Court overturns vet’s divorce ruling

Thursday, Oct. 30, 2003 | 9:11 a.m.

CARSON CITY -- Despite a federal law to the contrary, the Nevada Supreme Court ruled Wednesday that military veterans can be required to pay part of their disability benefits to their former spouses.

The court said: "Although states are precluded by federal law from treating disability benefits as community property, states are not precluded from applying state contract law, even when disability benefits are involved."

The decision overturned the ruling of Family Court Judge Robert Gaston of Las Vegas, who held that he was prevented by federal law from changing an agreement in a Las Vegas divorce decree between Maryann and Roland Shelton.

Under the agreement at the divorce, Roland Shelton's military retirement pay and military disability pay were both considered community property. The agreement awarded Maryann Shelton $577 a month from the retirement pay, and under the agreement Roland Shelton would receive $500 of the pension and $174 in disability based on his 10 percent disability. Two years later Roland Shelton's condition was re-evaluated to 100 percent disabled. He waived his military retirement benefits for an equivalent amount of tax-exempt disability pay as federal law allows.

He stopped making the $577-a-month payment to his ex-wife, saying the federal law prohibits his former wife from any of the proceeds.

The U.S. Supreme Court in 1989 ruled that states have not been granted the authority to treat disability pay as community property.

Justice Miriam Shearing, who wrote the unanimous opinion for the panel of the Nevada Supreme Court, said: "Roland cannot escape his contractual obligation by voluntarily choosing to forfeit his retirement pay."

Shearing said it appears Roland Shelton possesses ample other assets from which to pay his obligation without even touching his disability pay.

"Even if he lacks these assets, nothing prevents him from using his disability payments to satisfy his contractual obligations," Shearing said.

The full court also issued a decision overturning District Judge Lisa Brown of Clark County in a similar case.

It involved Eva and Jose Olvera, who were divorced in 1979. Under the divorce agreement Eva Olvera was to receive 41.2 percent of the gross retirement benefit. Jose Olvera waived his retirement pay from the military to take the tax-exempt disability pay. He maintained he did not have to pay Eva.