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Filed 9/27/16 CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

THIRD APPELLATE DISTRICT

(Sacramento)

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In re th e Marriage of JUDY KAY and PHIL IP KURTIS CHAPMAN. C079615

JUDY KAY CHAPMAN,

Respondent ,

v. PHILIP KURTIS CHAPMAN,

Appellant. (Super. Ct. No. 01FL06530)

APPEAL from a judgment of the Superior Cour t of Sacramento County, Steven M . Gevercer, Judge. Affirmed in part and reversed in part. Walzer Melcher, Steven K. Yoda and Christopher C. Melcher for Appellant. Michael R. Locks for Respondent.

The main issue in this case is whether one spouse’s unilateral election ( after a marital settlement agreement and judgment of dissolution) to change from one type of2

military benefit ( military ret irement that is taxable and community property ) to another type of military benefit ( combat

- related special compensation that is not taxable and separate property) can defeat the community property interest of the other spouse set
fo r th in the marital sett lement agree ment. The answer is “no.” “ It is a ‘settled principle that one spouse cannot, by invoking a condition wholly within his control, defeat the community interest of the other spouse.’ ” ( In re Marriage of Gillmore (1981) 29 Cal.3d 418, 423.)
T he trial court here correctly determine d that “the post

- judgment election” by appellant Philip Kurtis Chapman (Philip) “of Combat[

- ]Related Special Compensation in lieu of military pension payments” does not “relieve[] [Philip] of his agreement to pay [res pondent Judy Kay Chapman (Judy)] $475 per month for her community property share of his military retirement.” We reverse the trial court’s order , however , because the remedy th e court selected was improper

. The trial court imposed a constructive trust on the funds received by Philip as combat

- related special compensation benefits

. But t he remedy of a constructive trust is available only for wrongful conduct. ( Calistoga Civic Club v. City of Calistoga (1983) 143 Cal.App.3d 111, 116 .) Here, Philip ’s elec tion was not wrongful; h e had every right to choose to receive combat

- related special compensation benefit s in lieu of military retirement ben efit s

. But he could not , by that
election , defeat Judy’s right to receive $475 per month for her community proper ty interest in the pension payments he voluntarily and unilaterally relinquished. Accordingly, we will reverse and remand.

FACTUAL AND PROCEDURAL BACKGROUND For 20 years, from July 1971 to July 1991, Philip s erved in the United States Navy, including in the Vietnam War and the Persian Gulf War . For 17 of those years, beginning in August 1974, Philip and Jud y were married. In 1991, after Philip retired, he
started re ceiving military retirement benefits

.3

In 2003, Philip and Judy stipulated to a judgment of dissolution in a marital settlement agree ment. The stated intent of the agreement was “to effect a substantially equal division between [Judy] and [Philip] of their communit y assets . . . .” Philip and
Ju dy agreed that Judy “shall take [¶] . . . [¶] [Judy’s] community portion of [Philip] ’s military retirement pay in the am ount of $ 475.00 per month.” Judy “ acknowledge[d] that [certain] property

. . . [wa]s the separate property of [Philip] and

. . . waive[ d] any . . . interest in said property,” which included, “social security and disability accounts” and

“ [ a ] ny and all work r elated benefits.” In April 2004, the trial court approved the agreement. After the judgment of dissolution, the Department of Vet erans Affairs offered
Phili p the opportunity to apply for combat

- related special compensation benefit s in lieu of his military retirement benefit s , as he had been diagnosed with post traumatic stress disorder (PTSD) because of his active combat roles. The dollar amount s of the two
benefits were the same, but the difference was that combat

- related special compensation
benefit s were not taxable. Because of the tax advantage, Philip elected to receive
combat

- related special compensation benefit s in lieu of hi s military retirement benefit s

. In October 2004, Philip became eligible to receive combat

- related special compensation
benefit s

. Philip continued paying Judy $475 per month until March 2014. Judy then filed a lawsuit seeking to enforce the terms of the judgment of dissolution to continue her monthly payments of $475. The trial court ruled for Judy, reasoning that Philip and Judy “intended for [Judy] to continue to receive her original share of [Philip]’s retirement pay even if he waived all

or a portion of that pay to obtain [ combat

- related special compensation benefit s ], ” “because there is nothing in the language of the judgment that would make it reasonably susceptible to the interpretation that the parties had agree d that [Philip] would reduce or eliminate the retirement asset by his voluntary waiver some time in the future.”4

“Accordingly a constructive trust is imposed on the funds received by [Philip] as [ combat

- related special compensation ] benefits in order to remedy the monthly financial
im pact on [Judy] of his post

- judgment election to receiv e disability benefits in lieu of military retirement. [Philip] is not required to satisfy this obligation with his [ combat

related special compensation ] benefits , and is free to use any other assets in order to satisfy this obligation. ” Philip timely appealed from this order.
DISCUSSION
The gravamen of Philip’s ap peal is that under federal law, m ilitary disability benefits, such as combat

- related special compensation , are not c onsidered “retired pa y”
that is divisible community property un der state law. W e have no disagreement with this proposition. The problem for Philip, however, is that his unilateral election of combat

related special compensation benefit s could not defeat Judy’s community pro perty interest set forth in the marital settlement agreement. We explain these principles and their application below.
Retirement benefits generally represent deferred compensation for work performed by an employee. ( In re Marriage of Benson (2005) 36 Cal. 4th 1096, 1104.) Thus, to the extent the work was performed during the marriage, such benefits are community property. ( I

d

. at pp. 1103

- 1104. ) This includes military retirement payments to the extent they derive from military service performed d uring the marriage. ( Casas v. Thompson (1986) 42 Cal. 3d 131, 139 .) Consistent with this rule, under federal law, “ a court may treat disposable retired pay payable to a [military] member ” as community property. (10 U.S.C. § 1408(c) .)
There is a differen t rule, however , with respect to veteran s ’ disability benefits. “The purpose of disability benefits . . . is primarily to compe nsate the disabled veteran for

‘ the loss of earnings resulting from his compelled premature military retirement and from
diminis hed ability to com pete in the civilian job market’ [citation] and secondarily to5

compensate him for the personal suffering caused by the disability. ” ( In re Marriage of Stenquist (1978) 21 Cal.3d 779, 787. ) Thus, u nder federal law, a court may not treat
those benefits as community property. ( See Mansell v. Mansell (1989) 490 U.S. 581, 585, 594

- 59 6 [104 L.Ed.2d 675, 683, 688

- 6 89 ] [where a military spouse had been receiving both disability benefits and retired pay at the time of dissolution, the California state court could divide as community property the retired pay but not the disability payments] .) 1 Sometimes, as happened here, disabled military retirees choose to receive combat

related special compensation benefits , if they are entitled to them. This allows v eterans who h ave a combat

- related disability to receive tax

- free benefits in exchange for an equal
reduction in their retirement pay. ( 10 U.S.C. § 1413a (b); 26 U.S.C. § 104(a)(4), (b)(2)(C).) Payments made as combat

- related special c ompensation benefits “are not retired pay.” (10 U.S.C. § 1413a(g).) F ederal law precludes division of combat

- related special compensation b enefit s as community property. (See 10 U.S.C. § 1408(a)(4)(C);
Mansell v. Mansell , supra , 490 U.S. at pp. 594

- 5 9 6 [104 L.Ed.2d at pp. 688

- 6 89 ].) 2 This, however, does not mean that where , after dissolution , Philip unilaterally
elected to relinquish his military retirement benefit s that were community property in
favor of combat

- related special compensation benefit s t hat were separat e property, he could defeat Judy’s community property interest as set forth in the marital settlement

1 In keeping with the rule about disability benefits, “disposable retired pay” is defined as: “ ‘the total monthly retired pay to which a member is entitled’ less, among other things, amounts deducted as a result of the waiver required to receive disability benefits.” ( In re Marriage of Smith (2007) 148 Cal.Ap p.4th 1115, 1120

- 1121, quoting 10 U.S.C. § 1408(a)(4).)

2 The analysis in the pre ceding three paragraphs was largely drawn from Merrill v. Merrill (Ariz. Ct. App. 2012) 230 Ariz 369 [284 P.3d 880].6

agreement. Instructive here are two cases fro m the California Supreme Court, Marriage of Gillmore and Marriage of Stenquist , which we dis cuss next.
In Marriage of Gi llmore , the husband and wife separated after 14 years of marriage, and the trial court entered a final judgment of dissolution, specifically reserving jurisdiction ove r the husband’s retirement plan. ( In re Marriage of Gillmor e , supra , 29 Cal.3d at p. 421

. ) After t he marriage was dissolved, the h usband continued working even
when he became eligible to retire. ( Id . at p. 422

. ) The wife requested an order directing the husband to pay to her immediately her share of the pension benefits. ( Ibid. ) The trial

court denied the request, hol d ing it had discretion to delay distribution of the benefits until the husband actually retired. ( Ibid. ) The California Supreme Court reversed. ( Id . at p. 429.) The court held that the husband could not “ tim e his retirement to deprive [the wife] of an equal share of the community’s interest in his pension. It is a ‘settled principle that one spouse cannot, by invoking a condition wholly within his control,
defeat the communit y interest of the other spouse.’ ” ( Id . at p. 423 , quoting In re Marriage of Stenquist , supra , 21 C al.3d at p. 786 .)
In re Marriage of Stenquist “involved a husband’s election to receive disability benefits (usually separate property), rather than retirement pay (usually community property). [The California Supreme Court in Stenquist ] held that the husband could not use this election to deprive his wife of her interest in his retirem ent benefits. ‘[To] permit the husband, by unilateral election of a “disability” pension, to “transmute community property into his own separate property” [citation], is to negate the protective philosophy of the community property law as set out in previous decisions of this court.’ ” ( In re Marriage of Gillmore , supra , 29 Cal.3d at pp. 423

- 424.) “The result of the husband’s
unilateral decision in Stenquist would have been to deprive the wife of any interest in his retirement benefits.” ( Marriage of Gillmore , at p. 424.) “Thus, although the husband in Stenquist had every right to choose a disability pension rather than retirement pay, his choice did not prevent the court from ordering him to pay to the wife an amount7

equivalent to what her interest would have been had he chosen retirement pay.” ( Marriage of Gillmore , at p. 42 6

. ) “The employee spouse cannot by electio n defeat the nonemployee spouse’ s interest in the community property by relying on a condition

so lely within the employee spouse’ s control. ” ( I d

. at p. 425. )
The same is true here. While Ph ilip had every right to ch oose combat

- related special compensation benefit s rather than military retirement benefits , his choice could

not defeat Judy’s community property interest in the retirement benefits

. Philip made this choice after they separated, after they stipulated to the judgment of dissolution , after they
entered into the marital settlement agreement, and after the c ourt approved the agreement. In the agreement, Philip and Judy agreed that Judy “shall take [¶] . . . [¶] [Judy’s] community por tion of [Philip’s] military retirement pay in the amount of $4 75.00 per month.” There was nothing in the language of the agreemen t that would m ake it reasonably susceptible to the interpretation Philip urges, which is that he could unilaterally reduce or eliminate the retirement asset by his voluntary waiver sometime in
the future. Our conclusion is also not, as Philip urges, inconsistent with federal law.

“ Mansell held merely that the federal law does not grant state cou rts the power to divide

‘ military retirement pay that has been waived to receive v eterans’ disability benefits. ’ ” ( In re Marriage of Smith (2007) 148 Cal.App. 4th 1115, 1123

- 1124. ) Here, the trial court
did not divide military retirement pay that had been waived; it e nforced the preexisting marital settlement agreement by ordering Philip to pay Judy $475 per month to compensate her for her community property share of the retirement pay he unilaterally and voluntarily relinquished. 3

3 Moreover, contrary to Philip’s assertion, no reservation of jurisdiction clause was necessary here for Judy to raise the issue

. Judy wa s not attempting to modify or change the judgment, but to enforce it based upon Philip’s unilateral attempt to modify its terms.8

The trial court did err, however, in imposing a constructi ve trust “ on the funds received by [Philip] as [ combat

- related special compensation ] benefit s in order to remedy the monthly financial impact on [Judy] of his post

- judgment election to receive disability
benefits in lieu of military retirement,” because the remedy of a constructive trust is available only for wrongful conduct. A constructive trust requires “ the existence of a res (property or some interest in the property); the plaintiff’ s right to that res; and the defendant’ s acquisition o f the res by some wrongful act.” ( Calistoga Civic Club v. City of Calistoga , supra , 143 Cal.App.3d at p. 116 ; see also Civ. Code, § 2224 [“ One who gains a thing by fraud, accident, mistake, undue influence, the violation of a trust, or other wrongful act, is, unless he or she has some other and better right thereto, an involuntary trustee of the thing gained, for the benefit of the person w ho would otherwise
have had it ”]

. ) “ A constructive trust cannot exist unless there is evidence that property
has been wron gfully acquired or detained by a person not entitled to its possession.” ( Communist Party v. 522 Valencia, Inc. (1995) 35 Cal.App.4th 980, 991, italics omit ted .) Here, Philip did nothing wrong in electing to receive combat

- related special compensation be nefit s in lieu of military retirement benefit s

. He testified he did it for the tax benefits to himself and he did not understand “ th ere was a difference between c ombat

r elated special c ompensation and military retirement benefits in terms of what military spouses are entitled to.” The absence of any wrongful conduct, however, does not leave Judy without a remedy . Philip testified he has “about [a] $7,000 a month income.” The trial c ourt was entitled to order Philip to pay $475 per month to ensure Judy receives the benefit of the bargain she made in the marital settlement agreement to receive her community portion of Philip’s military retirement pay in that amount

. Whether the trial court may also

Family courts always have jurisdiction to enforce orders and judgments. (Fam. Code, § 290.)9

fashion some further equitable remedy to secure Judy’s right to that payment is a matter
we leave to the trial court in the first instance. At this point, all we hold with respect to the remedy is that imposition of a constructive trust is im proper. DISPOSITION The portion of the post

judgment order imposing a constructive trust on the funds received by Philip as combat

- related special compensation benefits is reversed. The portion of the order directing Philip to pay Judy $475 per month fo r her community property interest in the military retirement benefits he relinquished is affirmed.
The matter is remanded to the trial court to exercise its discretion to fashion further equitable relief to secure Judy’s right to that payment, if the cour t determines such relief is lawfully available and appropriate. Judy is entitled to her costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1 ).)

/s/ Robie, J.

We concur:

/s/ Blease, Acting P. J.

/s/ Mauro, J.