April 16, 2024 – A federal law prohibits a divorce court from dividing miliary disability pay that a veteran opts to receive instead of retirement pay, the Wisconsin Count of Appeals (District II) has ruled.

In a per curiam opinion, the Court of Appeals in DeWeese v. McLin, 2023AP565 (April 3, 2024) also held that the circuit court’s “purge order” involving the arrearages tied to the disability pay was erroneous.

In 1997, Sherry DeWees and Timothy McLin were married in Wisconsin. The couple divorced in North Carolina in 2011.

At the time of the divorce, McLin was on active duty with the U.S. Army.

Under the parties’ separation agreement (which became part of the divorce decree), DeWeese was entitled to half of the marital portion of McLin’s military retirement benefits.

The agreement specified that if McLin’s military retirement benefits were reduced by the payment of Veterans Administration disability benefits, DeWeese was still entitled to an amount equal to half of the original amount of McLin’s military retirement benefits.

The divorce decree also required McLin to pay child and spousal support to DeWeese. A later order specified that McLin was required to pay DeWeese half “of the marital share of his disposable retirement pay each month.”

Honorable Discharge

In 2014, the Army gave a McLin an honorable discharge, after he was injured on duty and suffered a permanent physical injury.

As a result, after McLin was discharged he began receiving disability benefits instead of military retirement benefits.

DeWeese contacted Defense Finance and Accounting Services (DFAS) about receiving her share of McLin’s military retirement disability benefits.

DFAS replied that under the Uniformed Services Former Spouses Protect Action (USFSPA), 10 U.S.C., section 1408 et seq., DeWeese wasn’t entitled to any of McLin’s post-discharge pay because that pay was based on his disability, and there was therefore no disposable pay available for payment to her under the decree.

Motions for Contempt

DeWeese brought a contempt motion against McLin in North Carolina. He failed to appear, and the court issued an arrest warrant.

DeWeese discovered that McLin had moved to Wisconsin. She filed a contempt motion against McLin in Manitowoc County Circuit Court.

McLin filed a motion to dismiss the motion, arguing that he wasn’t in contempt because he was receiving only disability pay, not retirement pay.

The circuit court concluded that McLin was not in contempt.

Monthly Payments Ordered

But the court ordered McLin to pay DeWeese $913.73 a month, beginning in November 2022.

The court arrived at that amount after calculating the retirement pay that McLin would have received had he retired from the Army instead of being honorably discharged with a disability.

In March 2023, DeWeese filed another contempt motion against McLin in the circuit court, because he hadn’t made any of the $913.73 payments.

The court found McLin in contempt.

The court ordered McLin to begin making the required monthly payments, as well as paying DeWeese $450 a month until he’d paid her $48,639.69 in arrearages.

McLin appealed.

Federal Law Governs

The Court of Appeals began its per curiam opinion by explaining that the division of marital property upon divorce is largely a creature of state law, which federal law almost always lacks the power to displace.

“But, under some narrow circumstances, the application of state family law cuts into substantial family interests and must yield,” the Court of Appeals wrote. “Military retirement pay is one example.”

The Court of Appeals explained that under the USFSPA, state courts are authorized to treat “disposable retirement pay” as marital property subject to division in a divorce decree.

However, the court noted that under the USFSPA, retirement pay that a beneficiary waives in favor of disability payments is excluded from the definition of “disposable retired pay.”

“Thus, if a veteran’s pay consists of disability retirement, it is not disposable retired pay under the USFSPA, and thus is not subject to division as marital property regardless of any agreement to the contrary,” the Court of Appeals wrote.

No Vested Interest

The Court of Appeals pointed out that the U.S. Supreme Court held in Howell v. Howell, 581 U.S. 214 (2017)  that a state court lacks the authority to order a veteran to reimburse a divorced spouse for the portion of retirement pay lost when the veteran elected to received disability payments instead.

“The Court rejected the argument that the former spouse had a vested interest in the benefits, noting that state courts ‘cannot “vest” that which (under governing federal law) they lack the authority to give,’” the Court of Appeals wrote.

As a result, the Court of Appeals concluded that the circuit court had erred when it ordered McLin to pay DeWeese a share of his disability pay and reversed the circuit court’s order.

Contempt Ruling Not Erroneous

But the Court of Appeals concluded that the circuit court did not err by finding McLin in contempt for his failure to follow the circuit court’s payment order.

The Court of Appeals pointed out that McLin had clearly violated the order, and that McLin should have made the payments pending the appeal.

“One cannot ignore a court order simply because they believe it is based on a faulty legal premise,” the Court of Appeals wrote.

However, the Court of Appeals reasoned that because the disability pay was not divisible, the circuit court’s order that McLin pay $450 a month until he’d paid DeWeese $48,639.69 in arrearages was unlawful, because the payments contravened the USFSPA.

“We therefore remand to the circuit court to set purge conditions for McLin that are consistent with the law,” the Court of Appeals wrote.

“Moreover, given our conclusions here, on remand the court may order DeWeese to repay McLin any amounts paid from the indivisible military disability pay.”