Wilson v. Wash. State Dep't of Ret. Sys.

Decision Date02 November 2020
Docket NumberNo. 79867-7-I,79867-7-I
Citation475 P.3d 193,15 Wash.App.2d 111
Parties Brian WILSON, Respondent, v. WASHINGTON STATE DEPARTMENT OF RETIREMENT SYSTEMS, Appellant.
CourtWashington Court of Appeals

Nam Duc Nguyen, WA Attorney General's Office, Dept. of Revenue A.g. Office, Attorney at Law, 7141 Cleanwater Lane Sw, Po Box 40123, Olympia, WA, 98504-0123, for Appellant.

Robert L. Christie, Christie Law Group, PLLC, 2100 Westlake Ave. N Ste. 206, Seattle, WA, 98109-5802, for Respondent.

PUBLISHED OPINION

Mann, C.J. ¶1 After over 33 years of police service, Brian Wilson retired from his position as chief of police for the City of Federal Way and sought to collect his Law Enforcement Officers’ and Fire Fighters’ Retirement System Plan 2 (LEOFF 2) retirement benefits. The Department of Retirement Systems (Department) denied Wilson's retirement benefits because, after leaving the police force, Wilson took a new job as chief of staff for the mayor of Federal Way. Wilson sought judicial review of the Department's final order under the Administrative Procedure Act (APA), ch. 34.05 RCW. The superior court reversed the Department's final order concluding that the Department was equitably estopped from denying Wilson's retirement benefit. The Department appeals, arguing that the superior court erred because equitable estoppel may be used only as a "shield" or defense, not as a "sword" or cause of action. Because Wilson raised equitable estoppel as a defense to the Department's denial of his earned retirement benefits, we conclude that the trial court did not err, and affirm.

FACTS

¶2 LEOFF 2 is a public retirement plan for the State's law enforcement officials and fire fighters. Any LEOFF 2 member at least 53 years old and has at least "five service credit years of service" is eligible to retire and to receive retirement benefits. RCW 41.26.430(1). Any member eligible to receive retirement benefits "shall be eligible" to begin receiving their retirement benefit after applying with the Department. RCW 41.26.490(1). Retirement benefits "shall accrue from the first day of the calendar month immediately following such member's separation from service." RCW 41.26.490(1). A person is "separated from service" on the date that they have "terminated all employment with an employer." RCW 41.26.490(5).

¶3 Wilson began his law enforcement career with the Renton Police Department on May 1, 1980. Wilson enrolled in LEOFF 2 at that time. In May 1996, Wilson joined the newly formed police department for the City of Federal Way as deputy chief. Wilson became chief of police for Federal Way in December 2006.

¶4 In November 2013 James Ferrell was elected mayor of Federal Way. Shortly after, Wilson met with Ferrell to discuss pressing issues in the city. Ferrell discussed hiring Wilson as his chief of staff. Wilson expressed interest in the position, but indicated that he intended to retire from law enforcement and wanted to ensure that he received his LEOFF 2 retirement benefits.

¶5 Wilson worked on his transition with Jean Stanley, the city's human resources director, and Patricia Richardson, the city attorney. Wilson reiterated to Stanley that he intended to retire from LEOFF 2, and "his expectation that all steps would be done properly to accomplish that." Stanley contacted the Department to ensure that Wilson would receive his LEOFF 2 retirement benefits. As the Department's presiding officer explained:

On December 19, 2013, Ms. Stanley telephoned the Department for information about retirement from LEOFF. She spoke with Employer Support Specialist Seth Miller, whose job duties included responding to inquiries from retirement system employers. Their five-to-fifteen-minute conversation covered steps necessary for the City's police chief to receive his LEOFF retirement benefit, in the context of future employment with the City in a general government, PERS-eligible position.[1] Ms. Stanley knew that in PERS, a 30-day break in employment had to be observed or a retiree could lose retirement benefits, and she asked if there was a similar condition for retirement from LEOFF. Mr. Miller responded that LEOFF did not have a similar requirement for a particular period of absence to avoid a payment penalty, so taking a new position even the day after termination from a LEOFF position would not affect the police chief's LEOFF retirement. He pointed out to Ms. Stanley that there could be advantages for the LEOFF member if he became a member of PERS without taking retirement from LEOFF (dual membership), but he understood Ms. Stanley's inquiry as a request for general information on the subject of LEOFF retirement, rather than advice for a particular individual's circumstances.
Mr. Miller emphasized that clear termination of the LEOFF employment would be key. He advised that the City should follow its normal employment termination process for the particular type of employee. He told Ms. Stanley that while different employer's normal procedures for terminating employees might vary, commonly an employ would return all employer-owned items (such as vehicles and credit cards), and all items that would allow access to the employers’ security and IT systems (such as key cards and access codes), and the employer would be expected to remove the individual as an active employee from the employer's HR and payroll systems. He mentioned that a retirement party might be expected.

¶6 When Stanley spoke with Miller, the Department did not have a rule defining the term "separation from service" in RCW 41.26.490(5). Miller's advice to Stanley tracked Department published materials at the time. For example, the Department publishes overview booklets of general information for LEOFF members. Between 2006 and 2014, the booklets advised that benefits would be effective on the first day of the month following the end of employment. For LEOFF 2 retirees, the booklets stated that a retiree that returned to work in positions eligible for membership in other Department administered systems, such as PERS, could participate in the new system, "in which case their LEOFF benefit would be temporarily stopped or suspended, or not to participate, in which case they would continue to receive their LEOFF retirement benefit."

¶7 The Department also published handbooks for members of the retirement systems it administers. Much like the booklets, between June 2011 and April 2015, the LEOFF 2 handbook explained the choice available to LEOFF retirees that returned to work in a position covered by another retirement system such as PERS. As with the booklets, the handbooks were silent about how long between separating from service under LEOFF 2 and returning to work.

To be covered under return to work rules, you must first retire by terminating all employment with your employer. This is called separating from service. Separating from service demonstrates that you've completed the necessary actions of leaving employment.
If you then decide to return to public service in Washington, your benefit may be affected, depending on the position you return to.
If you return to work in a position that is eligible for membership in the Washington State Public Employees’ Retirement System (PERS) ... you can choose to continue to receive your benefits or you can choose to become a member of that retirement system.
If you think you might be returning to work after retirement, please call us to see if your benefit will be affected. You'll also find helpful information in the publication Thinking About Working After Retirement?

¶8 The referenced Thinking About Working After Retirement? is a specialized two-page brochure for retirees. Beginning with the July 2011 version, the LEOFF 2 brochure explained what it meant to "separate from service" before returning to work. As with the booklets and handbooks, the brochure did not identify how long a LEOFF 2 retiree needed to remain separated from service before returning to work.

¶9 When do I become a retiree?

It's important to remember that you must retire before you can be covered under the return to work law. To retire you must:
• Meet the age and service requirements;
• Terminate all employment with your employer by completely separating from service; and
• File an application for retirement with DRS.
Separating from service means that you've completed the necessary actions of leaving employment. For example, you've returned any employer issued items, your computer access has been shut off and your employment has been ended in the payroll system.
If you are eligible to retire when you separate from service, your effective retirement date is the first day of the following month.

¶10 In summary, as of January 2014, no Department publication stated that a person following the usual procedures in separating from service and terminating all employment in his present LEOFF position would be prohibited from receiving his retirement benefits if he returned to work with that same employer in a different position after retirement. And no Department publications stated that employees could not have a reasonable expectation of receiving their LEOFF benefits if they were re-employed with the same employer in a different position. Instead, Department publications confirmed that a person could retire from LEOFF, accept new work as a public employee, and continue to receive their LEOFF retirement benefits so long as they did not participate in another State retirement program such as PERS.

¶11 On January 6, 2014, Wilson completed his application for retirement using the Department application form for LEOFF 2 service retirement. Wilson listed the effective date as January 15, 2014. Also on January 6, 2014, Wilson signed another Department form titled "LEOFF Plan 2 Retiree Re-employment." The form listed two options for re-employment retirement benefits.

As a LEOFF Plan 2 retiree eligible for membership in another retirement plan administered by DRS, you have two options:
1. Become a member
...

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