Ramsay v. Retirement Board

2017 UT App 17THE UTAH COURT OF APPEALS
LORI RAMSAY AND DAN SMALLING,
Petitioners,
v.
RETIREMENT BOARD AND KANE COUNTY HUMAN
RESOURCE SPECIAL SERVICE DISTRICT,
Respondents.
Opinion
No. 20150574-CA
Filed January 26, 2017
Original Proceeding in this Court
Brian S. King, Attorney for Petitioners
David B. Hansen and Erin L. Gill, Attorneys for
Respondent Retirement Board
Timothy C. Houpt, Mark D. Tolman, and C. Michael
Judd, Attorneys for Respondent Kane County
Human Resource Special Service District
JUDGE GREGORY K. ORME authored this Opinion, in which JUDGES
J. FREDERIC VOROS JR. and KATE A. TOOMEY concurred.
ORME, Judge:
¶1 Lori Ramsay and Dan Smalling seek judicial review of the
Utah State Retirement Board’s entry of summary judgment in
favor of the Kane County Human Resource Special Service
District, which operates the Kane County Hospital. Ramsay and
Smalling contend that the board erred in granting summary
judgment because the equitable discovery rule tolled the
applicable statute of limitations. We uphold the board’s decision.
Ramsay v. Retirement Board
BACKGROUND1
¶2 In 1993, the special service district, acting as a subdivision
of the state of Utah, established a defined contribution program
for its employees. Specifically, the district established a 401(k)
program and offered to match a certain percentage of its
employees’ contributions to their accounts. Lori Ramsay and
Dan Smalling, two employees of the hospital, enrolled in the
401(k) program in 1994 and 1995 respectively.
¶3 At some point in 2006 or 2007, for reasons not pertinent to
this appeal, the Internal Revenue Service notified some of the
hospital’s employees that it had frozen their 401(k) accounts,
prompting Ramsay to inquire of the Utah Retirement Systems
(URS) about her retirement benefits. In addition to responding to
Ramsay’s inquiry, URS sent Ramsay a questionnaire that it used
to determine a public employer’s eligibility to participate in URS.
Ramsay passed this questionnaire on to the hospital, which
completed it and returned it to URS.
¶4 After receiving the completed questionnaire, URS
informed the hospital that it was required to participate in URS.
At this time, the hospital first learned that its retirement program
did not comply with the Utah State Retirement and Insurance
Benefit Act (the Act). Specifically, the hospital learned that the
Act required public employers who provide a defined
contribution program, like a 401(k), to also provide a defined
benefit program, whereby employees receive pensions upon
retirement. See Utah Code Ann. § 49-13-202(3) (LexisNexis
1. ‚In reviewing a district court’s grant of summary judgment,
we view ‘the facts and all reasonable inferences drawn therefrom
in the light most favorable to the nonmoving party’ and recite
the facts accordingly.‛ Ockey v. Club Jam, 2014 UT App 126, ¶ 2
n.2, 328 P.3d 880 (quoting Orvis v. Johnson, 2008 UT 2, ¶ 6, 177
P.3d 600). We apply the same standard in reviewing a summary
judgment entered in an administrative proceeding.
20150574-CA 2 2017 UT App 17Ramsay v. Retirement Board
2015).2 Although the hospital provided 401(k) benefits for its
employees, it never contributed funds to URS for employee
pensions. As a result, URS demanded that the hospital
retroactively pay contributions to URS on behalf of all of its
employees from 1993, when the hospital first offered the 401(k)
plan, to 2009, when it elected nonparticipation in URS in
accordance with a new statutory provision. See supra note 2. The
hospital refused, and URS filed a Notice of Board Action.
¶5 Meanwhile, Ramsay and Smalling sued URS, the hospital,
and an insurance agency that assisted the hospital in establishing
the 401(k) program, seeking to recover their pension benefits.
Each defendant moved to dismiss, arguing that Ramsay and
Smalling failed to exhaust their administrative remedies by not
pursuing their claims before the board. The district court agreed
and dismissed that case. Afterward, Ramsay and Smalling
intervened in the administrative proceeding pending before the
board, initiated by URS against the hospital.
¶6 In 2013, the hospital filed a motion for summary
judgment in that proceeding, arguing that URS’s claim for
recovery was limited to three years under the applicable statute
of limitations. See Utah Code Ann. § 78B-2-305(4) (LexisNexis
2012). URS, along with Ramsay and Smalling, opposed the
motion, arguing that the limitations period should be tolled
under the equitable discovery rule. The board’s hearing officer
granted the hospital’s motion, concluding that ‚*t+here is no
evidence in the record that the Hospital actively or affirmatively
2. In 2009, the Utah Legislature amended the provision to allow
special service district hospitals to ‚make an election of
nonparticipation as an employer for retirement programs under
this chapter.‛ Utah Code Ann. § 49-13-202(5)(a)(i) (LexisNexis
2015). The hospital immediately elected nonparticipation in URS.
Aside from this amendment, other changes to the relevant
statutes have no bearing on the issues before us, so we otherwise
cite the current codification of the statutes for ease of reference.
20150574-CA 3 2017 UT App 17Ramsay v. Retirement Board
concealed its 401(k) plan from URS. Without such evidence, the
concealment version of the equitable discovery rule does not
apply.‛ Thus, the hearing officer limited the hospital’s liability to
the three years immediately preceding its election of
nonparticipation in URS.
¶7 Following the hearing officer’s summary judgment order,
the hospital settled with all but six of its current and former
employees who had a claim to unpaid pension contributions
arising during the three-year period.3 It then paid contributions
to URS for its employees who did not settle, including Ramsay
and Smalling. Soon after, the board filed a motion to dismiss
‚because all issues in the Board’s Request have been resolved
and the case . . . is moot.‛ The hearing officer granted the
motion.
¶8 With URS’s claims dismissed, the hospital sought
dismissal of Ramsay’s and Smalling’s claims as well. In a motion
for summary judgment, it argued that the claims for
contributions between 2006 and 2009 were moot, because they
had now been paid, and that the claims prior to 2006 were
untimely, because they were outside the three-year window. In
response, Ramsay and Smalling claimed that the limitations
period should be tolled under the equitable discovery rule. The
hearing officer granted the hospital’s motion and dismissed
Ramsay’s and Smalling’s claims, finalizing the administrative
proceeding. Ramsay and Smalling now seek our review of the
board’s disposition.
3. In 2012, the Utah Legislature created a grant program to assist
special service districts in resolving retirement liability. See Utah
Code Ann. § 26-9-5 (LexisNexis 2013). The hospital utilized a
grant, together with its own funds, to finance the settlements.
20150574-CA 4 2017 UT App 17Ramsay v. Retirement Board
ISSUE AND STANDARD OF REVIEW
¶9 Ramsay and Smalling claim that the hearing officer erred
when he refused to toll the three-year limitations period under
the equitable discovery doctrine. ‚The applicability of a statute
of limitations and . . . the discovery rule are questions of law,
which we review for correctness.‛ Jensen v. Young, 2010 UT 67,
¶ 10, 245 P.3d 731 (citation and internal quotation marks
omitted).
ANALYSIS
¶10 The parties agree that the three-year limitations period
applies to Ramsay’s and Smalling’s claims.4 See Utah Code Ann.
§ 78B-2-305(4) (LexisNexis 2012). The parties also agree that
more than three years have passed since most of their causes of
action accrued. Ramsay and Smalling contend, however, that the
hearing officer erroneously granted summary judgment with
respect to these claims because the equitable discovery rule
tolled the limitations period.5
4. Although Ramsay and Smalling refer in their opening brief to
limitations law related to the Governmental Immunity Act of
Utah, they concede in their reply brief that they ‚do not seek to
raise that statutory discovery rule now.‛ We therefore decline to
analyze this act’s limitations provisions.
5. Ramsay and Smalling also argue that the hospital was an
employer ‚subject to the requirements‛ of the Act. But this
proceeding for judicial review arises from a summary judgment
motion in which the hospital stipulated, for the sole purpose of
the motion, that it was an employer subject to the Act, so we
have no occasion to consider the question.
20150574-CA 5 2017 UT App 17Ramsay v. Retirement Board
I. The Discovery Rule Does Not Apply to Ramsay’s and
Smalling’s Claims.
¶11 Before we may consider whether the equitable discovery
rule applies, Ramsay and Smalling must show, as a threshold
matter, that they were unaware of ‚the facts underlying the
cause of action in time to reasonably comply with the limitations
period.‛ Berneau v. Martino, 2009 UT 87, ¶ 23, 223 P.3d 1128. See
Garza v. Burnett, 2013 UT 66, ¶ 10, 321 P.3d 1104 (treating this
showing as ‚*a]n essential prerequisite to the application of the
discovery rule‛). Additionally, ‚*t+he limitations period is
postponed only by belated discovery of key facts and not by
delayed discovery of legal theories.‛ Anderson v. Dean Witter
Reynolds, Inc., 920 P.2d 575, 579 (Utah Ct. App. 1996) (emphasis
added).
¶12 Ramsay and Smalling claim they were unaware that the
hospital’s defined contribution plan ‚obligated *the hospital] to
provide full retirement benefits,‛ that the hospital ‚had an
obligation to fund . . . service credits,‛ and that they ‚were
entitled to retirement benefits above and beyond the benefits
they had been promised.‛ These assertions, however, do not
represent unknown facts. Rather, they are legal conclusions.
Ramsay’s and Smalling’s contention that they did not ‚recognize
the legal significance‛ of the plan is irrelevant.6 Ignorance or
6. It is also unsurprising. Who would have guessed that an
employer’s well-intentioned design to help employees by
establishing a 401(k) plan for them and matching their
contributions would trigger the obligation to fund a pension for
them as well? This ‚in for a dime; in for a dollar‛ philosophy
would appear to be bad policy, as it would tend to chill public
employers not in a position to fund the full array of URS benefits
from offering at least something to their employees. And the
Legislature came around to this view, at least as concerns special
service district hospitals and nursing care facilities, and changed
the law. See supra note 2.
20150574-CA 6 2017 UT App 17Ramsay v. Retirement Board
obliviousness to the existence of a cause of action will not
prevent the running of the statute of limitations. Russell Packard
Dev., Inc. v. Carson, 2005 UT 14, ¶ 20, 108 P.3d 741. The pertinent
information was available to Ramsay and Smalling in the form
of their 401(k) plans and a readily available published statute.7
They simply failed to avail themselves of this information and to
more timely assert their claim to pension contributions.
II. Even If We Assume Ramsay and Smalling Made Their Initial
Showing, They Are Not Entitled to Equitable Tolling.
¶13 Ramsay and Smalling argue that the discovery rule
operates to toll the three-year statute of limitations. ‚Generally, a
cause of action accrues and the relevant statute of limitations
begins to run upon the happening of the last event necessary to
complete the cause of action[.]‛ Warren v. Provo City Corp., 838
P.2d 1125, 1128–29 (Utah 1992) (citation and internal quotation
marks omitted). Under certain circumstances, however, ‚the
discovery rule may operate to toll the period of limitations until
the discovery of facts forming the basis for the cause of action.‛
Walker Drug Co. v. La Sal Oil Co., 902 P.2d 1229, 1231 (Utah 1995)
(citation and internal quotation marks omitted). The discovery
rule applies
7. We recognize this is something of a legal fiction. Health
professionals are not going to sit around reading the Utah Code.
And no normal person, upon learning he or she can now
participate in a 401(k), is going to think: ‚Wow. I bet this entitles
me to a pension, too. I better check the applicable statutes.‛ But
so long as the hospital did not conceal information from Ramsay
and Smalling and so long as no exceptional circumstances exist,
there is no getting around the fact that once they were provided
with a 401(k) by their public entity employer, they were aware of
all the facts necessary to make a demand for pension
contributions as well, under the law as it then existed. See
Anderson v. Dean Witter Reynolds, Inc., 920 P.2d 575, 579 (Utah Ct.
App. 1996).
20150574-CA 7 2017 UT App 17Ramsay v. Retirement Board
(1) in situations where the discovery rule is
mandated by statute; (2) in situations where a
plaintiff does not become aware of the cause of
action because of the defendant’s concealment or
misleading conduct; and (3) in situations where the
case presents exceptional circumstances and the
application of the general rule would be irrational
or unjust, regardless of any showing that the
defendant has prevented the discovery of the cause
of action.
Warren, 838 P.2d at 1129 (internal citations omitted). Statutes that
mandate the application of the discovery rule contain a
‚statutory discovery rule.‛ See Russell Packard, 2005 UT 14, ¶ 21.
‚‘[C]oncealment’ and ‘exceptional circumstances,’‛ on the other
hand, comprise the ‚equitable discovery rule.‛ Id. at ¶ 25.
Ramsay and Smalling do not claim that the discovery rule is
mandated by statute. Instead, they focus their discussion on the
other two variants of the discovery rule. We therefore do the
same.
¶14 First, the concealment version of the equitable discovery
rule tolls the limitations period if ‚a plaintiff does not become
aware of the cause of action because of the defendant’s
concealment or misleading conduct[.]‛ Warren, 838 P.2d at 1129.
This is ‚essentially a claim of equitable estoppel, whereby a
defendant who causes a delay in the bringing of a cause of action
is estopped from relying on the statute of limitations as a defense
to the action.‛ Id. at 1129–30.
¶15 The hospital did nothing to prevent Ramsay and Smalling
from discovering the full extent of their available retirement
benefits. Indeed, the hospital was equally unaware of its
obligation to provide such benefits. ‚In no case . . . is mere
silence or failure to disclose sufficient in itself to constitute
fraudulent concealment.‛ Colosimo v. Roman Catholic Bishop, 2007
UT 25, ¶ 44, 156 P.3d 806 (brackets, citation, and internal
quotation marks omitted). Thus, we conclude that the hospital
20150574-CA 8 2017 UT App 17Ramsay v. Retirement Board
did not prevent Ramsay and Smalling from discovering their
cause of action.
¶16 Second, under the exceptional circumstances prong of the
equitable discovery rule, the limitations period is tolled ‚where
the case presents exceptional circumstances and the application
of the general rule would be irrational or unjust.‛ Russell Packard,
2005 UT 14, ¶ 25. Whether enforcing the limitations period
would be unjust depends on a balancing test that weighs ‚*t+he
hardship the statute of limitations would impose on the plaintiff
. . . [against] any prejudice to the defendant from difficulties of
proof caused by the passage of time.‛ Myers v. McDonald, 635
P.2d 84, 87 (Utah 1981).
¶17 Ramsay and Smalling were not prejudiced by the
application of the statute of limitations in the hospital’s favor.
Instead, they serendipitously received three years of unexpected
pension benefits through the happenstance of a statute no longer
applicable to them. In contrast, the hospital, in addition to
suffering financial burdens from paying the ‚missed‛ benefits,
would struggle in any suit it brought against the insurance
agency who advised it, as more than two decades have passed
since the agency assisted the hospital in establishing the 401(k)
program, and the applicable statute of limitations has no doubt
long since run. Such a suit would entail ‚surprise[] through the
revival of [a claim] that [has] been allowed to slumber until
evidence has been lost, memories have faded, and witnesses
have disappeared.‛ Id. at 86 (citation and internal quotation
marks omitted).
¶18 Because the hospital did not conceal the cause of action
from Ramsay and Smalling, and because the application of the
limitations period is not irrational or unjust, Ramsay and
Smalling are not entitled to equitable tolling of the limitations
period.
20150574-CA 9 2017 UT App 17Ramsay v. Retirement Board
CONCLUSION
¶19 Ramsay and Smalling have not established that they
lacked knowledge of essential facts relative to their claims
against the hospital for unpaid pension contributions. Nor have
they demonstrated that the hospital fraudulently concealed the
existence of their causes of action or that the application of the
statute of limitations was unjust. Accordingly, the hearing officer
did not err in granting summary judgment to the hospital and in
dismissing Ramsay’s and Smalling’s claims, and we decline to
disturb the board’s decision.
20150574-CA 10 2017 UT App 17