RE

CE

IVE

D by M

SC 8/17/2018 3:41:52 PM

IN THE MICHIGAN SUPREME COURT Appeal from the Michigan Court of Appeals

(Boonstra, P .J., Ronayne Krause and Swartzle, JJ.)

RICHARD WILLIAM DORKO, Plaintiff-Appellant,

V

SHERRY SUE DORKO, Defendant-Appellee.

Jeffrey M. Schroder (P63095) Attorney for Plaintiff-Appellant Schroder Law 8080 Moorsbridge Road, Ste. 203 Portage, Ml 49024 (269) 321-5059

Supreme Court Docket No. 156557

COA Docket No.: 333880

Kalamazoo County Circuit Court Case No. 2004-5765-DM Hon. G. Scott Pierangeli

George T. Perrett (P42751) Attorney for Defendant-Appellee Butler, Toweson & Payseno -- PLLC 202 N. Riverview Drive Parchment, Ml 49004 (269) 349-7686

APPELLEE SHERRY SUE DORKO'S SUPPLEMENTAL BRIEF IN SUPPORT OF ANSWER TO APPLICATION FOR LEAVE TO APPEAL

Respectfully Submitted:

George T. Perrett (P42751) Attorney for Defendant/Appellee Butler, Toweson & Payseno - PLLC 202 N. Riverview Drive Parchment, Ml 49004 (269) 321-5059

RE

CE

IVE

D by M

SC 8/17/2018 3:41:52 PM

TABLE OF CONTENTS

INDEX OF AUTHORITIES ......... ...... ........ ...... ... ............ ........................... .. ... ................... iii

STATEMENT OF APPELLATE JURISDICTION ... ..... ................. ........ ...... ........... ..... ..... iv

STATEMENT OF QUESTIONS PRESENTED .... ........... .. ......... .............. ...... .. ........ ..... .. iv

COUNTER-STATEMENT OF FACTS .... ........... ............................................ ... ............... 1

STANDARD OF REVIEW .. .... .. ................ ..... ...... ....... ..... ... ........ .... .. .. ........... ....... ..... .. ..... 4

ARGUMENT ............................. .. .... .......... .......... ................... .......................................... 5

I. The Appellant waived the statute of limitations defense by failing to assert it in his first or initial response to the first submitted QDRO, presented to the Court for entry pursuant to MCR 2.603 ................................................................. 5

II. The Michigan Court of Appeals correctly decided Joughin v Joughin, 320 Mich App 380; 906 NW2d 829 (2017), recognizing that the submission of a proposed Qualified Domestic Relations Order was a ministerial act, already obligated by the Judgment of Divorce, and not an independent act to enforce the judgment. ..................................................................................... ...... 8

Ill. The claim for retirement benefits against a retirement plan accrues at the time a "proposed QDRO" is deemed qualified .................................................... 13

STIPULATION REGARDING THE APPENDIX ... .................. ........................ .. ... ......... .. 15

STATEMENT REGARDING ORAL ARGUMENT .......................................................... 15

CONCLUSION AND RELIEF REQUESTED .. ....... ... ................... ...... ......... ....... ............ 16

ii

RE

CE

IVE

D by M

SC 8/17/2018 3:41:52 PM

INDEX OF AUTHORITIES

CASES

AG v Harkins, 257 Mich App 564, 569; 669 NW2d 296 (2003) ..................... ... ......... 4, 13

Attorney General ex rel Department of Envtl. Quality v Bulk Petroleum Corp., 276 Mich App 654;NW2d 857, 864 (2007) ............................................................................ 5,6,7

Gendreau v Gendreau (In Re Gendreau) , 122 F.3d 815 (9th Cir 1997), cert den 523 U.S. 1005, 118 S.Ct. 1187, 140 L.Ed.2d 318 (1998) ................. 10,12,14

Horvath v Delicia, 213 Mich App 620; 540 NW2d 760, 764 (1995) .... .................... .......... 6

House v Gibbs, 4 Mich App 519, 524; 145 NW2d 248 (1966) .......... ................ .......... 4

In Re Hthiy, 283 B.R. 447,451 (Bankr. E.D. Mich 2002) .................. .................... .... 12,14

In Re Marriage of Cray, 18 Kan App 2d 15; 946 P.2d 944 (1993), rev'd on other grds., 254 Kan 376 (1994) ............................................... .. ................................... ........................ 9

Jordan v Jordan, 147 SW3d 255 (Tenn App 2004) ............................... ....................... 8,9

Joughin v Joughin, 320 Mich App 380; 906 NW2d 829 (2017) ............ . ii, iv,8,9,10,11,12

Loweke v Ann Arbor Ceiling & Partition Co., LLC, 489 Mich 157, 162; 809 NW2d 553 (2011 ) .................................................................................................. 4

Napier v Jacobs, 429 Mich 222,227; 414 NW2d 862 ...................................................... 5

Neville v Neville, 295 Mich App 460,812 NW2d 816 (2012) ..................................... 8, 10

Palenkas v Beaumont Hospital, 432 Mich 527; 443 NW2d 354 (1989) ... ..................... 6, 7

Rybinski v Rybinski, 333 Mich 592, 596; 53 NW2d 386 (1952) .............. ....................... 14

Stephens v Dixon, 449 Mich 531, 534; 536 NW2d 755 (1995) ............... ....................... 13

Three Lakes Ass'n v Whiting, 75 Mich App 564,579; 255 NW2d 686 (1977) ................. 4

Torakis v Torakis, 194 Mich App 201; 486 NW2d 107 (1992)... ... .. . . . .. . .... .. .... ... .. ... 14

Trs. of the Dirs. Guild of America-Producer Pension Benefits Plans v Tise, 234 F.3d 415 (9th Cir. 2001) ............................................................................... .. 12, 13

RE

CE

IVE

D by M

SC 8/17/2018 3:41:52 PM

STATUTES

29 USC 1056( d)(3)(B)(i)(I) ........................................................... .. ......... ....... .. ..... ... ... .... . 9

29 USC 1056(d)(3)(B)(ii) ..... .. .... ..................... ........... ....... .......................... ..................... 9

29 USC 1056( d)(3)(G)(i) ... ........... . .... .... ....... ........ .................. . ......................... 9

MCL 600.5809 ............... ... .. .......................... ................................. ... ..... .... ..... 8

MCL 600.5827 ..... .......... ... .. ... ... .... .... ........ ........ .. ..... ...... ....... ........... ....... ... .................... 14

COURT RULES

MCR 2.110 .................. ............................................ ................................. ... ............... ..... 6

MCR 2.111(F) ............ ........... . .. ... .... .... ..... ....................................... ... ......... 6,7

MCR 2.111 (F)(3) .......... ... ....... ........ ....... ....... .. .......... ... ....... ........... ..... ................ .......... .. . 5

MCR 2.116(C)(7) .......... ................ ................................. .. ....................................... ......... 5

MCR 2.116(0)(2) .......... ............ ..... ...... .. ... ........ ... .. ................................... ....................... 5

MCR 2.116(0)(3) ......... ........ . ... .......... ........ .............. .. ..... .... ........ ... ........ .. ...... 7

MCR 2.118 ................ ..... .... ...... .................... ...... .. .... ... ... ... ... .. ... ...... . ... ... ..... . 5

MCR 2.603 ................. .. . . ... .......................................................................... . 2,5

MCR 7.214(E) .. .. ... ..... .................................. .... . .. ........................................ 15

ii

RE

CE

IVE

D by M

SC 8/17/2018 3:41:52 PM

STATEMENT OF APPELLATE JURISDICTION

Appellee Sherry Sue Dorko does not contest that Appellant Richard William Dorko

timely filed her Application for Leave to Appeal and that this Court has jurisdiction

pursuant to MGR 7.303(8)(1).

STATEMENT OF QUESTIONS PRESENTED

I. Whether the plaintiff waived any statute of limitations defense.

Appellant Answers: No.

Appellee Answers: Yes.

II. Whether Joughin v Joughin, 320 Mich App 380; 906 NW2d 829 (2017) was decided correctly.

Appellant Answers: Yes.

Appellee Answers: No.

Ill. When does a claim for retirement benefits under a Judgment of Divorce accrue?

Appellant Answers:

Appellee Answers:

At the time of the entry of the Judgment of Divorce.

At the time a "proposed QDRO" is deemed qualified.

ii i

RE

CE

IVE

D by M

SC 8/17/2018 3:41:52 PM

COUNTER-STATEMENT OF FACTS

This matter originates from certain post-judgment proceedings relative to a

Judgment of Divorce (hereinafter the "Judgment"), entered August 3, 2005. [4a]. The

Judgment awarded % of the marital portion of Appellant's General Motors Hourly-Rate

Employees' Pension Plan to the Appellee. [9a-1 Oa]. Specifically, the Judgment provides:

"Qualified Domestic Relations Order: Defendant is awarded % of the marital interest of Plaintiff's retirement plan via QDRO through employment with General Motors. She shall share in any early retirement subsidy under the Plan in proportion to her award. She shall be entitled to cost-of-living and other post-retirement increases in proportion to her award. She shall be allowed to elect to receive benefits under the Plan as soon as the Plan permits. To the extent necessary to protect her interest in the event of the Plaintiff's death, she shall be designated surviving spouse."

[9a-10a]. The Appellant was still an active General Motors employee when the Judgment

entered. In fact, Appellee was never advised when Appellant planned to retire, nor

became eligible to begin receiving of pension payments.

Appellant retired from GM, effective July 1, 2014. [147a]. Appellee filed her first

proposed Qualified Domestic Relations Order, under MGR 2.602(8)(3), on August 11,

2015. [13a] Contrary to the erroneous assertion in the Appellant's submission, the

Judgment of Divorce did not expire on August 3, 2015; cf Appellant's Supplemental Brief,

Statement of the Facts, p 1.

Significantly, the Appellant never objected to entry of the first proposed QDRO

(hereinafter the "August 19, 2015 QDRO"), which entered by the Kalamazoo County

Circuit Court - Family Division on August 19, 2015. More specifically, Appellant did not

assert any violation of statutes of limitations, nor did he assert the equitable defense of

"laches." It has been subsequently learned, on information, that the Appellant had

begun receiving his monthly pension benefit shortly after retirement. Significantly, the

1

RE

CE

IVE

D by M

SC 8/17/2018 3:41:52 PM

Appellant claims that he "had no other choice than to elect the pension and retirement

benefits available to him upon retirement because Defendant-Appellee had not entered

her QDRO;" Appellant's Supplemental Brief, Statement of Facts, p 1; [146a).

The August 19, 2015 QDRO was submitted to Fidelity, the pension plan

administrator. On January 4, 2016, Fidelity notified the parties, by letter, that the August

19, 2015 QDRO was not "qualified" due to several language deficiencies required under

the standard Fidelity administered QDRO draft. [20a).

The Appellee corrected the identified deficiencies in the August 19, 2015 QDRO

and submitted a second, amended QDRO (hereinafter the "January 8, 2016 proposed

QDRO") for entry under MCR 2.602(8)(3). [20a). Appellant objected to the entry of the

January 8, 2016 proposed QDRO, citing that entry of the QDRO was not fair as his

circumstances and health had changed since the Judgment of Divorce had entered, that

the stated date of marriage was incorrect, that the terminology was inaccurate with regard

to early retirement supplement/subsidy, and possibly other bases that are unclear.

[25a]. Again, Appellant did not assert any violation of statutes of limitations, nor did he

assert the equitable defense of "laches." [25a].

The Appellant, further, did not file a proposed alternate Order, as required to be

filed with an objection pursuant to MCR 2.602(B)(3)(c). A 15 minute motion hearing was

held on this Objection, but was adjourned without ruling to a scheduled 2 hour evidentiary

hearing. [27a; 39a].

Approximately one week prior to the evidentiary hearing, through recently retained

counsel, the Appellant filed an Amended Objection, without leave, and a Motion to Set

2

RE

CE

IVE

D by M

SC 8/17/2018 3:41:52 PM

Aside First Qualified Domestic Relations Order and To Deny Second Qualified Domestic

Relations Order. [44a; 46a]. This was the first time that Appellant claimed that entry of

any QDRO was barred by application of the statute of limitations. Appellant asserted

that a general 10 year statute of limitations on enforcement of judgment applied in this

instance and barred the entry of any QDRO, given that more than 10 years had expired

since entry of the Judgment. [46a; 48a].

A hearing was held on April 25, 2016 with counsel for each party arguing their

respective positions. On May 16, 2016, on the record with parties present, the trial court

denied the Appellant's Motion to Set Aside First Qualified Domestic Relations Order and

to Deny Second Qualified Domestic Relations Order. [111 a]. An order confirming such

denial was entered on June 27, 2016. [140a]. The trial court has also denied the

Appellant's Motion to Stay Proceedings by Order, entered May 20, 2016. [129a]. The

Amended QDRO was entered by the Court on June 24, 2016. [136a].

Appellant first brought his appeal before the Michigan Court of Appeals, which

issued an unpublished opinion, released on August 17, 2017. [281a-282a] The Court

of Appeals based its decision affirming the trial court, in principal part, upon the

application of the published opinion of a different appellate panel of the Court of Appeals

in Joughin v Joughin, 320 Mich App 380; 906 NW2d 829 (2017), which was released for

publication on July 11, 2017. [269a-280a] Appellant seeks further appellate review

with the Michigan Supreme Court and, in addition to other filings, the parties have been

directed to submit supplemental briefs in support of their respective positions on the

Appellant's application for leave to appeal, per Order dated June 20, 2018.

3

RE

CE

IVE

D by M

SC 8/17/2018 3:41:52 PM

STANDARD OF REVIEW

"The applicability of a statute of limitations is a question of law that we review de

novo. Ins. Comm'r v Aageson Thibo Agency, 226 Mich App 336, 340-341; 573 NW2d

637 (1997)." AG v Harkins, 257 Mich App 564, 569; 669 NW2d 296 (2003) [emphasis

added]. See also, Loweke v Ann Arbor Ceiling & Partition Co., LLC, 489 Mich 157, 162;

809 NW2d 553 (2011) [courts review questions of law under a de novo standard.]

In addition, it is a fundamental rule of appellate review that an appealed order is

presumed to be correct. House v Gibbs, 4 Mich App 519, 524; 145 NW2d 248 (1966).

It is the appellant's burden to demonstrate that the lower court made an error requiring

reversal, by producing an adequate appellate record and presenting argument and legal

authority demonstrating error requiring reversal. Three Lakes Ass'n v Whiting, 75 Mich

App 564, 579; 255 NW2d 686 (1977).

Because the Appellant has waived the defense of statute of limitations and has

presented no compelling ground warranting a grant of leave, this Court should summarily

deny the application. As indicated in the Appellee's first submission, the unique factual

circumstances of this dispute, the non-binding nature of the Court of Appeals'

unpublished opinion, and the numerous alternative grounds for affirmance make this

case particularly ill-suited for discretionary leave.

4

RE

CE

IVE

D by M

SC 8/17/2018 3:41:52 PM

ARGUMENT

I. The Appellant waived the statute of limitations defense by failing to assert it in his first or initial response to the first submitted QDRO, presented to the Court for entry pursuant to MCR 2.603.

"[F]ailure to timely raise an issue waives review of that issue on appeal." Napier v

Jacobs, 429 Mich 222, 227; 414 NW2d 862 (1987). MCR 2.116(C)(7) contemplates

summary dismissal of a matter as follows:

"(7) Entry of judgment, dismissal of the action or other relief is appropriate because of release, payment, prior judgment, immunity granted by law, statute of limitations, statute of frauds, an agreement to arbitrate or to litigate in a different forum, infancy, or other disability of the moving party, or assignment or other disposition of the claim before the commencement of the action." [Emphasis added].

MCR 2.116(0)(2) provides:

"(2) The grounds listed in subrule (C)(S), (6), and (7) must be raised in a party's responsive pleading, unless the grounds are stated in a motion filed under this rule prior to the party's first responsive pleading. Amendment of a responsive pleading is governed by 2.118."

MCR 2.111 (F)(3) further provides:

(3) Affirmative Defenses. Affirmative defenses must be stated in a party's responsive pleading, either as originally filed or as amended in accordance with MCR 2.118. Under a separate and distinct heading, a party must state the facts constituting:

"(a) an affirmative defense, such as contributory negligence; the existence of an agreement to arbitrate; assumption of risk; payment; release; satisfaction; discharge; license; fraud; duress; estoppel; statute of frauds; statute of limitations; immunity granted by law; want or failure of consideration; or that an instrument or transaction is void, voidable, or cannot be recovered on by reason of statute or nondelivery." [emphasis added]

The party asserting the statute of limitations defense has the burden or presenting

supporting evidence. Attorney Gen ex rel Dep't of Environmental Quality v Bulk

5

RE

CE

IVE

D by M

SC 8/17/2018 3:41:52 PM

Petroleum Corp., 276 Mich App 654, 664; 741 NW2d 857 (2007), citing Palenkas v

Beaumont Hospital, 432 Mich 527, 550; 443 NW2d 354 (1989).

Case law in Michigan is clear. "Affirmative defenses, such as expiration of the

period of limitation, must be raised in a party's responsive pleading and must be

supported by factual allegations." Horvath v Delida, 213 Mich App 620; 540 NW2d 760,

764 (1995). Under Michigan Court Rule 2.111 (F)(3), a party must state an affirmative

defense "under a separate heading and must include the facts constituting a defense."

Bulk, 276 Mich App 654,664; 741 NW2d 857 (2007).

Appellant argues that when the court rule references the requirement to set forth a

statute of limitations defense in a "first responsive pleading," this doesn't apply to

objections and motions. Appellant does not cite any case law in support of his position.

Rather, Appellant attempts to narrowly circumscribe the term "responsive pleading" under

MCR 2.111 (F) to only a "pleading" as defined by MCR 2.110, which doesn't include

objections and motions within its listing of "pleadings."

This argument is without factual and legal foundation. Earlier appellate decisions

inherently refute this argument. In Bulk, the Court of Appeals noted the defendants'

'failure to raise their statute of limitations defense in response to [the] plaintiffs' motion

for summary disposition.' [emphasis added] lg. at 865. It was also noted that the

defendants had made 'no reference to any statute of limitations as an affirmative defense

to plaintiff's claims' in their response brief. lg. Bulk held that the statute of limitations

defense had been waived. See also Palenkas, 432 Mich 527; 443 NW2d 354 (1989)

where a party's repeated failure to raise statute of limitations defense in a pre-trial

6

RE

CE

IVE

D by M

SC 8/17/2018 3:41:52 PM

motion and in its answer and the party's failure to produce evidence on this point waived

the affirmative defense. In both Bulk and Palenkas, Michigan appellate courts

considered pre-trial motions, such as a motion for summary disposition, and responsive

briefs as "pleadings" for purposes of implementing the obligation to plead a required

affirmative defense in a "first responsive pleading" under MCR 2.111 (F). 1

In the case at bar, the Appellant didn't file any responsive pleading to the proposed

entry of the first QDRO submission by this Appellee, let alone raise a statute of limitations

defense. In his second filing with the Court, upon the proposed submission of the

amended QDRO, the Appellant did not raise a statute of limitations defense, but rather

merely asserted that his present financial circumstances should bar entry of the amended

QDRO at this time. The statute of limitations defense was not interposed until the third

set of responsive pleadings, set forth in the Appellant's Motion to Set Aside First Qualified

Domestic Relations Order and to Deny Second Qualified Domestic Relations Order.

When this Appellant took no action to prevent the entry of the first submitted

QDRO by failing to file any responsive pleading to that submission, Appellant waived any

Appellant attempts an end around on his failure to timely assert the statute of limitations defense. Aware that he failed to timely assert that the statute of limitations defense directly applied and barred entry of the QDRO, Appellant adopts the position that the statute of limitations defense rendered the judgment of divorce void, expired and/or unenforceable [51 a] and that the trial court, accordingly, lacked subject matter jurisdiction to entertain the entry of the QDRO. [50a]

This position doesn't hold water, either. Generally stated, a Judgment of Divorce is not void, expired or unenforceable after 10 years. Parties remain divorced more than 10 years from the entry of their Judgment of Divorce. But why did the Appellant try this approach? Because Appellant's counsel knew that the affirmative defense of lack of subject matter jurisdiction could be raised at any time, even in the Appellant's third bit at the apple, challenging the submission of the QDRO. MCR 2.116(0)(3). It is a clever argument, but at the end of the day a duck is a duck and the Appellant's argument is a statute of limitations argument.

7

RE

CE

IVE

D by M

SC 8/17/2018 3:41:52 PM

right to raise a statute of limitations defense in regard to the submission of either the first

QDRO or the proposed, and now entered, amended QDRO. Because this defense was

not timely raised before the Trial Court in the Appellant's first responsive pleading, this

Court should deny leave to consider the Appellant's unpreserved issue concerning the

submission of this QDRO.

This conclusion is not marginalized in any respect by the fact that the first entered

QDRO was ultimately rejected by the plan administrator. In other words, the requirement

for an Amended QDRO doesn't renew the Appellant's opportunity to assert a statute of

limitations defense.

II. The Michigan Court of Appeals correctly decided Joughin v Joughin, 320 Mich App 380; 906 NW2d 829 (2017), recognizing that the submission of a proposed Qualified Domestic Relations Order was a ministerial act, already obligated by the Judgment of Divorce, and not an independent act to enforce the judgment.

The Court of Appeals' panel in the case at bar followed the prior Court of Appeals

decision in Joughin v Joughin, 320 Mich App 380; 906 NW2d 829 (2017) to conclude that

the 10 year statute of limitations under MCL 600.5809 did not apply to the submission of a

proposed Qualified Domestic Relations Order. Joughin's reasoned opinion was sound

and the case was correctly decided.

In holding that MCL 600.5809 does not control in this situation, Joughin states:

"The statute applies only to 'action[s] to enforce [] noncontractual money obligation[s].' And here, we hold that the entry of the proposed QDRO is not an action to enforce a noncontractual money obligation. This Court has held that, when a judgment of divorce requires a QDRO to be entered, the QDRO is to be considered as 'part of the judgment of divorce.' Neville v Neville, 295 Mich App 460,467; 812 NW2d 816 (2012). Thus, because a QDRO is part of the judgment, it necessarily cannot be viewed as enforcing the same judgment. As our sister court in Tennessee noted, '[T]he

8

RE

CE

IVE

D by M

SC 8/17/2018 3:41:52 PM

approval of a proposed QDRO is adjunct to the entry of the judgment of divorce and not an attempt to 'enforce' the judgment.' Jordan v Jordan, 147 SW3d 255, 262 (Tenn App 2004)."

Joughin, 320 Mich App 380, 386-87.

In what is probably the most significant passage of reasoning in the majority

opinion, Joughin continues:

"Additionally, to further demonstrate that the entry of the proposed QDRO is not equivalent to the enforcement of a 'noncontractual money obligation,' the entry of the order here does not compel the payment of any money to plaintiff. Indeed, after a court enters a proposed QDRO, as the trial court did here, the order is not enforceable until the plan administrator determines that the proposed QDRO is 'qualified' under ERISA. 29 USC 1056(d)(3)(G)(i). As the Tennessee Court of Appeals [in Jordan] aptly explained:

"Under ERISA, a QDRO 'creates or recognizes the existence of an alternate payee's right to ... receive all or a potion fo the benefits payable with respect to a participant under a plan ... " 29 USC 1056(d)(3)(B)(i)(I) (1999). A proposed QDRO under ERISA, on the other hand, is 'any judgment, decree, or order' entered by a trial court that 'relates to the provision of .. . marital property rights to a ... former spouse ... , and ... is made pursuant to a State domestic relations law .... " 29 USC 1056(d)(3)(B)(ii). Typically, ... a proposed QDRO is prepared by the parties' attorneys and submitted to the trial court for approval and entry, after which it is submitted to the administrator who administers the pension plan in question. The plan administrator must then determine if the proposed QDRO is 'qualified' under ERISA. [Jordan, 147 SW3d at 259-260 (footnotes omitted.)

"Therefore, an alternate payee only becomes entitled to rights under an ERISA plan when the proposed QDRO becomes qualified. And a proposed QDRO becomes qualified after it is approved by the plan administrator. See 29 USC 1056(d)(3)(G)(i); Jordan, 147 SW3d at 260; !o. re Marriage of Cray, 18 Kan App 2d 15, 21; 946 P.2d 944 (1993), rev'd in part on other grounds 254 Kan 376 (1994). Consequently, plaintiff's motion to have the trial court enter the proposed QDRO was not an act to enforce a judgment or obligation." Joughin, 320 Mich App 380, 387-88.

9

RE

CE

IVE

D by M

SC 8/17/2018 3:41:52 PM

This reasoning demonstrates the Joughin majority's understanding of the import

that ERISA plays in the resolution of this issue; an important distinction that is summarily

lost both in the Appellant's argument. As pointed out in Appellee's earlier submission,

the Appellant erroneously conflates a Judgment of Divorce with a QDRO, using Neville's

reference that a QDRO is "part of a Judgment of Divorce," to argue that submission of a

QDRO is an action to enforce the Judgment of Divorce subject to the application of the

statute of limitations under MCL 660.5809; cf. Neville, 295 Mich App 460, 467-69. In

highlighting the import of ERISA, Joughin reinforces two inescapable points, supported

by numerous federal and state court decisions considering this issue: 1) a Judgment of

Divorce isn't a QDRO; and, in fact, a "proposed QDRO" isn't a QDRO; and, 2) only after

an ERISA compliant domestic relations order is submitted and approved, becoming a

QDRO, may an ex-spouse enforce his or her interest against an ERISA qualified

retirement plan.

In Gendreau v Gendreau (In Re Gendreau), 122 F.3d 815 (9th Cir 1997), cert den

523 U.S. 1005, 118 S.Ct. 1187, 140 L.Ed.2d 318 (1998), the 9th Circuit Court of Appeals

held that the QDRO provisions of ERISA do not mean that an ex-spouse has no interest in

an ERISA qualified plan until she or he obtains the QDRO. Rather, Gendreau holds that

ERISA provisions merely prevent the ex-spouse from enforcing such interest until the

QDRO is obtained. .!.g. Joughin's reasoning is entirely consistent with this important

distinction.

The Joughin dissent seemingly ignores, or minimally downplays, this element of

an ERISA qualified plan. Instead, the dissent chooses to emphasize "[t]he limits on

10

RE

CE

IVE

D by M

SC 8/17/2018 3:41:52 PM

when and in what form an alternate payee may receive benefits pursuant to a retirement

plan are as varied as the plan themselves[.]" Joughin, 320 Mich App 380, 394.

Respectfully, this argument misses the point.

The fact that a QDRO can be fashioned to implement an Alternate Payee's

different election against a qualified plan than may be eventually selected by the plan

participant is ultimately irrelevant. While an alternate payee has an interest in an ERISA

qualified plan under the Judgment of Divorce and while the alternate payee may elect a

different payout scheme than the plan participant, unless and until the proposed domestic

relations order is submitted and is deemed "qualified," the Alternate Payee has no

enforceable right against the plan.

Appellant also makes the argument that following Joughin would open the door to

circumventing the statute of limitations with an effort to enforce the "property-division"

terms of a judgment of divorce, which "might include the entry of a deed, the transfer of

title in a vehicle, and the closing of banking and credit-card accounts." Again, Appellant

is wrong.

An ex-spouse's entry of a deed, the transfer of an interest in a vehicle, and the

closing of a bank or credit-card account are actions that are taken under a Judgment of

Divorce that by their nature are clearly enforcing a present right against the former

spouse's continuing interest in the affected property. This is clearly different than

submission of a proposed QDRO to establish an enforceable right against an ERISA

qualified pension plan.

Suppose, hypothetically, that the Judgment of Divorce, as many do, grants to one

11

RE

CE

IVE

D by M

SC 8/17/2018 3:41:52 PM

spouse the entire interest in a jointly owned piece of real estate that is legally described

within the Judgment. Now, further suppose that no deed is prepared to transfer the title

to that real property. Can the Judgment of Divorce be recorded to enforce an interest

transfer in that real estate to the recipient spouse? The answer is yes. Can a Judgment

of Divorce be used to enforce an interest transfer in an ERISA qualified plan? No.

Appellant's argument, on this point, really is a case of apples and oranges.

Finally, the Joughin dissent makes the illusory argument that it is the "right to entry

of a proposed QDRO that is at issue here," continuing that "[a]s previously discussed, a

party to a judgment of divorce can enforce his or her right to entry of a QDRO even before

he or she is entitled to payment of benefits under a retirement plan." Joughin, 320 Mich

App 380, 399. The dissent is wrong. The operative issue is the "right of enforcement"

against the plan.2 The Joughin majority recognizes this point and its legal conclusions

2

This relevant distinction is entirely consistent with the federal precedent. In Re Hthiy, 283 B.R. 447, 451 (Bankr.E.D.Mich.2002), adopting the Ninth Circuit's reasoning in Gendreau, noted that:

"The court [Gendreau) reasoned that the divorce decree, which had ordered the completion of a QDRO to satisfy ERISA's anti-alienation provision, effectively had divested the debtor of half the pension fund. Therefore, the ex-wife's divorce award allowed her to pursue a claim against the pension plan itself, not against the debtor, which meant that the debtor did not personally owe the ex-wife a 'debt' that could be discharged in bankruptcy. Id. at 819." [Emphasis added.)

Similarly, in the case at bar, when the Appellee's right to or interest in Y2 of the marital portion of the Appellant's pension is established in the Judgment of Divorce, at that point, the Appellee has been effectively, contractually divested of his interest in that portion of the pension. It is the transferred right to this same portion of the pension that the Appellee subsequently renders enforceable against the plan by entry of a compliant QDRO.

Further, this conclusion is consistent with other federal rulings, outside the 6th Circuit, but which support this proposition that delayed entry of the QDRO, which creates the enforceable interest, is entirely permissible. Trs. of the Dirs. Guild of America-Producer Pension Benefits Plans v Tise, 234 F.3d 415 (9th Cir. 2001), amd on other grounds, reh, en bane, den 255 F.3d 661 (9th Cir.

12

RE

CE

IVE

D by M

SC 8/17/2018 3:41:52 PM

were correct.

Ill. The claim for retirement benefits against a retirement plan accrues at the time a "proposed QDRO" is deemed qualified.

Michigan law has well-settled public policy supporting application of statutes of

limitations. "Statutes of limitations are procedural devices intended to promote judicial

economy and protect the rights of defendants by precluding litigation on stale claims.

Stephens v Dixon, 449 Mich 531, 534; 536 NW2d 755 (1995)." AG, 257 Mich App at

569.

In considering when a claim against a pension fund accrues for purposes of

application of a statute of limitations, it must be said that if, as Stephens held, the intention

of a statute of limitations is to "promote judicial economy and to preserve the rights of

defendants by precluding litigation on stale claims," the application of a statute of

limitation to prevent entry of a proposed qualified domestic relations order meets neither

objective. Stephens, 449 Mich at 534. First, the provisions within the Judgment of

Divorce directing the submission of a proposed QDRO contemplate further action by the

Court to enter the domestic relations order subject to qualification of the plan

administrator. This isn't a matter of judicial economy, but a requisite of ERISA's

anti-alienation provisions that permit the entry of such a state court domestic relations

order despite federal pre-emption in regard to qualified plans. Whether it is done

immediately after the entry of a judgment of divorce or years later, the expected and

directed burden to the trial court is the same.

2001 ), held that there is no "conceptual" reason why a QDRO must be obtained before a plan participant's benefits become payable on account of his retirement or death.

13

RE

CE

IVE

D by M

SC 8/17/2018 3:41:52 PM

Second, as the Ninth Circuit correctly reasoned in Gendreau, adopted by the U.S.

District Court for the Eastern District of Michigan in In Re Hthiy, when the Judgment of

Divorce enters and orders the submission of a proposed QDRO, the trial court has

divested the participant spouse from the assigned portion of the pension fund. See fn 2.

Thereafter, the participant spouse does not owe a debt to the alternate payee, but the

alternate payee has a divorce award that allows her to pursue a claim against the pension

plan itself. Accordingly, there is no stale claim to litigate with the participant spouse, nor

any right to preserve to the participant spouse by application of a statute of limitations.

Limitations periods, typically, begin to run from the time claims accrue, including

the periods applicable to enforcement of judgments. As MCL §600.5827 provides:

"Except as otherwise expressly provided, the period of limitations runs from the time the claim accrues. The claim accrues at the time provided in sections 5829 to 5838, and in cases not covered by these sections the claim accrues at the time the wrong upon which the claim is based was done regardless of the time when damage results." [emphasis added]

Michigan case law establishes that claims of this nature, i.e. obligated payments derived

from judgments of divorce, accrue as payments "become due." In other words, a claim

does not accrue until a right to payment exists. See Rybinski v Rybinski, 333 Mich 592,

596; 53 NW2d 386 (1952) and Torakis v Torakis, 194 Mich App 201; 486 NW2d 107

(1992).

Clearly, Appellant's pension payment did not "become due" until he elected to

initiate payments upon retirement. And, as pointed out above, Appellee's right to receive

payment from the ERISA qualified plan is inextricably linked with her enforcement rights

against the plan, solely derived from the plan administrator's qualification of a proposed

14

RE

CE

IVE

D by M

SC 8/17/2018 3:41:52 PM

QDRO directing payment to the alternate payee consistent with the payment options

under the plan. Payments "accrue" or became due to the Appellee after the qualification

of the proposed qualified domestic relations order. Hypothetically, if the Appellee had

not received payment from the plan, then her legal remedy is a claim against the plan, not

against the Appellant and her legal remedy carries with it an independent statute of

limitations that has no bearing on the Appellant.

This latter point demonstrates the greatest misunderstanding or misdirection in the

Joughin dissent and the clarity of the Joughin majority opinion. The submission of the

proposed QDRO truly is just a ministerial act. It does nothing to harm the Appellant's

interests - that's already been adjudicated and he has already been divested of the

assigned interest in the pension fund; nor, as pointed out above, is the submission of a

proposed qualified domestic relations order any more or any less than what the trial court

contemplates when executing the Judgment of Divorce.

STIPULATION REGARDING THE APPENDIX

Appellee, Sherry Sue Dorko, stipulates to use of the Appendix filed by the

Appellant.

STATEMENT REGARDING ORAL ARGUMENT

Pursuant to MCR 7.214(E), Appellee, Sherry Sue Dorko, submits that this

Appellant's Application should be submitted for decision after oral argument is held.

15

RE

CE

IVE

D by M

SC 8/17/2018 3:41:52 PM

CONCLUSION AND RELIEF REQUESTED

For and based upon the aforementioned reasons, Appellee Sherry Sue Dorko

16