Nicholas v. State

992 P.2d 262, 1 Nev. 40, 116 Nev. Adv. Rep. 6, 23 Employee Benefits Cas. (BNA) 2974, 2000 Nev. LEXIS 8
CourtNevada Supreme Court
DecidedJanuary 27, 2000
Docket27667, 28148
StatusPublished
Cited by4 cases

This text of 992 P.2d 262 (Nicholas v. State) is published on Counsel Stack Legal Research, covering Nevada Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Nicholas v. State, 992 P.2d 262, 1 Nev. 40, 116 Nev. Adv. Rep. 6, 23 Employee Benefits Cas. (BNA) 2974, 2000 Nev. LEXIS 8 (Neb. 2000).

Opinions

[42]*42OPINION

By the Court,

Leavitt, L:

These two cases have been consolidated on appeal. NRAP 3(b). Both appellants are former members of the Nevada Legislature who claim that they are entitled to certain retirement benefits pursuant to Assembly Bill 820 (hereinafter “A.B. 820”) passed by the 1989 session of the Nevada Legislature, which modified provisions of the Legislators’ Retirement Law stated in NRS chapter 218. See 1989 Nev. Stat., ch. 481. A.B. 820 quadrupled the amount of benefits a retired legislator may receive.

Former Governor Miller vetoed A.B. 820, but his veto was overridden the same day by the legislature. The public expressed outrage over the legislators increasing their own retirement benefits, but former Governor Miller announced he would not call a special session to repeal the law. However, the public clamor increased, and the former Governor called a special session of the legislature for the sole purpose of repealing A.B. 820. The legislature convened and repealed the law.

A.B. 820 was the law of Nevada for approximately five months, from June 23, 1989, the date the legislature overrode the Governor’s veto, to November 21, 1989, when the law was repealed. Both appellants retired during this period of time and received the increased retirement benefits until A.B. 820 was repealed. After A.B. 820 was repealed, the Public Employees’ Retirement Board notified appellants that their pension benefits would be reduced.

Appellants filed actions, claiming a vested right to the increased benefits of A.B. 820. They asserted that the repeal of A.B. 820 violated the Contracts Clause of the United States Constitution by denying them protection from impairment of contract. After motions and cross-motions for summary judgment were filed, the district court in both cases granted summary judgment for respondents.

We have previously examined the ramifications of A.B. 820. We held that article 4, section 33 of the Nevada Constitution forbids any increase in compensation for members of the legislature during their natural term of office. A.B. 820 was repealed prior to the expiration of a sitting legislator’s term of office. Therefore, any increased pension benefits did not vest and there was no impairment of any vested contract rights. See Mello v. Woodhouse, 110 Nev. 366, 872 P.2d 337 (1994).

The facts in this case are different. Both appellants are former members of the Nevada Assembly. David D. Nicholas served four [43]*43terms (eight years) in the Nevada Assembly, from January 1981 through December 1988. He declined to run for re-election in 1988. Robert G. Craddock served eight terms (sixteen years) from January 1, 1973, through December 1988. He was defeated in his bid for re-election in 1988. Therefore, neither appellant was a sitting member of the legislature when A.B. 820 was enacted.

Nicholas requested an application for retirement and submitted it to the Public Employees’ Retirement Board on September 15, 1989. At the time of submittal, A.B. 820 was still the law in Nevada. Pursuant to the formula, he received $1,147.94 per month for two months, September and October 1989. Thereafter, his retirement benefit was reduced to $284.67 per month, the preA.B. 820 rate.

Robert G. Craddock’s effective retirement date was November 1, 1989. His first check was a pro rata amount based on A.B. 820. His monthly benefit was $1,344.63 under the new law. After the repeal of A.B. 820, his benefit dropped to $325.65 per month.

DISCUSSION

The standard of review of an appeal from a summary judgment is de novo. See Maine v. Stewart, 109 Nev. 721, 726, 857 P.2d 755, 758 (1993); Walker v. American Bankers Ins., 108 Nev. 533, 536, 836 P.2d 59, 61 (1992). Additionally, “[q]uestions of law are reviewed de novo.” SHS v. United Exposition Services Co., 109 Nev. 28, 30, 846 P.2d 294, 295 (1993). There is no dispute concerning the facts in this case.

We have previously recognized that the vesting of pension benefits can either be limited or absolute.

Appellants argue that before the vesting of an employee’s right to receive pension benefits or retire early, the Legislature may modify the terms and conditions of receiving such benefits without impairing any contractual obligations. Historically, pension benefits were treated as gratuities subject to alteration, amendment, and repeal without any constitutional ramifications. The modern and better-reasoned view recognizes that employees accept their positions, perform their duties, and contribute to the retirement fund in reliance upon the governmental employer’s promise to pay retirement benefits and permit early retirement if certain conditions are met. By rendering services and making contributions, an employee acquires a limited vested right to pension benefits which may not be eliminated or substantially changed by unilateral action of the governmental employer to the detriment of the member.
[44]*44The limited vesting theory is premised on the principle that a pension is an element of compensation and thus part of the employment contract. A pension right may not be destroyed without impairing the contractual obligation of the public employer. However, prior to absolute vesting, pension rights are subject to reasonable modification ....

Public Emp. Ret. v. Washoe Co., 96 Nev. 718, 721-22, 615 P.2d 972, 974 (1980) (citations omitted; footnote omitted; emphasis added).

Thus, there are limited vested rights which can be modified and absolute vested rights which cannot be modified. Other jurisdictions have so ruled. See Pasadena Pol. Off. Ass’n v. City of Pasadena, 195 Cal. Rptr. 339 (Ct. App. 1983); LA. State Troopers v. LA. State Police, Etc., 417 So. 2d 440 (La. Ct. App. 1982); Campbell v. Michigan Judges Retirement Board, 143 N.W.2d 755 (Mich. 1966).

The difference between limited and absolute vested rights centers around the time when the retirement benefits have been folly earned or the date of retirement, that is, when the benefits are paid.

Until an employee has earned his retirement pay, or until the time arrives when he may retire, his retirement pay is but an inchoate right; but when the conditions are satisfied, at that time retirement pay becomes a vested right of which the person entitled thereto cannot be deprived; it has ripened into a foil contractual obligation.

Police Pension and Relief Board of Denver v. McPhail, 338 P.2d 694, 700 (Colo. 1959) (quoting Retirement Board of Allegheney County v. McGovern, 174 A. 400 (Pa. 1934)).

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Nicholas v. State
992 P.2d 262 (Nevada Supreme Court, 2000)

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Bluebook (online)
992 P.2d 262, 1 Nev. 40, 116 Nev. Adv. Rep. 6, 23 Employee Benefits Cas. (BNA) 2974, 2000 Nev. LEXIS 8, Counsel Stack Legal Research, https://law.counselstack.com/opinion/nicholas-v-state-nev-2000.