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In Re Marriage of Janice and Roman Kochan. v. Roman v. Kochan

March 9, 2011

IN RE MARRIAGE OF JANICE AND ROMAN KOCHAN. JANICE K. KOCHAN,
RESPONDENT,
v.
ROMAN V. KOCHAN,
APPELLANT.



Los Angeles County Super. Ct. No. BD460830 APPEAL from a judgment of the Superior Court of Los Angeles County. Donna Fields Goldstein, Judge. Reversed and remanded with directions.

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

CERTIFIED FOR PUBLICATION

Family Code section 4320 provides that the family law court "shall consider" the "earning capacity of each party" in ordering spousal support, but the decision whether to order support based on a party's earning capacity rather than actual earnings is a matter within the court's discretion. (See, e.g., In re Marriage of Rosen (2002) 105 Cal.App.4th 808, 825.) In the case before us today, the family law court entered a spousal support order based in part upon a finding that a spouse with a 40-year employment history with the California State University could earn more income by taking his retirement from the California Public Employees' Retirement System (CalPERS), and returning to work with the University under its Faculty Early Retirement Program (FERP). In other words, the family law court ruled that the spouse's support obligation would take into account his earning capacity imputed from a CalPERS/FERP retirement scenario, rather than on his actual income from long-held employment. We reverse.

FACTS

Background

Roman and Janice Kochan married in July 1982.*fn1 In November 2006, Janice left the family residence, and moved into her mother's home. Roman was 65 years old when the parties separated; Janice was 50 years old. In February 2007, Janice filed a petition to dissolve the parties' marriage.*fn2

Roman started working at California State University Long Beach (CSULB) in 1969, and continued working at CSULB throughout the parties' marriage. At the time of trial and judgment, he remained employed at CSULB. His current position is Dean of Library Services at CSULB. Janice earned a bachelor's degree shortly after she married Roman, but primarily worked in the family home during the marriage. She began working part-time in one of CSULB's academic advising departments after the parties' youngest child started elementary school.

The Family Law Proceedings

In June 2007, the family law court issued pendent lite support orders. The court found that Roman had a gross monthly income of $12,190, while Janice anticipated a gross monthly income of $3,833. The court ordered Roman to pay spousal support to Janice in the amount of $2,261, retroactive to March 1, 2007. The court deferred to a later date the issue of attorneys' fees.

In August 2007, Janice filed an order to show cause (OSC) to modify the support orders. The evidence at the hearing on Janice's OSC showed that she was not working.*fn3 Roman's income remained the same at $12,190 per month, but he was then also receiving Social Security benefits in the amount of $2,141 per month. In October 2007, the family law court issued modified support orders. The court increased Roman's spousal support obligation to $3,772 per month, and ordered Roman to pay $5,000 for Janice's attorneys' fees at a rate of $500 per month. The court appointed a pension expert to examine and report on the value of Roman's CalPERS pension, and reserved the issue of the expert's fees.

In November 2007, Roman filed a Chapter 7 (liquidation) bankruptcy petition. Roman's bankruptcy petition listed secured debts including mortgage loans with a first and second trust deed on the family residence, and a lease on Janice's car, and a loan on another vehicle. He listed another $100,000 (rounded) in unsecured community debts, including the $5,000 in attorneys' fees that the family law court had ordered him to pay in the dissolution action.*fn4 In February 2008, Roman served and filed written notice advising the family law court and Janice of the automatic stay in his bankruptcy action.

Trial

Over several trial days from March through October 2008, the family law court tried issues exempt from the bankruptcy stay, including spousal support, attorneys' fees, and division of Roman's CalPERS pension. Janice testified on her own behalf and called the following witnesses: Henry DuBois (a former co-worker of Roman's at CSULB, now retired), Mark Tubbiola (a forensic economist), Barbara DiFranza (a certified family law attorney specializing in pension plans), and Gail Billings-Beck, Ph.D. (Janice's mental health counselor). For his part, Roman testified on his own behalf and called Denise Torres (Janice's sister).

By the end of trial, the evidence established the following facts. Roman's current earnings from CSULB were $13,013 and that his Social Security benefit was $2,190, for a gross monthly income of $15,203. Secured debts included the mortgage on the family residence ($3,233) and a car loan payment ($270), both of which Roman had affirmed in his bankruptcy case. Roman, however, had stopped paying the mortgage in February 2008. Janice had no income other than spousal support; her disability benefits had expired.

The actuarial value of Roman's CalPERS retirement benefits as of October 2007 was $1,512,881, and the community's 68 percent interest in those benefits was $1,010,302. The value of the community's interest in the pension plan peaked as of the date of the parties' separation, and was decreasing so long as Roman continued to work, because Roman had reached the maximum multiplier used to determine plan payments due to his more than 40 years of service. By continuing to work, Roman was causing the actuarial value of his pension (and its value to the community) to decrease each year. This issue is discussed more fully below. Although the loss would be offset against annual increases resulting from added service years and any increase in salary, those increases would accrue to Roman's separate property interest in the plan.

Roman's decision not to retire reduced the overall value of his CalPERS pension because, in the words of the forensic economist, "if you give up your retirement for three or four years, you're going to [give] up all payments [during those years], and then the rest of the future years are going to be not as valuable because you're going to be older when you start your benefits." A Gillmore order (see In re Marriage of Gillmore (1981) 29 Cal.3d 418 (Gillmore)) would cut off losses to the community interest in the retirement from Roman's continued employment, but not without other factors coming into play.*fn5 By affecting an immediate Gillmore order, Janice would forego the benefit of Roman's future salary increases, if any. In the event Roman died before retiring, Janice's share of the pension would be limited to a return of Roman's contributions (roughly $300,000), six months of salary ($78,000), and a lump-sum death benefit ($5,000), all of which would be less than the present value of Janice's interest in Roman's pension.

A number of different retirement options were available to Roman from CalPERS, but he could not elect an option until he actually took his retirement. If Roman retired immediately, his monthly benefit would be $11,200, and the community interest in that benefit would be $7,822, and Janice's share would be $3,911. CalPERS would not set up a separate account for Janice because she was not of retirement age.*fn6

Under the terms of a collective bargaining agreement between CSULB and certain of its employees, FERP benefits were available to Roman. Under the FERP, an employee may begin a service retirement and be rehired concurrently at the same pay scale, working half-time. If Roman elected to participate in the FERP, he would receive full retirement benefits from CalPERS, plus FERP income for half-time employment, and thereby increase his current income by 50 percent. Roman would also proportionally increase his net ...


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