MY IMPORTANT CONTRIBUTION TO THE EXPANSION OF THE BOYETT HOLDING: A SUPREME COURT PENSION RULING

Last month I published a newsletter showing my second most important contribution in the development of case law. It dealt with the division of survivor benefits, which are the normal form of pension benefits paid to married employees. The Second DCA made three important findings that created new law in Florida. I drove to Tampa the weekend before oral argument to assist Tom Casper with the questions that could be asked at oral argument. Yet no one can predict everything that might be raised at oral arguments and you only have minutes of time allocated to address any issues not understood by the three judge panel

I wrote the Supreme Court Brief and won one of two points of law. Both were decided adversely at the Fifth DCA because both concepts were very similar involving the same theory of law. The result was a split decision based on convoluted logic. The point I won is that the early retirement subsidy in the Orlando Utilities Pension Plan was marital property even though it was not earned when the parties divorced. Point 1 that I lost is the marital benefit is based on a retirement benefit paid at retirement, as the First DCA correctly ruled, and not the deferred vested benefit that would have been paid on the cutoff date had the employed terminated employment on the date. Both points wrongly decided by the Fifth DCA were based on a fiction that the employee separated from service when the employee did not. The benefit that would have been paid had the separation occurred is a deferred vested termination benefit, not the earned portion of a retirement benefit, as Fla. Stat.§ 61.075(6) reads, and therefore violates that statute. The termination benefit is very different from the retirement benefits paid at retirement that includes salary earned after the cutoff date and is defined as separate benefits in every plan trust. This is covered briefly in the newsletter because the focus of the newsletter is Carollo v. Carollo, 920 So.2d 16 (Fla.3rd DCA 2004), which expanded the supreme court ruling decided seven years earlier on the point I did not win. That expansion can be a game changer under certain facts when there is a foundation of significant pre-marital service. In Carollo, it changed the marital portion from 50% to 85%. In other cases since Carollo, it quadrupled the marital portion because I used the convoluted reasoning of the Boyett Court to achieve through the backdoor what should have been won through the front door. Both rulings have a very interesting history, recounted below.

My experience with oral argument began on September 8, 1997, the very first day oral arguments at the Florida Supreme were broadcast in the closed tv network. It was also the first appellate brief I wrote. Jed Berman, principal at Infantino & Berman, who signed the brief I wrote, promised me that he would do oral arguments. He wrote the 5th DCA brief that lost. The Fifth DCA ruling was certified in conflict with Deloach v. Deloach, 590 So.2d 956 (Fla. 1stDCA 1991) and its expansion Kirkland v. Kirkland, 618 So.2d 295 (Fla. 1stDCA 1993) before I became involved writing the supreme court brief. In fact, that expansion from DeLoach to Kirkland defined the controversy raging throughout the US, with roughly sixty percent of sister states siding with Kirkland and 40% siding with DeLoach. It was fully explained in Mishandled QDROs: The Armageddon of Family Law . But a conflict in scheduling developed after oral argument was set and Jed instead sent a staff attorney in his place. This attorney was not involved in the Fifth DCA outcome or ever had argued a case at trial.

My interest in the Boyett issue began two years earlier with In Re; The Marriage of Hunt. Both Bill Carew and Catherine Rudisill had the same issue before the Colorado Supreme Court, consolidated on appeal, which resulted in a less than a satisfying Deloach outcome for them, believing, as I do, that the Kirkland expansion was the correct outcome. In an extremely rare move the Colorado Supreme Court granted rehearing, which was when both parties contacted me for assistance. After providing that assistance, the Court reversed itself and ruled to expand their ruling to the Kirkland outcome. Very pleased with the result, I wanted to bring that victory home to Florida when the opportunity presented itself, which is when I contacted Jed Berman and offered my services to write the appellate brief free of charge. Doing it free was the only mistake I made, explaining why he sent someone else in his place and why we won a split decision on one point of law but not both. Not having skin in the game, he had no motivation to attend oral argument himself, and he likely discounted any chance I had to win one.

We were the first case on the docket before the supreme court that Monday morning. It was also the most important case on retirement benefits the court would decide. This was also the very first oral argument that was televised throughout the state on a closed circuit network. This weighed heavily on Jed's replacement for the weeks leading up to oral argument, because he had no trial experience. I sat through it frustrated when he could not answer any of the questions posed by the seven justices because he had a panic attack. The justices had mistaken that panic attack for a stroke and called paramedics to the court to evaluate if he required hospitalization. After they learned it was a panic attack, the Court rescheduled the remaining time for the last case that morning, and it resumed about 12:30 before recessing for lunch. The questions the panel asked were excellent and went to the core of the issue, which is why I was so frustrated when he could not answer any of their questions. Despite the weeks of preparation for the hearing, where I drove from northern Pinellas County to Winter Park 4 days per week for three consecutive weeks, teaching him the concepts covered in the brief, he could not retain what he did not understand.

Afterward, and before the court ruled, I discussed my frustration with the late Matt Miller, who at the time had stepped down from section chair a few years earlier. That was when he gave me the advice that the person arguing the case could ask the panel if he could discuss the matter with me, the expert he relied upon, who was in the courtroom, and maybe they would even allow a substitution if it became necessary. I discussed this history with Tom Casper seven years later on the weekend we prepared for an identical Monday morning oral argument in Richardson, the appeal I wrote that was hugely successful reversing on all five points of law, the subject of the last newsletter.

This will also be the last appellate case that I discuss my accomplishments, because I am not an appellate lawyer but an expert who is interested in showing the historical impact I had as an expert witness. I won on a number of other appellate cases, like Geoghegan v. Geoghegan, where I wrote the appellate brief for Pam Huddleston, and reversed on attorneys fees and alimony. In Diaz v. Diaz, 970 S 429 (Fla. 4thDCA 2007) , where I was paid by Andrew Bernard to assist him with a key portion of his appellate brief, we reversed on a new issue related to survivor benefits, where the plan gave the employee the ability to change the beneficiary, not the election. These and other appellate victories were decided cases with a new set of facts deeply rooted in what appellate lawyers do from day to day.

I also won a major point regarding stipulations in Carollo, which was significant because it enabled the court to consider the argument expanding Boyett. Otherwise, the stipulation would have controlled on the measurement of the marital portion. It was also a major issue because of how much it irritated Cynthia Greene and Evan Marks, who both vehemently argued at trial and on appeal for its enforcement. While I neither argued the point at trial, nor defended it on appeal, everyone on both sides believed the stipulation was fully enforceable preventing the expansion discussed below. I explained why it was not enforceable to Ira Dubitsky, the attorney and former judge that retained me, and it will be discussed at the very end of this newsletter.

Joe Carollo was a former Mayor of Miami, who became mayor after the one he replaced died in office with two years left in his term. He was reelected to the office, and during the last year of his first full term his wife telephoned the police on account of domestic violence. Thereafter, she filed for divorce. It cost him the woman vote, and accordingly, he lost reelection. This embittered him and set the stage for one of the most bitterly contested divorces of my career. The trial was also a media circus, involving an Hispanic mayor, the second highest political office in Florida, domestic abuse, and his loss of office resulting from a police report and spending a night in jail. There were television cameras inside and outside the courtroom, and the events were reported over the Hispanic tv channels that played to an Hispanic audience in the US and South America over this two-week long trial.

My involvement began when I decided to write an article for the AAML Journal challenging the theory of an article written by a New Jersey attorney and actuary that opined that welfare benefits were marital property. The article they wrote appeared in the ABA Quarterly Journal. I had extensive experience with Voluntary Employee Benefit Associations "VEBAs" early in my career, which was over a dozen years before I wrote the 1998 article, and, therefore, I knew how wrong this attorney and NJ actuary were.

A VEBA is a welfare benefit trust that provides whatever welfare benefits you choose to cover in the plan. Unlike retirement benefits, which are a form of compensation for services rendered and must vest, generally welfare benefits only vest when they are paid. They include health and health related benefits, which include disability income, death benefits paid only at death, and prepaid legal fees. Unlike retirement plans, where entitlement to receive them is based on age and qualifying service, entitlement to welfare benefits is based on a trigger, such as illness, death, disability or being sued; and these triggers are generally random in nature and subject to a contract term, and expire unless the contract term is renewed. If these triggers occur outside the contract term nothing is paid. While the employer is just as free to terminate future retirement earnings, what was earned must be paid from the trust. The funds that aren't distributed from a welfare trust cannot revert back to the employer; but who receives what benefits is fully reserved by the plan sponsor, and can change unless the sponsor takes specific actions to defeat that ability.

I knew Roberta Watson early in my career because we both worked in Tampa, exclusively in the employee benefits industry. I asked to meet with her for lunch because I was well aware that she had developed a national reputation on welfare benefits and wanted to get some thoughts on how I would attack this issue. The hour we met gave me the insight I needed on how I would write the article. Eager to please their client, who did not want his wife, my client, to get one penny of his over $2,000,000 pension plan, including $700,000 of which was a non-divisible death benefit, his attorneys, Evan Marks, his trial attorney scheduled to become the section chair, and his standby appellate counsel, Cynthia Greene, both misunderstood the article I wrote published in the AAML Journal four years earlier to apply to retirement benefits. They both concluded that it read like the City of Miami Charter that gave the city the broad authority to cancel vested benefits. They promised Joe that I would support the absurd position that the mayoral retirement plan was not a property right. I did not have to turn him down and forfeit involvement because Ira retained me first. While I had little difficulty with the main issue, which I regarded as nonsense, it was what the fight was really all about. Both sides spent a half million dollars collectively litigating the nonsense but that was because the husband wanted this.

I was retained by Ira Dubitsky in January, 2002. In early April, Evan telephoned me to inquire of my availability and I informed him that I was working for the wife and was retained by her two months earlier. When I turned down the husband, what was already a nasty divorce elevated to World War III. The husband refused to pay my deposition cost because he was furious that his wife retained me and was threatening to take the matter before the judge seeking to disqualify me when I would not attend deposition in Miami without advance payment. The case law clearly supported me because I lived 100 miles north of Miami.

I understood that there was animus between Ira and Evan for years and this heightened the hostility between the litigants. Because of that animus, both attorneys wanted to win badly. Ira refused to put the issue before the judge because he wanted to take no chance that his dream of victory would be derailed. Therefore, the attorneys agreed between themselves only to pay the expert they deposed for the time at deposition, and the party that retained the expert would be responsible to pay the transportation and preparation time. When Evan spent one hour in deposition asking me nothing about why I would not support his position, when he was happy to retain me as his first choice when he thought he could, I knew then and there that he intended to disqualify me under the UPL, because the expert that replaced me was a seasoned tax and ERISA attorney that practiced in Coral Gables and the main issue contested was a legal issue. When people play games like that it angers me and when one spouse seeks to destroy another spouse that makes me protective of the other spouse. I fire clients when they expect me to support that nonsense.

Based on the husband's conduct, I knew that my client would be chasing him in court for the rest of her life, both for alimony and that pension, because, as a former mayor, he worked for a municipality that did not honor QDROs. He was retired receiving retirement pay and the position I believed that was correct that Boyett got wrong is that it should have applied the service fraction on the date of retirement, as almost all sister state rulings do, irrespective whether the employee is retired. As I pointed out in my two-part Florida Bar Journal article entitled, Dividing Pension Property After Boyett, part 1 and part 2 , the ruling applies the service fraction on the earned benefit at the cutoff date, and it should always divide it at the date of retirement, because deferred termination benefits paid if he separated from service early are different from retirement benefits, and they are defined as different benefits in every retirement trust. When Boyett ruled, it failed to follow the equitable distribution statute, because it divided deferred vested termination benefits, not retirement benefits, as the statute reads. If the employee terminated at the cutoff date then it is the benefit paid at retirement. The court understood that distinction when it ruled with us not to apply the early retirement discount that the Fifth DCA ruling did do unless the employee actually retired early, and that early retirement reduced the employee's benefit. Instead, the Court was confused about the role the higher salary played in the amount of retirement benefit when it occurred after the cutoff date, which although it involved post-marital labor, that labor was tangential to the higher salary when it was used to define retirement benefits in the plan trust.

Thus I do not believe that earning the higher salary after the cutoff date involved active effort, as the Boyett Court concluded. If it did, then the Boyett Court could not rule that the service fraction applies to the benefit on the cutoff date when pre-marital labor is involved, because the higher salary earned during the marriage improves the pre-marital service component, and is therefore earned during the marriage. But it did rule precisely that creating a ruling with convoluted reasoning.

Unlike other experts, I strictly follow the rulings, even when I think they are wrong. I will only apply that service fraction on the date of retirement when the employee is retired on the cutoff date. And when there is pre-marital service, and the employee isn't retired, the nonemployee spouse should have received the higher benefit based on the salary at retirement. I cannot do that because that directly violates the Boyett ruling. But nothing stops me from applying the convoluted reasoning used by our supreme court in those instances and I generally do. If earning the higher salary after the cutoff date involves active effort then the higher salary earned during the marriage improves the benefit based on pre-marital service with that higher salary, making the portion earned during the marriage the difference between the amount accrued on the cutoff date less the amount accrued entering the marriage. This makes the amount determined by the service fraction inconsistent with the holding, thereby revealing the convoluted reasoning the supreme court employed. But, when the employee is retired, applying the service fraction at the date of retirement is what should be done and is authorized under the holding. Carollo is the first time that I departed from my general practice of applying the service fraction on the date of retirement when the employee is retired on the cutoff date because I knew that she would spend her lifetime chasing the benefit. He never intended to pay her a dime of that benefit, and is aided because Florida municipalities do not recognize QDROs under the Vizcaino First DCA ruling.

After Joe lost in court he was outraged. Determined to prove me wrong, he went before the Miami City Council and told them his pension was too high, and after they reduced it pursuant to his request. Afterward, he filed a self-serving motion for a redetermination of the marital portion based on the lower benefit. He did that so he could argue on appeal that I was wrong about the authority the city had under its charter about their ability to cutback benefits. The wife did not have standing to fight that because she wasn't the participant and what the city did, reducing it, violated the supreme court holding in Branca v. The City of Miramar , but only the husband had standing to fight that. Besides, Mari was already defending a bankruptcy petition seeking to wipe her out as a creditor, and he retained a top bankruptcy firm to represent him in that filing, at the same time he appealed the trial court ruling to the Third DCA.  Joe also appeared with Judge Harnage's opponent endorsing him in television commercials when he ran for reelection, and unseated the judge who dared rule against him, a good jurist, who sat on the bench for 30 years. He even stuck Evan Marks, his attorney, on his unpaid bill. His spiteful tirade against a fine judge did not work to achieve his goal because the judge was appointed back to the bench by Jeb Bush the next year.

I was also irritated that he thought she should not share in that retirement benefit. He failed at every business he started until he met Mari. He became wealthy after he married her based on what he learned from her brother, a successful surgeon who practiced in NJ. Her brother was even the one who paid for my testimony. Joe learned that surgical gloves were in short supply and were about to become in critically short supply worldwide. He used that information and went to Asia and captured the surgical gloves market, capitalizing on that impending crisis, so his belief that she made no contribution to the marriage was misogynistic, not fact. Having that wealth is what positioned him to become mayor, which occurred during the marriage, where his salary increased by a multiple of six moving from city councilman to mayor of the largest city in Florida, the second highest political office exceeded only by the governor.

Our state rulings that determined the non-assignment clause found in pension plans apply to spouses, and contradicts the vast majority of sister state rulings that concluded otherwise. Our courts are wrong on these rulings, as well, and I am prepared to assist anyone in the Fifth DCA that wants to take that to the Florida Supreme Court, which has yet to rule on the topic. Access to the Florida Supreme Court can only occur through the Fifth DCA because every other district court in Florida agreed with the Vizcaino ruling, and while the Fifth DCA concurred, it did decide that the non-assignment clause frustrated enforcement of the 1988 equitable distribution statute that violated public policy, and it therefore ruled in Langford that it was a matter of great public importance that only the supreme court could decide.

I was able to defeat the stipulation in Carollo as follows: recall, the main issue to be decided was whether the mayoral pension was a property right. I knew that it was and that the article I wrote applied to welfare benefits, not retirement benefits. I also knew that it didn't matter how the Miami Charter read, the Florida Supreme Court controlled, ruling once vested no municipality could divest that benefit. They did so in 1980 as it applied to the state Sherriff's Plan, and in 1994, as it applied to municipal benefits involving a city mayor. I also knew that stipulations were enforced under contract law, and for enforceability there must be a meeting of the minds as to what was stipulated. The wife did not agree with the husband that the plan benefit was not a property right and the husband conditioned that stipulation to that outcome. An agreement contingent on an outcome is not a definite term and an enforceable contract requires agreement on definite terms. Either way, it is not enforceable under contract law.

Evan failed in disqualifying me under the UPL, because, as a federally licensed actuary, I am licensed to interpret the law governing retirement plans. He tipped me off that that was his plan when he became uninterested in my opinion after he could not secure me as a witness on behalf of his client. Therefore, I came to court armed with a 1963 US Supreme Court ruling that reversed Florida UPL when the person is federally licensed to give advice to Florida residents. In that instance the Supremacy Clause of the US Constitution preempts state law when there is a conflict. I also came to court armed with a 1990 Florida Supreme Court Advisory Opinion that acknowledged that US Supreme Court holding preempts Florida Law and it carved out an exception for certain pension professionals, including actuaries.

For those who would like to read the Carollo trial court ruling I am providing it at this link . My testimony is addressed at pages 9-12/

Thank You for your time

Jerry Reiss

Enrolled Actuary 20-3608

Listed Best Experts in America

For Employment Law: 2006-2012

For Family Law: 2007-2012

For AAML: 1995

#miamimayor #divorce #communityproperty #equitabledistribution #pensions