Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County No. SC087167, Lisa Hart Cole, Judge.
Silver, Hadden, Silver, Wexler & Levine and Stephen H. Silver for Plaintiffs and Appellants.
Liebert Cassidy Whitmore, Jeffrey C. Freedman, Steven M. Berliner and Arlin B. Kachalia for Defendant and Respondent.
KITCHING, J.
INTRODUCTION
The Public Employees Retirement Law (PERL, Gov. Code, § 20000 et seq.) established the Public Employment Retirement System (PERS), a retirement system for employees of state and local public agencies. PERS determines employees’ retirement benefits based on their years of service, final compensation, and ages at retirement. Retirement benefits are based in part upon an employee’s “compensation” or “compensation earnable,” which is not simply cash remuneration, but are terms that are statutorily defined in Government Code sections 20630 and 20636 to include or exclude certain benefits and items of pay. The PERS system is then funded by employer and/or employee contributions calculated as a percentage of an employee’s compensation or compensation earnable. (Hudson v. Board of Administration (1997) 59 Cal.App.4th 1310, 1316; Oden v. Board of Administration (1994) 23 Cal.App.4th 194 (Oden).)
Unless otherwise indicated, all unspecified statutory references are to the California Government Code.
Under the PERL, determining which benefits and items of pay constitute “compensation” or “compensation earnable” is necessary for calculating an employee’s ultimate pension benefit. (City of Sacramento v. Public Employees Retirement System (1991) 229 Cal.App.3d 1470, 1478-1479.)
In this case, in 1975, plaintiffs and appellants, retired management employees, and defendant and respondent Culver City (the City) entered into a Memorandum of Agreement (MOA), which set forth terms of employment for employees in the represented job classifications for the 1975-1976 and 1976-1977 fiscal years. Pursuant to the MOA, the City agreed to pay to PERS “additional compensation” on behalf of the covered employees.
Plaintiff and appellants also consist of employee organizations recognized by the City to represent its management employees. In 1975, plaintiffs and appellant Culver City Management Group (CCMG) was the sole bargaining unit which represented the individual appellants with respect to wages, hours and other terms of employment.
The additional compensation was in the form of a retirement benefit called “Employer Payment of Member Contributions” or “EPMC,” which represented the employees’ contribution to the PERS system, but was paid by the City. According to plaintiffs’ complaint, the purpose of the City paying this additional compensation to PERS was to increase the employees’ “compensation earnable,” which would then increase the employees’ pension income upon retirement. Plaintiffs alleged that the City paid the employees’ entire retirement contribution (i.e., EPMC), it reported the EPMC to PERS as “compensation earnable” and it funded all retirement contributions calculated on a base amount which included the entire EPMC.
In 1991, the City discontinued the practice of reporting the EPMC to PERS as compensation earnable. The City also discontinued paying retirement contributions calculated on an income base which included the value of the EPMC. This was because the State Controller’s Office represented that inclusion of EPMC in compensation earnable violated the PERL. According to plaintiffs, this change in reporting and method of calculating the base amount of compensation earnable resulted in reduced retirement benefits for the individual plaintiffs.
In Oden, the court agreed with the opinion of the State Controller’s Office and held that since 1976, “employer-paid pension contributions made on an employee’s behalf and paid in addition to an employee’s salary are not ‘compensation’ within the meaning of [former] Government Code section [20630].” (Oden, supra, 23 Cal.App.4th at p. 197.)
In 1994, the Legislature amended, repealed, and renumbered portions of the PERS. Relevant to this case, the Legislature enacted section 20636, subdivision (c)(4), which authorized the inclusion of EPMC as part of “compensation earnable.” Thus, the Legislature authorized public agencies to include EPMC as part of an employee’s compensation earnable, which would most likely increase the employee’s ultimate retirement benefit.
In 2005, plaintiffs filed a declaratory relief action seeking a writ of mandate to compel the City to report to PERS the EPMC as compensation earnable and to include EPMC as compensation earnable (to allow an increase in retirement benefits) for the three-year time period immediately preceding the filing of the lawsuit. Plaintiffs alleged that pursuant to the MOA, they had a vested right in the additional retirement compensation and that the City had a duty to provide the benefit through any other lawful means.
The trial court sustained the City’s demurrer without leave to amend on the basis that the statute of limitations barred the lawsuit. The trial court found that this lawsuit was an action to establish the right to have the EPMC included as “compensation earnable,” not an action to recover installments which were due and owing. (See Baillargeon v. Department Of Water and Power (1977) 69 Cal.App.3d 670 (Baillargeon).) Thus, the trial court concluded that plaintiffs’ cause of action accrued no later than 1994 (when the Legislature enacted section 20636, subdivision (c)(4)), and that the lawsuit should have been filed by no later than 1997. ~(CT 265:5)~ Plaintiffs appealed.
We affirm. This action is barred by the statute of limitations for the reasons articulated by the trial court.
FACTUAL BACKGROUND
As this is an appeal from a judgment following the sustaining of a demurrer, we accept as true properly pleaded material factual allegations (Roman v. County of Los Angeles (2000) 85 Cal.App.4th 316, 321-322; Gervase v. Superior Court (1995) 31 Cal.App.4th 1218, 1224), as well as facts that may be implied or inferred from those expressly alleged. (Lazar v. Hertz Corp. (1999) 69 Cal.App.4th 1494, 1501.)
1. The Parties
The plaintiffs consist of more than 50 individuals who are now retired employees of the City. The plaintiffs also consist of three employee organizations recognized by the City to represent employees in safety and non-safety positions.
The Culver City Police Management Group represents safety employees in supervisory or management job classifications within the City’s police department. The Culver City Fire Management Group represents safety employees in supervisory or management job classifications within the City’s fire department. The above-referenced CCMG represents non-safety employees in supervisory or management job classifications within the City. In 1975, CCMG was the sole employee organization representing safety and non-safety employees in supervisory or management job classifications within the City.
Plaintiffs alleged that Defendant City was and is a public agency as defined by sections 3501(c) and 22056. Plaintiffs also alleged that the City was a contracting agency as defined in section 20022.
2. The MOA
Plaintiffs attached the 1975 MOA to the original verified complaint as Exhibit 1. Section B2 of the MOA, entitled “Additional Compensation,” provided: “Effective the first pay period in January 1976, and each pay period thereafter, the City shall pay to the Public Employee’s Retirement System for the account of each employee in classifications set forth in Section B, Paragraph 1, the amount of the employee’s share of the retirement contribution as required by Section 10683 of the Government Code, including Survivor’s Benefits, which sum shall be equivalent to the percentage required by law to be paid for Miscellaneous or Public Safety Members thereof.”
Notably, the operative complaint in this case is the first amended verified complaint. The MOA was not attached to the first amended complaint as an exhibit.
Section B2 of the MOA further provided: “The payment by the City provided for herein shall be considered additional compensation for employees covered by this Agreement. [¶] The intent of this provision is: [¶] 1. To permit each employee to have his contribution to the Retirement System qualify as deferred compensation if permitted by law or rule. [¶] 2. Provide a net increase in salary equivalent to the employees[’] net contribution to the Retirement System, inclusive of Survivor’s Benefits.”
Additionally, section B2 of the MOA provided: “The parties further agree that salary and compensation benefits under this Agreement are intended to be effective July 1, 1975. Employees under this Agreement will have made their own contributions to the Retirement System until the effective date of this above provision.”
Section 8D of the MOA, entitled “Severability Clause” provided: “If any provision or the application of any provision of this Agreement as implemented should be rendered or declared invalid by a final court action or decree or by reason of any preemptive legislation, or by decision of any agency or tribunal having jurisdiction, the remaining sections of this Agreement shall remain in full force and effect for the duration of said Agreement. In the event of such decision or action on any item relating to wages or compensation[,] [t]he parties hereto agree to further meet and confer on substitute provisions of comparable benefit.”
3. City Begins Funding Additional Compensation
Plaintiffs alleged that pursuant to the MOA, in January 1976, the City began paying employer paid member contributions or EPMC to the PERS. Specifically, plaintiffs alleged that the City paid to PERS “the entire required member contribution for non-safety members, which was and still is 7% of their pensionable income, and 7/9ths of the required member contribution for safety members, which was an still is 9% of their pensionable income.” Plaintiffs further alleged: “The intended objective of the parties in entering into this arrangement was to provide a non-taxable seven percent increase in pensionable income. The vehicle selected by the parties to achieve this goal (i.e., creating the EPMC, which was not taxable income, and reporting it to [PERS] as pensionable income) was not intended by them to be the exclusive vehicle, and any other lawful device that would achieve this goal could be utilized if necessary.”
Plaintiffs alleged that sometime after January 1, 1976, the City agreed to pay the remaining two-ninths of the required member contributions for safety members to PERS, which had been paid by the safety members. Plaintiffs further alleged: “Again, the preferred, but not exclusive, vehicle contemplated by the parties to achieve this non-taxable increase in pensionable income was for the City to report the entire EPMC as pensionable income. Thereafter, the City in fact paid the entire safety member contributions, reported that entire EPMC as ‘compensation earnable’ and funded all contributions on a base that included that entire EMPC.”
Plaintiffs asserted that as a consequence of the foregoing, “all required contributions paid by the City, including those [it was paying] on behalf of the members, and the portion (2/9ths) of all required member contributions paid by safety members were calculated upon [an] . . . income base which included the value of the EPMC. By paying those increased contributions, the parties were funding the promised enhanced pensions in the same manner as pension enhancements resulting from a salary increase . . . .” Plaintiff also alleged that this additional compensation benefit was incorporated into all subsequent collective bargaining agreements.
4. City Discontinues Paying EPMC
According to the first amended complaint, on August 26, 1991, the City discontinued reporting the EPMC as compensation earnable. In addition, the City discontinued paying all contributions on an income base that included the value of the EPMC. Plaintiffs alleged that the State Controller’s Office represented to the City that inclusion of the value of the EPMC in compensation earnable was contrary to the provisions of the PERL.
Plaintiffs also alleged that in Oden, supra, 23 Cal.App.4th 194, the court held that since 1976, the value of EPMC was not properly included as compensation earnable, thereby confirming the representations from the State Controller’s Office.
5. PERS’ Short-Term Policy
Prior to Oden, PERS adopted a formal regulation, which is referred to as the Short-Term Policy. This policy expressly allowed for the inclusion of EPMC as compensation earnable until June 30, 1994, in situations where the result was required by a pre-existing collective bargaining agreement or the benefit was required by estoppel principles based on reliance upon PERS prior communications. The Short-Term Policy was in effect until June 30, 1994, because amendments to the PERL statutes on the same subject became effective on July 1, 1994.
The Short-Term Policy is not included in the record on appeal.
As alleged by plaintiffs, despite the Short-Term Policy, the City did not take steps to include the value of EPMC in compensation earnable.
6. The PERL Amendment
The PERL amendment authorizing governmental employers to include EPMC as “compensation earnable” became effective on July 1, 1994. The amendment, which originally appeared in former section 20023, subdivision (c)(4), became section 20636, subdivision (c)(4), as a result of the renumbering of the PERL statutes. The amendment provided: “Special compensation may include the full monetary value of normal contributions paid to the board [of administration of PERS] by the employer, on behalf of the member and pursuant to Section 20691, if the employer’s labor policy or agreement specifically provides for the inclusion of the normal contribution payment in compensation earnable.”
As alleged by plaintiffs, despite the enactment of the PERL amendment, the City did not resume designating the value of the EPMC as part of compensation earnable. In the first amended complaint, plaintiffs alleged that “[a]s a result of the foregoing, the retirement allowances received by [the plaintiffs] during the three year period immediately preceding the filing of this lawsuit and those they will receive thereafter were, are and will be seven percent lower (if the [plaintiff] is a non-safety member) or nine percent lower (if the [plaintiff] is a safety member) than entitled them in accordance with the vested contractual rights they had already earned for services previously rendered.”
7. Plaintiffs File Suit
On October 5, 2005, plaintiffs filed the present lawsuit, seeking declaratory relief, a writ of mandate, and damages. Plaintiffs alleged that pursuant to the MOA, the City contracted to provide the additional retirement benefits and agreed that it would report to PERS that the EPMC was “compensation earnable.” Plaintiffs alleged that the intent of the MOA was to provide plaintiffs with an increase in gross compensation identical in all respects (including the amount of compensation earnable) to a seven or nine percent salary increase (depending upon an employee’s classification) except that the increase would be regarded as deferred compensation and that it would not be taxed as ordinary income when received.
Plaintiffs further alleged that they had a vested contractual right to have the full value of the EPMC included in the amount of compensation earnable, upon which the pensions were calculated. The City filed a demurrer. The trial court sustained the demurrer with 30 days leave to amend.
In the minute order, the trial court found: “Defendants correctly argue that the EPMC to the California PERS was and is an unlawful benefit and could not be reported as earnable compensation. Therefore, plaintiffs either (1) never vested in those benefit enhancements; or (2) they were divested of any rights to those enhancements after the decision in [Oden]. The Court is further persuaded that since plaintiffs do not currently have a right to have EPMC reported to PERS as compensation earnable, the writ of mandate cause of action fails as well.”
8. The First Amended Complaint
On April 20, 2006, plaintiffs filed the operative first amended verified complaint. There, plaintiffs alleged two causes of action, one for declaratory relief and one for a writ of mandate.
Plaintiffs sought a judicial determination that the reduced retirement benefits during the three years preceding the filing of the lawsuit constituted an unlawful impairment of a vested contractual right. Plaintiffs also sought a writ of mandate to compel the City to perform all acts to cause the retirement allowances to be increased by seven or nine percent depending upon whether an individual was a non-safety or safety member.
Plaintiffs alleged that the City could have used an alternative device to accomplish the pension increases. Plaintiffs alleged: “Such action would have involved only a change in form, not substance, from the one utilized by the parties. It would have imposed no additional costs or other burdens on the City. All that the parties would have had to do to achieve their intended objective was to increase the salaries of each [plaintiff] by seven percent (for non-safety members) and nine percent (for safety members), which salary increase qualified as pensionable income under the PERL; in return, the [plaintiffs] would pay [their] own retirement contributions, and, at the same time, the City would declare the value of the employee-paid contributions as a ‘pick-up’ pursuant to Section 414(h)(2) of the United States Internal Revenue Code, whereupon the value of the resulting salary increase would not be regarded as ordinary income for taxation purposes.”
9. The City Files A Demurrer
The City filed a demurrer to the first amended complaint. There, the City asserted that the complaint failed as a matter of law because the action was barred by the applicable statute of limitations and because plaintiffs failed to name an indispensable party, PERS. The City also asserted that plaintiffs were not entitled to a writ of mandate because the City did not have a clear ministerial duty to report EPMC to PERS as compensation earnable.
The City asserted that the present action was an action to establish the existence of the right to recover additional retirement benefits, as opposed to an action to recover a missed installment. The City asserted that pursuant to Baillargeon, an action to establish the right to recover installment payments must be filed within the applicable limitations period following the event which terminates the payments. The City asserted that plaintiffs did not have a vested right to have the EPMC reported to PERS as compensation earnable. The City asserted that plaintiffs could not rely upon the more liberal rule governing accrual of actions to recover a missed installment payment, where the statute of limitations runs from the date of each individual installment.
In Baillargeon, the court explained: “Defendants assert that, even allowing tolling, plaintiff's claim that was presented to defendants on January 16, 1973, was filed two days after the one-year limitations period had run and, hence, her claim is barred. In part, plaintiff counters with the view that her claim is in the nature of one for installment payments, and she seeks to invoke the rule that the statute of limitations runs from the due date of each individual installment. [Citation.] Plaintiff’s reasoning is not persuasive here. The applicable principle is stated in Dillon v. Board of Pension Commrs. (1941) 18 Cal.2d 427, 430 [116 P.2d 37, 136 A.L.R. 800]: ‘An action to determine the existence of the right thus necessarily precedes and is distinct from an action to recover instalments which have fallen due after the pension has been granted.’ (Italics added.) Plaintiff herein is seeking to establish her right to benefits; she is not suing to recover on installments after benefits have been granted.” (Baillargeon, supra, 69 Cal.App.3d at p. 684.)
The City asserted that the action was therefore barred by the Code of Civil Procedure section 338, subdivision (a), three-year statute of limitation (violation of statute) or the section 337, subdivision (1), four-year statute of limitation (breach of written contract). The City asserted that an action to establish the right to have the pension benefit reported as compensation accrued as follows: (1) in 1991, when the City stopped reporting the EPMC to PERS as compensation earnable; (2) on June 30, 1994, when the PERS short term policy expired (which permitted the City to report EPMC to PERS as compensation earnable); or (3) July 1, 1994, when the Legislation permitting the City to report EPMC to PERS as compensation earnable took effect. The City explained that plaintiffs’ action was not filed within three or four years of any of these events and was thus time-barred.
10. Plaintiffs’ Opposition
In their opposition to the demurrer, Plaintiffs asserted that they had a vested contractual right to have the City report to PERS the value of the EPMC as “compensation earnable.” Plaintiffs also asserted that they alleged in the first amended complaint that the method of reporting the EPMC as compensation earnable was not intended to be the exclusive vehicle to accomplish the objective of enhanced retirement benefits and that any other lawful device could be used by the parties. Plaintiffs also asserted that for 15 years, the City legally reported to PERS the value of the EPMC as compensation earnable. On this basis, plaintiffs asserted that the present lawsuit was not an action to establish the right to the benefit, but instead was akin to an action to recover missed installment payments, similar to the facts presented in Abbott v. City of Los Angeles (1958) 50 Cal.2d 438 (Abbott). Thus, according to plaintiffs, the more liberal accrual rule governing missed installment payments applied and the action was timely.
In Abbott, the court explained: “Here, as we have seen, the statutory time limitation upon the right to sue for each pension instalment commences to run from the time when that instalment falls due. It follows that even though plaintiffs might have earlier brought suit for declaratory relief . . ., their failure to do so does not operate to bar their right to declaratory relief with respect to future pension payments as well as to a monetary judgment for the difference, for three years (insofar as the subject statute is concerned) prior to the filing of these actions, between the amount of the fixed and the fluctuating pensions.” (Abbott, supra, 50 Cal.2d at pp. 463-464.)
Plaintiffs also asserted that PERS was not an indispensable party, but in the event that it was, plaintiffs could amend the complaint to name PERS. Finally, plaintiffs asserted that reporting the EPMC as compensation earnable is not a discretionary act and therefore plaintiffs were entitled to a writ of mandate. Plaintiffs asserted that all the City would have to do would be to perform the ministerial acts necessary to re-characterize the EPMC as non-taxable salaries and to report the increased salaries to PERS as compensation earnable.
11. Trial Court Sustains Demurrer Without Leave to Amend
The trial court sustained the demurrer without leave to amend. The court ruled the present lawsuit was “an action to establish the vesting of the enhanced pension benefits as opposed to merely recovering an installment.” Thus, according to the trial court, the statute of limitations did not begin on the date of each pension installment. Instead, regardless of whether the first amended complaint was based upon a breach of contract or a breach of statute theory, the action was barred by the statute of limitations. The trial court entered judgment in favor of the City. Plaintiffs timely filed a notice of appeal.
The trial court explained: “If it is assumed in arguendo that any MOU in effect in 1991 required the City to report EPMC to PERS as compensation earnable, or even a ‘promise’ to enhance employees’ retirement benefits, the statute of limitations would have expired in 1995. To the extent that Plaintiffs allege that the City could have reported EPMC as special compensation under Govt. Code sec. 20636(c)(4), the statute of limitation to compel the City to do so ran on August 26, 1995, three years after Plaintiffs alleged that the City stopped reporting EPMC to PERS as compensation earnable. Finally, to the extent that the City could have continued to report EPMC during the pendency of the short-term policy adopted by PERS, which expired on June 30, 1994, or after the Legislature amended the PERL to provide mechanisms for such reporting as compensation earnable, the statute of limitation ran on July 1, 1997.”
CONTENTIONS
Plaintiffs contend the trial court erred by finding the action barred by the statute of limitations. Anticipating the City’s arguments, plaintiffs also contend that mandamus relief is appropriate and PERS is not an indispensable party. In the event this court agrees that PERS is an indispensable party, plaintiffs seek leave to amend the complaint to name PERS as a party defendant.
Because we conclude that this action is barred by the statute of limitations, we have no occasion to reach the issues of whether mandamus is appropriate or whether PERS is an indispensable party to this lawsuit.
STANDARD OF REVIEW
We review the complaint de novo to determine whether it contains sufficient facts to state a cause of action. (Roman v. County of Los Angeles, supra, 85 Cal.App.4th at pp. 321-322.) We review for abuse of discretion the order sustaining the demurrer without leave to amend. (Id. at p. 322.) It is an abuse of discretion to deny leave to amend if there is a reasonable possibility that the pleading can be cured by amendment. (Ibid.) A demurrer is properly sustained without leave to amend where the pleading discloses on its face that the action is barred by the statute of limitations. (Honig v. San Francisco Planning Depart. (2005) 127 Cal.App.4th 520, 524.)
DISCUSSION
For purposes of applying statutes of limitations, the pension cases distinguish on one hand, an action to determine the existence of a right to a pension benefit, from on the other hand, an action to collect a periodic payment of a pension benefit. (See Dillon v. Board of Pension Commrs. (1941) 18 Cal.2d 427 (Dillon) and Baillargeon, supra, 69 Cal.App.3d 670.)
In Dillon, a police officer committed suicide in April 1934. The officer’s widow then filed an application to the Board of Pension Commissioners of the City of Los Angeles for a widow’s pension. The Board denied the application in February 1935. (Dillon, supra, 18 Cal.2d at p. 429.) More than three years later, in December 1938, the widow filed a mandamus action to compel the Board to issue an order for the payment of the pension plus an amount equal to the pension which had accrued during the prior three-year period. The widow sought to establish that the officer’s suicide was a result of his job-related duties. The Board filed a demurrer asserting the action was barred by the three-year statute of limitations. The trial court agreed and the Supreme Court affirmed. (Id. at pp. 429, 432.)
The Dillon court explained: “The right to receive periodic payments under a pension is a continuing one [Citation], and any time limitation upon the right to sue for each instalment necessarily commences to run from the time when that instalment actually falls due. Before plaintiff can claim these periodic payments, however, she must establish her right to a pension. If the Board of Pension Commissioners refuses to acknowledge this right upon application, she can properly bring an action of mandamus in the superior court to review the soundness of the board’s decision, and to establish as a matter of law that she is entitled to the status of a pensioner. [Citations.] An action to determine the existence of the right thus necessarily precedes and is distinct from an action to recover instalments which have fallen due after the pension has been granted.” (Dillon, supra, 18 Cal.2d at p. 430.)
The Dillon court then explained that the cause of action to establish the right to the pension accrued at the time of the police officer’s death. Accounting for tolling of the statute of limitations while the Board deliberated the widow’s claim, the court held that the widow commenced the action to establish the right to a pension more than three years after the cause of action accrued. Thus, the action was time-barred. (Dillon, supra, 18 Cal.2d at pp. 430-431.)
In Baillargeon, the plaintiff became an employee of the defendant Department of Water and Power in 1959 and a member of the retirement plan in 1960. (Baillargeon, supra, 69 Cal.App.3d at p. 676.) In 1966, the Department’s Board of Administration of the retirement plan issued a 41-page booklet setting forth general information regarding benefits in the retirement plan. The booklet contained the following statement concerning the benefits available to Plan participants who sustained on-the-job injuries and received workers’ compensation benefits: “ ‘ . . . if you are on monthly salary, you would be paid supplemental benefits from the disability fund [of The Plan]. This assures that the amount you receive from compensation payments plus supplemental payments for an on-the-job injury at least equals the amount you would receive for disability resulting from an off-the-job sickness or injury.’ ” (Ibid.)
The plaintiff in Baillargeon suffered what she believed to be a non-work related injury in 1966. The plaintiff then applied for disability benefits available under the retirement plan and received approximately $7,700 until January 31, 1969, when the Board terminated the benefits. During the interim time period, the plaintiff learned that her injury was work-related. She filed a workers’ compensation claim on February 28, 1969. On January 14, 1972, the Workers’ Compensation Appeals Board found in favor of the plaintiff and awarded disability payments for the period from 1967 to 1971. (Baillargeon, supra, 69 Cal.App.3d at p. 677.) The plaintiff then made a demand upon the defendants for the supplemental benefits as described in the booklet, quoted above. The defendants refused to provide the supplemental benefits. (Ibid.)
The court of appeal held that the plaintiff’s cause of action for supplemental benefits accrued on January 31, 1969 “when [the] defendants ceased payment of any benefits pursuant to The [Retirement] Plan.” (Baillargeon, supra, 69 Cal.App.3d at p. 683.) The court explained: “This constituted a breach of the promise contained in the Booklet assuring supplemental benefit payments when an employee sustained an on-the-job injury. The statute of limitations commenced running as of that date.” (Ibid.) Accounting for tolling while the plaintiff litigated the workers’ compensation claim, the court of appeal held that the action was not time-barred. The court, however, squarely rejected the plaintiff’s assertion that the claim was one for installment payments and rejected the assertion that the statute of limitations ran from the due date of each individual installment. The court explained: “Plaintiff herein is seeking to establish her right to benefits; she is not suing to recover on installments after benefits have been granted.” (Id. at p. 684.)
In a non-pension case, County of San Diego v. Myers (1983) 147 Cal.App.3d 417 (Myers), the court of appeal relied upon the pension cases to conclude that an action was time-barred. There, for the 1973-1974 and 1974-1975 fiscal years, the State of California reimbursed San Diego County 100 percent of the costs in providing social services to “medically indigent” beneficiaries of the Medi-Cal program. In August 1975, the State Department of Health determined that the costs for such social services could not legally be billed to the Medi-Cal program. In September 1975, the State advised the County that the cost of social services could no longer be claimed under the Medi-Cal program. In December 1975 and April 1976, the State rejected the County’s claims for reimbursement of the costs of providing social services to medically indigent persons. (Myers, supra, 147 Cal.App.3d at pp. 419-420.)
The County filed suit on December 29, 1978. The trial court found that the action was barred by the three-year statute of limitations set forth in Code of Civil Procedure section 338, subdivision (1). (Myers, supra, 147 Cal.App.3d at p. 420.) The court of appeal affirmed. (Id. at p. 423.) The court looked to pension cases for guidance. The court explained: “Consequently, even though a pension is an obligation payable in periodic installments, the right to entitlement must be established within the applicable period of limitations or otherwise all pension rights are barred, including installments falling due in the future. [Citations.] [¶] Similarly, the underlying dispute here between the State and the County involves establishing statutory entitlement-whether the former’s interpretation of the law as not requiring its reimbursement to the County for the latter’s administrative costs incurred from providing social services for the medically indigent within the Medi-Cal program is proper. Accordingly, by analogy to the pension cases, the statute runs from the date notice entitlement is rejected, not upon failure to make a future periodic reimbursement where no obligation to do so exists. The trial court thus correctly ruled the matter was barred by the statute of limitations, because the statute began to run when the County received notice of the State’s policy decision it was not statutorily required to reimburse the County the disputed administrative expenses.” (Id. at p. 422.)
As to when a cause of action accrues, the Myers court stated: “Generally, a cause of action accrues and the statute of limitation begins to run when a suit may be maintained. [Citations.] ‘Ordinarily this is when the wrongful act is done and the obligation or the liability arises, but it does not “accrue until the party owning it is entitled to begin and prosecute an action thereon.” ’ [Citation.] In other words, ‘[a] cause of action accrues “upon the occurrence of the last element essential to the cause of action.” ’ ” (Myers, supra, 147 Cal.App.3d at p. 421.)
In this case, plaintiffs assert that this is an action to recover installment payments to which they have a vested right. We reject this assertion. This is not a lawsuit to recover installment payments which are due and owing. Plaintiffs did not establish in a prior action that they have a right to have the City report the EPMC to PERS as compensation earnable or that the City must include EPMC in the base amount used to determine the pension upon retirement. In other words, plaintiffs have not litigated the underlying issue of whether they have a right to the pension benefits at issue in this litigation.
Plaintiffs did not file a breach of contract action based upon the 1975 MOA when the City terminated the pension benefit in 1991. Notably, in Baillargeon, the retirement plan booklet appeared to give the plaintiff a contractual right to the benefit claimed. Nevertheless, the court ruled that the action was not an action to recover installment payments, but was an action to establish the right to benefits. The same analysis applies here. While the MOA may appear to give plaintiffs a contractual right to the benefit claimed, plaintiffs did not establish that right in a prior action. The City has never had a chance to defend such a breach of contract action.
In addition, plaintiffs did not file a declaratory relief or mandamus action following the Legislature’s enactment of section 20636, which expressly authorized the pension benefit at issue in this litigation. Thus, plaintiffs did not establish that they had a statutory right to the benefit claimed.
To the extent that plaintiffs’ claim for pension benefits is based upon a breach of written contract theory (i.e., breach of the 1975 MOA), this claim is subject to the four year statute of limitation set forth in Code of Civil Procedure section 337, subdivision (1). Analogous to the Baillargeon case, the right to sue for beach of contract accrued in 1991 when the City ceased reporting the EPMC to PERS as part of compensation earnable. This was the alleged wrongful act which entitled plaintiffs to litigate a claim for breach of contract. Thus, because plaintiffs filed this action to establish the right to the pension benefit in 2005, it is untimely.
To the extent that plaintiffs allege that the right to the pension benefits at issue is based upon statute, any such claims are subject to the three year statute of limitations period set forth in Code of Civil Procedure section 338, subdivision (a). Plaintiffs’ cause of action based upon a statutory entitlement to the pension benefits accrued on July 1, 1994, when the Legislature enacted former section 20636 expressly sanctioning the practice of including EPMC as part of “compensation earnable.” By analogy to Myers, the July 1, 1994, date was the first date upon which plaintiffs could claim a statutory right to oblige the City to provide the pension benefits. Thus, because plaintiffs filed this action to establish the statutory right to the pension benefit in 2005, it is untimely.
Finally, plaintiffs assert that the present case is analogous to and controlled by Abbott, supra, 50 Cal.2d 438. We reject this assertion and find Abbott is distinguishable.
In Abbott, for 20 years prior to 1925, the City of Los Angeles provided members of the police and fire departments with a fluctuating retirement pension after 20 or more years of service. (Abbott, at p. 446.) In 1925, the City amended the City Charter to grant retired persons a fixed rather than a fluctuating pension. Because salaries increased over time, the fluctuating pension provided greater retirement benefits than the fixed pension. (Id. at pp. 451-452.) In 1954, the plaintiffs, retired City employees, filed suit for declaratory relief and breach of contract. (Id. at pp. 456, 462.) The trial court ruled that the action was barred by the three-year statute of limitations set forth in a former version of Code of Civil Procedure section 388. (Abbott, at p. 462.)
The Supreme Court reversed. (Abbott, supra, 50 Cal.2d at p. 468.) The court held that the action was not an action to establish a right to the fluctuating pension payment, but instead an action to recover installments which were due and owing. (Id. at pp. 462-464.) The court explained that a right to receive periodic pension payments is a continuing one, and the time limitation on the right to sue commences to run from the time when the installment is due. (Id. at p. 462.)
The Abbott case is distinguishable because there, the fluctuating pension payment was not determined to be illegal and contrary to statute. Thus, the plaintiffs in Abbott did not have to establish a right to receive the fluctuating pension payment. Instead, the action was a relatively simple breach of contract action.
Here, by contrast, in 1994, the Oden court declared that EPMC could not be included as compensation earnable. (Oden, supra, 23 Cal.App.4th at p. 197.) Thus, in 1994, plaintiffs no longer had a right to have EPMC included in compensation earnable. Notably, plaintiffs did not then file an action to determine a right to have EPMC included as part of compensation earnable. Specifically, plaintiffs did not timely file an action for declaratory relief to assert a statutory right to have EPMC included in compensation earnable after the Legislature amended the PERL statute in 1994. (See § 20636, subd. (c)(4).)
Instead, plaintiffs waited until 2005 to file suit to assert that they had a vested right to have EPMC included as part of compensation earnable. The problem is that plaintiffs never established this alleged vested right in a prior action. In addition, plaintiffs did not establish that they had a right to accomplish the benefit objective of the EPMC payment by means of another lawful device. For example, plaintiffs did not timely litigate: (1) the alleged statutory right to have EPMC included as part of compensation earnable; (2) whether the City’s reporting of EPMC as compensation earnable was a ministerial or discretionary act, or (3) whether the City could be compelled to act pursuant to mandamus relief.
In conclusion, this is not an action to recover a due and owing installment retirement benefit. Instead, this action to establish the right to the claimed benefit is untimely pursuant to the applicable statutes of limitation.
DISPOSITION
The trial court’s judgment is affirmed. The City is awarded costs on appeal.
We concur: KLEIN, P. J. ALDRICH, J.