Bishop v. State, Division of Retirement

• Decision Date: 22 March 1982
• Docket Number: No. AE-458,AE-458
• Parties: 4 Ed. Law Rep. 681 Rex C. BISHOP, Jessie N. Karp, and Stanley E. Rosenberger, Appellants, v. STATE of Florida, DIVISION OF RETIREMENT, Appellee.
• Court: Florida District Court of Appeals

Page 776

413 So.2d 776

4 Ed. Law Rep. 681

Rex C. BISHOP, Jessie N. Karp, and Stanley E. Rosenberger, Appellants, v. STATE of Florida, DIVISION OF RETIREMENT, Appellee.

No. AE-458.

District Court of Appeal of Florida,

First District.

March 22, 1982.

Rehearing Denied May 21, 1982.

Bonnie S. Satterfield of Patterson & Traynham, Tallahassee, for appellants.

William A. Frieder, Miami, for appellee.

McCORD, Judge.

Appellants, three retired teachers, appeal from a final order of the State of Florida Division of Retirement, denying their request for either appropriate adjustments in their annuity payments under the Teachers Retirement System or return of the funds they had contributed to the annuity program under that system.

Appellants are teachers who retired in 1973 and 1974, respectively, having satisfied the requirements of Section 238.07(2)(d), Florida Statutes (1973) (Plan D), of the Teachers Retirement System. This plan allows for a teacher's retirement upon reaching the age of fifty after twenty-five years of service. It provides a pension equal to 1% of the individual member's average final compensation for teaching times the number of years served as a teacher. It also provides an annuity funded by the individual teacher's accumulated contributions. Plan D was designed to provide an annual retirement allowance equal to approximately one-half of the average final compensation of the teacher after twenty-five years of service at age fifty.

An actuary assisted in setting up Plan D in 1946; however, no actuary was again utilized by the administrators of the fund to review the plan until the mid-1950's. The initial rate of an individual teacher's contribution to Plan D had been set at 9.24% to 13.58% of his or her salary, depending upon the teacher's age when entering the plan. By 1951 it had become apparent to the administrators that Plan D was not obtaining the funds required to provide the 1% annuity. This shortfall was due to several factors: a failure to update the actuarial review, low earnings on investments, and increasing teacher's salaries. Despite this shortfall, the contribution rate was raised only once in 1957 to 9.49% to 13.83% of salary because of a legislative increase in the Survivor's Benefit Fund. § 238.09(5), Fla.Stat. (1957). As a result of this shortfall in Plan D, appellants are receiving approximately $1,000 less per year in retirement pay, respectively. While the appellants retired in 1973 and 1974, this petition for administrative relief pursuant to Section 120.57(1), Florida Statutes, was not initiated until 1980. Holding that the statute of limitations has run on appellants' claims, the hearing officer dismissed their petition. The Division of Retirement adopted this recommendation in its final order.

The question arises as to whether this claim sounds in contract or in tort. We are of the opinion that the legal relationship between the appellants and the Division of Retirement is that of contract. By electing to accept the provisions of Plan D, and having the necessary deductions drawn from their salaries in order to fund the retirement annuity, petitioners, upon retiring, became entitled to their pensions. The terms of the agreement are to be found in the statute, Sections 238.07(2)(d) and 238.07(6), Florida Statutes. As such, the right to benefits provided under the pension plan became vested rights of contract. See State ex. rel. O'Donald v. Jacksonville Beach, 142 So.2d 349 (Fla. 1st DCA 1962), aff'd, 151 So.2d 430 (Fla.1962).

The next consideration is at what time did the appellants' causes of action accrue. They retired in 1973 and 1974, at which time their retirement benefits vested. Arnow v. Williams, 343 So.2d 1309, 1310 (Fla. 1st DCA 1977). The Division thus urges that any breach of contract occurred as of the appellants' respective retirement dates and, therefore, that the statute of limitations has long since run on that breach. We disagree. It is well established that in the case of debts payable by installments, the statute of limitations runs against each installment from the day it becomes due. Isaacs v. Deutsch, 80 So.2d 657 (Fla.1955). Here, the Division issues each month to appellants a retirement payment. If each payment is less than the amount to which appellants are entitled, the Division's failure to pay the amount to which they are entitled would constitute a continuing breach of contract. We, therefore, disagree with the hearing officer's and the Division's conclusion that the statute of limitations had run on this contract claim.

This conclusion, however, does not end our analysis. Section 238.07(6) provides:

Upon service retirement under plan D, a member shall receive a service retirement allowance which shall consist of:

(a) an annuity which shall be the actuarial equivalent of his accumulated contributions at the time of his retirement; and

(b) a pension, in addition to his annuity, of one one-hundredth of his final compensation multiplied by the number of his years of membership service since he last became a...