In re Marriage of Gray

• Decision Date: 28 August 2007
• Docket Number: No. H030284.,H030284.
• Citation: 155 Cal.App.4th 504,66 Cal.Rptr.3d 87
• Court: California Court of Appeals Court of Appeals
• Parties: In re the MARRIAGE OF Mary Ann and James W. GRAY. Mary Ann L. Gray, Respondent, v. James W. Gray, Appellant.

66 Cal.Rptr.3d 87

155 Cal.App.4th 504

In re the MARRIAGE OF Mary Ann and James W. GRAY.

Mary Ann L. Gray, Respondent, v. James W. Gray, Appellant.

No. H030284.

Court of Appeal, Sixth District.

August 28, 2007.

Nancy Bennett Bunn, Newport Beach, CA, for Respondent.

Mark Hanley Lipton, Lipton, Warnlof, Segal, et al, Roseville, CA, for Appellant.

DUFFY, J.

Over the course of his career with the International Brotherhood of Electrical Workers (IBEW), some 15 years of which included his marriage to Mary Ann Gray (Caverly), James W. Gray has earned the right to receive a pension upon retirement through a defined benefit plan. James and Mary Ann¹ were married in 1963 and they separated in 1979. Their interlocutory judgment of dissolution of marriage was filed in 1980. As to James's pension, the judgment stated that the court would reserve jurisdiction over it until benefits would become due and payable, and then, "the Brawn Formula shall be applied."² (Italics added.)

In 2005, Mary Ann applied to receive her share of James's monthly retirement benefit, with payment to begin in April 2006 when James would have 42 years of vesting credit towards his defined pension benefit. In response to the IBEW's calculation of Mary Ann's share of his monthly benefit in accordance with the "time rule,"³ James filed a motion in the superior court for "Pension Division." The motion asked the court to "determine the community interest" in James's IBEW pension. In support of the motion, James offered his understanding that the previously entered interlocutory judgment reflected his prior stipulation with Mary Ann. His understanding of that stipulation was that the court would retain jurisdiction over the pension, which would be divided when it later became payable per the "Brown Formula." To James, this simply meant that "the community ... interest would be based on the benefits earned during the marriage (plus any enhancement to [the] pension due to community years) then divided equally." According to James, then, the court's 25-year-old interlocutory judgment characterized pension benefits derived during his marriage to Mary Ann, including those which were then nonvested or unmatured, as community property per Brown but did not apportion or divide the now fully accrued pension as between community and separate property or select a method of apportionment, which he asked the court to do.

Mary Ann opposed the motion, contending that the interlocutory judgment's reference to application of the "Brown Formula" meant that the court had already not only characterized the pension rights as community property but had also already apportioned or divided it as between the community and James's separate property per the "time rule," which, she contended, was and is synonymous with the term "Brown Formula." According to Mary Ann, all that remained for the court to do was to implement the division per the time rule as the retirement benefits were paid out.

The trial court agreed with Mary Ann. On James's motion for pension division, therefore, the court did not exercise its discretion in selecting application of the strict "time rule" as an equitable method of division of the pension, instead interpreting the 1980 judgment as having already determined that that apportionment method would apply by its reference to the "Brown Formula."

We conclude that even if it is now, in 1980, the term "Brown Formula" was not a universally accepted synonym for the "time rule."⁴ In the context of the interlocutory judgment in this case in which the record does not reflect either an agreement of the parties to employ the time rule or a judicial exercise of discretion to do so, that term is instead reasonably interpreted as an indication that the court had then determined the community to have an interest in James's pension and had directed that total accrued benefits at retirement would be divided in kind in the future exercise of the court's discretion. We accordingly reverse the trial court's order directing division of the pension per the time rule and remand the matter for the court to exercise its discretion in determining an equitable division of the pension.

STATEMENT OF THE CASE

I. Factual Background

James and Mary Ann were married on August 24, 1963. In 1972, James, through the IBEW, began participating in a newly established defined benefit pension plan. At the plan's inception, James was given a 10-year past service credit (for the years 1961 to 1971) for his prior work in the electrical industry even though no contributions had been received to support that benefit. Each of these 10 years was assigned an annuity value of $10 per month, for a total retirement benefit for these past service years of $100 per month, assuming retirement at age 65.

James and Mary Ann separated on February 1, 1979. For the years 1972 to 1978, James earned one retirement vesting credit per year. But his potential monthly retirement benefit for these years of service was calculated not based on credits but instead on contributions received, as a percentage (3 percent) of those contributions. The contributions in turn were based on the varying hours that James worked as reported in each of those years. Per the annual Pension Trust Fund statements James began receiving in 1973, therefore, it was easy to calculate his accrued monthly retirement benefit as of the date of separation in early 1979 based on prior service credits for the years 1961 to 1971, plus three percent of contributions paid thereafter through separation, at $270.24, all of which James acknowledges is community property.

In her community property declaration filed in their dissolution action before entry of the interlocutory judgment, Mary Ann proposed that the court reserve jurisdiction over James's pension "until benefits are due and payable." She did not propose in that document a method of apportioning the pension.

Appearing before the court in their dissolution case on November 7, 1980, the parties stipulated to "distribution of [IBEW] retirement fund reserved." Later that same month, their interlocutory judgment of dissolution of marriage was entered. Despite the earlier stipulation, the judgment stated that the proceedings had come on for "contested hearing" on November 7, 1980. With respect to James's pension, the judgment provided that the "Court reserves jurisdiction over that certain IBEW Retirement' Plan through [James's] employment until such time as benefits are due and payable, and at such time, the Brown Formula shall be applied."⁵

In 1981, James remarried. That marriage also ended in divorce, with a separation date of August 15, 1998. From 1981 through 1996, James continued to accrue annual credited contributions toward retirement, with his monthly benefit calculated as a percentage of those contributions, based on the number of hours worked in each year.⁶ Beginning in 1997, James began working in a management capacity with the result that while he continued to accumulate annual vesting credit, he no longer received credited contributions or annual increases to his monthly retirement benefit calculated as a percentage of those contributions.

As part of the dissolution of his second marriage and with respect to his defined benefit pension, James and his second wife stipulated to a Qualified Domestic Relations Order (QDRO) under the federal Employee Retirement Income Security Act of 1974 (ERISA), codified at title 29 United States Code section 1001 et seq.⁷ The QDRO attributed community benefits in relation to the entirety of James's retirement benefit according to a year-by-year analysis of hourly contributions made and retirement benefits to be received rather than strictly per the time rule based on longevity or years of service.

In 2005, when James was eligible to receive retirement benefits,⁸ Mary Ann submitted an application to the IBEW, which had previously been provided with a copy of her and James's interlocutory judgment of dissolution, to receive her share of his defined benefit pension beginning April 1, 2006.⁹ IBEW then provided her with a benefit calculation, which applied the time rule (there referred to as "Brown Formula") to James's 42 years of service (through April 28, 2005) to derive a monthly benefit to Mary Ann of $560.58 based on a total monthly benefit then accrued of $3,139.63.¹⁰

II. Procedural Background

In response to the IBEW calculation of Mary Ann's share of his monthly benefit per the time rule, James filed a motion for pension division in which he requested the court to "determine the community interest in [his] pension through the IBEW Local 332 Pension Han." The thrust of the motion was James's contention that the prior judgment's reference to the "Brown Formula" was not a previous agreement or determination that the time rule should be applied to divide or apportion the pension when it later accrued and became payable. It was instead an acknowledgement in 1980 that under Brown, the community had an interest in his pension rights derived during marriage—even before certain rights had vested or accrued—and a determination that when benefits were to become payable, the community should receive a pro rata credit for that interest. (Brown, supra, 15 Cal.3d at pp. 841-842, 844-848, 126 Cal.Rptr. 633, 544 P.2d 561.)

James's declaration in support of the motion said that he understood the prior judgment's reference to the "Brown Formula" to mean simply that "the community (my share and [Mary Ann's] share) interest would be based on the benefits earned during the marriage (plus any enhancement to my pension due to community years) then divided equally." James also acknowledged his understanding at the time of the judgment that if the plan benefit formula applicable to his pension were to increase in the future, the community share of the benefit would be enhanced by that increase for those years of service attributable to the marriage.

James...