In the Matter of the Marriage of James R. Herald vn Dixie L. Steadman

Husband appeals from a judgment of dissolution

of marriage, arguing that the court erred in dividing

the parties' retirement benefits, and, specifically, in its

treatment of wife's federal Civil Service Retirement System

(CSRS) benefits. In particular, husband asserts that the

trial court's apportionment methodology (described in

detail below) violated 42 USC section 407(a),1 as construed

and applied in Swan and Swan, 301 Or 167, 720 P2d 747

(1986). For the reasons amplified below, we conclude that

the property division does not violate 42 USC section 407(a),

is not precluded by Swan, and comports with the statutory

mandate that division of marital property be "just and proper

in all the circumstances.” ORS 107.105(1)(f). Accordingly, we

affirm.

The material facts are few and undisputed. The

parties were married from 1989 to 2010. At the time of

dissolution, wife was 53 years old and husband was 51 years

old. Both were employed during the marriage and at the

time of dissolution. As noted above, during the marriage,

wife participated in the CSRS—and, as a result of that

participation, wife did not contribute to, or accumulate,

social security benefits. Husband accumulated social

security benefits during the marriage. The sole dispute in

this case centers on the division of wife's CSRS benefits—

and, specifically, the proper role, if any, of 42 USC section

407(a) in that disposition.2

Before describing the trial court's resolution of that

matter, see 256 Or App at 360, and assessing the correctness

of its method and result, it is useful—indeed, essential—to

summarize the predicate legal principles.

In rendering a judgment of marital dissolution, a

trial court may provide "[f]or the division or other disposition

between the parties of the real or personal property, or both,

of either or both of the parties as may be just and proper in

all the circumstances.” ORS 107.105(1)(f). In providing for

1 The text of that statute is set out below. See 256 Or App at 357.

2 Unlike social security benefits, which, as explained below, are not subject to

inclusion in the division of marital property, CSRS benefits are not excluded from

marital property.

356 Herald and Steadman

a division of property, the trial court first determines what

portion of the parties' property is "marital property” subject

to distribution upon dissolution of the parties' marriage.

See Kunze and Kunze, 337 Or 122, 133-34, 92 P3d 100

(2004). The court then determines the value of the marital

property and, finally, the court determines in what manner

the marital property ought to be divided to achieve an

equitable division. Id. In fashioning an equitable division,

a "retirement plan or pension or an interest therein shall

be considered as property.” ORS 107.105(1)(f)(A). "The trial

court's ultimate determination as to what property division

is 'just and proper in all the circumstances' is a matter of

discretion.” Kunze, 337 Or at 136. We will not disturb the

trial court's determination unless we conclude that the trial

court "misapplied the statutory and equitable considerations

that ORS 107.105(1)(f) requires.” Id.

As a matter of federal policy, social security benefits

are not subject to equitable distribution. Specifically, 42 USC

section 407(a), the Social Security Act "antiassignment”

provision, states:

"The right of any person to any future payment under

this subchapter shall not be transferable or assignable, at

law or in equity, and none of the moneys paid or payable

or rights existing under this subchapter shall be subject

to execution, levy, attachment, garnishment, or other legal

process, or to the operation of any bankruptcy or insolvency

law.”3

In Swan, the Oregon Supreme Court construed and

applied that provision. There, the trial court's determination

of the value of the parties' marital property included "$50,000

attributable to the husband's social security benefits and

$29,000 attributable to the wife's [social security benefits].”

301 Or at 170. The court, with those amounts included,

awarded each party approximately one half of all of the

marital property, and, in doing so, awarded each party his

or her respective social security benefits. Id. at 169.

On cross-appeal, the husband asserted that 42 USC

section 407(a) prohibited the trial court from considering the

value of the parties' social security benefits in dividing the

3 The CSRS does not contain such an antiassignment provision.

Cite as 256 Or App 354 (2013) 357

marital property.4 Id. We rejected that contention, reasoning

that, while section 407(a)

"precludes a court from awarding one spouse's Social

Security benefits to the other[,] * * * it does not preclude

a court in a dissolution proceeding from considering

Social Security benefits when dividing the parties' real

or personal property 'as may be just and proper in all the

circumstances.' ORS 107.105(1)(f) directs that a 'retirement

plan or pension or an interest therein shall be considered

as property.' Although Social Security benefits can only be

awarded to the person to whom they accrue, the value of

those benefits can be considered in the equitable distribution

by the court.”

Swan and Swan, 74 Or App 616, 618-20, 704 P2d 136,

clarified on recons, 75 Or App 764, 709 P2d 245 (1985)

(footnote and citation omitted; emphasis added).

On review, the Supreme Court reversed and

remanded, holding that "it was error to consider the value

of any social security benefits in making a property division

under ORS 107.105(1)(f).” Swan, 301 Or at 171. In so

holding, the court's analysis turned on its construction of

section 407(a). Because there was no compelling, much less

controlling, federal precedent as to the purpose and proper

construction of section 407(a), the court in Swan relied,

by analogy, on Hisquierdo v. Hisquierdo, 439 US 572, 99 S

Ct 802, 59 L Ed 2d 1 (1979), in which the United States

Supreme Court had construed a similar antiassignment

provision contained in the Federal Railroad Retirement Act

of 1974, 45 USC section 231m (1974), superseded in part by

45 USC section 231m(b)(2) (1983).

In Hisquierdo, the husband had accumulated

railroad retirement benefits during the course of the

marriage, which the wife claimed was community property

to which she was entitled a share upon dissolution of the

marriage.5 439 US at 578. The Supreme Court of California

agreed with the wife. The United States Supreme Court

4 The wife appealed, challenging the trial court's failure to award any spousal

support. Swan, 301 Or at 169.

5 Any distinction between the division of community property and the

equitable distribution of marital property had no bearing on the Oregon Supreme

Court's analysis of Hisquierdo in Swan; nor does it bear on our analysis here.

358 Herald and Steadman

reversed, explaining that "[l]ike anti-attachment provisions

generally, [45 USC section 231m (1974)] ensures that the

benefits actually reach the beneficiary.” Id. at 583. The Court

in Hisquierdo concluded that treating the husband's railroad

retirement benefits as divisible community property would

thwart Congress's purpose, because dividing the benefits

would "diminish that portion of the benefit Congress has

said should go to the retired worker alone.” Id. at 590.

Accordingly, the federal provision preempted division of the

husband's railroad retirement benefits pursuant to state

law. Id.

As an alternative to direct division of the husband's

railroad retirement benefits, the wife in Hisquierdo

contended that the Court could "vindicate her interest and

leave the benefit scheme intact” by awarding an offset of

"presently available community property to compensate

her for her interest in” the husband's railroad retirement

benefits—specifically, the wife asked the Court to award her

the marital residence. Id. at 588. The United States Supreme

Court also rejected that proffered alternative because, the

Court concluded, "[a]n offsetting award * * * would upset the

statutory balance and impair petitioner's economic security

just as surely as would a regular deduction from his benefit

check.” Id.

In Swan, the Oregon Supreme Court concluded

that, "[b]ecause the antiassignment provisions of 45 USC

§ 231m are legally indistinguishable from the antiassignment

provisions of 42 USC § 407(a),” 301 Or at 176, the reasoning

in Hisquierdo as to the former applied irresistibly to the

latter. Proceeding from that premise, the Supreme Court

concluded:

"The effect of including the value of either spouse's social

security benefits in the property to be divided is to allow the

trial court to divide that value between the spouses. This

conflicts with 42 USC §§ 407, 659 and 662(c). We hold that

the value of social security benefits of either spouse may

not be considered in the division of property.”

Id.

It was against that precedential backdrop that the

trial court here addressed the conundrum of fashioning

Cite as 256 Or App 354 (2013) 359

a "just and proper” division in circumstances in which

(a) husband's social security benefits could not (because

of section 407(a) and Swan) be included in the division of

marital property, but (b) wife's CSRS benefits were subject

to inclusion in the division. Husband argued that, under

section 407(a), as construed in Swan, his social security

benefits are not marital property—and, thus, are not subject

to equitable distribution—but that he is entitled to half of

wife's CSRS benefits. That is, in the vernacular: "What is

mine is mine, and what is hers is half mine.”

Confronted with that incongruity, the trial court

identified and applied a methodology that, it believed,

comported with Swan's constraints while avoiding an

inequitable result. Specifically, the court did not include

husband's social security benefits in marital property or

refer to the amount of husband's social security benefits,

as a putative "offset” or otherwise, in effecting the

property distribution. Indeed, employing a method used

by Pennsylvania courts in similar circumstances, the trial

court determined that the value of wife's CSRS benefits,

for purposes of the property division, should be the value

of those benefits reduced by the value of the social security

benefit wife would have earned had she paid into social

security during the marriage. In Cornbleth v. Cornbleth,

580 A2d 369, 372 (Pa Super 1990), appeal den, 585 A2d 468

(Pa 1991), the court described that method:

"To facilitate a process of equating CSRS participants

and Social Security participants we believe it will be

necessary to compute the present value of a Social Security

benefit had the CSRS participant been participating in the

Social Security system. This present value should then be

deducted from the present value of the CSRS pension at

which time a figure for the marital portion of the pension

could be derived and included in the marital estate for

distribution purposes. This process should result in

equating, as near as possible, the two classes of individuals

for equitable distribution purposes.”

See also Schneeman v. Schneeman, 615 A2d 1369, 1375-76

(Pa Super 1992) (applying Cornbleth).

360 Herald and Steadman

The trial court, consequently, entered a dissolution

judgment according with that method. That judgment states

and directs:

"Although Swan * * * provides that social security

benefits cannot be divided in a marital dissolution action,

the court finds that the case does not say that the court

must never consider it for any circumstances. It is not just,

fair or equitable for one spouse to get an extra benefit that

the other spouse is not going to be able to share in. It is

more fair to determine what social security benefit would

have been earned by wife during the marriage had she paid

into social security and then reduce wife's CSRS annuity by

that amount and then equally divide what is left.

"* * * * *

"With respect to the CSRS annuity benefit payments

paid to wife after she reaches the age of 62, husband shall

be awarded a portion of wife's monthly CSRS annuity

benefit, determined as follows:

"* * * * *

"Deduct from the result * * * the amount of $391.41 per

month, representing an amount calculated by the parties to

represent a hypothetical social security benefit value.”

Husband appeals, arguing that the trial court's

method for calculating an equitable distribution of the

parties' retirement benefits is erroneous under 42 USC

section 407(a) and precluded by Swan. Consequently,

husband asserts, he is entitled to one half of wife's CSRS

benefits. Wife remonstrates that, "[c]ontrary to husband's

assertion, the trial court's equitable division of wife's CSRS

benefits does not violate federal law nor does it even implicate

the Supreme Court's decision in Swan” because the trial

court's decision "did not concern any award, valuation of, or

equalization of social security benefits between the parties.”

We readily conclude that the trial court's resolution

of the matter does not run afoul of 42 USC section 407(a).

As an initial matter, this case is not controlled by Swan.

The holding in Swan is that a court is not to consider "the

value of any social security benefits” in making a property

division. 301 Or at 171 (emphasis added); see id. ("[W]e

hold that it was error to consider the value of any social

Cite as 256 Or App 354 (2013) 361

security benefits in making a property division under ORS

107.105(1)(f).”); id. at 176 ("We hold that the value of social

security benefits of either spouse may not be considered in

the division of property.”). Here, the trial court did not refer

to the value of husband's social security benefits. To be sure,

the trial court's approach to dividing the parties' retirement

assets was triggered by the fact that husband is entitled

to social security benefits; however, the trial court did not

consider or rely on the value of those benefits. That approach

is qualitatively, and conclusively, different from that of the

trial court in Swan, which included the actual value of the

parties' social security benefits in the property division.6

Nor does the trial court's calculation of wife's

hypothetical social security benefits implicate the

fundamental "antiassignment” policies of 42 USC section

407(a). Rather, that calculation merely allowed the trial

court to place the parties on equal equitable footing with

respect to the division of wife's CSRS benefits. Husband

will receive the full amount of his social security benefits

without invasion, division, or impermissible offset. That is,

the trial court did not offset the value of husband's social

security benefits by awarding wife commensurate "presently

available [marital] property” in the manner that the Court

explicitly rejected in Hisquierdo. 439 US at 588. Indeed, as

noted, the trial court here did not evaluate or consider the

value of husband's social security benefits in any manner.

Although the fact of husband's entitlement to social security

benefits affected the result here, nothing in Swan or, as

nearly as we can perceive, the intended operation of section

407(a), precludes the consideration of that fact by itself.7

6 It is also dispositively distinguishable from the alternative approach

proffered by the wife in Hisquierdo, by which an offset in the property division

would have been based on the value of the husband's railroad retirement benefits.

439 US at 588.

7 We note that several other state appellate courts have determined that trial

courts may consider the fact of social security entitlement in dividing marital

property. See, e.g., Biondo v. Biondo, 809 NW2d 397, 403 (Mich App 2011) (holding

that a divorce court may consider social security benefits when formulating an

equitable division of property); Skibinski v. Skibinski, 964 A2d 641, 643 (Me 2009)

("To assure that the parties are treated fairly, courts are required to consider the

receipt of the Social Security benefits when dividing the marital property.”); In re

Marriage of Morehouse, 121 P3d 264, 267 (Colo App 2005) ("[W]hile a trial court

may not distribute marital property to offset the computed value of Social Security

benefits, it may premise an unequal distribution of property* * * on the fact that

362 Herald and Steadman

In sum, the trial court's thoughtful method of

dividing the marital property is not precluded by 42 USC

section 407(a) and manifestly comports with the statutory

direction to achieve a division that is "just and proper in all

the circumstances.” ORS 107.105(1)(f). Indeed, as the trial

court here emphasized, it would be manifestly unjust for

husband to receive his full social security benefits and to

share in wife's full CSRS benefits while wife is prohibited

from sharing in husband's social security benefits and is

entitled to no social security benefits of her own. See, e.g.,

Cornbleth, 580 A2d at 371-72 (explaining that a division

similar to what husband espouses here would result in a

"double blow,” in that CSRS benefits would "become part

of the marital estate and, thus, divided, yet there will be

no Social Security benefit waiting to cushion this financial

pitfall”). Accordingly, we affirm.



* * *



one party is more likely to enjoy a secure retirement.”); In re Marriage of Boyer, 538

NW2d 293, 296 (Iowa 1995) ("We see a crucial distinction between: (1) adjusting

property division so as to indirectly allow invasion of benefits; and (2) making a

general adjustment in dividing marital property on the basis that one party, far

more than the other, can reasonably expect to enjoy a secure retirement.”).

Affirmed.