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New Orleans Fire Fighters Pension and Relief Fund v. City of New Orleans

Court of Appeals of Louisiana, Fourth Circuit

March 21, 2018

NEW ORLEANS FIRE FIGHTERS PENSION AND RELIEF FUND, ET AL
v.
THE CITY OF NEW ORLEANS, ET AL

          APPEAL FROM CIVIL DISTRICT COURT, ORLEANS PARISH NO. 2012-07061, DIVISION "G-11" Honorable Robin M. Giarrusso, Judge

          Louis L. Robein, Jr. Nancy Picard ROBEIN, URANN, SPENCER, PICARD & CANGEMI, APLC, COUNSEL FOR PLAINTIFFS/DEFENDANTS-IN-RECONVENTION/APPELLANTS

          James M. Garner Matthew M. Coman Joshua P. Clayton Debra J. Fischman SHER GARNER CAHILL RICHTER KLEIN & HILBERT, L.L.C.

          Kimlin S. Lee Churita H. Hansell Rebecca H. Dietz Deputy City Attorneys COUNSEL FOR DEFENDANTS/PLAINTIFFS-IN-RECONVENTION/APPELLEES

          Court composed of Judge Terri F. Love, Judge Roland L. Belsome, Judge Daniel L. Dysart, Judge Joy Cossich Lobrano, Judge Paula A. Brown

          Paula A. Brown, Judge

         The New Orleans Fire Fighters' Pension and Relief Fund (the "Fund") and its Trustees[1] (the "Board") in their official capacities (collectively referred to as "NOFF")[2] seek review of the district court's partial grant of summary judgment, in the form of injunctive relief, in favor of New Orleans Director of Finance, Norman S. Foster ("Mr. Foster")[3], and New Orleans Fire Department Superintendent, Timothy McConnell, ("Mr. McConnell")(collectively referred to as the "City").[4]For the reasons set forth below, we reverse in part, and affirm in part, the district court's October 27, 2016 judgment.

         PROCEDURAL HISTORY

         The parties of this action have been before this Court on other issues. The following are the facts and the procedural history relevant to the instant appeal.

         In New Orleans Fire Fighters' Pension & Relief Fund v. City of New Orleans, 13-0873 (La.App. 4 Cir. 12/18/13), 131 So.3d 412, writ denied, 14-0142 (La. 3/21/14), 135 So.3d 623, cert. denied, ___ U.S. ___, 135 S.Ct. 148 (2014) (hereinafter referred to as "NOFF I"), this Court affirmed the district court's judgment granting a petition for a writ of mandamus filed by the Fund.[5] In NOFF I, this Court held that the City of New Orleans was statutorily required, under La. R.S. 11:3384(F), to pay into the Fund the sum of $17, 524, 329.00, as the City of New Orleans' actuarially required (and then-owed) contribution. Id., 13-0873, p. 10, 131 So.3d at 419.

         Over the next few years, the parties litigated various issues concerning the amount owed to the Fund by the City of New Orleans. In October 2015, the parties entered into a settlement agreement wherein most of their claims against one another, including issues concerning amounts owed by the City of New Orleans to NOFF, were resolved. The settlement agreement specifically reserved the right of the parties to submit the "Alternative Interpretation" dispute-the dispute between the parties over the meaning and application of La. R.S. 11:3384(B)(1)-to the district judge, but only as to the stated demand for injunctive relief. The settlement agreement further specified that "[i]n the event the Alternative Interpretation is enjoined, application of any benefit recalculations affecting existing and future retirees will be prospective and not include clawbacks."

         In furtherance of the settlement agreement, the parties executed a Cooperative Endeavor Agreement ("CEA"), effective January 1, 2016. The CEA reiterated the parties' agreement to submit the Alternative Interpretation dispute to the district court for resolution, with the further agreement that there would be no clawbacks; that is, no "retroactive recovery of any previously paid pension benefits to any Retiree or Fund participant as it applies to the Alternative Interpretation of benefits." The CEA also reserved the parties' rights to submit to the district court the issue of whether those receiving supplemental earnings benefits ["SEBs"], prior to January 1, 2016, may have their benefits offset.

         Thereafter, on August 12, 2016, NOFF filed a Motion and Order for Declaratory Judgment seeking to have the district court "hear and determine the rights and obligations of the parties . . . with respect to . . . justiciable controversies stipulated to by the parties in the . . . CEA . . . ."[6] More particularly, the motion sought to determine the "continued administration of the benefit formula established by La. R.S. 11:3384(B)" and the "application of the SEB Policy adopted by the Board of Trustees, as required by Section I(A)(19) of the CEA, to 'existing' retired Fund Participants (those who retired prior to January 1, 2016)."[7]

         In response to the motion for a declaratory judgment, the City filed an opposition, as well as a request for an injunction, seeking to prohibit the allegedly incorrect calculation and awarding of pension benefits under La. R.S.11:3384(B). The injunction also sought an order requiring NOFF "to perform, for the period from January 1, 2016 onward, a dollar-for-dollar offset of (SEB's [sic]) against retirement benefits payable from the Fund to the firefighters who have received and/or will receive SEB's [sic], including firefighters who were paid SEB's [sic] as of January 1, 2016."

         The district court conducted a hearing on September 13, 2016, on the request for injunctive relief filed by NOFF and the motion for declaratory judgment filed by the City.[8] The parties consented to convert the matters to cross-motions for summary judgment.

         On October 27, 2016, the district court rendered a judgment which granted the City's motion for summary judgment in part, and denied it in part, and granted NOFF's motion for summary judgment in part, and denied it in part. The district court also entered an injunction which ordered NOFF as follows:

. Effective prospectively as of January 1, 2017, as to all New System firefighters who have retired and/or will retire, who have received and/or will receive any benefits from the Fund and who have served beyond 12 years and have attained 50 years of age, to apply a 3⅓ compensation percentage only, to those members' service years served (1) beyond the twelfth service year, and (2) beyond age 50, and prospectively as of January 1, 2017, to recalculate any benefits to comply with the foregoing;
. Effective prospectively as of January 1, 2017, as to all New System firefighters who have retired and/or will retire, who have received and/or will receive any benefits from the Fund, and who have served beyond 30 years, to apply a 3⅓ compensation percentage only, to those members' service years served beyond the twelfth service year, and prospectively as of January 1, 2017, to recalculate any benefits to comply with the foregoing.

(emphasis in original.) The judgment, likewise, denied the City's request for an injunction which sought to offset pension benefits for firefighters who retired and began receiving benefits before January 1, 2016, by the amount of SEBs being received under the Louisiana's Workers Compensation statute.[9] In so ruling, the district court held that "no offset rule was in place at the time that those retirees retired and their rights to their benefits without offsets have vested."[10]

         This appeal follows.[11]

         STANDARD OF REVIEW

         The standard of review of a grant of a motion for summary judgments is de novo. Serpas v. Univ. Healthcare Sys., 16-948, p. 2 (La.App. 4 Cir. 3/8/17), 213 So.3d 427, 428. Additionally, when a matter involves the interpretation of a statute, it is a question of law, and a de novo standard of review is applied. Red Stick Studio Dev., L.L.C. v. State ex rel. Dep't. of Econ. Dev., 10-0193, p. 9 (La. 1/19/11), 56 So.3d 181, 187. We, therefore, review the district court's judgment under a de novo standard of review.

         DISCUSSION

         The district court's injunctive relief, which was granted in favor of the City, is limited to the current version of La. R.S. 11:3384(B)(1) and applies to those firefighters who have retired or will retire and were employed by the fire department on or before December 31, 2014. With these parameters in mind, we review NOFF's assigned errors:

(1) The district court erred when it found that the Fund had not correctly interpreted and applied La. R.S. 11:3384(B), considering the contemporaneous construction given the statute over many years; and
(2) The district erred by failing to apply a three-year statute of limitations to any enjoined recalculation of pension benefits determined to have been unlawfully calculated in past years.[12]

         Assignment of Error No. 1: Interpretation and Application of La. R.S. 11:3384(B)(1)

         NOFF asserts, as to the firefighter with thirty years or more of service, La. R.S. 11:3384(B)(1) is unclear and ambiguous, writing:

The statute is ambiguous in that it provides that "if a member continues service beyond 30 years, the retirement benefit for each year or portion of a year beyond twelve years of service shall be an amount equal to 3⅓ percent of the average annual compensation of each year or portion of a year, " and then adds that "the retirement benefit shall not exceed a total of 3⅓ percent each year." It finally states that the benefits of the firefighter "shall not exceed 100% of his average compensation." Taking these sentences into consideration, the governing Board of Trustees has implemented this formula by awarding those with 30 years of service 3⅓ percent for each year of service, not just 3⅓ percent for each year beyond 12 years of service as the City promotes. Otherwise, the sentence that states "the retirement benefit shall not exceed a total of 3⅓ percent each year" coupled with the qualifier that "benefits shall not exceed one hundred percent of average compensation" would have no meaning.

         As to a member with less than thirty years of service, NOFF does not specify how subpart (B)(1) is unclear or ambiguous. However, NOFF contends there is no express prohibition "recognizing a higher than 2½% multiplier for the critical initial 12 years of service required for vesting under R.S. 11:3386."

         History of La. R.S. 11:3384

         La. R.S. 11:3384 has historically provided a retirement allowance for certain years of service with a higher multiplication factor ("multipliers") for other years, based upon an individual firefighter's age and the number of years of his/her service. As early as 1993, the Louisiana legislature authored legislation that used increased multipliers to reward firefighters with more years of service. The 1993 version of La. R.S. 11:3384 provided in part:

         Firefighters employed after December 31, 1967; computation of benefits

Notwithstanding R.S. 11:3381, any firefighter who enters the employ of the fire department after December 31, 1967, who has reached the age of fifty years and who has not less than twenty years of service in the fire department, and who is a contributing member of this system, may retire upon his written application to the board setting forth at what time he desires to be retired, provided that at the time so specified for his retirement he shall have met the requirements as provided in this Section. In such event, the applicant shall receive a retirement allowance equal to two and one-half percent of his average salary based on the highest four consecutive years multiplied by the number of years of creditable service, not to exceed seventy-five percent and further provided that in the case of those employees who remain in service beyond twenty years and who have reached the age of fifty-five years, the percentage shall be three percent for all years over twenty, with a maximum benefit of eighty percent.

         In 1995, the statute was amended to include subpart B, which specifically dealt with the computation of benefits. From that point until the statute was amended in 2014 (discussed infra), the computation of benefits applied to firefighters who worked (one or more hours) after December 31, 1995. The 1995 amendment retained the same benefit calculation as the 1993 version of the statute, and provided if a firefighter remained a member of the system "beyond twenty years" and had attained "the age of fifty-five, his retirement benefit shall be increased by three percent for each year of service over twenty." The maximum benefit was increased from eighty percent to "one hundred percent of the average compensation earned during any three highest consecutive years of service preceding retirement"

         The 1997 amendment added language to include "portion[s] of years of service beyond twenty years" in the calculation of benefits for those years "beyond twenty years " The statute was also amended to add the following sentence: "the retirement benefits shall not exceed a total of three percent each year." (emphasis added.) Except for an increase to three and one-third percent in 2008, this sentence, along with the maximum service benefits which remained one hundred percent, have been carried over with each amendment to the statute. The 1999 amendment added the following language: "[i]f the member continues service beyond thirty years, the retirement benefit for each year or portion of a year beyond twenty years of service shall be an amount equal to three percent of the average annual compensation for each year or portion of a year." In 2007, the statute decreased the twenty year threshold to twelve years, which is reflected in the current version.

         In 2008, the statute was amended to decrease the age limit for the higher percentage rate of benefits from fifty-five to fifty years, to increase the rate from three percent to three and one-third percent, and to increase the maximum service benefit to three and one-third percent each year. In the 2013 amendment, the number of consecutive years to be counted in calculating retirement benefits was increased from four to five.

         In 2014 (effective January 1, 2015), La. R.S. 11:3384(B) was amended to add subpart B(2) that provided "a firefighter who entered the employ of the fire department on or after January 1, 2015, shall receive a retirement benefit equal to two and three quarters percent of his average compensation based on the five highest consecutive years of employment, multiplied by the number of years of creditable service." No cap was provided for subpart B(2), but subpart B(1) retained the three and one-third percent cap for those firefighters employed on or before December 31, 2014.

         In 2016 (effective August 15, 2016), La. R.S. 11:3384(B) was amended and added subpart B(3). It currently provides:

(1) If a firefighter employed by the fire department on or before December 31, 2014, has worked one or more hours of service after December 31, 1995, he shall receive a retirement benefit equal to two and one-half percent of his average compensation based on the five highest consecutive years of employment, multiplied by the number of years of creditable service. If the member continues to remain a member of the system beyond twelve years of service and such member attains the age of fifty, the retirement benefit for each year or portion of a year beyond twelve years of service and after age fifty shall be an amount equal to three and one-third percent of the average annual compensation for each year or portion of a year. If the member continues service beyond thirty years, the retirement benefit for each year or portion of a year beyond twelve years of service shall be an amount equal to three and one-third percent of the average annual compensation for each year or portion of a year. However, the retirement benefit shall not exceed a total of three and one-third percent each year. The service benefits of such firefighter shall not exceed one hundred percent of the average compensation earned during any five highest average consecutive years of service preceding retirement.
(2) A firefighter who enters the employ of the fire department on or after January 1, 2015, shall receive a retirement benefit equal to two and three quarters percent of his average compensation based on his highest consecutive years of employment, multiplied by the number of years of creditable service. The service benefits shall not exceed one hundred percent of the average compensation earned during any five average consecutive years of service preceding retirement.
(3) A firefighter who enters the employ of the fire department on or after August 15, 2016, shall receive a retirement benefit equal to two and one-half percent of his average compensation, based on the five highest consecutive years of employment, multiplied by the number of years of creditable service. The service benefits of such firefighters shall not exceed one hundred percent of the average compensation earned during any five highest average consecutive years of service preceding retirement.

(emphasis added).

         Statutory Interpretation

         It is well settled that "[w]hen a law is clear and unambiguous and its application does not lead to absurd consequences, it shall be applied as written and no further interpretation may be made in search of legislative intent." In re Succession of Boyter, 99-0761, p. 9 (La. 1/7/00), 756 So.2d 1122, 1128-29. However, if a statute is ambiguous or susceptible of more than one reasonable interpretation, statutory construction is necessary. Burnette v. Stalder, 00-2167, p. 6 (La. 6/29/01), 789 So.2d 573, 577.

         La. R.S. 11:3384(B)(1) sets forth three categories of retirement percentages based on years of service: (1) All members not qualified for a higher percentage- two and one-half percent; (2) Members with beyond twelve years of service and fifty years of age or older-three and one-third percent for all years after year twelve of service; (3) Members with thirty years or more of service-three and one-third percent for all years after year twelve of service. However, the statute further states that "the retirement benefit shall not exceed a total of three and one-third percent each year." While the initial language sets forth precise and mandatory percentages based on qualifying conditions, the latter sentence limits or caps retirement benefits at a mandatory three and one-third percent for each year without setting forth the circumstances under which the cap applies.

         There are at least two reasonable interpretations of La. R.S. 11:3384(B)(1), concerning the cap language. First, the one set forth by the district court, as previously discussed. Second, as urged by NOFF, the language concerning the mandatory percentages, when read in conjunction with the mandatory cap, can reasonably be construed to give NOFF discretion in setting the retirement benefit percentages between two and one-half percent and the three and one-third percent, provided it does not exceed the cap. In its written reasons for judgment, the district court, acknowledging the practice of the Board's calculation, set forth a possible reason for the cap:

[W]hen, under prior law, members age 55 with over 20 years of service received additional percentage points for each year of service over 20 years. Thus, absent the 3⅓% ceiling, the Board potentially could have added percentage points to a member's multiplier, and the 3⅓% ceiling prevented that result. The capping language makes certain that a maximum of three and one-half percent is applied overall to prevent the two and one-half percent benefit, applied for the first twelve years, from being added to the three and one-third percent benefit, applied after twelve years, allowing for a total of five and five-sixths percent benefit.

         Given that the cap cited in La. R.S. 11:3384(B)(1) is unclear and susceptible of more than one reasonable interpretation, we find La. R.S. 11:3384(B)(1) is ambiguous and statutory construction is necessary.

         In determining the manner by which La. R.S. 11:3384(B)(1) is to be interpreted, we look to our established rules of statutory construction. First, "[t]he rule that legislation is the solemn expression of the legislative will and, therefore, the interpretation of a law primarily involves the search for the legislature's intent (citations omitted)." City of New Orleans v. Louisiana Assessors' Ret. & Relief Fund, 05-2548, p. 20 (La. 10/1/07), 986 So.2d 1, 16. "When the language of the law is susceptible of different meanings, it must be interpreted as having the meaning that best conforms to the purpose of the law." La. C.C. art. 10; Fontenot v. Reddell Vidrine Water Dist, 02-439, p. 7 (La. 1/14/03), 836 So.2d 14, 20. Moreover, when the words of a law are ambiguous, their meaning must be sought by examining the context in which they occur and the text of the law as a whole, and laws on the same subject matter must be interpreted in reference to each other. La. C.C. arts. 12 and 13; Conerly v. State, 97-0871, p. 4 (La. 7/8/98), 714 So.2d 709, 711. "The words of a law must be given their generally prevailing meaning. Words of art and technical terms must be given their technical meaning when the law involves a technical matter." La. C.C. art. 11. Every word, sentence, or provision in a law is presumed to be intended to serve some useful purpose, that some effect is given to each such provision, and that no unnecessary words or provisions were used. Colvin v. Louisiana Patient's Compensation Fund Oversight Bd, 06-1104, p. 6 (La. 1/17/07), 947 So.2d 15, 19 (citing Sultana Corp. v. Jewelers Mut. Ins. Co., 03-0360, p. 9 (La. 12/3/03), 860 So.2d 1112, 1119). Consequently, courts are bound, if possible, to give effect to all parts of a statute and to construe no sentence, clause, or word as meaningless and surplusage "if a construction giving force to and preserving all words can legitimately be found." Id., 06-1104, p. 6, 947 So.2d at 19-20.

         In addition to the precepts on statutory construction, Louisiana courts have held that pension statutes, like those at issue here, are remedial in nature and must be liberally construed in favor of the intended beneficiaries, and any ambiguity in pension statutes must be resolved in favor of the persons intended to be benefited by those statutes. Swift v. State of Louisiana, 342 So.2d 191, 196 (La. 1977); Dunn v. City of Kenner, 15-1175, p. 7 (La. 1/27/16), 187 So.3d 404, 410; Harrison v. Trustees of Louisiana State Employees' Ret. Sys., 95-0048, p. 7 (La.App. 1 Cir. 10/6/95), 671 So.2d 385, 390. In Harrison, the court further explained, "[t]he law does not favor denial of retirement benefits whenever there exists a reasonable construction otherwise." Id. (citing West Monroe Police Pension and Relief Fund v. Lofton, 356 So.2d 1126 (La.App. 2d Cir.1978)).

         Title 11 of Louisiana Revised Statutes contains the statutes that create and set forth the rights and duties of the Board. In enacting Title 11, the legislature set forth its purpose. La. R.S. 11:2 states that "[t]he purpose of this title is to consolidate public retirement law in order to effectively comply with the mandate of Article X, Section 29(E) of the Constitution of Louisiana to maintain public retirement systems on a sound actuarial basis" La. R.S. 11:3363(A) gives the Board exclusive control and management of the fund. It provides:

The board of trustees shall have exclusive control and management of the fund and all money donated, paid, or assessed for the relief or pensioning of members with disabilities, members who are superannuated, and retired members of the fire department, their widows and minor children, or widowed mothers, and for the payment of death benefits. This board is created to administer the funds paid into this system and to invest these funds in accordance with the provisions of this Part.

         Subpart (F) of R.S. 11:3363 gives the Board the authority to "make necessary rules and regulations for its government in the discharge of its duties." The basic duty of a fiduciary or trustee of the fund is to discharge his/her duties with respect to the system in the exclusive interest of the members and beneficiaries. La. R.S. 11:3363.1(D).

         In the case sub judice, the Board, based upon the purpose of the Fund and its duties set forth in Title 11, relied on the mandatory percentages language read in conjunction with the mandatory cap language, to give it discretion in setting the retirement benefit percentages between the mandatory two and one-half percent and the mandatory three and one-third percent cap. The Board's discretion was not prohibited as long as the retirement benefit percentage did not exceed the cap and compensation did not exceed one hundred percent of the average compensation earned during any five highest consecutive years of service preceding retirement. The Board's interpretation of subpart (B)(1) allows members to reach one hundred percent of their average compensation in less time. This construction resolves the ambiguity in favor of the intended beneficiaries-the members of the Fund-and, in accordance with established jurisprudence, it must be adopted. Harrison, 95- 0048, p. 7, 671 So.2d at 390; Dunn, 15-1175, p. 7, 187 So.3d at 410.

         Contemporaneous Construction Rule

         NOFF asserts the Board's interpretation is supported by the contemporaneous construction rule.

         This jurisprudential established rule dates as far back as 1827. In State v. U- Drive It Car Co., 79 So.2d 590, 593 (La.App. 4 Cir. 1955), this Court explained:

A concise statement of the doctrine is found in U.S. v. Alabama Great So. Railway Co., 1892, 142 U.S. 615, 621, 12 S.Ct. 306, 308, 35 L.Ed. 1134, as follows:
'* * * It is a settled doctrine of this court that in case of ambiguity the judicial department will lean in favor of a construction given to a statute by the department charge with the execution of such statute, and, if such construction be acted upon for a number of years, will look with disfavor upon any sudden change, whereby parties who have contracted with the government upon the faith of such construction may be prejudiced. * * * These principles were announced as early as 1827 in Edwards' Lessee v. Darby, 12 Wheat. 206, 210 [6 L.Ed. 603], and have been steadily adhered to in subsequent decisions. U.S. v. [State] Bank, 6 Pet. 29, 39 [8 L.Ed. 308]; U.S v. MacDaniel, 7 Pet. 1 [8 L.Ed. 587]; Brown v. U.S., 113 U.S. 568, 5 S.Ct. 648');">5 S.Ct. 648 [28 L.Ed. 1079]; U.S. v. Moore, 95 U.S. 760, 763 [24 L.Ed. 588].'

         This Court quoting Houghton v. Payne, 1904, 194 U.S. 88, 99, 24 S.Ct. 590, 593, 48 L.Ed. 888, espoused:

But in addition to these considerations it is well settled that it is only where the language of the statute is ambiguous and susceptible of two reasonable interpretations that weight is given to the doctrine of contemporaneous construction. U.S v. Graham, 110 U.S. 219, 3 S.Ct. 582, 28 L.Ed. 126; U.S v. Finnell, 185 U.S. 236, 22 S.Ct. 633, 46 L.Ed. 890. Contemporaneous Construction is a rule of interpretation, but is not an absolute one. . . As was said in the Graham Case, 'if there were ambiguity or doubt, then such a practice, begun so early and continued so long, would be in the highest degree persuasive, if not absolutely controlling, in its effect. . . .'

U-Drive, 79 So.2d at 594.

         In Traigle v. PPG Indus., Inc., 332 So.2d 777, 782 (La. 1976), the Supreme Court, in reviewing whether a chemical used by PPG was exempted from taxation, set forth the applicable law on the contemporaneous construction rule writing:

[A]n administrative construction cannot have weight where it is contrary to or inconsistent with the statute. However, where the statute is ambiguous . . . a long settled contemporaneous construction by those charged with administering the statute is given substantial and often decisive weight in its interpretation. Roberts v. City of Baton Rouge, 236 La. 521, 108 So.2d 111 (1958); Esso Standard Oil Co. v. Crescent River Port P. Assn., 235 La. 937, 106 So.2d 316 (1958); and decisions therein cited. See also: Tennessee Gas Transmission Co. v. Violet Trapping Co., 248 La. 49, 176 So.2d 425 (1965); 3 Sutherland, Statutory Construction, Section 66.04 (4th (Sands) ed., 1974).

         Having found La. R.S. 11:3384(B)(1) to be ambiguous, we now review the Board's argument based upon contemporaneous construction of subpart (B)(1).[13]

         NOFF argues that dating back to 1999, the Board applied the same interpretation to the statute.

         In reviewing subpart (B)(1) under this rule, we will look at the two categories of firefighters separately: (1) as applied to members with thirty years or more of service; and (2) as applied to members with beyond ...


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