Gualano v. City of Des Plaines

487 N.E.2d 1050, 139 Ill. App. 3d 456, 94 Ill. Dec. 173, 1985 Ill. App. LEXIS 2843
CourtAppellate Court of Illinois
DecidedDecember 23, 1985
Docket84-3082
StatusPublished
Cited by14 cases

This text of 487 N.E.2d 1050 (Gualano v. City of Des Plaines) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Gualano v. City of Des Plaines, 487 N.E.2d 1050, 139 Ill. App. 3d 456, 94 Ill. Dec. 173, 1985 Ill. App. LEXIS 2843 (Ill. Ct. App. 1985).

Opinion

JUSTICE O’CONNOR

delivered the opinion of the court:

On October 2, 1967, plaintiff Herman Gualano joined the Des Plaines Fire Department whose pension fund is administered by-defendant, the board of trustees of the firemen’s pension fund of the city of Des Plaines (the board). He was injured while on duty in November of 1979. Although Gualano did not work, he was paid his full salary for one year by defendant, the city of Des Plaines (the city). The salary payments were terminated as of November 28, 1980. Gualano wrote to a fire department official requesting payment for 40 days of accumulated sick leave, reduction days and holiday and vacation days, but no further action was taken. Gualano then applied for a disability pension. After a hearing was held, he was granted a disability pension based on a termination date of November 28, 1980. Shortly thereafter he received a workers’ compensation award in the amount of $1,077. On February 6, 1984, the board acted to reduce Gualano’s disability pension benefits by the amount of his workers’ compensation award.

On February 29, 1984, Gualano filed the instant two-count suit for declaratory judgment. In count I, Gualano alleged that the reduction of his pension benefits by the amount of his worker’s compensation award was improper. In count II, Gualano contended that the board’s computation of his pension based on a termination date of November 28, 1980, failed to take into account 40 days of accumulated sick leave, reduction days, and holiday and vacation days. He claims that the city should have either kept him on the payroll for an additional 40 work days which would have qualified him for a larger pension or paid him for those accumulated days.

The trial court granted defendants’ motion for summary judgment with respect to count I and, on the board’s motion, dismissed count II of the complaint on the grounds that it was barred for failure to comply with the provisions governing judicial review of administrative decisions.

Two issues are raised by plaintiff’s appeal: (1) whether the reduction of his pension by the amount of his worker’s compensation award was proper; and (2) whether a declaratory judgment action is an appropriate method seeking judicial review of the allegations in count I of his complaint.

As to the first issue, the Illinois Constitution provides that membership in a pension system of any local governmental unit in the State is “an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.” (Ill. Const. 1970, art. XIII, sec. 5.) An employee’s rights in the system vest, either at the time he enters the system or in 1971 when the 1970 Constitution became effective, whichever is later. (Kraus v. Board of Trustees (1979), 72 Ill. App. 3d 833, 390 N.E.2d 1281.) “Vesting” refers to the employee’s acquisition of a contractual right to the benefits of the pension system. Kuhlmann v. Board of Trustees (1982), 106 Ill. App. 3d 603, 607 n.1, 435 N.E.2d 1307.

Because vesting is thus defined in a contractual sense, an employee’s “contractual relationship” with the State incorporates the law which exists at the time when his contractual rights to his pension vest. (See Board of Trustees v. Department of Insurance (1982), 109 Ill. App. 3d 919, 927, 441 N.E.2d 107.) Prior to 1974, employees’ pension rights were limited by a provision in the Workers’ Compensation Act which provided that a governmental employee’s pension benefits must be reduced by the amount of money received under the Workers’ Compensation Act (Ill. Rev. Stat. 1973, ch. 48, par. 138.1(b)(1)). In 1974,however, the Workers’ Compensation Act was amended to eliminate this provision. It was not until 1977, that the Pension Code was amended to insert a similar provision that pension benefits were to be reduced by Workers’ Compensation benefits being received. Ill. Rev. Stat. 1977, ch. 108½, par. 4-143.

Two districts of the appellate court have considered the question of whether an employee’s vested pension rights were increased by the elimination of the reduction provision of the Workers’ Compensation Act. In Sellards v. Board of Trustees (1985), 133 Ill. App. 3d 415, 478 N.E.2d 1123, a panel from the First District rejected the argument that an employee’s pension rights were increased by the elimination of section 1(b)(1) (Ill. Rev. Stat. 1973, ch. 48, par. 138.1(b)(1)), stating that an employee’s pension rights are fixed at the time of vesting and “[t]he Constitution does not provide that a person has a vested right in any beneficial changes in a pension system.” Sellards v. Board of Trustees (1985), 133 Ill. App. 3d 415, 417.

However, in Taft v. Board of Trustees (1985), 133 Ill. App. 3d 566, 479 N.E.2d 31, the Second District held that where a pension system increases an employee’s benefits, the employee can take advantage of a beneficial pension change when he provides additional consideration for the contractual modification, usually taking the form of new or continued contributions to the pension system. (133 Ill. App. 3d 566, 572, 479 N.E.2d 31.) Because the employee in Taft continued to contribute to his pension fund following the repeal of section 1(b)(1), his contractual rights to his pension benefits increased and he was vested with additional rights. (133 Ill. App. 3d 566, 572-73, 479 N.E.2d 31.) The supreme court denied leave to appeal in Taft.

We find that the contractual analysis used in Taft is supported by other cases which recognize that an employee may not acquire contractual right to a beneficial change in the pension system unless the employee provides additional consideration for the contractual modification. (Kuhlmann v. Board of Trustees (1982), 106 Ill. App. 3d 603; Ziebell v. Board of Trustees (1979), 73 Ill. App. 3d 894, 392 N.E.2d 101; Kraus v. Board of Trustees (1979), 72 Ill. App. 3d 833, 849, 390 N.E.2d 1281.) We elect to follow Taft rather than Sellarás.

In the instant case, plaintiff continued to contribute to his pension fund following the elimination of section 1(b)(1). This modified plaintiff’s contractual rights and resulted in the vesting of right to an additional pension benefit. The subsequent enactment of section 4— 103 of the Pension Code reinstituting the reduction provision could not constitutionally diminish his vested rights. Therefore, the reduction of plaintiff’s pension benefits by the amount of his worker’s compensation was improper. We reverse the trial court’s grant of summary judgment for defendants and remand the cause with directions to grant plaintiff’s motion for summary judgment.

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Bluebook (online)
487 N.E.2d 1050, 139 Ill. App. 3d 456, 94 Ill. Dec. 173, 1985 Ill. App. LEXIS 2843, Counsel Stack Legal Research, https://law.counselstack.com/opinion/gualano-v-city-of-des-plaines-illappct-1985.