Shields v. JUDGES'RETIREMENT SYSTEM

• Decision Date: 05 November 2001
• Docket Number: No. 1-00-4133.,1-00-4133.
• Citation: 263 Ill.Dec. 266,329 Ill. App.3d 27,768 N.E.2d 26
• Parties: David J. SHIELDS, Plaintiff-Appellee, v. The JUDGES' RETIREMENT SYSTEM OF ILLINOIS and the Board of Trustees of the Judges' Retirement System of Illinois, Defendants-Appellants.
• Court: United States Appellate Court of Illinois

768 N.E.2d 26

329 Ill. App.3d 27

263 Ill.Dec. 266

David J. SHIELDS, Plaintiff-Appellee, v. The JUDGES' RETIREMENT SYSTEM OF ILLINOIS and the Board of Trustees of the Judges' Retirement System of Illinois, Defendants-Appellants.

No. 1-00-4133.

Appellate Court of Illinois, First District, First Division.

November 5, 2001.

Rehearing Denied May 9, 2002.

George B. Collins, Adrian Vuckovich, Collins & Bargione, Chicago, for Appellee.

James E. Ryan, Attorney General, Joel D. Bertocchi, Solicitor General, Chicago (Jan E. Hughes, Assistant Attorney General, of counsel), for Appellants.

Justice COUSINS delivered the opinion of the court:

The Judges' Retirement System of Illinois (the System) terminated the retirement benefits of former judge David J. Shields when he was convicted of a felony in March 1992. Shields sought a refund of all the contributions that he made into the System over the years, which totaled $113,222.04. The Board of Trustees of the Judges' Retirement System (the Board) held that Shields was entitled to a refund of $37,873.27, which represents his contributions less benefits paid to him prior to the termination of his benefits. Shields sought administrative review. The circuit court reversed the decision of the Board. The System and the Board now appeal the circuit court's reversal. The primary issue upon appeal is whether the Board correctly determined that Shields is entitled to a refund of his contributions ($113,222.04) less benefits paid to him prior to his conviction ($75,348.77), for a total refund of $37,873.27.

BACKGROUND

In June 1971, David J. Shields was appointed as a magistrate in the 21st Judicial Circuit. Soon thereafter, the Judges' Retirement System notified Shields that he was eligible to participate in the System's pension plan. He elected to participate and made contributions in the form of salary deductions beginning in August 1971.

In November 1990, Shields applied for retirement benefits from the System, indicating that he was retiring from service in December 1990. As of December 3, 1990, Shields had contributed a total of $113,222.04 to the System. He began receiving retirement benefits of approximately $5,100 per month, effective December 13,1990.

On December 19, 1990, Shields was indicted on seven counts, including conspiracy to engage in extortion, attempted extortion, and knowingly making false statements of material fact to the Federal Bureau of Investigation. Shields was convicted on all seven counts of the indictment. He was sentenced to 37 months in prison plus 3 years' supervised release and was fined $6,000. The conviction was upheld upon appeal. See United States v. Shields, 999 F.2d 1090 (7th Cir.1993).

In a letter dated March 17, 1992, the System notified Shields that his benefits would be terminated, effective the day of his conviction, March 2, 1992, pursuant to section 18-163 of the Illinois Pension Code (the Pension Code) (40 ILCS 5/18-163 (West 1992)). The letter indicated that Shields was entitled to a refund of his contributions ($113,222.04) less benefits paid to him prior to his conviction ($75,348.77), for a total refund of $37,873.27. The letter noted that Shields could appeal the System's decision to the Board.

In a letter dated August 19, 1999, the System asked the office of the Attorney General to review the indictments and certified copies of Shield's conviction. The System requested an "unofficial opinion" as to whether Shields' conviction fell within the "Felony Conviction Forfeiture Provision, Section 18-163, of the Judges' Retirement System Pension Code, therefore forfeiting Shields' right to receive pension benefits."

Senior Assistant Attorney General Michael Luke commented "informally" that each of Shields' offenses is a felony under federal law and that the offenses for which he was convicted arose from and were connected to his service as a judge. It was Luke's opinion that the Board "may properly find that Mr. Shields is prohibited from receiving any benefits from the Judges' Retirement System subsequent to the date upon which he was sentenced" because he was convicted of felonies relating to or arising out of his service as a judge. Moreover, the Board may refund to him his contributions to the System, to the extent that those contributions exceed benefits already paid.

At the December 1999 Board meeting, the Board reviewed Shields' file along with the recommendation from the Attorney General's office. The Board held that, pursuant to section 18-163 of the Pension Code (40 ILCS 5/18-163 (West 1992)), Shields is prohibited from receiving any benefits from the System subsequent to the date of sentencing as a result of the felony conviction relating to and arising out of his service as a judge. A refund of $37,873.27 would be refunded to Shields.

Notice of the Board's findings and Shields' right to a hearing were provided to him on December 6, 1999. The Board notified Shields of its decision and stated that if he wished to appeal the decision, he must do so within 30 days from the date of the letter.

Shields appealed the decision of the Board and a hearing was heard on his appeal in January 2000. A bystander's record of testimony presented at the hearing is provided in the record. Shields argued that his retirement payments of $75,348.77 should not be deducted from his total contributions when paying a refund to him. It was his position that he was entitled to a principal payment of $113,222.04, plus interest on the refund at the statutory rate of 5% per annum from the date of the termination of pension payments until the refund is paid. Finally, Shields presented his intent to seek a federal pardon from the President of the United States, and indicated that he did not want to waive the rights to a pension should such pardon be granted.

At its meeting in April 2000, the Board held that Shields was entitled to a total refund of $37,873.27 and was not entitled to interest on that amount. The Board issued its written findings and decision regarding Shields' appeal in April 2000. In its written findings, the Board noted that while Shields' felony conviction did not preclude him from receiving a refund, section 18-163 of the Pension Code (40 ILCS 5/18-163 (West 1992)) did not offer instruction as to how to calculate the amount of the refund upon termination of his benefits.

Therefore, the Board relied on section 18-129(c) (40 ILCS 5/18-129(c)(West 1992)) in calculating the amount of Shields' refund. The Board stated that "the statute should not be read to benefit an annuitant whose pension benefits are terminated by felony conviction over an annuitant whose benefits are terminated by death." The Board further reasoned that if the System were required to follow Shields' rationale, future annuitants whose benefits are terminated by a felony conviction will be entitled to a full refund of all contributions even if the retirement benefits received by the annuitant far exceeded the contributions made by that annuitant. The Board held that the amount that Shields was entitled to equaled $37,873.27, representing $25,731.85 in contributions for survivor's benefits and $12,141.42 in contributions for retirement benefits and automatic increases in excess of retirement benefits paid. Also, interest would not be paid on the refund of Shields' contributions.

Shields appealed to the circuit court of Cook County for administrative review of the Board's decision. After oral argument, the circuit court judge reversed the findings and decision of the Board, stating:

"I do so almost exclusively based upon the language of the Jinada [sic ] case, which I do not think is distinguishable solely because of the fact that there is a policeman involved. I think that that case takes into consideration language which is substantially identical to the language contained in the Judges' Retirement System and in the statute.

* * *

With the same view in fact, though it has not been brought to my attention as of this time, I find that he is not entitled to interest, and the reason he is not entitled to interest is because I think that the way the statute should be interpreted without his ever having made a demand for the interest, I think it would be inappropriate for him to receive it under these circumstances."

The System was ordered to pay Shields "a full refund of all contributions paid in by Plaintiff in the amount of $113,222.04 less the sum of $37,873.27, for a net refund of $75,348.77." The circuit court's decision was stayed pending appeal.

ANALYSIS

Defendants assert that the Board correctly refunded Shields the difference between the sum of contributions that he made to the System and the sum of pension benefits he received from the System. Shields asserts that the plain language of the statutes provide that he should receive a refund of his total contributions to the System, without deduction for benefits lawfully paid to him while in retirement status.

As the reviewing court, we review the decision of the Board, not that of the circuit court. AFM Messenger Service, Inc. v. Department of Employment Security, 315 Ill.App.3d 308, 312, 248 Ill. Dec. 74, 733 N.E.2d 749 (2000). Section 18-164 of the Illinois Pension Code provides that judicial review of a final decision of the Board is governed by the provisions of the Administrative Review Law (735 ILCS 5/3-110 (West 1994)). 40 ILCS 5/18-164 (West 1992). Factual findings and factual conclusions of the Board shall be held by the reviewing court to be prima facie true and correct (735 ILCS 5/3-110 (West 1992)) and will not be disturbed on review unless they are against the manifest weight of the evidence. City of Belvidere v. Illinois State Labor Relations Board, 181 Ill.2d 191, 205, 229 Ill.Dec. 522, 692 N.E.2d 295 (1998). The Board's conclusions of law, however, are not entitled to the same deference and are subject to de novo review. AFM Messenger Service, Inc., 315 Ill.App.3d at 312, 248...