MEAD v. Leonard R. Mead, Defendant and Respondent.

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Court of Appeal, First District, Division 1, California.

Beatrice M. MEAD, Plaintiff, Appellant and Respondent, v. Theodore C. LACHELT et al., Defendants, Appellants and Respondents, Leonard R. Mead, Defendant and Respondent.

Civ. 42812.

Decided: June 27, 1979

Farella, Braun & Martel, Jon F. Hartung, Douglas R. Young, San Francisco, for defendants, appellants and respondents Lachelt et al. Gary T. Ragghianti, San Rafael, for defendant and respondent Leonard Mead. No appearance for plaintiff, appellant and respondent Beatrice Mead.

The 27-year marriage of Beatrice and Leonard Mead (hereafter for convenience, and respectively, Beatrice and Leonard) was dissolved by an interlocutory decree of divorce dated December 31, 1969. At the time, Leonard was the recipient of vested “retirement pay from US Air Force” in the amount of $295.17 monthly, for military service performed mainly, if not entirely, during the marriage. “Substantial uncertainty” with regard to the “community character” of the retirement benefits may then have existed (see Smith v. Lewis (1975) 13 Cal.3d 349, 357, and fn. 6, 118 Cal.Rptr. 621, 530 P.2d 589), which now seems to have been dispelled by In re Marriage of Brown (1976) 15 Cal.3d 838, 126 Cal.Rptr. 633, 544 P.2d 561, and In re Marriage of Fithian (1974) 10 Cal.3d 592, 596, 111 Cal.Rptr. 369, 371, 517 P.2d 449, 451 (cert. den., 419 U.S. 825, 95 S.Ct. 41, 42 L.Ed.2d 48). Fithian holds “that (military) 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.” (Fn. omitted.)

The parties, each of whom was represented by counsel, had entered into a “Marital Settlement Agreement” described “as a final single agreement concerning a division of their marital property rights and concerning the support of Wife, . . .” At Beatrice's request the agreement was incorporated in, and “made a part” of, the decree, and the parties were ordered to comply with it.

Beatrice and her attorneys were well aware of Leonard's retirement benefits (at least no contrary contention is made), and Leonard was guilty of no fraud, or concealment, or overreaching in respect of them. Leonard had apparently claimed them as his separate property, and Beatrice and her attorneys apparently believed that they were. No contention was made that they were community property, and no mention was made of them at the superior court hearing or in the interlocutory decree.

About eight years later Beatrice commenced the instant action against Leonard and the attorneys who had represented her in relation to the marital settlement agreement and the divorce action. Count 1 sought a recovery for malpractice from the attorneys because of their failure “to advise Plaintiff of her vested community property interest in said military retirement pay and benefits, . . .” Count 2 sought “a judicial determination of her rights and a declaration whether or not she has present and existing rights in the military pension” of Leonard.

The superior court sustained Leonard's demurrer to count 2 of the complaint without leave to amend, and judgment of dismissal of the action as to that count was thereupon entered. Beatrice and the defendant attorneys have appealed from that judgment of dismissal.

We have concluded from our consideration of the record, and the briefs and arguments of the respective parties, that the judgment of dismissal must be affirmed. Our reasons follow.

The interlocutory decree is, of course, now a final and binding adjudication, or Res judicata, of the matters therein determined.

The issue posed by the parties on the appeal is whether the interlocutory decree determined that Leonard's retirement benefits were not the community property of the parties, according to the rule set forth by Metropolitan Life Ins. Co. v. Welch (1927) 202 Cal. 312, 318, 260 P. 545, 547, as follows:

“. . . The parties having had an opportunity to litigate the question as to what part or portion of their property is community property, and having actually, under proceedings in which all of the community property apparently was involved, obtained a final decree establishing and determining the respective rights of the parties to said community property, said decree must be held to be a conclusive determination of all the rights of said parties in and to not only the community property described therein, but in and to all property owned by either of them. This rule, of course, would not be applicable when the final decree makes no disposition whatever of the community property. In such a case the former spouses become tenants in common in the community property, and their rights thereto could be determined in a subsequent action.”

California's Courts of Appeal are in disagreement.

In a context reasonably similar to that of the case at bench, the Fourth District (Div. One) held in Kelley v. Kelley (1977) 73 Cal.App.3d 672, 141 Cal.Rptr. 33, that the principle of res judicata did apply. The court said (p. 678, 141 Cal.Rptr. p. 36): “Here (the former wife) was fully cognizant of (the former husband's) status as retired and was aware of the fact he was to receive a pension. She was, however, mistaken as to her legal rights to that pension. She elected to decide the merits of a claim without aid of legal counsel and personally contributed to any mistake as to the character of the property. (The former husband) was not a party to that mistake and did not conceal the facts or otherwise participate in any wrongdoing. (P) The judgment is res judicata and there is no basis for equity to interfere.”

But the greater number of Courts of Appeal appear to have held otherwise. Lewis v. Superior Court (Third Dist. 1978) 77 Cal.App.3d 844, 852, 144 Cal.Rptr. 1, 5, held: “Prior to the dissolution the pension belonged to both parties. The judgment of divorce did not award wife an interest in the pension, but neither did it award the pension to the husband. Plaintiff's interest was present, existing and equal to that of her husband prior to divorce and a judgment which did not purport to affect that interest will not have the effect of terminating such interest. The purposes of res judicata should not be exalted over the policy of allowing a party a full and fair hearing on the merits of a controversy. To hold otherwise would defeat the express declaration of the Civil Code that a wife's interest is present, existing and equal to that of the husband in the community property. The parties remain tenants in common to such unadjudicated property.” (Fn. omitted.) In re Marriage of Bridges (Fourth Dist., Div. Two 1978) 82 Cal.App.3d 976, 979-980, 147 Cal.Rptr. 471, 473, concluded that: “The positions of Lewis and Kelley are irreconcilable. (P) We find Lewis persuasive and cannot improve its statement at page 852, 144 Cal.Rptr. 1, as to the policy basis for its ruling.” Also in general agreement are Fenn v. Harris (Fourth Dist., Div. One 1979) 91 Cal.App.3d 772, 774-775, 154 Cal.Rptr. 21, Gorman v. Gorman (Fourth Dist., Div. Two 1979) 90 Cal.App.3d 454, 463-465, 153 Cal.Rptr. 479; Sangiolo v. Sangiolo (Fourth Dist., Div. One 1978) 87 Cal.App.3d 511, 513-514, 151 Cal.Rptr. 27.

However, the state's high court in In re Marriage of Brown, supra (Jan. 16, 1976), 15 Cal.3d 838, 126 Cal.Rptr. 633, 544 P.2d 561, announced a pertinent ruling, apparently unnoticed and unargued in Kelley, Lewis, Bridges, Fenn, Gorman, or Sangiolo. Brown was a direct appeal from a judgment of marriage dissolution in which the parties' community property rights were adjudicated. As is well known, the case was the first to recognize community property rights in a spouse's Nonvested retirement benefits. Understandably, the court was concerned with the problem of retroactive operation which would undoubtedly trigger much litigation, as here, seeking to reopen community property awards of divorce and dissolution judgments long since final. The high court accordingly stated (pp. 850-851, 126 Cal.Rptr. p. 641, 544 P.2d p. 569):

“(I)f we accord complete retroactivity to our decision today we might reopen controversies long settled by final judgment. Undoubtedly in the 35 years since the rendition of French v. French (17 Cal.2d 775, 112 P.2d 235), counsel, relying on that decision, have often failed to list nonvested pension rights as among the community assets of the marriage. In some cases the inability of the nonemployee spouse to assert an interest in nonvested pension rights may have induced the court to award additional alimony. . . . (F)ull retroactivity poses the danger that a nonemployee spouse might upset a settled property distribution by a belated assertion of an interest as a tenant in common in the employee's nonvested pension rights.

“We conclude that our decision today should not apply retroactively to permit a nonemployee spouse to assert an interest in nonvested pension rights when the property rights of the marriage have already been adjudicated by a decree of dissolution or separation which has become final as to such adjudication, unless the decree expressly reserved jurisdiction to divide such pension rights at a later date (see Civ.Code, s 4800). Our decision will apply retroactively, however, to any case in which the property rights arising from the marriage have not yet been adjudicated, to such rights if such adjudication is still subject to appellate review, or if in such adjudication the trial court has expressly reserved jurisdiction to divide pension rights.” (Fn. omitted.)

It is notable also that, insofar as community property rights are concerned, Brown abolished any distinction between Vested and Nonvested pension rights of a spouse.

We are of the opinion that the policy of nonretroactivity adopted by Brown is controlling here. (See Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 455, 20 Cal.Rptr. 321, 369 P.2d 937.) The doctrine of res judicata will apply in a case such as that before us, so as to preclude a nonemployee spouse from asserting “an interest in (vested or) nonvested pension rights when the property rights of the marriage have already been adjudicated by a decree of dissolution or separation which has become final as to such adjudication, unless the decree expressly reserved jurisdiction to divide such pension rights at a later date . . . .” (Brown, supra, 15 Cal.3d, p. 851, 126 Cal.Rptr. 651, 544 P.2d 569, fn. omitted.)

It necessarily follows that the order of the superior court sustaining Leonard's demurrer to count 2 of Beatrice's complaint without leave to amend, and the judgment of dismissal of the action as to Leonard, were without error.

The judgment of dismissal of the action as to defendant Leonard Mead is affirmed.

ELKINGTON, Associate Justice.

RACANELLI, P. J., and NEWSOM, J., concur.