FACTUAL AND PROCEDURAL BACKGROUND
John and Annette Peterson were married on March 12, 1994, and they separated
on February 17, 2010. John1
is an attorney who works in private practice. Throughout
the marriage, John contributed to Social Security through mandatory payroll deductions.
Annette, also an attorney, began working for the County of Los Angeles as a
Deputy District Attorney in September 1994, and remained employed with the County
throughout the marriage. Through her employment Annette became a member of the Los
Angeles County Employees Retirement Association (LACERA) Plan E, which is a
defined-benefit retirement plan. LACERA members do not contribute to the plan; only
the County, Annette’s employer, contributes. The amount of a LACERA member’s
benefits is determined by the member’s age at retirement, amount of service credits, and
final compensation. Annette began accumulating LACERA service credits as soon as she
began working for the County. At the time of trial, she had more than 14 years of service
credits under LACERA’s Plan E.
LACERA members are barred from contributing to Social Security. Under the
Windfall Elimination Provision of the Social Security Act, 42 U.S.C. 415(a)(7), and the
1
Following the parties’ practice in their respective briefs, we refer to the parties
by their first names and intend no disrespect.
3
Government Pension Offset, 20 C.F.R. 404.408a(a), Annette is barred from receiving
Social Security benefits, both individually and as the spouse of someone who contributed
to Social Security.
Annette and John separated on February 17, 2010 and filed for divorce. They
entered into stipulated judgments regarding the custody of their children and division of
the community estate, with the exception of their retirement benefits. They agreed that
under existing law, John’s Social Security is separate property and Annette’s LACERA
benefits are community property. As a result of this classification, John is entitled to
keep 100 percent of his Social Security benefits and half of Annette’s LACERA benefits,
while Annette is entitled to none of John’s Social Security benefits and only half of her
LACERA benefits. Annette argued below that the trial court should fashion an equitable
division of the LACERA benefits to account for this disparity, while John argued that the
trial court was compelled by federal law and Family Code section 25502
to divide the
LACERA benefits equally.
The court below conducted a short trial to address how to divide the retirement
benefits. Annette stated that the present value of her LACERA benefits is approximately
$210,000 to $216,000, and the present value of John’s Social Security benefits is
$228,000. Annette also used an online calculator available from the Social Security
website3
to estimate the amount of Social Security benefits she would be entitled to
receive had she participated in Social Security. She also presented evidence showing the
amounts John and his employer contributed to his Social Security during the marriage.
John does not dispute these facts.
In its order following trial, the court acknowledged the parties’ agreement that
John’s Social Security benefits are separate property and Annette’s LACERA benefits are
community property. The trial court rejected Annette’s argument that the court should
fashion an equitable division of the LACERA benefits by either (a) requiring John to
2 All further statutory references are to the Family Code unless otherwise
indicated.
3
See, e.g., https://www.ssa.gov/planners/benefitcalculators.html.
4
reimburse the community estate for the amount of Social Security contributions withheld
from John’s pay, and then dividing the assets, (b) allocating a portion of the LACERA
benefits to Annette as separate property based on the present value of the Social Security
benefits Annette would have accumulated had she been a Social Security participant, or
(c) considering the present value of John’s Social Security benefits when dividing the
LACERA benefits to ensure the parties received roughly equal retirement benefits. The
court held that considering John’s Social Security benefits in dividing the LACERA
benefits would amount to a “setoff” of John’s Social Security, which is barred by federal
law. Relying on Hisquierdo v. Hisquierdo, 439 U.S. 572 (1979) (Hisquierdo) and In re
Marriage of Cohen (1980) 105 Cal.App.3d 836, 843 (Cohen), the trial court concluded
that because John’s Social Security benefits were his separate property and the LACERA
benefits were community property, the “LACERA retirement benefits accumulated
during marriage are subject to the mandate for equal division of Section 2550.” The
court added, “Thus, whether the result is inequitable or not, this court cannot adjust the
division of [Annette’s] LACERA benefits or deviate from the requirement of equal
division.”
Annette timely appealed.
Source: http://www.courts.ca.gov/opinions/documents/B259322.PDF