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Archer-Kath v. Teachers Retirement Association

November 18, 2003

JULIE ARCHER-KATH, RELATOR,
v.
TEACHERS RETIREMENT ASSOCIATION, RESPONDENT.



Considered and decided by Stoneburner, Presiding Judge, Willis, Judge, and Shumaker, Judge.

The opinion of the court was delivered by: Stoneburner, Judge

Teachers Retirement Association

OPINION

Relator appeals, by writ of certiorari, a decision of respondent Teacher's Retirement Association (TRA) Board that she is not entitled to service credit for the period during which she was on leave with pay pursuant to a settlement agreement between relator and Independent School District #13 (ISD 13). Relator argues that because TRA provided an estimate of the value of her pension benefit at the time of her marriage dissolution, and because she relied on that estimate in entering into a marital termination agreement, TRA is estopped from denying the service credit she seeks. TRA argues that estoppel does not apply because it has no authority under the governing statute to authorize credit for relator's leave. We agree and affirm.

FACTS

TRA administers the pension plan for Minnesota's licensed teachers under the authority of Minn. Stat. ch. 354 (2002) and the fiduciary duties and standards of Minn. Stat. ch. 356A (2002). The TRA pension plan is a tax-qualified "governmental" plan under federal law. See 29 U.S.C. § 1002(32); 26 U.S.C. § 414(d); AFSCME Councils 6, 14, 65 and 96, AFL-CIO v. Sundquist, 338 N.W.2d 560, 565-66, n.5 (Minn. 1983), appeal dismissed, 466 U.S. 933, 104 S. Ct. 1902 (1984). The TRA Board is composed of elected and appointed members and its duties include deciding issues related to TRA service credit and pension benefits. Minn. Stat. §§ 354.06, subd. 1,.07, subd. 1 (2002).

Relator Dr. Julie Archer-Kath was employed by ISD 13 and participated as a beneficiary in the TRA pension program. In 1998, relator settled a discrimination action against ISD 13. The settlement agreement provided that relator would be considered to be on leave with pay for the school years 1998-99 and 1999-2000 and would receive her regular salary and benefits, after which she would be considered to be on an extended leave of absence without pay through June 2005. Relator was required to execute an "irrevocable" letter of resignation to be deposited with the district court that would become effective on the occurrence of certain events, including any attempt by relator to be reinstated to any position with ISD 13. The agreement provided that "[s]aid resignation as provided herein will be immediately accepted by ISD No. 13 at the time of approval of this Settlement Agreement and Release," but ISD 13 retained the right to allow relator to withdraw the letter of resignation.

Under the agreement, ISD 13 was required to provide TRA with a copy of the Board minutes and resolution approving the settlement agreement and file a leave reporting form with TRA reporting relator to be on extended leave without pay from July 1, 2000 through June 30, 2005, and reporting that relator had no reinstatement rights. ISD 13 did not provide the required documents and did not report to TRA that relator was on a leave of absence during the 1998-99 and 1999-2000 school years as required by Minn. Stat. §á354.52, subd. 4a (2002). Through the 1999-2000 school year, ISD 13 continued to report relator's salary and made contributions on her behalf to TRA as if she was still teaching. And relator continued to make contributions to the TRA through the 1999-2000 school year. Relator understood the settlement agreement as permitting ISD 13 to recall her to perform services during the 1998-99 and 1999-2000 school years, if it chose to do so. At some point in the 1999-2000 school year, after obtaining permission from ISD 13, relator became employed by another school district.

Relator's marriage was dissolved in 2001. In connection with the dissolution, she requested information from TRA that would permit her to determine the present value of her pension benefits. TRA responded by letter purporting to set out the pension benefits to which relator was entitled. An actuary verified the information and determined that relator's pension was approximately 90% of the marital value of relator's spouse's pension. Based on this information, relator entered into a marital termination agreement under which she and her spouse each gave up any right in the other's pension benefits. The dissolution decree stated the present value of relator's pension as $344,781 based on a retirement credit of 30 years of service.

During an audit in July 2002, TRA discovered that two school districts were making contributions for relator for the 1999-2000 school year. TRA then reviewed, for the first time, the "leave with pay" provision of relator's settlement agreement with ISD 13. TRA staff concluded that the 1998-99 school year and 34% of the 1999-2000 school year did not qualify for service credit because it was paid as part of the settlement agreement terminating relator's employment with ISD 13 and therefore was a "severance" payment, excluded from TRA's statutory definition of "salary" under Minn. Stat. § 354.05, subd. 35a (2002). The remainder of the 1999-2000 school year, when relator was working for another school district, qualified for TRA credit. TRA informed relator of its determination in August 2002.

Relator asked TRA to reconsider the staff's decision. TRA's Executive Director affirmed the staff's decision, informing relator that the leave payments she received were "severance" payments, not "salary" since they were contingent on her termination of employment at the end of the leave period and were not paid for the performance of services. Relator petitioned the TRA Board for review of the Executive Director's decision under Minn. Stat. § 354.071, subd. 3 (2002). After a hearing, the board voted unanimously to affirm the Executive Director's decision on the ground that the law does not provide for service credit for leave-with-pay compensation, which must be considered severance pay. Relator then initiated this appeal by writ of certiorari.

DECISION

The scope of review of the TRA Board's quasi-judicial decisions is limited to determining whether the decision was arbitrary, oppressive, unreasonable, fraudulent, under erroneous theory of law, or without supporting evidence. McDermott v. Minn. Teachers Ret. Fund, 609 N.W.2d 926, 928 (Minn. App. 2000); Stang v. Minn. Teachers Ret. Ass'n Bd. of Trustees, 566 N.W.2d 345, 347 (Minn. App. 1997). The interpretation of statutes is a question of law reviewed de novo. Brookfield Trade Ctr. Inc. v. County of Ramsey, 584 N.W.2d 390, 393 (Minn. 1998); In re Twedt, 598 N.W.2d 11, 12 (Minn. App. 1999).

Relator argues that promissory estoppel prevents the TRA Board from denying service credits from ISD 13 through the end of the 2000 school year. Relator relies on Christensen v. Minneapolis Mun. Employees Ret. Bd., in which the supreme court stated that a public employee's interest in a pension is best characterized in terms of promissory estoppel. 331 N.W.2d 740, 747 (Minn. 1983). Christensen held that Minn. Stat. ยงรก422A.156 (1982), imposing a minimum age requirement for pension eligibility, is invalid as an unconstitutional impairment of contractual obligations to the extent that it applied to persons already ...


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