Is It Separate Property Or Community Property?

This was the question in a recent case from First Appellate District that was on appeal from Contra

Costa County. In the case of Marriage of Green,

Husband served in the military for four years prior to his marriage with Wife. He was in the Air Force for four years from 1982 to 1986. Husband started working for the Dougherty Regional Fire Authority in 1989, which merged with Alameda Country Fire Department in 1997. The parties married in 1992. The Alameda County Fire Department also participated in CalPERS. CalPERS members could obtain up to four years of service credit for service with the United States armed forces. So Husband, during the marriage and using community funds, purchased the four years of military credit and added those years to his CalPERS retirement plan. The parties separated in 2007 and Wife filed for Dissolution in 2008. One of the main issues in the case was these service credit years. Husband, of course, argued that they were his separate property since they were earned prior to his marriage to Wife. Wife claimed because they were purchased during the marriage, they were community property and she was entitled to two of those years that were purchased back. What did the trial court hold? It ruled for Husband and said the years purchased were his separate property. The appeals court overturned the trial court and said, “no,” the service years were community. So how does property that was acquired before marriage become community property? Well the appeals court was not persuaded that the property was really acquired before marriage. The appellate court went through an extensive review of when this property was acquired. Were the service years “vested” or were they more of an “expectancy”? Was there an enforceable right to the service years? If so, when was the enforceable right to that property acquire? The Court found that Husband had only an expectancy to the service years credits once he completed his military service. Thus, a mere expectancy is not an enforceable right and not property that can be divided at divorce. But what changed everything in this case is that Husband worked for Alameda Fire Department and because the Alameda Fire Department participated in CalPERS, Husband was able to purchase those years by being a member in CalPERS. Thus, the right to those years changed from a mere expectancy to a contractual right once he purchased those years through his employment with the Alameda Fire Deparment and CalPERS. Since the right to those service years changed from an expectancy to a

contractual right during the marriage, the court found them to be community property.