Pub. Sch. Ret. Sys. of Mo. v. Taveau

• Decision Date: 22 September 2015
• Docket Number: WD 77443
• Citation: 481 S.W.3d 10
• Parties: The Public School Retirement System of Missouri, Respondent, v. Scott Taveau, Appellant.
• Court: Missouri Court of Appeals

481 S.W.3d 10

The Public School Retirement System of Missouri, Respondent,

v.Scott Taveau, Appellant.

WD 77443

Missouri Court of Appeals, Western District.

FILED: September 22, 2015 Motion for Rehearing and/or Transfer to Supreme Court Denied October 27, 2015

Allen D. Allred, Lawrence C. Friedman, St. Louis, for Respondent.

Roger G. Brown, Jefferson City, for Appellant.

Before Division Four: Alok Ahuja, C.J., Gary D. Witt, J. and Kathleen A. Forsyth, Sp. J.

Alok Ahuja

, Chief Judge

The Public School Retirement System of Missouri determined that Scott Taveau, former superintendent of the Liberty Public School District, had been paid retirement benefits for which he was ineligible, because he was employed on a full-time basis as the School District's Superintendent when the retirement benefits were paid. The Retirement System notified Taveau that it intended to withhold payment of his future retirement benefits, to recoup the payments he received when he was ineligible. Following a bench trial, the Circuit Court of Cole County agreed with the Retirement System's determination, and found that Taveau had been improperly paid retirement benefits to which he was not entitled. Taveau appeals. We affirm.

Factual Background

Taveau served as Superintendent of the Liberty Public School District from July 1, 1999, until June 30, 2007.

In 2004, Taveau entered into an agreement with the School District to serve a three-year term as Superintendent, beginning July 1, 2004, and ending June 30, 2007. Under the agreement, Taveau had the option to "retire" from full-time employment on December 31, 2005. The contract stated that "[f]rom January 1, 2006 through June 30, 2006, the Superintendent, at his option, may perform his duties under Public School Retirement System regulations, including 16 C.S.R 10–5.010

and section 169.560 R.S.Mo., commonly referred to as the ‘550 hour rule’, with no reduction in pay from the District." The "550 hour rule" permits a school district employee to retire from full-time employment, but continue to work for the school district on a part-time or temporary basis while receiving retirement benefits, so long as the retiree works no more than 550 hours in any school year, and receives no more than 50% of the annual compensation for the position he or she fills as a retiree. See Pub. Sch. Ret. Sys. of Mo. v. Taveau, 316 S.W.3d 338, 342 (Mo. App. W.D. 2010)

("Taveau I").

Taveau's agreement with the School District also provided that "the District shall make reasonable efforts to allow the Superintendent to continue his duties as Superintendent of Schools during the final year of this agreement [, i.e., from July 1, 2006 through June 30, 2007,] pursuant to the terms of House Bill Nos. 346 and 174 and section 169.596 R.S.Mo

., i.e. ‘retire’ and continue employment without losing his retirement benefit from the Public School Retirement System." At the time of the initial contract in 2004, § 169.596 RSMo Cum. Supp. 2003¹ permitted retired certificated teachers to continue to work for a school district while receiving retirement benefits for up to two years, if the school district met certain conditions and declared that it was experiencing "a critical shortage of certificated teachers." § 169.596.4(6), RSMo Cum. Supp. 2003. Taveau's 2004 agreement with the School District provided that he would advise the Board if he intended to exercise the option to continue his employment under the "critical shortage" statute. The agreement provided that "if by July 1, 2006, the Superintendent is unable to qualify for continued or re-employment with the District without loss of retirement benefit, the Superintendent shall withdraw his ‘resignation’ and both parties shall continue to be bound by the terms of this agreement."

In 2005, the Missouri General Assembly amended § 169.596.1, to specify that "no such retired certificated teacher shall be employed as a superintendent." S.B. 287, 2005 Mo Laws 1311, 1371. As a result of the 2005 statutory amendment, Taveau no longer had the option of working his final year as Superintendent as a retiree based on a "critical shortage" of candidates for the position. Following the 2005 statutory change, Taveau and the School District signed an "Addendum" to Taveau's contract. Under the Addendum, Taveau agreed that during the 2006–2007 school year, he would receive only half of his annual salary, and would continue to serve as Superintendent under the 550 hour rule. The Addendum also provided that, following the end of his term as Superintendent on June 30, 2007, Taveau would serve as a consultant for the District from July 1 to December 31, 2007. The Addendum provided that Taveau would receive approximately the other half of his salary, split into two payments, for his work as a consultant. Thus, under the Addendum, Taveau would receive an amount of compensation approximately equal to his full-time annual salary for the 2006–2007 school year, paid over eighteen months, while also receiving his full retirement benefits during that period.

In November 2005, Taveau notified the Retirement System of his impending "retirement" as of December 31, 2005, and the Retirement System subsequently began paying Taveau his retirement benefits. Taveau continued to work as the School District's Superintendent until June 30, 2007. The School District also paid Taveau the consulting fees specified in the Addendum following the termination of his service as Superintendent.

In 2006, the Retirement System received information indicating that Taveau had continued to work full-time following his purported retirement on December 31, 2005. Over the next two years, the Retirement System sent Taveau and the School District a number of letters requesting a clarification of Taveau's working relationship with the District. After extensive correspondence, the Retirement System determined in July 2008 that Taveau was not, in fact, entitled to collect retirement benefits during the period from January 1, 2006 through June 30, 2007. Pursuant to this determination, the Retirement System withheld retirement benefit payments from July 2008 forward, to recover the sums improperly paid, along with eight percent interest. The total amount of the overpayment found by the Retirement System, exclusive of interest, was $ 212,471.46.

Natalie Shelton, a reporter with the Liberty Tribune newspaper, interviewed Taveau concerning his purported retirement. The results of Shelton's investigation were published under the headline "Retired or on the job?" During the interview, Shelton reported that she asked Taveau about his work schedule over the last two school years of his employment. Shelton quoted Taveau as saying, "[t]he first thing is that there's no such thing as a part-time superintendent.... I was 24/7. I worked 10–, 12–, 14–hour days.... That last year I was full time. I worked my tail off." Shelton also quoted Taveau as stating that, following the termination of his service as Superintendent, he was "not a consultant. It was the second part of my salary, pure and simple—duty owed.... Everyone understood it was not a consultant." Taveau was also quoted explaining that "[t]here's no impropriety here.... I worked a year and got a year's salary. If anyone wants to portray it differently, it's not true."

The School District hired an independent accounting firm, Westbrook and Co., to investigate alleged fraud and abuse in the District. With respect to the consulting arrangement called for by the Addendum, Westbrook and Co. concluded:

[Based on a] review of payroll and vendor records[,] ... the District paid a consulting fee of $90,764 to a past superintendent. The consulting agreement covered a period of time from July 1, 2007 through December 31, 2007. Based on review of records and interviews, we were unable to document any benefits received from this consulting agreement.

On August 1, 2008, the Retirement System filed a declaratory judgment petition against Taveau, seeking a declaration that he was not entitled to receive retirement benefits for the period from January 1, 2006 through June 30, 2007, and that the School District was required to make contributions to the Retirement System in connection with Taveau's continued full-time employment during that period. Taveau filed a counterclaim against the Retirement System and a third-party petition against certain Retirement System employees, alleging that the Retirement System's withholding of his retirement benefits to recoup payments previously made to him was unlawful. Ultimately, Taveau alleged claims for unjust enrichment, violation of due process under 42 U.S.C. § 1983

, breach of contract, breach of fiduciary duty, and detrimental reliance. Taveau requested injunctive and mandamus relief, and monetary damages.

The circuit court granted summary judgment to the Retirement System on May 21, 2009. Taveau appealed, and we reversed. Taveau I, 316 S.W.3d 338

.² Although

we found that the Retirement System's summary judgment motion and supporting materials made a prima facie case that Taveau had not in fact retired on December 31, 2005, id. at 346

, we concluded that Taveau had presented contrary evidence sufficient to create a genuine issue of material fact as to whether he had effected a bona fide retirement. Id. at 347. Assuming that Taveau in fact retired on December 31, 2005, we held that a genuine issue of material fact also existed as to whether Taveau thereafter complied with the 550 hour rule, and—if he violated the rule—when that violation occurred, causing him to forfeit retirement benefits from that point forward. Id. at 348–56. We remanded the case to the circuit court for trial on the Retirement System's and Taveau's claims. Id. at 356.

On remand from this Court, the circuit court conducted a twelve-day bench trial. On March 18, 2014, the court entered a 34–page judgment which made detailed findings of fact and conclusions of law. The court found that "[t]he overwhelming evidence in the...