PUBLIC EMP. RETIREMENT SYSTEM v. Porter

• Citation: 763 So.2d 845
• Decision Date: 24 February 2000
• Docket Number: No. 1999-SA-01058-SCT.,1999-SA-01058-SCT.
• Parties: PUBLIC EMPLOYEES' RETIREMENT SYSTEM v. Lola PORTER.
• Court: Mississippi Supreme Court

763 So.2d 845

PUBLIC EMPLOYEES' RETIREMENT SYSTEM v. Lola PORTER.

No. 1999-SA-01058-SCT.

Supreme Court of Mississippi.

February 24, 2000.

Mary Margaret Bowers, Jackson, Attorney for Appellant.

Frank J. Campbell, Vicksburg, Attorney for Appellee.

BEFORE PRATHER, C.J., SMITH AND WALLER, JJ.

PRATHER, Chief Justice, for the Court:

INTRODUCTION

¶ 1. The Court is called upon to determine the constitutionality of a statute which mandates that the pre-retirement death benefits of a Mississippi Public Employees' Retirement System (hereinafter PERS) member shall go to the member's surviving spouse, regardless of whom the member has duly designated as his or her beneficiary.

STATEMENT OF THE CASE

¶ 2. Thomas Gaines was born on May 3, 1942. He married Deloris Scott Gaines on June 14, 1973. On August 21, 1980, he became employed by the City of Greenville as a laborer. When Gaines began this employment, he became a member of PERS. Under the relevant PERS regulations in effect when Gaines entered PERS, if a member died before retiring, the accumulated contributions contained in his or her account were paid to the designated beneficiary. The only law in effect when Gaines entered PERS which even mentioned a spouse receiving a member's retirement benefits when that member died prior to retirement was Miss.Code Ann. § 25-11-111(c), which stated the following:

Any member who has completed ten (10) or more years of creditable service, and who dies prior to retirement and who leaves a spouse who is named as his beneficiary, and who has been married to the member for not less than five (5) years immediately preceding his death, and shall not have exercised any other option, shall be deemed to have automatically exercised Option 2 under Section 25-11-115 for the benefits of his spouse, who shall be paid Option 2 settlement benefits under this article.

Miss. Laws of 1980, Chapter 481 (emphasis added). At some point in 1980, and Mrs. Gaines separated. They never obtained a divorce, and no children were born to their marriage.

¶ 3. PERS uses a "Form 1" to enroll new members in the retirement system, as well as to designate beneficiaries. The record is silent as to whether Gaines designated a beneficiary when he entered PERS in 1980. However, on November 11, 1991, Gaines properly executed a "Form 1" in which he designated his sister, Lola Porter, as his beneficiary. This was the last "Form 1" executed by Gaines. Additionally, Gaines repeatedly told Porter, his mother, and his father that he wanted his sister, Porter, to receive his PERS benefits in the event of his death.

¶ 4. On July 1, 1992, an amendment to Miss.Code Ann. § 25-11-114 became effective. The revised statute, in relevant part, reads as follows:

(1) The applicable benefits provided in subsections (2) and (3) of this section shall be paid to eligible beneficiaries of any member who has completed four (4) or more years of creditable service and who dies before retirement and who has not filed a Pre-Retirement Optional Retirement Form as provided in Section 25-11-111.

(2)(a) The member's surviving spouse who has been married to the member for not less than one (1) year immediately preceding his death shall receive an annuity computed in accordance with paragraph (d) of this subsection (2) as if the member:

(i) Had retired on the date of his death with entitlement to an annuity provided for in Section 25-11-111, notwithstanding that he might not have attained age sixty (60) or acquired twenty-five (25) years of creditable service;

(ii) Had nominated his spouse as beneficiary ...

(emphasis added).

¶ 5. Gaines died on December 11, 1997, at which time he had 17½ years of service credit with PERS. After Gaines' death, Lola Porter sought to receive the PERS benefits as her brother's designated beneficiary. Deloris Scott Gaines also sought to receive the PERS benefits under Miss. Code Ann. § 25-11-114(2)(a) as Gaines' surviving spouse. By letter dated February 10, 1998, PERS informed Lola Porter's attorney that, pursuant to § 25-11-114(2)(a), Deloris Scott Gaines would receive Gaines' benefits as his surviving spouse. This letter further explained that if there was any money left once payments to Mrs. Gaines ceased, the remaining funds would go to Porter as Gaines' named beneficiary. Porter appealed this decision, and a hearing was held before the PERS Claims Committee on October 21, 1998. On this date, the balance on Gaines' account was $21,541.58. The Claims Committee also ruled that Mrs. Gaines should receive her husband's PERS benefits pursuant to the statute.

¶ 6. Porter then appealed the Committee's decision to the Circuit Court of the First Judicial District of Hinds County. By order dated April 27, 1999, the Honorable W. Swan Yerger, Hinds County Circuit Judge, held that Miss.Code Ann. § 25-11-114(2)(a) "unconstitutionally deprived Thomas Gaines of his right to direct the distribution of his property during his lifetime and at his death in violation of Art. 1, § 10 of the U.S. Constitution and Art. 3, § 16 of the Mississippi Constitution." The circuit court then declared the statute, as applied in all circumstances, to be unconstitutional "insofar as such statute defeats or diminishes the right of a PERS participant to designate a named beneficiary for accumulated benefits at death." The circuit court based its decision on the holding in In re Estate of Dillon, 632 So.2d 1298 (Miss.1994), in which this Court held that the clear intent of the PERS member should determine who is that member's beneficiary, and that if strict compliance with the particular statute in that case (different from the one at issue here) would defeat the member's intent, then strict compliance would not be required. Finally, the circuit court ordered PERS to deliver Gaines' benefits to Porter, as his named beneficiary.

¶ 7. Aggrieved from by the judgment of the circuit court, PERSs now appeals to this Court, raising the following assignments of error:

I. The trial court erred in basing its decision on the ruling in The Matter of the Estate of Dillon, 632 So.2d 1298 (Miss.1994), which is factually distinguishable and which was decided by the Mississippi Supreme Court prior to the amendment to Miss.Code Ann. Section 25-11-114 which provides for mandatory spousal benefits.

II. The trial court erred in holding that PERS applied Miss.Code Ann. Section 25-11-114(2)(a) so as to defeat or diminish benefits allegedly due Lola Porter, depriving Thomas Gaines of his right to direct the distribution of his property during his lifetime and at his death.

III. The trial court erred in declaring Miss.Code Ann. Section 25-11-114(2)(a) unconstitutional in that the ruling disregards the legislative intent to recognize the surviving spouse as a member of a "protected class" and further erred as its ruling discriminates between those cases where only adults are involved, those where member is survived by a spouse and dependent children, and those cases where the member is killed in the line of duty.

DISCUSSION

¶ 8. "This Court's standard of review of an administrative agency's findings and decisions is well established. An agency's conclusions must remain undisturbed unless the agency's order 1) is not supported by substantial evidence, 2) is arbitrary or capricious, 3) is beyond the scope or power granted to the agency, or 4) violates one's constitutional rights." Sprouse v. Mississippi Employment Sec. Comm'n, 639 So.2d 901, 902 (Miss.1994); Mississippi Comm'n on Envtl. Quality v. Chickasaw County Bd. of Supervisors, 621 So.2d 1211, 1215 (Miss.1993); Mississippi Employment Sec. Comm'n v. PDN, Inc., 586 So.2d 838, 840 (Miss.1991). This Court may neither substitute its own judgment for that of the agency which rendered the decision nor reweigh the facts of the case. Mississippi Pub. Serv. Comm'n v. Merchants Truck Line, Inc., 598 So.2d 778, 782 (Miss.1992).

¶ 9. The facts of this case are uncontroverted, and the PERS Claims Committee obviously has the authority to award benefits accrued within its retirement system. Therefore, the only issue before this Court, under the applicable standard of review, is whether the PERS order violates one's constitutional rights. As PERS based its decision on Miss.Code Ann. § 25-11-114(2)(a), the question becomes whether that statute is constitutional.

I.

¶ 10. In its first assignment of error, PERS correctly points out that Dillon is factually distinguishable from the case sub judice and was decided under a statute different from the one at issue here. In that case, Dillon was a member of PERS. On November 10, 1983, while divorced, he duly designated his children as beneficiaries of his state retirement funds. By will dated July 9, 1984, he again directed that his state retirement funds be divided between his children. Also in 1984, the applicable statute was amended, with the new version stating that the spouse of a PERS member would be the beneficiary of that member unless the member designated another beneficiary subsequent to the date of marriage to that spouse. Dillon remarried on July 27, 1987, and never redesignated his children as his PERS beneficiaries. Dillon and his new wife filed for divorce in 1988, and along with the petition for divorce, filed a property settlement agreement wherein each party waived any rights in the other's estate upon that party's death. By codicil dated May 30, 1989, Dillon directed that his children receive his death benefits. He died on September 21, 1989. Because the divorce decree had not been entered at the time of his death, Dillon was still legally married to his second wife. Because the revised statute gave the PERS member an opportunity to designate someone other than the member's spouse as beneficiary, this Court rejected the contention of Dillon's children that the statute violated the Contract Clauses of the United States and Mississippi Constitutions. Dillon, 632 So.2d at 1303. This Court went on to hold that...