Fazio v. Department of Employee Trust Funds, 01-2595.

Decision Date25 April 2002
Docket NumberNo. 01-2595.,01-2595.
Citation255 Wis.2d 801,645 N.W.2d 618,2002 WI App 127
PartiesMary E. FAZIO, Plaintiff-Appellant, v. DEPARTMENT OF EMPLOYEE TRUST FUNDS and Eric O. Stanchfield, Defendants-Respondents.
CourtWisconsin Court of Appeals

On behalf of the plaintiff-appellant, the cause was submitted on the briefs of Robert L. Elliott, Milwaukee.

On behalf of the defendants-respondents, the cause was submitted on the brief of Joely Urdan, assistant attorney general, and James E. Doyle, attorney general.

Before Vergeront, P.J., Dykman and Roggensack, JJ.

¶ 1. VERGERONT, P.J.

Mary Fazio appeals the order dismissing her complaint, which alleged that the retention of the death benefit due her by the Department of Employee Trust Funds (DETF) constituted unjust enrichment and a taking without just compensation contrary to Wis. CONST. art. I, § 13.1 The circuit court dismissed the complaint without prejudice upon concluding that Fazio had not exhausted the administrative remedies available to her. She contends on appeal that using the administrative process would be futile, and she is therefore not required to exhaust it before seeking in court the interest she claims is due her. We conclude that Fazio was not required to appeal to the DETF Board before filing this action because the Board did not have the authority to decide Fazio's claims and grant the relief she seeks. We therefore reverse and remand for further proceedings.

BACKGROUND

¶ 2. Because we are reviewing an order deciding a motion to dismiss the complaint, we begin with the allegations of the complaint. Mary Fazio is the widow of Anthony Fazio, who died on January 2, 1999. At the time of Anthony's death, he was a participant in the Wisconsin Retirement System (WRS) and had named Mary as his beneficiary. On January 2, 1999, she was entitled to a lump-sum death benefit of $506,570, but it remained in the possession of DETF until December 21, 2000, and DETF had the use of it during that time. On information and belief, DETF has retained for substantial periods of time the lump-sum death benefits due other beneficiaries after the benefits were distributable. DETF was unjustly enriched by the value of the use of those funds during the time period they were retained, and DETF's retention and use of those funds during that time period was an unconstitutional taking under the Wis. CONST. art. I, § 13. The complaint was filed as a class action, and Mary sought for herself and each member of the class the amount of unjust enrichment to DETF as a result of the retention of the benefits due each, and the amount taken from each without just compensation, plus interest. ¶ 3. DETF2 moved to dismiss the complaint on the ground that the exclusive remedy for Fazio, and others in her situation, was an appeal to the DETF Board and then review of the Board's decision by an action for certiorari review in the circuit court.3 Accompanying the motion was the affidavit of a DETF employee averring that on April 4, 2001, Fazio had filed an appeal with the DETF Board of the determination of DETF that Fazio was not entitled to any interest on her lump-sum benefit under WIS. STAT. § 40.73(1)(c) (1999-2000),4 and the appeal had been set for a prehearing conference on July 13, 2001.5 The DETF determination letter, attached to the affidavit, stated that the death benefit paid to Fazio was correctly calculated under § 40.73(1)(c), based on the present value on the day following the date of her husband's death, and there was no statutory provision for adding interest regardless of when it was paid or the form in which it was paid. The determination letter advised that Fazio could appeal to the DETF Board, and added:

However, it is important for [you] to understand that the Board has no equity authority in such cases. This means that while they may sympathize with [your] position, they cannot take an action that is contrary to the law. In order for [you] to be successful in an appeal to the Board, [you] will need to offer a legal argument that supports [your] right to interest payments in the death benefit [you] received. Again, based on my analysis of the applicable state statutes, there is no legal basis on which the Board could include interest in the death benefit.

¶ 4. Fazio opposed the motion to dismiss, arguing that appeal to the Board would be futile, because DETF had already taken the position that it had no statutory authority to award Fazio the interest she sought, and had repeated that position in its brief supporting its motion to dismiss. According to Fazio, DETF's own regulation, WIS. ADMIN. CODE § ETF 11.03(2) (a),6 prohibited it from giving the plaintiff class the equitable relief it sought. DETF replied that the administrative process was not futile because the Board had the authority to adopt a different interpretation of the statutes than DETF had employed in its determination on Fazio's request for interest; and, under Wis. ADMIN. CODE § ETF 11.12(1)(d), the Board had the authority to remand "the matter to the department with instructions to take necessary action on the matter, consistent with the final decision." Accordingly, DETF argued the Board did have the authority to decide that Fazio was entitled to interest and to order DETF to pay her interest.

¶ 5. The circuit court concluded that under the recent decision of State ex rel. Hensley v. Endicott, 2001 WI 105, 245 Wis. 2d 607, 629 N.W.2d 686, Fazio had to exhaust the available administrative remedies unless the result of the administrative process was "preordained." The court acknowledged difficulty in understanding DETF's argument on the source of the Board's authority to order that interest. It also acknowledged 79 Op. Att'y Gen. 139, 142 (1990), which opines that the DETF Board's equity powers are limited to those defined in WIS. STAT. § 40.03(1)(a),7 and states that the author "located no other statute, which, in [the author's] opinion, expressly or impliedly gives the ETF Board additional equity powers." However, the court also recognized that attorney general opinions are not binding.8 The court concluded that there was nothing to prevent the Board from deciding that it had the authority to award Fazio the interest she sought, that it was possible the Board would do so, and therefore the result was not preordained.

DISCUSSION

¶ 6. Fazio argues that the circuit court erred in concluding that Hensley was controlling, because the requirement of exhaustion of administrative remedies imposed in that case was based on the language of a specific statute, the Prison Litigation Reform Act (PLRA), and similar language in WIS. STAT. ch. 40 does not exist. According to Fazio, the common law doctrine of exhaustion of administrative remedies applies here and does not require exhaustion, because it would be futile and would not serve the purposes of the exhaustion doctrine. This is so, Fazio argues, because the Board is without authority to provide her with the relief she seeks. DETF responds, as it argued before the circuit court, that the Board does have the authority to order DETF to pay Fazio the interest she seeks if it decides DETF's decision was in error.

[1]

¶ 7. A resolution of these issues requires the interpretation of statutes and regulations. These are all questions of law, which we review de novo, see Hensley, 2001 WI 105 at ¶ 6; however, we benefit in our review from the circuit court's thoughtful analysis.

¶ 8. We agree with Fazio that Hensley is not controlling. The PRLA, codified at WIS. STAT. § 801.02(7)(b), provides:

(b) No prisoner may commence a civil action or special proceeding, including a petition for a common law writ of certiorari, with respect to the prison or jail conditions in the facility in which he or she is or has been incarcerated, imprisoned or detained until the person has exhausted all available administrative remedies that the department of corrections has promulgated by rule or, in the case of prisoners not in the custody of the department of corrections, that the sheriff, superintendent or other keeper of a jail or house of correction has reduced to writing and provided reasonable notice of to the prisoners.

In Hensley, the plaintiff, a prisoner, argued that there was a common law futility exception to this statutory requirement. That exception, he contended, applied to his constitutional challenges to certain Department of Correction (DOC) administrative regulations and permitted him to bring an action for a declaratory judgment without first going through the administrative inmate complaint review process. The supreme court concluded that the plain language of the statute contained no exception for futility. Hensley, 2001 WI 105 at ¶ 9. The supreme court disagreed with the analysis of this court, which had relied on cases that recognized a futility exception to the administrative exhaustion requirement, because those cases had been decided before the enactment of the PLRA. Id. at ¶ 13.

¶ 9. Because the result in Hensley was based on the language of the PLRA, the threshold question is whether the statutes governing DETF contain similar language. We conclude they do not. WISCONSIN STAT. § 40.03(1)(j) states that the Board:

(j) Shall accept timely appeals from determinations made by the department, other than appeals of determinations made by the department regarding disability annuities. The board shall review the relevant facts and may hold a hearing. Upon completion of its review and hearing, if any, the board shall make a determination which it shall certify to the participating employer or the appropriate state agency and to the appropriate employee, if any.

This paragraph plainly makes available to Fazio an administrative appeal to the Board from DETF's determination, but it does not require her to exhaust that appeal before bringing an action in court. WISCONSIN STAT. § 40.08(12) provides:

(12) COURT REVIEW. No
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6 cases
  • Fazio v. Department of Employee Trust Funds
    • United States
    • Wisconsin Court of Appeals
    • March 24, 2005
    ...death benefit, and further that no "section implicitly gives [the department] the authority to pay that interest." Fazio v. Department of Employee Trust Funds, 2002 WI App 127, ¶ 13, 255 Wis. 2d 801, 645 N.W.2d 618. We thus concluded that "if Fazio is entitled to interest on the lump-sum be......
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    • Wisconsin Court of Appeals
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    ...did not have the authority to provide the remedy sought. Id. at 426. On this point, the case of Fazio v. Department ofEmp. Trust Funds, 2002 WI App 127, 255 Wis. 2d 801, 645 N.W.2d 618 is instructive. ¶14 In Fazio, a plaintiff filed suit against the Department of Employee Trust Funds (DETF)......
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    ...authority to provide the remedy sought. Id. at 426. On this point, the case of Fazio v. Department of Emp. Trust Funds, 2002 WI App 127, 255 Wis.2d 801, 645 N.W.2d 618 is instructive.¶ 14 In Fazio, a plaintiff filed suit against the Department of Employee Trust Funds (DETF), alleging that t......
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