back to the date of separation, rather than the date of the dissolution judgment. We
affirm the judgment with directions.
FACTUAL AND PROCEDURAL HISTORY
A. JUDGMENT OF DISSOLUTION
Wife and Husband married in September 1992. They separated on February 13,
2009. The dissolution judgment was filed on April 19, 2010, in Riverside County
Superior Court, with a marital termination date of April 13, 2010. The settlement
agreement (the agreement) attached to the judgment, reflected “Petitioner, [Wife], is
awarded and Respondent agrees to transfer, assign, and set over to Petitioner, the
following community property assets . . . . [¶] h. $113,392 from [Husband’s] 401k
retirement account through Sentinell Benefits.”
The agreement also provided, “Respondent, [Husband], is awarded and Petitioner
agrees to transfer, assign, and set over to Respondent, the following community
property assets . . . . [¶] l. Balance of the community interest and Respondent’s
separate property interest in the 401k retirement account through Sentinell Benefits.”
2
The agreement further reflects jurisdiction is “reserved to the Orange County
Superior Court” for supervising payments pursuant to the agreement and supervising the
division of assets pursuant to the agreement.1
B. LETTERS
On February 26, 2014, Wife received a letter from Fidelity Investments (Fidelity)
reflecting Fidelity was directed by the administrator of the HEICO Corporation plan,
pursuant to a QDRO, to segregate $113,392 “with no earnings calculated through the
date of segregation.” Fidelity wrote, “The QDRO provides that [Wife] is entitled to
$113,392.00 of the above referenced account as of 02/24/2014, with no earnings
calculated through the date of segregation.” Fidelity informed Wife that it had
established an account for her in the amount of $113,392.
On March 21, Wife’s attorney sent a letter to HEICO Corporation reflecting
there was no QDRO. Wife’s attorney further asserted the correct date of segregation
would be the date of marital separation in 2009. Wife’s attorney demanded the Fidelity
transaction be unwound. HEICO Corporation complied.
C. REQUEST AND OPPOSITION
On December 12, 2014, Wife sought approval of a proposed QDRO directing
Fidelity Investments to segregate $113,392 “plus gains and losses (realized and
1 The parties do not raise the issue of jurisdiction being reserved to Orange County Superior Court. Because the judgment of dissolution was entered in Riverside County, and the ruling at issue in this case was made by the Riverside County Superior Court, we will give effect to what we infer was the parties’ intent—to reserve jurisdiction to the Riverside County Superior Court.
3
unrealized) income and expenses (accruals).” Wife asserted the relevant start date for
the gains and losses was the date of separation, in February 2009.
Husband opposed Wife’s request. Husband asserted the dissolution judgment
awarded Wife a lump sum amount of $113,392—not gains and losses. Husband
explained that he tried to give Wife the lump sum amount, as demonstrated by the letter
from Fidelity, but Wife rejected it, as demonstrated by Wife’s attorney’s letter.
D. HEARING
The family court held a hearing on May 20, 2015. Husband argued that Wife
was awarded a lump sum from his 401(k) account, not a percentage of the account, and
therefore, she was not entitled to gains earned on the account. Husband asserted that
awarding gains to Wife amounted to a modification of the dissolution judgment, and the
family court lacked jurisdiction to modify the judgment.
Wife asserted that if the 401(k) money had been segregated in 2010, then she
would have earned the gains on her portion of the money in her separate account. Wife
argued that Husband provided no authority to support his position that Wife was not
entitled to the gains earned while the money remained comingled.
The family court responded, “The problem is [sic] the judgment specifically says
$113,392. That’s the amount. It doesn’t say anything about gains or losses. It’s not
like she had a percentage interest in the 401K. It just says $113,392. That appears to be
what she’s entitled to.”
The family court continued, “It seems to me the parties bargained for a specific
amount, and it’s right here, and that amount for that matter the petitioner [in] this case
4
got $113,392 no matter what happened to the 401K, so if the 401K had lost money, she
still would have gotten $113,392. So perhaps the parties just bargained for that amount,
and it looks like that’s what she should get.”
Wife asserted she would have received less if the account suffered losses. The
family court asked, “How can you say that?” Wife responded, “Because of the fact that
it’s a retirement account, so when you transfer money from a retirement account from a
QDRO, it’s plus or minus the gains or losses on that amount of money.” The family
court explained the judgment provides Wife was awarded $113,392.
Wife explained the problem resulted from the money not being segregated in
2010. Wife asserted that if the money had been segregated in 2010, then she would
have earned gains on her separate account. Wife asserted that Husband should not
receive the gains from Wife’s $113,392. The family court responded, “It might be if
[Husband] for any reason was deleterious and dilatory in giving this money to her, she
might be entitled to interest on the money, but I don’t really have anything to show
that’s the case.”
Wife asserted she had been e-mailing Husband “for years” asking him to
segregate the money, but he failed to do so. Husband asserted Wife could have shown
the judgment to Fidelity and had the money transferred herself.
The family court said, “I don’t think she’s entitled to any grains [sic]. I can’t
modify the judgment. The judgment is a set amount.” Wife asserted she was not
seeking modification of the judgment because the judgment is silent on gains and losses.
Further, Wife questioned why she would need to show a lack of diligence on Husband’s
5
part in order to be awarded interest. Wife asserted she should be awarded interest
because the money had “been sitting in his account for all this time.” The court
responded, “It seems to me that it would depend on what the problem was. If the
problem was she wouldn’t accept it, then no. She’s not entitled to the interest on it.”
Wife asserted she could provide evidence of Husband standing in the way of
dividing the account. The court offered to hold a hearing on whether interest should be
awarded. Wife asked to brief the issue of whether gains could be awarded to Wife. The
court responded, “You can brief it, but I don’t think you’re going to find anything that’s
going to help you on the issue. It’s a modification of the judgment. It doesn’t say she
gets a percentage. It says she gets a set amount. I’ll be glad to look at any case law on
it that either one of you can provide me.” The court scheduled the hearing for July 22.
E. BRIEFS
Husband filed a trial brief. Husband asserted Wife was awarded a lump sum
from his 401(k) account and an award of gains would be a modification of the
judgment. Husband filed an updated trial brief in December, raising the same
arguments. Husband included points and authorities. Husband explained a trial court
cannot modify a final judgment.
Wife filed a trial brief. Wife asserted that equity required the court to award her
the gains on the $113,392. Wife asserted she had been fine with the money staying in
the Fidelity account because it was doing well in that account. However, if Wife had
been aware that Husband believed all the gains belonged to him, she would have sought
6
to segregate the money sooner. Wife asserted Husband made no attempt to pay the
$113,392 until 2014.
F. RULING
On December 29, Wife and Husband submitted on the QDRO issue. On January
22, 2016, the family court issued a written ruling. The court concluded that awarding
the gains to Wife would not be a modification of the judgment. The court explained,
“[T]here is no community interest in the growth of the separated 401k. The 401k was
actually litigated and fully divided by the judgment with [Wife] to receive $113,000
[sic] as her community property interest and [Husband] to receive the balance. [¶]
Inasmuch as [Husband] is entitled to his separate proper[ty] interest in the 401k, so is
[Wife]. The $113,000 became [Wife’s] separate property and the capitalization growth
and[/]or loss grew or were subtracted from her $113,000. That capitalization growth or
loss rightfully and equitably belongs to [Wife] because it was produced by her separate
property asset. [Husband] cannot justifiably claim that he is entitled to the growth
merely because he received the remainder because the judgment does not mention that
the growth would go to either party. The growth on the $113,000 is neither community
property nor [Husband’s] separate property. It is [Wife’s] separate property and she is
entitled to it.” The family court ordered Husband to execute the QDRO.
7
DISCUSSION
A. JURISDICTION
Husband contends the family court modified the 2010 judgment under the guise
of enforcing it. Husband contends the family court lacked jurisdiction to modify the
judgment.
The material facts are undisputed. Therefore, we apply the de novo standard of
review. (In re Marriage of Blazer (2009) 176 Cal.App.4th 1438, 1443.) Community
property becomes separate property upon execution of a marital separation agreement.
(Engelman v. Gordon (1978) 82 Cal.App.3d 174, 178; In re Marriage of Trantafello
(1979) 94 Cal.App.3d 533, 547.) Executing means signing and delivering the contract.
(Solano Concrete Co. v. Lund Construction Co. (1976) 64 Cal.App.3d 572, 575, fn. 2.)
Profits acquired on separate property are separate property. (Fam. Code, § 770, subd.
(a)(3).)
In the instant case, the agreement reflects it is “effective as of March 1, 2010.”
Wife signed the agreement on March 24, 2010. Husband signed the agreement on April
2, 2010. The agreement was attached to the final judgment, which was filed on April
19, 2010. Thus, the record reflects signatures were completed by April 2, and delivery
was completed by April 19. Therefore, the $113,392 in the 401(k) became Wife’s
separate property as of April 19, 2010, when the agreement was executed. The
remaining money in the account on that day belonged to Husband as his separate
property.
8
Husband has no legal right to the gains on Wife’s separate property. (Fam.
Code, §770, subd. (a)(3).) If Wife suffered losses on her separate property, she would
have to bear those losses. In other words, the money became Wife’s separate property
on April 19, 2010, and any gains or losses on that money belonged to her. (Fam. Code,
§ 770, subd. (a)(3).)
The judgment did not include a mention of the gains or losses; however, there
was no need to include them. The judgment included all the necessary information—
$113,392 of the 401(k) account was Wife’s separate property as of April 19, 2010.
Whatever gains or losses occurred on that money after that date belonged to Wife—it
was not necessary to include that information in the judgment. Accordingly, when the
family court stated that Wife’s gains on her separate property were her separate
property, the family court was not modifying the judgment.
Husband asserts the instant case is “on all fours” with In re Marriage of Thorne
and Raccina (2012) 203 Cal.App.4th 492 (Thorne). In Thorne, the wife and the
husband entered into a marital settlement agreement, in which the wife accepted 16
percent of the husband’s military pension. The wife sought to have the dissolution
judgment set aside when she learned courts apply a time rule to divide a pension. (Id. at
pp. 495-497.) The wife asserted she was “‘entitled to her one-half community share of
[the husband’s] disposable retirement pay.’” (Id. at p. 497.)
The trial court modified the judgment to comply with the time rule. (Thorne,
supra, 203 Cal.App.4th at p. 496.) The appellate court explained that “once a marital
dissolution judgment has become final, the court loses jurisdiction to modify or alter it.”
9
(Id. at p. 499.) The appellate court concluded the trial court erred by modifying the
judgment because the court lacked jurisdiction to make the modification. (Id. at p. 500.)
The instant case is distinguishable from Thorne. Wife is seeking the same
amount of principle that was awarded to her on April 19—$113,392 of the 401(k)
account. In Thorne, the wife was seeking to change the amount of principle she
received. The Thorne situation is a modification because the wife was seeking an
entirely different division of the asset. In the instant case, Wife is not changing the
division of the asset. Wife’s separate property is still $113,392. Wife will also take the
gains or losses on that amount of money. The family court did not change anything
about the judgment in issuing its ruling.
At oral argument in this court, Husband asserted (1) he and Wife had bargained
for certainty, in particular, the certain sum of $113,392, and (2) the $113,392 was an
equalization payment. Husband asserted that if the 401(k) account suffered losses after
April 19, then he still would have been required to pay Wife $113,392 because the
bargain was for a certain sum and it was an equalization payment.
We see nothing in the agreement indicating the $113,392 was an equalization
payment, as opposed to part of the regular division of community property. (See In re
Marriage of Bergman (1985) 168 Cal.App.3d 742, 761-762 [a spouse awarded more
than 50 percent of the community property may be required to make an equalization
payment])
Nevertheless, assuming Husband is correct, his argument fails to explain why he
is entitled to gains earned on the $113,392. If the $113,392 were a certain sum
10
bargained for as an equalization payment, then that money was still Wife’s separate
property on April 19. There is nothing indicating an equalization payment was to be
delayed; therefore, we assume the payment was to be made immediately. The fact that
Wife’s separate property equalization payment remained in the 401(k) account does not
entitle Husband to the gains earned on Wife’s separate property. (Fam. Code, § 770,
subd. (a)(3).) Accordingly, we find Husband’s argument to be unpersuasive as it
pertains to gains.
To the extent the account suffered losses, Husband’s argument is problematic. If
Wife bargained for a fixed sum of $113,392 as an equalization payment, it would be an
odd choice to tie that fixed equalization amount to a 401(k) account, in which the
possibility of loss is inherent. The agreement provides, Husband will pay Wife
“$113,392 from [Husband’s] 401k retirement account through Sentinell Benefits.” The
agreement also reflects Wife was awarded an IRA, two investment accounts, and “[a]ll
bank accounts presently in [Wife’s] name.” Husband was awarded an IRA account and
“[a]ll bank accounts presently in [Husband’s] name.”
Gains and losses are inherent in a 401(k) account. If the parties expected Wife to
receive a fixed sum of $113,392, it stands to reason Wife would not have tied the
funding of that fixed sum to a particular 401(k) account that could naturally depreciate
in value due to market changes. Instead, one would expect the agreement to reflect
Wife was awarded an equalization payment of $113,392, not attached to any particular
account, such that Wife could collect her equalization funds from any source. We are
not persuaded by Husband’s interpretation of the agreement. (See Civ. Code, § 1636
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[we interpret a contract to give effect to the parties’ intention as it existed at the time of
contracting].)
In sum, we are not persuaded by Husband’s position that (1) the parties intended
the $113,392 to be a fixed sum despite any gains or losses on the account, and
(2) Husband is entitled to the gains earned on Wife’s separate property.
B. DATE
Husband contends the family court erred by ordering that Wife is to receive gains
from the date of separation, rather than the date of the judgment of dissolution.
Property is to be valued as close as possible to the time of trial. (Fam. Code,
§ 2552, subd. (a).) If Wife wanted the family court to apply an alternative date of
valuation (e.g., the date of separation), she bore the burden of demonstrating good cause
as to why the alternative valuation date is applicable in this case. (In re Marriage of
Reuling (1994) 23 Cal.App.4th 1428, 1435.) Additionally, a party seeking application
of an alternative valuation date should file a noticed motion 30 days prior to the hearing,
giving the opposing party notice of a possible alternative valuation date. (Fam. Code, §
2552, subd. (b).) The 30-day noticed motion is not mandatory, but “timely notice from
the requesting party to the other party” is necessary. (In re Marriage of Bergman,
supra, 168 Cal.App.3d at p. 760, fn. 15.) The notice should set forth the alternative date
sought to be employed, the legal authority supporting the request, and the good cause
supporting the use of the alternative date. (Ibid.)
There is nothing in the register of actions indicating Wife filed a noticed motion.
We do not see notice of an alternative valuation date included with her request for a
12
QDRO. In Wife’s trial brief, we see no discussion concerning why there is good cause
for the family court to apply an alternative valuation date.
It appears from the record that, on Wife’s proposed QDRO, she used the date of
separation as the date of valuation, and the family court approved the proposed QDRO
as written without any substantive discussion of the date of valuation. Because Wife
did not properly notify Husband of her request for the alternative valuation date, we
conclude the family court erred by valuing the 401(k) account as of the date of
separation. The account should have been valued close in time to the trial—April 19,
2010.
At oral argument in this court, Wife asserted Husband forfeited his contention
concerning the alternative valuation date because, in the family court, Husband did not
object to the alternative valuation date that Wife included in the proposed QDRO.
Wife’s proposed QDRO was attached to her trial brief. The trial brief did not discuss
application of an alternative valuation date—no legal authority and no discussion of
good cause. The only indication of an alternative valuation date was the date on the
proposed QDRO.
Because Wife did not provide the required notice, e.g., legal authority and a
discussion of good cause, we cannot conclude Husband forfeited the issue. In other
words, Husband could not have forfeited an issue that Wife failed to properly raise.
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DISPOSITION
The family court is directed to modify the QDRO to reflect that the relevant start
date for the gains and losses is April 19, 2010. In all other respects, the judgment is
affirmed. The parties are to bear their own costs on appeal.
CERTIFIED FOR PUBLICATION.
MILLER J.
We concur:
McKINSTER Acting P. J.
SLOUGH J.
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AI Brief
AI-generated · verify before citing
Holding. The court held that a spouse awarded a specific dollar amount from a retirement account in a dissolution judgment is entitled to the gains and losses on that amount from the date the judgment was executed, as that sum became the spouse's separate property. The court further held that the trial court erred in using the date of separation rather than the date of the dissolution judgment for calculating those gains and losses.
Issues
Did the family court lack jurisdiction to modify the dissolution judgment by awarding gains and losses on a fixed-sum retirement asset?
Did the family court err by using the date of separation rather than the date of the dissolution judgment to calculate gains and losses on the awarded asset?
Disposition. Affirmed with directions.
Quotations verified verbatim against the opinion
“The family court is directed to modify the QDRO to reflect that the relevant start date for the gains and losses is April 19, 2010.”