Ventura County Employees' Retirement Association v. Pope

• Decision Date: 28 December 1978
• Citation: 87 Cal.App.3d 938,151 Cal.Rptr. 695
• Court: California Court of Appeals Court of Appeals
• Parties: VENTURA COUNTY EMPLOYEES' RETIREMENT ASSOCIATION, Plaintiff and Respondent, v. John Michael POPE, Defendant and Appellant. Civ. 52616.

Page 695

151 Cal.Rptr. 695

87 Cal.App.3d 938

VENTURA COUNTY EMPLOYEES' RETIREMENT ASSOCIATION, Plaintiff and Respondent, v. John Michael POPE, Defendant and Appellant.

Civ. 52616.

Court of Appeal, Second District, Division 2, California.

Dec. 28, 1978.

As Modified Jan. 22, 1979.

Hearing Denied March 14, 1979.

Roberts, Mead, Harrison & Dougherty, by Roger W. Roberts, Riverside, for defendant and appellant.

Dorothy L. Schechter, County Counsel, James Thonis, Asst. County Counsel, Ventura, for plaintiff and respondent.

FLEMING, Associate Justice.

Plaintiff Ventura County Employees' Retirement Association (Association) obtained a $17,000 judgment (rounded amount) against defendant Pope, an alleged third-party tortfeasor, for one-half the disability benefits payable to Temple, an employee-member of the Association, injured in an automobile collision with the defendant. (Gov.Code, § 31820.) Pope appeals.

I

On 26 June 1974, Nancy Temple, an employee for 14 years of the County of Ventura and a participant in the Association's retirement plan, had an automobile collision with defendant Pope. Although property damage was minor, Temple experienced headaches, pain in her neck, and numbness in her hands and arms. These symptoms worsened, and on November 7 she underwent surgery on her neck. Surgery returned feeling to her upper extremities, but her pain did not abate, and her condition prevented her from working. On 5 March 1975 she applied to the Association for disability retirement benefits. On July 21 the retirement board of the Association found her totally disabled for the performance of her duties and granted her "non-service connected" disability benefits. ¹

Meanwhile, on June 10 prior to the disability award, Temple settled for $20,000 a claim for personal injuries against Pope and executed a general release in his favor. The Association was not a party to the settlement and, as far as the record indicates, was unaware of any settlement proceedings, although on April 10 it received a letter from defendant's insurance adjusters indicating the adjusters had heard of Temple's application for disability benefits and requesting information about the retirement board's action. On July 22, thirteen months after the accident, the Association notified defendant's insurance adjusters of its intention to seek subrogation. On 10 October 1975, fifteen months after the accident, the Association, as statutory subrogee to Temple under Government Code section 31820, filed this action against Pope. The trial court, without adjudicating the wrongfulness of Pope's conduct or determining his tort liability, gave judgment to the association for $17,000, plus interest.

II

Liability. Government Code sections 31820-22 (Infra, fns. 2 & 3) incorporate into the statutory scheme for county employees' retirement the employer subrogation provisions of the workers compensation law (Lab.Code, §§ 3850-64). The state employees' retirement system contains analogous subrogation provisions (Gov.Code, §§ 21450 to 21455). Sections 31820-22 authorize a county retirement association to recover one-half the benefits payable to a member for injuries proximately caused by the act of a third person. At bench, the trial court, without making findings of fact or conclusions of law on the issue of Pope's liability, assumed the existence of liability and limited its adjudication to the issue of damages. Apparently both defense counsel and the trial court erroneously assumed that Pope's liability had been conclusively determined by the Association's administrative determination to pursue its statutory subrogation rights against defendant and that as a consequence the court was foreclosed from examining the issue of liability.

However, it is clear from Witt v. Jackson (1961) 57 Cal.2d 57, 17 Cal.Rptr. 369, 366 P.2d 641, that a defendant may contest liability in a subrogation action by an employer to the same extent as in an action brought by the injured employee. Implicit in the right to contest liability are rights to raise the issue of comparative negligence (Li v. Yellow Cab Co. (1975) 13 Cal.3d 804, 119 Cal.Rptr. 858, 532 P.2d 1226) and to contest the causality of the employee's injuries. We think similar rules apply to a subrogation action by a county retirement association. Only after a factual determination of the liability of the tortfeasor does a retirement association's claim for damages under Government Code section 31820 become germane. (Bilyeu v. State Employees' Retirement System (1962) 58 Cal.2d 618, 622, 25 Cal.Rptr. 562, 375 P.2d 442; Van Nuis v. Los Angeles Soap Co. (1973) 36 Cal.App.3d 222, 232, 111 Cal.Rptr. 398; Board of Administration v. Ames (1963) 215 Cal.App.2d 215, 224, 29 Cal.Rptr. 917.) At bench, therefore, a key issue in the cause liability of the alleged tortfeasor was never adjudicated. A judgment without required findings is a nullity (Ohio Cas. Ins. Co. v. Northwestern Mut. Ins. Co. (1971) 17 Cal.App.3d 204, 207, 94 Cal.Rptr. 586; McBride v. Alpha Realty Corp. (1975) 49 Cal.App.3d 925, 928, 123 Cal.Rptr. 270), and a court's failure to make a finding on a material issue mandates reversal even when a basis for liability appears in the record. (Kerr Chemicals, Inc. v. Crown Cork & Seal Co. (1971) 21 Cal.App.3d 1010, 1013, 1017, 99 Cal.Rptr. 162; Kuffel v. Seaside Oil Company (1977) 69 Cal.App.3d 555, 565, 138 Cal.Rptr. 575; Code Civ.Proc., §§ 632, 634.) We are aware that defense counsel precipitated this error through their mistaken theory that the Association's decision to bring an action predetermined defendant's liability. While invited error does not normally furnish a basis for reversal (cf. 6 Witkin, Cal. Procedure (2d ed. 1971), pp. 4257-59), when a trial court enters judgment without making required findings of fact on a defendant's liability findings which are essential to support its decision the judgment is a nullity and must be reversed. (Code Civ.Proc § 632; Ohio Cas. Ins. Co. v. Northwestern Mut. Ins. Co., supra; McBride v. Alpha Realty Corp., supra ; 4 Witkin, Cal. Procedure (2d ed. 1971), pp. 3139-40.)

On retrial, the court must determine the extent, if any, of Pope's liability for personal injuries to Temple and her subrogees under accepted concepts of comparative negligence. The court must then determine whether Temple's personal injuries proximately resulted from the collision. Finally, the court must determine whether the damages incurred by Temple and her subrogees included loss of future earning power that is being compensated by disability retirement benefits, which would entitle the Association to make a subrogated claim for one-half the actuarial equivalent of benefits payable to Temple. (Lab.Code, §§ 3854, 3855; Gov.Code, § 31820.)

The error in the proceedings below was sufficiently egregious to require summary reversal of the judgment without further comment, but for the guidance of court and counsel in a tangled thicket of the law we discuss additional issues that may become relevant on remand. In turn, this requires some reappraisal of the County Employees Retirement Law (Gov.Code, § 31450ff), its relationship to tort liability and worker's compensation, and the procedures appropriate to harmonize this relationship.

III

Statutory Scheme. On application, a county retirement association must grant disability retirement benefits to an employee-member who has applied for disability retirement, if it determines the employee is permanently disabled as a result of (1) an employment-related injury, regardless of length of service, or (2) any injury, whether or not employment-related, when the employee has completed five years service and met physical standards for employment. (Gov.Code, §§ 31720, 31725.) If the retirement association then determines the disabling injury was proximately caused by a person other than the disabled person's employer, the association is given a right of subrogation against the alleged third-party tortfeasor for recovery up to one-half the "actuarial equivalent" of the disability benefits the association is obligated to pay. (Gov.Code, § 31820.) ² In pursuing subrogation an association may join with the employer and its compensation insurance carrier. Amounts recovered by any of the parties are applied, first, to amounts the employer and its insurance carrier have paid or become obligated to pay, and, second, to amounts the retirement association is entitled to recover under subrogation. (Gov.Code, §§ 31821, 31822.) ³ Defendant asserts this statutory scheme is unconstitutional for lack of due process, denial of equal protection of law, and impairment of contract.

a. Due Process. The failure of the retirement board to notify him of the liability hearing and allow him to be heard at its meeting, defendant asserts, violates the guarantee of procedural due process. This erroneous assertion is premised on defendant's basic misconception that allowance of disability benefits constituted an adjudication of defendant's tort liability for the accident, a misconception paralleled by the trial court's erroneous conclusion that evidence of fault and comparative negligence could not be considered at trial. Such is not the case. The initial determination of the Association to initiate suit against the asserted third-party tortfeasor is merely a determination to seek in court through subrogation recovery of benefits payable to a member. Defendant may contest both liability and causation of injuries to the same extent as if the injured employee herself had brought an action. (Board of Administration v. Ames (1963) 215 Cal.App.2d 215, 224, 29 Cal.Rptr. 917; Witt v. Jackson (1961) 57 Cal.2d 57, 72, 17 Cal.Rptr. 369, 366 P.2d 641.) A retirement board's determination of disability fixes the retirement association's actuarial exposure to its member, a determination, however, which does not establish the third-party tortfeasor's liability, but merely sets a ceiling (50 percent of...