Marriage of Bergman, In re

Decision Date24 May 1985
CourtCalifornia Court of Appeals Court of Appeals
PartiesIn re MARRIAGE OF Joan F. and Elmer A. BERGMAN. Joan F. BERGMAN, Respondent, v. Elmer A. BERGMAN, Appellant. A021867.

Sharon L. Wesselius, Mountain View, Bernard N. Wolf, Dowgialo & Wolf, San Francisco, for respondent.

Elmer A. Bergman, in pro. per.

KING, Associate Justice.

In this case we hold that in disposing of the community interest in a pension plan in marital dissolution actions, the trial court possesses broad discretion to choose to divide it in kind between the spouses, or to award it to the employee spouse at its present value and accomplish an equal division of community property by an offsetting award of other assets. Although trial courts may not refrain from dividing the community interest in a pension plan, as with other community property, the court may temporarily reserve jurisdiction to divide it at a later time during the pendency of the dissolution litigation. We also hold that the trial court, in order to accomplish an equal division of community property, may require a spouse awarded more than one-half of the community property to execute a secured short-term promissory note in favor of the other spouse which bears a reasonable rate of interest. Finally, although the Family Law Act authorizes an award of attorney fees based upon a determination of need and the ability to pay, we hold that the trial court in dissolution proceedings may also impose attorney fees against a party if that party's tactics or actions not based on good faith are frivolous or cause unnecessary delay.

Elmer Bergman appeals from an interlocutory judgment of dissolution of his marriage to Joan Bergman. He also appeals from subsequent orders to vacate the family residence, and denying his motion to modify the interlocutory judgment. Joan cross-appealed, but later dismissed her cross-appeal. 1 We modify the language of the judgment as to Joan's pension plan and, as modified, the judgment and orders are affirmed.

I. Facts

Joan and Elmer were married August 22, 1959, and separated April 19, 1980. They had five children, two of whom were minors at the time of trial.

Elmer was employed in federal civil service from 1961 until 1976. Prior to marriage he had performed almost two years of military service which counts as service towards his federal longevity retirement. In 1976, as a result of developing severe hypertension, Elmer became permanently and totally disabled. He has been receiving a disability pension since that time. Pursuant to his pension plan Elmer becomes eligible for longevity retirement when he reaches age 62 in 1997 at which time his benefits will be recomputed as longevity retirement. 2

During the marriage Joan worked at several jobs. She was a school teacher at the time of the separation, but sometime thereafter she started working for a tax planning service. As a teacher for eight years she made contributions to the California State Teachers' Retirement System. After separation Joan and the minor children moved out of the family residence.

Following a trial on the division of community property and other issues, the court issued a statement of decision and an interlocutory judgment of dissolution of marriage providing, insofar as the published portion of this opinion is concerned: 3 (1) a determination and division of the community property interests in both Elmer's and Joan's pensions; (2) a requirement for execution of a promissory note to accomplish an equal division of community assets; (3) an order that Elmer pay Joan $15,000 for attorney fees and costs.

II. The Pension Plans
a. Method of division.

Elmer's primary contention is that the court abused its discretion by failing to divide the community interest in his defined benefit pension plan on an in kind basis; instead the court used the cash out method. 4 It determined the present value of the community property interest in Elmer's pension plan, awarded it to him, and gave an offsetting award of other community property to Joan. Elmer also contends, even if this was not an abuse of discretion, that the court erred in fixing the present value of the community interest in his pension plan at $86,000.

We first address the claimed abuse of discretion by the court's choosing to cash out Joan's interest and award the entire community interest in Elmer's plan to him. Upon dissolution of a marriage, the trial court has broad discretion in the division of the community property interest in a spouse's pension rights and can exercise its discretion in either of two ways. The trial court may either determine the present value of community property rights and award them to one spouse with offsetting community or other assets to the other (commonly called the cash out method), or it may divide the community interest in kind between the spouses, reserving jurisdiction Here, both parties presented evidence from experts on the present value of Elmer's pension benefits and his probability of receipt of them. The court exercised its discretion in favor of awarding the community interest in those benefits solely to Elmer, awarding offsetting assets to Joan to accomplish an equal division. It is clear the court did in fact exercise its discretion, since it utilized the cash out method to dispose of Elmer's pension while, as we shall discuss later, it divided the community interest in Joan's pension benefits in kind.

                to supervise future payments to each spouse.  (In re Marriage of Brown, supra, 15 Cal.3d at p. 848, 126 Cal.Rptr. 633, 544 P.2d 561.)   Prior to its decision in Brown, our Supreme Court had indicated a preference, when feasible, for the trial court to award the employee spouse all of the community interest in his or her pension rights and to compensate the other spouse with other property of equal value.  (Phillipson v. Board of Administration (1970) 3 Cal.3d 32, 46, 89 Cal.Rptr. 61, 473 P.2d 765, disapproved on other grounds by In re Marriage of Brown, supra, 15 Cal.3d at p. 851 fn. 14, 126 Cal.Rptr. 633, 544 P.2d 561.)   However, in deciding Brown, the Supreme Court referred to its statement in Phillipson and expressly stated it had not intended to specify a preference;  thus the trial "court retains the discretion to divide the community assets in any fashion which complies with the provisions of Civil Code section 4800."  (In re Marriage of Brown, supra, 15 Cal.3d at p. 848 fn. 10, 126 Cal.Rptr. 633, 544 P.2d 561;  see also In re Marriage of Skaden (1977) 19 Cal.3d 679, 688, 139 Cal.Rptr. 615, 566 P.2d 249;  In re Marriage of Freiberg (1976) 57 Cal.App.3d 304, 312, 127 Cal.Rptr. 792, disapproved on other grounds in In re Marriage of Gillmore (1981) 29 Cal.3d 418, 425, 174 Cal.Rptr. 493, 629 P.2d 1.)

Elmer's chief criticism of the court's exercise of discretion is based on his contention that due to his poor health the actual receipt of his longevity retirement benefits is too uncertain and speculative for the trial court to choose the alternative of a cash out to him, since it places all of the risks of future receipt of benefits on him. We know of no case which holds that one spouse's health condition deprives the court of its discretion to cash out the other spouse's interest in the former's pension plan and compels instead a division in kind. We decline to so hold. Health is only one of many factors to be considered by the trial judge. The value of Elmer's longevity retirement benefits is less speculative than would usually be true. The parties stipulated that 89.1 percent of his years of service were during marriage and additionally stipulated there should be a 25 percent reduction in the present value of his pension rights to take into account his poor health and the increased risk of his early death. Additionally, because of his disability, there is no need to speculate about what advances he would make up the career ladder or how many years he would work after separation. Thus, as to fixing a value, it can be done with greater certainty than would normally be true.

It is true that Elmer's reduced life expectancy is a factor to be used not only in determining present value, but also in deciding how to the trial court should exercise discretion in awarding the community property interest in pension benefits. 5 All other things being equal, where the employee spouse has significant health problems, the trial court could very well find that an in kind distribution is the method which is most fair to both parties. 6 However The other alternative method of awarding the community share of pension rights or benefits is to divide that share between the parties in kind. The court will usually use the time rule to allocate separate and community interests (In re Marriage of Judd (1977) 68 Cal.App.3d 515, 522, 137 Cal.Rptr. 318; In re Marriage of Freiberg, supra, 57 Cal.App.3d at p. 310, 127 Cal.Rptr. 792), but is not required to do so. (See In re Marriage of Poppe (1979) 97 Cal.App.3d 1, 158 Cal.Rptr. 500 [court utilized a point system rather than a strict time rule because of the factual circumstances].)

depending upon the evidence presented and the arguments of counsel, there are numerous factors the court may consider in determining how to exercise its discretion to divide community property interest in pension rights, and the weight to be given to each is peculiarly within the purview of the trier of fact.

Elmer exercised his right pursuant to Code of Civil Procedure section 632 to request a statement of decision on the issue of "distribution of respondent's retirement rather than reservation of benefits until received by respondent." The court in its statement of decision indicated it chose to cash out Joan because: (1) there were sufficient assets to award Joan property of equal value, (2) the economic...

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