Howell, How a Unanimous Supreme Court Overturned 27 States’ Indemnification Laws for Military Disability

Howell, How a Unanimous Supreme Court Overturned 27 States’ Indemnification Laws for Military Disability
by Keith Berkshire

On May 15, 2017, the United States Supreme Court issued its decision in my firm’s case Howell v. Howell, 137 S.Ct. 1400 (2017).  The surprising unanimous 8-0 decision overturned the Arizona Supreme Court’s decision in In re Marriage of Howell, 238 Ariz. 407 (2015),  and held that the Uniformed Services Former Spouses’ Protection Act (USFSPA) preempts a state court’s order directing a veteran to indemnify a former spouse for a reduction in the former spouse’s portion of the veteran’s military retirement pay (MRP), when that reduction results from the veteran’s post-divorce waiver of retirement pay in order to receive compensation for a service connected disability.

As the Supreme Court of the United States previously held in Mansell v. Mansell, the USFSPA permits the division of military retirement pay, but prohibits the division of disability pay in divorce proceedings.  However, in Mansell, the military spouse had waived his military retirement in lieu of disability benefits prior to the divorce decree.  In Howell, Petitioner’s disability arose after a divorce judgment had already divided his military retirement pay between the parties.

After Mr. Howell elected to take disability pay and waived a portion of his military retirement pay, Ms. Howell asked the family court to enforce the original decree, requiring him to indemnify her for the reduction in her share of MRP that resulted from his post-divorce election of disability compensation. The Arizona Supreme Court upheld the family court’s order, finding that the indemnification did not conflict with the USFSPA because the right to military retirement benefits had already “vested” at the time of the original decree, and the waiver of military retirement occurred post-divorce.

The United States Supreme Court reversed, specifically noting that state courts “cannot vest that which (under governing federal law) they lack the authority to give.”  Although Ms. Howell had a right to half of Mr. Howell’s MRP, the interest in that pay was “at most, contingent, depending for its amount on a subsequent condition;” the possible waiver in lieu of disability benefits.  When a state orders reimbursement when a veteran elects disability benefits, the effect is to “displace the federal rule and stand as an obstacle” to the federal statutory purpose of exempting the pay from division, and thus such a state order is preempted by federal law.

            This ruling will affect veterans and their spouses throughout the nation.  Prior to Howell, only 12 states had found federal preemption and prohibiting the division of disability benefits, while 27 states held that Mansell and the USFSPA did not apply to post-divorce waivers, and that indemnification was permitted.  A few states have mixed authority on the subject.  Howell serves as a clear guide to states that, regardless of when MRP is waived, the resulting disability benefits may not be divided or otherwise “made up” through reimbursement or indemnification.  The states upheld by Howell were Alaska, Arkansas, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Nebraska, North Carolina, South Carolina, Texas, and Vermont.[1]  The states overturned by Howell are Arizona, Arkansas, California, Colorado, Florida, Hawaii, Idaho, Illinois, Indiana, Iowa, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nevada, New Jersey, New Mexico, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, South Dakota, Tennessee, and Virginia.[2]

            While the decision has been criticized by many family law attorneys as inequitable, some quotes from the oral argument must be looked at in regards to the authority of the legislature versus the “equitable” power of the Courts.  The US Solicitor General, who participated on behalf of Ms. Howell told the justices that there are “many economically equivalent ways” that a court can effectively reach the same result without expressly dividing up a veteran’s disability pay. Justice Roberts retorted, fervently, that the SG was essentially saying that there is “no real substance to this law” if a state court can find a way around it.  And that all a court needs to do, Justice Roberts emphasized, is to “find some charade to get to the same result.”  Because if you have a law that bars courts from dividing up disability pay, but then allows them to award money from another source to compensate for the inability to divide disability pay, Justice Roberts concluded, “that’s the sort of thing that gives law a bad name.”  So while many in our field will undoubtedly try and come up with ways around this decision, at least according to Justice Roberts, that is just a “charade.”

[1] Clauson v. Clauson, 831 P.2d 1257 (Alaska 1992); Ashley v. Ashley, 990 S.W.2d 507 (Ark. 1999) (conflict with later case); In re Marriage of Pierce, 982 P.2d 995 (Kan. Ct. App. 1999); Copas v. Copas, 359 S.W.3d 471 (Ky. Ct. App. 2012); Wright v. Wright, 594 So.2d 1139 (La. Ct. App. 1992); Mallard v. Burkart, 95 So. 3d 1264 (Miss. 2012); Morgan v. Morgan, 249 S.W.3d 226 (Mo. Ct. App. 2008); Kramer v. Kramer, 567 N.W.2d 100 (Neb. 1997);  Halstead v. Halstead, 596 S.E.2d 353 (N.C. Ct. App. 2004); Tirado v. Tirado, 530 S.E.2d 128 (S.C. Ct. App. 2000); Gillin v. Gillin, 307 S.W.3d 395 (Tex. Ct. App. 2009); Youngbluth v. Youngbluth, 6 A.3d 677 (Vt. 2010)

[2] In re Marriage of Howell, 361 P.3d 936 (Ariz. 2015); Surratt v. Surratt, 148 S.W.3d 761 (Ark. Ct. App. 2004); In re Marriage of Krempin, 83 Cal. Rptr. 2d 134 (Cal. Ct. App. 1999); In re Marriage of Warkocz, 141 P.3d 926 (Colo. App. 2006); Blann v. Blann, 971 So. 2d 135 (Fla. Dist. Ct. App. 2007); Perez v. Perez, 110 P.3d 409 (Haw. Ct. App. 2005); McHugh v. McHugh, 861 P.2d 113 (Idaho Ct. App. 1993); In re Marriage of Neilsen and Magrini, 792 N.E.2d 844 (Ill. App. Ct. 2003); Bandini v. Bandini, 935 N.E.2d 253 (Ind. Ct. App. 2010); In re Marriage of Gahagen, 690 N.W.2d 695 (Iowa Ct. App. 2004); Black v. Black, 842 A.2d 1280 (Me. 2004); Dexter v. Dexter, 661 A.2d 171 (Md. Ct. Spec. App. 1995); Krapf v. Krapf, 786 N.E.2d 318 (Mass. 2003); McGee v. Carmine, 802 N.W.2d 669 (Mich. Ct. App. 2010); Gatfield v. Gatfield, 682 N.W.2d 632 (Minn. Ct. App. 2004); In re Marriage of Strassner, 895 S.W.2d 614 (Mo. Ct. App. 1995); Shelton v. Shelton, 78 P.3d 507 (Nev. 2003); Whitfield v. Whitfield, 862 A.2d 1187 (N.J. Super. Ct. App. Div. 2004); Scheidel v. Scheidel, 4 P.3d 670 (N.M. Ct. App. 2000); Bagley v. Bagley, 2011-Ohio-1272 (Ohio Ct. App. 2011); Hodge v. Hodge, 197 P.3d 511 (Okla. Civ. App. 2008); In re Marriage of Hayes, 208 P.3d 1046 (Ore. Ct. App. 2009); Resare v. Resare, 908 A.2d 1006 (R.I. 2006); Price v. Price, 480 S.E.2d 92 (S.C. Ct. App. 1996); Hisgen v. Hisgen, 554 N.W.2d 494 (S.D. 1996); Johnson v. Johnson, 37 S.W.3d 892 (Tenn. 2001); Owen v. Owen, 419 S.E.2d 267 (Va. Ct. App. 1992).