3 Cal. App. 5th 719
Cal. Ct. App.2016Background
- Philip Chapman served ~20 years in the U.S. Navy, married to Judy for 17 years; he began receiving military retirement pay after retiring in 1991.
- In 2003 the parties entered a marital settlement agreement incorporated into a dissolution judgment providing Judy would receive $475/month as her community portion of Philip’s military retirement pay; the court approved the agreement in 2004.
- After judgment, Philip elected combat-related special compensation (CRSC) in lieu of taxable military retired pay due to service-connected PTSD; the CRSC dollar amount equaled his retired pay but is non‑taxable and is federal non‑retired-pay disability compensation.
- Philip paid Judy $475/month through March 2014, then stopped; Judy sued to enforce the judgment and secure continued $475/month payments.
- The trial court ordered Philip to continue paying $475/month and imposed a constructive trust on the CRSC funds; Philip appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Philip’s postjudgment election of CRSC can defeat Judy’s community-property share in his retired pay | Judy: Election cannot defeat her contractual/community property right; she is entitled to $475/month under the MSA | Philip: Federal law treats CRSC as non‑retired disability pay that is not divisible, so his election ends Judy’s share | The election does not defeat Judy’s right to $475/month under the agreement; her share must be honored |
| Whether federal law preempts enforcement of the state judgment requiring payment tied to retired pay waived for disability | Judy: Enforcement of the judgment is not a division of CRSC but enforcement of a contractually fixed community share | Philip: Mansell and federal law prohibit state courts from treating waived retired pay (converted to disability) as divisible community property | Mansell does not bar enforcing a preexisting state judgment that awards a community share of retired pay; federal law does not permit using the election to defeat the agreed payment |
| Whether imposition of a constructive trust on CRSC funds was proper | Judy: Constructive trust remedies the impact of Philip’s election on her monthly benefit | Philip: CRSC was lawfully elected; no wrongful conduct to support a constructive trust | Imposition of a constructive trust reversed — no wrongful act; constructive trust requires wrongful acquisition/detention |
| Appropriate remedy to secure Judy’s contractual/community payment | Judy: Court may award equitable relief to ensure payment of $475/month | Philip: He already lawfully receives CRSC and cannot be deprived of it as retired pay; but he can still be ordered to pay from other assets | Court affirmed $475/month obligation and remanded to allow trial court discretion to fashion lawful equitable remedies (excluding constructive trust on CRSC) |
Key Cases Cited
- In re Marriage of Gillmore, 29 Cal.3d 418 (Cal. 1981) (employee spouse may not invoke a condition within his control to defeat the other spouse’s community interest in pension)
- In re Marriage of Stenquist, 21 Cal.3d 779 (Cal. 1978) (unilateral election of disability pension cannot transmute community retirement benefits into separate property to defeat spouse’s interest)
- Mansell v. Mansell, 490 U.S. 581 (U.S. 1989) (federal law forbids state courts from treating waived retired pay received as veterans’ disability benefits as divisible retired pay)
- In re Marriage of Benson, 36 Cal.4th 1096 (Cal. 2005) (retirement benefits are deferred compensation and are community property to the extent earned during marriage)