THIS OPINION HAS NO PRECEDENTIAL VALUE. IT SHOULD NOT BE CITED OR RELIED ON AS PRECEDENT IN ANY PROCEEDING EXCEPT AS PROVIDED BY RULE 239(d)(2), SCACR.
THE STATE OF
In The Court of Appeals
Stephen G. Ballentine, Appellant,
Norma M. Ballentine, Respondent.
Frances P. Segars-Andrews, Family Court Judge
Unpublished Opinion No.
Heard June 15, 2005 – Filed June 27, 2005
John Joseph Dodds, III, of Mt. Pleasant, for Appellant.
Donald Bruce Clark, and H. Stanley Feldman, both of
Charleston, for Respondent.
PER CURIAM: Stephen G. Ballentine (Husband) was granted a divorce from Norma M. Ballentine (Wife) on February 20, 2001. Husband appeals a family court order that found the parties’ Separation Agreement, which was incorporated into the final divorce decree, was ambiguous. We affirm.
Husband was granted a divorce on February 20, 2001. The Final Decree incorporated the parties’ Separation Agreement, which, among other things, provides for a division of personal property and financial accounts. The Agreement states:
B. Personal Property and Financial Accounts
. . . .
2. The SARSEP account, Husband’s IRA, Husband’s 401k, Wife’s 401k, and Wife’s IRA will be divided as set forth in Exhibit A.
3. The purpose of Exhibit A is to illustrate the apportionment of the property listed and to show the adjustment that has to be made in order to achieve the fifty-eight (58%) percent/forty-two (42%) percent distribution. The adjustment itself is to be drawn from the Wife’s 401k by way of a Qualified Domestic Relations Order (QDRO). The parties agree to request that this Court retain jurisdiction for the purpose of any supplemental orders which may be necessary.
Exhibit A is a schedule of the parties’ assets, the net value of which is listed as $1,306,537. As noted on Exhibit A, the assets were allocated in such a way that Husband’s share was $548,746 and Wife’s share was $757,791. In order to achieve the desired 58%/42% distribution, a $128,187 adjustment was to be paid to Husband, the adjustment “to be drawn from wife’s 401k plan.”
On January 8, 2002, the family court entered a QDRO directing Wife’s employer, BellSouth, to disburse to Husband his share of Wife’s 401(k). BellSouth received the QDRO, but informed Husband’s counsel by a letter dated March 12, 2002, that it did not meet requirements of ERISA and the Internal Revenue Code. Specifically, BellSouth instructed: “The Order should be amended to address the issue of whether or not the Alternate Payee’s benefits will be credited with gains and losses accumulated between the assignment date and the date of distribution.” Husband’s counsel forwarded the BellSouth letter to Wife’s counsel, along with a request that Wife secure an amended QDRO addressing the concerns raised by BellSouth. The family court entered an Amended QDRO on May 15, 2002. Paragraph five of the Amended QDRO provides:
The BELLSOUTH RETIREMENT SAVINGS PLAN 401(k) is directed to pay, to the Alternate Payee, ONE HUNDRED TWENTY EIGHT THOUSAND, ONE HUNDRED EIGHTY SEVEN AND NO/100 ($128,187.00) of the account balances credited to the Plan Participant as of February 20, 2001, to include gains or losses on this amount.
BellSouth received the Amended QDRO in June of 2002, and on August 14, 2002, BellSouth notified the parties the order had been approved. Husband was issued a check for $87,138.99 on September 25, 2002. This amount constitutes the $128,187 adjustment, minus losses incurred by the plan between February 20, 2001 and the date of distribution.
On November 26, 2003, over a year after receiving the check from BellSouth, Husband requested that Wife consent to a third QDRO which would provide that Husband’s adjustment of $128,187 would not reflect gains or losses accumulated between February 20, 2001 and the date of distribution. Wife declined Husband’s request.
Consequently, on January 28, 2004, Husband filed a Motion for Rule to Show Cause alleging Wife was in contempt for failing to consent to the third QDRO. After a hearing, the family court issued an order dismissing Husband’s Rule to Show Cause. The court found the Separation Agreement was ambiguous as to whether Husband’s adjustment was subject to gain and loss fluctuations between the entry of divorce and settlement of the account. The family court noted that “[n]either the Settlement Agreement nor the QDRO guaranteed the Plaintiff a minimum amount of $128,187 payable from Defendant’s BellSouth 401(k). To the contrary, the whole point of both was to effectuate the 58%/42% division of the marital property, as it was valued on February 20, 2001.” Reading the Amended QDRO along with the Final Decree, the court determined the parties intended Husband to receive $128,187, plus any gains or minus any losses. Husband appeals this order dismissing his Rule to Show Cause.
The pertinent provision giving Husband the adjustment from Wife’s BellSouth 401(k) is found in the Final Decree. However, the decree incorporated the Separation Agreement, which was entered into by the consent of the parties. Thus, as in Bogan v. Bogan, 298 S.C. 139, 142, 378 S.E.2d 606, 608 (Ct. App. 1989), “we are essentially dealing with an agreement between the parties.”
Where an agreement is clear and capable of legal interpretation, the court’s only function is to interpret its lawful meaning, discover the intention of the parties as found within the agreement, and give effect to it. Heins v. Heins, 344 S.C. 146, 543 S.E.2d 224 (Ct. App. 2001). “The court must enforce an unambiguous contract according to its terms, regardless of the contract’s wisdom or folly, or the parties’ failure to guard their rights carefully.” Id. at 158, 543 S.E.2d at 230. If a contract’s language is plain, unambiguous, and capable of only one reasonable interpretation, no construction is required, and the contract’s language determines the instrument’s force and effect. Jordan v. Security Group, Inc., 311 S.C. 227, 428 S.E.2d 705 (1993).
When an agreement is ambiguous, the court should seek to determine the intent of the parties. Ebert v. Ebert, 320 S.C. 331, 465 S.E.2d 121 (Ct. App. 1995). “A contract is ambiguous when it is capable of more than one meaning or when its meaning is unclear.” Smith-Cooper v. Cooper, 344 S.C. 289, 295, 543 S.E.2d 271, 274 (Ct. App. 2001).
We agree with the family court that the Separation Agreement was ambiguous as to whether Husband’s adjustment was subject to gains and losses accrued between the date of divorce and the date of distribution. On one hand, the agreement did not state Husband was entitled to a definite, lump sum payment of $128,187. On the other hand, the Separation Agreement also did not specifically provide that Husband’s adjustment was subject to gains or losses. The Separation Agreement simply fails to address the issue and is susceptible to more than one reasonable interpretation.
The Amended QDRO resolves the ambiguity by clarifying the adjustment should take into account gains and losses accrued. Thus, read together, the Separation Agreement and the Amended QDRO provide that Husband’s adjustment is subject to market fluctuations. Because the Amended QDRO and the Separation Agreement are reconcilable, the family court properly determined they should be read together. See Davidson v. Davidson, 916 S.W.2d 918, 923 (Tenn. Ct. App. 1995).
The Amended QDRO takes a sound approach to clarifying the ambiguity in the Separation Agreement. The parties expressed a clear intent to split personal property and financial accounts 58% to Wife, 42% to Husband. Ideally, Wife’s BellSouth 401(k) would have been divided on the date of divorce. However, the federal law requirements for alienating a retirement account render the process time consuming. 29 U.S.C.A. section 1056 sets forth a number of criteria for establishing an exception to the general rule against assignment or alienation of pension plans. Plan administrators are required to analyze QDROs to ensure they comply with the applicable federal law. See 29 U.S.C.A. § 1056(d)(3)(G)(i)(II). As a result, Husband was not able to obtain his share of Wife’s 401(k) at the time of divorce.
As of the date of divorce, the BellSouth 401(k) was valued at $314,275. The unfortunate downturn in the financial markets and the domestic turmoil occurring in 2001 resulted in both Husband and Wife suffering substantial losses to their respective shares of Wife’s 401(k). Under the Amended QDRO, the parties bear this loss in accordance with their agreed upon distribution ratio of 58%/42%. Of course, had the parties clearly expressed that Husband was entitled to a fixed sum of $128,187, such an agreement would control. However, considering the ambiguity in the Separation Agreement, we hold the family court correctly interpreted the agreement in conjunction with the Amended QDRO to best effectuate the parties’ intent. Accordingly, we affirm the family court’s dismissal of Husband’s Rule to Show Cause.
The order of the family court is
ANDERSON, STILWELL, and WILLIAMS, JJ., concur.