Green v. Green, A129436.

Decision Date06 June 2012
Docket NumberNo. A129436.,A129436.
CourtCalifornia Court of Appeals Court of Appeals
PartiesIn re the MARRIAGE OF Julie R. GREEN and Timothy P. Green.Julie R. Green, Appellant, v. Timothy P. Green, Respondent.

OPINION TEXT STARTS HERE

April Rose Sommer, for Appellant.

Tarkington, O'Neill, Barrack & Chong, San Francisco, Robert A. Roth, for Respondent.

Whiting, Fallon, Ross & Abel, Walnut Creek, Ann Fallon; Office of Barbara A. DiFranza, Barbara DiFranza, for Amicus Curiae Northern California Chapter of the American Academy of Matrimonial Lawyers, upon the request of the First District Court of Appeal.SEPULVEDA, J.*

In this case of first impression, we consider how to classify four years of credit in the California Public Employees' Retirement System (CalPERS) that respondent Timothy Green (Timothy) elected to purchase with community funds during his marriage to appellant Julie Green (Julie). Timothy was eligible to purchase the credit because he had performed four years of military service with the United States armed forces prior to the parties' marriage. (Gov.Code, § 21024.) 1 Over Julie's objection, the trial court characterized the military service credit as Timothy's separate property, and ruled that Julie was entitled only to reimbursement of the community funds used to pay for the service credit, plus interest. We conclude that, because the military service credit was purchased with community funds during the parties' marriage, it was community property. We remand to the trial court to determine the correct allocation of the credit.

I.

Factual and Procedural Background

Timothy served in the United States Air Force for four years (from July 23, 1982 to May 1, 1986). On June 16, 1989, he began working as a firefighter for the Dougherty Regional Fire Authority in Dublin. The fire authority was a participant in CalPERS. Julie and Timothy were married in May 1992.

In July 1997, the Dougherty Regional Fire Authority merged with the Alameda County Fire Department, which also is a participant in CalPERS. Timothy continued to work for the Alameda County Fire Department.

On August 1, 2002, Timothy exercised his right to buy service credit for his military service. The purchase was made pursuant to section 21024, which permits a CalPERS member to obtain up to four years of service credit for service with the United States armed forces. Timothy elected to pay for the purchase through an installment plan, paying $92.44 twice each month through payroll deductions for 15 years (scheduled to continue until July 2017). Before the parties separated on October 1, 2007, community funds in the amount of $11,462.56 were used toward the purchase of the military service credit.

Julie filed a petition for dissolution of marriage in March 2008. During dissolution proceedings, a dispute arose over whether to characterize Timothy's military service credit as separate or community property. The trial court appointed an expert for the purpose of drafting proposed orders to divide the community property interests in the parties' pension plans. According to a brief filed by Timothy in connection with the dispute over his military service credit, the expert proposed treating 34.44 percent of the service credit as a community property asset, representing the percentage of payments toward the military service credit made with community funds.

The parties could not agree on division of the military service credit, and submitted briefs on the issue to the trial court. Julie sought to continue to pay half of the cost of future installment payments, and requested that half of the military service credit be placed into a separate account for her benefit through CalPERS. Timothy argued that because his right to purchase military service credit arose prior to the parties' marriage, all four years of credit were his separate property. Timothy acknowledged, however, that community funds used to pay for the purchase before the parties' separation in October 2007 were community property.

A trial was held on the issue, and both parties testified regarding the purchase of the military service credit. The trial court ordered that the military service credit portion of the CalPERS pension in Timothy's name be awarded to Timothy as his separate property. Timothy was ordered to pay Julie the sum of $6,699.54, representing half of the installment payments made with community funds during the marriage toward the military service credit, plus interest at the rate of six percent.

Julie appealed after judgment was entered, challenging only the characterization of the military service credit.2 After appellate briefing was complete, this court on its own motion accorded amicus curiae status to the American Academy of Matrimonial Lawyers, Northern California Chapter (Academy), and invited the Academy to submit a brief. The Academy accepted the court's invitation. Because Academy members who discussed the issue were not unanimous in their views as to the appropriate characterization and allocation of the military service credit, the Academy filed a brief containing two sections, one advocating reimbursement with interest, and the other advocating allocation of separate and community property interests in the credit. Timothy and Julie thereafter filed answer briefs.

II.

Discussion

A. Overview of Applicable Law.

“The characterization of property as community or separate determines its division upon dissolution of marriage. Each spouse owns a one-half interest in all community property. ( [Fam.Code,] § 751.) In general, community property is divided equally in the aggregate when the marriage ends. ( [Fam.Code,] § 2550; see [Fam.Code,] §§ 2600–2604.) However, separate property is not subject to a similar division, and belongs only to the owner spouse. ( [Fam.Code,] § 752.) ( In re Marriage of Benson (2005) 36 Cal.4th 1096, 1102, 32 Cal.Rptr.3d 471, 116 P.3d 1152.) We review the trial court's characterization of military service credit as separate property as a mixed question of law and fact that is predominately one of law, subject to de novo review. ( In re Marriage of Sonne (2010) 48 Cal.4th 118, 124, 105 Cal.Rptr.3d 414, 225 P.3d 546 ( Sonne ).)

Any analysis of the division of pension rights must be guided by our Supreme Court's seminal case, In re Marriage of Brown (1976) 15 Cal.3d 838, 126 Cal.Rptr. 633, 544 P.2d 561 ( Brown ), which held that “the community owns all pension rights attributable to employment during the marriage.” ( Id. at p. 844, 126 Cal.Rptr. 633, 544 P.2d 561.) Brown concluded that pension rights, whether or not vested, represent a property interest, and to the extent that such rights derive from employment during marriage, they comprise a community asset subject to division in a dissolution proceeding. ( Id. at p. 842, 126 Cal.Rptr. 633, 544 P.2d 561.) The court defined a “vested” pension right as one that “is not subject to a condition of forfeiture if the employment relationship terminates before retirement.” ( Ibid.) An employee can hold a “vested” but “immature” pension right, such as when the right to payment is subject to the condition that the employee survive until retirement. ( Ibid.) Nonvested pension rights, by contrast, are contractual rights subject to a contingency or contingencies (usually, that an employee continue to work for his or her employer). ( Id. at p. 846, 126 Cal.Rptr. 633, 544 P.2d 561.)

At issue in Brown were the nonvested pension rights of husband, who accumulated retirement “points” pursuant to a plan under which he would forfeit his pension rights if he was discharged before he accumulated a threshold number of points. ( Brown, supra, 15 Cal.3d at pp. 842–843, 126 Cal.Rptr. 633, 544 P.2d 561.) The court distinguished such nonvested rights from a mere “expectancy,” which is not a property right divisible upon dissolution of marriage. ( Id. at pp. 844–845, 126 Cal.Rptr. 633, 544 P.2d 561.) An “expectancy” is “the interest of a person who merely foresees that he might receive a future beneficence, such as the interest of an heir apparent [citations], or of a beneficiary designated by a living insured who has a right to change the beneficiary [citations].” ( Id. at p. 845, 126 Cal.Rptr. 633, 544 P.2d 561, fn. omitted.) [T]he defining characteristic of an expectancy is that its holder has no enforceable right to his beneficence.” ( Ibid., original italics.) The Supreme Court concluded that the nonvested property rights in Brown were more than a mere expectancy: “Since pension benefits represent a form of deferred compensation for services rendered [citation], the employee's right to such benefits is a contractual right, derived from the terms of the employment contract.” ( Ibid.) [N]onvested pension rights are not an expectancy but a contingent interest in property.” ( Id. at p. 841, 126 Cal.Rptr. 633, 544 P.2d 561.)

B. Process for Purchasing Military Service Credit.

Many public employees in California enjoy the benefit of membership in CalPERS. “Members of CalPERS, once vested, participate in a defined benefit retirement plan, which supplies a monthly retirement allowance under a formula comprising factors such as final compensation, service credit (i.e., the credited years of employment), and a per-service-year multiplier. The retirement allowance consists of an annuity (which is funded by member contributions deducted from the member's paycheck and interest thereon) and a pension (which is funded by employer contributions and which must be sufficient, when added to the annuity, to satisfy the amount specified in the benefit formula). (Gov.Code, §§ 21350, 21362.2, subd. (a), 21363.1, subd. (a).) ( Sonne, supra, 48 Cal.4th at p. 121, 105 Cal.Rptr.3d 414, 225 P.3d 546, italics omitted.)

Section 21024 permits a CalPERS member to obtain up to four years of service credit for...

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  • Green v. Green (In re Green), A129436.
    • United States
    • California Court of Appeals Court of Appeals
    • August 29, 2012
    ...140 Cal.Rptr.3d 915In re the MARRIAGE OF Julie R. GREEN and Timothy P. Green.Julie R. Green, Appellant,v.Timothy P. Green, Respondent.No. A129436.Court of Appeal, First District, Division 4, California.May 16, 2012.As Modified on Denial of Rehearing June 6, 2012.Review Granted Aug. 29, Back......

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