Trial Court: Contra Costa County Superior Court Trial Judge: Honorable Charles B. Burch (Contra Costa County Super. Ct. No. D0801292)
The opinion of the court was delivered by: Sepulveda, J.*fn11
CERTIFIED FOR PUBLICATION
In this case of first impression, we consider how to classify four years of credit in the California Public Employees' Retirement System (CalPERS) that respondent Timothy Green (Timothy) elected to purchase with community funds during his marriage to appellant Julie Green (Julie). Timothy was eligible to purchase the credit because he had performed four years of military service with the United States armed forces prior to the parties' marriage. (Gov. Code, § 21024.)*fn1 Over Julie's objection, the trial court characterized the military service credit as Timothy's separate property, and ruled that Julie was entitled only to reimbursement of the community funds used to pay for the service credit, plus interest. We conclude that, because the military service credit was purchased with community funds during the parties' marriage, it was community property. We remand to the trial court to determine the correct allocation of the credit.
I. FACTUAL AND PROCEDURAL BACKGROUND
Timothy served in the United States Air Force for four years (from July 23, 1982 to May 1, 1986). On June 16, 1989, he began working as a firefighter for the Dougherty Regional Fire Authority in Dublin. The fire authority was a participant in CalPERS. Julie and Timothy were married in May 1992.
In July 1997, the Dougherty Regional Fire Authority merged with the Alameda County Fire Department, which also is a participant in CalPERS. Timothy continued to work for the Alameda County Fire Department.
On August 1, 2002, Timothy exercised his right to buy service credit for his military service. The purchase was made pursuant to section 21024, which permits a CalPERS member to obtain up to four years of service credit for service with the United States armed forces. Timothy elected to pay for the purchase through an installment plan, paying $92.44 twice each month through payroll deductions for 15 years (scheduled to continue until July 2017). Before the parties separated on October 1, 2007, community funds in the amount of $11,462.56 were used toward the purchase of the military service credit.
Julie filed a petition for dissolution of marriage in March 2008. During dissolution proceedings, a dispute arose over whether to characterize Timothy's military service credit as separate or community property. A court-appointed expert proposed awarding a pro rata share (34.44 percent) of the purchased service credit to Julie, representing the percentage of payments toward the military service credit made with community funds.
Both parties opposed the expert's proposal, and they submitted briefs on the issue to the trial court. Julie sought to continue to pay half of the cost of future installment payments, and requested that half of the military service credit be placed into a separate account for her benefit through CalPERS. Timothy argued that because his right to purchase military service credit arose prior to the parties' marriage, all four years of credit were his separate property. Timothy acknowledged, however, that community funds used to pay for the purchase before the parties' separation in October 2007 were community property.
A trial was held on the issue, and both parties testified regarding the purchase of the military service credit. The trial court ordered that the military service credit portion of the CalPERS pension in Timothy's name be awarded to Timothy as his separate property. Timothy was ordered to pay Julie the sum of $6,699.54, representing half of the installment payments made with community funds during the marriage toward the military service credit, plus interest at the rate of six percent.
Julie appealed after judgment was entered, challenging only the characterization of the military service credit.*fn2 After appellate briefing was complete, this court on its own motion accorded amicus curiae status to the American Academy of Matrimonial Lawyers, Northern California Chapter (Academy), and invited the Academy to submit a brief. The Academy accepted the court's invitation. Because Academy members who discussed the issue were not unanimous in their views as to the appropriate characterization and allocation of the military service credit, the Academy filed a brief containing two sections, one advocating reimbursement with interest, and the other advocating allocation of separate and community property interests in the credit. Timothy and Julie thereafter filed answer briefs.
A. Overview of Applicable Law.
"The characterization of property as community or separate determines its division upon dissolution of marriage. Each spouse owns a one-half interest in all community property. ([Fam. Code,] § 751.) In general, community property is divided equally in the aggregate when the marriage ends. ([Fam. Code,] § 2550; see [Fam. Code,] §§ 2600-2604.) However, separate property is not subject to a similar division, and belongs only to the owner spouse. ([Fam. Code,] § 752.)" (In re Marriage of Benson (2005) 36 Cal.4th 1096, 1102.) We review the trial court's characterization of military service credit as separate ...