Opinion
No. COA99-566
Filed 7 March 2000
1. Pensions and Retirement — Judicial benefits — return to state employment
The trial court did not err in concluding that N.C.G.S. 135-3(8)c and 135-3(8)d apply to plaintiff, thus forfeiting plaintiff's contractual right to his judicial monthly service retirement benefit for the period of time when he served as Chairman of the Utilities Commission.
2. Pensions and Retirement — Judicial benefits — return to state employment — constitutionality
The Retirement System's interpretation of N.C.G.S. 135-3(8)(d), providing that plaintiff's benefits would cease if he returned to employment with the State of North Carolina following his retirement from the Court of Appeals, does not violate the taking clause and the equal protection clause.
3. Civil Procedure — Affidavit — served after hearing — harmless error
Although the trial court abused its discretion in admitting an affidavit served after the hearing on the parties' motions for summary judgment in a case concerning plaintiff's rights to retirement benefits in the Consolidated Judicial Retirement System, the error was harmless in light of the fact that the trial court would likely have reached the same result. N.C.G.S. 1A-1, Rule 61.
Appeal by plaintiff from judgment entered 29 March 1999 by Judge Narley L. Cashwell in Superior Court, Wake County. Heard in the Court of Appeals 5 January 2000.
Marvin Schiller and Boyce Isley, P.L.L.C., by G. Eugene Boyce, for plaintiff petitioner-appellant.
Attorney General Michael F. Easley, by Special Deputy Attorney General Alexander McC. Peters, for defendants respondents-appellees.
The facts of the present case are undisputed. In August of 1979, Judge Hugh A. Wells ("plaintiff") began serving on the North Carolina Court of Appeals, became a member of the Consolidated Judicial Retirement System ("CJRS") and made regular contributions to it. His right to retirement benefits vested in August of 1984. On 30 June 1994, plaintiff retired from the bench, at which time he qualified for a CJRS monthly benefit. He received one check from CJRS. One month after plaintiff retired from the Court of Appeals, Governor James B. Hunt, Jr. appointed him Chairman of the Utilities Commission. As a result of this appointment, plaintiff became a member of the Teachers' and State Employees' Retirement System of North Carolina. The CJRS terminated plaintiff's monthly CJRS benefit. On 31 December 1996, plaintiff resigned from the Utilities Commission. While the CJRS restored plaintiff's monthly benefit effective 1 January 1997, the CJRS did not pay plaintiff his benefit from 1 August 1994 through 31 December 1996.
On 12 March 1998, plaintiff filed a petition for a case hearing in the Office of Administrative Hearings wherein he sought payment of his CJRS benefit from 1 August 1994 through 31 December 1996. Senior Administrative Law Judge Fred G. Morrison, Jr. filed a decision on 5 June 1998, recommending that plaintiff be denied relief. The Board of Trustees of the Teachers' and State Employees' Retirement System adopted the recommended decision as the final agency decision on 4 August 1998. Plaintiff filed a petition for judicial review in Superior Court, Wake County. On 29 March 1999, Superior Court Judge Narley L. Cashwell entered judgment affirming the final agency decision and granting summary judgment for defendants. Plaintiff appeals.
On appeal, plaintiff argues that: (I) the Retirement System applied the wrong statute; (II) the Retirement System's interpretation of North Carolina General Statutes section 135-3(8) is unconstitutional; and (III) the trial court erred in admitting the affidavit of Timothy S. Bryan into evidence.
The relationship between State employees and the Retirement System is contractual in nature. Simpson v. N.C. Local Gov't Employees' Retirement System, 88 N.C. App. 218, 223, 363 S.E.2d 90, 93 (1987), aff'd, 323 N.C. 362, 372 S.E.2d 559 (1988). In North Carolina, contractual rights vest in the Retirement System after five years of membership. N.C. Gen. Stat. § 135-57(c) (1997). The contract is embodied in state statute and governed by statutory provisions as they existed at the time the employee's contractual rights vested. Id. at 224, 363 S.E.2d at 94. "[Members of the Retirement System] had a contractual right to rely on the terms of the retirement plan as these terms existed at the moment their retirement rights became vested." Id.
Plaintiff became a member of the CJRS in August of 1979. Therefore, his right to retirement benefits vested in August of 1984. At that time, the relationship between plaintiff and the Retirement System became contractual in nature. Said contract was governed by the provisions of Chapter 135 as they existed in 1984.
By his first assignment of error, plaintiff argues that neither North Carolina General Statutes section 135-3(8)c nor section 135-3(8)d applies to him. N.C. Gen. Stat. § 135-3(8)c (1984); N.C. Gen. Stat. § 135-3(8)d (1994). As a consequence, plaintiff asserts that he did not forfeit his contractual right to his judicial monthly service retirement benefit for the period of time when he served as Chairman of the Utilities Commission. We cannot agree.
The CJRS based its decision to suspend plaintiff's benefits on North Carolina General Statutes section 135-3(8)d, which provides:
Should a beneficiary who retired on an early or service retirement allowance under this Chapter be restored to service as an employee or teacher, then the retirement allowance shall cease as of the first of the month following the month in which the beneficiary is restored to service and the beneficiary shall become a member of the Retirement System and shall contribute thereafter as allowed by law at the uniform contribution payable by all members.
N.C.G.S. § 135-3(8)d. According to plaintiff, the above prohibition does not apply to him because section 135-3(8)d was not in effect when plaintiff's contractual right to CJRS benefits vested in 1984. However, the prohibition within North Carolina General Statutes section 135-3(8)d was in effect when plaintiff's right to CJRS benefits vested; the prohibition was contained in North Carolina General Statutes section 135-3(8)c, the predecessor statute to North Carolina General Statutes section 135-3(8)d, which provided:
Should a beneficiary who retired on an early or service retirement allowance be restored to service for a period of time exceeding six calendar months, his retirement allowance shall cease, he shall again become a member of the Retirement System and he shall contribute thereafter at the uniform contribution rate payable by all members. . . .
N.C.G.S. § 135-3(8)c. By relying on section 135-3(8)d as the basis for its decision to suspend plaintiff's benefits, the CJRS merely cited the statute which currently contains the prohibition that was in effect when plaintiff's benefits vested.
Before examining section 135-3(8)d, we note that the CJRS' interpretation of the provisions in issue is entitled to deference. Taylor v. City of Lenoir, 129 N.C. App. 174, 497 S.E.2d 715 (1998). "While it is not controlling, the construction given a statute by the agency charged with administering it is relevant evidence of the statute's meaning." Id. at 181, 497 S.E.2d at 721.
Plaintiff further argues that section 135-3(8)d does not apply to him because it is located within Article 1 of Chapter 135, the Teachers' and Employees' Retirement System, while his benefits vested under Article 4 of Chapter 135, the Consolidated Judicial Retirement System. However, since 1982 the legislature has made clear its intent that the provisions of Article 1 apply to the Retirement System as a whole.
[E]xcept as otherwise provided in this Article, the provisions of Article 1 are applicable and shall apply to and govern the administration of the Retirement System established hereby. Not in limitation of the foregoing, the provisions of G.S. 135-5(h), 135-5(n), 135-9, 135-10, 135-12 and 135-17 are specifically applicable to the Retirement System established hereby.
N.C. Gen. Stat. § 135-52(a) (1994).
At oral argument, plaintiff conceded that Article 1 of Chapter 135 applies to Article 4 of Chapter 135 for the limited purpose of administration. Plaintiff argued that Article 1 merely contains "administrative requirements" for Article 4 and that those provisions within Article 1 which pertain to "benefits" rather than "administration" do not apply to Article 4. We cannot agree.
While section 135-52(a) states that the provisions of Article 1 "shall apply to and govern the administration of the Retirement System," it also states more broadly that the provisions of Article 1 "are applicable." Id. Pursuant to section 135-52(a), certain provisions are specifically applicable to the whole Retirement System, namely sections 135-5(h), 135-5(n), 135-9, 135-10, 135-12, and 135-17. N.C.G.S. § 135-52(a). However, the list of provisions within section 135-52(a) is not an exhaustive one; the statutory language provides that the list of specifically applicable provisions is "[n]ot in limitation of" the general rule that the "provisions of Article 1 are applicable." Id.
Furthermore, while plaintiff argues an "administration"/"benefits" dichotomy, he offers no definition of said terms. An examination of Articles 1 and 4 does not reveal any relevant statutory definitions. In interpreting words in a statute, we rely on their common meaning absent a definition or contextual cue to the contrary. Abernethy v. Commissioners, 169 N.C. 631, 86 S.E. 577 (1915). Applying the same principle here, we note that "administration" is commonly understood to be "the practical management and direction" of the operations of the various agencies. Black's Law Dictionary 44 (7th ed. 1999).
Upon examination of those provisions of Article 1 which the legislature has explicitly deemed applicable to Article 4, we are not convinced that they are merely administrative in nature. For example, North Carolina General Statutes section 135-9 provides that retirement benefits "are exempt from levy and sale, garnishment, attachment, or any other process whatsoever, and shall be unassignable except as in this Chapter specifically otherwise provided." N.C. Gen. Stat. § 135-9 (1997). Section 135-9 does not pertain to practical management, but instead pertains to the nature of benefits. Therefore, we hold that section 135-9 is not merely administrative in nature. Accordingly, we reject plaintiff's arguments that only those provisions of Article 1 which are administrative in nature apply to Article 4.
Plaintiff further argues that section 135-3(8)d does not apply to him because statutory terms within the section exclude him. More specifically, plaintiff argues that he is not a "member" for purposes of North Carolina General Statutes section 135-3(8). Section 135-3(8) states that "[t]he provisions of this subsection (8) shall apply to any member[.]" N.C.G.S. § 135-3(8) (emphasis added). The term "member" is defined as "any teacher or State employee." N.C. Gen. Stat. § 135-1(13) (1994). The definition of the term "employee" excludes any members of CJRS. N.C. Gen. Stat. § 135-1(10) (1994). Plaintiff argues that given he is neither a teacher nor an employee, section 135-3(8) does not apply to him.
However, the legislature has indicated that Article 1 provisions which refer to "members" may apply to CJRS members. North Carolina General Statutes sections 135-5(n), 135-9, 135-10, and 135-17 all employ the term "member" and have all been held specifically applicable to Article 4. N.C.G.S. § 135-52(a).
Similarly, plaintiff argues that he is excluded by the terms of section 135-3(8)d because he did not retire on an "early" or "service retirement" allowance. N.C.G.S. § 135-3(8)d. North Carolina General Statutes section 135-1(23) defines "service" as "service as a teacher or State employee as described in subdivision (10) or (25) of this section." N.C. Gen. Stat. § 135-1(23) (1994). Plaintiff is not a teacher for purposes of section 135-1(25), and section 135-1(10) defines "employee" so as to exclude members of the CJRS.
Plaintiff relies on the statutory definition of "employee" of section 135-1(10) in an effort to show that he was not on "service retirement." However, we have already determined that section 135-1(10) does not preclude application of section 135-3(8)d to plaintiff. The legislature indicated that the term "member" applies to Article 4 even while "member" is defined as a teacher or State employee. N.C.G.S. § 135-1(13). It follows that "service" may apply to Article 4 even while "service" is defined as service as a teacher or State employee. N.C.G.S. § 135-1(23).
In sum, after giving deference to the CJRS' interpretation of the provisions in issue and noting the general rule of section 135-52 that the provisions of Article 1 are applicable to Article 4, we are not convinced that the language of section 135-3(8)d prohibits application of the statute to plaintiff.
We conclude that the prohibition contained within section 135-3(8)d existed when plaintiff's rights vested in the Retirement System and that the prohibition applies to plaintiff. Therefore, plaintiff's contract under Chapter 135 provided that his benefits would cease if he returned to employment with the State of North Carolina following his retirement from the court.
By his second assignment of error, plaintiff argues that the Retirement System's interpretation of North Carolina General Statutes section 135-3(8)d violates the Taking Clause and the Equal Protection Clause of both the United States and the North Carolina Constitutions. We cannot agree.
As discussed above, plaintiff's contract under Chapter 135 provided that his benefits would cease if he returned to employment with the State of North Carolina following his retirement from the court. Therefore, plaintiff did not have a property interest in the CJRS benefits while he was employed by the Utilities Commission. We conclude that there was no violation of plaintiff's rights under the Taking Clause of either the United States or the North Carolina Constitution. See Woods v. City of Wilmington, 125 N.C. App. 226, 480 S.E.2d 429 (1997).
Furthermore, all retired officers and employees are subject to the provisions of North Carolina General Statutes section 135-3(8)d. Therefore, plaintiff was not treated differently than similarly situated persons. We conclude that the Retirement System's interpretation of North Carolina General Statutes section 135-3(8)d does not violate the Equal Protection Clause of either the United States or the North Carolina Constitution. See Texfi Industries v. City of Fayetteville, 301 N.C. 1, 269 S.E.2d 142 (1980).
By his third assignment of error, plaintiff argues that the trial court erred in admitting the affidavit of Timothy S. Bryan into evidence. We agree.
"[S]upporting affidavits should be filed and served sufficiently in advance of the hearing to permit opposing affidavits to be filed prior to the day of the hearing." Battle v. Nash Tech. College, 103 N.C. App. 120, 127, 404 S.E.2d 703, 706-07 (1991) (quoting Insurance Co. v. Chantos, 21 N.C. App. 129, 130, 203 S.E.2d 421, 423 (1974), cert. denied, 287 N.C. 465, 215 S.E.2d 624 (1975)). Once an affidavit has been served, the trial court has broad discretion under North Carolina Rule of Civil Procedure 56(e) to permit affidavits to be supplemented or opposed. Id.
In the present case, a hearing on the parties' motions for summary judgment was held on 8 February 1999. The affidavit of Timothy Bryan was filed with the court and served on plaintiff on 10 February 1999. In other words, the affidavit was not served prior to the day of hearing. Therefore, the trial court abused its discretion in failing to exclude the affidavit of Timothy Bryan. However, even if the affidavit had been excluded, the trial court would likely have reached the same result in this case by identifying and applying the relevant statutes. N.C. Gen. Stat. § 1A-1, Rule 61 (1990). See also Warren v. City of Asheville, 74 N.C. App. 402, 328 S.E.2d 859, disc. review denied, 314 N.C. 336, 333 S.E.2d 496 (1985). We conclude that the error was harmless.For the reasons stated herein, the decision of the trial court is affirmed.
Affirmed.
Judge MCGEE concurs.
Judge HORTON dissents.