Kennedy v. SC Retirement System, 25133.
| Citation | 345 S.C. 339,549 S.E.2d 243 |
| Decision Date | 22 May 2000 |
| Docket Number | No. 25133.,25133. |
| Parties | Glenn E. KENNEDY, Charles Wolfe, Terry Knighton, and Jerry Landford, Individually and on Behalf of a Class of Persons Similarly Situated, Appellants, v. The SOUTH CAROLINA RETIREMENT SYSTEM and the South Carolina Budget and Control Board, Respondents. |
| Court | United States State Supreme Court of South Carolina |
Michael Eugene Spears, of Spartanburg, for appellant.
Stephen Van Camp, of South Carolina Retirement System, of Columbia; and R. Kent Porth and Elizabeth H. Campbell, both of Nexsen Pruet, Jacobs & Pollard, of Columbia, for Respondent South Carolina Retirement System. Joseph D. Shine and Edwin E. Evans, both of State Budget and Control Board, of Columbia, for Respondent State Budget and Control Board. Richard Mark Gergel and W. Allen Nickles, both of Gergel, Nickles & Solomon, of Columbia, for Respondents. Lesley A. Bowers, of Columbia, for Amicus Curiae, Protection and Advocacy for People With Disabilities, Inc. Mary J. Bradwater, of Columbia, for Amicus Curiae, The South Carolina School Boards Association. Edwin Johnson, II, of McNair Law Firm, of Columbia, for Amicus Curiae, The South Carolina Chamber of Commerce. Deena Smith McRackan, of Charleston, for Amici Curiae, The South Carolina Education Association and The South Carolina Education Association-Retired. Vance J. Bettis, of Gignilliat, Savitz & Bettis, of Columbia, for Amicus Curiae, The South Carolina State Employees Association, for respondents. Richard J. Breibart, of Lexington, for Amicus Curiae, The Fraternal Order of Police. Ray E. Chandler, of Coffey Chandler & Johnson, of Manning, for Amicus Curiae the South Carolina State Fireman's Association. Scott T. Price, of Columbia, for Amicus Curiae the South Carolina School Boards Association.
Four retired state employees ("the Employees") brought suit against the South Carolina Retirement System and the South Carolina Budget and Control Board (collectively "the Retirement System") claiming their retirement benefits have been miscalculated. The trial court ruled in favor of the Retirement System and the Employees have appealed.
In 1986, the General Assembly amended S.C.Code Ann. § 9-1-10(17) (Supp.1998) of the South Carolina Retirement System.1 This statute provides the definition of "average final compensation" for a retiring state employee. Average final compensation is one element used in the Retirement System Act to calculate the monthly retirement benefits of a state employee. See S.C.Code Ann. § 9-1-1550(B)(1) (Supp.1999).2 The dispute in this case is over the 1986 amendment's effect on the calculation of the average final compensation of an employee with respect to the value of unused annual leave.
Before 1978, the Retirement System gave a retiring employee credit for all accrued unused annual leave when calculating the average final compensation for retirement benefits. The statutory section read:
(17) "Average final compensation" with respect to those members retiring on or after July 1, 1970, shall mean the average annual earnable compensation of a member during the three consecutive fiscal years of his creditable service producing the highest average.
Under this statute and its predecessors going back to the creation of the system in 1945, the Retirement System, as a matter of policy, gave credit for unused annual leave even though there was no specific requirement in the statutory section that it do so. Furthermore, there was no limit on the amount of accrued annual leave for which an employee could receive credit. In 1978, the General Assembly amended the section and addressed unused annual leave for the first time. After the 1978 amendment, the section read:
(17) "Average final compensation" with respect to those members retiring on or after July 1, 1970, shall mean the average annual earnable compensation of a member during the three consecutive fiscal years of his creditable service producing the highest such average; an amount up to and including forty-five days termination pay for unused annual leave may be added to the pay period immediately prior to retirement and included in the average as applicable.3
The 1978 amendment had two major effects on the use of unused annual leave in the average final compensation calculation. First, the amendment placed a forty-five day cap on the amount of unused annual leave for which an employee could receive credit. Second, the unused annual leave could only be calculated in the average final compensation equation if the pay period immediately prior to the employee's retirement was one of the three highest in the employee's career. As a consequence of this second restriction, employees would regularly have to retire on the last day of their last fiscal year to ensure that any unused annual leave would be included in the calculation. Servicing a large volume of retirement claims at one time created an administrative problem for the Retirement System.
In 1986, the General Assembly amended section 9-1-10(17) to read as follows:
(17) "Average final compensation" with respect to those members retiring on or after July 1, 1986, means the average annual earnable compensation of a member during the twelve consecutive quarters of his creditable service on which regular contributions as a member were made to the System producing the highest such average; a quarter means a period January through March, April through June, July through September, or October through December. An amount up to and including forty-five days' termination pay for unused annual leave at retirement may be added to the average final compensation. ...4
Both sides in this matter agree that the General Assembly intended to alter the calculation of average final compensation. The dispute in this case is over the nature of the change in unused annual leave benefits.
The parties disagree about whether the amendment changed the method of adding any unused annual leave to the average final compensation equation. Before the 1986 amendment, it is undisputed that the value of the unused annual leave was added into the average final compensation equation before the total was averaged. After the amendment, the Employees claim the value of the unused annual leave should be added to the average final compensation equation after the average has been taken. The Retirement System's position is that the unused annual leave should still be added into the average final compensation equation before the average is taken.
The Employees filed suit against the Retirement System in November 1995, seeking a declaratory judgment as to the meaning of section 9-1-10(17). The trial court noted that section 9-1-10(17), defining average compensation, does not contain the provisions for the payment or calculation of retirement benefits to the employee. The payment and benefit calculation provisions are contained in section 9-1-1550. Analyzing this relationship, the trial court found "harmony of these provisions is critical in the calculation of a retiree's monthly benefit." The trial court then noted that the 1986 amendment dividing the definition of average final compensation into two separate sentences, where it had previously been only one, added confusion to the process. The trial court determined that the first sentence of section 9-1-10(17) alone was the definition of average final compensation. The trial court then found that the second sentence discussing the addition of unused annual leave to the first sentence's definition of average final compensation produced a new number that the Employees called "total final compensation." The trial court determined that this new "total final compensation" number was not referenced in section 9-1-1550 so there existed an ambiguity about how the General Assembly intended to compute average final compensation in relation to the unused annual leave.
The trial court then looked to the rules of statutory construction to determine the intent of the General Assembly in regards to the calculation of average final compensation. First, the trial court analyzed what it determined to be the legislative history of the 1986 amendment. The trial court also looked at the Retirement System's statutory scheme as a whole. The trial court gave deference to the interpretation of the statute by the Retirement System. Furthermore, the trial court determined that the use of the word "may" in reference to the addition of unused time to the average final compensation resulted in total discretion on the part of the Retirement System as to whether any unused annual leave would be added into the equation. Finally, the trial court found that even if the Employees were correct in their interpretation, S.C. Const. art X, § 16 prevented them from recovering the requested relief.
The first question of statutory interpretation is whether the statute's meaning is clear on its face. "If a statute's language is plain and unambiguous, and conveys a clear and definite meaning, there is no occasion for employing rules of statutory interpretation and the court has no right to look for or impose another meaning." Paschal v. State Election Comm'n, 317 S.C. 434, 436, 454 S.E.2d 890, 892 (1995). We find the language of section 9-1-10(17) is ambiguous on its face because it is unclear at what point the General Assembly intended the unused annual leave to be added in the average final compensation equation.
The section can be read, as the Employees argue, that up to 45 days are added to the equation after the average is taken. The section can also be read as the Retirement System argues, adding up to 45 days of unused annual leave to the average final compensation equation before taking the average of the 12 highest quarters. The use of the phrase "average final compensation" in the section that...
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