Richard E. Swanson v. Dept. Of Retirement Systems, State Of Wa

• Court: Court of Appeals of Washington
• Decided: August 13, 2013
• Docket: 43114-9
• Status: Unpublished

Opinion

FILED COURT OF APPEALS OIVIS101i 11

1013 AUG 13 AN 10: 29 IN THE COURT OF APPEALS OF THE STATE OF

DIVISION II X WASHIN(- T BY CEP

RICHARD E. SWANSON, and others No. 43114 9 II - -

similarly situated,

Appellant,

V.

STATE OF WASHINGTON, DEPARTMENT UNPUBLISHED OPINION OF RETIREMENT SYSTEMS,

PENOYAR J. — Richard Swanson filed two complaints against the Department of

Retirement Systems (Department) in superior court because the Department reduced the amount of his monthly retirement benefit. The trial court dismissed his complaints because he failed to comply with Washington Administrative Procedure Act's APA)requirements and,thus, did not ( invoke the court's jurisdiction. Swanson appeals, arguing that he is challenging the validity of a rule; therefore, he did not have to file his complaints within 30 days of the Department's action or exhaust his administrative remedies. The trial court properly dismissed Swanson's complaints

because he did not comply with the APA's 30 day filing deadline. We affirm the trial court. - FACTS

Swanson is a Public Employees' Retirement System (PERS) Plan 1 retiree who retired

from state employment in 1999. At that time, the Department calculated his monthly retirement

Ch.34. 5 0 RCW 43114 9 II - -

benefit, using his two highest earning years ( 1990 to 1992). In 2010, the Department audited Swanson's retirement account and discovered that it had incorrectly calculated the amount of his

monthly benefit because it had included all of his unused leave. Unused leave may be included . in an employee's monthly retirement benefit calculation provided the unused leave was earned during the two year period used for computing the employee's monthly benefithere, 1990 to - — 1992. WAC 415 108- 1); Op. Att'y Gen. No. 1, at 10 11. The Department calculates - 510( 1976 -

the amount of unused leave earned during this time period using the first in firstout rule, which - - -

assumes that the first leave earned is the first leave used. WAC 415-108 -510( ). 2

The Department informed Swanson in an August 23, 2010 letter that it had discovered an overpayment and that it was required by statute to recover the overpayment. The Department also sent Swanson an invoice, which included three repayment options. Swanson did not reply

to the invoice, as requested, or seek an appeal with the Department.

On December 9, 2010, Swanson filed a complaint against the Department in Thurston

County Superior Court, seeking "damages and equitable relief against [the Department] for [its] application of the `first in,first out' rule to exclude some, or all, of annual leave benefits in the - - monthly retirement calculation of [ benefits]." s Papers (CP)at Clerk' 8. His complaint alleged

that the court had original jurisdiction over his claims under RCW 2.8. Rather 010. 0 superior

2 Under RCW 41. 0. retirement allowance is calculated using the employee's years of 185, 4 service and average final compensation. "Average final compensation" is the annual average of the greatest compensation earnable by a member during any consecutive two year period. RCW - a). 010( 41. 0. 6)( 4 3 The Department also contacted Swanson by phone and e mail. - 4 RCW 41. 0.allows the Department director to correct any errors appearing in the 130( 1 5 ) records of the retirement system and provides that, in the case of overpayments, the retiree shall repay the Department. 2 43114 9 II - -

than serving the Department, Swanson served his complaint on the Office of the Attorney

General, which, at that point, had not been named as the Department's attorney of record. The

Department moved to dismiss, arguing that Swanson failed to invoke the trial court's subject matter jurisdiction. The trial court granted the Department's motion to dismiss. On January 19, 2011, Swanson filed a second complaint against the Department in Thurston County. He again sought " quitable e relief ... and damages against [the Department]

for its application of the `firstin,first out' rule"but alleged that the court had subject matter - - jurisdiction under RCW 570( 34. 5. CP at 2 0 ). 621. The Department filed another motion to

dismiss, arguing that Swanson again failed to invoke the court's subject matter jurisdiction and failed to exhaust his administrative remedies. The trial court granted the Department's motion to

dismiss, finding that Swanson failed to invoke the trial court's subject matter jurisdiction, exhaust his administrative remedies, and establish the futility exception to exhaustion. Swanson

appeals the dismissal of both complaints.

5 Swanson amended this petition on December 16,201 1: - - - 6 Review of rules. (a) rule may be reviewed by petition for declaratory judgment A filed pursuant to this subsection or in the context of any other review proceeding under this section. In an action challenging the validity of a rule,the agency shall be made a party to the proceeding. ( b)( The validity of any rule may be i) determined upon petition for a declaratory judgment addressed to the superior court of .Thurston county, when it appears that the rule, or its threatened application, interferes with or impairs or immediately threatens to interfere with or impair the legal rights or privileges of the petitioner. The declaratory judgment order may be entered whether or not the petitioner has first requested the agency to pass upon the validity of the rule in question.... In a proceeding involving c)( review of a rule, the court shall declare the rule invalid only if it finds that: The rule violates constitutional provisions; the rule exceeds the statutory authority of the agency; the rule was adopted without compliance with statutory rule -making procedures; or the rule is arbitrary and capricious. RCW 34. 5. 570( 2): 0 3 43114 9 II - -

ANALYSIS

Swanson argues that the trial court erred by dismissing both of his claims. Because

Swanson failed to timely file and serve his complaints, we affirm the trial court's dismissal. I. FIRST COMPLAINT

The trial court dismissed Swanson's first complaint for failing to invoke the trial court's

subject matter jurisdiction. Because Swanson did not timely file his complaint or properly serve the Department as the APA requires, we affirm the trial court's dismissal. We review an order on a motion to dismiss de novo. Evergreen Wash. Healthcare

Frontier, LLC v. Dep't of Soc. & Health Servs.,171 Wn. App. 431, 444, 287 P. d 40 (2012), 3

review 2 3 The APA establishes the exclusive denied, 176 Wn. d 1028, 301 P. d 1048 (2013)).

means of judicial review of agency action. RCW 34, 5. Agency 510. " 0 action" is defined as

licensing, the implementation or enforcement of a statute, the adoption or application of an agency rule or order, the imposition of sanctions, or the granting or withholding of benefits." RCW 34. 5.Here, the Department's letter informing Swanson of the recalculation of his 010( 3 0 ). retirement benefits involved both the application of agency rules and the granting or withholding

of benefits; therefore, it was an agency action subject to the APA.

An appeal from an administrative decision invokes the superior court's appellate jurisdiction; therefore, "` statutory requirements must be met before jurisdiction is properly all invoked. "' Skinner v. Civil Servs. Comm'n ofthe City ofMedina, 168 Wn. d 845, 850, 232 P. d 2 3

558 (2010) quoting Fay v. Nw. Airlines, Inc.,115 Wn.2d 194, 197, 796 P. d 412 (1990)). ( 2 Under the APA, a petition for judicial review of an agency action must be filed with the court and served on the agency, the attorney general, and all parties of record within 30 days after the agency action. RCW 34. 5. A party 542( 3). 0 serves the agency by delivering a copy of the M 43114 9 II - -

petition to the director's office at the agency's principal office or by serving the agency's attorney of record. RCW 34. 5. An attorney of record is an attorney who has been 542( 4 6). 0 ), ( named his agent who has filed a notice of appearance in the case. Cheek v. by a party as or

Emp't Sec. Dep't, Wn. App. 79, 84, 25 P. d 481 (200 1)quoting BLACK'S LAw DICTIONARY 107 . 3 ( 129 ( th ed. 1990)). 6

Swanson failed to invoke the trial court's subject matter jurisdiction because he failed to

comply with the requirements of RCW 34. 5. First, he did not meet the 30 day filing 542( 3 0 ). - deadline. The Department sent the letter to Swanson informing him of the .overpayment on

August 23, 2010. Swanson filed his first complaint on December 9, 2010, more than 30 days

after receiving the Department's letter.

Swanson argues that the 30 day filing deadline did not apply to him because he is - alleging "improper rule- making."Appellant's Br. at 11 12. RCW 34. 5. - 542(. 1) 0 provides that a petition for review of a rule may be filed at any time, but subsection (3), which applies to petitions for review of agency actions other than the adoption of a rule or the entry of an order, that must be filed within 30 days of the agency action. Swanson's first provides a petition

complaint alleges "improper recalculation of past and future retirement benefits" and seeks d] for improperly reduced PERS 1 retirement benefits" and "[i]relief amages njunctive prohibiting [the Department] from recalculating his [benefits] using the `first in,first- ut' rule." - o CP at 6, 9 10. Nowhere in the complaint does Swanson state that he is challenging the validity -

7 the Department failed to raise this issue at the trial - ourt. c But the Swanson argues that Department raised this issue in its motions to dismiss both complaints, and, even if the Department had not raised the issue, we can review challenges to a trial court's jurisdiction for the first time on review: RAP 2. ( a)( 1). 5 5 43114 9 II - -

of a rule. Swanson is not seeking review of a rule or an order; therefore, subsection (3)applies

to his petition.

Additionally, Swanson failed to properly serve his first complaint on the Department.

Rather than delivering the complaint to the Department, Swanson delivered it to the Office of the

Attorney General where it was received by Assistant Attorney General Dionne Padilla - Huddleston. Padilla - Huddleston was not the Department's attorney of record, and, at the time

Swanson attempted to serve the complaint, no one at the Office of the Attorney General had been named as the Department's attorney of record for this matter. Thus, Swanson failed to comply with two of the requirements in RCW 34. 5.and the trial court correctly determined that he 542, 0 failed to invoke its subject matter jurisdiction.

II. SECOND COMPLAINT

The trial court dismissed Swanson's second complaint because he failed to invoke the

trial court's jurisdiction, failed to exhaust his administrative remedies, and failed to establish that the futility exception applied. Because Swanson was challenging the Department's application of the first in- out rule to reduce his retirement benefits, and not the adoption or general - first -

validity of the first in- out rule, we hold that the trial court did not err by dismissing his - first - second complaint.

Swanson again argues that the 30 day filing deadline did not apply to him because he is - alleging "improper rule -making."But, as we discussed above, RCW 34. 5. 542( 3 provides that 0 ) a petition for review of an agency action other than adoption of a rule or entry of an order must be filed within 30 days of the agency action. Here, Swanson is not challenging the adoption or general validity of a rule; he is alleging that the Department's application of the firstin first out - - -

G 43114 9 II - -

rule to him and other similarly situated individuals amounted to an unconstitutional violation of

Bowles v. Department ofRetirement Systems. Although Swanson cites RCW 34. 5.which concerns judicial review of a rule, 570( 2 0 ), and titles his causes of action " Improper Rule- Making,"he continually refers to the

Department's application of the rule to alter his benefits. CP at 367. In paragraph 1.1 of his 1 complaint, Swanson states that the Department's application of the first in first out rule - - - proscribing consideration of his total annual leave in computing his retirement benefits violated Bowles. His requests for relief include "[ Declaratory Judgment prohibiting [the Department] a] from relying on WAC 415-108 510 to recalculate his [benefits],"n Injunction prohibiting [the - a][ Department] from relying on WAC 415 108 510 to recalculate his [benefits]," "[ - - and d]amages for improperly reduced PERS 1 retirement benefits." CP at 365. Moreover, nowhere in his

briefs to this court does Swanson argue that the first in- out rule itself is invalid for - first - constitutional or other reasons. He merely repeats the argument in his complaint: the

Department erred by applying the firstin first out rule to him in this instance. We hold that the - - - trial court did not err by dismissing his second complaint.

8 Bowles,the Supreme Court held that the Department violated employees' pension rights In when it changed its practices regarding limitations on leave cashouts. 121 Wn. d 52, 68, 69, 847 2 P. d 440 ( 1993). 2 Swanson argues that his situation is comparable to the Bowles plaintiffs' because he was hired before the first in first out rule was enacted. He asserts that he relied on - - - the fact that all of his unused leave would be included in his retirement benefit calculation, and the Department's alleged change in practices was an unconstitutional violation of Bowles. This is obviously a fact based claim, not a claim of general invalidity. -

9 Because the trial court correctly determined that it lacked subject matter jurisdiction, we do not reach Swanson's other arguments. 7 43114 9 II - -

We affirm the trial court's dismissal of both of Swanson's complaints.

A majority of the panel having determined that this opinion will not be printed in the Washington Appellate Reports, but will be filed for public record in accordance with RCW 040, 2.6.it is so ordered. 0

Penoyar, .; .

4 J. Orgen,