Court Opinion

ID: 2765501
Source: CourtListenerOpinion
Date Created: 2014-12-30 21:12:45.067081+00
Date Added: 2024-06-11T12:45:50.634926
License: Public Domain

FILED
                                                                                           COURT OF APPEALS
                                                                                              DIVISION II

                                                                                          2G# 4 DEC 30      AM 9 : Lei

                                                                                          STATE OF WASHINGTON
                                                                                          BY
       IN THE COURT OF APPEALS OF THE STATE OF WAS ' "                                                     UTON

                                                          DIVISION II

    JEFFREY PROBST, and a class of similarly                                          No. 45128 -0 -II
    situated individuals,

                                                Plaintiffs,

    MICKEY FOWLER and LEISA FOWLER,
    and a class of TRS 3 Plan members,

                                                Appellants,

             v.

    DEPARTMENT OF RETIREMENT                                                    UNPUBLISHED OPINION
    SYSTEMS,

                                                Respondent.

          LEE, J. —        Mickey Fowler and Leisa Fowler (the Fowlers) 1 appeal the superior court' s order

remanding the action to the Department of Retirement Services ( DRS) based on our mandate
                                                                           2
issued in Probst           v.   Department of Retirement Services.             The Fowlers   argue: (   1) the trial court

failed to comply with our mandate when it refused to calculate the interest the Fowlers were

entitled to based on the common law daily interest rule and instead remanded the action to the

DRS, ( 2)     the DRS cannot retroactively apply a newly adopted rule, and ( 3) the DRS' s retroactive

1
    Appellants     are referred     to   as "   the Fowlers ";   some briefing refer to them as " the Teachers."
2
    Probst   v.   Dep' t   ofRet.   Sys., 167 Wash. App. 180, 271 P.3d 966 ( 2012).
No 45128 -0 -II

application of a new rule that does not use the common law daily interest rule will result in an

unconstitutional      taking. Additionally, the Fowlers seek costs and a common fund attorney fee

award at    the conclusion        of   the litigation.    Because the superior court properly interpreted our

mandate and properly remanded the action to the DRS pursuant to the Administrative Procedure

Act ( APA),      we affirm the superior court' s order remanding the case to the DRS for further

rulemaking consistent with our mandate in Probst.

                                                           FACTS

          This is the parties' second appeal to this court.3 This case arises from a dispute over how

the DRS calculates interest on the Public Employees Retirement Systems (PERS) and the Teachers

Retirement Systems ( TRS) accounts and on funds transferred between PERS /TRS Plan 2 and

PERS /TRS Plan 3. The DRS               stated, "[   It] has set the rate of interest to be credited to PERS Plan 2

member accounts at        5. 5%     per year, compounded        quarterly." Administrative Record (AR) at 261.

The DRS credits interest on deposits to members' accounts on the fourth Saturday ofthe last month

in each quarter.

A.        INITIAL ACTION AND FIRST APPEAL

          Jeffiey Probst contacted the DRS after finding that his contributions for the last quarter

before transferring to Plan 3 had not earned interest. The DRS told him that it "uses the quarter' s

ending balance to calculate interest, and if an account has a zero balance at the end of the quarter,
it   earns no   interest for that   quarter."   Probst, 167 Wash. App. at 183.

3 The parties do not dispute the substantive facts underlying this appeal; the substantive facts
presented for context are taken from our opinion in the first appeal, the Probst opinion. Probst,
167 Wash. App. 180.

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        Probst unsuccessfully appealed the calculation methods before the DRS. Probst, 167 Wn.

App. at 184. In his administrative appeal, Probst requested that the DRS pay interest on deposited
funds from the date of deposit into Plan 2 through the date that the DRS withdrew and transferred

the funds to the Plan 3 account. Probst then filed a class action suit in superior court challenging

the   DRS'   s   calculation    practice     and    sought     judicial        review   of   the    DRS'        s   decision.   The

administrative appeal was consolidated               into the       superior court action.          The superior court then

approved a class settlement agreement, which excluded some class members based on the date that

they transferred from Plan 2 to Plan 3. The settlement agreement provided that excluded proposed

additional class members' claims may still be brought against the DRS.

        The Fowlers, who were part of the proposed additional class, filed an amended complaint.

The superior court dismissed the claims; the Fowlers appealed to this court.

        We reviewed the DRS order pursuant to the APA, and ultimately reversed and remanded

the case. Probst, 167 Wash. App. at 185, 194. We found that " although the DRS had authority to
decide how to      calculate   interest,"   its method " was arbitrary and capricious because the agency did

not render a     decision   after   due   consideration."       Probst, 167 Wn.          App.      at    183.       Additionally, we

held that the " statutes do not require the DRS to pay daily interest" and that the legislature had

abrogated    the   common      law   daily   interest rule.      Probst, 167 Wn.         App.       at    191.       We declined to

address the Fowlers' unconstitutional takings argument because we were able to decide the case

based   on   the APA. Probst,        167 Wn.       App.   at   183   n.   1.   We remanded the case and later issued a

mandate for further proceedings in accordance with our opinion.

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B. REMAND AND CURRENT APPEAL

         On remand to the superior court, the Fowlers argued that our opinion required that

judgment be entered in their favor and required the DRS to pay daily interest. The superior court

disagreed and remanded the action to the DRS under the APA for proceedings consistent with our

opinion in Probst. The superior court signed the order remanding the action to the DRS on June

20, 2013.

         On July 22, 2013, the Fowlers filed a motion to recall the mandate in Probst and to require

compliance under RAP 12. 9. In the Fowlers' motion to recall, they argued that the superior court

failed to comply with our mandate issued in Probst by remanding the action to the DRS for

rulemaking under the APA instead of determining the interest itself. The Fowlers also argued that

our opinion held the DRS' s failure to pay daily interest was arbitrary and capricious. The Fowlers

argued, alternatively, that if the superior court was correct, then their constitutional claims are

unresolved and     they have   the   right   to   again appeal our   decision in Probst. In August 2013, we

denied the Fowlers' motion.

         Also on July 22, 2013, the Fowlers appealed the superior court' s order remanding the

action   to the DRS.   The Fowlers make the same arguments in their appeal as they made in their

motion to recall the mandate.

                                                     ANALYSIS

         The Fowlers argue that the superior court did not comply with our mandate when it

remanded the action to the DRS instead of ordering the DRS to pay the Fowlers interest based on

the common law daily interest rule. Next, the Fowlers argue that if the DRS is allowed to make a

                                                           4
No. 45128 -0 -II

new rule determining the interest calculation method, it will improperly apply it retroactively. The

Fowlers further argue that an unconstitutional taking will likely result if the DRS is permitted to

calculate interest by. not using the common law daily interest method.

         Whether the superior court properly implemented our mandate in Probst is the only issue

properly before us. The superior court did not abuse its discretion by remanding the action to the

DRS under the APA based on our opinion. As discussed below, the other issues are not properly

before   us.    Accordingly, we affirm the superior court' s order remanding the case to the DRS for

further rulemaking consistent with our opinion in Probst.

A.       MOTION TO RECALL MANDATE AND EFFECT ON APPEAL

         As an initial matter, the DRS argues that the Fowlers are precluded from appealing the

superior court' s order because they previously filed a motion to recall the mandate making the

same arguments         being made     in this   appeal, and we   have already   ruled on   the   matter.   The Fowlers

argue that their motion to recall was an opportunity for this court to exercise discretionary review,

while this appeal automatically gives us jurisdiction and is a separate review of the lower court' s

post -mandate decision.

         An " appellate court may recall a mandate issued by it to determine if the trial court has

complied       with   an earlier   decision   of the appellate court given   in the   same case."    RAP 12. 9. Rule

12. 9( a) gives an appellant two choices.

          a)    To Require Compliance With Decision.                  The appellate court may recall a
         mandate issued by it to determine if the trial court has complied with an earlier
         decision of the appellate court given in the same case. The question of compliance
         by the trial court may be raised by motion to recall the mandate, or by initiating a
         separate review of the lower court decision entered after issuance of the mandate.

                                                            5
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Rule 12. 9 clearly    contains   the disjunctive          conjunction " or."   The disjunctive " or" signals a choice

of methods for litigants. Here, the Fowlers are using both methods to present the same issues. On

July 22, 2013, the Fowlers filed both a motion to recall the mandate and a notice of appeal, raising

the same arguments in both.

          We " considered" the motion to recall, which raised the same arguments as in the appeal,

and    denied the   motion.   Specifically,        we ruled: "       Upon consideration by the court, the motion is

denied."    Order   Denying     Mot. to Recall Mandate, No. 40861 -9 -II (Aug. 1, 2013).              Thus, we have

already decided the issues in this appeal when we denied the motion to recall after consideration.

The Fowlers are not entitled to a second review of the same issues with a different panel. Reeploeg

v.   Jensen, 81 Wash. 2d 541, 546, 503 P.2d 99 ( 1972) ( noting that to " require courts to consider and

reconsider cases at the will of litigants would deprive the courts of that stability which is necessary

in the administration ofjustice ")..

          We do not approve of a party manipulating procedural rules in order to relitigate issues that

have been previously resolved by this court. However, because of the particular circumstances of

this case, we exercise our discretion to address the merits of the Fowlers' arguments. RAP 1. 2( a),

 c).

B.        THE PROBST DECISION

          We apply the law       of   the   case   doctrine "` to avoid indefinite relitigation of the same issue,

to obtain consistent results in the same litigation, to afford one opportunity for argument and

decision of the matter at issue, and to assure the obedience of lower courts to the decisions of

appellate courts. "'    State   v.   Harrison, 148 Wash. 2d 550, 562, 61 P.3d 1104 ( 2003) (            quoting 5 Am.

JUR. 2d Appellate Review § 605 ( 2d                ed.   1995)). "   Once an appellate court issues its mandate, the

                                                                 6
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court' s    decision becomes `           effective      and   binding   on   the   parties'    and ` governs   all   subsequent

proceedings        in the    action    in any   court. "'     State v. Strauss, 93 Wash. App. 691, 697, 969 P.2d 529

 1999); RAP 12. 2.

           When the appellate court issues a directive that leaves no discretion to the lower court, the

lower     court must     comply.        Harp    v.   Am. Sur. Co. of      Y, 50 Wash. 2d 365, 368, 311 P.2d 988 ( 1957).

     A]   remand `   for further        proceedings" `      signals this court's expectation that the trial court will

exercise     its discretion to decide any issue necessary to                  resolve    the   case."   Bank ofAm., N.A. v.

Owens, 177 Wn.             App. 181, 189,            311 P.3d 594 ( 2013),   review denied, 179 Wash. 2d 1027 ( 2014)

 citing In   re   Marriage of Rockwell, 157 Wn.                 App.    449, 453, 238 P.3d 1184 ( 2010)); McCausland

v.   McCausland, 129 Wn.               App.    390, 400, 118 P.3d 944 ( 2005), rev' d, 159 Wash. 2d 607, 152 P.3d
1013 ( 2007)).        When a mandate merely remands for further proceedings, compliance with that

mandate      is   reviewed       for   an abuse of      discretion. State v. Kilgore, 167 Wash. 2d 28, 34, 42 -43, 216
P.3d 393 ( 2009) (         finding that the trial court did not abuse its discretion following remand for

further     proceedings);        see Rockwell, 157 Wash. App. at 454 ( reviewing the trial court record to

determine whether it exercised its discretion on remand, noting that it "intended that the trial court

exercise its discretion on remand ").

           In Probst, we reversed the superior court' s original order and remanded the case for further

proceedings consistent with the opinion, intending for the trial court to exercise its discretion.

Specifically,      the   mandate        stated, "    this cause is mandated to the Superior Court from which the

appeal was taken for further proceedings in accordance with the attached true copy of the opinion."

Clerk' s Papers       at    5.   Thus, on remand, we review the superior court' s decisions for an abuse of

discretion. Rockwell, 157 Wash. App. at 454; see also Kilgore, 167 Wash. 2d at 43.

                                                                   7
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           The crux of the Fowlers' argument seems to be that when we said " although the DRS had

authority to decide how to calculate interest, the DRS 's interest calculation method was arbitrary

and capricious because the agency did not render a decision after due consideration" and " the .. .

statutes      do   not require    the DRS to pay          daily   interest,"   Probst, 167 Wash. App. at 183, 191, we

actually      meant:   the DRS' s "      failure to pay      daily      interest was arbitrary   and capricious,"   and the

 DRS is       required   to pay   daily   interest."     Mot. Hearing Transcript (MHT) at 7. The Fowlers assert

that the DRS' s " argument that daily interest is not required is contrary to the express language in

the   opinion."      MHT at 7.

           The Fowlers      misconstrue our          holding      in Probst. In Probst,    we    stated, " We hold that the

TRS statutes do not require the DRS to pay daily interest on balances transferred from Plan 2 to

Plan 3."      Probst, 167 Wn.         App.   at   191.   We also held that " the legislature has clearly expressed its

intent   to   give   the DRS authority to           determine how interest is        earned."    Probst, 167 Wash. App. at

190.     Thus, the DRS had the authority to determine how interest is                            calculated.   However, in

exercising that authority, .we found that the DRS acted arbitrarily and capriciously by electing to

continue using a " historical interest calculation method without due consideration of the facts and

circumstances" and without identifying the reasons for continuing to do so, even when the DRS

consistently recognized the historical method did not conform to industry standards and was unfair.

Probst, 167 Wn.          App.    at   193 -94.    Therefore, contrary to the Fowlers' assertion, we held that the

DRS acted arbitrarily and capriciously by not giving due consideration to the facts and

circumstances when it elected to continue the historical method of calculating interest; we did not

hold that the DRS was required to pay daily interest.

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         On remand, the superior court found that " it' s not up to [ the superior court] to determine

what an agency should or shouldn' t do" and that it is not appropriate for it to " set interest rates

      when     there   is   an   agency   who    is   given   that discretion."     MHT at 15, 18. It went on to say that

finding that the DRS' s method was arbitrary and capricious " is not the same thing as saying [ the

calculations]     ha[ ve] to be done            a particular    way."   MHT       at     18 -19.   The superior court correctly

interpreted our mandate to say that the DRS has the authority to determine how to calculate

interest, but it     must undergo         the   appropriate processes.        It follows that it is reasonable to remand

to the DRS to        allow   it to   undergo     the   appropriate processes        to   exercise   its authority.4   The superior

court did not abuse its discretion.

         The Fowlers also argue that the superior court improperly relied on the APA when it

remanded       the   action      to the DRS because their           claim   falls   under an exception        to the APA.     The

Fowlers' argument is without merit.

          The Fowlers assert that RCW 34. 05. 510 excludes their claim from the. APA because their

claim    involves money damages.                 This assertion is based on an incomplete reading of the statute.

RCW 34. 05. 510 states:

          This chapter establishes the exclusive means of judicial review of agency action,
          except:

4
    Under the APA, "[ t]he           court shall remand to the agency for modification of agency action, unless
remand     is impracticable            or would cause unnecessary delay." RCW 34. 05. 574( 1).          Courts

substantially defer to the agency and do not substitute its opinion " for that of the agency entrusted
tomake such decisions."     Hillis v. Dep' t ofEcology, 131 Wash. 2d 373, 396, 932 P.2d 139 ( 1997).
In Hillis, the court invalidated the agency' s decision that was made without appropriate rule
making. 131 Wash. 2d at 400. The Hillis court found that it "is not for the courts to make the decision
or set   the   priorities        for the agency,"      and "[   o] n remand, it is within the discretion of the agency
what specific procedures" to use after an agency decision has been invalidated. Hillis, 131 Wn.2d
at400.
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                      1) The provisions of this chapter for judicial review do not apply to
                     litigation in which the sole issue is a claim for money damages or
                     compensation and the agency whose action is at issue does not have
                     statutory authority to determine the claim.

                       2)    Ancillary procedural matters before the reviewing court,
                     including        intervention,       class       actions,   consolidation,       joinder,
                     severance,       transfer,      protective       orders,    and   other     relief from
                     disclosure of privileged or confidential material, are governed, to the
                     extent not inconsistent with this chapter, by court rule.

RCW 34. 05. 510( 1), (        2).    Thus, the APA does not govern " litigation in which the sole issue is a

claim for money damages or compensation and the agency whose action is at issue does not have

statutory authority to determine the               claim."    RCW 34. 05. 510( 1) (      emphasis added).

          Also, Washington courts have consistently held that RCW 34. 05. 510( 1) applies only to

suits in which the sole issue is a claim for money damages. For example, in Wells Fargo, the court

found that because          appellant' s " complaint contained a request               for   a   declaratory judgment...   its

action   did   not   fit   within   the   exception    for   suits   limited to money damages."           Wells Fargo Bank,

N.A. v. Dep' t ofRevenue, 166 Wash. App. 342, 353, 271 P.3d 268, review denied, 175 Wash. 2d 1009

 2012).

          In their first     appeal, "[     t]he Fowlers sought declaratory and /or equitable relief, monetary

relief, prejudgment         interest,     and   attorney fees."      Probst, 167 Wash. App. at 184. Here, in their second

appeal, they seek enforcement of the mandate based on that prior appeal; the Fowlers have not

offered any evidence or argument that this is now solely a claim for money damages.

          The superior court correctly ruled that the APA applied to the case and properly remanded

the action to the DRS               for   proceedings     consistent with our          opinion    in Probst.     The Fowlers'

argument that the superior court erred by remanding the action is not supported by law.

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C.       RETROACTIVE APPLICATION AND UNCONSTITUTIONAL TAKINGS

         The Fowlers argue that if the DRS enacts a new rule adopting the original interest

calculation methods under the authority of RCW 41. 50. 033, the new rule could not be retroactively

applied because it would interfere with their vested rights. However, the DRS has not yet had the

opportunity to make such a rule. Therefore, this argument is premature and is not ripe for review.

         Washington law has long established that courts are not " authorized to render advisory

opinions or pronouncements upon abstract or speculative questions under the declaratory judgment

act."   Wash.   Beauty Coll., Inc. v. Huse,    195 Wash. 160, 164, 80 P.2d 403 ( 1938);     see Kitsap County

Prosecuting Attorney's Guild v. Kitsap County, 156 Wash. App. 110, 122, 231 P.3d 219 ( 2010)

 noting that this   court   does   not give   advisory   opinions).   To be justiciable, " the interests must be

direct and substantial and involve an actual as distinguished from a possible or potential dispute."

Huse, 195 Wash.       at   164 -65.   The Fowlers ask us to ignore the fact that the DRS has not yet had

the opportunity to resolve this issue, and therefore, there is no rule to be retroactively applied.

Their argument is speculative; we do not render advisory opinions. Huse, 195 Wash. at 164 -65.

         The Fowlers also argue that if the DRS is allowed under RCW 41. 50. 033 to make and

apply a new rule that does not use the common law daily interest rule to calculate interest, the

potential failure to pay interest based on that rule will result in an unconstitutional taking. Pursuant

to the takings clause of the Fifth Amendment and applied to the states through the Fourteenth

Amendment,         the government cannot take private property for public use without just

compensation.       U.S. CONST.,      amend.   V. This argument is also speculative because the DRS has

not made or applied a new rule resulting in an unconstitutional taking; therefore, this argument is

premature. We do not render advisory opinions. Huse, 195 Wash. at 164 -65.

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                                       ATTORNEY FEES AND COSTS

            The Fowlers     seek   attorney fees      pursuant    to the    common        fund doctrine.   Under the

American rule, which Washington follows, attorney fees must be authorized by contract, statute,

or a recognized equitable principal.              City of Seattle v. McCready, 131 Wash. 2d 266, 273 -74, 931
P.2d 156 ( 1997).       Whether an equitable exception authorizes an award of attorney fees is a legal

question.      Tradewell    Group,   Inc.   v.   Mavis, 71 Wn.     App.    120, 126, 857 P.2d 1053 ( 1993).     The

Washington Supreme Court found that " the ` common fund /common benefit' theory" is a " narrow

equitable ground     for awarding attorney fees."         City ofSequim v. Malkasian, 157 Wash. 2d 251, 271,

138 P.3d 943 ( 2006).

            In order to award attorney fees based on the common fund doctrine, a court has to

determine      whether   the Fowlers' litigation benefited the          class and others.     Malkasian, 157 Wash. 2d

at   271.   A court then grants the award based on the size of the judgment. Bowles v. Dep' t ofRet.

Sys., 121 Wash. 2d 52, 75, 847 P.2d 440 ( 1993).                  Until the end of litigation, there is no basis to

determine whether the award of attorney fees is appropriate. Furthermore, the Fowlers themselves

note   that the    fee   award " awaits     the    conclusion    of   this litigation."     Br. of Appellant at 46. 5

Accordingly, the request for attorney fees from this court is premature.

            The Fowlers also request costs on appeal. RAP 14. 1 and 14. 2 provide that the clerk of the

appellate court will award costs to the substantially prevailing party. Here, the Fowlers are not the

prevailing party. Accordingly, the Fowlers' request for costs on appeal is denied.

5 We recognize that the Fowlers, in an abundance of caution, are preserving their right to claim
attorney fees pursuant to the common fund doctrine; however, for the reasons stated above, we do
not decide this issue.

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No. 45128 -0 -II

        We affirm.

        A majority of the panel having determined that this opinion will not be printed in the

Washington Appellate Reports, but will be filed for public record pursuant to RCW 2. 06. 040, it is

so ordered.

 We concur:

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