Parties to a Texas divorce may wish to reach a settlement agreement to avoid protracted litigation and resolve their issues amicably. Divorcing spouses may enter into an agreement incident to divorce pursuant to Tex. Fam. Code § 7.006, which may generally be revised or repudiated at any time before the divorce is rendered. They may also enter into a mediated settlement agreement pursuant to Tex. Fam. Code § 6.002. A mediated settlement agreement under § 6.002 is binding if it includes a prominent statement that it is not subject to revocation and is signed by both parties and their attorneys who are present. In a recent case, a former husband challenged a divorce decree that included language that was not in the parties’ mediated settlement agreement prohibiting him from waiving his military retirement for disability.
The parties executed a mediated settlement agreement (“MSA”) providing that the wife would get 50% of the community portion of her husband’s “net disposable retired pay.”
The wife asked the court to add a provision to the final divorce decree that would prohibit the husband from waiving military retirement pay in exchange for military disability. She asked the court to include language requiring him to reimburse her if he elected to waive retirement pay and receive disability.
The court included language that the parties agreed to divide the husband’s military retirement and “stipulate and agree [that the husband] shall not convert, buy civil service retirement or otherwise modify the terms or payment structure of his military retirement pay in any manner that will negatively impact” the wife’s payments. Furthermore, if he waived his retirement pay for disability, he would be required to pay the wife “directly that amount that [her] monthly payment is reduced by such action.”
The husband appealed.
Military Retirement
Courts may divide military retirement pay, but not disability pay. Additionally, Texas case law has held that a court cannot prohibit someone from waiving military retirement pay to receive disability benefits. The appeals court concluded the trial court had improperly prohibited the husband from unilaterally waiving retirement pay for disability benefits. The reimbursement language also erroneously limited his right to waive retirement pay to receive disability.
The wife argued that courts in other states have concluded a spouse a spouse can agree to reimburse the other spouse if they waive military retirement for disability. The appeals court noted that conclusion has not been made in a Texas court.
The appeals court modified the judgment to remove the language stipulating and agreeing that the husband would not modify the terms or payment structure of his military retirement in a way that would negatively affect the wife. The appeals court also removed the language requiring the husband to reimburse her if he took any action that reduced her share of his retirement pay.
Mediated Settlement Agreement
The wife argued that there had not been a meeting of the minds when they signed the MSA.
The appeals court concluded the parties MSA met the requirements set forth in Tex. Fam. Code § 6.602. It included a prominent notice that it was not subject to revocation. The parties and their respective attorneys signed it. The appeals court concluded that the wife could not unilaterally revoke the MSA and the trial court was required to enter judgment on the MSA.
The appeals court also noted that the court had not allowed evidence about whether there was a meeting of the minds. Without evidence on that issue, the appeals court could not conclude the judgment should be reversed due to a lack of a meeting of the minds.
The appeals court also rejected the wife’s argument the MSA was ambiguous. She had not identified specific language or alternative reasonable interpretations.
The appeals court affirmed the judgment as modified.
Seek Legal Advice
Settlement can help divorcing spouses avoid lengthy litigation and the stress that goes with it, especially in high net worth divorces or complex estates. Settlement may not be appropriate in every case and sometimes parties are unable to reach agreement on important issues. If you are considering divorce, a skilled Dallas divorce lawyer can advise you of your options. Set up a consultation with McClure Law Group at 214.692.8200.