Marriage of Van Allen

Filed 5/31/06 Marriage of Van Allen CA5

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIFTH APPELLATE DISTRICT

APPEAL from a judgment of the Superior Court of Kings County. James LaPorte, Commissioner.

Tritt & Tritt and James F. Tritt for Appellant.

Kathleen Bakergumprecht-Davies and Julie A. Hicks for Respondent.

-ooOoo-

INTRODUCTION

When the assets of the community estate include a defined benefit pension plan, frequently the proceeds of that plan include both separate and community property components. One of the most common ways to apportion these two components is through use of the time rule. (In re Marriage of Lehman (1998) 18 Cal.4th 169, 176, 187 (Lehman).) "Under the time rule, the community is allocated a fraction of the benefits, the numerator representing length of service during marriage but before separation, and the denominator representing the total length of service by the employee spouse. That ratio is then multiplied by the final plan benefit to determine the community interest. [Citations.]" (In re Marriage of Gowan (1997) 54 Cal.App.4th 80, 88 (Gowan).)

In 1990, appellant Franklin "Pat" Van Allen (Franklin) and respondent Jean Van Allen (Jean)^[1] dissolved their 21-year marriage. Franklin was employed by the State of California before, during and after their marriage, and entitled to pension benefits from the Public Employee Retirement System (PERS). As part of the judgment of dissolution, Jean was awarded one-half interest in Franklin's pension benefits which accrued during their marriage. Jean opted to wait to receive such benefits until Franklin retired.

In 2003, Franklin retired from the State of California, and sent a proposed Qualified Domestic Relations Order (QDRO) to Jean for the division of the PERS retirement benefits, which stated that the calculation was based on the "time-rule" but calculated Jean's benefit using Franklin's highest salary at the time of their separation. Jean objected and argued the time rule computation should be based on Franklin's highest salary at the time of his retirement. After a lengthy exchange of letters between the parties, the matter was heard by the court, which rejected Franklin's argument and found the time rule calculation required use of Franklin's highest salary at the time of his retirement.

On appeal, Franklin asserts that his proposed method of calculation, which used his highest salary at the time of separation, is more equitable and ensures that Jean does not receive his postseparation benefits. We will affirm.

FACTS

We rely on the parties' pleadings and declarations for the factual background in this case.

The Marriage and Dissolution

On February 1, 1966, Franklin started receiving service credits for his employment with the State of California, Department of Transportation.

On February 25, 1967, Franklin and Jean were married. Franklin continued to work for the state. In 1979, Jean started to work for the Hanford Joint Union High School District.

On August 15, 1988, Franklin and Jean separated. There were no minor children at the time of separation.

On January 19, 1989, Franklin filed a petition for dissolution of their marriage. On March 2, 1989, Jean filed a response. The parties were represented by counsel throughout the dissolution proceeding.

On January 16, 1990, the court filed a detailed judgment of dissolution which divided their community property. Franklin was ordered to pay Jean monthly spousal support until her remarriage or death. The judgment also addressed the division of each spouse's pension benefits from their respective jobs.

"Each of the Parties have earned vested benefits with the [PERS] during the marriage. These benefits shall be divided in conformance with the following ...."

As we will explain post, Jean opted to wait to receive her interest in Franklin's PERS benefits until he actually retired. The judgment recited their marriage and separation dates, and provided:

"[Franklin] is awarded one-half of all [PERS] benefits to which he is or may become entitled which have accrued as a result of his employment during marriage together with all of the benefits which resulted from his employment before February 25, 1967 and after August 15, 1988."

The judgment further ordered:

"[Jean] is awarded One-half of all [PERS] benefits to which [Franklin] is or may become entitled which have accrued as a result of his employment during marriage."

The judgment ordered Franklin and PERS to notify Jean "of any application for benefits or any changes which may affect the value of the account of either party. No benefits shall be paid or distributed therefrom to either party ... without the prior written approval of all parties or further order of the court."

The judgment contained identical provisions as to Franklin's interest in Jean's PERS retirement benefits: that Jean was awarded one-half of the retirement benefits which she may become entitled to and accrued during marriage, that Franklin was awarded one-half the benefits which Jean may become entitled to and accrued during marriage, and that Jean and PERS shall notify Franklin when she applied for such benefits.

Franklin's Proposed QDRO

After the dissolution of their marriage, Franklin continued to work for the state and Jean continued to work for the school district.

In February 2002, Franklin contacted PERS as to the calculation of Franklin and Jean's interests in each others' PERS benefits upon their respective retirements. Jean became aware of this communication, and in September 2002, the parties reached an agreement regarding beneficiaries for their respective shares.

In May 2003, Jean contacted PERS as to the calculation of Franklin and Jean's interests in each others' PERS benefits upon their respective retirements.

On June 21, 2003, Franklin's attorney, James Tritt, sent a letter to Jean, stating that Franklin had retained him "to finalize the issue of distribution of your respective interests" in Franklin's PERS benefits, pursuant to the judgment of dissolution which granted her one-half of the community's interest accrued during marriage.

"… You are entitled to those benefits because all benefits earned by [Franklin] during the period of your marriage to him are community property. On the other hand, benefits earned by [Franklin] and salary earned by [Franklin] prior to your marriage and after the date of separation are [Franklin's] separate property, as to which there is no community interest." (Italics added.)

Mr. Tritt included his interpretation of the dissolution judgment:

" ... [T]he benefits should be divided as of the date of separation, as though each of you stopped working for the State of California on that date. Each of you would be entitled to the increase in the benefit fund for interest, investments, and the like, but not to portions of the fund which derive from the separate property earnings/employment of the other party after the date of separation (or before the date of marriage)." (Italics added.)

Mr. Tritt set forth a computation which "we believe reflects your community interest" in Franklin's PERS benefits, using "the benefit formula, with the factors put into the formula of [Franklin's] age at the date of retirement, years of service, and highest annual one-year community salary earned at or prior to the date of separation." (Italics added.) Franklin's highest salary as of separation was $2,969 per month. Mr. Tritt stated this computation followed "the 'time-rule,' using the factors applicable to [Franklin], and incorporating his monthly salary as of the date of separation.... The salary figure is the figure as of the date of separation because [Franklin's] earnings up to and at that date were community earnings, but his salary increases beyond that date would be his separate property."

Mr. Tritt advised Jean that he was sending this letter to her because he was not aware if she was represented by counsel, that he could not offer her legal advice, and she should obtain legal counsel if she had any questions.

Mr. Tritt's letter thus declared that based on the time rule, the community did not have any interest in any benefits or enhancements to Franklin's PERS retirement benefits which accrued after separation. Mr. Tritt attached a proposed QDRO, which calculated Jean's interest in Franklin's PERS benefits using Franklin's highest salary earned prior to separation. Mr. Tritt's letter did not state that Franklin intended to retire or disclose a proposed retirement date. The proposed QDRO, however, stated that Franklin's service ended in May 2003.

On July 28, 2003, James Preston advised Mr. Tritt that he represented Jean, that he would review Franklin's proposed QDRO, and would contact him thereafter. On August 21, 2003, Mr. Preston sent two proposed QDROs, which purportedly maximized their respective retirement benefits since such benefits had been deferred for many years "in exchange for increased benefit."

PERS Notice of Franklin's Retirement

On September 15, 2003, Jean received a letter from PERS that Franklin intended to retire as of November 5, 2003.

On September 23, 2003, Mr. Preston advised Mr. Tritt about the notice from PERS, that the judgment of dissolution ordered Franklin to notify Jean when he was applying for PERS benefits, Franklin failed to do so, and PERS could not pay any benefits without court approval. Mr. Preston requested Franklin's response as to Jean's proposed QDROs to expedite resolution of this matter.

On September 25, 2003, Mr. Tritt responded that Franklin provided notice to Jean of his retirement though his letter of June 21, 2003, and that he would respond soon to Jean's proposed orders.

On September 26, 2003, Mr. Preston again asked Mr. Tritt to expedite his response to the proposed orders, and noted that Mr. Tritt's letter of June 21, 2003, never stated that Franklin intended to apply for his PERS retirement benefits.

On September 26, 2003, Mr. Preston sent a letter to PERS, acknowledging its letter about Franklin's planned retirement, that Franklin had failed to provide such notice to Jean, and that the parties had not agreed to an order to divide the PERS benefits. Mr. Preston advised PERS that based on the terms of dissolution judgment, PERS could not provide Franklin with any distribution without written agreement from the parties or a court order.

On October 7, 2003, PERS acknowledged Mr. Preston's letter and stopped processing Franklin's retirement until the community property issue was resolved.

Jean's Proposed QDRO

On October 16, 2003, Mr. Tritt advised Mr. Preston that Franklin rejected Jean's proposed orders, and Franklin believed his proposed order properly divided the community's interest in his PERS benefits using Franklin's highest salary at the time of separation instead of his retirement.

"… Where the salary utilized in the formulas is the current salary, the result will be, in our opinion, the improper award to the non-member spouse of post-separation salary benefits which are separate property. On the other hand, in the formulas utilized in the QDRO's which were drafted by this office, we have allowed for all of the normal increases in pension values resulting from the passage of time, but have utilized the salary amount as of the date of separation. We believe this accurately determines the community interest, just as if the wage earner had ceased working for the State of California at separation, but gone on to work for a different entity. In that event, the non-member spouse would be entitled to the accrued community interest in the pension, computed using the salary as of the date of separation, but would obviously not be entitled to wage increases obtained by the member spouse after separation."

Mr. Tritt stated that if Jean did not agree with Franklin's proposed order, Franklin would request the court's interpretation of the dissolution judgment.

On November 5, 2003, Franklin retired from the state.

On March 3, 2004, Mr. Preston advised Mr. Tritt that he had retained an expert consulting actuary, and attached a lengthy proposed QDRO reflecting each party's interest in Franklin's PERS benefits. Jean's proposed QDRO used Franklin's highest monthly compensation as of the date of his retirement as the basis to compute the community's interest in his retirement benefits using the "time rule."

Franklin's Motion

Franklin did not respond to Jean's proposed QDRO, but instead filed the motion which is the basis of the instant case. On March 19, 2004, Franklin filed a motion for entry of a QDRO as to the division of the PERS retirement benefits. Franklin argued the only appropriate and accurate method to calculate the community's interest in his PERS benefits was to use his highest monthly salary at the time of separation, instead of Jean's proposed method of using his highest monthly salary at the time of his retirement. Franklin asserted that Jean was not entitled to any portion of Franklin's postseparation salary, raises, and benefits, and her proposed order "would amount to giving her a portion of those raises in the form of improperly awarding her portions of [Franklin's] pension benefits which were solely attributable to the post-separation wages." Jean's proposed order "mechanically utilizes a simple 'time rule'" to calculate the community's interest, whereas that rule was "completely inappropriate" because Franklin could easily determine his wage increases after separation. "Therefore, the 'time rule' should only be utilized plugging in the pre-separation salary."

Franklin's motion was supported by exhibits solely consisting of the correspondence and proposed orders exchanged between the parties, as set forth ante. Franklin did not submit any expert declarations to support his arguments as to his proposed calculation of the community's interest in his PERS benefits.

Jean's Response

On April 23, 2004, Jean filed a response in opposition to Franklin's motion, supported by exhibits consisting of the declarations and letters discussed ante. Jean's response was further supported by a declaration from Donald Parkyn, an actuary with expertise in the determination of community property interests in PERS retirement benefits. Mr. Parkyn declared the calculations in Franklin's proposed QDRO were "contrary to long established California community property law regarding the division of pensions, including the CalPERS pension in the present case." Franklin's proposed calculation reduced the community share "to a level below its community property interest therein, so that the community interest therein is not equally shared between the parties." Mr. Parkyn declared that CalPERS benefits are calculated based upon an employee's age, years of service, and final compensation. Mr. Parkyn further declared that the proper calculation of the community's interest uses "the employee's highest final compensation" at retirement because "[t]he community has an interest in the ultimate benefit received, not the benefit calculated as of the date of separation." Mr. Parkyn prepared Jean's proposed QDRO based on these guidelines, and defined the "final compensation" element as Franklin's highest compensation at the time of his retirement.

Jean relied on Mr. Parkyn's declaration and a series of cases, and argued that Franklin's proposed QDRO was contrary to existing law and reduced Jean's interests in his PERS benefits by nearly $6,500 per year, Franklin's motion was misleading in its interpretation of the time rule, and Franklin's arguments had been rejected by the California Supreme Court and other courts on numerous occasions.

Jean also filed her own declaration, which explained that at the time of their dissolution, she was advised that she could take her interest in Franklin's PERS benefits either when Franklin was eligible to retire or when he actually retired. Jean's attorney advised her to wait until Franklin actually retired, even though the community percentage would be lower, because Franklin would be earning a higher wage and the community's interest would be calculated based on that final wage. Jean decided to wait until he retired, and rejected Franklin's offer to buy-out her share. Jean declared that when she rejected Franklin's offer, he demanded to speak to the court but was advised that he could not force Jean to sell out.

Franklin's Reply

On April 28, 2004, Franklin filed a reply brief, asserted the logic and reasoning of his motion were "compelling and [had] not been undermined by anything" in Jean's response, and the court should isolate that portion of his retirement benefits based on his postseparation earnings. Again, however, Franklin only offered narrative arguments and did not submit any expert declarations to support his contentions about the calculation of the PERS benefits.

The Court's Hearings

On May 4, 2004, the court held a hearing on Franklin's motion and noted that it had reviewed the pleadings. Mr. Tritt, representing Franklin, restated his position as set forth in his motion. Mr. Tritt argued Franklin's proposed QDRO was supported by In re Marriage of Adams (1976) 64 Cal.App.3d 181 (Adams), and asserted Adams held that it was an abuse of discretion to give the former spouse any portion of postseparation earnings. The court disagreed and noted that Adams specifically held that if the former spouse opted to receive benefits at retirement, then the community's interest was calculated at the time of retirement. Mr. Preston, representing Jean, agreed with the court, and further noted that Adams set forth the correct calculation using the spouse's salary at retirement. Mr. Preston argued that Franklin's position would "reverse over 25 years of case authority and go off in a totally new tangent ...."

The court denied Franklin's motion and agreed with Jean's arguments about the calculation of the retirement benefits. The court asked Mr. Preston to draft a proposed QDRO for his review.

On August 9, 2004, the court held another hearing, and ordered both parties to file their own proposed QDROs and objections, based upon the court's ruling, and the court would consider their objections. Thereafter, the parties exchanged letters and objections as to the form of the proposed order.

The Judgment

On November 12, 2004, the court issued its order and judgment, denying Franklin's motion to calculate the QDRO based on his salary at the time of separation. The court found that based upon current legal authority, CalPERS regulations, and the Government Code, it was appropriate to use the time rule to divide Franklin's pension benefits using his final compensation at retirement. The court filed the QDRO prepared by Mr. Preston, as to Jean's community interest in Franklin's PERS benefits, which followed the time rule and used Franklin's final compensation at the time of his retirement.

On November 18, 2004, the notice of entry of order was filed.

On January 3, 2005, Franklin filed a timely notice of appeal.

DISCUSSION

On appeal, Franklin contends the trial court improperly rejected his argument to use his highest salary at the time of separation to calculate the community's interest in his PERS benefits, the court "mechanically" and "thoughtlessly" applied the time rule, that a wife's interest in her husband's pension only should be calculated based on his pre-separation earnings, and Jean's version of the time rule, as adopted by the court, led to results which were "inconsistent, bordering on absurd."

Franklin contends we must review the trial court's ruling de novo, because the only issue is the mathematical application of his proposed formula to known facts, and "the only reasonable, appropriate and fair apportionment method is to apply [Franklin's] pre-separation highest annual salary to the CalPERS formula which defines the pension benefit." To the contrary, we review the trial court's order separating the community portion of a pension plan from the separate property portion of the pension plan for an abuse of discretion. (Lehman, supra, 18 Cal.4th at p. 187.) "The superior court must apportion an employee spouse's retirement benefits between the community property interest of the employee spouse and the nonemployee spouse and any separate property interest of the employee spouse alone. [Citations.] It has discretion in the choice of methods. [Citations.] Such methods include the time rule, which is apparently the one that is employed most frequently. [Citations.] Whatever the method that it may use, however, the superior court must arrive at a result that is 'reasonable and fairly representative of the relative contributions of the community and separate estates.' [Citation.]" (Ibid.) "When a trial court concludes that property contains both separate and community interests, the court has very broad discretion to fashion an apportionment of interests that is equitable under the circumstances of the case. [Citation.] '[T]he disposition of marital property is within the trial court's discretion, by whatever method or formula will "achieve substantial justice between the parties."' [Citation.] Consequently, we review the trial court's utilization of the time rule to divide the combined pension under an abuse of discretion standard. [Citation.]" (Gowan, supra, 54 Cal.App.4th at p. 88.)

As noted ante, when the assets of the community estate include a defined benefit pension plan, frequently the proceeds of that plan include both separate and community property components. One of the most common ways to apportion these two components is through use of the time rule. Under this rule, "the community property interest in retirement benefits is the percentage representing the fraction whose numerator is the employee spouse's length of service during marriage before separation … and whose denominator is the employee spouse's length of service in total …; the separate property interest is the percentage representing the remainder of 100 percent minus the community property interest percentage." (Lehman, supra, 18 Cal.4th at p. 176, italics in original.)

"The rationale for the use of the time rule was set forth in In re Marriage of Judd [(1977)] 68 Cal.App.3d 515: 'Where the total number of years served by an employee-spouse is a substantial factor in computing the amount of retirement benefits to be received by that spouse, the community is entitled to have its share based upon the length of service performed on behalf of the community in proportion to the total length of service necessary to earn those benefits. The relation between years of community service to total years of service provides a fair gauge of that portion of the retirement benefits attributable to community effort.' [Citation.] Using this rationale, courts have frequently used this method of determining the community's interest where the amount of the benefit is substantially related to the number of years of service rendered. [Citations.]" (Gowan, supra, 54 Cal.App.4th at p. 88.)

"Generally, all property acquired by a spouse during marriage before separation is community property. [Citations.] [¶] Under the leading case of In re Marriage of Brown (1976) 15 Cal.3d 838 (hereafter sometimes Brown) and its progeny, such property may include the right to retirement benefits accrued by the employee spouse as deferred compensation for services rendered. [Citation.] This is the case whether or not the right to retirement benefits is 'vested' in the sense of 'surviv[ing] ... discharge or voluntary termination,' and whether or not it is 'matured' in the sense of amounting to an 'unconditional' entitlement 'to immediate payment.' [Citation.] What is determinative is not any 'abstract terminology' of this sort [citation], but rather a single concrete fact--time. The right to retirement benefits 'represent[s] a property interest; to the extent that such [a] right[] derive[s] from employment' during marriage before separation, it 'comprise[s] a community asset ....' [Citation.] 'Throughout our decisions we have always recognized that the community owns all [such] rights attributable to employment during marriage' before separation. [Citation.]" (Lehman, supra, 18 Cal.4th at p. 177.)

In the instant case, the trial court agreed with Jean and applied the time rule to divide the pension benefits. Franklin renews his arguments made below, that the trial court should have modified the time rule by basing the community portion of his pension on his salary at the time of separation. Franklin contends this is a more equitable approach because his earnings after separation are his separate property and he should retain all benefits from any postseparation increases in salary and benefits.

Franklin is not the first to argue the time rule results in an unfair division of pension benefits. In In re Marriage of Andreen (1978) 76 Cal.App.3d 667 (Andreen), the trial court awarded wife one-half of the community portion of husband's judicial pension, and held the actual amount of wife's share of husband's retirement payments "would be pegged to the salary of whatever judicial position husband holds at the time of his retirement." (Id. at p. 675.) Andreen rejected husband's argument that the community portion of the pension should be based on his salary at the date of separation. "Husband errs in his claim that any post-separation judicial promotion would derive solely from his post-separation efforts. The promotion would stem from an indivisible mixture of past and future progress, some of which would have occurred during the marriage." (Ibid.)

In Gowan, husband presented a much stronger case than Franklin. Husband was employed for 14 years and earned no more than $30,000 per year. Husband and wife were married for each of those 14 years. Four years after husband terminated his employment, he and wife were divorced. Ten years after the divorce, husband was rehired by the same employer at a salary of more than $100,000 per year. Husband retired five years later. The trial court determined the pension should be divided using the time rule. (Gowan, supra, 54 Cal.App.4th at pp. 84-85.) On appeal, husband argued the two periods of employment should be treated separately and wife should not benefit from the significantly higher wages he received during the second period of employment. (Id. at p. 90.) Gowan rejected the husband's argument:

"We agree with the [In re Marriage of] Bergman [(1985) 168 Cal.App.3d 742] court that even where an employee's service is not continuous, a pension based upon total service years may be divided according to the time rule. The rationale for the time rule applies wherever the total number of years served by the employee spouse (continuous or otherwise) is a substantial factor in computing the retirement benefits. Although [husband] had two separate employment periods with [employer], his pension was based upon his total service years. The time rule fairly accounts for both the marital and postmarital years of service because it assigns to the community only a portion of the pension corresponding to the portion of service during marriage and before separation.

"Finally, we consider the argument, made implicitly by [husband], that his later service years at high salaries contributed more to the value of his pension than his earlier years at lower salaries. Similar arguments in cases involving continuous employment have been repeatedly rejected by California courts.…

"Like the court in [In re Marriage of] Judd [(1977) 68 Cal.App.3d 515], we are persuaded that the community contribution to [husband's] pension (approximately 14 years, beginning in 1960) was crucial to its final value and to the amount received by [husband]. Under these circumstances, despite the break in service and the salary differential, the trial court acted within its discretion when it utilized the time rule to apportion the parties' interests in the pension." (Gowan, supra, 54 Cal.App.4th at pp. 90-91.)

As noted by the trial court herein, the same result was reached in Adams. "When the employed spouse continues working after separation, in many cases the increased retirement benefits will be attributable in part to such spouse's continued earnings, and in part to the previous community property contributions. ... [T]he nonemployee spouse should be entitled to a valuation of the community interest at the later date if he or she so desires, and the maturing of the pension benefits depends on an event solely in the power of the other party." (Adams, supra, 64 Cal.App.3d at p. 186.) Husband argued the entire increase in benefits should be his separate property if the date of retirement is used as the valuation date. Husband "introduced evidence to show that three factors caused the increase: (a) his additional years of service ('time on the job'); (b) his increase in earnings; and (c) his increase in age. The trial court divided the retirement benefits by using the 'time rule' (based on years of service during and after marriage) approved in In re Marriage of Wilson [(1974)] 10 Cal.3d 851 and Bensing v. Bensing [(1972)] 25 Cal.App.3d 889.^[[2]] Husband is in error when he states the increase was caused solely by his earnings or efforts after separation. Clearly, the 21 years and 7 months of community contribution to date of separation played a substantial part in the increase. Two of the factors causing the increase, namely, 'time on the job' and increased earnings, were directly enhanced by the many years credited to the marriage." (Adams, supra, 64 Cal.App.3d at p. 186, fns. omitted; see also In re Marriage of Judd, supra, 68 Cal.App.3d at p. 523.)

Franklin contends that Adams approved of using a calculation other than the time rule to determine the community's interest in pension benefits, based on the following footnote in Adams:

"We are not saying that the 'time rule' is the only rule in situations such as this. The insurance apportionment rule or some other might have been reasonable. Also we can envision an increase in benefits after separation that might be caused solely by the employee spouse's earnings. In such a case it would be an abuse of discretion to give a portion of the increase to the community. Such a situation is not, however, the case here." (Adams, supra, 64 Cal.App.3d at p. 187, fn. 8.)

Franklin thus contends Adams approved of using a calculation other than the time rule to divide pre- and postseparation salary enhancements from the community's interest in his retirement benefits. In Lehman, however, the California Supreme Court rejected a similar argument, where the husband asserted that his former wife had no interest in an enhanced retirement benefit offered after the dissolution of their marriage, and that the trial court improperly used the time rule to apportion the community's interest in such benefits. (Lehman, supra, 18 Cal.4th at pp. 174-177.) Lehman explained that the right to retirement benefits "is a right to 'draw[] from [a] stream of income that ... begins to flow' on retirement, as that stream is then defined. [Citations.]" (Lehman, supra, 18 Cal.4th 177-178.)

"The stream's volume at retirement may depend on various events or conditions after separation and even after dissolution. [Citations.] Such events and conditions include both changes in the retirement-benefit formula [citations], and also changes in the basis on which the retirement-benefit formula operates [citations]. Changes in the retirement-benefit formula may be frequent. [Citation.] Changes in the basis on which the retirement-benefit formula operates are virtually constant. [Citation.]

"Thus, the stream's volume at retirement may turn out to be even less than feared, as when the right to retirement benefits fails to vest or mature [citation], or when the employment itself ceases because the employer ceases to do business. By contrast, it may turn out to be even more than hoped for, as when the employer increases the per-service-year multiplier of the retirement-benefit formula [citations], or when the employee spouse lives to a greater than expected age, or serves more than expected years, or attains a higher than expected final compensation [citation].

"That the nonemployee spouse might happen to enjoy an increase, or suffer a decrease, in retirement benefits because of postseparation or even postdissolution events or conditions is justified by the nature of the right to retirement benefits as a right to draw from a stream of income that begins to flow, and is defined, on retirement [citations], with the nonemployee spouse, at one and the same time, holding the chance of more [citations], and bearing the risk of less [citation], equally with the employee spouse. Because the nonemployee spouse is compelled to share the bad with the employee spouse [citation], he or she must be allowed to share the good as well." (Lehman, supra, 18 Cal.4th at pp. 178-179.)

Lehman held that if the right to retirement benefits accrues in some part during marriage before separation, that right is a community asset. (Id. at p. 179.)

"It follows that a nonemployee spouse who owns a community property interest in an employee spouse's retirement benefits owns a community property interest in the latter's retirement benefits as enhanced. That is because, practically by definition, the right to retirement benefits that accrues, at least in part, during marriage before separation underlies any right to an enhancement. [Citation.]

"The fact that a nonemployee spouse who owns a community property interest in an employee spouse's retirement benefits owns a community property interest in the latter's retirement benefits as enhanced does not mean that the enhancement is a community asset in its entirety. But the question what extent such an enhancement belongs to the community and separate estates is one of apportionment and not characterization." (Lehman, supra, 18 Cal.4th at pp. 179-180, italics in original.)

Lehman also addressed the potential application of the dictum in the Adams footnote:

"It is conceivable that, in a given case, a nonemployee spouse who owns a community property interest in an employee spouse's retirement benefits might not own a community property interest in the latter's retirement benefits as enhanced, as perhaps where the right to the enhancement is not derivative. (See In re Marriage of Adams, supra, 64 Cal.App.3d at p. 187, fn. 8 [stating in dictum that 'we can envision an increase in benefits after separation that might be caused solely by the employee spouse's earnings'].) Such a case, however, seems the exception and not the rule. In any event, the issue is not presented, and hence need not be resolved today." (Lehman, supra, 18 Cal.4th at p. 180, fn. 2.)

Lehman relied on Brown and concluded that "'we have always recognized that the community owns'" all rights to retirement benefits "'attributable to employment during marriage' before separation." (Lehman, supra, 18 Cal.4th at p. 183.)

"And to recall what we made plain in Brown and its progeny: The right to retirement benefits represents a certain kind of property interest. It is a right to draw from a stream of income that begins to flow, and is defined, on retirement. [Citations.] Hence, it is a right to payments specified in accordance with a formula as such payments may be specified in accordance with such formula as then obtains -- not to some 'pre-retirement' payments specified in accordance with some 'pre-retirement' formula. As stated, various events and conditions after separation and even after dissolution may affect the amount of retirement benefits that an employee spouse receives. But not their character. Once he or she has accrued a right to retirement benefits, at least in part, during marriage before separation, the retirement benefits themselves are stamped a community asset from then on.

"In Olivo v. Olivo (1993) 82 N.Y.2d 202 … the New York Court of Appeals spoke words that are pertinent here. 'By its very nature, a pension right … owned as' community property 'is subject to modification by future actions of the employee. Should the employed spouse retire early, both parties receive a smaller benefit than they would have otherwise. The employee is, of course, free to do so, even though it incidentally and adversely affects the other party's rights, and the nonemployee spouse would have no grounds for recovery of the "loss". On the other hand, an employee who engages in extended employment at progressively higher wages is not entitled to keep the "excess" earned beyond what would have accrued at the time of expected retirement.' (Olivo v. Olivo, supra, 82 N.Y.2d at p. 209; [citations.] 'Similarly, both parties' rights are generally subject to changes in the terms of a retirement plan, as well as to circumstances largely beyond their control, such as the salary level finally achieved by the employee and used to calculate the pension benefit. What the nonemployee spouse possesses, in short, is the right to share in the pension as it is ultimately determined.... [Any] enhancement' in the amount is a 'modification of an asset not the creation of a new one.' (Olivo v. Olivo, supra, 82 N.Y.2d at pp. 209-210, italics added; see In re Marriage of Gillmore [(1981)] 29 Cal.3d [418,] 425-426; In re Marriage of Brown, supra, 15 Cal.3d at p. 849, fn. 11.)" (Lehman, supra, 18 Cal.4th at pp. 183-184, fn. omitted, italics in original.)

Lehman thus concluded the court did not abuse its discretion in applying the time rule to apportion the community's interest in the husband's enhanced retirement benefits.

"… The use of the time rule is not unreasonable when the 'amount of the retirement benefits is substantially related to the number of years of service.' [Citations.] That is the case here. The amount of Husband's retirement benefits as enhanced was the product of his final compensation, length of service, and a per-service-year multiplier. Moreover, the result of the time rule is not unreasonable when the 'relative contributions of the community and separate estates' are accounted for. [Citation.] That is also the case here. Reflecting Husband's length of service of 17.39 years during marriage before separation and his length of service of 32.67 years in total, the community property interest in Husband's retirement benefits as enhanced was fixed at 53.23 percent and his separate property interest was fixed at 46.77 percent." (Lehman, supra, 18 Cal.4th at p. 187, italics in original.)

Franklin's arguments herein ignore the state of the law in California as explained in Lehman. Franklin has not cited any case that supports his proposed formula, that his highest salary at the time of separation must be used to calculate the community's interest in his PERS benefits. Instead, he repeatedly asserts the time rule must not be applied mechanically, declares that his position "is reasonable, lawful, logical and fair," without citation to authority, asserts there are "many" cases which support his position, but misconstrues the applicable law. The record in this case does not support the allegation that the trial court mechanically applied the time rule. Instead, the record demonstrates that Franklin adamantly opposed application of the time rule but failed to present any evidence, declarations, or exhibits to support his position aside from his narrative arguments in his moving papers. The record also demonstrates the trial court gave Franklin's views full consideration and concluded application of the time rule would result in the most reasonable and fair apportionment of this asset.

Franklin contends "California case law does not support the view that the 'time rule' should thoughtlessly be applied in every case." In support of this argument, Franklin relies upon In re Marriage of Poppe (1979) 97 Cal.App.3d 1 (Poppe) and In re Marriage of Steinberger (2001) 91 Cal.App.4th 1449 (Steinberger). Franklin misconstrues the facts and law of these two cases.

For example, Franklin correctly points out that Poppe concluded the trial court erred in applying the time rule to the facts before it and reversed the order. (Poppe, supra, 97 Cal.App.3d at pp. 8-9.) Franklin, however, fails to acknowledge that the reason Poppe reached this conclusion was because the pension plan at issue was from the Naval Reserve, and the amount of benefits received was based on the "points" earned by the husband while a reservist. (Ibid.) One point was earned for each day of service provided by husband while a reservist. (Id. at p. 5.) Poppe noted the time rule was applicable in situations where the amount of retirement benefits "depended upon or was substantially related to the number of years of service rendered." (Id. at pp. 8-9.) The Naval Reserve's pension plan, however, was based on a different system.

"... [T]he amount of former husband's pension is not substantially related to the number of years he served in the Naval Reserve. The only relationship between the number of years of service and the pension is that to be eligible for the pension former husband must have served a minimum number of 'qualifying' years, years in which he earned 50 or more points. That condition having been satisfied, all points earned, whether in a 'qualifying' year or not, counted in fixing the amount of his pension. The number of points that can be earned in a year may be as high as 364 or as low as 1, depending on the nature and frequency of the service rendered, not the number of years served. Thus the amount of the pension is not a function of the number of years of service; the number of years of service during the marriage is not a fair gauge of the community contribution; and the court's apportionment of the pension on the basis of the number of 'qualifying' years served as compared to the number of years of service during the marriage must be said to be unreasonable, arbitrary and an abuse of discretion." (Poppe, supra, 97 Cal.App.3d at p. 9.)

Franklin fails to explain how this holding has any application to the facts of this case.

Franklin similarly misconstrues Steinberger, and asserts that case "declined to 'mechanically' apply" the holding in Lehman and refused to apply the time rule to enhancements offered in a severance package. As with Poppe, however, Steinberger is inapposite to the instant case. In Steinberger, husband and wife separated in June 1997. In November 1997, wife was suddenly advised by her employer that she would receive stock options and salary benefits if she resigned immediately, instead of being terminated for cause. Wife signed an agreement not to sue the employer, resigned, and received severance pay and one year of stock options. Husband argued all these benefits were community assets, simply reflecting modification of the wife's existing employment contract, and were subject to division under the time rule. (Steinberger, supra, 91 Cal.App.4th at pp. 1454-1455, 1456-1457.)

Steinberger, however, held the severance pay was separate property based on the unique circumstances of wife's departure from her employment. The severance pay did not represent a modification of wife's original employment contract, but was a new right wife acquired at the time she left her employer, after separation from husband, based on her agreement to resign rather than face termination for cause. (Steinberger, supra, 91 Cal.App.4th at pp. 1458-1459.) As for the stock options, Steinberger held those benefits included both community and separate assets and required application of the time rule. However, the extra year of options offered as part of the severance package was a separate property interest because it was part of a new right created after the separation. (Id. at pp. 1462-1463.) In so holding, Steinberger rejected husband's reliance on Lehman, based on the unique circumstances of wife's resignation from her job:

"We are not persuaded that Lehman ... applies to the severance package at issue in this case. In Lehman, the court emphasized that the enhancement at issue 'was not a severance payment either in name or in nature. It called itself, and was in fact, an increase in retirement benefits.' [Citation.] The trial court in this case was not bound to apply Lehman mechanically in circumstances that were explicitly found to be different. Lehman involved an enhancement to retirement benefits based on the number of years of service, where part of the service occurred during marriage. Under those facts, the court held that the enhancement was partially community property. Here, in contrast, [wife] was allowed to receive vesting of the stock options in question not based on her prior service with [her employer], but because she entered a 'new deal' with her employer after the date of the marital separation. The options in question were not the result of [wife's] original contract or her prior years of service, but part of a separate, new severance package. [Wife] had not previously accrued any right whatsoever to this payment. Under these circumstances, the court was within its discretion to apply the time rule in a manner that gave [wife] the benefit of these stock options." (Steinberger, supra, 91 Cal.App.4th at p. 1462, italics in original, underscoring added.)

Again, as with Poppe, the specific facts of Steinberger do not support Franklin's characterization of the case.

Finally, Franklin submitted a letter brief which asserts that in Glover v. Crayk (Wyo. 2005) 122 P.3d 955 (Glover), the Wyoming Supreme Court recently rejected application of the time rule to postseparation pension benefits. In Glover, the parties married in 1979 and separated in 1997. They executed a property and child custody agreement, which awarded wife one-half of the sum that accrued in husband's military retirement fund during the first 17 years of his military career. That agreement was then included within the divorce decree. (Id. at pp. 956-957.)

"The language of the divorce decree states that [wife's] entitlement is limited to 'one-half (1/2) of the sum that accrued in [husband's] retirement fund during the first seventeen (17) years of [husband's] military career.' (Emphasis added.)" (Glover, supra, 122 P.3d at p. 958.)

In 2003, wife filed a motion to modify the retirement provision of the agreement pursuant to the time rule, and argued it would provide a fair and equitable distribution of husband's military pension. Husband objected because the proposed modification gave wife benefits beyond those accrued during the first 17 years of his service, as provided in their agreement. The trial court granted wife's motion and modified the agreement. (Glover, supra, 122 P.3d at pp. 956-957.)

"The divorce decree provided for the division of [husband's] military retirement benefits. The ambiguity in the decree is the absence of a formula to be applied in calculating the amount [wife] is entitled to from [husband's] retirement benefits. The district court accepted [wife's] argument that her one-half should be calculated pursuant to the 'time rule.' The 'time rule' is computed by multiplying 50% times a fraction, the numerator of which is the number of months of marriage during [husband's] creditable military service and the denominator of which is the total number of months of [husband's] creditable military service. The result is the percentage of [husband's] disposable retired pay to which [wife] is entitled. See In re Marriage of Hunt, 909 P.2d 525, 530-32 (Colo.1995). This allows [wife] to realize a benefit from promotions and pay increases [husband] may have received following the divorce up until the time of his retirement." (Glover, supra, 122 P.3d at p. 958.)

The Wyoming Supreme Court agreed with husband's argument that the wife's proposed distribution, as adopted by the trial court, violated the express terms of the separation agreement:

"[Wife's] formula is inconsistent with the language of the divorce decree. [Wife's] formula awards her the benefit of any income increases [husband] received after the first seventeen years of his military career. [Wife] supports this formula by simply stating that it is fair and equitable. The validity, let alone the 'equity,' of [wife's] formula is not the issue. The real issue is the intent of the divorce decree. Nowhere does [wife] present her formula within the context of the language of the decree. Upon review, we find no indication that the divorce decree anticipated [husband's] retirement calculation to be based upon sums yet to be accrued. Instead, the divorce decree speaks of sums already accrued. Indeed, the decree expressly defines the time frame for accrual as the first seventeen years of [husband's] military service. Under these circumstances, we hold that the district court erred in adopting [wife's] formula." (Glover, supra, 122 P.3d at p. 958.)

As with Poppe and Steinberger, Glover is inapposite to the instant case. First, it is a well-known and established principle that the decision of a sister state is persuasive authority only and not binding on the courts of this state. (In re Walton (2002) 99 Cal.App.4th 934, 946.) Second, there is no indication that Wyoming follows the "time rule" to determine the community's interest in pension benefits. (See In re Marriage of Hunt (Colo. 1995) 909 P.2d 525, 532, and cases cited therein.) In Broadhead v. Broadhead (Wyo. 1987) 737 P.2d 731 (Broadhead), the Wyoming Supreme Court acknowledged California's ruling in Brown, but specifically declined to follow Brown to determine the division of pension benefits after separation. (Broadhead, supra, 737 P.2d at pp. 737-739; see also Johnson v. Johnson (Wyo. 1993) 851 P.2d 4, 7-8; Forney v. Minard (Wyo. 1993) 849 P.2d 724, 728.) Indeed, the wife in Glover relied upon Colorado authority in arguing that the time rule should apply. Glover does not assist Franklin in this case.

Franklin repeatedly asserts his salary increases were solely the result of his "post-separation career success," the community has no interest in such postseparation benefits and enhancements, and the trial court's order allowed Jean to receive his postseparation property. As illustrated in Lehman, however, Franklin fails to explain why the 21 years that he was employed by the State of California while married to Jean did not contribute to any promotions or increases in salary he may have received. Franklin also ignores the facts that his total pension was largely a function of the length of his employment, including his 21 years of employment during the marriage. The total benefits Franklin received for his salary level would have been reduced dramatically if he were employed for only 15 years (between separation in 1988 and retirement in 2003) instead of his total service of 37 years.^[3]

The overwhelming applicable authority, along with the complete absence of any contrary authority, establishes that the trial court did not abuse its discretion when it concluded the time rule should be used to apportion Franklin's pension plan.^[4]

DISPOSITION

The judgment is affirmed. Costs to respondent.

_____________________

HARRIS, Acting P.J.

WE CONCUR:

_____________________

CORNELL, J.

_____________________

GOMES, J.

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^[1] "As is customary in family law proceedings, we refer to the parties by their first names for purposes of clarity and not out of disrespect. [Citations.]" (Rubenstein v. Rubenstein (2000) 81 Cal.App.4th 1131, 1136, fn. 1.)

^[2] Bensing v. Bensing, supra, was overruled on other grounds in In re Marriage of Brown, supra, 1