1), authorizes state courts to treat disposable retired pay as property solely of the retiree or as property of the retiree and his spouse. To this extent, the Act removed federal preemption retroactively to June 25, 1981, the day before the McCarty decision. See Mansell v. Mansell, U.S. , 109 S. Ct. 2033 (1989).

All of the appellants here had received divorce decrees prior to the passage of FSPA. However, appellants classify themselves into three groups: (A) "final-decree" plaintiffs who had received divorce decrees that specifically refused to divide military retired pay with a spouse in view of McCarty; (B) "omitted-asset" plaintiffs where the decrees did not refer to retired pay; and (C) "pre-McCarty" plaintiffs whose decrees had divided retired pay, pursuant to a state's community property law, but who had stopped paying after the McCarty decision. Former spouses of (A) and (B) class plaintiffs successfully petitioned their respective divorce courts to reopen and modify outstanding final decrees to give them a right to proportionate shares of their husband's benefits. The former spouses of class (C) plaintiffs successfully brought enforcement proceedings on the original decrees after the enactment of FSPA. While there are factual differences between the groups, the differences are not legally significant to the arguments advanced for reversal of the Claims Court and, except where the text indicates otherwise, the same analysis is applied to all claimants. For convenience, we refer to all claimants as "Fern".

Fern's position is that the division of his retired pay benefits, albeit directly resulting from a state court decree, was made possible only by passage of FSPA. In Fern's view, the Act constitutes a taking of his property by the United States for which compensation must be paid under the Fifth Amendment. Fern identifies the "taken property" variously as his interest in the "final judgment" which was reopened because of the Act; "property entitlements of a final judgment"; "fully earned retired pay"; "vested property rights [in the] entirety of his retired pay"; and "impair[ment]" or "alteration of plaintiff's contractual rights" or "entitlements." The statute is constitutional, per Fern, but the government must pay the cost of the past and future benefits conferred on the former spouses by FSPA, not the retirees. In its simplest terms, Fern asks us to require the government to pay up to a pension and a half.

The government argues that Fern has not established a "taking" by the United States; that the challenged statute merely abrogates federal preemption of state law and allows state courts to apportion military retired pay benefits between spouses; that Fern has no property interest in federal preemption of state law; and that, if the statute were to be construed as directly reducing the amount of Fern's retired pay, Fern has, in any event, no property interest in the level of that pay. Accordingly, the government urges us to uphold the judgment of the Claims Court.

II

Issu ...


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