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Ramirez v. State Teachers' Ret. Sys.

COURT OF APPEAL OF THE STATE OF CALIFORNIA THIRD APPELLATE DISTRICT (Sacramento)
Oct 24, 2018
C083828 (Cal. Ct. App. Oct. 24, 2018)

Opinion

C083828

10-24-2018

RAFAEL RAMIREZ,, Plaintiff and Appellant, v. STATE TEACHERS' RETIREMENT SYSTEM, Defendant and Respondent.


NOT TO BE PUBLISHED California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 34201580002215CUWMGDS)

Plaintiff Rafael Ramirez appeals after the trial court denied his petition for writ of mandate seeking reversal of defendant California State Teachers' Retirement System (CalSTRS) determination regarding his pension calculations. Finding no error, we affirm.

FACTUAL AND PROCEDURAL BACKGROUND

I

Plaintiff's Retirement

Plaintiff became a member of CalSTRS in 1972 and retired in December 2006. In June 2006, he entered into a "SETTLEMENT AGREEMENT AND RELEASE" with his employer, Alum Rock Elementary School District (the District). The agreement provided that in exchange for the lump sum of $10,000, plaintiff agreed to tender his resignation to the District effective June 30, 2006, and would not enter into any contract or business with the District for three years. The agreement further provided "[t]he District shall change [plaintiff's] personnel records to reflect that he held the position as Director of Student Services from July 1, 2001 to June 30, 2006. [¶] In addition to the sum of Ten Thousand Dollars ($10,000), the District shall also pay [plaintiff] the differential between the salary he earned in the 2005-2006 school year in the position of Coordinator of Student Services, and the salary he would have earned as Director of Student Services during the same period." This pay differential was to be paid to plaintiff in three monthly installments. In exchange for "valuable consideration," plaintiff "knowingly and voluntarily waiv[ed] and releas[ed] any and all rights he may have for age discrimination [under federal and state law]." Attached to the agreement was plaintiff's resignation letter dated June 8, 2006.

Plaintiff entered into a settlement agreement with the District the year before as well. In that agreement, the District agreed to give plaintiff the director's salary retroactive to July 1, 2004. The agreement did not mention plaintiff's retirement, except to state plaintiff "will be extended the opportunity to participate in an early retirement incentive that is available to other District employees for which he might be eligible for without special consideration."

The District's deputy superintendent, Jose Manzo, later sent a memo to the District's director of fiscal services describing the agreement with the same language contained in plaintiff's settlement agreement. The "Vendor Payment History" of checks issued to plaintiff identified the $10,000 payment as a "SETTLEMENT" and the checks issued for the differential in pay owed to plaintiff as "PAYMENTS."

In September and December 2006, plaintiff calculated his retirement allowance with CalSTRS. The September estimate used a projected retirement date of July 2008 and a yearly salary of $117,000. The December estimates used a projected retirement date of December 2006 and two different yearly salaries -- $109,764 and $117,000.

In January 2007, CalSTRS sent plaintiff a letter congratulating him on his retirement and announcing his monthly retirement allowance. The amount was based on a yearly salary of $108,952. The letter cautioned, "[p]lease be aware that this award letter may not reflect your final monthly benefit. . . . If we receive additional information from your employer that affects your monthly benefit, we will adjust your payments accordingly and send you a letter explaining the adjustment." In March and April 2007, CalSTRS notified plaintiff of a change in his benefit calculation; however, these subsequent calculations still provided plaintiff's yearly income had been $108,952.

In May and June 2007, plaintiff's attorney and the District exchanged e-mails wherein they attempted to calculate plaintiff's annual earnings for the purpose of his retirement calculations. The District contended plaintiff's creditable annual salary was $117,170, and the $10,000 payment pursuant to the agreement was "supplemental pay." Plaintiff's attorney disputed the classification of the $10,000 payment and instead argued it was retroactive pay pursuant to the settlement agreement; however the attorney acknowledged "[t]he retro pay was separate from what he received as 'settlement' pay."

The District exchanged several e-mails with CalSTRS as well. In May 2007, the District e-mailed CalSTRS stating it had adjusted plaintiff's salary for the 2005/2006 school year. The District inquired whether the adjustment gave plaintiff an additional service credit and whether the correct code was used to input the adjustment. CalSTRS responded in the affirmative to both questions. In June 2007, CalSTRS e-mailed the District to verify plaintiff's salary for the 2004/2005 and 2005/2006 school years. The e-mail does not state for what purpose the verification was needed. The District responded that plaintiff's salary for the 2005/2006 school year had been adjusted and was included in the May report. CalSTRS affirmed it would look at the report for the final numbers.

Following these e-mails, in August 2007, the District wrote to plaintiff informing him it would report to CalSTRS the "salary differential paid to [plaintiff] for the Director of Student Services position was retroactive salary and, therefore, creditable compensation." In October and November 2007, CalSTRS again notified plaintiff of a change in his retirement allowance; however, these calculations still provided his annual salary had been $108,952. A change of calculation notice dated December 2007 provided plaintiff's annual salary had been $127,170.

II

CalSTRS's Audit And Subsequent Communications With Plaintiff

CalSTRS conducted an audit of the District's personnel and payroll records for those who retired between July 1, 2005 through June 30, 2008. "The objective of the audit was to ensure that the District reported eligible membership, creditable compensation, and creditable service to CalSTRS in compliance with the Teachers' Retirement Law and to determine that the information reported to CalSTRS was supported by adequate and reliable records." On May 6, 2011, CalSTRS issued a draft audit to the District and informed plaintiff of its findings. The draft audit found the District incorrectly reported a settlement payment between itself and plaintiff to CalSTRS as part of plaintiff's creditable compensation. Instead of a creditable compensation amount of $127,170 that was initially reported, plaintiff was entitled to a creditable compensation amount of $117,170 consistent with the salary schedule for his position. The draft audit found the erroneous reporting of the $10,000 payment resulted in plaintiff receiving an overpayment in his retirement allowance of $531 a month. As part of the corrective action needed, CalSTRS stated it would collect overpayments from plaintiff pursuant to Education Code sections 24616 and 24617. The District agreed with the audit's findings.

Further section references are to the Education Code unless otherwise stated. --------

The final audit was issued on August 31, 2011, and was identical to the draft audit. Following the final audit, CalSTRS notified plaintiff the District's reporting error resulted in a total overpayment of $26,027.33 to him and it would recover this amount by reducing plaintiff's corrected allowance by 5 percent. Plaintiff requested a hearing.

III

Administrative Hearing And Writ Proceedings

Plaintiff argued to the Teachers' Retirement Board (the Board) that the $10,000 payment was creditable compensation toward the calculation of his retirement benefits because it was meant to compensate him in his position as director, in addition to the other sum negotiated under the settlement agreement. In support of a finding the $10,000 payment constituted retroactive wages, plaintiff submitted a declaration from Manzo, in which he declared the settlement agreement was meant to be an agreement between the parties "to retroactively change [plaintiff's] employment status from Coordinator to Director." The District "agreed to pay [plaintiff] $10,000 to cover any and all amounts he was owed for wages." Further, "the District did not demand that [plaintiff] sign the Settlement Agreement as a condition to the final payment of wages or related amounts. Instead, the parties negotiated the amounts due and agreed that $10,000 would cover any and all amounts owing or claimed as owing."

Plaintiff testified he entered into a settlement agreement with the District in the 2005/2006 school year. He believed the settlement required the District "to reinstate [his] position as a director of student services and provide [him] with back pay wages based on the services that [he] perform[ed]." As to the $10,000 payment specifically, plaintiff testified "the main point . . . was to cover the wages -- the nature of the position of student services was large. That was specifically for wages that the [D]istrict owed me." Plaintiff acknowledged the $10,000 payment gave him a salary above the salary schedule for his position, but testified that he was the only director of student services with the District. He admitted, however, he did not take on additional assignments falling outside the duties specified for the director position. Plaintiff knew it to be the District's practice to pay employees above the salary scheduled if the employee's duties included work outside that listed for the job classification.

In the alternative, defendant argued three affirmative defenses. First, CalSTRS was precluded from recalculating plaintiff's retirement benefits because the three-year statute of limitations provided in section 22008 had expired. Second, equitable estoppel prevented CalSTRS from changing his retirement benefits because, had he known he would be getting less in retirement, "he may well have chosen not to retire at that time, working at another district instead." And third, the doctrine of laches barred CalSTRS from recalculating his retirement benefits due to its unreasonable delay.

To this end, plaintiff testified he relied on CalSTRS's calculations in the December 2007 letter as an accurate representation of his retirement benefits. When asked whether the reduction of his retirement benefits had caused him harm, plaintiff responded "[y]es, it certainly has. I wouldn't have retired if I had known that my benefits were going to be reduced."

The Board found for CalSTRS. Plaintiff then petitioned for a writ of mandate. In a lengthy decision, the trial court exercised its independent judgment when reviewing the evidence and when interpreting the relevant statutes; however, afforded the administrative findings a strong presumption of correctness. The trial court ultimately agreed with the Board and denied the petition for the same reasons announced in the Board's decision.

Specifically, the trial court agreed with the Board's findings of fact. It found plaintiff's retirement was negotiated as part of a settlement agreement between himself and the District. In that agreement, plaintiff agreed to resign in exchange for $10,000. In addition to the $10,000, the agreement provided plaintiff would receive as salary, the difference between the pay he received as the coordinator of student services and the salary he would have earned as director of student services during the same period. The trial court also agreed with the Board that, pursuant to the District's salary schedule, the base salary for the director of student services, with the longevity increase and doctorate stipend applicable to plaintiff, was $117,170.

As to its findings of law, the trial court also agreed with the Board and rejected plaintiff's argument the $10,000 payment was creditable and meant to compensate him as the director of student services. The trial court found plaintiff failed to show he took on duties not required of the director of student services or was in a class of employment entitled to pay above the salary schedule. It further found Manzo's declaration did not support a finding the $10,000 payment was creditable. Instead, the trial court, like the Board, deferred to the language of the settlement agreement and determined the $10,000 payment was not creditable compensation according to the terms of the agreement. The trial court further agreed with the Board and rejected plaintiff's affirmative defenses.

Plaintiff appeals.

DISCUSSION

"Because CalSTRS's administrative decision to seek repayment substantially affects the retirees' fundamental vested right in the State Teachers' Retirement Fund to the amount to which they are entitled by law, the independent judgment standard of review applies. [Citations.] Under this standard, 'a trial court must afford a strong presumption of correctness concerning the administrative findings, and the party challenging the administrative decision bears the burden of convincing the court that the administrative findings are contrary to the weight of the evidence.' [Citation.] '[T]he standard of review on appeal of the trial court's determination is the substantial evidence test.' [Citation.] Additionally, 'we are not bound by any legal interpretations made by the administrative agency or the trial court; rather, we make an independent review of any questions of law.' " (Yuba City Unified School Dist. v. State Teachers' Retirement System (2017) 18 Cal.App.5th 648, 654.)

I

The $10,000 Payment Was Not Creditable Compensation

Plaintiff contends the trial court improperly found the $10,000 payment he received as a product of his agreement with the District was not creditable toward his retirement benefits. We disagree.

Section 22119.2, subdivision (a) defines creditable compensation to mean "remuneration that is paid in cash by an employer to all persons in the same class of employees for performing creditable service in that position." Subdivision (c) of the same section excludes multiple forms of compensation from that which is creditable. These exclusions include, but are not limited to, "[r]emuneration that . . . is not paid to all persons who are in the same class of employees" and "[s]everance pay, including lump-sum and installment payments, or money paid in excess of salary or wages to a member as compensatory damages or as a compromise settlement." (Id., subd. (c)(1), (8).)

Here, the trial court agreed with the Board that the $10,000 payment to plaintiff was not creditable because it was in excess of the maximum salary for plaintiff's position and the settlement agreement did not classify the $10,000 payment as part of plaintiff's salary as it did another sum given to plaintiff. Further, plaintiff did not show he took on additional duties in his position as director of student services entitling him to more than the maximum compensation for that position, nor did he show he was in a class of one. Substantial evidence supports the trial court's decision.

As the trial court noted, the maximum salary for the director of student services position for the period plaintiff was in that position and with the doctorate and two longevity increases he was entitled to was $117,170. Plaintiff does not dispute this amount. He instead argues the trial court ignored relevant and uncontradicted evidence he was in a class of one and his treatment was consistent with a prior year of his employment entitling him to the $10,000 payment as retroactive compensation. Not so.

As an initial matter, we note the trial court did not ignore evidence favorable to plaintiff. Plaintiff points to his own testimony and Manzo's declaration as proof that he established the $10,000 payment was unpaid compensation in exchange for work he performed in excess of his duties as director of student services. The trial court's opinion, however, quoted the portions of plaintiff's testimony he alleges were ignored and explicitly addressed the shortcomings in Manzo's declaration. It appears plaintiff's problem is not that the trial court ignored this evidence but resolved its probative value adverse to his position. In any event, we agree with the trial court and the Board in that neither plaintiff's testimony nor Manzo's declaration established the $10,000 payment was compensation and thus creditable toward his retirement benefits.

In the transcript pages cited by plaintiff in support of his argument, he testified he was the only person to hold the director of student services position, which entailed many responsibilities, and the $10,000 payment was meant to compensate him above the District's salary schedule. Plaintiff never testified he performed work in excess of his duties as director, contrary to his assertion on appeal. Indeed, plaintiff ignores his testimony immediately following the cited passages in which he states he did not perform any duties outside those reserved for the director of student services. Regardless, plaintiff argues this testimony showed he was in a class of one and that class included compensation above the director's salary schedule.

"A class of employees may be comprised of one person if no other person employed by the employer performs similar duties, is employed in the same type of program, or shares other similarities related to the nature of the work being performed and that same class is in common use among other employers." (§ 22112.5, subd. (b).) The class at issue here is that of director. While plaintiff testified he was the only director of student services, the record is absent of any evidence about whether there were other directors employed by the District, the duties of a director, or whether other school districts employed directors. In sum, plaintiff's testimony fell short of establishing he was in a class of employment comprised only of himself.

And while the District did give plaintiff retroactive compensation as director of student services the year before the settlement agreement at issue, the compensation plaintiff received was not above the salary schedule for the director position. The agreement between plaintiff and the District the year before plaintiff's retirement provided, "[t]he DISTRICT will adjust [plaintiff's] compensation retro to July 1, 2004 for the Director salary and additionally compensate [him] at his previous salary for 13 lost vacation days." Thus, that plaintiff previously received retroactive pay as he did upon retirement does not establish the $10,000 payment was part of the salary for that position.

We further agree with the court and the Board that Manzo's declaration is not helpful to plaintiff's case. The declaration was written in 2010 during plaintiff's proceedings before the Labor Commissioner -- four years after plaintiff's retirement. At that time, Manzo declared the $10,000 payment was "to cover any and all amounts [plaintiff] was owed for wages." The declaration is vague as to Manzo's understanding of the settlement agreement as a whole and only references the $10,000 payment without acknowledging plaintiff also received differential pay to compensate him as director. The failure to acknowledge the additional term of the agreement leaves unanswered the question of whether the District meant to compensate plaintiff above the salary schedule for his position. Further, Manzo's declaration contradicts a memo he sent to another member of the District at the time he entered into the settlement agreement with plaintiff. Given the evidentiary shortcomings of Manzo's declaration, the trial court did not err by deferring to the terms of plaintiff's settlement agreement.

The terms of plaintiff's settlement agreement provide he would be given $10,000 in exchange for his resignation and waiver of all claims he may have for age discrimination. "In addition to the sum of Ten Thousand Dollars," the District agreed to retroactively classify plaintiff as the director of student services and to pay him a "salary" differential between the position he held and that of director. As the trial court noted, the settlement agreement treated the $10,000 payment different than plaintiff's retroactive classification and salary. The $10,000 payment was in exchange for a waiver of claims, much like a compromise settlement, and for plaintiff's retirement, much like severance pay -- two forms of compensation that are not creditable. (See § 22119.2, subd. (c)(1), (8).) Accordingly, substantial evidence supports the trial court's finding the $10,000 payment was not creditable compensation.

II

The Statute Of Limitations Does Not Bar CalSTRS From Recalculating Plaintiff's

Retirement Benefits, Nor Do The Doctrines Of Laches And Equitable Estoppel Apply

Section 22008 sets forth the statute of limitations "[f]or the purposes of payments into or out of the retirement fund for adjustments of errors or omissions with respect to the Defined Benefit Program or the Defined Benefit Supplement Program" at three years. (Id. at subds. (a)-(c).) "If an incorrect payment is made due to lack of information or inaccurate information regarding the eligibility of a member . . . , the period of limitation shall commence with the discovery of the incorrect payment." (Id., subd. (c).)

The trial court determined CalSTRS did not know of the incorrect payment to plaintiff until 2011 when it completed its audit of the District. Thus, CalSTRS's efforts to recalculate plaintiff's retirement allowance that same year did not violate the three-year statute of limitations period provided in section 22008. Since the trial court's ruling, however, we held section 22008's three-year statute of limitations period is triggered by inquiry notice of an incorrect payment. (Yuba City Unified School Dist. v. State Teachers' Retirement System, supra, 18 Cal.App.5th at p. 656.) As plaintiff does on appeal, he argued before the trial court that CalSTRS knew there were problems with the calculation of his compensation as early as August 2007 because it communicated with the District and his attorney about the difficulties. The trial court rejected plaintiff's argument, and we conclude substantial evidence supports that finding.

The only communications showing there was a problem calculating plaintiff's retirements benefits were between plaintiff's legal counsel and the District. All communications between the District and CalSTRS involved the reporting of plaintiff's final compensation, none of which revealed the District had problems calculating it. Although the District reported two different final amounts for the 2005/2006 school year, it did not provide the reason to CalSTRS. The e-mails between the District and CalSTRS dealt exclusively with the District's inputting of information and not with how that information was calculated. Further, as the trial court noted, all communications between plaintiff and CalSTRS assumed plaintiff had a final salary of $117,170 and the last communication between the District and CalSTRS also reported a final salary of $117,170 -- consistent with the salary schedule and omitting the $10,000 payment.

Thus, the evidence showed CalSTRS was not aware of the potential for miscalculations of plaintiff's retirement allowance until it conducted the audit. Without knowledge the District had difficulty calculating plaintiff's final compensation, CalSTRS did not have notice of circumstances from which to inquire into the District's reported numbers. (Cf. Baxter v. State Teachers' Retirement System (2018) 18 Cal.App.5th 340, 363-364, 368 [CalSTRS had inquiry notice "that certain retired teachers in the [school district] were having their benefits incorrectly calculated" based on a memo the school district sent asking for guidance on how to report a class of teachers receiving increased pay for working six periods a year, instead of the usual five, because the district indicated it believed the extra compensation was creditable but pointed to inconsistencies in its reporting and the allowance given to a teacher it believed entitled to a larger retirement allowance because she worked six periods].) Thus, substantial evidence supports the trial court's finding the statute of limitations did not bar CalSTRS from recalculating plaintiff's retirement benefits.

For these same reasons, substantial evidence supports the trial court's rejection of plaintiff's affirmative defenses of laches (Krolikowski v. San Diego City Employees' Ret. Sys. (2018) 24 Cal.App.5th 537, 568 [the party asserting laches must show the opposing party acted with unreasonable delay]) and equitable estoppel (id. at pp. 564-565 [the party asserting estoppel must show the party to be estopped acted while apprised of the true facts to the asserting party's detriment]).

DISPOSITION

The judgment is affirmed. The parties shall bear their own costs. (Cal. Rule of Court, rule 8.278(a)(5).)

/s/_________

Robie, J. We concur: /s/_________
Raye, P. J. /s/_________
Hoch, J.


Summaries of

Ramirez v. State Teachers' Ret. Sys.

COURT OF APPEAL OF THE STATE OF CALIFORNIA THIRD APPELLATE DISTRICT (Sacramento)
Oct 24, 2018
C083828 (Cal. Ct. App. Oct. 24, 2018)
Case details for

Ramirez v. State Teachers' Ret. Sys.

Case Details

Full title:RAFAEL RAMIREZ,, Plaintiff and Appellant, v. STATE TEACHERS' RETIREMENT…

Court:COURT OF APPEAL OF THE STATE OF CALIFORNIA THIRD APPELLATE DISTRICT (Sacramento)

Date published: Oct 24, 2018

Citations

C083828 (Cal. Ct. App. Oct. 24, 2018)