## Facts

- Joan F. Bergman and Elmer A. Bergman married on August 22, 1959, and separated on April 19, 1980; they had five children, two of whom were minors at trial.
- Elmer was employed in federal civil service from 1961 to 1976 (with nearly two years of prior military service counting toward federal retirement service credit).
- In 1976, Elmer became permanently and totally disabled due to severe hypertension and began receiving a federal disability pension. Under the plan, when Elmer reached age 62 in 1997, his benefits would be recomputed as a longevity (retirement) benefit.
- During the marriage, Joan worked at several jobs; she was a school teacher at separation and later worked for a tax planning service.
- Joan participated in the California State Teachers’ Retirement system and made contributions over a number of years. At trial, no evidence was presented establishing Joan’s contributions or the present value of her retirement benefits.
- In the dissolution proceedings, expert testimony addressed the value of Elmer’s pension plan and the likelihood and character of future benefits.
- The trial court divided Elmer’s pension using a present-value “cash-out” approach: it determined the present value of the community interest, awarded the pension to Elmer, and awarded Joan additional community property to account for her share.
- The trial court addressed Joan’s retirement benefits using an in-kind approach and stated it would retain jurisdiction to divide the community interest when the benefits became payable.
- To equalize the overall division of community property, the trial court required a spouse receiving more than one-half of the community estate to execute a secured, short-term, interest-bearing promissory note in favor of the other spouse.
- The trial court also ordered attorney’s fees against Elmer based in part on litigation conduct found to be frivolous or to have caused unnecessary delay.
- Elmer appealed from an interlocutory judgment of dissolution and certain subsequent orders (including an order to vacate the family residence and an order denying his motion to modify the interlocutory judgment). Joan filed a cross-appeal but later dismissed it.
- The Court of Appeal declined to review an earlier interlocutory judgment that had been vacated because no appeal was taken from the order setting it aside.

## Issues

1. Whether a trial court has discretion, when dividing the community interest in a pension, to either divide the pension in kind or award it to the employee spouse at present value with an offsetting award of other community assets.
2. Whether a trial court may temporarily reserve jurisdiction to divide the community interest in a pension at a later time during the pendency of the dissolution litigation, rather than completing that division immediately.
3. Whether, to accomplish an equal division of community property, a trial court may require the spouse receiving more than one-half of the community estate to execute a secured, short-term promissory note bearing a reasonable rate of interest in favor of the other spouse.
4. Whether a trial court may award attorney’s fees in dissolution proceedings not only based on need and ability to pay, but also as a sanction when a party’s tactics are not in good faith, are frivolous, or cause unnecessary delay.

## Decision

- The Court of Appeal held that trial courts have substantial discretion in choosing how to allocate community pension interests and may either divide the pension in kind or value it and award it to the employee spouse with an offsetting award of other assets.
- The court held that, although a court may not permanently refrain from dividing a community pension interest, it may temporarily reserve jurisdiction to divide the pension at a later time during the dissolution litigation.
- The court held that a secured, short-term, interest-bearing promissory note may be ordered as an equalization device when necessary to effect an equal division of community property.
- The court held that attorney’s fees may be imposed against a party as a sanction for tactics not based on good faith that are frivolous or cause unnecessary delay, apart from need-based fee considerations.
- The court modified the language of the judgment regarding Joan’s pension plan and otherwise affirmed the interlocutory judgment and the appealed orders.

## Legal Principles

- A community interest in a pension must be divided in dissolution, but the trial court may choose between (a) in-kind division of future payments and (b) a present-value award to the employee spouse with an offsetting distribution of other community property to the nonemployee spouse.
- A trial court may temporarily reserve jurisdiction over a pension division during the pendency of dissolution proceedings when immediate division is impracticable, so long as the community interest will be divided.
- To achieve equal division of community property, a trial court may order a spouse who receives more than one-half of the community estate to execute a secured, short-term promissory note bearing a reasonable interest rate.
- In dissolution proceedings, attorney’s fees may be awarded not only on financial need and ability to pay, but also as a sanction for frivolous conduct or tactics causing unnecessary delay.

## Conclusion

Marriage of Bergman affirmed the family court’s authority to allocate community pension interests through either present-value offset or in-kind division, to temporarily retain jurisdiction to divide a pension later, to use secured equalizing promissory notes to achieve equal division, and to award attorney’s fees as a sanction for frivolous or dilatory litigation conduct, modifying only the judgment’s wording concerning the reservation of jurisdiction over Joan’s pension.


Marriage of Bergman, 168 Cal. App. 3d 742 (1985)