Marriage of Gram, In re
| Citation | 30 Cal.Rptr.2d 792,25 Cal.App.4th 859 |
| Decision Date | 07 June 1994 |
| Docket Number | No. D016979,D016979 |
| Court | California Court of Appeals Court of Appeals |
| Parties | , 18 Employee Benefits Cas. 1532 In re the MARRIAGE OF Marilyn J. GRAM and Allen E. Gram. Marilyn J. Gram HANSON, Appellant, v. Allen E. GRAM, Respondent. |
James D. Allen, Dorian L. Sailer, and Sullivan, Delafield, McDonald, Allen & Middendorf, San Diego, for respondent.
Marilyn J. Gram Hanson appeals from an order characterizing her former husband's enhanced early retirement benefits as separate property.
Marilyn J. and Allen E. Gram were married on May 28, 1960. Allen started work for the San Diego Union-Tribune Newspapers (Union-Tribune) on October 14, 1968, and began accumulating retirement credit in the Copley Press, Inc., Retirement Plan on November 1, 1969.
The couple separated on September 15, 1981. On April 19, 1983, the parties entered into a marital termination agreement giving the superior court continuing jurisdiction over the community interest in Allen's Union-Tribune employment benefits and defining a formula for their division. The formula required the total number of days employed during marriage be divided by the total number of days employed on the date of retirement. This figure was multiplied by the monthly retirement benefit to compute the community share of the payment. Marilyn's share of the benefit was one-half that amount.
In August 1991, the San Diego Union and San Diego Tribune newspapers announced plans to merge. The merged operation would not employ all workers from the two newspapers. In an attempt to avoid involuntary dismissals, the newspapers offered three voluntary termination incentive plans: an enhanced retirement option, an early retirement option and a voluntary separation option.
The early retirement option was available to those in departments where a need for staff reduction had been identified, who were 55 years of age as of January 31, 1992, and who had at least 10 years of service as of that date. A limit was placed on the total number of employees who would be accepted under the program and employees were given 45 days to decide if they wished to apply. The company would determine the actual date of retirement of those accepted based on its business needs.
The early retirement option added five years of service towards total credited service up to a maximum of 30 years, and added five years to the retiree's age up to a maximum age of 65 years, the latter to eliminate or reduce the reduction in benefits caused by early retirement. The age and service year modifications were used only to determine the early retirement benefit, and actual age and service years were used to determine all other benefits. The early retirement program also gave the employee the option of receiving an enhanced monthly payment or an enhanced lump-sum payment of the entire early retirement benefit. The lump-sum payment of retirement benefits was not a normal provision of the Copley Press Retirement Plan.
Each employee eligible for the enhanced early retirement plan received an individualized statement of benefits. Allen's statement indicated if he retired at actual age 65, his monthly retirement benefit would be $1,063.77; if he retired under the unenhanced early retirement scheme, his monthly payment would be $688.47; and if he retired under the enhanced early retirement plan, his monthly payment would be $1,252.14. Allen's individualized statement of benefits estimated the lump sum value of the unenhanced retirement benefit as $82,137 and the lump sum value of his enhanced early retirement as $149,384.
Under the plan Allen was credited with 27 years of service and his age was deemed to be 64 years. Allen elected to retire under the enhanced early retirement plan and receive a monthly benefit.
In January 1992, Marilyn sought an order to show cause why Allen's enhanced benefits for early retirement should not be treated as community property. After a hearing the trial court determined the enhanced portion of the retirement benefits was Allen's separate property.
The sole issue in this case is the characterization of the enhanced early retirement benefit accepted by Allen. If the benefit is a form of deferred compensation for services rendered, then it is a community asset and must be included in the calculation of Marilyn's share of the monthly retirement benefit. (See In re Marriage of Skaden (1977) 19 Cal.3d 679, 686, 139 Cal.Rptr. 615, 566 P.2d 249; In re Marriage of Horn (1986) 181 Cal.App.3d 540, 544-547, 226 Cal.Rptr. 666.) If, on the other hand, the enhanced retirement benefit is present compensation for Allen's loss of earnings, then it is separate property to which Marilyn has no right. (See In re Marriage of Flockhart (1981) 119 Cal.App.3d 240, 242-243, 173 Cal.Rptr. 818; In re Marriage of Wright (1983) 140 Cal.App.3d 342, 344-345, 189 Cal.Rptr. 336; In re Marriage of Kuzmiak (1986) 176 Cal.App.3d 1152, 1157-1159, 222 Cal.Rptr. 644; In re Marriage of DeShurley (1989) 207 Cal.App.3d 992, 994-996, 255 Cal.Rptr. 150; In reMarriageofLawson(1989)208Cal.App.3d446,450-451,256Cal.Rptr.283.)
To place a compensation scheme into a category is not always easy. The schemes are designed for business purposes and may not have as their main concern community property issues. Characterization is, nonetheless, necessary and in a series of cases the courts of this state have defined the general considerations applicable to that process.
In two cases courts have concluded the proceeds of severance plans to be community property.
In re Marriage of Skaden, supra, 19 Cal.3d 679, 139 Cal.Rptr. 615, 566 P.2d 249, involved the characterization of termination pay payable to an insurance agent under an employment contract entered into during the marriage. The agreement provided that after two years of employment a terminated or voluntarily departing agent received installment payments based on the percentage of net premiums collected within a five-year period after termination on polices credited to the agent. Such payments were subject to conditions tied to the agent's competitive activities. (Id. at pp. 683-685, 139 Cal.Rptr. 615, 566 P.2d 249.)
The court found the termination payments in Skaden to be community property. The court rejected the contention the payments were "consideration for termination" because they were not so characterized in the contract and because the termination of employment could be involuntary. The court also rejected the argument the payments were consideration for noncompetition since the amount of compensation related not to the degree of compliance with the noncompetition condition but rather to the policies credited to the agent. The court concluded the termination payments akin to pension benefits, were a form of compensation for services rendered and, thus, community property. (Id. at pp. 685-688, 139 Cal.Rptr. 615, 566 P.2d 249.)
In In re Marriage of Horn, supra, 181 Cal.App.3d 540, 226 Cal.Rptr. 666, this court concluded proceeds of a contract based termination payment scheme were community property. The collective bargaining agreement between the National Football League and the National Football League Players Association contained a lump sum severance pay provision. The amount of the payment was determined by the player's years of service, the payment had to be returned if the player reentered football within 12 months of retirement and if the player died, his beneficiary or estate received the severance pay. (Id. at pp. 542-543, 226 Cal.Rptr. 666.)
We concluded that because the severance pay in Horn was an absolute contractual right determined by years of service, it was a form of deferred compensation and, thus, community property. We found it irrelevant, given the structure of the scheme, that the payments were intended to aid the player in his transition from professional athletics to more prosaic employment. (Id. at pp. 547-550, 226 Cal.Rptr. 666.)
Several other cases have found the proceeds of termination plans to be separate property.
In In re Marriage of Flockhart, supra, 119 Cal.App.3d 240, 173 Cal.Rptr. 818, the issue was the characterization of a "weekly layoff benefit." In adding extensive property to a national park, the federal government adversely impacted a regional economy and caused a loss of jobs. As compensation to affected workers, the government provided a wide range of benefits, including contributions to retirement plans and relocation compensation. Eligibility for the various benefits varied. The act creating the benefit plan stated it did so to provide for the maintenance of income for a limited time. The only benefit at issue in the case was the weekly layoff benefit. The benefit was designed to replace lost income and the payment amount was reduced by present earnings. (Id. at pp. 242-243, 173 Cal.Rptr. 818.)
The court noted the weekly layoff benefit was not contractually based but arose as a compensation for a loss of capacity to earn based on the disability of an industry. In this respect the benefits were analogous to disability payments and workers' compensation awards made after separation which were both treated by the law as present compensation not deferred compensation for past service. The court concluded the weekly layoff benefit was separate property.
In In re Marriage of Wright, supra, 140 Cal.App.3d 342, 189 Cal.Rptr. 336, the contested benefit was a noncontract based lump sum termination payment given a hospital administrator on his termination from employment. The payment was made because of the anticipated difficulty the employee would have in finding new employment. (Id. at pp. 343-344, 189 Cal.Rptr. 336.)
The court, looking to Flockhart, noted the similarity between the facts before it and the disability and workers'...
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