Marriage of Doud, In re

• Decision Date: 23 May 1986
• Citation: 226 Cal.Rptr. 423,181 Cal.App.3d 510
• Court: California Court of Appeals Court of Appeals
• Parties: In re the MARRIAGE OF Betty and Robert DOUD. Betty A. DOUD, Respondent, v. Robert M. DOUD, Appellant. Civ. 24445.

Page 423

226 Cal.Rptr. 423

181 Cal.App.3d 510

In re the MARRIAGE OF Betty and Robert DOUD.

Betty A. DOUD, Respondent, v. Robert M. DOUD, Appellant.

Civ. 24445.

Court of Appeal, Third District, California.

May 23, 1986.

William Neil Shepherd, Citrus Heights, for appellant

Rex T. Kearney, Jr., Ingoglia, Marskey, Kearney & Kuperstein and Steven J. Green, Sacramento, for respondent.

BLEASE, Associate Justice.

Two and one-half years after the entry of a judgment awarding Robert Doud (Robert) a federal military pension as his separate property, Betty Doud (Betty) moved to modify the judgment pursuant to Civil Code section 5124. ¹ The judgment had been entered pursuant to a stipulation with Betty to apply the impending ruling in McCarty v. McCarty (1981) 453 U.S. 210, 101 S.Ct. 2728, 69 L.Ed.2d 589. The trial court granted the motion, awarding Betty an interest in the pension. In this appeal Robert challenges the constitutionality of section 5124 as impairing a contract embodied in the stipulation and rights vested in the judgment. Alternatively he contends the trial court erred in failing to grant his motion to set aside the entire stipulated judgment. We will reject the contentions and affirm the judgment.

PRELIMINARY FACTS

The judgment dissolving the thirteen and one-half year marriage of Robert and Betty Doud was entered on September 10, 1980. On June 2, 1981, they stipulated to a judgment dividing their claimed and disputed marital property but reserving a resolution of the status of the military pension pending a decision in McCarty. The stipulated judgment provided that "[t]he court specifically reserves jurisdiction over the division of the non-vested United States Air Force Retirement benefits, pending the decision of the United States Supreme Court in In Re the Marriage of McCarty ... and in the event that the court decides that military retirement pay is not divisible as a community property asset by California courts, there shall be a determination that there is no community interest in the United States Air Force retirement benefits." This judgment was entered on August 18, 1981. No appeal was taken from it.

On March 20, 1984, Betty, relying upon Civil Code section 5124, moved to modify the judgment to divide the pension as marital property. Robert opposed this motion and moved to set aside the entire judgment should Betty prevail. After argument of the matter the trial court granted Betty's motion and denied Robert's. Betty was awarded an interest in the military retirement benefits. This appeal followed.

DISCUSSION

I

McCarty held that "there is a conflict between the terms of the federal retirement statutes and the [California] community property right asserted" and that the federal law preempts state law. (453 U.S. at p. 232, 101 S.Ct. at p. 2741, 69 L.Ed.2d at p. 605.) This interpretation became a binding part of the federal statute and must be viewed as an integral part of the statute since its inception. (See Sharpe v. Superior Court (1983) 143 Cal.App.3d 469, 474, fn. 3, 192 Cal.Rptr. 16.) Since this statute was in effect during Robert and Betty's marriage and governed the distribution of the federal military pension acquired through Robert's service in the Air Force, it preempted the application of the California community property laws. (Cf. In re Marriage of Brown (1976) 15 Cal.3d 838, 126 Cal.Rptr. 633, 544 P.2d 561; In re Marriage of Fithian (1974) 10 Cal.3d 592, 111 Cal.Rptr. 369, 517 P.2d 449.)

Congress responded with the Federal Uniformed Services Former Spouse's Protection Act (FUSFSPA), effective February 1, 1983. (10 U.S.C. § 1408.) It provides that "a court may treat disposable retired or retainer pay payable to a member for pay periods beginning after June 25, 1981, either as property solely of the member or as property of the member and his spouse in accordance with the law of the jurisdiction of such court." (10 U.S.C. § 1408(c)(1).) FUSFSPA explicitly authorizes a state to apply its marital property laws to retirement benefits payable after June 26, 1981, and before its effective date.

The committee report accompanying the measure says: "The purpose of this provision is to place the courts in the same position that they were in on June 26, 1981, the date of the McCarty decision, with respect to treatment of non-disability military retired or retainer pay. The provision is intended to remove the federal pre-emption found to exist by the United States Supreme Court and permit State and other courts of competent jurisdiction to apply pertinent State or other laws in determining whether military retired or retainer pay should be divisable." (Pub.L. No. 97-252 (Sept. 8, 1982) 96 Stats. 730, 1982 U.S.Code Cong. & Admin.News, pp. 1555, 1611.) On June 26, 1981, California law measured the interests of the spouses in the amounts payable, including those interests preceding that date, by reference to the duration of the marriage. Thus, FUSFSPA sanctions the retroactive recognition of such events.

It is unmistakable that FUSFSPA is meant to remove (with exceptions not pertinent here) the federal preemption discerned in McCarty as of the date of McCarty's promulgation. When a federal statute overrides a state statute under the supremacy clause "the repeal of the federal statute reinstates or revives the state law without an express reenactment by the state legislature." (Fn. omitted.) (1A Sutherland, Statutory Construction (4th ed. 1985 rev.) § 23.21, p. 390; see eg. Boedefeld v. Reed (1880) 55 Cal. 299.) "The result is the same regardless of whether the federal statute is repealed or its repealing effects on state law are expressly rescinded by other congressional action." (1A Sutherland, supra, p. 392, fn. 9 and cases cited therein.) Accordingly, under FUSFSPA the application of California's community property law was revived and became operative on June 26, 1981.

However, the California law of finality of judgments operated to insulate the application of the community property laws to cases which became final by virtue of judgments and stipulations consummated during the period between McCarty and FUSFSPA. (See In re Marriage of Mahone (1981) 123 Cal.App.3d 17, 176 Cal.Rptr. 274; In re Marriage of Sheldon (1981) 124 Cal.App.3d 371, 177 Cal.Rptr. 380.) To redress this anomaly the Legislature enacted section 5124. It provides that "[c]ommunity property settlements, judgments, or decrees that became final on or after June 25, 1981, and before February 1, 1983, may be modified to include a division of military retirement benefits payable on or after February 1, 1983, in a manner consistent with federal law and the law of this state as it existed before June 26, 1981, and as it has existed since February 1, 1983." (Stats. 1983, ch. 775, § 1, effective Jan. 1, 1984, through Jan. 1, 1986.)

This change in the law of finality of judgments is within the power of the Legislature, subject to the constraints of the federal and state constitutions. FUSFSPA removed the statutory bar of federal preemption to the exercise of California's power to adopt section 5124. Apparently recognizing this, Robert challenges the constitutionality of section 5124 on other grounds.

II

Robert challenges the constitutionality of section 5124 as impairing a contract contained in the stipulation to apply the McCarty decision to the military pension. The resolution of the claim requires that we examine the content of the agreement.

A husband and wife may contract to allocate their property so as to avoid a judicial resolution of its status and, subject to approval of the family law court, may incorporate the agreement in a judgment. (Civ.Code, § 5103; see Dexter v. Dexter (1954) 42 Cal.2d 36, 265 P.2d 873.) The agreement, subject to contract principles, cannot be modified without the consent of the parties. Here Robert and Betty reached an agreement to divide their marital property. They failed to agree to a division of the pension because they could not agree to its character as separate or marital property.

Robert claims that, by virtue of the agreement, Betty renounced all rights in the military pension. That is not what the agreement provides. Perceiving that a definitive United States Supreme Court resolution of the status of Robert's pension was in the offing, Robert and Betty stipulated to forego a local and possibly ephemeral decision. They agreed to abide by the governing law. Had they done nothing, that would have been the result in any case. The agreement does not show the parties anticipated FUSFSPA and section 5124. We note attorneys are deemed vested with constructive foresight of such events. (See Aloy v. Mash (1985) 38 Cal.3d 413, 212 Cal.Rptr. 162, 696 P.2d 656.) The agreement cannot be read as a renunciation of rights not in being. There is no basis to conclude that the agreement was intended to allocate or compromise the risk of subsequent legislation undoing McCarty. (Compare In re Marriage of Downes (1986) 177 Cal.App.3d 205, 211, fn. 4, 212, 222 Cal.Rptr. 776.) However, the agreement is not without effect. In essence it is an agreement to acquiesce in a binding judgment based on the McCarty decision. Thus the benefit conferred by the agreement is the same as an interest in the finality of a judgment involving a property interest. Robert claims that section 5124 unconstitutionally impairs this interest.

III

That tenders the question of his contractual and vested rights to a final judgment. We first address the question in its contractual form. We assume that the stipulation is a contract subject to the contract clause of the federal constitution. (See Crane v. Hahlo (1922) 258 U.S. 142, 146, 42 S.Ct. 214, 215, 66 L.Ed. 514, 517; "It has long been settled by decisions of this court that the word 'contracts' in § 10 of article 1 of the Constitution is used in its usual or popular sense, as signifying an agreement of two or more minds, upon sufficient consideration, to do or not to...