Keeton v. City of Ashland
| Decision Date | 01 July 1994 |
| Docket Number | No. 93-CA-000800-MR,93-CA-000800-MR |
| Citation | 883 S.W.2d 894 |
| Parties | Curtis KEETON; Ruth J. Collier; James G. Gibson; Hobart M. Greene, Jr.; and Joe B. Cartwright, on behalf of themselves and all others similarly situated, Appellants, v. CITY OF ASHLAND, Kentucky; A.R. Dunnigan, Mayor; Pete Gute, Commissioner; Leslie Kevin Gunderson, Commissioner; Paul Reeves, Commissioner; Mike Stewart, Commissioner; William Fisher, City Manager; David Johnson, Finance Director, Appellees. |
| Court | Kentucky Court of Appeals |
H. David Hermansdorfer, A. Scott Coburn, Hermansdorfer & Coburn, Ashland, for appellants.
Richard W. Martin, III, Kevin P. Sinnette, Ashland, for appellees.
Thomas J. Keuler, Denton & Keuler, Paducah, for amicus curiae, City of Paducah, Ky.
Kerry D. Smith, McMurry & Livingston, Paducah, for amicus curiae, Board of Trustees of the Policemen's & Firefighter's Retirement Fund of the City of Paducah.
Before HUDDLESTON, JOHNSON and McDONALD, JJ.
This appeal involves an issue of first impression relating to Kentucky Revised Statutes (KRS) Chapter 95. The Boyd Circuit Court ruled that KRS 95.859(3) does not require the City of Ashland (the City) to provide funding for annual cost of living adjustments for pension beneficiaries; and that action taken by the pension fund board in setting a cost of living adjustment was without statutory authority since the pension fund could not support the increase without additional funding by the City. We affirm.
In 1956, the Kentucky Legislature enacted KRS 95.851 through 95.991, creating policemen and firefighters' retirement funds in cities of the second class. The funds were to provide benefits to meet "the hazards of old age, disability, death, and termination of service, thereby encouraging qualified personnel to enter and remain in the service of such departments." KRS 95.853. As of August 1, 1988, these funds were closed to new members, with new employees being placed in the county employees retirement system. KRS 95.852(2). After August 1, 1988, all active members of the Fund of the City of Ashland (a city of the second class) elected to transfer their membership from the Ashland Fund to the county fund pursuant to KRS 95.852(2). The present action was brought by retired members and their survivors who remained with the Ashland Fund.
This class action affecting seventy-four (74) plan beneficiaries was filed on September 25, 1991, as a "Petition for Declaration of Rights" against the City. The retiree petitioners alleged that the City failed to make a required annual contribution to the Fund to fund an annual cost of living adjustment (COLA) pursuant to KRS 95.859(3) (). They further alleged that they were entitled to COLAs from prior years during which the City failed to make the required annual contribution. In its response to their petition, the City admitted noncontribution; but claimed that pursuant to the relevant statutes, contributions to fund annual COLAs are discretionary, not mandatory.
On October 1, 1992, the City filed a "Counterpetition for Declaration of Rights," naming the Board of Trustees of the Fund (the Board) as a third-party defendant. The City based its counterpetition against the Board on the Board's recent approval of a COLA. At the July 28, 1992 Board meeting, with the Mayor absent and the Finance Director abstaining the two retired members voted a 3.7% cost of living increase "to comply with KRS 95.859(3)." At the time of the COLA approval, the Fund had insufficient resources to pay a COLA in the absence of a contribution by the City. In its counterpetition, the City contended that the approved COLA was improper since the City had no obligation to contribute additional funding for the COLA and did not intend to do so voluntarily. The City further contended that since the Board's action was not authorized by KRS 95.859(3) or any other statute, it was an illegal act and, accordingly, should be set aside.
On February 24, 1993, the Boyd Circuit Court entered its "Findings of Fact, Conclusions of Law and Judgment" in this matter. The trial court found that the City is not required under KRS 95.859(3) or any other statute to fund an annual COLA; and that a COLA must be "supported on an actuarially sound basis by the Fund" pursuant to KRS 95.859(3)--independently of any contribution by the City. (emphasis added).
Only two issues are before us: (1) whether a contribution by the City to the Fund to fund an annual COLA where the Fund has insufficient resources to pay the COLA itself is discretionary (as the City contends) or mandatory (as petitioners contend); and (2) whether the July 28, 1992 action of the Board was statutorily authorized (as petitioners contend) or an illegal act (as the City contends).
This is a case of first impression. Interpretation of statutes is a matter of law, White v. McAllister, Ky., 443 S.W.2d 541, 542 (1969), and a proper judicial function, Masonic Widows and Orphans Home and Infirmary v. City of Louisville, 309 Ky. 532, 544, 217 S.W.2d 815, 822 (1949). Since the issues raised herein are disposed of as a matter of law based on pure statutory construction, the judgment of the Boyd Circuit Court is not entitled to any deference. However, our judgment concurs with the trial court's judgment, and it is affirmed.
The present controversy centers around the proper interpretation of KRS 95.859(3), which provides that:
Within six (6) months after the performance of the actuarial study required by KRS 95.872(6), the rate of retirement annuity of each annuitant shall be increased annually by an amount determined by the study to reflect so much of the annual increase in the cost of living of the annuitant as may be supported on an actuarially sound basis by the fund. So long as the same is published, such studies shall rely on the "All Items Index" of the United States Department of Labor's Consumer Price Indexes, but no increase in the cost of living shall exceed five percent (5%) or the actual increase in the cost of living, whichever is lower. The increases shall be payable only after the member has been retired for a period of three (3) full years, and all increases granted on July 15, 1990, or thereafter shall be compounded. (emphasis added).
The trial court interpreted the underscored language to mean that a COLA may be granted only if it can be "supported" by the fund without any additional city contribution. Appellants, on the other hand, contend that the underscored language in no way limits their entitlement to a COLA since a COLA can always be "supported" inasmuch as the City has a continuing obligation to contribute to keep the Fund sound. In other words, if the Board decides to grant any COLA (so long as it does not "exceed five percent (5%) or the actual increase in the cost of living, whichever is lower"), the City must afterwards contribute the necessary funds to support it. We disagree with this construction of KRS 95.859(3) since "a Statute should be construed, if possible, so that no part of it is meaningless or ineffectual." Brooks v. Meyers, Ky., 279 S.W.2d 764, 766 (1...
To continue reading
Request your trial