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Giacinto v. Arizona State Retirement System

Court of Appeals of Arizona, First Division

April 4, 2017


         Appeal from the Superior Court in Maricopa County No. LC2015-000048-001 The Honorable Crane McClennen, Judge Retired

          Robaina & Kresin, PLLC, Phoenix By Thomas T. Griffin Counsel for Appellant

          Arizona State Retirement System, Phoenix By Jothi Beljan Counsel for Appellee Arizona State Retirement System

          Richard Hillis, Peoria Appellee

          Presiding Judge Peter B. Swann delivered the opinion of the court, in which Judge Kent E. Cattani and Judge Donn Kessler joined.


          SWANN, Judge

         ¶1 In this appeal, we hold that A.R.S. § 38-775 requires a former spouse of an Arizona State Retirement System (" ASRS") retiree to be treated as a "spouse" for purposes of survivor benefits awarded under a domestic relations order ("DRO"). Because of this requirement, we further hold that the age limits on non-spousal contingent annuitants contained in Arizona Administrative Code R2-8-126(H) do not apply to former spouses whose payments are ordered by Qualified DROs ("QDROs").

         ¶2 Sharon Di Giacinto appeals a judgment holding that ASRS could terminate her survivorship rights in her ex-husband, Richard Hillis's, retirement annuity that the superior court ordered as part of a decree of dissolution. A.A.C. R2-8-126(H) provides that "[a] member who is ten years and one day, or more, older than the member's non-spousal contingent annuitant is not eligible to participate in a 100% joint-and-survivor option."[1] The superior court ruled that the divorce decree and final DRO were not acceptable under A.R.S. § 38-773(B), because Di Giacinto, as a former spouse, is a "nonspouse" under A.A.C. R2-8-126(H) and because she is more than ten years younger than her former husband. We disagree. Because the final DRO complied with all statutory requirements necessary to qualify Di Giacinto as a spousal contingent annuitant, we reverse and remand for an entry of judgment.


         ¶3 The relevant facts are undisputed.[2] Di Giacinto and Hillis were married in 1983. In 2003, Hillis retired after working almost 39 years with an ASRS employer. Under A.R.S. § 38-760(B)(1) and A.A.C. R2-8-120(A)(2), Hillis elected a 100% joint and survivor annuity, which provided a reduced monthly benefit amount but continued payments until Di Giacinto's death if she outlived him ("the plan").

         ¶4 In February 2006, Hillis (then age 69) and Di Giacinto (then age 45) divorced, and the superior court issued a decree of dissolution with orders that a third party prepare a supplemental DRO. ASRS approved a draft DRO. In June 2007, the court issued the final DRO which awarded Di Giacinto 48.75% of the monthly annuity benefit and 100% survivor benefits as a contingent annuitant. ASRS agreed to comply with the final DRO, designating it a QDRO.

         ¶5 In June 2014, Hillis requested a review of the final DRO's distribution allocation, invoking ASRS's authority to correct errors under A.R.S. § 38-765. ASRS nominally denied his "request . . . to facilitate any legal review of the current DRO[, because] any formal amendment to the [final] DRO must be done in the Superior Court of Arizona." Nonetheless, under A.R.S. § 38-773(A), ASRS determined that the final DRO was "not acceptable, " because it preserved Di Giacinto's survivor benefits, which it concluded violated A.A.C. R2-8-126(H).

         ¶6 In July 2014, Di Giacinto requested a hearing on the issue. After the hearing, an ALJ issued a proposed ruling for the ASRS Board concluding that when the decree was entered, Di Giacinto "was automatically removed as the [contingent annuitant on the plan] by operation of law." The ALJ recommended that Di Giacinto's appeal be dismissed, and the Board did so.

         ¶7 Di Giacinto appealed to the superior court, which affirmed. The superior court did not directly address the statutory or equitable issues Di Giacinto raised except to adopt the view that A.R.S. § 38-773(D) removed Di Giacinto as a beneficiary by operation of law. Di Giacinto appeals.[3]


         ¶8 We review questions of statutory interpretation de novo. J.L.F. v. Ariz. Health Care Cost Containment Sys.,208 Ariz. 159, 161, ¶ 10 (App. 2004). Under A.R.S. § 12-910(E), we must reverse an administrative decision if it is contrary to law. When a statute is part of a broader statutory scheme concerning a single subject, we construe it in conjunction with related statutes, giving effect to each provision. Johnson v. Mohave County,206 Ariz. 330, 333, ΒΆ 11 (App. 2003). In interpreting statutes, we "give meaning to 'each word, phrase, clause, and sentence . . . so that no part of the ...

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