Manderson-Saleh v. Regents of the University of California ( 2021 )

Filed 2/5/21
CERTIFIED FOR PUBLICATION
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
AMIRA Z. MANDERSON-SALEH, D076652
Plaintiff and Appellant,
v.
(Super. Ct. No. 37-2018-
THE REGENTS OF THE 00017346-CU-BC-CTL)
UNIVERSITY OF CALIFORNIA,
Defendant and Respondent.
APPEAL from a judgment of the Superior Court of San Diego County,
Timothy B. Taylor, Judge. Affirmed in part and reversed in part.
David A. Kay for Plaintiff and Appellant.
Paul, Plevin, Sullivan & Connaughton and Joanne Alnajjar Buser for
Defendant and Respondent.
Amira Manderson-Saleh is the daughter of an oncology nurse (Mother)
who worked at the University of California at San Diego (UCSD) for about 12
years until she retired shortly before her death. Mother earned a pension
under rules permitting the employee to designate a beneficiary to receive
specified monthly pension benefits upon the employee’s death.
When Manderson-Saleh claimed her rights as the designated
beneficiary shortly after Mother’s death, The Regents of the University of
California (Regents) denied her claim, finding Mother did not properly
identify Manderson-Saleh as the contingent beneficiary before her death.
Thus, none of these earned pension benefits were paid, and instead they were
retained by the Regents.
Manderson-Saleh filed a complaint against the Regents. In her
amended pleading, she alleged breach of contract and alternatively sought a
writ of mandate to overturn the Regents’ decision. (Code Civ. Proc., § 1085.)1
The Regents demurred only to the contract claim, and the court sustained the
demurrer without leave to amend.
The court then conducted a separate proceeding on the section 1085
mandate petition. After evaluating the parties’ written evidence, the court
found Manderson-Saleh was not entitled to relief because the Regents had
the right to strictly apply its rule that contingent-annuitant pension benefits
are conditioned on the Regents receiving a signed beneficiary-election form
before the employee’s death, and the Regents received this form one week
after Mother’s death. The court rejected Manderson-Saleh’s different
interpretation of the rule and her arguments this rule was satisfied by the
Regents receiving Mother’s election worksheet before her death.
The court entered a final judgment sustaining the demurrer and
denying the mandate petition. Manderson-Saleh challenges both rulings.
1 All unspecified statutory references are to the Code of Civil Procedure.
We refer to “the Regents” in the singular based on its Constitutional
designation as a single entity. (Cal. Const., art. IX, § 9, subd. (a); see De
Vries v. Regents of University of California (2016) 6 Cal.App.5th 574, 580.)
2
We determine the court properly sustained the demurrer on the
contract claim without leave to amend. But we conclude the court erred in
denying the mandate petition. The undisputed evidence establishes Mother
substantially complied with the Regents’ pension rules and the Regents
abused its discretion in failing to consider and apply the substantial
compliance doctrine in evaluating Manderson-Saleh’s claim. We reverse and
remand with directions for the superior court to grant the mandamus petition
and to issue a writ ordering the Regents to grant Manderson-Saleh’s
contingent-annuitant pension claim.
FACTUAL AND PROCEDURAL SUMMARY
Manderson-Saleh appeals from two separate trial court orders.
Because each order requires a different standard for evaluating the record
and because the parties dispute the admissibility of portions of the record, we
initially describe only those facts that are undisputed for purposes of this
appeal. In later sections, we will discuss additional facts relevant in the
different procedural contexts and will resolve evidentiary disputes.
A. Summary of Background Facts
In 2004, Mother began working at UCSD as an oncology nurse, and in
2014, she learned she had cancer but continued working.
On August 25, 2016, after learning her cancer had advanced and she
would die soon, Mother contacted the Regents’ retirement administration
service center (Service Center) to initiate her retirement under the
University of California Retirement Plan (Plan). On this date, Mother (who
was not married) gave her young adult daughter, Manderson-Saleh, a signed
written notarized power of attorney, which was necessary because Mother
was becoming increasingly unable to function because of her advanced
cancer. The Regents was aware of Mother’s status, and accepted that
3
Manderson-Saleh could act on Mother’s behalf pertaining to all future
retirement and pension decisions.
About five days later, a Regents retirement representative emailed
Mother information about how to request a Personal Retirement profile with
a projected retirement-benefits estimate. This email included links to two
documents on the Service Center’s website: the Regents’ Retirement
Handbook (Handbook) and the Summary Plan Description for retirement
benefits. The Handbook provides detailed information about the retirement
process and benefits, including an explanation that after receiving the
employee’s information, the Service Center will provide a “personalized
retirement election form which is the document you will sign to confirm your
choices and finalize your decision to retire.” The Handbook also states: “If
you die before the . . . Service Center receives your retirement election form,
your retirement election will not be effective and may affect any beneficiary
payments.”
About two weeks later, on September 11, Mother retired from her
UCSD nursing job. The next day, the Service Center emailed Mother a blank
Monthly Retirement Income Election Worksheet (Election Worksheet) to
permit Mother to indicate how she wanted to receive her pension benefits and
to designate a contingent annuitant beneficiary (the person entitled to receive
specified portions of Mother’s earned pension benefits upon her death). The
Service Center had established a secure email with Manderson-Saleh to
expedite Mother’s elections because it was aware of Mother’s impending
death and the need to promptly formalize decisions. The Election Worksheet
printed form states at the top: “Please return your entire worksheet as soon
as possible so we may prepare your election documents for signature.”
4
One or two days later, on about September 13, Manderson-Saleh, on
Mother’s behalf, faxed the Election Worksheet to the Service Center. This
worksheet designated Manderson-Saleh as Mother’s contingent annuitant
beneficiary and identified Manderson-Saleh’s birthdate. The Election
Worksheet does not contain a signature line, and it was not signed. At that
point, Manderson-Saleh (with the Service Center’s knowledge and approval)
was filling out the forms for Mother under her power of attorney because
Mother’s illness had incapacitated her.
A few days later, on Friday September 16, the Service Center (located
in Oakland) mailed Mother (who lived in the San Diego area) a final “UBEN
161 Election” form for her to formally approve her final pension election
decisions made in the Election Worksheet. The prepared form mailed to
Mother contained the information from the Election Worksheet, including the
designation of Manderson-Saleh as Mother’s contingent beneficiary and
Manderson-Saleh’s birthdate. The form stated: “In signing and submitting
this election document, I acknowledge and understand and agree that:
[¶] . . . [¶] The election made on this form will not be effective if the form is
received by the [Service Center] after the member’s death.”
It appears Mother may not have received this prepared UBEN 161
Election form before she died on September 20, and neither she nor
Manderson-Saleh signed or returned this form before her death.
On the same date it mailed the UBEN 161 Election form, on September
16, the Service Center mailed or emailed a completed Personal Retirement
Profile to Mother, which contained a reference to the UBEN 161 Election
form and stated that the form must be submitted to finalize pension elections
before the member’s death.
5
Six days after Mother’s death, on September 26, the Service Center
received a faxed UBEN 161 Election form signed by Manderson-Saleh (on
behalf of Mother) with a date of September 26.
The next month, on October 12, the Service Center wrote to
Manderson-Saleh, acknowledging Mother’s September 20 death, and stating
that “since [it] received the UBEN 161 after September 20, 2016, we are
unable to move forward with your mother’s retirement.”
Several months later, Manderson-Saleh’s then attorney (Joseph Foley)
wrote to the Service Center challenging its decision to deny Manderson-
Saleh’s beneficiary claim. In the letter, Foley claimed that Manderson-Saleh
had signed the UBEN 161 Election form on September 16, but had
inadvertently misdated it as September 26. Foley also stated:
“Moreover, [Manderson-Saleh], as attorney in fact, was in
contact with [the Service Center] on several occasions from
September 12, 2016 through September 19, 201[6], both by
email and by telephone asking questions about the
retirement packet paperwork and advising the . . .
representative of [Mother’s] elections designated in the
paperwork. [Manderson-Saleh] was assured on more than
one occasion by [Service Center] representatives that
[Mother’s] elections designated on the paperwork, prior to
September 20, 201[6], were sufficient to effectuate her
retirement elections.
“It is clear from the background and circumstances of this
matter that [Mother] took an active role in completing
the . . . Retirement Packet prior to her passing thereby
memorializing her clear wishes and intent known. [Service
Center] representatives were actually contacted by
[Manderson-Saleh] as Attorney in Fact for [Mother],
expressing [Mother’s] wishes regarding her pension benefit
elections. [Service Center representatives were] well aware
of [Mother’s] elections regarding her pension beneficiary
prior to September 20, 2016.”
6
Foley requested that the Service Center accept and process Mother’s
retirement packet designating Manderson-Saleh as the pension beneficiary.
Three months later, the Regents’ Plan Administrator denied this
request. The denial letter stated in part:
“I have reviewed your appeal of the denial of your request
for Contingent Annuitant benefits. [A]fter careful
consideration of the facts and circumstances surrounding
the communications regarding those benefits, I find no
basis for reversing the denial. [¶] . . . [¶]
“The rules regarding Elections and Designations are
contained in the [Plan] Regulations section 12.03, which
states that an election or designation of Beneficiary or
Contingent Annuitant is effective only if the benefit
election form or designation of Beneficiary or Contingent
Annuitant is received by the Plan Administrator prior to
the Member’s date of death and is subsequently approved
as complete by the Plan Administrator. It is also stated on
the [UBEN 161 Election form] that the form must be
received prior to the member’s death. Since the election
form was not received until after [Mother’s] death, it is not
effective.
“In addition, the election form is signed by [Mother’s]
attorney-in-fact, and is dated 6 days after her death. Since
Powers of Attorney typically expire upon the death of the
principal, the Power of Attorney (granting Manderson-
Saleh authority to conduct retirement transactions for
[Mother]) was no longer valid at the time the form was
signed on September 26, 2016. [¶] This decision regarding
your appeal is final . . . .”
The Plan Administrator’s determination was pursuant to the Regents’ Claims
Review Procedure, section 11.07, which requires a “full and fair review” of
pension benefit challenges, including a review of the “written materials
submitted by the applicant or the University.”
7
B. Manderson-Saleh’s Superior Court Pleadings
In April 2018, Manderson-Saleh, represented by a different attorney
(Gastone Bebi), filed a complaint alleging four causes of action: (1) breach of
contract; (2) breach of fiduciary duty and the duty of good faith and fair
dealing; (3) equitable estoppel; and (4) negligent misrepresentation.
The Regents demurred to the complaint mainly on the basis that the
claims were barred because Manderson-Saleh’s exclusive remedy was to
petition for a writ of mandate.
Before the court ruled on the demurrer, Manderson-Saleh filed a first
amended complaint alleging a single cause of action for breach of contract,
and in the alternative, petitioned for a section 1085 writ of mandate to
overturn the Regents’ decision.
On her contract claim, Manderson-Saleh alleged Mother was
contractually entitled to retirement benefits under the Plan, including the
right to name a contingent annuitant to receive benefits upon her death, and
Manderson-Saleh had the right to enforce the contract as an intended
beneficiary. She alleged she communicated with Service Center
representatives from September 12 through September 19, explaining that
Mother’s “condition was rapidly deteriorating” and “[t]he representative then
offered to send a secured email with the [Election Worksheet] form” so
Mother could express her wishes and “guarantee the election as soon as
possible,” and that the worksheet form was faxed back to the Regents on
September 13 when Mother was still alive.
In her writ petition, Manderson-Saleh alleged that if her contract claim
is not “an available remedy,” she is entitled to a writ of mandamus
overturning the Regents’ decision. Among her mandate allegations were that
8
she was denied a fair hearing, and the Regents abused its discretion in
considering the relevant evidence and/or in applying the applicable law.
C. Regents’ Demurrer
The Regents filed a demurrer only to the contract claim. The Regents
argued this claim was barred because Manderson-Saleh’s sole means of
obtaining relief is through a mandamus remedy. The Regents also argued
the contract claim had no merit because (1) Mother’s employment was “by
statute not contract”; (2) Manderson-Saleh was not a third party beneficiary;
and (3) Mother failed to comply with the conditions precedent by failing to
timely submit the signed UBEN 161 Election form before her death.
On the last argument, the Regents relied on Plan Regulation 12.03,
which states in relevant part:
“Every election for a Plan benefit, every election for a
benefit payment option, and every designation of a
Beneficiary or Contingent Annuitant which a Member is
required or permitted to make shall be in accordance with
procedures established and approved by the Plan
Administrator. Such election or designation shall become
effective only if the benefit election form and/or the
designation of Beneficiary or Contingent Annuitant is
received by the Plan Administrator prior to the Member’s
date of death and is subsequently approved as complete by
the Plan Administrator.”2 (Italics added.)
2 The Regents also relied on a similar rule (Plan Regulation 4.08) stating:
“If a Member . . . submits an election form for Retirement Income, . . . but
dies prior to the distribution of the elected benefit, the election will be
honored as long as the election form was received by the Plan Administrator
prior to the Member’s date of death and provided the election is subsequently
approved as complete by the Plan Administrator. If the election form was not
timely received or correctly completed, or was not approved by the Plan
Administrator, the election form will not be honored.”
9
In opposing the demurrer, Manderson-Saleh argued that a public
employee’s compensation, including a pension, imposes a contractual
obligation on the public entity, and the employee’s beneficiary can enforce
those rights through a contract claim under a third party beneficiary theory.
She also asserted that Plan Regulation 12.03 does not require receipt of a
formal, signed beneficiary designation before the employee’s death, and in
any event, in California “a party is deemed to have substantially complied
with an obligation . . . where any deviation [was] ‘unintentional and so minor
or trivial as not “substantially to defeat the object which the parties intend to
accomplish.” ’ ”
The court sustained the demurrer without leave to amend. The court
reasoned that Manderson-Saleh’s failure to comply with the condition that
the UBEN 161 Election form be returned before Mother’s death “was fatal to”
her contract claim and to the related third party beneficiary theory. The
court denied Manderson-Saleh’s request for leave to amend.
The court then conducted a status conference for the merits hearing on
Manderson-Saleh’s writ of mandate petition. The parties apparently agreed
the petition would be decided based on a written record.
D. Writ Petition
Manderson-Saleh’s counsel then filed a memorandum of points and
authorities supporting her section 1085 mandate petition. Manderson-Saleh
argued that she (on Mother’s behalf) met the requirements for designating a
contingent annuitant because she faxed the Election Worksheet form to the
Regents on or about September 13, 2016; the Election Worksheet identified
her as the contingent annuitant beneficiary; and she had been assured by the
Service Center representatives that nothing further was required to make
the election effective. In support, she submitted her own declaration and the
10
declaration of her former partner (Albert Arellano) who assisted her in
communicating with the Service Center.
Manderson-Saleh’s declaration stated in part:
“I feel that it is important for the court to understand the
emotional turmoil and dire circumstances that my mother
and I faced when she was asked to make ‘election’ decisions
regarding her pension rights.
“My mother and I had an extremely close relationship.
[S]he was everything to me; mother, sister, friend, and
mentor and I was all those things to her. As two only
children, we held each other up and lived a close life.
[¶] . . . [¶]
“. . . I witnessed my mother’s resolve to be pragmatic and
unemotional towards her [cancer] diagnosis. As a caregiver
herself she was in denial and did not prioritize getting her
financial affairs in order. It was as if she isolated the
inconvenience of stage 4 lung cancer and continued to work
for the better part of a year and a half of her two-year fight.
My mom worked until 7 months before she died because
she said her patients still needed her. She hid her pain and
we were happy to live in a bubble of hope. [¶] . . . [¶]
“[In June 2016], she was admitted to the hospital and
started to deteriorate and could no longer walk as her
cancer metastasized to the bone. She was offered
occupational therapy and chemo treatment options . . . and
we did not see this as the beginning of the end, but rather a
new element in the fight. Hindsight is much clearer. We
discovered months later she [would not recover].
“Recognizing in August 2016 that the fight . . . was taking a
tremendous toll on her I obtained power of attorney . . . . In
her rapid decline, I was left to manage filing for her
disability, lawyers, notaries, and filing and sorting through
paperwork to gain power of attorney . . . all while caring for
her. . . . I was left to choose a hospice agency and during
this time it was explained to me that she could be kept on
11
life support while we sort her affairs. Mom was last
discharged from the hospital on 9/7/16. . . .
“On 9/12/16 Albert Arellano, my then partner of 7 years,
spoke with a . . . Service Center . . . representative about
my mother’s declining circumstances and expressed our
preference to only use life support to sustain her life while
we sorted her affairs as a very last resort . . . .
Understanding this, in humanity, the [Service Center]
representative forwarded a secured e-mail containing the
[Election Worksheet form] . . . which enabled my mother to
make the election for [her] retirement package electing me
as her beneficiary. . . . The representative did not state
that the form I faxed would not be enough to secure the
election, the intent was clearly to allow me to make an
election in haste. I believed that all the information [faxed]
on 9/13/2016 was all that was required to make the
election.
“I do not know when the official UBEN 161 [Election] form
arrived because I was providing around the clock care for
my immobile mother dying of stage 4 lung cancer; turning
her every 2-3 hours even in the night, for weeks, changing
her sheets with her in the bed, giving her shots, crushing
pills, feeding her, and changing her diaper. The hospice
bathed her for me. Everything else was performed by
me . . . knowing I would have to say goodbye soon. I was
not checking the mail as closely as I should have, feeling as
if I had settled her affairs.
“After her death on 9/20/16 . . . I then had to gather myself
and plan her services. When I was first able to emotionally
check the mail, I first noticed and received what I now
know to be the Official UBEN 161 form. [¶] On September
26 . . . I . . . faxed the form UBEN 161 to the [Service
Center]. [¶] . . . [¶]
“I was never told [when the UBEN 161 Election form
needed to be returned]. . . . If I had been so advised,
measures would have been taken to insure that my
mother’s wishes regarding [her] retirement benefits would
be honored. [M]y mother was on life support at the time
12
which could have been extended while the process was
completed. . . . I would have expedited presentation of
whatever forms were necessary if I had been advised that
certain forms had to be received and the claim would be
denied if all forms were not submitted prior to my mother’s
death. [¶] . . . [¶]
“My mother . . . had no other family besides myself. It was
her expressed desire that I receive the pension benefits she
worked for, contributed to and elected for me to receive. . . .
I am no longer with my [former] partner . . . .”
Manderson-Saleh attached a copy of the Election Worksheet emailed to
her on September 12, and the completed Election Worksheet naming herself
as Mother’s contingent beneficiary (with her birthdate and social security
number) faxed to the Service Center on September 13. She also attached a
“Transmission Verification Report” dated September 13, 2016, showing an
11-page fax was sent to the Service Center’s fax number on September 13 at
2:25 p.m.
She also submitted Arellano’s declaration, who stated in part:
“On 9/12/16 I spoke to a [Service Center] representative to
notify them that [Mother’s] health was declining
rapidly . . . and that we needed to make an election for her
today, in case things didn’t improve. The representative
then informed me that she would be providing us with a
secure email where we could make an election and fax it
back to them. I [asked] . . . if there was anything else that
we need[ed] to comply with, she said no that as soon as
they received the secured email with our election . . . that
would be all they need[ed] to secure our election. I was
assured by the representative that nothing further would
be required. The next day on 9/13/2016 the election was
faxed. I’m aware that the representative might have
misspoken but with all due respect, [Manderson-Saleh] and
I have always complied with everything from her mother’s
retirement to medical leave and always on time.
13
“If the representative would have been clear that we
need[ed] to wait for a reiterated version of the election
UBEN 161 form to sign, we would have complied.
“[Manderson-Saleh] has no relatives left, it has always
been just her and her mother . . . . [Mother] stated to me
that she was happy that all her hard work as a nurse would
at least leave her daughter with some funds for her future.
[¶] I have no financial interest in the outcome of this
litigation . . . .”
Manderson-Saleh also argued Plan Regulation 12.03 is ambiguous and
could be read as providing only a “benefit election” (and not the “Contingent
Annuitant” designation) must be made on a signed benefit election form
before the member’s death.
E. Regents’ Response to Writ Petition
The Regents’ primary response was that its Plan Administrator
properly denied the claim because it was entitled to strictly enforce Plan
Regulation 12.03, which it said unambiguously requires that the Regents
receive the signed UBEN 161 Election form no later than the day of the plan
member’s death and Manderson-Saleh admits the form was not sent or
signed until after Mother’s death. The Regents submitted an administrative
record consisting of various Plan documents referred to above, except it did
not include the completed Election Worksheet form that Manderson-Saleh
and Arellano said was faxed to the Service Center on September 13.3
3 The administrative record consisted of: (1) the September 16 Completed
Personal Retirement Profile; (2) the Service Center’s September 16 letter
enclosing the final UBEN 161 Election form; (3) Mother’s notarized Power of
Attorney; (4) the death notification; (5) the UBEN 161 Election form signed
by Manderson-Saleh on September 26; (6) the Regents’ October 12 denial
letter; (7) Manderson-Saleh’s counsel’s February 2017 letter; and (8) the May
2017 Plan Administrator’s letter upholding the denial of the contingent
annuitant benefits.
14
The Regents asserted evidentiary objections to the declarations of
Manderson-Saleh and Arellano (and the attached Election Worksheet form),
arguing a court cannot consider evidence beyond the administrative record.
But the Regents submitted its own extra-record evidence: a declaration of a
Service Center manager (Gregory Ricks), who said that based on his review of
the Service Center database, he “can confirm” the “pertinent points of
contact” between the Service Center and Mother (or her representative), and
described the dates of those contacts (summarized in Part A above). Ricks
also acknowledged that on September 14, 2016, Mother “or her representative
returned the . . . Election Worksheet to [the Service Center].” (Italics added.)
Ricks attached several documents to his declaration, including the
Retirement Profile form prepared by the Service Center on September 16,
containing information from the returned Election Worksheet form that
identified Manderson-Saleh as Mother’s contingent beneficiary.
Although Ricks admitted the Regents received the Election Worksheet
before Mother’s death and that this worksheet identified Manderson-Saleh as
the contingent beneficiary, the Regents objected to the Election Worksheet
document attached to Manderson-Saleh’s declaration.4 The Regents also
argued that even if it had received the Election Worksheet attached to
Manderson-Saleh’s declaration, the unsigned worksheet was not a valid
substitute for the UBEN 161 Election form, noting the printed worksheet
stated it should be returned “as soon as possible so we may prepare your
election documents for signature,” and that other documents provided to
4 The Regents did not explain the claimed difference between this
document and the Election Worksheet it admits receiving before Mother’s
death.
15
Mother distinguished between the Election Worksheet and the UBEN 161
Election form.
The Regents additionally argued it was entitled to deny Manderson-
Saleh’s claim because she did not satisfy Plan Regulation 12.03’s second
condition to obtaining benefits—that the election was “subsequently
approved as complete by the Plan Administrator.”
The Regents maintained the equitable estoppel doctrine was
inapplicable because it had notified Manderson-Saleh of the requirement it
must receive the UBEN 161 Election form before Mother’s death, including in
(1) the UBEN 161 Election form and the cover letter, each mailed to Mother
on September 16; (2) the Personal Retirement Profile mailed or emailed to
Mother on September 16; (3) the Retirement Handbook; and (4) the Election
Worksheet.5
The Regents also argued it cannot be held liable for any employee
representations that differed from its written materials, relying on
Government Code section 818.8 and provisions in its Plan documents and
Retirement Handbook stating that any such representations are
unauthorized, null, and void. The Regents also noted that when asserting
equitable estoppel against a public entity, the moving party must establish
“the ‘avoidance of injustice in the particular case justifies any adverse impact
on public policy or the public interest.’ ” The Regents argued any “theoretical
5 The September 16 mailed UBEN 161 Election form and cover letter
said: “IMPORTANT NOTE: A member’s election will not be effective if the
election is received by the [Service Center] after the member’s death” and
“The election made on this form will not be effective if the form is received by
the [Service Center] after the member’s death.” The Retirement Handbook
and the Election Worksheet form contained statements referring to a
separate document that needed to be signed for final election decisions.
16
injustice” to Manderson-Saleh would not warrant making an exception under
the circumstances.
The Regents also relied on Ricks’s additional statement in his
declaration that: “In my review of the database tool related to
communications about [Mother], there was no entry reflecting that any
[Service Center] representative told [Mother] or her representatives that
the . . . Election Worksheet would be sufficient on its own to confirm pension
election benefits. [¶] The Regents employs over 75,000 employees across
California and, to administer a pension plan such as the [Plan], The Regents
must be able to continue its efforts to apply statutory requirements
consistently to all members.”
The Regents argued it was important that it adhere to its strict policy
requiring a signed UBEN 161 Election form because “[t]he Plan
Administrator would have no certainty that the [Plan] member intended for
the member’s hard-earned pension benefits to be paid to someone other than
the [Plan] member . . . [and it] needs to hold someone accountable for the
accuracy of the information on the UBEN 161 Election form, which is signed
under penalty of perjury, in the event of any dispute.”
F. Manderson-Saleh’s Reply
In reply, Manderson-Saleh relied on Western States Petroleum Assn. v.
Superior Court (1995) 9 Cal.4th 559 (Western States) to support the
admissibility of the submitted declarations and attached Election Worksheet
form. As to equitable estoppel, Manderson-Saleh argued the Regents’
reliance on statements in the UBEN 161 Election form and the Personal
Retirement Profile was misplaced because Manderson-Saleh did not receive
these documents until after Mother’s death.
17
To counter the Regents’ factual assertions, Manderson-Saleh submitted
reply declarations from Arellano and herself. Arellano said in part:
“When I spoke to [Service Center] representative on 9/12/16
I made it very clear that we were concerned that [Mother]
might pass away at any moment. This is the reason we
established the secure-[e]mail for the rapid transmission of
documents. I specifically stated that we could not rely on
regular mail, as time was of the essence. It is my
recollection that my conversations may have been recorded.
If the conversations were recorded, the Regents could
provide the recordings so that there is no dispute as to
what was said . . . .
“. . . The . . . UBEN form was mailed . . . [on September 16,
which] . . . was a Friday. The [Service Center] . . . is in
Oakland California. The form was not received before
[Mother’s] passing on 9/20/2016, the following Tuesday. If I
had received it on the 20th, before [Mother] passed, it
would have been signed and fax returned that same day.
[¶] . . . [¶]
“. . . I am the person who caused the fax to be sent on
September 13, 2016. I sent the fax, from a FedEx
office . . . .”
In her declaration, Manderson-Saleh reiterated she understood the
Service Center would deliver “all necessary forms . . . via the secure
email . . . because of the urgency of the situation and that regular mail would
not be used to deliver important time sensitive documents to us.”
G. Court’s Ruling
After considering the parties’ briefs and the submitted materials, the
court denied the writ petition, and issued a written order explaining its
decision. The court first granted the Regents’ motion for judicial notice of the
proffered Plan regulations, sections of the Plan document, excerpts from the
Handbook, and an excerpt from the Plan Description. The court then
sustained the Regents’ objection to Manderson-Saleh’s evidence that was
18
beyond the Regents’ administrative record, noting Manderson-Saleh could
have submitted the Election Worksheet fax in the administrative
proceedings, and, in any event, this evidence would not change its legal
conclusion.
On the merits, the court found the Regents acted within its authority in
interpreting Plan Regulation 12.03 to mean it must receive a signed UBEN
161 Election form before a Plan member’s death for the contingent
beneficiary election to be effective, reasoning that an administrative agency
has “ ‘considerable deference’ ” in construing its own regulations. The court
said that “even if it had . . . considered” the faxed Election Worksheet, the
worksheet “would not satisfy this condition because it was not a signed
form . . . as described in the Retirement Handbook.” The court found the
“Regents ha[s] a compelling reason to strictly follow [its] own regulations,”
noting it “employ[s] over 75,000 employees across California,
and . . . mak[ing] an exception here . . . would undermine the regulations
which exist for predictability and to benefit all plan participants.”
The court also rejected Manderson-Saleh’s argument that she was
entitled to rely on representations made by Service Center representatives
under the equitable estoppel doctrine, stating:
“[Manderson-Saleh] does not know the identity of the
representative that Mr. Arellano spoke with on the phone
who made the alleged misrepresentation that nothing more
was needed to designate the contingent annuitant.
However, [the Regents] provides multiple examples of
instances where [Manderson-Saleh] was put on notice as to
the requirement of the signed UBEN 161 form. Indeed, the
mailed September 16 letter enclosing the UBEN 161 form
states on its face that it is the ‘final retirement election
document’ for review and signature. [Manderson-Saleh]
has not proven that [the Regents] intended that their
19
conduct should be acted upon, or acted so that [she] had a
right to believe it was so intended.”
The court entered judgment in the Regents’ favor. The judgment
included the court’s rulings sustaining the demurrer as to the breach of
contract claim without leave to amend, and finding against Manderson-Saleh
on her mandate petition.
DISCUSSION
I. Writ Petition
A. General Principles and Review Standards
The parties agree Manderson-Saleh’s writ petition was properly
brought under section 1085, which is used to review administrative decisions
that do not meet the requirements for review under section 1094.5. (See
Martis Camp Community Association v. County of Placer (2020) 53
Cal.App.5th 569, 593-594 (Martis Camp); Bunnett v. Regents of University of
California (1995) 35 Cal.App.4th 843, 848 (Bunnett).) One of the
requirements for review under section 1094.5 is that “a hearing is required to
be given.” (§ 1094.5, subd. (a).) The parties agree that a hearing was not
required to be given within the meaning of section 1094.5.
Mandamus under section 1085 is used to compel a ministerial duty or
to correct an abuse of discretion. (American Board of Cosmetic Surgery v.
Medical Board of California (2008) 162 Cal.App.4th 534, 547 (American
Board).) To establish entitlement to relief, the moving party must
demonstrate the agency’s “action was arbitrary, capricious or entirely
without evidentiary support, [and/or that] it failed to conform to procedures
required by law.” (People for Ethical Operation of Prosecutors and Law
Enforcement v. Spitzer (2020) 53 Cal.App.5th 391, 407 (Ethical Operation);
see Association of Irritated Residents v. San Joaquin Valley Unified Air
Pollution Control Dist. (2008) 168 Cal.App.4th 535, 542 (Irritated Residents).)
20
The trial court conducts a highly deferential review on these issues. (Martis
Camp, supra, 53 Cal.App.5th at p. 594.) It may not substitute its judgment
for that of the agency or force the agency to exercise its discretion in a certain
way. (Ibid.; McGill v. Regents of University of California (1996) 44
Cal.App.4th 1776, 1786 (McGill).)
But a mandate “ ‘will lie to correct abuses of discretion.’ ” (Ethical
Operation, supra, 53 Cal.App.5th at p. 407; Helena F. v. West Contra Costa
Unified School Dist. (1996) 49 Cal.App.4th 1793, 1799.) An abuse of
discretion occurs if an agency did not apply or properly interpret the
governing law or consider all relevant factors, or if there was no rational
connection between the relevant factors, the choice made, and the purposes of
the enabling statute or regulation. (California Hotel & Motel Assn. v.
Industrial Welfare Com. (1979) 25 Cal.3d 200, 212; American Board, supra,
162 Cal.App.4th at pp. 547-548.)
Under section 1085 and the Regents’ internal rules, the trial court was
required to apply a substantial evidence test to the Plan Administrator’s
factual findings.6 (Martis Camp, supra, 53 Cal.App.5th at pp. 593, 596;
McGill, supra, 44 Cal.App.4th at p. 1786; Bunnett, supra, 35 Cal.App.4th at
p. 849; Stone v. Regents of University of California (1999) 77 Cal.App.4th 736,
745.) We assess the court’s factual findings under the substantial evidence
standard, but exercise independent judgment on legal issues. (Rivero v. Lake
County Bd. of Supervisors (2014) 232 Cal.App.4th 1187, 1193-1194; Klajic v.
6 In the court below, Manderson-Saleh argued the trial court was
required to reweigh the evidence and apply its own independent review in
determining the foundational facts. On appeal, Manderson-Saleh does not
reassert the independent review standard or suggest error on this issue. (See
Do v. Regents of University of California (2013) 216 Cal.App.4th 1474, 1483-
1489 (Do).)
21
Castaic Lake Water Agency (2001) 90 Cal.App.4th 987, 996-997.) Legal issues
include the interpretation of the governing statute or regulation and whether
the agency took into account the relevant factors and acted “consistent with
applicable law.” (Associated Builders & Contractors, Inc. v. San Francisco
Airports Com. (1999) 21 Cal.4th 352, 361; Shapell Industries, Inc. v.
Governing Board (1991) 1 Cal.App.4th 218, 233 [“[i]n a mandamus
proceeding the ultimate question, whether the agency’s action was arbitrary
or capricious, is a question of law”]; see Martis Camp, at p. 596; Irritated
Residents, supra, 168 Cal.App.4th at pp. 543-549; San Diegans for Open
Government v. City of San Diego (2016) 245 Cal.App.4th 736, 740-741.)
B. Evidentiary Record
Before applying these mandamus principles, we consider the Regents’
objection to Manderson-Saleh’s proffered declarations and the faxed
September 13 Election Worksheet form. As discussed, we conclude this
evidence was admissible to explain the context of the parties’ communications
and course of actions. Because we do not reach the estoppel issues, we do not
consider whether the evidence would be relevant on those matters.
1. Legal Principles
Generally, on a section 1094.5 review after an administrative hearing,
the court is limited to the evidence presented in the administrative
proceedings unless the evidence was unavailable at the time of the hearing or
improperly excluded from the record. (See Metropolitan Water District of
Southern California v. Winograd (2018) 24 Cal.App.5th 881, 897; see also
Golden Door Properties, LLC v. Superior Court (2020) 53 Cal.App.5th 733,
766, fn. 22.)
But a different standard applies to a section 1085 review of a quasi-
judicial administrative decision. (Western States, supra, 9 Cal.4th at pp. 568-
22
569, 575-576.) The general rule is that parties can introduce evidence outside
the administrative record. (Id. at p. 576; Asimow et al., Cal. Practice Guide:
Administrative Law (The Rutter Group 2020) ¶20:65.) This rule reflects the
notion that in these types of proceedings, there will often not be a fully
developed administrative record or a formal process for receiving evidence.
(Western States, at pp. 575-576; see California Oak Foundation v. Regents of
University of California (2010) 188 Cal.App.4th 227, 255 [“[a]dministrative
actions that do not involve public hearings . . . are generally considered
‘informal’ ”].)
In Western States, the California Supreme Court addressed whether
this general rule should apply when a plaintiff brings a section 1085 writ
petition to challenge a quasi-legislative administrative decision (a CEQA
ruling), rather than a quasi-judicial administrative decision. (Western States,
supra, 9 Cal.4th at pp. 575-576.) The court concluded such an extension was
not warranted. (Ibid.) The court held “extra-record evidence is generally not
admissible in [section 1085] actions challenging quasi-legislative
administrative decisions . . . . However, we will continue to allow admission
of extra-record evidence in [section 1085] mandamus actions challenging
ministerial or informal administrative actions if the facts are in dispute.” (Id.
at p. 576, italics added.)
The high court recognized, however, that with respect to its rule
prohibiting evidence in section 1085 mandate actions challenging a quasi-
legislative decision, there may be exceptions “under unusual circumstances or
for very limited purposes,” including “ ‘for background information . . . or for
the limited purposes of ascertaining whether the agency considered all the
relevant factors or fully explicated its course of conduct or grounds of
decision.’ ” (Western States, supra, 9 Cal.4th at pp. 578-579; see Santa
23
Clarita Organization for Planning & Environment v. Castaic Lake Water
Agency (2016) 1 Cal.App.5th 1084, 1103; Outfitter Properties, LLC v. Wildlife
Conservation Bd. (2012) 207 Cal.App.4th 237, 251.) But the court made clear
these exceptions do not apply when the evidence is submitted “merely to
contradict the evidence the administrative agency relied on in making a
quasi-legislative decision or to raise a question regarding the wisdom of that
decision.” (Western States, at p. 579.)
2. Analysis
Manderson-Saleh is challenging a quasi-judicial administrative
determination resulting from an informal decisionmaking process rather
than a traditional hearing. Thus, under Western States, she was permitted to
submit additional evidence to support her contention the Regents abused its
discretion in considering her claim. Although the applicable rules permitted
Manderson-Saleh to submit evidence, this procedure—an informal review by
the Plan Administrator—was not the type of proceeding at which a party is
expected to submit a full evidentiary record. Under the rules, the Plan
Administrator had no obligation to identify the facts upon which he was
relying before making his decision or to provide Manderson-Saleh with an
opportunity to rebut any such facts. Further, Manderson-Saleh could
reasonably have expected that the Plan Administrator would have access to
much of the information provided in her declarations, including her contacts
with the Service Center representatives and the faxed Election Worksheet
form (the Regents admits it received the worksheet before Mother’s death,
but for unspecified reasons it was not part of the administrative record or
attached to Ricks’s declaration).
In arguing the court properly excluded this evidence, the Regents relies
on Cinema West, LLC v. Baker (2017) 13 Cal.App.5th 194 and Golden Drugs
24
Co., Inc. v. Maxwell-Jolly (2009) 179 Cal.App.4th 1455 (Golden Drugs).
Cinema West is inapposite because the petitioner was challenging a “ ‘quasi-
legislative’ ” decision by an agency director (Cinema West, at p. 206), and thus
was squarely governed by Western States’s holding.
Golden Drugs arose from a section 1085 proceeding, but is materially
distinguishable because in that case the administrative hearing (pertaining
to an agency revoking a pharmacist’s license) was more extensive (although
similarly “on paper”) and the petitioner’s new evidence included declarations
that directly contradicted the agency’s factual findings. (Golden Drugs,
supra, 179 Cal.App.4th at pp. 1460-1465, 1467-1470.) Here, the extra-record
evidence did not contradict or seek to rebut the Regents’ dispositive finding
that the UBEN 161 Election form was received after Mother’s death.
Manderson-Saleh conceded this fact. Rather, the evidence was relevant to
show the nature of the communications between the Service Center and
Manderson-Saleh, and to explain the background and context of those
communications.
These facts were admissible under Western States because the facts
were helpful to understand whether the Regents considered all relevant
factors, correctly applied the rules (including the substantial compliance
rule), and had in fact received information (the Election Worksheet form) that
was not contained in the administrative record. The Regents essentially
acknowledged the relevance of the course-of-conduct information by
submitting its own extra-record evidence (Ricks’s declaration) explaining the
chronology of the relevant events, and by relying on his declaration to
support its arguments.
On this record, Manderson-Saleh’s proffered declarations and the
attached September 13 fax were admissible to explain the course of conduct
25
between the Service Center and Manderson-Saleh, and whether the Plan
Administrator considered all relevant information in reaching his conclusion.
(See Western States, supra, 9 Cal.4th at pp. 578-579.) The court’s refusal to
consider this evidence, however, does not alone constitute prejudicial error
because the court said it would reach the same conclusions even if it had
considered the evidence. Thus, we must consider the issues on their merits.
C. Analysis
1. Plan Regulation 12.03
Manderson-Saleh contends the trial court and the Regents erred in
interpreting Plan Regulation 12.03 to mean a mandatory precondition to
obtaining contingent annuitant benefits is that the Regents receive a UBEN
161 Election form before the member’s death.
Plan Regulation 12.03 provides:
“Every election for a Plan benefit, every election for a
benefit payment option, and every designation of a
Beneficiary or Contingent Annuitant which a Member is
required or permitted to make shall be in accordance with
procedures established and approved by the Plan
Administrator. Such election or designation shall become
effective only if the benefit election form and/or the
designation of Beneficiary or Contingent Annuitant is
received by the Plan Administrator prior to the Member’s
date of death and is subsequently approved as complete by
the Plan Administrator.” (Italics added.)
The Regents interpret this rule to mean a beneficiary designation is
enforceable only if it receives a signed UBEN 161 Election form identifying
the contingent beneficiary before the member’s death.
Manderson-Saleh challenges this interpretation. She notes that the
rule does not refer to a specific form or a required signature, and emphasizes
the undisputed evidence the Regents had actual knowledge before Mother’s
death that Manderson-Saleh was the designated contingent annuitant based
26
on the Regents’ acknowledged receipt of the Election Worksheet on
September 14.7 She also argues the portion of the sentence referring to both
the “benefit election form and/or the designation of Beneficiary or
Contingent Annuitant” is ambiguous and can be reasonably read to mean the
contingent-annuitant “[d]esignation” need not be on the “benefit election
form” and can be communicated separately from the form. (Italics added.)
Generally, the interpretation of a regulation “ ‘is . . . a question of law’
and is . . . subject to . . . de novo review.” (Department of Industrial Relations
v. Occupational Safety & Health Appeals Bd. (2018) 26 Cal.App.5th 93, 100.)
However, a reviewing court accords an administrative agency’s interpretation
of its own regulation great weight and deference, unless the interpretation is
unauthorized or clearly erroneous. (Lusardi Construction Co. v. California
Occupational Safety & Health Appeals Bd. (1991) 1 Cal.App.4th 639, 645;
Aguilar v. Association for Retarded Citizens (1991) 234 Cal.App.3d 21, 28.)
This rule recognizes that an “agency has developed a level of ‘expertise’ in
light of its familiarity with the legal and regulatory issues.” (See Berman v.
Regents of University of California (2014) 229 Cal.App.4th 1265, 1272.)
Courts are particularly deferential of the Regents’ determinations because of
its role as a state constitutional entity. (Ibid.; see Miklosy v. Regents of
University of California (2008) 44 Cal.4th 876, 889-890.) Thus, although we
are not bound by the Regents’ interpretation, we give it great weight under
the circumstances. (See Yamaha Corp. of America v. State Bd. of
7 This evidence consisted of Ricks’ declaration that the Regents received
the completed Election Worksheet form on September 14, and the fact that
the Service Center sent Manderson-Saleh the UBEN 161 Election form on
September 16 that contained her name as the contingent beneficiary.
27
Equalization (1998) 19 Cal.4th 1, 12; Byrd v. California State Personnel
Board (2019) 36 Cal.App.5th 899, 907-908.)
Under these principles, we find the Regents’ interpretation to be
reasonable, particularly when construing the requirement in light of the first
sentence of Regulation 12.03, which provides that “Every election for a Plan
benefit, every election for a benefit payment option, and every designation of
a Beneficiary or Contingent Annuitant . . . shall be in accordance with
procedures established and approved by the Plan Administrator.” Those
procedures as set forth in the Retirement Handbook and various forms
indicate that the member must make a final election on a signed form before
the election takes effect. The interpretation is also consistent with the
Regents’ understandable intent to provide certainty that a member’s earned
benefits will not be improperly diverted to an unintended third party and the
Regents’ desire to “hold someone accountable for the accuracy of the
information,” particularly because changes can be made until the time the
final form is signed.
2. Substantial Compliance Doctrine
Our agreement with the Regents regarding the literal meaning of Rule
12.03 does not end the analysis. The courts have long held that the
substantial compliance doctrine applies to excuse strict compliance with
requirements pertaining to beneficiary designations for public employee
pensions. (Watenpaugh v. State Teachers’ Retirement (1959) 51 Cal.2d 675,
681-682 (Watenpaugh); see Coughlin v. Board of Administration (1984) 152
Cal.App.3d 70, 72-75 (Coughlin); Wicktor v. County of Los Angeles (1960) 177
28
Cal.App.2d 390, 394, 397-407 (Wicktor); Lyles v. Teachers Retirement Board
(1963) 219 Cal.App.2d 523 (Lyles).)8
This rule was first articulated in Watenpaugh, where a teacher had
filed a pension beneficiary designation naming his former wife.
(Watenpaugh, supra, 51 Cal.2d at p. 677.) About 11 years later he married
the plaintiff, and filled out and signed a new form naming her as his
beneficiary. (Id. at pp. 677-678.) However, he did not file the form with the
retirement system and instead kept it at home. (Id. at p. 678.) After he died,
the plaintiff discovered the form, and gave to it an attorney who filed it with
the retirement system. (Ibid.) The plaintiff’s stepchildren argued the form
was ineffective because the teacher did not comply with the rule that a
member who wishes to change or nominate a beneficiary must do so “ ‘by a
written instrument duly executed and filed with the board.’ ” (Id. at p. 680,
italics added.)
The California Supreme Court recognized that the teacher did not
strictly comply with the filing rule, but also noted that the governing statutes
did not “expressly preclude a filing of the designation form after the
member’s death . . . .” (Watenpaugh, supra, 51 Cal.2d at pp. 680-681.) The
court additionally held that even assuming the teacher was required to file
the beneficiary change form before his death, he substantially complied with
this requirement by manifesting his intent to change the beneficiary and
8 Although Manderson-Saleh did not explicitly raise the substantial
compliance doctrine in her appellate briefs, we provided the parties the
opportunity to address this issue in supplemental briefing. Because the
doctrine raises a purely legal issue in this case (whether the Regents applied
applicable law), we can properly consider the issue on appeal after
considering the parties’ supplemental briefing.
29
taking steps to do so, and such substantial compliance should be given effect.
(Id. at pp. 681-682.) The court reasoned:
“The purpose of the provisions requiring the filing of a
change of beneficiary is largely to protect the retirement
system against the possibility of being called upon to pay
twice. A second purpose, no doubt, is to provide a method
of ascertaining the desire and intent of the member with
reference to the payment of death benefits. The statute
should be construed to give effect to an executed designation
when there is a clear manifestation of intent by the member
to make the change and the designation is filed promptly
after death so as to prevent any prejudice to the retirement
system.
“Our interpretation is in accord with the decisions
involving War Risk or National Service Life Insurance
issued to men in military service, where the purpose of the
provisions of the statutes and regulations requiring the
filing of a change of beneficiary is also largely to protect the
government against being called upon to pay twice.
[Citation.] It has been held that literal compliance with
such regulations is not necessary to obtain a change of
beneficiary where it is established that there was an
intention to change and there was some affirmative action
evidencing the exercise of the right to change. [Citations.]
“It is true that in ordinary life insurance contracts the
general rule is that there must be strict compliance with
the method prescribed by the policy for change of
beneficiary. [Citations.] However, the provisions for death
benefits under retirement systems differ in important
respects from ordinary life insurance policies. For example,
the retirement benefits are completely statutory in origin,
membership in the retirement system is compulsory, and
the requirements for change of beneficiary are not subject
to negotiation. The cases dealing with ordinary life
insurance contracts are therefore not controlling.” (Id. at
p. 681, italics added.)
30
One year later, a Court of Appeal applied Watenpaugh’s substantial
compliance rule to uphold a public employee’s beneficiary designation even
though the required written designation form was never received by the
retirement system. (Wicktor, supra, 177 Cal.App.2d at pp. 394, 397-407.) In
that case, the employee (a member of a county retirement system) had
originally designated his sister as beneficiary. (Id. at pp. 393, 401-402.) He
then married and informed his wife he intended to make her the beneficiary,
and told others he had prepared, signed, and mailed a card to the retirement
system office. (Id. at pp. 393-394, 401-404.) However, that card never
reached the office, or the office lost or misplaced it.
Relying on Watenpaugh’s reasoning that substantial compliance is
sufficient for a beneficiary designation where “it is established that there was
an intention to change and there was some affirmative action evidencing the
exercise of the right to change,” the Wicktor court found these elements were
met. (Wicktor, supra, 177 Cal.App.2d at pp. 397-398.) The court noted the
evidence “abundantly established the existence of an intention of Dr. Wicktor
to make his wife the beneficiary of his retirement death benefit,” and he took
steps to do so, and there was no possibility the retirement system would be
“called upon to pay twice,” particularly because the sister had acknowledged
her husband’s widow as the rightful beneficiary. (Id. at p. 404; see also Lyles,
supra, 219 Cal.App.2d at p. 530 [holding teacher who made her beneficiary
designation known through a statement in her will (not filed with the
retirement system before her death) sufficiently complied with the retirement
system’s notice requirements9].)
9 The Lyles court also held the retirement system’s rule that beneficiary
designations must be received before the member’s death was invalid because
it went beyond the governing law in the Education Code. (Lyles, supra, 219
Cal.App.2d at p. 530.)
31
In Coughlin, the court applied the Watenpaugh substantial compliance
rule in a slightly different setting, but its observations are instructive.
(Coughlin, supra, 152 Cal.App.3d 70.) During divorce proceedings (but before
the divorce was final), a husband (a state employee) filed with the state
retirement system (PERS) his designation of his mother as beneficiary of his
pension death benefits. (Id. at p. 71.) The governing statutes automatically
revoked all beneficiary designations upon a final divorce. (Id. at p. 72.)
When the husband died after the final divorce, the question was whether his
mother was entitled to prevail on her claim that she was the intended
beneficiary, despite the statutory beneficiary revocation. Over PERS’s
objection, the trial court declined to apply the governing statute, finding it
went against the clear manifestation of the husband’s intent to benefit his
mother. (Id. at pp. 72-75.)
Relying on Watenpaugh, the Court of Appeal affirmed, reasoning that
the statute—which was intended to protect the inattentive employee after a
divorce—should be liberally construed to give effect to the husband’s intent.
(Coughlin, supra, 152 Cal.App.3d at pp. 72-75.) The court explained that
Watenpaugh and Wicktor reflect a “rule of liberal construction to excuse strict
compliance” with statutes pertaining to pension beneficiary designation filing
requirements, and rejected PERS’s argument that the statutes must be
strictly applied because one purpose of the enactments “was to provide
certainty for the identity of beneficiaries.” (Coughlin, at pp. 73, 74.) PERS
argued that the statutes revoking all prior designations “were designed to
avoid judicial inquiries into the intent of employees upon changes in their
family composition,” and maintained that “the legislative desire for certainty
will be subverted if [the court] hold[s] employees to anything less than strict
compliance with the [statutory] filing provisions.” (Id. at p. 74.) The
32
Coughlin court found these arguments unavailing, noting there was no
showing the Legislature intended to abrogate the Watenpaugh rule. (Ibid.)
The court observed that the husband “manifested a clear intention to name a
beneficiary of his own choosing in response to his change of family
composition . . . . We think his situation is entirely analogous to that in
Watenpaugh and Wicktor, where the employees’ intents were clear, they
substantially complied with the filing provisions, and their only fault was to
fail to actually file the designations they had executed. . . . Under these
circumstances, Watenpaugh mandates that his designation of [the mother] be
given effect.” (Id. at p. 75.) The court also noted that “no prejudice to PERS
will be suffered by this result. [The mother] disputed the initial PERS
determination before any benefits were paid out. Thus PERS was not placed
in the position of having to pay twice, a position which, PERS contends and
we agree, should be avoided.” (Ibid.)
In several other decisions, the courts recognized the Watenpaugh
substantial compliance rule but declined to apply it where there was
insufficient evidence that the public employee had intended to name a
particular beneficiary for his pension and had taken steps to do so. (See, e.g.,
Hudson v. Posey (1967) 255 Cal.App.2d 89, 91-95 [finding an oral statement
of future intent insufficient]; Gallaher v. State Teachers’ Retirement System
(1965) 237 Cal.App.2d 510, 517-519 [no steps taken to effectuate intent]; see
also BankAmerica Pension Plan v. McMath (9th Cir. 2000) 206 F.3d 821, 830-
831 [recognizing Watenpaugh’s substantial compliance rule applicable to
pension plans, but finding 401(k) plan at issue more closely resembled life
insurance rather than a pension plan].)
The Watenpaugh rule is consistent with the more generally applied
substantial compliance doctrine which is “commonly understood to mean
33
‘compliance with the substantial or essential requirements of something (as a
statute or contract) that satisfies its purpose or objective even though its
formal requirements are not complied with.’ ” (In re A.V. (2017) 11
Cal.App.5th 697, 709.) “ ‘Where there is compliance as to all matters of
substance[,] technical deviations are not to be given the stature of
noncompliance. [Citation.] Substance prevails over form.’ ” (St. Mary v.
Superior Court (2014) 223 Cal.App.4th 762, 779; accord San Diegans for Open
Government v. City of Oceanside (2016) 4 Cal.App.5th 637, 647 (San
Diegans).)
In this case as in Watenpaugh, Wicktor, Lyles, and Coughlin, it is
undisputed Mother intended to name her daughter as her contingent
beneficiary, and she made this intent known to the Regents in writing before
her death by her daughter faxing the information on the Election Worksheet
form on September 13. The Regents admitted receiving this information and
specifically included this beneficiary designation on the forms mailed to
Mother two or three days later on September 16. Although the September 13
information was provided by Manderson-Saleh (because Mother had become
incapacitated by that time), the Regents do not challenge that Manderson-
Saleh had a valid power of attorney to act on Mother’s behalf and that
Manderson-Saleh’s actions would have been binding if she had signed and
returned the form on or before September 20.
These facts (which are undisputed) show that Mother (who was
unmarried) had the clear intent to name her only child as her contingent
annuitant and took specific affirmative steps to accomplish this result. As in
Wicktor, there were no facts showing a possibility of a contrary claim or the
potential for double payment or that Mother would change her mind before
her death. Further, while Mother could have been more diligent by starting
34
the retirement and election process earlier, her failure to do so was not a
complete bar to the substantial compliance rule under the circumstances.
(See Watenpaugh, supra, 51 Cal.2d at pp. 681-682.) Additionally, the Service
Center bore some responsibility as it was aware time was of the essence but
nonetheless mailed the crucial document on September 16 (rather than
emailing it on the secure email that had been established). The totality of
these facts and circumstances trigger the application of the substantial
compliance doctrine under Watenpaugh.
This case presents an even stronger case for application of the
substantial compliance rule than in Watenpaugh, Wicktor, and Coughlin
because the Regents’ strict enforcement of the rule would mean Mother’s
earned pension benefits would result in a complete forfeiture (rather than
having the benefits be given to a different claimed beneficiary). Such
forfeiture would undermine the strong public policies in favor of recognizing
an employee’s pension rights and rights to name a contingent annuitant
beneficiary. (See O’Dea v. Cook (1917) 176 Cal. 659, 662 (O’Dea) [“firmly
established principle of judicial construction that pension statutes serving a
beneficial purpose are to be liberally construed”]; Frazier v. Tulare County
Bd. of Retirement (1974) 42 Cal.App.3d 1046, 1049 (Frazier) [“[P]ension
benefits which accrue to a third party upon the death of a public employee
constitute an integral part of the employee’s compensation for services
rendered.”].) The right to designate a beneficiary in the event of an
employee’s death can be as important to the employee, if not more important,
than the right to receive retirement benefits during the employee’s lifetime.
(Frazier, at p. 1051.)
In its supplemental briefing, the Regents argues the Watenpaugh and
Wicktor decisions are distinguishable because in those cases “the courts found
35
evidence in the record of the decedent’s intent to change beneficiaries prior to
death.” However, in this case, Mother’s intent was similarly clear. The
Regents does not challenge that Mother was essentially incapacitated with
terminal cancer by the time she officially retired and at this time Manderson-
Saleh had the full authority to act on Mother’s behalf (through the notarized
power of attorney), including to designate the contingent beneficiary.
Manderson-Saleh did so in the Election Worksheet that the Regents admit
receiving six days before Mother’s death. On this record, this case is virtually
identical to Watenpaugh and Wicktor with respect to the decedent’s
manifested intent to designate the person claiming beneficiary status
through the substantial compliance doctrine.
The Regents alternatively argues the substantial compliance doctrine
cannot as a matter of law apply here because (1) its regulations have the
“force and effect of a statute”; and (2) the substantial compliance doctrine
does not apply when a “statute’s requirements are mandatory, instead of
merely directory.” These arguments are unavailing.
First, we agree that policies established by the Regents “ ‘enjoy a status
equivalent to that of state statutes.’ ” (Campbell v. Regents of University of
California (2005) 35 Cal.4th 311, 320.) But the substantial compliance
doctrine can apply to statutes, as well as other mandates. (See San Diegans,
supra, 4 Cal.App.5th at p. 647 [“ ‘ “Unless the intent of a statute can only be
served by demanding strict compliance with its terms, substantial compliance
is the governing test.” ’ ”].) Additionally, although we must substantially
defer to the Regents’ determinations, the courts have long held these
determinations remain subject to judicial review for legal correctness and to
ensure discretion is exercised within permissible bounds. (See Do, supra, 216
Cal.App.4th at p. 1488.)
36
Second, with respect to the mandatory versus directory distinction, this
rule does not preclude the substantial compliance doctrine here. Generally,
the “substantial compliance [doctrine] does not apply at all when a statute’s
requirements are mandatory, instead of merely directory.” (Troyk v. Farmers
Group, Inc. (2009) 171 Cal.App.4th 1305, 1333, italics omitted.) But the
distinction between mandatory and directory does not depend on the literal
wording of the statute. Instead, “[t]he paramount consideration is the
objective of the statute.” (Downtown Palo Alto Com. for Fair Assessment v.
City Council (1986) 180 Cal.App.3d 384, 394.) Thus, even when a statute
uses “mandatory” terms, substantial compliance with statutory directives
will suffice if the purpose of the statute is satisfied. (Id. at p. 395; accord
People v. McGee (1977) 19 Cal.3d 948, 959; Cal-Air Conditioning, Inc.
v. Auburn Union School Dist. (1993) 21 Cal.App.4th 655, 670 (Cal-Air); see
Robertson v. Health Net of California (2005) 132 Cal.App.4th 1419, 1430.)
Under these principles, in evaluating whether a statutory mandate is
to be accorded mandatory or directory effect, courts focus on its purpose or
function. (Cal-Air, supra, 21 Cal.App.4th at p. 673.) If the element is
essential to promote the statutory design, it is “mandatory” and less than full
compliance is not acceptable. (Ibid.) If not, it is “directory.” (Ibid.) “If a
statutory directive does not go to ‘ “the essence” of the particular object
sought to be obtained, or the purpose to be accomplished’ and a ‘departure
from the statute will cause no injury to any person affected by it,’ the
provision will be deemed directory.” (Ibid.)
In this case, a core purpose underlying Plan Regulation 12.03’s
requirement of a signed UBEN 161 Election form received before death is to
ensure the employee’s final intent is realized as to his or her desired
beneficiary. This purpose is achieved by enforcing an employee’s beneficiary
37
designation communicated to the Service Center in an equivalent written
form before the employee’s death, under circumstances (as here) where there
is no dispute that the written designation reflected the employee’s final
intent. In both scenarios, the employee’s actual communicated intent is
enforced.
The Regents argues that the other important administrative policies
underlying Plan Regulation 12.03 (ensuring “consistent” treatment of all
employees, creating clear rules to avoid disputes among potential
beneficiaries, and reducing the possibility that it will be subject to multiple
claims) would be undermined by permitting less than strict compliance with
Plan Regulation 12.03, and thus the UBEN 161 Election form rule is
mandatory rather than directory. However, the Watenpaugh and Coughlin
courts rejected similar arguments, holding that administrative reasons
underlying the strict rule do not take precedence over the employee’s earned
right to designate a beneficiary where, as here, the employee’s intent was
clear and the employee affirmatively took all reasonable steps to do so.
(Watenpaugh, supra, 51 Cal.2d at pp. 680-682; Coughlin, supra, 152
Cal.App.3d at pp. 74-75.) This is particularly true in this case in which strict
enforcement of the rule would result in a complete forfeiture. (See Irwin v.
Irwin (1977) 69 Cal.App.3d 317, 322 [“it is basic that the law abhors
forfeitures and that statutes or rules must be . . . construed to avoid them
whenever possible”]; see also O'Dea, supra, 176 Cal. at p. 662.)
The Regents argues that “[i]f the Court were to apply substantial
compliance here, anyone could claim an entitlement to a deceased relative’s
benefits without having any evidence of the decedent’s intent to elect a
beneficiary.” This is obviously incorrect. The Regents received written
information before Mother’s death of her intent to name her only daughter as
38
beneficiary. Her intent was known, despite the absence of a signature on the
UBEN 161 Election final form. In the scenario envisioned by the Regents—
where a relative seeks to claim beneficiary status “without having any
evidence of the decedent’s intent” or even with only equivocal evidence of the
decedent’s intent—there would be no substantial compliance with the
governing regulations because the core purpose of the procedural rule would
be defeated.
We find unhelpful the Regents’ heavy reliance on City of Long Beach v.
Allen (1956) 143 Cal.App.2d 41. There, an ordinance provided that the
children of a law enforcement officer who died were entitled to a pension
benefit based on his service time. (Id. at pp. 42-43.) The trial court
nonetheless found the children were entitled to a higher benefit because he
had been only five days short of the higher benefit level. (Id. at p. 43.) The
Court of Appeal reversed, holding the substantial compliance doctrine was
inapplicable to increase the monthly benefit. (Id. at pp. 43-46.) The court
reasoned that the children were entitled only to the pension benefit to which
their father was entitled when he died. (Ibid.) The court emphasized the
“provisions of the salary ordinance are clear and no question of forfeiture is
involved. The children have been receiving a pension based on [their father’s
correct] salary scale for a number of years.” (Id. at pp. 44-45.)
This case is different. The issue is not whether Manderson-Saleh is
entitled to something more than the applicable regulation permits. Rather,
she is seeking to enforce her Mother’s clear intent to name her as a
beneficiary to receive her deferred compensation monthly benefits, despite
that the administrative rules were not strictly followed.
People v. Toluca Lake Collective, Inc. (2017) 15 Cal.App.5th Supp. 18,
cited by the Regents, is likewise inapposite. In that case, the appellate
39
division of a superior court declined to recognize substantial compliance in a
case involving a misdemeanor complaint against a medical marijuana
business that did not obey an ordinance requiring that it register with the
City Clerk in order to retain immunity from prosecution as an illegal
business. (Id. at pp. 25-28.) The obligations of a marijuana dispensary are
very different from the issues presented here involving an identified
beneficiary of a public pension.
Finally, we find untenable the Regents’ argument that Manderson-
Saleh’s claim fails because she did not meet the second condition in Plan
Regulation 12.03 requiring that the beneficiary designation be “subsequently
approved as complete by the Plan Administrator.” Interpreting this condition
to mean the Regents has unfettered discretion to decide whether to approve a
beneficiary designation “as complete” is not reasonable. If, as here, a
claimant proves substantial compliance with the beneficiary-designation
regulation, the Regents cannot reject the designation without a valid reason.
None appears on the record before us.
D. Remedy
We have concluded the Regents erred in failing to apply the substantial
compliance doctrine in considering Manderson-Saleh’s beneficiary claim. The
issue then is the appropriate remedy. Manderson-Saleh argues the
substantial compliance doctrine is generally a question of law and thus a
rehearing is not necessary. (See Black Property Owners Assn. v. City of
Berkeley (1994) 22 Cal.App.4th 974, 980; Buena Vista Gardens Apartments
Assn. v. City of San Diego Planning Dept. (1985) 175 Cal.App.3d 289, 298.)
The Regents counter that we should remand the matter for the Regents to
rehear and reconsider the matter because a factfinder must resolve any
40
underlying factual disputes before the substantial compliance doctrine can be
applied.
We agree a factfinder generally must resolve any disputed factual
issues. But in this case there are no factual disputes relevant to the
substantial compliance doctrine. Specifically, it is undisputed Mother signed
a notarized power of attorney on August 25, 2016; the Regents received this
power of attorney on or about this date; the Regents recognized this power of
attorney was valid and that it provided Manderson-Saleh with the authority
to act on Mother’s behalf, including with respect to all retirement and
pension decisions; by September 14, 2016 the Regents received Mother’s
Election Worksheet identifying Manderson-Saleh as the contingent annuitant
beneficiary with her birthdate and social security number; the Regents
completed a final UBEN 161 Election form based on this worksheet and
specifically identified Manderson-Saleh as the contingent annuitant
beneficiary with her birthdate and social security number; the Regents
mailed (rather than emailed) this final form to Mother on September 16, 2016
knowing that Mother was close to her death and on life support.
Based on this record, Manderson-Saleh satisfied the substantial
compliance doctrine and there are no relevant factual disputes on this issue.
Thus, there is no legal basis for the Regents to conduct a new hearing on
Manderson-Saleh’s contingent-annuity claim. We shall therefore remand the
case to the superior court with directions to grant Manderson-Saleh’s writ of
mandate petition and remand the matter to the Regents with directions that
the Regents grant Manderson-Saleh’s contingent-annuitant claim under the
substantial compliance doctrine.
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II. Breach of Contract Cause of Action
A. Demurrer Standards
“ ‘In reviewing an order sustaining a demurrer, we examine the
operative complaint de novo to determine whether it alleges facts sufficient to
state a cause of action under any legal theory.’ ” (Robertson v. Saadat (2020)
48 Cal.App.5th 630, 639.) “We ‘adopt[ ] a liberal construction of the pleading
and draw[ ] all reasonable inferences in favor of the asserted claims.’
[Citation.] We are not bound by the trial court’s reasoning and may affirm
the judgment if correct on any theory.” (Ibid.) “We review the trial court’s
refusal to grant leave to amend under the abuse of discretion standard.”
(Villafana v. County of San Diego (2020) 57 Cal.App.5th 1012, 1017.)
B. Analysis
The court properly sustained the demurrer without leave to amend on
the breach of contract action because the writ of mandate petition, and not a
breach of contract cause of action, is the proper vehicle for challenging the
Regents’ refusal to recognize Manderson-Saleh as Mother’s contingent
annuitant. (Bunnett, supra, 35 Cal.App.4th at pp. 847-848; see Professional
Engineers in California Government v. Brown (2014) 229 Cal.App.4th 861,
875-876; DeCuir v. County of Los Angeles (1998) 64 Cal.App.4th 75, 80-84;
Asimow et al., Cal. Practice Guide: Administrative Law (The Rutter Group
2020) ¶13:412 [“Mandamus is the correct remedy when the employee seeks to
enforce a statutory right . . . to secure pension or other statutory benefits].)”
Manderson-Saleh argues she was entitled to bring a contract cause of
action because statutory grants of pension rights produce vested contract
rights. The Regents disagrees, stating that public employment is governed
by statute “and not by contract,” and therefore Manderson-Saleh “cannot
state a contract claim to . . . [M]other’s pension benefits.”
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“A public employee’s pension constitutes an element of compensation,
and a vested contractual right to pension benefits accrues upon acceptance of
employment.” (Betts v. Board of Administration of Public Employees’
Retirement System (1978) 21 Cal.3d 859, 863 (Betts); Dickey v. Retirement
Board of San Francisco (1976) 16 Cal.3d 745, 748-749; California Teachers
Assn. v. Cory (1984) 155 Cal.App.3d 494, 506 (Cory).) “[T]he receipt of
pension benefits is granted constitutional protection because the benefits
constitute a portion of the compensation awarded by the government to its
employees, paid not at the time the services are performed but at a later
time,” e.g. as deferred compensation. (Cal Fire Local 2881 v. California
Public Employees’ Retirement System (2019) 6 Cal.5th 965, 985 (Cal Fire)
[recognizing principle but finding right at issue did not concern
constitutionally protected deferred compensation]; see Alameda County
Deputy Sheriff’s Assn. v. Alameda County Employees’ Retirement Assn. (2020)
9 Cal.5th 1032, 1077.)
The Regents argues that even if “[Mother] may have earned some
vested rights in her pension based on her own employment . . . , [Manderson-
Saleh] never earned those benefits” and therefore she “was not vested in any
‘right’ under any ‘contract.’ ” Manderson-Saleh counters that the vested-
contractual rights principle applies when a beneficiary challenges a pension
system’s denial of benefits. (See, e.g., Strumsky v. San Diego County
Employees Retirement Assn. (1974) 11 Cal.3d 28, 31 (Strumsky); Frazier,
supra, 42 Cal.App.3d at p. 1049.)
We need not resolve this dispute because even if we agree that
Manderson-Saleh has some form of vested right (which we do not decide), it
does not follow she has a right to challenge a denial of benefits through a
common law claim for damages. The decisions relied upon by Manderson-
43
Saleh in support of this proposition each arose in the context of a writ of
mandate petition. (See e.g., Betts, supra, 21 Cal.3d at p. 863; Strumsky,
supra, 11 Cal.3d at p. 31; Cory, supra, 155 Cal.App.3d at pp. 505-506; see also
Cal Fire, supra, 6 Cal.5th 965 [mandamus action brought to challenge
elimination of claimed vested contract right].) Manderson-Saleh does not cite
any relevant authority supporting that an employee can properly bring a
contract claim in lieu of a writ of mandate petition in challenging a denial of
pension benefits.
Additionally, even if such a claim could be brought for damages,
generally the judicial exhaustion doctrine would bar that claim. Under this
doctrine, a party is barred from contradicting a fact found by an
administrative tribunal unless it has first successfully challenged the
administrative determination by a writ of mandamus (under sections 1085 or
1094.5, whichever is appropriate under the particular circumstances). (See
Murray v. Alaska Airlines, Inc. (2010) 50 Cal.4th 860, 867.) “Unless the
administrative decision is [successfully] challenged, it binds the parties on
the issues litigated and if those issues are fatal to a civil suit, the plaintiff
cannot state a viable cause of action.” (Knickerbocker v. City of Stockton
(1988) 199 Cal.App.3d 235, 243.)
Although there are exceptions to this doctrine, Manderson-Saleh has
not raised any such exception in her appellate briefing, and therefore she has
forfeited any such argument on appeal.
As to Manderson-Saleh’s contention the court erred in denying her the
opportunity to amend her complaint to assert equitable estoppel and breach
of fiduciary duty claims, Manderson-Saleh has not met her burden to show
she can amend her complaint to state a viable claim. Manderson-Saleh’s
44
fiduciary duty and equitable claims are deficient on the same basis that her
contract claim fails. Her proper remedy was through a mandate petition.
DISPOSITION
We affirm the portion of the judgment sustaining the demurrer without
leave to amend on the contract claim. We reverse the portion of the judgment
denying Manderson-Saleh’s petition for writ of mandate.
We remand the matter to the superior court with directions to (1)
vacate its order denying Manderson-Saleh’s mandate petition; and (2) issue a
new order and judgment granting the petition and issuing a writ directing
the Regents to grant Manderson-Saleh’s contingent-annuitant claim under
the substantial compliance doctrine.
Regents to bear Manderson-Saleh’s costs on appeal.
HALLER, J.
WE CONCUR:
McCONNELL, P. J.
AARON, J.
45