Marriage of Johnston, In re, IBEW-NECA

• Decision Date: 27 October 1978
• Docket Number: IBEW-NECA
• Court: California Court of Appeals Court of Appeals
• Parties: , 1 Employee Benefits Cas. 1352 In re the MARRIAGE OF Clifford A. and Frances E. JOHNSTON. Clifford Albert JOHNSTON, Respondent, v. Frances Elizabeth JOHNSTON, Respondent and Cross-Appellant, and Southern CaliforniaPension Plan et al., Appellants and Cross-Respondents. Civ. 52160.

Page 798

149 Cal.Rptr. 798

85 Cal.App.3d 900, 1 Employee Benefits Cas. 1352

In re the MARRIAGE OF Clifford A. and Frances E. JOHNSTON Clifford Albert JOHNSTON, Respondent, v. Frances Elizabeth JOHNSTON, Respondent and Cross-Appellant and Southern California IBEW-NECA Pension Plan et al., Appellants and Cross-Respondents.

Civ. 52160.

Court of Appeal, Second District, Division 4, California.

Oct. 27, 1978.

Hearing Denied Dec. 20, 1978.

Richard J. Davis, Jr., Daniel M. Wyman, Brundage, Beeson & Pappy, Los Angeles, for appellants and cross-respondents.

John E. McDermott, Patricia M. Tenoso, Los Angeles, Robert T. Olmos, Delano, Diane S. Messer, Western Center on Law and Poverty, Inc., Toby S. Rothschild, Legal Aid Foundation, Long Beach, Bruce K. Miller, Neal S. Dudovitz, National Senior Citizens Law Center, Los Angeles, for respondent and cross-appellant.

No appearance for respondent Clifford Albert Johnston.

ALARCON, Associate Justice.

The Southern California IBEW-NECA Pension Plan, The National Electrical Benefit Fund and The International Brotherhood of Electrical Workers, (hereinafter "claimants") have appealed from a judgment awarding to respondent and cross-appellant, Frances Elizabeth Johnston (hereinafter "wife") one-half of the pension benefits to which respondent Clifford Albert Johnston (hereinafter "husband") is entitled and requiring that claimants pay the proportionate share of wife directly to her. Claimants also appeal from that portion of the judgment denying to them an award of attorneys' fees.

Cross-appellant, wife, appeals from that portion of the same judgment which authorizes claimants to deduct from each monthly pension benefit payment the sum of $5.00.

Husband and wife were married on December 10, 1936. On January 17, 1974, husband filed a petition for dissolution of that marriage. The amended response to the petition filed by wife listed as assets of the marriage, inter alia, pension funds payable monthly to husband, under the control of claimants.

On May 19, 1976, on motion of wife, claimants were joined as parties to the dissolution action. Claimants filed suit in the United States District Court, seeking an injunction against the Los Angeles Superior Court to prevent it from enforcing any judgment against claimants. That action was dismissed by the Federal District Court on July 16, 1976.

Husband and wife entered into a stipulation concerning disposition of all of the assets of the marriage. The husband's pension benefits, the largest asset of the marriage, were stipulated to be community property. It was further stipulated that wife was to receive 50 percent of each and every payment to which husband was entitled. The issue of the obligation of claimants to pay wife's share directly to her was bifurcated for purposes of trial. Following a trial on that issue, on August 10, 1976, the court rendered its intended decision, which included the following findings: "The court further finds that since the date of separation petitioner has received pension benefits which he failed to share with respondent and by petitioner's own testimony the possibility exists that if necessary petitioner would use future benefits for his own use and refuse to pay respondent's share to her. Therefore, the court finds that an order requiring claimants to pay respondent's share directly to her is 'necessary to the enforcement of the judgment.' "

On December 15, 1976, judgment on the bifurcated proceeding was entered. That judgment contained the following orders:

"Claimants IBEW-NECA Pension Plan, National Electrical Benefit Fund and International Brotherhood of Electrical Workers are each permanently enjoined to pay a portion of the monthly benefit due petitioner Clifford Albert Johnston directly to respondent Frances Elizabeth Johnston for each month that petitioner shall remain eligible for such benefits in the following manner:

"A. Claimants IBEW-NECA Pension Plan, National Electrical Benefit Fund and International Brotherhood of Electrical Workers may deduct from the combined pension benefits of petitioner Clifford Johnston a total of $5.00 to cover said claimants' excessive administrative costs of compliance with the order of this court.

"B. One-half of the balance of the remaining pension benefits after deduction of the $5.00 due to petitioner Clifford Johnston shall be paid each month by said claimants directly to respondent Frances Elizabeth Johnston.

"3. Counsel for claimants Brundage, Beeson and Pappy, . . . request for attorneys' fees in the amount of $200 is denied."

On this appeal from the judgment, claimants contend that the trial court erred in ordering direct payment to wife of one-half of husband's pension benefits for the following reasons:

A. The Employee Retirement Income Security Act of 1974 is legislation occupying the entire field of pension distribution and preempts all state action in connection therewith;

B. The trial court's order requires claimants to violate the terms of their employee benefit pension program enacted pursuant to the federal Employee Retirement Income Security Act.

Claimants further contend that the court erred in denying their request for attorneys' fees, arguing that under both California and federal law, such an award of fees is authorized.

We affirm both of the trial court's orders for the reasons set forth in this opinion.

Wife contends in her cross-appeal that the trial court erred in permitting the claimants to deduct $5.00 from the monthly benefits due to wife and husband, inasmuch as the record offers no support for the need for such a deduction and further no authority therefor is found in the law or the language of the benefit plans themselves. We agree and reverse that portion of the trial court's judgment authorizing the $5.00 monthly deduction.

DISCUSSION:

I. THE EMPLOYEE RETIREMENT INCOME SECURITY ACT DOES NOT PROHIBIT THE STATE COURT FROM ORDERING CLAIMANTS TO MAKE PENSION PAYMENTS DIRECTLY TO WIFE

The pension benefits which are the subject of the instant litigation are clearly community property. This is so not only by virtue of the stipulation of husband and wife but by settled law in California. Although some uncertainty previously existed concerning the community nature of unvested pension benefits, our Supreme Court in In re Marriage of Brown (1976) 15 Cal.3d 838 at 842, 126 Cal.Rptr. 633 at 635, 544 P.2d 561 at 562, expressly resolved the problem "Pension rights, whether or not vested, represent a property interest; to the extent that such rights derive from employment during coverture, they comprise a community asset subject to division in a dissolution proceeding."

In addition, California has long recognized the power of the court in a dissolution action to order the distributor of pension benefits to pay those benefits directly to a nonemployee spouse. (Phillipson v. Board of Administration (1970) 3 Cal.3d 32, 89 Cal.Rptr. 61, 473 P.2d 765; In re Marriage of Sommers (1975) 53 Cal.App.3d 509, 515, 126 Cal.Rptr. 220; In reMarriage of Brown, supra, 15 Cal.3d at p. 848, 126 Cal.Rptr. 633, 544 P.2d 561; In re Marriage of Verner (1978) 77 Cal.App.3d 718, 725, 143 Cal.Rptr. 826.)

A pension plan may properly be joined as a party to a dissolution action, whenever it holds in its possession funds which constitute a community asset. (In re Marriage of Sommers, supra, 53 Cal.App.3d at p. 515, 126 Cal.Rptr. 220.) In addition, the wisdom of requiring distribution of pension benefits directly to a nonemployee spouse has been acknowledged in the California courts. For example, in Phillipson v. Board of Administration, supra, 3 Cal.3d at page 43, 89 Cal.Rptr. at page 68, 473 P.2d at page 772, the court stated in that connection: "An award to plaintiff of a 'property interest' which consists of no more than a right to enforce payments to her ex-husband would indeed be vacuous."

Further, the fact that the source of the funds sought to be disposed of in the dissolution action is federal has been deemed to present no barrier to the power of the California court to award it to either spouse. "(T)he principle that retirement benefits are community property has been held to apply whether the source of the retirement fund lies in a state, federal, military, or private employment relationship. (Citations.)" (In re Marriage of Fithian (1974) 10 Cal.3d 592, 596, 111 Cal.Rptr. 369, 371, 517 P.2d 449, 451.)

Appellant contends that, in spite of all of the foregoing, the Employee Retirement Income Security Act (hereinafter "ERISA") deprives California courts of jurisdiction over pension plan benefits. Our research has disclosed no California cases discussing the impact of ERISA on such pension benefit distribution. Whether the preemption of state laws relating to pension plans set out in ERISA affects the kind of order made in this case, appears to be a question of first impression in California.

Our analysis is aided, however, by California cases discussing federal preemption in closely analogous areas and by cases from other jurisdictions which have considered the impact of ERISA on other state legislation. We have concluded that Congress did not intend to interfere with a state court's jurisdiction over distribution of marital property.

The Impact of ERISA:

ERISA was enacted by Congress in 1974. The Act was adopted upon findings by the Congress that employee benefit plans had proliferated; that the plans were national in scope and affected with a national interest; that regulation, supervision and accountability to the employees was either nonexistent or inadequate; that many plans were unsound or unstable; that there had been defaults in terminations to the detriment of employees and their beneficiaries; and that ". . . it is therefore desirable in the interests of employees and their beneficiaries, for the protection of the revenue of the United States, and to provide for the free flow of commerce, that minimum...