Flethez v. San Bernardino Co. Employees Retirement Assn. , 214 Cal. Rptr. 3d 482 ( 2017 )

Filed 3/2/17
IN THE SUPREME COURT OF CALIFORNIA
LETICIA FLETHEZ, )
)
Plaintiff and Respondent, )
) S226779
v. )
) Ct.App. 4/1 D066959
SAN BERNARDINO COUNTY )
EMPLOYEES RETIREMENT )
ASSOCIATION, )
) San Bernardino County
Defendant and Appellant. ) Super. Ct. No. CIVDS 1212542
____________________________________)
In this action for a writ of mandamus, the superior court determined that
San Bernardino County Employees Retirement Association (SBCERA)
wrongfully denied Frank Flethez the correct starting date for his disability
retirement allowance.1 The court then awarded Flethez prejudgment interest
under Civil Code section 3287, subdivision (a) (section 3287(a)) as part of his
damages, to be retroactively calculated from the same starting date.2 On appeal,
SBCERA challenged only the calculation of the prejudgment interest award.
1 Frank Flethez recently passed away and his wife, as his surviving spouse
and designated beneficiary, has been substituted in as plaintiff. (Code Civ. Proc.,
§ 377.31.) Our references in the opinion to “Flethez” are to Frank Flethez.
2 The Civil Code defines “damages” as monetary compensation for one “who
suffers detriment from the unlawful act or omission of another.” (Civ. Code,
§ 3281.) Under specified conditions, an award of damages may include an award
of prejudgment interest pursuant to section 3287(a).
SEE CONCURRING OPINION
The Court of Appeal agreed with SBCERA that the superior court had erred
in its calculation of prejudgment interest and reversed the court‟s judgment to the
extent it awarded section 3287(a) interest on all of Flethez‟s retroactive disability
retirement benefits starting from the first date of those benefits — July 15, 2000.
In doing so, the Court of Appeal expressly disagreed with the reasoning of Austin
v. Bd. of Retirement (1989) 209 Cal. App. 3d 1528 (Austin). We granted review to
consider how prejudgment interest under section 3287(a) should be calculated
when a retroactive award of service-connected disability retirement benefits under
the County Employees Retirement Law of 1937 is ordered in an administrative
mandamus proceeding.
As we will explain, we agree with the Court of Appeal that the superior
court erred in its award of prejudgment interest.
I. BACKGROUND
A. County Employee Service Disability Retirements
Public employee retirement boards have plenary authority regarding, and
fiduciary responsibility for, the administration of their retirement systems.
(Cal. Const., art. XVI, § 17.) A county‟s retirement system is administered by a
county retirement board, under the County Employees Retirement Law of 1937.
(Gov. Code, § 31450 et seq. (hereafter the CERL).)
County retirement systems formed under the CERL provide both service
retirements based on age and years of service (Gov. Code, § 31670 et seq.) and
disability retirements based on an employee becoming permanently incapacitated
for the performance of his or her work duties. (Gov. Code, § 31720 et seq.)
When the statutory requirements are met, an employee member of a county
retirement system who is permanently incapacitated may separate from county
service and receive either a service-related disability retirement and allowance, or
2
a general disability retirement and allowance. (Gov. Code, § 31720.) An
application for either type of disability retirement must be made “[1] while the
member is in service, [2] within four months after his or her discontinuance of
service, [3] within four months after the expiration of any period during which a
presumption is extended beyond his or her discontinuance of service, or [4] while,
from the date of discontinuance of service to the time of the application, he or she
is continuously physically or mentally incapacitated to perform his or her duties.”
(Gov. Code, § 31722.)
Because a county retirement board is “required to administer the retirement
system „in a manner to best provide benefits to the participants of the plan,”
(McIntyre v. Santa Barbara County Employees’ Retirement System (2001) 91
Cal. App. 4th 730, 734 (McIntyre); see also Cal. Const., art. XVI, § 17), it must
“investigate[] applications and pay[] benefits only to those members who are
eligible for them.” (McIntyre, at p. 734.) The board may require such proof as it
deems necessary to determine the existence of a disability. (Gov. Code, § 31723.)
“Permanent incapacity for the performance of duty shall in all cases be determined
by the board.” (Gov. Code, § 31725.) The applicant bears the burden of proving
his or her disability and that it is service related. (Masters v. San Bernardino
County Employees Retirement Assn. (1995) 32 Cal. App. 4th 30, 46; Rau v.
Sacramento County Retirement Bd. (1966) 247 Cal. App. 2d 234, 238.) “ „If the
proof received, including any medical examination, shows to the satisfaction of
the board that the member is permanently incapacitated,‟ the board shall retire that
member. (Gov. Code, § 31724, italics added.)” (Masters, at p. 46.) If the board is
not satisfied that the member is permanently incapacitated according to the proof
received, the request for disability retirement must be denied. (Gov. Code,
§ 31725.)
3
Government Code section 31724 governs the timing of disability
retirements and allowances. The statute provides that when a county retirement
board is satisfied that the member is permanently incapacitated and grants the
member a disability retirement, the retirement is “effective on the expiration date
of any leave of absence with compensation to which [the member] shall become
entitled . . . or effective on the occasion of the member‟s consent to retirement
prior to the expiration of such leave of absence with compensation.” (Gov. Code,
§ 31724.) In the case of a member who has been granted or is entitled to sick
leave, the statute provides that the retirement is not effective until the expiration of
such leave with compensation, unless the member consents to an earlier date.
(Ibid.)3
Government Code section 31724 also states the general rule that the
member‟s “disability retirement allowance shall be effective as of the date such
3 Government Code section 31724 reads in full: “If the proof received,
including any medical examination, shows to the satisfaction of the board that the
member is permanently incapacitated physically or mentally for the performance
of his duties in the service, it shall retire him effective on the expiration date of
any leave of absence with compensation to which he shall become entitled under
the provisions of Division 4 (commencing with Section 3201) of the Labor Code
or effective on the occasion of the member‟s consent to retirement prior to the
expiration of such leave of absence with compensation. His disability retirement
allowance shall be effective as of the date such application is filed with the board,
but not earlier than the day following the last day for which he received regular
compensation. Notwithstanding any other provision of this article, the retirement
of a member who has been granted or is entitled to sick leave shall not become
effective until the expiration of such sick leave with compensation unless the
member consents to his retirement at an earlier date. [¶] When it has been
demonstrated to the satisfaction of the board that the filing of the member's
application was delayed by administrative oversight or by inability to ascertain the
permanency of the member's incapacity until after the date following the day for
which the member last received regular compensation, such date will be deemed
to be the date the application was filed.”
4
application is filed with the [county retirement] board, but not earlier than the date
following the last day for which [the member] received regular compensation.”
(Italics added.) In other words, a retiree‟s disability retirement allowance will
typically be effective on the latter of two dates: the actual application date or the
date following the last day for which regular compensation was received after
separation. However, “[w]hen it has been demonstrated to the satisfaction of the
board that the filing of the member‟s application was delayed by administrative
oversight or by inability to ascertain the permanency of the member‟s incapacity
until after the date following the day for which the member last received regular
compensation, such date will be deemed to be the date the application was filed.”
(Ibid.) Here we are concerned with the latter provision — delay due to the
inability to ascertain the permanency of the disability.4
B. The Flethez Matter5
In 1990, Flethez became an employee of San Bernardino County (County).
He worked as an equipment operator from 1991 until 2000. In 1998, he was
injured while performing his job duties. His last day of work was on January 28,
2000. He underwent spinal surgery for his 1998 injury on February 1, 2000. His
last day of regular compensation was July 14, 2000. Flethez underwent additional
surgeries in 2001 and 2002 and received physical therapy through 2004.
4 Flethez sometimes refers to this provision as the “deemer clause,” referring
to the date “deemed” to be the application date under Government Code section
31724 because of the inability to earlier ascertain the permanency of the disability.
We will instead adopt the “inability to ascertain permanency clause” as a
shorthand term for this provision.
5 Because the historical facts and events established by the record are
undisputed, we generally adopt the summary of the factual and procedural
background from the decision of the Court of Appeal.
5
More than eight years after he last worked for the County, on June 12,
2008, Flethez filed an application with SBCERA for a service-related disability
retirement and allowance. It was rejected for omission of a signed medical records
authorization. A little more than one year later, Flethez filed a complete
application, including a signed medical records authorization and a supporting
physician‟s report. In August 2010, SBCERA granted Flethez‟s application for
service-related disability retirement benefits, effective as of the date of his initial
application in 2008. That is, Flethez‟s retirement allowance was made effective
under the general rule of Government Code section 31724 granting retroactive
benefits back to the date of his June 2008 application.
Flethez then filed a request for review and reconsideration limited to the
question of the starting date for his benefits. Flethez does not dispute that this was
the first time he contended that his retirement allowance should be retroactive,
under the inability to ascertain permanency clause of Government Code
section 31724, to July 15, 2000, the date following his last day of regular
compensation. When SBCERA, in April 2011, maintained its original decision
setting June 12, 2008 as the commencement date for his benefits, Flethez
requested a formal administrative hearing on the issue. An administrative hearing
was held and the hearing officer subsequently issued proposed findings of fact,
conclusions of law, and a recommended decision denying Flethez‟s request for
benefits retroactive to July 15, 2000. On October 4, 2012, SBCERA adopted the
hearing officer‟s proposed decision and maintained the original June 2008 date as
the effective date of Flethez‟s disability retirement benefits.
Flethez filed a petition for writ of mandate in the superior court pursuant to
Code of Civil Procedure section 1094.5, seeking a writ ordering SBCERA to set
aside its decision and grant him service-related disability retirement benefits
6
effective as of July 15, 2000. (Gov. Code, § 31724.) He also sought interest at the
legal rate on all retroactive amounts.
The superior court found that the evidence submitted in the mandamus
proceeding showed Flethez had not been able to ascertain the permanency of his
incapacity by the date he stopped working and when he received his last
compensation. It determined that the question of when Flethez thereafter became
able to ascertain the permanency of his incapacity was irrelevant under
Government Code section 31724 because under the unambiguous words of the
statute, it was the “inability to ascertain the permanency” until after the date
following the day of last regular compensation that triggers retroactive payments
under the inability to ascertain permanency clause. The court further determined
that the CERL sets no deadline for filing an application based on the date
permanency is eventually ascertained. (Gov. Code, § 31722 [an application is
timely if from “the date of discontinuance of service to the time of the
application,” the member is “continuously” incapacitated].) The superior court
issued a peremptory writ commanding SBCERA to grant Flethez a service-
connected disability retirement allowance retroactive to July 15, 2000, the date
after the last day he received regular compensation, i.e., the date that was deemed
to be his application date under the inability to ascertain permanency clause of
Government Code section 31724. SBCERA complied with the writ.
The superior court also ruled Flethez was entitled to prejudgment interest
under section 3287(a) at the legal rate from the date that each payment of
retroactive disability retirements benefits would have been due, starting from
July 15, 2000. The interest payments on all retroactive amounts totaled
$132,865.37. SBCERA timely filed a notice of appeal “limited to the issue of
interest.”
7
The Court of Appeal reversed the judgment insofar as it awarded
prejudgment interest retroactive to July 15, 2000. It concluded that “in the context
of disability retirement benefits, a retiring member is entitled to recover section
3287(a) prejudgment interest on a court award of disability retirement benefits
from the day on which his or her right to recover those benefit payments became
vested,” which was “not until the retiring member establishes his or her
entitlement” to those benefits. The Court of Appeal remanded the matter to the
superior court for further proceedings to determine the date that Flethez had
established his right to receive retroactive disability retirement benefit payments.
As noted earlier, we granted review to consider how prejudgment interest
under section 3287(a) should be calculated when a retroactive award of service-
connected disability retirement benefits under the CERL is ordered in an
administrative mandamus proceeding.
II. DISCUSSION
The interpretation of the prejudgment interest provisions of section 3287(a)
as it relates to the provisions of the CERL is, as the parties acknowledge, a
question of law subject to our independent review. (B.H. v. County of San
Bernardino (2015) 62 Cal. 4th 168, 189; Weber v. Bd. of Retirement (1998) 62
Cal. App. 4th 1440, 1444 (Weber).)
We begin by recognizing that “ „our fundamental task is to determine the
Legislature‟s intent so as to effectuate the law‟s purpose.‟ ” (People v. Cole
(2006) 38 Cal. 4th 964, 974.) Because statutory language is generally the most
reliable indicator of legislative intent, we start with the language of section
3287(a). (Fluor Corp. v. Superior Court (2015) 61 Cal. 4th 1175, 1198; Martinez
v. Combs (2010) 49 Cal. 4th 35, 51.)
Section 3287(a) provides that “[a] person who is entitled to recover
damages certain, or capable of being made certain by calculation, and the right to
8
recover which is vested in the person upon a particular day, is entitled also to
recover interest thereon from that day, except when the debtor is prevented by law,
or by the act of the creditor from paying the debt. This section is applicable to
recovery of damages and interest from any debtor, including the state or any
county, city, city and county, municipal corporation, public district, public agency,
or any political subdivision of the state.”
We have explained that in order to recover prejudgment interest under this
language, “the claimant must show: (1) an underlying monetary obligation,
(2) damages which are certain or capable of being made certain by calculation, and
(3) a right to recovery that vests on a particular day.” (American Federation of
Labor v. Unemployment Ins. Appeals Bd. (1996) 13 Cal. 4th 1017, 1022 (American
Federation of Labor); Tripp v. Swoap (1976) 17 Cal. 3d 671, 682 (Tripp), overruled
on other grounds in Frink v. Prod (1982) 31 Cal. 3d 166, 180.) Prejudgment
interest may be recovered “from any debtor,” including a public entity.
(§ 3287(a).)6 This is “an exception to the general rule that interest cannot be
6 Section 3287 was first enacted in 1872 when the Civil Code was adopted.
In 1955, it was amended to add the second sentence, making the provisions
applicable to “any debtor, including any political subdivision of the State.” (Stats.
1955, ch. 1477, § 1, pp. 2689-2690.) In 1959, the second sentence was amended
to further broaden the scope of the statute‟s application to recovery of damages
from “the State or any county, city, city and county, municipal corporation, public
district, public agency, or any political subdivision of the State.” (Stats. 1959,
ch. 1735, § 1, p. 4186.) In 1967, the existing provisions were designated as
subdivision (a) of the section and provisions not pertinent here were added as
subdivision (b). (Stats. 1967, ch. 1230, § 1, p. 2997.) In 2013, subdivision (c) was
added. (Stats. 2013, ch. 424, § 1.) We uniformly use “section 3287(a)” to
reference the applicable prejudgment interest provisions at issue here, even when
the provisions at the time were contained simply in section 3287. We have
previously observed, “[t]here is scant pertinent legislative history” regarding
section 3287(a). (American Federation of Labor, supra, 13 Cal.4th at p. 1030.)
9
recovered against a state or municipality.” (Sanders v. City of Los Angeles (1970)
3 Cal. 3d 252, 262 (Sanders).)
We have recognized that an employee who brings a successful mandamus
action to recover wrongfully withheld salary payments may satisfy the
requirements of section 3287(a). In Mass v. Bd. of Education (1964) 61 Cal. 2d
612 (Mass), we concluded that a wrongfully suspended teacher was entitled to
prejudgment interest as an element of his damages when the local board of
education was ordered to reinstate him with full back pay. We stated that section
3287(a) “authorizes prejudgment interest on salary payments from the date of
accrual to the entry of judgment.” (Mass, supra, at p. 624.) We rejected the
argument of the board that interest accrued only “from the date when the board
bore the legal duty to reinstate plaintiff because until that time the „right to
recover‟ did not „vest‟ in him” as required by section 3287(a). (Mass, supra, at
p. 625.) We explained as follows: “The Civil Code requires vesting . . . only in
order to fix with sufficient certainty the time when the obligation accrues so that
interest should not be awarded on an amount before it is due. Each salary payment
in the instant case accrued on a date certain. Unless the suspension itself can be
sustained and the board thus relieved of any obligation whatsoever, the salary
payments became vested as of the dates they accrued. If plaintiff had not been
wrongfully suspended, he would have obtained the benefit of the moneys paid as
of those dates; he has thus lost the natural growth and productivity of the withheld
salary in the form of interest.” (Ibid.)
Subsequent cases have relied on Mass to similarly award section 3287(a)
prejudgment interest on damage awards of wages wrongfully withheld. (Sanders,
supra, 3 Cal.3d at pp. 262- 263 [prejudgment interest awarded in mandamus
action on wrongfully withheld salary and wage increases]; Olson v. Cory (1983)
35 Cal. 3d 390, 401-402 (Olson) [prejudgment interest awarded in mandamus
10
action on claims for back salary]; Currie v. Workers’ Comp. Appeals Bd. (2001)
24 Cal. 4th 1109, 1118 (Currie) [Workers‟ Compensation Appeals Board has
statutory authority to include prejudgment interest in backpay award when
employee wrongfully denied reinstatement]; Goldfarb v. Civil Serv. Com. (1990)
225 Cal. App. 3d 633, 635-637 (Goldfarb) [county and civil service commissions
must include prejudgment interest on backpay award for wrongful demotion]; San
Diego County Sheriffs Assn. v. San Diego County Civil Serv. Com (1998) 68
Cal. App. 4th 1084, 1086-1087 (San Diego County Sheriffs) [local civil service
commission must include prejudgment interest in award of backpay for wrongful
termination].)
Relevant here are the cases that also recognize the applicability of section
3287(a) “on a trial court judgment following a successful administrative
mandamus action to recover wrongfully withheld benefits.” (American Federation
of Labor, supra, 13 Cal.4th at p. 1022, original italics omitted, italics added.) In
Tripp, supra, 17 Cal. 3d at pages 681-682, we concluded an award of prejudgment
interest was properly included in a mandamus action for wrongfully denied
welfare benefits under the former aid to the needy disabled program (Welf. & Inst.
Code, former §§ 13500-13801). In Aguilar v. Unemployment Ins. Appeals Bd.
(1990) 223 Cal. App. 3d 239, 246, it was held that a trial court properly ordered the
California Employment Development Department (EDD) to pay interest on
unemployment benefits wrongfully withheld. In Olson, we concluded that the
plaintiffs were entitled to prejudgment interest on wrongfully withheld judicial
salary and pension increases. (Olson, supra, 35 Cal.3d at p. 406; accord, Benson
v. City of Los Angeles (1963) 60 Cal. 2d 355, 365-366 [interest on widow‟s pension
benefits].)
The parties do not dispute that, under settled precedent, prejudgment
interest was properly awarded in this mandamus action challenging SBCERA‟s
11
denial of Flethez‟s request for disability retirement benefits retroactive under the
inability to ascertain permanency clause of Government Code section 31724. The
parties advance, however, very different views as to when the right to such
retroactive benefits was “certain” and “vested” for purposes of calculating the
amount of interest due under section 3287(a).
Flethez argues that county employees have a vested property right in a
disability retirement pension from the inception of their employment. He contends
that a later court award of retroactive disability retirements benefits after the
employee becomes disabled and retires carries with it a vested right to
prejudgment interest from the date each retirement benefit payment fell due under
the statutory effective date of the retirement allowance. In support, Flethez
principally relies on the statements in Mass, supra, 61 Cal. 2d 612, that section
3287(a) “authorizes prejudgment interest on salary payments from the date of
accrual to the entry of judgment,” that the statute “requires vesting . . . only in
order to fix with sufficient certainty the time when the obligation accrues so that
interest should not be awarded on an amount before it is due,” that “[e]ach salary
payment accrued on a date certain,” and therefore, “the salary payments became
vested as of the dates they accrued.” (Id., at pp. 624, 625; accord Olson, supra,
35 Cal.3d at p. 402 [prejudgment interest is recoverable “on each . . . pension
payment from the date it fell due”].) Flethez also relies on Austin, supra, 209
Cal. App. 3d 1528. In Austin, the reviewing court applied the reasoning of Mass to
affirm an award of section 3287(a) prejudgment interest on a retroactive award of
county disability retirement benefits — the same type of award of benefits ordered
in this case. (Austin, at pp. 1533-1534.) Flethez asserts that absent such an award
of interest here, he will be denied the benefit of the natural growth and
productivity of the retroactive benefits withheld by the SBCERA and
12
correspondingly, the remainder of the members of the SBCERA retirement system
will be unjustly enriched by the use of his retirement allowance in the interim.
SBCERA argues that county employees have only an inchoate right to a
disability retirement pension, which vests only when the last contingency to the
pension is removed. Specifically, SBCERA asserts that under the CERL, the right
to a disability retirement and accompanying allowance is not vested until the
retirement board to which an application is submitted has reviewed the submitted
evidence and finally acts on the application, or at least has the opportunity to do
so. Until such time, SBCERA contends, the applicant‟s benefits claim is also “not
certain or capable of being made certain” as required by section 3287(a).
According to SBCERA, it is only when the board wrongfully denies such an
application and withholds disability retirement payments that prejudgment interest
begins to run as damages under section 3287(a). SBCERA argues that this
distinguishes the instant case from those cases awarding section 3287(a) interest
on wrongfully withheld salary, wages, or service pensions — payments that do not
require conditions precedent or the inherent delay of an administrative process to
determine the plaintiffs‟ entitlement to them in the first instance. (Mass, supra, 61
Cal. 2d 612; Sanders, supra, 3 Cal. 3d 252; Olson, supra, 35 Cal. 3d 390; Currie,
supra, 24 Cal. 4th 1109; San Diego County Sheriffs, supra, 68 Cal. App. 4th 1084;
Goldfarb, supra, 225 Cal. App. 3d 633.) SBCERA relies principally on our
decision in American Federation of Labor, supra, 13 Cal. 4th 1017 and that of the
Court of Appeal in Weber, supra, 62 Cal. App. 4th 1440. SBCERA emphasizes
that its “fiduciary duty to safeguard its trust fund for all of its members” requires it
not pay benefits prior to the time the applicant meets his or her eligibility burden
of proof.
SBCERA has the better argument. As SBCERA contends, vesting in the
context of section 3287(a) must be understood in the framework of allowing
13
prejudgment interest as a component of damages. (§ 3287(a) [“A person who is
entitled to recover damages . . . , is entitled also to recover interest thereon”].)
As such, it has long been settled that the primary purpose of section 3287(a) “is to
provide just compensation to the injured party for loss of use of the [underlying]
award during the prejudgment period — in other words, to make the plaintiff
whole as of the date of the injury.” (Lakin v. Watkins Associated Industries (1993)
6 Cal. 4th 644, 663; Uzyel v. Kadisha (2010) 188 Cal. App. 4th 866, 919.) It
follows that where salary, wage or pension payments have been withheld because
of wrongful acts (e.g., Mass — wrongful suspension; Olson — wrongful denial of
salary and pension increases; Currie — wrongful refusal to reinstate; Goldfarb —
wrongful demotion; San Diego County Sheriffs — wrongful termination), the
plaintiff has been damaged by the failure to receive the payments to which he or
she was entitled and would have otherwise received. As we explained in Mass,
unless the underlying decision “can be sustained” and the defendant thus “relieved
of any obligation,” the payments became “vested as of the dates they accrued.”
(Mass, supra, 61 Cal.2d at p. 625.) In the absence of the wrongful act, the plaintiff
would have “obtained the benefit of the moneys paid as of those dates.” (Ibid.)
The factual situation here is different. Flethez first applied for a service-
related disability retirement in June 2008. He did not at that time request a starting
date for his benefits earlier than his actual application date. In accordance with its
duties under the CERL, SBCERA evaluated and granted his application for
benefits retroactive to June 2008. (McIntyre, supra, 91 Cal.App.4th at p. 734.)
Only then, did Flethez request an earlier starting date for his benefits pursuant to
the inability to ascertain permanency clause of Government Code section 31724.
If SBCERA had thereafter granted him the requested start date, as the trial court
later determined it should have done, Flethez would have received an additional
lump-sum payment for benefits calculated retroactively from the new deemed
14
application date in July 2000. But Flethez would not have been entitled to receive
the benefit payments in 2000 or in any of the years preceding the decision of
SBCERA. SBCERA could not by law pay Flethez any benefits before he applied
for them (Gov. Code, § 31722) and carried his burden (Rau v. Sacramento County
Retirement Bd., supra, 247 Cal.App.2d at p. 238) of demonstrating his eligibility
to SBCERA‟s satisfaction. (Gov. Code, § 31724.)
In other words, Flethez was not wrongfully denied the use of the benefit
moneys in any of the years prior to SBCERA‟s decision on his request. (Weber,
supra, 62 Cal.App.4th at p. 1450 [“That the payment is retroactive does not mean
that the Board wrongfully denied benefits for that period”].) Flethez was injured
only when SBCERA erroneously denied his request for a starting date under the
inability to ascertain permanency clause of Government Code section 31724. For
purposes of prejudgment interest as a component of damages under section
3287(a), until the SBCERA made its eligibility determination on his request, there
were no damages stemming from an underlying monetary obligation “capable of
being made certain” and his right to an award of retroactive disability benefits
under the inability to ascertain permanency clause did not vest. (§ 3287(a).) As
amicus curiae7 contend, county employees do not have a vested right to disability
retirement benefits before such time. (Weber, supra, 62 Cal.App.4th at p. 1451
[until a member makes the necessary showing under the CERL, “his or her right is
7 In addition to the briefs of the parties, we have received an amicus curiae
brief from the Alameda County Employees‟ Retirement Association, Kern County
Employees‟ Retirement Association, Los Angeles County Employees‟ Retirement
Association, Marin County Employees‟ Retirement Association, Sacramento
County Employees‟ Retirement Association, San Joaquin County Employees‟
Retirement Association, Tulare County Employees‟ Retirement Association, and
Ventura County Employees‟ Retirement Association.
15
merely inchoate”].) Rather, the “vested right” members possess is to have their
CERL retirement board make an “eligibility-to-benefits determination.” (County
of Alameda v. Bd. of Retirement (1988) 46 Cal. 3d 902, 908.)
We find the CERL disability retirement framework to be similar in this
regard to the unemployment insurance administrative process this court discussed
in American Federation of Labor, supra, 13 Cal. 4th 1017. In American
Federation of Labor, we considered the “narrow question” of “whether an
administrative law judge may award interest on a payment of retroactive
unemployment insurance benefits.” (Id., at p. 1021.) We answered that question
in the negative, finding no express or implied authority for such an award. (Id., at
pp. 1022-1023, 1042-1043.) Of assistance here is our explanation that “[u]nder
the administrative scheme of the Unemployment Insurance Code, the EDD has no
underlying monetary obligation to the claimant until it determines the claimant is
eligible for the benefits.” (Id., at p. 1023.) “[T]he Unemployment Insurance Code
allows the EDD, and unemployment insurance claimants, a reasonable time to
process each legitimate claim. Benefits are not due immediately after a claim is
filed following employment termination. Rather, they are due promptly only after
a claimant has established benefit eligibility. [Citation.] The statutory scheme
thus accounts for the fact that delays are inherent in the entitlement claim review
process and are necessary to ensure [that] only those claimants who have
established eligibility will receive benefits. . . . The delays inherent in this system
are not, however, tantamount to a ‘wrongful withholding’ of benefits giving rise to
a right to section 3287(a) prejudgment interest once the Board rules in favor of
the claimant.” (Id., at p. 1026, italics added.) Only if the Board wrongfully denies
benefits, we explained, would the claimant be entitled to section 3287(a) interest
as part of a court award of “compensation for the egregious delay in receiving
benefits caused by the necessity of filing a mandamus action challenging the
16
Board‟s denial.” (American Federation of Labor, supra, 13 Cal.4th at p. 1022.)
“[C]laimants may not argue that their benefits have been wrongfully withheld until
the Board erroneously determines they are ineligible . . . .” (Id., at p. 1037.)
“Thus, „[t]he central theme of [American Federation of Labor] … is that interest is
not available absent an agency decision or action which has resulted in wrongful
withholding of, and corresponding delay in receiving, benefits to which the
claimant is entitled.‟ ” (Currie, supra, 24 Cal.4th at p. 1118.)
Like the unemployment insurance benefits at issue in American Federation
of Labor, Flethez‟s disability retirement benefits under the CERL were not due
before SBCERA received his application and made a determination of his
eligibility. Flethez experienced a wrongful withholding of his benefits when the
Board erroneously denied his application for a retroactive disability retirement
allowance under the inability to ascertain permanency clause, thus necessitating
this mandamus action. His entitlement to prejudgment interest under section
3287(a) commenced on the date of wrongful denial.8 However, because the
record before us is not entirely clear as to that date, we shall remand the matter for
such factual determination.9
8 The reviewing court in Austin, supra, 209 Cal. App. 3d 1528, concluded that
plaintiff Austin was entitled to section 3287(a) prejudgment interest on the trial
court‟s award of retroactive disability retirement benefits under the CERL from
the last day of his service — the date he became entitled to such benefits — up to
the date upon which he was granted the benefits. (Austin, at pp. 1530-1534.) We
disapprove Austin v. Bd. of Retirement, supra, 209 Cal. App. 3d 1528 to the extent
it is inconsistent with this opinion.
9 We note that Flethez has argued only that SBCERA‟s erroneous denial of
benefits entitles him to prejudgment interest calculated from July 15, 2000. He
has not submitted any argument supporting an alternate date. Nor has he claimed
that SBCERA‟s decision was unreasonably delayed, and therefore we express no
opinion on whether a demonstrated unreasonable delay in deciding an applicant‟s
(footnote continued on next page)
17
III. DISPOSITION
The judgment of the Court of Appeal is affirmed. The matter is remanded
to the Court of Appeal with directions that it remand the matter to the superior
court for a determination of the date SBCERA wrongfully denied Flethez‟s
application for a retroactive disability retirement allowance under the inability to
ascertain permanency clause of Government Code section 31724 and a
recalculation of the amount of prejudgment interest owed based on such date.
CANTIL-SAKAUYE, C. J.
WE CONCUR:
WERDEGAR, J.
CHIN, J.
CORRIGAN, J.
LIU, J.
CUÉLLAR, J.
KRUGER, J.
(footnote continued from previous page)
eligibility for benefits could result in a superior court finding that benefits were
wrongfully withheld earlier than the retirement board‟s eligibility decision.
18
CONCURRING OPINION BY CUÉLLAR, J.
I concur in the majority opinion and its conclusion that prejudgment
interest under Civil Code section 3287, subdivision (a) begins to run only when a
county retirement board wrongfully denies a member‟s application for retroactive
disability retirement benefits. I concur, too, in the court‟s decision directing the
Court of Appeal to remand the matter to the superior court for a determination of
the date on which the San Bernardino County Employees Retirement Association
(SBCERA) wrongfully denied plaintiff‟s application for retroactive disability
benefits. It would be helpful to the trial court on remand, though, for us to more
fully explain when a wrongful denial occurs. The standard I endorse is the one
articulated by SBCERA: A wrongful denial occurs on the date the retirement
system‟s governing board should have determined that the member was entitled to
retroactive benefits.
CUÉLLAR, J.
WE CONCUR:
WERDEGAR, J.
LIU, J.
1
See next page for addresses and telephone numbers for counsel who argued in Supreme Court.
Name of Opinion Flethez v. San Bernardino County Employees Retirement Association
__________________________________________________________________________________
Unpublished Opinion
Original Appeal
Original Proceeding
Review Granted XXX 236 Cal. App. 4th 65
Rehearing Granted
__________________________________________________________________________________
Opinion No. S226779
Date Filed: March 2, 2017
__________________________________________________________________________________
Court: Superior
County: San Bernardino
Judge: David Cohn
__________________________________________________________________________________
Counsel:
Michael P. Calabrese; Arias & Lockwood and Christopher D. Lockwood for Defendant and Appellant.
Nossman, Ashley K. Dunning, Michael V. Toumanoff and Catherine F. Ngo for Alameda County
Employees‟ Retirement Association, Kern County Employees‟ Retirement Association, Los Angeles
County Employees‟ Retirement Association, Marin County Employees‟ Retirement Association,
Sacramento County Employees‟ Retirement Association, San Joaquin County Employees‟ Retirement
Association, Tulare County Employees‟ Retirement Association and Ventura County Employees‟
Retirement Association as Amici Curiae on behalf of Defendant and Appellant.
Reed Smith, Harvey L Leiderman and Jeffrey R. Rieger for California Public Employees‟ Retirement
System as Amicus Curiae on behalf of Defendant and Appellant.
Faunce, Singer & Oatman, Mark Ellis Singer, Edward L. Faunce and Larry J. Roberts for Plaintiff and
Respondent.
Law Offices of John Michael Jensen and John Michael Jensen as Amici Curiae on behalf of Plaintiff and
Respondent.
Counsel who argued in Supreme Court (not intended for publication with opinion):
Michael P. Calabrese
San Bernardino County Employees‟ Retirement Association
348 West Hospitality Lane
San Bernardino, CA 92414
(909) 915-2039
Ashley K. Dunning
Nossman
50 California Street, 34th Floor
San Francisco, CA 94111
(415) 398-3600
Edward L. Faunce
Faunce, Singer & Oatman
315 North Vine Street
Fallbrook, CA 92028
(760) 451-7377