Stone v. Stone
| Decision Date | 18 April 1978 |
| Docket Number | No. C-77-1124-CBR.,C-77-1124-CBR. |
| Citation | 450 F. Supp. 919 |
| Court | U.S. District Court — Northern District of California |
| Parties | Noel Zeona STONE, Plaintiff, v. Ward Herbert STONE, Seafarers International Union, Pacific District, Pacific Maritime Association Pension Plan, Does One through Five, Defendants. |
Dennis R. Pedersen, Walnut Creek, Cal., for plaintiff.
Dennis Daniels, Ernst & Daniels, John Paul Jennings, Jennings, Gartland & Tilly, San Francisco, Cal., for defendant Pension Plan.
The major issue in this lawsuit is whether the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1001-1381, preempts California community property laws to the extent that they require employee benefit plans subject to ERISA to pay part of a participant's benefits to his1 divorced spouse.
In 1973, plaintiff Noel Zeona Stone ("Noel") instituted divorce proceedings against her husband, defendant Ward Herbert Stone ("Ward"), in the California Superior Court for the County of Alameda in the Northern District of California. On September 25, 1974, the Superior Court entered an Interlocutory Judgment of Dissolution of Marriage, and that court entered a final judgment on October 17, 1974, dissolving the marriage and dividing the couple's community property according to the terms of the interlocutory decree. One community asset was a monthly pension of $425.00 which defendant Seafarers International Union, Pacific District — Pacific Maritime Association Pension Plan (the "Pension Plan") had paid Ward since 1970 when he retired from employment covered by the Plan.2 Under the terms of the interlocutory and final divorce decree, the community property interest in these pension benefits was divided as follows:
"The community property interest of the parties in the pension being received by the respondent is 80%, and accordingly 40% of the pension is to be paid to the petitioner, which at the present rate of payment of $425.00 is to be $170.00 per month to the petitioner with the petitioner accepting the tax consequences of said payment."
Noel alleges that between the end of 1974 when she obtained her divorce and May 3, 1977, when she filed this action in the California Superior Court for the County of Alameda, Ward failed to comply with his obligations under the terms of the divorce decree. Until May 3, 1977, Noel made no effort to notify the Pension Plan of its alleged obligation to pay 40% of Ward's monthly pension directly to her, although she did try unsuccessfully to join the Pension Plan by moving in 1976 to modify the final judgment. The Pension Plan first received written notification of Noel's claim against the Plan on May 9, 1977, when it received in the mail a copy of the summons and complaint in Noel's enforcement action in Superior Court.
On May 25, 1977, the Pension Plan filed a petition for removal of Noel's civil action from the Superior Court, together with a supporting bond. Noel has not moved to remand this action to state court.
At a status conference on July 28, 1977, Noel and the Pension Plan agreed to file cross-motions for summary judgment. Pursuant to that agreement, they entered into a stipulation concerning the material facts. After the parties briefed the issues, the Court heard oral argument on October 13, 1977, and took the motions under submission. On November 30, 1977, the Court sent a letter to counsel for Noel and the Pension Plan requesting them to address two additional issues: whether the division of Ward's and Noel's community property by the Superior Court became effective before or after January 1, 1975; and whether the divorce decree required the Pension Plan to pay directly to Noel her 40% share of the pension benefits. Both Noel and the Pension Plan have responded to this request.
On February 3, 1978, Noel filed a motion for default judgment against Ward after Ward failed to respond to summons mailed to his last known address and printed in a local newspaper of general circulation on six separate occasions.
Having considered the written and oral arguments of counsel, the Court grants Noel's motion for summary judgment against the Pension Plan. In addition, the Court remands Noel's action against Ward to the Superior Court for the County of Alameda.
This action was removed to this Court pursuant to 28 U.S.C. § 1441(a), which authorizes the removal of "any civil action brought in a State court of which the district courts of the United States have original jurisdiction."3 This Court therefore has jurisdiction only if Noel could have brought suit in federal court to enforce her right under the terms of the divorce decree to part of the pension benefits. Although the parties have not addressed this issue, the Court has an independent duty to determine whether it has subject-matter jurisdiction. Wong v. Bacon, 445 F.Supp. 1177, 1182 (N.D.Cal.1977).
Intervention in divorce proceedings by federal courts involves them in state domestic relations law, an area traditionally and wisely left to state courts. See cases cited at pp. 924-925, infra. Exercise of federal jurisdiction over Noel's action against the Pension Plan is authorized by federal statute and creates none of the problems which this noninterventionist policy is designed to avoid.
The cause of action of a nonemployee spouse against a benefit plan for benefits awarded by a state court in a divorce action has two elements: (1) that the employee spouse had a right under the terms of the plan to receive benefits; and (2) that this right was validly transferred to his spouse by the divorce decree. Proof of neither of these elements requires federal courts to intrude into state domestic relations law.
The first element of the nonemployee spouse's cause of action does not involve state domestic relations law at all. Under § 502(a)(1)(B) of ERISA, 29 U.S.C. § 1132(a)(1)(B), a participant of a pension plan4 like Ward has a right to bring a civil action "to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan * * *." Section 502(e)(1), 29 U.S.C. § 1132(e)(1), gives a participant the right to bring this action in federal courts, which have jurisdiction concurrent with state courts in § 502(a)(1)(B) actions.5 If a participant's cause of action under § 502(a)(1)(B) is transferable to his spouse by operation of state community property laws (see n.17, infra), federal courts have original jurisdiction over § 502(a)(1)(B) suits brought by nonemployee spouses who were awarded benefits in state divorce actions.
Only the second element of the nonemployee spouse's cause of action, proof of a completed transfer of her husband's rights against the benefit plan to her, has even the potential to involve federal courts in state domestic relations law. However, their actual involvement is in fact slight.
A nonemployee spouse with a present interest in benefits must be able to sue a benefit plan to enforce that interest. If she could not, she would have no remedy for any kind of wrongful failure by the plan to pay benefits to her. A plan's failure could be wrongful not only because of a goodfaith but erroneous belief that ERISA preempts state community property laws (as in this case), but also because of a willful, intentional violation by the trustees of their fiduciary duties. In other words, the plan's failure to pay could have nothing to do with the claimant's status as a nonemployee spouse.
The nonemployee spouse's right to sue should not depend on the nature of the reason for the plan's failure to pay her. If the existence of a federal cause of action depended on the defense, a federal court could not know whether it had jurisdiction until the plan answered the complaint, and the well-pleaded complaint rule, which makes federal jurisdiction depend on the complaint, was designed to avoid just this kind of uncertainty and confusion. See Wong v. Bacon, supra, 445 F.Supp. 1177; 13 C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure § 3566 (1975) (hereinafter cited as Wright, Miller & Cooper). To deny a nonemployee spouse awarded benefits in a divorce action the right to sue under § 502(a)(1)(b) leaves her dependent on the willingness of her spouse to sue the plan or its trustees on her behalf, which the spouse has little or no incentive to do.
The right of a nonemployee spouse with an interest in benefits to sue a benefit plan does not, however, give her a right to seek a division of community property in federal court whenever pension benefits allegedly constitute a community asset. Federal courts need not become involved in any prospective divisions of community property. That is, until the community property has been divided by court decree or by property settlement, the nonemployee spouse has no enforceable interest in benefits and no enforceable right against the plan. So long as the employee spouse shares equally the management and control of personal community property with his wife during their marriage, Cal.Civ.Code § 5125, she has no separate or superior right to receive all or part of the benefits and no right to sue to enforce this undetermined and inchoate right.
Consequently, a federal court need not decide how community property should be divided under state domestic relations laws. It need decide only how such property has previously been divided by court order or property settlement. That determination involves state contract law more than state community property law because the interpretation of a divorce decree as well as a property settlement depends on the intent of the parties. In re Marriage of Verner, 77 Cal.App.3d 718, 143 Cal.Rptr. 826, 830 (1978).6
Any suit by a nonemployee spouse to obtain management and control of a community asset would not arise under federal law, and ...
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