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J. Clauson v. D. Clauson (5/8/92), 831 P 2d 1257
NOTICE: This opinion is subject to formal correction
before publication in the Pacific Reporter. Readers are
requested to bring typographical or other formal errors to
the attention of the Clerk of the Appellate Courts, 303 K
Street, Anchorage, Alaska 99501, in order that corrections
may be made prior to permanent publication.
THE SUPREME COURT OF THE STATE OF ALASKA
JAMES F. CLAUSON, )
Appellant, ) File No. S-4150
v. ) 3AN 83 8418 CI
DOROTHY F. CLAUSON, ) O P I N I O N
Appellee. ) [No. 3836 - May 8, 1992]
Appeal from the Superior Court of the State
of Alaska, Third Judicial District,
Anchorage, Victor D. Carlson, Judge.
Appearances: William T. Ford, Anchorage,
for Appellant. Timothy E. Troll, Roger H.
Beaty, Beaty, Draeger, Locke & Troll,
Anchorage, for Appellee.
Before: Rabinowitz, Chief Justice, Burke,
Matthews, Compton and Moore, Justices.
James Clauson appeals a superior court order requiring
him to pay his former wife, Dorothy Clauson (now Dorothy
Crabtree), $168 per month to replace her share of his waived
military retirement pay. Four years after the parties stipulated
to a marital property settlement in which Dorothy was awarded a
portion of James' military pension, James elected to waive his
military pension in order to collect veterans disability
benefits. The waiver resulted in Dorothy's payments ceasing and
led her to seek a modification of the divorce judgment.
James challenges both the procedural and substantive
aspects of the modification order. The threshold procedural
issue concerns Dorothy's entitlement to relief from a final
property settlement judgment. If, upon remand, the trial court
finds that Dorothy's motion was timely filed, we conclude that
the circumstances presented here support Civil Rule 60(b)(6)
relief from judgment.
The substantive question we must address is whether the
Uniformed Services Former Spouses' Protection Act (USFSPA),1 as
it has been interpreted in Mansell v. Mansell, 490 U.S. 581
(1988), precludes state courts from considering a former spouse's
military disability benefits received in lieu of waived
retirement pay when making an equitable division of marital
assets. The Mansell holding clearly prohibits state courts from
treating veterans' disability pay as divisible property upon
divorce. However, the Supreme Court's interpretation of the
USFSPA does not require our courts to entirely disregard this
source of post-divorce income in effecting an equitable
distribution of the parties' assets.
Alaska Statute 25.24.160(a)(4) (1991) requires a trial
court to "fairly allocate the economic effect of divorce"based,
inter alia, on the earning capacity and financial condition of
the parties involved. Since the waiver of retirement pay and
collection of disability benefits clearly affects James and
Dorothy's relative financial positions, Dorothy is entitled to a
redistribution of the marital estate under these new
Nevertheless, in the case at bar, the trial judge
simply ordered James to pay an amount equivalent to Dorothy's
share of the waived retirement pension as if the waiver had never
occurred. The effect of the modification order was to award
Dorothy a portion of James' disability benefits. The order,
therefore, runs afoul of the holding in Mansell and,
consequently, the Supremacy Clause of the federal constitution.
We vacate the modification order and remand the case for a
hearing to reconsider an equitable division of the parties'
marital assets in light of the new circumstances.
Dorothy and James were married in Texas in 1958 and
divorced in Alaska in 1984. The parties entered into a
stipulated property settlement at the time of their divorce that
provided, in part:
A. Plaintiff shall receive:
. . . .
(iv) 13/40 of Defendant's
current military pension and
increases therein, which will
currently entitle her to
approximately $150.00 per month,
which sum shall be paid directly to
her by the Department of Defense
for the rest of her natural live
(sic), or the natural life of
defendant, whichever event occurs
James' pension was part of a marital estate which included
automobiles and some real estate. Both parties were represented
by counsel during the divorce proceeding. The trial court
accepted the parties' stipulated findings of fact and conclusions
of law and stated in the divorce decree that "the division of the
parties' property is found to be fair and equitable."
Four years later, James elected to waive all of his
military retirement pension in order to receive disability
benefits.2 Dorothy had been receiving $168 per month from the
federal government as her share of the pension. After the
waiver, the payments stopped.
On May 23, 1990, Dorothy filed a "Motion to Amend [the]
Decree of Divorce." The motion and its supporting memorandum did
not cite any statute or rule of civil procedure authorizing a
court to amend a property settlement included in a final divorce
decree. James, citing Mansell, opposed Dorothy's motion but did
not challenge her right to modify a final property settlement.
Even so, in her reply to the opposition, Dorothy maintained that
James' waiver of his retirement pay, which terminated her own
interest in this benefit, "is a change of circumstances under AS
25.24.1703 and in addition constitute[d] a destruction of the
Court's original finding in its Divorce Decree that the property
division was fair and equitable." There is no record that James
objected to Dorothy's motion on procedural grounds at any stage
of the proceedings below.
Dorothy requested oral argument to resolve the legal
issues in the case, but it appears that no hearing took place.
In August 1990, Judge Carlson signed an order requiring James to
the sum of $168 per month for the months
of December 1989 through May 1990 in the
total amount $888 for past payments due.
Future payments of $168 per month beginning
June 1990, or such amount as is due pursuant
to the Divorce Decree in the event
Defendant's retirement pay has increased,
shall also be paid by Defendant to Plaintiff.
The modification order contained no supporting findings of fact
or conclusions of law. James now appeals.
1. Do the circumstances of this case justify relief from
judgment under Civil Rule 60(b)(6)?4
James argues on appeal that Dorothy is not entitled to
modify the final divorce decree because she has not established
"extraordinary circumstances"justifying relief from judgment as
required by Civil Rule 60(b)(6). See Lowe v. Lowe, 817 P.2d 453
(Alaska 1991); Schofield v. Schofield, 777 P.2d 197 (Alaska
1989); Foster v. Foster, 684 P.2d 869 (Alaska 1984).5 Our prior
cases have enunciated four factors constituting extraordinary
circumstances justifying relief, under Rule 60(b)(6), from a
Those factors [a]re: (1) the
fundamental, underlying assumption of the
dissolution agreement ha[s] been destroyed;
(2) the parties' property division was poorly
thought out; (3) the property division was
reached without the benefit of counsel; and
(4) the [asset in controversy] was the
parties' principal asset.
Lowe at 458-59. If, as James assumes, the presence of all four
factors is necessary to support a finding of "extraordinary
circumstances,"then Dorothy would not be entitled to modify her
divorce decree because few, if any, of these factors are present
in this case.
However, we have never held that all of these factors
are essential for a finding of "extraordinary circumstances."
Rule 60(b)(6) is, after all, a catch-all provision and "should be
liberally construed to enable courts to vacate judgments whenever
such action is necessary to accomplish justice." O'Link v.
O'Link, 632 P.2d 225, 230 (Alaska 1981) (emphasis added). The
four factors which we have cited in previous cases are not
strictly necessary conditions but, rather, are particular
instantiations of the equitable factors required to overcome the
principle that, at some point, "litigation [must] be brought to
an end."Lowe, 817 P.2d at 459 (quoting Livingston v. Livingston,
572 P.2d 79, 85 (Alaska 1977)).
In this case, the equities clearly reside with Dorothy.
In reality, she is not even seeking to modify the divorce decree.
James did that, unilaterally and extrajudicially, when he decided
to waive his retirement pension in order to collect disability
benefits. Dorothy is merely trying to reestablish the status quo
through her motion. Therefore it does not matter whether the
first property settlement was well thought out or whether both
sides were adequately represented by counsel. The financial loss
to Dorothy of her share of James' military pension is not
insignificant and likely justifies a redistribution of the
parties' marital property.
As we stated in Norman v. Nichiro Gyogyo Kaisha, Ltd.,
761 P.2d 713, 717 (Alaska 1988), "[i]n reaching the conclusion
that [a party] is entitled to relief from judgment under Rule
60(b)(6) we balance the interest in the finality of judgments
against the interest in granting relief from judgment when
justice so requires." Since Dorothy is essentially trying to
enforce the financial arrangements of the earlier decree, there
is very little weight on the "finality"side of the scale. We
conclude, therefore, that these circumstances are sufficiently
extraordinary to support a 60(b)(6) motion for relief from
2. Does federal law preclude the modification of a
property settlement to compensate for the loss of
military retired pay which has been waived to secure
veterans disability benefits?
The Uniformed Services Former Spouses' Protection Act
provides that state courts may treat "disposable retired pay"
either as the property of the armed forces member "or as property
of the member and his spouse in accordance with the law of the
jurisdiction." 10 U.S.C. 1408(c)(1) (Supp. 1991). The USFSPA
clearly confers upon state courts the authority to divide
military pensions according to applicable state divorce and
property laws.6 See Chase v. Chase, 662 P.2d 944, 946 (Alaska
In Chase, we noted that the USFSPA gave state courts
"the option to consider military retirement pay in effecting an
equitable and just property division." Id. We then held that
under state law, military pensions are divisible marital property
upon dissolution of marriage. Id.; see also Lang v. Lang, 741
P.2d 1193, 1196 (Alaska 1987) (trial courts can award a former
spouse part of a military pension "if necessary to effectuate an
equitable property division").
However in 1989, the United States Supreme Court held
that the USFSPA "does not grant state courts the power to treat
as property divisible upon divorce military retirement pay that
has been waived to receive veterans disability benefits."
Mansell, 490 U.S. at 594-95. The majority in Mansell reasoned
that Congress granted state courts only "limited" authority to
divide military benefits when it passed the USFSPA. The Court
noted that the language of the statute:
was both precise and limited. It
provided that "a court may treat disposable
retired or retainer pay . . . either as
property solely of the member or as property
of the member and his spouse in accordance
with the law of the jurisdiction of such
court. 1408(c)(1). The Act's definitional
section specifically defines the term
"disposable retired or retainer pay" to
exclude, inter alia, military retirement pay
waived in order to receive veterans'
disability payments. Thus, under the Act's
plain and precise language, state courts . .
. have not been granted the authority to
treat total retired pay as community [or
Id. at 588-89 (footnote omitted). Congress intended the statute,
the Court concluded, "both to create new benefits for former
spouses and to place limits on state courts designed to protect
military retirees."7 Id. at 594.
James considers Mansell to be dispositive on the
substantive issue presented in his appeal. He argues that any
adjustment of the parties' marital property settlement would have
the effect of dividing his current veterans' disability benefits
in direct contravention of the holding in Mansell.
There are actually two related but separate questions
that must be answered in order to resolve this appeal. The first
is whether state courts have any power, after Mansell, to
equitably divide veterans' disability benefits received in place
of waived retirement pay. The answer to that question is an
unequivocal no. Despite the fact that Mansell involved a
community property state, California, which had classified waived
retired pay as community property, the Mansell holding is equally
applicable to equitable distribution states, such as Alaska,
which employ an equitable division concept to settle property
upon divorce and permit the division of both separate and marital
property to achieve an equitable result.8 See Mansell, 490 U.S.
at 584 n.2. Accordingly, we hold that the USFSPA prohibits our
courts from distributing this type of military benefit to a
former spouse when allocating property upon divorce.
The second, more difficult question is whether federal
law also precludes our courts from considering the economic
impact that a waiver of military retirement pay and corresponding
receipt of disability pay has on the parties to a divorce. It is
clear that, but for federal preemption, state law requires our
courts to consider this information in making an equitable
allocation of property upon divorce. Alaska Statute
25.24.160(a)(4)(C) & (D) (1991) provides, for example, that the
property division "must fairly allocate the economic effect of
divorce by being based on consideration of . . . . the earning
capacity of the parties . . . . [and] the financial condition of
In recent cases involving federal preemption of state
domestic relations law, the Supreme Court, noting the states'
paramount role in this area, has refused to override state law
unless preemption is "positively required by direct [federal]
enactment" or the particular law does "major damage" to "clear
and substantial"federal interests. Hisquierdo v. Hisquierdo,
439 U.S. 572, 581 (1979); see also Mansell, 490 U.S. at 587; Rose
v. Rose, 481 U.S. 619, 625 (1987); McCarty v. McCarty, 453 U.S.
210, 220-21 (1981).
We are persuaded that neither the USFSPA nor prior
Supreme Court decisions require our courts to completely ignore
the economic consequences of a military retiree's decision to
waive retirement pay in order to collect disability pay. The
statute merely speaks to a state court's power to "treat" this
type of military benefit "either as property solely of the [armed
forces] member or as property of the member and his spouse." 10
U.S.C. 1408(c)(1) (Supp. 1991). Even the McCarty decision,
which first found preemption in this area, held only that state
courts were precluded from "dividing" retirement pay or
"characterizing"such pay as community property based on the fact
that "retired pay"was a "personal entitlement" of the armed
forces member and that "division of retired pay [wa]s simply
inconsistent with th[e] explicit expression of congressional
intent that retired pay accrue to the retiree." McCarty, 453
U.S. at 224-27.
We are aware of no federal statute which specifically
prohibits a trial court from taking into account veterans'
disability benefits when making an equitable allocation of
property. Cf. Hisquierdo, 439 U.S. at 583-89 (an offset of
property for railroad workers' federally protected benefits was
inappropriate where statute provided "[n]otwithstanding any other
law . . . of any State"statute prevented "attachment, or other
legal process under any circumstances whatsoever"). Nor do we
see how this practice does major damage to clear and substantial
In fact, of more relevance to this question than
Mansell, is the Supreme Court's decision in Rose v. Rose, 481
U.S. 619. In Rose, the Court held that anti-attachment
provisions and similar restrictions in federal laws governing
veterans' disability benefits did not conflict with the
enforcement of state child support orders even where disability
benefits represented a disabled veteran-obligor's only source of
income and would necessarily be used to pay child support. Id. at
636. The Court specifically noted that such "benefits are
intended to support not only the veteran, but the veteran's
family as well."9 Id. at 634.
Other jurisdictions struggling with these post-Mansell
issues have generally found that their family law courts are not
precluded from considering veterans' disability benefits as they
affect spousal maintenance or the equitable allocation of the
parties' assets. See McMahan v. McMahan, 567 So. 2d 976, 980
(Fla. Dist. App. 1990) (notwithstanding Mansell, state courts may
consider the impact of veterans' disability payments in
determining the "entire equitable distribution scheme . . . in an
effort to do equity and justice to both [parties]"); Jones v.
Jones, 780 P.2d 581 (Hawaii App. 1989) ("Neither Hawaii's rule
nor federal law precludes the family court, when dividing
property and debts in a divorce case, from considering as one of
the relevant circumstances . . . a party's time-of-divorce right
to receive veterans' and military disability pay post-divorce in
the same way that the family court considers each party's ability
or inability to earn and receive income post-divorce."); Weberg
v. Weberg, 463 N.W.2d 382 (Wis. App. 1990) (trial court may
consider veterans' disability payments as a factor in assessing
ex-husband's ability to pay spousal maintenance). We similarly
hold that federal law does not preclude our courts from
considering, when equitably allocating property upon divorce, the
economic consequences of a decision to waive military retirement
pay in order to receive disability pay.
We are aware of the risk that our holding today might
lead trial courts to simply shift an amount of property
equivalent to the waived retirement pay from the military
spouse's side of the ledger to the other spouse's side. This is
unacceptable. In arriving at an equitable distribution of
marital assets, courts should only consider a party's military
disability benefits as they affect the financial circumstances of
both parties. Disability benefits should not, either in form or
substance, be treated as marital property subject to division
upon the dissolution of marriage.
This is, however, precisely what happened in the case
before us. The trial court's modification order simply replaced
direct federal garnishment of James' retirement benefits with a
state order to pay. The trial judge even ordered that increases
in James' retirement pay be passed on to Dorothy without any
apparent recognition that James no longer has any retirement pay.
The court was clearly trying to regain the status quo as if the
Mansell decision did not exist. The effect of the order was to
divide retirement benefits that have been waived to receive
disability benefits in direct contravention of the holding in
Mansell. This simply cannot be done under the Supremacy Clause
of the federal constitution.
We therefore VACATE the order and REMAND the case to
the superior court for further proceedings consistent with this
1. 10 U.S.C. 1408 (1983 ed. and Supp. 1991).
2. James states in his brief that he "suffered from a
multiple arthritic condition which was determined by the
Veteran's Administration to be service-connected." For those
eligible, former service personnel who elect to receive
disability pay in lieu of retirement pay can obtain certain tax
The Supreme Court explains:
In order to prevent double dipping, a
military retiree may receive disability
benefits only to the extent that he waives a
corresponding amount of his military
retirement pay. [38 U.S.C.] 3105. Because
disability benefits are exempt from federal,
state, and local taxation, [38 U.S.C.]
3101(a), military retirees who waive their
retirement pay in favor of disability
benefits increase their after tax income.
Mansell, 490 U.S. at 583-84.
3. This statute allows for the modification of alimony and
maintenance judgments but does not authorize a court to modify a
decree as it relates to property rights. See AS 25.24.170 (1991);
see also Allen v. Allen, 645 P.2d 774 (Alaska 1982). On appeal,
Dorothy analogizes monthly pension payments to alimony payments
and then argues that the decree should be modifiable under AS
25.24.170. However, despite the fact that retirement pensions,
military or otherwise, are paid out on a monthly, prospective
basis, pensions are property and decrees resolving rights to
property are modifiable only to the extent that relief may be
obtained from any other final judgment. See Lowe v. Lowe, 817
P.2d 453, 456 (Alaska 1991) ("As this is not an initial
adjudication of the parties' property rights [in a military
pension], relief may be granted only within the parameters of
Civil Rule 60(b).").
4. We will not overturn a trial court's decision to modify
a decree adjudicating property rights except upon a showing that
the court abused its discretion. Schofield v. Schofield, 777 P.2d
197, 202 (Alaska 1989). "On the other hand, whether the trial
court applied the appropriate legal standard in exercising its
broad discretion is a question of law regarding which this court
may substitute its independent judgment."Laing v. Laing, 741
P.2d 649, 651 (Alaska 1987).
5. Although James did not raise this procedural argument
below, he may raise it on appeal because under Civil Rule 6(b),
the superior court lacks subject matter jurisdiction to set aside
judgments unless a motion is made within the Rule 60(b) time
limits. See Lowe, 817 P.2d at 457. Civil Rule 60(b)(6) requires
a motion to be filed within a "reasonable time" stating "any
. . . reason justifying relief from the operation of the
judgment." Here Dorothy filed a motion to modify the decree but
never explicitly denominated it as a 60(b) motion. The trial
court, in its order, also failed to base its modification on Rule
60(b). Nevertheless, Dorothy's motion can, at least implicitly,
be considered a 60(b) motion as it provides a "reason justifying
relief from the operation of the judgment."Civil Rule 60(b)(6).
It also may have been filed within a reasonable time. See Lowe,
817 P.2d at 459 (four and a half years not per se unreasonable).
However we need not decide this issue at the present time. On
remand, the superior court should treat this as a Rule 60(b)(6)
motion to modify the parties' earlier division of property and
make appropriate findings as to the timeliness of the motion.
6. It is helpful to briefly explain the legal landscape
prior to passage of the USFSPA. In 1979, based on our conclusion
that federal law "prohibit[ed the] application of state property
settlement concepts"in this area, we held that military "retired
pay" (i.e. a military pension) was not property which could be
divided upon divorce. Cose v. Cose, 592 P.2d 1230, 1232 (Alaska
1979). In 1981, the U.S. Supreme Court also ruled that federal
law governed the division of military pensions and precluded
state courts from dividing military pensions upon divorce.
McCarty v. McCarty, 453 U.S. 210 (1981). The next year, Congress
passed the USFSPA, explicitly intending the act to abrogate most
preemptive aspects of McCarty. See H.R. Conf. Rep. No. 97-749,
97th Cong., 2d Sess. 49, 165-68; S. Rep. No. 97-502, 97th Cong.,
2d Sess. 1-5, reprinted in 1982 U.S. C.C.A.N 1555, 1569, 1570-73,
1596-1600; see also Mansell, 490 U.S. at 583-85.
7. Section 1408 was revised in 1990, but Congress did not
address the issues raised by the Mansell decision. The section
now reads in pertinent part:
(a)(4) The term "disposable retired
pay" means the total monthly retired pay to
which a member is entitled less amounts which
. . . .
(B) are deducted from the retired pay of
such member as a result of . . . a waiver of
retired pay required by law in order to receive
compensation under title 5 or title 38;
. . . .
(c)(1) Subject to the limitations of
this section, a court may treat disposable
retired pay payable to a member . . . either
as property solely of the member or as
property of the member and his spouse in
accordance with the laws of the jurisdiction
of such court.
10 U.S.C. 1408 (Supp. 1991).
8. See AS 25.24.160 (1991); Carlson v. Carlson, 722 P.2d
222, 223-24 (Alaska 1986) ("The division of property in a
divorce action involves a three-step process. The court 1)
determines what property is available for distribution, 2) values
the property and 3) determines the most equitable allocation.").
9. Under the logic of Rose, a state court is clearly free
to consider post-divorce disability income and order a disabled
veteran to pay spousal support even where disability benefits
will be used to make such payments. We, on the other hand, have
stated our preference for property disposition over an award of
alimony or spousal support. See Bussell v. Bussell, 623 P.2d
1221, 1224 (Alaska 1981). Therefore, under our marital property
scheme, we see no valid reason why veterans disability benefits
should not be considered in making an equitable allocation of
property and thereby avoid the need to award spousal support.
Our approach is, if anything, even more compatible with federal
law as it provides a disabled veteran sole possession of his or
her disability benefits both in law and in fact.