Vail v. Employees' Retirement System of State, 16196

• Decision Date: 12 August 1993
• Docket Number: No. 16196,16196
• Citation: 75 Haw. 42,856 P.2d 1227
• Parties: John T. VAIL, Plaintiff-Appellee, v. EMPLOYEES' RETIREMENT SYSTEM OF the STATE of Hawaii, Defendant-Appellant.
• Court: Hawaii Supreme Court

Page 1227

856 P.2d 1227

75 Haw. 42

John T. VAIL, Plaintiff-Appellee, v. EMPLOYEES' RETIREMENT SYSTEM OF the STATE of Hawaii Defendant-Appellant.

No. 16196.

Supreme Court of Hawai'i.

Aug. 12, 1993.

Reconsideration Denied Aug. 30, 1993.

Syllabus by the Court

1. The construction of a statute is a question of law which this court reviews under the right/wrong standard.

2. A claim first accrues under Hawaii Revised Statutes (HRS) § 661-5 when appellant knew, or reasonably should have known, that an actionable wrong has been committed against him or her.

3. Review of a decision made by the circuit court upon its review of an agency's decision is a secondary appeal. The standard of review is one in which the reviewing court must determine whether the circuit court was right or wrong in its decision, applying the standards set forth in HRS § 91-14(g) to the agency's decision. Appellate review is further qualified by the principle that the Board's decision carries a presumption of validity and appellant has the heavy burden of making a convincing showing that the decision is invalid because it is unjust and unreasonable in its consequences.

4. Under HRS § 91-14(g), conclusions of law are reviewable under subsections (1), (2), and (4); questions regarding procedural defects under subsection (3); findings of fact under subsection (5); and an agency's exercise of its discretion under subsection (6).

5. This court has recognized the wisdom of a well established rule of statutory construction that, where an administrative agency is charged with the responsibility of carrying out the mandate of a statute which contains words of broad and indefinite meaning, courts accord persuasive weight to administrative construction and follow the same, unless the construction is palpably erroneous.

6. A per diem judge is a per diem worker under applicable sections of HRS chapter 88.

7. Under HRS § 88-74, an Employees' Retirement System (ERS) employee-member's retirement allowance under the system is based on a percentage of average final compensation multiplied by the total number of years of that member's credited service.

8. Under HRS § 88-71, a member's credited service at retirement consists of the member's membership service.

9. According to HRS § 88-21, a member's membership service is all service rendered by a member.

10. Under HRS § 88-21, service is defined as service as an employee paid by the State or county.

11. HRS § 88-43 clearly gives the ERS the power to deny membership to any class of part-time employees, and is therefore a specific qualification of HRS § 88-42's blanket admission of all employees to the system.

12. Per diem employees are included in the class of part-time employees to whom the agency may deny membership in the system under HRS § 88-43 and its implementing administrative rule.

Celia L. Jacoby and Charleen M. Aina, Deputy Attys. Gen., on the briefs, Honolulu, for defendant-appellant Employees' Retirement System of State of HI.

Shackley F. Raffetto, Jaress & Raffeto, on the briefs, Wailuku, Maui, for plaintiff-appellee John T. Vail.

MOON, Chief Justice.

Plaintiff-appellee John T. Vail (Vail) claimed that he had earned full-time membership credit in defendant-appellant State of Hawaii's Employees' Retirement System (ERS) as a result of his service as a per diem district court judge. The ERS disagreed, and filed a declaratory order denying Vail's petition for full-time membership credit. Vail appealed the ERS ruling to the State circuit court, which reversed the ERS's order and held that Vail was eligible for full-time credit.

The ERS now appeals to this court from the order of the circuit court, arguing that 1) Vail's lawsuit was time-barred under Hawaii Revised Statutes (HRS) § 661-5; 2) Vail's claim would violate the State's retirement law; and 3) the ERS has the express authority to deny membership to part-time employees, and per diem judges, like Vail, are also subject to this authority.

Although we conclude that Vail's lawsuit was not time-barred under HRS § 661-5, we also conclude that Vail's claim would violate the State's retirement law, and that the ERS possesses the statutory authority to deny Vail full-time membership credit. We therefore vacate the circuit court's order and reinstate the declaratory order of the ERS.

I. BACKGROUND

The ERS, established under HRS chapter 88, Pension and Retirement Systems, is administered by the Board of Trustees of the ERS (Board) and provides retirement benefits to state and county workers. HRS §§ 88-22 and 88-23.

This appeal focuses on certain provisions of HRS chapter 88, an ERS administrative rule governing membership in the system, and the methods of calculating the membership service of differently situated employees. Specifically, Vail, who is currently a State district court judge, claims that he earned full-time membership service credit for the period he spent as a per diem judge (1981-1989), pursuant to HRS § 88-42, which provides in relevant part:

Membership generally. Except as otherwise provided in this part, all employees ... shall be members of the system[.]

Per diem workers shall become eligible for membership on January 1, 1952, and all persons who are employed as per diem workers after December 31, 1951, shall become members of the system.

Conversely, ERS maintains that it had the authority under HRS § 88-43 and its own administrative rule § 6-21-14 to deny membership to Vail because, during much of the period of his per diem judgeship, Vail was only a part-time employee. HRS § 88-43 provides in pertinent part: "The board of trustees may deny membership to any class of part-time employees[.]" Rule § 6-21-14, promulgated to implement HRS § 88-43, provides in relevant part:

The following classes of employees shall be excluded from membership in the system:

....

(5) Persons in any position requiring less than one-half of full-time employment[.]

....

(7) Persons employed in any position where employment is casual or intermittent and the percentage of full-time equivalence is indeterminate; provided that after at least three months, any person whose employment has been determined to average twenty or more hours per week shall be included in the membership of the system[.]

The ERS claims that under subsections (5) and (7) of Rule § 6-21-14, Vail did not qualify as a member of the system for at least some of the time he served as a per diem judge. Vail counters that HRS § 88-43 does not apply to the category of per diem workers who are specifically provided for in HRS § 88-42, and who therefore cannot be considered a class of part-time workers under the statute.

On August 23, 1984, Vail wrote to the ERS concerning the cost of "buying back" service credit, which he had earlier voluntarily forfeited by withdrawing his accumulated contributions from the system. Vail had previously been a member of the ERS and earned service credit for a combined period of approximately three years while serving as both a deputy corporation counsel and a deputy prosecuting attorney in Honolulu in the early 1960's, and as a Maui County councilman in the early 1980's.

Additionally, since 1981, Vail had been serving as a per diem district court judge on Maui, and in the August 23 letter, he also inquired about his eligibility to rejoin the system under HRS § 88-42. On December 26, 1984, the ERS responded to Vail's letter informing him that, according to ERS Rule § 6-21-14, as a part-time employee, he did not qualify for membership in the system. On January 14, 1985, Vail wrote to the ERS disputing its interpretation of HRS § 88-42 and, implicitly, its implementation of HRS § 88-43 through Rule § 6-21-14. Vail suggested that the ERS request an opinion on the matter from the State Attorney General, indicating that he (Vail) thought this "a more viable option than my filing a lawsuit for declaratory judgment."

The record does not reflect a response by the ERS to Vail's request. In December 1988, Vail wrote to the ERS and claimed full-time membership credit for the entire period of his per diem judgeship since 1981 (Vail had been reappointed in 1986 and 1988). Shortly thereafter, Vail again wrote to the ERS and requested a declaratory order from the agency as to the applicability of HRS § 88-42 to his situation. The ERS did not reply.

Vail was appointed to a six-year term as a regular district court judge, effective April 28, 1989. He subsequently wrote twice more to the ERS in May 1989 regarding his request for a declaratory order. The ERS responded on May 16 by sending Vail a copy of the administrative rules, which the agency considered pertinent to Vail's case, along with a copy of the ERS procedures for petitioning an agency ruling. Vail responded by again requesting the ERS seek an opinion from the Attorney General. He stated that he did "not want to make a fuss over it but there is much at stake and if necessary I'll have to go to court." The ERS did not respond.

On July 3, 1989, Vail wrote to the ERS again requesting the agency procure an opinion on his case from the Attorney General. The ERS did not respond. On July 17, pursuant to ERS administrative rules, Vail formally petitioned the ERS for full-time membership credit for the entire period of his former per diem judgeship under HRS § 88-42. Vail also implicitly sought an ERS declaration that per diem workers are not subject to the agency's authority to deny membership to part-time employees pursuant to HRS § 88-43. On September 6, the ERS responded to Vail's letter of July 3, informing him that an Attorney General's opinion had been requested.

In an opinion letter dated January 4, 1990, the Attorney General essentially agreed with the ERS that HRS § 88-43 authorized the agency to exclude any class of part-time employees, including per diem workers, from membership in the system. On January 29, 1990, the ERS informed Vail of the Attorney General's opinion and...