Brown v. Brown

Citations: 332 Ark. 235; 962 S.W.2d 810; 1998 Ark. LEXIS 135Docket: 97-646

Court: Supreme Court of Arkansas; March 12, 1998; Arkansas; State Supreme Court

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The appeal concerns the division of pension benefits between divorced spouses, Billy and Phyllis Brown. They married in 1951, and Phyllis began working at Hiram Walker in 1981, participating in the company's retirement plan. After their separation on March 17, 1988, and subsequent divorce on June 20, 1989, the divorce decree awarded Billy a half interest in Phyllis's pension benefits accrued until their separation, as well as a half marital interest in 90% of his military pension, including post-decree cost-of-living increases.

Phyllis worked at Hiram Walker until retiring in January 1996 at age 63, subsequently receiving $978.72 in monthly retirement benefits. In 1996, Billy filed a chancery court action seeking an accounting and a contempt order, claiming Phyllis failed to pay him the correct pension share and provide necessary information. The chancellor found that Phyllis had accrued benefits allowing her to receive approximately $414.00 monthly at the time of the divorce, which increased to $978.72 due to merit salary increases during her employment.

The chancellor ruled that, despite the divorce decree being drafted by Billy's attorney, Phyllis's interpretation arguments were unfounded, as divorce decrees are not contracts. The chancellor concluded that all postmarital salary increases should factor into determining Billy's share of Phyllis's pension benefits, ultimately awarding him a share based on the $978.72 amount. On appeal, Phyllis argued for a strict interpretation of the decree against Billy, referencing cases involving contract interpretation, which the court found inapplicable. The ruling affirmed that divorce decrees are orders of the chancery court, not contracts.

The decree did not outline the calculation method for Phyllis Brown’s pension shares, leaving the chancellor to determine this later. Phyllis Brown argues that the chancellor incorrectly interpreted Askins v. Askins, which she believes should not require postmarital appreciation in calculating Billy Brown’s pension share. If the court finds otherwise, she requests a reconsideration of the Askins decision. Previous rulings established that pensions are marital property subject to equitable distribution. 

In this case, a marital percentage was calculated using a numerator/denominator formula, with Phyllis Brown earning 70 months of pension during marriage out of a total of 164 months, resulting in a marital share of 42.68%. Billy Brown’s entitlement is one-half of that share, equating to 21.34%. The court must decide if Billy Brown is entitled to half of Phyllis Brown’s pension at separation on March 17, 1988, or 21.34% of the pension amount considering postmarital salary increases by 1996. 

Billy Brown contends he should benefit from the entire pension amount received by Phyllis Brown after retirement, while she argues that his share should reflect only the pension earned at separation. The dispute arises from contrasting principles: Phyllis believes post-divorce property should remain separate, while Billy argues for inclusion of any value increase before distribution, especially since he did not receive his share until years post-divorce. The court, following the chancellor's reasoning, supports the inclusion of postmarital appreciation, referencing the Askins case, which confirmed that it is equitable to account for pension enhancements resulting from the former spouse's efforts, especially as these benefits often increase significantly in later years.

The chancellor has significant discretion in dividing marital property, allowing for equitable distribution rather than a strict 50/50 split, as per Ark. Code Ann. 9-12-315(a)(1)(A). This principle is supported by case law from other jurisdictions. In the current case, there is a dispute regarding Phyllis Brown's salary increases post-separation, which she claims were merit-based and should not enhance Billy Brown's share. However, Billy Brown argues these were merely cost-of-living increases. The chancellor found the increases to be merit-based but did not exclude them from consideration. He deemed them legitimate adjustments for retirement benefits, allowing Billy Brown to participate. The court affirms the chancellor's decision, asserting that the Askins case grants discretion rather than limits it. Additionally, Phyllis Brown acknowledges that the cutoff for Billy Brown should align with the divorce date, but the chancellor opted for the separation date, which is not contested in this appeal.