IN THE COURT OF ApPEAL

Transcription

1 D IN THE COURT OF ApPEAL OF THE STATE OF CALIFORNIA FOURTH APPELLATE DISTRICT, DIVISION ONE VINCENT KROLIKOWSKI, et ale Appellants, v. SAN DIEGO CITY EMPLOYEES RETIREMENT SYSTEM, Respondent. ON APPEAL FROM A JUDGMENT OF THE SUPERIOR COURT OF SAN DIEGO CASE No CU-OE-CTL CASE No CU-OE-CTL THE HONORABLE JOEL M. PRESSMAN, JUDGE APPELLANTS' OPENING BRIEF LAW OFFICE OF MICHAEL A. CONGER MICHAEL A. CONGER (STATE BAR No ) P. O. Box 9374 RANCHO SANTA FE, CA TELEPHONE: (858) FACSIMll.,E: (858) E-MArr..,: congermike@aol.com ATTORNEY FOR PLAINTIFFS AND APPELLANTS VINCENT KROLIKOWSKI, ET AL. Received by Fourth District Court of Appeal, Division One

2 TO BE FILED IN THE COURT OF APPEAL COURT OF APPEAL CASE NUMBER: COURT OF APPEAL FOURTH APPELLATE DISTRICT, DIVISION ONE APP-008 ATTORNEY OR PARTY WITHOUT ATTORNEY: STATE BARNO.: 147,882 NAME: Michael A. Conger FIRM NAME: Law Office of Michael A. Conger STREET ADDRESS: P.O. Box 9374 CITY: Rancho Santa Fe STATE: CA ZIP CODE: TELEPHONE NO.: (858) FAX NO.: (858) ADDRESS: ATTORNEY FOR (name): Vincent Krolikowski and Connie Van Putten APPELLANT! VINCENT KROLIKOWSKI and CONNIE VAN PUTTEN PETITIONER: RESPONDENT/ SAN IDEGO CITY EMPLOYEES RETIREMENT REAL PARTY IN INTEREST: SYSTEM SUPERIOR COURT CASE NUMBER: CU-OE-CTL and CU-OE-C rr L, CERTIFICATE OF INTERESTED ENTITIES OR PERSONS (Check one): m INITIAL CERTIFICATE 0 SUPPLEMENTAL CERTIFICATE Notice: Please read rules and before completing this form. You may use this form for the initial certificate in an appeal when you file your brief or a prebriefing motion, application, or opposition to such a motion or application in the Court of Appeal, and when you file a petition for an extraordinary writ. You may also use this form as a supplemental certificate when you learn of changed or additional information that must be disclosed. 1. This form is being submitted on behalf of the following party (name): Vincent Krolikowski and Connie Van Putten 2. a. 0 There are no interested entities or persons that must be listed in this certificate under rule b. 0 Interested entities or persons required to be listed under rule are as follows: Full name of interested entity or person Nature of interest (Explain): (1 ) (2) (3) (4) (5) o Continued on attachment 2. The undersigned certifies that the above-listed persons or entities (corporations, partnerships, firms, or any other association, but not including government entities or their agencies) have either (1) an ownership interest of 10 percent or more in the party if it is an entity; or (2) a financial or other interest in the outcome of the proceeding that the justices should consider in determining whether to disqualify themselves, as defined in rule 8.208(e)(2). Date: June 22, 2017 Michael A. Conger (TYPE OR PRINT NAME) Form Approved for Optional Use Judicial Council of California APP-008 [Rev. January 1, 2017] ~ /s/ Michael A. Conger (SIGNATURE OF APPELLANT OR ATTORNEY) Page 1 of 1 CERTIFICATE OF INTERESTED ENTITIES OR PERSONS Cal. Rules of Court, rules 8.208,

3 TOPICAL INDEX Table of Authorities... 9 I. INTRODUCTION II. STATEMENT OF THE CASE A. Statement of Facts SDCERS acts as a fiduciary and has a trust relationship with pensioners Before deciding to retire, Van Putten and Krolikowski met with SDCERS to determine if they could afford to retire SDCERS provided pension calculations to Van Putten and Krolikowski, who relied on these calculations and retired SDCERS is aware of pensioners' reliance on its pension calculations Van Putten and Krolikowski paid state and federal taxes on their pensions SDCERS erroneously calculated Van Putten 's pension in 2000 and took 14 years to inform her SDCERS erroneously calculated Krolikowski's pension in 2006 and took seven years to inform him SDCERS always had all of the data it needed to correctly calculate Van Putten 's and Krolikowski's pensions SDCERS knew as early as 1992 that it better find mistakes within three years of making them

4 10. Neither Van Putten nor Krolikowski were aware of SDCERS errors After SDCERS discovered its errors, it deducted (or threatened to deduct) what it claimed was owed from its members' pensions B. Statement of Procedure Krolikowski and Van Putten exhausted SDCERS' written appeal policy Krolikowski filed suit Van Putten filed suit Both cases were assigned to the same judicial officer The trial court sustained SDCERS' demurrer to Krolikowski's breach offiduciary duty and conversion claims, and overruled the demurrer to his declaratory relief and mandamus claims The parties stipulated that the Krolikowski demurrer rulings would apply to Van Putten, preserving her right to appeal The cases were consolidatedfor all purposes The parties all filed a motionfor summary judgment The trial court denied the motions for summary judgment Krolikowski and Van Puttenfiled amended complaints to expressly allege laches and equitable estoppel

5 11. After a two-day bench trial, the trial court adopted sncers' proposed statement of decision and enteredjudgmentfor sncers C. Statement of Appealability III. ISSUES PRESENTED IV. BECAUSE THE ISSUES RAISED IN THIS APPEAL ARE ISSUES OF LA W, THE STANDARD OF REVIEW IS DE NOVO V. THE TRIAL COURT ERRED IN SUSTAINING SDCERS' DEMURRER TO THE THIRD CAUSE OF ACTION FOR BREACH OF CONSTITUTIONAL AND FIDUCIARY DUTY A. The Requisite Elements of a Cause of Action for Breach of Fiduciary Duty B. SDCERS Owes Constitutional, Fiduciary Duties in Administering the Pension Trust Fund SnCERS' fiduciary duties are so important they are embodied in the California Constitution sncers has a duty to provide correct and accurate information to its members C. Like the Conduct of Any Other Fiduciary, the Conduct of SDCERS Is Subject to Judicial Review and the Imposition of Tort Remedies D. The Trial Court Erred in Sustaining SDCERS' Demurrer Without Leave to Amend E. VanPutten is Entitled to Reversal Pursuant to the Parties' Stipulation and the Trial Court's Order

6 VI. THE TRIAL COURT ERRED BY FAILING TO APPL Y THE THREE-YEAR STATUTE OF LIMITATIONS A. SDCERS' Authority Does Not Extend to Matters Within the Purview of the Other Branches of Government B. Unlike Other Pension Systems, SDCERS Has Not Been Granted Authority to Directly Recoup Overpayments from Future Pension Payments C. Overpayment As a Result of Mistake Is Subject to a Three-Year Statute of Limitations D. "Delayed Discovery" Does Not Apply Because SDCERS Always Had All the Information Necessary to Discover Its Errors E. The "Administrative Exception" Does Not Apply This trial court held that SDCERS does not have an "administrative process" Administrative hearings require a hearing, evidence, and discretion to determine facts SDCERS' meetings were not administrative hearings VII. THE TRIAL COURT ERRED BY FAILING TO APPL Y THE DOCTRINE OF LACHES A. The Elements of Laches B. Laches Applies to Public Entities C. Laches Should Have Been Applied Because SDCERS' Delay in Discovering Its Errors Was Unreasonable and the Plaintiffs Were Prejudiced by SDCERS' Delay

7 1. The trial court erred by failing to place the burden of proof on SDCERS SDCERS' delays in discovering its errors was unreasonable..,..,',... "...,.. ".,..,., Van Putten and Krolikowski were prejudiced by SDCERS'delay "',.,...,.,.. "..,',... ". 72 VIII. THE TRIAL COURT ERRED BY FAILING TO APPL Y THEDOCTRINEOFEQUITABLEESTOPPEL "... ",,74 A. Equitable Estoppel Has Been Applied in Pension Cases...,',..,',."..,',."...,.,..,.". 74 B. SDCERS Had the Ability to Know the Facts and Its Sole Negligence Is The Only Reason For the Errors at Issue.,.,",.,...",...,',...,', C. Reliance on SDCERS' Calculations Caused Harm..., 77 IX, THE TRIAL COURT ERRED BY FAILING TO RECOGNIZE STATUTORY PROTECTIONS OF PENSIONS FROM LEVY AND ATTACHMENT,,...,,,,.,. 78 X. THE TRIAL COURT ERRED IN SUSTAINING SDCERS' DEMURRER TO THE FOURTH CAUSE OF ACTION FOR CONVERSION,,...,,...,...,.,...,., 82 A. The Elements of a Claim for Conversion..,.,...,..,. 82 B. Krolikowski Adequately Pleaded a Claim for Conversion. 83 C. Van Putten is Entitled to Reversal Pursuant to the Parties' Stipulation and the Trial Court's Order...,..., XI. THE TRIAL COURT ERRED BY EXCLUDING MS, JAMISON'S PERCIPIENT TESTIMONY AND IN ADMITTING MR. HOVEY'S EXPERT OPINION TESTIMONY...,...,..., A. The Standard of Review...,...,.,...,

8 B. Ms. Jamison's Testimony Should Have Been Admitted C. Mr. Hovey's Expert Opinions Should Not Have Been Admitted D. The Trial Court's Evidentiary Errors Were Prejudicial XII. CONCLUSION

9 TABLE OF AUTHORITIES Cases Amarel v. Connell (1988) 202 Cal.AppJd Aryeh v. Canon Business Solutions, Inc. (2013) 55 Ca1.4th Atchley v. City of Fresno (1984) 151 Cal.AppJd Auto Equity Sales, Inc. v. Superior Court (1962) 57 Ca1.2d Barrett v. Stanislaus County Employees' Retirement Ass 'n (1987) 189 Cal.AppJd ,84 Blank v. Kirwan (1985) 39 Ca1.3d Board of Retirement v. Santa Barbara County Grand Jury (1997) 58 Cal.AppAth Boren v. State Personnel Board (1951) 37 Ca1.2d Bozzi v. Nordstrom, Inc. (2010) 186 Cal.AppAth Brown v, State Personnel Board (1985) 166 Cal.AppJd Cabral v. Ralph's Grocery Co. (2011) 51 Ca1.4th California Logistics, Inc. v. State of California (2008) 161 Cal.AppAth

10 City of Oakland v. Oakland Police and Fire Retirement System (2014) 224 Cal.AppAth City of Oakland v. Public Employees' Retirement System (2002) 95 Cal.AppAth ,59-60 City of San Diego v. San Diego City Employees' Retirement System (2010) 186 Cal.AppAth ,51 Conti v. Board of Civil Service Commissioners (1969) 1 Ca1.3d County of Marin Assn. of Firefighters v. Marin County Employees Ret. Assn. (1994) 30 Cal.AppAth , 70, 84 Crumpler v. Board of Administration (1973) 32 Cal.App.3d , 76 Davaloo v. State Farm Ins. Co. (2005) 135 Cal.AppAth Douglas v. Douglas (1951) 103 Cal.App.2d Driscoll v. City of Los Angeles (1967) 67 Ca1.2d , 77 Edgar Rice Burroughs, Inc. v. Commodore Productions & Artists, Inc. (1959) 167 Cal.App.2d Evans v. City of Berkeley (2006) 38 Ca1.4th Fountain Valley Regional Hospital & Medical Center v. Bonta (1999) 75 Cal.AppAth Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Ca1.4th Green v. MacAdams (1959) 175 Cal.App.2d

11 Harman v. City and County of San Francisco (1972) 7 Ca1.3d Haro v. City of Solana Beach (2011) 195 Cal.AppAth Heaps v. Heaps (2005) 124 Cal.AppAth Hittle v. Santa Barbara County Employees Retirement Assn. (1985) 39 Ca1.3d ,49 Horsford v. Board of Trustees of Calif. State Univ. (2005) 132 Cal.AppAth Ideal Boat & Camper Storage v. County of Alameda (2012) 208 Cal.AppAth In re Javier G. (2006) 137 Cal.AppAth In Re Retirement Cases (2003) 110 Cal.AppAth Johnson v. City of Loma Linda (2000) 24 Ca1.4th Keeler v. Superior Court (1956) 46 Ca1.2d Keener v. Jeld-Wen, Inc. (2009) 46 Ca1.4th Kilker v. Stillman (2015) 233 Cal.AppAth Kirschner- Brothers Oil, Inc. v. Natomas Co. (1986) 185 Cal.App.3d Laidlaw Waste Systems, Inc. v. Bay Cities Services, Inc. (1996) 43 Cal.AppAth

12 Lam v. Bureau of Security & Investigative Services (1995) 34 Ca1.App.4th LaMonte v. Sanwa Bank California (1996) 45 Ca1.App.4th Lee v. Hanley (2015) 61 Ca1.4th Lexin v. Superior Court (Lexin) (2010) 47 Ca1.4th ,48 Little Co. of Mary Hosp. v. Belsh (1997) 53 Ca1.App.4th Logan v. Southern California Rapid Transit District (1982) 136 Ca1.App.3d Los Angeles Federal Credit Union v. Madatyan (2012) 209 Ca1.App.4th Lueter v. State of California (2002) 94 Ca1.App.4th Manufactured Home Communities, Inc. v. County of San Luis Obispo (2008) 167 Ca1.App.4th McLeod v. Board of Pension Commissioners (1970) 14 Ca1.App.3d Miklosy v. Regents of University of California (2008) 44 Ca1.4th O'Neal v. Stanislaus County Employees' Retirement Association (2017) 8 Ca1.App.5th ,45,48 Osborne v. Todd Farm Service (2016) 247 Ca1.App.4th Pannu v. Land Rover North America, Inc. (2011) 191 Ca1.App.4th

13 Parsons v. Tickner (1995) 31 Cal.AppAth People v. Cole (1956) 47 Cal.2d People v. McAlpin (1991) 53 Cal.3d People v. McDonald (1984) 37 Ca1.3d Reynoso v. United States (9th Cir. 2012) 692 F.3d , 72 Robert F. Kennedy Ctr. v. Dep 't of Health Servs. (1998) 61 Cal.AppAth San Francisco Bay Area Rapid Transit v. General Reinsurance Corp. (N.D. Cal. 2015) 111 F.Supp Sargon Enterprises, Inc. v. University of Southern Calif. (2012) 55 Cal.4th Semole v. Sancoucie (1972) 28 Cal.App.3d Sierra Club v. City of Hayward (1981) 28 Cal.3d Singh v. Board of Retirement (1996) 41 Cal.AppAth Summers v. A.L. Gilbert Co. (1999) 69 Cal.AppAth Sun 'N Sand v. United California Bank (1978) 21 Cal.3d Symington v. City of Albany (1971) 5 Cal.3d

14 Tanner v. California Public Employees' Retirement System (2016) 248 Ca1.App.4th Taylor v. Forte Hotels International (1991) 235 Ca1.App.3d Tenzer v. Superscope, Inc. (1985) 39 Ca1.3d DeHaro Street Investors v. Dept. of Housing and Community Development (2008) 161 Ca1.App.4th Trafcone Wireless, Inc. v. County of Los Angeles (2008) 163 Ca1.App.4th Ulloa v. McMillen Real Estate and Mortgage, Inc. (2007) 149 Ca1.App.4th Weirv. Snow (1962) 210 Ca1.App.2d Westly v. Board of Administration (2003) 105 Ca1.App.4th ,51-54,66 Wood v. Elling Corp. (1977) 20 Ca1.3d Zelig v. County of Los Angeles (2002) 27 Ca1.4th

15 Constitutions California Constitution art. XVI ,87 17, subd (a) , subd. (b) , subd. (c) art. XX Statutes Civil Code Code of Civil Procedure 338, subd. (d)... 22,36,39, 54-56, 58-59, 66, 70, , , , subd. (b)

16 904.1, subd. (a)(l) , , subd. (b) Education Code 22008, subd. (b) ,78 Evidence Code , subd. (b) , subd. (a) , subd. (a) Government Code , subd. (a)

17 11513, subd. (b) , subd. (c) , subd. (c) , subd. (b)(l) , subd. (c) , subd. (b)(l) Health and Safety Code , subd. (a) Probate Code 16002, subd. (a) Revenue and Tax Code , 72 Welfare and Institutions Code , subd. (a)

18 State Regulations 22 Cal. Administrative Code Municipal Laws San Diego City Charter San Diego Municipal Code (f) (b)(4) (a)

19 Rules California Rules of Court (a)(2)(B) Other Authorities Ballentine's Law Dictionary (3ed. 1969) Wegner, Fairbank, Epstein & Chernow, Cal. Practice Guide: Civil Trials and Evidence (The Rutter Group 2016),-r 8:643, p. 8C-lOl... 91,-r 8:644, p. 8C-lOl... 91,-r 8:645, p. 8C-lOl... 91,-r 8:687, p. 8C-lll... 89,-r,-r 8:693-8:694, p. 8C ,-r 8:695, p. 8C Witkin, Cal. Evidence (5th ed. 2012) Opinion Evidence 29, p Witkin, Cal. Procedure (5th ed. 2008) Actions 659, p , pp Witkin, Cal. Procedure (5th ed. 2008) Pleading 378, pp

20 13 Witkin, Summary of California Law (10th ed. 2005) Equity 16, p , p Witkin, Summary of California Law (10th ed. 2005) Trusts 6, p

21 I INTRODUCTION The San Diego City Employees' Retirement System (SDCERS) made a mistake in 2000 in calculating police lieutenant Connie Van Putten's pension. In 2006 SDCERS made the same mistake in calculating Sergeant Vincent Krolikowski's pension. Both police officers were unaware of SDCERS' mistakes. Both detrimentally relied on SDCERS' calculations. Both retired earlier than they otherwise would have had SDCERS done its job correctly. SDCERS always had all the information it needed to correctly calculate these police officers' pensions. SDCERS was aware of the critical reliance its members and their spouses placed on it in making indelible retirement decisions. And SDCERS always had all of the information it needed to double check its math. SDCERS admits it erred and is completely at fault. In 2014, despite SDCERS' initial negligence, its dilatory failure to check its math, lacking any statutory or municipal code authority to act on its own, and without resort to judicial process or any established administrative proceeding, SDCERS simply began docking VanPutten's and Krolikowski's pensions to collect what SDCERS claimed it was owed. And SDCERS charged retroactive 7.5 percent interest since the time it erred -21-

22 in 2000 and VanPutten and Krolikowski filed suit seeking a declaration that SDCERS' unauthorized self-help deductions from their monthly pensions should be subject to ordinary tenets oflaw, including the statute of limitations, laches, equitable estoppel, and statutes protecting pensions from levy and attachment. VanPutten and Krolikowski each raised claims for declaratory relief, writ of mandate, breach of constitutional and fiduciary duty, and conversion. The trial court disposed of the latter two causes of action by demurrer, and the first two causes of action after a two-day bench trial. The judgment should be reversed for several reasons. First, the trial court erred in sustaining SDCERS' demurrer to the third causes of action for breach of constitutional and fiduciary duties because Krolikowski and VanPutten stated valid claims which were not amendable to resolution by demurrer. (Section V,post.) Second, the trial court erred by failing to apply the three-year statute oflimitations of Code of Civil Procedure section 338, subdivision (d). (Section VI,post.) Third, the trial court erred by failing to apply the doctrine of laches, despite undisputed evidence that SDCERS' delays in discovering its errors was unreasonable and that its delays prejudiced the appellants. (Section -22-

23 VII, post.) Fourth, the trial court erred by failing to apply the doctrine of equitable estoppel, which was shown by undisputed facts, including SDCERS' negligence and the prejudice to Krolikowski and VanPutten. (Section VIII,post.) Fifth, the trial court erred by failing to recognize and apply statutory provisions protecting pensions from levy and attachment. (Section IX, post.) Sixth, the trial court erred in sustaining SDCERS' demurrer to the fourth causes of action for conversion because SDCERS had no statutory or other authority to simply seize what it thought was owed from future pension payments without resort to judicial process. (Section X,post.) Seventh, the trial court erred by excluding the testimony of one of its former board members and in admitting expert legal testimony from a nondesignated witness who lacked any legal training. (Section XI, post.) -23-

24 A. Statement of Facts II STATEMENT OF THE CASE 1. SneERS acts as a fiduciary and has a trust relationship with pensioners. SDCERS is a public employees' retirement system operating under section 17 of article XVI of the California Constitution, San Diego City Charter sections 141 through 149, and San Diego Municipal Code Section , et seq. Pursuant to Charter section 144, SDCERS is managed by its Board of Administration. SDCERS administers the pension plan for employees of the City of San Diego (City). (Appellants' Appendix, Volume 14, pp (l4aa ) [responses 1-3]; 14AA2841 [responses 1-3].) SDCERS has fiduciary duties to its members, including VanPutten and Krolikowski. (0 'Neal v. Stanislaus County Employees' Retirement Association (2017) 8 Cal.App.5th 1184, (0 'Neal) [applying "well-settled principles governing trust fiduciaries"]; 13 Witkin, Summary of California Law (loth ed. 2005) Trusts, 6, p. 572 ["A pension plan creates two relationships... [including] a trust relationship between the pensioner and the trustee administering the plan"].) -24-

25 2. Before deciding to retire, Van Putten and Krolikowski met with SDCERS to determine if they could afford to retire. VanPutten began her career as a police officer with the City on November 19, (Reporter's Transcript, Volume I, p. 16:24-25 (lrt16:24-25); 15AA2896.) On July 5, 1988, Van Putten left the City after achieving the rank of Lieutenant, and went to work as a Captain in the City of Union City police department. (lrt17:1-2, 17:14-16.) Van Putten retired from both the City of San Diego and the City of Union City on December 24,2000. (lrt19:11-13, 19:26-28; 15AA2899.) Krolikowski began his career as a police officer with the City on March 17, (lrt88:18-24; 15AA2864.) On June 14, 1990, he left the police department after achieving the rank of detective, and began working at the San Diego County District Attorney's Office as an investigator. (lrt87:21-23; 2RT282:13-17.) Krolikowski retired from both the City and the County of San Diego on March 10,2006. (lrt95:18-23, 171:13-17; 2RT284:11-14; 15AA ) After careers of public service as law enforcement officers, Van Putten and Krolikowski met several times with SDCERS before deciding when to retire to determine what their pensions would be if they retired on a certain date. (lrt19:14-21:11, 21:27-22:25,82:15-84:15,91:8-93:18, 95:23-96:12, 153:12-155:14.) -25-

26 3. SDCERS provided pension calculations to Van Putten and Krolikowski, who relied on these calculations and retired. Before they decided whether they could afford to retire, SDCERS provided pension calculations to both VanPutten and Krolikowski. (1 RT 20:5-17, 82:19-27, 94:3-14, 153: : 14.) Each relied on these calculations in deciding when to retire. (lrt25:l1-15, 82:19-27,94:9-14, 153:12-155:14.) Each retired earlier than they otherwise would have had SDCERS provided correct infonnation. (lrt22:19-13:28, 25:11-15, 81 :22-82:27,93:16-94:8, 100:5-11, 155:5-14.) 4. SDCERS is aware ojpensioners' reliance on its pension calculations. SDCERS is aware its members rely on the accuracy of its calculations in retirement planning. (lrt161:25-162:12; 2RT260:20-26, 274:7-9.) SDCERS' Member Service Director Cynthia Queen testified that SDCERS is very aware that employees rely on the accuracy of SDCERS' pension calculations in deciding when to retire. (lrt161:25-162:9 [SDCERS' infonnation regarding the amount of an employee's pension is "very, very important infonnation" regarding the timing of retirement]; 1RT162:10:12 [aware "members are relying on the accuracy" of the infonnation provided by SDCERS].). -26-

27 5. Van Putten and Krolikowski paid state and federal taxes on their pensions. Van Purten and Krolikowski both paid federal and state income taxes on their pensions. (lrt31:9-15, 101:2-103:13.) SDCERS knows that pensions are taxable because it withholds taxes from payments to members and reports pension income to taxing authorities on 1099 forms. (6AA1212; 6AA1214; 2RT327:3-6; 1RT73:28-74:11, 124:17-19, 156:7-10; 2RT258:8-14.) 6. SDCERS erroneously calculated Van Putten's pension in 2000 and took 14 years to inform her. SDCERS concedes that it erred in calculating Van Purten's pension in 2000 because it incorrectly applied the wrong retirement factor. (lrt197:16-24,198:27-199:9; 2RT206:17-22, 219:2-6, 275:6-8, 285:24-26; 15AA2956 [~ 13].) SDCERS did not notify VanPutten of its error until (l3aa ; 2RT277:9-15.) 7. SDCERS erroneously calculated Krolikowski's pension in 2006 and took seven years to inform him. SDCERS concedes that it erred in calculating Krolikowski's pension in 2006 because it incorrectly applied the wrong retirement factor. (lrt197:16-24, 198:27-199:9; 2RT2756-8; 15AA2919 [~13].) SDCERS did not inform Krolikowski of its error until (13AA ; 2RT 265:6-8; 267:9-12; 267:16-22; 277:13-278:2; 287:21-28.) -27-

28 8. SDCERS always had all of the data it needed to correctly calculate Van Putten 's and Krolikowski's pensions. SDCERS always had all of the necessary information to calculate Van Putten's and Krolikowski's pensions because the retirement factors are established in readily-available San Diego Municipal Code provisions. 288:2,288:19-28; 14AA ; see e.g., San Diego Municipal Code, (f).) SDCERS conceded that "[t]he source information [necessary to calculate Van Putten's and Krolikowski's pension] is information that SDCERS maintains in the ordinary course of business and customarily relies on in calculating member benefits." (l5aa2917[,-r 3]; 15AA2954 [,-r 3].) 9. SDCERS knew as early as 1992 that it better find mistakes within three years of making them. In 1992, SDCERS' attorney (which was then represented by the City Attorney) wrote a memorandum to the SDCERS Retirement Administrator. (9AAI ) The memorandum addressed the issue in this case-sdcers' ability to recoup of overpayments of pension benefits. In This memorandum is subject to judicial notice. In Evans v. City a/berkeley (2006) 38 Cal.4th 1, 8-9, fu's. 4-5, the Supreme Court took judicial notice of a City attorney opinion. (Evid. Code, 452, subd. (b).) The opinion was offered to show facts that "the city attorney concluded continuing free berths [for Sea Scouts] would violate the city's resolution and ordinance and conveyed that opinion to the city manager and council." (lrti97:16-24, 198:27-199:9; 2RT206:17-25, 215:2-10, 219:2-6, 287:

29 that memorandum, SDCERS' lawyer explained that recovery of overpayments would be "subject to various defenses including statute of limitations and estoppel." (9AA1782.) SDCERS' attorney warned: "[SD]CERS could be precluded from recovering those payments made in violation of the three year statute of limitations period set forth in Code of Civil Procedure section 338(d)" (9AA1784), and may be barred by the 1785.) The 1992 memorandum put SDCERS on notice as early as 1992 that its ability to recover overpayments of pension benefits caused by SDCERS' mistakes could be limited. This further heightened SDCERS' obligation to correctly calculate members pensions and to double check its calculations promptly, rather than waiting several years to do so. 10. Neither Van Putten nor Krolikowski were aware of SDCERS errors. Neither Van Putten nor Krolikowski were aware of SDCERS' errors. (lrt24:9-25:10, 94:9-11, 94:26-95:10, 96:9-13; 14AA [response to request no. 15]; 14AA2845 [response to request no. 15].) 11. After SDCERS discovered its errors, it deducted (or threatened to deduct) what it claimed was owed from its members' pensions. After SDCERS discovered its errors, it wrote to VanPutten (l3aa2386) and Krolikowski (13AA2388) and threatened to deduct the doctrine of equitable estoppel from recovering overpayments. (9AA

30 amount SDCERS claimed was owed, including interest at the rate of 7.5 percent from the date the pension payments began. (13AA2388; 13AA2422; 13AA2386; 1RT 31:27-33:1.) SDCERS has begun deducting $ per month from Krolikowski's pension. It will continue to do so until it collects $27,360.15, plus interest, from him. (15AA2919 [,-r,-r 16-17].) On May 27,2015, in order to prevent accruing interest, Van Putten paid SDCERS the amount it claimed was owed, $21, (15AA2956 [,-r 17]; 15AA2998; 6AA O [payment].) Van Putten paid this amount under protest, and expressly reserved her right to challenge SDCERS' actions. (13AA2392.) SDCERS has reduced the amount of Van Putten's and Krolikowski's pensions prospectively to the amount SDCERS should have originally calculated those pensions. (l5aa2956 [,-r 16]; 15 AA 2919 [,-r 15]; lrt31 :27-32:5; 2RT 320:6.) B. Statement of Procedure 1. Krolikowski and Van Putten exhausted SDCERS' written appeal policy. SDCERS has created its own "appeal" process which essentially involves a member's right to exchange letters with SDCERS' staff, and attend a meeting of lay persons where a member disagreeing with SDCERS' threatened action can speak for no more than three minutes. -30-

31 (13AA2387 [30 days to appeal]; 13AA2389 [same]; 13AA ; 13AA2474 [Board agenda: "Public testimony on an item on the agenda is limited to 3 minutes per speaker"]; 14AA2619 [Business and Governance Committee also only allows three minutes per speaker].) SDCERS requires any such appeal to be pursued within 30 days after it mails notice of SDCERS' intended adverse action, or the right to appeal is forfeited. (13AA2387 ["If you wish to appeal, you must do so within 30 days of the date of this letter"]; 13AA2389; 13AA ) Although Krolikowski and Van Purten disputed SDCERS' authority to force its members to follow SDCERS' self-created appeal policy, rather than seeking relief in court like any other litigant seeking to recover money paid by mistake (13AA2436; 14AA2638), they complied with SDCERS' appeal process anyway. (13AA ; 14AA ) 2. Krolikowski filed suit. Krolikowski filed suit against SDCERS on February 24,2015. (laa36-43.) His complaint included claims for declaratory relief, writ of mandate, breach of constitutional and fiduciary duty, and conversion. (Ibid.) 3. Van Puttenfiled suit. Van Putten filed suit against SDCERS on June 23, (2AA ) Her complaint also included claims for declaratory relief, writ of -31-

32 mandate, breach of constitutional and fiduciary duty, and conversion. (Ibid.) Pursuant to rule of the California Rules of Court, Van Purten filed a notice that her case was related to Krolikowski's case. (2AA ) 4. Both cases were assigned to the same judicial officer. Both cases were assigned to the same judicial officer, The Honorable Joel M. Pressman. (3AA655.) 5. The trial court sustained SDCERS' demurrer to Krolikowski's breach of fiduciary duty and conversion claims, and overruled the demurrer to his declaratory relief and mandamus claims. SDCERS filed a demurrer to Krolikowski's complaint. (laa ) In response, Krolikowski filed an amended complaint asserting the same causes of action as his original complaint. (2AA ) SDCERS then demurred to Krolikowski's first amended complaint, 548.) SDCERS contended that Krolikowski's complaint failed to allege facts sufficient to state any cause of action against it, and that the only available remedy to Krolikowski was administrative mandamus under Code of Civil Procedure section (2AA ) Krolikowski opposed SDCERS' demurrer. (3AA ) Krolikowski argued that: 1. his was not an administrative mandamus case because (a) and lodged what it contended was the "administrative record." (2AA

33 Section applies to administrative hearings, which requires a hearing, evidence, and discretion to determine facts, and (b) SDCERS' meetings lacked the requirements for an administrative hearing (3AA579:3-581: 19); 2. SDCERS must follow laws not expressly delegated to it (3AA581 :20-589:20); and 3. Each of Krolikowski's claims were adequately pleaded. (3AA589:2l-15: 13.) On August 14,2015, the trial court overruled SDCERS' demurrer to Krolikowski's first cause of action for declaratory relief and his second cause of action for a writ of mandate. (3AA ) The trial court expressly found that SDCERS' appeal process did not constitute an "administrative hearing." While there was an appeal process to the Board, this appeal was not the type of administrative hearing contemplated under CCP This is not a hearing where evidence was required to be taken and discretion based upon fmdings of facts was vested in the Board. The appeal was a hearing regarding legal duties regarding calculation and award of benefits, which is within the purview of traditional mandamus. As stated by the Court in Shelden [v. Marin County Employees Ret. Ass'n (2010) 189 Cal.App.4th 458]: "Shelden seems to argue administrative mandamus was appropriate because MCERA in fact provided him with an administrative hearing. However, administrative mandamus is only appropriate to review only an administrative decision that is made "as the result of a proceeding in which by law a hearing is required to be given.... " (Code Civ. Proc , subd. (a).) If the administrative agency provides a hearing but it was not required by law, administrative mandamus does not apply." Id. citing Keeler y. Superior Court (1956) 46 Ca1.2d 596,

34 (3AA656, italics in original.) Finally, the trial court sustained SDCERS' demurrer to Krolikowski's third cause of action for breach of constitutional and fiduciary duties and his fourth cause of action for conversion. (3AA657.) The trial court held: "SDCERS had an obligation to comply with the law and correct errors in benefit payments. See Barrett v. Stanislaus County Employees' Retirement Ass 'n (1987) 189 Cal.App.3d 1593, The exercise of attempting to correct an error in benefit payments cannot subject defendant to tort liability. (As stated above, with respect to the First and Second Causes of Action, there may be an issue as to whether SDCERS correctly calculated payments but the attempt to correct errors is not tort liability given SDcERS independent duty to make such corrections if necessary.)" (3AA657.) 6. The parties stipulated that the Krolikowski demurrer rulings would apply to Van Putten, preserving her right to appeal. In light of the similarity in Van Putten's complaint to Krolikowski's first amended complaint, and the assigmnent of the cases to the same judicial officer, the parties stipulated that: 1. The Court's order dated August 14, 2015, partially overruling and partially sustaining SDCERS' demurrer to the first amended complaint in the Krolikowski case shall be -34-

35 applicable to this (the Van Putten) case. 2. The briefmg and oral arguments made regarding SDCERS' demurrer to the first amended complaint in the Krolikowski case shall be applicable to th[e] (the Van Putten) case. 3. The parties reserve and retain all rights to appeal in... []the Van Putten[] case as if SDCERS had made the same demurrer it filed in the Krolikowski case, that parties had raised the same written and oral arguments, and the Court made the same ruling. (3AA ) The trial court accepted the parties stipulation and entered it as an order (3AA68 1), which is included in the judgment. (12AA ) 7. The cases were consolidatedfor all purposes. On January 6,2016, Krolikowski and Van Putten moved to consolidate the cases for all purposes, including trial. (4AA ) SDCERS did not oppose the motion. (6AA ) On January 29, 2016, the trial court granted the motion and designated Krolikowski as the lead case. (6AA ) 8. The parties all filed a motion for summary judgment. The parties all filed motions for SU1)l1llary judgment. (4AA ; 5AA [SDCERS' motion]; 5AA ; 6AAl [Krolikowski's and Van Putten's consolidated motion]; 6AA ; -35-

36 7AAI238-IS27; 8AAIS [SDCERS' opposition]; 9AAI ; IOAA [Krolikowski's and Van Putten's consolidated opposition]; IOAA [SDCERS' reply]; loaa [Krolikowski's and Van Putten's consolidated reply].) 9. The trial court denied the motions for summary judgment. The trial court denied both motions. (1IAA S.) However, the trial court held that SDCERS could resort to selfhelp and recoup overpayments from pension payments despite statutes protecting pensions from levy or attachment (1IAA2104), and that the statute of limitations provided by Code of Civil Procedure section 338, subdivision(d), does not apply to SDCERS. (Ibid.) Finally, the trial court held that the doctrines of laches and equitable estoppel could apply, but that there were issues of fact on these theories that precluded summary judgment. (11AA S.) The trial court noted that" [b] ecause SDCERS levied plaintiffs' pensions, the plaintiffs could not have asserted these affirmative defenses. To the extent that SDCERS did not anticipate th[ese] defense[s], the pleadings can be amended to allege these doctrines. (1IAA210S.) \ -36-

37 10. Krolikowski and Van Puttenfiled amended complaints to expressly allege laches and equitable estoppel. Krolikowski and VanPutten amended their complaints to expressly allege the doctrines of laches and equitable estoppel. (llaa 2111: 12-24, 2112: :10,2115:14-26,2116:4-7; l1aa2122: :11, 2124:14-26,2125:10-12,2126: :10,2127:16-19.) 11. After a two-day bench trial, the trial court adopted SDCERS' proposed statement of decision and entered judgment for SDCERS. The court held a two-day bench trial on May 23, 2016, and May 25, (lrtl-2rt410; l2aa [minute orders].) Each party filed trial briefs. (l1aa2l74-2l94 [SDCERS' trial brief]; 12AA [Krolikowski's and Van Putten's trial brief].) Before trial began, the trial court granted SDCERS' motion to exclude the testimony of Conny Jamison (lrt9:12-22; 12AA2273), a former 18-year member ofsdcers' board, who would have testified that SDCERS' delay in discovering its errors was unreasonable. (lrt8:1-13.) At trial seven witnesses were called. (lrti-2rt410; 12AA [minute orders].) Several exhibits were admitted. (l2aa ; 12AA ; 13AA AA3007 [trial exhibits admitted into evidence].) Closing arguments were presented at the end of the second day 404:5[SDCERS' closing].) Krolikowski and Van Putten were not permitted of trial. (2R T3 81 : :23 [plaintiffs' closing]; 2R T3 92:

38 rebuttal. (2RT404:7-9o) The trial court was highly complementary of both counsel. (2RT405:14-17.) The trial court asked each party to prepare and provide a proposed statement of decision. (2RT 404:11-18.) Each side complied. (12AA [SDCERS' proposed statement of decision]; 12AA [plaintiffs' proposed statement of decision].) On June 29, 2016, the trial court adopted SDCERS proposed statement of decision verbatim. (l2aa ) C. Statement of Appealability The judgment appealed from (12AA ) is final (Cal. Rules of Court, rule 8.204(a)(2)(B)) and appealable (Code Civ. Proc., 904.1, subd. (a)(l)). -38-

39 III ISSUES PRESENTED 1. Whether the trial court erred in sustaining SDCERS' demurrer to the third cause of action for breach of constitutional and fiduciary duties. 2. Whether the trial court erred in ruling that the statute of limitations (Code Civ. Proc., 338, subd. (d)) does not apply to SDCERS. 3. Whether the trial court erred by failing to apply the doctrine oflaches. 4. Whether the trial court erred by failing to apply the doctrine of equitable estoppel. 5. Whether the trial court erred by holding that SDCERS is not subject to statutes protecting pensions from levy and attachment. 6. Whether the trial court erred in sustaining SDCERS' demurrer to the fourth cause of action for conversion. 7. Whether the trial court erred in excluding the testimony of Ms. Jamison and admitting expert testimony from Mr. Hovey. -39-

40 IV BECAUSE THE ISSUES RAISED IN THIS APPEAL ARE ISSUES OF LAW, THE STANDARD OF REVIEW IS DE NOVO. Issues oflaw are reviewed de novo. (In re Javier G. (2006) 137 Ca1.App.4th 453,459.) Further, when "the issue presented... is a question of law based on undisputed facts, the standard of review on appeal is independent review or de novo review. [Citations.]" (Laidlaw Waste Systems, Inc. v. Bay Cities Services, Inc. (1996) 43 Ca1.App.4th 630,635.) '" [T]he proper interpretation of a statute, and its application to undisputed facts' [citation]" is a question oflaw which is reviewed de novo. (Tanner v. California Public Employees' Retirement System (2016) 248 Ca1.App.4th 743, 753.) This court reviews de novo a trial court's sustaining of a demurrer, exercising its independent judgment as to whether the complaint alleges sufficient facts to state a cause of action. (Zelig v. County of Los Angeles (2002) 27 Ca1.4th 1112, 1126.) In Harman v. City and County of San Francisco (1972) 7 Ca1.3d 150, 157, the Supreme Court restated a plaintiffs burden of pleading as follows: '''''[a]ll that is required of a plaintiff, as a matter of pleading, even as against a special demurrer, is that his complaint set forth the essential facts of the case with reasonable precision and with sufficient particularity -40-

41 to acquaint the defendant with the nature, source and extent of his cause of action'" (italics added)." (Semole v. Sancoucie (1972) 28 Ca1.App.3d 714, 719 [same]; Davaloo v. State Farm Ins. Co. (2005) 135 Ca1.App.4th 409, 415 [a plaintiff must allege ultimate facts that as a whole apprise the adversary of the factual basis of the claim]; 4 Witkin, Cal. Procedure (5th ed. 2008) Pleading, 378, pp ) "In reviewing the sufficiency of a complaint against a general demurrer," reviewing courts "treat the demurrer as admitting all material facts properly pleaded." (Blankv. Kirwan (1985) 39 Cal.3d 311,318.) "In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed," and given a reasonable interpretation, "with a view to substantial justice between the parties." (Code Civ. Proc., 452; Amarel v. Connell (1988) 202 Ca1.App.3d 137, ) The court treats as true not only the complaint's material factual allegations, but also facts which may be reasonably implied or inferred from those expressly alleged. (Id. at p. 141; Miklosy v. Regents of University of California (2008) 44 Ca1.4th 876, 883.) "Because the function of a demurrer is to test the sufficiency of a pleading as a matter of law, [reviewing courts] apply the de novo standard of review." (California Logistics, Inc. v. State of California (2008) 161 Cal.App.4th 242,247; Haro v. City of Solana Beach (2011)

42 Cal.AppAth 542, 549.) It is error for a trial court to sustain a demurrer when the plaintiff has stated a cause of action under any possible legal theory. (Aryeh v. Canon Business Solutions, Inc. (2013) 55 Ca1.4th 1185, 1201; Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Ca1.4th 797,810.) -42-

43 v THE TRIAL COURT ERRED IN SUSTAINING SDCERS' DEMURRER TO THE THIRD CAUSE OF ACTION FOR BREACH OF CONSTITUTIONAL AND FIDUCIARY DUTY. A. The Requisite Elements of a Cause of Action for Breach of Fiduciary Duty. "In order to plead a cause of action for breach of fiduciary duty against a trustee, the plaintiff must show the existence of a fiduciary relationship, its breach, and damage proximately caused by that breach." (LaMonte v. Sanwa Bank California (1996) 45 Cal.App.4th 509,517.) Krolikowski adequately alleged each element. First, Krolikowski adequately alleged the existence of SDCERS' fiduciary duty. (2AA289 [,-r 3], [,-r,-r 7-10].) Second, Krolikowski adequately alleged facts showing how SDCERS breached its fiduciary duty. (2AA [,-r,-r 11-18],292 [,-r,-r 21-24],295 [,-r,-r 34-35].) Third, Krolikowski adequately alleged damages caused by SDCERS' s breach of fiduciary duty. (2AA295 [,-r 36].) "Duty is a question of law for the court, to be reviewed de novo on appeal." (Cabral v. Ralph's Grocery Co. (2011) 51 Cal.4th 764, ) The existence of a fiduciary duty is a question of law; breach of the duty is a question of fact. (Kirschner Brothers Oil, Inc. v. Natomas Co. (1986) 185 Cal.App.3d 784, 790; see also Tenzer v. Superscope, Inc. (1985) 39 Cal.3d 18, 32.) "Questions of fact may be resolved by demurrer only when there is -43-

44 only one legitimate inference to be drawn from the allegations of the complaint." (Trafcone Wireless, Inc. v. County of Los Angeles (2008) 163 Ca1.App.4th 1359, 1368.) Here, the only legitimate inference to be drawn from the allegations of Krolikowski's first amended complaint militate against sustaining SDCERS's demurrer. SDCERS conceded that it erred twice-in 2006 and 2013-in calculating Krolikowski's pension. (2RT291:9-293:17; 14AA [request 19], [requests 21, 24-25].) Krolikowski relied on SDCERS 2006 calculation in deciding when to retire. (1RT94:9-14, 153:12-155:14.) Krolikowski retired earlier than he otherwise would have had SDCERS provided correct information. (1RT93:16-94:8, 100:5-11, 155:5-14.) Krolikowski paid federal and state income taxes on his pension. (1 RT :2-103: 13.) He cannot recover most of the amount he overpaid in taxes as the result of SDCERS' 2006 error. (Reynoso v. United States (9th Cir. 2012) 692 F.3d 973,977 [three-year statute oflimitations for claim of a refund due to overpayment of taxes]; Rev. & Tax. Code, [four-year statute oflimitations].) B. SDCERS Owes Constitutional, Fiduciary Duties in Administering the Pension Trust Fund. As the Supreme Court explained in Hittle v. Santa Barbara County Employees Retirement Assn. (1985) 39 Cal.3d 374 (Hittle), the members of a public retirement board are trustees. (Id. at p. 392, citing former Civil -44-

45 Code sections 2216 and 2222.) As such, they are charged with the fiduciary relationship to the beneficiaries of the trust described in Probate Code section 16002, subdivision (a): "The trustee has a duty to administer the trust solely in the interest of the beneficiaries." (See Hittle, at pp , quoting former Civil Code section 2228.) And in O'Neal, supra, 8 Cal.App.5th at pp , the court applied "well-settled principles governing trust fiduciaries" to the administrator of a public employee pension plan. "Retirement board trustees are fiduciaries (Cal. Const., art. XVI, 17)... " (Lexin v. Superior Court (Lexin) (2010) 47 Cal.4th 1050, 1102.) In short, retirement boards administering public pension funds owe traditional fiduciary duties to the beneficiaries of the trust. 1. SDCERS' fiduciary duties are so important they are embodied in the California Constitution. SDCERS' fiduciary duties are so important they are enumerated in the California Constitution. "The retirement board of a public pension or retirement system [has] the sole and exclusive fiduciary responsibility over the assets of the public pension or retirement system. The retirement board... also ha[ s] sole and exclusive responsibility to administer the system in a manner that will assure prompt delivery of benefits and related services to the participants and their beneficiaries. The assets of a public pension or -45-

46 retirement system are trust funds and [must] be held for the exclusive purposes of providing benefits to participants in the pension or retirement system and their beneficiaries and defraying reasonable expenses of administering the system." (Cal. Const., art. XVI, 17, subd. (a), italics added.) "The members of the retirement board of a public pension or retirement system [ must] discharge their duties with respect to the system with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with these matters would use in the conduct of an enterprise of a like character and with like aims." (Cal. Const., art. XVI, 17, subd. (c).) "A retirement board's duty to its participants and their beneficiaries... take [ s] precedence over any other duty." (Cal. Const., art. XVI, 17, subd. (b).) 2. SDCERS has a duty to provide correct and accurate information to its members. The court in Hittle held that a trustee, such as SDCERS, "must exercise [its] fiduciary trust in good faith and must deal fairly with the pensioners-beneficiaries." (Hittle, supra, 39 Cal.3d at p. 392.) In Hittle, the Court explained: "'[i]n all matters connected with his trust, a trustee is bound to act in the highest good faith toward his beneficiary, and may not obtain any advantage therein over the latter by the slightest misrepresentation, [or] concealment... ' [Citation.]" (Hittle, at p. 393.) -46-

47 "In a matter as important to the welfare of a public agency employee as his pension rights, the employing public agency 'bears a more stringent duty' to desist from giving misleading advice." (Crumpler v. Board of Administration (1973) 32 Ca1.App.3d 567,582 (Crumpler), citing Driscoll v. City of Los Angeles (1967) 67 Ca1.2d 297,308 (Driscoll).) A public pension plan administrator "has a fiduciary duty to provide timely and accurate information to its members." (City of Oakland v. Public Employees' Retirement System (2002) 95 Ca1.App.4th 29,40.) Moreover, SDCERS admits it realizes the vital importance of its pension calculations in member's retirement decisions. (Section II(A)(4), ante.) And SDCERS is aware that when it makes overpayments, its right to recover overpayments is limited. (9AA ; section II(A)(9), ante.) SDCERS must administer the pension trust fund as would a reasonably prudent trustee. And SDCERS had all of the information it needed to perform correct calculations in 2000 and (Section II(A)(8), ante.) Without question, SDCERS had a duty to provide Van Putten accurate information regarding her pension in SDCERS had a similar duty to provide Krolikowski accurate information regarding his pension in