IN RE MARRIAGE OF LORENZ

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Docket Number

Docket No. 67466.

Attorney(S)

COUNSEL Gassner Gassner and Lawrence M. Gassner for Appellant. J. Patrick Conroy for Respondent.

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Smart Summary

Factual and Procedural Background

Helma Lorenz (appellant) filed a petition for dissolution of marriage in March 1980. The marriage to James B. Lorenz (respondent) was dissolved on November 25, 1981. The trial court resolved issues concerning property division and spousal support following a trial. This appeal challenges certain aspects of the trial court's judgment.

Legal Issues Presented

Whether the term life insurance policies on the husband's life should be considered community property subject to division.
Whether the trial court abused its discretion in its award of spousal support.
Whether the trial court erred in not evaluating and dividing the husband's accrued vacation benefits.

Arguments of the Parties

Appellant's Arguments

The term life insurance policies on the husband's life are community assets and should be subject to division.
The trial court abused its discretion by awarding spousal support without requiring the husband to maintain medical insurance for the wife.
The husband's accrued vacation benefits should have been evaluated and divided as community property.

Respondent's Arguments

The term life insurance policies have no cash or economic value and thus are not divisible community property.
The accrued vacation time is not payable if unused, and therefore not an asset subject to division.
The trial court properly exercised discretion in awarding spousal support without mandating medical insurance coverage.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
In re Marriage of Aufmuth (1979) 89 Cal.App.3d 446	Defines "property" under community property statutes as requiring certain attributes including ownership, transferability, and survivability.	Used to establish that not all rights or benefits acquired during marriage qualify as divisible property.
Franklin v. Franklin (1945) 67 Cal.App.2d 717	Clarifies the attributes necessary for property classification under community property laws.	Supports the court's reasoning that intangible assets must have economic value to be divisible.
In re Marriage of Brown (1976) 15 Cal.3d 838	Recognition that certain intangible assets (e.g., non-vested pension rights) are community property if economically valuable.	Distinguishes assets with monetary value from those without, such as term life insurance policies.
In re Marriage of Forrest (1979) 97 Cal.App.3d 850	Contingent retirement benefits can be community property if they have economic value.	Used to illustrate that intangible benefits must be monetarily valuable to be divisible.
In re Marriage of Mantor (1980) 104 Cal.App.3d 981	ERISA retirement benefits are community property due to their economic value.	Supports the principle that economic value is key to divisibility.
Todd v. Todd (1969) 272 Cal.App.2d 786	Property must be of a character that a monetary value can be placed on it for division.	Applied to conclude term life insurance policies have no cash value and thus are not divisible.
In re Marriage of Holmgren (1976) 60 Cal.App.3d 869	Whole life insurance policies have cash surrender value and can be divided as community property.	Distinguished from term life insurance, which lacks cash value.
Brawman v. Brawman (1962) 199 Cal.App.2d 876	Whole life insurance policies' cash surrender value is community property.	Supports the distinction between whole life and term life insurance for division purposes.
Biltoft v. Wootten (1979) 96 Cal.App.3d 58	Proceeds from life insurance policies paid from community funds are community property.	Clarified that only proceeds payable at death are community property, not the term policy itself.
Patillo v. Norris (1976) 65 Cal.App.3d 209	Life insurance proceeds payable at death are community property if premiums paid from community funds.	Does not support treating term life policies as divisible property at dissolution.
In re Marriage of Morrison (1978) 20 Cal.3d 437	Trial court's discretion in setting spousal support is broad and will not be disturbed absent abuse.	Affirms that no abuse of discretion occurred in the spousal support award.
In re Marriage of Andreen (1978) 76 Cal.App.3d 667	Defines abuse of discretion as exceeding bounds of reason considering all circumstances.	Supports affirming the trial court's spousal support decision as reasonable.

Court's Reasoning and Analysis

The court consolidated the appellant's first and third issues, focusing on whether assets without economic value can be divided as community property. The term life insurance policies on the husband's life were found to have no cash value, consistent with the general understanding that term policies expire worthless if not claimed. The court distinguished term life insurance from whole life insurance, which has a cash surrender value and can be divided. The court also examined the husband's accrued vacation time, noting that it was not payable if unused, and therefore lacked economic value or convertibility to cash. Consequently, both assets were held not to qualify as divisible community property under California law, which requires that property have attributes such as ownership, transferability, and economic value.

Regarding spousal support, the court acknowledged the wife's medical needs and the prior temporary order requiring husband to maintain medical insurance. However, the final judgment increased spousal support payments without mandating medical insurance coverage, presumably accounting for the cost of insurance in the increased amount. The court emphasized the broad discretion trial courts have in setting spousal support and found no abuse of discretion in the trial court's decision.

Holding and Implications

The judgment of the trial court is affirmed.

The court held that term life insurance policies without cash value and accrued vacation time not payable in cash are not divisible community property. The trial court did not abuse its discretion in awarding spousal support without requiring the husband to maintain medical insurance for the wife. The decision directly affects the parties by upholding the trial court's property division and support award, but it does not establish new precedent beyond clarifying the non-divisibility of term life insurance policies lacking cash value and non-payable accrued vacation benefits.

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In re the Marriage of HELMA and JAMES B. LORENZ. HELMA LORENZ, Appellant, v. JAMES B. LORENZ, Respondent.

OPINION

SCHNEIDER, J.[fn*] [fn*] Assigned by the Chairperson of the Judicial Council.

Helma Lorenz (hereinafter wife) appeals from a judgment of dissolution of her marriage to James B. Lorenz (hereinafter husband). The issues raised by appellant do not necessitate an elaborate recitation of the facts. Suffice it to say that the marriage of the parties was dissolved on November 25, 1981. Petition for dissolution had been filed by wife in March 1980 and issues of property and support rights were resolved by the lower court following a trial.

Wife raises the following issues on appeal:

1. The court should have determined that the term life insurance policies, on the life of husband, were a community asset, subject to division.

2. The court abused its discretion in its award of spousal support.

3. The court erred in not evaluating and dividing husband's vacation benefits.

Appellant's first and third contentions both concern the power of the trial court to divide assets which have no economic value. Those issues will both be discussed under this first rubric. As to the first asset, husband is the named insured under two policies of life insurance, one issued through the Veterans Administration and one through his employment. They have a face value of $10,000 each, and both are term policies. The court found: "Any life insurance policies on respondent's life are found to have no cash value."

As to the second asset, wife contends that the trial court should have determined that husband's accrued vacation pay was an asset subject to division. The record does not reflect that appellant was entitled to any accrued vacation pay. Rather, he testified that he had accumulated 120 hours of vacation time, but that if it was not used, he would not be paid for it.

Appellant cites and relies on Hewett v. Hewett (Cal.App.). In December 1979, the California Supreme Court directed the Reporter of Decisions not to publish this opinion in the official reports. Citation thereto is, therefore, improper. (Cal. Rules of Court, rule 977.)

(1) "It is well established that the word `property', as used in the statutes relating to community property, does not encompass every property right acquired by either husband or wife during marriage, . . ." ( In re Marriage of Aufmuth (1979) 89 Cal.App.3d 446, 461 [ 152 Cal.Rptr. 668]. Rather, it is implicit in the scheme of community property laws that property have certain attributes — that it be susceptible of ownership in common, of transfer, and of survival. ( Franklin v. Franklin (1945) 67 Cal.App.2d 717, 725 [ 155 P.2d 637].)

We recognize that certain intangible assets are property under community property statutes. (See for example, In re Marriage of Brown (1976) 15 Cal.3d 838 [ 126 Cal.Rptr. 633, 544 P.2d 561, 94 A.L.R.3d 164]: non-vested pension rights; In re Marriage of Forrest (1979) 97 Cal.App.3d 850, 852 [159 Cal.Rptr. 229]: contingent retirement benefits; In re Marriage of Mantor (1980) 104 Cal.App.3d 981 [ 164 Cal.Rptr. 121]: ERISA retirement benefits.) However, each of those assets, although intangible, was acknowledged to have economical monetary value. In order to qualify as property, within the meaning of our community property laws, an asset must be "of such a character that a monetary value for division with the other spouse can . . . be placed upon it." ( Todd v. Todd (1969) 272 Cal.App.2d 786, 791 [ 78 Cal.Rptr. 131] .)

(2) No such monetary value can be placed upon the assets claimed here by wife. The mere fact that these assets are of benefit to husband does not compel the conclusion that that benefit must, or can, be divided. We imagine that there are many "assets" held by a spouse at the time of marriage, particularly those arising out of employment, which are not subject to division. For example, an employee may be entitled to use the facilities of a health club owned by his employer, to purchase meals at an employer-owned cafeteria at reduced prices, or to receive a discount for purchases made at an employer-owned retail establishment. An employee may be given the privilege of choosing to work four 10-hour days per week rather than five 8-hour days per week, thus entitling him or her to a three-day weekend. All of these benefits, although of value to the employee spouse, are not convertible into cash. They are therefore, not divisible on dissolution of the marriage.

These benefits, although not divisible as community property, may be considered by the trial court as they may impact other issues: i.e., spousal support, custody and visitation rights.

In many California cases, courts have recognized the value of whole life insurance as its cash surrender value, and have divided that value when the policy was determined to be community property. (See for example, In re Marriage of Holmgren (1976) 60 Cal.App.3d 869, 871 [ 130 Cal.Rptr. 440]; Brawman v. Brawman (1962) 199 Cal.App.2d 876, 878 [ 19 Cal.Rptr. 106].) However, unlike whole life insurance, term life insurance is generally accepted as having no value, since once its term has expired it is worthless. (Markey, Cal. Family Law, Practice and Procedure, § 24.45 [3][e] p. 24-25; Hogoboom, Cal. Basic Practice Guide, Family Law, § 8:313.)

Appellant relies on a series of cases which have found a community interest in life insurance, even term insurance, on the death of the insured. In those cases, the courts have held that the proceeds of insurance, whether term or otherwise, then payable, were community property, to the extent that premiums thereon were paid from community funds. (See for example, Biltoft v. Wootten (1979) 96 Cal.App.3d 58 [ 157 Cal.Rptr. 581] ; Patillo v. Norris (1976) 65 Cal.App.3d 209 [ 135 Cal.Rptr. 210].) Those cases do not support the proposition asserted by wife here: that the term policy itself, at the time of dissolution of a marriage, has a value which can then be divided. The proceeds or benefits of the policy, of course, have a value. However, until those benefits are payable, the policy itself is worthless.

The parties cite no California cases addressing the divisibility of term life insurance, and our research has discovered none. Nonetheless, we are persuaded that the trial court properly ruled that the policies of term life insurance were not property subject to division on dissolution of the marriage.

Likewise, the trial court properly concluded that appellant's accumulated vacation time was not an item of community property subject to division.

(3a) Wife contends that the trial court abused its discretion in awarding spousal support unaccompanied by a requirement that husband maintain medical insurance for her benefit. She correctly asserts that she established at trial considerable medical needs. The court's recognition of this fact is reflected in the following finding: "Petitioner is found to be presently unemployed and chronically ill." It does not follow, however, that the court abused its discretion in not ordering husband to purchase medical insurance for the benefit of wife.

Early in the dissolution proceedings, on April 29, 1980, the trial court entered an order on wife's order to show cause, compelling husband to pay to wife the sum of $700 per month spousal support, and to maintain medical insurance for her benefit. At the conclusion of trial, the court increased the spousal support to $850 per month, but did not incorporate into the interlocutory judgment the temporary order that husband maintain responsibility for wife's medical expenses. It is reasonable to assume from the record that the court, in increasing the amount of spousal support, took into consideration the cost of medical insurance which wife would now have to acquire.

(4) "Although not unlimited, a trial court's discretion is broad in setting the amount of spousal support to be awarded upon dissolution of marriage. [Citations.]" In re Marriage of Morrison (1978) 20 Cal.3d 437, 454 [ 143 Cal.Rptr. 139, 573 P.2d 41]. This court will not interfere in the absence of evidence that it has been abused. Abuse is demonstrated if the trial court's discretion exceeds the bounds of reason, taking into consideration all of the circumstances before the court. ( In re Marriage of Andreen (1978) 76 Cal.App.3d 667, 671 [ 143 Cal.Rptr. 94] .) (3b) The trial court's order in the instant matter is not unreasonable under the circumstances, and no abuse of discretion has been demonstrated.

The judgment is affirmed.

Kingsley, Acting P.J., and Amerian, J. concurred.

Appellant's petition for a hearing by the Supreme Court was denied October 20, 1983. Kaus, J., Reynoso, J., and Grodin, J., were of the opinion that the petition should be granted.