Tanner v. CalPERS Ruling

8/10/2019 Tanner v. CalPERS Ruling

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S U P E R I O R C O U R T O F C A L I F O R N I A

C O U N T Y O F S A C R A M E N T O

DATE:

JUDGE:

December22,2014

HON. SHE LLEY ANNE W. L . CHANG

DEP. NO.

C L E R K :

24

HIGGINBOTHAM

JOSEPH TANNER,

Petitioner,

C A L I F O R N I A P U B L I C E M P L O Y E E S

RETIREMEN T SY STEM (CalPERS);

BOARD

O F

ADMINISTRATION OF TH E CALIFO RNIA

PUBLIC E M P L O Y E E S R E T I R E M E N T S Y S T E M ;

and DOES 1 THROUGH

100, inclusive.

Respondents.

Case

No.34-2013-80001492

CIT Y O F

V A L L E J O ,

RealPartyinInterest.

Nature of Proceedings:

RULING ON SUBMITTED MA TTER: PETITION FOR

WRIT OF ADMINISTRATIVE MANDAMUS AND

WRIT OF MANDATE

The

following

is the Court's tentative

ruling

to the above-entitled matter set fo rhearing in

Department 24 on

Friday,

December 12, 2014, at 1:30

p.m.

The tentative

ruling

shall become

thefinalrulingof the Court,unlessa party

wishing

to be heard soadvisesthe clerkof

this

Department no later than 4:00p.m. on the court day preceding the hearing, andfurther

advises

the clerk that such party hasnotifiedthe other side ofitsintentiontoappear.

f

oralargument is requested, the parties shallnot ifythe clerk, at the time of therequest,

what specificissues

willbeaddressedat the hearing. Oral argument shall not exceed 20

minutes per side.

Petitioner, Joseph

Tanner,

petitions forawritof administrative mandamus to set asideadecision

(Decision) of RespondentCaliforniaPublicEmployees' Retirement System (CalPERS),which

found that Petitioner's unmodified

annual

retirement allowance was $216,446. Petitioner claims

that he is entitled toaretirement allowance based ona$305,844base

salary,

which includes

items that Respondent determined to be non-pensionable. Petitioner also petitions for awritof

mandate directingCalPERSto set aside its Decisionandfollow the law.' ThePetition is

D E N I E D .

' ThePetitionchallenges CalPERS

administrative decision,

whichis thepropersubjectof a writ of

administrative

mandamus underCodeof CivilProcedure section 1094.5.Because

Petitioner's 'traditional

mandateclaiminthe

Petitionalso

seeksto

setasideCalPERS

decisionon thebasis

that

itallegedlydid not

follow

the law, and

because

1


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B CKGROUND

The background facts are takenfromthe parties'briefs,relevant portions

of

theadministrative

record,

and the administrative

law

judge's(ALJ)decision, adopted by CalPERS.

Petitioner is a retired member of CalPERS and

made

contributions thereto through his service

withvarious governmental entities asCityManagerfortheCityof

Pacifica,

Redevelopment

ConsultantfortheCityo fAlameda, AssistantCityManagerfortheCityofAlameda,C ity

ManageroftheC ityofPleasantH i ll , CityManagerfortheC ityof

Emeryville,

andCityManager

for

theCityofGait. (AR,3596.)

Sometimepriorto November 2006,

while

employed at theCityof

Pacifica,

Petitioner was

contacted by a recruiter regarding an openingforthepositionofCityManagerwiththeCityof

Vallejo(Vallejo).

(AR,

3597.) Petitioner

informed

the recruiter,Mr. W illiamAvery,that he

desired a substantially higher salary than whatVallejowasinitiallyoffering forthe positionat

least

$300,000 in

PERSable

or

pensionable

compensation

eligible

for

CalPERS retirement

benefits.

(Id.;

AR,643) OnNovember 6, 2006, theinterim CityManagerfor Vallejo,John

Thompson, communicated to theC ity

Council

that Petitioner

requestedtotal

amiual

compensation of $349,952,whichincluded $267,840

o f

pensionablecompensation.

(AR,

651-

652,

2508-2510.) Petitioner wished to beinitiallyhiredas an interim CityManagerforvarious

reasons,

including

the fact that he wished towait

for

a certain time period afterretiringfromthe

Cityo f

Pacifica,

andbecausehe was concerned aboutworking for Vallejo. (AR,3597-3598.)

Ata November 14, 2006 closedsessionmeeting, theCityCouncildiscussedPetitioner's

proposed employment contract. On November 16, 2006, theCity

Council

heldanotherspecial

meeting on November 16, 2006 and appointed Petitioner asC ityManager. (AR,3598-3599.)

InNovember 2006, Petitionerentered

into

an employment contractwithVallejo(November

2006 Contract). The 2006 Contract had a startdateofJanuary8, 2007 and wasforathree-year

term. (AR393, 404.) Under the November 2006 Contract, Petitionerwouldbegin as a limited

term CityManager,which wouldautomatically convert to a

permanent

employee position

two

months

into

the

three-year

term,onMarch8, 2007, when Petitionerwouldbe reinstated in

CalPERS.

(AR,

393, 404.) His basesalary wasinitiallyset at $216,000.

(AR399.)

However,

the November 2006 Contractprovidedthat Petitionerwouldreceive other items of

non-

pensionablepay thatwould convert to basesalary

once

his limitedtenn period expired as

well

as aleaveallowance and

severance

pay. (A R399, 401.)

Petitioner retired

from

the

C ity

of

Pacifica,effective

January

8, 2007,

with

a

final

compensation basesalary of $170,216. He drew an annual retirement allowancefromPacifica

of$131,543that

year.

(AR,624, 379-381.) OnJanuary8, 2007, he

began

working for Vallejo.

(AR,393.)

Petitioner

does

not againreferenceany

separatecauses

of

actionin

his memorandumofpoints and authorities

(MPAs),the

Court

disposesof

thispetition

pursuant

to

Codeof

Civil

Proceduresection 1094.5.


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VallejoHumanResourcesManager Debra Boutteforwardedthe November 2006 Contract to

CalPERS. (AR,3599.) OnJanuary26, 2007, CalPERS employee Carious Johnson mailed a

responseto Boutte. CalPERS'responsedetailed the provisionsofthe November 2006 Contract

that

conflicted

withthe Public Employees' Retirement

Law (PERL).

(AR,409-411.) The letter

statedthat although Petitioner's initialsalary of $216,000qualifiedas pensionable compensation,

the items that

would

be automatically added or converted to

base

pay were not.

(AR,

410.)

Theseitems included

management

leave credits, automobile allowance, and deferred

compensation, andseverancepay.

Additionally,

CalPERS' letternotifiedBoutte that i fEMPC

(employer-paid

member

contributions)

andmanagementincentive pay were intended to be

pensionable, the contract provisions must be revised to complywiththe pertinent regulations.

(Id.) For example, as toEMPCpay, theCitymust adopt a resolutionfora group orclassof

employees and amend the contract. (Id.)Finally,the letter

informed

Boutte that anyseverance

paywhichchould be paid to Petitioner was not pensionable. (AR,411.)

Whenshown CalPERS' letter, PetitionertoldVallejo staff

to

f ix it . (AR,3601.)

On March27,

2007, the

Vallejo

City

Council

approved Petitioner's new employment agreeinent,

entered into asofMarch8, 2007, which supercedes[sic]the November 18, 2006 Agreement

(March2007 Contract). (AR,458-471,464.) Petitioner'sbasesalary was changed

from

$216,000 to $305,844 annually, and the contract term wasfromMarch 8, 2007 to March 8, 2010.

(AR,464.) TheMarch2007 Contractomittedlanguagerelating to converting the car allowance,

deferred compensation, and 30daysof

management

leave tobasesalary, alongwiththe

employeesoptionto sell back 120 hours of accrued annual leave. (AR,458-471.) Theprovision

regarding 12 months'severancepay was amended to add that it is not reportable to CalPERS.

(AR,466.)

Petitioner resignedeffectiveJune

1,

2009. TheC ity

Council

adopted a settlement

agreement

with

Petitioner

in

which

they paid

h imseverance

pay of$390,000.

(AR,

3607-3608.)

Petitioner submitted his application

for

retirement benefits on May 22, 2009. Petitioner reported

his highest compensation paid asfrom

June

1,2007 to

May

31 ,2008 ($305,842.) (AR,3607-

3608.) CalPERS denied Petitioner's reported

final

compensation and

found

that Petitioner's

basesalary was $216,000. (AR,3609, 3611.)

I L

D I S C U S S I O N

a. Request forJudicialNotice; Administrative Record

CalPERS

unopposed request for

judicial

notice

is

G R A N T E D .

The Court

admonishes

Petitioner

forproviding

a copyoftheadministrative record that is

unbound and extremelyd ifficul ttoreview. The administrative record is quite large, as the

administrativehearing in this matter lasted 10 days. Despite thisfact,Petitionerfurnishedthe

Court

withan administrative record comprised of loose documents in

folders,

and an electronic

copywith

multiple

PDF documents. IntheftiturePetitioner shouldensurethat any


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administrative record, and in particular, hearing transcripts, is bound and in a format that allows

the Court to easily review it.

b. Standard of Review

This Court'staskis to determine whether the Boardabusedits discretion.Inthiscase, abuseof

discretion is established i fthecourtdeterminesthat thefindingsare not supported by the weight

of

theevidence. (Code of

Civ .

Proc, 1094.5(c); Strumsky

v .

San Diego County Employees

Ret. Assn (1974) 11 Cal.3d 28, 44-45.)

In

exercising its independent judgment, a

trial

court

must

afford

a strong presumption of

correctness

conceming the administrative

findings,

and the

party challenging the administrative decision

bears

the burden ofconvincingthe court that the

administrativefindingsare contrary to the weight ofthe evidence. {Fukudav. C ityo fAngels

(1999) 20 Cal.4th 805, 817.)

Further, to the extent the Court finds any ambiguity in the applicable provisions ofthePERL or

regulations goveming CalPERS' administration thereof,

under

well-settled law the Court must

give

substantial

deference

to the Board's interpretations of

those

provisions. In

City

of

Pleasanton

v.Boardof

Administration

(2012) 211 Cal.App.4th 522, the court explained that

where our review requires that we interpret the PERL or a

PERS

regulation, the court

accords

greatweight to [CalPERS'] interpretation.[Citation.]This is in recognition ofthefact that as the

agency

charged

with

administering PERL, [CalPERS] has expertise and

teclinical

knowledge as

wellas an 'intimate knowledgeofthe problems dealtwithin thestatuteand the various

administrativeconsequencesarisingfromparticular interpretations.' {Id.at 539.)

c. Argument

CalPERSfoundthat, by entering into the March 2007 Contract,

Vallejo rolled

or converted

five

items into [Petitioner's]

original

basesalary of $216,000 in order to arrive at a newbasesalary of

$305,844. (AR,3604-3605.)

Accordingly,

the approximate $90,000 difference between

these

amountswas not pensionable. Having reviewed the record and applied its independent

judgment, the Court

concludes

that CalPERS did not

abuse

its discretion in determining that only

$216,000 of Petitioner's salary waspensionable compensation.

i.

C a l P E R SDid Not Abuse its Discretion in Determining that Specific

Items were Excluded from Petitioner's Pensionable Compensation

As

a

preliminary

matter, the Courtdiscussesthe governing background law that allows CalPERS

to administer its retirement system and review its

members'

applications

for

retirement benefits.

1. BackgroundL a w

CalPERS is a prefunded, defined benefit retirement plan. {Odenv.BoardofAdministration

(1994) 23 Cal.App.4 194, 198.) Under the PERL, the determination of what benefits and items

of

pay constitute

pensionable

compensation is crucial to the computation of

the employee's

ultimate pension benefits. {Molinav.Boardof

Administration

(2011) 200 Cal.App.4 53, 64.)


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Theformulafordetermininga CalPERS' member's retirement

benefit

takes

into

account (1)

yearsofservice, (2) apercentagefigurebasedon age at thedateof

refirement,

and (3) final

compensation. {City ofSacramento v.Public EmployeesRet.Sys. (1991)221Cal.App.4 1470,

1479.)

The

PERLspecifically

defines pensionable compensation. Compensation includes and shall

not

exceed compensation eamable, whichisdefinedas (1) pay rate, and special

compensation.

(Gov.

Code,

20630, 20636.)

TheP ERL

furtherdefines payrate and special compensation.

'Payrate' meansthenormal

monthlyrateofpay

orbasepay

o f

themember

paid

in

cash

to

similarlysituated members ofthe

same

group orclassofemploymentforservices rendered on a

full-timebasis

during

normalworkinghours, pursuant to

publicly

available pay

schedules.

'Payrate,' fora member who is not

in

a group orclass,

means

themonthlyrateofpayor

base

pay

ofthe member, paidincashand pursuant topubliclyavailable pay

schedules,for

services

rendered on afiill-tim e

basis

duringnormal

working

hours, subject to the

limitations

o f

paragraph

(2)

ofsubdivision(e). (Gov.Code, 20630, subd.

(b)(1).)

' Special Compensation' includes a paymentforspecialskills,knowledge,abilities,work

assignment,holidayhours, or otherworkconditions. [Tf]Special compensation shall belimited

tothat

which

is received by a member pursuant to a labor

policy

or agreement or as otherwise

required

bystateor federal

law,

tosimilarlysituated members ofagroup orclassofemployment

that isin

addition

to payrate.

fanindividual

is not part

of

agroup or

class,

special compensation

shallbelim itedto thatwhichthe

[CalPERS]

board determines is received bysimilarlysituated

members inthe closest related group orclassthat is inadditionto payrate.... (Gov.Code,

20636, subd.

(c)(1),

(2).)

Special compensation shall be

for

services rendered

during

normal

working

hours and, when

reported to the

[CalPERS]

board, the employer shallidentifythe payperiod

in

whichthe special

compensation was earned. Special compensationdoesnot include finalsettlement pay, ^

paymentsmadeforadditionalservices rendered outsideo fnormalworkinghours, or other

payments that the [CalPERS] board has notaffirmativelydetermined to be special

compensation.

(Gov.

Code,

20636, subd.

(c)(3),

(7).)

CalPERS regulationsftirtherdefine special compensation items that must be reported to

CalPERS i fthoseitems are containedinawrittenlaborpolicyor

agreement.

(2

Cal.

Code

Regs.,

571,

subd. (a).)

Among

otherthings,thesespecial compensation items must be: (1) available

to

all

members

in

the group or

class;

(2)

parto f

normally

required duties; (3)

performed

during

normalhours

o femployment;

(4) paid

periodically

as earned; (5)

historically

consistent with

prior

paymentsforthejobclassification;(6) not paidexclusively

in

thefinalcompensation

period;(7) notfinalsettlement pay;

additionally,

the items must (8) notcreatean unfunded

liability

over and above PERS' actuarial assumptions. (2

Cal.

Code

Regs.,

571,

subd. (b).)

Final

Settlement Pay

means

any

cash

or conversions

ofemployerbenefits

inexcess

of

compensation

earnable

awarded to a member

in

connection

with

oranticipation

ofa

separation

from

employment.

(Gov.

Code,

20636,

subd.

(f);

2

Cal.

Code

Regs.,

570.)


6/13

Thus, the PERL and applicable regulationsspecificallydefine pensionable compensation, and its

components, pay rate and special compensation.

ii . PetitionerHasNotEstablishedthat He isEntitledto theClaimed

Benefits

Inthe administrative proceedings

below.

Petitioner, as the applicantforthe entitlement, (here

retirement benefits) had the burdenofprooftoestablish arightto the entitlement,absenta

statutoryprovisionto the contrary. {See Lindsayv.San Diego Ret.Bd

(1964) 231

Cal.App.2d

156, 161-162.) Petitioner challenges CalPERS' determination that

only

$216,446ofPetitioner's

$305,844 salary was pensionable, or compensation

forpurposesof

receivingCalPERS

retirement benefits. CalPERS determined that Petitioner had not met his burdenofproof

in

establishing that the entire $305,844 salary was pensionable. Thus to show that CalPERs

abused

itsdiscretion

in

makingthisfinding.Petitioner must establish that the $305,844 was his pay

rate, or that theadditionalitems were special compensation

totaling

$305,844.

1. Petitioner's

SalaryDoes

Not Appear on a Publicly Available

PaySchedule

First,Petitioner cannotlegitimatelyclaimthat his salary of $305,844 is pay rate, because

Petitioner has not shown that this salary was on apubliclyavailable pay schedule. {See

Prentice v.BoardofAdministration(2007) 157Cal.App.4 '983, 993-994.)

CalPERSarguesthat the

only

documents that

list

Petitioner's salary at $305,844 are the

March

2007 Contract and the May 8, 2007 documentsrelatingto that contract, and that

these

documents cannot be a pay schedule becausethey do not refer to Petitioner orlistany other

person or

position.

Further, CalPERS

contends

that

there

is no evidence that the

City

intended

that

these

documentswouldserveas pay

schedules.

Additionally,CalPERS points to evidence

that Petitioner's salary was not the type thatwouldhave appearedon a pay schedule, and that

theC ity didnotfeelobligated to post theC ityManager's salary on a pay schedule. (AR,

1798-1789, 2430.)

Petitionerrespondsin his ReplyBriefthat (1) his salary waspubliclyavailable, and (2) Ms.

Boutte

testifiedthat a documentrelatingto the

March

8, 2007C ityManager Salary

Computation

was a payscheduleand was a type of document that theC itywouldmakepublicly

available as to theC ityManager's salary.(AR,823, 1876-1877.) Thus, Petitioner

contends

that

his salaryappearedon apubliclyavailable pay schedule. The Court is notpersuaded.

The factsdemonstratethat theCitymadean exceptional arrangement withPetitioner to provide

him significantcompensation. Indeed, this compensation waswellabovethe salary paid to the

lastVallejoCityManager($198,000).

(AR,

552-557, 2143-2144.)

Further, the document cited by Petitioner as his pay schedule differsfromthe payschedules

for

other groups or classificationsofCityemployees.


7/13

ThePERLdefinitionof payrate requires that an employee's salaryappearon apublicly

available pay schedule i ftheemployee issimilarlysituated to other

members

ofthe

same

group orclassof employment or i fthe member is notina group or

class.

The documents cited

by

the parties show that

Vallejo's

salary

informationfor

Petitionermarkedly

differedfrom

the

salary

infonnationfor

Department

Heads

and

Executive

Assistants (a group orclass

of

employees). Here,

Vallejo

published salary

range

information

for

Department

Heads

&

Executive Assistants on a yearly

basis,

e.g.,fromJuly

1,2006-June

30, 2007, and July

1,

2007-

June30, 2008. (AR,539-542.) Incontrast, the pay schedule document cited by Petitioner is

specificto

him

only,inthat it is dated

March

8, 2007 and pertains

only

to the

City

Manager.

Petitioner's broadinterpretationof pay schedule

would

permit an

agency

to provideadditional

compensation to a particularhigh-rankingofficial,any time itmadea documentwithhis specific

pay

information

publiclyavailable. {Prenticev.Boardof

Administration,

supra,157

Cal.App.4 '

at

p.

994.) The Courtdoesnot believe that the Legislature intended such a broad

constmction

of pay schedule.

Accordingly,

CalPERS was not

obligated

to consider the document cited by Petitioner to be a

publicly

available pay schedule and

find

that the entire $305,844 salary was Petitioner's pay

rate. CalPERSd idnotabuseits discretion on thisbasisinfindingthat

only

$216,446 of the

$305,844 was pensionable.

2.

The

AdditionalItems that Petitioner Seeks to Include are not

SpecialCompensation

In

claiming

that entire amounto fPetitioner's $305,844 salary is pensionable. Petitionerargues

that CalPERS must consider as compensation certain itemsreflectedinthe November 2006

Contract, and converted to salary

in

theMarch2007 Contract. This includes the automobile

allowance, employer paid deferred compensation, 30-day leave allowance, and one percent of

the employer cost of member

contributions.

Theseitemse.g., the

difference

between

Petitioner's $305,844 converted salary, and the $216,446, salary inthe November 2006

Contract

are not special compensation that is pensionable.

First,

the value

of

thesecomponents

of

Petitioner's pay is

specifically

excluded under the PERL.

(Gov.Code,20636, subd.

(g)(4)(E),

(F),(H) ,(I).)Government Code section 20636,

subdivision

(g)(4)

excludes

from

the

definitionof

payrate and special compensation

for

state

members :

(E)

Employerpayments that are to be credited as employee

contributions

for

benefitsprovidedby this system, or employer payments that are to be credited to employee

accounts

in

deferred compensation plans. The amounts deductedfroma

member's

wagesfor

participation in

a deferred compensation plan may not be considered to be 'employer payments.'

(F)Paymentsfor

unused vacation, armual leave, personal leave, sick leave, or compensating time

off,

whether paid in lump sum or otherwise. (G)

Final

settlement pay.

(H )Payments

for

overtime,

including

payin

lieuof

vacationor

holiday.

(I )Compensation

for

additional

services

outside regular

dufies,

such as standby pay, callback pay, courtduty,allowanceforautomobiles.

The

parties

do

not dispute that Petitioner

isa

state

member and subject

to this specific

statute. (See

Molinav.

BoardofAdministration

(20110 200

Cal.App.4'''53[applying

Govemment Code section 20636 to

fonnercity

employee].)


8/13

andbonuses

forduties

perfomiedafter

the member's regular

work

shift. Accordingly,

these

items

are not special compensation.

PefiUoner

appears

toarguethat

these

items

fall

within

management

incentive

pay, oneofthe

categories

of special

compensation. (2Cal.CodeRegs. 571.)

AllowingPetifioner

to

characterize

these

components as management

incentive

pay

falling within

special

compensation wouldrender Government Code 20636's exclusions meaningless,becauseany

extraamounts paid to a manager couldbe called management

incentive

pay.

Additionally,Petifioner'sNovember 2006 Contractmadeclear that various itemsof

non-

pensionable compensationwouldautomatically convert to

base

salary.

Accordingly,

these

items

couldalso be considered finalsettlement pay,

which

is also excluded

from

special

compensafion.

(Gov.Code,20636, subd.(g)(4)(G).)

CalPERS

Regulation

570 defines FinalSettlement Pay as:

any pay or

cash

conversions

o f

employeebenefits

in

excess

ofcompensafion

eamable, that are granted or awarded to a member

incormection

withor in

anticipationo faseparationfromemplovment.

Final

setfiementpay is excluded

from payrollreporting

to PERS,

in

either payrate or compensation eamable.

For

example,

finalsettlement pay may consist of

severance

pay or so-called

golden

parachutes .It may bebasedon accruals over aperiodofpriorservice. It

is

generally, but not

always,

paidduringthe

period

offinal

compensafion.

It may

be paid

in

either

lump-sum,

or

periodic

payments.

Finalsettlement pay may take the

form

ofanyitemof

special

compensation not

listed

in Section

571.

It may also take the

form

of

a

bonus,

retroacfive

adjustment

to

payrate, conversion of

special

compensation to payrate, or any other method of

payrollreported to PERS. (2Cal.CodeRegs., 570.)

TheMarch

2007 contract attempted to

convert previously

non-pensionable items to

pensionable compensation. Respondents arguethat there was no

logical

reasonto convert non-

pensionable pay items to

base

salary, other than toincrease compensation eai-nable in

anficipafionof

retirement,which

occurred alittleovertwo

yearsafter

the conversion occurred.

Thisargument iswell-taken,as (1)

Pefitioner

had already retiredfromtheCityof

Pacifica

before

commencing employmentwith

Vallejo,(2)Petitionerclaimsthat he

initially

began

working

for

Vallejoas a retiredannuitant , and(3)theVallejocontracts wereforatermo f

three

years.

Thus,

CalPERS

could

reasonably

infer

that Petitioner

couldrefire

after separating

from

Vallejo,

and

that the converted non-pensionable items occurred

in

anticipationof

a

separationfrom

employment.

Accordingly,CalPERSd idnot

abuse

its

discrefioninrejecting

the

claimed

totalamountof

Petitioner's

$305,844 salary as pensionable on the

basis

that

this

amount

included

non-

pensionable items that were not special compensation.


9/13

iii.

Vallejo's Authority to Determine Compensation and C a l P E R S

Authorityto Review it

Petitioner

argues

that CalPERS' reviewofhis

refirement

benefits cannot trump

Vallejo's

authorityto contractwithits employees and provide them a negotiated-for salary. The Court is

not

persuaded.

Vallejo'sCityCharter authorizes it to contractwithCalPERS

for

the purpose ofadministering

refirement

benefits. (AR,3616 [cifingCityCharter202, 807].) As such,Vallejois subject to

the PERL provisions and CalPERS' reviewofVallejoemployees'

applicafions

for

retirement

benefits. CalPERS is not obligated toaccepttheMarch2007 Contract terms as compensationfor

purposesofcalculatingretirement benefits. {Molinav.Boardo fPersonnel Admin.,supra, 200

Cal.App.4 'at 67

[noting

difference between salary and nanowerdefinitionof compensation

earnable ].)

Further, CalPERS has a duty to its members to determine who are employees and is the sole

judgeofthecondifionsunderwhichpersonsmay be admitted to and continue to receive benefits

under this system. (Gov. Code, 20125.) CalPERS has

jurisdicfion

to administer andhear

all

matters related to Petitioner'sapplicationforretirement benefits.

iv.

C a l P E R S Authority to Review Petitioner's Employment as Retired

Annuitant

Petitioner alsoarguesthat CalPERS

lacked

jurisdicfionto investigate hisclaim forretirement

benefits,becausewhen hefirstbegan his employment as aCityManager, he was a retired

annuitant. The Court rejects this argument.

The retired annuitant sections ofthePERL

allow

retired CalPERS members towork fora

CalPERS-participating employer

for

a limitedduration not to exceed 960 hours annually,

whilemaintaining

refirement

status. (Gov. Code, 2 1 2 2 1 ,subd.(h),21224.)

Further, Petitioners' November 2006 Contract provides that Petitionerwillbeinitiallyhired as a

limitedterm employee but then become a permanent employee and be reinstated in

CalPERS on or before March 8, 2007. (AR,393.) TheMarch2007 Contract alsomakesthe

same

provision. (AR,458.) AcceptingPetitioner's argument as true, a CalPERS beneficiary

couldevadeany CalPERS review by structuring employment contracts to provide that the

employee

would

be

initially

hired as a

refired

annuitant and then automatically become a

pennanentemployee and CalPERS inember shortly thereafter.

BecausePetitioner's employment contractsprovidedthat he

would

become a pemianent

employee on or before March 8, 2007, andbecausethe contracts wereforthree-year terms, his

initial limitedterm or alleged retirement annuitant statuscannot preclude CalPERSfrom

investigafing

his

claim

for

refirement

benefits.


10/13

V. PrinciplesofContract

Interpretation

Do NotProhibitC a l P E R Sfrom

Reducing

Petitioner'sClaimedRetirement Benefits

Petitionerarguesthatprinciplesofcontractinterpretation

prohibit

CalPERSfromreducing his

pensionable

benefit

from

$305,844 to $216,446

because

CalPERS may not

look

beyond the

March

2007 Contract. The Court rejects

these

arguments.

For example,Pefitionerarguesthat the parol evidence rulebarsCalPERSfromlookingto the

November 2006 contractinevaluating Petitioner's

requestfor

$305,844 in pensionable

compensation under the

March

2007 Contract. Petifioneris mistaken.

Theparolevidence

rule, codified

inCode ofCivilProceduresecfion1856 andCivilCode 1625,

provides that when parties

enter

an integrated

writtenagreement,

extrinsic evidence may not be

reliedupon to alter or add to the termsofthe

writing.

(Code ofCiv .Proc, 1856;Civ.Code,

1625;RiverislandColdStorage, Inc., (2013) 55 Cal.4 ' 1169, 1174.) However, the parol

evidence rule

does

not apply to exclude evidenceofthe circumstances under

which

the

agreement

wasmadeor towhichit relates, or toexplainanextrinsicambiguityor to otherwise

interpretthe terms

o f

the

agreement,

or to establish illegalityor

fraud.

(Code

Civ.

Proc, 1856,

subd. (g).)

CalPERS is mandated to investigate claims

for

retirement benefits. Further,

it

may require a

member orbeneficiaryto provide

information

itdeems necessaryto determine CalPERS'

liability withrespectto,and anindividual'sentitlement to CalPERS benefits. (Gov.Code,

20128.)

Accordingly,

the parol evidence ruledoesnot bar CalPERSfromexaminingthe terms

of

theNovember 2006 and

March

2007

agreements

to examine the circumstances underwhich

theagreementsweremade,explainan

extrinsic

ambiguity,or establish illegalityorfraud.

CityCouncil

Resolution

No.07-68 authorized the mayor toexecutethefirst amendment to the

2006 Contract.(AR,418, 3615, 3616.) TheC ity

Councilalso

believed that

it

was amending the

2006 Contract to incorporate thelanguagerecommended by CalPERS, and that the amendment

wouldnotchangethe costoftheoriginalNovember 2006 Contract. The way to determine

whether that was truee.g., whether the $305,844 claimed by Petitioner was pensionablewas

toexamine the differences between the November 2006 and

March

2007 Contracts. (Id.)

Further, after CalPERS communicated toVallejothat various items

in

the November 2006

Contract were nonpensionable,Vallejothenforwardedto CalPERS the

March

2007 contract

with

a substantially higherbasesalary.

Accordingly,

the parol evidence rule

does

not

prohibit

CalPERSfrom

examining

the two

contracts.

The Court rejects Pefitioner's other argument, that CalPERS is bound by theMarch2007

contract,becauseit sought to

reform

amutualmistakethat the parties thought they were

negotiating

for$305,844

in

pensionable compensation. Theprincipleso fcontractinterpretation.

10


11/13

and what Petitioner andVallejomay

have

intended, do not trump CalPERS'authorityto review

aclaim forretirement benefits.

vi . Estoppel

Pefifioner

claims that CalPERS is estopped

from

denying

him

the

f i i l l

amount

of

hisrequested

pension. This argument is

without

merit.

Equitable estoppel may beassertedagainst the govemment insomecircumstances. {Medinav.

Board

o f

Ret. (2003) 112Cal.App.4 '864, 868.) The requisite elementsforequitable estoppel

against a private party are: (1) the party to be estopped was apprised

of

the facts, (2) the party to

be estopped intended by conduct to induce reliance by the otherparty,or acted so as tocausethe

other party reasonably to believe reliance was intended, (3) the party asserting estoppel was

ignorantofthe

facts, and (4) the party asserting estoppel suffered injuryin reliance on the

conduct.{Ibid) The govermnent may be bound by an equitable estoppel in the

same

manner as

a private party when the elements requisite to such an estoppel against a private party arepresent

and,

in

the considered

view

of

a

court

ofequity,

the

injustice

which would

result

from

a

failure

to

upholdan estoppel is of

sufficient

dimensiontojust ifyanyeffectuponpublicinterest orpolicy

which wouldresultfromthe raisingofan estoppel. {Id.atpp.868-869.)

The elements of estoppel are not met. Namely,Pefifionerdidnot reasonablyrelyon any

representations or omissions fromCalPERS. Rather, the facts show that he was aware that there

may be problemsassociatedwith

converting

non-pensionable items to

base

pay. Additionally,

the Court declines to exercise any equitable power after considering the equities on bothsides

of

the dispute.

{Cortezv.

PurolatorA ir

Filtration

Prods. (2000) 23 Cal.4 ' 163, 179-180.) The

Courtfinds

hat itwouldnot be equitable to award Petitioner the vastly increased pension that he

seeks.

vii.

Laches

Petifionerclaims that the doctrine

of

laches barsCalPERSfrom

reviewing

his amended

employment contract inevaluafinghisclaim

for

retirement benefits. The Court rejects this

argument. Laches may apply to apublicagency that unreasonably delays in taking action

against the party, and the party is prejudiced as a result

ofthat

delay. {Cityand

Countyof

San

Francisco v.Pacello (1978) 85Cal.App.3d637, 644-645.) Petitioner

asserts,

but has not shown

that the delay was unreasonable, nor has heassertedany prejudice arisingfromthe delay.

viii.

Other claims

Petitioner's otherclaims,that CalPERS has discriminated against him,that CalPERS' actions are

barred by the

statute

of

limitations,and Petitioner's

requestfor

attorneyfeespursuant to

Govemment Code section 800 or any other applicablefeesor

costs,

are

without

merit.

III .

D I S P O S I T I O N

The Petition is

DENIED.

CounselforRespondent is directed toprepareaformalorder,

incorporatingthe Court's

ruling

as an

exhibit

thereto, and a

separatejudgment,

submit them to

11


12/13

counsel

for

the parties

for

approval as toform ,and thereafter submit them to the Court

for

signature,

in

accordancewith

Califomia

Rules ofCourt,Rule 3.1312.

R U L I N G A F T E R

H E A R I N G

The matter was argued and

submitted.

The Court

affirms

the tentativerulingwiththefollowing

modifications.

Atoralargument, the parties extensively argued whether Petitioner'shiringand compensation

negotiations were the product

of

underhanded dealings between Petitioner andVallejo.The

Courtreachedits decision on the merits by considering the applicable

law.

For thisreason,the

Court'srulingpurposely

does

not consider

address

any political considerations raised by the

parties, such as whetherVallejoviolatedtheBrown

Act.

The

fifth

and last paragraph, appearing at thebottom

of

page7, is stricken and replacedwiththe

following

paragraph:

First,

the value

of

thesecomponents

of

Petitioner's pay is excluded under the

PERL.

(Gov.

Code,20636, subd.(c).) Government Code section 20636,subdivision(c) excludesfromthe

definitionof special compensation

(A )Final

settlement

pay. (B)Payments

made

for

additional

servicesrendered outside

of

normalworkinghours, whether paid

in

lumpsum or otherwise [and]

(C)

Other payments the board has not

affirmatively

detemiined to be special compensation.

CalPERS has notaffirmafivelydetermined that

these

items are special compensation.

Thecitafionto Govemment Codesecfion20636, appearing

in

the last

line

ofthe second

full

paragraph onpage8, is stricken and changed to

(Gov.

Code,

20636, subd.

(c)(7)(A).)

At

the hearing. Counsel

for

CalPERS averred that Petitioner actually sought $349,356 in

pensionable compensation, but CalPERS

found

that Petitioner had compensationearnable of

$246,732 and retirement benefits

of

$216,446. Thesechanges

in

detaildo notaffectthe Court's

ruling.

Petitioner challenges CalPERS' decision,

which

the Court

upholds. Additionally,

the

parties

agree

that Petitioner claims that he isenfifiedto an annualunmodifiedretirement

allowance

of

approximately$305,000, rather than $216,446. (Opposition,2:14-16.)

12


13/13

S U P E R I O R

C O U R T

O F

CALIFORNIA

C O U N T Y

O F

S A C R A M E N T O

J O S E P H

T A N N E R

C a s e

Number:

34-2013-80001492

vs .

C E R T I F I C A T E

O F S E R V I C E

CALIFORNIA PU B L IC

E M P L O Y E E S B Y M AILING

(C .C .P .

S e c .

1013a 4))

R E T I R E M E NT S Y S T E M

et al

CITY O F V A L L E J O

I, the Clerk of the Superior Court of California, County of Sacramento, certify that

I am not a party to this cause, and on the date shown below I served the foregoing

RULING ON SUBMITTED MATTER: PETITION FOR WRIT OF ADMINISTRATAIVE

MANDAMUS AND WRIT OF MANDATE by depositing true copies thereof, enclosed in

separate, sealed envelopes with the postage fully prepaid, in the United States Mail at

720 9 Street, S acram ento, California, each of which envelopes was addressed

respectively to the persons and addresses shown below:

John Jensen Jeffrey Rieger

11500 West Olympic

Blvd,

Suite 550 REED SMITH LLP

Los Ange les, CA 90064 101 Second Street, Suite 1800

San Francisco, CA 94105-3659

I, the undersigned Deputy Clerk, declare under penalty of perjury that the

foregoing is true and correct.

SUPERIOR COURT OF CALIFORNIA

COUNTY OF SACRAMENTO

Dated:

December 22, 2014 By: M. GAR CIA, /Vf^C

Deputy Clerk

55pos.doc

Documents

Tanner v. CalPERS Ruling