City of Dallas v. Arnett

• Decision Date: 16 December 1988
• Docket Number: No. 05-87-01233-CV,05-87-01233-CV
• Citation: 762 S.W.2d 942
• Parties: CITY OF DALLAS, et al., Appellants, v. George C. ARNETT, et al., Appellees.
• Court: Texas Court of Appeals

Page 942

762 S.W.2d 942

CITY OF DALLAS, et al., Appellants, v. George C. ARNETT, et al., Appellees.

No. 05-87-01233-CV.

Court of Appeals of Texas,

Dallas.

Dec. 16, 1988.

Rehearing Denied Jan. 17, 1989.

Analeslie Muncy, Carroll R. Graham, Donna M. Atwood, Dallas, for appellants.

Marvin Menaker, Dallas, for appellees.

Before STEPHENS, STEWART, and ROWE, JJ.

ROWE, Justice.

This class action was brought by certain retired employees of the City of Dallas (the City) to recover additional benefits under the Firemen, Policemen, and Fire Alarm Operators Pension Fund (the Fund) established by the City and managed by a board of trustees (the Board). The class consisted of those retirees who had been contributing members both under the current pension plan (Plan B) and under the former pension plan (Plan A or the old plan). The City, the Fund, and the Board were named as defendants in the suit and are now appellants in this Court.

At issue is the meaning of an option provision guaranteeing that "service retirement benefits" under Plan B shall never be less in amount than such benefits under the old plan. Liability for additional pension benefits was decided by the trial judge in favor of the class on its summary judgment motion. Liability for attorney fees, both against the defendants and against members of the class, was likewise decided by the trial judge, only the reasonable amount of attorney fees being determined by the jury. For reasons given below, we affirm the trial court's judgment awarding additional pension benefits to the class. We affirm the award of attorney fees against the City--but only upon condition that the class members accept a remittitur of a substantial portion of the fees awarded for appellate court handling. We reverse the trial court's judgment awarding separate attorney fees against all members of the class and remand for further proceedings on such issue consistent with this opinion.

I. CONSTRUCTION OF THE PLAN

This dispute over pension benefits arises because of the dramatic increase in recent years in the monthly pay scale for patrolmen and privates in the City's police and fire departments. Benefits under the City's former pension plan, the old plan, were directly tied to fluctuations in this monthly pay scale. Benefits under the City's new pension plan, Plan B, vary according to the retiree's salary and the Consumer Price Index. When benefits under the old plan began to exceed those under Plan B, those retirees who had participated in both plans but had retired under provisions of Plan B claimed a contractual right to receive the highest benefits. In this class action, the trial court agreed with the retirees and enforced such right.

In its first six points of error, the City complains of the trial court's construction of Plan B which resulted in an award of additional pension benefits. To properly focus on these contentions, we set forth in its entirety that section of Plan B pertaining to the computation of benefits:

Section 6.02. Computation of Service Retirement Benefits

(a) Service retirement benefits shall be computed as follows for any member of this Pension Plan.

(1) For pension service through the first twenty years, the member shall be entitled to a base pension equal to two and one-half percent (2 1/2%) of the average of his computation pay for the best five consecutive years (best sixty consecutive months) he was employed by either department multiplied by the number of years of pension service accrued.

(2) For the twenty-first through twenty-fifth years of pension service the member shall be entitled to a base pension equal to fifty percent (50%) of the average of his computation pay for the best five consecutive years (best sixty consecutive months) he was employed by either department for the first twenty years of pension service plus three per cent (3%) of the average of his computation pay for the best five consecutive years he was employed by either department for each of the next five years of pension service through the twenty-fifth year.

(3) For the twenty-sixth through thirty-fifth years of pension service the member shall be entitled to a base pension equal to sixty-five percent (65%) of the average of his computation pay for the best five consecutive years (best sixty consecutive months) he was employed by either department for the first twenty-five years of pension service plus one and one-half percent (1 1/2%) of the average of his computation pay for the best five consecutive years he was employed by either department for each of the next ten years of pension service through the thirty-fifth year.

(4) In no event shall any member receive service retirement benefits in an amount greater than eighty percent (80%) of the average of his computation pay for the best five consecutive years (best sixty consecutive months) he was employed by either department.

(5) In no event shall any member who was at any time a contributing member of the old plan or Plan A receive service retirement benefits in an amount less than the amount he would be entitled to receive if he retired under the terms of the old plan or Plan A.

The retirees base their claim to higher benefits on subsection 6.02(a)5. They contend that when the benefits available under the old plan exceed those of Plan B, they are entitled to receive benefits under the old plan. For reasons which are obvious, the City's complaints address the meaning of and the interrelationship between subsections 6.02(a)4 and 6.02(a)5. The City questions the validity of any construction which increases pension benefits above those amounts already paid because, under its reading of Plan B, members who have contributed under both Plan B and the old plan have only one opportunity to elect whether to receive benefits under the old plan or the new plan. This election must be made at retirement and is irrevocable. Alternatively, the City contends that the availability of additional benefits under the old plan must be determined cumulatively, i.e., the election to take old plan benefits is not triggered until all past benefits payable under the old plan exceed all past benefits received under Plan B.

As is readily noted, subsection (a)4 imposes a ceiling on service retirement benefits, and subsection (a)5 imposes a floor on service retirement benefits. The question to be decided is to what particular "benefits" do these limitations apply.

Since none of the parties has found any ambiguity in these two subsections, we proceed to determine the applicability of these two subsections as though ambiguity were not our concern. In so doing, we apply the following well-established general rules of construction, because the naked provisions of subsections (a)4 and (a)5 do not satisfactorily answer the question at issue 1. The terms of a particular section of the plan are not to be construed in an unduly technical sense or in isolation but are to be construed to make good sense in conjunction with all other terms of the plan.

2. That construction is to be favored which avoids conflict and gives meaning to every provision of the plan.

3. The terms of the plan are to be construed liberally in favor of the members. See Collin [Collins] v. Board of Firemen, Policemen and Fire Alarm Operators Pension Fund Trustees of San Antonio, 290 S.W.2d 719 (Tex.Civ.App.--Waco 1956, writ ref'd n.r.e.).

Although both subsections refer to "any member," subsection (a)4 applies broadly to those retirees whose base pension is being determined under subsections (a)1, (a)2, or (a)3, i.e., those who have contributed only to Plan B. Subsection (a)5 applies restrictively to those retirees who have contributed to both Plan B and to the old plan. Thus, subsections (a)4 and (a)5 apply to discrete classes, with the result that the ceiling on benefits in one can function independently of the floor of benefits in the other. Such a result permits the floor on occasion to be above the ceiling.

Subsections 6.02(a)1-(a)3 concern the calculation of a base pension" while subsections 6.02(a)4 and (a)5 concern "service retirement benefits." Plan B contains no special definition of the term "service retirement benefits." The plan does define "base pension" as the "initial benefit rate," which in turn is computed according to the same monthly rate of pay as is used in determining the member's contribution to the pension fund. Section 6.02 which deals with the computation of pensions is not, however, entitled either "Computation of the Base Pension" or "Computation of the Initial Benefit Rate." Rather, it is entitled "Computation of Service Retirement Benefits." Within the confines of such designated section, subsections (a)1, (a)2, and (a)3 specifically refer only to the "base pension" while the later subsections (a)4 and (a)5 specifically refer only to "service retirement benefits." This contrasting use of terms within section 6.02 suggests that the computation of "service retirement benefits" is not always identical to the computation of the "base pension" or the "initial benefit rate." Further, the plural and undefined term "service retirement benefits" appears in that first subsection to deal with collective concerns, only after the single and narrowly defined term "base pension" has been utilized exclusively in three prior subsections dealing with individual concerns. This arrangement suggests that the scope of "service retirement benefits" is potentially greater than that of either the "base pension" or the "initial base rate."

With respect to the ceiling described in subsection 6.02(a)4, the eighty percent "cap" on benefits cannot be made to refer broadly to pension benefits of every kind, whenever determined, without precluding any increase thereof through those annual adjustments provided for in section 6.12. ¹ The provisions of both sections can be harmonized, however, by limiting the eighty percent cap to a particular variety of initial benefits, i.e.,...