IN RE MARRIAGE OF SHATTUCK

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Docket Number

Docket No. 49787.

Attorney(S)

COUNSEL Suzanne Cummins, Ruth Miller and Davidson, Miller Digiacinto for Appellant. Gassett, Perry Frank, Gassett, Perry, Frank Bondelie, Rolf M. Bondelie and Cherie A. Christiansen for Respondent.

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Smart Summary

Factual and Procedural Background

This appeal arises from a dissolution of marriage proceeding involving Doris M. Shattuck (wife/appellant) and Karl W. Shattuck (husband/respondent), both employees of Pacific Telephone and Telegraph Company and beneficiaries of its pension plan. At trial, Doris' pension rights were vested but not matured, while Karl's pension rights were both vested and matured. Neither party was required to retire nor planned to retire imminently. The superior court entered a judgment concerning the division of their pension funds following the interlocutory decree of dissolution of marriage. Doris appealed from the judgment regarding the division of pension funds.

Legal Issues Presented

Whether the court must distribute a vested, matured pension fund to the nonemployee spouse despite the employee spouse's election to continue working.

Arguments of the Parties

Appellant's Arguments

Doris argued that the community interest in Karl's pension fund should have been distributed at trial despite Karl's election to continue working.
She contended she had elected to receive her community property share of Karl’s monthly retirement benefits immediately, rather than waiting for Karl’s retirement.

Respondent's Arguments

This information was not available in the provided opinion.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
In re Marriage of Brown (1976) 15 Cal.3d 838	Retention of jurisdiction over pension funds; determination of present actuarial value of pension rights; broad discretion in payment methods.	Used as a foundational authority for jurisdiction and valuation of pension interests, emphasizing actuarial calculation of present value and discretion in payment.
In re Marriage of Judd (1977) 68 Cal.App.3d 515	Proper formula for division of community and separate property interests in pension benefits.	The court agreed the parties’ interests should be determined according to Judd’s formula rather than the erroneous formula used below.
In re Marriage of Freiberg (1976) 57 Cal.App.3d 304	Timing of retirement benefits and control over commencement of pension payments by employee spouse.	Confirmed that the employee spouse controls the timing of retirement and pension payments, affecting division of pension benefits.
In re Marriage of Gillmore (1981) 29 Cal.3d 418	Nonemployee spouse’s right to elect immediate distribution of community property share of pension benefits.	Held that nonemployee spouse may elect to receive an amount equivalent to their community share immediately, even if employee spouse continues working.
Phillipson v. Board of Administration (1970) 3 Cal.3d 32	Preferred method of awarding pension rights to employee with offsetting property to spouse; valuation of pension benefits.	Referenced for the principle that pension rights should be awarded to the employee with property of equal value awarded to spouse.
In re Marriage of Olson (1980) 27 Cal.3d 414	Mandate that community property be divided equally in dissolution proceedings.	Reinforced the absolute rule of equal division of community property under Civil Code section 4800.
Smith v. Lewis (1975) 13 Cal.3d 349	Actuarial determination of present value of pension benefits.	Supported the court’s approach to valuing pension rights based on actuarial present value.
Waite v. Waite (1972) 6 Cal.3d 461	Actuarial valuation of pension benefits.	Further authority for actuarial valuation approach.
In re Marriage of Forrest (1979) 97 Cal.App.3d 850	Valuation of pension rights.	Referenced in support of actuarial valuation principles.
In re Marriage of Samuels (1979) 96 Cal.App.3d 122	Valuation of pension rights.	Used to support actuarial valuation methodology.
Bensing v. Bensing (1972) 25 Cal.App.3d 889	Actuarial valuation and expert testimony as factual question.	Established that actuarial valuation is a factual determination, typically requiring expert testimony.

Court's Reasoning and Analysis

The court analyzed the issue of whether the nonemployee spouse, Doris, was entitled to immediate distribution of her community property interest in the matured pension fund despite Karl’s choice to continue working. It relied heavily on the Civil Code section 4800 mandate that community property be divided equally upon dissolution. The court noted that while the employee spouse is free to continue working and delay retirement, the nonemployee spouse is entitled to an amount equivalent to her community interest in the pension fund immediately upon dissolution, as held in In re Marriage of Gillmore.

The court rejected Doris’ contention that she could receive monthly payments as if Karl were retired, pointing out this would frustrate the equal division mandate by obligating Karl to make payments without receiving pension benefits himself. Instead, the court emphasized that the trial court must determine the present actuarial value of the pension rights as of the date of separation, considering uncertainties like life expectancy and health, following principles established in In re Marriage of Brown and related cases.

The court explained that the method and timing of payments are within the trial court’s broad discretion. It also noted an additional issue regarding Doris’ pension rights, which, although vested but not matured, must also be considered for division as community property on remand.

Holding and Implications

The court REVERSED the judgment and REMANDED the case to the superior court for further proceedings consistent with the principles set forth in In re Marriage of Judd, In re Marriage of Freiberg, and In re Marriage of Gillmore, and the views expressed in the opinion.

The direct effect is that Doris is entitled to receive an amount equivalent to her community property interest in Karl’s pension fund immediately upon dissolution, rather than waiting for Karl’s retirement. The superior court must determine the present actuarial value of the pension benefits and decide on an appropriate method of payment. Additionally, Doris’ own pension rights, vested but immature, are subject to division as community property. No new legal precedent was established; rather, the court applied and clarified existing authorities.

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In re the Marriage of DORIS M. and KARL W. SHATTUCK. DORIS M. SHATTUCK, Appellant, v. KARL W. SHATTUCK, Respondent.

OPINION

ELKINGTON, J.

In a marriage dissolution action the wife, Doris, appeals from a "Judgment re Division of Pension Funds After Interlocutory Decree of Dissolution of Marriage."

Doris, and the husband, Karl, were employed by the Pacific Telephone and Telegraph Company. Each was a beneficiary of the company's employees' pension plan. Doris' pension rights at the time of the trial had vested but not matured, while Karl's such rights were both vested and matured. Neither party was obliged to retire, and neither had plans to do so until required by the company's rules.

The judgment, as relevant, stated:

"1. The court retains jurisdiction over both the petitioner's and respondent's pension funds with Pacific Telephone and Telegraph Company pursuant to the Brown [ In re Marriage of Brown (1976) 15 Cal.3d 838 ( 126 Cal.Rptr. 633, 544 P.2d 561, 94 A.L.R.3d 164)] decision.

"a. The court retains jurisdiction over the pension fund of petitioner to distribute the same in accordance with the following formula: . . ." (There followed an erroneous formula for division of the parties' respective community and separate property interests in the retirement benefits.)

The parties now agree (we think correctly) that their respective interests in the retirement benefits should have been determined as provided by In re Marriage of Judd (1977) 68 Cal.App.3d 515, 522 [ 137 Cal.Rptr. 318], and In re Marriage of Freiberg (1976) 57 Cal.App.3d 304, 310 [ 127 Cal.Rptr. 792] (disapproved on other grounds in In re Marriage of Gillmore (1981) 29 Cal.3d 418, 425, fn. 5 [ 174 Cal.Rptr. 493, 629 P.2d 1]).

(1) Doris states the remaining issue of her appeal as follows: "Whether the court must distribute a vested, matured pension fund to the nonemployee spouse despite the employee spouse's election to continue working." She argues that in such a case, or at least this case, the community interest in the fund should have been distributed at the trial, as she had elected.

We find merit in the contention. In re Marriage of Gillmore, supra, 29 Cal.3d 418, passim (decided after entry of the instant judgment), expressly holds that a nonemployee spouse may elect to take his or her community property share of the other's retirement benefits at the time of their marriage dissolution proceedings.

Indeed, it has been said that where possible, "the preferable mode of division would be to award the pension rights to the employee and property of equal value to the spouse." ( Phillipson v. Board of Administration (1970) 3 Cal.3d 32, 46 [ 89 Cal.Rptr. 61, 473 P.2d 765] [disapproved on other grounds in In re Marriage of Brown, 15 Cal.3d 838, 851, fn. 14].)

But nevertheless we discern what appears to be a contention of Doris' appeal that under Gillmore she had a right to, and did, elect at the time of the parties' marriage dissolution proceedings, to thereafter receive from Karl sums of money ($178.92 monthly) equal to what her community property interest in his monthly retirement benefits would have been, had he then been retired. In this, she is mistaken.

We point out initially — the absolute rule of Civil Code section 4800 — that in marriage dissolution proceedings, the community property of the parties shall be divided equally. (See In re Marriage of Olson (1980) 27 Cal.3d 414, 421 [ 165 Cal.Rptr. 820, 612 P.2d 910].)

Equally well established is the rule that in marriage dissolution proceedings an employee spouse, eligible to retire as the beneficiary of a pension fund, who is not required to and wishes not to so retire, is under no legal compulsion to do so. "He is free to continue working" ( In re Marriage of Gillmore, supra, 29 Cal.3d 418, 427), and "The time when the monthly retirement payments will commence . . ., as between the [employee] husband and the wife, [is] entirely within the control of the husband" ( In re Marriage of Freiberg, supra, 57 Cal.App.3d 304, 311).

Doris' contention's nonconformity with the mandate of Civil Code section 4800, that community property be divided equally, will perhaps best be pointed up in this manner. Assuming, as was his right, that Karl wished not to retire until required to after 10 more years, under her contention he would be obliged over that period of time to pay her $21,384 ($178.20 x 120 mos.) while he, himself, received no retirement benefits. Only thereafter would they share the benefits according to their respective interests. The consequent frustration of section 4800's purpose is manifest.

Instead Gillmore, which beyond any doubt is the latest and leading case on the subject, provides that upon dissolution of the parties' marriage, Doris was entitled to immediate distribution of her community property share of Karl's pension fund. That distributive share consisted of an amount equivalent to her interest therein. The court did not create a fiction that Karl be deemed to have received his monthly pension payments, and was therefore bound to pay over to Doris her community property share of them. Gillmore says no more than that: "If he does not wish to retire, he must [upon dissolution of the marriage and her demand] pay her an amount equivalent to her interest." (29 Cal.3d p. 427; our italics.)

Upon determination of Doris' present community property interest in Karl's pension fund, its value will be affected by its inherent uncertainties such as the parties' probable life expectancies and their health, and the fact that an early death might preclude any pension payments at all. It will embrace everything that has reasonable relevancy to the expectancy's present value. See In re Marriage of Brown, supra, 15 Cal.3d 838, 848. The judicial concern will be the "present value of pension rights." ( Id., p. 848.) And it is settled that such present value will be actuarially determined, among other things, by considering the retirement benefit's uncertainties. The search will be for the " actuarial current value of the benefits." ( Smith v. Lewis (1975) 13 Cal.3d 349, 361 [ 118 Cal.Rptr. 621, 530 P.2d 589, 78 A.L.R.3d 231] [disapproved on other grounds In re Marriage of Brown, 15 Cal.3d 838, 851, fn. 14]; and see Waite v. Waite (1972) 6 Cal.3d 461, 465 [ 99 Cal.Rptr. 325, 492 P.2d 13] [disapproved on other grounds In re Marriage of Brown, 15 Cal.3d 838, 851, fn. 14]; Phillipson v. Board of Administration, supra, 3 Cal.3d 32, 39; In re Marriage of Forrest (1979) 97 Cal.App.3d 850, 852 [159 Cal.Rptr. 229] ; In re Marriage of Samuels (1979) 96 Cal.App.3d 122, 128 [ 158 Cal.Rptr. 38]; In re Marriage of Judd, supra, 68 Cal.App.3d 515, 519; Bensing v. Bensing (1972) 25 Cal.App.3d 889, 894 [ 102 Cal.Rptr. 255] [disapproved on other grounds In re Marriage of Brown, 15 Cal.3d 838, 851, fn. 14].) Such an actuarial value determination will, of course, be a question of fact for the trial court. ( Bensing v. Bensing, supra, 25 Cal.App.3d p. 895.) And it would seem that, at least ordinarily, it would be the subject of expert testimony. (See Smith v. Lewis, supra, 13 Cal.3d p. 361.)

Upon determination of Karl's retirement benefit's present value (as of the date of the parties' separation; see Civ. Code, § 5118), the trial court will have broad discretion as to the manner in which Karl will be directed to pay Doris an amount equivalent to her community property interest in it. ( In re Marriage of Brown, supra, 15 Cal.3d 838, 848, fn. 10.)

For these several reasons, the judgment will be reversed and the cause remanded to the superior court for further proceedings.

There appears yet another issue, unraised by the parties on the appeal, that will undoubtedly be presented upon remand to the superior court.

All community property interests in pension funds, "whether the benefits are vested or nonvested, matured or immature" are subject to equal division upon dissolution of a marriage. ( In re Marriage of Gillmore, supra, 29 Cal.3d 418, 422.) Doris' above-mentioned pension fund will accordingly, at Karl's request, also be subject to appropriate division between the parties, as an offset to Karl's pension fund obligation.

The judgment is reversed. The superior court will take such further proceedings as are not inconsistent with In re Marriage of Judd, supra, 68 Cal.App.3d 515, 522, In re Marriage of Freiberg, supra, 57 Cal.App.3d 304, 310, In re Marriage of Gillmore, supra, 29 Cal.3d p. 425, and otherwise with the views we have here expressed.

Racanelli, P.J., and Newsom, J., concurred.

On September 2, 1982, the opinion was modified to read as printed above.