Maryland Appellate Court Decides Railroad Retirement Benefit Case

The Maryland Court of Special Appeals recently determined in Dapp v. Dapp that certain retirement benefits may not be assigned or split in a divorce agreement. The case arose from a dispute between a couple who married in 1968. Amtrak employed the husband starting in 1981 and the couple separated about five years later. Two years after the couple separated, the wife was granted a divorce. The judgment of divorce incorporated the couple’s Marital Separation and Property Settlement Agreement.

The Agreement mutually waived alimony and other spousal support, but one paragraph provided that if the wife did not remarry within five years of the divorce, she would be entitled to half of the husband’s pension accrued with Amtrak. The wife did not remarry.

The husband had worked for Amtrak for 88 months before the divorce and 243 months after it. When he retired, he started to receive monthly retirement benefits as required by the Railroad Retirement Act (RRA) of 1974. $1950 of that monthly sum was “Tier 1” benefits. The Tier 1 benefits that the RRA provides are structured to substitute for Social Security benefits. $1163.13 was “Tier II benefits” and supplemental annuity payments. Mr. Dapp did not inform Mrs. Dapp of his retirement when he retired and she did not receive any retirement benefits.

In 2010, the wife found out her former husband had retired and filed a complaint to enforce the Agreement. She sought ½ of all of the railroad retirement benefits. The former husband stated that she was only entitled to ½ of the marital portion of his Tier 2 benefits and supplemental annuity payments. By “marital portion”, he meant she was only entitled to the benefits that accrued during the marriage, not after it.

They both filed cross motions for summary judgment that were denied. The lower court found the word “accrued” ambiguous because the Agreement did not specify the timing of the accrual. Accordingly, the court heard evidence on the meaning of “accrual” to determine whether the Agreement referred to only the benefits that accrued during the marriage, whether it referred to all benefits accrued during the husband’s term of employment, and whether it meant all benefits, or if Tier 1 benefits were excluded.

After the hearing, the court decided in favor of the wife that the Agreement meant all benefits, not just those accrued during his marriage, and that “benefits” referred to all benefits. The court required that the husband pay the wife ½ of the Tier 1 benefits received by him in the future and award her ½ of those benefits already paid reduced by ½ of the taxes paid on the sum. The court also ordered that the husband’s Tier 2 benefits, both received and to be received, be split in half.

The husband appealed with respect to the Tier 1 benefits, but did not contest the Tier 2 benefit split. He argued that the RRA prohibited an assignment of Tier 1 benefits, including that they not be subject to any “other legal process under any circumstances whatsoever, nor shall the payment thereof be anticipated.”

The appellate court agreed with the husband, reasoning that the agreement to assign the Tier 1 benefits was void when made. Because the husband could not legally assign the Tier 1 benefits, the state courts could not enforce the agreement. The appellate court analogized the prohibition on assigning Tier 1 benefits to how state courts are similarly prohibited from dividing social security benefits.

If you are dealing with difficult family law matters like the one described above, the well being of your children may depend on hiring a qualified and knowledgeable attorney who can navigate the rules for you. Contact lawyer Anthony Fatemi and his legal team for a legal consultation. They have years of experience in Maryland family law, including matters of divorce, prenuptial agreements, separation agreements, property distribution, custody arrangements, alimony, and domestic violence.

More Blogs:

Maryland Appellate Court Denies Adult Sibling Visitation, Maryland Divorce Lawyer Blog, April 27, 2013

Maryland Appellate Court Recognizes Congolese Marriage By Proxy, Maryland Divorce Lawyer Blog, April 24, 2013

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