Opinion
No. C6-01-1913.
Filed June 4, 2002.
Appeal from Duluth Teachers' Retirement Fund Association
David M. Johnson, (for relator)
Joseph V. Ferguson III, Joseph M. Fischer, (for respondent)
Considered and decided by Lansing, Presiding Judge, Randall, Judge, and Stoneburner, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2000).
UNPUBLISHED OPINION
The Duluth Teachers' Retirement Fund Association denied John Wohlwend's petition to add 19 years to his 12-year service credit. The association found that a contribution refund Wohlwend received in 1982, after 19 years of teaching, was not a loan dischargeable in bankruptcy and that promissory estoppel did not preserve Wohlwend's right to repay the refund after retirement. The decision denying the petition is reasonable, supported by substantial evidence, and consistent with the law. We affirm.
FACTS
As a result of declining enrollment, the Duluth school board, in May 1982, notified John Wohlwend that he would not be reemployed the following school year. Wohlwend, who had been a teacher in the Duluth schools since 1963, was given a termination date of August 1, 1982.
On July 5, 1982, Wohlwend sent a letter to the association requesting a refund of his retirement-account contributions. The association sent Wohlwend a check for $15,295, the amount that Wohlwend had contributed to his retirement account during his 19 years of service as a teacher. Two days after Wohlwend received his refund, and almost a month before Wohlwend's effective termination date, the Duluth school board notified Wohlwend of an available position for the 1982-83 school year, created by teacher turnover. The association did not receive notice of Wohlwend's rehire before distributing the refund to him, and Wohlwend did not return the refund or independently notify the association that he had been rehired.
At least twice during the 1990s, the association notified Wohlwend by letter that he had to repay the refund in order to reinstate his 19-year service credit. One of the letters stated that upon retirement, "the refund must be paid at least 30 days prior to [Wohlwend's] first annuity check." Wohlwend made no repayment.
Wohlwend retired from the Duluth public schools on July 31, 1999. The following December, Wohlwend filed for bankruptcy, listed the association as a creditor, and obtained a discharge from indebtedness in a Wisconsin bankruptcy court. Wohlwend then applied for retirement benefits from the association including a service credit for 19 years before his 1982 refund. The association notified him that repayment of the refund was not a debt dischargeable in bankruptcy and calculated Wohlwend's retirement benefits based only on the 12-year service credit that accrued after his 1982 refund.
On November 12, 2000, Wohlwend offered to repay the refund if the association would reinstate the additional 19-year service credit. The association declined to accept the repayment because Wohlwend had terminated his teaching service the previous year and was no longer a coordinated member eligible to make a repayment.
Seven months later, Wohlwend filed a petition with the association board of trustees for review of the denial of the 19-year service credit. The board affirmed the denial, and Wohlwend appeals by writ of certiorari.
DECISION
Judicial review of a decision by a teachers' retirement fund board is analogous to review of a decision by an administrative agency. Axelson v. Minneapolis Teachers' Ret. Fund Ass'n, 544 N.W.2d 297, 299 (Minn. 1996). We will reverse the decision only if it is "fraudulent, arbitrary, unreasonable, unsupported by substantial evidence, not within [the board's] jurisdiction, or based on an error of law." Id. (quoting Dokmo v. Indep. Sch. Dist. No. 11, 459 N.W.2d 671, 675 (Minn. 1990)).
I
Wohlwend's primary contention throughout this proceeding has been that the retirement fund distribution, made at his request in 1982, was not authorized by statute because his teaching position was reinstated before termination in 1982. Because it was unauthorized, Wohlwend maintains it was a loan rather than a distribution and that he could discharge the loan in bankruptcy and still receive service credit for those years. Alternatively, he contends that if it was not dischargeable in bankruptcy, it is a loan on which the statute of limitations has run. We are not persuaded by either argument.
Wohlwend's 1982 eligibility for a refund from the teachers' retirement fund is governed by Minn. Stat. § 354A.37, subd. 1 (1982). See Axelson, 544 N.W.2d at 300 (stating that law governing right to pension is law in force when claim arises). That subdivision states, "Any coordinated member who ceases to render teaching service for the school district in which the teachers retirement fund association is located shall be entitled to a refund in lieu of any other annuity or benefit from the teachers retirement fund association." Minn. Stat. § 354A.37, subd. 1 (1982) (emphasis added). "Teaching service" is "any service as a teacher performed by any person included within the definition of a teacher." Minn. Stat. § 354A.011, subd. 28 (1982). "Teacher" is defined as "any person who renders service in a public school district * * * as * * * a full time employee in a position for which a valid license from the state board of education is required." Minn. Stat. § 354A.011, subd. 27(a) (1982).
Wohlwend was reinstated to teaching service almost a month before his effective date of termination and, therefore, arguably never "ceased to render teaching service." But Wohlwend cannot claim that he is not obligated to repay the retirement fund distribution when the refund was based on information about his termination that he provided and failed to correct. See Minn. Stat. § 354A.37, subd. 1 (stating "application for the refund shall not be made prior to 30 days after the cessation of teaching services if the coordinated member has not resumed active teaching services for the district").
Even if Wohlwend were not precluded from benefiting from the self-created error, we find no authority for his claim that an improper refund would constitute a loan. Nothing in the 1982 version of Chapter 354A or the association's articles of incorporation or by-laws gives the association the authority to make loans to teachers. The remedy for an improper distribution would be no different from the remedy for a proper distribution: it must be repaid within the prescribed time to count as service credit. Minnesota law provides that if a member "applies for and accepts a refund pursuant to section 354A.37," then all service credit is terminated. Minn. Stat. § 354A.38, subd. 1 (1982). The loss of the service credit is the direct result of Wohlwend's applying for and accepting the refund.
The board properly denied Wohlwend's request to have his 19-year service credit reinstated because the refund was not a loan and the termination of the service credits occurred as a result of Wohlwend's application for and acceptance of the refund.
II
Wohlwend offered to repay the refund on November 12, 2000. At that time, Wohlwend had been retired for over a year. Repayment eligibility is restricted to coordinated members Minn. Stat. § 354A.38, subd. 2 (1982). ("A coordinated member * * * shall be entitled to repay the refund.").
The statute defines "coordinated member" as "any member of the teachers retirement fund association who is covered by the coordinated program of the association." Minn. Stat. § 354A.011, subd. 11 (1982). The statute further defines "member" for the purposes of annuities or benefits as "every teacher who joins and contributes to the respective teachers retirement fund association who has not retired or terminated teaching service." Minn. Stat. § 354A.011, subd. 15 (1982). The statute defines retirement as "the time after the date of cessation of active teaching service by a teacher who is thereafter entitled to an accrued retirement annuity." Minn. Stat. § 354A.011, subd. 21 (1982).
In short, the teacher retirement statute requires that, in order to repay the refund, Wohlwend must not be retired or have terminated his teaching service. Wohlwend requested that his retirement be effective July 31, 1999. It is undisputed that he had terminated his teaching service on or before that date. Wohlwend was then eligible for accrued annuity retirement under Minn. Stat. § 354A.31, subd. 1 (1998) because he had ceased to provide teaching services, was older than 55 years old, and had more than 3 years of service credit. Therefore, he met the statutory definition of retired and was no longer a coordinated member who was eligible to repay the refund.
The association's articles of incorporation state, "A person's membership in the Association shall terminate whenever he has been paid all benefits to which he is, or may become, entitled." This definition of membership appears to conflict with the statutory definition because it provides that Wohlwend would continue to be a member until he has been paid all benefits to which he is entitled. Because Wohlwend is relying on the statute to establish his eligibility to repay the refund, however, the statute's definition of "member" controls. The board did not err in applying the statutory definition of member and in holding that Wohlwend was not entitled to make repayment because he was no longer a member.
Wohlwend also argues that the association is estopped from denying his offer to repay the refund, and thereby restoring his service credit, because he relied on a letter the association sent him in July 1994, that stated that the refund must be repaid 30 days before he received his first annuity check. Wohlwend claims that had he known that he would be required to repay the refund before that time, he would have done so. He invokes promissory estoppel to prevent the association from denying his request to repay the refund.
Even if Wohlwend were able to show that he reasonably relied on the language in the letter to mean that he could extend his repayment right until thirty days before he requested an annuity check, his estoppel argument still fails. The refund repayment option is a "creature of statute," and the association only has the authority to take action that is authorized by statute. Minneapolis Bd. of Educ. v. Sand, 227 Minn. 202, 211, 34 N.W.2d 689, 695 (1948). The only way the association can honor a request for repayment is if the requestor meets the statutory requirements for repayment. Id at 211-12 ; see also Axelson, 544 N.W.2d at 299-300 (denying teacher's request to have two years during which he was in Peace Corps added to his service credit years because promissory estoppel will not lie "where an agency has no authority to act"); Spaulding v. Board of County Comm'rs, 306 Minn. 512, 515, 238 N.W.2d 602, 604 (1976) ("The county cannot be bound by estoppel to make unauthorized payments.").
Only "members" are permitted to repay the refunds, Minn. Stat. § 354A.38, subd. 2; consequently, Wohlwend's retirement prevents him from repaying the refund. In both Sand and Axelson, the association was determined to have no statutory authority to accept repayment from a non-member. Therefore, Wohlwend cannot rely on the doctrine of promissory estoppel to force the association to honor his untimely request to repay the refund.
Because we hold that the board did not err in denying Wohlwend's request to repay the refund and that promissory estoppel cannot be used to require the board to take action that is not statutorily authorized, we affirm. Because we affirm, we decline to reach the issue of the appropriate interest rate to be charged upon repayment.