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DIVORCE 45: Federal law preempts state law such that the parties’ consent judgment is unenforceable to the extent that it required defendant to reimburse plaintiff for the reduction in the amount payable to her due to his election to receive CRSC

BACKGROUND

This case involves a dispute between former spouses who entered into a consent judgment of divorce (the consent judgment), which provided that defendant would pay plaintiff 50% of his military retirement benefits. Beyond that, the parties agreed that if defendant waived a portion of his military retirement benefits in order to receive military disability benefits, he would continue to pay plaintiff an amount equal to what she would have received had defendant not elected to receive such supplemental disability benefits. Defendant elected to increase his disability benefits when he applied for Combat-Related Special Compensation (CRSC), a form of military disability benefits, pursuant to 10 USC 1413a. He started receiving CRSC shortly after the divorce. As a result, defendant’s retirement benefits decreased, which in turn decreased the share of the retirement benefits payable to plaintiff. When defendant failed to reimburse plaintiff for the reduced payment she received in connection with defendant’s lowered military retirement benefits, plaintiff sought relief in the Dickinson Circuit Court, asking that the consent judgment be enforced. The trial court and the Court of Appeals enforced the plain terms of the consent judgment and required defendant to reimburse plaintiff for the reduction in her interest in defendant’s retirement benefits. Defendant argues that federal law preempts state law in regard to the division of veteran benefits and, thus, the consent judgment is unenforceable. Although the Court of Appeals indicated its agreement with plaintiff’s assertion that defendant was engaging in an improper collateral attack against the consent judgment, the panel did not discuss the effect of federal preemption on the trial court’s subject-matter jurisdiction or defendant’s ability to challenge the terms of the consent judgment outside of direct appeal.

ANALYSIS

State courts are deprived of subject-matter jurisdiction when principles of federal preemption are applicable. And an error in the exercise of a court’s subject-matter jurisdiction can be collaterally attacked. Moreover, subject-matter jurisdiction cannot be granted by implied or express stipulation of the litigants.  Nor can subject-matter jurisdiction be conferred by the consent of the parties.  Accordingly, in the instant case, defendant did not engage in an improper collateral attack on the consent judgment and the trial court lacked subject-matter jurisdiction to enforce the consent judgment with respect to the offset provision due to the principle of federal preemption

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