48 Cal. 4th 118, 225 P.3d 546, 105 Cal. Rptr. 3d 414

Filed 2/22/10

IN THE SUPREME COURT OF CALIFORNIA

In re the MARRIAGE of GORDON
ALBERT SONNE and THERESSA LYNN )
SONNE.
GORDON ALBERT SONNE,
Appellant,
S166221
v.
Ct.App. 6 H030110
THERESSA LYNN SONNE,
Monterey County
Respondent.
Super. Ct. No. DR 41290

Gordon Albert Sonne (Husband), the former Sheriff-Coroner-Public
Administrator of Monterey County, is a member of the California Public
Employees? Retirement System (CalPERS). Members of CalPERS, once vested,
participate in a defined benefit retirement plan, which supplies a monthly
retirement allowance under a formula comprising factors such as final
compensation, service credit (i.e., the credited years of employment), and a per-
service-year multiplier. The retirement allowance consists of an annuity (which is
funded by member contributions deducted from the member?s paycheck and
interest thereon) and a pension (which is funded by employer contributions and
which must be sufficient, when added to the annuity, to satisfy the amount
1

specified in the benefit formula). (Gov. Code, ?? 21350, 21362.2, subd. (a),
21363.1, subd. (a).)
In 1995, Husband transferred to his former wife, Dalia, 8.677 years of
service credit, which represented her one-half interest in the service credit
Husband had earned during their marriage. Dalia subsequently exercised her right
to a refund of the accumulated contributions in the account, thereby permanently
waiving her rights to any further claim on Husband?s retirement benefits,
including any service credit. (Gov. Code, ? 21292, subds. (a), (d).) Husband, who
was then married to Theressa Lynn Sonne (Wife), exercised his right to redeposit
the contributions (id., ? 20751) and paid for it with community funds through
monthly deductions from his salary. By the time Husband and Wife had
separated, the community had redeposited 70.83 percent of the scheduled
payments, and the question arose: What was the community?s share of the service
credit from the Husband-Dalia marriage?
The trial court and the Court of Appeal agreed with Wife that the
community was entitled to 70.83 percent of the service credit because the
community had redeposited 70.83 percent of the member contributions for that
period of service. Husband contends that such an apportionment vastly overstated
the community?s interest, in that it accorded no weight or value to Husband?s
service as a deputy sheriff during that earlier period, which had supplied the
consideration for the service credit. Amicus curiae Barbara A. DiFranza, Certified
Family Law Specialist, contends further that since community funds contributed
only to the annuity component of the retirement allowance, the community was
entitled only to a pro tanto share of the annuity?and not to a share of the much
larger pension component, which was funded by employer contributions.
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We agree with amicus curiae. We therefore reverse the judgment of the
Court of Appeal and remand the matter for reconsideration of the apportionment
of the service credit arising from the Husband-Dalia marriage.
BACKGROUND
In March 1971, Husband began working as a deputy sheriff for Monterey
County. He was elected Sheriff of Monterey County in 1998 and retired in
December 2002. He earned 31.918 years of service credit in the CalPERS
retirement system.
For present purposes, we discuss two of Husband?s marriages, each of
which ended in dissolution. The first marriage, to Dalia, ended in 1991 after more
than 17 years. Under the original divorce settlement, Husband was awarded all
CalPERS pension and retirement rights earned during the marriage. In return,
Husband was to make an offsetting cash payment to Dalia.
Husband married Wife on November 12, 1994. In 1995, because Husband
could no longer keep up with the equalization payments to Dalia, he transferred to
her one-half of the CalPERS service credit earned during their prior marriage.
Accordingly, CalPERS credited Dalia?s nonmember account with 8.677 years of
service credit and $42,555.64 in member contributions and interest. When Dalia
withdrew the contributions and interest, Husband elected to redeposit them into his
member account through a paycheck deduction over a period of years. The
deduction at first was taken from his salary and then, when he retired, from his
monthly retirement allowance. The redeposit ultimately restored the service credit
to his member account.
Husband filed for dissolution of his marriage to Wife in January 2004, after
he had retired, but the deductions from his retirement allowance for the redeposit
continued. The total of the deductions taken during his marriage to Wife was
$31,938.92. The member contributions and accumulated interest over Husband?s
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entire career totaled $238,064.35. The actuarial present value of the retirement
benefit at the time of trial was in excess of $2 million. The difference between
Husband?s total contributions and the actuarial present value of the retirement
account was funded entirely by Husband?s employer as a ?current period
expense.?
In the dissolution proceeding arising from the Husband-Wife marriage, the
parties disputed the character of the redeposited member contributions and the
service credit arising from the Husband-Dalia marriage, among other issues.
Husband?s expert, Ronald G. Reddall, opined that the service credit was
Husband?s separate property and that the community had a right only to
reimbursement of the community funds used to make the redeposit. However,
when asked whether the community would be entitled to ?a pro tanto share of the
appreciation,? Reddall replied that he ?would leave that to the lawyers.?
Wife?s expert, George McCauslan, did not address the issue of the
redeposited member contributions or the service credit in his trial testimony. In an
unsworn posttrial letter that was considered by the trial court, he articulated his
understanding that the service credit should be allocated between community and
separate property in the same proportion by which those estates had contributed to
the redeposit. He determined that community funds had been used to redeposit
70.67 percent of the member contributions from the Husband-Dalia marriage and
concluded that the community should therefore be allocated an additional 6.132
years (0.7067 x 8.677 years) of service credit. When these years were added to the
service credit that was earned during the Husband-Wife marriage, McCauslan
calculated the community share of the retirement allowance to be 41.22 percent.
Husband offered an unsworn posttrial letter from Reddall, who determined
the community share through a different method, which assigned only an
additional 0.47 years of service credit to the community. Reddall began with an
4

estimate of the actuarial present value of the 8.677 years of service credit:
$594,322. Because the community had redeposited only 5.374 percent
($31,938.92 divided by $594,322) of the actuarial value of the service credit, the
community was entitled only to 5.374 percent of the 8.677 service years?which is
0.47 service years.
The trial court largely adopted Wife?s approach. It calculated that the
community had provided $31,938.92 of the $45,090.24 in redeposited member
contributions (or 70.83 percent) and concluded that the community share of the
service credits from the Husband-Dalia marriage was therefore 70.83 percent.
When added to the service credit earned during the Husband-Wife marriage, the
total community share of the retirement allowance was calculated by the trial court
to be 41.22 percent, and Wife was awarded one-half of this as her share.
The Court of Appeal affirmed this aspect of the judgment, but on different
grounds. The Court of Appeal agreed that Husband had a separate property
interest in the premarital service to his employer, ?which created his right to
repurchase the service credits.? However, the court found that Husband had
commingled community property with his separate property when he used
community funds to redeposit member contributions in order to recoup the
premarital service credit, and he did not ?indisputably establish? or ?unequivocally
trace? what proportion of the service credit was attributable to his separate
property and what proportion to the community so as to overcome the presumption
that the service credit became community property. (See Fam. Code, ? 760.)
According to the Court of Appeal, the trial court ?could have credited? Reddall?s
allocation of the respective shares but ?was not required to credit this evidence,?
since ?[t]he trial court was vested with the power to credit or discredit Husband?s
evidence. If it discredited Husband?s evidence, it could properly conclude that the
community property presumption applicable to property purchased during a
5

marriage with community funds had not been rebutted, and therefore the
repurchased service credits were community property.? The appellate court also
rejected Husband?s suggestion that the community be reimbursed for its
contribution instead of being awarded an interest in his retirement allowance.
We granted Husband?s petition for review and now reverse.
DISCUSSION
Generally, all property acquired by a spouse during marriage prior to
separation is community property. (Fam. Code, ?? 760, 770.) Community
property ?may include the right to retirement benefits accrued by the employee
spouse as deferred compensation for services rendered. . . . The right to retirement
benefits ?represent[s] a property interest; to the extent that such [a] right[]
derive[s] from employment? during marriage before separation, it ?comprise[s] a
community asset . . . .? [Citation.] ?Throughout our decisions we have always
recognized that the community owns all [such] rights attributable to employment
during marriage? before separation.? (In re Marriage of Lehman (1998) 18
Cal.4th 169, 177, italics added.) We review the superior court?s characterization
of Husband?s service credit from the Husband-Dalia marriage as community
property?a mixed question of law and fact that is predominantly one of law?de
novo. (Id. at p. 184; In re Marriage of Rossin (2009) 172 Cal.App.4th 725, 734.)
In a dissolution proceeding, ?[t]he superior court must apportion an
employee spouse?s retirement benefits between the community property interest of
the employee spouse and the nonemployee spouse and any separate property
interest of the employee spouse alone. [Citations.] It has discretion in the choice
of methods. . . . Whatever the method that it may use, however, the superior court
must arrive at a result that is ?reasonable and fairly representative of the relative
contributions of the community and separate estates.? ? (In re Marriage of
Lehman, supra, 18 Cal.4th at p. 187.) In awarding the Husband-Wife community
6

70.83 percent of the service credit earned during the Husband-Dalia marriage, the
lower courts failed to make a reasonable and fair allocation of the respective
contributions by Husband and the community and failed as well to apprehend the
two distinct components of Husband?s retirement allowance?the annuity and the
pension?only one of which derived from Husband-Wife community
contributions.
The trial court assumed that the community acquired a 70.83 percent share
of the service credit arising from the Husband-Dalia marriage because the
community had redeposited 70.83 percent of the member contributions for that
time period. The trial court?s approach, in essence, is that the community
purchased the service credit by redepositing member contributions. But a
redeposit of member contributions for a prior period of service does not constitute
consideration for the service credit for that period; it is merely a condition
precedent to a credit for that previously rendered service. (See Gov. Code,
? 20756.) The service credit (and the pension component of the retirement
allowance) are more correctly described as ? ?a form of deferred compensation for
services rendered.? ? (In re Marriage of Skaden (1977) 19 Cal.3d 679, 686.) The
trial court?s analysis gave no weight whatsoever to the service Husband rendered
as a deputy sheriff during those years, all of which preceded the Husband-Wife
marriage.
In other words, the trial court apportioned to the community the same share
of service credit it would have received had Husband and Wife actually been
married during those years of Husband?s service to Monterey County. This
apportionment failed to consider that the right to the 8.677 years of service credit
was Husband?s separate property, which preexisted the Husband-Wife marriage,
inasmuch as the service credit was offered in consideration for that prior 8.677
7

years of service. (See In re Marriage of Lehman, supra, 18 Cal.4th at pp. 182-
183; In re Marriage of Lucero (1981) 118 Cal.App.3d 836, 841 (Lucero).)
Lucero, which involved almost the mirror image of the present case, is
instructive. There, the husband redeposited his federal employee retirement
contributions after he and his wife had separated, using his own separate funds.
Part of the redeposited contributions related to service years during the marriage.
(Lucero, supra, 118 Cal.App.3d at p. 839.) In rejecting the husband?s claim that
the increase in his retirement benefit due to the redeposit was entirely his separate
property, the Court of Appeal recognized that the substantial increase in the
husband?s retirement benefit ?was possible only as consideration for husband?s
service? during the marriage (id. at p. 841) and that ? ?the community owns all
pension rights attributable to employment during the marriage.? ? (Id. at p. 842.)
Accordingly, the court concluded that the wife had a right ?to share in the
increased retirement benefits upon payment of her pro rata share of the redeposit.?
(Ibid.)
The service credit at issue here, by contrast, was not attributable to
employment during the Husband-Wife marriage. Rather, it was earned during the
Husband-Dalia marriage and was originally an asset of that community. In the
divorce proceeding in 1991, Husband and Dalia entered into a stipulated judgment
that awarded the entirety of the community?s CalPERS pension and retirement
rights to Husband. These rights remained Husband?s separate property at the time
of Husband?s marriage to Wife in 1994. (In re Marriage of Stenquist (1978) 21
Cal.3d 779, 788 [?that portion of the husband?s pension attributable to
employment before marriage? is ?correctly? classified ?as separate property?];
Fam. Code, ? 770, subd. (a)(1).) In May 1995, Husband transferred one-half of
the accumulated member contributions and service credit attributable to the
Husband-Dalia marriage to Dalia to satisfy an outstanding obligation to Dalia.
8

Dalia?s share was placed in a separate nonmember account (Gov. Code, ? 21290),
and it entitled her to receive ?a retirement allowance based on the service
retirement formula applicable to the service credited to the nonmember,? which
would ?consist of a pension and an annuity, the latter of which shall be derived
from the nonmember?s accumulated contributions.? (Gov. Code former ?
21215.8, added by Stats. 1988, ch. 542, ? 6, p. 1999, and repealed by Stats. 1995,
ch. 379, ? 1, p. 1955, italics added; see now ? 21298, subd. (b).)
Husband retained, as his separate property, a right to recoup that service
credit in the event Dalia were to withdraw the assets in her nonmember account.
(See In re Marriage of Brown (1976) 15 Cal.3d 838, 846, fn. 8 [?The law has long
recognized that a contingent future interest is property [citation] no matter how
improbable the contingency?]; In re Marriage of Joaquin (1987) 193 Cal.App.3d
1529, 1533 [? ?property to which one spouse has acquired an equitable right before
marriage is separate property, though such right is not perfected until after
marriage? ?].) Dalia did just that (see Gov. Code, ? 21292), and Husband elected
to exercise his right to redeposit his member contributions plus interest. (See id.,
?? 20750, 20751.) Had he made that redeposit with separate property funds, the
recouped service credit would unquestionably have been his separate property.
(Cf. In re Marriage of Shea (1980) 111 Cal.App.3d 713, 717 [?where a fringe
benefit is earned entirely by employment before marriage, it is the separate
property of the employee even if received after marriage?].) Wife errs in
characterizing Husband?s right to redeposit his member contributions as an
investment opportunity governed by the interspousal fiduciary duty (see Fam.
Code, ? 1100, subd. (e)), inasmuch as the right to recover the prior service credit
was Husband?s separate property.
We therefore agree with the Court of Appeal that the service credit earned
during the Husband-Dalia marriage was Husband?s separate property at the time
9

Husband invoked his right to redeposit his member contributions plus interest.
The rest of the Court of Appeal?s analysis, however, is problematic. The appellate
court devised a new theory to uphold the trial court?s apportionment of the
Husband-Dalia service credit ?i.e., that Husband had used community funds to
make the redeposit, thus commingling community property with his separate
property, yet had failed to discharge his burden of demonstrating ?what proportion
of the value of the repurchased service credits was attributable to his separate
property as opposed to the community?s funds.? (See See v. See (1966) 64 Cal.2d
778, 783.) Where separate and community funds are commingled in such a
manner that it is impossible to trace the source, the Court of Appeal continued,
? ? ?the whole will be treated as community property . . . .? ? ? (Quoting In re
Marriage of Mix (1975) 14 Cal.3d 604, 611.)
The Court of Appeal?s commingling analysis rests on the erroneous legal
assumption that Husband?s retirement benefit was a unitary and indivisible asset.
It is not. As amicus curiae Barbara A. DiFranza, a certified family law specialist,
points out, Husband?s retirement allowance under the Public Employees?
Retirement Law (Gov. Code, ? 20000 et seq.) consists of two distinct components:
an annuity and a pension. (Gov. Code, ? 21350.) ?[C]ontributions made by a
member? are converted on retirement to an ? ?[a]nnuity,? ? which makes
?payments for life? and is equal in value to the accumulated normal contributions
and interest in the member?s individual account. (Id., ? 20018; see id., ?? 20012,
21351.) ?[C]ontributions made from employer controlled funds,? in turn, form a
? ?[p]ension,? ? which also makes ?payments for life.? (Id., ? 20054.) The
retirement allowance thus consists of ?a pension derived from the contributions of
the employer sufficient when added to the service retirement annuity that is
derived from the accumulated normal contributions of the member at the date of
his or her retirement to equal 3 percent of his or her final compensation at
10

retirement, multiplied by the number of years of . . . local safety service subject to
this section with which he or she is credited at retirement.? (Id., ? 21362.2, subd.
(a), italics added; see ? 20576, subd. (a).)
In this case, the community made a redeposit of a portion of Husband?s
accumulated contributions (id., ? 20012) for the period of the Husband-Dalia
marriage. Those contributions were converted into an annuity upon Husband?s
retirement. The obligation of the employer to contribute to the pension
component, on the other hand, derived from Husband?s service during the
Husband-Dalia marriage. Accordingly, the community had a claim only on the
annuity component relating to the time period of the Husband-Dalia marriage, and
was entitled only to a pro tanto share of that portion of Husband?s retirement
allowance. (Cf. 26 U.S.C. ? 414(k)(2) [?A defined benefit plan which provides a
benefit derived from employer contributions which is based partly on the balance
of the separate account of a participant shall [?] . . . [?] be treated as consisting of a
defined contribution plan to the extent benefits are based on the separate account
of a participant and as a defined benefit plan with respect to the remaining portion
of benefits under the plan?].)
Wife contends that Husband forfeited his right to seek apportionment on
this basis by failing to present evidence at trial concerning the appropriate
apportionment of the annuity portion of the retirement allowance. However, Wife
presented no evidence at trial concerning apportionment, either. As the Court of
Appeal remarked, ?Wife?s expert did not address the issue of the repurchased
service credits in his trial testimony.? Indeed, the issue was not even joined until
Husband?s expert addressed the issue in his posttrial letter and Wife?s expert
submitted a responsive letter. Notably, neither the trial court nor the Court of
Appeal ever asserted that Husband had forfeited his right to contest the
11

apportionment of the service credit, and we decline to interpose a procedural bar
for the first time here.
Instead, the Court of Appeal concluded that the trial court had chosen not to
credit the evidence that Husband had presented?and that the trial court was
within its discretion to do so. But both the trial court and the Court of Appeal
made an error of law in assuming that Husband?s redeposit of member
contributions with community funds entitled the community to a corresponding
fraction of the entire retirement allowance attributable to the years of the Husband-
Dalia marriage. In their view, since the community had redeposited 70.83 percent
of the member contributions from the Husband-Dalia marriage, the community
was entitled to 70.83 percent of the service credit earned during the Husband-
Dalia marriage. But, as demonstrated above, the redeposit was of member
contributions, and member contributions are used to purchase the service
retirement annuity, which is only one component of the retirement allowance.
(Gov. Code, ?? 20018, 21362.2, subd. (a).) The remainder of the retirement
allowance is supplied by the pension, which derives from the contributions of the
employer and which, the record shows, is several orders of magnitude larger than
the accumulated member contributions. The Husband-Wife community did not
contribute to that larger component of the retirement allowance, and it was
therefore an abuse of discretion to award any share of it to the community. (Cf.
Bono v. Clark (2002) 103 Cal.App.4th 1409, 1427 [?there may be reason to
consider the value of the acreage separately from that of the home, if the
improvements enhanced only the residence?].)
Accordingly, the trial court was correct in its general statement that ?Wife
is entitled to a pro tanto share of the appreciation of the [retirement benefit] in
proportion to her community share of its purchase.? But the trial court abused its
discretion in assuming that the community, by redepositing member contributions
12

under Government Code section 20751, had any entitlement at all to the pension
component of Husband?s retirement benefit arising from the Husband-Dalia
service years. The trial court should instead have apportioned to the community
only a pro tanto share of the annuity.1 (See Gov. Code, ? 20576, subd. (a)(2).)
Husband asserts that his expert already performed this calculation in his
posttrial letter. In that letter, Reddall derived the community?s share of the service
years arising from the Husband-Dalia marriage by dividing the community?s
redeposit of member contributions by the total actuarial present value of the
service credit for that period. Amicus curiae proposes a somewhat different
calculation; she derives the community?s share of the retirement allowance by
dividing the community?s redeposit of member contributions by the actuarial
present value of the total retirement allowance.
As we stated above, a trial court in general has discretion in selecting its
method of apportionment, so long as the result ?is ?reasonable and fairly
representative of the relative contributions of the community and separate
estates.? ? (In re Marriage of Lehman, supra, 18 Cal.4th at p. 187.) Tracing the
community?s contributions (and accumulated interest thereon) in the annuity
component of Husband?s retirement allowance would satisfy that standard. We
believe, though, that it is most prudent to grant the trial court the opportunity to

1
Wife seems to suggest that the trial court?s apportionment was nonetheless
fairly representative of the relative contributions of the community and separate
estates, in that Husband?s salary and the value of his retirement benefit increased
substantially because of his tenure as Sheriff-Coroner-Public Administrator of
Monterey County during their marriage. Nothing in the record, however, indicates
that the trial court apportioned Husband?s retirement benefit on this basis.
Moreover, a trial court has discretion to accord equal weight to each year of
service in calculating the community interest in retirement rights, even though the
employee?s salary may be much higher in the later years than the early years. (In
re Marriage of Gowan (1997) 54 Cal.App.4th 80, 90-91.)
13

exercise its discretion as to apportionment of the annuity component in the first
instance, especially since the court did not take evidence at trial concerning the
apportionment issue, the experts? posttrial letters on the issue were unsworn, and
neither expert was available for cross-examination about their findings and
opinions on the issue. We therefore remand the matter to the Court of Appeal for
remand to the trial court so it may take evidence and select and apply the
appropriate method of apportionment. (In re Marriage of Skaden, supra, 19
Cal.3d at p. 689; Bono v. Clark, supra, 103 Cal.App.4th at pp. 1424-1425.)

DISPOSITION
The judgment of the Court of Appeal is reversed to the extent it affirmed
the trial court?s apportionment of the service credit arising from the Husband-
Dalia marriage and is otherwise affirmed. The matter is remanded to the Court of
Appeal for further proceedings consistent with our opinion.
BAXTER, J.

GEORGE, C. J.
KENNARD, J.
WERDEGAR, J.
CHIN, J.
MORENO, J.
CORRIGAN, J.
14


See next page for addresses and telephone numbers for counsel who argued in Supreme Court.
Name of Opinion In re Marriage of Sonne __________________________________________________________________________________

Unpublished Opinion
Original Appeal
Original Proceeding
Review Granted XXX 164 Cal.App.4th 1331
Rehearing Granted

__________________________________________________________________________________

Opinion No. S166221
Date Filed: February 22, 2010
__________________________________________________________________________________

Court: Superior
County: Monterey
Judge: Robert A. O?Farrell

__________________________________________________________________________________

Attorneys for Appellant:
Tarkington, O?Neill, Barrack & Chong and Robert A. Roth for Appellant Gordon Albert Sonne.
Barbara A. DiFranza as Amicus Curiae on behalf of Appellant Gordon Albert Sonne.

__________________________________________________________________________________

Attorneys for Respondent:
Law Offices of Bernard N. Wolf, Bernard N. Wolf; Law Office of Billie C. French and Billie C. French for
Appellant Theressa Lynn Sonne.

Counsel who argued in Supreme Court (not intended for publication with opinion):
Robert A. Roth
Tarkington, O?Neill, Barrack & Chong
2111 Vine Street, Suite B
Berkeley, CA 94709-1576
(510) 704-0921

Bernard N. Wolf
Law Offices of Bernard N. Wolf
225 Bush Street, Suite 1439
San Francisco, CA 94104
(415) 788-7030