Moss, Andrea E.

English

University of Baltimore School of Law

University of Baltimore Law ForumVolume 25Number 2 Fall, 1994 Article 171994Recent Developments: Matthews v. Matthews:Maryland Courts Have the Authority to Order aParty to Maintain a Former Spouse as theBeneficiary of His or Her Survivor Benefit PlanAndrea E. MossFollow this and additional works at: http://scholarworks.law.ubalt.edu/lfPart of the Law CommonsThis Article is brought to you for free and open access by ScholarWorks@University of Baltimore School of Law. It has been accepted for inclusion inUniversity of Baltimore Law Forum by an authorized editor of ScholarWorks@University of Baltimore School of Law. For more information, pleasecontact snolan@ubalt.edu.Recommended CitationMoss, Andrea E. (1994) "Recent Developments: Matthews v. Matthews: Maryland Courts Have the Authority to Order a Party toMaintain a Former Spouse as the Beneficiary of His or Her Survivor Benefit Plan," University of Baltimore Law Forum: Vol. 25 : No. 2 ,Article 17.Available at: http://scholarworks.law.ubalt.edu/lf/vol25/iss2/17MaUhews v. MaUhews: MARYLAND COURTS HAVE THEAUTHORITY TO ORDER A PARTY TO MAINTAIN A FORMER SPOUSE AS THE BENEFICIARY OF HIS OR HER SURVIVOR BENEFIT PLAN. Rt:Cfl:NJ' DIHVlElOPfVlIENTS Congress granted Mary-land courts the authority to or-der a party to maintain a former spouse as the beneficiary of his or her Survivor B enefit Plan. In Matthewsv. Matthews, 33 6Md. 241,647 A.2d 812 (1994), the Court of Appeals of Maryland held that it was the intent of Congress to allow state courts to compel military service mem-bers to elect or not elect certain persons as beneficiaries of their Survivor Benefit Plan. In so holding, the court used legisla-tive history and statutory inter-pretation to reach its conclu-slon. Admiral Herbert Matthews, Appellee, served in the Navy for 3 1 years. Two years priorto his retirement from theNavy, Adm. Matthews mar-ried Jacqueline Matthews, Ap-pellant, and designated her as the beneficiary of his Survivor Benefit Plan ("SBP"). After twenty-one years of marriage, Adm. and Mrs. Matthews were granted an absolute divorce in the Circuit Court for St. Mary's County. Following the separa-tion of the two parties, Mrs. Matthews was removed from the SBP due to the cancellation of Adm. Matthews' participa-tion in the plan. The SBP, 10 US.c. §§ 1447-55(1988& Supp.I1993), is a federal law designed to pro-vide financial support to desig-nated beneficiaries of active or retired military personnel. Eli-gible participants of the plan include any member who is en-titled to retired pay and who is married or has a dependent child at the time that the retirement occurs. In the event of the member's death, the beneficiary receives a monthly annuity. The circuit court award-ed Mrs. Matthews a monetary award of $25,000, indefiniteal-imonyof $ 1,750 per month, and attorneys fees of $9,000.00. Initially, the court also granted Mrs. Matthews' requestto have Adm. Matthews secure her sur-vival benefits by way of court order. However, in its response to both parties' motions to alter the judgment, the circuit court held, in a revised order, that it lacked authority to compel Adm. Matthews to retain Mrs. Matthews as a beneficiary of the SBP. The court reasoned that the benefits which accrued prior to the marriage could not be considered marital property. Furthermore, because the SBP is considered a form of life in-surance, any order granting Mrs. Matthews' request would vio-late section 371 ofthe Maryland Insurance Code, which prohib-its forcing an individual to per-mit an ex-spouse to obtain a life insurance policy. Mrs. Matthews ap-pealed to the Court of Special Appeals ofMaryland. The Court of Appeals ofMaryland granted certiorari prior to the court of special appeals' review. The court focused on whether the 1986 Amendment to the SBP confers authority upon Mary-land courts to require a party to maintain a former spouse as the beneficiary ofthe SBP, orwheth-er the Maryland General As-sembly must enact legislation to ________________________ 25.2/U. Bait. LF. - S'} complement the SBP Amend-ment before Maryland courts may affect the military survivor benefits. The Court first ad-dressed Adm. Matthews' argu-ment that absent enabling legis-lation, Maryland courts are with-out authority to order service members to elect to provide an annuity to a former spouse un-der the SBP. Matthews, 336 Md. at 246, 647 A.2d at 814 (1994). The court began its analysis by first looking to the legislative history of 10 US.C. § 1450 (t)( 4), which lays out the guidelines and requirements of theSBP. Id at244,647 A.2dat 814. When first enacted in 1972, the SBP did not expressly pro-vide that a former spouse was an eligible beneficiary. Id. at 245,647 A.2d at 813. Howev-er, the court recognized limited situations in which a former spouse could retain an insurable interest in a former husband or wife, such as providing a mea-sure of financial security upon divorce. Id. Consequently, Congress amended the SBP in 1982 to expressly authorize members to elect a former spouse as a beneficiary of the SBP. Id, 647 A.2d at 814. Ab-sent from the 1982 amendment, however, was the courts' au-thority to order a person to elect a former spouse as a beneficiary without a written, voluntary agreement by the electing party. Id. In 1986, Congress re-placed the provision requiring a voluntary written agreement with a provision authorizing a court to require a person "to elect or to enter an agreement to elect ... under § 1448 (b) ofthe title to provide an annuity to a former spouse ... " 10 US.C. § 1450 (t)(4). In light of the 1986 amendment, the court agreed with Mrs. Matthews and held that state courts are ex-pressly authorized to compel service members to elect or not elect certain persons as benefi-ciaries of their SBP's. Id at 246,647 A.2d at 815. In the court's interpre-tation of the statute, it found support from case law of other jurisdictions which gave the stat-ute the same meaning and rec-ognized the state's authority to award survivor benefits for former spouses. Id at 247, 647 A.2d at 815. In each case, the court found that 10 US.c. § 1450 (t)(4), standing alone, served as the basis for the vari-ous courts' decisions. Id at 248,647 A.2d at 815. In addi-tion, none of the reported cases identified enabling legislation in support of their finding or re-quired that such legislature be created to give affect to US.C. § 1450 (t)(4). Id. The court relied on State v. Siegel, 266 Md. 256, 292 A.2d 86 (1972), to conclude that when Congress intends to require state enabling legislation to become effective within a state, it will expressly provide such an interpretation within the statutory scheme. Id. at 249, 647 A.2d at 816. The court found that in this case, no such express requirement exist-ed under the SBP. Id. Next, the court turned to Adm. Matthews' contention that the SBP is a form of life insurance and, therefore, under the Maryland Insurance Code the court is precluded from or-dering the election of a former spouse as the beneficiary of the SBP. Id at 250, 647 A.2d at 816. In addressing this argu-ment, the court looked to Mary-land's definition of life insur-ance as set out in Section 63 (2) of the Insurance Code. Id at 251, 647 A.2d at 817. Under this section, life insurance is defined as "insurance on human lives." Id The court then looked to the definition of annu-ities. According to Md. Ann. Code art. 48, § 65 (1957, 1994 Repl. VoL), annuities are de-fined as "all agreements to make periodical payments where the making or continuance of all or some of a series of such pay-ments, or the amount of any such payment is dependent upon the continuance of human life, except payments made under the authority of Section 63 [Def-inition of Life Insurance]." Id (emphasis added). Thus, the court found that annuities are expressly excluded from the def-inition of life insurance under the Insurance Code. Id at 252, 647 A.2d at 817. The court again looked to case law in other jurisdictions to support its conclusion. Id In each case, the courts likened the SBP to insurance, but neverthe-less, held that the SBP is not considered to be life insurance. Id. The court, therefore, con-cluded that the SBP is not life insurance within the meaning of Section 371 of the Insurance Code.ld Finally, the court ad-dressed the trial court's error in not granting Mrs. Matthews' request to be maintained on Adm. Matthews' SBP, based on the characterization of the SBP as non-marital property. Id Mrs. Matthews argued that marriage during a substantial period of active duty is not a prerequisite to the award of benefits under the SBP. Id Ad-miral Matthews, on the other hand, alleged that the SBP, which was derived prior to his marriage, is not subject to equi-table distribution, as marital property.ld Again, the court agreed with Mrs. Matthews, but first Powell v. Maryland Aviation Admin.: COURT'S FINDING OF GUILT IN CRIMINAL CASE MAYBE USED INSTATE ADMINISTRATIVE HEARING AS EVIDENCE OF MISCONDUCT, BUTMAYNOT BE GIVEN CONCLUSIVE EFFECT. ,'I(U ,., i ,~.,i determined that the power of the court to order a party to elect a former spouse as a ben-eficiary of the SBP does not involve the transfer of proper-ty. Id. at 253,647 A.2d at 817. The court then recognized oth-er court holdings which charac-terized the SBP as a separate and distinct property interest. Id, 647 A.2d at 818. In its conclusion, the court stated that its holding does not require the court to characterize the nature of the interest involved in the case. Id It reasoned that, while property gets its form from the federal statute, a property right is subject to "all conditions of the statute which created it." Id In this case, the condition was the power ofthe state court In Powell v. Maryland Aviation Admin. , 336Md. 210, 647 A.2d437 (1994), the Court of Appeals of Maryland deter-mined that an administrative agency hearing on employee misconduct may use a trial court's finding of the individu-aI's guilt as evidence of the misconduct. The criminal find-ing may not, however, be given conclusive effect in such pro-ceedings. A maintenance worker at Martin State Airport, David Powell ("Powell"), was sus-pended for threatening a super-visor. At one of his hearings, Powellieamed that a secretary, Colleen Holthaus ("Holthaus"), to order a service member to designate a beneficiary. Id Matthews v. Matthews interprets 10 U.S.C. § 1450 (t)( 4) as authorizing Maryland courts to compel military ser-vice members to maintain former spouses as beneficiaries of their Survivor BenefitPlan. The case is significant in that it grants state courts additional power in the area of family law which may be exercised during divorce proceedings. The case also rec-ognizes those unusual circum-stances in which a former spouse may be in need of a measure of financial security that would not otherwise exist but for the Sur-vivor Benefit Plan. - Andrea E. Moss had provided information used in the case against him. Follow-ing the hearing, Holthaus re-ceived obscene and harassing telephone calls which were re-corded on her answering ma-chine. She believed the voice was Powell's and, subsequent-ly, the calls were traced back to an area of Martin State Airport to which he had access. Holthaus filed a complaint against Powell in the Circuit Court for Harford County. He was charged and found guilty of telephone misuse in violation of Article 27, Section 555A of the Annotated Code of Maryland (1957, 1992 Repl. Vol.). At sentencing, Powell was granted _____________________________ . '?5."/~.:j£:~~.: ... :~,:.-SS) 

Recent Developments: Matthews v. Matthews: Maryland Courts Have the Authority to Order a Party to Maintain a Former Spouse as the Beneficiary of His or Her Survivor Benefit Plan

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Recent Developments: Matthews v. Matthews: Maryland Courts Have the Authority to Order a Party to Maintain a Former Spouse as the Beneficiary of His or Her Survivor Benefit Plan

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