Marriage of Grubb, In re, 86SC93

• Decision Date: 09 November 1987
• Docket Number: No. 86SC93,86SC93
• Parties: , 9 Employee Benefits Cas. 1354 In re the MARRIAGE OF Leisa T. GRUBB, Petitioner, and William E. Grubb, Respondent.
• Court: Colorado Supreme Court

Page 661

745 P.2d 661

56 USLW 2322, 9 Employee Benefits Cas. 1354

In re the MARRIAGE OF Leisa T. GRUBB, Petitioner and William E. Grubb, Respondent.

No. 86SC93.

Supreme Court of Colorado En Banc.

Nov. 9, 1987.

Frederick Epstein, Denver, Polidori, Rasmussen, Gerome and Jacobson, Peter L. Franklin, Lakewood, for petitioner.

Garfield & Hecht, P.C., Robert E. Kendig, Aspen, for respondent.

QUINN, Chief Justice.

The question in this case is whether a husband's interest in a vested employer-supported pension plan constitutes marital property subject to division upon dissolution of marriage when the receipt of benefits under the plan is contingent upon the husband's survival until the actual commencement of retirement. The court of appeals in In re Marriage of Grubb, 721 P.2d 1194 (Colo.App.1986), held that the husband's interest in the plan was not marital property. We reverse the judgment and remand the case for further proceedings.

I.

The petitioner, Leisa T. Grubb (wife), and the respondent, William A. Grubb (husband), were married on April 5, 1950. They had one child who was emancipated prior to the commencement of the present dissolution proceeding. When the decree of dissolution was entered on February 28, 1984, the wife was 58 years of age and the husband was 60 years of age. The wife was unemployed at the time of the decree, having worked primarily as a mother and homemaker during the marriage. The husband has been employed by the Atlantic Richfield Company (ARCO) since February 2, 1948, and was earning approximately $92,000 per year at the time of the decree. Although the husband was eligible for retirement when the decree was entered, he testified that he was in good health and had no plans for retirement in the foreseeable future. ARCO has no mandatory retirement age.

During the course of his employment with ARCO, the husband participated in the Atlantic Richfield Retirement Plan (Plan). Under the terms of the Plan, the employee's retirement benefits become fully vested after the completion of ten years of service; and after fifteen years of service, the employee is eligible to retire at age 55 and receive 100% of the money in the Plan. Prior to 1974 the employees were required to make contributions to the Plan, but since that time the Plan has been employer-funded, with the employees being permitted to make voluntary contributions. Upon the employee's retirement or death, all employee contributions, plus interest, are unconditionally returned to the employee, the employee's estate, or beneficiary.

The employer contributions are kept separately from and are not intermingled with the employee contributions. The amount of the employer contributions is actuarially determined each year on a group basis, utilizing interest rates, mortality tables, turnover rates, ages of all Plan members, salary scales, and other factors. Employer contributions, in contrast to employee contributions, are "retirement qualified," which means that the employee must survive until the commencement of retirement in order to receive any payment. If the employee dies unmarried before retiring, only the employee contributions, plus interest, are paid to the employee's estate or the employee's beneficiary, even though the employee's right to benefits might have fully vested. Thus, although the employee has a vested right to payment after completing ten years of service, this right is subject to the requirement that the employee survive until the actual commencement of retirement. The employer contributions, therefore, have no cash or loan value prior to retirement, and cannot be sold, conveyed, pledged, garnished, or attached.

When the dissolution decree was entered, the husband had been employed by ARCO for 36 years and his right to retirement benefits was fully vested. He had made required and voluntary contributions which, with accrued interest, were valued at approximately $32,000, and ARCO had made employer contributions which, when added to the husband's contributions, brought the total value of the husband's interest in the Plan to approximately $250,000. As of the date of the dissolution decree, the husband, if he had chosen to retire at that time, would have been entitled to receive the total amount of employer contributions or, alternatively, a lifetime pension of approximately $2900 per month, calculated on the basis of several factors including his average annual salary during the last three years of employment. ¹

At the dissolution hearing, John Connell, a certified public accountant, estimated that the present value of the husband's interest in the Plan was approximately $250,000. He offered two reasons for this opinion. First, the husband would receive approximately that amount if he immediately retired. Second, according to Connell, if the husband elected to retire at age 65 (five years after the dissolution), he would be entitled to receive $37,759.63 per year. Based on the husband's life expectancy at age 65 of 14.05 years and expected benefits over that period of time of $530,523, Connell discounted the total benefits to a present value by using a seven per cent discount factor, and concluded that the present value of the husband's interest in the Plan was within ten per cent of $250,000.

In contrast to Connell's opinion, Jerome Karsh, also a certified public accountant, estimated that the fair market value of the husband's interest in the plan was $32,000--the amount of his required and voluntary contributions. Karsh based his opinion on the fact that the husband was not entitled to receive the employer contributions until the commencement of retirement.

Finding that "there [was] nothing speculative or uncertain about [the husband's] rights to the money" and that "he could if he wished, quit work and withdraw the money he ha[d] accumulated," the trial court concluded that the employer contributions to the Plan qualified as marital property. The court then valued the retirement benefits at $250,000, and awarded these benefits to the husband in addition to other property valued at $42,722. In order to equalize the award of the Plan to the husband, the court awarded various items of marital property to the wife and also ordered the husband to pay maintenance of $2,350 per month until further order of the court. The husband appealed, and the court of appeals reversed the judgment. It held that an employer-supported pension plan subject to divestment is not an item of marital property but rather is an economic resource to be received in the future and, hence, is merely a factor to be considered in fixing the amount of maintenance. Grubb, 721 P.2d at 1196. We thereafter granted the wife's petition for certiorari to consider whether the pension plan in this case qualifies as marital property under section 14-10-113(1), 6 C.R.S. (1973 & 1986 Supp.).

II.

Under the Uniform Dissolution of Marriage Act, §§ 14-10-101 to -133, 6 C.R.S. (1973 & 1986 Supp.), the district court in a dissolution proceeding is required to:

divide the marital property, without regard to marital misconduct, in such proportions as the court deems just after considering all relevant factors including:

(a) The contribution of each spouse to the acquisition of the marital property, including the contribution of a spouse as homemaker;

(b) The value of the property set apart to each spouse;

(c) The economic circumstances of each spouse at the time the division of property is to become effective, including the desirability of awarding the family home or the right to live therein for reasonable periods to the spouse having custody of any children; and

(d) Any increases or decreases in the value of the separate property of the spouse during the marriage or the depletion of the separate property for marital purposes.

§ 14-10-113(1), 6 C.R.S. (1973 & 1986 Supp.). Although the Uniform Act does not define the term "property," section 14-10-113(2), 6 C.R.S. (1973), states that "[f]or purposes of this article only" the term " 'marital property' means all property acquired by either spouse subsequent to the marriage except:"

(a) Property acquired by gift, bequest, devise, or descent;

(b) Property acquired in exchange for property acquired prior to the marriage or in exchange for property acquired by gift, bequest, devise, or descent; (c) Property acquired by a spouse after a decree of legal separation;

(d) Property excluded by valid agreement of the parties.

We have previously considered whether particular forms of retirement benefits qualify as marital property. In Ellis v. Ellis, 191 Colo. 317, 552 P.2d 506 (1976), for example, we held that military retirement pay, which the husband had just begun to receive at the time of the dissolution decree, was not marital property because it did not have "any of the following elements: cash surrender value; loan value; redemption value; lump sum value; and value realizable after death." 191 Colo. at 319, 552 P.2d at 507. Subsequent to Ellis we decided Mitchell v. Mitchell, 195 Colo. 399, 579 P.2d 613 (1978), in which we held that the employee contributions of the husband-schoolteacher to the Public Employees Retirement Association (PERA) fund were marital property subject to division in a dissolution proceeding. Drawing on the analysis of the court of appeals in In re Marriage of Pope, 37 Colo.App. 237, 544 P.2d 639 (1975), which addressed this identical issue, we emphasized in Mitchell that there was nothing "speculative or uncertain about the husband's right to the money" and that if he wished he could presently quit work and withdraw his contributions from the fund. 195 Colo. at 403, 579 P.2d at 616. We then distinguished the husband's contributions to the PERA fund from the military retirement pay considered in Ellis:

PERA funds have many of the attributes which we found lacking in military retirement pay. Our distinction between the two retirement plans is based on a belief that it would be...