T ritorial Law Library
2 IN THE SUPERIOR COURT OF GUAM 3
4 ) 5 ODILIA BAUTISTA and JOSEPH A.) CIVIL CASE NO. CV1848-01 6 GUTHRIE, ) Plaintiffs, ) 7 ) v. ) DECISION AND ORDER 8 ) ON PLAINTIFF GUTHRIE'S MOTION FOR ENFORCEMENT 9 GERALD SA PEREZ, et. ai., ) ) 10 Defendants. ) 11
12 INTRODUCTION 13 This matter came before the Honorable Alberto C. Lamorena, III, on August 15,2011,0 14 Plaintiff Guthrie's motion for enforcement of a prior order of this Court issued on February 23 15 2003. Plaintiff, acting pro se, was present. Attorney Elyze M Iriarte represented the Defendants 16 the Trustees of the Government of Guam Retirement Fund ("Board,,).l Following the hearing 17 this Court took the matter under advisement. In order to receive additional information, thi 18 Court issued an Order to Show cause to the Board requiring the Board to appear on January 12 19 2012 and explain to this Court its efforts to comply with its obligations under the law. Afte 20 considering the parties' written and oral arguments regarding the underlying motion fo 21 enforcement as well as the information provided at the show cause hearing the Court now issue
22 its Decision and Order. 23 FACTUAL BACKGROUND 24 Plaintiff Guthrie is a member of a Government of Guam Defined Benefit Plan ("D 25 Plan") established in 1951. The DB Plan provides for a fixed, determinable, defined armuit
27 1 The original Complaint named as defendants those individuals serving as Trustees for th 28 Government of Guam Retirement Fund at the time the complaint was filed. The current Trustee are Joe T. San Agustin, Wilfred Leon Guerrero, Katherine Taitano, Antolina Leon Guerrero
-1- based on an employee's earnings and years of service. The government's cost to provide thi 2 defined benefit is whatever is necessary to provide the benefit and these costs are paid from th 3 Government of Guam Retirement Fund ("Fund"). See 4 G.C.A. § 8168. 4 In 2001, Plaintiffs Guthrie and Bautista filed an action for declaratory relief in relation t 5 various laws passed by the legislature that created additional funding obligations by the Fund. 6 The laws established non-vested benefits and cost of living increases to be paid to retirees 7 though the legislature did not appropriate funds upfront to pay for the benefits. Instead, the Fun 8 agreed to "pick up" the liability on the condition that costs would be amortized and paid bac 9 over a period of years. Plaintiffs sought a judicial determination and declaration that woul IO essentially relieve the Fund of any obligation to pay for these unfunded liabilities because, 11 Plaintiffs argued, such obligations negatively impacted the maintenance of an actuarially soun 12 retirement fund. 13 In a Decision and Order dated February 23, 2003 ("Order"), this Court ultimately foun 14 that a government employee's right to collect a pension under a public retirement statut 15 amounts to contractual rights and that the government cannot generally pass a law that impair 16 that contractual right. See Bautista v. Perez, Civil Case No. 1848-01, Decision and Order a 17 Motionfor Summary Judgment (Feb. 23,2003). This Court determined that "diversion of fund 18 increases the Retirement Fund's unfunded accrued actuarial liability, thus impairing th 19 soundness of the Fund" and undermines the government's ability to perform its contractu 20 obligations. Id. The Order therefore explained that the Board must, inter alia, challeng 21 legislation that would amend the DB Plan to increase benefits levels, reduce or delay funding 0 22 contributions, "or otherwise impair the ability of the government to provide retirement 23 disability, and survivor benefits to members and beneficiaries." Id. 24 In 2011, the Guam Legislature passed Public Law 31-1. This law broadened the position 25 under which a retired government worker could be re-employed while, at the same tim 26 continuing to collect a pension. Plaintiff argues re-hiring of government workers who continue t 27
28 George A. Santos, Gerard Cruz, and Wilfred Aflague. These current trustees are substituted Defendants, in their official capacities, pursuant to Guam Rule of Civil Procedure 25(d).
-2- receive a pension amounts to "double-dipping" that effectively increases the unfunded liability 0 2 the fund and expands minimum eligibility requirements. Plaintiff therefore argues that the Boar 3 was required by this Court's Order to challenge this legislation. 4 In 2011, the Guam Legislature also passed Public Law 31-74. 5 contribution rate of select government agencies from June 4, 2011, to September 30, 2011. Th 6 total reduction (or "savings") from the reduction totaled $6,837,736, and this amount was the 7 re-appropriated and applied in large part to cover health insurance premiums for governmen 8 workers and retirees. The law added the amount of the savings to the total delinquent amoun 9 owed to the Fund and required that the outstanding principal and interest owed to the Fun 10 would be repaid with money from the next general obligation bond issue of the Government 0 11 Guam. Notwithstanding the repayment provision, which Plaintiff argues is merely illusory 12 Plaintiff asserts that because P.L. 31-74 expressly reduced contributions to the Fund, the Boar 13 was required to challenge that law pursuant to this Court's Order. 14 In response to Plaintiff's assertions, the Board claims that it has fully complied with th 15 Order and its fiduciary obligations. The Board argues that while P.L. 31-1 may not represen 16 sound fiscal policy on the part of the legislature, the law does not adversely affect the DB Plan 17 Plaintiff argues: While the employees may be double dipping in terms of receiving both a sal 18 and annuity, they have already made their full contributions to the DB Plan and do not receiv 19 additional DB Plan benefits under the law. 20 DISCUSSION 21 This Court is convinced at this time that the Board has complied both with its fiduci 22 duties and with this Court's Order. Title 4, section 8139.1(b) of the Guam Code sets forth th 23 Board's fiduciary duties: "The members of the Board of Trustees shall discharge their dutie 24 with respect to the management of the Retirement Fund solely in the interest of the members an 25 beneficiaries of the Fund and for exclusive purpose of Providing benefits to the members an 26 beneficiaries and defraying reasonable expenses of administering the Fund." This Court's Orde 27 neither added to nor removed from those fiduciary duties established under section 8139.1 (b). B 28 issuing the Order, this Court merely attempted to clarify that the Board has a fiduciary obligatio
-3- to consider legislation that may affect the actuarial soundness of the fund challenge laws that ar 2 likely to negatively impact the resources available to the Fund for payment of member benefits. 3 With respect to P.L. 31-74, this Court is convinced that by analyzing the law an 4 weighing its effects on the financial integrity of the Fund and concluding that no challenge wa 5 necessary, the Board acted in a responsible manner as to its fiduciary obligations under sectio 6 8139.1 and did not act inconsistently with the spirit of this Court's Order. The Board considere 7 the implications of P.L. 31-74 and found that rather than impair the Fund's ability to provid 8 retirement, disability, and survivor benefits, the law would actually result in a net gain 0 9 resources that would allow the Board and the Fund to provide these benefits. And while it is tm 10 that the Order directs the Board to challenge legislation that would effectively "reduce or dela II funding of contributions," this Court was primary concerned with ensuring that the Board tak 12 appropriate measures to promote and ensure the actuarial soundness of the Fund.
Free access — add to your briefcase to read the full text and ask questions with AI
T ritorial Law Library
2 IN THE SUPERIOR COURT OF GUAM 3
4 ) 5 ODILIA BAUTISTA and JOSEPH A.) CIVIL CASE NO. CV1848-01 6 GUTHRIE, ) Plaintiffs, ) 7 ) v. ) DECISION AND ORDER 8 ) ON PLAINTIFF GUTHRIE'S MOTION FOR ENFORCEMENT 9 GERALD SA PEREZ, et. ai., ) ) 10 Defendants. ) 11
12 INTRODUCTION 13 This matter came before the Honorable Alberto C. Lamorena, III, on August 15,2011,0 14 Plaintiff Guthrie's motion for enforcement of a prior order of this Court issued on February 23 15 2003. Plaintiff, acting pro se, was present. Attorney Elyze M Iriarte represented the Defendants 16 the Trustees of the Government of Guam Retirement Fund ("Board,,).l Following the hearing 17 this Court took the matter under advisement. In order to receive additional information, thi 18 Court issued an Order to Show cause to the Board requiring the Board to appear on January 12 19 2012 and explain to this Court its efforts to comply with its obligations under the law. Afte 20 considering the parties' written and oral arguments regarding the underlying motion fo 21 enforcement as well as the information provided at the show cause hearing the Court now issue
22 its Decision and Order. 23 FACTUAL BACKGROUND 24 Plaintiff Guthrie is a member of a Government of Guam Defined Benefit Plan ("D 25 Plan") established in 1951. The DB Plan provides for a fixed, determinable, defined armuit
27 1 The original Complaint named as defendants those individuals serving as Trustees for th 28 Government of Guam Retirement Fund at the time the complaint was filed. The current Trustee are Joe T. San Agustin, Wilfred Leon Guerrero, Katherine Taitano, Antolina Leon Guerrero
-1- based on an employee's earnings and years of service. The government's cost to provide thi 2 defined benefit is whatever is necessary to provide the benefit and these costs are paid from th 3 Government of Guam Retirement Fund ("Fund"). See 4 G.C.A. § 8168. 4 In 2001, Plaintiffs Guthrie and Bautista filed an action for declaratory relief in relation t 5 various laws passed by the legislature that created additional funding obligations by the Fund. 6 The laws established non-vested benefits and cost of living increases to be paid to retirees 7 though the legislature did not appropriate funds upfront to pay for the benefits. Instead, the Fun 8 agreed to "pick up" the liability on the condition that costs would be amortized and paid bac 9 over a period of years. Plaintiffs sought a judicial determination and declaration that woul IO essentially relieve the Fund of any obligation to pay for these unfunded liabilities because, 11 Plaintiffs argued, such obligations negatively impacted the maintenance of an actuarially soun 12 retirement fund. 13 In a Decision and Order dated February 23, 2003 ("Order"), this Court ultimately foun 14 that a government employee's right to collect a pension under a public retirement statut 15 amounts to contractual rights and that the government cannot generally pass a law that impair 16 that contractual right. See Bautista v. Perez, Civil Case No. 1848-01, Decision and Order a 17 Motionfor Summary Judgment (Feb. 23,2003). This Court determined that "diversion of fund 18 increases the Retirement Fund's unfunded accrued actuarial liability, thus impairing th 19 soundness of the Fund" and undermines the government's ability to perform its contractu 20 obligations. Id. The Order therefore explained that the Board must, inter alia, challeng 21 legislation that would amend the DB Plan to increase benefits levels, reduce or delay funding 0 22 contributions, "or otherwise impair the ability of the government to provide retirement 23 disability, and survivor benefits to members and beneficiaries." Id. 24 In 2011, the Guam Legislature passed Public Law 31-1. This law broadened the position 25 under which a retired government worker could be re-employed while, at the same tim 26 continuing to collect a pension. Plaintiff argues re-hiring of government workers who continue t 27
28 George A. Santos, Gerard Cruz, and Wilfred Aflague. These current trustees are substituted Defendants, in their official capacities, pursuant to Guam Rule of Civil Procedure 25(d).
-2- receive a pension amounts to "double-dipping" that effectively increases the unfunded liability 0 2 the fund and expands minimum eligibility requirements. Plaintiff therefore argues that the Boar 3 was required by this Court's Order to challenge this legislation. 4 In 2011, the Guam Legislature also passed Public Law 31-74. 5 contribution rate of select government agencies from June 4, 2011, to September 30, 2011. Th 6 total reduction (or "savings") from the reduction totaled $6,837,736, and this amount was the 7 re-appropriated and applied in large part to cover health insurance premiums for governmen 8 workers and retirees. The law added the amount of the savings to the total delinquent amoun 9 owed to the Fund and required that the outstanding principal and interest owed to the Fun 10 would be repaid with money from the next general obligation bond issue of the Government 0 11 Guam. Notwithstanding the repayment provision, which Plaintiff argues is merely illusory 12 Plaintiff asserts that because P.L. 31-74 expressly reduced contributions to the Fund, the Boar 13 was required to challenge that law pursuant to this Court's Order. 14 In response to Plaintiff's assertions, the Board claims that it has fully complied with th 15 Order and its fiduciary obligations. The Board argues that while P.L. 31-1 may not represen 16 sound fiscal policy on the part of the legislature, the law does not adversely affect the DB Plan 17 Plaintiff argues: While the employees may be double dipping in terms of receiving both a sal 18 and annuity, they have already made their full contributions to the DB Plan and do not receiv 19 additional DB Plan benefits under the law. 20 DISCUSSION 21 This Court is convinced at this time that the Board has complied both with its fiduci 22 duties and with this Court's Order. Title 4, section 8139.1(b) of the Guam Code sets forth th 23 Board's fiduciary duties: "The members of the Board of Trustees shall discharge their dutie 24 with respect to the management of the Retirement Fund solely in the interest of the members an 25 beneficiaries of the Fund and for exclusive purpose of Providing benefits to the members an 26 beneficiaries and defraying reasonable expenses of administering the Fund." This Court's Orde 27 neither added to nor removed from those fiduciary duties established under section 8139.1 (b). B 28 issuing the Order, this Court merely attempted to clarify that the Board has a fiduciary obligatio
-3- to consider legislation that may affect the actuarial soundness of the fund challenge laws that ar 2 likely to negatively impact the resources available to the Fund for payment of member benefits. 3 With respect to P.L. 31-74, this Court is convinced that by analyzing the law an 4 weighing its effects on the financial integrity of the Fund and concluding that no challenge wa 5 necessary, the Board acted in a responsible manner as to its fiduciary obligations under sectio 6 8139.1 and did not act inconsistently with the spirit of this Court's Order. The Board considere 7 the implications of P.L. 31-74 and found that rather than impair the Fund's ability to provid 8 retirement, disability, and survivor benefits, the law would actually result in a net gain 0 9 resources that would allow the Board and the Fund to provide these benefits. And while it is tm 10 that the Order directs the Board to challenge legislation that would effectively "reduce or dela II funding of contributions," this Court was primary concerned with ensuring that the Board tak 12 appropriate measures to promote and ensure the actuarial soundness of the Fund. Unlike the la 13 at issue in the original case, which essentially allowed for rechanneling of monies from the Fun 14 to other sections of the government with only vague prospects of repayment, P.L. 31-74 makes 15 clear appropriation for prompt repayment of diverted funds, with interest, and provides for 16 substantial benefit to the Fund - namely the repayment in full of the outstanding deficiency owe 17 to the Fund. See P.L. 31-74, section 3, (a)-(c). Thus, the current legislation does not appear on it 18 face to have the effect of "otherwise impair[ing] the ability of the government to provid 19 retirement, disability, and survivor benefits to members and beneficiaries." As such, this Court i 20 satisfied with the Board's action - or in this case inaction - with respect to P.L. 31-74. 21 Moreover, this Court declines to issue an enforcement order with respect to P.L. 31-l. 22 There is simply no indication that P.L. 31-1 amends the DB Plan to increase benefits levels or t 23 expand minimum eligibility requirements as this Court cautioned against in its Order. The la 24 simply broadens the list of retired government workers who may become re-employed whil 25 continuing to receive an annuity. Those workers are required to enroll in the Define 26 Contribution Plan, but they do not receive expanded eligibility or benefits relating to thei 27 Defined Benefit pension for which they have already made all necessary contributions to suppo 28 the annuity payments which they receive pursuant to Guam law. Further, the Board did, in fact
-4- challenge the law on grounds that the law does not represent sound fiscal policy. However, a 2 there is no indication that the law compromises the actuarial soundness of the Fund or its abilit 3 to pay benefits to DB Plan members this Court finds that the circumstances here do not suppo
4 an order requiring the Board to challenge the legislation in court. 5
6 CONCLUSION 7 This Court finds that the Board has complied with its obligations prescribed by Guam la 8 and this Court's Order. At the hearing on the Order to Show Cause, the Board indicated that th 9 Fund is next in line to be repaid from the government's next general obligation bond. The Boar 10 indicated that bond funds would likely be released in June and that ensuring payment of thos II funds is a top priority of the Board. In the meantime, the Board asserts that the Fund continues t 12 make all required benefit payments to its members and that all interest payments owed to th 13 Fund are current. In order to ensure payment to the Fund out of the next bond issue, the Boar 14 shall appoint a representative to be present at any discussions between the Governor an 15 Legislature in which priority of payments regarding the next general obligation bond will b 16 discussed. Based on the foregoing, Plaintiff Guthrie's motion for enforcement is hereb 17 DENIED. A Further Proceedings hearing is scheduled for April 2, 2012, at 3:00 p.m. at whic 18 time this Court expects the Board report on its progress in securing payment of all outstandin 19 amounts owed to the Fund. 20
21 It is SO ORDERED this 13 th day of March, 2012. 22
23 Presiding Judge, Su.nII
-5-