Retired California employees must pay back pension overpayment, court rules

By Elizabeth Alt | Jun 19, 2018

SAN DIEGO (Legal Newsline) – The California 4th District Appellate Court, Division One affirmed a trial court decision that two retired officers must pay the San Diego City Employees’ Retirement System more than $30,000 combined, finding that the overpayments had been a mistake, albeit a costly one for the former officers.

SAN DIEGO (Legal Newsline) – The California 4th District Appellate Court, Division One affirmed a trial court decision that two retired officers must pay the San Diego City Employees’ Retirement System more than $30,000 combined, finding that the overpayments had been a mistake, albeit a costly one for the former officers.

“No constitutional provision is trumped when Government Claims Act immunity is applied to bar liability for monetary damages based on the SDCERS Board members' alleged breach of fiduciary duty,” the May 23 ruling states.

Judge Joan Irion wrote the court order published on June 14, with Judge Cynthia Aaron and Judge Patricia D. Benke concurring.

Vincent Krolikowski and Connie Van Putten filed complaints against the San Diego City Employees' Retirement System alleging that SDCERS should not be able to recoup overpayments from them after a 2013 audit revealed that SDCERS had been overpaying the plaintiffs. The complaint listed claims of conversion, breach of fiduciary duty, writ of mandate and declaratory relief.

Van Putten and Krolikowski retired after serving more than 20 years each in the San Diego Police Department and used information from their consultations with the SDCERS regarding their pension amounts before deciding when to retire.

In 2013, the decision states SDCERS discovered that it had miscalculated both plaintiffs’ pensions and that Krolikowski owed $18,739.88 and Van Putten owed $17,049.48. SDCERS told the plaintiffs they could either pay the entire amount or make payments with interest. Both plaintiffs lost their appeals with SDCERS's Board of Administration.

Krolikowski filed his complaint in 2015, alleging among the claims that SDCERS is subject to the three-year statute of limitations “and therefore may not collect any arrears overpayments from levy or attachment,” and questioned whether "SDCERS is subject to California law exempting pensions…and therefore may not simply take money from Krolikowski's pension.” Van Putten filed her complaint alleging the same claims later in 2015.

The trial court decided that SDCERS was not subject to “the statute of limitations for civil court actions in implementing its administrative recoupment process; and (2) SDCERS's act of seeking recoupment for the overpayments was not subject to the exemption against levy or attachment on a pension.”

The order further stated that “the doctrine of equitable estoppel did not apply because Krolikowski and Van Putten did not establish that SDCERS was apprised of its mistake before 2013 and did not establish that they sustained an injury in reliance on SDCERS's conduct.”

Irion affirmed the trial court ruling, agreeing that the board had immunity under Government Claims Act for the claims of conversion and fiduciary duty, and that the trial court had not erred in its ruling. Irion stated to clarify that the court agreed that “The doctrine of constitutional supremacy does not apply here because appellants have not identified any conflict between the constitutional provisions and the Government Claims Act immunity provisions”, further stating that the plaintiffs had not provided any legal doctrine that would bar SDCERS from recouping the overpayments.

In a footnote, Irion noted that while the court found SDCERS had provided substantial evidence that it was not aware of its mistake until 2013, “we are nevertheless sympathetic to appellants' situation as they did not find out until many years after the fact that SDCERS made mistakes in calculating their pension benefits, by which time the overpayments and associated interest amounted to a substantial sum.”

4th Appellate District of California Court of Appeals, Division One case number D071119

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