Sch. Admin. Dist. 27 v. Employees Ret. Sys.

• Decision Date: 05 November 2009
• Docket Number: No. Ken-09-136,Ken-09-136
• Citation: 2009 ME 108,983 A.2d 391
• Parties: MAINE SCHOOL ADMINISTRATIVE DISTRICT NO. 27 v. MAINE PUBLIC EMPLOYEES RETIREMENT SYSTEM.
• Court: Maine Supreme Court

983 A.2d 391

2009 ME 108

MAINE SCHOOL ADMINISTRATIVE DISTRICT NO. 27 v. MAINE PUBLIC EMPLOYEES RETIREMENT SYSTEM.

No. Ken-09-136

Supreme Judicial Court of Maine.

Argued: September 16, 2009.

Decided: November 5, 2009.

Jeffrey T. Piampiano, Esq. (orally), Drummond Woodsom & MacMahon, Portland, ME, for Maine School Administrative District No. 27.

Janet T. Mills, Atty. Gen., Christopher L. Mann, Asst. Atty. Gen. (orally), Augusta, ME, for the Maine Public Employees Retirement System.

Panel: ALEXANDER, LEVY, SILVER, MEAD, and GORMAN, JJ.

LEVY, J.

[¶ 1] The Superior Court (Kennebec County, Jabar, J.) affirmed the decision of the Board of Trustees for the Maine Public Employees Retirement System that Maine School Administrative District No. 27 was responsible for back contributions, plus interest, on behalf of six employees for time periods when the employees should have been, but were not, enrolled in the system. In this appeal, the District argues that the court erred because: (1) the System's assessments of the District for the back contributions are barred by the six-year statute of limitations for civil actions; (2) the System's assessments are barred by the doctrine of laches; and (3) the System lacks the authority to assess and collect these back contributions from the District. We affirm the judgment.

I. BACKGROUND

[¶ 2] This case concerns six secretaries employed by the District between 1973 and 1987 for whom the District failed to pay retirement contributions to the System. Although at the time the District was required by statute to enroll the six secretaries in the State Retirement System, see 5 M.R.S.A. §§ 1062(2)(A), 1091(5) (1964), the District instead withheld Social Security contributions and submitted them to the Social Security Administration. As the Board found, the District acted to correct the error "piecemeal" over seven years "from the time proper deductions were begun for the first secretary until the correction was made for the last one."

[¶ 3] The System first became aware of the District's error in November 2000, when three of the secretaries asked the System about purchasing service credit for periods prior to their enrollment in the System. The following month, the System wrote to the District requesting data for the employees, as well as information on any other secretaries employed by the District prior to July 1, 1989; the period when secretaries were covered by the definition of "teachers" for System membership purposes. As the Superior Court noted, it took the District over two years to respond to the System's request for information.

[¶ 4] In June 2003, the System informed the District that it owed $34,752.12 in back contributions and interest for the three employees. The District paid the assessment in July 2003, while reserving its right to appeal.

[¶ 5] Eventually, the System identified three other secretaries for whom the District had similarly failed to make contributions, and in December 2003 assessed the District an additional $46,560.97 in back contributions. The District did not pay this amount and requested review of the assessment by the System's Executive Director in January 2004.

[¶ 6] After some delay,¹ in January 2007, the Executive Director affirmed the System's decision to assess back contributions for all six employees. The District appealed the Executive Director's decision to the Board, which ultimately affirmed the decision in April 2008. The District then appealed to the Superior Court, which affirmed the Board's decision. This appeal followed.

II. DISCUSSION

[¶ 7] "When the Superior Court acts in an intermediate appellate capacity pursuant to M.R. Civ. P. 80C, we review [the administrative] agency's decision directly . . . for legal errors, an unsustainable exercise of discretion, or unsupported findings of fact." Tremblay v. Land Use Regulation Comm'n, 2005 ME 110, ¶ 13, 883 A.2d 901, 904 (quoting S.D. Warren Co. v. Bd. of Envtl. Prot., 2005 ME 27, ¶ 4, 868 A.2d 210, 213). The party seeking to overturn the Board's action bears the burden of persuasion on appeal. Zegel v. Bd. of Social Worker Licensure, 2004 ME 31, ¶ 14, 843 A.2d 18, 22.

[¶ 8] The District contends that: (A) the System's assessments are barred by the statute of limitations pertaining to civil actions; (B) the System's assessments, even if timely, are barred by the equitable doctrine of laches; and (C) the System does not have the authority to assess back contributions from the District as an employer.

A. Statute of Limitations

[¶ 9] The District asserts that the System's assessments are barred by the six-year statute of limitations for civil actions because all of the alleged misdirection of funds occurred between 1972 and 1989, and the System did not issue its initial assessment until June 2003. See 14 M.R.S. § 752 (2008).² The System responds that it has not brought a "civil action" and therefore the statute of limitations does not apply.³ Whether a claim is time-barred is a question of law we review de novo. Francis v. Stinson, 2000 ME 173, ¶ 56, 760 A.2d 209, 220. The specific issue of whether an administrative procedure constitutes a "civil action" is a matter of first impression in Maine.

[¶ 10] The Superior Court, noting that 5 M.R.S. § 17203 (2008) provides that delinquent payments may be recovered by action in a court, and citing the Black's Law Dictionary definition of "civil action," determined that the System's assessments constitute a civil action subject to 14 M.R.S. § 752.⁴ The Superior Court appears to conclude that the assessments were intended to "protect a private or civil right" under the plain meaning of "civil action," and that the System must consider its Board a "court of competent jurisdiction," or it would not have rested its decision on section 17203, which provides no other mechanism for recovering delinquent payments. The Superior Court ultimately decided, however, that 14 M.R.S. § 752 did not bar the System's assessments due to the doctrine of nullum tempus, which provides that statutes of limitation do not apply to State actions.

[¶ 11] The Superior Court's characterization of the System's assessments as a civil action finds some support in the Maine Administrative Procedure Act, which provides that when a final agency action is appealed to the Law Court, "[t]he appeal shall be taken as in other civil cases." 5 M.R.S. § 11008 (2008) (emphasis added). However, the Act also provides that the Superior Court may review "final agency action." See 5 M.R.S. §§ 11001-11008 (2008) (emphasis added). These provisions, taken together, do not equate "agency action," final or otherwise, with civil actions. Indeed, for the reasons we will explain, a review of the agency action in this case establishes that a civil action was not commenced until the District filed its appeal with the Superior Court under M.R. Civ. P. 80C.

[¶ 12] The System did not commence this action in a judicial proceeding pursuant to 5 M.R.S. § 17203(1)(B)(2). Rather, it acted administratively to collect delinquent payments from the District. Subsequent to the Board's determination, the District appealed the final administrative decision pursuant to Rule 80C and the Maine Administrative Procedure Act. It was the District, and not the System, that commenced a civil action. The Legislature has not enacted a statute of limitations applicable to the type of administrative enforcement in this case. See, e.g., 32 M.R.S. § 10015(6) (2008) (limit on the enforcement actions brought by the Board of Underground Storage Tank Installers against certified persons concerning underground oil tanks); 36 M.R.S. § 612(5) (2008) (limit on time period of perfection of a tax lien after the lien arises); 38 M.R.S. § 347-A(8) (2008) (limit on air and wastewater discharge enforcement actions brought by Department of Environmental Protection or Attorney General).

[¶ 13] Because the Maine Administrative Procedure Act roughly mirrors the Federal Administrative Procedure Act, particularly regarding judicial review of final agency action,⁵ interpretation of the federal act offers useful guidance. Under the federal APA, appeal of a final agency action is considered a civil action; as such, the appeal is subject to the applicable federal statute of limitations regarding civil proceedings. See, e.g., Narragansett Elec. Co. v. United States EPA, 407 F.3d 1, 5 (1st Cir.2005) ("[T]he standard statute of limitations for APA actions is six years."); Trafalgar Capital Assocs. v. Cuomo, 159 F.3d 21, 34 (1st Cir.1998) ("A complaint under the APA for review of an agency action is a civil action that must be filed within the six year limitations period set forth in 28 U.S.C. § 2401(a)."). As one court has explained: "[A] cause of action under the APA accrues when the person challenging the administrative action can institute and maintain a suit in court. That is, when there has been a final agency action." Blanco v. United States, 433 F.Supp.2d 190, 197 (D.P.R.2006) (citation marks omitted).

[¶ 14] Agency decisions are not considered civil actions, even if they are subsequently appealed to a federal court pursuant to the APA. In BP Am. Prod. Co. v. Burton, 549 U.S. 84, 94, 127 S.Ct. 638, 166 L.Ed.2d 494 (2006), the Court held that a six-year limitations period applied only to "court actions" and not administrative proceedings, and thus did not apply to the administrative orders issued for the collection of gas lease royalties. Taken together, these federal cases demonstrate that it is the aggrieved party's appeal to the federal court system that commences a civil action.

[¶ 15] Thus, using federal law as a guide, the District, not the System, has initiated a civil action subject to a period of limitations. Neither the System's administrative assessment against the District, nor the Board's review of the same, were civil actions subject to the six-year statute of limitations.⁶

B. Laches

[¶ 16] The District also argues...