Spaccia v. Cal. Pub. Emps' Ret. Sys.
| Docket Number | B319774 |
| Decision Date | 21 July 2023 |
| Parties | PIER'ANGELA SPACCIA, Plaintiff and Appellant, v. CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM, Defendant and Respondent. |
| Court | California Court of Appeals Court of Appeals |
NOT TO BE PUBLISHED
APPEAL from an order of the Superior Court of Los Angeles County No. BS174401 James C. Chalfant, Judge. Affirmed.
Law Office of Robert F. Keehn and Robert F. Keehn for Plaintiff and Appellant.
Mathew G. Jacobs, General Counsel, Elizabeth Yelland Assistant Chief Counsel, and Preet Kaur, Senior Attorney, for Defendant and Respondent.
Public pension systems exist to induce and reward faithful public service and it is well established that public employee pension rights are protected under the contract clause of the California Constitution. In the wake of several incidents of financial corruption involving public employees, the Legislature adopted the California Public Employees' Pension Reform Act of 2013 (PEPRA), designed to close certain loopholes, curb pension abuse, and discourage corruption. Among other things, the legislation provided that a public employee convicted of a job-related felony forfeits pension benefits earned during the time of the commission of the felony. (Gov. Code, § 7522.72, subds. (b)(1), (c) (forfeiture provision).)[1] Two recent court of appeal decisions[2]have held that the forfeiture provision does not unconstitutionally infringe on a public employee's protected pension rights, nor does it violate the prohibition against ex post facto laws.
Plaintiff and appellant Pier'Angela Spaccia was convicted in 2013 of numerous job-related felonies stemming from her participation in schemes to defraud the citizens and city council of the City of Bell.[3] In this matter, Spaccia challenges the application of the forfeiture provision to her pension benefit by the California Public Employees' Retirement System (CalPERS).
The trial court denied her petition for a writ of mandate and a writ of administrative mandamus barring CalPERS from applying the forfeiture provision. She appeals, asserting that the forfeiture provision cannot be applied to her because she started receiving her pension benefits before the forfeiture provision was enacted. We find Spaccia's argument unpersuasive. Instead, we follow Wilmot and affirm.
Spaccia was employed by the City of Bell from 2003 to 2010, first as the assistant to the city manager and then as the assistant city manager. The city council terminated her employment in July 2010 amidst a highly publicized corruption scandal involving Spaccia and others. Spaccia was arrested in September 2010 and charged with more than 50 counts of job-related criminal conduct.
In Spaccia, supra, 12 Cal.App.5th 1278, we summarized in detail the evidence presented at the jury trial. For present purposes, it is sufficient to say that from the outset of her employment through her dismissal by the city council, Spaccia participated in multiple schemes designed to increase beyond all reasonable limits the salaries, fringe benefits, and retirement benefits for herself and others employed by the City of Bell. For example, Spaccia's annual salary rose from approximately $102,000 to more than $340,000 over just seven years with no change in job responsibilities. In addition, the city funded her retirement savings plan in the maximum allowable amount and purchased additional service credit for her, she earned vacation and sick leave accruals at an excessive rate and received monthly checks cashing out the value of those accruals, and she received multiple unauthorized loans from the city in amounts exceeding $100,000 per loan. Spaccia also designed and implemented a supplemental pension plan intended to provide substantial retirement benefits for only herself and the city manager. (See id. at pp. 1282-1286.)
In December 2013, after a lengthy trial, a jury convicted Spaccia of multiple felonies relating to the City of Bell scandal including one count of conspiracy to misappropriate public funds in violation of Penal Code section 182 subdivision (a)(1), four counts of conflict of interest in violation of Government Code sections 1090 and 1097, and one count of unlawful secretion of an official record in violation of Government Code section 6200. We affirmed those convictions and they are now final.[4] (Spaccia, supra, 12 Cal.App.5th at pp. 1281, 1298.)
In October 2010, Spaccia submitted a request for a service retirement to CalPERS.[5] She requested that CalPERS use her final compensation at the City of Bell to calculate her retirement benefit allowance. CalPERS declined and Spaccia requested an administrative hearing. In the interim, Spaccia began receiving retirement benefits in December 2010.
In July 2013, the Board of Administration of CalPERS (Board) issued its final decision regarding Spaccia's pension.[6] In sum, and for reasons not pertinent here, the Board determined that Spaccia's retirement allowance should be calculated using her initial salary with the City of Bell and that the five years of service credit purchased for her by the city should be excluded from the benefit calculation.
In late April 2014, CalPERS contacted Spaccia to advise her that it had become aware of her 2013 job-related felony convictions and that a portion of her retirement benefit was subject to forfeiture under section 7522.72.[7] Specifically, CalPERS had determined that the seven years of service credit Spaccia accrued between February 1, 2003, the earliest date of the commission of a felony, and September 29, 2010, her last date on payroll, would be forfeited and would result in a reduction in her monthly retirement benefit.
Spaccia initiated the present case in July 2018. The operative verified amended petition asserts six causes of action seeking a traditional writ of mandate (Code Civ. Proc., § 1085), a writ of administrative mandamus (Id., § 1094.5), damages (Id., § 1095), and asserting violations of the contracts clauses, takings clauses, and due process clauses of the United States and California Constitutions. Spaccia asked the court to direct CalPERS to recalculate her retirement benefit by using her highest 12-month salary (i.e., the inflated $340,123 salary she was receiving when the city council terminated her employment) and by including the service credit purchased for Spaccia by the City of Bell. She also asked the court for an injunction barring CalPERS from applying section 7522.72 to cause the forfeiture of service credit earned during her tenure at the City of Bell.
The court stayed the proceedings until the California Supreme Court ruled on the constitutionality of section 7522.72. (See Alameda County Deputy Sheriff's Assn. v. Alameda County Employees' Retirement Assn. (2020) 9 Cal.5th 1032 (Alameda).)
In August 2021, CalPERS moved for judgment on the pleadings. Specifically, CalPERS noted that two recent appellate court opinions applying Alameda, Wilmot and Hipsher, had held that section 7522.72's forfeiture provision could be applied retroactively to retired public employees without running afoul of either the contract clause of the California Constitution or the constitutional prohibition on ex post facto laws. CalPERS argued, therefore, that its retroactive application of section 7522.72 to Spaccia's retirement benefit, which resulted in the forfeiture of approximately seven years of service credit, was permissible and rendered her additional claims moot.
Spaccia opposed the motion, contending that neither Hipsher nor Wilmot was controlling. Specifically, Spaccia argued that section 7522.72 could not be applied in her situation because, unlike the plaintiffs in Hipsher and Wilmot, she had been receiving pension benefits for several years before the forfeiture provision was adopted by the Legislature.
The court granted CalPERS's motion for judgment on the pleadings. After reciting the factual background, the court summarized the controlling law as set forth in Alameda, Hipsher, and Wilmot. In Alameda, the court had articulated a test for analyzing constitutional contract claims in the pension context and applied that test to a different provision of the 2013 legislation. Subsequently, Hipsher and Wilmot applied that test to the forfeiture provision at issue and both courts concluded that the forfeiture statute did not violate the contract clause of the California Constitution. And in Wilmot, the Court of Appeal concluded that the forfeiture law could be applied retroactively to a former public employee who, like Spaccia, had retired before the 2013 legislation's effective date. Accordingly, the court found that CalPERS permissibly applied the forfeiture provision in its determination of Spaccia's retirement benefits, resulting in the forfeiture of all benefits earned during her tenure at the City of Bell.
By minute order dated December 16, 2021, the court noted that it had granted a motion for judgment on the pleadings "on the bulk of the case" and that Spaccia had agreed to dismiss the remainder of the case without prejudice. The order also stated that, "[p]ursuant to agreement of counsel, the case is ordered dismissed this date." No judgment of dismissal was signed or entered by the court.
Spaccia subsequently filed a request for dismissal asking the Clerk of the Court to dismiss the first and second causes of action with prejudice and to dismiss the remaining causes of action without prejudice, "in order to expedite a possible appeal." The clerk entered the dismissal as requested...
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