A federal appeals court has ordered a Maryland man to pay his ex-wife an additional $35,961 from his pension plan, rejecting his argument that federal tax law prohibits him from doing so.
Pamela Fox asked for and received a lump- sum payment of $247,496 from her husband Arthur’s retirement plan in 1990 as part of their divorce, according to court documents.
When it was later determined that she was due another $35,961, he refused to pay, citing federal tax codes that limit lump-sum payments from pension plans to one tax year.
Mr. Fox, who said he is president of the Chem-Met chemical company in Clinton, also argued in court documents that he was barred from making the payments in his capacity as manager of the company’s retirement and profit-sharing plan.
“It isn’t a question of not wanting to pay — the way the law reads, he can’t pay,” said Mr. Fox’s attorney, Diana Savit.
But the 4th U.S. Circuit Court of Appeals disagreed Friday in a ruling that called Mr. Fox’s position “unreasonable.”
“While it is true that a lump-sum payment is generally a single payment, in this case a Maryland appellate court determined that an error had been made in calculating Ms. Fox’s rightful share to the couple’s property,” the federal court ruled.
A three-judge panel of the federal circuit court said the state court ruling, “simply seeks to secure Ms. Fox’s just share of benefits by correcting an earlier miscalculation.”
It upheld a 1997 U.S. District Court order that Mr. Fox pay his ex-wife the additional money, plus interest and court costs.
Mr. Fox said Tuesday he had not heard of the ruling and he declined to comment on it.
His ex-wife welcomed the decision, which she hopes will bring an end to divorce proceedings that have now dragged on for 10 years.
“It was like beating your head against a brick wall,” she said of legal wrangling that has taken her through “five to six” attorneys.
But Savit blamed the length of the case on the number of attorneys Ms. Fox retained, which has resulted in “a lot of lengthy delays attributed to the court system and her lawyers.”
Ms. Fox, who has kept her married name and lives in Baltimore, said that while the couple’s three children from their 1974 marriage are now grown, the ordeal has “been very stressful” on her family.
The Foxes were granted a divorce in 1989. At the time of the initial settlement, Pamela Fox was offered four payment options from the pension plan: taking a lump sum, accepting installment payments, accepting an annuity or leaving the money in the plan. She opted for a lump sum and received the $247,496 in May 1990.
Both Foxes appealed the initial divorce judgment and the Maryland Court of Special Appeals in 1991 ordered a review of the amount awarded to Ms. Fox, with a different date to calculate the amount she was due under the plan.
That recalculation led to the determination that Ms. Fox was owed an additional $35,961. Mr. Fox appealed, ultimately leading to Friday’s ruling.
Neither Savit nor Mr. Fox would say Tuesday if they planned to appeal the 4th Circuit ruling. But Ms. Fox does not think the case is over yet.
“He doesn’t care what it costs (in legal fees) as long as he doesn’t have to pay,” she said.
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