Blaser v. State Teachers' Retirement System

• Decision Date: 10 July 2019
• Docket Number: H045071
• Citation: 249 Cal.Rptr.3d 701,37 Cal.App.5th 349
• Parties: Steven V. BLASER et al., Plaintiffs and Respondents, v. STATE TEACHERS' RETIREMENT SYSTEM, Defendant and Appellant.
• Court: California Court of Appeals Court of Appeals

37 Cal.App.5th 349

249 Cal.Rptr.3d 701

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

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

H045071

Court of Appeal, Sixth District, California.

Filed July 10, 2019

As Modified on Denial of Rehearing August 6, 2019

Attorneys for Defendants and Appellants Sheppard, Mullin, Richter & Hampton LLP State Teachers' Retirement, System: Raymond C. Marshall, Robert J. Stumpf, Jr.

Attorneys for Plaintiffs and Respondents Law Offices of Bennett, Sharpe, Bennett Steven V. Blaser et al.: & Licalsi, Inc., Barry J. Bennett, Eric J. Licalsi, JRG Attorneys at Law, Robert E. Rosenthal, Sergio H. Parra

BAMATTRE-MANOUKIAN, J.

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. )¹ In March 2014, William Baxter and 10 other retired teachers (the Baxter petitioners) formerly employed by the Salinas Unified High School District (District) filed a petition for a peremptory writ of administrative mandamus, naming CalSTRS as respondent and the District as real party in interest. (See Baxter v. State Teachers' Retirement System (2017) 18 Cal.App.5th 340, 351, 227 Cal.Rptr.3d 37 ( Baxter ).) The Baxter petitioners sought relief to prevent CalSTRS from continuing to reduce their monthly retirement benefit payments and to restore prior monies they claimed CalSTRS had wrongfully withheld. ( Ibid. ) CalSTRS made the deductions to recoup overpayments that had been made to the Baxter petitioners as a result of a years-long miscalculation by the District of their monthly retirement benefits. ( Id. at p. 347, 227 Cal.Rptr.3d 37.) The trial court held that the three-year statute of limitations (§ 22008, subd. (a)) barred CalSTRS from (1) recouping prior overpayments made to the Baxter petitioners by adjusting downward their future monthly benefits, and (2) reducing their future monthly benefits to reflect the correct calculation of their benefits. ( Baxter , supra , at pp. 347-348, 227 Cal.Rptr.3d 37.) In December 2017, 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. ( Id. at p. 349, 227 Cal.Rptr.3d 37.) This court found that the continuous accrual theory applied. ( Id. at p. 382, 227 Cal.Rptr.3d 37.) Under this theory, " ‘a series of wrongs or injuries may be viewed as each triggering its own limitations period, such that a suit for relief may be partially time-barred as to older events but timely as to those within the applicable limitations period. [Citation.]’ [Citation.]" ( Id. at pp. 378-379, 227 Cal.Rptr.3d 37.)

The present action is a successor to the suit by the Baxter petitioners. In February 2016—while the Baxter appeal was pending—respondents in this appeal, who are 31 retired District teachers (hereafter collectively Teachers),² filed a petition for writ of mandate and a complaint for declaratory and injunctive relief against CalSTRS and the District. Like the Baxter petitioners, Teachers challenged reductions that CalSTRS had made and continued to make to their monthly retirement benefits to recoup prior overpayments and to adjust ongoing monthly benefits to their proper amounts. The overpayments were the result of the same miscalculation the District had made to the Baxter petitioners' monthly retirement benefits.

In July 2017—five months prior to this court's decision in Baxter —the trial court granted Teachers' petition for writ of mandate in this case, concluding that CalSTRS's claims to reduce Teachers' retirement benefits and collect overpayments were time-barred. The trial court held that CalSTRS, by no later than July 30, 2010, "was ‘aware of the possibility’ " that there were District schoolteachers other than the Baxter petitioners whose retirement benefits had been incorrectly calculated by the District, but that "CalSTRS did not take action until 2014, more than three years later." In holding that CalSTRS was barred from recouping prior overpayments from Teachers or from reducing future payments to correct the District's prior miscalculation, the trial court concluded that the continuous accrual theory did not apply.

CalSTRS appealed from the judgment. In its appeal, CalSTRS challenges the trial court's rejection of the continuous accrual theory. CalSTRS urges that, under Baxter , the continuous accrual theory applies, and that "CalSTRS is time-barred only as to claims relating to pension benefit payments made more than three years before CalSTRS took ‘action’ by reducing each individual teacher's monthly benefit payment[ ]."

We hold—following Baxter , supra , 18 Cal.App.5th 340, 227 Cal.Rptr.3d 37, which in turn relied on Supreme Court precedent, including Dryden v. Board of Pension Commrs. (1936) 6 Cal.2d 575, 59 P.2d 104 ( Dryden )—that the continuous accrual theory applies here to the periodic pension benefit payments made to Teachers. Thus, CalSTRS was time-barred from pursuing any claim against Teachers as to pension benefit overpayments made more than three years before CalSTRS commenced an action. But CalSTRS is not barred by the statute of limitations from pursuing any claim concerning periodic overpayments to Teachers and adjustments to Teachers' future monthly benefits, where the payment accrued not more than three years prior to commencement of an action. Further, the trial court held that CalSTRS commenced an "action" by reducing Teachers' monthly benefit payments beginning in 2014. But we decide—as we did in Baxter —that the reduction in benefits made by CalSTRS, under the factual and procedural context presented here, did not constitute the commencement of an "action" within the meaning of the statute of limitations. Instead, we conclude that CalSTRS constructively commenced an "action" at the time Teachers herein filed their verified petition and complaint in the superior court on February 1, 2016. Under well-established legal principles, the filing of a complaint by the plaintiff tolls or suspends the statute of limitations as to any counterclaims existing in favor of the defendant on the date of such filing. ( Union Sugar Co. v. Hollister Estate Co. (1935) 3 Cal.2d 740, 746, 47 P.2d 273 ( Union Sugar ).) Therefore, CalSTRS is deemed to have commenced an "action" to toll or suspend the statute of limitations when Teachers filed suit on February 1, 2016. Accordingly, we hold that CalSTRS may assert claims to recoup overpayments for past monthly payments accruing on or after February 1, 2013, and it may adjust future monthly payments to recoup prior overpayments (on benefit payments that accrued on or after February 1, 2013) and to correct the District's prior miscalculation of monthly benefits going forward. We will reverse the judgment.

I. FACTUAL AND PROCEDURAL BACKGROUND³

A. Pre-Suit Background

Teachers are retired employees of the District who had been classroom teachers.⁴ Each of the Teachers is a member 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.

"CalSTRS was created by the Legislature in 1913 as a retirement system for credentialed California teachers and administrators in kindergarten through community college. (See § 22000 et seq. (Teachers' Retirement Law).)" ( Duarte v. California State Teachers' Retirement System (2014) 232 Cal.App.4th 370, 384, 181 Cal.Rptr.3d 169 ( Duarte ).) "CalSTRS is the state agency responsible for managing contributions made by employees and member school districts to the State Teachers' Retirement Fund. [Citation.]" ( Baxter , supra , 18 Cal.App.5th at p. 349, 227 Cal.Rptr.3d 37.)

"On September 29, 1999, the District and the Salinas Valley Federation of Teachers (SVFT) entered into a tentative collective bargaining agreement for the 1998-1999 and 1999-2000 school years. That agreement included an additional schedule for teachers who taught a sixth period, and changed the definition of a normal workday to include the extra period for all sixth period teachers. Each subsequent iteration of the collective bargaining agreement ‘contained provisions defining the sixth period teachers as a separate class of employees and the district has developed two distinct salary schedules that reflect the compensation paid to the two classes of certificated employees.’ " ( Baxter , supra , 18 Cal.App.5th at p. 349, 227 Cal.Rptr.3d 37.)

The Teachers' Retirement Law was amended in 2000 to provide, effective January 1, 2001, 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. Under the DBS Program, the member receives a lump sum or annuity based upon his or her contribution to that program.

"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] ......