State ex rel. Helman v. Gallegos

Decision Date07 March 1994
Docket NumberNo. 20702,20702
Citation117 N.M. 346,871 P.2d 1352,1994 NMSC 23
PartiesSTATE of New Mexico, ex rel. Leonard A. HELMAN, et al., Petitioners-Respondents, v. Carlos GALLEGOS, Executive Secretary, New Mexico Public Employees Retirement Association; Public Employees Retirement Board, et al., Respondents-Petitioners.
CourtNew Mexico Supreme Court
OPINION

MONTGOMERY, Chief Justice.

This is a statutory construction case. It involves two themes or approaches running through New Mexico law and relating to how a court performs the task of applying a statute when the parties to a case disagree over the statute's meaning. These approaches, though probably intended to be complementary, often seem to work at cross purposes and to call for different answers to the question.

The first approach, relied on by the Court of Appeals in the decision reviewed here on certiorari, State ex rel. Helman v. Gallegos, 114 N.M. 414, 839 P.2d 624 (Ct.App.1992), is often called the "plain meaning" rule. The Court of Appeals summarized this approach as follows: " 'State statutes are to be given effect as written and, where they are free from ambiguity, there is no room for construction; where the meaning of statutory language is plain, and words used by the legislature are free from ambiguity, there is no basis for interpreting the statute....' " Id. at 416, 839 P.2d at 626 (quoting Johnson v. Francke, 105 N.M. 564, 566, 734 P.2d 804, 806 (Ct.App.1987)).

The second theme might be called the "rejection-of-literal-language" approach. It was quoted by the Court of Appeals in the opinion below, but not followed, as follows:

"Courts will not add words except where necessary to make the statute conform to the obvious intent of the legislature, or to prevent its being absurd. But where the language of the legislative act is doubtful or an adherence to the literal use of words would lead to injustice, absurdity or contradiction, the statute will be construed according to its obvious spirit or reason, even though this requires the rejection of words or the substitution of others."

Id. at 417, 839 P.2d at 627 (quoting State v. Nance, 77 N.M. 39, 46, 419 P.2d 242, 247 (1966), cert. denied, 386 U.S. 1039, 87 S.Ct. 1495, 18 L.Ed.2d 605 (1967)).

The specific issue in the present case turns on the meaning of a section in the 1987 recodification of the Public Employees Retirement Act (cited below) and relates to whether that section was, as the Court of Appeals held, "clear and unambiguous," or whether it was ambiguous, and in fact internally inconsistent, so that judicial interpretation is necessary to effectuate the legislature's intent. The case was brought as a mandamus action in the District Court of Santa Fe County on behalf of a class of retired public employees ("the retirees") who claimed that they had been required to pay too much to purchase certain retirement benefits and who obtained a judgment directing that the Public Employees Retirement Board ("the Board") refund eleven-twelfths of the amounts they had paid. In holding that the statutory meaning was plain and that interpretation was therefore not required, or even permitted, the Court of Appeals agreed with similar conclusions by the district court and affirmed the judgment. Id. at 416, 839 P.2d at 626. We reach the opposite conclusions and, construing the statute in the manner advocated by the Board, reverse.

I.

State and other public employees in New Mexico receive retirement benefits through a program established under the Public Employees Retirement Act, NMSA 1978, Sections 10-11-1 to -140 (Repl.Pamp.1992) ("the Act"). The Act provides that participating employees, who are members of the Public Employees Retirement Association ("PERA") (referred to in the Act as "members"), earn credit toward retirement through periods of service with their employers and may retire and receive a pension when they have met certain age and service credit requirements. See Sec. 10-11-8.

In 1986, the New Mexico Legislature enacted legislation to encourage early retirement by public employees. The legislation appeared in an amendment to the Act, 1986 N.M.Laws, ch. 89, Secs. 1-4 (compiled as NMSA 1978, Secs. 10-11-14.1 to -14.4 (Cum.Supp.1986)), the purpose of which, according to its title, was to effect the voluntary early retirement "during a one-year period" of public employees meeting certain requirements. One of those requirements was that the employee desiring to retire elect in writing to purchase up to five years of service credit; another was that the employee's election "actually effectuate[ ] the member's retirement during the seventy-fifth fiscal year." 1986 N.M.Laws, ch. 89, Secs. 3(A), (B) (compiled as NMSA 1978, Secs. 10-11-14.3(A), (B) (emphasis added)).1 The amendment provided that "the cost of purchasing the service credit ... is computed by the retirement board based on the member's average annual earnings for the five years immediately prior to the member's election in writing to purchase the service credit at the combined rate of both the employer and employee contributions applicable to and in effect for that member." Id. Sec. 3(D) (compiled as Sec. 10-11-14.3(D)) (emphasis added). The phrase "average annual earnings" was not defined in Chapter 89 or elsewhere in the Act as it existed at that time.

The effect of Section 3 of the 1986 amendment (Chapter 89) was to allow employees to purchase a year of service credit at a cost computed by multiplying the employee's average annual earnings over a five-year period by the combined employer and employee contribution rates applicable to the employee.

In the following year, the legislature enacted a comprehensive revision and recodification of the Act. 1987 N.M.Laws, ch. 253, Secs. 1-143 (compiled as NMSA 1978, Secs. 10-11-1 to -138 (Repl.Pamp.1987)). This recodification appeared in an act consisting of 143 sections and occupying almost 100 pages in the 1987 session laws. Its effective date was July 1, 1987. 1987 N.M.Laws, ch. 253, Sec. 143. The recodification repealed the 1986 amendment, id. Sec. 140, and replaced it with a substantially similar provision allowing public employees to purchase service credit toward retirement, id. Sec. 139. The outcome of this lawsuit turns on the meaning of Section 139.

Section 139 read in its entirety as follows:

Section 139. TEMPORARY PROVISION--PURCHASE OF CREDITED SERVICE.--A member may purchase not more than five years of credited service during the seventh-fifth or seventy-sixth fiscal year subject to the following conditions:

A. the member has five or more years of credited service acquired as a result of personal service rendered in the employ of an affiliated public employer;

B. the member reinstates all forfeited credited service;

C. the purchase cost for each year of credited service purchased under the provisions of this section is an amount equal to the member's final average salary multiplied by the sum of the member contribution rate and the employer contribution rate for the coverage plan applicable to the member; and

D. the purchase cost shall be paid to the association in one payment and the member shall retire the first day of the month following payment of the purchase cost.

1987 N.M.Laws, ch. 253, Sec. 139 (emphasis added).2

As noted above, the requirements in Section 139 for an employee's purchase of up to five years of credited service (in the seventy-sixth fiscal year) were substantially similar to the requirements in Section 3 of the 1986 amendment (applicable to the seventy-fifth fiscal year); but there was an important difference, which formed the basis for the present litigation. Whereas Section 3 of the 1986 amendment had defined the employee's cost for such a purchase in terms of the employee's "average annual earnings" for the five years immediately prior to the employee's election to purchase the credit (at the combined employer and employee contribution rates applicable to the employee), Section 139 provided that the cost for each year of purchased credited service was to be an amount equal to the employee's "final average salary" (also multiplied by the combined employee and employer contribution rates applicable to the employee). Critically, the term "final average salary" was defined in Section 24 of the 1987 recodification (fifty-six pages earlier) as a monthly figure: "Under [the applicable coverage plan], the final average salary is one thirty-sixth of the greatest aggregate amount of salary paid a member for thirty-six consecutive months of credited service." 1987 N.M.Laws, ch. 253, Sec. 24 (compiled as Sec. 10-11-24 (Repl.Pamp.1987)).3

The terms "member contribution rate" and "employer contribution rate" in Section 139 were defined, respectively (for the coverage plan applicable to all retirees in the present action), in Sections 25 and 26 of the recodification, id. Secs. 25, 26 (compiled as Secs. 10-11-25 and -26 (Repl.Pamp.1987)). It is undisputed that that combination produced a figure of 20.01 percent. Thus, Section 139(C) yielded a straightforward computation of a prospective retiree's purchase cost for a year of purchased credited service: an amount equal to his or her final average salary (a monthly figure, defined in Section 24) times 20.01 percent. Read literally, therefore, Section 139 allowed employees to purchase one year of service credit at a cost of one month's salary times 20.01 percent, or one-twelfth of the cost applicable in the preceding year.

Before the 1987 recodification went into effect, the Board, which administers the Act, became aware of the reduced purchase cost associated with a literal reading of Section 139. Believing that the legislature had not intended this result, the Board...

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