Warner v. Cal. Pub. Employees' Ret. Sys.

• Decision Date: 17 August 2015
• Docket Number: E060337
• Citation: 239 Cal.App.4th 659,190 Cal.Rptr.3d 870
• Parties: Christopher J. WARNER, Plaintiff and Appellant, v. CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM, Defendant and Respondent.
• Court: California Court of Appeals Court of Appeals

239 Cal.App.4th 659

190 Cal.Rptr.3d 870

Christopher J. WARNER, Plaintiff and Appellant

v.CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM, Defendant and Respondent.

E060337

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

Filed August 17, 2015

Shernoff Bidart Echeverria Bentley and Michael J. Bidart, Claremont; The Ehrlich Law Firm and Jeffrey Isaac Ehrlich, for Plaintiff and Appellant.

Gina M. Ratto and Renee Salazar for Defendant and Respondent.

OPINION

HOLLENHORST, Acting P.J.

This appeal turns on a matter of first impression, a question of statutory interpretation regarding the Judges' Retirement System II Law (JRS II) (Gov.Code,¹ §§ 75500 et seq. ), which establishes the system providing retirement benefits to California judges first elected or appointed to judicial office on or after November 9, 1994. Plaintiff and appellant Christopher J. Warner (Judge Warner) contends that under JRS II he is entitled to receive both a disability retirement allowance and payment of the monetary credits he accrued during his service. Defendant and respondent California Public Employees' Retirement System (CalPERS), the agency that administers JRS II, ruled JRS II entitles Judge Warner only to the disability retirement allowance. The trial court denied Judge Warner's petition for writ of mandate, which sought to reverse the agency's ruling. We affirm.²

I. FACTS AND PROCEDURAL BACKGROUND

Judge Warner served as a municipal and then superior court judge from July 1996 until his retirement in October 2010. In November 2010, he applied for a disability retirement benefit under JRS II. CalPERS granted his application, and he was awarded a monthly retirement allowance, paying him an amount equal to 65 percent of his retirement-level salary.

In May 2011, Judge Warner applied to CalPERS to receive a distribution of his monetary credits in the JRS II system, which totaled $572,407. CalPERS staff denied the request. Judge Warner appealed that decision to the CalPERS Board of Administration (Board). After a hearing, the administrative law judge (ALJ) issued a proposed decision recommending the staff decision be affirmed. The Board adopted the ALJ's recommendation.

In January 2013, Judge Warner filed a petition for writ of mandate in San Bernardino County Superior Court challenging the Board's decision. The Judicial Council assigned the case to Los Angeles County Superior Court. On November 13, 2013, the court issued an order denying the petition.

II. DISCUSSION

A. Standard of Review

There are no disputed facts at issue. We review the trial court's ruling interpreting the relevant statutes and applying them to the undisputed facts de novo. (Saffie v. Schmeling (2014) 224 Cal.App.4th 563, 569, 168 Cal.Rptr.3d 766 [Fourth Dist., Div. Two], citing Cuiellette v. City of Los Angeles (2011) 194 Cal.App.4th 757, 765, 123 Cal.Rptr.3d 562.) “The ultimate interpretation of a statute is of course an exercise of judicial power and it is the responsibility of the courts to declare its true meaning even if it requires rejection of an earlier erroneous administrative interpretation.” (Crumpler v. Board of Administration (1973) 32 Cal.App.3d 567, 578, 108 Cal.Rptr. 293 [Fourth Dist., Div. Two].) While the “ ‘agency interpretation of the meaning and legal effect of a statute is entitled to consideration and respect by the courts...,’ ” we must nevertheless “ ‘independently judge the text of [a] statute....’ ” (Bonnell v. Medical Board (2003) 31 Cal.4th 1255, 1264, 8 Cal.Rptr.3d 532, 82 P.3d 740.)

B. Analysis

1. Overview of JRS II.

JRS II governs the retirement system for judicial officers at all levels of California state court who were elected or appointed to judicial office on or after November 9, 1994. (§ 75502, subd. (a).) It provides for three types of retirement benefits—normal, early, and disability. (§§ 75522, 75521, 75560.1.) All retirement allowances are paid from a trust fund, known as the Judges' Retirement System II Fund (JRS II fund), held in the State Treasury, which receives all contributions to the JRS II system from judges and the state. (§ 75600.)

A judge who has either served 20 years and reached age 65, or served five years and reached age 70, is eligible for normal retirement. (§ 75522, subd. (a).) Upon retirement, a judge must “elect” to receive either (1) a “monthly retirement allowance”—essentially, an annuity paying an amount determined by multiplying the judge's final salary, years of service, and a statutory “benefit factor”—which is capped at 75 percent of the judge's final compensation, or (2) a lump sum equal to the judge's accumulated “monetary credits”—an amount equal to 18 percent of the judge's monthly salary for every month of the judge's service, plus the JRS II fund's net earnings on that amount—payable either in a single payment or in installments over time, at the judge's election. (§ 75522, subds. (d), (e); § 75520.) The 18 percent lump sum represents a portion of amounts contributed to the JRS II fund during the judge's period of service by the judge and the state; judges contribute eight percent of their monthly salary, while the state contributes an amount that is adjusted yearly from an initial contribution rate of 18.8 percent. (§§ 75502, subd. (f), 75601, 75602, 75520, 75600, 75600.5.)

If a judge leaves service but does not qualify for normal retirement, he or she is eligible for an early retirement benefit. (§ 75521.) A judge who leaves service before accruing five years of service may receive a refund of his or her eight percent monthly contributions into the JRS II fund plus interest. (§§ 75521, subd. (a); 75502, subd. (f).) If five or more years of service have been accrued, the judge may receive a distribution of his or her “monetary credits”—as noted above, an amount equal to 18 percent of the judge's monthly salary for every month of service. (§§ 75521, subds. (a), (b), 75520.) Importantly, given the issues in this case, section 75521 provides that the judge leaving service and receiving an early retirement benefit is to receive the specified payment “and no other amount.” (§ 75521, subds. (a), (b).)

A judge who becomes disabled as a result of an injury or disease “arising out of and in the course of judicial service,” or a judge who becomes disabled for any reason who has accrued five or more years of judicial service, may, “with his or her consent,” apply for a disability retirement benefit. (§§ 75560, 75560.1, subd. (a).) The disability retirement benefit is a monthly allowance—like the normal retirement benefit, essentially an annuity—tied to a percentage of the judge's final salary and capped at 65 percent. (§ 75560.4.) Unlike the early retirement benefit, the disability retirement benefit comes with certain restrictions on the judge's postretirement employment that remain in effect until the judge reaches the age he or she would have been eligible for normal retirement. (§ 75580.)

2. Under JRS II, a Judge Who Receives a Disability Retirement Benefit Is Not Entitled to Also Receive an Early Retirement Benefit.

Judge Warner contends that a judge who becomes disabled may first apply for and obtain a disability retirement benefit, and then still proceed to receive the retirement benefit appropriate to his or her years of service (in his case, the early retirement benefit of a lump-sum payment of monetary credits pursuant to § 75521, subd. (b).) This contention is based in part on the circumstance that provisions regarding disability benefits are codified in article 4 of the JRS II law, while service retirement provisions, including both normal and early retirement, are codified in article 2. (§§ 75522, 75521, 75560.1.)

We cannot say Judge Warner's interpretation is explicitly foreclosed by the relevant statutory language, which ideally would have been drafted with greater precision. Nevertheless, we conclude the interpretation that fits most comfortably with the statutory scheme as whole, as well as its purpose, legislative history, and public policy, is that a judge who becomes disabled is not entitled to receive both disability and service retirement benefits under JRS II, but only one or the other.

First, the statute that provides the early retirement benefit expressly states that the retiring judge is to receive the specified lump sum “and no other amount.” (§ 75521, subds. (a), (b).) Judge Warner's position, whereby a retired judge might receive both an early retirement benefit and a disability retirement allowance, is at least in some tension with this language.³

Second, the structure of JRS II benefits generally suggests that retiring judges are to receive either a monthly retirement allowance or a lump sum payment, but not both. (See State Farm Mutual Automobile Ins. Co. v. Garamendi (2004) 32 Cal.4th 1029, 1043, 12 Cal.Rptr.3d 343, 88 P.3d 71 [statutes are interpreted “ ‘ “ ‘with reference to the entire scheme of law of which it is a part so that the whole may be harmonized and retain effectiveness' ” ’ ”].) Judges qualified for normal retirement must “elect” between retirement allowance and lump sum payment of monetary credits. (§ 75522, subd. (c).) Judges who leave service before becoming eligible for normal retirement may receive an early retirement benefit of a lump sum payment, “and no other amount.” (§ 75521, subds. (a), (b).) Judges who qualify for disability retirement may receive a monthly allowance, despite having not reached normal retirement eligibility, but there is no explicit provision allowing such judges also to receive a lump sum payment of contributions or monetary credits. (§ 75560.1.) The absence of any contrary example—any situation where a judge is explicitly entitled to collect two retirement benefits under JRS II—weighs in favor of CalPERS's interpretation.

Third, the legislative history of JRS II provides no support for Judge Warner's interpretation, and indeed strongly weighs against it. (Day v. City of Fontana (2001) 25 Cal.4th 268, 272, 105 Cal.Rptr.2d 457, 19 P.3d 1196 ...