Hyperlawhypertext legal databasebeta Schofield v. Schofield 62 Cal. App. 4th 131

← Cases

Schofield v. Schofield

62 Cal. App. 4th 131 Court Fourth Dist., Div. One. Decision date 1998-03-13 Docket No. D024362 English

Delivered by HUFFMAN, J.

Contents

Majority

p. 131
No. D024362.
Fourth Dist., Div. One.
Mar. 13, 1998.
In re the Marriage of JOYCE and WILLIAM SCHOFIELD. JOYCE SCHOFIELD, Respondent, v. WILLIAM SCHOFIELD, Appellant.
p. 132
Counsel
John Knoll for Appellant.
Sharron Voorhees for Respondent.

Opinion

William Schofield (William) appeals a supplemental judgment and related findings and order issued by the superior court, directing

p. 133
the federal Office of Personnel Management (OPM) to pay William’s former wife, Joyce Schofield (Joyce), a specified amount of funds from William’s retirement fund (previously determined to be a community asset in the parties’ 1987 marital settlement agreement and dissolution judgment), which included a portion representing arrearages due to Joyce. William appeals, contending the manner in which the judgment and order handle the arrearages is violative of federal and state law, as an improper recharacterization of the parties’ property division of the pension asset, and/or as an improper form of garnishment or execution of judgment on these public retirement benefits. We conclude the judgment and order are in compliance with applicable federal law and regulations, as well as community property principles, and affirm.

Factual and Procedural Background

After a 26-year marriage, Joyce and William obtained a judgment of dissolution dated March 31, 1987, incorporating their marital settlement agreement. This judgment awarded William the civil service retirement pay from his career at the Post Office, and the military retirement pay to Joyce, and stipulated that William would not combine these retirement accounts. Jurisdiction was retained to enforce and carry out the terms of the agreement.

William then combined these retirement accounts, which effectively prevented Joyce from receiving payments from OPM, which handled the retirement funds. After Joyce brought an order to show cause, the parties stipulated in a July 1993 modification of the dissolution judgment that Joyce would receive that portion of his civil service retirement amounting to what she would have received from the military retirement had it not been combined with the other pension. Jurisdiction was retained by the trial court in the modification of judgment to ensure that Joyce receive her share of the retirement pay and to enforce the terms and conditions of the judgment.

William paid nothing to Joyce and she brought another order to show cause to require the payments to be made, along with arrearages, and to require OPM to make the payments. William filed a bankruptcy proceeding in Arizona, and Joyce obtained relief from the automatic stay. At the renewed order to show cause, William sought to have the court recognize an anticipated bankruptcy order that this debt was dischargeable in bankruptcy, but he was unsuccessful. The court received income and expense declarations from the parties. It made findings that William’s arrearages of Joyce’s portion of the pension benefits were $27,230.12. It then issued the supplemental judgment and accompanying findings and order, which we attach here as appendix A for the reader’s convenience.

I

p. 134
This supplemental judgment ordered that the amount to be paid each party by OPM be adjusted, such that Joyce receive $1,706.83 per month for 72 months, with her share to be adjusted downward thereafter to $1,206.83 (with both figures to include any cost of living adjustments (COLA)).[1] William was to receive the balance. The separate findings and order after hearing set the arrearages amount and provided that they should be paid through the vehicle of the supplemental judgment, which did not mention arrearages. (Appen. A, post, pp. 146-149.)

The trial court also issued a separate statement of decision at that time, but it was lost and not provided to the court file until later ex parte proceedings were conducted after the notice of appeal was filed. This statement of decision explained the court’s reasoning that under the applicable regulations, the court was required to address arrearages by adjusting the percentage of the pension payable to the retired spouse, and concluded that this did not result in any “re-division” of the pension. The court stated that it had clearly distinguished in its order, as contrasted with its judgment, between the ongoing pension benefits owed to Joyce and the arrearages of those benefits also owed to her. The court interpreted the applicable regulations as placing only one limit on the court regarding payment of arrearages, i.e., the entire amount of the net annuity. ( 5 C.F.R. § 838.234 (1997), Collection of Arrearages; 5 C.F.R § 838.211 (b), setting as the limit on the amount to be collected the entire amount.) Thus, the court set the portion to be paid by OPM to Joyce as including $500 per month arrearages, in addition to her monthly share of the pay, for the specified 72-month time period. (See appen. A, post, p. 148.)

William timely appealed the supplemental judgment and order, solely arguing the impropriety of the arrearages order.

Discussion

Statutory Framework

The issue presented is whether the trial court had jurisdiction under federal and state law to fashion an order to enable Joyce to collect arrearages due upon a stipulated division of the pension asset, or whether, as William

1 The original modification of the dissolution judgment set Joyce’s share of the pension at $1,140.16. At the time of the order to show cause, Joyce was seeking a monthly payment of $1,173.96. The monthly amount ordered was $1,206.83. The slight variation in these figures is due to the COLA.

p. 135
contends, this somehow amounted to an excess or abuse of jurisdiction, as invading William’s share of the community asset. Joyce’s position in response is that there is a federal statutory and regulatory scheme that enabled the court to take the action that it did. Before examining applicable federal law, we set forth basic rules which govern the family court in this area. “It is well established that California courts may apply community property principles to federally created benefits so long as the result does not frustrate the objectives of the federal legislation. [Citations.]” (In re Marriage of Samuels (1979) 96 Cal.App.3d 122 , 125 [ 158 Cal.Rptr. 38 ].) Courts have discretion in the area of enforcement of family law judgments: Under Family Code section 290, “A judgment or order made or entered pursuant to this code may be enforced by the court by execution, the appointment of a receiver, or contempt, or by such other order as the court in its discretion determines from time to time to be necessary.”

Family Code section 2610, dealing with retirement plans, reads in relevant part as follows: ”(a) Except as provided in subdivision (b), the court shall make whatever orders are necessary or appropriate to ensure that each party receives the party’s full community property share in any retirement plan, whether public or private, including all survivor and death benefits, including, but not limited to, any of the following: [ft] . . . [ft (4) Order a retirement plan to make payments directly to a nonmember party of his or her community property interest in retirement benefits, [ft (b) A court shall not make any order that requires a retirement plan to do . . . the following: [ft] (1) Make payments in any manner that will result in an increase in the amount of benefits provided by the plan.” (Italics added.)

To determine whether the trial court’s actions were proper, we look to the general and administrative provisions of the law covering the federal employees’ retirement system, 5 United States Code section 8401 et seq.[2] In particular, section 8467 deals with court orders for redirecting benefit payments from the federal employee to a former spouse or other family law judgment creditor. In pertinent part, section 8467 provides: “(a) Payments under this chapter which would otherwise be made to an employee, Member, or annuitant. . . based on service of that individual shall be paid (in whole or in part) by the Office or the Executive Director, as the case may be, to another person if and to the extent expressly provided for in the terms of— [ft (1) any court decree of divorce, annulment, or legal separation, or the terms of any court order or court-approved property settlement agreement incident

2 All further statutory references are to the United States Code Annotated, title 5, Government Organization and Employees, unless otherwise specified.

p. 136
to any court decree of divorce, annulment, or legal separation . . . .” (Italics added.)[3]

Section 8470 provides, inter alia, for a limited exemption from legal process for such benefits payable to the employee: “(a) An amount payable under subchapter II, IV, or V of this chapter is not assignable, either in law or equity, except under the provisions of section 8465 or 8467, or subject to execution, levy, attachment, garnishment or other legal process, except as otherwise may be provided by Federal laws.” (Italics added.)

These sections have been implemented by a number of federal regulations. As pertinent here, 5 Code of Federal Regulations, section 838.225 (1997) deals with the processing of amended court orders: “(a) If the employee, separated employee, retiree, or former spouse submits an amended court order pertaining to payment of a portion of the employee annuity, OPM will process the amended court order prospectively only, effective against employee annuity accruing beginning the first day of the second month after OPM receives the amended court order. ]ff\(b) A court order is not effective to adjust payments prior to the first day of the second month after OPM receives the court order unless— fl[] (1) The court order— flQ (i) Expressly directs OPM to adjust for payment made under the prior court order, and [ftj (ii) Determines the total amount of the adjustment or the length of time over which OPM will make the adjustment; and fl[] (iii) Provides a specific monthly amount of the adjustment or a formula to compute the amount of the monthly adjustment; and HO (2) Annuity continues to be available from which to make the adjustment.” (Italics added.)

Also applicable here is 5 Code of Federal Regulations, section 838.234 (1997), dealing with collection of arrearages: “Specific instructions are required before OPM may pay any arrearage. Except as provided in § 838.225 (b), OPM will not increase a former spouse’s share of employee annuity to satisfy an arrearage due the former spouse. However, under § 838.225, OPM will prospectively honor the terms of an amended court order that either increases or decreases the court order’s entitlement.” (Italics added.)

Another regulation which must be taken into account here is 5 Code of Federal Regulations, section 838.211 (1997), controlling the amounts of benefits that are subject to court orders; this section first states the conditions for payment of benefits pursuant to court order (e.g., the employee or former

3 See also U.S. v. Comer (6th Cir. 1996) 93 F.3d 1271 , 1280, footnote 12, interpreting section 8467 as providing “for payment of an employee’s annuity to a person other than the employee in the contexts of divorce, annulment, legal separation, or child abuse.”

II

p. 137
employee shows entitlement to payment), and as to the allowable amount, states: “(b) Payment to a former spouse under a court order may not exceed the net annuity.” (Italics added; also see 5 C.F.R. § 838.103 (1997), a definitions section, defining “court order” in this context as: “Court order means any judgment or property settlement issued by or approved by any court of any State [etc.; e.g., District, Commonwealth, or Indian court] in connection with, or incident to, the divorce, annulment of marriage, or legal separation of a Federal employee or retiree.”)

Application of Rules

Having set forth the relevant law, we proceed to apply it to these facts. Such questions of statutory interpretation are reviewed de novo: Where, as here, there is a lack of substantial evidentiary dispute about the facts giving rise to a question of statutory interpretation, “. . . the proper interpretation of statutory language is a question of law which an appellate court may review de novo, independent of the trial court’s ruling or rationale. [Citation.]” (Building Industry Assn. v. City of Oceanside (1994) 27 Cal.App.4th 744 , 771 [ 33 Cal.Rptr.2d 137 ].) Here, William has not directly challenged the trial court’s discretionary choice of the $500 per month figure for payment of arrearages, instead attacking the entire order as unauthorized by law. We therefore have no occasion to apply the abuse of discretion standard which would normally apply to review of a division of community assets. (See In re Marriage of Emmett (1980) 109 Cal.App.3d 753 , 759 [ 169 Cal.Rptr. 473 ].)

William has two basic arguments that the judgment and order are erroneous: The amount to be collected by Joyce from the retirement pay which represents the arrearages is in violation of the basic “time rule” which sets the amount of an equal community property share in a pension asset (In re Marriage of Brown (1976) 15 Cal.3d 838 , 847-848 [ 126 Cal.Rptr. 633 , 544 P.2d 561 , 94 A.L.R.3d 164 ]; Fam. Code, § 2550); and/or, the judgment represents an incorrect execution of judgment or garnishment, etc., which would be contrary to federal and state statutory protections for retirement pay. We discuss these arguments separately.

A

Amount of Judgment

William contends Joyce should not receive any OPM payment above the $1,206.83 amount that represents the amount of military retirement pay to

p. 138
which she is entitled, on the grounds that the court improperly recharacterized the arrearages as included in the monthly sum awarded. He generally relies on authority that trial courts are “without jurisdiction to modify an unqualified disposition of property rights in an interlocutory decree of divorce, except in accordance with methods applicable to judgments generally” (In re Marriage of Maunder (1976) 57 Cal.App.3d 570 , 573 [ 127 Cal.Rptr. 707 ]). In that case, the wife sought a modification of the interlocutory decree to increase her spousal support by the value of her community property interest in the pension, which she was unable to collect due to federal law that was controlling at the time. This was not allowed because “relabeling” of the property interest in the pension as spousal support was not proper. (Id. at p. 573.)

William also relies on In re Marriage of Carnall (1989) 216 Cal.App.3d 1010 , 1023-1026 [ 265 Cal.Rptr. 271 ], in which the court reversed a judgment ordering that the retirement plan (the claimant in that case) designate the former wife as the employee’s “surviving spouse,” even though they were now divorced. The judgment thus awarded the wife “an entitlement which was intended to belong only to the spouse married to respondent at the time of his death and for at least one year before his retirement.” (Id. at p. 1022.) The Court of Appeal noted that the objective of former Civil Code section 4800.8 (now Fam. Code, § 2610) was “to ensure that [the wife] and others similarly situated receive their full and fair community share of a spouse’s retirement plan. The statute does not create new community interests; it simply preserves those interests existing upon dissolution that under prior law would have been extinguished by the death of either party.” (Camall, supra, at p. 1023, fn. omitted.) Accordingly, the court found that the judgment improperly reformed the pension contract to the detriment of the retirement plan and other third parties; “most importantly,” it gave the wife more than her share of the community’s interest in Robert’s benefits. (Id. at p. 1024.) The court reversed the judgment so that the trial court could make orders to ensure that each spouse received a full community share of the survivor and death benefits, while not increasing the plan’s liability. (Id. at p. 1026.)

Based on In re Marriage of Carnall, supra, 216 Cal.App.3d 1010 , William contends that the trial court could not impair the statutory rights of either the retirement plan or William’s future or current spouse by ordering arrearages to be paid in addition to Joyce’s monthly share. However, in Camall, the Court of Appeal expressly said that it was not ruling upon any question presented about the division of any vested or nonvested retirement benefits payable to the husband while he was alive, such as is the case here. (Id. at p. 1017.) Rather, the court was dealing only with the division of the husband’s survivor and death benefits. (Ibid.)

p. 139
Moreover, this judgment did not go against the purpose of Family Code section 2610, to ensure that a spouse receive his or her full and fair community share of a retirement plan, nor did it impermissibly create any new community interest or increase the amount of benefits provided by the plan. (In re Marriage of Carnall, supra, 216 Cal.App.3d at p. 1023.) Jurisdiction was properly retained by the trial court in both the original dissolution judgment and the modification judgment to ensure that Joyce receive her share of the retirement pay, and to enforce the terms and conditions of the judgment. This was proper as pertaining to the distribution of benefits, rather than any underlying court division of the community property interest in the asset. (Id. at p. 1026, fn. 5.)

Further, the award of arrearages here does not in any sense constitute “relabeling” of the property interest in the pension into another form of entitlement under the dissolution judgment, such as was found improper in Maunder (57 Cal.App.3d at p. 573). The two pensions had already been combined and there is no basis for treating them differently at this time. Instead, the supplemental judgment and findings were within the scope of the action allowed under section 8467, that a payment which would otherwise be made to an employee or former employee may be made to another person as allowed by a court decree of divorce or the terms of a related property settlement agreement. Similarly, under section 8470, William could properly assign his rights to receive the payment pursuant to section 8467. The federal regulations ( 5 C.F.R. § 838.234 (1997)) confirm that OPM may pay arrearages if specific instructions are given, such as are provided in 5 Code of Federal Regulations (1997) section 838.225(b): Pursuant to that section, “OPM will prospectively honor the terms of an amended court order that either increases or decreases the court order’s entitlement.” ( 5 C.F.R. § 838.234 .)

In light of these provisions, we are unpersuaded by William’s alternative argument: Since 5 Code Federal Regulations, section 838.225(b) (1997), dealing with the processing of amended court orders, specifies that a court order will not be effective to adjust payments prior to the first day of the second month after OPM receives the court order unless that court order “[ejxpressly directs OPM to adjust for payment made under the prior court order” (italics added), the regulation must mean that adjustments can be made only for “payment made” (credits for William), not “payments not made” (debits to William). Instead, we believe a reasonable reading of 5 Code Federal Regulations, section 838.225(b), together with 5 Code Federal Regulations, section 838.234 (1997), allows trial courts to make orders to adjust payments of a portion of the employee annuity, within a certain specified time frame and pursuant to specific instructions, with the result of either increasing or decreasing the subject entitlement. There is no ceiling on

p. 140
the amount that can be adjusted, except for the entire sum of the retirement pay, although that is a matter for the court’s discretion. ( 5 C.F.R. § 838.211 (b) (1997).) This procedure was duly followed here. Accordingly, we conclude the inclusion in the supplemental judgment of an amount representing $500 arrearages per month was not in violation of either state or federal law.

B

Statutory Protections for Retirement Pay

William next argues that the supplemental judgment and related findings and order impermissibly operate as a garnishment or execution of judgment on an additional share of the civil service retirement pay, over and above Joyce’s monthly entitlement. In support, he cites certain state provisions exempting public retirement benefits from ordinary execution of a money judgment (Code Civ. Proc., § 704.110 et seq.; see also 8 Witkin, Cal. Procedure (4th ed. 1997) Enforcement of Judgment, § 194 et seq., pp. 210-213; id., § 393 et seq., pp. 391-393). He also cites to section 8470(a), forbidding execution, levy, attachment, garnishment or other legal process upon federal retirement pay, “except as otherwise may be provided by Federal laws.” (Italics added.) (As discussed above, section 8467 constitutes such a federal law which allows this type of order and judgment.)

William also relies on other federal law which represents a protection against garnishment of an individual’s periodic payments under a retirement program ( 15 U.S.C.A. §§ 1601 et seq., 1671-1677, the Consumer Credit Protection Act). He claims that any effort to distinguish between the type of judgment that was issued here, and “garnishment,” “execution of judgment,” and the like, is merely a semantic exercise and does not reflect “the real world” effect of the judgment, i.e., reducing his current retirement pay share. We disagree that there is no meaningful distinction here, because in our view, sections 8467 and 8470, and related regulations, clearly allow the trial court to craft an order which will deal with the problem of collecting arrearages that have been accrued pursuant to a valid judgment or modification that established a community share in retirement pay. That was done here in accordance with established federal procedure, and there is no basis to view the arrearages order as an impermissible garnishment or execution of judgment.

C

Fees and Costs

In conclusion, Joyce has sought an award of attorney fees and costs on appeal pursuant to Family Code section 2030. Such a request must properly

p. 141
be addressed to the trial court in the first instance, and we express no opinion on that subject.

Disposition

The supplemental judgment and order are affirmed.

Work, Acting P. J., and Nares, J., concurred.

Cases cited

Statutes and regulations cited