Austin v. Board of Retirement

In Austin v. Board of Retirement (1989) 209 Cal.App.3d 1528, the court addressed the question of whether the trial court erred by finding an employee was entitled to interest from the last day of service on the retroactive portion of his award of disability retirement benefits. (Id. at pp. 1530-1531.) In that case, the employee applied for disability retirement benefits in 1985, which application was initially denied, and, following an administrative hearing, the retirement board denied his application in 1987 on finding he was not disabled. (Id. at p. 1531.) In 1988, the trial court granted the employee's petition for writ of mandate and issued a writ directing the retirement board to grant him disability retirement benefits retroactive to his last day of service with interest at the legal rate on the amount of the pension that was retroactive (i.e., presumably for payments for the period from 1985 through 1988). (Ibid.) Austin initially concluded the statutory scheme governing disability pension benefits did not preclude recovery of section 3287(a) interest on "damages awarded as prejudgment benefits from the date such benefits became due." (Austin, at p. 1533, italics added.) The court stated: "'Section 3287(a) requires vesting, however, only in order to fix with sufficient certainty the time when the obligation accrues so that interest should not be awarded on an amount before it is due.'" (Id. at p. 1533, italics added, quoting Mass v. Board of Education (1964) 61 Cal.2d 612, 625 39 Cal. Rptr. 739, 394 P.2d 579.) Accordingly, Austin rejected the retirement board's argument that section 3287(a) interest could not accrue on the amount of retroactive benefits for the period prior to its completion of the administrative process in deciding the employee's application. (Austin, at pp. 1532-1534.) The court reasoned: "If the employee had not been wrongfully denied disability retirement benefits, he would have obtained the benefits of the moneys paid as of the date of accrual of each payment." (Id. at p. 1534.) Therefore, Austin affirmed the judgment awarding the employee section 3287(a) prejudgment interest. (Austin, at p. 1536.)