18 Cal.App.5th 340
Cal. Ct. App.2017Background
- Eleven retired Salinas Unified High School District teachers (Teachers) received monthly CalSTRS Defined Benefit pension payments that were later found to be overstated because the District misclassified sixth-period pay as creditable compensation.
- A District memorandum dated August 18, 2005 (the Fellows memorandum) alerted the Monterey County Office of Education (MCOE) to possible reporting errors affecting sixth-period teachers; CalSTRS received audit findings from its outside auditor on December 1, 2008, and a final CalSTRS audit on July 30, 2010.
- CalSTRS ordered the District to correct reports and remit overpayments in July 2010; when the District did not, CalSTRS notified affected teachers in March 2012 that it would reduce ongoing benefits (effective April 1, 2012) and recoup prior overpayments by withholding up to 5% of benefits.
- Teachers appealed administratively; CalSTRS filed a Statement of Issues on July 6, 2012, an ALJ and the CalSTRS Appeals Committee upheld CalSTRS, and Teachers petitioned for writ of administrative mandamus in superior court.
- The superior court granted the writ, holding CalSTRS’s recoupment and benefit reductions were time‑barred under Education Code §22008; the Court of Appeal reversed in part, holding (1) §22008(c)’s “discovery” incorporates inquiry notice, (2) the limitations accrual date was August 18, 2005, and (3) the administrative “action” was commenced by filing the Statement of Issues on July 6, 2012, but the continuous‑accrual rule permits recovery for payments due within three years of that filing.
Issues
| Issue | Teachers' Argument | CalSTRS' Argument | Held |
|---|---|---|---|
| Meaning of “discovery” in Ed. Code §22008(c) (when 3‑year limit begins) | "Discovery" requires actual knowledge; inquiry notice insufficient | "Discovery" includes actual or inquiry notice (CalSTRS asserted actual discovery later) | "Discovery" includes actual or inquiry notice (statute accrues when claimant knows or should have known) |
| Whether August 18, 2005 (Fellows memo) started the limitations period | Teachers: that memo (to MCOE) gave notice earlier; limitations run from that date | CalSTRS: memo did not put it on notice (no evidence CalSTRS received it; MCOE not CalSTRS agent) | Memo gave inquiry notice to MCOE, and MCOE was ostensible agent of CalSTRS; accrual date = Aug 18, 2005 |
| What constitutes commencement of an “action” under §22008(a) | Teachers: action commenced when CalSTRS filed Statement of Issues (July 6, 2012) | CalSTRS: action commenced earlier (mailing final audit July 30, 2010) or by unilateral benefit reductions effective April 1, 2012 | Filing the Statement of Issues (July 6, 2012) commences an administrative “action”; mailing audit or reducing payments did not suffice |
| Effect of statute of limitations on past and future periodic pension payments | Teachers: entire recoupment and benefit reductions are time‑barred because CalSTRS did not act within 3 years of discovery | CalSTRS: even if some claims are stale, continuous accrual means each periodic payment gives rise to its own limitations period; only payments older than 3 years before July 6, 2012 are barred | Continuous accrual applies to periodic pension payments; CalSTRS is time‑barred only as to payments due more than three years before July 6, 2012; claims for payments within 3 years and for future corrections are not barred |
Key Cases Cited
- People v. Tulare County, 45 Cal.2d 317 (California Supreme Court 1955) (administrative mandamus framework)
- Bixby v. Pierno, 4 Cal.3d 130 (California Supreme Court 1971) (independent judicial review where vested fundamental rights affected)
- Jolly v. Eli Lilly & Co., 44 Cal.3d 1103 (California Supreme Court 1988) (discovery rule: inquiry notice starts limitations)
- Aryeh v. Canon Business Solutions, Inc., 55 Cal.4th 1185 (California Supreme Court 2013) (continuous‑accrual doctrine for periodic claims)
- Dryden v. Board of Pension Commissioners, 6 Cal.2d 575 (California Supreme Court 1936) (pension payments are continuing rights; limitations run per installment)
- Deveny v. Entropin, Inc., 139 Cal.App.4th 408 (California Court of Appeal 2006) (statutory “discovery” construed to include inquiry notice)
- Debro v. Los Angeles Raiders, 92 Cal.App.4th 940 (California Court of Appeal 2001) (similar construction of “discovery” in Government Code limitations)
- Dillon v. Board of Pension Commissioners of Los Angeles, 18 Cal.2d 427 (California Supreme Court 1941) (distinguishes entitlement‑determination actions from installment recovery; limitations per installment)