Marriage of Pace, In re

• Decision Date: 04 June 1982
• Court: California Court of Appeals Court of Appeals
• Parties: In re the MARRIAGE OF Geraldine Lillian and John Wesley PACE. Geraldine Lillian PACE, Appellant, v. John Wesley PACE, Respondent. Civ. 49867.

Page 314

183 Cal.Rptr. 314

132 Cal.App.3d 548

In re the MARRIAGE OF Geraldine Lillian and John Wesley PACE.

Geraldine Lillian PACE, Appellant, v. John Wesley PACE, Respondent.

Civ. 49867.

Court of Appeal, First District, Division 3, California.

June 4, 1982.

Hansen, Custer & Bratter, Charles A. Hansen, Oakland, for appellant.

Howard Moore, Jr., Oakland, for respondent.

SCOTT, Acting Presiding Justice.

Appellant Geraldine Pace appeals from a judgment providing that federal civil service disability retirement benefits paid monthly to her former husband, respondent John Pace, are his separate property.

I

Geraldine and John were married in 1947 and separated in 1974. Throughout their marriage, John was employed by the federal Veterans' Administration. In October 1975, the parties entered into a property settlement agreement. Among its provisions, Geraldine was awarded a seven-fifteenths interest in the retirement benefits arising out of John's employment as of the date of separation, "whether accumulations or anticipated retirement at the age of 55," as her share of the community interest in those benefits. She waived spousal support.

On December 5, 1975, John was seriously injured in an automobile accident. On December 19, 1975, apparently while John was hospitalized, an interlocutory judgment of dissolution was entered consistent with the property settlement agreement. ¹ As a result of the accident, John became totally disabled, and was involuntarily retired. He is a quadraplegic, confined to bed except when someone dresses him and straps him in a wheelchair. He requires constant supervision and care, and is unable to do anything for himself unaided. His present wife, a registered nurse, works at night and cares for him during the day.

John is entitled to receive monthly disability benefits of approximately $952 from the federal Civil Service Retirement System. In 1977, when John reached age 55, the age at which he would have been eligible to retire for longevity had he not been disabled, Geraldine sought to claim a seven-fifteenths share of John's pension pursuant to the property settlement agreement. The longevity benefits would be in the same amount as his disability benefits. After a hearing, ² the trial court compared the situation to a pension fund gone bankrupt or to an award of damages for personal injury, and concluded that the monthly payments are now and will continue to be his separate property.

II

Relying on In re Marriage of Stenquist (1978) 21 Cal.3d 779, 148 Cal.Rptr. 9, 582 P.2d 96, In re Marriage of Webb (1979) 94 Cal.App.3d 335, 156 Cal.Rptr. 334, and In re Marriage of Samuels (1979) 96 Cal.App.3d 122, 158 Cal.Rptr. 38, Geraldine contends that since John's 55th birthday he has been receiving a pension based on longevity rather than disability and that she is entitled to her community interest in that pension. John contends that because he is totally disabled and did not voluntarily retire, Stenquist, Webb, and Samuels are inapplicable, and his benefits will always be his separate property.

Pension or retirement benefits are not gratuities, but are deferred compensation for past services rendered by an employee. (In re Marriage of Brown (1976) 15 Cal.3d 838, 845, 126 Cal.Rptr. 633, 544 P.2d 561.) Pension rights, whether or not vested, ³ 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. (Id., at p. 842, 126 Cal.Rptr. 633, 544 P.2d 561.) The value of pension rights frequently represents the most important asset of the marital community. (In re Marriage of Stenquist, supra, 21 Cal.3d at p. 786, 148 Cal.Rptr. 9, 582 P.2d 96.)

In Stenquist, a husband who retired after 26 years of military service received a "disability" pension of 75 percent of his basic pay instead of a "retirement" pension of 65 percent of that pay. Upon dissolution of his marriage, he urged that his disability pension was his separate property. The Supreme Court disagreed, and held that only the excess amount over the "retirement" pension that he would have received if not disabled was separate property; the remainder of the pension, to the extent that it derived from employment during marriage, was community. (In re Marriage of Stenquist, supra, 21 Cal.3d at p. 788, 148 Cal.Rptr. 9, 582 P.2d 96.)

The court justified its conclusion on two separate grounds. First, permitting the serviceman to elect a disability pension and defeat the community interest in his right to a longevity pension would violate the principle that one spouse cannot, by invoking a condition wholly within his or her control, defeat the community interest of the other spouse. Second, despite the label "disability," only a portion of the pension benefits were properly allocable to disability. The court noted that military retirement pay based on disability serves dual purposes: to compensate for loss of earnings and diminished ability to compete in the civilian job market, and to provide support for the serviceman and his spouse after he leaves the service. The court stated that as the veteran approaches normal retirement age, the latter purpose becomes the predominant function served by the "disability" pension. (In re Marriage of Stenquist, supra, 21 Cal.3d at p. 787, 148 Cal.Rptr. 9, 582 P.2d 96.)

In In re Marriage of Webb, supra, 94 Cal.App.3d 335, 156 Cal.Rptr. 334, this court considered the pension of a San Francisco policeman who was compelled to retire prematurely because of disability. He received a retirement allowance calculated by his final salary times his percent disability. According to the city charter, when he reached the age at which he would have qualified for longevity retirement but for his incapacity, his retirement allowance would be recalculated to equal the amount he would have received had he worked without interruption until eligible for longevity retirement. We recognized that unlike serviceman Stenquist, Officer Webb did not elect disability retirement. Nevertheless, we were compelled by Stenquist to conclude that when Webb's benefits were recalculated to equal longevity retirement benefits, their predominant function from that date on would be to provide retirement support rather than to compensate for loss of earnings resulting from compelled premature retirement. Accordingly, those benefits, to the extent they derived from employment during marriage, were community. (Id., at p. 342, 156 Cal.Rptr. 334.)

A retirement annuity of a federal civil service employee was at issue in In re Marriage of Samuels, supra, 96 Cal.App.3d 122, 158 Cal.Rptr. 38, as it is in this case. In Samuels, shortly after husband and wife were married in 1942, he became a federal civil service employee. In 1971, at age 50, he terminated his employment due to an injury and began receiving monthly disability benefits pursuant to the federal Civil Service Retirement System. (5 U.S.C. § 8331 et seq.) ⁴ Because he had completed a minimum of five years of service prior to incurring his disability, he was eligible for a "disability retirement annuity" (§ 8337), to be computed by a formula based on service longevity and average pay. (§ 8339(a).) Unlike the system at issue in Webb, the federal employee's percent disability was not a factor in the computation of his disability benefits....