CROSKEY, J.
Phillip Molina (Molina) appeals from a judgment denying his petition for a writ of mandate (Code of Civ. Proc., § 1094.5). By that petition, Molina had sought to compel the inclusion in the calculation of his retirement pension all, or at least some portion of, the settlement proceeds received in the negotiated resolution of his wrongful termination action against the City of Oxnard. Because we agree with the trial court that, (1) given the explicit language of the integrated settlement agreement between Molina and the City of Oxnard, the settlement proceeds constitute neither "payrate" nor "special compensation" and therefore are not taken into consideration as "compensation earnable" for purposes of Molina's "final compensation"; and (2) under applicable state law, such settlement proceeds may thus not be legally utilized to increase Molina's pension benefits, we will affirm the judgment.
In November of 1999, Molina was terminated from his employment as the Director of Finance and Administrative Services of the City of Oxnard (Oxnard). He is a certified public accountant and, for over eighteen years, he had been employed by various public entities, all of whom were a part of the California Public Employees Retirement System (CalPERS).
About six months after his termination by Oxnard, Molina was hired by the Los Angeles County Office of Education (LACOE), an entity that also participated in CalPERS. In February or March of 2001, he left that position and applied for and was awarded a pension by CalPERS later that year. That pension became effective on December 1, 2001 and was based on his years of service with participating public agencies, including Oxnard and LACOE.
In the meantime, however, on March 3, 2000, Molina had filed an action for wrongful termination against Oxnard in the United States District Court for the Central District of California.
The settlement agreement contains several provisions that are relevant to the issues raised in this appeal. First, the purpose of the settlement agreement was set forth in its recitations, one of which states: "This Agreement is made as a compromise between Molina and Oxnard for the complete and final settlement of all claims, differences and causes of action with respect to Molina's employment with Oxnard and for every claim for relief, causes of action and/or any events occurring between the parties prior to the execution of the Agreement, including those set forth in the lawsuit entitled
Second, the settlement agreement included an unconditional waiver and release of all claims by Molina against Oxnard in exchange for the payment to him of $875,000. The settlement agreement, however, did not provide for how such payment, in whole or in part, should be characterized (i.e., as "back pay" or "tort damages"). It said only that the "City [would] prepare a letter that will address the characterization of the settlement amount (hereinafter `the Letter')." Molina agrees that he will not disseminate the Letter other than for preparation of his taxes and to Federal or State governmental entities as needed for tax purposes.
Next, section 6 provides for a special "one-day" reinstatement: "6.
Finally, section 14 provides for the parties' agreement to an integration clause: "14.
Following the conclusion of the settlement, Molina requested that CalPERS utilize the settlement funds to increase his pension. Molina contended that those funds were characterized as "back pay" and demanded that CalPERS recalculate his pension under two different assumptions: first, by assuming that $200,000 of the settlement proceeds represented his final annual salary with Oxnard; and second, by assuming the entire $875,000 settlement represented his last five years' salary with Oxnard. CalPERS rejected this request, explaining that none of "[t]he payment of $875,000 [can] be reported to CalPERS as earnable compensation and [thus it cannot be] properly used in the calculation of your re-retirement allowance to inflate the gross payrate reported by . . . Oxnard." (Italics added.)
Molina appealed this decision and, in the administrative law proceedings that followed, an Administrative Law Judge (ALJ) found that Oxnard's settlement payment
On June 12, 2009, Molina filed in the trial court a petition for writ of administrative mandamus (Code of Civ. Proc., § 1094.5)
In support of his petition, Molina asked the trial court to consider not only the Administrative Record, but also his 2007 federal income tax return, in which he claims to have reported receiving $200,000 in "back pay" and paid income taxes on such amount as required under applicable law. Both CalPERS and Oxnard objected to the receipt in evidence of such tax return arguing that it could have been but was not introduced in the administrative proceedings below. The trial court sustained their objections and ruled that the tax return would not be admitted because Molina was unable to show that the return was either offered and refused as evidence by the ALJ, or was unavailable as evidence at the time of the administrative hearing, as required under Code of Civil Procedure section 1094.5, subdivision (e).
The trial court then considered the merits of Molina's petition, which it denied. First, Molina argued that Oxnard had participated improperly in the proceedings before the ALJ because both Molina and Oxnard were characterized as "respondents," and that, as a result, the burden of proof fell on Oxnard to produce evidence in his support rather than against him. The court found that his contention that he had somehow been prejudiced by the characterization of Oxnard as a respondent was specious, since he and Oxnard "were obviously on opposite sides" and that such designation had no "effect whatsoever on the presentation of evidence or upon the administrative decision." The trial court also rejected the contention that Oxnard was not a necessary party because Molina had never objected to Oxnard's participation before the ALJ and raised the issue for the first time during the writ proceeding.
Next, the trial court dismissed Molina's argument that the ALJ had improperly shifted the burden of proof and of producing evidence to him, explaining: "The administrative decision was based upon the interpretation of the settlement agreement between [Molina] and [Oxnard] and upon various statutes and regulations. Whether the $875,000.00 payment under the settlement agreement constituted compensation was a legal issue and it was rightly decided on the basis of the terms of the integrated settlement agreement."
The trial court then rejected Molina's contention that the settlement agreement granted him the right to unilaterally characterize a portion of the settlement proceeds as "back pay." The trial court found it "clear from the integrated settlement agreement signed by the parties that any characterization of the settlement amount is [to] be done by . . . Oxnard, not by [Molina]."
Finally, the trial court flatly rejected Molina's contention that relevant case law and the Public Employees Retirement Law (PERL; Gov. Code, § 20000 et seq.) supported his position that the settlement proceeds were "back pay" and must be taken into account when calculating his pension benefits. As the trial court explained, the Supreme Court opinion on which Molina relied (Ventura County Deputy Sheriffs' Assn. v. Board of Retirement (1997) 16 Cal.4th 483 (Ventura)) does not hold that a wrongful termination settlement payment "constitutes compensation for the purpose of computing retirement benefits under the state retirement law." Likewise, for the proper application of the PERL section cited by Molina (Government Code, § 21198), it is necessary that there be a reinstatement for a genuine period of service, not a one-day reinstatement. It cannot be, as it was here, granted for the sole purpose of allowing Molina to purchase service credit and with no services to be performed.
Based on these findings and conclusions, the trial court denied the petition and entered judgment in favor of respondent CalPERS on February 10, 2010. Molina has prosecuted this timely appeal.
Code of Civil Procedure section 1094.5 is the administrative mandamus provision providing the procedure for judicial review of adjudicatory decisions rendered by administrative agencies. (Topanga Assn. for a Scenic Community v. County of Los Angeles (1974) 11 Cal.3d 506, 514-515.) Code of Civil Procedure section 1094.5 does not specify which cases are subject to independent review, leaving that issue to the courts. (Fukuda v. City of Angels (1999) 20 Cal.4th 805, 811.) In cases reviewing decisions which affect a vested, fundamental right, the trial court exercises independent judgment on the evidence. (Bixby v. Pierno (1971) 4 Cal.3d 130, 143.) Retirement benefits of the nature involved here have long been held to be a vested and fundamental right. (Strumsky v. San Diego County Employees Retirement Assn. (1974) 11 Cal.3d 28, 44-45.) Molina's petition concerned his fundamental, vested right to receive a pension benefit in an amount specified by law. Under applicable law, the trial court was required to exercise its independent judgment in reviewing the evidence admitted at the administrative hearing to determine whether such evidence supported CalPERS' findings concerning the amount of Molina's pension benefits. (O'Connor v. State Teachers' Retirement System (1996) 43 Cal.App.4th 1610, 1620.)
We review the trial court's factual findings to determine whether such findings were supported by substantial evidence. (O'Connor v. State Teachers' Retirement System, supra, 43 Cal.App.4th at p. 1620; Prentice v. Board of Administration (2007) 157 Cal.App.4th 983, 989 (Prentice ).) We must uphold the trial court's findings unless they are "so lacking in evidentiary support as to render them unreasonable." (Id., at p. 989, citing Jaramillo v. State Bd. of Geologists & Geophysicists (2006) 136 Cal.App.4th 880, 888-889.) We may not reweigh the evidence, but instead are bound to consider the facts in the light most favorable to CalPERS' Board, giving it every reasonable inference and resolving all conflicts in its favor. (Ibid.)
A different standard, however, applies to questions of law. We review trial court decision as to those questions de novo. (Prentice, supra, 157 Cal.App.4th at p. 989.) "However, where our review requires that we interpret the PERL or a PERS regulation, the court accords great weight to PERS interpretation. [Citation.]" (Id.)
As a preliminary matter, we agree with the trial court's conclusion that the settlement agreement was integrated. Molina argues that the settlement agreement was not integrated and that both the ALJ and the trial court should have considered extrinsic evidence on the issues of (1) the proper characterization of the settlement proceeds, and (2) which of the parties had the right to designate such characterization.
"`An integrated agreement is a writing or writings constituting a final expression of one or more terms of an agreement. In California, the rule is embodied in Code of Civil Procedure section 1856, which states that `[t]erms set forth in a writing intended by the parties as a final expression of their agreement with respect to such terms as are included therein may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement.'" (Alling v. Universal Manufacturing Corp. (1992) 5 Cal.App.4th 1412, 1433, internal citations omitted.)
Such an integration was clearly the intent of the parties here. The settlement agreement (in section 14) clearly states that it "is the entire agreement of the Parties pertaining to the subject matter contained in them and supersedes any and all prior and/or contemporaneous negotiations, memoranda of understanding, correspondence, understandings, representations, letters of intent and agreements. The Parties acknowledge and agree that they have not entered into the Agreement in reliance on any inducement, statement, promise or representation other than those contained within the Agreement."
In discussing Molina's main contention, the trial court directly addressed this issue. After reciting Molina's contention that, "as a condition of settlement," he had received the right to characterize the settlement proceeds "as back pay or compensation," the trial court noted that Molina's authority for such a statement was the settlement agreement itself. The trial court then stated the settlement agreement "plainly does NOT give any right to petitioner to characterize the settlement payment, or any part thereof, as back pay or compensation. [¶] The settlement agreement provides in pertinent part, `a check in the amount of $875,000 . . . shall be delivered to the undersigned counsel for Molina. . . . [Oxnard] will also prepare a letter that will address the characterization of the settlement amount. . . . Molina agrees that he will not disseminate the letter other than for the preparation of his taxes and to federal or state governmental entities as needed for tax purposes.' [Emphasis added by trial court]. It is clear from the integrated settlement agreement signed by the parties that any characterization of the settlement amount is [to] be done by . . . Oxnard, not by petitioner."
The settlement agreement contained a clause which provided that Oxnard, after the agreement was executed, would "address the characterization of the settlement amount" in a letter that could be used only for preparation of Molina's taxes and related tax purposes and that could not otherwise be disseminated. This plain language gave Oxnard authority to "address the characterization of the settlement amount" in that letter and for that specific and limited purpose; i.e., that purpose being the preparation of Molina's taxes. It clearly did not give Oxnard the authority to characterize the settlement payment for purposes of determining Molina's pension, nor did it give Molina that authority.
We do not agree with Molina that the fact that the settlement agreement is otherwise silent on the issue of characterization provides any justification for an inference by this court that he is entitled to make such a characterization for purposes of increasing his retirement pension. We also reject Molina's contention that a (1) letter from CalPERS dated June 19, 2006 (relating to the amount that should be reported to CalPERS should Oxnard reinstate him for a five-month period after his termination and the commencement of his employment by LACOE — an event that did not occur) or (2) his complaint against Oxnard in the federal action
Moreover, both Molina and Oxnard were well aware, prior to execution of the settlement agreement, that any characterization of the settlement proceeds would not be relevant to any determination as to the proper amount of Molina's CalPERS pension. For example, CalPERS had advised both Molina and Oxnard on November 28 and again on November 30, 2006, that a portion of the settlement payment could potentially be eligible for inclusion in Molina's pension, but only if Molina were reinstated for a full year in a valid position under a legitimate salary based on a salary schedule. But this did not happen. Rather, he was reinstated for only one day, the purpose of which was solely to purchase service credits which otherwise would not have been available, a right for which he had apparently bargained and was granted by Oxnard in the settlement agreement.
None of the authorities cited by Molina help him avoid the impact and effect of the rules regarding integrated agreements. We simply cannot read into the settlement agreement a provision which the parties plainly did not intend to include. More importantly, to do so would contravene the clear statutory provisions in the PERL. We now turn to that issue.
"In City of Sacramento v. Public Employees Retirement System [1991] 229 Cal.App.3d 1470, 1478-1479, the court summarized the general principles governing determination of a public employee's retirement allowance: `Under the PERL, the determination of what benefits and items of pay constitute "compensation" is crucial to the computation of an employee's ultimate pension benefits. The pension is calculated to equal a certain fraction of the employee's "final compensation" which is multiplied by a fraction based on age and length of service. [Citations.] "Final compensation" is the "highest average annual compensation earnable by a member during the three consecutive years of employment immediately preceding the effective date of his retirement" or other designated consecutive three-year period. [Citation.] Both the employer and the employee are required to make contributions to the system, based on a percentage of "compensation."'" (Fns.omitted.) (Prentice, supra, 157 Cal.App.4th at p. 989.)
In a case very similar to the one before us, the court in Prentice, supra, 157 Cal.App.4th at p. 983 discussed the PERL provisions that determine the amount of a public employee's pension. The plaintiff in that case, Glenn Prentice, was general manager of a city that had contracted with CalPERS. Right before retirement, the city gave him a pay increase, which he asked CalPERS to include in his pension calculation. CalPERS refused, and Prentice petitioned for a writ of mandate. The trial court denied the petition, and on appeal, the Prentice court affirmed. It explained that the amount of a pension is most directly a function of two variables: (1) an age-adjusted fraction of the employee's "final compensation;" and (2) the employee's service credit. (Id., at p. 989, citing City of Sacramento v. Public Employees Retirement System, supra, 229 Cal.App.3d at pp. 1478-1479; see also, e.g., Gov. Code, § 21354.3.)
The Prentice court described the derivation of "final compensation:" (1) it is a function of the employee's highest "compensation earnable" (Prentice, supra, 157 Cal.App.4th at p. 989);
To summarize, a participant's specific pension benefit depends on "final compensation," which will not increase without a rise in "payrate" or "special compensation." In Prentice, the court held: "The increase Prentice received was neither part of his payrate nor special compensation. Accordingly, it was not part of his final compensation." (Id., at p. 996.) The court found that Prentice's pay increase was not part of his "payrate" because it was never part of a published pay schedule. (Id., at pp. 993-994.) And, the increase could not be considered "special compensation" because it was not "set forth `in a written labor policy or agreement' and `available to all members in the group or class.'" (Id., at p. 995.)
Molina's argument appears to confuse the total pay he might receive that could be includible in gross income for tax purposes and the published rate at which he was paid. Thus, even if the $200,000 figure (now settled upon by Molina) was deemed "back pay," this would not necessarily increase his pension because the payrate for the position he had held with Oxnard was $8,527.98 per month and it was not affected by the settlement payout. As one of CalPERS' witnesses explained in the administrative proceedings, back pay could hypothetically affect a pension, but in order for Molina to have a qualifying "$200,000 final compensation, he would have had to have been reinstated into a [] position with the City of Oxnard whose publicly available pay scale is $200,000. And he would have had to have worked in that position for 12 months. And that would entitle him to a re-retirement with the final compensation of $200,000."
Molina, however, was not reinstated by Oxnard for a year at a published monthly payrate that would have generated $200,000 in yearly compensation. Rather, he was reinstated for a single day at his normal monthly rate. Thus, there was no legal basis for his assertion that $200,000 of the settlement payment should increase Molina's pension benefits.
As noted earlier and like the plaintiff in Prentice, Molina fails to recognize the important difference between the amount he was paid by Oxnard (i.e., the settlement proceeds), which may be subject to income taxes, and the much narrower category of "compensation earnable" that can be taken into account for pension purposes, as established under PERL. Because, under PERL, even if a portion of the settlement amount had been labeled back pay and was includible in taxable income, it could not be included in Molina's "payrate" because there was no evidence that the amount was either: (1) paid to similarly situated employees; or (2) paid in accordance with a "publicly available pay schedule for services rendered on a full time basis during normal working hours." (See Gov. Code, § 20636, subd. (b)(1).) Similarly, even if a portion had been labeled back pay, no part of the settlement qualifies as being "special compensation," because Molina failed to show that it either: (1) was available to similarly situated employees under a labor policy or federal requirement; or (2) was determined by the CalPERS Board to have been available to other, similarly situated employees as required by PERL. (See Gov. Code, § 20636, subd. (c)(2); see also 2 Calif. Code of Regs., § 571(b)-(d) ["all items of special compensation" must meet certain Board-specified requirements, including that they be "[c]ontained in a written labor policy or agreement;" "[a]vailable to all members in the group or class;" and "[h]istorically consistent with prior payments for the job classification"].)
These statutory retirement provisions make it clear that the settlement proceeds cannot, as a matter of law, be utilized to increase Molina's final compensation for purposes of calculating his pension benefits. Neither of the sections of the Government Code on which Molina relies provides a basis for his arguments.
Ventura makes it plainly clear that an individual's pay will not count towards "compensation earnable" unless it qualifies as either "payrate" or "special compensation." Additionally, Ventura describes certain specific types of cash payments, as noted above, that count towards "compensation earnable" precisely because they do meet PERL's definition of "special compensation." But Ventura says nothing that would require broadening PERL's definition of "compensation earnable" to include cash payments that are not special compensation.
As CalPERS, in its respondent's brief, correctly points out: "Whether or not back pay might be considered `compensation' is academic. It is `compensation earnable' — not `compensation' — that is used to set the amount of the pension; and `compensation earnable' is a narrow subset of `compensation.' (See Ventura, supra, at pp. 493-494 [`an item must meet [the] broad definition of "compensation" if it is also to fall within the narrower category of "compensation earnable" [] and thus form the basis for the calculation of `final compensation' on which the pension is based . . . .']) [¶] . . . Ventura says nothing to support Molina's insistence that the settlement proceeds constitute any kind of compensation used for the purpose of computing his CalPERS retirement benefits."
As we find that none of the settlement proceeds constitutes any kind of compensation used for the purpose of computing his CalPERS retirement benefits, we need not reach or address Molina's contention that Oxnard has a duty to report the settlement sum to CalPERS.
The judgment is affirmed. CalPERS and Oxnard shall recover their costs on appeal.
KLEIN, P. J. and KITCHING, J., concurs.
Nor does Government Code section 20636, subdivision (a) help Molina despite his argument to the contrary. He argues that back pay is explicitly included in "payrate" and "special compensation" as those terms are used in section 20636, subdivision (a) but that section states only that: "`Compensation earnable' by a member means the payrate and special compensation of the member, as defined by subdivisions (b), (c), and (g), and as limited by Section 21752.5."
