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Docket Number

No. 88-819

Attorney(S)

Duane F. Lantz, for appellant. Windell F. Fisher and Judith R. Maxwell, for appellee.

Judges

WRIGHT, J.

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Smart Summary

Taylor v. Taylor, No. 88-819 (Supreme Court of Ohio, July 5, 1989)

Factual and Procedural Background

Louise A. Taylor (appellant) and Charles H. Taylor (appellee) were divorced on January 24, 1980. The divorce decree awarded Mrs. Taylor permanent alimony of $350 per month until remarriage, death, or further court order; she also received equity in marital real estate, a 1972 automobile, personal property, and a savings account. Mr. Taylor received his retirement account with Columbia Gas System, Inc. ("Columbia Gas"), among other assets.

Mr. Taylor ceased making alimony payments in December 1982. By December 31, 1986, he was in arrears in the amount of $16,450. Mrs. Taylor moved to hold him in contempt and requested that continuing alimony and arrearages be withheld from his monthly pension benefits. On May 4, 1987 the trial court ordered Columbia Gas to withhold $350 per month for continuing alimony and $250 per month toward the arrearage (the latter to cease when arrearage was paid).

Columbia Gas responded by letter that it could not comply unless presented with a qualified domestic relations order ("QDRO") because ERISA prohibits assignment or alienation of benefits absent a QDRO; it also requested suspension of withholdings pending appeal. Mr. Taylor appealed, arguing the withholding order was not a QDRO because it was not made pursuant to state domestic relations law. The Franklin County Court of Appeals vacated the trial court's order, holding that R.C. 3113.21(D)(3) permits withholding only from governmental pension benefits and not from private ERISA plans. The cause was brought to the Supreme Court of Ohio on a certified record.

Legal Issues Presented

Whether the attachment/withholding order issued by the trial court is a "qualified domestic relations order" as defined in ERISA Section 1056(d)(3)(B).
Whether R.C. 3113.21(D)(4) authorizes a domestic relations court to issue a QDRO attaching benefits provided under private pension plans that qualify under ERISA (i.e., whether the state statute qualifies as "State domestic relations law" for purposes of ERISA's QDRO requirement).

Arguments of the Parties

Appellant (Louise A. Taylor)

Moved to have Mr. Taylor held in contempt for failure to pay alimony and sought an order withholding continuing alimony and arrearages from Mr. Taylor's pension benefits from Columbia Gas.
Implicit position before the court: that the trial court's withholding order could be treated as a QDRO or otherwise enforced against the pension benefits.

Appellee (Charles H. Taylor)

Argued that the trial court's withholding order is not a QDRO because it was not made pursuant to state domestic relations law, and thus could not be treated as a QDRO under ERISA Section 1056(d)(3)(B)(ii)(II).

Columbia Gas System, Inc. (third-party plan administrator)

Responded to the trial court's withholding order by letter stating it could not comply absent a QDRO because ERISA prohibits assignment or alienation of plan benefits unless a QDRO is issued; advised that withholdings should be deferred pending resolution on appeal.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
American Tel. Tel. Co. v. Merry (C.A.2, 1979), 592 F.2d 118	Illustrates pre-ERISA/post-ERISA questions about whether courts in divorce actions could assign ERISA-covered pension benefits to nonparticipant spouses despite ERISA's anti-alienation provision.	Used as background to show that Congress enacted the Retirement Equity Act of 1984 to create a limited exception (the QDRO) to ERISA's anti-alienation rule; supports the description of the statutory context.
Stinner v. Stinner (1987), 362 Pa. Super. 219, 523 A.2d 1161	An example of a case holding that an order attaching ERISA pension benefits was not a QDRO because it was not made pursuant to state domestic relations law (it was based on property settlement enforcement principles).	Cited as the only apparent authority holding an order not to be a QDRO for lack of being "pursuant to domestic relations law"; acknowledged but not followed as a general bar—court distinguished by finding R.C. 3113.21(D)(4) does provide a state domestic relations law basis.

Court's Reasoning and Analysis

The court framed the dispositive issue as whether the trial court's attachment/withholding order is a "qualified domestic relations order" (QDRO) under ERISA Section 1056(d)(3)(B). The court proceeded as follows:

Explained ERISA's anti-alienation rule (Section 1056(d)(1)) and how Congress, by the Retirement Equity Act of 1984, created a limited exception permitting assignment of plan benefits pursuant to orders that satisfy the QDRO requirements (Section 1056(d)(3)).
Identified the statutory QDRO requirement at issue: a QDRO must be a "domestic relations order," which ERISA defines to include orders that (I) relate to child support, alimony, or marital property rights, and (II) are made pursuant to State domestic relations law.
Observed there was no dispute that the order related to alimony (satisfying clause (I)). The disagreement concerned clause (II): whether the order was "made pursuant to State domestic relations law."
Reviewed the Court of Appeals' reliance on R.C. 3113.21(D)(3), which describes withholding from governmental pension plans, and the appellate conclusion that the statute did not authorize withholding from ERISA plans.
Examined R.C. 3113.21 as a whole and focused on R.C. 3113.21(D)(4), which authorizes orders requiring withholding from "any form of income, including, but not limited to" a broad list of income types. The court read the phrase "any form of income" to encompass benefits under ERISA-governed pension plans.
Considered legislative history and precedent: the court found no indication in the legislative history of ERISA's QDRO provision that the "State domestic relations law" requirement should be narrowly construed to exclude general state statutes authorizing withholding from various income sources.
Noted the scarcity of contrary authority (citing Stinner) but concluded that R.C. 3113.21(D)(4)'s broad language authorizes domestic relations courts to issue orders withholding benefits from ERISA-covered pension plans and thus can support issuance of a QDRO.
Clarified that the court did not pass on whether the particular attachment order complied with the other, substantive QDRO requirements set out in ERISA Section 1056(d)(3)(D) (listed in the opinion as prohibitions on requiring benefits or forms of benefit not provided by the plan, increasing plan benefits, or conflicting with prior QDROs).

Holding and Implications

HOLDING: The Supreme Court of Ohio reversed the Court of Appeals and held that R.C. 3113.21(D)(4) authorizes a domestic relations court to issue a "qualified domestic relations order" attaching benefits provided under pension plans qualifying under ERISA, Section 1001 et seq., Title 29, U.S. Code.

Implications:

The Court of Appeals' decision vacating the trial court's withholding order was reversed, and the case was remanded for enforcement of the trial court's order if that order otherwise meets the substantive and formal requirements of a QDRO under ERISA.
The decision means that, under Ohio law as interpreted in this opinion, R.C. 3113.21(D)(4) supplies the state domestic relations law basis required by ERISA for a QDRO with respect to private ERISA-governed pension benefits.
The court expressly declined to decide whether the specific attachment order satisfied the other ERISA QDRO requirements (e.g., not requiring benefits or options not provided by the plan), leaving that determination to the lower court on remand.

Disposition: Judgment reversed and cause remanded.

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TAYLOR, APPELLANT, v. TAYLOR, APPELLEE.

Domestic relations — Pensions — ERISA — R.C. 3113.21(D)(4) authorizes issuance of "qualified domestic relations order."

O.Jur 3d Family Law §§ 638, 994.

R.C. 3113.21(D)(4) authorizes a domestic relations court to issue a "qualified domestic relations order" attaching benefits provided under pension plans qualifying under the Employee Retirement Income Security Act, Section 1001 et seq., Title 29, U.S. Code.

WRIGHT, J.

The issue here concerns whether the attachment order issued by the trial court in this case is a "qualified domestic relations order" as defined in ERISA Section 1056(d)(3)(B). We hold that R.C. 3113.21(D)(4) (now renumbered [4][a]) authorizes a domestic relations court to issue a "qualified domestic relations order" ("QDRO") attaching pension plans qualifying under ERISA.

Private pension plans qualifying under ERISA are subject to numerous restrictions, the most significant of which is that the benefits provided in such plans may not be assigned or alienated. ERISA Section 1056(d)(1). Following the enactment of ERISA a question arose as to whether, in divorce actions, courts could assign ERISA pension benefits to nonparticipant spouses notwithstanding the anti-alienation provision and Section 1144(a), which establishes ERISA's preemption of state law. See, e.g., American Tel. Tel. Co. v. Merry (C.A.2, 1979), 592 F.2d 118. In the Retirement Equity Act of 1984, Congress responded by creating a limited exception to the anti-alienation provision for court orders which meet the requirements of a QDRO. See ERISA Section 1056(d)(3).

There are several requirements of a QDRO, the first of which is that the order must be a "domestic relations order." This is the requirement at issue in this case. ERISA Section 1056(d)(3)(B)(ii) defines "domestic relations order" as "* * * any judgment, decree, or order (including approval of a property settlement agreement) which —

"(I) 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, and

"(II) is made pursuant to State domestic relations law (including a community property law)."

There is no dispute over the fact that the court's order relates to "alimony payments" as required in ERISA Section 1056(d)(3)(B)(ii)(I). The court of appeals below, however, held that the order was not made pursuant to a state domestic relations law and thus did not satisfy ERISA Section 1056(d)(3)(B)(ii)(II). In reading R.C. 3113.21(D)(3), the court noted that the statute describes only the withholding of ordered alimony payments from numerous governmental pension plans.

R.C. 3113.21(D)(3) (now renumbered [3][a]) provides:

"If the court * * * determines that the obligor is receiving any pension, annuity, allowance, or other benefit or is to receive or has received a warrant refunding his individual account from the public employees retirement system [or other specified governmental retirement fund], * * * the court may issue an order requiring the public employees retirement board [or other appropriate controlling entity] * * * to withhold from the obligor's pension, annuity, allowance, other benefit, or warrant a specified amount for support in satisfaction of the support order, to begin the withholding one week after receipt of the order, and to continue the withholding at intervals determined by the court in its order until further order of the court. * * *"

R.C. 3113.21, however, is not limited to the withholding of pension benefits for the payment of alimony and support from governmental pension plans alone. R.C. 3113.21(D)(4) (now renumbered [4][a]) provides:

"If the court * * * determines that the obligor is receiving any form of income, including, but not limited to, disability or sick pay, insurance proceeds, lottery prize awards, [etc.], * * * the court may issue an order requiring the person who pays or otherwise distributes the income to the obligor to withhold from the obligor's income a specified amount for support in satisfaction of the support order, to begin the withholding one week after receipt of the order, and to continue the withholding at intervals determined by the court in its order until further order of the court. * * *" (Emphasis added.)

Under the court of appeals' ruling in this case, no QDRO could issue until the General Assembly has enacted a statute which specifically authorizes the withholding of benefits from ERISA-governed pension plans. The legislative history of ERISA Section 1056(d)(3) gives no indication that the "State domestic relations law" requirement of Section 1056(d)(3)(B)(ii)(II) was to be so strictly construed. See 1984 U.S. Code Cong. Admin. News 2564-2569. Indeed, since the enactment of Section 1056(d)(3) in 1984 there appears to have been only one case holding that an order attaching ERISA pension benefits is not a QDRO because it was not made pursuant to state domestic relations law. Stinner v. Stinner (1987), 362 Pa. Super. 219, 226, 523 A.2d 1161, 1164 (holding that because the order therein was based on a property settlement it was rendered "pursuant to general rules pertaining to the enforcement of contracts and not by virtue of any domestic relations law"). R.C. 3113.21(D)(4) authorizes the withholding of "any form of income, including, but not limited to" the items listed therein. Appellee's pension benefits, like all benefits provided under ERISA-governed pension plans, are clearly a "form of income" within the language of this statute. Thus, we conclude that R.C. 3113.21(D)(4) authorizes the trial court to issue an order withholding benefits from an ERISA-governed pension plan, i.e., to issue a QDRO. The court of appeals decision is reversed and the case is remanded for enforcement of the order if it meets the other requirements of a QDRO. Judgment reversed and cause remanded.

In addition to the formal requirements of a QDRO, such an order must not: (1) require a plan to provide any type or form of benefit, or any option, not otherwise provided under the plan, (2) require the plan to provide increased benefits, or (3) require payment of benefits to an alternate payee that are required to be paid to another alternate payee under a previously existing QDRO. ERISA Section 1056(d)(3)(D). Whether the attachment order complies with these other requirements has not been passed on by the court below, and thus we express no opinion in this regard.

MOYER, C.J., SWEENEY, HOLMES, DOUGLAS, H. BROWN and RESNICK, JJ., concur.

TAYLOR v. TAYLOR