1. Divorce_equitable distribution_interest on distributive award_correction of award
There was no abuse of discretion in modifying a qualified domestic relations order to
reflect the intent of the parties by deleting language referring to interest from a distributive award
from a retirement plan, or by ordering a refund of an amount paid by the plan under that
language.
2. Divorce_equitable distribution_distributive award from retirement plan_interest
not included
There was no error in not including interest on an amount paid from a retirement plan
under a qualified domestic relations order. The court made clear that this was a distributive
award (which is a sum certain and does not include gains and losses) to be paid from a retirement
account, and not a distribution of the retirement account.
David B. Hough for plaintiff-appellee.
Lennard D. Tucker for defendant-appellant.
McGEE, Judge.
Plaintiff filed a complaint for absolute divorce on 12 January
2000. Defendant filed an answer and counterclaim on 16 March 2000,
that included a claim for equitable distribution. In a reply to
the counterclaim, plaintiff requested a hearing on equitable
distribution. The case was heard at the 4 September 2001 session
of District Court in Forsyth County. The parties advised the trial
court that they had resolved by stipulation all of the issues in
the case. The terms of their agreement and stipulations were readinto the record by the attorneys representing the parties. The
trial court signed an equitable distribution consent judgment dated
26 September 2001.
Paragraph fourteen of the equitable distribution consent
judgment provided for a distributive award by plaintiff to
defendant with the following language:
In order to effectuate the equitable
distribution of the marital property of the
parties as set forth herein, the Plaintiff
shall pay as a distributive award to the
Defendant the sum of Eighty-one Thousand
Dollars ($81,000.00) and shall be paid by way
of a distribution to the Defendant from the
Plaintiff's R.J. Reynolds Capital Investment
Plan. This Court shall enter an appropriate
Qualified Domestic Relations Order to
effectuate this transfer of retirement funds
from the Plaintiff to the Defendant.
The trial court signed a qualified domestic relations order (QDRO)
dated 26 September 2001 to effectuate the distributive award from
plaintiff's R.J. Reynolds Capital Investment Plan. The QDRO
contained the following language in paragraph five regarding the
distributive award:
From the benefits which would otherwise
be payable to the Participant under the Plan,
the Participant assigns to the Alternate
Payee, and the Alternate Payee shall receive
from the Plan, a benefit equal to $81,000.00,
plus gains and/or losses earned on that amount
from January 9, 1999 up to and including the
last day of the month preceding the date of
distribution of the benefit payable hereunder.
Plaintiff provided the plan administrator with a copy of the
order on 28 September 2001 and informed the plan administrator that
the parties intended for the order to be a QDRO. The Benefits
Administration Committee of the R.J. Reynolds Capital Investment
Plan issued a check to defendant in the gross amount of $100,750.31on 25 October 2001. Plaintiff filed a motion dated 17 December
2001 to modify the QDRO, pursuant to N.C. Gen. Stat. § 1A-1, Rule
60. Plaintiff alleged that the equitable distribution consent
judgment only allowed defendant to receive $81,000.00. However,
the resulting QDRO from plaintiff's Capital Investment Plan, which
included the language "plus gains and/or losses," directed that
defendant receive $100,750.31. Accordingly, plaintiff sought a
refund from defendant of $19,750.31, plus interest. Defendant
filed an objection to the motion to modify the QDRO on 4 February
2002.
The trial court entered an order on 4 June 2002 stating that
plaintiff, pursuant to Rule 60(b), was entitled to a modification
of the QDRO to eliminate the words "plus gains and/or losses earned
on that amount from January 9, 1999 up to and including the last
day of the month preceding the date of distribution of the benefit
payable hereunder." Defendant was also ordered by the trial court
to immediately refund to plaintiff, on or before 4 July 2002, the
sum of $19,750.31, plus interest. Defendant appeals from this 4
June 2002 order.
Plaintiff filed a motion for show cause and contempt dated 24
July 2002, alleging that as of 15 July 2002, defendant had made no
deposit to plaintiff's Capital Investment Plan. A hearing was held
on 19 August 2002. The trial court entered an order dated 27
August 2002, denying plaintiff's motion since the trial court did
not have jurisdiction in that defendant had already filed notice of
appeal of the 4 June 2002 order. Plaintiff filed notice of appeal
on 26 September 2002 from this denial. "The purpose of Rule 60(b) is to strike a proper balance
between the conflicting principles of finality and relief from
unjust judgments. Generally, the rule is liberally construed."
Carter v. Clowers, 102 N.C. App. 247, 254, 401 S.E.2d 662, 666
(1991) (citation omitted). "A trial court's ruling on a Rule 60(b)
motion is reviewable only for an abuse of discretion. The trial
court's findings of fact are conclusive on appeal, if supported by
competent evidence. However, those conclusions of law made by the
court are reviewable on appeal." Coppley v. Coppley, 128 N.C. App.
658, 663, 496 S.E.2d 611, 616, disc. review denied, 348 N.C. 281,
502 S.E.2d 846 (1998) (citations omitted). "Abuse of discretion is
shown only when 'the challenged actions are manifestly unsupported
by reason.'" Blankenship v. Town & Country Ford, Inc., 155 N.C.
App. 161, 165, 574 S.E.2d 132, 134 (2002), disc. review denied , 357
N.C. 61, 579 S.E.2d 384 (2003) (quoting Clark v. Clark, 301 N.C.
123, 129, 271 S.E.2d 58, 63 (1980)).
[1] Defendant first argues the trial court erred when it
modified the parties' QDRO on the basis of mutual mistake under
Rule 60(b). At the outset, we note the trial court did not
necessarily rely on mutual mistake in granting the relief. The
order merely stated that "the Plaintiff, pursuant to Rule 60 (b) of
the North Carolina Rules of Civil Procedure, remains entitled to a
modification of the QDRO entered in this case." In addition to
mistake, Rule 60(b) provides relief from judgment for a number of
reasons, including the following:
(1) Mistake, inadvertence, surprise, or
excusable neglect;
(2) Newly discovered evidence which by duediligence could not have been discovered
in time to move for a new trial under
Rule 59(b);
(3) Fraud (whether heretofore denominated
intrinsic or extrinsic),
misrepresentation, or other misconduct of
an adverse party;
(4) The judgment is void;
(5) The judgment has been satisfied,
released, or discharged, or a prior
judgment upon which it is based has been
reversed or otherwise vacated, or it is
no longer equitable that the judgment
should have prospective application; or
(6) Any other reason justifying relief from
the operation of the judgment.
N.C. Gen. Stat. § 1A-1, Rule 60 (2003).
The unique facts of the case before us fall within the
confines of Rule 60(b)(6).
Rule 60(b)(6) is equitable in nature and
authorizes the trial court to exercise its
discretion in granting or denying the relief
sought. The rule empowers the court to set
aside or modify a final judgment, order or
proceeding whenever such action is necessary
to do justice under the circumstances. The
test for whether a judgment, order or
proceeding should be modified or set aside
under Rule 60(b)(6) is two pronged: (1)
extraordinary circumstances must exist, and
(2) there must be a showing that justice
demands that relief be granted.
Howell v. Howell, 321 N.C. 87, 91, 361 S.E.2d 585, 587-88 (1987)
(citations omitted).
In the case before us, the trial court noted the following in
its findings of fact in the order to modify the QDRO:
5. In the resulting QDRO entered by this
Court on September 27, 2001, the Court
inadvertently and mistakenly ordered that the
Defendant receive $81,000 from the Plaintiff's
R.J. Reynolds Capital Investment Plan, plus"gains and/or losses earned on that amount
from January 9, 1999 up to and including the
last day of the month preceding the date of
distribution of the benefit payable hereunder"
(emphasis added).
Previously, in the equitable distribution consent judgment, the
trial court had ordered that "[p]laintiff shall pay the sum of
Eighty-one Thousand Dollars ($81,000.00) by way of a transfer from
the Plaintiff's R.J. Capital Investment Plan pursuant to a
Qualified Domestic [Relations] Order which shall be entered by this
Court." The additional "gains and/or losses" language was
mistakenly inserted into the resulting QDRO.
The facts of this case make relief under Rule 60(b)(6)
appropriate. Defendant received an additional $19,750.31 to which
she was not entitled simply due to the wording in the QDRO. The
evidence supports the conclusion that both parties intended that
plaintiff only receive a set amount of $81,000.00 through the
distributive award. In fact, the equitable distribution consent
judgment awarded the R.J. Reynolds Capital Investment Plan wholly
to plaintiff. Similarly, the judgment awarded the Teachers' &
State Employees' Retirement System Plan to defendant. Neither
party was awarded any interest whatsoever in the other's retirement
plan. Plaintiff was simply ordered to pay defendant $81,000.00 as
a distributive award to make the division equitable. In this case,
the money for the award was ordered to come from plaintiff's R.J.
Reynolds Capital Investment Plan. The fact that the money for the
award originated from a retirement plan is immaterial. The origin
of the money does not transform an ordinary distributive award into
a division of a retirement plan whereby the payee can reap thebenefits of subsequent gains.
Furthermore, defendant's reliance on Stevenson v. Stevenson,
100 N.C. App. 750, 398 S.E.2d 334 (1990), is misplaced. Stevenson
involved the modification of a consent judgment which resolved
multiple issues between the parties who were divorcing. The
plaintiff and the defendant had agreed that the plaintiff would
have sole possession of the marital home and would receive an
additional sum if the value of the house was less than the value of
defendant's profit-sharing plan. Stevenson, 100 N.C. App. at 751,
398 S.E.2d at 335. The formula for assessing the value of the
home, which was read into the record, was to include a certain
deduction based on a loan. However, after multiple revisions, the
formula in the written consent judgment failed to include that
particular deduction. Id. The trial court granted a Rule 60(b)
motion to correct the consent judgment to reflect the agreement of
the parties. Stevenson, 100 N.C. App. at 751, 398 S.E.2d at 336.
However, this Court vacated the trial court's judgment because
there was no showing of fraud, lack of consent, or mistake.
Stevenson, 100 N.C. App. at 752, 398 S.E.2d at 336.
The case before us is distinguishable. In Stevenson, the
parties initially read the agreement into the record on 31 May
1988. Thereafter, the agreement was "altered many times by both
parties" before a final draft was submitted to the court and filed
on 6 July 1988. Stevenson, 100 N.C. App. at 753, 398 S.E.2d at
337. In contrast, in the case before us, the equitable
distribution consent judgment was dated 26 September 2001.
Likewise, the QDRO was also dated 26 September 2001. UnlikeStevenson, there was only a single draft of the QDRO. The parties
did not create multiple drafts with revisions. Rather, the two
documents were dated the same day. The consent judgment directed
simply that defendant receive a distributive award in the amount of
$81,000.00. Due to inadvertence, the provision in the QDRO
effectuating the award included the language concerning gains and
losses. Such a result was not intended. Because the facts in
Stevenson are distinguishable from those before this Court,
Stevenson is not controlling. The trial court did not abuse its
discretion in modifying the QDRO to reflect the true intent of the
parties. Accordingly, we overrule this assignment of error.
Defendant next argues the trial court did not have authority
to modify the QDRO pursuant to Rule 60(a). As already noted, the
trial court based its order to modify the QDRO on Rule 60(b).
Therefore, defendant improperly relies on Rule 60(a) to argue error
by the trial court. Accordingly, this assignment of error is
overruled.
[2] Defendant also argues that the method used in the QDRO,
whereby gains and losses on the pension plan are considered, is
proper under North Carolina law. Defendant cites Allen v. Allen,
118 N.C. App. 455, 455 S.E.2d 440 (1995) for the proposition that
an award of a retirement account must include gains and losses on
the prorated portion of the benefit vested at the date of
separation. Under the version of N.C. Gen. Stat. § 50-20(b)(3) in
effect in 1995, awards of vested pension, retirement, and other
deferred compensation benefits were required to "include gains and
losses on the prorated portion of the benefit vested at the date ofseparation." The same requirement is mandated in the current
equitable distribution statutes; however, the provision is now set
forth in N.C. Gen. Stat. § 50-20.1(d) (2003).
Defendant's argument that this method is proper under North
Carolina law is accurate if an actual retirement account is being
divided. However, in the case before us, an entire account is not
being divided. Rather, funds from plaintiff's R.J. Reynolds
Capital Investment Plan are being used to effectuate an $81,000.00
distributive award from plaintiff to defendant. A distributive
award is "payments that are payable either in a lump sum or over a
period of time in fixed amounts. . . ." N.C. Gen. Stat. § 50-
20(b)(3) (2003). A distributive award is a sum certain and does
not include gains and/or losses. The trial court made it clear
that a distributive award was involved in this case. In the order
to modify the QDRO, the trial court noted that the provision
pertaining to the distributive award in the equitable distribution
judgment was a "directive" that "constituted a distributive award
which was being paid out of a retirement fund. This said
distributive award did not represent a division or a distribution
of an existing retirement plan." Based on this finding of fact,
this assignment of error is overruled.
Defendant's final argument addresses plaintiff's cross-
assignment of error. However, plaintiff has failed to present an
argument in support of this cross-assignment of error.
Accordingly, pursuant to N.C.R. App. P. 28(b)(6), this cross-
assignment is deemed abandoned.
Affirmed. Judges HUNTER and CALABRIA concur.
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