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In re Marriage of Sonne

June 28, 2010

IN RE THE MARRIAGE OF GORDON ALBERT SONNE AND THERESSA LYNN SONNE.
GORDON ALBERT SONNE, APPELLANT,
v.
THERESSA LYNN SONNE, APPELLANT.



(Monterey County Super. Ct. No. DR41290). Trial Court: Monterey County Superior Court Trial Judge: Honorable Robert O'Farrell.

The opinion of the court was delivered by: Mihara, J.

CERTIFIED FOR PUBLICATION

Both Husband and Wife appeal from the trial court's decision dividing their interests in Husband's California Public Employees' Retirement System (PERS) retirement allowance and survivor benefit. Husband's first contention is that the trial court abused its discretion in concluding that reacquired service credit for Husband's years of service to his employer prior to his marriage to Wife was community property. The opportunity to reacquire this service credit arose when Husband's previous spouse withdrew the retirement contributions and interest in her portion of Husband's PERS retirement account. This service credit was reacquired by redepositing the contributions and interest using community funds during the marriage. Husband maintains that this service credit was his separate property, and the community was merely entitled to a pro tanto interest. Husband's second contention is that the trial court abused its discretion in assigning to Wife the entire survivor benefit, of which she was the irrevocable beneficiary, in exchange for her reimbursing Husband for the monthly cost (a reduction in Husband's retirement allowance) of the survivor benefit. The value of the survivor benefit far exceeded its cost. Husband claims that the trial court should have awarded Wife only her share of the community's interest in each survivor benefit payment. Wife asserts that, if we credit either of Husband's contentions, we should order the trial court to reconsider the amount of spousal support and attorney's fees awarded to her.*fn1

We conclude that the trial court abused its discretion both in concluding that the reacquired service credit was entirely community property and in awarding the entire survivor benefit to Wife. Because the trial court's actions on remand may significantly affect Wife's financial resources, we agree with Wife that it is appropriate for the trial court to have the opportunity to reconsider spousal support and attorney's fees on remand. We reverse the judgment and remand the matter to the trial court with directions.

I. California's Public Employees' Retirement System

One of the benefits offered to many public employees in California is membership in PERS. "Members of CalPERS, once vested, participate in a defined benefit retirement plan, which supplies a monthly retirement allowance under a formula comprising factors such as final compensation, service credit (i.e., the credited years of employment), and a per-service-year multiplier. The retirement allowance consists of an annuity (which is funded by member contributions deducted from the member's paycheck and interest thereon) and a pension (which is funded by employer contributions and which must be sufficient, when added to the annuity, to satisfy the amount specified in the benefit formula). (Gov. Code, §§ 21350, 21362.2, subd. (a), 21363.1, subd. (a).)" (In re Marriage of Sonne (2010) 48 Cal.4th 118, 121 (Sonne).)

When a former spouse acquires a portion of a PERS member's PERS retirement benefit account in a dissolution, the former spouse may withdraw that portion of the contributions and interest and obtain a refund of those monies, but by doing so the former spouse waives all of his or her rights in the member's PERS retirement benefits. (Gov. Code, § 21292.) After such a refund, "any service credit eligible for purchase . . . shall be deemed the exclusive property of the member." (Gov. Code, §§ 21292, 21294, subd. (e).) The member may reacquire that service credit by redepositing the withdrawn contributions along with the interest that would have been credited on the withdrawn contributions. (Gov. Code, § 20750.)

At the time of retirement, a PERS member may either elect an unmodified retirement allowance, under which the retiree will receive full monthly PERS retirement allowance payments, or select from a group of options under which the retiree's monthly retirement allowance payments are reduced so that a selected beneficiary may receive "survivor benefit" payments after the retiree's death, if the beneficiary survives the retiree.*fn2

One of the options for a PERS retiree is known as Option 2. Option 2 is "the right to have a retirement allowance paid a member until his or her death and thereafter to his or her beneficiary for life." (Gov. Code, § 21456.) An Option 2 election and the designation of the beneficiary are generally irrevocable after retirement.*fn3 (Gov. Code, §§ 21454, 21456, 21492.) The beneficiary of an "Option 2" survivor benefit need not be the retiree's spouse or even the retiree's relative.

II. Factual Background

Husband became employed as a Monterey County deputy sheriff in March 1971. One of the benefits of his employment was PERS membership. During a portion of his employment by Monterey County, Husband was married to his second wife, Dalia. Husband divorced Dalia in 1991. Dalia ultimately received an interest in Husband's PERS retirement as part of the division of their community property. Husband, who remained employed by Monterey County, married Wife in November 1994. In 1995, Dalia's interest in Husband's PERS retirement was cashed out by her withdrawal of her share of Husband's contributions and interest from his PERS retirement account.

Husband subsequently arranged to redeposit the contributions and interest withdrawn by Dalia so that he could reacquire the service credit to which they related. The redeposit was accomplished by monthly deductions from his paychecks (and later his retirement allowance payments) beginning in 1997 and continuing throughout his marriage to Wife. The total of these deductions during Husband's marriage to Wife was $31,938.92.*fn4

In 1998, Husband was elected Sheriff. In February 2002, Husband's years of service and age qualified him for the maximum level of retirement benefits. In November 2002, Husband selected Option 2 PERS retirement as his choice of retirement plans, and he irrevocably named Wife as the beneficiary of the survivor benefit funded by Option 2.*fn5 Husband retired in December 2002.

III. Procedural Background

Husband filed for dissolution of his marriage to Wife in January 2004.*fn6 In August 2004, Wife filed a motion seeking spousal support and attorney's fees. At Wife's request, ...


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