Johnson v. Fresno County Employees' Retirement Assn. CA5 ( 2015 )

Filed 6/26/15 Johnson v. Fresno County Employees’ Retirement Assn. CA5
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIFTH APPELLATE DISTRICT
GARY JOHNSON,
F069503
Plaintiff and Appellant,
(Super. Ct. No. 12CECG00759)
v.
FRESNO COUNTY EMPLOYEES’ OPINION
RETIREMENT ASSOCIATION,
Defendant and Respondent.
APPEAL from a judgment of the Superior Court of Fresno County. Debra J.
Kazanjian, Judge.
Moscone Emblidge Sater & Otis; Moscone Embridge & Otis, G. Scott Emblidge
and Matthew K. Yan for Plaintiff and Appellant.
Reed Smith, Harvey L. Leiderman, Jeffrey R. Rieger and Dennis Peter Maio for
Defendant and Respondent.
-ooOoo-
During the last few years of his employment with the County of Fresno (County),
appellant Gary Johnson, was on assignment in Sacramento County. The County paid
appellant a flat monthly allowance on top of his regular salary to cover appellant’s out-of-
town living expenses.
When appellant retired, respondent, the Fresno County Employees’ Retirement
Association (FCERA), calculated appellant’s pension without including this flat monthly
allowance as part of appellant’s final compensation. Appellant filed a claim with the
FCERA seeking to have the flat monthly allowance included in his pension calculation.
The FCERA denied appellant’s claim and declared the flat monthly allowance was not
pensionable.
Appellant then filed a petition for writ of mandate in the trial court. The trial court
denied appellant’s petition on the ground that appellant’s claim was barred by a class
action settlement agreement. The court did not rule on whether the flat monthly
allowance is “compensation earnable” and therefore included in the final compensation
calculation. (Gov. Code,1 §§ 31461, 31462.)
Appellant challenges the trial court’s ruling on two grounds. Appellant argues that
the release in the class action settlement agreement does not cover his claim because the
flat monthly allowance reimbursement method did not exist when the agreement was
signed. Rather, at that time, the County reimbursed employees for expenses incurred
while on assignment on a dollar-for-dollar basis. Appellant further contends that the flat
monthly allowance is pensionable compensation under the California Supreme Court case
of Ventura County Deputy Sheriffs’ Assn. v. Board of Retirement (1997) 16 Cal. 4th 483
(Ventura).
Contrary to appellant’s position, his claim is barred by the class action settlement
agreement. Accordingly, the judgment will be affirmed.
1 All further statutory references are to the Government Code.
2.
BACKGROUND
1. The CalWIN program and expense reimbursement policies.
The California Work Opportunity and Responsibility to Kids Information
Network, referred to as “CalWIN,” is an online computer system and database used to
administer public welfare and assistance programs throughout California. Employees
from various California counties designed the CalWIN software and were required to live
near the project site in Folsom.
Beginning in February 2000, Fresno County employees on assignment to the
CalWIN project were reimbursed for actual, authorized expenditures. This policy was
“‘adopted to allow additional reimbursement to the employee as an incentive for
volunteering to relocate.’” In May 2000, the County adopted the CalWIN policy under
which “CalWIN workers could obtain cash advances and reimbursement on a monthly
basis for meals and incidentals” and “did not need to provide proof of expenses unless it
was requested.”
In December 2001, the County modified its CalWIN reimbursement policy. The
County “‘did away with the dollar-for-dollar reimbursement scheme and, instead, put into
place a flat monthly allowance … for staff members assigned to the project on a long-
term basis.’” This allowance covered “‘expenses including lodging/utilities, meals, and
transportation/mileage’, plus a ‘gross-up’ to account for taxes on these sums.’”
The County defined the flat monthly allowance as standardized amounts paid each
month as an estimate of the employees’ liability for the actual costs plus taxation of those
costs in order to provide total reimbursement to the employee. The County’s reason for
this policy switch was to minimize tracking and reporting requirements. Nevertheless,
each employee was required to certify under penalty of perjury the distance between the
employee’s county headquarters and the project site, the amount of monthly rent or
mortgage at the project site, and that the employee will continue to maintain his or her
primary residence at a net expense in excess of $200 per month. The employee was
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further required to semi-annually submit CalWIN expense claims providing rental
receipts, a lease agreement, or other suitable documentation attesting to payment for
lodging in the Sacramento area.
2. The Ventura II litigation and settlement.
Under the County Employees Retirement Law of 1937 (CERL), Government
Code section 31450 et seq., retirement benefits are calculated based on a retired
employee’s “final compensation” as defined by sections 31460, 31461 and 31462 or
31462.1. (Salus v. San Diego County Employees Retirement Assn. (2004) 117
Cal. App. 4th 734, 736.) This final compensation involves: compensation in the form of
cash, rather than in the form of in-kind goods and services or time off; cash earned during
a usual work period, as opposed to cash earned for overtime; and cash earned before
retirement, rather than at or after retirement. (Ibid.)
In Ventura, supra, 16 Cal. 4th 483, the California Supreme Court defined certain
aspects of final compensation under CERL. There, a group of law enforcement officers
argued their final compensation should include salary enhancements they received in
cash from their county employer under the terms of a memorandum of understanding.
These enhancements included a uniform maintenance allowance, bilingual premium pay,
educational incentive pay, additional compensation for scheduled meal periods for
designated employees, pay in lieu of annual leave accrual, and a motorcycle bonus. (Id.
at p. 488.)
The Ventura court extensively analyzed certain sections of CERL in order to
ascertain what must be included in an employee’s “final compensation” for purposes of
calculating his or her pension. The court explained that, while only cash payments
received by an employee qualify as compensation within the meaning of Government
Code section 31640, when cash is paid in lieu of other in-kind benefits, those payments
qualify as compensation. The court noted that the “Legislature has recognized that some
employees receive remuneration other than wages or salary but has concluded that if
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those ‘advantages’ are not paid in cash, their value need not be included in
‘compensation’ for purposes of computing a pension. It has not done so for cash
payments made in lieu of providing the same advantages in kind. When paid in cash, the
payment is remuneration and, as it is not excluded, it is ‘compensation’ under section
31460.” (Ventura, supra, 16 Cal.4th at p. 497.) Accordingly, the court held that, in
addition to an employee’s base salary, other forms of cash remuneration, excluding
overtime, had to be included in calculating the employee’s final compensation for
purposes of a CERL retirement pension. Thus, the Ventura plaintiffs’ final compensation
included the premiums at issue, i.e., the uniform maintenance allowance, educational pay,
bilingual pay, payments in lieu of accrued vacation time, etc. (Ventura, supra, at pp.
487-505.) The Ventura court disapproved a long-standing Court of Appeal decision upon
which many counties had relied in making pension calculations. (Id. at pp. 505-507.)
Following Ventura, a number of class action lawsuits were filed in various
counties alleging noncompliance with Ventura in the computation of retirement benefits.
These cases were collectively referred to as the Ventura II litigation. (Chisom v. Board of
Retirement of Fresno County Employees’ Retirement Assn. (2013) 218 Cal. App. 4th 400,
405 (Chisom).) The parties to the Fresno County Ventura II litigation, including
appellant, reached a final settlement pursuant to a settlement agreement effective
December 15, 2000.
Under this settlement agreement, the class received an increased service retirement
benefit comprised of both a statutory benefit and a supplemental benefit for members
retiring on and after January 1, 2001. The agreement purported to be a compromise that
was meant to fully resolve and settle all of the Fresno County Ventura II lawsuits and all
issues between the parties therein. (Chisom, supra, 218 Cal.App.4th at pp. 406-407.)
The settlement was intended “to be complete and final with respect to the issues that it
has resolved and that the settlement will not be changed on behalf of settling parties or
the class members in response to later court developments, whether favorable or
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unfavorable.” The parties specifically agreed “that petitioners and class members will
forbear bringing any future demand, claim or lawsuit seeking to enlarge, define, narrow,
or in any other way relate to the scope of the decision of the California Supreme Court in
[Ventura], or the items of compensation to be included for benefit purposes under the
1937 County Employees Retirement law. All parties agree that this forbearance
agreement applies to all items of compensation which were included or which could have
been included” (italics added) in the Ventura II actions.
3. Appellant’s retirement increase request.
Appellant participated in the CalWIN program and received a flat monthly
allowance of $3,930 from March 2003 through December 2007. Appellant retired from
County employment in August 2008. In calculating appellant’s retirement benefits, the
FCERA did not include the flat monthly allowance amount of approximately $47,000 per
year.
In 2011, appellant filed a claim with the FCERA requesting that the flat monthly
allowance be included as part of his final compensation in his retirement benefit
calculation. The FCERA referred appellant’s claim to a referee.
Following a hearing, the referee found in favor of appellant and recommended that
the FCERA adjust appellant’s pension to include the CalWIN flat monthly allowance.
The referee concluded that the flat monthly allowance constituted compensation under
section 31460 and, being analogous to a uniform allowance, was pensionable under
Ventura. The referee also rejected the County’s claim that the 2000 settlement barred
appellant’s claim because the reimbursement policy at issue was instituted after the
settlement was reached.
After hearing argument, the FCERA rejected appellant’s claim and the referee’s
proposed decision. The FCERA disagreed with the referee’s interpretation of the CERL
and the settlement agreement.
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4. The trial court proceeding.
Appellant petitioned the trial court for a writ of mandate. The trial court denied
the petition finding the settlement agreement barred appellant’s claim. The court
determined the settlement agreement expressed the mutual intent of the parties to waive
the right to present future unknown items for determination of whether they constitute
compensation for purposes of calculation of retirement benefits.
DISCUSSION
Appellant argues that his pension claim is not barred by the release in the 2000
class action settlement agreement because the CalWIN reimbursement policy was not
adopted until 2001. Therefore, appellant contends, the calculation of his pension benefit
was not a claim that could have been included in the class action.
The interpretation of a settlement agreement is governed by the principles
applicable to any other contract. (Winet v. Price (1992) 4 Cal. App. 4th 1159, 1165.)
Where, as here, the interpretation of the agreement is based solely on its own language,
the construction is a question of law. (Id. at p. 1166.)
The release and forbearance provisions in the settlement agreement are
unambiguous. (Chisom, supra, 218 Cal.App.4th at p. 416.) The settlement agreement
provides “that it disposes of all claims and issues among the parties, including those
relating to or arising out of the Ventura case, and that the parties would forbear from
bringing any future suit under the Ventura case.” (Ibid.) This forbearance provision is
applicable “‘to all items of compensation which were included or which could have been
included in [the Ventura II litigation].’” (Ibid.)
Appellant contends his claim could not have been included in the Ventura II
litigation because the flat monthly allowance reimbursement method did not exist at that
time. As support for his position, appellant notes that the pre-2001 policy was a non-
taxed dollar-for-dollar reimbursement that required CalWIN participants to keep receipts
of their actual incurred expenses while the 2001 flat monthly allowance was neither
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tailored to actual expenses nor required receipts and was taxed. Appellant characterizes
the 2001 flat monthly allowance as “a sea change” that was paid to CalWIN participants
to compensate them for the added burden of working on a project several hours from
home.
However, when the County first adopted the reimbursement policy for CalWIN
participants in February 2000, one purpose was to allow additional reimbursement to the
employees as an incentive for volunteering to relocate. Then in May 2000 the County
modified the CalWIN policy to permit the CalWIN workers to obtain cash advances and
reimbursement on a monthly basis for meals and incidentals. Moreover, the workers did
not need to provide proof of expenses unless it was requested. Thus, before the Ventura
II litigation settlement, the CalWIN participants received their reimbursement in advance
of incurring the expenses and were not required to provide proof of their actual expenses.
When the County modified the reimbursement policy in 2001 to put the flat
monthly allowance in place, the scheme was not materially changed from the May 2000
policy. As before, the participants were: paid in advance based on expense estimates;
required to provide proof of payment for lodging; and required to certify the distance they
traveled. Both before and after the Ventura II settlement, the County wanted to provide
total reimbursement to the CalWIN workers and motivate them to relocate. The 2001
policy differed from the May 2000 policy in that the County, rather than the employee,
estimated the monthly expenses in advance and no receipts were ever required for meals
and incidentals. The reason behind this policy change was to simplify the paperwork.
Also, the County grossed up the amount to cover the taxes on the flat monthly allowance
to provide total reimbursement of expenses.
Thus, based on the policy in place in May 2000, a claim that the CalWIN
reimbursement amounts were pensionable could have been asserted in connection with
the Ventura II litigation. The administrative differences between the 2000 policy and the
2001 policy are not so significant that the potential claim did not exist when the litigation
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was settled. Thus, as a member of the class in the Ventura II cases, appellant waived and
released his claim and is barred from pursuing it. (Cf. Chisom, supra, 218 Cal.App.4th at
p. 416.)
In light of this conclusion, we need not decide whether the FCERA erred when it
refused to include the flat monthly allowance in calculating appellant’s pension benefit.
DISPOSITION
The judgment is affirmed. Costs on appeal are awarded to respondent.
_____________________
LEVY, J.
WE CONCUR:
_____________________
HILL, P.J.
_____________________
GOMES, J.
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