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All opinions are subject to modification and technical correction prior to official publication in the North Carolina Reports and North Carolina Court of Appeals Reports. In the event of discrepancies between the electronic version of an opinion and the print version appearing in the North Carolina Reports and North Carolina Court of Appeals Reports, the latest print version is to be considered authoritative.
KAREN SUE BRANTLEY ROWLAND, Plaintiff, v. TERRY LYNN ROWLAND,
Filed: 20 December 2005
Divorce_equitable distribution_civil service pension_marital property
A civil service pension, received in lieu of social security, should have been classified as
marital rather than as separate property, and the equitable distribution order was remanded.
N.C.G.S. § 50-20(b)(1).
Appeal by defendant from judgment entered 14 September 2004,
by Judge Donna H. Johnson in Cabarrus County District Court. Heard
in the Court of Appeals 3 November 2005.
Mary Beth Smith for plaintiff appellee.
Tharrington Smith, L.L.P., by Jill Schnabel Jackson and Fred
M. Morelock, for defendant appellant.
Defendant (Mr. Rowland) appeals from judgment of equitable
distribution finding that plaintiff's (Mrs. Rowland) civil service
retirement account was her separate property and therefore not
subject to equitable distribution. We reverse and remand.
Mr. and Mrs. Rowland were married on 23 July 1965 and
separated on 30 September 2002. On 14 January 2004, the parties
came before the district court in order to make an equitable
distribution of the marital estate. The matter was continued and
again heard in district court 10 March 2004. In the pretrial order,
the parties contended in Schedule D that both sides were unable to
agree on whether Mrs. Rowland's civil service retirement pensionand Mr. Rowland's social security benefits should be classified as
marital property or not. At trial Mrs. Rowland argued that, if her
civil service retirement pension were considered marital property,
then Mr. Rowland's social security benefits should be valued and
considered marital as well for distribution. Mr. Rowland contended
at trial that his social security benefits were separate property
and not subject to valuation and distribution.
The evidence tended to show at trial that during the marriage,
Mrs. Rowland was employed by the Social Security Administration as
a civil service employee. During the entire period of employment,
Mrs. Rowland was exempt from social security coverage. Near the
beginning of her employment she selected civil service coverage
instead of social security coverage. In lieu of social security
coverage, Mrs. Rowland was enrolled in a civil service retirement
system pension. The civil service retirement system benefits had
a date-of-separation value of $351,583.68.
Mr. Rowland was employed during the marriage as a government
employee of Cabarrus County, North Carolina. He retired from
county employment in 1998 and began working for Tax Management
Associates (TMA). Mr. Rowland was not exempt from social security
coverage, and it was determined that the present value of his
Social Security benefits at the date of separation was $171,056.08.
The district court judge entered a judgment of equitable
distribution after hearing all the evidence and arguments in which
he made findings of facts and conclusions of law on 14 September
2004. In finding 8(e) the judge found: The Defendant's [Mr. Rowland] social security
account is not marital. The Plaintiff's [Mrs.
Rowland] civil service account is not marital.
According to the uncontroverted evidence,
there are no rights of survivorship on this
account. Although the Plaintiff was employed
by the social security administration, she
does not have a social security account. Early
in her employment, the Plaintiff was forced to
elect between a social security account and a
civil service account. She chose the civil
service account, with no rights of
survivorship to the Defendant's social
security account. Therefore, the social
security account in the Defendant's name and
valued at $171,056.08 is the Defendant's
separate property. In addition, the civil
service account in the Plaintiff's name and
valued at $351,583.68 is the Plaintiff's
The judgment also stated in 11(e)(1): That the Plaintiff has her
civil service retirement in lieu of social security. That Defendant
has his social security account and the Plaintiff has no right of
survivorship. The trial court then determined that an equal
distribution would be inequitable and instead distributed the
marital estate giving 52 percent to Mrs. Rowland and 48 percent to
Defendant now appeals.
On appeal, Mr. Rowland contends that it was error for the
trial court to classify Mrs. Rowland's civil service retirement
system pension as separate property. We agree.
In an action for equitable distribution the court must
classify property as either marital property or separate
property, as defined in N.C. Gen. Stat. § 50-20(b)(1) and§ 50-20(b)(2), before dividing the property pursuant to § 50-20(c).
Caudill v. Caudill
, 131 N.C. App. 854, 855, 509 S.E.2d 246, 247-48
Accordingly, federal law provides that civil service
retirement benefits are subject to classification and distribution
in equitable distribution proceedings. 5 U.S.C. § 8345(j) (2005).
Moreover, North Carolina General Statute § 50-20(b)(1) states that
all vested and nonvested pension, retirement, and other deferred
compensation rights, and vested and nonvested military pensions
eligible under the federal Uniformed Services Former Spouses'
Protection Act are marital property and therefore mandates a
classification of marital in this case. N.C. Gen. Stat. § 50-
20(b)(1) (2003); see also
N.C. Gen. Stat. § 50-20.1(d) (coverture
In the instant case, the evidence is clear that Mrs. Rowland
was enrolled in a civil service retirement pension. We believe that
the General Assembly has indicated through the plain language of
the statute that all pensions be classified as marital property,
and therefore N.C. Gen. Stat. § 50-20(b)(1) is controlling in this
situation. Therefore, it was error for the district court to
classify Mrs. Rowland's civil service retirement system benefits as
Accordingly, we find that the trial court erred in classifying
Mrs. Rowland's civil service retirement system pension as separate
property, and we remand to the trial court to enter a new order of
equitable distribution. However, the trial court is still entitledto make a distribution of the marital assets as the North Carolina
General Statutes allow.
Reversed and remanded.
Judges ELMORE and LEVINSON concur.
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