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Sullivan v. Sullivan12/30/2004
AFFIRMED.
Thibodeaux, C.J., dissents and assigns written reasons.
In this community property case, the dispute involves the valuation of retirement funds in the former husband's Deferred Retirement Option Plan (DROP) account, which he rolled over into a Merrill Lynch IRA account without giving his former wife her interest in those funds. She repeatedly attempted to collect her share of the funds, during which time they greatly diminished in value. The husband appeals the trial court's judgment, which valued the funds as of the date he withdrew them from the DROP account and which awarded interest from the date his wife filed a request to establish her share of the funds. Finding no error in the trial court's judgment, we affirm.
Mr. Charles Sullivan and Mrs. Paige Sullivan married in 1964, divorced in 1988, and partitioned their community property in 1990. The partition judgment, inter alia, ordered that each party had an interest in "any retirement plan, and in any annuity or lump sum payment paid to either party" in accordance with the formula established in Sims v. Sims. Both parties worked for the Calcasieu Parish School Board (CPSB), Mrs. Sullivan as a teacher and Mr. Sullivan as a principal. In June 1995, Mr. Sullivan retired and entered into DROP.
"The DROP program is an optional method of retiring whereby an employee changes his status in the state retirement system from 'active member' to 'retiree' but continues to work at his regular job while he accumulates money in an individual DROP account based on the amount he would have received as a monthly retirement benefit had he in fact retired." An employee may participate in DROP for up to three years.
Mr. Sullivan's retirement funds went into that account, drawing interest over the three year period. On September 15, 1999, he withdrew $92,354.47 of the $108,541.45 in the account and rolled it into an individual retirement account (IRA). After repeated amicable demands, Mrs. Sullivan filed a rule to establish her share in his retirement benefits. The parties stipulated that Mrs. Sullivan's interest in his retirement benefits under the Sims formula was 31 percent. However, Mr. Sullivan argued that the DROP funds should not be included because they were his separate property. The trial court agreed with him. However, this court reversed its judgment because it was contrary to our supreme court's holding in Bailey v. Bailey.
On April 30, 2002, Mrs. Sullivan filed a "Rule to Require Defendant to Pay Percent of DROP Account." The court heard the rule on June 30, 2002. By the time of the June 30, 2002 hearing on the Rule, the IRA funds had diminished in value to $60,978.24. Mr. Sullivan urges us to value the DROP funds as of this date. Conversely, Mrs. Sullivan urges, and the trial court found, that the funds should be valued as of September 15, 1999, when the husband made his first withdrawal from the account. Mr. Sullivan appeals. Thus, the central question before us is at what point in time the DROP funds should be valued.
VALUATION DATE
Louisiana Revised Statutes 9:2801(4)(a) mandates that the court "value the assets as of the time of trial on the merits,determine the liabilities, and adjudicate the claims of the parties." (Emphasis added.) However, " se of the 'fixed percentage' method [such as the Sims formula] does not require valuation of the pension."
Our supreme court in Sims v. Sims discussed the unique situation pension plans which have not matured at the date of dissolution create, stating:
he community interest in the retirement plan has no immediate redeemable cash value. Until the employee is separated from the
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