Huddleson v. Huddleson

• Decision Date: 19 December 1986
• Citation: 187 Cal.App.3d 1564,232 Cal.Rptr. 722
• Court: California Court of Appeals Court of Appeals
• Parties: Elizabeth HUDDLESON, Plaintiff and Respondent, v. Neil HUDDLESON, Defendant and Appellant. A031811.

Page 722

232 Cal.Rptr. 722

187 Cal.App.3d 1564

Elizabeth HUDDLESON, Plaintiff and Respondent, v. Neil HUDDLESON, Defendant and Appellant.

A031811.

Court of Appeal, First District, Division 2, California.

Dec. 19, 1986.

Review Denied April 1, 1987.

Timothy C. Wright, Robertson, Alexander, Luther, Esselstein, Shiells & Wright, Menlo Park, for defendant and appellant.

Edward Irving Mears, Redwood City, for plaintiff and respondent.

ROUSE, Associate Justice.

Defendant husband appeals from a judgment apportioning and ordering distribution of 12.4 percent of each of his pension payments to plaintiff, his former wife. We affirm that judgment.

Husband began working at Lockheed Aircraft Corporation (Lockheed) on June 23, 1958. Lockheed provided a pension plan, totally funded by employer contributions, which vested after ten years of service. On November 23, 1960, the couple was married. They separated on June 15, 1967.

Husband filed for dissolution in 1970, and on July 12, 1971, an interlocutory judgment was entered which incorporated the parties' property settlement agreement. That agreement made no mention of husband's pension. A final judgment of dissolution was entered on September 14, 1971.

Over 12 years later, in 1984, wife brought the action from which this appeal is taken, seeking distribution of the pension as an undistributed community property asset. After a trial to the court, judgment was entered for wife on March 20, 1985. On April 17, 1985, the court rendered its statement of decision. Also on April 17, 1985, a second judgment, containing essentially the same disposition--that husband was to pay wife 12.4 percent of each pension payment as it was received--was signed and filed. On July 24, 1985, the trial court issued an order vacating the first judgment on grounds it had been mistakenly filed before the statement of decision. Husband makes a timely appeal.

I.

Husband argues that the trial court erred in finding that wife had an interest in his pension benefits, because his pension was not vested as of June 15, 1967, when the parties separated. He contends that In re Marriage of Brown (1976) 15 Cal.3d 838, 126 Cal.Rptr. 633, 544 P.2d 561, which overruled previous California authority by holding that a nonvested pension is a community asset, has no retroactive application here.

Brown arose in the context of an appeal from an interlocutory judgment which found no community interest in a pension which would not vest until two years in the future. (In re Marriage of Brown, supra, 15 Cal.3d 838, 843, 847, 126 Cal.Rptr. 633, 544 P.2d 561.) The Brown court limited the retroactive application of its ruling to cases in which "the property rights of the marriage have already been adjudicated by a decree of dissolution or separation which has become final ... unless the decree expressly reserved jurisdiction to divide such pension rights at a later date." (Id., at p. 851, 126 Cal.Rptr. 633, 544 P.2d 561.) Husband contends that, since jurisdiction over the pension was not reserved here, the action of the trial court was contrary to the rule of Brown.

The initial question before us, is whether Brown is applicable here. Brown permitted only limited retroactivity as to nonvested pension rights. In Brown, the rights only vested two years after the dissolution. (15 Cal.3d 838, 847, 126 Cal.Rptr. 633, 544 P.2d 561.) In this case, husband's pension vested after the parties separated, but before the interlocutory judgment. There is ample authority for the proposition that the crucial time to measure whether or not pension rights are vested is at the time of the dissolution--namely the date of the interlocutory decree. (Giovannoni v. Giovannoni (1981) 122 Cal.App.3d 666, 668-669, 176 Cal.Rptr. 154; In re Marriage of Smethurst (1980) 102 Cal.App.3d 494, 497, 162 Cal.Rptr. 300; In re Marriage of Ward (1975) 50 Cal.App.3d 150, 153, 123 Cal.Rptr. 234, disapproved on another point in In re Marriage of Brown, supra, 15 Cal.3d 838, 851, fn. 14, 126 Cal.Rptr. 633, 544 P.2d 561.) ¹ Because husband's pension was vested at the time of the dissolution, the limited retroactivity rule of Brown, applicable to nonvested pensions, does not apply. ²

Regardless of whether the parties know of, or discuss, the vested pension, if the "court was not called upon to award it, and did not award it, as community property, separate property, or any property at all" (Giovannoni v. Giovannoni, supra, 122 Cal.App.3d 666, 672, 176 Cal.Rptr. 154), then the pension is a missed asset subject to a post-dissolution claim. (Henn v. Henn (1980) 26 Cal.3d 323, 330, 161 Cal.Rptr. 502, 605 P.2d 10.) In reliance upon Henn the trial court in this case determined the proportion of the pension which was earned during the marriage and awarded wife half of that community property interest, or 12.4 percent of each pension payment. ³

Husband urges us to adopt a rule based upon language he finds in Bowman v. Bowman (1985) 171 Cal.App.3d 148, 217 Cal.Rptr. 174. He argues that the only community property interest from the pension which wife can recover is that which derives from those portions of the pension which were "vested at the time of the parties' separation." (Id., at p. 157, 217 Cal.Rptr. 174.) This contention is incorrect and it is a misreading of Bowman.

In Bowman, the post-dissolution action to partition pension rights was brought as to rights which were both vested and nonvested at the date of dissolution. (171 Cal.App.3d 148, 157, 217 Cal.Rptr. 174.) Finding that the wife was not barred by Brown from seeking partition as to the vested pension rights, the court then looked to how her community property interest should be calculated. It instructed the trial court to calculate the community property interest in the pension. This calculation was to be based on the period of the marriage--that is, pension benefits first earned during the time the parties were married up to the date of their separation.

The court retroactively applied Civil Code section 5118 which provides that all "earnings and accumulations of a spouse" after separation are the separate property of that spouse. (Stats.1971, ch. 1699, § 1, p. 3640.) Section 5118 is retroactively applicable to "all property rights, whenever acquired, that have not been finally adjudicated by a judgment from which the time to appeal has lapsed." (In re Marriage of Bouquet (1976) 16 Cal.3d 583, 594, 128 Cal.Rptr. 427, 546 P.2d 1371.)

Apparently reasoning that, since the omitted vested pension was not a property right which had been adjudicated by the final judgment of dissolution, the Bowman court calculated wife's community interest in those portions of husband's pension rights which vested prior to their separation. We do not read Bowman to hold that unless a pension has vested prior to separation the nonemployee spouse has no community interest in the pension.

Such a result would be contrary both to our own prior decision in In re Marriage of Ward, supra, 50 Cal.App.3d 150, 123 Cal.Rptr. 234, and to the conception of pension benefits set out in the subsequent Supreme Court decisions of In re Marriage of Brown, supra, 15 Cal.3d 838, 126 Cal.Rptr. 633, 544 P.2d 561, and Henn v. Henn, supra, 26 Cal.3d 323, 161 Cal.Rptr. 502, 605 P.2d 10.

In Ward, the husband's retirement benefits vested some 12 days post separation, and he relied on the provisions of Civil Code section 5118 for the proposition that the date of vesting was the date his pension benefits were "earned and accumulated." (50 Cal.App.3d 150, 153, 123 Cal.Rptr. 234.) We rejected that argument, finding instead that, with the exception of the 12 days post separation, the benefits had been earned during the marriage hence were community property. (Id., at pp. 153-154, fn. 1, 154, 123 Cal.Rptr. 234.) Thus, in substance, Ward held that, to the extent they had been earned prior to separation, pension rights were not post-separation "earnings" within the meaning of Civil Code section 5118.

The rationale of Ward is totally consistent with the rationale underlying the California Supreme Court's reasoning as set out in In re Marriage of Brown, supra, 15 Cal.3d 838, 845, 126 Cal.Rptr. 633, 544 P.2d 561. Crucial to the Brown decision was the view that pension benefits are a form of "deferred compensation" which the employee earns incrementally beginning with the first day of his employment. (Ibid.) While the right to receive such benefits may not vest until some 10 or 20 years later, the benefits have been earned day by day throughout the employment. The date of vesting establishes only the moment when the employer becomes obligated to pay those benefits regardless of whether the employment relationship subsequently ends. (Id., at p. 842, 126 Cal.Rptr. 633, 544 P.2d 561.)

Brown noted that the employee has a property right in his pension benefits from the moment he begins to perform under his employment contract. (15 Cal.3d 838, 845, 126 Cal.Rptr. 633, 544 P.2d 561.) A spouse's entitlement to share in community property arises at the time the property is acquired (Henn v. Henn, supra, 26 Cal.3d 323, 330, 161 Cal.Rptr. 502, 605 P.2d 10), therefore, pension benefits earned during marriage, up to the date of separation, are a form of deferred compensation or earnings of the employee spouse in which the nonemployee spouse has a community interest regardless of whether the pension is vested or nonvested. (Brown, supra, 15 Cal.3d at p. 847, 126 Cal.Rptr. 633, 544 P.2d 561; In re Marriage of Marsden (1982) 130 Cal.App.3d 426, 448, 181 Cal.Rptr. 910.)

Husband asks us to adopt the view that, because his pension only vested post separation, the whole of his pension benefits, both those attributable to his work during marriage and those attributable to his post-separation work are his separate property. Such a view is neither compelled by Bowman nor consistent with the view of pension benefits which has been enunciated by our Supreme Court in Brown and...