COURT OF APPEALS DECISION DATED AND FILED March 11, 2010 David
R. Schanker Clerk of Court of Appeals |
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NOTICE |
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This opinion is subject to further editing. If published, the official version will appear in the bound volume of the Official Reports. A party may file with the Supreme Court a petition to review an adverse decision by the Court of Appeals. See Wis. Stat. § 808.10 and Rule 809.62. |
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Appeal No. |
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STATE OF WISCONSIN |
IN COURT OF APPEALS |
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DISTRICT IV |
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In re the marriage of: Crystal K. Kelly,
Petitioner-Appellant, v. Gary M. Kelly,
Respondent-Respondent. |
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APPEAL
from a judgment of the circuit court for
Before Dykman, P.J., Vergeront and Higginbotham, JJ.
¶1 VERGERONT, J. Crystal
Kelly appeals the judgment of divorce from Gary Kelly, challenging the property
division, maintenance, and child support. We agree with
¶2 Our reversal of the property division necessitates a reversal
and remand of the orders on maintenance and child support. However, we address
BACKGROUND
¶3 At the time of the divorce trial in November and December
2008, Gary and Crystal had been married approximately 25 years and had three
children, two adults and a sixteen-year-old son who lived with Crystal.
¶4 The parties resolved the issues of custody and placement of
their minor child, and the issues of property division, maintenance and child
support were tried. The circuit court
found that
¶5 The parties’ primary assets were their home and
¶6 Excluding
¶7 The court awarded
¶8 With respect to child support, the circuit court ordered
DISCUSSION
¶9 On appeal
¶10 A circuit court’s decisions on property division, maintenance,
and child support are committed to the court’s discretion. Hokin v. Hokin, 231
¶11 A circuit court erroneously exercises its discretion if it
makes an error of law. King
v. King, 224
I. Property Division
A.
¶12 The parties’ dispute over the court’s treatment of
¶13 We agree with Crystal that Steinke is controlling and requires that the pension be included in the property division and also requires that, if the court decides to divide the pension by dividing the monthly payments, the 50/50 presumption applies. We conclude that Herdt is consistent with Steinke, and to the extent Dutchin is inconsistent with Steinke, we must follow Steinke.
¶14 In Steinke one spouse, like
¶15 The supreme court explained this conclusion with reference to
the presumption of equal division of property required by Wis. Stat. § 767. 255, now renumbered § 767.61(3). This statute establishes a rebuttable
presumption that the marital estate is to be divided equally, although the
court may alter the distribution after considering the enumerated statutory
factors. This presumption of equality in
the division of the marital estate is based upon the status of marriage as a
partnership. Steinke, 126
¶16 The Steinke court recognized the difficulty in valuing a pension and listed three methods of valuation that courts may use: (1) calculating the pensioned spouse’s contributions to the fund plus interest and awarding the other spouse an appropriate share; (2) calculating the present value of the retirement payments when they vest under the plan; and (3) “determine and fix a presumptively equitable percentage of the pension payments ‘payable to [the nonpensioned spouse] as, if, and when paid to [the pensioned spouse].’” Steinke at 384-85.
¶17 When a pension is in pay status, the Steinke court emphasized,
“the fact that the asset is paid out very similarly to how employment income is
paid out—on a monthly or semi-monthly basis—[does
not] diminish its property character.”
¶18 Thus, Steinke establishes that, while the
division of a pension may be accomplished by dividing the monthly payments when
received, this method of division does not alter the fact that the pension is
property subject to the rebuttable presumption of equal division under Wis. Stat. § 767.61(3). Of course, this presumption may be rebutted
after a consideration of the statutory factors.
See Steinke, 126
¶19 In the more recent case Cook v. Cook, 208
¶20 Herdt
is consistent with Steinke and does not deviate from the principle that, even if a
pension is divided by dividing monthly payments, it remains property that is
subject to the rebuttable presumption of equal division. In Herdt the retired spouse was
receiving monthly pension payments, and that monthly amount plus his other
income was significantly less than the income of the other spouse, who was
still working. Herdt, 152
¶21 The facts in Dutchin are somewhat similar to
those in Herdt, but language in Dutchin clouds the distinction
between treating a pension as property to be divided pursuant to Wis. Stat. § 767.61(3) and the
manner of division. In Dutchin,
the spouse receiving monthly pension payments was unable to work and had a somewhat
higher income than the working spouse. Dutchin,
273
¶22 In our discussion in Dutchin, we accepted the distinction
made by the parties and the circuit court between treating the pension as an “asset”
subject to division and treating it as an “income stream.”
¶23 The distinction we apparently accepted in Dutchin between treating
a pension as an asset subject to division and treating the monthly pension payments
as an income stream is inconsistent with Steinke and Cook insofar as it
suggests that the circuit court has the discretion not to include the pension
in the property division. As already
noted, Steinke makes clear that the circuit court does not have the
discretion to do that, although the court may choose to divide the pension by
dividing the monthly payments in a manner that takes into account the
rebuttable presumption of an equal property division in Wis. Stat. § 767. 61(3). Steinke, 126
¶24 The difference between treating monthly pension payments as an
income stream that is considered when deciding on maintenance and treating them
as property of the marital estate is more than semantics. As the Steinke court noted, in contrast to
the statutory presumption of equal property division, there is no statutory
presumption of an equal division of marital income upon divorce.
This distinction reflects a legislative recognition that property held by the parties at the termination of the marriage is presumed to have been acquired by their joint efforts. After the marriage is terminated, the parties are no longer considered partners, and the contribution toward the maintenance of a former spouse is to be treated under a basic concept of need by the dependent party and the corresponding ability to pay by the supporting party, with consideration of other supplementary factors.
Bahr v. Bahr, 107
¶25 Because we conclude that Dutchin is inconsistent with Steinke and Cook insofar as it suggests that the circuit court has the discretion not to include the pension in the property division, we must follow Steinke and Cook. Cook, 208 Wis. 2d at 189 (only the supreme court has the power to overrule, modify, or withdraw language from a previous supreme court case); Cuene v. Hilliard, 2008 WI App 85, ¶15, 312 Wis. 2d 506, 754 N.W.2d 509 (if an opinion of this court is inconsistent with a supreme court opinion, we must follow the supreme court opinion).
¶26 Turning to the case before us, we conclude the circuit court applied
an incorrect legal standard with respect to
¶27 This is not a Herdt situation in which the spouse
receiving the pension payments has the lower income and is entitled to
maintenance, triggering the “property in lieu of maintenance” factor, see Wis.
Stat. § 767.61(3)(i), to justify an unequal property division. Nor do we see an explanation in the record for
dividing the monthly pension payments unequally because of an unequal division
of other assets. Indeed, the other
assets were divided unequally in
¶28 Because we conclude the circuit court erred in not dividing
B. Division of Other Assets
¶29 Although we are remanding the property division because of the
pension, we address aspects of
¶30
¶31 The circuit court found that Crystal and Gary were equal
partners in the marriage and recognized the presumption of an equal division of
property. It also recognized that the
$30,000 it ordered did not balance the unequal division of assets. However, it explained that it did not believe
¶32 The circuit court’s rationale accepts
¶33 Insofar as the circuit court’s rationale for an unequal
division of the other assets was based on the maintenance it ordered, we
question why the court’s finding that Crystal was entitled to maintenance under
Wis. Stat.§ 767.56 results
in her receiving less than half these assets.
However, because, as we explain below, the issue of maintenance will be
significantly affected by our decision on dividing
II. Maintenance
¶34 Our ruling that the circuit court erred in not dividing Gary’s
monthly pension payments as part of the property division requires that we
reverse and remand the court’s order of maintenance. As noted above,
III. Child Support
¶35 Similarly, the order of child support must be reversed and
remanded to determine
¶36
Determine child support before maintenance. If a payer will have obligations for both child support and maintenance to the same payee, the court shall determine the payer’s child support obligation under this chapter before determining the payer’s maintenance obligation under s. 767.56, Stats.
¶37 The circuit court deducted the $1000 maintenance from
¶38 However,
¶39 Neither Gary nor Crystal requested that the court deviate from
the 17% standard. Indeed,
¶40 On remand, consistent with Wis.
Admin. Code § DCF 150.03(6),
CONCLUSION
¶41 We reverse the court’s decision on the property division,
maintenance, and child support and remand for further proceedings. On remand the court shall consider
¶42 Along with its reconsideration of the property division, the court shall reconsider the issue of maintenance and the amount of child support. The child support determination shall be consistent with paragraph 40 above.
By the Court.—Judgment reversed and cause remanded with instructions.
Recommended for publication in the official reports.
[1] All references to the Wisconsin Administrative Code are to the November 2009 version unless otherwise noted.
[2] All references to the Wisconsin Statutes are to the 2007-08 version unless otherwise noted.
[3] Wisconsin Stat. § 767.61(3), provides:
Presumption of equal division. The court shall presume that all property not described in sub. (2)(a) is to be divided equally between the parties, but may alter this distribution without regard to marital misconduct after considering all of the following:
(a) The length of the marriage.
(b) The property brought to the marriage by each party.
(c) Whether one of the parties has substantial assets not subject to division by the court.
(d) The contribution of each party to the marriage, giving appropriate economic value to each party’s contribution in homemaking and child care services.
(e) The age and physical and emotional health of the parties.
(f) The contribution by one party to the education, training or increased earning power of the other.
(g) The earning capacity of each party, including educational background, training, employment skills, work experience, length of absence from the job market, custodial responsibilities for children and the time and expense necessary to acquire sufficient education or training to enable the party to become self-supporting at a standard of living reasonably comparable to that enjoyed during the marriage.
(h) The desirability of awarding the family home or the right to live therein for a reasonable period to the party having physical placement for the greater period of time.
(i) The amount and duration of an order under s. 767.56 granting maintenance payments to either party, any order for periodic family support payments under s. 767.531 and whether the property division is in lieu of such payments.
(j) Other economic circumstances of each party, including pension benefits, vested or unvested, and future interests.
(k) The tax consequences to each party.
(l) Any written agreement made by the parties before or during the marriage concerning any arrangement for property distribution; such agreements shall be binding upon the court except that no such agreement shall be binding where the terms of the agreement are inequitable as to either party. The court shall presume any such agreement to be equitable as to both parties.
(m) Such other factors as the court may in each individual case determine to be relevant.
[4] A
qualified domestic relations order (QDRO) is a judgment, decree, or order made
pursuant to a state domestic relations law that authorizes payment of retirement
benefits to a former spouse in order to satisfy child support, maintenance, or
marital property obligations. Taylor
v. Taylor, 2002 WI App 253, ¶2 n.1, 258
[5] We recognize that the circuit court in Dutchin v. Dutchin, 2004 WI App 94, 273 Wis. 2d 495, 681 N.W.2d 295, was apparently attempting to achieve an equal division of property and income. It may be that, despite the labels used, the order that the retired spouse pay $425 to the other spouse until she was 65, when considered with the division of other assets, did achieve a roughly equal division of the property, including the pension, as occurred in Herdt v. Herdt, 152 Wis. 2d 17, 447 N.W.2d 66 (Ct. App. 1989). However, our opinion did not use this analysis in affirming the circuit court’s decision.
[6] Subsequently
the supreme court in LaRocque v. LaRocque, 139
[7] As
we understand the court’s reason for electing to award
We recognize that the court ordered that the
survivorship benefit of