Bates v. City of Richland, 20245-3-III.
| Decision Date | 23 April 2002 |
| Docket Number | No. 20245-3-III.,20245-3-III. |
| Parties | L. Vernon BATES, Dale Brunson, George Derrick, Roger Duchemin, Richard Lohdefinck, D. Arthur Manuel, Thomas McGuire, Kenneth Taylor, James Thomas, Gerald Thomas, and Roy Turner, Appellants, v. CITY OF RICHLAND, a municipal corporation, Respondent. |
| Court | Washington Court of Appeals |
Daryl D. Jonson, Cowan, Walker, Jonson & Moore, Richland, for Appellants.
David A. Elofson, Menke, Jackson, Beyer, Elofson & Ehlis, Yakima, for Respondent.
Each of the appellants ("Pensioners") retired from the Richland Police Department at the highest step for his respective position and participates in LEOFF I pursuant to RCW 41.26.040(2). The Pensioners' pension benefits are calculated under RCW 41.20.050 or .060, which provides that each pensioner is entitled to a pension of "fifty percent of the amount of salary at any time hereafter attached to the position" held by the retired member for the year preceding the date of his retirement. Until 1999, the Pensioners' pensions were calculated using Richland's step and grade salary structure that provided for advancement through steps within a given rank based on longevity and satisfactory performance of service. In 1999, Richland implemented a performance-based system, and began calculating the Pensioners' pensions based on 50 percent of the midpoint of the salary range for each position rather than 50 percent of the highest step for each position.
The Pensioners filed this declaratory judgment action seeking a determination of their rights under the applicable statutes, and damages for breach of contract and breach of promise. The court granted summary judgment in favor of Richland. On appeal, the Pensioners contend: (1) the decision to calculate their pensions based on the midpoint of the new salary range impairs an existing contractual obligation in violation of article I, section 23 of the Washington Constitution; (2) Richland is obligated by statute, contract, and administrative practice to calculate their pensions based on the highest step for each position; (3) promissory estoppel prevents Richland from changing the method for calculating their pensions; and (4) the court erred by considering hearsay evidence when deciding the motion for summary judgment. Additionally, the Pensioners seek prejudgment interest or, alternatively, double damages for willful nonpayment of wages under RCW 49.52.070, and attorney fees under RCW 49.48.030 and RCW 49.52.070.
We conclude that Richland's performance-based salary system does not maintain parity between the pensions of the Pensioners and the salaries of their currently-employed counterparts. For that reason, calculating the Pensioners' pensions based on the mid-point of the performance-based salary system violates the Pensioners' rights under RCW 41.20.050 and .060. We hold that the Pensioners are entitled to have their pensions calculated based on the salary for the highest step for their positions under Richland's performance-based system. We deny the Pensioners' request for prejudgment interest, double damages, and attorney fees. We reverse and remand for the entry of a judgment in favor of the Pensioners.
The Pensioners were each hired by the City of Richland as police officers before March 1, 1970, and later retired with varying periods of service. In 1959, Richland established the Richland Police Relief and Pension Plan ("Richland Plan") for its officers pursuant to chapter 41.20 RCW. All of the Pensioners are retired participants in the Richland Plan. Each Pensioner retired at the highest step available for his position.
In 1969, the Legislature combined all municipal police and firefighter pension plans into a single statewide system. The Legislature created the Washington Law Enforcement Officers' and Fire Fighters' Retirement System ("LEOFF I"), which became effective on March 1, 1970. RCW 41.26.040(2). As police officers employed by Richland, all of the Pensioners became participants in LEOFF I because their participation was mandated by RCW 41.26.040(2). LEOFF I is administered by the Department of Retirement Systems ("DRS").
The LEOFF I legislation did not terminate the Richland Plan. Under RCW 41.26.040(2), the Pensioners' service continued to be credited under the Richland Plan and LEOFF I as benefits under both plans are coordinated. Specifically, RCW 41.26.040(2) provides that for purposes of computation of retirement benefits, pensioner's "creditability of service and eligibility for service or disability retirement and survivor and all other benefits shall continue to be as provided in such prior retirement act, as if transfer of membership had not occurred."
The Pensioners' pension benefits are those specified in RCW 41.20.050 or .060, which provide that each pensioner is entitled to a pension—based on service or disability—of "fifty percent of the amount of salary at any time hereafter attached to the position" held by the retired member for the year preceding the date of his retirement. (Emphasis added.) An additional two percent of the salary attached to the position at retirement must be paid to pensioners for each year of service over 25. RCW 41.20.050, .060.
When each Pensioner retired, his pension under LEOFF I was calculated and paid by the DRS. If the LEOFF I pension was less than the pension specified in RCW 41.20.050 or .060, the difference was to be paid by Richland under the Richland Plan. RCW 41.26.040(2). Hence, the combined pension payments must equal the amount specified in RCW 41.20.050 or .060.
Until 1999, Richland maintained a step and grade salary structure for managers in its police department. This salary structure provided for steps or increments in the salary for each rank. Advancement from one step to another within the same rank was based upon longevity of service and satisfactory performance of duties. At the time of his retirement, each Pensioner had advanced to and was being paid at the highest salary step for his position.
The Pensioners contend—and Richland denies —that as each Pensioner retired, Richland promised each Pensioner that they would receive a pension equal to 50 percent of the salary for the highest step attached to the position from which they retired. Nevertheless, the parties agree that after each Pensioner retired, Richland paid each Pensioner a pension based on 50 percent of the salary payable to the highest step attached to the position from which he retired. This practice continued from 1959 until 1998.
In December 1998, pursuant to Resolution No. 92-98, Richland adopted a new performance-based pay and classification plan. Richland contends that each level of the step and grade system was based on a market rate for that step and grade. Richland points out that under the step and grade system, there was no method available for providing incentive or bonus payments to current employees. Richland maintains that the new pay system replaces the step and grade system with a unique performance-based system that uses the market rate to establish the midpoint of the salary schedule. In Richland's view, the ability to receive and retain payments over the salary midpoint is earned by exemplary—as opposed to satisfactory —performance.
After the adoption of the performance-based system, Richland began paying the Pensioners 50 percent of the midpoint of the salary range for the position from which each had retired, rather than the highest step as had been the practice since 1959. Hence, on January 1, 1999, Richland's Pension Board calculated the pensions due the Pensioners at 2.8 percent above the pensions paid in 1998, rather than at 50 percent of the highest step in the 1999 pay schedule. For the calendar year 2000, Richland increased the salary structure for active employees by 4 percent and also increased Pensioners' pensions by 4 percent over the 1999 level. Effective January 1, 2001, Richland increased the salaries for all active police officers by 3.2 percent of the 2000 wage scale and provided a comparable increase in the Pensioners' pensions. Although dissatisfied with the method of calculation, each Pensioner has received an increase in his retirement income. If the Pensioners' position is accepted, the cost to Richland is estimated to consist of a lump sum payment of $46,007.58, and annual costs of at least $20,000.
The Pensioners filed this action seeking a declaratory judgment under chapter 7.24 RCW. After considering both the Pensioners' and Richland's motions for summary judgment, the superior court granted Richland's motion. The Pensioners appeal. Standard of Review. When reviewing an order granting summary judgment, this court engages in the same inquiry as the trial court, considering all facts and reasonable inferences in the light most favorable to the nonmoving party. Kahn v. Salerno, 90 Wash.App. 110, 117, 951 P.2d 321 (1998). Once the moving party has established that there is no dispute as to any issue of material fact, the burden shifts to the nonmoving party to establish the existence of an element material to its case. Id. Bare assertions that a genuine material issue exists will not defeat a summary judgment motion in the absence of actual evidence. White v. State, 131 Wash.2d 1, 9, 929 P.2d 396 (1997).
In Washington, pension rights are contractual rights that vest at the beginning of the employment relationship. Bakenhus v. City of Seattle, 48 Wash.2d 695, 700, 296 P.2d 536 (1956). Pension rights vesting from the inception of employment become property rights and may not be divested unless the changes are equitable to the employee or are necessary to maintain the flexibility and integrity of the pension system. Eagan v. Spellman, 90 Wash.2d 248, 256, 581 P.2d 1038 (1978) (citing Bakenhus, 48 Wash.2d at 701, 296 P.2d 536). Article I, section 23 of the Washington Constitution and article I, section 10 of the United States Constitution...
To continue reading
Request your trial