PLAINTIFF v. DEFENDANT (2025)

Before the Court are dueling applications both seeking a declaratory judgment regarding the 7 years and 8 months ("7.8 years") of Plaintiff's pre-marital pension service that was purchased during the marriage (hereinafter the "pension buy back years"). Defendant's position is that the pension buy back years should be included in both the numerator and denominator of the fraction pursuant to the formula established in the seminal case Majauskas v. Majauskas, 61 NY2d 481 (1984), when determining Defendant's equitable share of Plaintiff's pension. By contrast, Plaintiff's position is that the pension buy back years should only be included in the denominator of the fraction pursuant to Majauskas, supra.

Defendant also seeks a declaratory judgment that the pension buy back years are marital property subject to equitable distribution, partial summary judgment as it pertains to the marital portion, the equitable distribution of the pension, and $5,000.00 in counsel fees. Plaintiff also seeks sanctions in the form of an award of counsel fees and disbursements in the amount of $10,000.00 claiming Defendant's motion is frivolous.

The parties were married on August 27, 2016. Plaintiff commenced this action on January 8, 2024. At commencement, the parties were married for approximately 7 years and 5 months. There are no children of the marriage and none expected. Prior to the marriage Plaintiff was employed as a teacher for 7 years and 8 months and was a participant in the NYSTRS pension. Plaintiff thereafter moved to Virginia. In 2000, Plaintiff returned to New York, and once again began teaching and participating in the NYSTRS pension system.¹ The NYSTRS permits members to buy back years of service if they re-enter the system. In September 2016, one month after the marriage, the parties purchased the 7.8 years of Plaintiff's pre-marital service for $26,467.08. The funds originated from Defendant's separate property IRA. The parties dispute whether the funds used to purchase the pension buy back years are Defendant's separate property or marital property, as Plaintiff's avers the funds were commingled with marital property. In any event, Defendant stated he was not making a separate property claim for the pension buy back years.

Both parties present many facts, raise many claims, advance legal arguments and cite various cases to support their respective positions. In determining the applications the Court has reviewed all of the papers submitted.

Several months ago the Court of Appeals in the case Szypula v. Szypula, 42 NY3d 620 (2024), ruled on the classification of pension rights which were the product of the participant's service before the marriage, but purchased during the marriage with marital funds. In Szypula, supra the husband was employed by the Navy for eleven years. Of those eleven years, nine years were the prior to the marriage. As a result of leaving the Navy prior to twenty years of service, the husband's pension benefits did not vest. During the marriage, the husband began working for the Foreign Service, which permits Veterans to add their prior years of military service to their Foreign Service pension. The parties took advantage of the benefit and for the following six years a portion of the husband's salary was used to buy back his eleven years of Navy (military) service. Accordingly, the husband's Foreign Service pension was worth more and vested sooner. The Court of Appeals was called upon to determine whether the husband's nine years of pre-marital military service, was separate or marital property. The Court of Appeals held that the pre-marital years of service constitute marital property as they were purchased during the marriage with marital property.

Here, the Plaintiff consents to a declaratory judgment affirming that the pre-marital pension buy back of 7.8 years is marital property and subject to equitable distribution. The issue remains whether the pension buy back years should be added to the numerator and the denominator of the coverture fraction or just the denominator of the coverture fraction, based upon a Majauskas calculation.

In Majauskas, supra the Court of Appeals held that vested rights in a pension plan are marital property subject to equitable distribution if acquired from the date of marriage through the date of commencement of the divorce action. It also established a formula to determine the marital portion of a pension in those instances. Based upon the Majauskas formula, the numerator is the years of pension service during the marriage and the denominator is the total years of the participants pension service.

Unlike in the case at bar, in Majauskas, supra there was no pension service outside the marriage deemed marital property. Plaintiff argues that the pension buy back years should only be added to the denominator. Based upon Majauskas, supra, the denominator is the participant's total years of service. Defendant correctly raises that if the pension buy back years are included in the denominator only, he would receive an interest less than if the pension buy back never occurred. Accordingly, the denominator never changes and remains the total years of service.

Plaintiff's reliance upon the NYSTRS Domestic Relations Orders guide and the conclusions set forth in the affirmation of Thomas A. Treacy from QRDO Advisors, Inc. are unavailing as they pertain only to the strict application of the Majauskas formula.

The Szypula Court stated that their decision was limited to addressing whether the pre-marital years of pension purchased during the marriage were marital property. It appears that there have been no recorded decisions since Szypula, supra and this is a case of first impression. As the pension buy back years are marital property, this Court must determine how to equitably distribute the pension buy back years which accrued prior to the date of marriage, but purchased during the marriage. The Court will make that determination based upon the intent of the Court of Appeals in the Szypula decision.

In Szypula, supra the Court went through a comprehensive analysis of marital, separate and commingled property. As set forth above, the Court emphatically determined that the entirety of pension buy back was marital property. The Szypula Court distinguished their holding from Majauskas, supra, stating: "The pension rights at issue in this case differ from the benefits addressed in our prior caselaw. As we recognized in Majauskas, an employee's pension rights generally accrue incrementally over time (61 NY2d at 490, 474 N.Y.S.2d 699, 463 N.E.2d 15)."

Furthermore, in Szypula, supra the Court held that although "the entirety of the asset is deemed marital", the trial court can distribute the asset based upon the testimony, evidence and the prevailing law, and has broad powers, including, giving an origination credit, a separate property credit, or otherwise dividing the asset equitably, which is not necessarily equally.

A strict application of the Majauskas formula is not appropriate in cases where it is determined that the marital portion of a pension either accrued prior to the date of the marriage, or presumably after the commencement of the action for divorce, and instead the formula needs to be modified to include those years of pension service.

If the pension buy back years are not included in the numerator, then the Szypula holding is of no consequence or effect. For example, when using the formula established in Majauskas, supra, if the participant's total years of service was 10 years, that number is the denominator. If the parties were married for only 5 years, that number is the numerator. In the example, if the parties purchased 5 years of the participants pre-marital service during the marriage with marital funds, the denominator remains 10 years. The issue is whether the 5 years of pre-martial service purchased during the marriage should be added to the numerator.

If those 5 years of pre-marital service are not included in the numerator as Plaintiff claims, the pension buy back years would have no value to the non-participant as the numerator would remain 5 years and the denominator would remain 10 years. Clearly that was not the intent of the Szypula Court. If the 5 years of pension buy back are included in the numerator then the numerator is 10 years and the denominator is 10 years. The entire pension is then marital property, which was the intent of the Szypula Court.²

This Court sees no reason to deviate from the formulaic approach established in Majauskas, supra. The Court determines that the pension buy back years, here the 7.8 years of pre-martial service, will be included in the numerator only. The Court further determines that when calculating the "marital portion" of the Plaintiff's NYSTRS pension, the denominator shall include the total years of Plaintiff's service. The numerator shall include the years of pension service during the marriage and all other years of pension service deemed to be marital property, which in this case includes the 7.8 years of pre-martial pension service purchased during the marriage with marital funds. This does not preclude either party from offering evidence or testimony as to why the pre-marital portion should be divided equitably, and not equally.

Based upon this decision both parties request for counsel fees and/or sanctions are denied.Neither party provided any documentation regarding a value of any portion of Plaintiff's NYSTRS pension. At trial if a party intends upon seeking any separate property credits or an unequal distribution, they must provide the appropriate valuations and/or expert testimony.

Accordingly, it is

ORDERED, that the buy back of the 7 years and 8 months of pre-martial pension service is marital property and subject to equitable distribution; and it is further

ORDERED, that the formulaic approach established in the case Majauskas v. Majauskas, 61 NY2d 481 (1984) shall be modified when calculating the marital portion of the Plaintiff's NYSTRS pension; the numerator shall include the years of pension service during the marriage and the 7 years and 8 months of pre-martial service pension purchased during the marriage; the denominator shall be the total years of Plaintiff's service; and it is further

ORDERED, that all other relief requested by Defendant in his Notice of Motion dated February 18, 2025 is DENIED; and it is further

ORDERED, that Plaintiff's Notice of Cross-Motion dated March 11, 2025 is DENIED in it's entirety; and it is further

ORDERED, that Defendant shall serve a copy of this decision and order with notice of entry upon the Plaintiff within 7 days.

The foregoing constitutes the Order of this Court.

Dated: May 22, 2025

GLENN A. MURPHY

A.J.S.C.

FOOTNOTES

1.   Plaintiff did not state if she removed any funds from her pension when she initially left the NYSTRS pension system.

2.   The example assumes there were no additional years of service after the date of commencement.

Glenn A. Murphy, J.