Wednesday, May 15, 2019
C.A. Opinion Spotlights:
Former Municipal Court Member Has No Cap on Cost-of-Living Increases
By a MetNews Staff Writer
The Court of Appeal for this district has brought to light that a retired judge of a municipal court that existed in Orange County is being paid retirement benefits, pursuant to a settlement agreement, under a scheme that is applied to no other judicial pensioner in the state.
The former judge, Paul G. Mast, 86, who served on the Central Orange County Municipal Court from Nov. 8, 1965 until his retirement from the bench on Jan. 15, 1979, is the only judicial pensioner unaffected by a statutory cap on cost-of-living increases. (Municipal courts were abolished in 2000.)
He was the only sitting or former judicial officer in the state who received a cost-of-living increase during fiscal years 2008-2009, 2009-2010, 2010-2011, 2013-2014, 2014-2015, and 2015-2016, it emerges.
That Mast is in a category of one is only touched upon in the decision which emanated from Div. Seven on Monday, and was not certified for publication. The opinion recites the controversy below over whether Mast is entitled to an annual cost-of-living increase not subject to a statutory cap, but confines itself to resolving the narrow question raised by the former judge’s appeal.
Seeks More Money
Mast had made a $362,424 claim to the Judges Retirement System (“JRS”) for back benefits plus interest, asserting he had been underpaid; JRS contended, on inspection of his claim, that he was actually overpaid by more than $95,000 and is owed no arrearages; the California Public Employees’ Retirement System (“CalPERS”) Board of Administration sided with JRS. CalPERS administers the retirement system.
The former judge appealed from that portion of Los Angeles Superior Court Judge James Chalfant Feb. 22, 2018 declaratory judgment holding that Mast had not been underpaid benefits and the Court of Appeal affirmed in its decision Monday. Presiding Justice Dennis Perluss wrote:
“In concluding JRS had not underpaid Mast, the superior court relied on a declaration from Pamela Montgomery, dated November 30, 2017, which stated, ‘In 2010, I determined that the initial calculation that a JRS staff member prepared in 1996 had included an incorrect 9% increase for the cost of living in 1987. The true cost of living increase for that year was actually only 1.9%. While other errors had been made in the calculation of Mast’s benefits over time, that error was by far the most significant and the errors resulted in net overpayments to Mast in excess of $95,000 before the errors were corrected on a prospective basis.’ Montgomery’s declaration constitutes substantial evidence supporting the superior court’s decision that Mast was not entitled to any additional payments from JRS.”
JRS did not appeal that portion of Chalfant’s ruling that payments must be made to Mast on a basis distinctive to him.
The case is Mast v. The Judges’ Retirement System, B289043.
Mast represented himself and Harvey L. Leiderman and Jeffrey R. Rieger of Reed Smith were attorneys for JRS. The retired judge did not respond to a request for comment and Leiderman said Monday:
“[W]e represent CalPERS in this matter, so we do not have a comment on the decision today.”
Effective Jan. 1, 1970, legislation provided that judges would receive annual cost-of-living increases, with no limitation, but legislation that went into effect on Jan. 1, 1977, placed a five percent cap on the cost-of-living increases, and the state proceeded to apply the cap to sitting judges. Mast’s position that he has a lifetime vested right in retirement benefits with an unlimited cost-of-living hike, as determined by the consumer price index, stems from his reading of the California Supreme Court’s March 27, 1980 decision in Olson v. Cory.
There, it was held that applying the ceiling to judges whose terms began before the statute took effect impaired vested rights, declaring:
“A judge entering office is deemed to do so in consideration of—at least in part—salary benefits then offered by the state for that office. If salary benefits are diminished by the Legislature during a judge’s term, or during the unexpired term of a predecessor judge…, the judge is nevertheless entitled to the contracted-for benefits during the remainder of such term. The right to such benefit accrues to a judge who served during the period beginning 1 January 1970 to 1 January 1977,…whether his term of office commenced prior to or during that time period….
“A judge who completes one term during which he was entitled to unlimited cost-of-living increases and elects to enter a new term has impliedly agreed to be bound by salary benefits then offered by the state for the different term.”
The opinion also says that pensioners who served while the old law was in effect “acquired a vested right to a pension benefit based on some proportionate share of the salary of the judge or justice occupying the particular judicial office including the incumbent judge’s or justice’s unlimited cost-of-living increases.”
Letter to JRS
In retiring from the bench, Mast took the position that his retirement pay should be determined, through the years, not in accordance with a fixed percentage of what municipal court judges were making at the time of the payments to him, with a five percent cap on cost-of-living increases, but based on his salary when he left office, with no such cap. In a May 1, 1995 letter to JRS’s lead analyst, he said:
“I elect calculation of my pension benefits under the old law to which I have vested rights.”
While JRS initially disputed his reading of Olson v. Cory, insisting that his benefits must be tethered to current salaries, as provided by statute, in the end, it acquiesced. A settlement agreement entered into in October 1996 recites that his benefits would be “based on the compensation he was entitled to on the date of his retirement,” with no limitation on cost-of-living increases.
No other judicial pensioner has been treated in the same manner.
In 1980, the Legislature acted to link annual increases in pay for judges to salaries of state employees. During all fiscal years between 2008-2009 and 2015-15 except 2011-12 and 2012-13, all judicial officers in the state—other than Mast—were denied any cost-of-living increase, under a theory repudiated by the Court of Appeal in its 2017 decision in Mallano v. Chiang.
In 2010, Mast filed a claim with JRS setting forth that it had been calculating figures incorrectly in connection with his pension and he was owed back amounts. A series of proceedings ensued, which included a determination by an administrative law judge that the 1996 settlement was void and a contention by JRS that it had overpaid Mast and that the overpayments should be recouped.
The CalPERS board ultimately determined that the settlement agreement was enforceable, that no back payments were due Mast, and there should be no recoupment.
Chalfant held on Jan. 30, 2018, that JRS must pay Mast’s retirement benefits in accordance with the settlement agreement.
Mast’s view as to the effect of Olson v. Cory was repudiated in 2014 by Div. One of the Fourth District Court of Appeal in Staniforth v. Judges’ Retirement System. The lead plaintiff was Faye Staniforth, the widow of Robert Staniforth, who served as a justice on that division from 1976-86, and died in 1995.
Mast was one of the two attorneys for all 10 of the plaintiff/appellants but one.
Affirming a declaratory judgment in favor of JRS, then-Justice Alex C. McDonald (since deceased) said:
“The statutory scheme is clear that judicial pensioners are entitled to an allowance that is calculated as a fixed percentage of whatever salary is payable to the judge holding the particular judicial office to which the retired judge was last elected or appointed….Although the right to the relevant fixed percentage is vested, and may not be impaired absent comparable new advantages, there is nothing in the JRS scheme that conferred on judicial pensioners a vested right to be exempted from changes in the underlying salary structure for active jurists.”
Declaration of Bankruptcy
A May 24, 1985 article in the Los Angeles Times reports:
“A former Orange County Municipal Court judge who quit the bench six years ago to make more money as a lawyer has filed for bankruptcy, listing 25 lawsuits against him as part of debts that total more than $4.3 million.
“Paul G. Mast of Newport Beach is asking the U.S. Bankruptcy Court in Santa Ana to liquidate his assets, which he listed as $536,800, to pay a host of creditors.
“One of the suits the bankruptcy petition will halt is a $10-million class action claiming that Mast and a bail bonding company were paid more than $2 million for their services with money Mast’s client stole in an investment scam.”
State Bar records reflect that Mast was suspended from law practice from Sept. 18, 2006 to April 7, 2011 based on MCLE noncompliance and a failure to pay State Bar dues.
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