Krempin, In re

• Decision Date: 18 March 1999
• Docket Number: No. A078423,A078423
• Citation: Krempin, In re, 83 Cal.Rptr.2d 134, 70 Cal.App.4th 1008 (Cal. App. 1999)
• Court: California Court of Appeals
• Parties: , 99 Cal. Daily Op. Serv. 1994, 1999 Daily Journal D.A.R. 2569 In re the Marriage of Robert E. KREMPIN and Patricia A. Krempin. Robert E. Krempin, Respondent, v. Patricia A. Krempin, Appellant.

Page 134

83 Cal.Rptr.2d 134

70 Cal.App.4th 1008, 99 Cal. Daily Op. Serv. 1994,

1999 Daily Journal D.A.R. 2569

In re the Marriage of Robert E. KREMPIN and Patricia A. Krempin Robert E. Krempin, Respondent, v.Patricia A. Krempin, Appellant.

No. A078423.

Court of Appeal, First District, Division 4, California.

March 18, 1999.

Certified for Partial Publication ^*

Patricia A. Krempin, John A. DeRonde, Jr., DeRonde & DeRonde, Fairfield, for Appellant.

Robert E. Krempin, John D. Hodson, Hodson & Mullin, Vacaville, for Respondent.

HANLON, P.J.

Patricia Espinoza, formerly Patricia Krempin, appeals from post-judgment orders in the action for dissolution of her marriage to respondentRobert Krempin.The trial court among other things denied her motion to enforce a provision of the parties' stipulated judgment which gave her a share of respondent's military pension.In the published portion of this opinion we hold that this motion was denied on an erroneous ground, and remand that matter for further proceedings.In the unpublished sectionwe reject appellant's other claims.

I.BACKGROUND

The parties separated in June of 1991 after a marriage of almost twenty years.In June of 1993, a stipulated judgment was filed which divided their community property.The judgment provided that "[appellant] is awarded a twenty-five percent (25%) interest in [respondent's] Air Force Retirement with monthly payments to commence upon [respondent's] retirement from the Air Force."The marital settlement agreement incorporated into the judgment added: "Said monthly payments shall be in the amount of twenty-five (25%) of the monthly payments payable to [respondent] upon his retirement.[p]The Court in the parties' dissolution action will reserve jurisdiction to make such orders relating to these retirement benefits as are necessary to carry out this agreement."

Respondent retired from the Air Force in February of 1994.In May 1994, the parties filed a stipulation which terminated spousal support to appellant.The stipulation included provisions relating to respondent's "Air Force Retirement" which stated that the Defense Accounting and Finance Center would begin direct payment to appellant of her $327 monthly share of the pension in July 1994, and that respondent would pay that sum to appellant until those direct payments started.

Respondent was examined by the Department of Veterans Affairs in July of 1994 in connection with an application for service-connected disability compensation under title 38 of the United States Code.(See generallyIn re Marriage of Daniels(1986)186 Cal.App.3d 1084, 1087, 231 Cal.Rptr. 169.)In October of 1994, the VA rated respondent 40 percent disabled, from a combination of hypertension, tinitus, gout and a left knee condition.The VA notified respondent that he would be receiving disability benefits of $403 per month beginning in November 1994.Respondent's retirement payments were reduced by the amount of disability benefits he received.(38 U.S.C. § 3105.)As a result, the monthly payments appellant received from respondent's retirement were reduced from about $330 to $230 beginning in December 1994.

In June 1996, respondent was rated 100 percent disabled from a combination of hypertension, left knee disability, gout, a hiatal hernia and prostate cancer.This disability rating was effective as of April 1996, and entitled respondent to monthly disability benefits of $2,051 beginning in May 1996.Since this amount was greater than respondent's retirement pay, the payments on his military pension stopped.Appellant's monthly payments from respondent's pension fell to about $50 per month from March to July of 1996, and then to zero in August 1996.

In August 1996, appellant filed a motion to restore the monthly "payments of $329.00 to me as previously agreed and stipulated" based on respondent's pension.Respondent objected on the ground that his pension had been eliminated by his disability benefits.The court denied appellant's motion in March 1997, citing Mansell v. Mansell(1989)490 U.S. 581, 109 S.Ct. 2023, 104 L.Ed.2d 675.

II.DISCUSSION

A.The Mansell Decision

The Mansell case interpreted the federal Uniformed Services Former Spouses' Protection Act. (10 U.S.C. § 1408; hereafter the Former Spouses' Protection Act or Act.)The Act was enacted in response to the holding in McCarty v. McCarty(1981)453 U.S. 210, 101 S.Ct. 2728, 69 L.Ed.2d 589, that federal law prevented state courts from treating military retirement pay as community property.(Mansell v. Mansell, supra, 490 U.S. at p. 584, 109 S.Ct. 2023.)The Act authorizes a state court to treat "disposable retired pay ... as property of the [military] member and his spouse in accordance with the law of the jurisdiction of such court."(10 U.S.C. § 1408, subd. (c)(1).)However, " 'disposable retired pay' " is defined as "the total monthly retired pay to which a member is entitled" less certain amounts, including amounts that "are deducted from the retired pay of such member ... as a result of a waiver of retired pay required by law in order to receive compensation under title 5 or title 38."(10 U.S.C. § 1408, subd. (a)(4)(B).)¹That is to say an application and approved rating of service-connected disability operates as a waiver of a percentage or all of a service member's retired pay.

Mansell held that under these "plain and precise" statutory terms (Mansell v. Mansell, supra, 490 U.S. at p. 592, 109 S.Ct. 2023) retirement pay waived by the retiree to receive disability benefits could not be treated by state courts as "property divisible upon divorce"(id. at pp. 583, 595, 109 S.Ct. 2023).The court acknowledged that waivers of retirement pay to obtain disability benefits "are common" because the disability benefits are tax exempt (id. at p. 584, 109 S.Ct. 2023), and that excepting such benefits from marital property divisions "may inflict economic harm on many former spouses"(id. at p. 594, 109 S.Ct. 2023).However, Congress was "free to change" this result if it so desired.(Ibid.)

Here, the trial court observed that the statute had not been so amended, and thus rejected appellant's motion on the ground that "Congress has tied this court's hands."

B. Out-of-State Precedents

In the years since Mansell was decided, post-judgment waivers of retirement pay like the one at issue here have " 'caused problems for courts and litigants across the nation in divorce cases where a percentage of military retirement benefits has been distributed as marital property.' "(In re Marriage of Gaddis(App.1997)191 Ariz. 467, 957 P.2d 1010, 1014.)While the situation has not yet been addressed in a published California case, there is a "growing trend" elsewhere "to ensure that former spouses' property interests are protected in the event of a future award of VA disability [to] ... the service member."(Fenton, Uniformed Services Former Spouses' Protection Act and Veterans' Disability and Dual Compensation Act Awards (1998)Feb. 1998 Army Law. 31, 33 [hereafter Fenton].)Courts in other states have protected the non-military spouse's interest through various means.

Some courts have found that the waiver of retirement pay and resulting reduction in the pension payment to the non-military spouse were changed circumstances which permitted reassessment of support payments or redistribution of marital property.(E.g., Kramer v. Kramer(1997)252 Neb. 526, 567 N.W.2d 100, 113;Clauson v. Clauson(Alaska1992)831 P.2d 1257, 1260-1261;Torwich v. Torwich(App.Div.1995)282 N.J.Super. 524, 660 A.2d 1214, 1216;McMahan v. McMahan(Fla.App.1990)567 So.2d 976, 980;compareIn re Marriage of Jennings(1998)91 Wash.App. 543, 958 P.2d 358, 360-362.)

In some casesthe courts have enforced judgments which provided that the military spouse would take no action to diminish his or her retirement pay, and would indemnify the non-military spouse for any such diminution.(E.g., Abernethy v. Fishkin(Fla.1997)699 So.2d 235, 239-240;Owen v. Owen(1992)14 Va.App. 623, 419 S.E.2d 267, 269-271;In re Marriage of Strassner(Mo.App.1995)895 S.W.2d 614, 617-618;see alsoHisgen v. Hisgen(S.D.1996)554 N.W.2d 494, 497-498;In re Marriage of Jennings, supra, 958 P.2d at p. 361, fn. 5;compareKramer v. Kramer, supra, 567 N.W.2d at p. 110.)The non-military spouse is given the benefit of the original bargain or order with respect to retirement pay, even if the military spouse's disability benefits will be a source of the indemnity payments.Because the military spouse is free to satisfy the indemnity obligation with assets other than the disability benefits, there is no division of those benefits in contravention of Mansell.(Abernethy v. Fishkin, supra, at p. 240;Owen v. Owen, supra, at p. 270;In re Marriage of Strassner, supra, at p. 618.)

This same result has been reached even where there was no express indemnity agreement.In McHugh v. McHugh(App.1993)124 Idaho 543, 861 P.2d 113, 115, where the parties had agreed that the non-military spouse's monthly retirement payments would not be modified " 'for any reason' " other than cost-of-living increases, and the military spouse then waived a portion of his retirement to obtain disability benefits, the court increased the non-military spouse's percentage of the remaining retirement to maintain her original level of payments.In Price v. Price(App.1996)325 S.C. 379, 480 S.E.2d 92, 93, the military spouse entered into a non-modifiable agreement to remain " 'directly responsible' " for monthly payments of a percentage of his "gross monthly military retirement pay," an amount that included disability pay.The court held that the military spouse "could not unilaterally deprive [the non-military spouse] of the property granted to her pursuant to the Agreement" by waiving a portion of his retirement pay to increase his disability benefits.(Id. at p. 93.)The court reasoned that the military spouse had "breached his...