2 Cal. 5th 630
Cal.2017Background
- Frank Flethez stopped working for San Bernardino County on January 28, 2000; his last day of regular compensation was July 14, 2000.
- He filed a service‑related disability retirement application in June 2008; SBCERA awarded benefits retroactive only to the June 2008 application date.
- Flethez later argued his benefits should be retroactive to July 15, 2000 under Government Code §31724’s "inability to ascertain permanency" (deemer) clause; SBCERA denied that earlier start date after administrative review.
- Flethez obtained a writ of mandate in superior court ordering SBCERA to make benefits effective July 15, 2000 and the court awarded prejudgment interest under Civil Code §3287(a) from that 2000 date.
- The Court of Appeal reversed only the prejudgment interest award, holding interest runs from the date the claimant’s right to the payments vested (i.e., when entitlement was established); the Supreme Court granted review.
- The Supreme Court affirmed the Court of Appeal: prejudgment interest under §3287(a) for CERL retroactive disability awards begins when the retirement board wrongfully denies the claim (the date damages vested), not from the retroactive effective date of the benefits.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| When does §3287(a) prejudgment interest run on retroactive CERL disability benefits? | Interest should run from each retroactive payment's accrual date (e.g., July 15, 2000) because pension rights vest and each payment accrued then. | Interest should run only from the date the retirement board wrongfully denied the application (i.e., when the right to recover vested), because eligibility is contingent on board determination. | Interest accrues from the date of the wrongful denial (when the right to recover vested), not from the retroactive effective date of the benefit payments. |
Key Cases Cited
- Mass v. Bd. of Education, 61 Cal.2d 612 (Cal. 1964) (prejudgment interest awarded on wrongfully withheld salary; payments deemed vested as they accrued)
- American Federation of Labor v. Unemployment Ins. Appeals Bd., 13 Cal.4th 1017 (Cal. 1996) (administrative scheme means agency has no monetary obligation until eligibility determined; delays inherent in process do not automatically create §3287(a) liability)
- Austin v. Bd. of Retirement, 209 Cal.App.3d 1528 (Cal. Ct. App. 1989) (affirmed interest from retroactive benefit start date; disapproved to extent inconsistent with this opinion)
- Olson v. Cory, 35 Cal.3d 390 (Cal. 1983) (prejudgment interest recoverable on pension payments from date they fell due)
- Weber v. Bd. of Retirement, 62 Cal.App.4th 1440 (Cal. Ct. App. 1998) (recognizes inchoate rights before eligibility established; relevant to timing of vesting)