Casas v. Thompson

• Citation: 720 P.2d 921,228 Cal.Rptr. 33,42 Cal.3d 131
• Court: United States State Supreme Court (California)
• Decision Date: 21 July 1986
• Parties: , 720 P.2d 921, 55 USLW 2139 Virginia CASAS, Plaintiff and Appellant, v. Max E. THOMPSON, Defendant and Appellant. L.A. 32131.

Page 33

228 Cal.Rptr. 33

42 Cal.3d 131, 720 P.2d 921, 55 USLW 2139

Virginia CASAS, Plaintiff and Appellant, v. Max E. THOMPSON, Defendant and Appellant.

L.A. 32131.

Supreme Court of California,

In Bank.

July 21, 1986.

E. Stephen Temko, San Diego, for plaintiff and appellant.

Daniel B. Hunter, Thomas J. Ryan, Hunter & Ryan, James D. Allen and McDonald & Allen, San Diego, for defendant and appellant.

LUCAS, Justice.

This case presents two issues for review: (1) following enactment of the Federal Uniform Services Former Spouses' Protection Act ¹ (FUSFSPA), does a California court have the power to award a former spouse an interest in a military retiree's pension which was omitted from an earlier dissolution decree; and (2) if the court can make such an award, should the division of the pension be based on its "disposable" (as defined in FUSFSPA) ² amount or its "gross" amount? We conclude that the court has the power to award a former spouse an interest in the "gross" amount of a military retiree's pension.

I

Virginia Casas (Virginia) and Max Thompson (Max) were married October 20, 1949. Max was a commissioned officer in the United States Navy at the time of the marriage. Virginia and Max were married for over 15 years and had five children. The parties separated July 21, 1965; at that time, Max had been on active duty with the Navy for over 21 years.

Virginia filed a complaint for divorce in the year that she and Max separated, and an interlocutory judgment of divorce was entered on November 2, 1966. Max's military retirement pension was not mentioned by either party in the divorce pleadings, and the trial court did not consider or rule on the pension when dividing the couple's property. The trial court found that the community property of the parties consisted of stock, household furniture, and an automobile. Max was awarded "all of the community property of the parties."

Max was also awarded custody of four of the children; the fifth child, the eldest, was already married at the time her parents were divorced. The four children continued to live with Max and were supported solely by Max during their minority. One of the children lived with Virginia for a brief period, but Max paid child support to Virginia during that time.

Max retired from the Navy July 1, 1970, after serving over 26 years, and began receiving monthly nondisability retirement pay. On November 5, 1980, Virginia filed a complaint to have an omitted asset, Max's military pension, partitioned. The trial on the partition was held March 22, 1982, and the court ruled from the bench that, pursuant to McCarty v. McCarty (1981) 453 U.S. 210, 101 S.Ct. 2728, 69 L.Ed.2d 589, Max's pension was his separate property.

Prior to entry of judgment, however, Virginia moved the court to enter a judgment different than announced, based on passage of FUSFSPA. The court reopened the matter and another hearing took place June 15, 1983. This time the trial judge found that FUSFSPA overruled McCarty and that Max's retirement pay was a community property asset which was omitted in the earlier divorce proceeding and should now be partitioned. However, the court refused to partition the amount paid to Max from the date of his retirement in July 1970 to November 1980, when Virginia filed her complaint for partition, even though the court made no finding of laches or of unclean hands. Max's attorney had argued the unclean hands defense based on the 1966 judgment which found Virginia to be an "unfit parent," but the court responded that fault and guilt have no place in property division in dissolution proceedings according to current state policy. In spite of finding no unclean hands or laches defenses, the court reasoned that it would be unfair in view of all the facts of this case to require Max to pay Virginia money which he had received and spent over the last 10 years, especially because Virginia had waited until 14 years after her divorce to file for the partition and because Max had been supporting the children during that period. However, because Max was put on notice that the pension was subject to division when Virginia filed her complaint in November 1980, from that time forward the pension was to be divided.

Based on the number of years that Max and Virginia were married during Max's years of military service, Virginia was awarded 30 percent of the gross retirement pay for any future pension payments received by Max. The trial judge specifically ruled that under FUSFSPA he was not limited to dividing disposable retirement income, but instead was allowed to divide gross retirement income. As to payments that Max received from November 1980 (when Virginia filed for partition) to June 15, 1983 (the date of the hearing), the court, using its equitable powers, nonetheless ruled that Virginia would receive only 30 percent of the disposable pay received by Max. The court reasoned that Max had already paid taxes on the pay and that using the disposable pay figures would be fair and would avoid an "accounting nightmare."

Both Max and Virginia appealed the trial court's judgment. Max argued that the retirement income should not have been partitioned and, alternatively, that the award for future payments should be based on his disposable pay instead of his gross pay. Virginia contended that she should not have been denied a percentage of the retirement pay from the retirement date in 1970 to her filing date in 1980. She further argued that she should have been awarded 30 percent of the gross retirement pay that Max received between 1980 and the 1983 hearing date, regardless of the accounting problems such an award might cause.

The Court of Appeal majority upheld the lower court's judgment on all matters except one--the matter of Virginia's award of 30 percent of the disposable pension income Max received between 1980 and 1983. As noted, the trial court's only reason for not awarding a percentage of the gross income was its belief that such an award would cause an "accounting nightmare." The Court of Appeal held that the trial court, having offered no other equitable considerations to support its reasoning, abused its discretion in denying Virginia an award of 30 percent of the gross income for those years.

Both parties filed petitions for review. Max sought review on five grounds: that (1) McCarty should be applied retroactively to preclude division of military pensions; (2) military pensions are not vested after 20 years of active duty service; (3) military retirement pay is not community property in California; (4) FUSFSPA precludes division of his military pension because his divorce was final before McCarty was decided; and (5) FUSFSPA allows state courts to divide only disposable retirement pay. Virginia sought review of the Court of Appeal's refusal to award her a share of Max's pension benefits received before she filed for partition in 1980.

After carefully considering the matter, we have determined that the thoughtful opinion of Justice Work for the Court of Appeal, Fourth Appellate District, in this case correctly treats the issues, and that (with appropriate deletions and additions) ^* we should adopt it as our own opinion. The Court of Appeal opinion, as modified, is as follows:

II

[ ] Virginia seeks to partition an asset, Max's military pension, omitted and unadjudicated in the 1966 divorce. Henn v. Henn (1980) 26 Cal.3d 323, 161 Cal.Rptr. 502, 605 P.2d 10, permits Virginia to bring an independent action to partition such an omitted asset if she had a divisible interest in it at the time of the 1966 divorce. (Shaver v. Shaver (1980) 107 Cal.App.3d 788, 794, 165 Cal.Rptr. 672.) Unless Virginia had such an interest in 1966, she cannot prevail because under California law whether the asset is separate or community is established as of the time the asset is acquired. (Henn, supra, 26 Cal.3d at p. 330, 161 Cal.Rptr. 502, 605 P.2d 10.) That interest is not altered except by judicial decree or the parties' agreement. (Ibid.) Thus, Virginia contends her community property interest attached to the pension before the divorce. Because this asset was not before the court in 1966, her interest was not altered by that judgment. If the asset was a community property asset, Virginia's unadjudicated rights continued in the form of a tenancy in common with Max. (Ibid.) However, if Virginia had no community property interest in Max's pension in 1966, there is nothing to partition now, and Virginia cannot prevail.

Until In re Marriage of Fithian (1974) 10 Cal.3d 592, 111 Cal.Rptr. 369, 517 P.2d 449, the California view regarding the characterization of vested military retirement pensions as community or separate property was unsettled. (See Aloy v. Mash (1985) 38 Cal.3d 413, 416, 212 Cal.Rptr. 162, 696 P.2d 656.) After 1974, California courts uniformly held vested military pensions were community property. However, in McCarty v. McCarty, supra, 453 U.S. 210, 101 S.Ct. 2728, 69 L.Ed.2d 589, the United States Supreme Court held the federal legislative scheme authorizing military pensions impliedly preempted state community property law and prohibited the division of military retirement pay. Reacting to McCarty, Congress amended these statutes by adding section 1408, FUSFSPA, to title 10 of the United States Code. The compilation of FUSFSPA's legislative history shows Congress's express intent was to remove the effect of McCarty by permitting state courts to apply their marital property laws to military retired pay when fixing the parties' property rights in a divorce, consistent with the application of "such laws to the retired pay of Federal Civil servants, Foreign Service personnel and private sector employees." (Sen.Rep. No. 97-502, 2d Sess., p. 1 (1982); 1982 U.S.Code Cong. & Admin.News, p. 1596, italics added.) Consistent with an express intent to erase McCarty's impact on all cases, FUSFSPA's provisions were made retroactive to the day before...