Marriage of Peterson

John Peterson (defendant) and Annette Peterson (plaintiff) married in 1994 and separated in 2010. John was an attorney in private practice and therefore contributed to social security. Annette was an attorney who worked for Los Angeles County and accumulated retirement benefits through the Los Angeles County Employees Retirement Association (LACERA). Under the LACERA system, the county made contributions on behalf of its employees, and employees did not contribute to the fund. A LACERA employee’s benefits were determined by the employee’s age at retirement, salary at the time of retirement, and length of employment with the county. LACERA members were precluded from contributing to or benefiting from the social-security system. When John and Annette filed for divorce, they stipulated that under the law, John’s social-security benefits were his separate property and Annette’s LACERA benefits were community property. Under California law, therefore, John was entitled to all his social-security benefits and half of Annette’s LACERA benefits, an outcome that Annette argued was inequitable. Annette argued that the trial court should account for the discrepancy in its division of assets to avoid allowing John to receive 150 percent of the combined retirement benefits. John argued that state law required the trial court to equally divide the LACERA benefits and that federal and state law forbade consideration of his social-security benefits, barring the trial court from making any adjustments in the interest of equity. The trial court held that accounting for the social-security benefits in dividing the LACERA benefits would equate to a setoff—an attempt to work around the federal requirement to treat social-security benefits as separate property, in contravention of federal law. The trial court held that John’s social-security benefits were separate property and Annette’s LACERA benefits were community property, and that under California law, the social-security benefits could not be considered in the division of property and the LACERA benefits were required to be divided equally, even if the division was inequitable. Annette appealed.