Marriage of Gillmore, In re

• Decision Date: 08 June 1981
• Citation: 29 Cal.3d 418,174 Cal.Rptr. 493,629 P.2d 1
• Court: California Supreme Court
• Parties: , 629 P.2d 1 In re the MARRIAGE OF Vera and Earl GILLMORE. Vera GILLMORE, Appellant, v. Earl GILLMORE, Respondent. L.A. 31381.

Page 493

174 Cal.Rptr. 493

29 Cal.3d 418, 629 P.2d 1

In re the MARRIAGE OF Vera and Earl GILLMORE Vera GILLMORE, Appellant, v. Earl GILLMORE, Respondent.

L.A. 31381.

Supreme Court of California.

June 8, 1981.

Michael Meaney and Meaney & Player, San Diego, for appellant.

Christopher J. Schatz, Kimberly J. Grove and Sheela, Lightner & Castro, San Diego, for respondent.

BIRD, Chief Justice.

Did the trial court abuse its discretion in a dissolution action when it refused to order the immediate payment of a nonemployee spouse's interest in a retirement benefit where the employee spouse was eligible to retire and receive the benefit but had chosen not to do so?

I.

Vera and Earl Gillmore separated in 1978 after a marriage of 14 years. The trial court issued an interlocutory decree dissolving their marriage on November 27, 1978, and entered a final judgment of dissolution on January 19, 1979. The decree awarded Vera physical custody of their minor child as well as $225 per month child support and $100 per month spousal support.

The community property was divided evenly, with the exception of Earl's interest in a retirement plan managed by his employer, Pacific Telephone Company. The court found that Earl would become eligible to retire on April 11, 1979, at which time he would be entitled to a monthly benefit of $717.18. Vera's interest in that benefit was found to be approximately $177.14 per month. The court specifically reserved jurisdiction over the retirement plan.

Earl continued to work after he became eligible to retire in April 1979. He represented that he was a "healthy, active man" in his early 50's, and he intended to work for some time to come. He was not required to retire until he reached the age of 70.

In July 1979, Vera requested an order directing Earl to pay to Vera her share of the pension benefits immediately, retroactive to the date he became eligible to collect them. Earl responded with a request to modify child and spousal support. The trial court denied both requests, retained jurisdiction over the retirement benefits, and held that it had discretion to delay distribution of the benefits until Earl actually retired.

II.

Under California law, retirement benefits earned by a spouse during a marriage are community property, subject to equal division upon the dissolution of that marriage. (In re Marriage of Brown (1976) 15 Cal.3d 838, 842, 126 Cal.Rptr. 633, 544 P.2d 561, Civ.Code, § 4800.) ¹ This is true whether the benefits are vested or nonvested, matured or immature. (Brown, supra, at p. 842, 126 Cal.Rptr. 633, 544 P.2d 561.) ² Vera and Earl agree that Earl's retirement benefits are community property to the extent they were earned during their marriage. The sole disagreement concerns the timing of the distribution of those benefits. Vera contends that the trial court abused its discretion when it refused to order Earl to begin immediate payments to her of her share. Earl claims that the trial court had discretion to postpone distribution of the benefits until he actually retired and began to receive payments from the pension plan. Trial courts have considerable discretion to determine the value of community property and to formulate a practical way in which to divide property equally. (In re Marriage of Connolly (1979) 23 Cal.3d 590, 603, 153 Cal.Rptr. 423, 591 P.2d 911.) However, that discretion has been strictly circumscribed by the statutory requirement that all community property be divided equally between the parties. (Civ.Code, § 4800.) ³ A trial court has been held to abuse its discretion when it improperly classifies community property as the separate property of one of the spouses or fails to arrive at an equal division of the community property. (In re Marriage of Olson (1980) 27 Cal.3d 414, 422, 165 Cal.Rptr. 820, 612 P.2d 910; In re Marriage of Brown, supra, 15 Cal.3d at p. 847, 126 Cal.Rptr. 633, 544 P.2d 561.)

Under the cases and statutory law, Earl cannot time his retirement to deprive Vera of an equal share of the community's interest in his pension. It is a "settled principle that one spouse cannot, by invoking a condition wholly within his control, defeat the community interest of the other spouse." (In re Marriage of Stenquist (1978) 21 Cal.3d 779, 786, 148 Cal.Rptr. 9, 582 P.2d 96. See also Waite v. Waite, supra, 6 Cal.3d at p. 472, 99 Cal.Rptr. 325, 492 P.2d 13; In re Marriage of Peterson, supra, 41 Cal.App.3d at pp. 650-651, 115 Cal.Rptr. 184.)

Earl's retirement benefits are both vested and matured. (See ante, fn. 2.) He will not forfeit his benefits if he leaves his employment voluntarily, is terminated or retires. The only condition precedent to payment of the benefits is his retirement, a condition totally within his control. A unilateral choice to postpone retirement cannot be manipulated so as to impair a spouse's interest in those retirement benefits.

In re Marriage of Stenquist, supra, 21 Cal.3d 779, 148 Cal.Rptr. 9, 582 P.2d 96, involved a husband's election to receive disability benefits (usually separate property), rather than retirement pay (usually community property). This court held that the husband could not use this election to deprive his wife of her interest in his retirement benefits. "(T)o permit the husband, by unilateral election of a 'disability' pension, to 'transmute community property into his own separate property' (In re Marriage of Fithian, supra, 10 Cal.3d 592, 602 (111 Cal.Rptr. 369, 517 P.2d 449)), is to negate the protective philosophy of the community property law as set out in previous decisions of this court." (Stenquist, supra, 21 Cal. at p. 782, 148 Cal.Rptr. 9, 582 P.2d 96.)

The result of the husband's unilateral decision in Stenquist would have been to deprive the wife of any interest in his retirement benefits. In the present case, Vera is no less entitled to protection. The fact that the deprivation she faces is less than total is not decisive. Earl would deprive Vera of the immediate enjoyment of an asset earned by the community during the marriage. In so doing, he would subject Vera to the risk of losing the asset completely if Earl were to die while he was still employed. Although Earl has every right to choose to postpone the receipt of his pension and to run that risk, he should not be able to force Vera to do so as well. ⁴

The case of In re Marriage of Luciano (1980) 104 Cal.App.3d 956, 164 Cal.Rptr. 93, is directly on point. In Luciano, the trial court ordered that a nonemployee spouse must wait until the employee spouse actually retires before receiving his or her share of the retirement benefits. The Court of Appeal held that "(t)o uphold the trial court's ruling as to the time Dorothy is to commence receiving her portion of this community asset would give Ferdinand the option of determining the receipt by Dorothy of her own property which would be basically unfair. The employee spouse cannot by election defeat the nonemployee spouse's interest in the community property by relying on a condition solely within the employee spouse's control. (Citations.) ... (P) A proper order for a trial court to make in these circumstances is that the nonemployee spouse is the one who has the choice as to when his or her share of the pension shall begin." (Id., at p. 960, 164 Cal.Rptr. 93.)

Similar results were reached in two earlier cases. In In re Marriage of Martin, supra, 50 Cal.App.3d 581, 123 Cal.Rptr. 634, the appellate court held that where the only condition to receipt of the benefits by one spouse was the employee spouse's decision to retire and apply for them, the benefits should be divided as community property. The language of the court is instructive. "The only condition to the payment of the pension benefits is a condition entirely within (the husband's) control, and that is not an uncertainty precluding division of the asset upon dissolution of marriage." (Martin, supra, 50 Cal.App.3d at p. 584, 123 Cal.Rptr. 634.) Similarly a trial court decision to order the immediate payment of a share of a husband's vested, matured pension benefits to his wife, where the husband was eligible to retire but had not yet done so, was upheld in Bensing v. Bensing, supra, 25 Cal.App.3d at pages 892-893, 102 Cal.Rptr. 255. ⁵

These cases, however, do not preclude the employee spouse from choosing among alternative retirement plans. The employee spouse retains the right (1) to change or terminate employment; (2) to agree to a modification of the retirement benefits; or (3) to elect between alternative benefits. (In re Marriage of Brown, supra, 15 Cal.3d at p. 849, 126 Cal.Rptr. 633, 544 P.2d 561.) "(T)he employee spouse retains the right to determine the nature of the benefits to be received." (In re Marriage of Stenquist, supra, 21 Cal.3d at p. 786, 148 Cal.Rptr. 9, 582 P.2d 96, fn. omitted.)

The right of the employee spouse is nonetheless limited by the fact that the nonemployee spouse owns an interest in the retirement benefits. Thus, Brown notes that the employee spouse has a right to agree to "a reasonable ... nondetrimental modification of the pension system" (In re Marriage of Brown, supra, 15 Cal.3d at p. 849, fn. 11, 126 Cal.Rptr. 633, 544 P.2d 561, emphasis added, and Stenquist finds that the employee spouse retains the right to elect "higher than ordinary retirement benefits." (In re Marriage of Stenquist, supra, 21 Cal.3d at p. 786, fn. 6, 148 Cal.Rptr. 9, 582 P.2d 96, emphasis added.) If the right to choose among alternative retirement plans is exercised in a way which impairs the nonemployee's interest in the benefits, the nonemployee spouse must be compensated. ⁶

Thus, although the husband in Stenquist had every right to choose a disability pension rather than retirement pay, his choice did not prevent the court from ordering him to pay to the wife an amount equivalent to what her interest would have been had he chosen retirement pay. Similarly, Earl retains the right to determine what...