Bakalekos v. Furlow

2011 Ark. 505

385 S.W.3d 810

Michael BAKALEKOS, James Bauldree, Randall Beers, Curtis Briggs, Darel Casteel, Dan Chandler, Mary Cook, Robert Cullison, James Dickson, David Ebinger, Jimmy Evans, Marty Garrison, John Hall, Fred Hopkins, David Hudson, Samuel Iverson, Ralph Jackson, Richard Jensen, Richard Jordan, Richard Kinsey, Robert Littleton, Jimmy Massie, Brian McClung, Mark Ross, Danny Sabo, Charles Simon, David Smith, Patrice Smith, Charles Speer, John Stafford, Stuart Sullivan, Patricia Swain, Raymond Timmons, Kevin Tindle, Charles Vint, Dwain Watson, Robert Wortham, and William Yeager, Appellants

v.Brad FURLOW, Lee Harrod, Farris Hensley, Sara Lenehan, Mike Lowery, Albert Miller and Bruce Moore, in their Official Capacities as Trustees of The Policemen's Pension and Relief Fund of the City of Little Rock, Arkansas; and The Policemen's Pension and Relief Fund of the City of Little Rock, Arkansas, Appellees.

No. 11–526.

Supreme Court of Arkansas.

Dec. 1, 2011.

Gregory B. Graham and John Lindsay Burnett Jr., Little Rock, for appellants.

William Dean Overstreet, Little Rock, for appellees.

COURTNEY HUDSON GOODSON, Justice.

Appellants Michael Bakalekos, and others, appeal the circuit court's grant of summary judgment dismissing their complaint in which they mounted a multi-pronged challenge to an increase in benefits approved by appellee Policemen's Pension and Relief Fund of the City of Little Rock, Arkansas (“Fund”), acting through the members of its Board of Trustees, appellees Brad Furlow, Lee Harrod, Farris Hensley, Sara Lenehan, Mike Lowery, Albert Miller, and Bruce Moore (collectively “Board”). For reversal, appellants contend that the circuit court erred (1) in ruling that the additional payments were authorized by Arkansas Code Annotated section 24–11–102(a) (Repl.2002); (2) by failing to find that the statute represents an unconstitutional delegation of legislative authority; (3) by finding that the Board did not breach its fiduciary duties by increasing benefits to some but not all retirees; (4) in ruling that the statute, as applied, does not violate the Equal Protection Clause of the Arkansas Constitution; and (5) in finding that a portion of their claims are barred by the statute of limitations. As this appeal involves issues of statutory interpretation and a challenge to the constitutionality of a statute, our jurisdiction is pursuant to Arkansas Supreme Court Rule 1–2(a)(1) and (b)(6). We affirm.

I. Factual Background

The Fund, organized under the authority of Arkansas Code Annotated sections 24–11–101 to –438 (Repl.2002), is a municipal police pension and relief fund for certain policemen employed by the Little Rock Police Department. The Fund is considered “closed,” meaning that its membership became fixed in 1983 when a replacement system was put in place for newer hires. Acting through its seven-member Board, the Fund disburses pension benefits; disability retirement benefits; death benefits; funeral benefits; additional retirement benefits for those hired prior to 1983; and partial disability benefits. Pursuant to Arkansas Code Annotated section 24–11–422(a)(1)(A) & (B) (Repl.2002), the basic yearly pension benefit for a retiring police officer with at least twenty years of service is one-half of his or her highest salary year.

In 1996, the Board authorized a series of monthly benefit increases for retired members, including those members participating in a Deferred Retirement Option Plan. The increases were in fixed-dollar amounts and were made applicable to members who were retired as of the effective date of each such payment, as shown below:

+-------------------------------------------+
¦August 1, 1996       ¦$ 75 monthly increase¦
+---------------------+---------------------¦
¦February 28, 1997    ¦$125 monthly increase¦
+---------------------+---------------------¦
¦May 14, 1998         ¦$100 monthly increase¦
+---------------------+---------------------¦
¦March 1, 1999        ¦$150 monthly increase¦
+---------------------+---------------------¦
¦March 1, 2000        ¦$ 50 monthly increase¦
+---------------------+---------------------¦
¦January 1, 2003      ¦$ 50 monthly increase¦
+---------------------+---------------------¦
¦January 1, 2004      ¦$ 90 monthly increase¦
+---------------------+---------------------¦
¦January 1, 2005      ¦$ 50 monthly increase¦
+---------------------+---------------------¦
¦January 1, 2007      ¦$ 75 monthly increase¦
+-------------------------------------------+

On September 15, 2006, appellants, who are retired police officers who did not receive the benefit of all the increases, filed suit challenging the monthly benefit increases. In their second amended complaint, appellants alleged (1) that the benefit increases were not authorized by section 24–11–102(a); (2) that the Board breached its fiduciary duties by not giving benefit increases to each retiree; (3) that the Board breached its fiduciary duties by making the increases payable in fixed-dollar amounts, rather than as a percentage of earnings as contemplated by statute; (4) that, to the extent that section 24–11–102(a) authorizes the payment of increased benefits to retired members without providing commensurate increases to future retired members, the statute violates the Equal Protection Clause of the Arkansas Constitution; and (5) that, to the extent that section 24–11–102(a) invests the Board with unbridled discretion to make additional retirement payments in fixed-dollar amounts, the statute represents an unlawful delegation of legislative authority. Appellants sought declaratory judgment for each of these propositions; an order that the benefit increases apply to each of them, along with a schedule for the recoupment of payments from any overpaid retirees; and an injunction against the Board to prevent it from implementing any future payment arrangements that vary from a structure ordered by the court. The Board answered the complaint, denying each material allegation.

Thereafter, the parties filed a stipulation of facts and agreed to submit the issues to the circuit court for decision on cross-motions for summary judgment. Based on the motions, the briefs, the stipulation, and the affidavit of Farris Hensley, the circuit court entered an order granting the Board's motion for summary judgment. The circuit court ruled that the payment of additional, fixed-dollar monthly payments only to retired members was authorized by Arkansas Code Annotated section 24–11–102(a). The court also found that section 24–11–102 did not constitute an unlawful delegation of legislative authority. The circuit court ruled that section 24–11–102(a) permitted the Board to increase benefits to current but not future retirees and that the statute, as applied, did not violate the Equal Protection Clause of the Arkansas Constitution. The court also found that the pension fund was not a trust. The court stated that, in any event, a three-year statute of limitations barred appellants' claims with regard to benefits paid prior to 2003. This timely appeal followed.

II. Standard of Review

Normally, on a summary-judgment appeal, the evidence is viewed in the light most favorable to the party resisting the motion, and any doubts and inferences are resolved against the moving party. Aloha Pools & Spas, Inc. v. Employer's Ins. of Wausau, 342 Ark. 398, 39 S.W.3d 440 (2000). But in a case where the parties agree on the facts, we simply determine whether the appellee was entitled to judgment as a matter of law. Id. When parties file cross-motions for summary judgment, as was done in this case, they essentially agree that there are no material facts remaining, and summary judgment is an appropriate means of resolving the case. McCutchen v. Patton, 340 Ark. 371, 10 S.W.3d 439 (2000).

III. Arkansas Code Annotated section 24–11–102

The issues in this case center on section 24–11–102. Subsection (a) of the statute provides as follows:

The board of trustees of a municipal firemen's relief and pension fund and the board of trustees of a policemen's pension and relief fund are authorized to increase benefits for future or current retired members and beneficiaries of the firemen's relief and pension fund or policemen's pension and relief fund.

Subsection (b) of the statute states that, before granting any increase, the Board must strictly comply with the following conditions:

(1) The board of trustees of the firemen's relief and pension fund or policemen's pension and relief fund shall adopt a resolution approved by not less than three-fourths (3/4) of the membership of the board of trustees, outlining the proposed increase in benefits;

(2)(A) The action proposed by the board of trustees under the resolution shall be determined by actuarial evaluations to be actuarially feasible to the extent that the unfunded liabilities resulting from the proposed increase in member or beneficiary benefits under the fund will be funded over a period of not more than thirty (30) years, pursuant to rules promulgated by the Arkansas Fire and Police Pension Review Board, based on the current available and known revenue or income sources available to the retirement and pension fund.

(B) The actuarial valuations shall be made by an actuary who is a member of the American Academy of Actuaries and who is employed by the review board.

(C) The Executive Director of the Arkansas Fire and Police Pension Review Board shall state the actuarial findings in writing to the board of trustees and shall certify the appropriate action to be taken;

(3)(A) A copy of the resolution adopted by the board of trustees of the firemen's relief and pension fund or policemen's pension and relief fund outlining the proposed increase in member or beneficiary benefits is filed with the executive director, who shall determine that an actuarial valuation has been made in accordance with the provisions of this subchapter and that the actuarial valuation had determined...