Court Opinion

ID: 3209772
Source: CourtListenerOpinion
Date Created: 2016-06-06 19:26:35.04662+00
Date Added: 2024-06-11T14:29:29.892209
License: Public Domain

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     IN THE COURT OF APPEALS FOR THE STATE OF WASHINGTON

SARAH JOHNSON, as personal
representative of THE ESTATE OF
PHILIP CUNNINGHAM,
                                                No. 74848-3-1
                    Appellant,
                                                DIVISION ONE
      v.

CITY OF TACOMA, a municipality,                 UNPUBLISHED OPINION

                    Respondent.                 FILED: June 6. 2016

      Spearman, J. — Sarah Johnson, as personal representative of the estate

of Philip Cunningham, appeals the trial court's order granting summary judgment

to the City of Tacoma. She argues that genuine issues of fact exist as to whether

the City misrepresented its retirement plan to Cunningham and whether the City

breached its retirement contract with Cunningham. Finding no error, we affirm.

                                     FACTS

      Cunningham worked for the City of Tacoma for nearly 30 years. He

contributed about $170,000 to the City's mandatory retirement plan, the Tacoma

Employees Retirement System (TERS). TERS is a defined benefit plan funded

by employer and employee contributions. After employment for a given number

of years, TERS guarantees the retiree a fixed benefit described as an "annuity"

or "pension." Clerk's Papers (CP) at 10, 52, 55, 62.
No. 74848-3-1/2

       Cunningham received a TERS account statement at the end of each year.

The statements showed the amount of his contributions to the retirement plan

and informed Cunningham that he could withdraw his contributions if he left

employment with the City. The statements also showed that Cunningham had not

designated a beneficiary for his TERS account. The December 2011 statement

informed Cunningham that, in the absence of a designated beneficiary, his estate

was the default beneficiary.

       In the fall of 2013, Cunningham requested information about retirement.

He submitted a "Retirement Estimate Request" form to learn the amount of

benefits he could receive under the City's different retirement plan options. The

City prepared a retirement estimate with information about five plan options.

       The first listed option is the "Unmodified Benefit." The estimate states:

"The Unmodified Benefit will pay you approximately $2,834.45 per month for your

life. No benefit will be paid to a beneficiary after your death." CP at 38. The

estimate then describes four other options that offered reduced monthly

payments to Cunningham but provided for a benefit to a beneficiary after

Cunningham's death. Under options A and B, the beneficiary receives the

balance, if any, of Cunningham's contributions to the TERS plan. Under options

C5 and C10, the beneficiary receives a defined benefit for a fixed period of time.

The cover letter that accompanied the estimate advised Cunningham to review

the options carefully as the selection is irrevocable. The letter also referred

Cunningham to the TERS website for further information and recommended that

he schedule a retirement counseling session with a benefits specialist.
No. 74848-3-1/3

      Cunningham scheduled a retirement counseling session with Marni

Moore, a City benefits specialist. Cunningham talked with employee Cecelia

Moullet in the reception area while he was waiting for Moore. According to the

City, Cunningham told Moullet that he had selected the unmodified option.

Moullet asked him if he was sure that was the option he wanted. She explained

that it takes about 10 to 12 years of retirement to exhaust a retiree's contributions

to TERS and that if Cunningham died within that timeframe the balance of his

contributions would stay in the TERS plan. Cunningham allegedly stated that he

was sure of his choice and he did not want to leave any of his retirement

contributions to anyone. Cunningham then attended his meeting with Moore.

       During a retirement counseling session, Moore's role is to explain the
options to the retiree. Moore is not a financial adviser and she does nottry to
choose a retirement plan for the retiree. Moore uses a "counseling checklist" to
address several topics, including the retirement estimate and the retirement plan
options. On the checklist from Cunningham's session, the unmodified plan option
is circled. Each topic is initialed by Moore and the form is signed and dated by

Cunningham.

       Moore filled out Cunningham's retirement application during the

counseling session. On the application, the unmodified plan option is selected.
Moore stated that Cunningham had already decided to select the unmodified
option when he arrived for the counseling session. About 20 percent of City
employees select that option and Moore did not find the choice surprising. Moore
stated that she explained the option and specifically told Cunningham that under
No. 74848-3-1/4

the unmodified option no one would receive the balance of his TERS

contributions if he died during retirement. Moore asked Cunningham if he was

sure he did not have someone he wanted to leave his retirement account to.

Cunningham allegedly replied that he did not want his family "'to get a dime.'" CP

at 66.

         The retirement application instructs applicants to designate at least one

primary beneficiary and states that "[y]our primary beneficiary(ies) will receive

any monies in your account at the time of your death." CP at 47. On

Cunningham's application, the word "estate" is handwritten in the beneficiary

designation space, jd Moore stated that she explained to Cunningham that a

pro-rata payment for the number of days Cunningham was alive in the month of

his death would be paid to his estate. The application is signed and dated by

Cunningham. The text in the signature block acknowledges that he "made this

decision after receiving the foregoing information including a printout of [his]

retirement options benefits estimate." CP at 48.

         After Cunningham submitted his application, he received a "retirement

confirmation." CP at 52-55. The confirmation reiterates that a retiree's selection

of a plan option is irrevocable and refers the retiree to the TERS website for

further information. The confirmation also explains that pension payments are

distributed on the last business day of each month.

         Cunningham retired on January 1, 2013. He died by suicide on February

10, 2013. The City informed Cunningham's estate that, under the retirement

option he had selected, the estate was entitled only to the retirement benefit
No. 74848-3-1/5

accrued during the month of Cunningham's death. The City calculated the pro

rata benefit for the number of days Cunningham was alive in February 2013 and

distributed that amount to Cunningham's bank account.

      Cunningham's will, which he executed before beginning employment with

the City of Tacoma, named his daughter Sarah Johnson as the executor and sole

beneficiary of his estate. Cunningham had told Johnson that she would inherit

everything when he died. However, Cunningham never discussed specific

investments with Johnson or mentioned his retirement plan.

      Johnson brought this action against the City as personal representative of
Cunningham's estate. She asserted that Cunningham's estate was entitled to the
residue of the contributions Cunningham had paid into the retirement system.

Johnson argued that Cunningham's will showed that he had a long-standing plan
to leave everything to his estate, the City had informed Cunningham that his
estate was his default beneficiary, and Johnson confirmed his intent to leave his

retirement contributions to his estate by designating his estate as beneficiary on

his retirement application. Johnson asserted claims for negligent or intentional
misrepresentation, breach of contract, and unjust enrichment. She also sought a
declaration that the retirement benefits Cunningham was entitled to during his life

were properly payable to his estate.

       The City moved for summary judgment. It attached, among other
documents, Moore's affidavit testifying to her meeting with Cunningham and
statements he made during that meeting. Johnson moved to strike the affidavit
as barred by the Deadman's Statute.
No. 74848-3-1/6

       The trial court granted Johnson's motion to strike and granted the City's

motion for summary judgment. Johnson appeals. The City cross-appeals the trial

court's application of the Deadman's Statute to bar Moore's affidavit.

                                   DISCUSSION

       The City's cross-appeal is only properly before this court in the event that

we remand. RAP 2.4. Accordingly, we first consider Johnson's argument that the

trial court erred in dismissing her claims on summary judgment. We consider the

evidence before the trial court without reference to the excluded affidavit.

       In reviewing a grant of summary judgment, any matters argued below but

not raised on appeal are deemed abandoned. GMAC v. Everett Chevrolet, Inc.,

179 Wn. App. 126, 134, 317 P.3d 1074 review denied. 181 Wn.2d 1008,335

P.3d 941 (2014) (citing Coqqle v. Snow, 56 Wn. App. 499, 512, 784 P.2d 554

(1990)). Because Johnson does not discuss her claim for declaratory judgment

on appeal, it is abandoned.

       We review the trial court's summary dismissal of Johnson's other claims

de novo. Podbielancik v. LPP Mortq.. Ltd., 191 Wn. App. 662, 666, 362 P.3d

1287 (2015) (citing Camicia v. Howard S. Wright Constr. Co.. 179 Wn.2d 684,

693, 317 P.3d 987 (2014). Summary judgment is appropriate if there is no

genuine issue as to any material fact and the moving party is entitled to judgment

as a matter of law. CR 56(c). To survive a motion for summary judgment, the

nonmoving party "must set forth specific facts that sufficiently rebut the moving

party's contentions and disclose that a genuine issue as to a material fact exists."

Seven Gables Corp. v. MGM/UA Entm't Co.. 106 Wn.2d 1, 13, 721 P.2d 1
No. 74848-3-1/7

(1986). We view all evidence in the light most favorable to the nonmoving party.

Columbia Cmtv. Bank v. Newman Park. LLC. 177 Wn.2d 566, 573, 304 P.3d 472

(2013).

       Johnson's claims concern Cunningham's contributions to the City's

retirement system. TERS is a defined benefit retirement plan. Unlike a defined

contribution plan, a defined benefit plan guarantees the participant a fixed

periodic payment for life. Washington Federation of State Employees v. State.

107 Wn. App. 241, 245 n.5, 26 P.3d 1003 (2001) (quoting Hughes Aircraft Co. v.

Jacobson. 525 U.S. 432, 439, 119 S.Ct. 755, 142 L. Ed. 2d 881 (1999)). A

defined benefit plan is a "general pool of assets," not a collection of individual

accounts. Hughes Aircraft Co., 525 U.S. at 439 (citing Commissioner v. Kevstone

Consol. Industries. Inc.. 525 U.S. 152, 154, 113 S.Ct. 2006, 124 L. Ed. 2d 71

(1993)). The employer bears the risk of investment and guarantees the

distribution of the fixed benefit even if the value of the plan's investments decline.

Id. at 440. Employees who participate in a defined-benefit plan do not share in

any decrease or surplus in the value of plan assets, ]d_,

       Johnson first argues that the trial court erred in dismissing her claims for

negligent or intentional misrepresentation. She argues that the City negligently or

intentionally conveyed to Cunningham the message that the residue of his

retirement contributions would pass to his estate upon his death.

       To establish negligent misrepresentation, a plaintiff must prove that the

defendant supplied false information and the plaintiff reasonably relied on that

false information. Ross v. Kirner. 162 Wn.2d 493, 499, 172 P.3d 701 (2007)
No. 74848-3-1/8

(citing Lawyers Title Ins. Corp. v. Baik. 147 Wn.2d 536, 545, 55 P.3d 619 (2002).

Intentional misrepresentation requires proof that the defendant knowingly

misrepresented a material fact and the plaintiff reasonably relied on the

misrepresentation. West Coast. Inc. v. Snohomish Cntv.. 112 Wn. App. 200, 206,

48 P.3d 997 (2002).

      Johnson asserts that the City misrepresented the benefit due to

Cunningham's estate through the 2011 TERS account statement, which informed

Cunningham that in the absence of a specifically designated beneficiary, his

estate was the default beneficiary of his retirement account. The statement,

which is one double-sided page, summarizes Cunningham's employment details,

outlines the eligibility requirements to receive a pension, and explains that an
employee may withdraw TERS contributions upon leaving employment with the
City. The statement does not discuss retirement options, guarantee a retirement
benefit, or discuss the status of an employee's contributions after retirement. The

statement refers the employee to the TERS plan website and the TERS office to

receive further information.

       The statement does not include all the information necessary for an

employee to fully understand the TERS plan orthe status of contributions to that
plan before and after the employee retires. But the statement contains no
misrepresentation. We conclude that the 2011 TERS account statement does not
raise a question of material fact as to whether the City misrepresented the benefit
that Cunningham's estate would receive.

                                          8
No. 74848-3-1/9

       Johnson also relies on Cunningham's application for retirement, on which

the word "estate" is handwritten in the space to designate a beneficiary. Johnson

asserts that the City misrepresented the effect of the beneficiary designation and

that Cunningham may have been under the impression that his estate would

receive the balance of his retirement contributions.

       The retirement application instructs the applicant to designate at least one

beneficiary and states that the beneficiary will receive "any monies" in the

retiree's account. CP at 47. The application does not explain how the account

balance is determined or guarantee that there will be "any monies" in the

account. ]d_, The application also contains check boxes to select one of several

retirement plan options. The form does not explain these options, but

incorporates by reference the benefits estimate. The estimate details the monthly

benefit payable to the retiree under each option and the after-death benefit, if

any, to the retiree's beneficiary. The estimate states that under the unmodified

option "no benefit will be paid to a beneficiary" after the retiree's death. Under

options A and B, on the other hand, a beneficiary receives the balance, ifany, of

a retiree's contributions to his TERS account.

       Like the 2011 TERS account statement, the application for retirement

does not contain a full explanation of the TERS plan, the retirement options, or

what happens to an employee's contributions to the TERS plan after the

employee's death. The requirement to designate a beneficiary, in conjunction

with the selection of the unmodified benefit, may cause confusion. But the

referenced benefits estimate clearly states that, in contrast to other plan options,
No. 74848-3-1/10

under the unmodified benefit a beneficiary does not receive the residue of an

employee's contributions to the TERS plan. The application and estimate do not

falsely represent that Cunningham's estate would receive the balance of his

retirement contributions.

      We conclude that the 2011 TERS account statement and the retirement

application do not raise a question of material fact as to whether the City

provided false information concerning the distribution of Cunningham's retirement

contributions. The trial court properly dismissed Johnson's claims for negligent

and intentional misrepresentation on summary judgment.

       Johnson next argues that the trial court erred in dismissing her breach of

contract claim. A mandatory retirement or pension plan is a contract interpreted

according to the ordinary rules of contract construction. Jacobv v. Grays Harbor

Chair & Mfg.. 77 Wn.2d 911,916, 468 P.2d 666 (1970)). A contract term is

ambiguous when it is susceptible to more than one reasonable interpretation.

American Nat. Fire Ins. Co. v. B & L Trucking and Const. Co.. Inc.. 134Wn.2d

413, 428, 951 P.2d 250 (1998) (citing Morgan v. Prudential Ins. Co.. 86 Wn.2d

432, 435, 545 P.2d 1193 (1976)). The meaning of an ambiguous term may be

ascertained from the contract as a whole as well as extrinsic evidence, jd.

       Johnson argues that the retirement application is ambiguous on its face

because the selection of the unmodified option is inconsistent with the

designation of "estate" as Cunningham's beneficiary. Appellant's Brief at 11;

Appellant's Reply Briefat 8-9. Johnson argues that this ambiguity must be

                                         10
No. 74848-3-1/11

construed against the City and the residue of Cunningham's contributions to his

TERS account should therefore be awarded to the estate.

       The beneficiary designation on the application states that the beneficiary

will receive "any monies in your account" at death. CP at 47. The application

does not explain what account it is referring to or how it determines if"any

monies" remain in that account, jd. The City argues that a retiree who begins

drawing benefits under the unmodified option no longer has an individual TERS

account but has only a guaranteed monthly pension for life. The only "monies" in

the retiree's "account" are thus those pension benefits accrued but not distributed

during the last month of the retiree's life. Id,

       Johnson appears to argue that, by its plain language, the application

guarantees that the beneficiary will receive the residue of the retiree's TERS

contributions. But this interpretation is inconsistent with the majority of retirement

options. Options A and B guarantee a beneficiary the residue, if any, of the

retiree's TERS contributions, but the other options contain no such provision.

And the unmodified option expressly provides for no benefit to a beneficiary after

the retiree's death.

       Reading the application together with the explanation of plan options in

the benefits estimate, we conclude that the phrase "any monies in your account"

is not reasonably susceptible to the interpretation that Johnson proposes. The

application and referenced estimate clearly differentiate between those

retirement options that distribute the residue of a retiree's TERS contributions

                                           11
No. 74848-3-1/12

and those that do not. The "monies" in the retiree's "account" are logically

determined by reference to the terms of the selected retirement option.

       We conclude that the language of the pension contract is not ambiguous.

The City was contractually obligated to make pension payments to Cunningham

during his life and to pay his estate "any monies" due under the terms of his

selected retirement option. Johnson produced no evidence to suggest that the

City breached this contract. The trial court properly dismissed Johnson's breach

of contract claim.

       Johnson next asserts a claim for unjust enrichment in the alternative that

we determine that Cunningham's retirement plan was not contractual. She

argues that "the ambiguities in the contractual documents" could lead us to

conclude that there was no final agreement between the City and Cunningham.

Appellant's Reply Brief at 10. But there is no ambiguity in the pension documents

that prevented contract formation. Because the pension is governed by contract,

we do not consider Johnson's claim in equity. Young v. Young. 164 Wn.2d 477,

484, 191 P.3d 1258 (2008) (citing Bailie Commc'ns. Ltd. v. Trend Bus. Svs.. Inc..

61 Wn. App. 151, 160, 810 P.2d 12 (1991)) (stating that unjust enrichment may

be asserted where there is no contractual relationship).

       Finally, Johnson asserts that the beneficiary designation in Cunningham's

retirement application is a contract provision that takes effect at death and is thus

testamentary in nature. Johnson argues that the application does not meet the

requirements for a will and cannot control over the will Cunningham properly

executed in 1983. Johnson asserts that Cunningham's retirement contributions

                                         12
No. 74848-3-1/13

should have been distributed with his other probate assets. This argument is

without merit.

       A pension plan is a nonprobate asset. RCW 11.02.005(10). A nonprobate

asset may be controlled through a will, but only if the asset is specifically referred

to in the owner's will. RCW 11.11.020. Johnson makes no argument that

Cunningham's will specifically referred to his TERS account or to his nonprobate

assets generally.

       In addition, under the terms of his selected retirement option, once

Cunningham retired, he only had a claim to a monthly defined benefit during his

lifetime, not to the TERS contributions he made during employment. After

retirement, Cunningham no longer had an ownership interest in his retirement

contributions and thus had no interest to devise through his will.

       We conclude that the trial court properly granted the City's motion for

summary judgment. We accordingly do not reach the City's cross-appeal

concerning the application of the Deadman's Statute to bar the affidavit of the

City's benefits specialist.

       Affirm.

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WE CONCUR:                                        —4*
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