Cassinelli v. Cassinelli (In re Cassinelli)

20 Cal.App.5th 1267

229 Cal.Rptr.3d 801

IN RE the MARRIAGE OF Janice R. and Robert J. CASSINELLI.

Janice R. Cassinelli, Respondent,

v.Robert J. Cassinelli, Appellant.

E063769

Court of Appeal, Fourth District, Division 2, California.

Filed March 2, 2018

Law Offices of Ellen C. Dove and Ellen C. Dove, Sacramento for Appellant.

Julie M. Clark, Hemet for Respondent.

OPINION

RAMIREZ, P.J.

In 1964, Robert J. Cassinelli and Janice R. Cassinelli were married; in 1986, they were divorced. In the meantime, after 20 years of service, Robert had retired from the United States Air Force. In a stipulated judgment, the trial court awarded Janice her community property interest in Robert's military retired pay.

Fast forward 26 years. In 2012, it was determined that Robert had a combat-related disability. As a result, he became eligible to receive both veteran's disability benefits and combat-related special compensation (CRSC); to do so, however, he had to waive his retired pay. Before the waiver, Robert received $791 a month and Janice received $541 in retired pay (taxable). After the waiver, Robert received $1,743 a month in veteran's disability benefits and $1,389 a month in CRSC, for a total of $3,132 (tax-free); Janice received zero. As a result, the trial court ordered Robert to start paying Janice $541 a month in permanent and nonmodifiable spousal support.

Robert appeals. Among other things, he contends:

1. Under overriding federal law, the trial court lacked jurisdiction to make any award to Janice based on Robert's receipt of either veteran's disability benefits or CRSC.

2. The trial court erred by using spousal support as a remedy for the loss of a community property interest.

3. The trial court erred by making its award of spousal support nonmodifiable.

4. Because the judgment dividing the community property was long-since final, the trial court could not give Janice any remedy for the loss of her community property interest in the retired pay.

5. All of Robert's income was "non-attachable" (i.e., exempt), and therefore he could not be required to use it to satisfy Janice's claim.

6. Based on the relevant factors (see Fam. Code, § 4320 ), Janice was not entitled to spousal support, and the trial court abused its discretion by finding otherwise.

We agree that federal law prohibited the trial court from compensating Janice, in the form of spousal support or otherwise, for the loss of her share of Robert's retired pay. However, it could properly modify spousal support, provided it did so based on the relevant factors and not as compensation. Accordingly, we will reverse and remand with directions to hold a new trial on Janice's request for a modification of spousal support.

IFACTUAL AND PROCEDURAL BACKGROUND

Janice and Robert were married in 1964. At that time, Robert was on active duty as a member of the United States Air Force. After 20 years of service, he retired from the military with the rank of Technical Sergeant.

In 1985, after 21 years of marriage, the parties separated. Janice then filed this marital dissolution proceeding.

In August 1986, pursuant to stipulation, the trial court entered a final judgment. It provided: "The Court finds that [Janice] has a 43.1% interest in [Robert]'s United States Air Force Pension, and that she shall receive the sum of Two Hundred Thirty ($230) Dollars per month, or 43.1% of said pension, whichever sum is greater. Said payments to commence on May 1, 1986, providing that [Robert] shall make such payments to [Janice] until such time as the United States Air Force is able to process [Janice]'s claims so that her share of the military pension can be paid directly to her." The judgment reserved jurisdiction over the issue of spousal support.

Thereafter, Robert held several jobs, primarily as a teacher. He developed ischemic heart disease ; in 2011, he had a quadruple bypass. In 2012, he took a medical retirement from teaching. His ischemic heart disease was presumed to be due to his exposure to Agent Orange in Viet Nam. (See 38 C.F.R. § 3.309.) Thus, also in 2012, the Department of Veterans Affairs determined that he had a service-connected disability, making him eligible for disability benefits. It was further determined that his disability was combat-related, making him eligible for CRSC.

In 2013, Robert elected to receive CRSC. Before his election, he was receiving $791 a month of his retired pay and Janice was receiving $541 a month of his retired pay. After his election, he received $1,743 a month in veteran's disability benefits and $1,389 a month in CRSC, for a total of $3,132 a month. These benefits were nontaxable. Janice received zero. However, when Robert made his election, he was not aware that it would affect Janice.

At the time of trial, Robert was 72 years old. His monthly income consisted of:

Veteran's disability benefits	$1,743
CRSC	$1,389
State teacher's disability benefits	$1,433
Social security benefits	$1,105
Total	$5,670

His total monthly expenses were $5,577.

Janice was 71 years old. She worked part-time for Rite Aid. Her monthly income consisted of $1,673 in wages and $1,568 in social security, for a total of $3,286. After paying her monthly expenses, she testified, "[s]ome months I have [$]100, some months I have $50 [left over]."

If and when Janice stopped working, she would lose more than half her income, although she could get another $200 a month ("if I'm lucky") by drawing on $44,000 in a 401(k) account and $15,000 in an annuity.

In January 2014, Janice filed a motion to modify the judgment by ordering Robert to pay the amount of her share of his retired pay as "non-modifiable spousal support."

In opposition, Robert argued: (1) the property division in the judgment was final and could not be reopened; (2) "[f]ederal law which supersedes state law ... prohibits the non-military spouse[']s participation in the member's disability combat pay"; (3) "some or all of [Robert's] income is protected from attachment"; and (4) the relevant statutory factors militated against an award of spousal support.

In August 2014, Janice filed a motion for attorney fees.

In January 2015, the trial court held a trial on both pending motions. After the trial, at the trial court's invitation, both parties filed supplemental declarations.

In April 2015, the trial court issued a written ruling. It acknowledged that, under federal law, it could not treat Robert's retired pay as community property. However, it ruled that it was not precluded from "tak[ing] equitable action" to compensate Janice.

It found that "[Robert's] voluntary election and the resulting termination of [Janice's] share of the military retirement" was a material change of circumstances. It further found that it would be a "miscarriage of justice" to allow Robert, acting unilaterally, to increase his military-source income from $791 (taxable) to $3,132 (tax-free) while reducing Janice's military-source income from $541 to zero. After discussing each of the factors listed in Family Code section 4320, it concluded that Janice was entitled to receive $541 a month in spousal support.

The trial court further found that, in 1986, when the original judgment was entered, Janice had a reasonable belief that her share of Robert's retired pay was nonmodifiable. It therefore made its award of spousal support non-modifiable.

Finally, it awarded Janice $7,180 in attorney fees against Robert.

Robert filed a motion for reconsideration. The trial court denied the motion. Robert filed a timely notice of appeal.

II^**

IIIFEDERAL LAW REGARDING MILITARY RETIRED PAY IN A DIVORCE

Robert contends that, as a matter of federal law, the trial court erred by awarding Janice spousal support to replace her interest in his retired pay.

A member of the armed services who retires based on length of service becomes entitled to retired pay. ( 10 U.S.C. §§ 1401 [Army], 6333 [Navy], 8991 [Air Force].)

Meanwhile, a veteran who becomes disabled as a result of an injury suffered or a disease contracted in the line of duty becomes entitled to disability benefits. ( 38 U.S.C. § 1110 [wartime disability], 1131 [peacetime disability].)¹

"In order to prevent double dipping, a military retiree may receive disability benefits only to the extent that he waives a corresponding amount of his military retirement pay. [Citation.]" ( Mansell v. Mansell (1989) 490 U.S. 581, 583, 109 S.Ct. 2023, 104 L.Ed.2d 675, fn. omitted; see 38 U.S.C. §§ 5304 - 5305.) "For example, if a military retiree is eligible for $1500 a month in retirement pay and $500 a month in disability benefits, he must waive $500 of retirement pay before he can receive any disability benefits." ( Mansell v. Mansell , supra , at p. 584, fn. 1, 109 S.Ct. 2023.) Unlike retired pay, veteran's disability benefits are not taxable. ( 38 U.S.C. § 5301(a) ; Haas v. United States (2012) 107 Fed.Cl. 1, 3.) Thus, normally a retiree is better off by making such a waiver.

Under California law, military retired pay that accrues based on service during marriage is community property. ( In re Marriage of Barnes (1987) 43 Cal.3d 1371, 1374-1375, 240 Cal.Rptr. 855, 743 P.2d 915 ; In re Marriage of Stenquist (1978) 21 Cal.3d 779, 782, 148 Cal.Rptr. 9, 582 P.2d 96.) Moreover, as a matter of federal law, the Uniformed Services Former Spouses Protection Act (FUSFSPA) allows a state court in a community property jurisdiction to treat "disposable retired pay" as community property. ( 10 U.S.C. § 1408(c)(1).) However, its definition of "disposable retired pay" excludes any retired pay that has been waived in order to receive disability benefits. ( 10 U.S.C. § 1408(a)(4)(A)(ii).)

Accordingly, in Mansell v. Mansell , supra , 490 U.S. 581, 109 S.Ct. 2023, the United States Supreme Court held that federal law prohibits a state court from treating the waived portion of military retired pay as community property. ( Id . at pp. 594-595, 109 S.Ct. 2023.) It acknowledged that its holding "may inflict economic harm on many former spouses," but it felt constrained by "the plain...