Eldredge v. Utah State Retirement Bd.

Decision Date21 June 1990
Docket NumberNo. 880583-CA,880583-CA
PartiesDale A. ELDREDGE, Petitioner, v. UTAH STATE RETIREMENT BOARD, Respondent.
CourtUtah Court of Appeals

L. Zane Gill (argued), Law Office of L. Zane Gill, P.C., Salt Lake City, for petitioner.

Mark Madsen (argued), State Retirement Bd., Salt Lake City, for respondent.

Before DAVIDSON, JACKSON and LARSON, 1 JJ.

OPINION

JACKSON, Judge:

Dale A. Eldredge (Eldredge) appeals an order of the Utah State Retirement Board (Board) that reduced his future monthly retirement benefit payments and required him to repay a portion of benefits previously received unless he purchased credit for 6.123 years of pre-July 1961 public employment. We vacate the order and remand.

FACTS

The relevant facts were undisputed below, and Eldredge does not challenge the findings of the adjudicative hearing officer, adopted in full by the Board. Eldredge was employed by Salt Lake County from January 1, 1955, until February 15, 1961, for a total of 6.123 years. He was rehired on May 1, 1967, and worked continuously until July 1, 1987, when his retirement became effective.

In May 1986, Eldredge received from the County an information bulletin, which advised:

All County employees receive a yearly statement from the Utah State Retirement Office stating how much money is in their account and how much service time is credited to their names. Employees who worked for the County for at least 90 days between July 1, 1960 and June 30, 1961 OR who worked a full year between July 1961 and July 1967 can receive service credit for qualifying employment prior to July 1961. If you think you should be credited with additional service time, contact the Utah State Retirement Office at 355-3884.

Eldredge observed that he would have over twenty-five years of service and could retire, if he was credited with his initial 6.123 years of County service. He went to the Utah State Retirement Office and consulted with Tamera Wilson, an accounting technician employed by the Board. She said she would check and advise him. Approximately two weeks later, she sent him a letter stating that he would have to purchase his first 6.123 years of service in order to retire. Shortly after receiving the letter, Eldredge happened to see Dee William, a representative of the Utah State Retirement Office, at the County office. They discussed the notice in the County information bulletin. According to Eldredge's unrefuted testimony, William said, "[I]t looks like you might be entitled to those years ... I don't know the law, I'll have it checked into...." He told Eldredge to call Lois Daly at the Utah State Retirement Office in a week or so. Eldredge eventually called Daly and was told, "I've got good news for you ... you're entitled to those years." Daly told Eldredge that, after talking to Mr. Sharp, a deputy director at the Retirement Office, and three or four other people, "We've got it straightened out where you people that are entitled to that time are going to get it." Daly told Eldredge that Wilson would be sending him a letter.

The promised letter from Wilson, dated September 11, 1986, stated:

This letter is in regards to your service with Salt Lake County. After further questioning of the law, it appears our office's original interpretation of the law was incorrect.[ 2 You do not need to purchase your service with Salt Lake County from January 1, 1955 through February 15, 1961.

This service has already been posted to your account and is accounted for in your "Members Annual Statement." A copy of your statement is enclosed for your convenience. Please be aware all service is estimated until retirement at which time it is verified.

The staff of the Retirement Office is happy to be of assistance to you. If you have any further questions, please feel welcome to contact our office.

Eldredge's years of service as of September 11, 1986, were shown on the enclosed membership statement, prepared by Wilson, as:

Years of service forward 24.790

Years of service awarded this year 0.630

------

Total years of service 25.420

In 1987, the Utah Legislature enacted House Bill 142, Utah Code Ann. § 49-2-802 (1989), opening an early retirement window for those public employees with twenty-five years of credited service, regardless of their age. Cf. Utah Code Ann. § 49-2-401 (1989). In reliance on the Board's representations that his 6.123 years of County employment before July 1961 would be credited to his years of service at no cost to him, Eldredge submitted a retirement application to the Retirement Office in the spring of 1987, to take effect July 1, 1987. The Board sent Eldredge a retirement benefit estimate dated March 16, 1987, based on a July 1 retirement date and 26.290 total years of credited service to that date. The monthly estimates ranged from $1,463.39 to $1,606.34, depending on the particular benefit payment plan selected. Eldredge selected Plan 4, with an estimated monthly benefit of $1,537.91 and a 50% continued payment to his spouse upon his death. Although their monthly house and car payments totalled $1,128, Eldredge testified he and his wife felt they could make ends meet on the $1,537.91 monthly benefit, so he retired at age 52 under Plan 4 after resigning from his $37,000 a year position as an area supervisor.

The Board paid Eldredge retirement benefits based on 26.290 years of service, in accordance with his selection of Plan 4, until September 9, 1987, when the Board sent him a letter stating:

In a recent audit of your file, we noted that your retirement benefit effective July 1, 1987, was calculated to include 6.123 years of service that you rendered prior to July 1, 1961.

This service, by law, cannot be credited to your account unless it is purchased.[ 3 Enclosed are two calculations of the cost to purchase that prior service. One amount reflects the cost for all 6.123 years. The other calculation reflects 4.833 years which is what you would need to purchase to give you a total of 25 years.

We will still allow you to retire under HB 142 even if you do not purchase the service prior to July 1, 1961.[ 4 However, in that case, your monthly benefit will be based on your actual service and will equal approximately $1,246.00 under Plan 4. We will deduct $4.64 each month from that amount for the lump-sum death benefit coverage.

If you select to purchase the 4.833 years, your Plan 4 monthly benefit will be approximately $1,545.00 less the death benefit deductions.

In any case, there will be an adjustment in your monthly benefit but it will not be retroactive. It will begin with your September retirement check paid at the end of September. We would appreciate hearing from you as soon as possible.

The enclosed calculations stated that Eldredge could purchase his 6.123 prior years of service by paying $33,931.02, or he could purchase 4.833 years of service, for a total of exactly twenty-five years of service, for $25,435.89. If he failed to make either of these purchases, his monthly benefit was to be reduced to $1,246 from $1,538.

Eldredge formally requested credit for the 6.123 years, without having to purchase them, but the executive director of the Board denied the request. Eldredge then asked for a review of the director's decision by an adjudicative hearing officer, claiming that the Board was estopped from denying his eligibility to retire without having to pay to obtain service credit for the 6.123 years. He based this claim on the erroneous representations of Board personnel on which he had reasonably relied in making his irrevocable decision to give up his job and retire. Because he could not be restored to the status quo, 5 Eldredge contended the Board should be estopped from conditioning his continued receipt of $1,538 in monthly retirement benefits on payment of $33,931.02.

In his findings and conclusions, the hearing officer noted that the factual basis for estoppel was undisputed, but he interpreted Utah Code Ann. §§ 49-1-603(1) and -610(1) (1989) as precluding application of the doctrine of estoppel. The pertinent portion of section 49-1-610(1) provides: "All members of a [retirement] system, plan, or program shall acquaint themselves with their rights and obligations as members." Section 49-1-603 provides:

If any error in any records or in any calculation of the retirement office results in any member or beneficiary receiving more or less than the member or beneficiary would have been entitled to receive if the records or calculations had been correct, the administrator shall correct the error, and, as far as practicable, make future payments in such a manner that the actuarial equivalent of the benefit to which the member or beneficiary was entitled shall be paid, and to this end may recover any overpayments.

The hearing officer interpreted these statutory sections as, in the words of the Board's attorney, "anti-estoppel" provisions completely barring application of the doctrine of equitable estoppel against the Board. The hearing officer concluded:

To hold that the Retirement Board is estopped from correcting its error and that the petitioner is not required to ascertain his own rights is to disregard specific legislative directives. This the Retirement Board cannot do under our system of law.

The September 1988 order of the adjudicative hearing officer denying Eldredge's claim, which sought credit for the pre-July 1961 years of service without payment of $33,931.02, enforced the terms and conditions of the September 9, 1987 letter to Eldredge from the Board. After a review conducted pursuant to Utah Code Ann. § 49-1-610(2) (1989), the Board adopted in full the adjudicative hearing officer's findings, conclusions, and order.

In his petition for review, filed pursuant to Utah Code Ann. § 63-46b-14 (1989), Eldredge claims that he has been substantially prejudiced by the Board's erroneous statutory interpretation. See Utah Code Ann. § 63-46b-16(4)(d) (1989). Whether sections 49-1-603(1)...

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