Marriage of Sheldon, In re

• Court: California Court of Appeals
• Writing for the Court: WIENER; BROWN, P. J., and WORK
• Citation: 177 Cal.Rptr. 380,124 Cal.App.3d 371
• Parties: , 3 Employee Benefits Cas. 1108 In re the MARRIAGE OF Laura Lee and Robert Monroe SHELDON. Laura Lee SHELDON, Petitioner and Respondent, v. Robert Monroe SHELDON, Respondent and Appellant. Civ. 22645.
• Decision Date: 07 October 1981

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177 Cal.Rptr. 380 124 Cal.App.3d 371, 3 Employee Benefits Cas. 1108 In re the MARRIAGE OF Laura Lee and Robert Monroe SHELDON.
Laura Lee SHELDON, Petitioner and Respondent,
v.
Robert Monroe SHELDON, Respondent and Appellant. Civ. 22645. Court of Appeal, Fourth District, Division 1, California. Oct. 7, 1981.
As Modified Nov. 4, 1981.
Hearing Denied Dec. 2, 1981.

[124 Cal.App.3d 374]

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William E. Blatchley, San Diego, for respondent and appellant.

[124 Cal.App.3d 375] Nancy H. Flick, San Diego, for petitioner and respondent.

WIENER, Associate Justice.

Robert Monroe Sheldon appeals an interlocutory judgment dissolving his thirteen year marriage.

The principal issue concerns the retroactivity of the United States Supreme Court's recent decision in McCarty v. McCarty (1981) 453 U.S. --, 101 S.Ct. 2728, 69 L.Ed.2d -- and its applicability to cases not final on appeal as of the date McCarty was filed. We stress our decision is not meant to be a holding for all seasons resolving all the issues precipitated by McCarty. We only answer the narrow issue before us, concluding (1) the principles enunciated by the Supreme Court which govern the retroactivity of high court decisions mandate McCarty not be accorded full retroactivity, and (2) McCarty should not be applied to cases not final on appeal unless the military spouse requested the trial court reserve jurisdiction on the character of the property interest in the pension or timely raised and briefed the federal preemption issue on appeal. ¹

Factual and Procedural Background

The principal assets at issue in this dissolution proceeding were the family residence and Robert's United States Navy Pension. ² The trial court found the value of the residence to be $65,750 and the value of the pension to be $116,996. It awarded all the benefits due under the pension to Robert and the entire interest in the residence to Laura. Laura waived any difference in value of the respective properties.

Initially, on appeal, Robert challenged the actuarial valuation of his pension and the trial court's decision not to award each party a one-half [124 Cal.App.3d 376] interest in each of the assets. He did not contest the characterization of the pension rights as community property.

On June 8, 1981, we filed our unpublished opinion in this case, upholding the valuation of the pension and the distribution scheme. On June 26, the United States Supreme Court filed its decision in McCarty v. McCarty, supra, 453 U.S. --, 101 S.Ct. 2728, 69 L.Ed.2d 589, holding that federal law precludes a state from characterizing a military pension as community property in order to divide it between the parties on dissolution of the marriage.

Robert then filed a petition for rehearing, arguing McCarty compels us to reverse the interlocutory judgment and remand for a new division of the community property and a recharacterization of Robert's pension rights as his separate property. Laura countered that the stipulation at trial coupled with Robert's express failure to contest the community nature of the pension rights on appeal rendered the McCarty holding inapplicable to the instant case. ³ We granted a rehearing to address several problems

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inherent in the application of McCarty to California dissolution proceedings.

Retroactivity of McCarty

We must first concern ourselves with the degree of retroactivity to be accorded the McCarty decision. If McCarty is fully retroactive, Robert is entitled to receive the benefits of the decision, and the effect of the stipulation and failure to raise the issue on appeal become irrelevant.

The United States Supreme Court has had numerous occasions to review the question of prospective versus retroactive application of a judicial decision. (See, e. g., England v. Louisiana State Bd. of Med. Exam. (1964) 375 U.S. 411, 422, 84 S.Ct. 461, 468, 11 L.Ed.2d 440; Linkletter v. Walker (1965) 381 U.S. 618, 85 S.Ct. 1731, 14 L.Ed.2d 601; Stovall v. Denno (1967) 388 U.S. 293, 296-301, 87 S.Ct. 1967, 1969-72, 18 L.Ed.2d 1199.) Most recently, in Chevron Oil Company v. Huson (1971) 404 U.S. 97, 92 S.Ct. 349, 30 L.Ed.2d 296 (hereinafter Huson), ⁴[124 Cal.App.3d 377] ⁴ the Court discussed the issue at some length, identifying three factors to be considered:

(1) whether "the decision to be applied nonretroactively establish(es) a new principle of law, either by overruling clear past precedent on which litigants may have relied, (citation) or by deciding an issue of first impression whose resolution was not clearly foreshadowed, (citation)";

(2) whether the "history purpose and effect" of the rule mandates restrospective operation; and

(3) whether retroactive application of the rule " 'could produce substantial inequitable results , "injustice or hardship" ' (Citation.)" (Id., at pp. 106-107, 92 S.Ct. at 354-55.) ⁵

Applying this standard to the McCarty decision, we are convinced that McCarty should not be accorded fully retroactive effect. McCarty presented an issue of first impression for the United States Supreme Court. Although the majority opinion relied on the two-year-old decision in Hisquierdo v. Hisquierdo (1979) 439 U.S. 572, 99 S.Ct. 802, 59 L.Ed.2d 1 for support, Hisquierdo involved an entirely different statutory scheme and clearly did not mandate the McCarty holding. (See In re Marriage of Milhan (Milhan II) (1980) 27 Cal.3d 765, 772-777, 166 Cal.Rptr. 533, 613 P.2d 812; Gorman v. Gorman (1979) 90 Cal.App.3d 454, 460-462, 153 Cal.Rptr. 479.) Moreover, McCarty effectively overrules consistent and well-settled California precedent holding a military pension constitutes community property, the divisibility of which on dissolution is not preempted by federal statute. (See, e. g., French v. French (1941) 17 Cal.2d 775, 778, 112 P.2d 235, [124 Cal.App.3d 378] overruled on other grounds in In re Marriage of Brown (1976) 15 Cal.3d 838, 126 Cal.Rptr. 633, 544 P.2d 561; In re Marriage of Fithian (1974) 10 Cal.3d 592, 111 Cal.Rptr. 369, 517 P.2d 449, cert. den. 419 U.S. 825, 95 S.Ct. 41, 42 L.Ed.2d 48; In re Marriage of Milhan (Milhan I) (1974) 13 Cal.3d 129, 131, 117 Cal.Rptr. 809, 528 P.2d 1145; In re Marriage of Stenquist (1978) 21 Cal.3d 779, 782, 148 Cal.Rptr. 9, 582 P.2d 96.) A state supreme court enjoys a position equal to that of lower federal courts where questions of federal statutory and constitutional law are involved, and is bound only by the contrary rulings of the United States Supreme Court

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on such issues. (See Rohr Aircraft Corp. v. County of San Diego (1959) 51 Cal.2d 759, 764-765, 336 P.2d 521, revd. on other grounds (1960) 362 U.S. 628, 80 S.Ct. 1050, 4 L.Ed.2d 1002; People v. Estrada (1965) 234 Cal.App.2d 136, 145, 44 Cal.Rptr. 165.) Just as the Huson court concluded retroactivity was inappropriate because the court's previous decision in Rodrigue, supra, "overruled a long line of decisions by the Court of Appeals for the Fifth Circuit" (404 U.S. at p. 107, 92 S.Ct. at 355), so we conclude retroactive application of McCarty is unwarranted since the Supreme Court's decision overruled a long line of California Supreme Court cases which had definitively spoken on the issue.

Similarly, our review of the rationale underlying the McCarty decision does not convince us that retroactive application is mandated. The majority opinion notes two primary purposes of the military pension plans which community property division threatened to undermine. First, Congress has sought "to provide for the retired service member, and to meet the personnel management needs of the active military forces." (453 U.S. at p. --, 101 S.Ct. at p. 2741.) In discussing this objective of providing for the retired service member, ⁶ the majority emphasizes that "the community property division of retired pay may disrupt the carefully balanced scheme Congress has devised to encourage a service member to set aside a portion of his [124 Cal.App.3d 379] or her retired pay as an annuity for a surviving spouse or dependent children." (Ibid.) While a purely prospective application of McCarty may have the effect of discouraging some already-divorced-but-not-yet-retired service members from electing to fund an annuity, the number of factors which must affect such a decision make the potential effect speculative at best. ⁷ Commenting on the second objective, the court said that "the military retirement system is designed to serve as an inducement for enlistment and reenlistment, to create an orderly career path, and to ensure 'youthful and vigorous' military forces." (Id., at p. --, 101 S.Ct. at p. 2742, fn. omitted.) Potential division of the military pension, allegedly diminishes 'one of the inducements selected to make military service, attractive as well as "discourag(ing) retirement by reducing the retired pay available to the service member, " (Ibid.) It is clear that the concept of an inducement operates prospectively as to potential enlistees and reenlistees. A non-retroactive application of McCarty would do no harm to this asserted federal interest. As to the discouraging retirement rationale, the argument assumes the service member is not yet retired. Many members subject to pre-McCarty divorce decrees, however, have already retired and the pension incentive is inapplicable to them. Moreover, even as to those divorced members who have not yet retired, community property division of pension rights discourages retirement only to the extent the pension was actually divided in kind; if the non-service member spouse received an off-setting award of other community property in exchange for the pension rights, as in the present case, a failure to apply McCarty retroactively will not discourage retirement of that service member. We thus conclude that the harm to federal interests which would be occasioned by a purely prospective application

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of McCarty is minimal. Rather, the Congressional purposes articulated by the McCarty majority can be...