Gurnee v. Lfugg

• Decision Date: 19 March 1999
• Docket Number: No. 1998-CA-000958-MR.,1998-CA-000958-MR.
• Parties: Jack GURNEE and Fred Blake, Appellants, v. LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT, Appellee.
• Court: Kentucky Court of Appeals

6 S.W.3d 852

Jack GURNEE and Fred Blake, Appellants, v. LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT, Appellee.

No. 1998-CA-000958-MR.

Court of Appeals of Kentucky.

March 19, 1999.

Discretionary Review Denied by Supreme Court December 9, 1999.

Mark L. Miller, Louisville, KY, for Appellant.

Phillip D. Scott, Margaret A. Miller, Lexington, KY, for Appellee.

Before GARDNER, HUDDLESTON and JOHNSON, Judges.

OPINION

JOHNSON, Judge.

Jack Gurnee (Gurnee) and Fred Blake (Blake) (collectively, the appellants), have appealed from the judgment of the Fayette Circuit Court entered on April 8, 1998, which interpreted the provisions of Kentucky Revised Statutes (KRS) 67A.520, and determined that the appellee, Lexington-Fayette Urban County Government (LFUCG), had complied with the statute. We affirm.

This appeal involves an issue of first impression relating to KRS 67A.520, the statute governing the obligation of the LFUCG to contribute to the appellants' pension fund, the Police and Firefighter's Retirement Fund of the Lexington-Fay ette Urban-County Government (the fund). The statute was enacted in 1974 as part of a comprehensive scheme enabling urban-county governments to establish retirement funds for its police and firefighters.¹ Upon retirement under this scheme, eligible members of the fund are entitled to receive a defined benefit equal to 2½% of their average salary for each year of service. KRS 67A.430. Active members are required to contribute a sum equal to no less than 10.5%, or no more than 11% of their current salaries, the exact percent to be determined by LFUCG. KRS 67A.510. The "responsibility for the proper operation of the fund" is vested in the eleven member Board of Trustees made up of various officials or employees of the urban county government,² the police and fire chiefs, one retired member of the fund and two active members of the fund from each department. KRS 67A.530.

KRS 67A.520, which is at issue in this case, is the provision of the scheme designed to establish the amount of LFUCG's annual obligation to the fund. This statute reads in its entirety as follows:

The government shall make current contributions to the fund on an actuarially funded basis, toward the annuities and benefits herein provided. These contributions shall be equal to the sum of the following:

(1) An annual amount resulting from the application of a rate percent of salaries of active members determined by the entry age normal cost funding method. Such rate percent shall be fixed by the board every three (3) years, within six (6) months after the actuarial study required by subsection (6) of KRS 67A.560 (actuarial survey of the fund), and shall be in effect for a period of at least three (3) years.

(2) An amount resulting from the application of a rate percent of the salaries of active members which will provide each year regular interest on the remaining liability for prior service.

(3) In any event, the total contribution of the government shall be at least seventeen percent (17%) of the salaries of the active members participating in the fund.

(4) In addition to other remedies provided by law, any member of the fund or any annuitant may obtain in the Circuit Court of any county in which the government is located an injunction or mandamus requiring the government to comply herewith.

On December 28, 1992, Gurnee, a police officer currently employed by LFUCG, and Blake, a retired police officer formerly employed by LFUCG, filed a complaint pursuant to KRS 67A.520(4). They alleged that, beginning with the fund's inception in 1974, LFUCG had violated KRS 67A.520 by failing to make its required annual contribution to the fund. The appellants sought a judgment equal to the difference between the annual contribution they alleged was required by KRS 67A.520 and the contributions actually made by LFUCG.

In its answer, LFUCG denied that it had failed to make appropriate contributions, and alleged in the alternative that KRS 67A.520 is "unconstitutional in that it is vague, overly broad and indefinite so as to render the statute meaningless and void." It asked the circuit court to enter a judgment declaring the statute "void and unenforceable." LFUCG notified the Attorney General of Kentucky of its challenge, to the statute, but the Attorney General, did not intervene to defend the statute.

After obtaining discovery, the appellants moved for summary judgment on the issue of liability., In support, of their motion, they filed the deposition of their expert actuary, Charles Lynch (Lynch), who testified that KRS 67A.520 established a funding level for the fund which required an annual contribution from LFUCG equal to the sum of the current service costs under the entry-age normal cost method³ and an amount which would provide interest on the, unfunded liability.⁴ In addition to Lynch's testimony, the appellants relied upon the testimony of Stephen Gagel (Gage!), an actuary, whose firm prepared many of the valuation reports of the fund for the Board of Trustees beginning in the late 1970's. Gagel testified that several times over the years he had advised LFUCG that its contributions to the fund were less than the level prescribed by the statute. Betty Pendergrass King (King), the Commissioner of Finance for LFUCG from 1983 to 1993, confirmed that from 1978 through 1993, LFUCG had not contributed to the fund at the rates recommended by actuaries hired by the Board of Trustees.

There was no dispute before the circuit court that since the fund was created in 1974, LFUCG had paid only the minimum contribution required by subsection (3) of the statute.⁵ There was also no dispute that the minimum contribution had been less than the percent recommended by the actuaries employed by the Board of Trustees. Further, there was also no dispute that the Board of Trustees had not established any percentage rate to be applied to the salaries of active fund members as required in KRS 67A.520(1). Nevertheless, the appellants asked the circuit court to determine that the statute obligated LFUCG to make a contribution in excess of the minimum contribution.

In its order of April 8, 1998, the circuit court rejected LFUCG's argument that KRS 67A.520 is unconstitutional. Although the circuit court described the statute as having been "poorly drafted" and as "difficult to interpret if read literally," it opined that "a logical interpretation" was "attainable." In its determination that LFUCG had complied with the mandate of KRS 67A.520, the circuit court reasoned as follows:

The Plaintiffs' argument that the law requires the contribution be equal to the amount set by adding subparagraphs (1) and (2) of KRS 67A.520, or using the amount stated in KRS 67A.520(3), whichever is the larger amount, may or may not be correct. However, in this case where the Board has not established the rate necessary to ascertain the amount due under KRS 67A.520(1) and (2), the practice of the Defendant contributing the amount stated under KRS 67A.520(3) is compliance with the statute. The issue of what would be the proper result if the Board had set the rate necessary to calculate the amount due under KRS 67A.520(1) and (2) is not presently before the Court.

This appeal followed.

Before addressing the merits of the issues raised by the appellants, we will discuss LFUCG's contention that KRS 67A.520 is "so ambiguous, vague and indefinite" that this Court should declare it unconstitutional. Clearly, there is a grammatical flaw in the statute in that it provides that the urban-county government shall make a contribution to the fund which is "equal to the sum" of its four subsections. It is readily apparent that the four subsections are not capable of being added together. However, it is equally apparent that the drafters intended for the government to pay an amount which equals the sum of subsections (1) and (2), or ("[i]n any event") the minimum contribution contained in subsection (3). Since Subsection (4) provides specific nonmonetary remedies to members of the fund, it is not capable of being added to the preceding subsections of the statute.

LFUCG insists that if read literally, KRS 67A.520 is "nonsensical" and "illogical." It contends that it "has been forced to `guess' the amount of contribution the General Assembly intended to require." It relies on those cases which reason that "[a] statute is vague if `men of common intelligence must necessarily guess at its meaning.'" State Board for Elementary and Secondary Education v. Howard, Ky., 834 S.W.2d 657, 662 (1992), citing Broadrick v. Oklahoma, 413 U.S. 601, 93 S.Ct. 2908, 37 L.Ed.2d 830 (1973). See also Raines v. Commonwealth, Ky.App., 731 S.W.2d 3 (1987).

It is settled in this jurisdiction that "a statute carries a presumption of constitutionality." Commonwealth v. Halsell, Ky., 934 S.W.2d 552, 554 (1996). "In deciding whether an act of the General Assembly of Kentucky is unconstitutional we necessarily begin with the strong presumption in favor of constitutionality and should so hold if possible." Brooks v. Island Creek Coal Company, Ky.App., 678 S.W.2d 791, 792 (1984). "When considering the constitutionality of a statute, we are `obligated to give it, if possible, an interpretation which upholds its constitutional validity.'" Halsell, at 554-555, citing American Trucking Ass'n v. Com., Transp. Cab., Ky., 676 S.W.2d 785, 789 (1984). The fact that a statute is nonsensical if read literally, or is susceptible to more than one interpretation, does not require a holding that the statute is unconstitutional if, as the circuit court determined, those who are affected by the statute can reasonably understand what the statute requires of them. Although LFUCG contends that it was required to "guess" at the statute's meaning, it nevertheless argues that it managed to comply with the statute's directives for over twenty years without event. Accordingly, we agree with the circuit court and hold that the statute...