Smith v. Lewis

• Court: United States State Supreme Court (California)
• Writing for the Court: MOSK; WRIGHT; CLARK; McCOMB
• Citation: 530 P.2d 589,13 Cal.3d 349,118 Cal.Rptr. 621
• Parties: , 530 P.2d 589, 78 A.L.R.3d 231 Rosemary E. SMITH, Plaintiff and Respondent, v. Jerome R. LEWIS, Defendant and Appellant. Sac. 7981. In Bank
• Decision Date: 20 January 1975

Page 621

118 Cal.Rptr. 621 13 Cal.3d 349, 530 P.2d 589, 78 A.L.R.3d 231 Rosemary E. SMITH, Plaintiff and Respondent,
v.
Jerome R. LEWIS, Defendant and Appellant. Sac. 7981. Supreme Court of California, In Bank. Jan. 20, 1975.

[13 Cal.3d 353]

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[530 P.2d 591] Bullen, McKone & McKinley, George W. Bullen, Sacramento, Robert A. Seligson, San Francisco, and Stephen J. Gay, Sacramento, for defendant and appellant.

Bonelli & Brown and R. Edward Brown, Sherman Oaks, as amici curiae for defendant and appellant.

Edward Freidberg, Sacramento for plaintiff and respondent.

MOSK, Justice.

Defendant Jerome R. Lewis, an attorney, appeals from a judgment entered upon a jury verdict for plaintiff Rosemary E. Smith in an action for legal malpractice. The action arises as a result of legal services rendered by defendant to plaintiff in a prior divorce proceeding. The gist of plaintiff's complaint is that defendant negligently failed in the divorce action to assert her community interest in the retirement benefits of her husband.

Defendant principally contends, inter alia, that the law with regard to the characterization of retirement benefits was so unclear at the time he represented plaintiff as to insulate him from liability for failing to assert a claim therefor on behalf of his client. ¹ We conclude defendant's appeal is

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[530 P.2d 592] without merit, and therefore affirm the judgment.

In 1943 plaintiff married General Clarence D. Smith. Between 1945 and his retirement in 1966 General Smith was employed by the [13 Cal.3d 354] California National Guard. As plaintiff testified, she informed defendant her husband 'was paid by the state . . . it was a job just like anyone else goes to.' For the first 16 years of that period the husband belonged to the State Employees' Reitrement System, a contributory plan. ² Between 1961 and the date of his retirement he belonged to the California National Guard retirement program, a noncontributory plan. In addition, by attending National Guard reserve drills he qualified for separate retirement benefits from the federal government, also through a noncontributory plan. The state and federal retirement programs each provide lifetime monthly benefits which terminate upon the death of the retiree. The programs make no allowance for the retiree's widow.

On January 1, 1967, the State of California began to pay General Smith gross retirement benefits of $796.26 per month. Payments under the federal program, however, will not begin until 1983, i.e., 17 years after his actual retirement, when General Smith reaches the age of 60. All benefits which General Smith is entitled to receive were earned during the time he was married to plaintiff.

On February 17, 1967, plaintiff retained defendant to represent her in a divorce action against General Smith. According to plaintiff's testimony, defendant advised her that her husband's retirement benefits were not community property. Three days later defendant filed plaintiff's complaint for divorce. General Smith's retirement benefits were not pleaded as items of community property, and therefore were not considered in the litigation or apportioned by the trial court. The divorce was uncontested and the interlocutory decree divided the minimal described community property and awarded Mrs. Smith $400 per month in alimony and child support. The final decree was entered on February 27, 1968.

On July 17, 1968, pursuant to a request by plaintiff, defendant filed on her behalf a motion to amend the decree, alleging under oath that because of his mistake, inadvertence, and excusable neglect (Code Civ.Proc., § 473) the retirement benefits of General Smith had been omitted from the list of community assets owned by the parties, and that such benefits were in fact community property. The motion was denied on the ground of untimeliness. Plaintiff consulted other counsel, and shortly [13 Cal.3d 355] thereafter filed this malpractice action against defendant.

Defendant admits in his testimony that he assumed General Smith's retirement benefits were separate property when he assessed plaintiff's community property rights. It is his position that as a matter of law an attorney is not liable for mistaken advice when well informed lawyers in the community entertain reasonable doubt as to the proper resolution of the particular legal question involved. Because, he asserts, the law defining the character of retirement benefits was uncertain at the time of his legal services to plaintiff, defendant contends the trial court committed error in refusing to grant his motions for nonsuit and judgment notwithstanding the verdict and in submitting the issue of negligence to the jury under appropriate instructions. ³

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[530 P.2d 593] The law is now settled in California that 'retirement benefits which flow from the employment relationship, to the extent they have vested, are community property subject to equal division between the spouses in the event the marriage is dissolved.' (In re Marriage of Fithian (1974) supra, 10 Cal.3d 592, 596, 111 Cal.Rptr. 369, 371, 517 P.2d 449, 451, citing Waite v. Waite (1972) supra, 6 Cal.3d 461, 99 Cal.Rptr. 325, 492 P.2d 13; Phillipson v. Board of Administration (1970) supra, 3 Cal.3d 32, 89 Cal.Rptr. 61, 473 P.2d 765; Benson v. City of Los Angeles (1963) 60 Cal.2d 355, 33 Cal.Rptr. 257, 384 P.2d 649; French v. French (1941) 17 Cal.2d 775, 112 P.2d 235; Crossan v. Crossan (1939) 35 Cal.App.2d 39, 94 P.2d 609.) Because such benefits are part of the consideration earned by the employee, they are accorded community treatment regardless of whether they derive from a state, federal, or private source, or from a contributory or non-contributory plan. (10 Cal.3d at p. 596, 111 Cal.Rptr. 369, 517 P.2d 449.) In light of these principles, it becomes apparent that General Smith's retirement pay must properly be characterized as community property. ⁴

[13 Cal.3d 356] We cannot, however, evaluate the quality of defendant's professional services on the basis of the law as it appears today. In determining whether defendant exhibited the requisite degree of competence in his handling of plaintiff's divorce action, the crucial inquiry is whether his advice was so legally deficient when it was given that he may be found to have failed to use 'such skill, prudence, and diligence as lawyers of ordinary skill and capacity commonly possess and exercise in the performance of the tasks which they undertake.' (Lucas v. Hamm (1961) 56 Cal.2d 583, 591, 15 Cal.Rptr. 821, 825, 364 P.2d 685, 689.) We must, therefore examine the indicia of the law which were readily available to defendant at the time he performed the legal services in question.

The major authoritative reference works which attorneys routinely consult for a brief and reliable exposition of the law relevant to a specific problem uniformly indicated in 1967 that vested retirement benefits earned during marriage were generally subject to community treatment. ⁵ (See, e.g., Note, Pensions, and Reserve or Retired Pay, as Community Property, 134 A.L.R. 368; 15 Am.Jur.2d, Community Property, § 46, p. 859; 38 Cal.Jur.2d, Pensions, § 12, p. 325; 10 Cal.Jur.2d, Community Property, § 25, p. 692; 1 Cal.Family Lawyer (Cont.Ed.Bar 1962) p. 111; 4 Witkin, Summary of Cal.Law (1960) pp. 2723--2724; cf. 41 C.J.S. Husband and Wife § 475, p. 1010 & fn. 69 and 1967 Supp. p. 1011.) A typical statement appeared in The California Family Lawyer, a work with which defendant admitted general familiarity: 'Of increasing importance is the fact that pension or retirement benefits are community property, even though they are not paid or payable until after termination of the marriage by

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[530 P.2d 594] death or divorce.' (1 Cal.Family Lawyer, supra, at p. 111.)

Although it is true this court had not foreclosed all conflicts on some aspects of the issue at that time, the community charactr of retirement benefits had been reported in a number of appellate opinions often cited in the literature and readily accessible to defendant. (Benson v. City of Los Angeles (1963) supra, 60 Cal.2d 355, 33 Cal.Rptr. 257, 384 P.2d 649; French v. French (1941) supra, 17 Cal.2d 775, 112 P.2d 235; Cheney v. City & County of San Francisco (1936) 7 Cal.2d 565, 61 P.2d 754; Williamson v. Williamson (1962) supra, 203 Cal.App.2d 8, 21 Cal.Rptr. 164; Estate of Manley (1959) 169 Cal.App.2d 641, 337 P.2d 487; Estate of Perryman (1955) 133 Cal.App.2d 1, 283 P.2d 298; Crossan v. Crossan (1939) supra, 35 Cal.App.2d 39, 94 P.2d 609.) In Benson, decided four years [13 Cal.3d 357] before defendant was retained herein, we stated directly that 'pension rights which are earned during the course of a marriage are the community property of the employee and his wife.' (60 Cal.2d at p. 359, 33 Cal.Rptr. at p. 259, 384 P.2d at p. 651.) In French, decided two decades earlier, we indicated that 'retire(ment) pay is community property because it is compensation for services rendered in the past.' (17 Cal.2d at p. 778, 112 P.2d at p. 236.) The other cases contain equally unequivoal dicta.

We are aware, moreover, of no significant authority existing in 1967 which proposed a result contrary to that suggested by the cases and the literature, or which purported to rebut the general statutory presumption, as it applies to retirement benefits, that all property acquired by either spouse during marriage belongs to the community. (Civ.Code, § 5110, as amended Jan. 1, 1970; formerly Civ.Code, § 164.)

On the other hand, substantial uncertainty may have existed in 1967 with regard to the community character of General Smith's Federal pension. The above-discussed treatises reveal a debate which lingered among members of the legal community at that time concerning the point at which retirement benefits actually vest. ⁶ (See also Kent, Pension Funds and Problems Under California Community Property Laws (1950) 2 Stan.L.Rev. 447; Note, Community...