HOLMES v. USA
Filing
48
PUBLISHED OPINION AND ORDER granting in part and denying in part 12 Defendant's Motion to Dismiss; granting 12 Defendant's Motion for Judgment on the Administrative Record; denying 26 Plaintiff's Motion for Judgment on the Admini strative Record; denying 31 Defendant-Intervenor's Motion to Supplement the Administrative Record; denying 38 Plaintiff's Motion to Supplement the Administrative Record. The Clerk is directed to enter judgment. Signed by Judge Charles F. Lettow. (cm)
In the United States Court of Federal Claims
No. 09-746C
(Filed: May 31, 2011)
NOREEN M. HOLMES,
Plaintiff,
v.
UNITED STATES,
Defendant,
and
LINDA HOLMES,
Defendant-Intervenor.
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Former spouses as Survivor Benefit Plan
beneficiaries; former-spouse election;
10 U.S.C. § 1448(b)(3); 10 U.S.C.
§ 1450(f)(3)(A); motion to dismiss;
equitable tolling; supplementation of the
administrative record; substantial
compliance
Daniel J. Kelly, McCarter & English, LLP, Boston, MA, for plaintiff. With him at the
hearing and on the briefs was John L. McGowan, Donahue, Tucker, & Ciandella, PLLC, Exeter,
NH. Of counsel was Bonnie A. Vanzler, McCarter & English, LLP, Boston, MA.
Alex P. Hontos, Trial Attorney, Commercial Litigation Branch, Civil Division, United
States Department of Justice, Washington, D.C., for defendant. With him on the briefs were
Tony West, Assistant Attorney General, Jeanne E. Davidson, Director, and Steven J. Gillingham,
Assistant Director, Commercial Litigation Branch, Civil Division, United States Department of
Justice, Washington, D.C.
Bernice M. Jenkins, Law Office of Bernice M. Jenkins, North Charleston, S.C., for
defendant-intervenor.
OPINION AND ORDER
LETTOW, J.
This military benefits case involves tragic circumstances. Thomas Holmes served
honorably in the United States Navy from 1971 until he retired as a Sonar Technician First Class
in 1993. He died in a motor vehicle accident in 2006, leaving behind his former wife of twenty-
six years, plaintiff Noreen Holmes, and his wife of just over one year, defendant-intervenor
Linda Holmes. Pursuant to the terms of Noreen and Thomas Holmes’ divorce decree,
Ms. Noreen Holmes had been receiving a monthly payment of Mr. Holmes’ retirement benefits,
which ceased upon Mr. Holmes’ death. Ms. Noreen Holmes then applied to receive benefits
under the Survivor Benefit Plan (“SBP”), a program designed to provide for survivors of retired
military personnel, which benefits she understood were granted to her in the divorce. The Board
for Correction of Naval Records (“BCNR” or “Board”) denied Ms. Noreen Holmes’ request,
holding that notwithstanding the existence of the divorce decree, neither she nor Mr. Holmes had
fulfilled the statutory requirements that would have allowed Ms. Noreen Holmes to collect
benefits under the Survivor Benefit Plan. Ms. Noreen Holmes filed suit in this court for the
benefits. Ms. Linda Holmes, who is currently collecting Mr. Holmes’ SBP benefits, has
intervened. Pending before the court are defendant’s motion to dismiss and cross-motions for
judgment on the record before the Board.
BACKGROUND 1
A. The Survivor Benefit Plan
Central to this case is the Survivor Benefit Plan, created in 1972 to provide for survivors
of retired military personnel. See Pub. L. No. 92-425, 86 Stat. 706 (1972) (codified, as amended,
at 10 U.S.C. §§ 1447-1455). Under the plan, premiums are deducted from an eligible service
member’s payments. When the service member dies, payments go to the service member’s
designated beneficiary.
Enrollment in the plan is automatic for military personnel who are entitled to retired pay,
unless they affirmatively opt out of the Survivor Benefit Plan. See 10 U.S.C. § 1448(a)(1)(A),
(a)(2)(A). By default, benefits are paid to an eligible surviving spouse. See 10 U.S.C. § 1450(a).
A service member whose marriage ends after becoming eligible to participate in the Survivor
Benefit Plan has “one year after the date of the decree of divorce, dissolution, or annulment” to
“elect to provide an annuity to that former spouse.” 10 U.S.C. § 1448(b)(3)(A). A service
member who elects to provide an annuity to a former spouse under Section 1448(b)(3) must, at
the time of making the election, provide the Secretary concerned 2 with a written statement,
signed by the service member and the former spouse, stating whether the election is being made
pursuant to the requirements of a court order or voluntary written agreement. See 10 U.S.C.
1
The court derives the background from the plaintiff’s complaint, the exhibits attached to
the plaintiff’s complaint, and the administrative record. In addressing the cross-motions for
judgment on the administrative record, the court has “ma[d]e factual findings under [what is now
Rule 52.1 of the Rules of the Court of Federal Claims (‘RCFC’)] from the record evidence as if it
were conducting a trial on the record.” Bannum, Inc. v. United States, 404 F.3d 1346, 1357 (Fed.
Cir. 2005).
2
In title 10 of the United States Code, the phrase “the Secretary concerned” can refer to
the Secretary of the Army, the Navy, the Air Force, or Homeland Security, depending on
whether the relevant matter concerns the army, navy, air force, or coast guard. See 10 U.S.C.
§ 101(a)(9). Because Mr. Holmes was a service member in the navy, this decision will generally
refer to the Secretary of the Navy as the pertinent official.
2
§ 1448(b)(5).
Alternatively, if a service member “is required . . . to provide an annuity to a former
spouse and . . . fails or refuses to make such an election,” the service member’s former spouse
may cause the election to be “deemed” made by providing the Secretary of the Navy with a
“written request . . . that such an election be deemed to have been made,” and a “[c]opy of [a]
court order or other official statement” requiring the annuity to be paid to the service member’s
former spouse. 10 U.S.C. § 1450(f)(3)(A). For a former spouse to invoke this “deemed
election,” the Secretary must “receive[] a request from the former spouse . . . within one year of
the date of the court order or filing involved.” 10 U.S.C. § 1450(f)(3)(C).
B. The Retired Service Member
Thomas Holmes began a career as an active duty seaman in the United States Navy on
December 29, 1971. See AR-121 to 122. 3 The plaintiff avers that Thomas then married Mary D.
Perry on June 16, 1973, in St. Louis, Missouri, and that the couple divorced in Connecticut on
October 15, 1976. See Compl. ¶¶ 8, 10; Compl. Ex. 1 (Judgment dissolving marriage of Mary
and Thomas Holmes).
Noreen Holmes met Thomas in 1977 and married him on February 4, 1978, in
Portsmouth, New Hampshire. They had two children, born in 1979 and 1982, and remained
married for twenty-six years. Mr. Holmes was automatically enrolled in SBP spousal coverage
in 1993, when he was transferred to the Fleet Reserve. See AR-83. On November 9, 2004, the
couple agreed to dissolve their marriage and divided their property pursuant to a permanent
stipulation they drafted without aid of counsel. See AR-20 to 24 (Divorce Decree of Ms. Noreen
Holmes and Mr. Thomas Holmes (Nov. 9, 2004)) (hereinafter “Divorce Decree”); see also
Compl. ¶ 32 (“Noreen Holmes and Thomas Holmes handled the divorce pro se.”). Courts of the
State of New Hampshire then issued a notice entering the divorce decree. See AR-26 (Decree of
Divorce, In re Noreen Holmes and Thomas Holmes, Case No. 2004-M-0401 (Nov. 9, 2004)).
Noreen and Thomas Holmes’ divorce decree contained several provisions for Noreen’s
care. Thomas agreed to pay Noreen $450.00 per month in alimony for thirteen years. Divorce
Decree ¶ 9. The decree also provided that Noreen would “continue to be the primary beneficiary
of [Thomas’] life insurance policy through the [United States] Military.” Id. ¶ 11. Another
paragraph titled “Pensions and Other Tax-Deferred Assets” specified that Thomas “maintain[ed]
a retirement account through the [United States] Military with an approximate value of
$1,000.00 per month[, and that Noreen would be] awarded 55% monthly upon final decree.” Id.
¶ 14(A). Noreen believed that paragraph 14(A) of the divorce decree referred to Thomas’ SBP
benefits. See Compl. ¶ 37 (“Section 14(A) of the Divorce Decree cannot refer to anything other
than the SBP. The SBP is a retirement program and fifty-five percent of the base amount is the
default amount at which the annuity is set.”); see also 10 U.S.C. § 1451(a)(1)(A). Following
their divorce, Noreen received in a joint checking account held by Noreen and Thomas, Thomas’
military retirement benefits in the amount of $1,000 per month. Compl. ¶ 41. Noreen avers that
3
“AR-__” refers to the administrative record filed with this court in accord with RCFC
52.1(a).
3
she believed Thomas had arranged for her to receive his survivor benefits, pursuant to what she
believed their divorce decree mandated, and had no knowledge of the SBP “deemed election”
process until March 2007. Compl. ¶¶ 49, 51, 52.
Thomas Holmes married defendant-intervenor Linda Holmes (formerly known as Linda
Turner) on July 2, 2005. Compl. ¶ 54. A little over a year later, on July 31, 2006, Thomas
Holmes died in a motor vehicle accident. AR-28 (Certificate of Thomas Holmes’ Death). The
next month, the retirement benefits previously paid at $1,000 per month stopped being credited
to Noreen’s account. Compl. ¶ 60.
C. The Former Spouse’s Effort to Obtain Administrative Redress
On September 9, 2006, Noreen submitted to the Defense Finance and Accounting Service
(“DFAS”) a DD Form 2656-7 (Verification for Survivor Annuity). See Compl. ¶ 63; AR-95 to
96 (DD Form 2656-7 (Verification for Survivor Annuity) (Sept. 9, 2006)). On December 1,
2006, the government deposited $680.50 into Noreen’s checking account, and a week later, on
December 8, 2006, the same amount was debited. See Compl. ¶ 65; Compl. Ex. 5 (Noreen’s
Bank Statement). Noreen believed this deposit was the government’s payment of her benefits
under the Survivor Benefit Plan. However, she avers that she never received a response
concerning the DD Form 2656-7 or an explanation for the deposit to and withdrawal from her
bank account. Compl. ¶ 66.
On November 2, 2006, Noreen submitted a DD Form 149 (Application for Correction of
Military Record), again seeking Thomas’ survivor benefits. See Compl. ¶ 67, AR-89 to 90 (DD
Form 149 (Application for Correction of Military Record) (Nov. 2, 2006)). The Board for
Correction of Naval Records denied Noreen’s request, stating that “the evidence submitted was
insufficient to establish the existence of probable material error or injustice.” AR-82 (Letter
from W. Dean Pfeiffer, Executive Director, BCNR, to Noreen Holmes (Mar. 14, 2007)). A
memorandum from the BCNR explained that when a service member “[i]s required to elect
former[-]spouse coverage by a court order, . . . the member may elect to change to former
[-]spouse category coverage during the one[ ]year immediately following that date. . . . If the
member fails or refuses to make such election, the member shall be deemed to have made such
election if the [DFAS] receives a request from the former spouse . . . within one year of the date
of the court order or filing.” AR-83 (Mem. for Executive Director, BCNR (Feb. 9, 2007)).
Noreen did not attempt to make a deemed election within a year of her and Thomas’ divorce, see
Compl. ¶¶ 49-52, 98-99, and has not alleged that Thomas took steps to change his beneficiary
from “spouse” to “former spouse.”
Noreen wrote a letter to the Board on July 9, 2007, requesting reconsideration of its
decision. She included a copy of Thomas’ revoked Last Will and Testament as evidence that
Thomas wanted her to be “tak[en] care of.” AR-62 to 63 (Letter from Noreen Holmes to Board
of Officers, Dep’t of the Navy, BCNR (July 9, 2007)). Noreen’s request for reconsideration was
denied because the new evidence she submitted was “not material.” AR-59 (Letter from Pfeiffer
to Noreen Holmes (August 8, 2007)).
4
On February 20, 2008, Noreen submitted an Application and Verified Petition for
Correction of Military Records, with attached exhibits to “demonstrate Thomas Holmes’ intent
that Noreen Holmes receive the SBP payments.” Compl. ¶ 72; AR-9 (DD Form 149
(Application for Correction of Military Record) (Feb. 20, 2008)). The petition requested that the
Board find that it was the intent and legal obligation of Thomas Holmes to provide SBP
payments to Noreen and correct Thomas Holmes’ military record to show that Noreen Holmes
was deemed the recipient of the SBP payments. See AR-14 to 15 (Verified Petition for
Correction of Military Record of Thomas Holmes).
The Board’s executive director, W. Dean Pfeiffer, replied to Noreen’s petition on
September 22, 2008. See AR-5 to 7 (Letter from Pfeiffer to John L. McGowan (Sept. 22, 2008)).
Again, Noreen’s request for reconsideration was denied because the new evidence she had
submitted was not “material.” Mr. Pfeiffer explained, “[R]econsiderations are granted only upon
presentation of new and material evidence or other matter that was not previously considered. . . .
Evidence is considered to be ‘material’ if it is ‘likely to have a substantial effect on the outcome’
of the prior Board’s decision.” AR-5 to 6. The documents Noreen submitted on July 9, 2007,
and February 20, 2008, were not considered “material” by Mr. Pfeiffer because “the [Board’s]
decision would inevitably [have been] the same” if the documents had been before the Board
initially. AR-6.
Mr. Pfeiffer emphasized that “there is . . . no evidence that [Noreen] made a ‘deemed
election’ under 10 [U.S.C. §] 1450(f)(3) within one year of the divorce,” and “when [Thomas]
Holmes died, he was in the ‘spouse’ category of SBP coverage and had been married to Linda G.
Holmes for over one year.” AR-6. 4 Additionally, he stated,
This board is ill-equipped to adjudicate . . . a dispute
between two competing beneficiaries for the same benefit.
The Board is not an adversarial forum. There are no Board
procedures for providing third parties (such as Linda G.
Holmes) with notice and other basic due process rights that
must be afforded before the government removes an
entitlement. . . . Finally, as a general matter, the Board will
not take action when such action will operate to the
detriment of an individual. Here, granting your application
would necessarily require that Linda lose her entitlement to
SBP.
Id. Mr. Pfeiffer then informed Noreen that she had “exhausted the administrative remedies
available at BCNR” but could continue to “pursue the matter in a court of competent
jurisdiction.” Id. at 6-7.
In a later e-mail exchange between Noreen’s attorney, John L. McGowan, and William
Hess of the BCNR, Mr. McGowan asked what hypothetically happened when (1) a service
4
A subsequent spouse must be married to a qualifying service member for one year
before the service member’s death to be eligible for SBP benefits. See 10 U.S.C. § 1447(7)(A).
5
member enrolled in SBP and made a spousal election, (2) the service member and spouse
divorced, but the divorce decree failed to address the SBP, (3) neither service member nor
spouse took affirmative steps to change the beneficiary of SBP payments from “spouse” to
“former spouse,” and (4) the service member did not remarry and passed away. Compl. Ex. 12
at 2 (E-mail from McGowan to Hess (Nov. 10, 2008)). Mr. Hess responded:
The scenario you have asked about is fairly
common. In such cases (in the Navy at least), as I
understand it, DFAS would deny the ‘former
spouse’ application for an annuity and return any
premiums deducted after the divorce to the person
designated for arrearages of pay. I have seen DFAS
refer the member to the Correction Board (but I am
not sure whether they do that in every case).
Every case is different, but our Navy Board
usually grants equitable relief to former spouses in
this situation, assuming the retiree continued to pay
premiums and did not marry someone else. This is
especially true in cases where the divorce decree
requires ‘former spouse’ coverage. . . . The ‘theory’
is usually that the spouse premiums were being
deducted each month. And the member was
informed of the deductions.
And he did not take any action to stop the
deductions. Therefore, presumably, the premiums
were being deducted to cover somebody. And if the
only possible “somebody” is the former spouse,
perhaps the member intended to “cover” the former
spouse because there is nobody else left.
[]Note, this is not the only possible
conclusion.
A reasonable person might also
conclude that premiums continued to be deducted
with the retiree[’]s knowledge because the member
simply did not know that he could stop them by
simply telling DFAS he was divorced. Not an
unlikely scenario considering how technically
complex this can be. Or maybe, due to inattention,
he did not know [wh]at the deductions were for or
that they were being made. Or, maybe the retiree
allowed the deductions to continue without
objection because he wanted to remarry and cover
the new spouse and was afraid he would not be able
to cover a new spouse unless he continued paying
premiums while divorced. There are lots of
possible scenarios . . . .
6
What distinguishes [Noreen’s] case . . . ,
however, is that [Thomas] paid “spouse” coverage
premiums while he was married to [Linda]. It
cannot as easily be said that he intended to “cover”
[Noreen]. Perhaps those premiums were intended
to “cover” [Linda].
Id.
In a later e-mail, Mr. Hess reiterated that it was BCNR’s “view/policy that [it would] not
make a change to a record that deprives another (Linda) of a benefit.” Compl. Ex. 12 at 1
(E-mail from Hess to McGowan (Nov. 20, 2008)).
D. Suit in This Court
Noreen brought suit in this court on November 2, 2009. In her complaint, she requests
SBP payments from August 1, 2006, to the present and continuing payments. Compl. ¶ 108.
She also requests that Thomas’ military records be corrected to specify Noreen as the recipient of
SBP benefits. Compl. ¶ 116. Noreen additionally claims that the refusal of the Board to
designate her as Thomas’ beneficiary under the SBP has resulted in an unconstitutional taking, in
the denial of due process of law, and in a violation of equal protection of the law. See Compl. at
17 (Count III), at 21 (Count IV), at 23 (Count V).
Pending before the court are the government’s motions to dismiss and for judgment on
the administrative record and plaintiff’s cross-motion for judgment on the administrative record.
Evidentiary matters are also at issue; the government objects to the court’s consideration of
certain materials attached to plaintiff’s complaint, and defendant-intervenor has moved to
supplement the administrative record.
ANALYSIS
I. JURISDICTION
The government seeks dismissal of Counts III and V of plaintiff’s complaint for lack of
subject matter jurisdiction. These counts allege that the government denied plaintiff’s
constitutional rights to due process of law and equal protection.
“Jurisdiction must be established as a threshold matter before the court may proceed with
the merits of this or any other action.” OTI Am., Inc. v. United States, 68 Fed. Cl. 108, 113
(2005) (citing Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 88-89 (1998)). When
considering a motion to dismiss for lack of subject matter jurisdiction, the court “accepts as true
the undisputed allegations in the complaint, and draws all reasonable inferences in favor of the
plaintiff.” De Maio v. United States, 93 Fed. Cl. 205, 209 (2010) (citing Hamlet v. United States,
873 F.2d 1414, 1415-16 (Fed. Cir. 1989)). When a defendant or the court challenges the court’s
jurisdiction, “‘the plaintiff cannot rely merely on allegations in the complaint, but must instead
bring forth relevant, competent proof to establish jurisdiction.’” Hall v. United States, 91 Fed.
7
Cl. 762, 770 (2010) (quoting Murphy v. United States, 69 Fed. Cl. 593, 600 (2006), and citing
Cedars-Sinai Med. Ctr. v. Watkins, 11 F.3d 1573, 1583-84 (Fed. Cir. 1993)).
The Tucker Act grants this court jurisdiction over claims “against the United States
founded either upon the Constitution, or any Act of Congress or any regulation of an executive
department, or upon any express or implied contract with the United States, or for liquidated or
unliquidated damages in cases not sounding in tort.” 28 U.S.C. § 1491(a)(1). However, “[t]he
Tucker Act itself does not create a substantive cause of action; . . . to come within the
jurisdictional reach and the waiver of the Tucker Act, a plaintiff must identify a separate source
of substantive law that creates the right to money damages.” Fisher v. United States, 402 F.3d
1167, 1172 (Fed. Cir. 2005) (en banc portion) (citing United States v. Mitchell, 463 U.S. 206,
216 (1983)).
This court generally lacks jurisdiction to hear due process and equal protection claims
because the fifth-amendment due process clause is not money-mandating. See LeBlanc v. United
States, 50 F.3d 1025, 1028 (Fed. Cir. 1995); Mullenberg v. United States, 857 F.2d 770, 773
(Fed. Cir. 1988) (citing United States v. Testan, 424 U.S. 392, 401-02 (1976)); Nwogu v. United
States, 94 Fed. Cl. 637, 649-50 (2010); Del Rio v. United States, 87 Fed. Cl. 536, 539-40
(2009). 5 Noreen Holmes acknowledges that the due process clause is not an ‘“independently
sufficient’” basis for this court’s jurisdiction. Pl.’s Resp. to Def.’s Mot. to Dismiss and CrossMot. for Judgment (“Pl.’s Cross-Mot.”) at 4 (quoting Marandola v. United States, 76 Fed. Cl.
237, 249 (2007)). However, she argues that the court can consider constitutional claims when
they arise from the government’s conduct under a money-mandating statute, such as the Survivor
Benefit Plan program, 10 U.S.C. §§ 1447-1455. See Pl.’s Cross-Mot. at 5.
The determination of whether Noreen Holmes is entitled to Mr. Holmes’ survivor
benefits “may include consideration of whether [the denial of SBP benefits to Ms. Holmes]
violated [a] constitutional right[]” if the “constitutional issue does not stand alone, but is a factor
in the claim for which Tucker Act jurisdiction is established.” Holley v. United States, 124 F.3d
1462, 1466 (Fed. Cir. 1997) (holding that the Court of Federal Claims had jurisdiction over a due
process claim that supported entitlement to military back pay); see also Filipczyk v. United
States, 386 Fed. Appx. 973, 977 (Fed. Cir. 2010) (“Claimants in the Court of Federal Claims
may argue issues based on violations of the Constitution or of a statute or regulation to support
their claims for monetary relief under money-mandating statutes.”); Sam v. United States, 682
F.2d 925, 935 (Ct. Cl. 1982) (“Plaintiffs’ equal protection challenge is based upon the Navy’s
interpretation of [certain] statutes. . . . [P]laintiffs’ claim [is] that the subject statutes, if correctly
construed according to the fifth amendment, [would] require this court to award money damages.
This is precisely the type of claim over which this court has jurisdiction.”).
Ms. Noreen Holmes claims she had an “entitlement to SBP annuity benefits” and that the
government’s failure to provide notice and an opportunity to be heard before the “termination of
5
The due process and equal protection clauses of the fourteenth amendment apply
exclusively to the states. However, the due process clause of the fifth amendment has been held
to incorporate principles of equal protection. See Bolling v. Sharpe, 347 U.S. 497, 498-99
(1954).
8
her entitlement to SBP annuity benefits [became] effective” constituted a violation of procedural
due process. Compl. ¶ 127. 6 Correlatively, at the heart of her equal protection claim is the
allegation that the government treats the class of “former spouses of military veterans”
“substantially different[ly] depending on whether the former spouse’s military veteran spouse
had remarried and depending on the specific military affiliation of the former spouse.” Id.
¶¶ 155, 156.
These allegations are not merely part of a claim that the government failed to grant
Ms. Noreen Holmes benefits she was owed under the Survivor Benefit Plan. Instead, they raise
separate issues which stand alone. This court therefore lacks subject matter jurisdiction to hear
those stand-alone due process and equal protection claims, and they necessarily are dismissed
without prejudice. 7
6
To the extent that Ms. Noreen Holmes has made a separate statutory claim that she is
entitled to notice, this court has consistently held that the United States is not required to provide
service members’ former spouses with notice of their rights and obligations under the SBP. See
Pence v. United States, 52 Fed. Cl. 643, 646-47 (2002); Woll v. United States, 41 Fed. Cl. 371,
375 (1998) (“The elaborate statutory scheme for SBP insurance does not place that burden on the
Army, and makes it incumbent on the spouse to trigger notification for a deemed election of
former spouse benefits.”). But cf. Downing v. Office of Pers. Mgmt., 619 F.3d 1374, 1377 (Fed.
Cir. 2010) (noting that under the Civil Service Retirement System “[a] former spouse may
receive survivor annuity benefits in the absence of a new election by the annuitant if (1) the
annuitant did not receive the required annual notice of his election rights under 5 U.S.C.
§ 8339(j), . . . and (2) ‘there is evidence sufficient to show that the retiree indeed intended to
provide a survivor annuity for the former spouse.’” (quoting Hernandez v. Office of Pers. Mgmt.,
450 F.3d 1332, 1334-35 (Fed. Cir. 2006))); Simpson v. Office of Pers. Mgmt., 347 F.3d 1361,
1365 (Fed. Cir. 2003) (holding that notice given under the Civil Service Retirement System is
insufficient if it does not specify that a reelection after divorce is required to provide such an
annuity for a former spouse).
7
In Count III, the plaintiff also addresses “the BCNR’s . . . ‘view’ or ‘policy’ against
adjudicating a dispute between competing beneficiaries and changing a military record if doing
so would deprive another person of a benefit.” Compl. ¶ 129. The plaintiff calls this position
“arbitrary and capricious, unreasonable, contrary to the intent of the SBP, . . . inconsistent with
10 U.S.C. [§] 1453(a),” “not authorized by . . . the procedures for . . . consideration of an
application for correction of military records,” and “contradict[ing] the practice of the BCNR”
and “of other Boards for Correction of Military Records of other branches of the U.S. Military”
in similar situations. Compl. ¶¶ 132-35. Although this claim has been included in the plaintiff’s
Count III, which concerns denial of due process of law, it relates to the BCNR’s substantive
decision-making policies rather than the procedures afforded to Noreen Holmes. Accordingly,
the court will consider this challenge to the stated position of BCNR as part of plaintiff’s
statutory claim and not as a separate due process claim.
9
II. MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM
“To survive a motion to dismiss [for failure to state a claim upon which relief can be
granted], a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to
relief that is plausible on its face.’” Ashcroft v. Iqbal, __ U.S. __, __, 129 S.Ct. 1937, 1949
(2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). The allegations
contained in the complaint must indicate to the court that there is “more than a sheer possibility
that a defendant has acted unlawfully;” “[t]hreadbare recitals of the elements of a cause of action,
supported by mere conclusory statements, do not suffice.” Iqbal, 129 S.Ct. at 1949-50 (citing
Twombly, 550 U.S. at 555, 556).
In performing this analysis, the court must construe the allegations of the complaint in the
light most favorable to the plaintiff. See Henke v. United States, 60 F.3d 795, 797 (Fed. Cir.
1995); see also Hamlet, 873 F.2d at 1416. It must decide “‘not whether a plaintiff will ultimately
prevail but whether the claimant is entitled to offer evidence to support the claims.’”
Swierkiewicz v. Sorema N.A., 534 U.S. 506, 511 (2002) (quoting Scheuer v. Rhodes, 416 U.S.
232, 236 (1974), overruled on other grounds as noted in Francis v. Giacomelli, 588 F.3d 186,
192 n.1 (4th Cir. 2009)).
A. Claim of Right to Survival Benefit Plan Annuity
The government has moved to dismiss Ms. Noreen Holmes’ claim that she was unjustly
denied benefits under the SBP, arguing that Ms. Noreen Holmes would be “eligible for the SBP
annuity only if (1) Mr. Holmes elected to change his beneficiary status from ‘spouse’ to ‘former
spouse,’ or (2) she complied with the statutory requirements for a deemed election.” Def.’s Mot.
at 12 (citing 10 U.S.C. §§ 1448(b)(3), 1450(f)(3); Dep’t of Defense Financial Management
Regulation 7000.14R, Military Pay, Policy, and Procedures, vol. 7B, chap. 43, § 430503 (June
2008)). Ms. Noreen Holmes did not know about the deemed-election process until March 2007,
over two and a half years after her divorce, and has not alleged that she complied with the
statutory requirements to make a deemed election. See Compl. ¶¶ 49-52. She also does not
allege that Mr. Holmes changed his beneficiary status from “spouse” to “former spouse” but
rather she avers that Mr. Holmes intended for her to receive SBP payments and that her receipt
of benefits under the SBP was required by her and Mr. Holmes’ divorce decree. See Compl.
¶¶ 35-37, 39-40, 46.
The government asserts that Mr. Holmes’ intentions and Noreen and Thomas Holmes’
divorce decree are irrelevant to the question of who ought to receive Mr. Holmes’ SBP benefits.
The government argues that Noreen Holmes cannot have been inappropriately denied SBP
benefits as a matter of law because she has not alleged that she or Thomas fulfilled the statutory
requirements for her, as a former spouse, to receive the benefits. See Def.’s Mot. at 12.
Courts which have previously considered a former spouse’s entitlements under the SBP
have sometimes focused on the statutory scheme’s formal requirements and have sometimes
considered equitable principles or the intent of relevant parties. Decisions which emphasize
10
formal compliance with the statute include Woll, 41 Fed. Cl. 371, and Pence, 52 Fed. Cl. 643.
Woll concerned a service member’s divorce from his spouse. The divorce decree
required that “any survivorship rights in [Mr. Woll’s] military pension shall vest in [his former
wife] upon [his] death . . . to the extent allowable by law.” 41 Fed. Cl. 372. 8 After his divorce,
notwithstanding the divorce decree, Mr. Woll contacted the Department of Defense Finance and
Accounting Service (DFAS), directing the DFAS to discontinue his participation in the SBP
because he no longer had a spouse. Id. His former spouse did not attempt to make a deemed
election within a year and did not know she had to take steps to secure her survivor benefits. She
did, however, submit her divorce decree to DFAS to secure alimony. Id. at 375. Mr. Woll did
not remarry and died several years later. Following his death, Mr. Woll’s former spouse applied
for benefits under the SBP program and was rejected. Id. at 373. In the Court of Federal Claims,
the court upheld the denial of benefits to Mr. Woll’s former spouse, explaining, “Congress has
determined the manner by which the Army is to administer this annuity program, and plaintiff
failed to perfect her rights in the manner set forth by statute. . . . Plaintiff cannot receive SBP
benefits because she fails to meet the statutory requirements for eligibility as a former spouse.”
Id. at 375.
In Pence, Mr. and Mrs. Pence divorced at a time when the SBP existed, but when former
spouses could not receive benefits. 52 Fed. Cl. at 644-45. After the Pences’ divorce but before
Mr. Pence’s death, Congress enacted Pub. 98–94, 97 Stat 614 (1983), allowing retired service
members, for the first time, to elect “former[-]spouse coverage” under the SBP. 52 Fed. Cl. at
645. Such an election had to be in writing and submitted within one year of the decree of
divorce. Id. For members whose divorce decrees were already dated more than one year prior,
Congress provided a one-year open enrollment period. Id. Congress later granted retired service
members who had SBP coverage another period of one-year open enrollment to elect “former[-]
spouse coverage.” Id. (citing Pub. L. 99–145, 99 Stat 583 (1985)). Mr. Pence never elected
former-spouse coverage but did file his divorce decree with the “appropriate Air Force finance
center.” 52 Fed. Cl. at 645. The court observed, “[I]t is not a stretch of law to conclude that
Major Pence was under an obligation to take the steps necessary from the date of his divorce and
thereafter to effect the state court’s divorce decree terms. That he did not do so is stipulated by
the parties. In any event, Major Pence either failed or refused to make the election when that
opportunity became available.” Id. at 648. The court held that Mr. Pence’s submission of his
divorce decree was not sufficient to fulfill the statutory requirements for making a “deemed
election” under 10 U.S.C. § 1450(f)(3)(A), which required Ms. Pence to submit a “written
request . . . that such an election be deemed to have been made,” and a “[c]opy of a court order
or other official statement” requiring the annuity to be paid to her. Id. at 647. The court
acknowledged the adverse effect of its ruling on the former spouse: “It may be that Congress has
inadvertently overlooked the admittedly difficult situation of former military spouses like
plaintiff here who thought they were properly provided for in their divorce decrees and did not
know of the affirmative requirement to submit a timely request for deemed election benefits. It
is not for this [c]ourt, however, to act as a legislative body by filling in the interstices of
otherwise clearly elaborated statutory provisions.” Id. at 648-49.
8
The government conceded that the decree’s language could not refer to anything other
than the SBP. 41 Fed. Cl. at 372.
11
Other decisions have employed equitable considerations in applying the SBP’s
requirements. In Holt v. United States, 64 Fed. Cl. 215, 218 (2005), Mr. Holt, a service member,
divorced his wife, Mrs. Shirley Holt, and later remarried. Mr. Holt died over a year after his
second marriage, and his wife at the time of his death began collecting his SBP benefits. Id.
Although the divorce decree between Mr. Holt and Ms. Shirley Holt stated, “[Mr. Holt] shall
maintain [Ms. Shirley Holt] as sole beneficiary of the Survivor Benefit Plan,” Mr. Holt did not
change his designated beneficiary status from “spouse” to “former spouse.” Id. at 216.
Although Ms. Shirley Holt submitted the divorce decree to DFAS “as many as three times during
the one-year window for deemed election,” she did not make the separate “written request”
required to make a deemed election under 10 U.S.C. § 1450(f)(3)(A) because she “believe[d]
that she had done all that was necessary to secure all her entitlements.” Id. at 218. The court
noted that “[a]fter hearing oral argument on the initial briefs . . . , we became convinced that
neither the [c]ourt, nor the [p]laintiff, nor even the [g]overnment, understood the proper
procedure for making a deemed election by a former spouse.” Id. at 220. Subpart
1450(f)(3)(A)(i) specifies that a written request should be made “in such manner as the Secretary
shall prescribe.” No regulations specifying the form of written request existed during the
relevant time period in Holt. 64 Fed. Cl. at 223. 9 The court found that Ms. Shirley Holt had
successfully made a deemed election through the filing of her divorce decree and through a
written request a DFAS paralegal submitted on Ms. Shirley Holt’s behalf. See id. at 227-228.
The court explained, “Contrary to the rationale of Woll or Pence, there was at the time in
question, no magic language required nor specific procedures involved in making a deemed
9
Subsequent to the pertinent time period in Holt, the Secretary prescribed the manner in
which a written request is to be received. At the time of Mr. and Mrs. Holmes’ divorce, this
regulation provided:
[T]he member shall be deemed to have made such an election if
the Secretary of the military department concerned receives a
written request from a former spouse or the former spouse’s
attorney on behalf of the former spouse. The request is acceptable
if it refers to or cites provisions in a court order concerning SBP
former[-]spouse coverage, or makes clear by other references to
SBP that there is an intent that the annuity coverage be provided to
the former spouse. The written request must be accompanied by a
copy of the pertinent court order or agreement referring to the SBP
coverage.
DoD Financial Management Regulation DoD 7000.14-R, Military Pay, Policy, and Procedures,
vol. 7B, chap. 43 § 430503(C) (Oct. 2000).
A regulation now in place provides that “the member shall be deemed to have made
such election if the Secretary of the Military Department concerned receives a completed DD
Form 2656-10 from a former spouse or the former spouse’s attorney on behalf of the former
spouse. The DD Form 2656-10 must be accompanied by a copy of the pertinent court order or
agreement referring to the SBP coverage.” Dep’t of Defense Financial Management Regulation
7000.14-R, Military Pay, Policy, and Procedures, vol. 7B, chap. 43 § 430503(C) (Dec. 2010).
12
election.” Id. at 228. It criticized the “highly formalized approach” taken in the Woll and Pence
decisions, noting that “the various service Correction Boards have overlooked the one-year
window and enforced defective deemed elections on equitable grounds.” Id. at 227-228 (citing
Letter of W. Dean Pfeif[f]er, BCNR, to Sen. Jon Kyl (Jul. 18, 2000) (discussing exception to
policy regarding review of former-spouse applications in a “rather narrow range of cases . . .
where it was clear that both the former spouse and the deceased service member clearly intended
that the former spouse would be covered by SBP and where, because the deceased
service[ ]member had not remarried, there was no competing claim of coverage by a subsequent
spouse.”)).
Bonewell v. United States, 95 Fed. Cl. 752 (2010), also explicitly disapproves of a strict
reading of the SBP’s former-spouse election procedures. Mr. Bonewell had elected to provide
SBP coverage for his children and wife, Ms. Rosa Bonewell. Id. at 754. Mr. Bonewell and
Ms. Rosa Bonewell divorced and agreed that Ms. Rosa Bonewell would receive Mr. Bonewell’s
SBP benefits. Id. Mr. Bonewell submitted DD Form 2558 to DFAS, requesting part of his
retirement allotment be directed to Ms. Rosa Bonewell pursuant to their Decree of Dissolution,
and attached part of the decree to the form, including the paragraph providing SBP payments to
Ms. Rosa Bonewell. Id. at 754-55. However, neither Mr. Bonewell nor Ms. Rosa Bonewell
made a request with DFAS to change Mr. Bonewell’s SBP coverage from “spouse” to “former
spouse.” Id. at 755. Mr. Bonewell married Ms. Carmen Titong-Bonewell and did not attempt to
change his SBP election. Id. He died over a year later. Id. DFAS denied Ms. Rosa Bonewell’s
application for SBP benefits because Mr. Bonewell had elected to participate in SBP spouse and
child coverage, and Ms. Rosa Bonewell was not Mr. Bonewell’s spouse at the time of his death.
Id. As in the present case, the government argued that Ms. Rosa Bonewell had not stated a
claim upon which relief could be granted because the statutory and regulatory requirements for
electing former-spouse coverage had not been strictly met. Id. at 762. Ms. Rosa Bonewell
argued that by virtue of Mr. Bonewell’s submitting the relevant portion of the Decree of
Dissolution to DFAS, he had “substantially complied with the legal requirements for a former
[-]spouse election.” Id. After an examination of precedent and the underlying purposes of the
former-spouse election requirements, the court concluded that alleging substantial compliance
with the requirements of 10 U.S.C. § 1448(b) and its implementing regulations could state a
claim for relief. Id. at 768. The court did not reach a final judgment, remanding the case to
consider evidentiary issues. Id. at 769.
Ms. Noreen Holmes acknowledges that neither she nor Thomas Holmes strictly complied
with the statutory and regulatory requirements for electing former-spouse coverage. Although
she does not allege that the government knew the content of the divorce decree, she does state
that after the divorce, she received $1,000 a month from the government, pursuant to the terms of
the divorce decree, Compl. ¶ 41, and infers that Mr. Holmes had taken some action with the
government to direct the funds.
Ms. Noreen Holmes claims that “[the government’s] knowledge of the divorce, [the
government’s] post-divorce payments to Noreen Holmes, and Thomas Holmes’ manifest
intent . . . to provide Noreen Holmes with SBP benefits constitutes a ‘deemed election’ that
secures Noreen Holmes’ entitlement to the SBP annuity.” Compl. ¶ 104. In effect, she contends
that there was substantial compliance with the requirements for electing former-spouse coverage.
13
These allegations survive a motion to dismiss. See Bonewell, 95 Fed. Cl. at 768; Holt, 64 Fed.
Cl. at 219-20 (“This is a military pay case, in which the entitlement to statutory benefits is at
issue. The question of entitlement to those benefits is a merits question, and clearly survives a
RCFC 12(b)(6) motion.”).
B. Claim for Correction of Military Records
Ms. Noreen Holmes’ claim for improper denial of correction of military records, see
Compl. ¶¶ 111, 116, is necessarily bound up with her claim for denial of survivor benefits. If she
is entitled to SBP benefits as a former spouse, then this court has the authority to correct
Mr. Holmes’ military records. See 28 U.S.C. § 1491(a)(2) (“To provide an entire remedy and to
complete the relief afforded by the judgment, the court may, as an incident of and collateral to
any such judgment, issue orders directing restoration to office or position, placement in
appropriate duty or retirement status, and correction of applicable records, and such orders may
be issued to any appropriate official of the United States.”); see also Holt, 64 Fed. Cl. at 228
(remanding to the BCNR to correct a service member’s military record to indicate that a deemed
election had been made). The government’s motion to dismiss Ms. Noreen Holmes’ claim for
correction of military records is accordingly denied.
C. A Takings Claim
Finally, Ms. Noreen Holmes claims that she “has a substantial, cognizable, protected
property interest in Thomas Holmes’ SBP survivorship benefits” and that the government’s
refusal to pay those benefits to Noreen constitutes a taking. See Compl. ¶¶ 147-51. She requests
“just compensation and a declaration that [the government’s] conduct is unconstitutional under
the [t]akings [c]lause of the Fifth Amendment.” Compl. ¶ 152. She did not assert a takings
claim before the BCNR. As a consequence, she cannot now challenge on review the denial of
survivor benefits on that ground. See Metz v. United States, 466 F.3d 991, 999 (Fed. Cir. 2006);
Murakami v. United States, 398 F.3d 1342, 1354 (Fed. Cir. 2005). The government’s motion to
dismiss under RCFC 12(b)(6) is granted insofar as this claim is concerned.
III. THE ADMINISTRATIVE RECORD OF BCNR’S ACTION
In reviewing BCNR’s action respecting Ms. Noreen Holmes’ claims, the court must
render its judgment on the administrative record “the agency presents to the reviewing court.”
Florida Power & Light Co. v. Lorion, 470 U.S. 729, 743-44 (1985); see also id. at 743 (“‘[T]he
focal point for judicial review should be the administrative record already in existence, not some
new record made initially in the reviewing court.’”) (quoting Camp v. Pitts, 411 U.S. 138, 142
(1973)). If the administrative record is incomplete, “[t]he reviewing court is not generally
empowered to conduct a de novo inquiry into the matter being reviewed and to reach its own
conclusions based on such an inquiry.” 470 U.S. at 744. Rather “the proper course, except in
rare circumstances, is to remand to the agency for additional investigation or explanation.” Id. at
744; see also Riser v. United States, 93 Fed. Cl. 212, 217 (2010). Exceptions to this rule apply in
“cases in which the omission of extra-record evidence precludes effective judicial review.”
Axiom Res. Mgmt., Inc. v. United States, 564 F.3d 1374, 1380 (Fed. Cir. 2009) (internal
quotation marks omitted); see also Vanguard Recovery Assistance, J.V. v. United States, __ Fed.
14
Cl. __, __ n.19) (slip op. at 25 n.19) (May 27, 2011) (listing three typical situations in which the
agency record may not be sufficient for effective review).
A. Certain Exhibits to Ms. Noreen Holmes’ Complaint
The government argues that exhibits 5 and 12 of Ms. Noreen Holmes’ complaint were
not part of the administrative record and should not be considered by the court when deciding
motions for judgment on the administrative record. See Def.’s Mot. at 24 n.6. Responding to the
government’s objection, Noreen Holmes states, “[I]f the [c]ourt decides to limit its review to the
[a]dministrative [r]ecord [instead of conducting de novo review] . . . , then the [c]ourt should
supplement the [a]dministrative [r]ecord with [e]xhibits 5 and 12 because they are necessary for
effective judicial review of this case and reflect an exceptional circumstance justifying their
review by the [c]ourt.” Pl.’s Resp. to Gov’t’s Objection to the Court’s Consideration of
Materials Included as Exhibits to the Complaint (“Pl.’s Opp’n”) at 3. The court will treat this
response as a motion to supplement the administrative record with exhibits 5 and 12.
Exhibit 5 to Ms. Noreen Holmes’ complaint is a bank statement which shows the
government’s credit and debit of what Noreen believes was an SBP payment. Ms. Noreen
Holmes avers that the payment shows that “the [g]overnment had knowledge of [her] and
Thomas’ divorce and understood that Noreen was entitled to receipt of the SBP payments per the
terms of their Divorce Decree.” Pl.’s Opp’n at 5. Exhibit 12 consists of several e-mails between
Noreen’s attorney, John L. McGowan, and William Hess of the BCNR, which support the
statement of W. Dean Pfeiffer that the Board follows a policy of not “tak[ing] action when such
an action will operate to the detriment of an individual [such as Linda Holmes].” AR-6 (Letter
from W. Dean Pfeiffer, Executive Director, BCNR, to John L. McGowan (Sept. 22, 2008)); see
also Compl. Ex. 12 at 1 (“[N]one of this would change our view/policy that we will not make a
change to record that deprives another of a benefit.”).
To perform an effective review pursuant to the Administrative Procedure Act, the court
must have a record containing the information upon which the agency relied when it made its
decision as well as any documentation revealing the agency’s decision-making process. See
Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 420 (1971) (“[S]ince the bare
record may not disclose the factors that were considered or the Secretary’s construction of the
evidence[,] it may be necessary for the [d]istrict [c]ourt to require some explanation in order to
determine if the Secretary acted within the scope of his authority and if the Secretary’s action
was justifiable under the applicable standard.”), abrogated on other grounds by Califano v.
Sanders, 430 U.S. 99, 104-05 (1977). The agency did not have exhibit 5 before it, and the
e-mails contained in exhibit 12 did not exist when the board rendered its decision. To the extent
that exhibit 12 sheds light on the Board’s “decision-making process,” Mr. Hess’ statements
merely corroborate a statement made by Mr. Pfeiffer in his rejection of Ms. Noreen Holmes’
final request for reconsideration of the BCNR’s decision and are not necessary for effective
judicial review. Accordingly, neither of these exhibits will be added to the administrative
record. 10
10
Exhibits to a complaint nonetheless are properly considered in ruling on the
government’s motion to dismiss, see Bonewell, 95 Fed. Cl. at 753 n.1, and in addressing the
15
B. Supplementation Proposed by Ms. Linda Holmes
Defendant-Intervenor, Ms. Linda Holmes, has moved to supplement the administrative
record with an affidavit by her plus three pieces of correspondence. Both the government and
Ms. Noreen Holmes oppose this motion.
Ms. Linda Holmes relies upon the precept that supplementation of the administrative
record is permissible where it is “required for meaningful judicial review.” Def.-Intervenor’s
Reply at 3 (quoting Impresa Construziono Geom. Domenico Garufi v. United States, 238 F.3d
1324, 1338 (Fed. Cir. 2001)) (internal quotation marks omitted). However, consideration of the
documents Ms. Linda Holmes seeks to add to the administrative record is not necessary for a full
and complete understanding of the issues in this case. Ms. Linda Holmes’ declaration describes
her relationship with Thomas Holmes, and the correspondence provides a further glimpse into
that relationship and a discussion between Linda and Noreen Holmes about the Survivor Benefit
Plan. These materials are not probative of the issues before this court and before the BCNR.
Accordingly, Ms. Linda Holmes’ motion to supplement the administrative record is denied.
IV. CROSS-MOTIONS FOR JUDGMENT ON THE ADMINISTRATIVE RECORD
Ms. Noreen Holmes and the government have moved for judgment on the administrative
record. In addressing cross-motions for judgment on the administrative record pursuant to RCFC
52.1(c), the court asks whether the party seeking relief has shown that the Board’s decision was
arbitrary and capricious, contrary to law, or unsupported by substantial evidence. See Chambers
v. United States, 417 F.3d 1218, 1227 (Fed. Cir. 2005); Godwin v. United States, 338 F.3d 1374,
1378 (Fed. Cir. 2003). Under this standard, the court must ask “whether the decision was based
on a consideration of the relevant factors and whether there has been a clear error of judgment.”
Citizens to Preserve Overton Park, 401 U.S. at 416. The Board’s decision will comply with the
substantial evidence standard so long as a “‘reasonable mind might accept’ [the] particular
evidentiary record as ‘adequate to support [the contested] conclusion.’” Dickinson v. Zurko, 527
U.S. 150, 162 (1999) (quoting Consolidated Edison Co. of N.Y. v. NLRB, 305 U.S. 197, 229
(1938)). Similarly, the arbitrary and capricious standard “requires a reviewing court to sustain an
action evincing rational reasoning and consideration of relevant factors.” Advanced Data
Concepts, Inc. v. United States, 216 F.3d 1054, 1058 (Fed. Cir. 2000).
In sum, the court must satisfy itself that the Board considered all of the relevant evidence
and provided a reasoned opinion that reflects a contemplation of the facts and circumstances
pertinent to the case before it. See Heisig v. United States, 719 F.2d 1153, 1157 (Fed. Cir. 1983)
(“Under the substantial evidence rule, all of the competent evidence must be considered, whether
original or supplemental, and whether or not it supports the challenged conclusion.”); see also
Melendez Camilo v. United States, __ F.3d __, __, 2011 WL 1601997, at *3 (Fed. Cir. Apr. 29,
motion to supplement. See Vanguard Recovery Assistance, __ Fed. Cl. at __ n.20 (slip op. at 26
n.20). Exhibits 5 and 12 have been considered in those contexts and are part of the record of this
case, although not of the administrative record of the BCNR’s decision.
16
2011).
Ms. Noreen Holmes has urged the court to review her case de novo, rather than under the
arbitrary and capricious standard, because “BCNR review . . . [was] not a strict precondition to
[her] suit.” Compl. ¶ 88; see also Pl.’s Cross-Mot. at 26. In support of her position, she cites
Holt, 64 Fed. Cl. at 220, which decided a claim for SBP benefits on a Motion for Summary
Judgment rather than a Motion for Judgment on the Administrative Record. Pl.’s Cross-Mot. at
26. In Holt, the court observed,
We are . . . not reviewing the decision of the BCNR.
Although that is typically the route traveled before a
military pay claim comes before this [c]ourt, the
Board’s review is not a mandatory precondition to
filing suit. . . . The Board declined Mrs. Holt’s
petition because she was not a qualified applicant.
While Mrs. Holt challenges the Board's
jurisdictional rejection, she also seeks substantive
relief.
64 Fed. Cl. at 220.
In Holt, however, there was no administrative record for the Court of Federal Claims to
review because the plaintiff’s case before the military corrections board had been dismissed on
jurisdictional grounds. Had the military corrections board reviewed the plaintiff’s case
substantively, the Holt court would have been required to adjudicate the plaintiff’s case on a
motion for judgment on the administrative record, rather than on a motion for summary
judgment. See Martinez v. United States, 333 F.3d 1295, 1307-08, 1311-14 (Fed. Cir. 2003) (en
banc) (stating that a service member need not seek relief from a military corrections board before
suing in the Court of Federal Claims, but when a service member does pursue relief before a
board, the Court of Federal Claims should apply its ordinary standard of review to the board’s
actions). Consequently, the court will not review this matter de novo, but will determine whether
the Board’s decision was arbitrary and capricious, contrary to law, or unsupported by substantial
evidence. See Chambers, 417 F.3d at 1227; Godwin, 338 F.3d at 1378; Martinez, 333 F.3d at
1314.
A. Explicit Election of Former-Spouse Coverage
Analysis of an explicit election of former-spouse coverage begins by clarifying the role
of the divorce decree in this dispute. Ms. Noreen Holmes argues that the existence of the divorce
decree alone should have perfected her rights to Mr. Holmes’ SBP benefits. For purposes of
resolving the motions for judgment on the administrative record, the court assumes without
deciding that the divorce decree included an obligation for Mr. Holmes to provide his SBP
benefits to Ms. Noreen Holmes in the event of his death.
A former spouse’s entitlement to SBP benefits can be secured by parties to a divorce in
one of two ways. Either the service member whose marriage ends can “elect to provide an
17
annuity to that former spouse,” 10 U.S.C. § 1448(b)(3)(A)(i)(II), (A)(iii); or the former spouse
can file a “written request . . . that such an election be deemed to have been made” along with
a“[c]opy of court order or other official statement” requiring the annuity to be paid to the service
member’s former spouse. 10 U.S.C. § 1450(f)(3)(A).
A service member can, by agreement or court order, incur an obligation to secure benefits
for a former spouse by electing former-spouse coverage. However, the service member’s legal
obligation to elect SBP coverage for his or her former spouse does not create a corresponding
legal obligation for the United States government to grant SBP benefits when the statutory
prerequisites for securing those benefits have not been fulfilled. Regardless of what Mr. Holmes
promised Ms. Noreen Holmes in their agreed divorce decree, the statute requires Mr. Holmes or
Ms. Noreen Holmes to take particular steps to secure former-spouse benefits under the SBP. The
mere existence of the divorce decree does not, as a matter of law, secure former-spouse benefits
to Ms. Noreen Holmes. While New Hampshire law recognizes non-vested military retirement
benefits as marital property for the purposes of dividing property during the dissolution of
marriage, see N.H. Rev. Stat. Ann. § 458:16-a(I); Halliday v. Halliday, 593 A.2d 233, 234 (N.H.
1991); the division of those assets in a divorce does not, on its own, cause unvested government
benefits to vest. Cf. Schism v. United States, 316 F.3d 1259, 1268 (Fed. Cir. 2002) (“Benefits for
retired military personnel — and for civilian retired federal employees . . . — depend upon an
exercise of legislative grace, not upon principles of contract, property, or ‘takings’ law.”); Zucker
v. United States, 758 F.2d 637, 640 (Fed. Cir. 1985) (explaining that federal workers’
“entitlement to retirement benefits must be determined by reference to the statute[s] and
regulations governing these benefits, rather than to ordinary contract principles”). The BCNR
followed these limiting conditions in concluding that neither Mr. Holmes nor Ms. Noreen
Holmes had fulfilled the statutory requirements to elect SBP former-spouse coverage.
B. Substantial Compliance with Deemed-Election Procedures
Pursuant to Bonewell, Ms. Noreen Holmes argues that substantial compliance with the
requirements of the SBP deemed-election process occurred and should be given effect. See Pl.’s
Cross-Mot. at 7 (“[T]he facts and circumstances [of] this case qualify as [creating] a deemed
election.”); Pl.’s Resp. to Def.-Intervenors’ Supplemental Br. at 2-3 (discussing Bonewell, 95
Fed. Cl. 752). Bonewell considers whether a service member can substantially comply with the
former-spouse election requirements of 10 U.S.C. § 1448(b), but it specifically did not analyze
whether the former spouse had stated a viable claim for making a deemed election under 10
U.S.C.§ 1450(f)(3)(A). See 95 Fed. Cl at 762 n.12. Ms. Noreen Holmes has raised both
alternatives.
1.
Deemed election under 10 U.S.C. § 1450(f)(3)(A).
If a service member “is required . . . to provide an annuity to a former spouse and . . .
fails or refuses to make such an election,” the election may be “deemed” to have been made if
Secretary of the Navy receives a “written request . . . from the former spouse concerned
requesting that such an election be deemed to have been made” and a “[c]opy of [a] court order
or other official statement” requiring the annuity to be paid to the service member’s former
spouse. 10 U.S.C. § 1450(f)(3)(A). For a former spouse to take advantage of this “deemed
18
election” option, the Secretary of the Navy must “receive[] a request from the former
spouse . . . within one year of the date of the court order or filing involved.” 10 U.S.C.
§ 1450(f)(3)(C).
Ms. Noreen Holmes does not claim she communicated with the government about her
divorce or benefits, in writing or otherwise, during the one-year period from the date of her
divorce. A fortiori, Ms. Noreen Holmes cannot support a substantial-compliance argument
through a timely request made to the Secretary of the Navy.
The second element of the deemed-election process concerns the Secretary’s receipt of a
“[c]opy of [a] court order or other official statement” requiring the annuity to be paid to the
service member’s former spouse. 10 U.S.C. § 1450(f)(3)(A)(ii). The court does not decide here
if the submission of a divorce decree in an unrelated document, unaccompanied by a submission
of a written request by a former spouse, can constitute a deemed election. 11 Based upon the
facts at hand, there is no indication that Ms. Noreen Holmes submitted her divorce decree to the
government for any purpose during the one-year period within which she could have made a
deemed election. She therefore cannot support a substantial compliance argument by arguing
she complied with the second aspect of the deemed election requirement.
2. Election under 10 U.S.C. § 1448(b)(3).
A service member whose marriage ends after becoming eligible to participate in the
Survivor Benefit Plan may “elect to provide an annuity to that former spouse.” 10 U.S.C.
§ 1448(b)(3)(A)(i)(II). “Any such election must be written, signed by the person making the
election, and received by the Secretary concerned within one year after the date of the decree of
divorce, dissolution, or annulment.” 10 U.S.C. § 1448(b)(3)(A)(i). A service member who elects
to provide an annuity to a former spouse under section 1448(b)(3) must, at the time of making
the election, provide the Secretary concerned with a written statement, signed by the service
member and the former spouse, stating whether the election is being made pursuant to the
requirements of a court order or voluntary written agreement. See 10 U.S.C. § 1448(b)(5).
In Bonewell, the court denied the government’s motion to dismiss because the plaintiff,
Ms. Rosa Bonewell, had alleged that the former spouse election requirements had been
substantially satisfied when Mr. Bonewell submitted the relevant portion of his divorce decree
along with a DD Form 2558, requesting that part of his retirement allotment be directed to
11
The statute implicitly but not explicitly links the submission of a request with provision
of a copy of the court order or official statement giving the former spouse rights to SBP
coverage. However, the version of the Department of Defense Financial Management
Regulation 7000.14-R in effect at the time of Mr. and Mrs. Holmes’ divorce specified that a
written request by the former spouse must have been accompanied by “a copy of the pertinent
court order or agreement referring to the SBP coverage.” Dep’t of Defense Financial
Management Regulation 7000.14-R, Military Pay, Policy, and Procedures, vol. 7B, chap. 43
§ 430503(C) (Oct. 2000).
19
Ms. Rosa Bonewell. See 95 Fed. Cl. at 754, 768.
Whether Mr. Holmes submitted his divorce decree to the government is not known.
Ms. Noreen Holmes apparently received a portion of Mr. Holmes’ retirement benefits monthly,
subsequent to the divorce. See Compl. ¶ 41. These benefits apparently were paid because
Mr. Holmes submitted an allotment form similar to the one the service member submitted in
Bonewell. See Hr’g Tr. 59:8-59:20 (Feb. 24, 2011). That allotment form is not in the
administrative record. See Hr’g Tr. 21:25-22:3. It is not known whether Mr. Holmes submitted
a copy of the divorce decree with an allotment form or for any another purpose. See Hr’g Tr.
22:24-23:3. Although Ms. Noreen Holmes has alleged the government knew about the divorce,
Compl. ¶¶ 54-55, 101, there is no evidence in the record the government was furnished with a
copy of their divorce decree prior to her submission of the decree to the BCNR. 12 The absence
of evidence that Thomas Holmes submitted the divorce decree further impedes a substantialcompliance contention.
C. Equitable Tolling
Ms. Noreen Holmes argues that the one-year period to make a deemed election should be
equitably tolled. This issue was implicitly raised in Ms. Noreen Holmes’ Petition for Correction
of Military Record, DD Form 149, filed on February 20, 2008. See AR-14 to 15 (discussing
Ms. Noreen Holmes’ lack of notice and knowledge).
Equitable tolling is appropriate “‘where the claimant has actively pursued his judicial
remedies by filing a defective pleading during the statutory period, or where the complainant has
been induced or tricked by his adversary’s misconduct into allowing the filing deadline to pass.’”
Young v. United States, 535 U.S. 43, 50 (2002) (quoting Irwin v. Department of Veterans Affairs,
498 U.S. 89, 96 (1990)). The Supreme Court has acknowledged that equitable tolling may be
appropriate under some statutory regimes and in deserving circumstances. In Baldwin County
Welcome Center v. Brown, 466 U.S. 147 (1984) (per curiam), the Court took note of a number of
circuit court opinions that permitted tolling, including where:
a claimant has received inadequate notice, see Gates
v. Georgia-Pacific Corp., 492 F.2d 292 ([9th Cir]
1974); . . . where a motion for appointment of
counsel is pending and equity would justify tolling
the statutory period until the motion is acted upon,
see Harris v. Walgreen’s Distribution Center, 456
F.2d 588 ([6th Cir.] 1972); . . . where the court has
led the plaintiff to believe that she had done
12
At the hearing on the motions, the government accepted for purposes of resolving the
motion to dismiss that it had a copy of the divorce decree, apparently believing that Ms. Noreen
Holmes had alleged that the government had a copy. See Hr’g Tr. 14:17-15:5, 56:9-57:2.
However, the government “d[id] not concede that some entity within the Department of Defense
had a copy of the divorce decree before Noreen filed her materials with the BCNR.” Hr’g Tr.
56:17-56:20.
20
everything required of her, see Carlile v. South
Routt School District RE 3-J, 652 F.2d 981 ([10th
Cir.] 1981) . . . [or] where affirmative misconduct
on the part of a defendant lulled the plaintiff into
inaction. See Villasenor v. Lockheed Aircraft,
Corp., 640 F.2d 207 ([9th Cir.] 1981); Wilkerson v.
Siegfried Insurance Agency, Inc., 621 F.2d 1042
([10th Cir.] 1980); Leake v. University of
Cincinnati, 605 F.2d 255 ([6th Cir.] 1979).
Id. at 151. Ms. Noreen Holmes has argued that equitable tolling is appropriate in this instance
because she was “induced” by the government into allowing the one-year deadline to pass by the
government’s failure to give notice of the one-year period for her to make a deemed election.
Pl.’s Cross-Mot. at 16. 13
The government’s lack of notice to Ms. Noreen Holmes does not support equitable
tolling. The United States is not required to provide service members’ former spouses with
notice of their rights and obligations under the SBP. See Pence, 52 Fed. Cl. at 646-47; Woll, 41
Fed. Cl. at 375 (“The elaborate statutory scheme for SBP insurance does not place that burden on
the Army, and makes it incumbent on the spouse to trigger notification for a deemed election of
former spouse benefits.”); see also Japanese War Notes Claimants Ass’n v. United States, 373
F.2d 356, 359 (Ct. Cl. 1967) (“Ignorance of rights which should be known is not enough” to
trigger equitable tolling.). Equitable tolling therefore is not sustainable here.
D. Synopsis
The BCNR’s decision rested on two apparent grounds: first, that neither Ms. Noreen
Holmes nor Mr. Holmes had fulfilled the statutory requirements to elect SBP former spouse
coverage; and, second, that it had a policy of not awarding a benefit when the decision would
take the benefit from another party. In addressing the first ground, the BCNR did not consider
any equitable principles such as substantial compliance. The court cannot say that the BCNR’s
choice was arbitrary, capricious, or contrary to law. The substantial-compliance doctrine is a
narrow one. See Credit Life Ins. Co. v. United States, 948 F.2d 723, 726-27 (Fed. Cir. 1991).
Moreover, regardless of whether or how the substantial-compliance doctrine might apply to
Survivor Benefit Plan elections, there is no evidence that Thomas or Noreen Holmes complied
with the former spouse election procedures in any way, let alone in a substantial way.
More problematic is the Board’s statement that “as a general matter, the Board will not
take action when such action will operate to the detriment of an individual.” AR-6. This policy
has no stated legal justification and serves to prevent full and fair adjudication of competing
13
Ms. Noreen Holmes also argues that Thomas Holmes induced her to let the election
deadline pass by promising “that she would continue to be covered by the SBP following their
divorce.” Pl.’s Cross-Mot. at 15. However, Ms. Noreen Holmes is endeavoring to apply
equitable tolling against the government, not Thomas Holmes, and for that purpose any material
misrepresentation would have to be made by or be attributable to a governmental official.
21
claims for survivor benefits. Nonetheless, in this instance, the failure of Noreen and Thomas
Holmes to effect a former-spouse election mandates the result that the Board reached. Under the
facts at hand, the Board’s policy amounts to a harmless error. See Christian v. United States,
337 F.3d 1338, 1343 (Fed. Cir. 2003) (addressing application of the harmless error doctrine in
military pay cases).
In light of the foregoing, Ms. Noreen Holmes’ motion for judgment on the administrative
record is unavailing, and the government’s motion for judgment on the administrative record
must be granted.
CONCLUSION
For the reasons stated, the government’s motion to dismiss is GRANTED IN PART AND
DENIED IN PART. It is granted insofar as plaintiff has claimed an entitlement to relief based
upon the due process and equal protection clauses, standing alone, and upon the takings clause,
but it is otherwise denied. The defendant-intervenor’s motion to supplement the administrative
record is DENIED. The plaintiff’s motion to supplement the administrative record and motion
for judgment on the administrative record are DENIED. The government’s motion for judgment
on the administrative record is GRANTED. The Clerk shall enter judgment in accord with this
decision.
No costs.
It is so ORDERED.
s/ Charles F. Lettow
Charles F. Lettow
Judge
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