IN RE: MARRIAGE OF Barbara C. and Keith BENNETT.

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Court of Appeal, Second District, Division 5, California.

IN RE: MARRIAGE OF Barbara C. and Keith BENNETT. Barbara C. BENNETT, Appellant, v. Keith BENNETT, Respondent.

Civ. 62455.

Decided: April 29, 1982

Young & Young by Walter H. Young, Los Angeles, for petitioner and appellant. Bernard E. O'Connor, Jr., Torrance, for respondent.

The major issue on this appeal is whether the trial court could retain jurisdiction over the husband's military retirement pay in order to change future benefits from community property to his separate property should there be a subsequent change in the law.1

 Appellant Barbara C. Bennett (wife) brought a motion pursuant to California Civil Code of Procedure section 473 to set aside two provisions of her Interlocutory Judgment of Dissolution of Marriage from respondent Keith Bennett (husband).   One provision reserved jurisdiction over husband's military retirement and the other provision divided husband's insurance policies.   The court denied her request and this appeal followed.

FACTS

The trial of this matter was heard on October 3, 1979.   By prior agreement the parties had divided their community property, but two issues were undetermined, namely, the division of certain insurance policies and the spousal support for wife.   Counsel for both parties joined the court in chambers where these undecided issues were discussed.   The court reporter was not present and neither were the parties.   At the conclusion of the discussions in chambers the attorneys and the judge returned to the courtroom.   Wife took the stand and testified as to irreconcilable differences between the parties and the court granted the interlocutory judgment dissolving the marriage.   The court then asked counsel for both parties to address the issues discussed in chambers.   The first issue concerned a division of the insurance policies and wife's attorney stated that two of the policies, namely, husband's National Service Life Insurance policy and a Veteran's Group Life Insurance policy would be assigned or changed in order to benefit wife.   The court then verbally approved the suggested arrangement.

The second issue concerned spousal support.   The court stated that it had considered all of the pleadings and analyzed the division of the property and the financial declarations of both parties and concluded by ordering spousal support of $300 per month.

The only other matter raised in open court was a short conversation concerning attorneys fees followed by an award that is not contested on this appeal.

Wife's counsel did not prepare the proposed Interlocutory Judgment of Dissolution until January of 1980.   It was signed by the court and filed on February 6, 1980.   The paragraph concerning husband's military retirement pay reads as follows:  “c. Respondent shall pay to Petitioner, monthly, .4494 [sic] percent of his retirement pay accruing to him as a result of his service with the United States Navy.   The Court reserves jurisdiction of the military retirement plan and its disposition in order to determine whether Respondent must pay to Petitioner 44.94 percent of his net or gross retirement pay and to determine any tax adjustments to be made by the parties at the end of each calendar year and to determine whether or not Petitioner's interest is assignable or inheritable and to determine whether prospective payments under the plan are in their entirety the separate property of Respondent or in part the community property of Petitioner and Respondent․”

Another paragraph of the interlocutory judgment disposed of the life insurance policies.   It covered the two policies referred to in open court in the identical language approved by the trial court.

There was no appeal taken from the interlocutory judgment.   Wife discharged her attorney of record and on July 2, 1980, substituted in her present attorneys who filed the motion under Code of Civil Procedure section 473 to set aside the provisions relating to husband's military retirement pay and division of the insurance policies.

DISCUSSION

Wife makes several arguments on why the court could not reserve jurisdiction to change the status of husband's military retirement pay.   Briefly summarized they are:  (1) She did not stipulate to the reservation;  (2) husband in his Response to her Petition agreed it was community property therefore the judgment that she was entitled to 44.94 percent was final and could not be changed;  (3) Reservation of jurisdiction in a divorce is only to enforce the judgment, not to change it;  and (4) she cannot be bound by actions of her attorney that she did not agree to.

Before discussing the key issue of reservation of jurisdiction some additional facts are required.   On file at the hearing on the 473 motion was a declaration of wife's former attorney, Howard H. Taylor.   This declaration states that both attorneys raised this issue while in chambers and suggested that the court reserve jurisdiction over the military retirement pay for two reasons:  (1) That there might in the future be an issue as to whether wife should receive her percentage of the gross pay or a percentage of the net pay.  (2) That the recent case of Hisquierdo v. Hisquierdo, 439 U.S. 572, 99 S.Ct. 802, 59 L.Ed.2d 1, although a case dealing with railroad retirement pay rather than military pay, demonstrated that the United States Supreme Court was not adverse to overruling California Supreme Court decisions concerning the community property rights of government pensions, therefore a reversal of In re Marriage of Milhan, supra, 27 Cal.3d 765, 166 Cal.Rptr. 533, 166 P.2d 812,2 was a legal possibility.

The declaration of Mr. Taylor also states that he specifically gave wife a copy of the proposed interlocutory decree and requested her to study it carefully to ascertain if it was satisfactory to her.   He claims that she at no time, orally or in writing, indicated to him that she was dissatisfied or that it was contrary to the parties' agreement.   He then states, “Indeed, the parties themselves decided on all the issues of property division, except for the insurance policies.   Thus, leaving only the issues of the insurance policies division and the issue of spousal support for the Court to rule on.”   No appeal was taken from the judgment, he says, because the trial court made a fair and reasonable decision as to both issues.

The declaration of husband's attorney, Bernard E. O'Connor, Jr., also before the court, states that he raised the problem of the military pension to wife's attorney prior to the date of trial because the law on United States government pensions was in such a state of flux at that time.   Attached to this declaration as an exhibit was a copy of the trial brief submitted to the court by respondent.   This document listed the items of community property and the parties agreement pertaining to the division of each.   In connection with the Navy retirement fund the brief states that the parties had agreed that approximately 90 percent of these benefits were community property;  however, this was modified in the brief by this statement, “Respondent contends ․ that the Court retain jurisdiction over the disposition of the pension plan to review disposition and tax consequences and further, to terminate the payments to petitioner in the event that the rule in Hisquierdo v. Hisquierdo is expanded and it is determined that military retirement plans are the separate property of the employee spouse and not community property.”

 It is now well established by decisional law that the trial court may reserve jurisdiction over retirement and pension plans for numerous reasons.   In In re Marriage of Brown, 15 Cal.3d 838, 126 Cal.Rptr. 633, 544 P.2d 561, our Supreme Court recognized reservation of jurisdiction in order to divide the pension rights at maturity.  (See also, In re Marriage of Carl, 67 Cal.App.3d 542, 136 Cal.Rptr. 703.)   In Brown the court even went so far as to say that its ruling was not retroactive unless the decree expressly reserved jurisdiction to divide such pension rights at a later date and cited Civil Code section 4800.  (In re Marriage of Brown, supra, 15 Cal.3d at p. 851, 126 Cal.Rptr. 633, 544 P.2d 561.)   A portion of this section provides:  “․ the court shall, either in its interlocutory judgment of dissolution of the marriage, in its judgment decreeing the legal separation of the parties, or at a later time if it expressly reserves jurisdiction to make such a property division, divide the community property and quasi-community property of the parties, ․”  We recognize that this wording authorizes the courts to bifurcate dissolution proceedings into two or more proceedings, namely, one that dissolves the marriage and subsequent hearings more lengthy in nature that divides the community property.   However, the Supreme Court's reference to the section on just one item of the community property, namely, the nonvested pension, is authority that reservation of jurisdiction on individual property items is proper.   This right to reserve jurisdiction was further recognized in In re Marriage of Skaden, 19 Cal.3d 679, 139 Cal.Rptr. 615, 566 P.2d 249, where, beginning on page 688, 139 Cal.Rptr. 615, 566 P.2d 249, the court states:  “We believe that in cases of this kind the matter of the proper division of rights to termination benefits as marital property should be left to the sound discretion of the trial court, exercised in light of the particular circumstances of the case.   We anticipate that in many instances the parties, seeking to achieve a final determination at the time of dissolution, may be able to reach some reasonable agreement and settlement relative to the present disposition of the rights in question.   In cases where this is not possible the court will of necessity be called upon to make an assessment of the relative feasibility of present valuation by actuarial means [citation] before choosing between that approach and the expedient of reserving jurisdiction so as to determine value and effectuate a disposition of the property at some time in the future.”  (Emphasis added.)

 Wife contends that the court can only reserve jurisdiction to enforce performance of a judgment already made and jurisdiction cannot be reserved to modify and change an issue already adjudicated.   The fallacy of this argument is manifested in In re Marriage of Brown, supra, 15 Cal.3d 838, 847, 126 Cal.Rptr. 633, 544 P.2d 561, that overruled French v. French, 17 Cal.2d 775, 112 P.2d 235, which had held that nonvested pension rights could not constitute community property.  Brown held that such rights are community property and in giving the decision limited retroactivity it held that a court could change judgments rendered under French where “the trial court has expressly reserved jurisdiction to divide pension rights.”  (In re Marriage of Brown, supra, 15 Cal.3d at p. 851, 126 Cal.Rptr. 633, 544 P.2d 561.)   In other words a court could change pension rights from separate property to community property.   The same rule must apply to a reverse situation, as in our present case.

 Wife argues that the court lacked jurisdiction to reserve jurisdiction in view of the fact that husband had admitted in his Response to her petition for dissolution of the marriage that his retirement plan was community property.   We disagree.   This is not a legal stipulation between the parties entered into for purposes of dividing the community property.  (See In re Marriage of Mahone, 123 Cal.App.3d 17, 176 Cal.Rptr. 274, Stephens, J., dissenting.)   By time of trial husband's position was quite clear.   He acknowledged that ninety (90) percent was community property under California law at that time;  however, he also took the position (citing Hisquierdo v. Hisquierdo, supra, 439 U.S. 572, 99 S.Ct. 802, 59 L.Ed.2d 1) that the law was still uncertain until the United States Supreme Court addressed the issue.   Hisquierdo, he argued, was a good indication of how the court might overrule California decisions, therefore as any prudent lawyer 3 would do he asked the court to reserve jurisdiction over the military retirement pay in order to make adjustments to conform to any change in the law.4  The court and wife's attorney agreed with this concept.   Furthermore, there was evidence before the court at the section 473 hearing that wife was in accord.   Mr. Taylor's Declaration stated that he showed the proposed interlocutory decree of dissolution to wife and asked that she carefully read it and point out to him any portions that were incorrect or that she could not agree to.   She did not indicate any displeasure with the proposed decree and it became final and no appeal was taken.   He also represented to the court that all portions of the judgment had been agreed to by the parties at time of trial, except division of the insurance policies, and wife's spousal support.   It is clear that the trial court accepted this evidence and not the representations of wife to the contrary.   We cannot reverse when the principal issue turns on the credibility of the evidence.   For this reason alone we cannot say the trial court abused its discretion in denying the section 473 motion.5

The same reasoning holds true on the remaining issue concerning division of the insurance policies.   In addition to Mr. Taylor's declaration that wife accepted the division as set forth in the proposed interlocutory judgment is the fact that she made no objection to the division when it was outlined to the judge in her presence in open court.

The order of the court is affirmed.

FOOTNOTES

1.   Jurisdiction was reserved when In re Marriage of Milhan, 27 Cal.3d 765, 166 Cal.Rptr. 533, 166 P.2d 812, was the law in California.   McCarty v. McCarty, 453 U.S. 210, 101 S.Ct. 2728, 69 L.Ed.2d 589, had not been decided.

2.   The judgment in In re Marriage of Milhan has subsequently been vacated by the United States Supreme Court and the case was remanded to the California Supreme Court for further consideration in light of McCarty v. McCarty, supra, 453 U.S. 210, 101 S.Ct. 2728, 69 L.Ed.2d 589;  453 U.S. 918, 101 S.Ct. 3152, 69 L.Ed.2d 1000.

3.   His perspicacity was excellent.  McCarty v. McCarty, supra, 453 U.S. 210, 101 S.Ct. 2728, 69 L.Ed.2d 589, subsequently decided military retirement pay could not be divided as community property, but was the separate property of the spouse in the military service.

4.   We wish to make it clear that the issue here is not concerned with whether McCarty v. McCarty, supra, can be applied retroactively.   It cannot.  (See In re Marriage of Fellers, 125 Cal.App.3d 254, 178 Cal.Rptr. 35.)   In Fellers there was no reservation of jurisdiction provision.

5.   In denying the motion the court said:  “This is, of course, without prejudice to an order to show cause that might be brought in the future to obtain additional spousal support ․”  This suggestion would seem to be in line with a closing comment made by the court in In re Marriage of Jacanin, 124 Cal.App.3d 67, 71, 177 Cal.Rptr. 86.  (Also see In re Marriage of Gillmore, 29 Cal.3d 418, 174 Cal.Rptr. 493, 629 P.2d 1.)   Some decisions, however, indicate a change in the law is not a change of circumstances.  (In re Marriage of Cobb, 68 Cal.App.3d 855, 860, 137 Cal.Rptr. 670, and In re Marriage of Maunder, 57 Cal.App.3d 570, 573, 127 Cal.Rptr. 707.)   Also noteworthy is an admonishment in McCarty v. McCarty, supra, 453 U.S. 210, 101 S.Ct. 2728, 69 L.Ed.2d 589, that an injunction against attachment is not to be circumvented by the simple expedient of an offsetting award and citing Hisquierdo v. Hisquierdo, supra, 439 U.S. 572, 99 S.Ct. 802, 59 L.Ed.2d 1.

 HASTINGS, Associate Justice.

STEPHENS, Acting P. J., and ASHBY, J., concur.

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