Blaser v. Cal. State Teachers' Ret. Sys.

• Decision Date: 21 November 2022
• Docket Number: H049277
• Citation: 86 Cal.App.5th 507,302 Cal.Rptr.3d 428
• Parties: Steven V. BLASER et al., Plaintiffs and Respondents, v. CALIFORNIA STATE TEACHERS' RETIREMENT SYSTEM, Defendant and Appellant.
• Court: California Court of Appeals Court of Appeals

86 Cal.App.5th 507

302 Cal.Rptr.3d 428

Steven V. BLASER et al., Plaintiffs and Respondents,

v.CALIFORNIA STATE TEACHERS' RETIREMENT SYSTEM, Defendant and Appellant.

H049277

Court of Appeal, Sixth District, California.

Filed November 21, 2022

Attorneys for Plaintiffs and Respondents: Steven V. Blaser et al., Barry Jay Bennett, Ann Marie Bennett, Fresno, Law Offices of Bennett, Sharpe & Bennett Inc., Robert E. Rosenthal, Paul Anthony Rovella, JRG Attorneys at Law

Attorneys for Defendant and Appellants: California State Teachers' Retirement System, Robert J. Stumpf Jr., Raymond Charles Marshall, San Francisco, Sheppard Mullin LLP

Attorney for Real Party in Interest: Salinas Union High School District, Eric James Bengtson, San Jose, Davis & Young, APLC

BAMATTRE-MANOUKIAN, ACTING P.J.

I. INTRODUCTION

California State Teachers' Retirement System (CalSTRS) is the state agency responsible for managing contributions made by employees and member school districts to the State Teachers' Retirement Fund. (See Ed. Code, § 22000 et seq. ; Teachers' Retirement Law.)¹ In February 2016, respondents, who are 31 retired teachers (Teachers) formerly employed by the Salinas Unified High School District (District), filed a petition for writ of mandate and a complaint for declaratory and injunctive relief against CalSTRS and the District. Teachers challenged reductions that CalSTRS had made and continued to make to their monthly retirement benefits after determining that the District had erred in its reporting to CalSTRS; those errors resulted in the overstatement of Teachers' monthly benefits. The reductions by CalSTRS adjusted ongoing monthly benefits to their proper amounts and recouped prior overpayments. In July 2017, the trial court granted the petition, concluding that CalSTRS's claims to reduce Teachers' retirement benefits and collect overpayments were time-barred.

In July 2019, a panel of this court reversed, concluding the trial court had erred in holding that CalSTRS's efforts to recoup overpayments were time-barred as to all monthly retirement payments, both past and future. (See Blaser v. State Teachers' Retirement System (2019) 37 Cal.App.5th 349, 249 Cal.Rptr.3d 701 ( Blaser I ).) This court found that the continuous accrual theory applied. ( Id. at pp. 365-368, 249 Cal.Rptr.3d 701.) In so concluding, we relied on our prior decision, Baxter v. State Teachers' Retirement System (2017) 18 Cal.App.5th 340, 227 Cal.Rptr.3d 37 ( Baxter ). There, the pension benefits of 11 other retired schoolteachers (collectively, the Baxter petitioners) had likewise been overstated due to reporting errors by the District, and the case thus concerned "the same periodic (monthly) pension payments" at issue in Blaser I. ( Blaser I, supra , at p. 368, 249 Cal.Rptr.3d 701.) This court held in Blaser I that CalSTRS was not barred from adjusting to the correct amounts Teachers' monthly benefit payments accruing on or after February 1, 2013, and it was not barred from asserting claims for prior overpayments for periodic benefits accruing on or after that date. ( Blaser I, supra , at p. 378, 249 Cal.Rptr.3d 701.)

In their respondents' brief in Blaser I , Teachers had raised the defenses of equitable estoppel and laches, which they argued precluded CalSTRS from adjusting monthly benefits or from asserting overpayment claims. Because these defenses had not been raised below and therefore the trial court had not considered them, this court remanded the case for further proceedings to determine, first, whether Teachers had forfeited the defenses by failing to assert them, and second (if the trial court determined they had not been forfeited), whether either defense served as a bar to CalSTRS's adjustment of benefits and its claims for overpayments of prior benefits. ( Blaser I, supra , 37 Cal.App.5th at p. 379, 249 Cal.Rptr.3d 701.)

On remand, after briefing and argument, the trial court decided both questions in favor of Teachers. In an order filed March 16, 2021, the court ruled that Teachers were not barred by forfeiture from asserting equitable estoppel and laches, and it held that the two defenses applied. In the judgment and writ of mandate filed May 21, 2021, the court directed that CalSTRS refrain from reducing Teachers' monthly pension benefits or from seeking recovery of claimed overpayments.

CalSTRS challenges the judgment, arguing, inter alia, that (1) the undisputed evidence shows that Teachers forfeited the defenses by never asserting them prior to remand; (2) on the merits, estoppel may not be asserted in this instance against the public agency, CalSTRS, because to do so would run contrary to statutory limitations upon its conduct; and (3) laches, an equitable defense, is not available here to claims seeking money judgments.

We conclude that the equitable estoppel and laches defenses could not be asserted in this case as a matter of law. While equitable estoppel may be asserted in a proper case against a governmental entity, it "may not be invoked to directly contravene statutory limitations." ( Medina v. Board of Retirement (2003) 112 Cal.App.4th 864, 869, 5 Cal.Rptr.3d 634 ( Medina ).) In this case, the court erred in applying equitable estoppel because doing so required CalSTRS to continue to miscalculate Teachers' monthly pension benefits in contravention of the Education Code. We hold further that laches, which is an equitable defense, was unavailable to defeat the claims of law at issue here. And, related to this conclusion, because this court previously held in Blaser I that CalSTRS was not barred—based upon the application of the continuous accrual theory—from making benefit adjustments or from asserting overpayment claims for benefits accruing on or after February 1, 2013, laches may not be asserted to negate this prior determination. Because of these conclusions, we need not decide whether Teachers forfeited the defenses of equitable estoppel and laches by failing to raise them below prior to the appeal in Blaser I.

Accordingly, we will reverse the judgment.

II. FACTUAL AND PROCEDURAL BACKGROUND²

A. Pre-Suit Background

The 31 petitioners/Teachers in the present case—like the 11 Baxter petitioners ( Baxter, supra , 18 Cal.App.5th at p. 349, 227 Cal.Rptr.3d 37 )—are classroom teachers who had taught within the District before retiring and becoming "member[s] of CalSTRS and of its Defined Benefit Program (DB Program). A portion of Teachers' compensation was reported by the District as being deferred to Teachers' respective DB Program accounts for the purpose of their receiving postretirement benefits." ( Blaser I, supra , 37 Cal.App.5th at p. 356, 249 Cal.Rptr.3d 701.)

As this court explained in Baxter : "Schools within the District utilized a six period schedule. [Schoolteachers] within the District typically taught five of those periods and used the additional period to prepare prospective lesson plans. Some of them, however, including [the Baxter petitioners], agreed to teach during their sixth period time for additional compensation, and to shift their preparation time to before or after the regular school day. [The Baxter petitioners] believed that this additional compensation would be credited toward their retirement plan [i.e., the DB Program, which was] ... administered by CalSTRS." ( Baxter, supra , 18 Cal.App.5th at p. 349, 227 Cal.Rptr.3d 37.) Similarly here, "Teachers elected to work the sixth period for one or more school years, and in doing so, believed that their compensation for that work would be credited toward their respective DB Program accounts." ( Blaser I, supra , 37 Cal.App.5th at p. 357, 249 Cal.Rptr.3d 701.) The manner in which the District reported to CalSTRS the compensation earned for sixth-period work by the Baxter petitioners and by Teachers—upon which CalSTRS based its calculation of the schoolteachers' monthly retirement benefits—was at the heart of the controversy in both cases.³

We note that legislation was enacted, effective January 1, 2001, that provided supplemental benefits for members of the DB Program. ( § 25000 ; see Stats. 2000, ch. 74, § 69, p. 1261.) "As a result, a Defined Benefit Supplement Program (DBS Program) was established to provide, inter alia, retirement benefits that are separate from those paid under the DB Program. After the DBS Program was established by statute, the hours that CalSTRS members worked beyond full-time work (i.e., in excess of 1,000 hours), such as overtime or summer school work, were creditable to the DBS Program." ( Blaser I, supra , 37 Cal.App.5th at p. 357, 249 Cal.Rptr.3d 701.)

On December 1, 2008, an accounting firm retained by CalSTRS to audit District records determined that the District had adopted a practice of coding improperly the sixth-period earnings of the Baxter petitioners as creditable to their respective DB Program accounts. Thereafter, on May 27, 2010, CalSTRS issued a draft audit report adopting this conclusion and indicated that the District's incorrect coding of sixth period earnings had resulted in 15 CalSTRS members who were sampled in the audit, including the Baxter petitioners, receiving overstated monthly retirement benefits. CalSTRS issued its final audit report on July 30, 2010, upholding the draft report's finding. ( Baxter, supra , 18 Cal.App.5th at pp. 349-350, 227 Cal.Rptr.3d 37.)

CalSTRS mailed the final audit report to the District and to the Baxter petitioners. ( Baxter, supra , 18 Cal.App.5th at p. 371, 227 Cal.Rptr.3d 37.) At the same time, "CalSTRS apprised each of the [Baxter petitioners] in separate letters that it had concluded from its final audit that the District had ‘incorrectly reported (coded) your sixth period teaching assignment (extra duty) earnings ... as creditable compensation to the Defined Benefit (DB) Program for the ... school year ending in your retirement. Under state law, these extra duty assignment payments should have been credited to the Defined Benefit Supplement (DBS) program, thus it does not count...