Funding a retirement distribution with a previously unnamed retirement plan is permissible after a divorce decree is final, according to the unpublished Virginia Court of Appeals decision in Forest v. Forest (Record No. 0836-12-4. March 12, 2013).

            The opinion is noteworthy for its back story — its unusual length (14 pages) and its reversal of Judge Dennis J. Smith of Fairfax Circuit Court.  Judge Smith practiced family law for years, teaches the subject at George Mason University Law School, and is considered among the most knowledgeable domestic relations trial judges in Virginia.  Joseph A. Condo, representing the wife and prevailing party, is himself one of the premier divorce lawyers in Virginia.

            The facts are straightforward.  Husband and wife sign a property settlement agreement (PSA) dividing marital portions of their retirements. Husband surreptitiously depletes one of his retirement accounts, the court enters a final order of divorce, and then husband commits suicide.  Insufficient money remains in the retirement accounts identified in the PSA for wife to receive her agreed marital retirement share.

            Mr. Condo says to Judge Smith, in effect, “Allow wife to claim her retirement funds from a different retirement, not named in the PSA, since the one named was fraudulently depleted of most of its funds.”  Judge Smith declines to enter a Qualified Domestic Relations Order (QDRO) more than twenty-one days after entry of the final decree that taps into a retirement fund that the parties had not agreed to divide in their PSA.

            The issue on appeal is whether Virginia Code § 20-107.3(K)(4) authorizes the requested relief.  The statute provides:

      "The court shall have the continuing authority and jurisdiction to make any additional orders necessary to effectuate and enforce any order entered pursuant to this section, including the authority to:

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          "Modify any order entered in a case filed on or after July 1, 1982, intended to affect or divide any pension, profit-sharing or deferred compensation plan or retirement benefits pursuant to the United States Internal Revenue Code or other applicable federal laws, only for the purpose of establishing or maintaining the order as a qualified domestic relations order or to revise or conform its terms so as to effectuate the expressed intent of the order."

            The Court of Appeals matches up the facts in Forest with those set forth in a prior opinion, Williams v. Williams, 32 Va. App. 72, 75, 526 S.E.2d 301, 303 (2000), and declares the retirement payout modification is allowable.  The match-up permits Forest to be unpublished; since its fact pattern is essentially identical to that of an established precedent.  I believe the exceptionally high number of pages written to deliver a mere reiteration of a prior ruling may be a subtle acknowledgement of the prestige of the lower court judge who is being reversed.

            If you analogize this appellate opinion to the tracks of a downhill skier, then one may say that very little room exists to vary the skier’s path on either side.  The court forecloses any major factual deviation by pointing to its earlier rulings that preclude changes to either the timing or the amount of retirement payouts.

            I believe a host of other factors, had they existed, would similarly prevent a trial court from exercising the revisory authority permitted here.  Those factors include a bankruptcy filing; the need to supplement retirement funds by crossing over from a defined contribution plan to a defined benefit plan or vice versa; and a situation in which the only available source of funds for topping off a claimant’s retirement share is non-retirement assets.  Additionally, in my view, relief would be curtailed if the only alternate retirement plan were burdened with a security interest; as for example, if a beneficiary had borrowed against their plan.

            Overall, the exception-to-finality loophole clarified here may rarely benefit equitable distribution practitioners.  Few QDRO’s involve drafting errors or fraud, and a limited number of retirees have more than one private retirement.
            The metaphorical “skier’s path” delineated by Code § 20-107.3(K)(4) and exemplified by Williams is so narrow that it is understandable how Judge Smith might have missed it.  Judges tend to be conservative when facing a choice between allowing an exception and upholding the finality of their decision.  When confronting this choice, judges usually select finality.  On the other hand, some fact pattern has to fit the statutory language allowing the court to “revise or conform … terms so as to effectuate the expressed intent of the order”, in order for the law to have any meaning.  If the qualifying facts are not these facts presented in Forest, what could they possibly be?  Perhaps Judge Smith was thinking of a mistake in a retirement plan address or in an account number.

            The most important sentence in the Forest opinion appears in footnote 9:  “Our precedents neither encourage approbation and reprobation nor countenance fraudulent behavior.”  The court is saying that it is not about to allow a party to frustrate a contract by hiding money.  The court also points out that instead of relying on the statute, the wife might have sought relief under the PSA (for breach of contract and fraud).  But lawsuits are time-consuming and expensive.  When the legislature provides a conforming mechanism that is more cost-effective and rapid — as it did here, and the litigant has been wronged, then she should be entitled to employ it.