37 Cal. App. 5th 349
Cal. Ct. App. 5th2019Background
- CalSTRS audited Salinas Unified High School District and found the district had misreported teachers' "sixth period" pay as DB‑creditable rather than DBS, producing overpaid monthly pensions; final audit issued July 30, 2010.
- Baxter petitioners (11 retirees) sued CalSTRS to prevent recoupment; this court in Baxter held the continuous‑accrual theory applied to pension installments and limited time‑bar only to payments older than three years before CalSTRS "commenced an action."
- Separate group of 31 retired teachers (Teachers/Blaser) sued CalSTRS (Feb 1, 2016) seeking to enjoin benefit reductions and recoupment as time‑barred; trial court ruled for Teachers, holding CalSTRS entirely time‑barred and rejecting continuous accrual.
- CalSTRS appealed, arguing Baxter controls and that continuous accrual permits recovery for installments accruing within three years of when CalSTRS commenced an action.
- This court held the continuous‑accrual theory applies to periodic pension payments, that CalSTRS is time‑barred only as to payments more than three years before it commenced an "action," and that CalSTRS is deemed to have commenced an action on Feb 1, 2016 (when Teachers filed suit), tolling counterclaims.
Issues
| Issue | Plaintiff's Argument (Teachers) | Defendant's Argument (CalSTRS) | Held |
|---|---|---|---|
| Whether continuous‑accrual applies to periodic pension overpayments | Continuous‑accrual should not apply here; facts/procedure differ from Baxter and Teachers didn’t act "wrongfully" | Baxter and Supreme Court precedent (Dryden) require continuous‑accrual for periodic pensions | Continuous‑accrual applies to periodic pension payments; Baxter and Dryden control |
| When statute of limitations accrues under §22008(c) | (Teachers largely accepted accrual findings below) | Accrues on discovery or when party should have discovered incorrect payment | Accrual rule is discovery/inquiry notice standard (as in Baxter) |
| What event constitutes commencement of an "action" under §22008(a) | CalSTRS did not commence an action by unilateral benefit reductions; only administrative filing counts | In this case CalSTRS took action in 2014 by reducing benefits | Filing by plaintiff (Teachers) on Feb 1, 2016 tolled limitations for CalSTRS; benefit reductions did not constitute commencement |
| Scope of remedies available to CalSTRS given continuous accrual | CalSTRS entirely time‑barred from recouping or adjusting benefits | CalSTRS may recoup/adjust for installments within 3 years of action commencement | CalSTRS barred only as to payments older than 3 years before Feb 1, 2016; may recoup/adjust for payments on or after Feb 1, 2013 |
Key Cases Cited
- Dryden v. Board of Pension Commrs., 6 Cal.2d 575 (Cal. 1936) (pensions are continuing rights; recovery available for recent and future periodic installments)
- Baxter v. State Teachers' Retirement System, 18 Cal.App.5th 340 (Cal. Ct. App.) (applies continuous‑accrual to CalSTRS periodic pension overpayments and analyzes what constitutes commencement of an action)
- Aryeh v. Canon Business Solutions, 55 Cal.4th 1185 (Cal. 2013) (explains continuous‑accrual theory for recurring obligations)
- Union Sugar Co. v. Hollister Estate Co., 3 Cal.2d 740 (Cal. 1935) (plaintiff’s complaint tolls statute of limitations as to counterclaims existing on filing date)