In the recently published opinion of the Appellate Division in Fattore v. Fattore,A-3727-16 (App. Div. 2019), the Appellate Division the husband appealed a trial court order requiring him to indemnify his former wife for the loss of her share of equitable distribution of his military pension, which was waived as a result of his receipt of disability benefits. The wife filed a cross appeal arguing that the trial court should have granted her request for alimony to replace the value of her lost pension benefit.
In this case, the Fattores divorced in 1997 after a thirty-five year marriage. In the marital settlement agreement, both parties waived any claim to alimony from the other. As part of equitable distribution, the husband’s Army National Guard was divided equally between the parties. A Qualified Domestic Relations Order (QDRO) to divide the pension was completed in 1999. In 2002, the husband became disabled. At that time, the husband collected his pension and disability benefits without any impact on the pension payout. In 2010 the wife inquired why she had not received any pension payments. She was advised that a portion of her former husband’s pay was based on disability, which cannot be divided under the Uniformed Services Former Spouses Protection Act. The disability amount is used as an authorized deduction. In this case, once the disability was deducted along with the survivor benefit from the husband’s pay, there was nothing left for the distribution to the wife.
The wife wife filed a post-judgment motion in the family court seeking to compel her former husband to compensate her for the loss of her equitable distribution share of the military pension. The trial court decided to compensate the wife for her lost pension benefit based on the decision in Whitfield v. Whitfield, 373 N.J. Super. 573 (App. Div. 2004). At the time of the trial court’s decision, the U.S. Supreme Court had not yet decided the case of Howell v. Howell, 137 S.Ct. 1400 (2017). The trial judge appointed a pension appraiser to determine the value of the wife’s coverture interest in the husband’s pension and, in the interim, ordered the husband to pay the wife $1,800 per month, not as alimony, but as an equitable distribution payment. The trial court denied the wife’s request for alimony because alimony is not a compensation for equitable distribution and the parties waived alimony.
The husband appealed arguing that the indemnification was preempted by Howell. The wife argued that if Howell applied then the denial of alimony must be reversed given the substantial change in circumstances by the judgment of divorce and the current circumstances.
The Appellate Division held that, pursuant to the Supreme Court decision in Howell, a trial court cannot indemnify a payee spouse when the payor spouse waives a military pension and receives veteran disability retirement benefits. It is very unusual in a matrimonial matter for a waiver of alimony to be disturbed. The Appellate Division, however, stated that, a court is free to treat the pension waiver as a change in circumstances and may award the payee alimony or modify it. The Appellate Division agreed with the wife that the husband’s wavier was substantial and permanent change in circumstances warranting consideration of alimony despite the parties’ waiver of alimony in their 1997 settlement agreement. The Appellate Division stated that, “an alimony waiver cannot withstand such a substantial change in circumstances as occurred here, and it is neither fair not equitable to uphold such a waiver.”