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IN RE MARRIAGE OF RIFE
Case Summary: In re the Marriage of Betty Louise Rife and Jack W. Rife, No. 93-1689 (Iowa Supreme Court, Mar. 29, 1995)
Factual and Procedural Background
The marriage of Betty Louise Rife and Jack W. Rife was dissolved in 1982. Under the dissolution decree Betty was awarded alimony of $500 per month. Except for two $500 payments, Jack made no alimony payments for the next twelve years; Betty was forced to receive public assistance. Jack also failed to pay $1,000 in attorney fees ordered by the decree. Jack was found in contempt in 1982 and again in 1987 for willfully failing to pay the alimony and attorney fees. Collection attempts were unsuccessful.
In 1993 Betty filed an application for a qualified domestic relations order (QDRO). The Warren County district court entered a QDRO finding an arrearage of $117,084.32 and directing that the arrearage be satisfied "after the execution of the [qualified domestic relations order] on [Jack's] pension plan[s]." The order also required that Betty be established as an alternate beneficiary under the retirement plan. Jack appealed the district court's order to the Iowa Supreme Court.
Legal Issues Presented
- Whether the corpus of a retirement plan may be garnished or invaded to satisfy past-due spousal support obligations under federal law (ERISA) and related QDRO authority.
- Whether payments from certain pensions and annuities are exempt under Iowa Code § 627.6(8)(e), and whether a spousal exception in Iowa Code § 627.11 affects that exemption (raised by the parties, but not decided by the trial court).
Arguments of the Parties
Appellant (Jack W. Rife)
- Argued that the district court's order invading the corpus of his retirement plan violated the federal statute (ERISA), asserting that QDROs permit only a limited invasion of payments and not the corpus itself.
- Claimed protection under Iowa Code § 627.6(8)(e), which exempts payments from certain pensions and annuities.
Appellee (Betty Louise Rife)
- Filed for and obtained a QDRO seeking to satisfy the arrearage from Jack's pension plan and to be designated an alternate beneficiary under the plan.
- Responded to the state-exemption argument by pointing to Iowa Code § 627.11, which creates a spousal exception to the exemption for those (like her) who have not remarried.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Ablamis v. Roper, 937 F.2d 1450 (9th Cir. 1991) | Explains that only "qualified" domestic relations orders are exempt from ERISA's spendthrift provisions and that other domestic relations orders are subject to anti-assignment provisions and may be preempted. | Used to describe the statutory scheme under ERISA distinguishing QDROs from other domestic relations orders and to show the scope of federal protection and the QDRO exception. |
| Mallory v. Mallory, 179 N.J. Super. 556, 432 A.2d 950 (Ch. Div. 1981) | Rejected a challenge to garnishment against the corpus of an IRA fund, finding ERISA-enacted protections were not intended to permit avoidance of familial support obligations. | The court found Mallory closely analogous and relied on its reasoning to support that ERISA does not prohibit invasion of corpus between obligor and obligee under a QDRO. |
| West Branch State Bank v. Gates, 477 N.W.2d 848 (Iowa 1991) | Addresses waiver principles related to failure to file a motion to enlarge under Iowa R. Civ. P. 179(b). | Cited to support the court's procedural conclusion that Jack's state-law exemption claim was waived because the trial court did not rule on it and no motion to enlarge was filed. |
Court's Reasoning and Analysis
The court began by recognizing that federal law (ERISA, 29 U.S.C. ch. 18) generally protects retirement plans from garnishment and similar invasions, but that ERISA contains an explicit exemption for obligations defined as "qualified domestic relations orders" (29 U.S.C. § 1056(d)(3)(B)). The opinion quoted the statutory definition of a QDRO and noted the distinction drawn in the statute (and explained in Ablamis) between qualified orders that are exempt and other domestic relations orders that remain subject to anti-assignment provisions.
Addressing Jack's contention that QDROs permit only a limited invasion of payment streams and not the corpus itself, the court stated that nothing in the federal statute prohibits invasion of the corpus in the dispute between the obligor and obligee. The court found Mallory v. Mallory analogous, where a court rejected a challenge to garnishment of the corpus of an IRA, reasoning that ERISA was not intended to serve as a vehicle for avoiding familial support obligations. The Iowa Supreme Court agreed with that reasoning and therefore upheld the district court's QDRO authorizing satisfaction of arrears from the pension corpus.
The court emphasized the limited scope of its holding: it adjudicated only the rights of Betty and Jack and expressly did not decide the rights of any other parties, such as holders of the funds.
On the state-law exemption point (Iowa Code § 627.6(8)(e) and § 627.11), the court explained it need not resolve the contention because the trial court had not ruled on the matter and no motion to enlarge was filed under Iowa R. Civ. P. 179(b). Citing West Branch State Bank v. Gates, the court treated the assignment of error as waived.
Holding and Implications
AFFIRMED.
Holding: The Iowa Supreme Court affirmed the district court's entry of a QDRO ordering that Betty's arrearage of $117,084.32 be satisfied from Jack's pension plans and directing that Betty be established as an alternate beneficiary. The court concluded that, insofar as the rights between the obligor (Jack) and the obligee (Betty) are concerned, ERISA does not prohibit invasion of the corpus of the retirement plan under the circumstances presented.
Implications: The direct effect is that the district court's QDRO stands and may be executed to satisfy Betty's arrearage from Jack's pension corpus. The court limited its ruling to the parties before it and expressly declined to decide rights of any other persons or entities (for example, plan administrators or fund holders). The court also did not decide the contested state-law exemption issue because that claim was waived for procedural reasons.
HARRIS, Justice.
Can the corpus of a retirement plan be garnished to satisfy past-due support orders? The trial court thought yes and we agree.
Federal law protects retirement plans from misuse or invasion by such things as garnishment. 29 U.S.C. ch. 18 (employee retirement income security program [ERISA]). Exempt from this protection however are obligations known as "qualified domestic relations orders" [QDRO]. 29 U.S.C. § 1056. A QDRO is:
[A]ny judgment, decree or order made pursuant to a state domestic relations law . . . which (1) "creates or recognizes the existence of an alternative payee's right to, or assigns to an alternate payee the right to, receive all or a portion of the benefits payable with respect to a participant under the plan;" and (2) "relates to the provision of child support, alimony payments, or marital property rights to a spouse, former spouse, child or other dependent of a participant." 29 U.S.C. § 1056(d)(3)(B). Only "qualified" domestic relations orders are exempt from ERISA's spendthrift provisions; other domestic relations orders are expressly made subject to the anti-assignment provisions and are, as a result, preempted. See 29 U.S.C. § 1056(d)(3)(A).Ablamis v. Roper, 937 F.2d 1450, 1454 (9th Cir. 1991).
The marriage between Betty Rife and Jack Rife was dissolved in 1982. Betty was awarded alimony in the amount of $500 per month. Except for two $500 payments, Jack has not paid Betty anything for the last twelve years. Meanwhile Betty was forced to receive public assistance. Jack is also in arrears for $1000 in attorney fees he was to pay under the dissolution decree. In 1982 and again in 1987 Jack was found in contempt for willfully failing to pay alimony and the attorney fees as ordered. All attempts to collect from him have been unsuccessful.
In 1993 Betty filed an application for a qualified domestic relations order. The district court entered such an order, finding that the arrearage of $117,084.32 be satisfied "after the execution of the [qualified domestic relations order] on [Jack's] pension plan[s]." The order also required that Betty be established as an alternate beneficiary under the retirement plan. Jack appeals from this order.
I. Jack complains that the federal statute is violated by the invasion of the corpus under the court order. He thinks QDROs can go only so far as a limited invasion of payments under a retirement plan. It is perhaps true that the statutory scheme is designed for the protection of retirement income. See Annotation, Employee Retirement Pension Benefits as Exempt from Garnishments, Attachment, Levies, Execution, or Similar Proceedings, 93 A.L.R.3d 711, 760 (1979). But, as between the obligor and obligee under a QDRO, we see nothing in the federal statute that prohibits invasion of the corpus.
Mallory v. Mallory, 179 N.J. Super. 556, 432 A.2d 950 (Ch.Div. 1981), was closely analogous. The court there rejected a challenge to a garnishment against the corpus of an IRA fund, finding the ERISA enactments "were not intended to be a vehicle for avoidance of familial support obligations of [an IRA] settlor." Id. at 955.
We agree, though we emphasize our holding is limited to adjudicating only the rights of Betty and Jack. We do not decide the rights of any others, including the holders of the funds.
II. Jack also claims protection under Iowa Code section 627.6(8)(e) (1995) (exempting payments from certain pensions and annuities). Betty counters by pointing to Iowa Code section 627.11 which creates a spousal exception to the exemption for those, like her, who have not remarried. We need not reach the contention because the trial court did not rule upon it and no motion to enlarge was filed pursuant to Iowa rule of civil procedure 179(b). The assignment was thus waived. See West Branch State Bank v. Gates, 477 N.W.2d 848, 852 (Iowa 1991).
AFFIRMED.
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