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Baldwin v. Milwaukee County

Court of Appeals of Wisconsin, District I

April 19, 2018

Susan L. Baldwin and Leverett F. Baldwin, Plaintiffs-Appellants,
v.
Milwaukee County and Employees' Retirement System of the County of Milwaukee, Defendants-Respondents.

          APPEAL from an order of the circuit court for Milwaukee County No. 2015CV9354: TIMOTHY G. DUGAN, Judge.

          Before Lundsten, P.J., Blanchard and Fitzpatrick, JJ.

          FITZPATRICK, J.

         ¶1 Many employees of Milwaukee County have the right to pension benefits through the Employees' Retirement System of the County of Milwaukee (ERS), which is overseen by a Pension Board.[1] Susan Baldwin was an employee of Milwaukee County.[2] At the time of Baldwin's retirement in 2003, the Pension Board approved her monthly pension payment, and Baldwin started receiving that approved monthly payment in 2003. In 2014, the ERS informed Baldwin of the following: a mistake had been made by the ERS in 2000 in determining her eligibility to receive certain service credits[3] and that error affected the Pension Board's 2003 determination of her monthly pension payment; as a result, the pension payments Baldwin received were incorrect; and she had received overpayments totaling approximately $223, 000. In 2015, the ERS informed Baldwin that her monthly pension payment would be reduced significantly to adjust for the service credit error and to recoup the overpayments. In 2015, Baldwin appealed to the Pension Board the ERS's determinations that she was ineligible to receive the service credits and that her monthly pension payments would be reduced to account for the service credit mistake and to recoup the overpayments. Baldwin's appeal was denied by the Pension Board. Baldwin sought certiorari review of the Pension Board's decisions in the Milwaukee County Circuit Court, and the circuit court affirmed the Pension Board's decisions. Baldwin appeals.

         ¶2 On appeal, Baldwin, for the first time, concedes that the Pension Board was correct when it decided that Baldwin was not eligible to receive the service credits. We accept that concession and, on that basis, affirm the circuit court in this respect. However, we agree with Baldwin that, pursuant to a time limitation contained in Pension Board Rule 1001, the Pension Board no longer had the authority in 2015 to reduce Baldwin's monthly pension payments. Accordingly, we affirm in part, and reverse in part, the order of the circuit court, and remand this matter to the circuit court with directions that it remand to the Pension Board for proceedings consistent with this opinion.[4]

         BACKGROUND

         ¶3 There is no dispute as to the following facts. Baldwin was employed by Milwaukee County from April 1984 to September 2003. Of importance to this dispute is that Baldwin was also employed by Milwaukee County for about seven weeks in 1969.

         ¶4 Milwaukee County administered a "Reinstatement Program" which gave County employees an opportunity to purchase, for the purpose of pension calculations, service credits for prior, non-continuous years of service. Milwaukee County and the ERS notified County employees, including Baldwin, of the program. In 1999, Baldwin made a request to purchase additional service credits based on her 1969 short-term employment with Milwaukee County.

         ¶5 In 2000, Robert Ott, then Corporation Counsel for Milwaukee County, circulated a memorandum which approved Baldwin's request and concluded that: Baldwin was employed by Milwaukee County in 1969; and Baldwin "should be allowed to buy back" service credits "as provided for in the Pension Board rules." A short time later, the ERS sent Baldwin a letter offering her service credit for her 1969 period of employment in exchange for a payment from Baldwin. Baldwin accepted the offer and paid the amount the ERS requested. The ERS accepted Baldwin's check and made the corresponding time of service credit adjustment. The time of service credit adjustment had the effect of changing Baldwin's employment start date from 1984 to 1969. As a result, different rules, advantageous to Baldwin, applied to the calculation of her pension benefits.

         ¶6 As Baldwin neared retirement, she received written confirmation from the ERS that her ERS enrollment date had been adjusted from 1984 to 1969. In 2003, Baldwin retired from her county position and, at its October 2003 meeting, the Pension Board determined that Baldwin's monthly pension payment would be $4, 198.

         ¶7 In 2007, the ERS and Milwaukee County filed a Voluntary Correction Program application with the Internal Revenue Service and therein self-reported operational errors regarding, among other things, overpayments to retirees. Also in 2007, Baldwin and other pensioners received letters from the ERS stating that, as a result of those errors reported to the IRS, their pension benefits may need to be reevaluated. At that time, the ERS took no action to modify Baldwin's benefits and did not inform Baldwin how, or even if, the ERS might take action to change her benefits.

         ¶8 In 2014, the ERS sent Baldwin a letter advising her that her purchase of the service credits in 2000 was invalid and her monthly pension benefit would be recalculated. But, that letter did not state how much Baldwin's payment would be reduced.

         ¶9 In February 2015, the ERS informed Baldwin that her monthly pension payment determined by the Pension Board in 2003 would be reduced from her then-monthly pension benefit of $5, 121 to $3, 705.[5] Additionally, the ERS took the position that Baldwin had been overpaid monthly pension benefits since October 2003 and informed Baldwin that she must repay $223, 209 to the ERS.[6]The ERS also advised Baldwin that the amended $3, 705 monthly pension payments would be further reduced by fifty percent to $1, 852 until the overpayment amount was recovered in full by the ERS.

         ¶10 Baldwin appealed to the Pension Board the rescission of the service credits, the ERS demand for her to remit the overpayment, and the proposed reduction of her pension payments. Among other arguments, Baldwin contended that, under Pension Board Rule 1001, the Pension Board had only one year from the date on which the Pension Board determined her benefits in 2003 to address any errors related to her pension payment and, accordingly, the Pension Board no longer had the authority to reduce her pension payments.

         ¶11 On March 31, 2015, the Pension Board issued a written decision denying Baldwin's appeal. The Pension Board decided that Baldwin was not employed in 1969 in a position that gave her an option to enroll in the ERS at that time and, consequently, she was ineligible to purchase the service credits. The Pension Board also rejected Baldwin's interpretation of Rule 1001. As a result, the Pension Board directed that: Baldwin's purchase of the service credits was rescinded; her monthly pension payment was reduced to $1, 852 per month to reflect her reduced pension and to provide repayment of the overpayments; and, after the overpayments were fully repaid, Baldwin's monthly benefit will be $3, 705.

         ¶12 Baldwin filed a petition against the ERS and Milwaukee County in the Milwaukee County Circuit Court seeking certiorari review of the Pension Board's decisions. The circuit court affirmed the Pension Board's decisions. Baldwin now appeals.

         ¶13 Other material facts will be mentioned in particular parts of the discussion which follows.

         DISCUSSION

         ¶14 Baldwin argues in her brief-in-chief that we should reverse the Pension Board's decisions that Baldwin was not eligible to purchase the service credits, and the Pension Board's related decision to reduce Baldwin's monthly pension payments to correct for the service credits mistake and to recoup the overpayments. First, based on a concession in Baldwin's reply brief, we affirm the circuit court's decision concluding that the Pension Board was correct in deciding that Baldwin was not eligible to purchase the service credits. Second, we conclude that the plain language of Pension Board Rule 1001 establishes that the Pension Board no longer had the authority in 2015 to reduce Baldwin's pension benefits to correct for the service credits mistake. Therefore, the Pension Board erred by reducing Baldwin's pension payments and determining that Baldwin must reimburse the ERS for the overpayments.

         I. Standard of Review and Interpretation of Ordinances and Rules.

         ¶15 This dispute comes before us through common law certiorari review, a procedure in which a court tests the validity of a decision rendered by, as an example, a municipal board such as the Pension Board. See Ottman v. Town of Primrose, 2011 WI 18, ¶34, 332 Wis.2d 3, 796 N.W.2d 411. In certiorari review, we review the decision of the Pension Board and not that of the circuit court. State ex. rel. Harris v. Annuity & Pension Bd., 87 Wis.2d 646, 651, 275 N.W.2d 668 (1979). Our review is limited to: (1) whether the Pension Board kept within its jurisdiction; (2) whether the Pension Board proceeded on a correct theory of law; (3) whether its action was arbitrary, oppressive or unreasonable and represented its will and not its judgment; and (4) whether the evidence was such that the Pension Board might reasonably make the order or determination in question. See Ottman, 332 Wis.2d 3, ¶35; see also Lamar Cent. Outdoor, Inc. v. Board of Zoning Appeals of City of Milwaukee, 2005 WI 117, ¶¶15-16, 284 Wis.2d 1, 700 N.W.2d 87 (certiorari review of the decision of a board created by the City of Milwaukee).

         ¶16 In certiorari review, there is a presumption of correctness and validity to a decision of a board created by a municipality. Lamar Cent. Outdoor, Inc., 284 Wis.2d. 1, ¶16. However, affording that presumption of correctness does not "eviscerate[ ] meaningful review." Ottman, 332 Wis.2d 3, ¶51.

         ¶17 Generally, the interpretation and application of an ordinance to an undisputed set of facts is a question of law.[7] Id., ¶55; Marquardt v. Milwaukee Cty., 2000 WI.App. 77, ¶10, 234 Wis.2d 294, 610 N.W.2d. 496. However, "[a]n interesting question arises when a court is asked on certiorari to review a municipality's interpretation and application of its own ordinance." Ottman, 332 Wis.2d 3, ¶55. When, as here, "the municipality's ordinance appears to be unique and does not parrot a state statute but rather the language was drafted by the municipality in an effort to address a local concern ... we will defer to the municipality's interpretation if it is reasonable." See id., ¶60.[8] This does not mean that the Pension Board's interpretation here is reviewed "without a critical eye." See id., ¶61 (quoting Racine Harley-Davidson, Inc. v. State Division of Hearings & Appeals, 2006 WI 86, ¶15, 292 Wis.2d 549, 717 N.W.2d 184). A municipality's interpretation of its own rules and applicable ordinances is unreasonable if it is, as examples: (a) contrary to law; (b) clearly contrary to the intent, history or purpose of the ordinance; (c) without a rational basis; or (d) the interpretation "directly contravenes the words of the ordinance" or rule. See Id., ¶62.

         ¶18 "The rules for the construction of statutes and municipal ordinances are the same." Bruno v. Milwaukee Cty., 2003 WI 28, ¶6, 260 Wis.2d 633, 660 N.W.2d 656 (quoting County of Columbia v. Bylewski, 94 Wis.2d 153, 169 n.7, 288 N.W.2d 129 (1980)).[9] We start with the language of the applicable ordinances or rules. Id., ¶7. If the meaning of the ordinance or rule is clear, then a court need not look to rules of statutory construction or other intrinsic aids. Id. Rather, "a court should simply apply the clear meaning of the [ordinance or rule] to the facts before it." Id. (quoting UFE, Inc. v. LIRC, 201 Wis.2d 274, 281-82, 548 N.W.2d 57 (1996)). Words in an ordinance or rule must be given their common meaning. Id., ¶8. Technical words or phrases with a peculiar meaning in the law must be construed according to such meaning. Id., ¶20.

         ¶19 We now turn to the question of whether Baldwin was eligible to purchase the service credits.

         II. Baldwin's Purchase of Service Credits.

         ¶20 In her brief-in-chief, Baldwin asserts that the Pension Board erred when it decided that she was not eligible to purchase the service credits based on her 1969 short-term employment. The Pension Board takes the position that Baldwin has not presented a developed argument supporting the view that this determination of the Pension Board was incorrect.[10] We agree that Baldwin has presented no developed argument on this point. Moreover, in her reply brief, Baldwin concedes that there is substantial evidence in the record to support the Pension Board's decision that she was ineligible to purchase the service credits.

         ¶21 Therefore, we do not address the merits of this issue. Rather, we deem Baldwin to have conceded this issue and, on that basis, affirm the circuit court's decision affirming the Pension Board's 2015 decision that Baldwin was not eligible under Milwaukee County General Ordinances and Pension Board rules to purchase the service credits. In addition, regardless of whether Baldwin was eligible to purchase the service credits, we conclude, pursuant to a time limitation contained in Pension Board Rule 1001, that the Pension Board no longer had the authority in 2015 to reduce Baldwin's monthly pension payments.

         III. Rule 1001.

         ¶22 Pension Board Rule 1001 reads as follows:

         1001. Action of board final after one year.

All actions of the board affecting the status of rights of any individual employe or his beneficiaries shall be considered to be final after expiration of one (1) year from the date such action was taken.

         Baldwin argues that, based on this language, the Pension Board's 2003 decision which set her monthly pension payments was a Board "action" that became "final" in 2004, and, accordingly, the Pension Board had no authority in 2015 to reduce her payments to correct for an error or to recoup overpayments. In response, the Pension Board contends that: (1) the 2003 Pension Board decision was a "routine ratification" rather than an "action"; (2) Rule 1001 is not applicable unless the Pension Board takes "action, " and the Board never took any "action" on Baldwin's purchase of the service credits; (3) even if the Board's decision was an "action, " Rule 1001 cannot be read as Baldwin argues because the Pension Board must be able to correct mistakes found more than one year after an action is taken by the Board; and (4) there will be adverse federal tax consequences to the Milwaukee County retirement system if Rule 1001 is interpreted to bar the ERS from collecting overpayments from Baldwin.

         ¶23 We conclude that, pursuant to the plain language of Pension Board Rule 1001, the Pension Board did not have the authority in 2015 to reduce Baldwin's pension payments to correct for the service credits error and to recover related overpayments because the Pension Board's 2003 decision setting the amount of Baldwin's monthly pension payment was an "action" that became "final" in 2004. We reject the Pension Board's various interpretations of Rule 1001 because those interpretations are not reasonable, and we reject the Pension Board's assertion regarding the alleged adverse federal tax ramifications.

         A. The Pension Board Took "Action" in 2003 and That Action Became "Final" in 2004.

         ¶24 Baldwin argues that, under Rule 1001, the Pension Board did not have the authority in 2015 to reduce her monthly pension amount. We agree and now discuss why we conclude that the powers and duties of the Pension Board, the events of the October 2003 Pension Board meeting, and the elements of Rule 1001 demonstrate that the decision at the October 2003 meeting regarding Baldwin's pension payment was an "action" of the Pension Board, and that action became "final" in October 2004.

         1. Powers and Duties of the Pension Board.

         ¶25 The applicable Milwaukee County General Ordinances and Pension Board rules set forth the powers and duties of the Pension Board.[11] Milwaukee County General Ordinance (M.C.G.O.) § 201.24 is lengthy, detailed, and governs the ERS. Section VIII of M.C.G.O. § 201.24 concerns administration of the ERS, and portions of Section VIII are pertinent to our analysis. M.C.G.O. § 201.24(8.1) states:

The general administration and responsibility for the proper operation of the retirement system and for making effective the provisions of this ordinance are hereby vested in a [Pension Board] ….

         (Emphasis added.) M.C.G.O. § 201.24(8.6) is entitled "Rules and regulations" and reads:

Subject to the limitations of this ordinance, the [Pension Board] shall, from time to time, establish rules and regulations for the administration of the funds created by this ...

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