Patterson v. Chrysler Group Addendum
Shortly after the Sixth Circuit decided Patterson v. Chrylser Group, 845 F.3d 756 (2017), I first wrote about this case. Based on some recent comments, updating the blog with dates for clarification is necessary. The issue is when the statute of limitations starts on the qualification of a domestic relations order. It is proper to note that this dispute is between the Plan and the Alternate Payee or the Transferee Spouse. The Plan Participant (ex-Husband) is not a party and does not have standing. It is the Transferee Spouse’s vested benefit under consideration. Ex-Husband no longer has an interest. The Plan is the legal owner as Trustee of the retirement benefits.
In Patterson v. Chrysler, here are the theoretically possible dates for the start of the statute of limitations:
September 27, 1993: Date of Divorce and entry of the State Court Order awarding the retirement benefit. This Order set the parameters of the award from Husband’s Plan legally titled to the Trustee of the Chrysler Plan to Wife. This date clearly does not start the statute of limitations.
January 18, 1995: The Plan phoned the Wife and told her the Plan did not have enough information based upon the terms in the state court order of September 27, 1993, to honor the transfer of benefits. The Sixth Circuit held that the January 18, 1995, phone call put the Wife on notice that she did not have the appropriate Domestic Relations Order and the statute of limitations started to run.
January 4, 2008: Note that this is thirteen years from 1995 when Wife made more attempts to qualify her benefits. In the original blog, I refer to this thirteen years, so this is an important note. The thirteen years start from January 18, 1995, not the entry of the equitable distribution by the state court.
March 3, 2014: Divorce Court entered a nunc pro tunc order. Nunc pro tunc doesn’t work to re-start a statute of limitations, but that discussion is not part of this blog.
So the above dates are the choices for starting the statute of limitations. The date that the statute of limitations begins to run is when the Plan puts the Alternate Payee/Transferee on notice that the benefits will be denied. The Sixth Circuit held that date was the phone call from the Plan on January 18, 1995. The statute of limitations, based upon state law’s most appropriate statute of limitations, was six years. In the Patterson v. Chrysler case, the Sixth Circuit selected the six-year statute of limitations under Michigan law.
Professor Howell, in 2015, blogged on a similar topic at https//civil.sog.unc.edu/so-someone-forgot-to-draft-that-qdro-now-what. She accurately states that the North Carolina 10-year statute of limitations for “actions on judgments” in GS 1-47 is irrelevant to the discussion of the state court’s entry and approval of a DRO by the Trustee of the Plan. According to Professor Howell, a DRO is a “means of completing the ED judgment by accomplishing the actual division of the marital interest in the retirement account.” (Emphasis added.) Patterson v. Patterson, 137 NC App 653 (2000), also discussed by Professor Howell, indicates QDROs can be entered well after the fact to “effectuate” the division if requested by the Transferee.
(Note: two Patterson cases that are unrelated are being discussed.)
As one can see from Patterson v. Chrysler, discussed at the beginning of this blog, a DRO can be entered to complete the Equitable Distribution Order many years later. As long as the court file is open, a divorce court can enter a DRO. In Patterson v. Chrysler, the DRO was entered 21 years after the divorce. Now, as Professor Howell discusses, the delay may result in prejudice that has to be evaluated. But, if there is no prejudice and the money is still available from the Plan (the legal owner is the trustee), then a DRO can be completed. The Plan, as the legal owner, starts a denial process and the Statute of Limitations begins to run.
Retirement plans are a complex area of the law. I have studied this area now for more than two decades. The nuances of ownership are essential. Individuals do not own Plans, IRAs, and qualified retirement. The legal ownership is with the Trustee.