Marriage of Belthius ( 2023 )

Filed 1/4/23; certified for publication 1/31/23 (order attached)
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION TWO
In re Marriage of DARRELL P. B315673
and ANGELA M. BELTHIUS.
(Los Angeles County
Super. Ct. No. VD023301)
DARRELL P. BELTHIUS,
Respondent,
v.
ANGELA M. BELTHIUS,
Appellant.
APPEAL from an order of the Superior Court of
Los Angeles County. A. Veronica Sauceda, Judge. Reversed and
remanded with directions.
Law Offices of Lisa R. McCall, Lisa R. McCall and Erica M.
Baca for Appellant.
Law Offices of Gregory G. Yacoubian and Gregory G.
Yacoubian for Respondent.
______________________________
In this marital dissolution case, appellant Angela M.
Belthius (Angela) appeals from a postjudgment order denying her
request for the entry of a qualified domestic relations order
(QDRO) and instead adopting the QDRO proposed by respondent
Darrell P. Belthius (Darrell).1 We reverse and remand with
directions.
FACTUAL AND PROCEDURAL BACKGROUND
The Marriage
Angela and Darrell were married on September 14, 1985,
and separated on September 1, 1995.
Darrell’s Employment
On April 27, 1987, Darrell began working for the
Los Angeles Police Department (LAPD). He joined the
Los Angeles Fire and Police Pension Plan on October 11, 1987.
During the parties’ marriage, Darrell held the rank and paygrade
of Police Officer I, Police Officer II, and Police Officer III.
Stipulated Judgment of Dissolution
A stipulated judgment of marital dissolution was entered
on May 12, 1997 (stipulated judgment). As relevant here, the
stipulated judgment awarded Angela and Darrell each “[o]ne-half
of the community interest in” Darrell’s LAPD pension.
1 For ease of identification, we refer to the parties by their
first names. No disrespect is intended.
2
The stipulated judgment also provided: “The parties
stipulate and the Court orders that [Darrell’s LAPD pension] . . .
shall be divided pursuant to the ‘time rule’ formula”—citing, In re
Marriage of Judd (1977) 68 Cal.App.3d 515 (Judd) and In re
Marriage of Henkle (1987) 189 Cal.App.3d 97—“by [QDRO]. The
parties further stipulate and the Court orders that the parties
will take action to join the pension to this action as a Claimant if
necessary and that the Court shall reserve jurisdiction over the
issue of the pension, and any [QDRO] necessary to divide the
parties’ interests.”
Darrell’s Postseparation Employment
Darrell continued to be employed by the LAPD after the
parties separated until August 31, 2019. During that period,
Darrell was successively promoted to and held the ranks and
paygrades of Detective I, Detective II, Sergeant I, Sergeant II,
Lieutenant I, and Lieutenant II.
Angela’s Request for Order
On January 28, 2021, Angela filed a request for order
seeking the entry of a proposed QDRO (Angela’s QDRO).
As to the calculation of the community interest in Darrell’s
pension, Angela’s QDRO provided: “[T]he community interest in
[Darrell]’s entitlement to a service pension . . . shall be
determined by dividing the years of service used in computing
his[] service pension entitlement attributable to the period that
[Darrell] was married to [Angela] before separation (Marital
Service) by the total years of service used in computing [Darrell]’s
service pension entitlement (Total Service); the resultant
percentage then shall be multiplied by [Darrell]’s service pension
entitlement, including any cost of living increases, to arrive at
the community interest:
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“MARITAL SERVICE DIVIDED BY TOTAL SERVICE
TIMES [DARRELL]’S SERVICE PENSION ENTITLEMENT
EQUALS COMMUNITY INTEREST.
“All funds in [Darrell]’s [Deferred Retirement Option Plan
(DROP)] account, if any, constitute . . . [Darrell]’s service pension
entitlement and shall be divided according to the formula in this
paragraph.”
Angela’s QDRO further provided: “[I]f [Angela]’s death
occurs, [Angela]’s separate property interest established under
this Order shall pass under [Angela]’s beneficiary designation on
file with the Board or, if none, shall pass under [Angela]’s will or
should [Angela] leave no will, shall pass by intestate succession.”
Darrell’s Responsive Declaration
Darrell filed a responsive declaration, indicating that he
did not consent to Angela’s requested QDRO. According to
Darrell, during the divorce proceedings, he believed that Angela
would be entitled to half of his pension contributions, plus
interest, as calculated at the time of their separation.
Darrell stated: “I contributed 9% of my gross income every
pay period to the pension fund for an additional 24 years after
separation, which computes [to] several hundred thousands of
dollars. [Angela] contributed zero. The pension payout is based
upon years of service and final 12 months of income. Your
income is the result of promotions and education. I incurred the
costs, hard work and family hardships to receive a graduate level
education while working full time and supporting my family.
This education was required to obtain management level
positions to obtain the higher pay and benefits. If I would have
remained at the rank/position at the time of the separation, my
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final pension settlement would have been a fraction of what was
earned after the time of separation.”
Darrell contended that Angela “should only be entitled to
her accruals acquired on her half of the pension value at the time
of the separation, not based upon [Darrell’s] future earnings and
contributions into the pension plan as the time rule formula
outlines.”
Darrell’s Proposed QDRO
At the family court’s direction, Darrell filed a memorandum
of points and authorities and his own proposed QDRO (Darrell’s
QDRO).
Darrell’s QDRO characterized the increase to his pension
benefits “attributable to [Darrell]’s post-separation rank
promotions” as his separate property. Regarding community
property, it provided: “[T]he community interest in [Darrell]’s
entitlement to a service pension . . . shall be determined by
dividing the years of service used in computing his service
pension entitlement that are attributable to the period that
[Darrell] was married to [Angela] before separation (Marital
Service) by the total years of service used in computing [Darrell]’s
service pension entitlement (Total Service); the resultant
percentage then shall be multiplied by the amount of [Darrell]’s
service pension entitlement based upon [Darrell]’s rank of Police
Officer III on the date of separation, September 1, 1995, including
any cost-of-living increases, to arrive at the community interest
therein, and . . . [Angela]’s Monthly Pension Benefit, as provided
for in the Plan’s ‘Request for Estimate of Community Property
Division of the Service Pension Benefit and Deferred Retirement
Option Plan (DROP) Account’ dated July 28, 2021, which is
attached hereto as Exhibit-A. All funds included in . . . [Darrell]’s
5
DROP account will also be divided based on the foregoing
analysis . . . .”
The referenced exhibit was a letter from the assistant
manager of the City of Los Angeles’s DROP/Service Pensions
Section, dated July 28, 2021. It was sent in response to Darrell’s
“request for an estimate of [his] monthly service pension benefit
and DROP account balance using the rank of Police
Officer III . . . .” The letter cautioned that “a court filed and
judged signed” QDRO was not on file and that “[a]ctual
community property will be determined based on court signed
documents.”
Darrell’s QDRO also provided that, if Angela predeceased
Darrell, her interest in the pension would revert to Darrell.
Family Court Order
After entertaining oral argument on August 31, 2021, the
family court denied Angela’s request for order and instead signed
Darrell’s QDRO.
The family court stated: “[Y]ou both agreed that the time
rule formula applies. So there is no dispute regarding that
whether or not . . . [Angela]—as [Darrell] said, [would] gain a
windfall, . . . because she will get an additional amount of his
pension based on his promotion. And so . . . [Darrell] stated . . .
that these promotions occurred post separation. . . . Whether
there’s a dispute, whether he spent his own money, or this is
something that’s provided by the police department, it doesn’t
matter. These promotions don’t just happen. Someone has to
work hard for them and merit testing, et cetera. And all these
promotions happened post separation. And so I’m going to
deny . . . [Angela]’s request. I’m going to sign . . . [Darrell]’s
QDRO.”
6
Appeal
Angela timely appealed from the family court’s August 31,
2021, order.
DISCUSSION
Angela contends that the family court erred in two respects
when it signed Darrell’s QDRO. First, the court erroneously used
Darrell’s rank and salary at the time of the parties’ separation to
calculate the community interest in Darrell’s pension2 instead of
his final rank and salary at the time of his retirement, as
required by the time rule. Second, the court committed legal
error by ordering that Angela’s property interest in the pension
reverts to Darrell if she predeceases him.3
We agree with Angela on both points.
I. Standard of Review
With respect to the characterization of property as separate
or community, “[i]nasmuch as the basic ‘inquiry requires a
critical consideration, in a factual context, of legal principles and
their underlying values,’ the determination in question amounts
to the resolution of a mixed question of law and fact that is
predominantly one of law. [Citation.] As such, it is examined de
novo. [Citation.]” (In re Marriage of Lehman (1998) 18 Cal.4th
2 Darrell’s pension includes the monthly pension benefit as
well as the DROP account balance.
3 Darrell argues that this issue should not be considered on
appeal because Angela failed to raise it in the family court. We
disagree. Angela’s QDRO provided that, upon her death, her
separate property interest in the pension would pass to her
designated beneficiary, under her will, or by intestate succession.
This was sufficient to preserve the issue for appeal.
7
169, 184 (Lehman).) This appeal also requires us to apply law to
undisputed facts and to construe the terms of the stipulated
judgment. We also do so de novo. (Martinez v. Brownco
Construction Co. (2013) 56 Cal.4th 1014, 1018 [application of law
to undisputed facts]; Estate of Jones (2022) 82 Cal.App.5th 948,
952–953 (Jones) [interpretation of a stipulated judgment not
involving extrinsic evidence].)4
II. Community Interest in Darrell’s Pension
A. Applicable law
In general, all property acquired by spouses during
marriage but before separation is considered community
property. (Lehman, supra, 18 Cal.4th at p. 177.) This includes
the property right to retirement benefits attributable to
employment during marriage. (Ibid.)5 “The right to retirement
4 Darrell contends that we should apply the abuse of
discretion standard of review. (See In re Marriage of Adams
(1976) 64 Cal.App.3d 181, 187 [method selected to distribute the
community interest in retirement rights reviewed for abuse of
discretion].) Because we conclude that the family court
committed legal error, the result would be the same regardless of
the standard applied. (See People v. Superior Court
(Humberto S.) (2008) 43 Cal.4th 737, 746 [“when a trial court’s
decision rests on an error of law, that decision is an abuse of
discretion”].)
5 Under California law, retirement pension benefits “‘do not
derive from the beneficence of the employer, but are properly part
of the consideration earned by the employee.’ [Citation.] Since
pension benefits represent a form of deferred compensation for
services rendered [citation], the employee’s right to such benefits
is a contractual right, derived from the terms of the employment
contract.” (In re Marriage of Brown (1976) 15 Cal.3d 838, 845.)
“[A]n employee acquires a property right to pension benefits
8
benefits is a right to ‘draw[] from [a] stream of income that . . .
begins to flow’ on retirement, as that stream is then defined.
[Citations.] [¶] The stream’s volume at retirement may depend
on various events or conditions after separation and even after
dissolution. [Citations.]” (Id. at pp. 177–178, fn. omitted.)
Upon dissolution of the marriage, the family 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.]” (Lehman, supra, 18 Cal.4th
at p. 187.) The “time rule” is one such method of apportionment.
“Under the time rule, the community is allocated a fraction
of the [pension] 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).)
The Judd court explained the rationale underlying the time
rule: “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 retirement benefits
when he enters upon the performance of his employment
contract.” (Ibid.)
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attributable to community effort.” (Judd, supra, 68 Cal.App.3d
at pp. 522–523.)
“The rule thus divides the separate property and
community property interests in a pension by giving equal weight
to each year of service, regardless of whether the divorce occurred
early in the employed spouse’s career (when salary-based pension
contribution deductions might be smaller but would have longer
to grow) or closer to retirement (when salary-based pension
contribution deductions might be greater but would have less
time to grow).” (In re Marriage of Gray (2007) 155 Cal.App.4th
504, 508 (Gray).)
B. Analysis
Darrell’s QDRO signed by the family court calculates the
community interest in Darrell’s pension by dividing the length of
employment service during marriage by the total length of
service, and then multiplying that fraction by what Darrell’s
pension benefit hypothetically would have been if he had retired
at the rank he held at the time of the parties’ separation—that of
a Police Officer III.6 Of course, Darrell did not retire as a Police
Officer III, but rather as a Lieutenant II. Thus, Darrell’s QDRO
does not comport with stipulated judgment’s unambiguous
provisions that the parties were each entitled to half of the
6 According to the July 28, 2021, letter from the City of
Los Angeles’s DROP/Service Pensions Section, Angela’s monthly
share of the pension would be $1,004.99 and her share of the
DROP account would be $51,896.09 if calculated using the final
average salary of a Police Officer III ($8,632.14), as Darrell’s
QDRO dictates. Alternatively, Angela’s monthly share of the
pension would be $1,363.76 and her share of the DROP account
would be $70,422.27 if calculated using the final average salary
of a Lieutenant II ($11,713.68).
10
community interest in Darrell’s pension and that the method of
apportionment would be made pursuant to the time rule.
Under the traditional time rule, the fraction of service
during marriage divided by total service must be “multiplied by
the final plan benefit to determine the community interest.
[Citations.]” (Gowan, supra, 54 Cal.App.4th at p. 88, italics
added; see also In re Marriage of Steinberger (2001)
91 Cal.App.4th 1449, 1460 [multiplying “by the total benefit
received”].) That is because the community property interest at
issue—the right to retirement benefits—“is a right to draw from a
stream of income that begins to flow, and is defined, on
retirement. [Citations.]” (Lehman, supra, 18 Cal.4th at p. 183,
italics added.)
“[E]ven though an employee spouse while married might
have earned less in early career years than in the later prime of a
career that might occur postseparation, the right to the ultimate
benefit, at least in part, still accrued during the earlier marriage.
This entitles the marital community to evenly share in the
ultimate benefit based solely on the ratio of the duration of the
marriage to the duration of the total employment service,
regardless of the amount of the benefit specifically attributable to
service or salary during the marital years or any breaks in
service. [Citation.]” (Gray, supra, 155 Cal.App.4th at p. 516.)
Darrell does not dispute that the time rule governs the
apportionment of the community interest in his pension. Rather,
he contends that increases in his pension benefits “attributable
solely to his promotions post separation, that were the result of
his personal initiative . . . and separate property expenditures,”
are his separate property to which the time rule should not apply.
11
We cannot agree. Our intention is not to derogate Darrell’s
professional achievements, but he “errs in his claim that any post
separation . . . promotion . . . derive[d] solely from his post-
separation efforts.” (In re Marriage of Andreen (1978)
76 Cal.App.3d 667, 675.) Rather, the promotions “stem[med]
from an indivisible mixture of” effort and progress both during
and after the marriage. (Ibid.) The community thus retained a
property interest in the final pension benefits, as increased by
post-separation promotions. That the value of the benefits at
retirement “is reflective of an employee’s subsequent [post-
separation] salary increases cannot alter or diminish the stature
of the community’s interest in those rights. [Citations.]” (Judd,
supra, 68 Cal.App.3d at p. 523.)
Darrell’s QDRO deprives the community of its proper share
of the pension benefits and must be reversed.
III. Reversion of Angela’s Interest to Darrell
Darrell’s QDRO, signed by the family court, provides that,
if Angela predeceases Darrell, her separate property interest in
the pension will revert to Darrell. This provision violates
Family Code section 2610, subdivision (a), which provides, in
relevant part, that “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[.]”
Family Code section 2610 was enacted to abolish the
terminable interest rule (Regents of University of California v.
Benford (2005) 128 Cal.App.4th 867, 874), which had previously
“governed disposition of community property interests in
retirement benefits upon the death of either of the spouses in
12
dissolution proceedings” (In re Marriage of Powers (1990)
218 Cal.App.3d 626, 634 (Powers)). Under the terminable
interest rule, “a nonemployee spouse’s interest in pension
benefits terminated on that person’s death, so that the
nonemployee spouse could not bequeath benefits by will.
[Citations.]” (In re Marriage of Nice (1991) 230 Cal.App.3d 444,
451 (Nice).)
“[A]brogation of the terminable interest rule means that a
nonemployee spouse’s community property interest is now
inheritable. [Citation.]” (Nice, supra, 230 Cal.App.3d at p. 452;
see also Powers, supra, 218 Cal.App.3d at p. 639 [“if the
nonemployee spouse dies before the employee spouse, his or her
interest in the employee spouse’s pension plan does not revert to
the employee spouse by operation of the terminable interest rule
but becomes part of the nonemployee spouse’s estate”].)
By mandating that upon Angela’s death her share of the
pension would revert to Darrell, Darrell’s QDRO effectively
revives the terminable interest rule, contravening Family Code
section 2610. The provision cannot stand.
13
DISPOSITION
The August 31, 2021, order entering Darrell’s QDRO is
reversed. On remand, the family court is directed to enter a
QDRO that (1) calculates the community interest in Darrell’s
pension by applying the time rule to the final pension benefits as
those benefits were defined at retirement; and (2) complies with
Family Code section 2610, subdivision (a), with respect to the
disposition of Angela’s share of the pension upon her death.
Angela is entitled to her costs on appeal.
_____________________, Acting P. J.
ASHMANN-GERST
We concur:
________________________, J.
CHAVEZ
________________________, J.
HOFFSTADT
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Filed 1/31/23
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION TWO
In re Marriage of DARRELL P. B315673
and ANGELA M. BELTHIUS.
(Los Angeles County
Super. Ct. No. VD023301)
DARRELL P. BELTHIUS,
Respondent, ORDER CERTIFYING
OPINION FOR
v. PUBLICATION
ANGELA M. BELTHIUS,
Appellant.
THE COURT:
The opinion in the above-entitled matter filed on
January 4, 2023, was not certified for publication in the Official
Reports.
For good cause it now appears that the opinion should be
published in the Official Reports and it is so ordered.
____________________________________________________________
ASHMANN-GERST, Acting P. J. CHAVEZ, J. HOFFSTADT, J.