California State Teachers’ Retirement System (CalSTRS) is the state agency responsible for managing contributions made by employees and member school districts to the State Teachers’ Retirement Fund. (See Ed. Code, § 22000 et seq.) In March 2014, William Baxter and 10 other retired teachers (the Baxter petitioners) formerly employed by the Salinas Unified High School District (District) filed a petition for a peremptory writ of administrative mandamus, naming CalSTRS as respondent and the District as real party in interest. (See Baxter v. State Teachers’ Retirement System (2017) 18 Cal.App.5th 340, 351 (Baxter).) The Baxter petitioners sought relief to prevent CalSTRS from continuing to reduce their monthly retirement benefit payments and to restore prior monies they claimed CalSTRS had wrongfully withheld. (Ibid.) CalSTRS made the deductions to recoup overpayments that had been made to the Baxter petitioners as a result of a years-long miscalculation by the District of their monthly retirement benefits. (Id. at p. 347.) The trial court held that the three-year statute of limitations (§ 22008, subd. (a)) barred CalSTRS from (1) recouping prior overpayments made to the Baxter petitioners by adjusting downward their future monthly benefits, and (2) reducing their future monthly benefits to reflect the correct calculation of their benefits. (Baxter, supra, at pp. 347-348.) In December 2017, a panel of this court reversed, concluding the trial court had erred in holding that CalSTRS’s efforts to recoup overpayments were time-barred as to all monthly retirement payments, both past and future. (Id. at p. 349.) This court found that the continuous accrual theory applied. (Id. at p. 382.) Under this theory, “ ‘a series of wrongs or injuries may be viewed as each triggering its own limitations period, such that a suit for relief may be partially time-barred as to older events but timely as to those within the applicable limitations period. [Citation.]’ [Citation.]” (Id. at pp. 378-379.)
The present action is a successor to the suit by the Baxter petitioners. In February 2016—while the Baxter appeal was pending—respondents in this appeal, who are 31 retired District teachers (hereafter collectively Teachers), filed a petition for writ of mandate and a complaint for declaratory and injunctive relief against CalSTRS and the District. Like the Baxter petitioners, Teachers challenged reductions that CalSTRS had made and continued to make to their monthly retirement benefits to recoup prior overpayments and to adjust ongoing monthly benefits to their proper amounts. The overpayments were the result of the same miscalculation the District had made to the Baxter petitioners’ monthly retirement benefits.
In July 2017—five months prior to this court’s decision in Baxter—the trial court granted Teachers’ petition for writ of mandate in this case, concluding that CalSTRS’s claims to reduce Teachers’ retirement benefits and collect overpayments were time-barred. The trial court held that CalSTRS, by no later than July 30, 2010, “was ‘aware of the possibility’ ” that there were District schoolteachers other than the Baxter petitioners whose retirement benefits had been incorrectly calculated by the District, but that “CalSTRS did not take action until 2014, more than three years later.” In holding that CalSTRS was barred from recouping prior overpayments from Teachers or from reducing future payments to correct the District’s prior miscalculation, the trial court concluded that the continuous accrual theory did not apply.
CalSTRS appealed from the judgment. In its appeal, CalSTRS challenges the trial court’s rejection of the continuous accrual theory. CalSTRS urges that, under Baxter, the continuous accrual theory applies, and that “CalSTRS is time-barred only as to claims relating to pension benefit payments made more than three years before CalSTRS took ‘action’ by reducing each individual teacher’s monthly benefit payment[].”
We hold—following Baxter, supra, 18 Cal.App.5th 340, which in turn relied on Supreme Court precedent, including Dryden v. Board of Pension Commrs. (1936) 6 Cal.2d 575 (Dryden)—that the continuous accrual theory applies here to the periodic pension benefit payments made to Teachers. Thus, CalSTRS was time-barred from pursuing any claim against Teachers as to pension benefit overpayments made more than three years before CalSTRS commenced an action. But CalSTRS is not barred by the statute of limitations from pursuing any claim concerning periodic overpayments to Teachers and adjustments to Teachers’ future monthly benefits, where the payment accrued not more than three years prior to commencement of an action. Further, the trial court held that CalSTRS commenced an “action” by reducing Teachers’ monthly benefit payments beginning in 2014. But we decide—as we did in Baxter—that the reduction in benefits made by CalSTRS, under the factual and procedural context presented here, did not constitute the commencement of an “action” within the meaning of the statute of limitations. Instead, we conclude that CalSTRS constructively commenced an “action” at the time Teachers herein filed their verified petition and complaint in the superior court on February 1, 2016. Under well-established legal principles, the filing of a complaint by the plaintiff tolls or suspends the statute of limitations as to any counterclaims existing in favor of the defendant on the date of such filing. (Union Sugar Co. v. Hollister Estate Co. (1935) 3 Cal.2d 740, 746 (Union Sugar).) Therefore, CalSTRS is deemed to have commenced an “action” to toll or suspend the statute of limitations when Teachers filed suit on February 1, 2016. Accordingly, we hold that CalSTRS may assert claims to recoup overpayments for past monthly payments accruing on or after February 1, 2013, and it may adjust future monthly payments to recoup prior overpayments (on benefit payments that accrued on or after February 1, 2013) and to correct the District’s prior miscalculation of monthly benefits going forward. We will reverse the judgment.
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