Opinion
No. ED 107830
11-26-2019
James MURPHY, Appellant, and Vernon Betts, Plaintiff, v. EMPLOYEES RETIREMENT SYSTEM OF the CITY OF ST. LOUIS, et al., Respondents.
MEMORANDUM SUPPLEMENTING ORDER AFFIRMING JUDGMENT PURSUANT TO RULE 84.16(b)
This memorandum is for the information of the parties and sets forth the reasons for our order affirming the judgment.
THIS STATEMENT DOES NOT CONSTITUTE A FORMAL OPINION OF THIS COURT. IT IS NOT UNIFORMLY AVAILABLE. IT SHALL NOT BE REPORTED, CITED, OR OTHERWISE USED IN UNRELATED CASES BEFORE THIS COURT OR ANY OTHER COURT. IN THE EVENT OF THE FILING OF A MOTION TO REHEAR OR TRANSFER TO THE SUPREME COURT, A COPY OF THIS MEMORANDUM SHALL BE ATTACHED TO ANY SUCH MOTION.
James Murphy, the retired sheriff of the City of St. Louis, ("Plaintiff") appeals from the summary judgment denying his claim for retirement benefits under the Employees Retirement System of the City of St. Louis ("ERS") on the ground that it was barred by the statute of limitations. We affirm.
The ERS is a retirement system for certain employees of the City funded by contributions from employers and governed by a board of trustees. It was created by ordinance in 1960, and the ERS plan documents are codified in Chapter 4.16 of the Revised Code of the City of St. Louis. The sheriff of the City of St. Louis is an employee of the City and historically was a participant in the ERS. In 1983, the legislature established the Sheriffs’ Retirement System ("SRS") in Section 57.949, et seq. In September of 1988, the board of alderman for the City of St. Louis authorized the sheriff to participate in the SRS. The ERS board of trustees recognized that this meant the sheriff at the time, Plaintiff’s predecessor, was a member of both the ERS and the SRS and upon retirement would become eligible for two pension benefits. Therefore, "to obviate the reoccurrence of the sheriff of the City of St. Louis being a member of two retirement systems satisfied by public funds," the ERS board passed a resolution on December 21, 1988, that "the newly elected successor sheriff ought not be made a member of the [ERS] when he takes office inequitably qualifying him unchangeably in the [ERS]." The board resolved that the sheriff "be and is hereby discontinued as part of such [ERS], and any person assuming the office of sheriff of the City of St. Louis after December 31, 1988, shall not be a member of the [ERS]."
Plaintiff began his tenure as the sheriff of the City of St. Louis on January 1, 1989. The ERS board sent a letter to Plaintiff, dated February 7, 1989, explaining that as sheriff he is a member of the SRS and notifying him that the board "has determined that membership in a singular plan providing retirement benefit satisfied by public funds is the most equitable use of said funds," and therefore the sheriff "shall not be a member of the [ERS]." Enclosed with the letter was a copy of the ERS board resolution. Plaintiff received this letter and kept it in a file he maintained for documents relating to his retirement. Plaintiff testified in deposition that he understood when he took office that he was a member of the SRS and after receiving the ERS letter, knew he was not a member of the ERS. He explained that he did not make any inquiries regarding his eligibility for retirement benefits because, at that time, he did not know how long he would be sheriff. The City never contributed to the ERS on behalf of Plaintiff.
In September of 2016, a few months before his retirement on December 31, 2016, Plaintiff’s counsel sent a letter to the ERS board, asking to meet with the board about the 1988 resolution and 1989 letter. The board responded that it had "already addressed" the sheriff’s participation in the ERS in December of 1988 and did "not intend to revisit this issue." In November of 2016, Plaintiff made some attempt to apply for ERS benefits, but no application was processed and no ERS benefits ever granted. Therefore, since his retirement, Plaintiff has been receiving benefits related to his service as sheriff only from the SRS.
The petition alleges that Plaintiff attempted to submit a written application, which was rejected by ERS staff. The ERS’s answer to the petition admits only that Plaintiff inquired about obtaining an application. No evidence regarding this fact was developed in the summary judgment record, but it is undisputed no application was ever processed.
Plaintiff also receives pension benefits from another state retirement system relating to his employment in the Missouri legislature.
Plaintiff filed this lawsuit on December 31, 2016, which was later amended. The defendants named in the third amended petition were the City of St. Louis, the ERS and individuals on the ERS board of trustees (collectively "Defendants"). The petition alleged that the SRS statute, Section 57.991, expressly authorizes dual eligibility in the SRS and the ERS because it provides that SRS benefits "shall in no way affect any person’s eligibility for retirement benefits under ... any other local government retirement or pension system ... anything to the contrary notwithstanding." Plaintiff alleged that the ERS ordinance, Section 4.16.010 of the City Code, defining "employee" as "any appointive or elective employee ... except ... members of other retirement systems established by ordinance and/or state statute," conflicted with the above SRS provision. Due to that conflict, he asserted that the ERS ordinance was unconstitutional and the ERS resolution renouncing dual eligibility was void and never had the effect of removing him from participation in the ERS. The petition sought a declaration that Plaintiff is, and has been since he took office, a member of the ERS and a declaration that the ERS ordinance definition of "employee" was unconstitutional. Plaintiff sought injunctive relief directing Defendants to afford him ERS benefits and damages resulting from the deprivation of those benefits, on a theory that Defendants’ conduct was an unconstitutional impairment of his contractual right to ERS benefits and a breach of their fiduciary duties.
The current sheriff of the City of St. Louis, Vernon Betts, was permitted to intervene in the case. Defendants’ motion for summary judgment against him was also granted, but he has not appealed.
Defendants filed a motion for summary judgment arguing, among other things, that all of Plaintiff’s claims were barred by the applicable five-year statute of limitations. Defendants argued that Plaintiff’s right to participate in the ERS had been clearly repudiated and he was made aware of that repudiation in the February 1989 letter from the ERS board. They argued that such clear repudiation triggers the limitation period in a pension benefits case, and the petition challenging that repudiation—filed almost 28 years later—was untimely. The trial court agreed the claim was barred by the statute of limitations. As an alternative basis for entering summary judgment, the court also found there was no conflict between the SRS statute and the ERS ordinance definition of employee, concluding that Section 57.991 of the SRS statute did not preempt the ERS’s long-standing definition of its own membership nor did it preclude the ERS from adopting a resolution that expressly excluded the sheriff from membership in the future. Thus, the court found Plaintiff was not a member of the ERS at any time, and refusing to process his application or provide him benefits thereunder was neither an impairment of any right nor a breach of any fiduciary duty. This appeal follows. Because we agree the claims are barred by the statute of limitations, we need only address that issue on appeal.
"The statute of limitations is an affirmative defense, and a party who moves for summary judgment on that basis bears the burden of showing that the statute bars the plaintiff’s claims." Dempsey v. Johnston , 299 S.W.3d 704, 706 (Mo. App. E.D. 2009). Where, as here, the relevant facts are uncontested, the statute of limitations issue is decided by the Court as a matter of law. Id. The parties agree that the five-year statute of limitation in Section 516.120(2) for actions upon a liability created by statute applies to Plaintiff’s claims that Defendants owe him retirement benefits under the ERS statute. See Bettis v. Potosi R-III School District , 51 S.W.3d 183, 186 (Mo. App. W.D. 2001) and Lane v. Non-Teacher School Employee Retirement System of Missouri , 174 S.W.3d 626, 638 (Mo. App. W.D. 2005). Bettis and Lane were successive appeals in the Western District from the same underlying pension benefits case, in which the court addressed when such a cause of action accrues. The general rule in all cases is that a cause of action accrues and a limitations period begins to run not when the wrong or technical breach occurs, but when the fact of damage is capable of ascertainment. See Section 516.100. Consistent with that directive, in a case seeking retirement benefits, the statute usually does not begin to run until the claimant has retired or otherwise qualified and submitted a formal claim. Bettis , 51 S.W.3d at 188. But there is also an exception:
Under this exception to the general rule of accrual in pension cases, the statute of limitations would begin to run in cases calculating benefits or determining rights under a pension plan when the claimant has retired or otherwise qualified, and has submitted a formal claim for benefits which has been denied, unless the claimant knew or should have known from an event or circumstance that a clear repudiation of those benefits or rights has occurred.
Lane , 174 S.W.3d at 638 (emphasis added). Plaintiff argues the trial court erred in concluding that his claims were barred under this "repudiation exception," not because the undisputed facts here do not fit that exception, but because he contends Lane should not be followed. Plaintiff asserts a variety of reasons why, none of which have merit.
First, Plaintiff baldly asserts that Lane was "poorly reasoned." We strongly disagree. In adopting the accrual rule and the repudiation exception for pension cases in Missouri, the Western District relied in part on federal cases employing the same rules in determining when an ERISA cause of action accrues. See id. at 636-37 ; Bettis , 51 S.W.3d at 188-89. The court found the federal ERISA accrual rules persuasive because the general accrual rule in federal law—namely that the statute begins to run when the plaintiff discovers or with due diligence should have discovered the injury—is similar to Missouri’s general capable of ascertainment accrual test. See Lane , 174 S.W.3d at 637. Lane discussed at length the policy reasons behind the federal adoption of the accrual rule and repudiation exception in ERISA cases. The rule that a cause of action for benefits does not accrue until there has been a formal claim for and denial of such benefits "reflects a concern that it would be burdensome and unfair to require lay participants and beneficiaries to be constantly alert for possible errors or abuses that might give rise to a claim and start the statute of limitations running" prior to the filing and denial of a claim. Id. at 637 (internal quotation marks and citations omitted). The repudiation exception to that rule "recognizes that, despite this concern, there are instances where it is made clear to the employee that his pension rights or benefits are being repudiated" and therefore it is "reasonable and in keeping with the guiding principles" of the federal accrual rules to begin the limitations period immediately. Id. In those instances, immediate accrual promotes important policies underlying statutes of limitations: "rapid resolution of disputes, repose for those against whom a claim could be brought, and avoiding of litigation involving lost evidence or distorted testimony of witnesses." Id. (internal quotation marks and citations). The Lane court concluded that these were "obvious and logical reasons" for adopting the same accrual rule and repudiation exception for Missouri pension cases. Id. at 637-38.
The Employment Retirement Income Security Act, 29 U.S.C. 18.
The reasoning in Lane is sound. In essence, the accrual rule and repudiation exception are just a manifestation of the capable of ascertainment test in the pension setting: If there is no clear indication before the time to apply for pension benefits that a claimant is ineligible, then that harm is not capable of being ascertained until a formal application for benefits has been denied and the limitations period does not begin to run until then. But if eligibility has been clearly repudiated and the claimant knew or should have known about it before the time to file an application for benefits, then the harm is capable of being ascertained prior to denial of a formal application, and the limitations period begins to run upon repudiation. Plaintiff’s contention that, under the repudiation exception, the statute will begin to run "remorselessly" upon the "technical breach" in contravention of the capable of ascertainment test is unfounded. Because only those clear repudiations that a plaintiff knew or should have known about trigger the limitations period, a claim will not accrue prior to a plaintiff’s capability to ascertain any harm or lead to an unjust result. These accrual rules for pension cases also reflect a balancing of the well-established interests and policies attending any statute of limitations, namely, giving the plaintiff adequate time to prosecute valid claims while protecting the defendant from having to defend stale ones. See generally Business Men’s Assurance Company of America v. Graham , 984 S.W.2d 501, 507 (Mo. banc 1999) ("The general purpose of statutes of limitation is to prevent the assertion of stale claims" and "to compel the settlement of claims within a reasonable period after their origin and while the evidence remains fresh in the memory of the witnesses"); see also Lockett v. Owens-Corning Fiberglas , 808 S.W.2d 902, 906-08 (Mo. App. E.D. 1991) ("Statutes of limitations are designed to ensure fairness to the defendant; to encourage prompt processing of claims; to suppress stale and fraudulent claims; and to avoid difficulties of proof created by delay" and they attempt "to protect plaintiffs and defendants equally and fairly"). Thus, Plaintiff’s assertion that his interest in pursuing valid claims is not protected under the repudiation exception is misplaced. Valid, but stale claims, are properly denied if they are barred by a statute of limitations. Moreover, the need for repose from stale claims is particularly acute in the pension context. In reliance on a clear repudiation of rights, a pension fund may not receive any contributions on behalf of the repudiated claimant’s behalf, potentially for decades. Allowing the claimant to sit on a challenge to that repudiation and pursue benefits from that fund after such long-standing detrimental reliance on the repudiation would be unfair and defeat the purpose of the statute of limitations.
In addition to challenging the reasoning in and policies behind Lane , Plaintiff also contends that Lane "squarely conflicts" with Wahl v. Cunningham , 320 Mo. 57, 6 S.W.2d 576 (Mo. 1928) and that, as a result, we must ignore Lane . We disagree. Wahl was a breach of contract case—not a pension case—discussing the anticipatory breach by repudiation doctrine in the context of whether a cause of action was premature—not untimely under the statute of limitations—because it was filed before the time for performance of the contract was due, which is when a breach of contract claim ordinarily accrues. Id. at 579. The Court held that when a party to a contract repudiates his obligations before the time for performance, the other party has the option to (a) treat this as an anticipatory breach and immediately bring an action for recovery of his damages or (b) treat the repudiation as inoperative and await the time when the agreements are to be performed to seek recovery for all the consequences of nonperformance. Id. at 580. The Court concluded the plaintiff’s claim, filed just a few months after the defendant repudiated, was not premature. Id. The Court did not have occasion to address the statute of limitations because the claim was obviously not late. Id. Because it was decided in a different context, the Court in Wahl did not consider any of the policies underlying statutes of limitations—much less in the context of pension cases—that were addressed by the court in Lane . The repudiation exception adopted in Lane based on those considerations does not conflict with Wahl , it is simply a different rule to be applied to a different situation. The issue in this case is when Plaintiff’s pension benefits claim accrued for statute of limitations purposes—a matter squarely within the parameters of the law discussed in Lane and having nothing to do with the issue discussed in Wahl , namely the options of a plaintiff in a breach of contract case upon the other party’s anticipatory breach by repudiation.
Plaintiff argues that an appellate court, like the Western District in Lane , has no authority to carve out special rules for specific situations where the Supreme Court has announced a general rule, claiming only the Supreme Court can do that itself. The case he cites for this claim stands only for the proposition that one appellate district is not necessarily bound to follow the decision of another district if that case is not in accord with other cases, especially Supreme Court cases. Forsthove v. Hardware Dealers Mutual Fire Insurance Company, 416 S.W.2d 208, 213 (Mo. App. St. Louis 1967). Plaintiff also asserts that Wahl trumps Lane here because "contract law governs pension cases." Again, the cases he cites in support stand only for the broad idea that courts look to contract law, among other principles, when determining rights and duties under a pension plan. See Wehmeier v. Public School Retirement System of Missouri , 631 S.W.2d 893, 896 (Mo. App. E.D. 1982) (using general principles of contract interpretation and statutory construction to define rights and duties of parties under Public School Retirement System of Missouri); Beard v. Missouri State Employees’ Retirement System , 379 S.W.3d 167, 170–71 (Mo. banc 2012) (discussing restrictions on employee’s designated beneficiaries’ rights to her retirement benefits by referencing employment contract and governing statute). None of these cases in any way support the outcome Plaintiff urges here: that we should ignore an on-point statute of limitations pension case from an appellate court in favor of a contract case decided in a different context by the Supreme Court.
Having found no conflict with applicable Supreme Court or other precedent, we are free to follow Lane . Having found the decision to be based on sound reasoning and policy, we choose to follow Lane . Plaintiff’s arguments opposing the repudiation exception adopted in Lane amount to no more than a case of self-inflicted regret that, thereunder, the claims in his petition were capable of ascertainment decades ago and are untimely. As noted above, Plaintiff does not even challenge the facts in this case or that, under Lane , those undisputed facts demonstrate that his claim is untimely. And with good reason: the undisputed facts conclusively establish that the repudiation exception applies in this case.
To establish the repudiation exception, there must be "some event or circumstance that would have alerted [the plaintiff], exercising due diligence," that his or her right to retirement benefits was clearly being repudiated. Lane, 174 S.W.3d at 638. In Lane , the plaintiffs claimed they were wrongfully denied pension benefits for certain years of service. Id. at 629-32. The record revealed that the plaintiffs had been told at a meeting with representatives of the retirement plan, prior to the date of retirement, that the employer had not made and would not make contributions to the pension fund for the disputed years of service and that the pension system had not and would not give the plaintiffs credit for those years. Id. at 638. This, the court found, "might be evidence of" a repudiation of benefits for those years of service, but it was not conclusive because there was also evidence the plaintiffs had been told during that meeting that they "were entitled to" benefits for those years. Id. at 639 (emphasis added). The court found it was therefore arguable that the plaintiffs reasonably believed once they applied for benefits at retirement, they would be given credit for those years and the necessary contributions would be made retroactively. Id. Thus, there was no clear repudiation of rights prior to the denial of benefits, and the statute of limitation did not begin to run before that denial. Id.
Here, the December 21, 1988 resolution was a total, unequivocal and immediate renunciation of any future sheriff’s right of membership in the ERS after December 31, 1988: the office of sheriff "is hereby discontinued as party of [the ERS]" and anyone assuming that position "shall not be a member of the [ERS]." Plaintiff, upon assuming the office of sheriff was informed by letter dated February 7, 1989, that he was not a member of the ERS and was given a copy of the resolution. The letter is equally clear and leaves no doubt that Plaintiff was not considered a participant in the ERS: "you as sheriff shall not be a member of the [ERS]." Plaintiff testified in deposition that after receiving that letter, he knew he was not a member of the ERS. Unlike in Lane , there are no facts in this record suggesting that despite this knowledge, it was reasonable for Plaintiff to nevertheless believe that if he applied the ERS upon retirement, he would receive benefits from a pension fund that he was not a member of. Plaintiff was capable of ascertaining the fact that he was not then nor would he ever be considered a member of the ERS upon receiving the February 1989 letter. No formal application and denial was needed in order for Plaintiff to be capable of ascertaining that fact. Plaintiff was, therefore, required to raise his challenge to the validity of that repudiation within five years of receiving the letter, and his petition filed almost 28 years later is barred.
In another attempt to avoid the statute of limitations, Plaintiff contends that because the resolution was void at its inception—based on the alleged conflict with the SRS statute—it is as if it never occurred and therefore cannot logically trigger a limitations period, even under Lane . Plaintiff suggests that use of such "void ab initio" acts to thwart a plaintiff’s rights is impermissible, relying on cases discussing the general notion that a void act is a nullity. See Taylor v. Taylor , 47 S.W.3d 377, 384 (Mo. App. W.D. 2001) ("a void judgment is entitled to no respect, and may be impeached at any time"). According to the cases from Tennessee and Pennsylvania Plaintiff cites, it appears that some other jurisdictions have adopted a "void ab initio doctrine," under which a plaintiff in zoning cases can avoid a statute of limitations defenses when the ordinance is deemed void from its inception. See Edwards v. Allen , 216 S.W.3d 278 (Tenn. 2007) ; Glen-Gery Corporation v. Zoning Hearing Board of Dover Township , 589 Pa. 135, 907 A.2d 1033 (2006). But the only context in which Missouri courts have been willing to disregard a limitations period under similar circumstances is in cases challenging a tax sale of property where the tax deed is void on its face. A tax deed void on its face will not start the running of the three-year statute limitation period in which a party can challenge that sale. Braun v. Petty, 129 S.W.3d 449, 452–53 (Mo. App. E.D. 2004). But a plaintiff who seeks to have a tax sale set aside because it is void due to some defect not readily apparent on its face and yet to be proven , cannot "avoid the limitation period on that action simply by alleging those same failures." Id. (emphasis in original). "That cannot be what the legislature intended." Id. Here, the resolution giving rise to the lawsuit and triggering the statute of limitations was not void on its face; rather, Plaintiff alleges it was void because it conflicted with a statute. At this point, that is merely an allegation of voidness that has yet to be proven. Unlike something that is void from inception because it is void on its face, the resolution in this case will only be deemed void from its inception if a court determines it be so, after engaging in a judicial analysis of Plaintiff’s claims. In other words, for Plaintiff to circumvent the statute of limitations defense on the grounds that the triggering event was void would require a determination on the merits of Plaintiff’s claim in order to determine the timeliness of the claim. Plaintiff has failed to show that such a cart-before-the-horse approach is proper here.
The motion for summary judgment was properly granted because the undisputed facts conclusively show that Plaintiff’s claim is barred by the statute of limitation. Point I is denied. The remaining points on appeal, regarding the trial court’s alternative basis for granting summary judgment on the merits of Plaintiff’s claims, are denied as moot. The judgment is affirmed.