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Green v. Bd. of Municipal Employees', Officers', and Officials' Annuity and Benefit Fund, No. 1-98-1743

1st District, December 14, 1999

SECOND DIVISION

JUSTICE McBRIDE delivered the opinion of the court:

Plaintiff Robert Green filed a class action suit on behalf of himself and all others similarly situated, alleging that defendants, the Board of the Municipal Employees', Officers' and Officials' Annuity and Benefit Fund of Chicago, and its former executive director, James Stack, had damaged plaintiff and other putative class members through their calculation of employees contributions into the Municipal Employees', Officers' and Officials' Annuity Fund. The trial court dismissed the cause in its entirety. Plaintiff appeals, alleging various errors in the trial court's dismissal of his complaint.

Plaintiff is a retired City of Chicago employee and a member of the Municipal Employees', Officers' and Officials' Annuity and Benefit Fund of Chicago (Fund). The Fund was created pursuant to section 8-101 of the Pension Code, which requires such a fund to be created in any Illinois city of 500,000 or more inhabitants. 40 ILCS 5/8-101 (West 1996). Money in the Fund is used to pay certain benefits, including retirement annuities, to persons who qualify under the statute. Plaintiff's class action suit alleged that defendants, the Board of the Municipal Employees', Officers' and Officials' Annuity and Benefit Fund of Chicago, and its former executive director, James Stack (hereafter collectively referred to as "the Board"), had calculated employee contributions to the Fund that were in excess of the statutory amount permitted in section 8-234 of the Pension Code. 40 ILCS 5/8-234 (West 1996).

The gist of plaintiff's complaint was that the calculation of the employees' contributions into the Fund were figured using a different definition of "salary" than was used in calculating an employees' retirement benefit. The parties agreed that employee contributions to the Fund were statutorily set at 8 1/2% of an employee's "actual" salary. One method of calculating an employee's retirement annuity involves determining the highest average annual salary received by the employee for any four consecutive years within the employee's last ten years of service. See 40 ILCS 5/8-138 (West 1996). In calculating an annual salary for purposes of determining an annuity, section 8-233 provided that:

"where a salary rate change occur[ed] during the year, it shall be considered that the annual wage for any year [was] at such monthly, weekly, daily, or hourly salary or wage rate as was applicable for the greater number of months, weeks, days or hours, respectively, in each year under consideration." 40 ILCS 5/8-233(b) (West 1996).

Plaintiff's complaint provided the following example of how overpayments to the Fund might occur. An employee making a salary of $24,000 per year receives a raise, effective August 1, to $36,000. Under section 8-233(b), his salary for that year for purposes of calculating an annuity was $24,000, rather than the "true average" of $31,000, because his annual salary was $24,000 for seven months during the year and $36,000 for only five months. However, the contributions actually made were based on actual salary and were thus 8 1/2% of the $24,000 annual salary through July 31 and 8 1/2% of $36,000 thereafter. Therefore, the contributions for the year were made on the actual average salary of $31,000 and were thus more than 8 1/2% of the salary ($24,000) used for annuity purposes. Plaintiff claims that the above results in a violation of section 8-234, which states that:

"The total of salary deductions for employee contributions for annuity purposes to be considered for any 1 calendar year shall not exceed that produced by the application of the proper salary deduction rates to the highest annual salary considered for annuity purposes for such year." 40 ILCS 5/8-234 (West 1996).

Plaintiff's complaint stated that he was bringing the action on "his own behalf and in a representative capacity on behalf of all persons who are or were employed by the City of Chicago, who have received or will receive salary or wage increases at various times[] in the last ten years they were or will be employed by the City of Chicago, and who are now or will be retired."

After the instant litigation was commenced, the legislature amended section 8-233, effective June 27, 1997, to add an alternative method of calculation. Pub. Act 90-31, eff. June 27, 1997 (amending 40 ILCS 5/8-233 and various other sections of the Pension Code). Now, where a salary rate change occurs during the year, the annual salary for purposes of determining an annuity shall be considered to be the annual equivalent of whatever the employee's salary was for the greater number of months, weeks, days, or hours, whichever is applicable, for the year under consideration, or "the annual equivalent of the average salary or wage rate in effect for the employee during the year, whichever is greater." 40 ILCS 5/8-233(c) (West 1998). The amended statute stated that the change applied to persons withdrawing from service on or after July 1, 1990, and for each such person was intended to be retroactive to the date upon which the affected annuity began. 40 ILCS 5/8-233(d) (West 1998). Plaintiff retired in June 1993.

In addition to alleging, in Count I of his complaint, that the Board's calculation of contributions to the Fund was in violation of the statute, plaintiff alleged in Counts II, III, and IV, that the calculation of contributions resulted in due process violations of both the Illinois and Federal Constitutions. On July 19, 1996, plaintiff's constitutional claims were dismissed on defendants' motion pursuant to section 2-615 of the Code of Civil Procedure. 735 ILCS 5/2-615 (West 1996). The record does not contain a transcript of the hearing at which Counts II, III, and IV were dismissed.

The Board subsequently filed a motion to dismiss plaintiff's remaining count pursuant to section 2-619 of the Code of Civil Procedure. 735 ILCS 5/2-619 (West 1996). The Board maintained in its motion that the statutory amendment to section 8-233 had rendered plaintiff's suit moot. The motion was filed on May 30, 1997, after the legislation had been passed by the General Assembly but prior to it being signed into law by the Governor. Plaintiff was given until June 27, 1997, to respond to the Board's motion but failed to do so. On October 31, 1997, the Board filed a second motion to dismiss based on the fact that the Governor had signed the bill, thus enacting it into law. Pub. Act 90-31, eff. June 27, 1997. Plaintiff was given until November 13, 1997, to respond to defendants' motion but again failed to do so. The court then entered an order giving plaintiff until December 15, 1997, to file a response and scheduled a status hearing on the matter for January 15, 1998. On January 15, 1998, plaintiff failed to appear and had still not responded to defendants' motion. The trial court, noting that plaintiff had had ample time to file a response to the Board's motion to dismiss, dismissed plaintiff's remaining count (Count I) and dismissed the cause in its entirety. Although a motion by plaintiff to certify the class was filed at some point during the litigation, no class was certified by the court prior to the ruling on the motion to dismiss.

On February 20, 1998, plaintiff filed a motion to vacate the dismissal, stating that plaintiff's counsel had not been present at the January 15 status hearing because he had appeared before the appellate court for oral arguments in a different case on that date. The court denied plaintiff's motion at an April 8, 1998, hearing.

The trial court, in both its written order and oral statement denying the motion to vacate, emphasized that the dismissal had been granted based on "the merits of the motion [to dismiss] and the pleadings as they appeared before [the court] at the time." Thus, although the court noted that plaintiff had missed a number of opportunities to file a response to the motion to dismiss, the decision to dismiss was based on the pleadings before the court and was not technically a default order. The parties agree that the court's decision to dismiss was on the merits.

Plaintiff first contends that the trial court erred in dismissing his complaint at a status date without affording him an opportunity to respond orally or in writing to defendants' motion to dismiss. The record, however, indicates that plaintiff was granted three continuances in the 7