McAllister v. City of Bellevue Firemen's Pension Board

210 P.3d 1002
CourtWashington Supreme Court
DecidedJuly 9, 2009
Docket81187-3
StatusPublished
Cited by1 cases

This text of 210 P.3d 1002 (McAllister v. City of Bellevue Firemen's Pension Board) is published on Counsel Stack Legal Research, covering Washington Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
McAllister v. City of Bellevue Firemen's Pension Board, 210 P.3d 1002 (Wash. 2009).

Opinion

210 P.3d 1002 (2009)

David McALLISTER and ken McAllister, Petitioners,
v.
CITY OF BELLEVUE FIREMEN'S PENSION BOARD, Respondent.

No. 81187-3.

Supreme Court of Washington, En Banc.

Argued June 11, 2009.
Decided July 9, 2009.

*1003 Hans Eric Johnsen, Attorney at Law, Bellevue, WA, for Petitioners.

Cheryl Ann Zakrzewski, Siona Dee Windsor, Bellevue, WA, for Respondent.

Daniel G. Lloyd, City of Vancouver Attorney's Office, Vancouver, WA, Amicus Curiae on behalf of Washington State Association of Municipal Attorneys.

STEPHENS, J.

¶ 1 As fire fighters for the city of Bellevue (the City), David and Ken McAllister (the McAllisters) made contributions to a pension fund for many years under the "Firefighters' Relief and Pensions-1955 Act," chapter 41.18 RCW (1955 Act). By the time the men retired, the 1955 Act had been replaced by the Law Enforcement Officers' and Fire Fighters' System Pension Plan (LEOFF), chapter 41.26 RCW, effective March 1, 1970. The City is required under LEOFF to pay the McAllisters the difference, if any, between their benefits under LEOFF and what their benefits would have been had they retired under the 1955 Act. This is called an excess payment. For many years the City calculated the excess payment due to the McAllisters by using definitions contained in LEOFF rather than the 1955 Act, resulting in what the City later determined was an overpayment to the McAllisters of around $500,000. When the overpayment was discovered, the City began paying the McAllisters a reduced excess payment, but did not seek reimbursement. The McAllisters challenge that action. This case presents a question of statutory interpretation. We affirm the Court of Appeals and hold that under LEOFF the City is required to calculate excess payments based upon the statutory definitions in the 1955 Act.

FACTS

¶ 2 The facts of this case are not in dispute. McAllister v. City of Bellevue Firemen's Pension Bd., 142 Wash.App. 250, 252, 180 P.3d 786 (2007). In 1965, the McAllisters went to work for the Bellevue Fire Department. They contributed to the City's firemen's pension fund under the 1955 Act, *1004 which required every fire fighter to contribute six percent of his basic salary to the fund. The 1955 Act capped a contributor's basic salary at that of a battalion chief. A battalion chief is a lower rank than either the deputy chief or the chief of the department, the ranks at which the McAllisters later retired.

¶ 3 On March 1, 1970, the 1955 Act, which was administered by individual municipalities, was replaced by LEOFF, a single statewide pension system administered by the State Department of Retirement Systems. Under LEOFF, an employee's contribution rate remains at six percent of his basic salary. However, the basic salary is not capped at the battalion chief salary but is commensurate with the employee's actual salary. In addition, LEOFF provides for an "excess" payment if a fire fighter's pension, as computed under the 1955 Act, would have been greater than the pension as computed under LEOFF. If the fire fighter is entitled to an excess payment, the City, not the State, is responsible for payment. RCW 41.26.040(2).

¶ 4 David McAllister retired from the fire department on February 1, 1975, having attained the rank of chief of the Bellevue Fire Department. Ken McAllister retired on May 6, 1983, having attained the rank of deputy chief. Pursuant to RCW 41.26.040(2), the McAllisters received an excess payment from the City. However, for many years the City calculated the benefits the McAllisters would have received under the 1955 Act by using the chief and deputy chief salaries the McAllisters retired at (in other words, by using the LEOFF definition of basic salary) instead of the battalion chief salary required by the 1955 Act. As a result, the McAllisters received a combined pension payment totaling approximately $500,000, more than they would have received had the definition of basic salary under the 1955 Act been used.

¶ 5 The City did not seek reimbursement from the McAllisters, but it decided to correct what it regarded as a mistake prospectively by using the battalion chief salary for its future calculations. The McAllisters unsuccessfully appealed this decision to a hearing examiner with the Bellevue Firemen's Pension Board (Pension Board). The McAllisters then filed a writ of review in King County Superior Court, which was denied. The McAllisters appealed to Division One of the Court of Appeals, which affirmed the judgment of the Pension Board and the superior court. McAllister, 142 Wash.App. 250, 180 P.3d 786. The McAllister's petitioned for review with this court, which we granted at 164 Wash.2d 1002, 190 P.3d 54 (2008). After we granted review, the Washington State Association of Municipal Attorneys filed an amicus brief in support of the City's position.

ISSUE

¶ 6 Did the City err when it concluded it must base its pension calculations on the basic salary as defined under the 1955 Act rather than under LEOFF?

ANALYSIS

¶ 7 A public employee's pension is "not a gratuity but is deferred compensation for services rendered." Bakenhus v. City of Seattle, 48 Wash.2d 695, 698, 296 P.2d 536 (1956). Although an employee may have vested contractual pension rights, the pension system may be modified prior to an employee's retirement in order to keep the system flexible enough to "`permit adjustments in accord with changing conditions and at the same time maintain the integrity of the system.'" Id. at 701, 296 P.2d 536 (quoting Allen v. City of Long Beach, 45 Cal.2d 128, 131, 287 P.2d 765 (1955)). But because of the compensatory nature of pensions, we have recognized that modifications to a pension plan that "`result in disadvantage to employees should be accompanied by comparable new advantages.'" Id. at 702, 296 P.2d 536 (quoting Allen, 45 Cal.2d at 131, 287 P.2d 765). Without comparable new advantages attendant to a disadvantageous change to a pension system, the modification is void and unconstitutional. Id. at 702-03, 287 P.2d 765. If a modification is unconstitutional, "a pensioner's rights will be determined by the latest act which can be constitutionally applied to him." Vallet v. City of Seattle, 77 Wash.2d 12, 21, 459 P.2d 407 (1969).

¶ 8 To ensure that LEOFF remained consistent with Bakenhus, the legislature enacted *1005 RCW 41.26.040

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Related

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Bluebook (online)
210 P.3d 1002, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mcallister-v-city-of-bellevue-firemens-pension-boa-wash-2009.