Ruchti v. Goldfein

• Decision Date: 23 December 1980
• Citation: 170 Cal.Rptr. 375,113 Cal.App.3d 928
• Court: California Court of Appeals Court of Appeals
• Parties: Sharolyn Ann RUCHTI, etc., Plaintiff and Appellant, v. Jerome D. GOLDFEIN, Defendant and Respondent. Civ. 22301.

Page 375

170 Cal.Rptr. 375

113 Cal.App.3d 928

Sharolyn Ann RUCHTI, etc., Plaintiff and Appellant, v. Jerome D. GOLDFEIN, Defendant and Respondent.

Civ. 22301.

Court of Appeal, Fourth District, Division 1, California.

Dec. 23, 1980.

Hearing Denied Feb. 18, 1981.

Turney & Turney and Margaret V. Turney, National City, for plaintiff and appellant.

Feinberg, Zybelman & Paluso, Michael J. Feinberg and George V. Paluso, San Diego, for defendant and respondent.

COLOGNE, Acting Presiding Justice.

Sharolyn Ann Ruchti brought this action in April 1979, against Ronald Clarence Ruchti, her former husband, for determination of her community property interest in, and partition of, the military retirement benefits deriving from Ronald's navy career, and in the second and third causes of action against Jerome D. Goldfein and Thomas D. Kelly, her attorneys in the divorce action for negligence in failing to have the interest determined earlier. Goldfein demurred to the second and third causes of action on the ground the action is barred by the statute of limitations. The demurrer was sustained without leave to amend.

Accepting as true all of the allegations of the complaint, we make the following recitation of the facts:

Sharolyn and Ronald were married on July 7, 1962, and separated on January 15, 1973. Sharolyn hired Goldfein and later hired Kelly to represent her in her action for dissolution of marriage. The action was filed and the court issued an interlocutory decree of dissolution on August 2, 1974. The final decree of dissolution was entered August 12, 1974. Neither the interlocutory nor the final judgment of dissolution contained any reference to military retirement benefits. ¹ In Sharolyn's April 5, 1979, action she alleges her entitlement to an award of at least a one-fourth interest in Ronald's pension accruing during the eleven-and-one-half-year marriage.

The developing law relative to the community property character of military pensions has been a matter of considerable concern to the courts as well as the profession (see In re Marriage of Smithurst, 102 Cal.App.3d 494, 496, 162 Cal.Rptr. 300). In 1941, the right to receive a nonvested ² military pension was held to be a mere "expectancy which is not subject to division as community property" (French v. French, 17 Cal.2d 775, 778, 112 P.2d 235).

In January 1974, about eight months before the entry of judgment in Ruchti, the California Supreme Court restated the law in this area most succinctly, stating:

"The law is settled in California that retirement benefits which flow from the employment relationship, to the extent they have vested, (fn. omitted) are community property subject to equal division between the spouses in the event the marriage is dissolved. (Citations.) .... Furthermore, the 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, 10 Cal.3d 592, at 596, 111 Cal.Rptr. 369, 517 P.2d 449; italics added.)

The court's understanding of the distinction between vested and nonvested pensions was underscored by footnote 2 which states:

"The right to retirement benefits 'vests' when an employee acquires an irrevocable interest in a fund created by his own contributions and/or the contributions of his employer. The 'vesting' of retirement benefits must be distinguished from the 'maturing' of those benefits, which occurs only after the conditions precedent to the payment of benefits have taken place or are within the control of the employee. (Citations.) (P) Husband does not contend his rights to the retirement fund had not vested during the marriage." (Ibid.)

There is no doubt the courts intended to assign community property character only to the case of a vested pension. The pleadings indicate here, and the parties do not dispute, Ruchti's pension rights were not vested at the time of the dissolution judgment since he had not completed the necessary time in the navy. Had his duty been terminated or had he left the navy voluntarily, he would have received nothing. The law was clear in 1974 that Sharolyn had no right in the pension; nor did the attorney have any reason to appeal the judgment. Since Sharolyn then had no legal right to a division of the pension, she had no legal right to sue her attorney for not dividing it.

In January 1976, In re Marriage of Brown, 15 Cal.3d 838, 126 Cal.Rptr. 633, 544 P.2d 561, the California Supreme Court presented us a case dealing with nonvested rights and it altered the state of the law making both vested and nonvested pensions subject to community property claim. Brown overruled not only French v. French, supra, 17 Cal.2d 775, 112 P.2d 235, but also expressly disapproved statements to the effect nonvested pension rights are not community property that were contained in such cases as In re Marriage of Fithian, supra, 10 Cal.3d 592, 111 Cal.Rptr. 369, 517 P.2d 449 (Jan. 1974), Smith v. Lewis, 13 Cal.3d 349, 118 Cal.Rptr. 621, 530 P.2d 589 (Jan. 1975), and In re Marriage of Jones, 13 Cal.3d 457, 119 Cal.Rptr. 108, 531 P.2d 420 (Feb. 1975) (15 Cal.3d 838, 851, fn. 14, 126 Cal.Rptr. 633, 544 P.2d 561). Brown made it clear, however, there would be only limited retroactive application of its holding.

"(T)he resolution of this issue of prospective application turns primarily on two factors: 'the extent of the public reliance upon the former rule, ... (and) the ability of litigants to foresee the coming change in the law.' In the present case both factors militate against a purely prospective overruling of French v. French. It is unlikely that a layman would rely upon the French rule, or even know of that doctrine; attorneys familiar with the decision in French v. French would also realize from our opinion in Marriage of Wilson, supra, 10 Cal.3d 851, 112 Cal.Rptr. 405, 519 P.2d 165, that the French rule was ripe for reconsideration. The unjust distribution of property engendered by the French rule should not be perpetuated by denial of any retrospective effect to our decision."

"...

"We conclude that our decision today should not apply retroactively to permit a non-employee spouse to assert an interest in nonvested pension rights when the property rights of the marriage have already been adjudicated by a decree of dissolution or separation which has become final as to such adjudication, (fn.) ³ unless the decree expressly reserved jurisdiction to divide such pension rights at a later date (see Civ.Code, § 4800). Our decision will apply retroactively, however, to any case in which the property rights arising from the marriage have not yet been adjudicated, to such rights if such adjudication is still subject to appellate review, or if in such adjudication the trial court has expressly reserved jurisdiction to divide pension rights." (In re Marriage of Brown, supra, 15 Cal.3d 838, 850, 851, 126 Cal.Rptr. 633, 544 P.2d 561.)

Thus, even after Brown, Sharolyn had no right in the military pension since, as she concedes, it was nonvested at the date of the judgment of dissolution (Aug. 1974) from which no appeal was taken (see Shaver v. Shaver, 107 Cal.App.3d 788, 793-794, 165 Cal.Rptr. 672). It follows under the limited retroactivity rule of Brown that since the Ruchtis' property was presently divided and there was no appeal or reservation of jurisdiction to divide property later, the decree became a final and conclusive adjudication of the parties' property rights (see ante, p. 377, fn. 3). We note, too, Sharolyn admits in her supplemental brief Shaver, supra, effectively ends any cause of action against her former husband.

She asserts, however, this does not end the cause of action against her attorneys in the dissolution proceeding and, relying on Smith v. Lewis, supra, 13 Cal.3d 349, 118 Cal.Rptr. 621, 530 P.2d 589, asserts the attorney should have been aware of the direction the court was moving and was negligent in not so advising her.

"(W)e believe an attorney assumes an obligation to his client to undertake reasonable research in an effort to ascertain relevant legal principles and to make an informed decision as to a course of conduct based upon an intelligent assessment of the problem. In the instant case, ample evidence was introduced to support a jury finding that defendant failed to perform such adequate research into the question of the community character of retirement benefits and thus was unable to exercise the informed judgment to which his client was entitled." (Smith v. Lewis, supra, 13 Cal.3d 349, 359, 118 Cal.Rptr. 621, 530 P.2d 589.)

We do not believe any attorney should be held to have foreseen the 180o shift in the law in this area. ⁴ However, even if we were to concede for the purpose of argument that (1) had the trial attorney appealed this case, the Supreme Court would have made "In re Marriage of Ruchti" the precedent rather than In re Marriage of Brown, supra, and Sharolyn would have received the benefits Gloria Brown obtained; (2) the attorney had a duty to anticipate the direction of the developing law; and (3) the attorney breached the duty by failing to adequately research and advise his client of the "uncertain" nature of this law, Sharolyn's cause of action arose when the attorney's negligence terminated her rights in the pension benefits, i. e., when the judgment was entered, or at least when the attorney allowed the judgment to become final. At that point, any possibility of acquiring an interest in the pension was terminated. That is real damage. This damage occurred more than four years before the filing of this action and the action is, therefore, barred by the statute of limitations.

Section 340.6 of the Code of Civil Procedure reads:

"(a) An action against an attorney for a wrongful act or omission, other than for actual fraud, arising in the performance of professional services shall be...