In re Marriage of Padgett

172 Cal.App.4th 830

91 Cal. Rptr. 3d 475

In re the Marriage of BEVERLY and ROBERT J. PADGETT BEVERLY PADGETT, Respondent, v. DONNA LITTLE, as Personal Representative, etc., Appellant AUTOMOTIVE INDUSTRIES PENSION PLAN, Respondent.

No. A120644.

Court of Appeals of California, First District, Division Two.

March 25, 2009.

Luce, Forward, Hamilton & Scripps, Charles A. Bird; Peggy L. Bennington, a Professional Corp., Peggy L. Bennington; Law Offices of Barbara A. Ginsberg and Barbara A. Ginsberg for Appellant.

Ryan A. Kent and Kenneth S. McFarlan for Respondent Beverly Padgett.

OPINION

KLINE, P. J. —

INTRODUCTION

Donna Little, the widow of Robert Padgett and the personal representative of his estate, appeals the trial court's entry of a final qualified domestic relations order (QDRO) enforcing the interest of Robert's former spouse, Beverly Padgett, in Robert's pension plan, following the court's nunc pro tunc entry of an order dividing Robert's pension plan survivor's benefit as a community asset in their 1988 dissolution.¹

Donna contends that surviving spouse benefits irrevocably vested in her at Robert's death. She further contends the antialienation provision of the Employee Retirement Income Security Act of 1974 (29 U.S.C. § 1001 et seq.²; ERISA) prevented the court from ordering the pension plan to pay part of the survivor's benefit to Beverly where Beverly took no steps to inform the pension plan of her community property claim until after Robert died, before his retirement and while married to Donna.

We shall conclude that, where the plan participant dies or retires before the former spouse secures an order awarding that spouse any interest in the pension plan, a domestic relations order entered before the plan participant's death that does not award the former spouse an interest in the participant's pension plan but simply "reserves jurisdiction" over the plan provides an inadequate basis for entry nunc pro tunc of either a QDRO or of an order determining the former spouse's interest in the pension plan that later may be qualified as a QDRO. We shall therefore reverse the trial court's order.

I. Background

Robert and Beverly were married on June 11, 1972. They had two children. They separated on August 15, 1985, and the court entered a judgment of dissolution on March 14, 1988, nunc pro tunc to December 31, 1987. Beverly had counsel. While married to Beverly, Robert worked as a mechanic and was a participant in the Automotive Industries Pension Plan (the Plan). The judgment of dissolution did not adjudicate Beverly's interest in Robert's pension plan, but the court expressly retained jurisdiction to do so. The sole reference to Robert's pension is contained in paragraph 4 of the judgment of dissolution as follows: "Husband's Pension Plan: The court shall reserve jurisdiction over husband's pension plan."

Robert married Donna on March 3, 1995. They had one child. Robert continued to work in positions that added to his potential benefits from the Plan. Robert died on January 26, 2005, before he had retired and before receiving any benefits from the Plan. The Plan provides a survivor's benefit of half of the monthly pension benefit Robert would have received if he had retired immediately before his death. Donna became the personal representative of his estate.

During Robert's lifetime, Beverly took no steps to notify the Plan of her community property claim and did not seek to obtain an order giving her an interest in pension benefits or a QDRO in connection with the court's reservation of jurisdiction. At no time before Robert's death did Beverly or her attorney communicate with the Plan in writing or provide the Plan with a copy of the judgment of dissolution. Beverly stated she did not know that she had to do anything until Robert retired and benefits became payable.

In February 2005, after Robert's death, Beverly contacted the Plan and advised that she was making a claim for benefits payable under the Plan. The Plan informed her the domestic relations order contained in the judgment of dissolution was not a proper QDRO. The Plan notified both Beverly and Donna, alerting them to the possibility of a conflict between them relating to their possible claims to survivor benefits. The Plan took no position on the dispute. It withheld from payments to Donna its estimate of the sums payable to Beverly should her claim be determined to be valid, and offered to interplead the issue. On March 21, 2006, the Plan advised the parties that it intended to segregate $300.32 per month, representing an estimated amount that might be assigned by the court to Beverly were the court to determine that she had a QDRO.

On July 12, 2006, Beverly applied ex parte to the superior court for a QDRO. The court entered the order. The order was vacated pursuant to a stipulation of the parties, because Donna had not been noticed and had not appeared in the action until she joined in the stipulation to vacate the order. In November 2006, the Plan was joined in the action. Beverly moved to divide the Plan survivor's benefit as an unadjudicated community asset and to have the requested QDRO made effective nunc pro tunc to a date before Robert's death. Donna opposed the motion.

On April 24, 2007, the superior court adopted its tentative ruling, granting Beverly's motion, declaring that Beverly was not required to obtain a QDRO before Robert's death and that she was not required to notify the Plan of her community property claim to Plan benefits before his death. The court directed further adjudication of Beverly's exact community interest according to a formula it set forth in the order based upon the length of her marriage to Robert—allocating to her a portion of the survivor's benefits—and ordered Beverly's attorney to prepare a proposed QDRO, nunc pro tunc as of March 14, 1988, consistent with its ruling and in compliance with ERISA, and to serve it on the Plan. The Plan was ordered to advise Beverly by May 4, 2007, whether it accepted the proposed QDRO and, if not, why not.³ The court retained jurisdiction to implement the ruling and the judgment filed March 14, 1988.

Donna appealed from the April 24, 2007 order. On August 8, 2007, we dismissed the appeal as from a nonappealable order. (In re Marriage of Padgett (Aug. 8, 2007, A117991) [nonpub. opn.].)

On December 14, 2007, the superior court entered the QDRO pursuant to Family Code, division 6, part 1, chapter 6 (Employee Pension Benefit Plan as Party). The QDRO provisions were consistent with the court's previous order dividing the survivor benefits as an unadjudicated community asset, effective nunc pro tunc as of March 14, 1988, assigning from Donna to Beverly "the right . . . to receive Surviving Spouse Benefits payable under the Plan in an amount equal to half of the community's interest in the Surviving Spouse Benefits payable under the Plan." It further identified the annuity starting date of payments to the alternate payee (Beverly) as February 1, 2005. The court retained jurisdiction, if necessary, to amend the QDRO and the judgment of dissolution to establish its qualifications as a QDRO, and to implement Beverly's right to receive surviving spouse benefits under the plan.

Donna timely appealed the court's entry of the QDRO.

II. Standards of Review and Overview of ERISA's QDRO Provision

(1) The interpretation of ERISA, including whether ERISA preempts state law, is a question of law which we review de novo. (Carmona v. Carmona (9th Cir. 2008) 544 F.3d 988 (Carmona).) "[T]he decisions of the lower federal courts, although entitled to great weight, are not binding on state courts. `[T]he decisions of the lower federal courts on federal questions are merely persuasive. . . . Where lower federal court precedents are divided or lacking, state courts must necessarily make an independent determination of federal law.' (Rohr Aircraft Corp. v. San Diego (1959) 51 [Cal.]2d 759, 764 [336 P.2d 521].) [Citations.]" (9 Witkin, Cal. Procedure (5th ed. 2008) Appeal, § 506, pp. 569-570.)

Two recent Ninth Circuit decisions, Carmona, supra, 544 F.3d 988 and Hamilton v. WA State Plumbing Pension Plan (9th Cir. 2006) 433 F.3d 1091 (Hamilton), provide an overview of the ERISA statutory framework relevant to the questions presented here. We therefore quote them at length: "Congress originally enacted ERISA to protect the rights of workers who earn pension benefits and to encourage plan participation. PAUL J. SCHNEIDER, BRIAN M. PINHEIRO, ERISA: A COMPREHENSIVE GUIDE § 1.02 (3d ed.2008). In addition to protecting plan participants, Congress also sought to protect plan beneficiaries. See Boggs v. Boggs, 520 U.S. 833, 845, 117 S.Ct. 1754, 138 L.Ed.2d 45 (1997). In order to meet those ends Congress enacted an intricate, comprehensive statute that governs both pension and welfare plans. Id. at 841, 117 S.Ct. 1754. ERISA pension plans must comply with participation, vesting, and funding requirements. Id." (Carmona, supra, 544 F.3d at pp. 997-998.)

(2) "ERISA contains an anti-alienation provision and a preemption provision that restrict the ability of state courts and plan participants to transfer and alter interests in ERISA-governed retirement benefits. See 29 U.S.C. § 1056(d)(1) (`Each pension plan shall provide that benefits provided under the plan may not be assigned or alienated.'); 29 U.S.C. § 1144(a) (establishing that ERISA `supercede[s] any and all State laws insofar as they may . . . relate to any employee benefit plan . . . .'). Despite this broad preemption and anti-alienation scheme, Congress has recognized that states, in some circumstances, should be able to enforce their own domestic relations laws with respect to ERISA pensions. As a result, state domestic relations orders (`DROs') that comply with statutory requirements are exempt from both the anti-alienation and preemption provisions of ERISA. 29 U.S.C. § 1144(b)(7); 29 U.S.C. § 1056(d)(3); Hamilton, 433...