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Merino v. State

Court of Appeals of Washington, Division 2

March 11, 2014

Douglas Merino et al., Appellants,
v.
The State of Washington et al., Respondents

Oral Argument December 2, 2013.

Appeal from Thurston Superior Court. Docket No: 11-2-00307-5. Date filed: 08/03/2012. Judge signing: Honorable Wm Thomas Mcphee.

Hans E. Johnsen, for appellants.

Robert W. Ferguson, Attorney General, and Matthew Kuehn, Assistant, for respondents.

Paul A. Neal on behalf of Washington State Patrol Troopers Association, amicus curiae.

AUTHOR: J. Robin Hunt, J. We concur: Lisa Worswick, C.J., Joel Penoyar, J.

OPINION

Page 154

Hunt, J.

[179 Wn.App. 892] ¶ 1 Douglas and Kay Merino [1] appeal the superior court's denial of their motion for summary judgment and granting of the State's motion for summary judgment in

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their action for disability benefits against the Washington State Patrol (WSP). Merino argues that Washington law entitles him to disability compensation as long as he remains disabled from injuries incurred in the line of duty, even after WSP terminated his employment as a trooper for violating WSP regulations. Holding that under RCW 43.43.040, Merino's disability benefits vested when he became disabled in the line of duty and that he is entitled to continuing disability payments, we reverse the superior court's summary judgment rulings and remand for entry of summary judgment in favor of Merino, reinstatement of his disability benefits, and calculation of attorney fees to which he is entitled under RCW 49.48.030.

FACTS

I. Background

A. WSP Disability Status

¶ 2 The parties agree on the facts. Douglas Merino joined the WSP in 1978 and served as a fully commissioned trooper until October 11, 1988, when he suffered a herniated disc and injuries to his left neck and left shoulder after being ejected from a patrol vehicle while on duty. As a result of these injuries, Merino was unable to meet the physical requirements for his WSP trooper position and went without pay from 1989 through 1991. On February 10, 1994, then-Chief Roger Bruett placed Merino on full job-related disability status, for which he received monthly payments equal to one-half of his previous active-status monthly [179 Wn.App. 893] salary.[2] Sometime thereafter, Merino found employment as an investigator with the Department of Labor and Industries (L& I).

¶ 3 On November 1, 1999, more than five years after becoming disabled, Merino received a certified letter that the WSP sent to all troopers on disability status at that time. This letter (1) confirmed that Merino was an " employee on inactive status due to a disability," (2) informed him that he must continue to comply with WSP regulations and policies, (3) required him to sign and to return the letter, and (4) threatened potential loss of his disability payments if he did not do so. Clerk's Papers (CP) at 212. Merino promptly signed and returned the letter.

B. Insurance Fraud; WSP Termination

¶ 4 In 2005 and 2006, while still on WSP disability status, Merino became involved in an insurance fraud scheme: He attempted to defraud Farmers Insurance of $60,000 and lied to insurance investigators questioning this claim. On January 28, 2008, a jury convicted Merino of two felony counts of fraud based on this false insurance claim. Three days later, WSP received a letter from Merino asking to retire. On February 1, WSP advised Merino that he was not eligible to retire because he had not yet applied for active duty status.

¶ 5 Merino's fraud involvement prompted WSP to investigate whether he had violated WSP regulations, and it charged him with several grounds for discipline. On June 2, 2008, WSP Chief John Batiste conducted a predetermination [179 Wn.App. 894] hearing to give Merino an opportunity to respond to WSP's administrative disciplinary charges; Merino's attorney was present, but Merino was not. On August 6, Chief Batiste found that Merino had violated WSP regulations and terminated him from WSP for violating WSP Rules of Conduct Regulation 8.00.010. As a result of Merino's employment termination, WSP terminated his disability payments. [3]

II. Procedure

¶ 6 Merino did not appeal Chief Batiste's

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decision. [4] On January 31, 2011, Merino sued the State of Washington, the Washington State Department of Retirement Systems, WSP, Chief Batiste, and WSP Deputy Chief David Karnitz. [5] Merino and the defendants filed cross-motions for summary judgment under CR 56. Merino argued that WSP had wrongfully terminated his disability payments because he remained disabled from injuries in the line of duty. The defendants sought dismissal of all of Merino's claims.

¶ 7 The superior court denied Merino's summary judgment motion and granted summary judgment to WSP, ruling that RCW 43.43.040 entitled Merino to

a disability benefit so long as he was an officer of [the] WSP and not fit to return to active duty. The fact that he committed a fraud and the fact that he was convicted of a crime did not affect his right to continued receipt of the disability payment; but when he was terminated from the WSP the right to the payment also terminated because he was no longer an officer.

CP at 308. Merino appeals.[6]

[179 Wn.App. 895] ANALYSIS

¶ 8 Merino argues that (1) his WSP disability benefits vested when he was hired as a state patrol officer in 1978; (2) Washington law requires payment of disability benefits as long as his disability exists and does not allow termination of these vested benefits, regardless of whether he was terminated from WSP for committing a felony; and (3) under Wash. Const. art. I, § 15, his disability compensation qualifies as an " estate," which cannot be forfeited based on a felony conviction. WSP counters that the superior court ruled properly on summary judgment because (1) Merino's disability payments were compensation paid by his employer and, thus, were not vested benefits; and (2) the disability compensation that Merino received was specifically provided only to WSP officers, for which Merino no longer qualified when he was terminated from WSP.

¶ 9 Merino's first argument fails: His disability benefits did not vest when he was hired as a WSP trooper; rather, he was entitled to such benefits only if and when he became disabled in the line of duty, the point at which these benefits vested. See RCW 43.43.040(1); see also State ex rel. Johnson v. Funkhouser, 52 Wn.2d 370, 373, 325 P.2d 297 (1958). We agree with Merino's second argument; and, therefore, we do not reach his third, constitutional argument. We hold that the legislature enacted RCW 43.43.040 to provide disability benefits to WSP officers that vested upon injury in the line of duty; Merino's WSP disability benefits vested when he was injured in the line of duty; and, therefore, they are a vested statutory benefit that continues as long as he remains disabled, including after his termination from WSP.

I. Standards of Review

¶ 10 We review a summary judgment ruling de novo, " engaging in the same inquiry as the trial court." Navlet v. [179 Wn.App. 896] Port of Seattle, 164 Wn.2d 818, 827, 194 P.3d 221 (2008) (citing City of Sequim v. Malkasian, 157 Wn.2d 251, 261, 138 P.3d 943 (2006)). Summary judgment is appropriate when " there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law." CR 56(c). The parties here agree that there are no factual disputes and that we may resolve the issues as a matter of law. We review such questions of law de novo. Andersen v. King County, 158 Wn.2d 1, 13, 138 P.3d 963 (2006); Hanson Indus., Inc. v. Kutschkau, 158 Wn.App. 278, 286-87, 239 P.3d 367 (2010), review denied, 171 Wn.2d 1011 (2011).

¶ 11 The primary issue here is whether Merino was entitled to disability benefits under RCW 43.43.040 while his disability, incurred in the line of duty, persisted after his termination as a WSP employee. We look to the plain language of a statute to discern

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legislative intent. Wright v. Dep't of Soc. & Health Servs., 176 Wn.App. 585, 594, 309 P.3d 662 (2013) (citing Lacey Nursing Ctr., Inc. v. Dep't of Revenue, 128 Wn.2d 40, 53, 905 P.2d 338 (1995)).

II. RCW 43.43.040: WSP Disability Benefits

¶ 12 RCW 43.43.040 provides, in pertinent part,

(1) The chief of the Washington state patrol shall relieve from active duty Washington state patrol officers who, while in the performance of their official duties ... have been ... injured or incapacitated to such an extent as to be mentally or physically incapable of active service: PROVIDED, That:
(a) Any officer disabled while performing line duty who is found by the chief to be physically incapacitated shall be placed on disability leave for a period not to exceed six months ... . Prior to the end of the six-month period, the chief shall either place the officer on disability status or return the officer to active status.
... .
(c) An officer injured while engaged in willfully tortious or criminal conduct shall not be entitled to disability benefits under this section; ...
[179 Wn.App. 897] ... .
(2)(a) Officers on disability status shall receive one-half of their compensation at the existing wage, during the time the disability continues in effect, less any compensation received through the department of labor and industries.

(Emphasis added.) [7] Merino contends that his WSP disability payments were vested benefits under this statute and, therefore, WSP cannot terminate them as long as he is disabled, regardless of whether he committed a felony or violated WSP regulations after becoming disabled. We agree with Merino.

¶ 13 WSP counters that (1) because RCW 43.43.040's compensation scheme is separate from the Washington Law Enforcement Officers' and Firefighters' Retirement System Act (LEOFF), ch. 41.26 RCW (which covers most Washington law enforcement personnel), WSP is not subject to the rules that ordinarily govern disability compensation [8]; (2) Merino's disability payments could not be vested compensation because they were fundamentally " wages," functioning as deferred compensation for services he already rendered, not a pension [9]; and (3) because LEOFF disability [179 Wn.App. 898] benefits apply to former officers and former employees (individuals whose employment relationship has ended), RCW 43.43.040 applies only to currently employed WSP officers. We disagree with WSP.

A. Vesting

¶ 14 The legislature's purpose for these disability payments is to provide income to a WSP officer who can no longer perform line duty by virtue of injuries suffered while protecting

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the public. RCW 43.43.040(1). Merino was injured while engaged in line duty as a WSP officer and, as a result, was placed on disability status under RCW 43.43.040. He qualified for disability benefits under this statute, which provides that " [o]fficers on disability status shall receive one-half of their compensation at the existing wage, during the time the disability continues in effect ." RCW 43.43.040(2)(a) (emphasis added).

¶ 15 Once an officer is assigned disability status, he or she retains only the title " officer" and the right to be considered to a return to active service; the officer no longer has the law enforcement power of a state trooper on active status. [10] State v. Hendrickson, 98 Wn.App. 238, 242-43, 989 P.2d 1210 (1999), review denied, 140 Wn.2d 1024 (2000). Because the disability prevents the officer from earning a regular income working full-time for the WSP, the monthly " half-wage" disability payments help offset the officer's diminished earning capacity and partially compensates the officer for his or her sacrifices in the line of duty. See RCW 43.43.040(1).

¶ 16 In striking contrast with the legislature's explicitly narrow disqualification of disability benefits if the trooper receives injuries while engaged in a tort or a [179 Wn.App. 899] crime, [11] ch. 43.43 RCW contains no analogous language requiring a disabled recipient to continue WSP employment in order to receive such disability benefits. [12] On the contrary, the plain language of RCW 43.43.040 shows that the legislature drafted this statute to compensate WSP officers for injuries sustained in the line of duty (to compensate them partially for employment-generated wages that these disabilities have taken from them, not to compensate them for continued employment); thus, the legislature conditioned this statutory disability benefit only on the officer's becoming injured " in the line of duty."

¶ 17 Washington courts have adopted a similar approach with other statutory disability and disability-related pension benefits, holding that such disability payments vest at the time of injury. See Newlun v. Dep't of Ret. Sys., 53 Wn.App. 809, 821-22, 770 P.2d 1071 [13] (quoting Johnson, 52 Wn.2d at 372-73), review denied, 113 Wn.2d 1014 (1989).

¶ 18 In Newlun, Division Three of our court favorably cited a Delaware court's holding that the primary purpose of a disability pension statute is to compensate injured police officers for permanent disabilities received in the [179 Wn.App. 900] course of their official duties, including that " '[t]he right to a pension [depends] on fulfillment of the statutory requirements for eligibility.'" 53 Wn.App. at 823 (quoting Miller v. City of Wilmington, 285 A.2d 443, 445-46 (Del. Ch. 1971), aff'd, 293 A.2d 574 (Del. 1972)).

¶ 19 Newlun also emphasized the importance of " 'consider[ing] the liberal rules of construction ... in construing pension statutes. Because of the remedial purpose of

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such statutes ... a forfeiture or waiver of [disability] pension rights should be found only where clearly intended by the parties.'" Newlun, 53 Wn.App. at 823 (third alteration in original) (quoting Miller, 285 A.2d at 445-46). And our Washington legislature has expressly intended a forfeiture or waiver of disability benefits only when an officer becomes disabled " while engaged in willfully tortious or criminal conduct." [14] This sole narrow disqualification from WSP disability benefits is consistent with the general principle that because RCW 43.43.040 is the only disability benefit scheme immediately available to WSP officers disabled in the line of duty, [15] we liberally construe it in favor of recipient eligibility. [16]

[179 Wn.App. 901]¶ 20 WSP asserts that Merino's reading of the statute would compel it to employ a convicted felon as a WSP officer. This assertion is incorrect: The statute did not prohibit WSP's terminating Merino's WSP employment when he was convicted of a felony. Because Merino's " employment [contract] include[d] service connected disability rights, those rights ... vested at the instant [he was] injured in the course of his employment." [17] Johnson, 52 Wn.2d at 373.

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[179 Wn.App. 902] B. Duration

¶ 21 WSP's interpretation of the legislature's statutory scheme for disabled WSP troopers would require us to read into RCW 43.43.040(2)(a) a nonexistent restriction of disability payments--limiting such payments to the duration of the trooper's WSP employment, without regard to the duration of the trooper's disability, especially when, as here, the disability continues after WSP employment ends. As we explain above, WSP's terminating Merino's WSP employment when he violated WSP regulations and was convicted of a felony did not terminate his preexisting, vested disability benefits. On the contrary, the legislature's RCW 43.43.040 provision of disability payments to WSP troopers injured in the line of duty entitle injured troopers, such as Merino, to continue receiving these disability payments as long as the disability continues. See RCW 43.43.040(2)(a).

¶ 22 Consistent with this reading of the statute's plain language, we further note that our legislature allocated disciplinary and disability decisions between two separate entities in establishing (1) a WSP " trial board" with jurisdiction over officer discipline and discharge, RCW 43.43.070; and (2) a WSP " disability retirement board" with jurisdiction over disability decisions. [18] WAC 446-40-060. [179 Wn.App. 903] Significantly, the legislature did not give this WSP disciplinary trial board jurisdiction to revoke a trooper's disability benefits. [19] See RCW 43.43.070-.090. The legislature's provision of two separate boards to handle WSP disciplinary and disability issues independently further exemplifies the legislature's intent for RCW 43.43.040 disability benefits to remain independent of the recipient's WSP employment status.

¶ 23 We hold that under the plain language of RCW 43.43.040, the legislature does not allow WSP to revoke vested disability benefits for injuries suffered by WSP troopers in the line of duty by terminating WSP employment, regardless of the reason for such termination. We further hold that under the plain language of this statute, Merino is entitled to receive benefits as long as his disability continues. [20]

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C. November 1999 Letter

¶ 24 In its response to the Washington State Patrol Troopers Association's amicus curiae brief, WSP further argues that (1) Merino's disability payments never vested because he was always subject to losing them if he violated WSP regulations; and (2) Merino waived any contrary [179 Wn.App. 904] contractual obligation by WSP when he signed and returned the WSP's November 1, 1999 letter, which explained that Merino was still subject to WSP regulations, policies, and directions, and that he risked losing his disability payments if he failed to comply with those terms, regardless of whether he was still disabled. Having held that Merino's RCW 43.43.040 disability benefits vested when he became disabled in the line of duty, we reject this argument. Again, although WSP could terminate Merino's employment for failing to comply with WSP regulations, RCW 43.43.040(2)(a) prohibits WSP from terminating his disability benefits as long as he is disabled.

¶ 25 Division One of our court rejected a similar agreement as binding on an employee where the State required the employee to forfeit a vested right, holding that " an agreement in which a public employee waives his or her vested right to participate in an applicable retirement system is void as against public policy." Helgeson v. City of Marysville, 75 Wn.App. 174, 182, 881 P.2d 1042 (1994).

¶ 26 Our legislature enacted RCW 43.43.040 to create a vested disability benefit for WSP troopers injured on the job; we are aware of no authority allowing WSP to create different conditions for disability benefit eligibility, including WSP's attempt to do so with its November 1999 letter. WSP's letter left Merino with little choice other than to sign it; the letter warned him that if he did not sign it, he risked losing his disability benefits, a condition that did not exist under the law at the time that Merino became entitled to disability benefits. As in Helgeson, we hold that WSP's November 1999 letter was unenforceable to revoke Merino's vested disability benefits because it was void as against public policy and contrary to the legislature's dictates in RCW 43.43.040. See 75 Wn.App. at 182. Accordingly, we further hold that WSP's November 1999 letter does not control whether Merino is entitled to his vested disability benefits.

¶ 27 The legislature's decision not to tie a WSP trooper's disability payments to continuing job performance shows [179 Wn.App. 905] that the legislature intended to create a lifetime disability scheme with benefits that vest when the officer qualifies for them upon being injured in the line of duty. RCW 43.43.040(1). Consequently, we hold that Merino's benefits vested when he became disabled, they continue as long as his disability exists, and he did not lose them when WSP terminated him.

ATTORNEY FEES

¶ 28 Merino requests statutory attorney fees under RCW 49.48.030. He argues that if he is entitled to recover past due disability benefits, then he is also entitled to attorney fees. We agree. [21]

¶ 29 Merino further argues that under Bates v. City of Richland, 112 Wn.App. 919, 51 P.3d 816 (2002), recovery of statutory disability benefits qualifies as " wages" according to the expansive definition of RCW 49.46.010(7). WSP counters that if Merino agrees his disability benefits are " wages," then he must concede that the payments were not a vested benefit. We disagree with WSP. Although the chapter containing RCW 49.48.030 (which compels a court to award attorney fees for recovery of wages) does not define " 'wage,' courts have applied the definition

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contained in [RCW 49.46.010(7)]." Bates, 112 Wn.App. at 939. Moreover, " Washington courts have interpreted RCW 49.48.030 broadly, and [have awarded] attorney fees ... for breach of an employment contract." Bates, 112 Wn.App. at 940 (citing Gaglidari v. Denny's Rests., Inc., 117 Wn.2d 426, 450-51, 815 P.2d 1362 (1991)).

¶ 30 In Bates, Division Three of our court further held that

[179 Wn.App. 906] awards for attorney fees under RCW 49.48.030 are not limited to judgments for wages or salary earned for work performed, but, rather, that attorney fees are recoverable under RCW 49.48.030 whenever a judgment is obtained for any type of compensation due by reason of employment. Pensions are deferred compensation for work performed.

112 Wn.App. at 940 (emphasis added) (citing Bakenhus v. City of Seattle, 48 Wn.2d 695, 698, 296 P.2d 536 (1956)). Even if we were to accept WSP's argument that the pension benefits in Bates are distinguishable from Merino's disability benefits, Merino's disability payments are still " compensation due by reason of employment" ; thus, he is entitled to attorney fees under RCW 49.48.030. Bates, 112 Wn.App. at 940.

¶ 31 We hold that the legislature enacted RCW 43.43.040 to provide a vested, ongoing disability payment system to individuals disabled as WSP officers while serving in the line of duty. Merino fulfilled this contingency [22] in February 1994 upon becoming disabled as a result of injury on the job, at which point his benefits vested. [23] The legislature did not condition continued receipt of these payments on continued employment with the WSP or continued good behavior; on the contrary, only recovery from the disability could result in discontinuing these benefits. RCW 43.43.040(1). Furthermore, because the legislature adopted a broad interpretation [179 Wn.App. 907] of " wages" under RCW 49.46.010(7), RCW 49.48.030 compels the superior court to award Merino reasonable attorney fees here.

¶ 32 We reverse the superior court's grant of summary judgment in favor of WSP and the superior court's denial of summary judgment for Merino. And we remand to the superior court for entry of summary judgment in favor of Merino against WSP and for calculation of Merino's attorney fees.

Worswick, C.J., and Penoyar, J. Pro Tem., concur.


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