Federal Preemption Voids State-Court Enforcement of Divorce Indemnification Clauses that Restore Waived Military Retired Pay (Including via “Spousal Support”)

Introduction

In Marschner v. Marschner, 2026 ND 66, the North Dakota Supreme Court reversed an amended divorce judgment that required Richard A. Marschner (“Richard”), a former North Dakota Army National Guard member, to compensate his ex-spouse Roxane M. Marschner (“Roxane”) after he waived military retired pay in favor of military disability retired pay. The parties’ 2016 divorce settlement had allocated substantial assets immediately to Richard (including $50,500 from Roxane’s 403(b) and a $90,000 equity payment), while Roxane was to receive a share of Richard’s military retirement when payable. Post-judgment orders attempted to protect Roxane’s expected share by defining “military retirement” broadly and requiring indemnification if Richard’s actions reduced her payments, including through disability-related waivers.

The central legal issue was whether federal law—principally the Uniformed Services Former Spouses’ Protection Act (“USFSPA”), 10 U.S.C. § 1408, as interpreted by the United States Supreme Court—preempts a North Dakota court from enforcing an indemnification provision (or an equivalent “spousal support” remedy) that, in effect, restores to a former spouse amounts lost when a service member elects disability pay.

Summary of the Opinion

The Court held that federal law prohibits North Dakota district courts from dividing military disability retired pay. Applying Howell v. Howell, 581 U.S. 214 (2017), and Mansell v. Mansell, 490 U.S. 581 (1989), the Court concluded that “regardless of form,” orders requiring reimbursement/indemnification to offset a waiver of divisible retired pay in favor of non-divisible disability pay are preempted and void. The district court’s award of “spousal support” was deemed a semantic reframing of an impermissible division of disability pay—especially because the district court did not calculate support by applying the Ruff-Fischer spousal support framework.

The amended judgment was therefore reversed.

Analysis

Precedents Cited

1) The governing federal preemption framework

  • Howell v. Howell, 581 U.S. 214 (2017)
    This is the controlling authority. The North Dakota Supreme Court relied on Howell for the rule that, when a veteran waives military retired pay to receive disability benefits, a state court cannot “restore” the former spouse’s lost share by ordering reimbursement or indemnification. Critically, Howell emphasized that such orders are preempted “regardless of their form,” because they “displace the federal rule” and obstruct congressional objectives.
  • Mansell v. Mansell, 490 U.S. 581 (1989)
    Mansell anchors the proposition that USFSPA permits state division only of “disposable retired pay,” and not amounts waived to receive disability benefits. Howell reaffirmed and extended this limitation to bar later “make-whole” orders following a waiver. The Court cited Mansell through Howell to confirm that disability pay lies outside state property division authority.

2) Post-Howell state cases illustrating competing approaches—and North Dakota’s alignment

The district court had noted a line of cases distinguishing “voluntary” indemnification agreements from court-imposed indemnification, suggesting Howell would not bar enforcement of contractual promises. The Supreme Court, however, aligned with decisions rejecting that workaround and treating even “agreed” indemnification as preempted when it functions as an indirect division of disability pay.

  • In re Marriage of Weiser, 475 P.3d 237 (Wash. Ct. App. 2020); Jones v. Jones, 505 P.3d 224 (Alaska 2022); Martin v. Martin, 520 P.3d 813 (Nev. 2022); Hammond v. Hammond, 680 S.W.3d 269 (Tenn. Ct. App. 2023); Yourko v. Yourko, 884 S.E.2d 799 (Va. 2023)
    These cases were cited by the district court as examples of jurisdictions reading Howell more narrowly, at least where indemnification is voluntary/contractual rather than judicially imposed. The North Dakota Supreme Court implicitly rejected that distinction as a basis to enforce a make-whole remedy here.
  • Berberich v. Mattson, 903 N.W.2d 233 (Minn. Ct. App. 2017)
    This case supported the Supreme Court’s conclusion that even voluntary indemnification provisions are unenforceable because federal preemption prevents states from accomplishing indirectly (through “contract enforcement”) what they cannot do directly (divide disability pay).
  • In re Marriage of Babin, 437 P.3d 985 (Kan. Ct. App. 2019)
    Cited for the principle that state courts cannot “do indirectly” what federal law prohibits directly. This directly undercuts the district court’s attempt to recast indemnification as spousal support.
  • Parish v. Parish, 991 N.W.2d 1 (Neb. 2023)
    Reinforced the rule that indemnification for waived retired pay is prohibited under the Act and Howell, while recognizing a narrower space: disability benefits may be considered as part of the parties’ financial condition in a genuine alimony analysis (not as an offset designed to replicate the lost property share).

3) North Dakota procedural and domestic relations authorities

  • Gomm v. Winterfeldt, 2022 ND 172, 980 N.W.2d 204 and Envtl. Driven Solutions, LLC v. Dunn County, 2017 ND 45, 890 N.W.2d 841
    Cited for de novo review of legal questions and federal preemption questions.
  • Boumont v. Boumont, 2005 ND 20, 691 N.W.2d 278
    Cited for de novo interpretation of a divorce judgment.
  • Heinle v. Heinle, 2010 ND 5, 777 N.W.2d 590
    Cited to emphasize that spousal support requires consideration of the Ruff-Fischer factors. The Court used this to show the district court’s “support” label was not supported by a true spousal support analysis.

Legal Reasoning

  1. The dispositive question is preemption: The Court framed the appeal as a pure question of law: whether federal statute preempts state enforcement of the decree’s indemnification mechanism when the only source of replacement funds is non-divisible disability retired pay.
  2. USFSPA’s “disposable retired pay” limitation controls: When DFAS denied Roxane’s application, it confirmed the practical consequence of federal law: because Richard’s pay was “based on disability,” there were “no funds available” under USFSPA for direct payment. This is consistent with the federal line drawn between divisible “disposable retired pay” and excluded disability-related amounts.
  3. Howell forbids make-whole orders “regardless of form”: The Court treated the indemnification clause and the spousal support award as functionally identical: both were triggered by Richard’s waiver and both aimed to restore the precise value Roxane lost. Under Howell, such orders obstruct congressional objectives by reallocating disability benefits through state law.
  4. “Spousal support” cannot be used as a semantic workaround: The Court noted that the district court did not apply the Ruff-Fischer guidelines required by Heinle v. Heinle. That omission mattered because it revealed the award was not grounded in support principles (need/ability to pay and equitable support considerations), but rather was pegged to the exact value of the foreclosed property interest—an impermissible end-run around federal law.
  5. Resulting rule in North Dakota: Any order “requiring indemnification of a veteran’s former spouse for military retirement pay waived for disability pay” is preempted and void. The Court’s phrasing is broad, capturing both explicit indemnification provisions and functionally equivalent remedies.

Impact

  • Drafting and enforcement of divorce settlements: Parties and courts in North Dakota cannot rely on indemnification clauses (even if stipulated) to preserve a former spouse’s expected share of military retired pay when that pay is later waived for disability retired pay. Clauses purporting to reach waived amounts or requiring repayment keyed to the waiver are likely unenforceable.
  • Limits on “support” as a corrective tool: The decision signals that a spousal support award cannot be used as an offset mechanism simply to replicate lost retired pay. If support is sought, it must be grounded in the ordinary spousal support analysis (including Ruff-Fischer factors), and cannot be structured as a dollar-for-dollar replacement for the waived share.
  • Renewed focus on alternative equitable remedies—highlighted by the concurrence: While the majority reversed outright, the concurrence underscores litigation risk in cases where the property division’s fairness depended on receipt of divisible retired pay that never materializes. Future cases may test the boundaries of post-judgment relief tools (e.g., reopening judgments, redistributing non-preempted property) so long as they do not operate as an indirect division of disability pay.
  • Potential divergence across jurisdictions: Because the opinion acknowledges other jurisdictions distinguishing contractual indemnity from court-imposed indemnity, North Dakota’s approach aligns with the stricter reading of Howell (e.g., Berberich v. Mattson, In re Marriage of Babin, Parish v. Parish). This may influence forum-specific strategy and expectations in military divorce cases.

Complex Concepts Simplified

USFSPA (10 U.S.C. § 1408)
A federal statute allowing state courts to treat certain military retired pay as divisible property in divorce—but only “disposable retired pay,” a defined subset that generally excludes disability-related amounts and waived retired pay.
Disposable retired pay vs. disability retired pay
“Disposable retired pay” is the portion of military retirement that federal law permits to be divided in divorce. “Disability retired pay” (and amounts waived to obtain disability benefits) is generally excluded from division.
Federal preemption
A doctrine under which federal law overrides conflicting state law. Here, even if a state divorce judgment or contract purports to reallocate disability pay, federal law controls and renders the state remedy unenforceable.
Indemnification clause (in divorce context)
A provision requiring one ex-spouse to reimburse the other if an expected payment stream is reduced. After Howell, indemnification that effectively restores waived retired pay by tapping disability pay is prohibited.
“Regardless of form” principle
From Howell: courts cannot avoid preemption by changing labels (e.g., calling it “support” rather than “property”) if the order’s substance is to replace the former spouse’s share of waived retired pay.
Ruff-Fischer factors
North Dakota’s framework for determining spousal support, requiring consideration of factors related to the parties’ circumstances, needs, and fairness. A support award must be justified under these factors—not mechanically pegged to a lost property stream.
N.D.R.Civ.P. 60(b)(5) and 60(b)(6)
Post-judgment relief mechanisms allowing a court in certain extraordinary circumstances to grant relief from a judgment when prospective application is no longer equitable (60(b)(5)) or for other reasons justifying relief (60(b)(6)). The concurrence quoted authorities discussing the “grand reservoir of equitable power” language.
N.D.C.C. § 14-05-24(3) (redistribution for noncompliance)
A statutory basis the concurrence highlighted: post-judgment redistribution may be available when a party fails to comply with an order distributing property and debts—though the majority did not reach this as a remedy on the record before it.

Conclusion

Marschner v. Marschner establishes a clear North Dakota rule implementing Howell v. Howell: a district court may not enforce indemnification (or any functionally equivalent order, including a pegged “spousal support” award) to compensate a former spouse for military retired pay lost when the service member elects disability retired pay. The opinion emphasizes substance over labels and treats such make-whole remedies as preempted and void.

The concurrence, however, highlights a practical aftershock: strict federal preemption may leave one spouse with the benefit of an asset allocation premised on retirement payments that never arrive. While disability pay cannot be divided directly or indirectly, future litigation will likely explore what equitable, non-preempted avenues remain—such as reopening or redistributing other marital property—when the original deal’s assumptions collapse.