More Alabama State Retirement Plan Mischief

Every divorce lawyer knows that Retirement Systems of Alabama won’t respond to a Qualified Domestic Relations Order. It’s a stupid rule, of course, fueled more by the crass selfishness of legislators (all of whom are participants in the state retirement system) than by any possible logic or reason. But it is the law in Alabama, and the only way it’s going to change is for the citizens to shame the legislature into it.

Poor Barbara Prater Hallmark figured that out too late. She agreed to terms in her divorce settlement that said that she “shall receive and is hereby awarded fifty (50) percent of all amounts and/or shares in [her husband’s RSA account] … The date for calculation of the percentage hereby awarded to [Ms. Hallmark] is the date of this agreement, May 19, 1998, and the funds or shares, hereby awarded to the wife, shall be transferred to her account in accordance with the provisions of the Qualified Domestic Relations Order entered this day, and adopted herein by reference as if fully set out herein.”

Of course, when Ms. Hallmark or her lawyer sent the QDRO to RSA, David Bronner and his staff just took one look at it and giggled. Then she did the natural thing: she petitioned for modification. Saying she had recently discovered that the QDRO was unenforceable and asking the court to transfer to her 1/2 the “value of the former husband’s TRS (Teachers’ Retirement System, part of RSA) account.”

After the parties stipulated that the husband’s contributions totaled $24,745.38, the trial court entered an order awarding Ms. Hallmark $12,372.69 (1/2 the total contributions) plus statutory interest, in lieu of distribution from the husband’s TRS account. The husband appealed, and the Alabama Court of Civil Appeals reversed, in the case of Hallmark v. Hallmark, Case No. 2040193/2040339 (Ala. Civ. App. November 23, 2005).

The Appeals Court acknowledged that the trial court had “the inherent authority to interpret, implement, or enforce its own judgments” but said that this authority does not extend to changing an otherwise effective and unambiguous final order.

In the case now before us, the divorce judgment clearly states that the trial court awarded the former wife “fifty (50) percent of all amounts and/or shares in [the former husband’s TRS account].” Therefore, the divorce judgment unambiguously states that the trial court awarded the former wife one-half of the funds in the former husband’s TRS account rather than a judgment for a sum certain. Thus, the order under review awarding the former wife a judgment against the former husband for a sum certain in lieu of the award of one-half of the funds in the former husband’s TRS account constituted a modification of the property division in the original divorce judgment more than 30 days after the entry of the original divorce judgment. See [Fielding v. Fielding, 843 So. 2d 766, 770 (Ala. Civ. App. 2002)]. Therefore, we reverse the trial court’s judgment and remand the case to the trial court for further proceedings consistent with this opinion. Our resolution of this issue pretermits discussion of the remaining arguments raised by the former husband.

The Appeals Court is correct, of course. So what now becomes of Mrs. Hallmark? She’s up the Alabama State Retirement Creek without a paddle. Perhaps she will become the poster child for a movement to make state retirement accounts amenable to QDROs just like any other retirement plans.