Even though the parties’ consent judgment of divorce included an offset provision regarding the defendant’s military retirement benefits that was a “mistake” in the exercise of jurisdiction, the defendant’s challenge to enforcing that provision is an improper collateral attack, the Michigan Supreme Court has ruled.

It was the third time the Michigan Supreme Court addressed the distribution of marital property in Foster v Foster (Docket No. 161892).

The parties in Foster had agreed that if the defendant waived a portion of his military retirement benefits in order to receive military disability benefits, he would continue to pay the plaintiff an amount equal to what she would have received had the defendant not elected to receive disability benefits. The defendant chose to increase his disability benefits when he applied for Combat-Related Special Compensation (CRSC) under 10 USC 1413a. He started receiving CRSC shortly after he and the plaintiff divorced. The defendant’s retirement benefits decreased as a result, which in turn reduced the share of benefits payable to the plaintiff. When the defendant did not reimburse the plaintiff for the reduced payment, the plaintiff filed suit in Dickinson County Circuit Court, requesting the consent divorce judgment be enforced. The trial court enforced the judgment and required the defendant to reimburse the plaintiff for the reduction in her interest in his retirement benefits. The Michigan Court of Appeals affirmed, finding the matter was not preempted by federal law.

In the first appeal to the Michigan Supreme Court, the justices issued an order remanding the case to the Michigan Court of Appeals for reconsideration in light of Howell v Howell, 581 US ____ (2017). On remand, the Court of Appeals again affirmed the trial court’s decision.

In the second appeal to the Michigan Supreme Court, the justices granted leave and held that federal law pre-empted state law and, as a result, the consent divorce judgment was unenforceable to the extent that it required the defendant to reimburse the plaintiff for the reduction in the amount payable. The high court once again remanded the case, this time so the Court of Appeals could address the effect of the ruling on the defendant’s ability to challenge the terms of the consent judgment (Docket No. 157705). The Court of Appeals, on remand (Docket No. 324853), held that principles of federal preemption deprived the trial court of subject-matter jurisdiction and concluded the defendant did not engage in an improper collateral attack on the consent divorce judgment. The plaintiff appealed this decision.

The Michigan Supreme Court, in a unanimous opinion issued April 5, 2022, held that federal preemption under 10 USC 1408 and 10 USC 5301 does not deprive Michigan state courts of subject-matter jurisdiction in a divorce action involving the division of marital property. “Therefore, while the offset provision in the parties’ consent judgment of divorce was ‘a mistake in the exercise of undoubted jurisdiction,’ … that judgment is not subject to collateral attack,” Justice David F. Viviano wrote.

No Collateral Attack  

At the outset of its analysis, the Michigan Supreme Court noted it previously held that the offset provision in the parties’ consent divorce judgment violated federal law and “impermissibly” divided the defendant’s military disability pay. “We must now answer the question we left open in Foster I: whether defendant may challenge this provision of the consent judgment on collateral review,” Justice Viviano said.

Accordingly, the high court first examined the doctrine of res judicata. “Importantly for purposes of this case, the doctrine of res judicata applies even if the prior judgment rested on an invalid legal principle,” Justice Viviano wrote. “The United States Supreme Court has recognized that the application of the doctrine of res judicata in this context is an issue of state law. … Applying these principles, the provision of the parties’ consent judgment of divorce that divides defendant’s military retirement and disability benefits is generally enforceable under the doctrine of res judicata even though it is preempted by federal law.”

Next, the Michigan Supreme Court turned to whether the consent divorce judgment was void and subject to collateral attack, noting the defendant’s assertion that the judgment was subject to collateral attack simply because it conflicted with federal law was “manifestly in error.” The high court then addressed the defendant’s argument that the consent divorce judgment was void and subject to collateral attack because Congress deprived state courts of subject-matter jurisdiction over the division of military disability benefits. The defendant “has failed to persuade us that the Veteran’s Administration or any other federal forum has exclusive jurisdiction over the division of military disability benefits in a divorce action,” Justice Viviano wrote, emphasizing the U.S. Supreme Court “rejected a similar argument” in Rose v Rose, 481 US 619 (1987). “Although the Court in Rose found that the state child support statute was not preempted by federal law, its analysis is still helpful in determining whether Congress has established an exclusive forum for dividing military disability benefits in a divorce action.”

Here, the defendant argued the Secretary of Veterans Affairs has exclusive jurisdiction over all veteran’s benefit issues, including the division of benefits in a state court divorce action. “Defendant correctly notes that appellate jurisdiction from a decision by the Secretary is limited to the federal courts,” Justice Viviano observed. “38 USC 511(a) establishes that ‘[t]he Secretary shall decide all questions of law and fact necessary to a decision by the Secretary under a law that affects the provision of benefits by the Secretary to veterans or the dependents or survivors of veterans’ and generally precludes review of the Secretary’s decision ‘as to any such question’ ‘by any other official or by any court,’ with a limited number of exceptions. And 38 USC 5307 provides for a process of requesting apportionment of a veteran’s benefits.”

However, Justice Viviano continued, “just as the Court in Rose was ‘not reviewing the Administrator’s decision finding the veteran eligible for specific disability benefits,’ … the trial court in this case was not reviewing a decision of the Secretary of Veterans Affairs under 38 USC 511(a). Therefore, contrary to defendant’s assertion, there is no exclusive federal forum for dividing military disability benefits in divorce actions.”

Therefore, “[w]e agree with plaintiff that 38 USC 511 - just like 38 USC 211(a), which was at issue in Rose - does not refer to, restrict, or displace state court jurisdiction,” Justice Viviano said. “In sum, we hold that federal preemption under 10 USC 1408 and 10 USC 5301 does not deprive our state courts of subject-matter jurisdiction over a divorce action involving the division of marital property. Therefore, while the offset provision in the parties’ consent judgment of divorce was ‘a mistake in the exercise of undoubted jurisdiction,’ … that judgment is not subject to collateral attack.”

Because the Court of Appeals “erroneously concluded that the type of federal preemption at issue in this case deprives state courts of subject-matter jurisdiction, and because there is no other justification for a collateral attack on the consent judgment in this case, we reverse the judgment of the Court of Appeals and remand this case to the Dickinson Circuit Court for further proceedings …,” Justice Viviano concluded.