Ostler v. Retirement Board

2017 UT App 96THE UTAH COURT OF APPEALS
NEAL K. OSTLER,
Petitioner,
v.
RETIREMENT BOARD AND
SALT LAKE COMMUNITY COLLEGE,
Respondents.
Opinion
No. 20160220-CA
Filed June 15, 2017
Original Proceeding in this Court
Florence M. Vincent and Tara Pincock, Attorneys
for Petitioner
David B. Hansen and Erin G. Christensen, Attorneys
for Respondent Retirement Board
Sean D. Reyes and Erin T. Middleton, Attorneys for
Respondent Salt Lake Community College
JUDGE MICHELE M. CHRISTIANSEN authored this Opinion, in
which JUDGES J. FREDERIC VOROS JR. and DAVID N. MORTENSEN
concurred.
CHRISTIANSEN, Judge:
¶1 Neal K. Ostler petitions for judicial review of the Utah
State Retirement Board’s order denying him pension benefits.
He contends that the withdrawal of member contributions he
made over the course of about 15 years should not have resulted
in forfeiture of all 15 years of service credit he accrued. He
further contends that the statute of limitations did not begin to
run on his claim that he was eligible for other service credit,
because he had not yet retired. We conclude that the Board
correctly interpreted the forfeiture statute and that Ostler’s other
Ostler v. Retirement Board
claims are barred by res judicata. Consequently, we decline to
disturb the Board’s decision.
BACKGROUND
¶2 The legislature enacted the Utah State Retirement and
Insurance Benefit Act to establish and administer a state
retirement system. See Utah Code Ann. § 49-11-103(1)
(LexisNexis 2015). The resulting program is known as Utah
Retirement Systems (URS) and is governed by the Board. Id.; id.§ 49-11-201. An individual employed by a participating public
employer may qualify to become a member of URS. Those who
do may be eligible to participate in a defined-contribution plan
(e.g., a 401(k)) and/or a defined-benefit plan, often referred to as
a pension plan.
¶3 An employer who participates in a pension plan may
choose between two contribution schemes. The first is a non-
contributory defined-benefit plan where only the employer pays
money into the plan. See, e.g., id. § 49-13-301(1). The second is a
contributory defined-benefit plan where both the member and
the employer deposit money into the plan. See, e.g., id. § 49-14-
301(1).
¶4 Member contributions vest immediately. See, e.g., id. § 49-
14-301(5)(c). Upon the termination of employment, the member
may withdraw his or her member contributions (also referred to
as “receiving a refund” from the plan) or may leave them in the
pension plan. Id. § 49-11-501(1). When a member withdraws his
or her personal contributions, the associated service credit is
forfeited. Id. § 49-11-501(5); id. § 49-11-102(51) (defining “service
credit”). But a member who is reemployed by a participating
employer may reinstate that service credit by redepositing the
withdrawn contributions along with any applicable interest. Id.
§ 49-11-502.
20160220-CA 2 2017 UT App 96Ostler v. Retirement Board
¶5 Under either type of defined-benefit plan, members only
qualify for pension benefits once they have accrued at least
4 years of service credit. See, e.g., id. § 49-13-401. The amount of a
member’s pension benefits is dependent on his or her total
amount of service credit.
¶6 During his career, Ostler was a member of both
contributory and non-contributory retirement systems. To begin
with, Ostler was employed by the Salt Lake County Sheriff’s
Office and the Department of Corrections between 1972 and
1988. By virtue of this employment, he was a member of the
Public Safety Contributory Retirement System. Ostler made
member contributions to the system and his employers made
employer contributions. During this employment, he accrued
15.167 years of service credit. In 1990, having been terminated
from public employment, Ostler elected to receive a refund of
his member contributions—roughly $27,000. Ostler admitted
that he knew that he would have to redeposit the funds (plus
interest) in order to reinstate his service credit. He did not do so.
¶7 Ostler was also employed at various times from 1988 to
2004 by several other entities that participated in the Public
Employees’ Noncontributory Retirement System, including the
Utah Department of Commerce, the Davis Applied Technology
Center, and Salt Lake City Corporation. In these positions, he
accrued 3.352 years of service credit. Finally, from 1992 to 1998,
Ostler also worked as an adjunct employee of Salt Lake
Community College (SLCC). Because the position was
temporary and part-time, SLCC did not consider Ostler eligible
for retirement benefits, did not enroll him in a retirement plan,
and did not make contributions to URS on his behalf.
¶8 In 2001, Ostler filed a complaint in district court, alleging
that SLCC had breached its contract with him by wrongfully
failing to enroll him in a retirement plan or to otherwise provide
him with retirement benefits. He argued, in part, that he was
eligible for retirement benefits because he had worked more
hours than specified in his part-time employment contract. The
20160220-CA 3 2017 UT App 96Ostler v. Retirement Board
district court noted that Ostler had not reported these extra
hours at the time and “ha[d] no record of those hours he
allege[d] to have worked.” Ultimately, the district court granted
summary judgment to SLCC. Ostler attempted to challenge that
judgment but failed to file a timely notice of appeal, resulting in
a dismissal for lack of appellate jurisdiction. Ostler v. Salt Lake
Community College, 2004 UT App 18U, para. 7 (per curiam).
Ostler then filed another notice of appeal which this court
determined was also untimely. Ostler v. Salt Lake Community
College, 2004 UT App 125U, paras. 1, 6 (per curiam).
¶9 Ostler applied for retirement benefits in 2013. URS
determined that Ostler had only 3.352 years of service credit,
short of the 4 years required for retirement benefit eligibility,
and consequently denied his application. Ostler filed a request
for the Board to review URS’s decision, asserting two claims.
First, Ostler contended that, despite having withdrawn his
member contributions, he was entitled to some or all of an
additional 15.167 years of service credit based on his 1972–1988
employment, to the extent of his employer’s contributions.
Second, Ostler contended that he was entitled to additional
service credit based on his SLCC employment because SLCC
should have enrolled him as a retirement-eligible employee
despite his status as a temporary and part-time employee. The
Board determined that Ostler was not entitled to any service
credit because he had withdrawn his member contributions and
never redeposited them. The Board further determined that
Ostler’s claims regarding SLCC were barred by the statute of
limitations and the doctrine of laches. As a result, the Board
rejected Ostler’s claims. Ostler now seeks review of the Board’s
resolution.
ISSUES AND STANDARDS OF REVIEW
¶10 Ostler first contends that the Board erred “when it
determined that Ostler forfeited all of his service credits, and
therefore was not entitled to any retirement benefits, because he
20160220-CA 4 2017 UT App 96Ostler v. Retirement Board
did not re-deposit his member share of his retirement
contributions.” (Emphasis in original). We review the Board’s
interpretation and application of a statute for correctness.
McLeod v. Retirement Board, 2011 UT App 190, ¶ 9, 257 P.3d 1090.
¶11 Ostler next contends that the Board erred “when it
determined Ostler’s claim against Salt Lake Community College
was barred by the statute of limitations.” We review the Board’s
application of the statute of limitations to undisputed facts for
correctness. See Ramsay v. Retirement Board, 2017 UT App 17, ¶ 9,
391 P.3d 1069. Ostler also contends that the Board improperly
applied the doctrine of laches to reach the alternate ground for
rejecting his SLCC claims. The application of laches presents a
mixed question of law and fact; we review the district court’s
legal conclusions for correctness and its factual findings for clear
error. See Johnson v. Johnson, 2014 UT 21, ¶ 8 & n.11, 330 P.3d 704.
However, before reaching the statute of limitations and laches
issues, we first determine whether the doctrine of res judicata
bars Ostler’s claims against SLCC as a collateral attack; this issue
presents a question of law. See PGM, Inc. v. Westchester Inv.
Partners, Ltd., 2000 UT App 20, ¶ 3, 995 P.2d 1252; see also Olsen v.
Board of Educ., 571 P.2d 1336, 1338 (Utah 1977). Although res
judicata was not the basis of the Board’s decision, “an appellate
court may affirm the judgment appealed from if it is sustainable
on any legal ground or theory apparent on the record.” See Bailey
v. Bayles, 2002 UT 58, ¶ 13, 52 P.3d 1158 (emphases, citation, and
internal quotation marks omitted).
ANALYSIS
I. Forfeiture
¶12 Ostler first contends that “[t]he plain language of [Utah’s
retirement act] clearly shows a member is entitled to [an]
employer’s contributions even if the member takes a refund.” In
his view, a member who elects to receive a refund of his or her
member contributions “should only forfeit service credits equal
20160220-CA 5 2017 UT App 96Ostler v. Retirement Board
to the amount of the refund and should still be entitled to a
retirement allowance based on the [employer] contributions that
remain in the system.”
¶13 This contention requires us to analyze the meaning of
certain provisions of the Utah State Retirement and Insurance
Benefit Act (the Act). “Under our rules of statutory construction,
we look first to the statute’s plain language to determine its
meaning.” Sindt v. Retirement Board, 2007 UT 16, ¶ 8, 157 P.3d 797(citation and internal quotation marks omitted). “[S]tatutory
enactments are to be so construed as to render all parts thereof
relevant and meaningful[.]” Perrine v. Kennecott Mining Corp., 911
P.2d 1290, 1292 (Utah 1996) (citation and internal quotation
marks omitted). “It is our duty to construe each act of the
legislature so as to give it full force and effect.” Board of Educ. v.
Sandy City Corp., 2004 UT 37, ¶ 9, 94 P.3d 234 (citation and
internal quotation marks omitted). “The meaning of a part of an
act should harmonize with the purpose of the whole act.
Separate parts . . . should not be construed in isolation from the
rest of the act.” Jensen v. Intermountain Health Care, Inc., 679 P.2d
903, 906 (Utah 1984).
¶14 From 1972 to 1988, Ostler worked for employers that
participated in the Public Safety Contributory Retirement
System. Both Ostler and his employers made contributions to
that system. Ostler concedes that he withdrew his member
contributions and never redeposited them. But, in his view,
when he elected to withdraw his member contributions from the
system, he forfeited the service credit attributable to the member
contributions yet retained the service credit attributable to the
employer contributions. In other words, Ostler asserts that some
fraction of the 15.167 years of service credit flowed only from the
employer contributions and that he did not forfeit that portion.
¶15 The Board responds that the Act “shows two crucial
principles that are dispositive here: 1) a member is only granted
service credit if all the required retirement contributions, both
member and employer contributions, are paid to URS; and
20160220-CA 6 2017 UT App 96Ostler v. Retirement Board
2) only member contributions, not employer contributions are
vested to a member.” (Emphasis omitted). According to the
Board, because Ostler did not redeposit his retirement
contributions (plus interest) and because the employers’
contributions did not vest in Ostler, he is not entitled to
retirement benefits.
¶16 We agree with the Board. Ostler’s contention relies on the
Act’s forfeiture provision: “A member who receives a refund of
member contributions forfeits the service credit based on those
contributions.” Utah Code Ann. § 49-11-501(5) (LexisNexis 2015)
(emphasis added). According to Ostler, the phrase “those
contributions” means only the “member contributions.” On this
basis, he asserts that withdrawal of member contributions leaves
intact a portion of the member’s service credit based on
employer contributions. But, as we read the Act, all service credit
is based on member contributions. This is because the language
of the Act unambiguously provides that both employer
contributions and member contributions must be deposited with
URS in order for the member to receive service credit: “In the
accrual of service credit . . . [a] person employed and
compensated by a participating employer who meets the
eligibility requirements for membership in a system . . . shall
receive service credit for the term of the employment provided
that all required contributions are paid to [the retirement
office].” Utah Code Ann. § 49-11-401(3)(a) (emphasis added).
When both contributions are received, the member receives
service credit. But the nonpayment of either type of contribution
results in the member receiving no service credit. In other words,
because the award of service credit is predicated on receipt of
both contributions, all service credit is “based on” the member
contributions just as all service credit is also “based on” the
employer contributions.
¶17 This conclusion is reinforced by the fact that the Act
makes no distinction between service credit related to member
contributions and service credit related to employer
contributions. Instead, there is only a single type of service
20160220-CA 7 2017 UT App 96Ostler v. Retirement Board
credit—one that is based on the payment of both employee and
employer contributions. The Act contains no provisions for
dividing earned service credit into a member-contribution-based
portion and an employer-contribution-based portion. The
absence of a mechanism or formula for splitting earned service
credit into two such components is a clear indication that the Act
was not designed to allow an employee to withdraw all of his or
her member contributions yet still receive pension benefits.
¶18 Our conclusion is also reinforced when we consider the
Act’s treatment of employer contributions. The Act is clear that
member contributions are held by the retirement office in the
member’s individual account, in trust for the member, and are
vested in the member. See Utah Code Ann. § 49-14-301(5). But
the Act contains no similar provisions regarding employer
contributions. Instead, the Act allows an employer’s contribution
rate to vary depending on the demographics and predilections of
its employees: “Contribution rates for a participating employer
may be different than for other participating employers based on
the participating employer’s current funding status and actuarial
experience.” Id. § 49-14-301(7). That is to say, an employer’s
contribution rate is discounted based on predictions about the
percentage of its employees who will qualify for pension benefits
and the average amount those employees will receive. Thus, an
employer that has made extensive contributions to the
retirement plan and whose former employees tend to draw
fewer and smaller pensions might not be required to contribute
as much for each new employee enrolled as an employer whose
expected retirement liabilities exceed the assets deposited with
URS. But if an employer’s contribution was tied to an individual
employee, as Ostler’s argument requires, the employer
contribution rate would simply be a flat amount per employee; it
would make no conceptual sense to require a lower employer
contribution for a new employee simply because other
employees’ individual retirement plans are properly funded. By
allowing an employer’s per-employee contribution to “float” up
and down based on actuarial assumptions, the Act is engineered
to account now for the fact that some employees will receive
20160220-CA 8 2017 UT App 96Ostler v. Retirement Board
refunds of their member contributions in the future or will
otherwise not qualify for pension benefits.
¶19 “A member who receives a refund of member
contributions forfeits the service credit based on those
contributions.” Utah Code Ann. § 49-11-501(5). We conclude
that, because service credit requires both types of contribution,
all of the service credit earned during the period of member
contributions is “based on” the member contributions. 1
Consequently, the Board did not err in determing that Ostler’s
decision to withdraw all of his member contributions resulted in
the forfeiture of all of his service credit earned during that
employment.
II. Collateral Attack
¶20 Ostler next contends that the Board improperly ruled that
his SLCC claims were barred by the statute of limitations and the
doctrine of laches. This contention rests on his argument that
SLCC should have enrolled him as a retirement-eligible
employee despite his status as a temporary and part-time
employee. In Ostler’s view, if SLCC had properly enrolled him,
he would have earned additional service credit during his SLCC
employment, which would have put him over the 4 year
threshold for pension-benefit eligibility.
1. We note that a member who receives a refund does not
necessarily forfeit all of his or her service credit. For example, if
an employee earns 5 years of service credit at his or her first
employer and then a further 7 years of service credit with a
second employer, then elects to receive a refund of his or her
member contributions deposited during employment by the
second employer, he or she will forfeit the 7 years of service
credit but not the 5. This is because only the 7 years of service
credit were “based on” the refunded member contributions.
20160220-CA 9 2017 UT App 96Ostler v. Retirement Board
¶21 The Board determined that the statute of limitations on a
claim against an employer for retirement service credit begins to
run at the time the employer fails to make contributions to URS.
Utah courts have not yet definitively ruled on when the statute
of limitations for such a claim begins to run. We see potential
merit in the idea that the statute of limitations for an employee’s
claim against an employer for failing to classify the employee as
eligible to earn service credit might begin to run at a different
point than the applicable statute of limitations for the
employee’s claim against the Board seeking pension benefits. Cf.
Ramsay v. Retirement Board, 2017 UT App 17, 391 P.3d 1069(discussing the application of the equitable discovery rule in the
context of a claim for retirement benefits). But we need not and
do not address that issue; given that Ostler’s district court case
already challenged SLCC’s failure to contribute or consider him
qualified to receive benefits, his specific claim in this petition for
judicial review is barred by the issue-preclusion branch of the
doctrine of res judicata.
¶22 “The general rule of law is that a judgment may not be
drawn in question in a collateral proceeding[.]” Tolle v. Fenley,
2006 UT App 78, ¶ 15, 132 P.3d 63 (citation and internal
quotation marks omitted). “[A]n attack upon a judgment is
regarded as collateral if made when the judgment is offered as
the basis of a claim in a subsequent proceeding.” Id. (citation and
internal quotation marks omitted). “Where a judgment is
attacked in other ways than by proceedings in the original action
to have it vacated or revised or modified or by a proceeding in
equity to prevent its enforcement, the attack is a ‘Collateral
Attack.’” Olsen v. Board of Educ., 571 P.2d 1336, 1338 (Utah 1977)
(citation and additional internal quotation marks omitted).
¶23 “Collateral estoppel, otherwise known as issue
preclusion, prevents parties or their privies from relitigating
facts and issues in the second suit that were fully litigated in the
first suit.” Moss v. Parr Waddoups Brown Gee & Loveless, 2012 UT
42, ¶ 23, 285 P.3d 1157 (emphasis, citation, and internal
quotation marks omitted). “Issue preclusion applies only when
20160220-CA 10 2017 UT App 96Ostler v. Retirement Board
the following four elements are satisfied: (i) the party against
whom issue preclusion is asserted was a party to or in privity
with a party to the prior adjudication; (ii) the issue decided in
the prior adjudication was identical to the one presented in the
instant action; (iii) the issue in the first action was completely,
fully, and fairly litigated; and (iv) the first suit resulted in a final
judgment on the merits.” Id. (citation and internal quotation
marks omitted).
¶24 As noted above, Ostler filed a complaint in 2001 in district
court, alleging that SLCC had breached its employment contract
with him by wrongfully failing to enroll him in a retirement plan
during his employment with SLCC from 1992 to 1998. In that
suit, Ostler challenged the determination made by SLCC that, as
a part-time and temporary employee, he was not eligible for
enrollment into a retirement plan. The district court ruled
against Ostler in 2003, and Ostler failed to bring a timely appeal.
See Ostler v. Salt Lake Community College, 2004 UT App 18U (per
curiam); Ostler v. Salt Lake Community College, 2004 UT App 125U
(per curiam). In 2013, when Ostler applied for retirement
benefits, was rejected, and petitioned the Board for review, he
argued to the Board that he should have been granted service
credit for the time he was employed by SLCC. The Board
rejected those claims, as do we. We conclude that this claim is a
collateral attack upon the 2003 final judgment by the district
court.
¶25 The first element of issue preclusion is whether “the party
against whom issue preclusion is asserted was a party to or in
privity with a party to the prior adjudication.” Moss, 2012 UT 42,
¶ 23 (citation and internal quotation marks omitted). Here, the
party against whom issue preclusion applies is Ostler, who
brought both suits. Thus, the first element is satisfied.
¶26 The second element of issue preclusion is whether “the
issue decided in the prior adjudication was identical to the one
presented in the instant action.” Id. (citation and internal
quotation marks omitted). The question before the Board was
20160220-CA 11 2017 UT App 96Ostler v. Retirement Board
whether Ostler should have received service credit for his
employment by SLCC. Ostler had not received such credit,
because the district court had determined that SLCC properly
decided Ostler was not eligible for enrollment in a retirement
plan. Put another way, SLCC made a status determination that
Ostler was not eligible for a retirement plan, the district court
upheld that status determination, and Ostler now seeks
retroactive enrollment in the retirement plan in contravention of
the district court’s ruling. Although now framed as an attack on
the Board’s failure to pay retirement benefits, the underlying
issue is identical: whether Ostler’s employment at SLCC
qualified him for enrollment in a retirement plan. Consequently,
the second element is satisfied.
¶27 The third element of issue preclusion is whether “the
issue in the first action was completely, fully, and fairly
litigated.” Id. (citation and internal quotation marks omitted). An
issue is completely, fully, and fairly litigated when it is properly
raised, submitted for determination, and actually determined.
See Fowler v. Teynor, 2014 UT App 66, ¶ 24, 323 P.3d 594. In the
present case, Ostler argues that he should have earned service
credit while employed by SLCC because he was a retirement-
eligible employee. The issue raised in the district court case was
whether SLCC was obligated to enroll Ostler as a retirement-
eligible employee, which would have allowed him to earn
service credit, despite his status as a part-time and temporary
employee. During the resolution of that case, Ostler had a full
and fair opportunity advance his arguments regarding his
employment status. And by granting summary judgment in
favor of SLCC, the district court determined that there was “no
genuine dispute as to any material fact” and that, under the
undisputed facts, SLCC was “entitled to judgment as a matter of
law.” See Utah R. Civ. P. 56(a). Because the core issue in the
district court case was whether Ostler’s SLCC employment
qualified him to earn service credit, and because the district
court actually determined that it did not, we conclude that issue
was completely, fully, and fairly litigated. See Fowler, 2014 UT
App 66, ¶¶ 24–26. The third element is therefore satisfied.
20160220-CA 12 2017 UT App 96Ostler v. Retirement Board
¶28 The fourth element of issue preclusion is whether “the
first suit resulted in a final judgment on the merits.” Moss, 2012
UT 42, ¶ 23 (citation and internal quotation marks omitted). All
of the claims raised in Ostler’s district court case were disposed
of by summary judgment. Ostler, 2004 UT App 125U, para. 5 (per
curiam) (“In granting SLCC’s motion for summary judgment,
the district court necessarily denied Ostler’s cross-motion for
summary judgment.”) A summary judgment that disposes of all
of the claims amounts to a final judgment on the merits. See
American Estate Mgmt. Corp. v. International Inv. & Dev. Corp.,
1999 UT App 232, ¶¶ 15–17, 986 P.2d 765; see also Scholzen
Products Co. v. Palmer, 2000 UT App 191U, para. 6 (noting that a
“suit resulted in a final judgment on the merits when the trial
court granted [the defendants’] motion for summary
judgment”). Consequently, the fourth element is also satisfied.
¶29 Ostler’s claim that he is entitled to additional service
credit based on his employment by SLCC is predicated on the
assumption that SLCC improperly deemed him ineligible for
enrollment in a pension plan. Because the propriety of SLCC’s
determination was fully and fairly litigated and culminated in
the district court’s 2003 final order, all four elements of issue
preclusion are satisfied, and Ostler is barred from collaterally
attacking that order nearly a decade after its entry.2
2. The Board’s final order adopted the Hearing Officer’s written
decision. The Hearing Officer’s written decision contains a
cryptic footnote stating that “the hearing officer in this matter
has ruled that the Third District Court did not have jurisdiction
to hear the relevant claims in [the 2003 action].” Neither the
Board nor the Hearing Officer explained the reasoning for this
statement, and we are unaware of any authority of the Board to
rule on a district court’s jurisdiction. Cf. Utah R. Civ. P. 60
(describing the procedure by which a court may set aside a
judgment or order for, inter alia, lack of jurisdiction). At oral
argument, counsel suggested that the footnote may reference
Ostler’s failure to exhaust his administrative remedies before
(continued…)
20160220-CA 13 2017 UT App 96Ostler v. Retirement Board
CONCLUSION
¶30 We conclude that all 15.167 years of service credit Ostler
earned while participating in the Public Safety Contributory
Retirement System were “based on” his member contributions;
consequently, the Board did not err in determining that Ostler
forfeited 15.167 years of service credit when he elected to receive
a refund of 15.167 years’ worth of his member contributions. We
further conclude that Ostler’s attempt to establish additional
service credit within the Public Employees’ Noncontributory
Retirement System based on his employment with SLCC is a
collateral attack on the 2003 district court determination (that
SLCC had correctly deemed Ostler’s position ineligible for
enrollment in that system); consequently, this issue is barred by
the issue preclusion branch of res judicata.
¶31 For the foregoing reasons, we decline to disturb the
Board’s decision.
(…continued)
filing suit in district court. See Utah Code Ann. § 63G-4-401
(LexisNexis 2016) (discussing the exhaustion requirement). This
argument was never properly raised in the district court
proceeding. And even if it had been raised and found
meritorious so as to nullify the district court’s summary
judgment, it would simply establish that Ostler should have
begun administrative proceedings within three years after, at the
latest, his alleged discovery of the claims underlying his 2001
complaint. See id. § 78B-2-305(4) (2012) (prescribing a three-year
statute of limitations for “a liability created by the statutes of this
state”).
20160220-CA 14 2017 UT App 96