Mattis v. State Universities Retirement System

• Decision Date: 29 May 1998
• Docket Number: No. 4-97-0941,4-97-0941
• Citation: 231 Ill.Dec. 49,695 N.E.2d 566,296 Ill.App.3d 675
• Court: United States Appellate Court of Illinois
• Parties: , 231 Ill.Dec. 49, 127 Ed. Law Rep. 928 Brian E. MATTIS, Individually and on behalf of all others similarly situated, Plaintiff-Appellant, v. The STATE UNIVERSITIES RETIREMENT SYSTEM, William Norwood, Individually, Emil Haeflinger, Individually and Stanley Rives, Individually, Defendants-Appellees. Fourth District

Page 566

695 N.E.2d 566

296 Ill.App.3d 675, 231 Ill.Dec. 49,

127 Ed. Law Rep. 928

Brian E. MATTIS, Individually and on behalf of all others similarly situated, Plaintiff-Appellant, v. The STATE UNIVERSITIES RETIREMENT SYSTEM, William Norwood Individually, Emil Haeflinger, Individually and Stanley Rives, Individually, Defendants-Appellees.

No. 4-97-0941.

Appellate Court of Illinois,

Fourth District.

Argued April 16, 1998.

Decided May 29, 1998.

Michael E. Raub (argued), Heyl, Royster, Voelker & Allen, Urbana, for Brian E. Mattis.

Michael R. Cornyn, Linda L. Laugges (argued), Thomas, Mamer & Haughey, Champaign, for State Universities Retirement System.

Justice KNECHT delivered the opinion of the court:

In June 1993, plaintiff Brian E. Mattis filed an irrevocable election for early retirement from his position as a law professor at Southern Illinois University (SIU). The defendant State Universities Retirement System (System) informed plaintiff of the monthly payment he would receive from his annuity. Plaintiff challenged the amount of that payment. Following a hearing, the System concluded article 15 of the Pension Code (Code) (40 ILCS 5/15-101 et seq. (West 1992)), particularly section 15-136.2 (40 ILCS 5/15-136.2 (West 1992)), mandated the monthly annuity payment it determined for plaintiff. Plaintiff disagreed, arguing the System misinterpreted the statutes. Plaintiff filed suit in the circuit court of Champaign County seeking administrative review of the System's decision, as well as seeking relief through the court's original jurisdiction.

The circuit court agreed with the System's interpretation. On April 29, 1996, the circuit court dismissed the counts seeking the original jurisdiction of the circuit court. The circuit court reserved an equal protection argument added to count I, the count seeking administrative review. On August 6, 1997 the circuit court confirmed the agency's decision. Plaintiff appeals, arguing (1) the System and the circuit court misinterpreted the Code, resulting in a surplus of funds for the System, and (2) the circuit court improperly dismissed the remaining counts. We agree with plaintiff's interpretation of the Code and reverse.

I. BACKGROUND

Plaintiff opted for early retirement, signing an "irrevocable" election to have his "retirement annuity processed under the Early Retirement Incentive pursuant to Section 15-136.2" (40 ILCS 5/15-136.2 (West 1992)). Plaintiff estimated his monthly retirement income would be approximately $3,600 per month. Plaintiff learned the System determined his retirement income to be approximately $2,800 per month. He requested his resignation be rescinded, but SIU denied his request.

In a March 3, 1994, letter, SIU offered plaintiff a payment of $60,558, if he would waive the early retirement option (ERO). If plaintiff accepted, SIU would have been relieved of expending the early retirement payment of $122,929. SIU explained to plaintiff under the ERO he would receive an additional estimated $144 per month after taxes. With a waiver and $60,558, plaintiff could earn $216 per month by purchasing a tax-deferred annuity from Aetna.

Plaintiff informed the System of SIU's offer and proposed the transfer of the funds contributed to the System by SIU to his individual retirement account (IRA). The System's attorney contacted plaintiff via April 19, 1994, letter, to inform him the System could not apply the employer's contribution to his IRA and his claim would be forwarded for administrative review by the claims committee.

The System, in a letter dated August 24, 1994, informed plaintiff the value of his account as of May 31, 1994, was $329,935.42. This amount did not include the $122,928.60 SIU paid pursuant to section 15-136.2. The letter also informed plaintiff his annuity under the general formula (Rule 1) amounted to $2,815.98, and the money purchase amount (Rule 2) was $2,586.37. See 40 ILCS 5/15-136(a) (West 1992). Prior to the ERO, plaintiff had an annuity of approximately $2,090 under Rule 1, and an annuity of approximately $2,600 under Rule 2.

On August 29, 1994, a hearing was held before the System's claims committee. The claims committee considered whether "the [System should] include the $122,928.60 employer [ERO] payment in the calculation of retirement benefits under Section 5/15-136 Rule 2." A statement provided by the System to plaintiff estimated his monthly annuity at age 60 would have been $3,640. The System assisted in "fine-tuning the language" of section 15-136.2 of the Code. By letter dated December 22, 1994, the claims committee denied plaintiff's appeal. The executive committee concurred in that decision.

On February 16, 1995, plaintiff filed a six-count complaint in the circuit court of Champaign County against the System and three members of the System's executive committee. Plaintiff sought administrative review of the executive committee's decision and set forth other claims in the circuit court's original jurisdiction. Both plaintiff and the System filed briefs on the issue of statutory interpretation. On January 17, 1996, the circuit court ruled in the System's favor on the issue of statutory interpretation.

Plaintiff amended his complaint on February 15, 1996, to add a number of facts and an additional count. (Plaintiff abandoned counts III and V.) Count I was amended to add an equal protection argument. In addition to the statutory interpretation argument, plaintiff contended the irrevocable clause was not applied to everyone equally, as individuals had been permitted to revoke their election. Count II set forth a claim for the equitable action of an accounting and included the equal protection argument in count I. Count IV was almost identical to count II, but sought the remedy of a constructive trust. In count VI, plaintiff maintained his civil rights were violated. In count VII, plaintiff alleged a claim of economic duress.

At a hearing on April 29, 1996, the circuit court considered the System's motion to dismiss as a section 2-615 motion (735 ILCS 5/2-615 (West 1996)). The circuit court denied the System's motion to dismiss the equal protection argument added to count I, but granted the motion dismissing the remaining counts. The circuit court concluded the equal protection argument need not be considered for counts II and IV. The circuit court concluded because the System's interpretation of the Code was correct, the other issues in counts II and VI were dismissed. The circuit court determined there was no evidence in the record of a due process violation argued in count VI and of economic duress set forth in count VII.

On August 6, 1997, the circuit court heard arguments on the motion for judgment on the pleadings and denied the motion. The circuit court found the agency's decision was neither against the manifest weight of the evidence nor contrary to law. Plaintiff appealed.

II. STATUTORY INTERPRETATION

The parties dispute whether the $122,928.60 employer ERO payment should be included in the calculation of plaintiff's retirement benefits under Rule 2 in section 15-136 of the Code. The System's argument relies on an interpretation of section 15-136.2 in conjunction with section 15-136, whereas plaintiff relies on an interpretation of section 15-136.2 in conjunction with both sections 15-185 and 15-136 (40 ILCS 5/15-185, 15-136 (West 1992)). It is not disputed the System's interpretation of the Code results in more funds than necessary, perhaps as much as $90,000, to fund plaintiff's retirement under Rule 1.

Courts usually provide great deference to an agency's interpretation of a statute it is charged with administering. The agency's interpretation is not binding and is to be rejected if it is erroneous. Denton v. Civil Service Comm'n, 277 Ill.App.3d 770, 774, 214 Ill.Dec. 666, 670, 661 N.E.2d 520, 524 (1996). When a statute is unclear and ambiguous, judicial construction of statutory language becomes necessary. Buckellew v. Board of Education of Georgetown-Ridge Farm Community Unit School District No. 4, 215 Ill.App.3d 506, 511, 159 Ill.Dec. 58, 61, 575 N.E.2d 556, 559 (1991). The main rule in judicial construction is to give effect to the intent of the legislature. Denton, 277 Ill.App.3d at 773, 214 Ill.Dec. at 670, 661 N.E.2d at 524. In deciding legislative intent, factors a court may consider include the necessity and reason for the law, the evils to be remedied, and goals to be met. The interpreting court will assume the legislature did not intend to produce an unjust or absurd result. Dunahee v. Chenoa Welding & Fabrication, Inc., 273 Ill.App.3d 201, 205, 209 Ill.Dec. 898, 902, 652 N.E.2d 438, 442 (1995).

A presumption exists statutes on the same subject are guided by one policy and the legislature will not create a law in complete contradiction to an earlier statute without expressly repealing the prior statute. Jahn v. Troy Fire Protection District, 163 Ill.2d 275, 279-80, 206 Ill.Dec. 106, 108, 644 N.E.2d 1159, 1161 (1994). Courts should construe apparent conflicts between statutes on the same subject in harmony with each other, if reasonably possible. Collins v. Board of Trustees of Firemen's Annuity & Benefit Fund, 155 Ill.2d 103, 112, 183 Ill.Dec. 6, 9, 610 N.E.2d 1250, 1253 (1993). Because a purely legal question is presented for review, our consideration is de novo. Denton, 277 Ill.App.3d at 773, 214 Ill.Dec. at 670, 661 N.E.2d at 524.

Three sections of the Code are particularly relevant to this appeal: sections 15-136, 15-136.2, and 15-185. Section 15-136 of the Code lists four rules from which the amount of a university employee retirement annuity is determined. The amount of the annuity must be determined by the rule that applies and provides the greatest annuity. Rules 1 and 2, both applicable to plaintiff, lie at the center of this controversy. Rule 1 determines an annuity based on years of service and a percentage of an individual's earnings during those years. Rule...