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Atchley v. City of Fresno (1984) :: :: California Court of Appeal Decisions :: California Case Law :: California Law :: US Law :: Justia
Justia › US Law › Case Law › California Case Law › Cal. App. 3d › Volume 151 › Atchley v. City of Fresno (1984)
Atchley v. City of Fresno (1984)
The Council of the City of Fresno established two retirement systems in 1955. One of these systems is the fire and police retirement system (Fresno Mun. Code, § 2-1702) fn. 1 which is administered by the retirement board (§ 2-1703).
All members of the system may become eligible for service retirements or disability retirements. The general provisions pertaining to service and disability retirements are contained in sections 2-1727 through 2-1731, inclusive. A service retirement is generally awarded to any member who has been a member for at least 10 years and is at least 50 years of age. A [151 Cal. App. 3d 640] disability retirement is generally awarded to any member physically or mentally incapacitated for the performance of his duties. There is no minimum age for disability retirement and there is no minimum length of service if the disability was incurred in the line of duty. "Ordinary disability" refers to a disability which was incurred in a manner unrelated to employment. "Industrial disability" refers to a service-connected disability.
The controller and director of finance for respondent City of Fresno, Walter Berg, discussed implementation of the "earnings test" with the retirement board in 1960. Subsequent to that meeting, the current practice of auditing and withholding retirement benefits where excess outside income was present, was adopted. Richard Turner, a senior account auditor in charge of the retirement section in the department of finance for respondent City of Fresno, testified that no written policy existed for the implementation [151 Cal. App. 3d 641] of the "earnings test" other than the explanation that appears on the reporting form.
A hearing was granted in the Winslow case, and the Supreme Court's opinion is cited asWinslow v. City of Pasadena (1983) 34 Cal. 3d 66 [192 Cal. Rptr. 629, 665 P.2d 1]. In the now defunct opinion filed by the Second District Court of Appeal, it was held that the trial court erred in denying a former city police officer's petition for a writ of mandate by which he sought to set aside the city's action terminating his medical disability retirement pension and ordering him back to duty in a newly created "light duty" assignment. The decision rested on the case authority of Newman v. City of Oakland Retirement Bd. (1978) 80 Cal. App. 3d 450 [145 Cal. Rptr. 628]. The Supreme Court affirmed the trial court's decision.
Winslow was employed by the City of Pasadena Police Department as a police officer in 1958. In 1975, serving as a motorcycle officer, he developed an employment-connected disease. He was granted a service-connected disability retirement continuing "until further order of the Retirement Board." In 1979, a number of light duty positions were created in the department, including that of "desk officer." The retirement board had Winslow reexamined to determine his eligibility for this type of service, and after a hearing, recommended his reinstatement based on the finding that Winslow was not totally disabled, and that his physical condition "has ceased to disable him from service as a police officer with the assignment as desk officer. ..." Winslow then filed a petition for writ of mandate pursuant to Code of Civil Procedure section 1094.5. (Winslow v. City of Pasadena, supra, 34 Cal. 3d 66, 67-68.) The trial court found that the weight of the evidence supported the board's action and concluded that the board's action did not constitute a change in policy impairing Winslow's vested pension rights.
The Supreme Court held in Winslow that the assignment did not constitute a change in policy which unconstitutionally impaired the officer's vested [151 Cal. App. 3d 642] pension rights, where, when an officer retired, there was no guarantee or reasonable expectation that the department would not create new positions, where the retirement was subject to further order of the retirement board, and where the reinstatement involved no policy change and was consistent with the city charter, which did not require conditioning reinstatement an officer's capacity to serve either as a motorcycle officer or in every other police position; rather, the charter permitted reinstatement to any equivalent position which the officer's health permitted. The court distinguished the case of Newman v. City of Oakland Retirement Bd., supra, 80 Cal. App. 3d 450.
Newman, as explained by the Supreme Court in Winslow, involved a change in policy because it entailed a substantial alteration of the basic conditions under which an employee could be recalled. When Winslow retired, however, there was neither guarantee nor reasonable expectation that the department would not alter its internal structure periodically, by creating, eliminating, or restructuring necessary positions or rearranging existing assignments. Nor was there a requirement that an active officer be able to serve in every possible assignment. Indeed, the record disclosed that the city's policy "in the past" had been to provide light duty assignments to injured employees. (Winslow v. City of Pasadena, supra, 34 Cal. 3d 66, 69.)
Next, appellants rely on Chula Vista Police Officers' Assn. v. Cole (1980) 107 Cal. App. 3d 242 [165 Cal. Rptr. 598] for the proposition that unless [151 Cal. App. 3d 643] there is some provision for reporting the outside income, there is no duty to report it, and the City of Fresno, according to appellants, cannot impose a duty without a change in the contract.
Lastly, appellants citeOlson v. Cory (1980) 27 Cal. 3d 532, 538 [178 Cal. Rptr. 568, 636 P.2d 532] for the proposition that "If there is an unabridged right to receive vested benefits, there can be no subsequent impairment." In Olson the trial court declared unconstitutional legislation which limited an annual cost-of-living increase in judicial salaries to a maximum of 5 percent beginning on July 1, 1977, which were previously calculated strictly according to the California consumer price index. The amendment was effective January 1, 1977. The trial court ruled the statute unconstitutional on the grounds it constituted an impermissible impairment of vested contractual rights. The Supreme Court affirmed the judgment as to any judge who served any portion of his term or the unexpired term of a predecessor judge prior to January 1, 1977, and as to judicial pensioners whose benefits were based on the salary for the office of such a judge. The Supreme Court reversed the judgment in all other respects. The high court held that the statute as it purportedly limited cost-of-living salary increases provided by the statute before its amendment was unconstitutional as to judges during any term or any unexpired term of a predecessor judge if such portion of said term was served prior to January 1, 1977, and judicial pensioners whose benefits were based on some proportionate amount of the salary for the office of such a judge. However, the Supreme Court also held that a judge or justice who completes a protected term and voluntarily embarks upon a new term can no longer claim to serve in a protected term, and his or her compensation would thereafter be governed by the provisions of the new legislation. (Id, at pp. 546-548.) Thus, the Olson decision is consistent with the general rule that an employee has a vested contractual right to a [151 Cal. App. 3d 644] pension consistent with the pension system existing at the time employment is accepted. Therefore, Olson does not support appellant's contention as will hereinafter be explained.
[2] A public employee who serves under a pension system similar to those contained in the Fresno Municipal Code acquires a vested contractual right to a substantial pension. This right arises before the happening of the contingency which makes the pension payable, and it cannot be constitutionally abolished by subsequent changes in the law. (Kern v. City of Long Beach (1947) 29 Cal. 2d 848, 852-856 [179 P.2d 799].) The courts have recognized that a public pension system is subject to the implied qualification that the governing body may make reasonable modifications and changes before the pension becomes payable and that until that time the employee does not have a right to any fixed or definite benefits but only to a substantial or reasonable pension. (Wallace v. City of Fresno (1954) 42 Cal. 2d 180, 183 [265 P.2d 884];Betts v. Board of Administration (1978) 21 Cal. 3d 859, 863 [148 Cal. Rptr. 158, 582 P.2d 614].) When a city originally sets up its pension system it has rather wide latitude in prescribing the terms and conditions for retirement, and it may adopt restrictions that would be considered unreasonable impairments of the contract if subsequently imposed upon employees who have served under the pension plan. Wallace v. City of Fresno, supra, 42 Cal. 2d 180, 183.)
The "earnings test" provided in section 2-1731, subdivision (c) appears in California cases which involve questions regarding pension benefits. Although the "earnings test" itself was not challenged, the decisions impliedly approved the test. (Brophy v. Employees Retirement System (1945) 71 Cal. App. 2d 455 [162 P.2d 939]; Burger v. Employees' Retirement System (1951) 101 Cal. App. 2d 700 [226 P.2d 38].)
Respondent relies on the case of Berry v. City of Portsmouth, Virginia (4th Cir. 1977) 562 F.2d 307 in which an "earnings test," authorized by a city ordinance, somewhat similar to that in the instant case, was challenged by plaintiffs who alleged they had been denied their constitutional rights, including, but not limited to, equal protection under the laws, substantive and procedural due process, and freedom from involuntary servitude. In Berry, the City of Portsmouth enacted a city ordinance authorizing the reduction of disability retirement payments if a disabled city employee resumed gainful employment or refused employment suitable to his capacity. The ordinance was enacted in 1961. Although the board of trustees of the fire and police retirement system (the Board), knew that some disabled employees were gainfully employed, from 1961 to 1975 it paid all disabled employees an unreduced pension. But in 1975, the ordinance was amended by the city council to require employees on disability retirement to submit [151 Cal. App. 3d 645] to the Board's secretary "at least once each year during the first five years following retirement ... such information as the Board may deem appropriate concerning any gainful employment, and the compensation therefor. ..." The Fourth Circuit held: "When the City enacted its plan for certain individuals to receive disability benefits under certain conditions, it reserved the right in the Board to reduce payments if the disabled employee resumed gainful employment or refused employment suitable to his capacity. Neither the Board nor the City ever relinquished the right to reduce pensions. It was only through the Board's grace that gainfully employed disabled workers continued to receive unreduced payments until 1975. The employees have no property right to continued unreduced payments, paid in the first place in the discretion of the Board, necessary to invoke procedural due process protection ...." (Id, at p. 311.)
In the instant case, section 2-1731, subdivision (c) was part of the fire and police retirement system which was established by the council of the City of Fresno on July 1, 1955. (§§ 2-703.)
The question remains would the enforcement of the board's right to reduce payments, in the manner adopted, amount to a subsequent and intolerable impairment of the contract right. [3] "'An employee's vested contractual pension rights may be modified prior to retirement for the purpose of keeping a pension system flexible to permit adjustments in accord with changing conditions and at the same time maintain the integrity of the system. [Citations.] Such modifications must be reasonable, and it is for the courts to determine upon the facts of each case what constitutes a permissible change. To be sustained as reasonable, alterations of employees' pension rights must bear some material relation to the theory of a pension system and its successful operation, and changes in a pension plan which result in disadvantage to employees should be accompanied by comparable new advantages. [151 Cal. App. 3d 646] [Citations.] ...'" (Betts v. Board of Administration, supra, 21 Cal. 3d 859, 864; italics in original.)
Section 2-1706 provides: "The right of a person to a pension, annuity, a retirement allowance, or the return of contributions, the pension, annuity, or retirement allowance itself, any optional benefit, or any other right or benefit accrued or accruing to any person under the provisions hereof and the moneys in the fund created herein, shall not be subject to execution, garnishment, attachment, or any other process whatsoever, and shall be unassignable; provided, however, that the right of any member to the return of contributions upon his permanent separation from the service may be assigned by such member to any credit union in which eligibility for membership is limited to persons employed or formerly employed by the city, as collateral for any loan made by such credit union directly to such member; and provided further, that no such assignment by a member to a credit union shall be deemed a waiver by such member of his right, under any provision of this article, to allow his accumulated contributions to remain in the Retirement Fund. Assignments permitted hereunder shall be deemed acknowledged by the city upon the filing thereof with the Controller, but the city, its officers and employees shall not be liable to any credit union for any loss or damage on account of failure for any reason to give effect to any such assignment." [151 Cal. App. 3d 647]
A writ of execution is the process authorizing the seizure and appropriation of the property of a defendant for the satisfaction of a money judgment against him. (5 Witkin, Summary of Cal. Law (8th ed. 1974) p. 3388.) Appellants offer no authority, nor analysis, for the proposition that the conduct of respondent City of Fresno qualifies as an execution prohibited by the terms of section 2-1706. [5] Where a point is merely asserted by appellant's counsel without any argument of or authority for the proposition, it is deemed to be without foundation and requires no discussion by the reviewing court. (People v. Dougherty (1982) 138 Cal. App. 3d 278, 282 [188 Cal. Rptr. 123].)
[6] The construction of a municipal ordinance or resolution is governed by the rules governing construction of statutes. (In re Yick Wo (1885) 68 Cal. 294 [9 P. 139], revd. on other grounds,118 U.S. 356 [30 L. Ed. 220, [151 Cal. App. 3d 648] 6 S. Ct. 1064].) A basic rule of statutory interpretation requires that courts avoid a construction which renders a part of the statute or ordinance "surplusage." (People v. Gilbert (1969) 1 Cal. 3d 475, 480 [82 Cal. Rptr. 724, 462 P.2d 580].)
Under well established principles the contemporaneous administrative construction of a statute or ordinance by the administrative agency charged with its enforcement is entitled to great weight and will be followed unless clearly erroneous. (Rivera v. City of Fresno (1971) 6 Cal. 3d 132, 140 [98 Cal. Rptr. 281, 490 P.2d 793].)
In the instant case, appellants are obligated to comply with the rules and regulations of the board. (§ 2-1712.) Such rules and regulations include the filing of the quarterly reports of income derived from gainful employment other than from service to the City of Fresno. Thus, the rights created in section 2-1735 are contingent upon the satisfaction of the earnings test requirements as set forth in section 2-1731, subdivision (c).
[7a] Appellants contend the trial court erred in failing to determine the unlawfulness of withholding based on the discriminatory nature of not allowing [151 Cal. App. 3d 649] for promotional changes ("freezing") and not allowing for the right to seek outside gainful employment. Appellants complain that the respondent discriminates against the retiree on the basis that employees are allowed two kinds of opportunities to enhance their income, without any reduction whatsoever, i.e., "moonlighting," or working with pay off-duty, and promotions. It is claimed that this kind of conduct is simply discriminatory and that now the same pursuit of income enhancement deprives the retiree, through no fault of his own, of that enhancement.
Article IV, section 16 of the California Constitution guarantees to every person that "[a]ll laws of a general nature shall have a uniform operation" and article I, section 7 provides that "[a] citizen or class of citizens, may not be granted privileges or immunities not granted on the same terms to all citizens" (formerly § 11 and 21 of art. I, respectively); the Fourteenth Amendment of the United States Constitution provides that no state may "deny to any person within its jurisdiction the equal protection of the laws." [8] This principle of "equal protection" preserved by both state and federal Constitutions, of course, "does not preclude the state from drawing any distinctions between different groups of individuals" (In re King (1970) 3 Cal. 3d 226, 232 [90 Cal. Rptr. 15, 474 P.2d 983], cert. den.403 U.S. 931 [29 L. Ed. 2d 709, 91 S.Ct. 2249]) but it does require that, at a minimum, "persons similarly situated with respect to the legitimate purpose of the law receive like treatment." (Brown v. Merlo (1973) 8 Cal. 3d 855, 861 [106 Cal. Rptr. 388, 506 P.2d 212, 66 A.L.R.3d 505].) The constitutional principle of equal protection does not preclude the state from drawing distinctions between different groups of individuals. However, a classification "'must be reasonable, not arbitrary, and must rest upon some ground of difference having a fair and substantial relation to the object of the legislation, so that all persons similarly circumstanced shall be treated alike.'" (Reed v. Reed (1971) 404 U.S. 71, 75-76 [30 L. Ed. 2d 225, 229, 92 S. Ct. 251].)
[7b] It appears abundantly clear that those retirees receiving an industrial disability allowance and active employees are not similarly situated. A disability retirement benefit is received if the disability is industrial, upon medical determination the individual is physically or mentally incapacitated for the performance of duty and ought to be retired. (§ 2-1729, subd. (a).) The retiree with an industrial disability receives a disability annuity which equals one-half of his average compensation currently received by an active employee of the same rank. (§ 2-1730, subd. (a).) This benefit is presumably [151 Cal. App. 3d 650] for the purpose of financially compensating the individual for loss of income due to his service-connected disability. The sole question is whether he is incapacitated for performance of duty as a fireman or policeman, as the case may be. This, in and of itself, is reasonable justification for the class to be singled out. Disabled persons are not similarly situated with those actively employed. There is no constitutional obligation to treat the two classes equally.
Respondent counters that this section of state law does not apply, and no violation exists, where the person charged with failure to pay wages has valid offsets or counterclaims to such wages, citing People v. Porter (1930) 107 Cal. App. Supp. 782 [288 P. 22], an appellate department decision. Respondent asserts that section 2-1731, subdivision (c) provides a valid offset to certain benefits otherwise payable to pensioners of the system. However, this argument does not appear particularly helpful since a valid offset of a portion of wages would not justify withholding the entire sum.
On the other hand, it has been recognized that a dispute in good faith as to whether any wages were due would be a defense to an action for penalties pursuant to Labor Code section 216. (In re Trombley (1948) 31 Cal. 2d 801, 808 [193 P.2d 734].) In the instant case, the facts do not indicate a wilful failure to pay wages due and payable, but merely a withholding of benefits until it can be determined the amount of benefits due and payable as provided by the retirement system. The established procedure for determining [151 Cal. App. 3d 651] the amount due and payable is the employee's submission for consideration of the quarterly report form in question.
Therefore, it does not appear that the conduct of respondent amounted to a violation of Labor Code section 216. (Code Civ. Proc., § 909.) fn. 3 Furthermore, were the board to fail to enforce section 2-1731, subdivision (c), said failure would result in the distribution of retirement benefits in an amount in excess of the amounts to which the appellants are statutorily entitled. Excess payments would constitute an impermissible gift of public funds in violation of section 6 of article XVI (formerly § 6 of art. XIII) of the California Constitution. (See Lamb v. Board of Peace Officers, etc. (1938) 29 Cal. App. 2d 348, 350 [84 P.2d 183].)
Appellants continue to argue that the conduct of the respondent in this matter is "inexcusably wrong." Appellants' position remains that their expectations, reinforced by the law, are that there is "no reduction, no audit, no reports, no withholdings, and no forfeiture to be suffered." Respondent then cites Chula Vista Police Officers' Assn. v. Cole, supra, 107 Cal. App. 3d 242 andOlson v. Cory, supra, 27 Cal. 3d 532, which were previously discussed.
We hold the "earnings test" provided in section 2-1731, subdivision (c) is a valid term and condition for receiving industrial disability benefits in [151 Cal. App. 3d 652] that it was originally established when the city created its pension system in 1955. The requirement of reporting outside income as a condition precedent to receiving said benefits appears to be a reasonable manner of enforcing the provisions of section 2-1731, subdivision (c). Therefore, the procedures and practices of the retirement board discussed herein are valid and lawful.
FN 1. All code references are to the Fresno Municipal Code unless otherwise indicated.
FN 2. Section 2-1731, subdivision (c) reads as follows: "Should any person retired for disability or service engage in a gainful occupation, prior to attaining age fifty, the Board shall reduce the amount of his monthly pension as defined herein to an amount which, when added to the compensation earned monthly by him in such occupation, shall not exceed the amount of the compensation attached to the rank which he held at the time of his retirement. Should the earning capacity of such beneficiary be further altered, the Board may further alter his said pension to an amount which shall not exceed the full amount to which he would be entitled under this article in the absence of engagement in such occupation, but which, subject to such limitation, shall equal, when added to the compensation earned by him, the amount of the compensation attached to said rank. When said beneficiary reaches age fifty, his retirement allowance shall be made equal to the full amount to which he would be entitled under this article in the absence of engagement in such occupation, and shall not again be modified because of earnings other than under employment by the city."
FN 3. Section 909 of the Code of Civil Procedure reads as follows: "In all cases where trial by jury is not a matter of right or a trial by jury has been waived, the reviewing court may make factual determinations contrary to or in addition to those made by the trial court. The factual determinations may be based on the evidence adduced before the trial court either with or without the taking of evidence by the reviewing court. The reviewing court may for the purpose of making the factual determinations or for any other purpose in the interests of justice, take additional evidence of or concerning facts occurring at any time prior to the decision of the appeal, and may give or direct the entry of any judgment or order and may make any further or other order as the case may require. This section shall be liberally construed to the end among others that, where feasible, causes may be finally disposed of by a single appeal and without further proceedings in the trial court except where in the interests of justice a new trial is required on some or all of the issues."