Saks v. Riga, 8th Dist. Cuyahoga No. 101091, 2014-Ohio-4930
Lions (Expert Witnesses), Tigers (Coverture), and Bears (Deferred Distribution), Oh My!

Released and Journalized: November 6, 2014
Judgment Affirmed in Part, Reversed in Part, and Remanded

Today’s feature case is just plain good ole’ domestic relations law fun. It hits on several pinnacle issues related to QDROs (or in this case rather, a Court Order Acceptable for Processing (COAP), which divides Federal Employees Retirement System (FERS) pensions). In fact, the issues are so well canvased that this Opinion makes a wonderful primer – or refresher course – for domestic relations attorneys practicing in Ohio.

For starters, both parties in this case were/are attorneys. So that may help explain the need for a 34 page Opinion. After trial, the magistrate divided the parties’ marital property, and ordered Husband to pay monthly child and spousal support and one-half of Wife’s attorney fees. Both parties filed objections to the magistrate’s decision; the trial court overruled all of the objections and adopted the magistrate’s decision except for a few limited modifications. Husband appealed, raising eleven assignments of error. Wife cross-appealed, raising one assignment of error.

I have broken down the relevant issues in Saks v. Riga in an index-like format below, for future quick reference. But I strongly encourage every attorney reading this blog (or just the two, thanks DP and GA) to read this Opinion in full. You know, with all your spare time.


Husband argued that an earlier date for termination of the parties’ marriage should have been used (March 25, 2011, versus the date of the final hearing, December 31, 2012). The Court of Appeals duly noted that the date of final hearing is the appropriate termination date of marriage, while also acknowledging that in some circumstances, an earlier de facto termination date may be more equitable (see Opinion at ¶8). These circumstances are limited, and include cases where the parties have separated; have made no attempts to reconcile; and have continually maintained separate residences, separate business activities, and separate bank accounts (see Opinion at ¶9).

The above factors were all at play in Saks, however, the trial court found that there was not sufficient reliable evidence as to value the parties’ assets as of March 25, 2011. Husband disagreed. In overruling Husband’s first assignment of error, however, the Court of Appeals reviewed the record and found that marital assets, including Wife’s FERS pension, were not appraised or valued until after March 25, 2011. Thus, the Court of Appeals affirmed that the date of final hearing, December 31, 2012, was the proper termination date of marriage for asset valuation purposes.


Husband argued that the trial court failed to provide the correct value of Wife’s FERS pension. At trial, Husband’s expert valued Wife’s FERS pension at $915,851.00, assuming she continued working for the federal government until retirement age. The Court of Appeals found that Husband’s assertion was not supported by the record, relying upon Potts v. Potts, 8th Dist. Cuyahoga No. 66729, 1994 Ohio App. LEXIS 5514 (Dec. 8, 1994) (holding that a trial court may not assume that an employee-spouse would continue working for years into the future when valuing that spouse’s pension). The Court of Appeals instead was persuaded by Wife’s expert, who testified that the value of the FERS pension was $177,911.96, as of November 5, 2012.

In evaluating the FERS pension, Husband’s expert testified that he calculated the value Wife could expect to receive when she retires at age 62. Husband’s expert admitted that to calculate this value, he assumed wife would continue to work an additional 16 to 17 years. Husband’s expert also assumed that Wife would continue to receive an annual 3 percent cost of living increase until she retires. Based on these assumptions, Husband’s expert determined what the pension would be worth in 2029. Husband’s expert admitted he was not familiar with qualified domestic relations orders or orders acceptable for processing. 

[Insert Author’s Shameless Plug. This point cannot be overstated: In some ways, experts tend to exist in a vacuum. Each knows a great deal about one issue or area of law, but more than one expert might be necessary in order to see the full picture, so to speak. Your expert, or team, should know three areas: the actuarial mathematics to calculate present values; the federal and state law governing the plan being examined, as well as the plan's specific terms and internal QDRO procedures and rules; and your state's domestic relations law as it relates to those present values and the division of marital property rights (e.g., there are significant variations in such law amongst Kentucky, Ohio, and Indiana). Few experts alone have a comprehensive knowledge of more than one of those areas. And a deficiency in any one of those areas can end up blind-siding even the best expert witness. See my previous blog post from March 25, 2014, regarding a Kentucky Court of Appeals case wherein Husband’s valuation expert was not privy to the specific statutory requirements of the Kentucky Teachers’ Retirement System (KTRS).]

By contrast, Wife’s expert, testified that he used the Pension Benefit Guaranty Corporation (“PBGC”) method for valuing FERS pensions because the PBGC is the government entity that ensures plans are properly funded and can pay their benefits. He further testified that the PBGC method is widely used in the industry.

In preparing his evaluation, he assumed Wife performed no additional work for the federal government after June 29, 2012, and assumed a retirement age of 62 years. An individual who has a minimum five years of service in the FERS plan becomes eligible for retirement benefits at 62 years of age. After factoring in the PBGC interest rates and the PBGC mortality tables, Wife’s expert determined that Wife’s FERS pension had a present value of $177,911.96, as of November 12, 2012. In his opinion, this figure also represented the marital portion of the pension earned during the marriage.

Wife’s expert further testified that the report of Husband’s expert assumed that (1) Wife would continue to work until retirement age, and (2) Wife would receive steady pay increases until she retired. Wife’s expert explained that he does not assume that an individual will continue working into the future and does not assume the individual will receive steady pay increases because he does not know whether an individual will continue working, much less whether the individual’s salary will increase at any specific rate.

After careful consideration of the opposing expert opinions, the Court of Appeals found that the trial court properly adopted Wife’s valuation method when it valued Wife’s FERS pension, relying in part on Potts (see Opinion at ¶52):

In Potts v. Potts, 8th Dist. Cuyahoga No. 66729, 1994 Ohio App. LEXIS 5514 (Dec. 8, 1994), this court held that a trial court should not assume that an employee participating in a defined benefit plan will continue working into the future because “[s]uch an assumption places an unfair burden” on the employee-spouse. Id. at * 10.


Husband argued that the trial court erred in holding that Ohio law precludes pension valuation using the coverture method offered by his expert.

In dividing Wife’s pension, the trial court ordered that FERS pension “be divided equally between the parties pursuant to the coverture fraction as of December 31, 2012 by Order Acceptable for Processing.”

Wife’s expert explained that unmatured pensions are typically divided using a deferred distribution method, employing the coverture formula or proportionate share method, and that the actual division is completed through a court order (e.g., QDRO, COAP, or similar court order). Wife’s expert also explained that a COAP would take into consideration any changes in the FERS pension that took place after the parties’ divorce.

Wife’s expert further explained that the appropriate coverture formula is 50 percent times a fraction, the numerator of which is the number of years of service earned during the marriage and the denominator of which is the total number of years that the participant has earned at the time of retirement.

The Court of Appeals found that the trial court properly adopted Wife’s coverture method when it valued Wife’s FERS pension. At ¶20, the Court reasoned:

The “coverture fraction” refers to a formula used to equitably divide a defined benefit plan that has not yet matured. Daniel v. Daniel, 139 Ohio St.3d 275, 2014-Ohio-1161, 11 N.E.3d 1119, ¶14-15. The formula divides the number of years of creditable service during the marriage (the numerator) by the total number of years of creditable service at the time the employee would retire (the denominator). Id. at ¶15, quoting Thompson v. Thompson, 196 Ohio App.3d 764, 2011-Ohio-6286, 965 N.E.2d 377, ¶33 (4th Dist.). “Once a pension member retires, the defined benefit plan administrator multiplies the monthly accrued benefit by the coverture fraction.” Thompson at ¶ 33, citing Long v. Long, 176 Ohio App.3d 621, 2008-Ohio-3006, 893 N.E.2d 217, ¶ 60, fn. 6. The resulting sum is the marital portion of the pension benefit. The Ohio Supreme Court has held that use of the coverture fraction to divide unmatured pension benefits is “a reasonable method of achieving equity.” Daniel at ¶ 14.


Husband argued that the trial court abused its discretion when it concluded that dividing Wife’s pension by COAP would not financially entangle the parties and their interests. Specifically, Husband asserted that a utilizing a COAP could result in a number of scenarios that would unfairly delay his right to collect his portion of the benefit or lead to forfeiture of his portion altogether. For example, Husband argued that if Wife elected to receive a lump sum refund of her employee contributions, he would be entitled to nothing. Or, if Wife decided not to retire until age 70, he would be forced to wait until she retired to begin receiving his interest.

Husband’s argument did not fall on deaf ears, but still, the Court of Appeals was not convinced. In consideration Husband’s argument, the Court deliberated at ¶54 of its Opinion:

Undoubtedly, “when a trial court decides that a pension asset shall be paid by deferred distribution, it has created a situation where the parties’ affairs are not concluded.” Hoyt v. Hoyt, 53 Ohio St.3d 177, 182, 559 N.E.2d 1292 (1990). However, the Ohio Supreme Court has recognized that dividing a pension by way of a qualified domestic-relations order “divides the risk between the parties that the benefits will fail to vest or mature.” Daniel at ¶ 13, quoting Hoyt at 182. Further, the qualified domestic-relations order notifies the plan administrator of the non-employee spouse’s interest in the pension and thereby protects that interest. Trustees of the Dirs. Guild of Am.-Producer Pension Benefits Plans v. Tise, 234 F.3d 415 (9th Cir.2000). Once an acceptable order for processing has been forwarded to the FERS program and approved, [Husband’s] interest in [Wife’s] FERS plan is protected.

The Court rightfully determined that if Wife were to request a lump sum payment, Husband would receive his proportionate share of the payment. That is, if the COAP was drafted accordingly. [I interject here to also point out that 5 C.F.R. § 838.505 would also permit a COAP to be drafted wherein Wife could be barred from receiving a lump sum payment, if such payment would prevent Husband from receiving his portion of a monthly employee or former spouse survivor annuity.]

In the end, in overruling, the Court found that a QDRO or COAP preserves the retirement asset in such a way so that each party can procure the most benefit, and that the trial court’s use of the COAP would achieve an equitable result and was therefore not an abuse of discretion.


In his final assignment of error, Husband argued the trial court abused its discretion in awarding Wife attorney fees. Husband contended the trial court’s basis for the attorney fee award, i.e., Wife’s inability to pay, was not justified because the trial court equalized the parties’ incomes.

Pursuant to R.C. 3105.73(A), a domestic relations court “may award all or part of reasonable attorney’s fees * * * to either party if the court finds the award equitable.” In determining whether an award of fees is equitable, the court may consider “the parties’ marital assets and income, any award of temporary spousal support, the conduct of the parties, and any other relevant factors the court deems appropriate.”

Husband claimed, among other things, that Wife’s FERS pension was worth approximately $1,000,000.00 and she also had a Thrift Savings Plan (a deferred compensation plan, offered through Wife’s employer to supplement retirement benefits through FERS) of unknown value. However, the Court of Appeals, referring back to its previous discussion, found that the FERS had a present value of $177,911.96, as of November 12, 2012, NOT the $1,000,000.00 Husband’s expert claimed.

Further, the Court noted that trial court ordered that each party roll over one-half of the balance of his or her retirement accounts, including Wife’s Thrift Savings Plan, to the other spouse’s retirement accounts, thus equalizing both retirement accounts. The Court observed that these distributions were made to equally divide the marital assets.

Finally, the Court discerned from the record that Husband received free legal services from his colleagues at Jones Day. Thus, Wife owed the only attorney fees paid for legal representation in this divorce. Although Wife arguably had sufficient means to pay her attorney fees, the trial court equalized the cost of attorney fees between the parties just as it equalized the marital assets. The Court observed that Wife may earn enough income to support herself, but equity justified an award of 50 percent of her attorney fees. In this way, the Court of Appeals found, the trial court properly acted within its discretion to equally divide the parties’ assets and liabilities.