Petrillo v. Pub. Emps. Ret. Bd.

JurisdictionOregon
Parties Samuel Joseph PETRILLO, Petitioner, v. PUBLIC EMPLOYEES RETIREMENT BOARD, Respondent.
Citation286 Or.App. 200,398 P.3d 1006
Docket NumberA160397
CourtOregon Court of Appeals
Decision Date14 June 2017

Stephen C. Thompson, Portland, argued the cause for petitioner. With him on the briefs was Kirklin Thompson & Pope LLP.

Judy C. Lucas, Assistant Attorney General, argued the cause for respondent. With her on the brief were Ellen F. Rosenblum, Attorney General, and Benjamin Gutman, Solicitor General.

Before Duncan, Presiding Judge, and DeVore, Judge, and Garrett, Judge.

DeVORE, J.

Petitioner seeks judicial review of a final order of the Public Employees Retirement Board (PERB) that allowed the Public Employees Retirement System (PERS) to recoup an overpayment of benefits paid to petitioner as a beneficiary of his late wife's PERS account. Petitioner argues that a 2004 settlement agreement bars PERS from recovering the overpayment and that, under the agreement, the Marion County Circuit Court has exclusive jurisdiction over this dispute. We conclude that the settlement agreement resolved only early claims in prior litigation, does not prevent recovery of the overpayment, and does not deprive PERB of jurisdiction. Therefore, we affirm PERB's final order allowing PERS to collect the overpayment of $4,803.88.

I. FACTS
A. Overpayment and Legislation

Our conclusion rests on a distinction between an overpayment made in 1999 and an underpayment corrected in 2004. For the reasons we will explain, the 2004 correction of the underpayment was what was settled while the 1999 overpayment was not settled. That distinction provides the light for the path through these facts and related cases.

PERB administers PERS. Petitioner's wife became a PERS member before January 1, 1996, and was a Tier One member. When she died in 2002, petitioner became the beneficiary of her PERS account. In 2000, PERB had adopted an order establishing that Tier One member accounts would receive a 20 percent earnings credit for 1999. Several public employers challenged the order in several cases. In 2002, the Marion County Circuit Court found error, vacated the 20 percent crediting order, and directed PERB to issue a revised order to correct the 1999 overpayment. City of Eugene v. PERB , Marion County Circuit Court Case Nos. 99C12794, 00C-16173, 99C-12838, 99C-20235. The decision was appealed. City of Eugene v. PERB , 339 Or. 113, 117 P.3d 1001 (2005), modified on recons , 341 Or. 120, 137 P.3d 1288 (2006).

In light of the trial court decision, the PERS Fiscal Division recalculated the earnings credit for 1999 and found that the proper 1999 earnings credit for member accounts should have been 11.33 percent. See Arken v. City of Portland , 351 Or. 113, 123, 263 P.3d 975 (2011) (reciting that fact).

While appeals were pending, the Oregon legislature passed House Bill (HB) 2003 (2003), the "PERS Reform and Stabilization Act of 2003." Section 10 of HB 2003 addressed, among other things, the 1999 overpayment that was at issue in the appeal noted above. Section 10 required PERB to recalculate members' account balances with an earnings credit of 11.33 percent, rather than 20 percent, for the year 1999. Or. Laws 2003, ch. 67, § 10, amended by Or. Laws 2003, ch. 625, § 13. The effect of the legislation on the pending appeals was not then known.

B. Underpayment and Settlement

Other parts of HB 2003 became a source of dispute between PERB and PERS members, including petitioner. Among petitioner's differences with PERB was a matter involving an underpayment in the calculation of his wife's death benefit. Previously, PERB had told petitioner that the interest rate for death benefits was eight percent. Interest ran "from the date of death to the date of distribution if distributed in a partial or total lump sum payment." Initially, petitioner elected to defer distribution of his wife's death benefit. After the 2003 legislation, however, PERB told petitioner that, due to a deficit in the PERS fund, the 2003 legislation prevented any future interest from being paid to the beneficiaries of deceased Tier One members. PERB told petitioner that no interest would be credited to beneficiaries' accounts and that the decision was retroactive to January 1, 2003. Under protest, petitioner notified PERS that he was withdrawing his wife's account to be rolled-over into his Individual Retirement Account (IRA), and he did so.

Petitioner then filed a petition for judicial review in the Supreme Court, challenging the constitutionality of particular provisions of HB 2003 regarding interest earnings allocations. Significantly, petitioner did not squarely or directly raise the 1999 overpayment issue. In particular, his petition for judicial review did not challenge section 10 of HB 2003. Instead, his petition referenced only section 14b which involved various means of recouping the 1999 overpayment. In time, his petition was consolidated into a proceeding known as the Strunk litigation. See generally Strunk v. PERB , 338 Or. 145, 108 P.3d 1058 (2005).

In 2004, petitioner settled out of the Strunk litigation individually while the case was still pending in the Oregon Supreme Court. The parties to the settlement agreement were petitioner, PERB, the state, petitioner's employer, and his wife's former employer. For his part, petitioner agreed to dismiss the claims in his petition for judicial review. In exchange, PERB reinstated the PERS account of petitioner's wife and allowed petitioner to return the previously distributed death benefit. He transferred the funds from his IRA back to the reinstated PERS account. In addition, PERS provided a credit for interest on that death benefit calculated at 22 percent for 2003. Thus, contrary to prior announcements, PERB credited petitioner's account with $59,101.56 in interest. The interest was added because PERB had reversed itself and adopted a rule that allowed a deceased Tier One member's account to receive the same interest earnings allocation as Tier Two members.

The settlement limited its effect on petitioner insofar as the settlement provided that petitioner would be entitled to the benefit of the final resolution of the Strunk litigation, like any other Tier One member. Only petitioner's claims were dismissed. He was not precluded from bringing claims other than those in his petition. Finally, the settlement agreement did not provide a release or waiver of any claims of PERB against petitioner, known or unknown.1 In short, the settlement agreement expressed petitioner's release of his pleaded claims in exchange for reinstatement of his wife's PERS account with interest.

As it happened, the Supreme Court decided Strunk in 2005 shortly after petitioner settled out of the same litigation. 338 Or. 145, 108 P.3d 1058. Although the decision does not affect our view of petitioner's 2004 settlement agreement, we note that the decision did determine that Tier One members had a statutory, contract right to annual cost of living adjustments (COLA). Id. at 221-22, 108 P.3d 1058. Consequently, the court invalidated the COLA freeze mechanism that the legislation had included as one of the means to recoup the over-payments in 1999. See Arken , 351 Or. at 127, 263 P.3d 975 (making that characterization).

C. These Proceedings

Later in 2005, the Supreme Court concluded in City of Eugene that the appeal was moot as a result of a settlement between PERB and public employers after the 2003 legislation. 339 Or. at 128, 117 P.3d 1001. Subsequently, the Supreme Court vacated the trial court decision. City of Eugene v. PERB , 341 Or. 120, 127, 137 P.3d 1288 (2006). Nevertheless, PERB was constrained to follow the same directive because "the PERS reform legislation [had] effectively codified the 11.33 percent figure as the correct 1999 crediting decision." Arken , 351 Or. at 123, 263 P.3d 975. Relying on that legislation, PERB issued an order to recalculate earnings credit for 1999 at 11.33 percent, rather than the original 20 percent rate, while notifying PERS members, former members, and beneficiaries who were affected by the repayment. Petitioner received such a letter in 2012 advising him that PERS anticipated beginning recovery efforts shortly. In response, petitioner asserted that the 2004 settlement agreement had settled the 1999 overpayment dispute. PERS conducted a review but determined that the 2004 settlement agreement did not apply so as to bar the recovery of the overpayment.

Unconvinced, petitioner filed a petition for a contested case hearing, alleging that PERS' determination violated the terms of the settlement agreement. PERB filed a motion for summary determination, arguing, as a matter of law, that PERS made the 1999 overpayment to petitioner's wife, that PERS had the statutory authority to recover the overpayment, and that the 2004 settlement was no bar to recovery. Petitioner contended that, in executing the 2004 settlement agreement, the parties intended that his wife's death benefit was final. Although he had sought a contested case hearing, petitioner also disputed PERB's jurisdiction based upon a provision of the 2004 settlement agreement that provided that any action arising out of the 2004 settlement agreement was subject to the exclusive jurisdiction of the Marion County Circuit Court.

After a hearing, the administrative law judge (ALJ) granted PERS' motion for summary determination and denied petitioner's cross-motion to dismiss for lack of jurisdiction. On review, PERB issued its final order, affirming the ALJ's decision to grant summary determination and deny the motion to dismiss for lack of jurisdiction. PERB adopted the ALJ's opinion, including the ALJ's interpretation of the 2004 settlement agreement. PERB determined that there was no ambiguity in the agreement that would allow the agreement to prohibit recovery of overpayment, and, if there was ambiguity, then extrinsic evidence reflected that the 2004 settlement agreement did not concern the 1999 ov...

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    • United States
    • Oregon Court of Appeals
    • 30 Mayo 2019
    ...apparent that there is a genuine issue of fact raised about the parties’ intent in the relevant extrinsic evidence. Petrillo v. PERB , 286 Or. App. 200, 206, 398 P.3d 1006, rev. den. , 362 Or. 175, 406 P.3d 608 (2017) ("Summary judgment is not appropriate unless there are no factual dispute......
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  • § 28.5 Particular Actions and Issues
    • United States
    • Oregon Civil Pleading and Litigation (OSBar) Chapter 28 Summary Judgment
    • Invalid date
    ...a complete integration of the parties' agreement is a question of law for the court. Petrillo v. Pub. Emps. Ret. Bd., 286 Or App 200, 205, 398 P3d 1006, rev den, 362 Or 175 (2017) (citing Yogman v. Parrott, 325 Or 358, 361, 937 P2d 1019 (1997)). When a writing is unambiguous, its constructi......
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