Court Opinion

ID: 9613916
Source: CourtListenerOpinion
Date Created: 2023-08-22 04:20:52.087241+00
Date Added: 2024-06-11T18:03:33.058603
License: Public Domain

CLARK, J.
I dissent.
Retirement pensions earned during marriage constitute community property, and disability pensions—no matter when the disability occurs—constitute separate property. Under federal law, a veteran who has qualified for both may receive only one. Either the separate property interest or the community property interest must be sacrificed, and the question before us is whether upon dissolution a portion of the disability pension—equal to the amount of retirement pension earned during marriage—shall be held to be community property. On the basis of well-settled principles, authorities and reason set forth in In re Marriage of Jones (1975) 13 Cal.3d 457 [119 Cal.Rptr. 108, 531 P.2d 420], it must be concluded the disabled person upon dissolution is entitled to the future *792disability pension payments as separate property, with spousal support available to meet the needs of the nondisabled former spouse in appropriate cases.
To reach the result that part of the disability pension is community, the majority disapprove our recent unanimous decision in Jones (by the author of today’s opinion), now implying that Jones was based on the overruled doctrine of French v. French (1941) 17 Cal.2d 775 [112 P.2d 235, 134 A.L.R. 366], which held that nonvested retirement pensions are mere expectancies. (Ante, p. 785.) The implication is false; Jones did not rely upon the doctrine of French. Moreover, by repudiating Jones, the majority establish an invidious discrimination between disabled employees and healthy ones who terminate employment, a discrimination betraying a shocking lack of compassion for the handicapped.
Facts
Husband entered the Army in 1944 and married in 1950. In 1953 he was injured by shell fragments, suffering amputation of his left forearm. Rather than exercising his right to disability compensation, he chose to remain on active duty.
When husband retired in 1970 at the age of 43, he possessed the options of regular retirement pay based on longevity of service equal to 65 percent of his basic pay, or disability compensation equal to 75 percent of his basic pay. Disability compensation is not subject to federal or state taxes. The Army assumed husband desired the higher amount and began making disability payments to him.
Husband commenced dissolution of the marriage in 1974. The trial court held the difference between future disability compensation and regular retirement benefits constitutes husband’s separate property. A portion of the pension was attributed to husband’s employment prior to marriage and was also held to be his separate property. The balance was attributed to employment during marriage and was held to be community property. The court awarded the wife half of all community assets, determined $38,000 was her separate property, granted child support and one dollar per month spousal support for two years.
*793Retirement Pensions
Recognizing that retirement benefits are not gratuities but represent deferred compensation for past service, this court has held that anticipated future retirement payments attributable to employment during marriage constitute a community asset divisible upon dissolution. (In re Marriage of Brown (1976) 15 Cal.3d 838, 841 et seq. [126 Cal.Rptr. 633, 544 P.2d 561]; In re Marriage of Jones, supra, 13 Cal.3d 457, 461; Waite v. Waite (1972) 6 Cal.3d 461, 471 [99 Cal.Rptr. 325, 492 P.2d 13]; Phillipson v. Board of Administration (1970) 3 Cal.3d 32 [89 Cal.Rptr. 61, 473 P.2d 765].) On this basis, future military retirement benefits have been held divisible as community property. (In re Marriage of Fithian (1974) 10 Cal.3d 592, 604 [111 Cal.Rptr. 369, 517 P.2d 449].) The retirement pension is divisible whether vested or nonvested. (In re Marriage of Brown, supra, 15 Cal.3d 838, 843-850.) While nonvested pension rights may in theory be divided by determining the present value of the rights, their evaluation must take into account the possibility that death or termination of employment may destroy them before maturity. The uncertainties warrant refusal to divide present value and instead awarding a portion of each pension payment as it comes due. (Id., at p. 848.)
Limitations on the applicability of community property principles to retirement pensions have also been established. Judicial recognition of the nonemployee spouse’s interest in pension rights does not limit the employee’s freedom to change or terminate his employment, to modify employment terms, including retirement benefits, or “to elect between alternative retirement programs.12 . . . The employee retains the right to decide, and by his decision define, the nature of the retirement benefits owned by the community.” (In re Marriage of Brown, supra, 15 Cal.3d 838, 849-850.) Unlike other community property interests, the nonemployee spouse’s interests may not be devised or inherited. (Waite v. Waite, supra, 6 Cal.3d 461, 472-474.) And a provision in the employee benefit plan granting benefits to an employee’s “widow” will be enforced to exclude benefits to a spouse married during the employment period where the marriage was dissolved and the employee remarried. (Id., at p. 472, fn. 6; Phillipson v. Board of Administration, supra, 3 Cal.3d 32, *79442-43; Benson v. City of Los Angeles (1963) 60 Cal.2d 355, 360-362 [33 Cal.Rptr. 257, 384 P.2d 649]; In re Marriage of Peterson (1974) 41 Cal.App.3d 642, 650 [115 Cal.Rptr. 184].)
These limitations on the applicability of community property doctrine reflect that pension programs not only compensate for past services but are also designed to induce persons to continue in the service of their employer by providing subsistence for employees and their dependents. (Waite v. Waite, supra, 6 Cal.3d 461, 472-473.) When the various goals conflict, community interests will be sacrificed when necessary to protect the private interests of employers and employees.
Disability Compensation
Unlike retirement pensions, veteran’s disability benefits do not constitute deferred compensation for past services. While longevity of service may be a factor in determining the underlying right to disability compensation and its amount, benefits depend primarily upon physical or mental disability, compensating for loss of earning capacity in the open labor market. Earnings following dissolution are of course separate property. The secondary purpose of disability benefits is to compensate for pain, suffering, disfigurement and resulting misfortune—all personal rather than community concerns. (In re Marriage of Jones, supra, 13 Cal.3d 457, 462; 7 Witkin, Summary of Cal. Law (8th ed. 1974) Community Property, § 1, p. 5094.)
Because the main bases for disability compensation are loss of earning capacity and personal damage rather than past services performed, disability compensation is analogous to a personal injury award rather than to a retirement benefit. In Washington v. Washington (1956) 47 Cal.2d 249 [302 P.2d 569], we held that while personal injury awards recovered during marriage might be classified as community property, a cause of action for such injury becomes the injured spouse’s separate property when the cause has not been reduced to judgment prior to the date of divorce. Justice Tray nor reasoned that in “such a case not only may the personal elements of damages such as past pain and suffering be reasonably treated as belonging to the injured party, but the damages for future pain and suffering, future expenses, and future loss of earnings are clearly attributable to him as a single person following the divorce. Moreover, as in any other case involving future earnings or other after acquired property, the wife’s right, if any, to future support may be protected by an award of alimony.” (47 Cal.2d 249, 253-254.)
*795The Legislature subsequently extended the Washington principle to all personal injury damages and settlement payments received after interlocutory decree of dissolution. (Civ. Code, § 5126.)
For the foregoing reasons, we concluded in In re Marriage of Jones, supra, 13 Cal.3d 457, 464, that “military disability payments received after dissolution of a marriage should ... be classified as the separate property of the disabled veteran.” (See In re Marriage of Olhausen (1975) 48 Cal.App.3d 190, 192 et seq. [121 Cal.Rptr. 444] (police officer disability).)1
Waiver of Retirement Pension
The veteran in Jones did not possess a vested right to a retirement pension and we expressly left open the question whether a disability pension, granted after the serviceman obtains a vested right, constitutes separate property. Nevertheless, the reasoning of Jones requires our conclusion that disability payments are separate property whether or not the veteran’s right to a retirement pension has vested.
Jones was decided when the rule existed that nonvested pension rights do not constitute community property divisible on divorce. (French v. French, supra, 17 Cal.2d 775, 778.) We later overruled French and held that nonvested pension rights are divisible upon dissolution. (In re Marriage of Brown, supra, 15 Cal.3d 838, 851.) Rejecting the argument that division of nonvested retirement pensions would infringe upon the employee’s freedom to contract, we pointed out that recognition of the nonemployee spouse’s interest in vested pension rights does not limit the employee’s right to change or terminate employment, to modify employment terms including retirement benefits, or to elect between alternative retirement programs. (Id., at p. 849.)
Because our decision in Brown determined that vested and nonvested retirement pensions shall be treated "alike, no reason exists to distinguish our holding in Jones that disability compensation following dissolution is separate property when a disabled employee possesses nonvested retirement rights. Disability compensation is obviously a legitimate separate property interest, whether the retirement pension is vested or not. And when, as here, direct conflict exists between that interest and the community interest in the retirement pension, one must bow. Resolution *796of the conflict is provided by Washington v. Washington, supra, 47 Cal.2d 249, 253-254, holding disability compensation separate property but fashioning spousal support to meet the needs of the nondisabled spouse.2
Such holding does not result in a deprivation of the spouse’s justifiable reliance on a retirement pension. Any such reliance must take into account our holding in In re Marriage of Jones, supra, 13 Cal.3d 457, 464 that military disability payments received after dissolution of a marriage are separate property of the disabled veteran if retirement due to disability occurs prior to vesting of a retirement pension. Thus, the spouse is on notice during the entire period when the retirement pension is assertedly earned that should the employee obtain dissolution and retire for disability, the disability payments will be separate.
The Majority Opinion
A. The Excuse to Reconsider In re Marriage of Jones, supra, 13 Cal.3d 457.
The majority indicate that Jones was somehow based on the doctrine of French v. French, supra, 17 Cal.2d 775, that nonvested pension rights were mere expectancies and thus not subject to division upon divorce as community property. (Ante, p. 785.) The majority then reason that because French was overruled in In re Marriage of Brown, supra, 15 Cal.3d 838, 851, we should now repudiate Jones.
The majority’s indication that Jones was based on the expectancy doctrine is false. As shown above, the basis of Jones was that disability pensions are primarily compensation for loss of earning capacity and for pain, suffering, disfigurement, and resulting misfortune—all separate rather than community concerns after dissolution. Jones does not cite French or mention the expectancy doctrine. And there was a very good reason why it was not mentioned—the justices were fully aware of the likelihood that French and the expectancy doctrine would be repudiated. Less than a year earlier, this court in In re Marriage of Wilson (1974) 10 Cal.3d 851, 853 [112 Cal.Rptr. 405, 519 P.2d 165], stated in the second and third sentences of the opinion; “We granted a hearing upon the petition *797of respondent wife, supported by an implied invitation from the Court of Appeal, to ascertain the current viability of the rule of French v. French (1941) 17 Cal.2d 775, 778 [112 P.2d 235, 134 A.L.R. 366], that pension benefits which have not yet vested are a mere expectancy and not subject to division as community property. [If] Upon further examination of the record it appears this issue is not properly before us . . . .”
All of the justices who participated in Jones had participated in Wilson, and all participated less than a year after Jones when in Brown, French was disapproved. The right hand knew what the left hand was doing. In the circumstances, while expectancy doctrine could have furnished a basis to reach the result in Jones, any reliance upon expectancy doctrine of French in Jones would have been improper. Jones not even mentioning French or the expectancy doctrine, it is unreasonable to suggest that Jones was somehow based on French or the doctrine.
The excuse furnished by the majority for repudiating our recent unanimous decision in Jones displays a remarkable lack of candor.
B. Results of Repudiation of Jones.
However contrived the excuse given for reconsidering a recent unanimous decision, however weak the reasons given for repudiating the decision, in the last analysis the results following from the new rule adopted must be weighed on their own merits. When we weigh the majority’s determination to repudiate Jones, we find that they have established an invidious discrimination between disabled employees and healthy employees who terminate employment when there is a dissolution.
Disapproving Jones, the majority purport to rely upon In re Marriage of Brown, supra, 15 Cal.3d 838. Both Jones and Brown dealt with employees who had nonnested retirement pension rights. Brown was concerned with employees generally without focusing on those who were disabled. Brown held that nonvested retirement pensions would be community property like vested ones. However, recognizing that nonvested pension rights might be destroyed by death or termination of employment before vesting, this court held that the uncertainties warrant refusal to divide present value of the pension and instead awarding a portion of each pension payment as it comes due. (In re Marriage of Brown, supra, 15 Cal.3d 838, 848.) This court carefully pointed out that judicial recognition of the nonemployee spouse’s interest in pension *798rights does not “limit” the employee’s freedom to change or terminate employment. “The employee retains the right to decide, and by his decision, the nature of the retirement benefits owned by the community.” (Id., at pp. 849-850.)
In short under Brown when the healthy employee having only nonvested retirement rights terminates his employment—perhaps for more lucrative employment—the nonvested pension rights are lost with the employee owing no obligation to compensate a former spouse for the loss of the nonvested pension rights. Under Jones, a comparable result was reached—the disabled employee having nonvested retirement rights who terminated employment and received a disability pension was not required to compensate the former spouse for loss of the nonvested pension rights.
By disapproving Jones, the majority single out the handicapped and compel them to compensate former spouses for loss of nonvested pension rights due to termination of employment. The disabled are placed in a worse position than the healthy who terminate employment. Former spouses of the disabled are given benefits when former spouses of the healthy are denied similar benefits.
The disabled are also placed in a worse position than the healthy employee who continues his employment. There is no liability to former spouses because there are no retirement benefits. The employee may continue to work until he dies in which event there may never be retirement pension payments. On the other hand, the employee who retires for disability under today’s majority decision immediately must pay part of the disability pension to the former spouse. The former spouse of the disabled employee is entitled to benefits upon payment of the disability pension, when had the employee remained healthy the former spouse might not have been entitled to any benefits and at most could only receive delayed benefits.3
Both federal and state law prohibit discrimination against the handicapped in employment. (See, e.g., 29 U.S.C. § 793; Lab. Code, §§ 1430, 1735.) Today, the majority not only permit but require discrimination against the disabled who are compensated for their inability to compete in *799the labor market—discrimination essentially against the unemployed handicapped. I cannot join in the majority’s discrimination; I cannot share their lack of compassion.
Primarily, there are three situations where there is a clear difference in the practical effects of the majority’s determination to give the former spouse an interest in the disability pension and my approach to hold that the pension is separate property with spousal support available to meet the needs of the former spouse. The three situations involve justification to deny or severely limit spousal support. The disability pension and other economic resources available to the disabled employee may be insufficient to meet his needs, warranting denial of spousal support. The former spouse may have sufficient economic resources so that little or no support is required. The former spouse may remariy terminating spousal support. (Civ. Code, § 4801.)4 In all three situations the balance of equities falls in favor of the disabled employee.
C. The Majority’s Settled Principle.
Relying upon Waite v. Waite, supra, 6 Cal.3d 461, 472, and In re Marriage of Peterson, supra, 41 Cal.App.3d 642, 650-651, the majority proclaim the “settled principle that one spouse cannot, by invoking a condition wholly within his control, defeat the community interest of the other spouse.” (Ante, p. 786.)
However, the cases cited do not stand for the so-called “settled principle,” but hold only that the possibility the employee may elect to forego an otherwise vested pension does not unvest that pension. (Waite and Peterson were decided prior to this court’s decision in Brown holding that nonvested pensions are community property subject to division upon dissolution.)
Moreover, the so-called “settled principle” is contrary to Brown because, as we have seen, the employee is free to change or terminate employment, modify retirement terms, or elect between alternative retirement programs. (In re Marriage of Brown, supra, 15 Cal.3d 838, 849-850.) Dissolution of the marriage does not require an employee to retire at the earliest possible age; rather he may forego retirement and *800continue working in which case there are no retirement payments to divide and the earnings after dissolution will be the employee’s separate property or community property of any new marriage.5
I would reverse the judgment.

“In Phillipson v. Board of Administration, supra, 3 Cal.3d 32, the employee had absconded with most of the community assets; the trial court to equalize the division of community property awarded the spouse all of the employee’s pension rights. Under those special circumstances we held that since the employee no longer enjoyed a beneficial interest in the rights, the divorce court could control the employee’s election between alternative benefit programs. (3 Cal.3d at p. 48.)”

The majority’s formula implicitly accepts the conclusion that disability benefits are separate property. Under the formula, had there been no retirement benefits, the former spouse of the disabled employee would not be entitled to any of the disability pension.

Such an approach was followed by the trial court in Waite v. Waite, supra, 6 Cal.3d 461, 466 in dividing the retired judge’s pension and providing for $1 a month support. The court ordered that, in the event the retired judge accepted a temporary judicial assignment thereby suspending pension payments, the support should be increased to an amount equal to the former spouse’s share of the pension.

The majority in footnote 10 suggest that the proper comparison is between healthy employees who receive pension payments and the disabled. The comparison is not in point because no payments are made under nonvested pensions. The pension must be vested before there are payments.

Death of the obligor ordinarily terminates spousal support (Civ. Code, § 4801), but employee pension payments ordinarily terminate on death of the employee. As pointed out earlier, surviving spouse benefits are paid only to surviving spouses, not former spouses who may have been married to the employee during the period of employment.

In re Marriage of Cavnar (1976) 62 Cal.App.3d 660 [133 Cal.Rptr. 267], is distinguishable on its own terms. In that case, the husband, after obtaining retirement payments at the age of 59, converted his retirement benefit plan to a disability retirement plan, receiving increased benefits. The court held that the portion of the disability benefits which could have been received as retirement benefits was a community asset. The court pointed out that In re Marriage of Jones, supra, 13 Cal.3d at page 462 and In re Marriage of Olhausen, supra, 48 Cal.App.3d at pages 193-194, holding disability pay was separate property were based on the characterization of disability benefits “as compensation for personal anguish and diminished earning capacity.” The court then went on to reason that, because the husband had already retired before electing disability pay, that pay could not be characterized as compensation for diminished earning capacity or for inability to compete in the labor market. It was concluded that only part of the disability pay could be properly allocated to disability. (62 Cal.App.3d at p. 665.)
By way of contrast, in the instant case the husband commenced receiving disability pay at the age of 43, he did not receive retirement pay, and it is clear that his disability pay is compensation for the diminished ability of a one-armed man to compete in the labor market.
I would disapprove In re Marriage of Mueller (1977) 70 Cal.App.3d 66 [137 Cal.Rptr. 129].