Bilda v. County of Milwaukee

• Decision Date: 23 March 2006
• Docket Number: No. 2004AP2539.,2004AP2539.
• Citation: 2006 WI App 57,713 N.W.2d 661
• Parties: Geoffrey L. BILDA and Virginia Schumann, Individually, and as representatives of a class consisting of all members, participants, retirees and beneficiaries of the ERS in any given year that its administrative and operational expenses were paid for with its funds, including, but not limited to, all retirees and beneficiaries currently receiving benefits from the ERS, former employees of Milwaukee County who have an interest in the ERS but are not yet receiving benefits from it and all current employees of Milwaukee County that are members of the ERS regardless of whether their interest in the ERS has vested, Plaintiffs-Appellants,<SMALL><SUP>†</SUP></SMALL> v. COUNTY OF MILWAUKEE, Wisconsin, and Milwaukee County Employes' Retirement System Pension Board, Defendants-Respondents, Wisconsin Counties Mutual Insurance Company, Intervenor.
• Court: Wisconsin Court of Appeals

713 N.W.2d 661

2006 WI App 57

Geoffrey L. BILDA and Virginia Schumann, Individually, and as representatives of a class consisting of all members, participants, retirees and beneficiaries of the ERS in any given year that its administrative and operational expenses were paid for with its funds, including, but not limited to, all retirees and beneficiaries currently receiving benefits from the ERS, former employees of Milwaukee County who have an interest in the ERS but are not yet receiving benefits from it and all current employees of Milwaukee County that are members of the ERS regardless of whether their interest in the ERS has vested, Plaintiffs-Appellants,^† v. COUNTY OF MILWAUKEE, Wisconsin, and Milwaukee County Employes' Retirement System Pension Board, Defendants-Respondents Wisconsin Counties Mutual Insurance Company, Intervenor.

No. 2004AP2539.

Court of Appeals of Wisconsin.

Submitted on Briefs August 10, 2005.

Opinion Filed March 23, 2006.

On behalf of the plaintiffs-appellants, the cause was submitted on the briefs of John F. Fuchs of Fuchs, DeStefanis & Boyle, S.C., Milwaukee; Eugene O. Duffy and Kerry E. Dwyer of O'Neil, Cannon, Hollman, DeJong, S.C., Milwaukee.

On behalf of the defendant-respondent County of Milwaukee, the cause was submitted on the briefs of Alan M. Levy of Lindner & Marsack, S.C., Milwaukee.

On behalf of the defendant-respondent Milwaukee County Employes' Retirement System Pension Board, the cause was submitted on the briefs of Emery K. Harlan, Brian A. Price, and Erin C. Hughes of Gonzalez, Saggio & Harlan, L.L.P., Milwaukee.

Before LUNDSTEN, P.J., DEININGER and HIGGINBOTHAM, JJ.

¶ 1 DEININGER, J

Geoffrey Bilda and Virginia Schumann, class representatives for "members, participants, retirees and beneficiaries" of the Milwaukee County Employes' Retirement System, appeal a judgment that dismissed their action seeking compensation from and declaratory relief against Milwaukee County and its Employes' Retirement System Pension Board.¹ Bilda claims that a 1992 change in the way in which retirement fund administrative expenses are paid contravenes applicable state legislative enactments and constitutes a taking of property for a public purpose without just compensation, in violation of the Wisconsin Constitution. On cross-motions for summary judgment, the circuit court concluded that the 1992 change did not "diminish or impair ... benefits or other [participant] rights" and, thus, did not violate the quoted legislative limitation on the County's "home rule" over its retirement system. The court also concluded that there had been no taking of the plaintiffs' property, and, accordingly, no constitutional violation. The circuit court granted summary judgment to the County and dismissed the action with prejudice. We affirm the judgment doing so.

BACKGROUND

¶ 2 Milwaukee County administers a retirement system for its employees that is separate and distinct from the State of Wisconsin Retirement System established and governed under WIS. STAT. ch. 40 (2003-04).² Prior to 1965, however, the State Legislature, through a series of session laws beginning with 1937 Wis. Laws, ch. 201, directed how the Milwaukee Employe Retirement System was to be administered. The system provides retirement, disability and death benefits to participating county employees. It is administered by a pension board made up of employees and county board designees. 1937 Wis. Laws, ch. 201, § 8(5), directed the pension board to maintain a separate "Expense Fund," to which "shall be credited all money provided by the county to pay the administration expenses of the retirement system, and from which shall be paid all the expenses necessary in connection with the administration and operation of the system." Id. The board was also directed to "[a]nnually ... estimate the amount of money which shall be deemed necessary to be paid into the expense fund during the ensuing year for the expenses of operation of the retirement system, and such amount shall be paid to the expense fund for this purpose by the county." Id.

¶ 3 In 1965, the legislature granted the County "home rule" over its employee retirement system. The legislation provided:

Each county which is required to establish and maintain a retirement system pursuant to this act is hereby empowered by county ordinance, to make any changes in such retirement system which hereafter may be deemed necessary or desirable for the continued operation of such retirement system, but no change shall operate to diminish or impair the annuities, benefits, or other rights of any person who is a member of such retirement system prior to the effective date of any such change.

1965 Wis. Laws, ch. 405, § 2. In addition, "for the further purpose of safeguarding the stability" of the Milwaukee County Employe Retirement System, ch. 405 directed the creation of a "pension study commission" in Milwaukee County "to have jurisdiction over all proposed changes" to the system. Id. The legislature charged the commission to "advise the county board as to the actuarial effect and the cost implications of all proposed changes," with a further directive that "[n]o change in [the] retirement system shall be considered by the county board until it has been referred to the commission... and until said commission has submitted a written report on the proposed change." Id.

¶ 4 Milwaukee County responded to the "home rule" legislation by enacting Chapter 201 of the county ordinances, which sets out provisions for administering the Employes' Retirement System, largely incorporating those enacted by the legislature in session laws since 1937. As originally enacted, the county ordinance specified that "all expenses in connection with the administration and operation of the retirement system are hereby made obligations of the County." In 1992, however, the County amended its ordinance to provide that "all expenses in connection with the administration and operation of the retirement system are hereby made obligations of the retirement system." The circuit court stated in its summary judgment decision that "[t]hereafter, [the retirement system] paid for its own administrative expenses and the County made annual contribution payments which were and are actuarially sufficient to pay the costs of ... benefit obligations as well as ... administration," a fact which Bilda does not dispute.³

¶ 5 Prior to the County Board's adoption of the 1992 ordinance amendment regarding the payment of administrative expenses, the Milwaukee County Pension Study Commission met to consider the proposed amendment and an actuarial report regarding it. The minutes of its meeting indicate that the commission received input from County human resources personnel, as well as from members of the pension board, its attorney and its actuary. The minutes reflect that the actuary informed the pension study commission that

there are adequate funds for this purpose [paying retirement system administrative expenses] and the County is making contributions to make sure that continues. He stated that he did not see that the payment of these costs each year would materially affect the funding of the plan, as long as those monies are reimbursed to the fund, over time, through additional contributions.

The commission voted unanimously to "recommend adoption of the proposed ordinance," which the Milwaukee County Board did several days later on November 5, 1992.

¶ 6 Bilda commenced this action on June 18, 2003, on behalf of a class consisting of "all persons who were or are members, retirees and beneficiaries of the Milwaukee County Employes' Retirement System in any given year that [the system] administrative and/or operational expenses were paid for with funds of [the system]." Bilda alleged that payment of administrative, operational and investment management costs directly out of system funds and/or earnings "was contrary to law and has operated to diminish or impair the annuities benefits or other rights" of class members. He also asserted that the retirement system's payment of these costs "diminished and impaired the ... rights" of class members in the system's "funds and earnings of those funds and constitutes an unconstitutional taking of a substantial property interest without just compensation in violation of Article I, § 13 of the Wisconsin Constitution."

¶ 7 Bilda and the County both moved for summary judgment. The court granted the County's summary judgment motion, denied Bilda's and ordered Bilda's complaint dismissed with prejudice. Bilda appeals the subsequent judgment that dismissed the action and awarded the County statutory costs.

ANALYSIS

¶ 8 We review the dismissal of an action on summary judgment de novo, applying the same methodology and standards as the trial court. See Green Spring Farms v. Kersten, 136 Wis.2d 304, 315, 401 N.W.2d 816 (1987). If there are no disputed issues of material fact, summary judgment is proper where the moving party is entitled to judgment as a matter of law. See id. Bilda does not argue that disputed material facts preclude summary judgment. Rather, he claims the circuit erred in concluding that the County, and not he, was entitled to judgment as a matter of law.

¶ 9 Bilda challenges the County's current method of paying the administrative expenses of its retirement system on two grounds, one substantive and the other procedural. Substantively, he claims that the County's annual contribution to the retirement fund of an amount sufficient to meet the anticipated payments of benefits to system participants and the system's amortized administrative costs, instead of directly paying for administrative expenses of the system on an annual basis, violates state legislative directives and the takings clause of the Wisconsin Constitution. His procedural claim is that the Milwaukee County Board, when it amended the County's ordinance in 1992 to establish the current method of paying...