DeShurley v. DeShurley

Opinion

TODD, J. Margaret J. DeShurley appeals a judgment confirming the separate property nature of severance pay received by John R. DeShurley from Continental Airlines pursuant to a bankruptcy court order.

Facts

Margaret and John married on December 31, 1950, and separated on October 15, 1984. John was employed as a pilot with Continental Airlines from August 13, 1951, until about October 1, 1983, when he joined a strike called by the Air Line Pilots Association, International (ALPA).

On October 31, 1985, in the United States Bankruptcy Court, Southern District of Texas, Houston Division, case number 83-04019-H2-5, Continental Airlines and the ALP A submitted their pending claims, controversies and related litigation to the court for resolution. The bankruptcy court, in essence, ordered (1) the strike terminated, (2) no recrimination or retaliation be taken against striking pilots, (3) the parties to dismiss all litigation between them pending in federal courts, (4) striking pilots be given the option of being recalled and reinstated or severance pay.

The severance pay option provided that active pilots on Continental’s seniority list as of September 24, 1983, could elect severance pay in exchange for waiving the right to recall and waiving the right to claims against the company connected with the strike. The amount of severance [994]pay was to be computed by multiplying $4,000 times the number of years of active service with Continental as of September 24, 1983.

John opted for the severance pay option and his severance pay was calculated at $126,800. According to the set schedule, John receives 10 percent before December 15, 1985, 15 percent before June 30, 1986, and the remainder in 20 quarterly payments, with 10 percent interest to be paid on amounts due after eight quarters from September 30, 1986.

John and Margaret worked out a division of their marital estate with the exception of the severance pay, which John claimed was his separate property. The trial court agreed.

Discussion

Margaret contends the severance pay is community property, and she is entitled to one-half of it. We disagree.

In In re Marriage of Skaden (1977) 19 Cal.3d 679 [139 Cal.Rptr. 615, 566 P.2d 249], the California Supreme Court found termination benefits paid to an insurance agent under an employment agreement to be community property. The benefits consisted of a percentage of insurance premiums collected on insurance policies sold by the agent. The Skaden court held the benefits were community property because they were deferred compensation for the agent’s previous endeavors. {Id. at pp. 687-688.)