Jiricek v. Woonsocket School Dist. No. 55-4

• Citation: 77 Ed.LawRep. 490,489 N.W.2d 348
• Decision Date: 14 January 1992
• Docket Number: 17497,Nos. 17491,s. 17491
• Parties: 77 Ed. Law Rep. 490 William JIRICEK, Plaintiff and Appellee, v. WOONSOCKET SCHOOL DISTRICT # 55-4, Defendant and Appellant. . Considered on Briefs
• Court: Supreme Court of South Dakota

Page 348

489 N.W.2d 348

77 Ed. Law Rep. 490

William JIRICEK, Plaintiff and Appellee, v. WOONSOCKET SCHOOL DISTRICT # 55-4, Defendant and Appellant.

Nos. 17491, 17497.

Supreme Court of South Dakota.

Considered on Briefs Jan. 14, 1992.

Reassigned May 19, 1992.

Decided July 22, 1992.

Rehearing Denied Aug. 25, 1992.

David R. Gienapp of Arneson, Issenhuth & Gienapp Madison, for plaintiff and appellee.

Richard D. Hagerty, Yankton, for defendant and appellant.

MILLER, Chief Justice (on reassignment).

Woonsocket School District #-55-4 (District) appeals from the circuit court's judgment ordering District to pay $23,472.25 to the South Dakota Retirement System (SDRS) on behalf of William Jiricek (Jiricek), District's former superintendent of schools. We reverse in part and affirm in part.

FACTS

Jiricek taught school in Greenwood, South Dakota, from 1961--1963. At that time, public school teachers were covered by the South Dakota Teachers' Retirement System (TRS). SDCL ch. 13-45 (repealed by 1974 S.D.Sess.L. ch. 35, Sec. 80). The retirement plan was voluntary; however, Jiricek never joined during that time period.

On July 1, 1964, SDCL 13-45-21 (repealed by 1974 S.D.Sess.L. ch. 35, Sec. 80) made participation in TRS mandatory for all teachers entering employment after that date. Teachers employed before that date did not have to participate. On July 1, 1967, a public employees' retirement system was established. SDCL 3-12-3 (repealed by 1974 S.D.Sess.L. ch. 35, Sec. 80). Teachers who were members of TRS were excluded from that plan. In 1974, all previous public employee retirement systems were consolidated and participation became mandatory. See SDCL 3-12-46 and 3-12-62. This plan became known as the South Dakota Retirement System (SDRS).

Jiricek left South Dakota in 1963 to take a teaching job in Montana. In September, 1967, he returned to South Dakota to teach in the Woonsocket School District. At that time, he intentionally did not join TRS because he thought it would be tough to support his family on his salary. This somehow occurred even though participation was legally mandatory.

In 1971, after he had obtained a master's degree in school administration he became the Woonsocket Superintendent of Schools. He remained superintendent until 1976. When he became superintendent, he again intentionally chose not to participate in the retirement system. As superintendent, he was responsible for administrating all of District's payroll deductions, including retirement contributions. SDCL 13-45-31 (repealed). He stated that he chose not to participate (and prevented the payroll deductions) because he felt this change would not be popular with the school board. Additionally, during his testimony, he admitted that he had no desire to participate in the retirement plan prior to 1974, because it was not, in his opinion, a very good system.

In 1974, when participation became mandatory for all public employees, Jiricek began making contributions and filed a Notice of Participation in SDRS. On this form, he was required to explain why his participating date (7-1-74) was later than his employment date (9-1-67). Although he obviously knew otherwise, he wrote, "participation was optional."

In 1976, Jiricek moved to Madison, South Dakota, to become the superintendent of schools for Lake Central School District. In 1979, Jiricek contacted District and the Department of Labor (which at that time administered SDRS) in an attempt to receive credit for the seven-year-period (1967-1974) when he made no contributions. In response to his inquiry, SDRS informed Jiricek that he could purchase the years of credited service; however, it would cost him $18,725.00 to purchase these years. At the time of trial, this amount had increased to $23,472.25.

Jiricek was dissatisfied with SDRS' recommendation that he purchase the seven years' credited service and therefore he tried to get a cash settlement from District. Jiricek wrote to District: "The amounts being discussed here would well run into several tens of thousands of dollars at a retirement age especially when age 55 is considered. ¹ With the rapid changes in the economy in the past couple of years I do not feel that I can afford to write these years off, nor would it be fair to my family to do so."

Later, he tried to get SDRS to support legislation that would secure his credit for the seven years. In a memo dated February 13, 1986, from the deputy administrator of SDRS to the administrator, it was written: "He [Jiricek] wanted SDRS to slip an amendment on one of our bills to mandate the employer to make the payments and then settle with the ex-employee.... [W]e said no." All of Jiricek's collateral efforts failed and, in February, 1990, he commenced this suit.

The trial court found that District was obligated to pay $23,472.25 to SDRS on Jiricek's behalf and ordered District to pay that amount to SDRS pursuant to SDCL 3-12-83's "buy-back" provision. This amount represented 7 1/2% of Jiricek's current salary of $51,520, multiplied by the number of years in which no contributions were made (seven). This calculation was made pursuant to SDCL 3-12-83. The trial court then deducted $3,434 which was equivalent to the amount which would have been deducted from Jiricek's salary had the required contributions been made. (The parties do not dispute these calculations.)

District argues that Jiricek's claim was barred by the six-year statute of limitations set forth in SDCL 15-2-13(2). Jiricek, on the other hand, argues that since he has not yet retired the statute of limitations has not yet begun to run. In his notice of review, Jiricek argues that District should be compelled to pay the entire amount of the unpaid contributions, both the employer's share ($23,472.25) and the employee's share ($3,434.00), for a total of $26,906.25.

DECISION

The statutes creating SDRS do not include any limitation period regarding contributions which an employer fails to make. SDCL 15-2-13 applies when no limitation period is proscribed by statute. Thus, SDCL 15-2-13(2) ² sets forth the applicable statute of limitations, which is six years after the cause of action accrued. The crucial issue here is when Jiricek's cause of action accrued.

Jiricek contends that his cause of action does not accrue until he retires. He argues that SDCL 3-12-83 illustrates the legislature's intent that a member be able to "buy back" into the system until he retires or is no longer a contributing member. We disagree with his contention because SDCL 3-12-83 is totally irrelevant to the question of when Jiricek's cause of action accrued. SDCL 3-12-83 provides:

A current contributing member of the system may receive credited service by election to make, or have made on his behalf, contributions, based on the higher of his current compensation, or his final compensation calculated as if he retired on the date of election, at seventy-five percent of twice the member rate, for each year of service for which he wishes to receive credit, if:

(1) The current contributing member of the system could have established credit for any South Dakota public service by making contributions under this chapter or any prior law; or

(2) The current contributing member was not permitted to establish credit for any South Dakota public service.

The amount of the credited service and the rate of contribution shall be at class A rates unless the service for which credit is sought was rendered as a class B member in which case class B rates shall apply. If a participating unit has failed to pay employer or member contributions to the system on behalf of a member as required under this chapter or under any predecessor system consolidated pursuant to Sec. 3-12-46, the amount due the system shall be calculated in accordance with this section.

While it is true that an employee may "buy back" into the system until retirement (see SDCL 3-12-84 and 3-12-87), this does not necessarily imply that his cause of action against his employer for failing to make contributions does not accrue for purposes of the statute of limitations until retirement, especially when he has known all the pertinent facts since at least 1979.

Furthermore, to accept Jiricek's argument would permit him, and others like him, to defer their actions indefinitely. In Jiricek's case, he was fifty-five years old at the time of trial. Jiricek could wait ten more years, until he turns sixty-five (assuming he retires at sixty-five), plus another six years for the statute of limitations to run before his claim is time-barred. This does not promote the purposes of the statute of limitations, and it would also increase the financial burden suits like this would create for public entities.

Jiricek has a remedy; he can purchase the years of service at his own expense. There is no reason why the district should have to purchase it on his behalf. Jiricek was fully aware of his rights in 1979, and probably even earlier. He should not now be allowed to profit from the choices he made many years ago. Statutes of limitation are designed to protect parties from stale claims and from those who sleep on their rights. Burke v. Foss, 334 N.W.2d 861 (S.D.1983); Chipperfield v. Woessner, 84 S.D. 13, 166 N.W.2d 727 (1969). Accordingly, Jiricek's cause of action is barred by the statute of limitations set forth in SDCL 15-2-13(2).

We reverse in part and affirm the issue raised by notice of review.

HENDERSON and SABERS, JJ., concur.

WUEST and AMUNDSON, JJ., dissent.

WUEST, Justice (dissenting).

The sole issue raised by District on appeal was whether Jiricek's claim for retirement system contributions under the "buy-back" provisions of (SDRS) is barred by the statute of limitations set forth in SDCL 15-2-13.

Under the law as it existed when contributions should have been paid to the Teacher's Retirement System on behalf of Jiricek, contributions from his salary were to be deducted and contributions by...