This class action was brought by retirees who contended that the Teachers Retirement System (“TRS”) incorrectly calculated their monthly retirement pay. The Supreme Court previously reversed the trial court’s grant of summary judgment to TRS, analyzing the applicable statute and directing the trial court to determine whether the class members should have received a higher monthly benefit and which statute of limitation applied.
Plymel v. Teachers Retirement System,
In Case No. A08A1958, TRS contends the trial court erred by applying the twenty-year statute of limitation for enforcement of rights under a statute (OCGA § 9-3-22) instead of the six-year statute of limitation for breach of contract (OCGA § 9-3-24). TRS also asserts the trial court erred in finding that a new statute of limitation begins to run upon each successive benefits payment, and erred in awarding class counsel such a large fee. In Case No. A08A1959, the class members argue the trial court erred in awarding interest at only 4.5 percent instead of 7 percent pre-judgment (OCGA §§ 7-4-15; 7-4-2), and prime plus 3 percent post-judgment (OCGA § 7-4-12). For the reasons that follow, we reverse the trial court’s finding that the applicable statute of limitation is twenty years instead of six and its application of 4.5 percent pre- and post-judgment interest, and remand for further proceedings consistent with this opinion. We affirm the finding that the statute of limitation begins to run on each successive breach and the attorney fee award.
*840
The class members are retired educators who are members of TRS. At retirement, each class member elected to participate in an optional retirement plan, which paid a reduced monthly retirement benefit for the retired teacher with a remaining benefit paid to a named beneficiary upon the teacher’s death, as provided in OCGA § 47-3-121.
1
The optional plan benefits were calculated using “option factors” based upon mortality tables adopted by TRS in 1983. In 2003 TRS adopted new option factors based on new mortality tables, which reflected a longer life expectancy. The longer the member has to fund the beneficiary’s remainder benefit, the cheaper the monthly payments are to buy that benefit. Thus, as life expectancy increased with the new mortality tables, the member had a longer time to buy the benefit, which resulted in smaller deductions from the member’s monthly benefit amount. The application of the new option factor resulted in increased benefits payable under the option plan for retirees who retired after February 2003, but TRS did not increase the monthly benefits for members who retired before then. See
Plymel v. TRS,
supra,
TRS is governed by a complex statutory scheme provided in OCGA § 47-3-1 et seq., which requires that the optional plan allowance be “actuarially equivalent” to the maximum plan allowance. The members filed this action in April 2004 alleging that TRS unlawfully used an outdated mortality table to calculate the optional plan participants’ monthly benefits. The trial court initially granted summary judgment to TRS, and the members appealed to the Supreme Court of Georgia, contending that TRS breached their employment contracts and raising constitutional claims.
The Supreme Court of Georgia held that the trial court erred in granting summary judgment to TRS on the members’ breach of contract claim.
Plymel v. TRS,
supra,
*841 On remand from the Supreme Court, TRS did not dispute that it used the wrong mortality tables in calculating the optional plan benefits, and that it owed additional funds to some class members, but disputed the amounts due. The trial court granted summary judgment to the class members and attorney fees to class counsel, and this appeal followed.
Case No. A08A1958
1. TRS first argues that the applicable statute of limitation is six years for breach of contract rather than twenty years for enforcement of a statutory right. The trial court disagreed. It held that, according to the Supreme Court opinion, the class members’ statutory claims form the basis of their recovery, not their individual contracts, none of which had been introduced into evidence during this litigation. Accordingly, the trial court concluded that the applicable statute of limitation was 20 years under OCGA § 9-3-22, which provides, “All actions for the enforcement of rights accruing to individuals under statutes or acts of incorporation or by operation of law shall be brought within 20 years after the right of action has accrued.”
TRS argues that statutes establishing government employee retirement plans become part of the employees’ employment contract, which is then interpreted under contract law. The statute of limitation for breach of contract is six years. OCGA § 9-3-24. Further, class members framed their argument in breach of contract terms, and the Supreme Court of Georgia agreed with the plaintiffs that the trial court “erred by granting summary judgment to TRS on [the members’] breach of contract claim.”
Plymel v. TRS,
supra,
We agree. Georgia’s appellate courts have held that a “statute or ordinance establishing a retirement plan for government employees becomes a part of an employee’s contract of employment if the employee contributes at any time any amount toward the benefits he is to receive.”
Parrish v. Employees’ Retirement System of Ga.,
Further, reviewing the history of the 20-year statute of limitation reveals that it does not apply in this situation. The General Assembly enacted the predecessor to OCGA § 9-3-22 in 1856.
Harris v. Smith,
The evident purpose of [the 20-year statute] is to fix a period of limitation for special cases not provided for by the general statute of limitations, or otherwise, where rights accruing to “individuals” are sought to be enforced. A statutory liability is one that depends for its existence upon the enactment of a statute, and not upon the contract of the parties.
Bigby v. Douglas,
In concluding that the 20-year statute of limitation did not apply to a suit against a county sheriff seeking repayment of money left over after the sheriff levied on a writ of fieri facias, the Supreme Court considered the legislature’s intentions.
In looking at the act itself, we find that the legislature was dealing with rights accruing to individuals under statutes, and acts of incorporation, the latter of which, especially about the date of the passage of the act, had given rise to great litigation in the state. In some of the cases growing out of both statutory and charter liabilities of parties, it was held that obligations arose which were quasi ex contractu, and imposed by operation of mere law. Looking at the act and the judicial decisions of the times, it would seem that these words were intended to apply to such rights as arise in connection with, though not strictly under, the very words of the statutes or acts of incorporation.
(Citation and punctuation omitted.)
Harris v. Smith,
supra,
In other words, the legislature was spurred to enact the 20-year statute of limitation because corporations were being created by charter in courts of law and the bench and bar were confused about the rules applicable to lawsuits involving these corporations. This point is illustrated by an earlier case,
Ga. Masonic Ins. Co. v. Davis,
The trial court and appellees in this case cite Georgia Masonic for the proposition that the 20-year statute should apply, but considering the statutory history and entire opinion, the case does not support this conclusion. The court in that case said:
The deceased, in his life-time, planted a contract, and from that root sprang up a statutory right, the measure of which is found in the charter and by-laws, and to gather in the fruits of that right the action is prosecuted. The purpose of the suit is not to burrow after the contract, but to shake the tree which express enactment of the law has made to grow out of it.
Id. at 474. In other words, the corporate charter, or statute, contained all the terms of the insurance payments. Accordingly, the twenty-year statute applied to a claim for payment arising under the charter.
The reverse was true in
Savannah & Ogeechee Canal Co. v. Shuman,
If the charter had declared that in case the company should fail to keep its canal in good condition and repair, and any person should be injured thereby, the company should be liable to such person for the injury, this would have created such a statutory right in favor of a person thus injured as would render [the 20-year statute of limitation] applicable.
Id. at 173. Consequently,
the twenty-year limitation prescribed in that statute has reference only to rights which arise under legislative enactment, and which would not exist except for some act of the legislature. . . . [It] applies to cases in which there is a special liability created by a special charter or statute, as instanced in numerous cases in the early Georgia reports.
Williams v. Clemons,
Thus, the 20-year statute of limitation does not apply to all cases in which a statutory duty is violated. “[I]f, indeed, it were made so to apply, we are at a loss to see where it would stop; for every right to recover arises in some way by operation of law, and if we stick to the letter of this act there would be but few cases barred by [a shorter] statute.”
Harris v. Smith,
supra,
In this case, the members’ rights to their retirement pay do not arise from the statute; they arise from their contract of employment. The statute simply provides the mechanism by which that payment is calculated. Therefore, the six-year period of limitation applies in this case.
2. The trial court also held that the statute of limitation accrued each month the retirees were underpaid, rather than once when they retired. OCGA § 9-3-24 requires that an action upon a written contract be brought within six years after the contract becomes due and payable, and when that six-year period begins running on a breach of contract claim depends on whether the agreement is entire or divisible.
Douglas & Lomason Co. v. Hall,
*845
If the contract is divisible, the statute runs separately as to each payment when it becomes due, and the failure of one part does not void the remainder.
Piedmont Life Ins. Co. v. Bell,
The trial court here determined that this was an entire contract, but that the breaches occurred at successive periods, thus allowing an action for each breach under OCGA § 13-6-14. While we agree with the trial court’s conclusion that the statute of limitation accrued on a payment-by-payment basis, we do so for a different reason. In this case, “the agreement is not entire, because the contractual consideration at issue is not a single sum certain which remained unpaid after a definite due date,” but instead “was for an indefinite total amount which was payable in installments over the uncertain period” of the member’s life.
Baker v. Brannen/Goddard Co., 274
Ga. 745, 748-749 (2) (
TRS argues that the contract is entire, and that the exception in OCGA § 13-6-14 — providing that if breaches in an entire contract occur in successive periods, an action lies for each breach — does not apply here because TRS only breached the contract once, citing
City of East Point v. Seagraves,
Similar reasoning cannot be applied to this case. TRS had a duty to pay benefits in successive installments over the uncertain period of the members’ lives. Accordingly, the trial court did not err in holding that the statute of limitation accrued on a payment-by-payment basis.
3. The trial court granted class counsel’s application for 30 percent of the Common Fund for attorney fees and expenses after considering in detail the 12 “ Johnson” factors this court approved in
Friedrich v. Fidelity Nat. Bank,
TRS asserts on appeal that this award is excessive. The uncontested claims falling within the six-year statute of limitation total over $93 million, 30 percent of which is almost $28 million. These funds would otherwise go to the retirees and come, not from a for-profit corporation, but from a public retirement system, it argues. Class counsel responds that their payment comes from the common fund that TRS had to pay regardless and that TRS has no standing to complain about a fee issue between class members and class counsel, who have fought this complex case since 2004.
Pretermitting whether TRS has standing to complain about the fee awarded to class counsel from the common fund, we conclude that the trial court did not err in its award. As the trial court noted, under Georgia law, if a common fund is generated in a class action for the benefit of the class, a percentage of the fund goes to pay for reasonable attorney fees.
State of Ga. v. Private Truck Council of America,
The trial court exhaustively considered all 12 “ Johnson” factors, and thoroughly explained the reasoning behind the award. We find no error.
Case No. A08A1959
4. The class members argue that the trial court applied the wrong interest rates to the judgment. TRS does not dispute that it owes back benefits, and has already paid into the common fund about $93 million, which represents amounts due applying the six-year statute of limitation. The court held that the applicable pre- and post-judgment interest rate was 4.5 percent, based on an administrative rule. Class members argue in their cross-appeal that this interest rate applies to retirement system operations, not to judgments, and that the trial court should have awarded seven percent pre-judgment interest and prime plus three percent post-judgment interest.
OCGA § 7-4-2 (a) (1) (A) provides that the legal rate of interest is seven percent unless the rate is otherwise established by written contract. OCGA § 7-4-12 (a) provides that post-judgment interest is prime plus three percent, again unless the rate is otherwise established by written contract. The Code further defines “interest” as “a charge for the use of money computed over the term of the contract at the rate stated in the contract or precomputed at a stated rate on the scheduled principal balance or computed in any other way or any other form.” OCGA § 7-4-2 (a) (3). TRS argues its Board of Trustees established the interest rate at 4.5 percent under a statute directing the Board to determine the rate of “regular interest” to use “in all calculations required in connection with the retirement system.” OCGA § 47-3-23 (b). In 1975 the Board adopted Administrative Rule 513-5-1-.50, which provides in its entirety, “Member accounts will be credited with 4-1/2% interest rather than 3-1/2% effective June 30, 1975.”
While employed, teachers contribute a percentage of their income to fund part of their retirement, and TRS holds that money in its annuity savings fund. “Member accounts” are the employees’ individual accounts which contain their contributions. See OCGA §§ 47-3-1 (1); 47-3-41 (a). Member accounts must be credited with interest once a year (OCGA § 47-3-44), and the 4.5 percent set in the administrative rule applies to this interest paid from one fund to the other. That interest is paid out of the “pension accumulation *848 fund,” from which the pensions are paid once the employee retires or dies. When either event occurs, the former employee is no longer a “member” of the system and that person’s individual member account is paid into the pension accumulation fund. OCGA §§ 47-3-60 (e) (1), (2); 47-3-41 (d). The retiree or his beneficiary is entitled to an annuity based on amounts formerly held in the annuity savings fund, plus a pension that raises the annuity payment to a sum calculated on income and years of service. OCGA § 47-3-120 (a).
Two years after adopting this rule paying 4.5 percent annually to the member accounts, the Board of Trustees asked the Attorney General for an opinion as to “whether the term ‘regular interest’ as it is used throughout the TRS Act requires that only one rate of regular interest be used in all calculations made in connection with the operation of TRS.” (Emphasis omitted.) Op. Atty. Gen. 77-74. In his answer, the Attorney General noted that “the use of differing interest rates for different calculations is the standard practice among governmental and private retirement systems,” and that it was “abundantly clear that many different rates of interest have been used by the board of trustees in connection with different calculations made by TRS for various purposes.” Id. For example, the actuarially assumed interest rate was five percent, but the actual rate paid on member contributions was 4.5 percent. The opinion concluded that TRS had the statutory authority to “establish different rates of regular interest for use in connection with different mathematical calculations made by the Retirement System.” Id.
A contract that specifies an interest rate for one purpose does not automatically set the rate for other purposes. For example, in a contract that specified only the interest rate on overdue loan installments, the statutory rate applied to pre-judgment interest.
Hopkins v. West Publishing Co.,
As the Attorney General opinion makes clear, TRS already uses different interest rates in different calculations. Its administrative rule only establishes the rate that applies to member accounts, does not by its terms apply to pre- or post-judgment interest, and cannot be construed to apply to any other calculation TRS makes. There being no pre- or post-judgment interest rate established by written *849 contract, the trial court erred in applying the rate of 4.5 percent in both cases instead of the statutory rates of 7 percent and prime plus 3 percent.
Chilivis v. Rogers Oil Co.,
Therefore, this case is remanded to the trial court with direction to determine the correct amount of damages owed and include interest at the appropriate rate.
Judgment affirmed in part and reversed in part, and case remanded with direction.
Notes
The other plan available to retirees provided benefits only to the class members and paid the maximum monthly amount.
“[A]n opinion is physical precedent only with respect to any Division of the opinion for which there is a concurrence in the judgment only or a special concurrence without a statement of agreement with all that is said.” Court of Appeals Rule 33 (a).