Court Opinion

ID: 2827709
Source: CourtListenerOpinion
Date Created: 2015-08-17 19:03:10.537806+00
Date Added: 2024-06-11T13:39:57.647247
License: Public Domain

Filed 8/17/15

                            CERTIFIED FOR PUBLICATION

            IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                           FOURTH APPELLATE DISTRICT

                                     DIVISION TWO

CHRISTOPHER J. WARNER,

        Plaintiff and Appellant,                       E060337

v.                                                     (Super.Ct.No. CIVDS1300493)

CALIFORNIA PUBLIC EMPLOYEES’                           OPINION
RETIREMENT SYSTEM,

        Defendant and Respondent.

        APPEAL from the Superior Court of San Bernardino County. Brian M. Hoffstadt,

Judge. Affirmed.

        Shernoff Bidart Echeverria Bentley and Michael J. Bidart; The Ehrlich Law Firm

and Jeffrey Isaac Ehrlich, for Plaintiff and Appellant.

        Gina M. Ratto and Renee Salazar for Defendant and Respondent.

        This appeal turns on a matter of first impression, a question of statutory

interpretation regarding the Judges’ Retirement System II Law (JRS II) (Gov. Code,1

        1   Further undesignated statutory references are to the Government Code.

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§§ 75500 et seq.), which establishes the system providing retirement benefits to

California judges first elected or appointed to judicial office on or after November 9,

1994. Plaintiff and appellant Christopher J. Warner (Judge Warner) contends that under

JRS II he is entitled to receive both a disability retirement allowance and payment of the

monetary credits he accrued during his service. Defendant and respondent California

Public Employees’ Retirement System (CalPERS), the agency that administers JRS II,

ruled JRS II entitles Judge Warner only to the disability retirement allowance. The trial

court denied Judge Warner’s petition for writ of mandate, which sought to reverse the

agency’s ruling. We affirm.2

                   I. FACTS AND PROCEDURAL BACKGROUND

       Judge Warner served as a municipal and then superior court judge from July 1996

until his retirement in October 2010. In November 2010, he applied for a disability

retirement benefit under JRS II. CalPERS granted his application, and he was awarded a

monthly retirement allowance, paying him an amount equal to 65 percent of his

retirement-level salary.

       In May 2011, Judge Warner applied to CalPERS to receive a distribution of his

monetary credits in the JRS II system, which totaled $572,407. CalPERS staff denied the

request. Judge Warner appealed that decision to the CalPERS Board of Administration

       2 In the interest of giving credit where credit is due, it should be noted that our
discussion below not only affirms the ruling of the trial court, but also adopts or adapts
large portions of the excellent analysis of the trial court judge, the Honorable Brian M.
Hoffstadt. In 2014 Judge Hoffstadt was appointed and confirmed as Associate Justice for
the Second District, Division Two Court of Appeal.

                                             2
(Board). After a hearing, the administrative law judge (ALJ) issued a proposed decision

recommending the staff decision be affirmed. The Board adopted the ALJ’s

recommendation.

       In January 2013, Judge Warner filed a petition for writ of mandate in San

Bernardino County Superior Court challenging the Board’s decision. The Judicial

Council assigned the case to Los Angeles County Superior Court. On November 13,

2013, the court issued an order denying the petition.

                                      II. DISCUSSION

A. Standard of Review

       There are no disputed facts at issue. We review the trial court’s ruling interpreting

the relevant statutes and applying them to the undisputed facts de novo. (Saffie v.

Schmeling (2014) 224 Cal.App.4th 563, 569 [Fourth Dist., Div. Two], citing Cuiellette v.

City of Los Angeles (2011) 194 Cal.App.4th 757, 765.) “The ultimate interpretation of a

statute is of course an exercise of judicial power and it is the responsibility of the courts

to declare its true meaning even if it requires rejection of an earlier erroneous

administrative interpretation.” (Crumpler v. Board of Administration (1973) 32

Cal.App.3d 567, 578 [Fourth Dist., Div. Two].) While the “‘agency interpretation of the

meaning and legal effect of a statute is entitled to consideration and respect by the

courts,’” we must nevertheless “‘independently judge the text of [a] statute . . . .’”

(Bonnell v. Medical Board (2003) 31 Cal.4th 1255, 1264.)

                                               3
B. Analysis

       1. Overview of JRS II.

       JRS II governs the retirement system for judicial officers at all levels of California

state court who were elected or appointed to judicial office on or after November 9, 1994.

(§ 75502, subd. (a).) It provides for three types of retirement benefits—normal, early,

and disability. (§§ 75522, 75521, 75560.1.) All retirement allowances are paid from a

trust fund, known as the Judges’ Retirement System II Fund (JRS II fund), held in the

State Treasury, which receives all contributions to the JRS II system from judges and the

state. (§ 75600.)

       A judge who has either served 20 years and reached age 65, or served five years

and reached age 70, is eligible for normal retirement. (§ 75522, subd. (a).) Upon

retirement, a judge must “elect” to receive either (1) a “monthly retirement allowance”—

essentially, an annuity paying an amount determined by multiplying the judge’s final

salary, years of service, and a statutory “benefit factor”—which is capped at 75 percent of

the judge’s final compensation, or (2) a lump sum equal to the judge’s accumulated

“monetary credits”—an amount equal to 18 percent of the judge’s monthly salary for

every month of the judge’s service, plus the JRS II fund’s net earnings on that amount—

payable either in a single payment or in installments over time, at the judge’s election.

(§ 75522, subds. (d), (e); § 75520.) The 18 percent lump sum represents a portion of

amounts contributed to the JRS II fund during the judge’s period of service by the judge

and the state; judges contribute eight percent of their monthly salary, while the state

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contributes an amount that is adjusted yearly from an initial contribution rate of 18.8

percent. (§§ 75502, subd. (f), 75601, 75602, 75520, 75600, 75600.5.)

       If a judge leaves service but does not qualify for normal retirement, he or she is

eligible for an early retirement benefit. (§ 75521.) A judge who leaves service before

accruing five years of service may receive a refund of his or her eight percent monthly

contributions into the JRS II fund plus interest. (§§ 75521, subd. (a); 75502, subd. (f).)

If five or more years of service have been accrued, the judge may receive a distribution of

his or her “monetary credits”—as noted above, an amount equal to 18 percent of the

judge’s monthly salary for every month of service. (§§ 75521, subds. (a), (b), 75520.)

Importantly, given the issues in this case, section 75521 provides that the judge leaving

service and receiving an early retirement benefit is to receive the specified payment “and

no other amount.” (§ 75521, subds. (a), (b).)

       A judge who becomes disabled as a result of an injury or disease “arising out of

and in the course of judicial service,” or a judge who becomes disabled for any reason

who has accrued five or more years of judicial service, may, “with his or her consent,”

apply for a disability retirement benefit. (§§ 75560.1, subd. (a), 75560.) The disability

retirement benefit is a monthly allowance—like the normal retirement benefit, essentially

an annuity—tied to a percentage of the judge’s final salary and capped at 65 percent.

(§ 75560.4.) Unlike the early retirement benefit, the disability retirement benefit comes

with certain restrictions on the judge’s postretirement employment that remain in effect

until the judge reaches the age he or she would have been eligible for normal retirement.

(§ 75580.)

                                             5
       2. Under JRS II, a Judge Who Receives a Disability Retirement Benefit Is Not

Entitled to Also Receive an Early Retirement Benefit.

       Judge Warner contends that a judge who becomes disabled may first apply for and

obtain a disability retirement benefit, and then still proceed to receive the retirement

benefit appropriate to his or her years of service (in his case, the early retirement benefit

of a lump sum payment of monetary credits pursuant to section 75521, subdivision (b).)

This contention is based in part on the circumstance that provisions regarding disability

benefits are codified in Article 4 of the JRS II law, while service retirement provisions,

including both normal and early retirement, are codified in Article 2. (§§ 75522, 75521,

75560.1.)

       We cannot say Judge Warner’s interpretation is explicitly foreclosed by the

relevant statutory language, which ideally would have been drafted with greater

precision. Nevertheless, we conclude the interpretation that fits most comfortably with

the statutory scheme as whole, as well as its purpose, legislative history, and public

policy, is that a judge who becomes disabled is not entitled to receive both disability and

service retirement benefits under JSP II, but only one or the other.

       First, the statute that provides the early retirement benefit expressly states that the

retiring judge is to receive the specified lump sum “and no other amount.” (§§ 75521,

subds. (a), (b).) Judge Warner’s position, whereby a retired judge might receive both an

                                              6
early retirement benefit and a disability retirement allowance, is at least in some tension

with this language.3

       Second, the structure of JRS II benefits generally suggests that retiring judges are

to receive either a monthly retirement allowance or a lump sum payment, but not both.

(See State Farm Mutual Automobile Ins. Co. v. Garamendi (2004) 32 Cal.4th 1029, 1043

[statutes are interpreted “‘“‘with reference to the entire scheme of law of which it is a part

so that the whole may be harmonized and retain effectiveness’”’”].) Judges qualified for

normal retirement must “elect” between retirement allowance and lump sum payment of

monetary credits. (§ 75522, subd. (c).) Judges who leave service before becoming

eligible for normal retirement may receive an early retirement benefit of a lump sum

payment, “and no other amount.” (§ 75521, subds. (a), (b).) Judges who qualify for

disability retirement may receive a monthly allowance, despite having not reached

normal retirement eligibility, but there is no explicit provision allowing such judges also

to receive a lump sum payment of contributions or monetary credits. (§ 75560.1.) The

absence of any contrary example—any situation where a judge is explicitly entitled to

collect two retirement benefits under JSP II—weighs in favor of CalPERS’s

interpretation.

       3  We acknowledge Judge Warner’s argument that this language could, in
isolation, be interpreted to impose restrictions only on any further service benefits under
Article 2 of the JRS II law, but to place no restriction on award of a disability retirement
allowance under Article 4. We do not, however, accept that argument, for the reasons
discussed below.

                                              7
       Third, the legislative history of JRS II provides no support for Judge Warner’s

interpretation, and indeed strongly weighs against it. (Day v. City of Fontana (2001) 25

Cal.4th 268, 272 [where plain meaning is insufficient to resolve a question of statutory

interpretation, “we may resort to extrinsic sources, including the ostensible objects to be

achieved and the legislative history”].) JRS II was enacted to “[p]rovide a new, lower

tier of benefits for judges” because the prior system was “[a]ctuarially unsound from its

inception.” (Conf. Com., Rep. on Sen. Bill No. 65 (1993-1994 Reg. Sess.) Aug. 25,

1994, p. 1.) An interpretation that allowed judges to receive two retirement benefits—not

only a monthly allowance, but also payment of a large portion of the sums contributed to

the retirement fund by the judge and the state during his or her service—would hardly

further the ostensible goal of creating a new, actuarially sound retirement system.4

Further, the legislative history includes repeated observations that payment of the lump

sum early retirement benefit “fully discharges the retirement system’s obligation to the

former judge.” (Id. at p. 5; see also Select Committee on Judicial Retirement, Final

Report, May 1993, p. 14; CalPERS memorandum to Members of the Board of

Administration dated Aug. 31, 1994, attached LGSD Bill Analysis, pp. 2-3.) A chart

       4  To be sure, as a logical exercise, it is possible to imagine a system designed to
subsidize judges who become disabled, providing not only a retirement allowance but
also return of the disabled judges’ contributions or monetary credits, which nevertheless
was actuarially sound. Such a system would simply require commensurately higher
contributions from and/or lower benefits for those judges who do not become disabled, so
that the fund remained solvent. If such a system for the benefit of disabled judges was
intended by the Legislature, however, one would expect to find something in the
legislative history explicitly discussing that decision, and justifying it both as a matter of
policy and in terms of actuarial analysis. In the legislative history of JRS II, there is
nothing of the sort.

                                              8
prepared for the Senate committee considering the JRS II legislation, comparing the

benefits provided under JRS II with those of its predecessor system, indicates explicitly

that a judge receiving a disability retirement allowance under JRS II would not also

receive any lump sum payment of contributions or monetary credits (described as a

“defined contribution benefit”), stating “[d]efined contribution benefit not paid at

disability.” (California Judges’ Retirement System Benefit Illustrations and Cost Data

prepared for Sen. Bill 65 Conference Committee, Aug. 25, 1994.) At another point in the

legislative history, it is observed that “[i]f the judge retires on disability, he or she forfeits

all rights to the [defined contribution]-like account balance.” (Select Committee on

Judicial Retirement, Final Report, May 1993, Report Addendum, p. 3.) It is difficult, if

not impossible, to reconcile these aspects of the legislative history with Judge Warner’s

interpretation of JRS II.

       Finally, Judge Warner’s interpretation falters on the principle that we must avoid

statutory interpretations that lead to unreasonable results. (Dreyer’s Grand Ice Cream,

Inc. v. County of Alameda (1986) 178 Cal.App.3d 1174, 1181-1182.) Under his

interpretation, judges who are eligible for disability are entitled to two retirement

benefits, even though they have funded through their contributions only a portion of one.

(§§ 75502, subd. (f), 75601, 75602.) We find it unreasonable to single out a subset of

judges for such preferential treatment, at least in the absence of any unambiguous

indication in the statutory language or the legislative history that such a result was

intended.

                                                9
       In support of his interpretation, Judge Warner emphasizes that JRS II does not

specifically require judges to “elect” between an early retirement benefit and a disability

retirement benefit. But a judge who becomes disabled and leaves service does not

automatically receive a disability retirement benefit; he or she must “consent” to

disability retirement. (§ 75560.1, subd. (a).) In the context of JRS II as a whole and the

legislative history, discussed above, the judge’s “consent” to disability retirement is most

reasonably understood to serve as an election between the early retirement benefit and the

disability retirement benefit.

       Judge Warner also points to JRS II’s treatment of judges convicted of certain

crimes, noting that such judges are entitled to a refund of their contributions to the

system, but otherwise “shall not receive any benefits from the system.” (§ 75526.)       He

observes that such judges are eligible nevertheless to apply for and receive a disability

retirement benefit, albeit under a higher standard of proof. (§ 75562.) He concludes

from this circumstance that language in Article 2 of the JRS II law limiting further

payments, such as the “and no other amount” clause in section 75521 regarding the early

retirement benefit, applies only within Article 2, and does not preclude the judge from

also receiving a disability retirement benefit under Article 4.

       We disagree that Judge Warner’s conclusion follows from his premises. At most,

it is appropriate to conclude that a conviction does not cut a judge off completely from

possible eligibility for a disability retirement benefit, not that a judge may collect both

disability retirement and early retirement benefits. Indeed, Judge Warren’s argument

accidently highlights the unreasonableness of his interpretation of JRS II. It is

                                              10
implausible that the Legislature intended judges convicted of felonies to have the

opportunity to collect two retirement benefits, if they should happen to become

disabled—both a disability retirement allowance and a return of their monthly

contributions to the JRS II fund—while judges who retire normally, after careers

unmarred by any criminal conviction, may receive only a monthly retirement allowance

or a lump sum payment of their monetary credits.

       Judge Warner further urges us to apply the rule that ambiguities in pension statutes

should be construed in favor of the pensioner, citing Ventura County Deputy Sheriffs’

Assn. v. Board of Retirement (1997) 16 Cal.4th 483, 490.) That rule only applies,

however, where the construction urged by the pensioner is “consistent with the clear

language and purpose of the statute.” (Ibid.) For the reasons discussed above, Judge

Warner’s interpretation of JRS II is not.

       Additionally, Judge Warner invokes the maxim that the “‘law abhors forfeitures.’”

(See Wooster v. Department of Fish & Game (2012) 211 Cal.App.4th 1020, 1027)

Indeed, as noted, the legislative history includes at least one use of the word “forfeit” in

describing a judge’s decision to take disability retirement and thereby relinquish his or

her entitlement to payment of his or her contributions or monetary credits. (Select

Committee on Judicial Retirement, Final Report, May 1993, Report Addendum, p. 3.)

And CalPERS described Judge Warner as “forfeiting” his right to receive a distribution

of monetary credits, upon applying for and receiving the disability retirement benefit, in

the letter sent to Judge Warner informing him that he is not entitled to both a disability

retirement allowance and payment of his accrued monetary credits. In both cases,

                                             11
however, the term is used in its general meaning, to give up or relinquish, not as the legal

term of art utilized in the cited maxim. In Kuhlemeier v. Lack (1942) 50 Cal.App.2d 802,

the court of appeal observed that “[i]n law the word ‘forfeit’ means ‘to lose and surrender

to an individual or the state something that belongs to one for misconduct or breach of

duty . . . .” and found no forfeiture, in the legal sense, despite parties’ use of the term in a

lease. (Id. at p. 808.) In that case, “the payment of money, or the relinquishment of the

right to demand the return of money, constitute[d] the consideration for the option to

terminate the lease.” (Ibid.) Here, too, Judge Warner relinquished the right to

distribution of his monetary credits, when he consented to receive a disability retirement

allowance. But it does not follow that there was ever a forfeiture of the sort the law

abhors. In fact, the money continues to inure to his benefit, as part of the JRS II fund

from which his disability retirement allowance is paid. (§ 75600.)

       In short, we agree wholeheartedly with the trial court’s conclusion: “Judge

Warner has served the State with distinction as a bench officer, and his disability prior to

full retirement age deprived the People of San Bernardino County of an able judge. As

currently written, however, the JRS II statutes require that Judge Warner be awarded a

disability retirement annuity benefit and no other retirement benefit.”

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                                     III. DISPOSITION

      The trial court’s order denying Judge Warner’s petition for writ of mandate is

affirmed. CalPERS shall recover its costs on appeal.

      CERTIFIED FOR PUBLICATION

                                                             HOLLENHORST
                                                                      Acting P. J.
We concur:

      MCKINSTER
                                J.

      MILLER
                                J.

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