Notes From the Courts: A Rose By Any Other Name

Marital Share of Spouse’s Pension Includes All Elements of the Pension Benefit In a new application of an old theme, the Maryland Court of Special Appeals reiterated the basic concept of interpreting an agreement of the parties with regard to a spouse’s pension benefit.  In Pulliam v. Pulliam, filed on April 29, 2015, the Court held that a consent judgment was unambiguous and that all elements of the Husband’s pension benefit are to be included in the transfer to Wife of her marital share of Husband’s pension. The facts of this case are straightforward.  At the time of the entry of a judgment of absolute divorce, the parties reached a settlement of their differences and subsequently created a consent order for review and signature by the judge.  The consent order contained all of the elements in the agreement of the parties. The term of the consent order that the court was interpreting was written as follows: “ORDERED, that the Defendant shall assign to the Plaintiff an interest in the Pension System for Law Enforcement officers of the State of Maryland as follows: One half of the Marital Share of his entire pension benefit.” When the time came for Husband to sign the particular order needed to transfer Wife’s marital share to her, he refused to do so. He asserted that one particular piece of the Husband’s benefit (referred to as the Deferred Retirement Option Program or “DROP”) should not be included in the calculation of the transfer to Wife.  Husband argued that at the time of the divorce, Husband was not eligible to receive DROP as a part of...

Notes from the Courts: Know Your Marital Assets & Say it Clearly in Writing

The recent decision by the Maryland Court of Special Appeals in Baker v. Baker reminds us that in order to avoid differences in the interpretation of an agreement, it is crucial for an agreement to expressly contain the complete articulation of each and every element of the agreement.  If a clear and complete articulation of the terms of an agreement is absent, the court will look to principles of law and regulation to resolve an issue. The Baker case involved the allocation of a marital asset that was not specifically addressed in the marital settlement agreement signed by the parties.  The language of the agreement of the parties required Wife to relinquish to Husband any interest she might have in any jointly titled investment or bank accounts.  At the time of the divorce, the parties had a capital-loss carry-forward that resulted from losses in their investment accounts, but this specific asset was not discussed in their agreement.  The carry-forward came about because the Internal Revenue Code limits the amount of a capital loss that taxpayers may use to reduce their tax liability in any given year, but allows taxpayers to defer (or carry-forward) the excess loss to reduce tax liabilities in future years.  After the divorce, Ms. Baker used about 50% of the capital-loss carry-forward to offset the gains she had realized from the sale of a parcel of real property. Mr. Baker argued that because their agreement stated that Wife was required to relinquish any interest she may have had in any jointly titled investment account, Husband was entitled all of the capital-loss carry-forward asset.  While the trial...

Notes from the Courts: Court Prevents Husband’s Shell Game with Marital Money

When are the proceeds from an employer loan considered a “debt,” or “income,” or “marital property”?  This is one of the questions faced by the Maryland Court of Special Appeals in the recent case, Troy T. Bryant v. Roxanna K. Bryant. In this case, Husband was a successful employee of a financial institution, UBS.  Husband and UBS entered into an agreement where Husband received what was characterized in the employment agreement as a “cash loan” or “transition loan” in the amount of $1,305,000.  Unlike a more conventional loan, UBS made “payments” to Husband by forgiving one-ninth of each loan on Husband’s anniversary dates with the company as long as he worked there with the total “loan” being forgiven in nine years. Husband argued that the “loans” were in fact loans, not signing bonuses or compensation, because after the divorce he would remain responsible to repay them.  He also argued that this money could not be considered “property acquired during the course of the marriage” because he would have not done the work entitling him to forgiveness until after the divorce.  Husband not only received the loan proceeds, but he also earned a commission-based salary from UBS. Not surprisingly, Wife argued that the payment of $1,305,000 was really a “retention bonus” that UBS structured for tax purposes as a loan with payments due over a period of years.  Wife added that UBS paid Husband over $2.2 million between November 2010 and February 2013.  After construing the employment agreement between Husband and UBS, listening to the testimony of the parties and dueling experts, the Court of Special Appeals affirmed the decision...

Notes from the Courts: The Maryland Electronic Court System – Pilot Program in Arundel County

This month, the Anne Arundel County Courts go very “high tech” with the launching of a new program called the Maryland Electronic Court System (MDEC). Anne Arundel is the first of Maryland’s jurisdictions to participate in the MDEC; eventually all Maryland’s counties and Baltimore City will be required to participate in the MDEC. As envisioned by the Maryland Judiciary, the MDEC will achieve several important objectives: eliminate paper files; support the judiciary’s case management system by allowing for greater flexibility than is now currently available; and reduce processing delays. Another overall goal of the MDEC is to create electronic case records as official court records. One critical aspect of the MDEC is the mandatory requirement for attorneys to file pleadings on behalf of a client electronically. Specific procedures related to e-filing are contained in Title 20 of the Maryland Rules for Civil Procedure, and the Maryland Judiciary is also offering tutorials through its website for attorneys. Failure to comply with mandatory e-filing will have serious consequences because after November 10, paper filings will no longer be accepted by the Anne Arundel County courts. As we can expect when transitions occur in our individual lives or in business matters, there will likely be several bumps in the road before the goals of the MDEC are achieved. Persistence and patience by attorneys and members of the public who must access the Maryland court system will be necessary in the coming...

Notes from the Courts: Child Support Required for Certain Adult Children

As our children return to school in the fall, most of us experience a sense of optimism about their growth as they move toward adulthood and independence. In Maryland, adulthood is attained when a person reaches the age of 18 years and parents are generally no longer legally obligated to provide financial support for their children. (Maryland’s child support statute may require parents to provide financial support for their children until they graduate from high school or reach the age of 19 years at the latest. This situation occurs typically if a child has a birthday at the end of the calendar year following high school graduation in the spring.) Not all parents, however, are free from the legal obligation of child support after a child reaches the chronological age of an adult. As we are reminded in the recent case decided by the Maryland Court of Special Appeals in Zahn v. Zahn, in certain situations, a parent must support an adult child if the adult child is destitute and the parent has sufficient means to provide that support. In Maryland’s Family Law Article, an adult destitute child is defined as one who has no means of subsistence and cannot be self-supporting due to mental or physical infirmity. In the Zahn case, the adult child in question, Douglas, was diagnosed with a host of psychological disorders, including autism spectrum disorder, anxiety, oppositional defiance disorder, and attention deficit disorder. After graduating from high school, he received services from the state of Maryland. Upon evaluating the evidence provided by both parents and a vocational expert at trial, the Court of Special...