Mickey Fowler And Leisa Fowler v. Dept. Of Retirement Systems ( 2014 )

FILED
COURT OF APPEALS
DIVISION II
2G# 4 DEC 30 AM 9 : Lei
STATE OF WASHINGTON
BY
IN THE COURT OF APPEALS OF THE STATE OF WAS ' " UTON
DIVISION II
JEFFREY PROBST, and a class of similarly No. 45128 -0 -II
situated individuals,
Plaintiffs,
MICKEY FOWLER and LEISA FOWLER,
and a class of TRS 3 Plan members,
Appellants,
v.
DEPARTMENT OF RETIREMENT UNPUBLISHED OPINION
SYSTEMS,
Respondent.
LEE, J. — Mickey Fowler and Leisa Fowler (the Fowlers) 1 appeal the superior court' s order
remanding the action to the Department of Retirement Services ( DRS) based on our mandate
2
issued in Probst v. Department of Retirement Services. The Fowlers argue: ( 1) the trial court
failed to comply with our mandate when it refused to calculate the interest the Fowlers were
entitled to based on the common law daily interest rule and instead remanded the action to the
DRS, ( 2) the DRS cannot retroactively apply a newly adopted rule, and ( 3) the DRS' s retroactive
1
Appellants are referred to as " the Fowlers "; some briefing refer to them as " the Teachers."
2
Probst v. Dep' t ofRet. Sys., 167 Wash. App. 180, 271 P.3d 966 ( 2012).
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application of a new rule that does not use the common law daily interest rule will result in an
unconstitutional taking. Additionally, the Fowlers seek costs and a common fund attorney fee
award at the conclusion of the litigation. Because the superior court properly interpreted our
mandate and properly remanded the action to the DRS pursuant to the Administrative Procedure
Act ( APA), we affirm the superior court' s order remanding the case to the DRS for further
rulemaking consistent with our mandate in Probst.
FACTS
This is the parties' second appeal to this court.3 This case arises from a dispute over how
the DRS calculates interest on the Public Employees Retirement Systems (PERS) and the Teachers
Retirement Systems ( TRS) accounts and on funds transferred between PERS /TRS Plan 2 and
PERS /TRS Plan 3. The DRS stated, "[ It] has set the rate of interest to be credited to PERS Plan 2
member accounts at 5. 5% per year, compounded quarterly." Administrative Record (AR) at 261.
The DRS credits interest on deposits to members' accounts on the fourth Saturday ofthe last month
in each quarter.
A. INITIAL ACTION AND FIRST APPEAL
Jeffiey Probst contacted the DRS after finding that his contributions for the last quarter
before transferring to Plan 3 had not earned interest. The DRS told him that it "uses the quarter' s
ending balance to calculate interest, and if an account has a zero balance at the end of the quarter,
it earns no interest for that quarter." Probst, 167 Wash. App. at 183.
3 The parties do not dispute the substantive facts underlying this appeal; the substantive facts
presented for context are taken from our opinion in the first appeal, the Probst opinion. Probst,
167 Wash. App. 180.
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Probst unsuccessfully appealed the calculation methods before the DRS. Probst, 167 Wn.
App. at 184. In his administrative appeal, Probst requested that the DRS pay interest on deposited
funds from the date of deposit into Plan 2 through the date that the DRS withdrew and transferred
the funds to the Plan 3 account. Probst then filed a class action suit in superior court challenging
the DRS' s calculation practice and sought judicial review of the DRS' s decision. The
administrative appeal was consolidated into the superior court action. The superior court then
approved a class settlement agreement, which excluded some class members based on the date that
they transferred from Plan 2 to Plan 3. The settlement agreement provided that excluded proposed
additional class members' claims may still be brought against the DRS.
The Fowlers, who were part of the proposed additional class, filed an amended complaint.
The superior court dismissed the claims; the Fowlers appealed to this court.
We reviewed the DRS order pursuant to the APA, and ultimately reversed and remanded
the case. Probst, 167 Wash. App. at 185, 194. We found that " although the DRS had authority to
decide how to calculate interest," its method " was arbitrary and capricious because the agency did
not render a decision after due consideration." Probst, 167 Wn. App. at 183. Additionally, we
held that the " statutes do not require the DRS to pay daily interest" and that the legislature had
abrogated the common law daily interest rule. Probst, 167 Wn. App. at 191. We declined to
address the Fowlers' unconstitutional takings argument because we were able to decide the case
based on the APA. Probst, 167 Wn. App. at 183 n. 1. We remanded the case and later issued a
mandate for further proceedings in accordance with our opinion.
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B. REMAND AND CURRENT APPEAL
On remand to the superior court, the Fowlers argued that our opinion required that
judgment be entered in their favor and required the DRS to pay daily interest. The superior court
disagreed and remanded the action to the DRS under the APA for proceedings consistent with our
opinion in Probst. The superior court signed the order remanding the action to the DRS on June
20, 2013.
On July 22, 2013, the Fowlers filed a motion to recall the mandate in Probst and to require
compliance under RAP 12. 9. In the Fowlers' motion to recall, they argued that the superior court
failed to comply with our mandate issued in Probst by remanding the action to the DRS for
rulemaking under the APA instead of determining the interest itself. The Fowlers also argued that
our opinion held the DRS' s failure to pay daily interest was arbitrary and capricious. The Fowlers
argued, alternatively, that if the superior court was correct, then their constitutional claims are
unresolved and they have the right to again appeal our decision in Probst. In August 2013, we
denied the Fowlers' motion.
Also on July 22, 2013, the Fowlers appealed the superior court' s order remanding the
action to the DRS. The Fowlers make the same arguments in their appeal as they made in their
motion to recall the mandate.
ANALYSIS
The Fowlers argue that the superior court did not comply with our mandate when it
remanded the action to the DRS instead of ordering the DRS to pay the Fowlers interest based on
the common law daily interest rule. Next, the Fowlers argue that if the DRS is allowed to make a
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new rule determining the interest calculation method, it will improperly apply it retroactively. The
Fowlers further argue that an unconstitutional taking will likely result if the DRS is permitted to
calculate interest by. not using the common law daily interest method.
Whether the superior court properly implemented our mandate in Probst is the only issue
properly before us. The superior court did not abuse its discretion by remanding the action to the
DRS under the APA based on our opinion. As discussed below, the other issues are not properly
before us. Accordingly, we affirm the superior court' s order remanding the case to the DRS for
further rulemaking consistent with our opinion in Probst.
A. MOTION TO RECALL MANDATE AND EFFECT ON APPEAL
As an initial matter, the DRS argues that the Fowlers are precluded from appealing the
superior court' s order because they previously filed a motion to recall the mandate making the
same arguments being made in this appeal, and we have already ruled on the matter. The Fowlers
argue that their motion to recall was an opportunity for this court to exercise discretionary review,
while this appeal automatically gives us jurisdiction and is a separate review of the lower court' s
post -mandate decision.
An " appellate court may recall a mandate issued by it to determine if the trial court has
complied with an earlier decision of the appellate court given in the same case." RAP 12. 9. Rule
12. 9( a) gives an appellant two choices.
a) To Require Compliance With Decision. The appellate court may recall a
mandate issued by it to determine if the trial court has complied with an earlier
decision of the appellate court given in the same case. The question of compliance
by the trial court may be raised by motion to recall the mandate, or by initiating a
separate review of the lower court decision entered after issuance of the mandate.
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Rule 12. 9 clearly contains the disjunctive conjunction " or." The disjunctive " or" signals a choice
of methods for litigants. Here, the Fowlers are using both methods to present the same issues. On
July 22, 2013, the Fowlers filed both a motion to recall the mandate and a notice of appeal, raising
the same arguments in both.
We " considered" the motion to recall, which raised the same arguments as in the appeal,
and denied the motion. Specifically, we ruled: " Upon consideration by the court, the motion is
denied." Order Denying Mot. to Recall Mandate, No. 40861 -9 -II (Aug. 1, 2013). Thus, we have
already decided the issues in this appeal when we denied the motion to recall after consideration.
The Fowlers are not entitled to a second review of the same issues with a different panel. Reeploeg
v. Jensen, 81 Wash. 2d 541, 546, 503 P.2d 99 ( 1972) ( noting that to " require courts to consider and
reconsider cases at the will of litigants would deprive the courts of that stability which is necessary
in the administration ofjustice ")..
We do not approve of a party manipulating procedural rules in order to relitigate issues that
have been previously resolved by this court. However, because of the particular circumstances of
this case, we exercise our discretion to address the merits of the Fowlers' arguments. RAP 1. 2( a),
c).
B. THE PROBST DECISION
We apply the law of the case doctrine "` to avoid indefinite relitigation of the same issue,
to obtain consistent results in the same litigation, to afford one opportunity for argument and
decision of the matter at issue, and to assure the obedience of lower courts to the decisions of
appellate courts. "' State v. Harrison, 148 Wash. 2d 550, 562, 61 P.3d 1104 ( 2003) ( quoting 5 Am.
JUR. 2d Appellate Review § 605 ( 2d ed. 1995)). " Once an appellate court issues its mandate, the
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court' s decision becomes ` effective and binding on the parties' and ` governs all subsequent
proceedings in the action in any court. "' State v. Strauss, 93 Wash. App. 691, 697, 969 P.2d 529
1999); RAP 12. 2.
When the appellate court issues a directive that leaves no discretion to the lower court, the
lower court must comply. Harp v. Am. Sur. Co. of Y, 50 Wash. 2d 365, 368, 311 P.2d 988 ( 1957).
A] remand ` for further proceedings" ` signals this court's expectation that the trial court will
exercise its discretion to decide any issue necessary to resolve the case." Bank ofAm., N.A. v.
Owens, 177 Wn. App. 181, 189, 311 P.3d 594 ( 2013), review denied, 179 Wash. 2d 1027 ( 2014)
citing In re Marriage of Rockwell, 157 Wn. App. 449, 453, 238 P.3d 1184 ( 2010)); McCausland
v. McCausland, 129 Wn. App. 390, 400, 118 P.3d 944 ( 2005), rev' d, 159 Wash. 2d 607, 152 P.3d
1013 ( 2007)). When a mandate merely remands for further proceedings, compliance with that
mandate is reviewed for an abuse of discretion. State v. Kilgore, 167 Wash. 2d 28, 34, 42 -43, 216
P.3d 393 ( 2009) ( finding that the trial court did not abuse its discretion following remand for
further proceedings); see Rockwell, 157 Wash. App. at 454 ( reviewing the trial court record to
determine whether it exercised its discretion on remand, noting that it "intended that the trial court
exercise its discretion on remand ").
In Probst, we reversed the superior court' s original order and remanded the case for further
proceedings consistent with the opinion, intending for the trial court to exercise its discretion.
Specifically, the mandate stated, " this cause is mandated to the Superior Court from which the
appeal was taken for further proceedings in accordance with the attached true copy of the opinion."
Clerk' s Papers at 5. Thus, on remand, we review the superior court' s decisions for an abuse of
discretion. Rockwell, 157 Wash. App. at 454; see also Kilgore, 167 Wash. 2d at 43.
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The crux of the Fowlers' argument seems to be that when we said " although the DRS had
authority to decide how to calculate interest, the DRS 's interest calculation method was arbitrary
and capricious because the agency did not render a decision after due consideration" and " the .. .
statutes do not require the DRS to pay daily interest," Probst, 167 Wash. App. at 183, 191, we
actually meant: the DRS' s " failure to pay daily interest was arbitrary and capricious," and the
DRS is required to pay daily interest." Mot. Hearing Transcript (MHT) at 7. The Fowlers assert
that the DRS' s " argument that daily interest is not required is contrary to the express language in
the opinion." MHT at 7.
The Fowlers misconstrue our holding in Probst. In Probst, we stated, " We hold that the
TRS statutes do not require the DRS to pay daily interest on balances transferred from Plan 2 to
Plan 3." Probst, 167 Wn. App. at 191. We also held that " the legislature has clearly expressed its
intent to give the DRS authority to determine how interest is earned." Probst, 167 Wash. App. at
190. Thus, the DRS had the authority to determine how interest is calculated. However, in
exercising that authority, .we found that the DRS acted arbitrarily and capriciously by electing to
continue using a " historical interest calculation method without due consideration of the facts and
circumstances" and without identifying the reasons for continuing to do so, even when the DRS
consistently recognized the historical method did not conform to industry standards and was unfair.
Probst, 167 Wn. App. at 193 -94. Therefore, contrary to the Fowlers' assertion, we held that the
DRS acted arbitrarily and capriciously by not giving due consideration to the facts and
circumstances when it elected to continue the historical method of calculating interest; we did not
hold that the DRS was required to pay daily interest.
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On remand, the superior court found that " it' s not up to [ the superior court] to determine
what an agency should or shouldn' t do" and that it is not appropriate for it to " set interest rates
when there is an agency who is given that discretion." MHT at 15, 18. It went on to say that
finding that the DRS' s method was arbitrary and capricious " is not the same thing as saying [ the
calculations] ha[ ve] to be done a particular way." MHT at 18 -19. The superior court correctly
interpreted our mandate to say that the DRS has the authority to determine how to calculate
interest, but it must undergo the appropriate processes. It follows that it is reasonable to remand
to the DRS to allow it to undergo the appropriate processes to exercise its authority.4 The superior
court did not abuse its discretion.
The Fowlers also argue that the superior court improperly relied on the APA when it
remanded the action to the DRS because their claim falls under an exception to the APA. The
Fowlers' argument is without merit.
The Fowlers assert that RCW 34. 05. 510 excludes their claim from the. APA because their
claim involves money damages. This assertion is based on an incomplete reading of the statute.
RCW 34. 05. 510 states:
This chapter establishes the exclusive means of judicial review of agency action,
except:
4
Under the APA, "[ t]he court shall remand to the agency for modification of agency action, unless
remand is impracticable or would cause unnecessary delay." RCW 34. 05. 574( 1). Courts
substantially defer to the agency and do not substitute its opinion " for that of the agency entrusted
tomake such decisions." Hillis v. Dep' t ofEcology, 131 Wash. 2d 373, 396, 932 P.2d 139 ( 1997).
In Hillis, the court invalidated the agency' s decision that was made without appropriate rule
making. 131 Wash. 2d at 400. The Hillis court found that it "is not for the courts to make the decision
or set the priorities for the agency," and "[ o] n remand, it is within the discretion of the agency
what specific procedures" to use after an agency decision has been invalidated. Hillis, 131 Wn.2d
at400.
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1) The provisions of this chapter for judicial review do not apply to
litigation in which the sole issue is a claim for money damages or
compensation and the agency whose action is at issue does not have
statutory authority to determine the claim.
2) Ancillary procedural matters before the reviewing court,
including intervention, class actions, consolidation, joinder,
severance, transfer, protective orders, and other relief from
disclosure of privileged or confidential material, are governed, to the
extent not inconsistent with this chapter, by court rule.
RCW 34. 05. 510( 1), ( 2). Thus, the APA does not govern " litigation in which the sole issue is a
claim for money damages or compensation and the agency whose action is at issue does not have
statutory authority to determine the claim." RCW 34. 05. 510( 1) ( emphasis added).
Also, Washington courts have consistently held that RCW 34. 05. 510( 1) applies only to
suits in which the sole issue is a claim for money damages. For example, in Wells Fargo, the court
found that because appellant' s " complaint contained a request for a declaratory judgment... its
action did not fit within the exception for suits limited to money damages." Wells Fargo Bank,
N.A. v. Dep' t ofRevenue, 166 Wash. App. 342, 353, 271 P.3d 268, review denied, 175 Wash. 2d 1009
2012).
In their first appeal, "[ t]he Fowlers sought declaratory and /or equitable relief, monetary
relief, prejudgment interest, and attorney fees." Probst, 167 Wash. App. at 184. Here, in their second
appeal, they seek enforcement of the mandate based on that prior appeal; the Fowlers have not
offered any evidence or argument that this is now solely a claim for money damages.
The superior court correctly ruled that the APA applied to the case and properly remanded
the action to the DRS for proceedings consistent with our opinion in Probst. The Fowlers'
argument that the superior court erred by remanding the action is not supported by law.
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C. RETROACTIVE APPLICATION AND UNCONSTITUTIONAL TAKINGS
The Fowlers argue that if the DRS enacts a new rule adopting the original interest
calculation methods under the authority of RCW 41. 50. 033, the new rule could not be retroactively
applied because it would interfere with their vested rights. However, the DRS has not yet had the
opportunity to make such a rule. Therefore, this argument is premature and is not ripe for review.
Washington law has long established that courts are not " authorized to render advisory
opinions or pronouncements upon abstract or speculative questions under the declaratory judgment
act." Wash. Beauty Coll., Inc. v. Huse, 195 Wash. 160, 164, 80 P.2d 403 ( 1938); see Kitsap County
Prosecuting Attorney's Guild v. Kitsap County, 156 Wash. App. 110, 122, 231 P.3d 219 ( 2010)
noting that this court does not give advisory opinions). To be justiciable, " the interests must be
direct and substantial and involve an actual as distinguished from a possible or potential dispute."
Huse, 195 Wash. at 164 -65. The Fowlers ask us to ignore the fact that the DRS has not yet had
the opportunity to resolve this issue, and therefore, there is no rule to be retroactively applied.
Their argument is speculative; we do not render advisory opinions. Huse, 195 Wash. at 164 -65.
The Fowlers also argue that if the DRS is allowed under RCW 41. 50. 033 to make and
apply a new rule that does not use the common law daily interest rule to calculate interest, the
potential failure to pay interest based on that rule will result in an unconstitutional taking. Pursuant
to the takings clause of the Fifth Amendment and applied to the states through the Fourteenth
Amendment, the government cannot take private property for public use without just
compensation. U.S. CONST., amend. V. This argument is also speculative because the DRS has
not made or applied a new rule resulting in an unconstitutional taking; therefore, this argument is
premature. We do not render advisory opinions. Huse, 195 Wash. at 164 -65.
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ATTORNEY FEES AND COSTS
The Fowlers seek attorney fees pursuant to the common fund doctrine. Under the
American rule, which Washington follows, attorney fees must be authorized by contract, statute,
or a recognized equitable principal. City of Seattle v. McCready, 131 Wash. 2d 266, 273 -74, 931
P.2d 156 ( 1997). Whether an equitable exception authorizes an award of attorney fees is a legal
question. Tradewell Group, Inc. v. Mavis, 71 Wn. App. 120, 126, 857 P.2d 1053 ( 1993). The
Washington Supreme Court found that " the ` common fund /common benefit' theory" is a " narrow
equitable ground for awarding attorney fees." City ofSequim v. Malkasian, 157 Wash. 2d 251, 271,
138 P.3d 943 ( 2006).
In order to award attorney fees based on the common fund doctrine, a court has to
determine whether the Fowlers' litigation benefited the class and others. Malkasian, 157 Wash. 2d
at 271. A court then grants the award based on the size of the judgment. Bowles v. Dep' t ofRet.
Sys., 121 Wash. 2d 52, 75, 847 P.2d 440 ( 1993). Until the end of litigation, there is no basis to
determine whether the award of attorney fees is appropriate. Furthermore, the Fowlers themselves
note that the fee award " awaits the conclusion of this litigation." Br. of Appellant at 46. 5
Accordingly, the request for attorney fees from this court is premature.
The Fowlers also request costs on appeal. RAP 14. 1 and 14. 2 provide that the clerk of the
appellate court will award costs to the substantially prevailing party. Here, the Fowlers are not the
prevailing party. Accordingly, the Fowlers' request for costs on appeal is denied.
5 We recognize that the Fowlers, in an abundance of caution, are preserving their right to claim
attorney fees pursuant to the common fund doctrine; however, for the reasons stated above, we do
not decide this issue.
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We affirm.
A majority of the panel having determined that this opinion will not be printed in the
Washington Appellate Reports, but will be filed for public record pursuant to RCW 2. 06. 040, it is
so ordered.
We concur:
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