DeLellis v. Borough of Verona

• Decision Date: 20 June 1995
• Citation: 541 Pa. 3,660 A.2d 25
• Parties: Camillo DeLELLIS, Appellant, v. BOROUGH OF VERONA and Borough of Verona Police Pension Fund, Appellees.
• Court: Pennsylvania Supreme Court

Page 25

660 A.2d 25

541 Pa. 3

Camillo DeLELLIS, Appellant, v. BOROUGH OF VERONA and Borough of Verona Police Pension Fund Appellees.

Supreme Court of Pennsylvania.

Argued Sept. 19, 1994.

Decided June 20, 1995.

Stanford A. Segal, Gatz, Cohen, Segal & Koerner, P.A., Pittsburgh, for appellant.

Peter B. Skeel and John J. Edson, Swensen, Perer & Johnson, Pittsburgh, for appellees.

Before NIX, C.J., and FLAHERTY, ZAPPALA, PAPADAKOS, CAPPY, CASTILLE and MONTEMURO, JJ.

OPINION OF THE COURT

CASTILLE, Justice.

The sole issue raised in this appeal is whether subsection (ii) of Section 771 of the Police Pension Act (the "Act") ¹ authorizes a municipal police pension fund to reduce a 65-year-old retired police officer's pension benefits to 75% of his primary social security benefits where the retiree has retired from the police force but has elected to continue working for another employer. For the reasons set forth below, we find that the Act does not permit such a reduction and, on that basis, we reverse the ruling of the Commonwealth Court.

When appellant turned age 62, he retired from the Borough of Verona's police force and began receiving pension benefits he was due under the retirement plan administered by the Borough of Verona Pension Fund (the "Fund"). However, despite his early retirement from the police force, appellant continued to work as a private-duty security guard, thereby making him ineligible to receive federal social security benefits until he reached age 70, at which age he would receive full social security benefits without regard to his employment status. See 42 U.S.C. § 403(f)(3). ² Had appellant chosen to retire altogether at age 65, he would have been eligible to receive full social security benefits at that time. See 42 U.S.C. § 403(b). ³

When appellant reached age 65 in 1989, the Fund reduced appellant's pension benefit by $274.50 per month in purported accordance with clause (ii) of Section 771 of the Act, which provides in pertinent part that a police retiree's pension benefits shall include, inter alia,:

if positions covered by the fund are included in an agreement under the Federal Social Security Act, up to seventy-five per centum of his full social security old-age insurance benefit calculated in accordance with the provisions of the Federal Social Security Act in effect on the date of his termination of employment, except that such amount shall be included only upon attainment of the age at which the officer would be eligible to receive full social security old-age insurance benefits and in determining such eligibility and such amount only compensation for services actually rendered by the officer and covered by the police pension fund shall be included ...

53 P.S. § 771 (emphasis added).

The Fund interpreted this section to mean that as long as appellant could receive social security benefits (i.e., by electing not to work beyond age 65), his pension benefits could be reduced to 75% of what his social security benefits would be were he receiving them.

Also in 1989, the Auditor General of Pennsylvania conducted an audit of the Fund and determined that with regard to the Fund's reduction of appellant's benefits, the Fund had misinterpreted the Act and erroneously reduced appellant's pension benefits. The Auditor General recommended that the Fund reinstate appellant's full pension benefits both on a prospective and on a retrospective basis. The Fund, however, refused to follow the Auditor General's recommendation and continued to pay pension benefits at the reduced rate.

Appellant then filed a complaint in the Allegheny County Court of Common Pleas alleging that appellees had improperly reduced his pension benefits. Appellant sought reimbursement of the $274.50 monthly reduction of his monthly pension benefits since May 5, 1989. After appellees filed a timely answer and new matter, they then filed a Motion for Summary Judgment asserting that the deduction in appellant's pension was proper and in accordance with the plain language of Section 771 of the Act. The trial court denied appellees' motion.

Thereafter, appellant filed a motion for judgment on the pleadings which the trial court granted. In considering whether appellant was "eligible" to receive social security old-age insurance benefits so as to enable the Fund to reduce his police pension benefits to 75% of his social security benefits, the trial court first found that the term "eligible" as used in the Act was ambiguous since it could mean either "technical eligibility" or "selective eligibility." ⁴ Accordingly, the trial court turned to an analysis of the legislative intent and purpose underlying the statute which it determined was to prevent a retired police officer from receiving duplicate retirement benefits (i.e., pension benefits and social security benefits) attributable to the same employment. In accordance with its determination of legislative intent, the trial court found that the term "eligible" meant "technical eligibility" and not "selective eligibility." Accordingly, since appellant was not technically eligible for social security benefits until age 70 because he continued to work, the trial court found that the Fund improperly reduced appellant's pension payments under Section 771 to 75% of what his social security payments would be were he receiving such payments.

In a 2-1 decision, the Commonwealth Court reversed the order of the trial court, finding that the language of Section 771 was clear and unambiguous that a municipal pension fund could reduce a retiree's pension benefit to 75% of his putative social security benefits under these circumstances, and that, therefore, the trial court exceeded its authority in looking beyond the language of the statute and determining the legislative purpose underlying Section 771 of the Act. ⁵ The majority construed Section 771 to mean that as long as a retired officer could receive social security benefits had he chosen to retire altogether, a municipal pension fund could permissibly reduce such officer's pension benefits in accordance with the Act. ⁶ Appellant argues that because he continued to work, he was not eligible under federal law to receive social security benefits and that, therefore, the Fund improperly reduced his pension benefits when he turned 65.

Our determination of whether or not appellant's pension benefits legitimately could have been reduced depends upon the meaning of the phrase "eligible to receive" as it is used in this portion of the Act. When reviewing a statute, the interpretive principles set forth by the Statutory Construction Act guide this Court's analysis. See 1 Pa.C.S. § 1501 et seq.

In interpreting any statute, the legislative intent behind the enactment of the statute controls its ultimate meaning and application. 1 Pa.C.S. § 1921(a); Frontini v. Commonwealth, Department of Transportation, 527 Pa. 448, 451, 593 A.2d 410, 411-412 (1991). Where statutory words or phrases at issue are undefined by the statute, as in the instant case, ⁷ this Court is required to construe the words according to their plain meaning and common usage. 1 Pa.C.S. § 1903(a); Barasch v. Pennsylvania Public Utility Commission, 507 Pa. 430, 439, 490 A.2d 806, 810 (1985). In that regard, the common usage of the term "eligible" relevant to this analysis is "fit and proper to be chosen." See, e.g., Black's Law Dictionary 521 (6th ed. 1990). In view of this definition and of the independent reasonableness of each of the parties' opposing arguments, we agree with the dissent to the Commonwealth Court's majority opinion that reasonable minds can differ regarding the definition of "eligible" as it is used in Section 771. This phrase is therefore ambiguous.

In turn, when a statutory word or phrase is ambiguous, this Court must look beyond the statutory language and attempt to ascertain the intention of the General Assembly by reference to various statutory construction factors, including:

(1) The occasion and necessity for the statute.

(2) The circumstances under which it was enacted.

(3) The mischief to be remedied.

(4) The object to be attained.

(5) The former law, if any, including other statutes upon the same or similar subjects.

(6) The consequences of a particular interpretation.

(7) The contemporaneous legislative history.

(8) Legislative and administrative interpretations of such statute.

1 Pa.C.S. § 1921(c).

Further, because the Act is not included in any class of statute listed by the legislature as requiring a strict construction, this provision of the Act must be liberally construed to effect the Act's objective and to promote justice. 1 Pa.C.S. § 1928(c).

Initially, the Police Pension Act requires municipal employers to make contributions during their employees' term of employment to provide for those employees' retirement. 53 P.S. § 771. Once a police officer retires, the Police Pension Act requires a municipality to provide that officer with pension benefits at a rate of up to one-half of the officer's average monthly salary. 53 P.S. § 771. However, Section 771 also operates as a recognition that a municipality should be partially relieved of the burden of paying pension benefits to a retiree who receives full federal social security benefits since the retiree would not experience a net negative financial effect from the reduction in pension benefits since that reduction is more than offset by the retiree's receipt of social security benefits. ⁸ Pursuant to 1 Pa.C.S. § 1921(c)(1), (3) and (4) it is reasonable to conclude that the legislature enacted this part of Section 771 to ease municipalities' obligation to pay full police pension benefits when a retired officer receives full social security benefits, in an effort to moderate the depletion of the pension fund into which the municipality contributed. In this regard, we agree with the trial court that the occasion and necessity of the statute can be readily and...