Teachers Retirement System of Ga. v. Plymel

• Decision Date: 19 February 2009
• Docket Number: No. A08A1958.,No. A08A1959.,A08A1958.,A08A1959.
• Citation: 676 S.E.2d 234,296 Ga. App. 839
• Parties: TEACHERS RETIREMENT SYSTEM OF GEORGIA et al. v. PLYMEL et al. Plymel et al. v. Teachers Retirement System of Georgia et al.
• Court: Georgia Court of Appeals

676 S.E.2d 234

296 Ga. App. 839

TEACHERS RETIREMENT SYSTEM OF GEORGIA et al. v. PLYMEL et al.

Plymel et al. v. Teachers Retirement System of Georgia et al.

No. A08A1958.

No. A08A1959.

Court of Appeals of Georgia.

February 19, 2009.

Reconsiderations Denied March 23, 2009.

Thurbert E. Baker, Attorney General, Annette M. Cowart, Senior Assistant Attorney General, Bryan K. Webb, Christopher A. McGraw, Assistant Attorneys General, for appellants.

Gregory & Forehand, Hardy Gregory, Jr., David A. Forehand, Jr., Cook & Connelly, Bobby Lee Cook, Summerville, Rogers & Hardin, Richard H. Sinkfield, Atlanta, for appellees.

BARNES, Judge.

This class action was brought by retirees who contended that the Teachers Retirement System ("TRS") incorrectly calculated their monthly retirement pay. The Supreme Court previously reversed the trial court's grant of summary judgment to TRS, analyzing the applicable statute and directing the trial court to determine whether the class members should have received a higher monthly benefit and which statute of limitation applied. Plymel v. Teachers Retirement System, 281 Ga. 409, 637 S.E.2d 379 (2006). After remand, TRS did not dispute that the members received lower monthly payments than they should have, and did not contest any claims resulting from the retirement of members beginning six years before this complaint was filed. The trial court granted summary judgment to the class, holding that the applicable statute of limitation was 20 years, and that the claims accrued payment by payment instead of only once when the class member retired. The court ordered TRS to pay into a common fund the difference between what it paid and what it should have paid, plus 4.5 percent pre- and post-judgment interest. The court also granted class counsel's fee application and set aside 30 percent of the common fund for fees, costs, and expenses.

In Case No. A08A1958, TRS contends the trial court erred by applying the twenty-year statute of limitation for enforcement of rights under a statute (OCGA § 9-3-22) instead of the six-year statute of limitation for breach of contract (OCGA § 9-3-24). TRS also asserts the trial court erred in finding that a new statute of limitation begins to run upon each successive benefits payment, and erred in awarding class counsel such a large fee. In Case No. A08A1959, the class members argue the trial court erred in awarding interest at only 4.5 percent instead of seven percent pre-judgment (OCGA §§ 7-4-15; 7-4-2), and prime plus three percent post-judgment (OCGA § 7-4-12). For the reasons that follow, we reverse the trial court's finding that the applicable statute of limitation is twenty years instead of six and its application of 4.5 percent pre- and post-judgment interest, and remand for further proceedings consistent with this opinion. We affirm the finding that the statute of limitation begins to run on each successive breach and the attorney fee award.

The class members are retired educators who are members of TRS. At retirement, each class member elected to participate in an optional retirement plan, which paid a reduced monthly retirement benefit for the retired teacher with a remaining benefit paid to a named beneficiary upon the teacher's death, as provided in OCGA § 47-3-121.¹ The optional plan benefits were calculated using "option factors" based upon mortality tables adopted by TRS in 1983. In 2003 TRS adopted new option factors based on new mortality tables, which reflected a longer life expectancy. The longer the member has to fund the beneficiary's remainder benefit, the cheaper the monthly payments are to buy that benefit. Thus, as life expectancy increased with the new mortality tables, the member had a longer time to buy the benefit, which resulted in smaller deductions from the member's monthly benefit amount. The application of the new option factor resulted in increased benefits payable under the option plan for retirees who retired after February 2003, but TRS did not increase the monthly benefits for members who retired before then. See Plymel v. TRS, supra, 281 Ga. at 410-411(2), 637 S.E.2d 379.

TRS is governed by a complex statutory scheme provided in OCGA § 47-3-1 et seq., which requires that the optional plan allowance be "actuarially equivalent" to the maximum plan allowance. The members filed this action in April 2004 alleging that TRS unlawfully used an outdated mortality table to calculate the optional plan participants' monthly benefits. The trial court initially granted summary judgment to TRS, and the members appealed to the Supreme Court of Georgia, contending that TRS breached their employment contracts and raising constitutional claims.

The Supreme Court of Georgia held that the trial court erred in granting summary judgment to TRS on the members' breach of contract claim. Plymel v. TRS, supra, 281 Ga. at 412(4), 637 S.E.2d 379. It concluded that TRS was obligated to use the updated mortality tables it had adopted for other uses to calculate the deductions for the optional plan participants, and further held that it need not address the members' constitutional claims, which were premised on its agreeing with TRS on the contract claims. Id. at 415, n. 13, 637 S.E.2d 379. The court remanded the case to the trial court to determine whether the optional plan and maximum plan benefits were actuarially equivalent, and to address any other claims, including whether any of the members' claims were "barred by the applicable statute of limitations." Id. at 415, 637 S.E.2d 379.

On remand from the Supreme Court, TRS did not dispute that it used the wrong mortality tables in calculating the optional plan benefits, and that it owed additional funds to some class members, but disputed the amounts due. The trial court granted summary judgment to the class members and attorney fees to class counsel, and this appeal followed.

Case No. A08A1958

1. TRS first argues that the applicable statute of limitation is six years for breach of contract rather than twenty years for enforcement of a statutory right. The trial court disagreed. It held that, according to the Supreme Court opinion, the class members' statutory claims form the basis of their recovery, not their individual contracts, none of which had been introduced into evidence during this litigation. Accordingly, the trial court concluded that the applicable statute of limitation was 20 years under OCGA § 9-3-22, which provides, "All actions for the enforcement of rights accruing to individuals under statutes or acts of incorporation or by operation of law shall be brought within 20 years after the right of action has accrued."

TRS argues that statutes establishing government employee retirement plans become part of the employees' employment contract, which is then interpreted under contract law. The statute of limitation for breach of contract is six years. OCGA § 9-3-24. Further, class members framed their argument in breach of contract terms, and the Supreme Court of Georgia agreed with the plaintiffs that the trial court "erred by granting summary judgment to TRS on [the members'] breach of contract claim." Plymel v. TRS, supra, 281 Ga. at 412(4), 637 S.E.2d 379.

We agree. Georgia's appellate courts have held that a "statute or ordinance establishing a retirement plan for government employees becomes a part of an employee's contract of employment if the employee contributes at any time any amount toward the benefits he is to receive." Parrish v. Employees' Retirement System of Ga., 260 Ga. 613(1), 398 S.E.2d 353 (1990) (irrevocable statutory tax exemption unconstitutional, and therefore new legislation subjecting retirement benefits to state taxation was not unconstitutional impairment of contractual obligation); Alverson v. Employees' Retirement System of Ga., 272 Ga.App. 389, 391(1)(b), 613 S.E.2d 119 (2005).

Further, reviewing the history of the 20-year statute of limitation reveals that it does not apply in this situation. The General Assembly enacted the predecessor to OCGA § 9-3-22 in 1856. Harris v. Smith, 68 Ga. 461, 462 (1882). In the early stages of codifying the law, if no statute prescribed a limitation for a cause of action, then the suit was "not barred by mere lapse of time." Nixon v. Nixon, 196 Ga. 148, 153(2) 26 S.E.2d 711 (1943). The 1856 act "sought to provide a limitation of time to apply to every suit at law in this State." Id.

The evident purpose of [the 20-year statute] is to fix a period of limitation for special cases not provided for by the general statute of limitations, or otherwise, where rights accruing to "individuals" are sought to be enforced. A statutory liability is one that depends for its existence upon the enactment of a statute, and not upon the contract of the parties.

Bigby v. Douglas, 123 Ga. 635, 637-638, 51 S.E. 606 (1905) ("right of one surety to compel contribution from a cosurety, recognized and declared in the Civil Code, § 2992, is not of statutory origin," but mere codification of common law).

In concluding that the 20-year statute of limitation did not apply to a suit against a county sheriff seeking repayment of money left over after the sheriff levied on a writ of fieri facias, the Supreme Court considered the legislature's intentions.

In looking at the act itself, we find that the legislature was dealing with rights accruing to individuals under statutes, and acts of incorporation, the latter of which, especially about the date of the passage of the act, had given rise to great litigation in the state. In some of the cases growing out of both statutory and charter liabilities of parties, it was held that obligations arose which were quasi ex contractu, and imposed by operation of mere law. Looking at the act and the judicial decisions of the times, it would seem that these words were intended to apply to such rights as arise in connection with, though not strictly under, the very words of the statutes or acts of...