Espy v. Espy

• Decision Date: 22 January 1987
• Docket Number: A024253.
• Citation: 236 Cal.Rptr. 755,191 Cal.App.3d 1163
• Parties: Alys Ann ESPY, Plaintiff and Respondent, v. Glenn Douglas ESPY et al., Defendants and Appellants.
• Court: California Court of Appeals Court of Appeals

236 Cal.Rptr. 755

191 Cal.App.3d 1163

Alys Ann ESPY, Plaintiff and Respondent, v. Glenn Douglas ESPY et al., Defendants and Appellants.

A024253.

Court of Appeal, First District, Division 4, California

Rehearing Granted February 20, 1987^*

January 22, 1987

Richard Sherman, DeGoff & Sherman, Berkeley, Lorin B. Blum, Blum, Kay & Merkle, Oakland, for defendants and appellants.

Robert A. Foster, Newport Beach, for plaintiff and respondent.

ANDERSON, Presiding Justice.

Today we decide a former wife, after a lapse of 12 years, cannot by an action for partition obtain a division of the husband's vested pension benefits which had been omitted from a final unmodifiable property settlement agreement. Glenn Douglas Espy (Glenn or appellant) appeals from a judgment awarding his former wife Alys Ann Espy (Alys or respondent) an interest in his IBM retirement benefits. We reverse that judgment.

The parties were married in 1958 and separated in 1969. Throughout the marriage Glenn was employed by IBM. During the dissolution proceedings Alys was represented by counsel, but Glenn represented himself. On January 6, 1969, Alys' attorney drafted a letter agreement setting forth the parties' proposed property settlement, which was duly executed by the parties; Glenn's pension was not vested at that time and the agreement made no mention of it. However, in August 1969 at Alys' request the parties executed a new agreement, because Alys had changed her mind and wanted to receive the family home instead of the stock. In the meantime, in May 1969 IBM had changed the provisions of its retirement plan, so that at the time of this August agreement Glenn's pension had, in fact, vested. The August agreement, just as the January one, however, made no mention of Glenn's pension.¹

An interlocutory decree of dissolution incorporating the parties' property settlement agreement was entered on December 30, 1969.

In 1981 Alys retained her present attorney to represent her in connection with a child support problem. He suggested that she might have an interest in Glenn's retirement plan because it was not mentioned in the dissolution documents. On November 20, 1981, approximately 12 years after the parties' dissolution, Alys filed the present action for partition and declaratory relief.

The trial court determined that Glenn's pension was an omitted community asset subject to partition, and that Alys has a one-half interest as a tenant in common with Glenn in the community share of the pension, which interest she can at her election receive either when Glenn is first eligible to retire or when he actually does retire. The court also awarded Alys an interest in any death benefit payable by the plan.

Glenn contends that this suit is barred by the limited retroactivity of In re Marriage of Brown (1976) 15 Cal.3d 838, 126 Cal.Rptr. 633, 544 P.2d 561 or, in the alternative, by laches. He argues additionally that Alys' recovery, if any, should be limited to the cash buy-out value of her interest in the pension at the time of the parties' dissolution, plus interest, but that if she is entitled to a share of the matured pension, the trial court erred in failing to provide for different means of calculating her share, depending on whether she elects to receive payment when the pension first matures or when Glenn actually retires. Finally, Glenn asserts that the court erred in awarding Alys any interest in the pension plan's death benefits.

DISCUSSION

I. The Rights of the Parties are Controlled by the Terms of Their Agreement

It is well settled that the division of the community property is trusted primarily to the parties and that the courts assume this task only if the spouses failed to make the necessary arrangement between themselves. CIVIL CODE SECTION 4800² provides in relevant part that "(a) Except upon the written agreement of the parties, or an oral stipulation of the parties in open court, the court shall, either in its judgment of dissolution of the marriage, in its judgment decreeing the legal separation of the parties, or at a later time if it expressly reserves jurisdiction to make such a property division, divide the community property and the quasi-community property of the parties equally." (Emphasis added.)³

In interpreting the above cited code sections (or former sections of the Civil Code regulating the same subject), the case law underlines that private settlements dividing marital property are favored as a matter of public policy (In re Marriage of Moore (1980) 113 Cal.App.3d 22, 27, 169 Cal.Rptr. 619); and that in the absence of fraud or mistake the intention of parties expressed in the property settlement agreement is controlling (Esserman v. Esserman (1982) 136 Cal.App.3d 572, 578, 186 Cal.Rptr. 329; Henley v. Henley (1960) 183 Cal.App.2d 519, 522, 6 Cal.Rptr. 733). As stated in Adams v. Adams (1947) 29 Cal.2d 621, 624, 177 P.2d 265: "Property settlement agreements occupy a favored position in the law of this state and are sanctioned by the Civil Code. [Citations.] Such agreements are usually made with the advice of counsel after careful negotiations, and the courts, in accord with legislative sanction, prefer agreement rather than litigation. [Citation.] When the parties have finally agreed upon the division of their property, the courts are loath to disturb their agreement except for equitable considerations. A property settlement agreement, therefore, that is not tainted by fraud or compulsion or is not in violation of the confidential relationship of the parties is valid and binding on the court." (Accord In re Marriage of Vomacka (1984) 36 Cal.3d 459, 464, 204 Cal.Rptr. 568, 683 P.2d 248; In re Marriage of Moore, supra, 113 Cal.App.3d at p. 27, 169 Cal.Rptr. 619.)

This follows from the sanctity and constitutional protection of contracts. The United States Constitution, article I, section 10, provides that no state shall pass any law impairing the obligation of contracts. The California Constitution likewise provides that no law impairing the obligation of contracts may be passed. (art. I, § 9.) The cases construing the contract clauses explain that the prohibition against impairment of contractual obligations is almost absolute and that unless there are overriding considerations of public policy, the courts cannot lawfully disregard the provisions of valid contracts or deny to either party his or her rights thereunder. (Bradley v. Superior Court (1957) 48 Cal.2d 509, 519, 310 P.2d 634; Bodle v. Bodle (1978) 76 Cal.App.3d 758, 767, 143 Cal.Rptr. 115; Rabwin v. Chotiner (1967) 249 Cal.App.2d 675, 680, 57 Cal.Rptr. 721; see also Allied Structural Street Co. v. Spannus (1978) 438 U.S. 234, 240, 98 S.Ct. 2716, 2720, 57 L.Ed.2d 727; In re Marriage of Potter (1986) 179 Cal.App.3d 73, 82, 224 Cal.Rptr. 312.)

In the case at bench respondent and appellant entered into a valid and enforceable contract whereby they intended to, and did in fact, reach a final and complete settlement of their property rights. The settlement agreement (which was drafted by respondent's attorney and survived its incorporation in the interlocutory decree, see discussion, infra ) provided in clear and unambiguous terms that it was to include all the respective property rights of the parties; that the husband and wife accepted their share under the agreement in full satisfaction and in lieu of their rights in the marital property regardless of their community or separate nature; and that in consideration of the shares received the parties released each other forever from all liabilities in law or equity arising out of their marital relationship.⁴

These contractual provisions make it clear that the parties to the agreement disposed of all their property rights (known or unknown) and that as a consequence no property rights have remained unadjudicated. It is, of course, elementary that where, as here, the language of the contract is clear and explicit, the trial court must give effect to the mutual intention of the parties expressed in their agreement and may not undertake to rewrite the contract under the guise of judicial interpretation. It follows that the purported modification of the property settlement agreement on the basis of unadjudicated vested pension rights amounts to an unveiled disregard of the parties' contractual intent and clearly violates the constitutional prohibition against impairment of contracts.

Respondent's contention that the property settlement agreement at bench was assailable because it was the result of mutual mistake of the parties or fraud on the part of the husband, may be briefly answered. While it is conceded that a contract may be set aside for extrinsic or intrinsic fraud, coercion, mutual mistake and the like, respondent here did not seek such contractual remedies. Rather, she brought an action for partition some 12 years later in which she intended to keep all the benefits under the agreement and to repudiate only the disadvantageous portions thereof. This she cannot do. It is well settled that where, as here, the marital settlement agreement is entire or "integrated," the court must approve or disapprove the entire agreement and cannot embark on a partial modification. (In re Marriage of Nicolaides (1974) 39 Cal.App.3d 192, 198, 114 Cal.Rptr. 56; Wright v. Wright (1957) 148 Cal.App.2d 257, 270, 306 P.2d 536.)

II. The Agreement Relative to Division of Marital Property is not Modifiable Despite its Incorporation in the Interlocutory Decree

Even though the 1969 property settlement agreement was incorporated in the interlocutory decree of dissolution of marriage, such incorporation did not render the division of community property modifiable.

The cases and legal authorities unanimously hold that while the support provisions of a property settlement incorporated in the decree are modifiable under certain circumstances ( § 4811, subd. (b); In re Marriage of Vomacka, supra, 36 Cal.3d 459, 204 Cal.Rptr. 568, 683 P.2d 248), the provisions...