United States District Court, N.D. California
PETER J. NOWICKI, Plaintiff,
CONTRA COSTA COUNTY EMPLOYEES' RETIREMENT ASSOCIATION, et al., Defendants.
ORDER GRANTING DEFENDANTS' MOTIONS TO DISMISS THE
COMPLAINT AND GRANTING LEAVE TO AMEND Re: Dkt. Nos. 31,
ILLSTON United States District Judge
9, 2017, the Court held a hearing on defendants' motions
to dismiss plaintiff's complaint. For the reasons set
forth below, the Court GRANTS defendants' motions, and
GRANTS leave to amend. If plaintiff wishes to amend the
complaint, plaintiff must do so by July 10, 2017.
Peter J. Nowicki is a retired fire chief who served in the
Moraga-Orinda Fire District in Contra Costa County from June
1983 until his retirement on January 30, 2009. Compl. at
¶¶ 15-21 (Dkt. No. 1). Defendants are the Contra
Costa County Employees' Retirement Association
(“CCCERA”), CCCERA Board members John B.
Phillips, Scott W. Gordon, Russell V. Watts, David J.
MacDonald, Jerry Telles, Debora Allen, Candace Anderson,
Gabriel Rodrigues, William Pigeon, Louie A. Kroll, Jerry R.
Holcombe, and Todd Smithey (“CCCERA Board”), the
Moraga-Orinda Fire District (“Fire District”) and
Fire District Board members Steve Anderson, John Jex,
Kathleen Famulener, Brad Barber, and Craig Jorgens.
Id. at ¶ 11.
complaint alleges that CCCERA is a retirement board within
the meaning of California Constitution, Article XVI, section
17(h) and the County Employees Retirement Act of 1937, Cal.
Gov't Code section 31450 et seq. Id. at
¶ 10. Section 17(a) of Article XVI of the California
Constitution provides that “[t]he retirement board of a
public pension or retirement system shall have sole and
exclusive fiduciary responsibility over the assets of the
public pension or retirement system. The retirement board
shall also have sole and exclusive responsibility to
administer the system in a manner that will assure prompt
delivery of benefits and related services to the participants
and their beneficiaries.” C.A. CONST. art. XVI
received a promotion from Battalion Chief to Fire Chief in
July 2006. Id. at ¶ 15. Plaintiff alleges that
he initially raised concerns about the lower salary and
benefits offered as Fire Chief. Id. Fire District
Board President Gordon Nathan and then Fire Chief Jim
Johnston assured him “that an annual review would be
conducted of Nowicki's salary and benefits and an
appropriate adjustment would be made to his Fire Chief
contract.” Id. After his promotion,
plaintiff's contract with the Fire District awarded him
$173, 000 in annual salary and a vacation accrual policy of
20 hours per month, and had a cap at 400 hours. Id.
Fire District amended plaintiff's contract on February 6,
2008, retroactive to July 2007. Id. at ¶ 16.
The amended contract increased his salary to $186, 000, and
added a “vacation sell-back” provision.
Id. This enabled plaintiff to sell up to 200 hours
(per year) of unused vacation time, and convert them into
cash payments. Id. Plaintiff exercised this option,
and on February 8, he sold 200 hours of unused vacation.
Id. at ¶ 17. The Fire District amended his
contract again on December 10, 2008, retroactive to July
2008. Id. at ¶ 18. The contract increased the
vacation sell-back allotment to 260 hours, “and allowed
conversion of non-cashable paid administrative leave into
cashable vacation.” Id. Plaintiff sold an
additional 60 hours of vacation that December, and converted
the maximum 260 hours on January 5, 2009. Id. at
complaint alleges that on January 30, 2009, plaintiff retired
from the Fire District “pursuant to a defined plan
administered by CCCERA, which allowed him to retire at the
age of 50 with a pension benefit calculated by multiplying
his highest compensation over any consecutive 12 months of
employment by the product of 3% and his accrued years of
service.” Id. at ¶ 21. According to the
complaint, “[i]n compliance with the rules governing
the CCCERA retirement plan, and consistent with the
provisions of the California Constitution and the 1937 Act,
calculation of Nowicki's highest 12 months of
compensation included his annual salary, vacation sell-backs,
a Fire Retirement Allotment, uniform allowance, and vacation
and personal holiday payout upon retirement. Application of
the above factors to Nowicki's 28.3 years of service
resulted in a monthly pension benefit of $20, 076.00 before
taxes and other withholdings. Id. at ¶ 22.
August 5, 2015, plaintiff received a letter from the CCCERA
Board informing him that it had scheduled a hearing on
September 9, 2015 to review what was described as “. .
. acts of pension spiking, through members' receipt of
pay items that were not earned as part of their regularly
recurring employment compensation during their
careers.” Id. at ¶ 24. The letter also
informed plaintiff that his pension was subject to
investigation and that the hearing would allow him “the
opportunity to present to the Board your position and any
information you believe is relevant to the calculation of
your retirement allowance.” Id. The letter
also stated that plaintiff “could submit written
materials relevant to this issue in advance of the Board
meeting” and that “[a]ny public meeting materials
prepared by CCCERA for the purpose of the hearing will be
provided to you in advance of the meeting.”
Defendant's Request for Judicial Notice, Ex. A (Dkt. No.
attended the administrative hearing and alleges he “was
not given a full, fair and reasonable opportunity to present
evidence and to call witnesses supporting the validity of his
retirement benefit calculations.” Compl. at ¶ 25.
Contrary to the Board's assurances in its August 5, 2015
letter, the requirements of the 1937 Act, and the due process
and taking clauses of the U.S. Constitution and the
California Constitution, Nowicki was not given a full, fair
and reasonable opportunity to present evidence and to call
witnesses supporting the validity of his retirement benefit
calculations. Nowicki was allotted an unduly restrictive
amount of time in order to present his case. In addition, the
CCCERA Board declined Nowicki's offer of witnesses. None
of the testimony before the Board was under oath. Nor were
the Board proceedings full, fair or unbiased. The claims
against Nowicki were presented to the CCCERA Board by the
same legal counsel who subsequently advised the CCCERA Board.
Furthermore, the CCCERA Board was told during the
deliberations that it need not find that Nowicki violated any
law: “It does not have to be a violation. We don't
have to show it to be improper. Remember that the word
that's used is ‘improper'. It's not
‘illegal'. We don't have to show a
violation of the law.” (Underlining added.)
Furthermore, representatives of the Fire District declined to
participate in the meeting, even though, as stated by counsel
for the CCCERA, “But they received notice as well,
since it is, you know, the benefits that they promised and
that they're paying for that are at issue here
September 11, 2015, CCCERA formally notified plaintiff that
it was reducing his pension payments to $14, 667.74 per
month, stating that he “had caused his ‘final
average salary (compensation earnable) to be improperly
increased at the time of retirement.'” Id.
at ¶ 26. On September 21, 2015, plaintiff received
another letter from CCCERA stating that plaintiff had
received overpayments of retirement benefits in the amount of
$585, 802.90, plus $143, 165.00 in interest, for a total
repayment obligation of $728, 967.90. Id. at ¶
27. The complaint alleges that CCCERA offered plaintiff
“several options for repayment of the alleged
overpayments, including monthly installment payments over a
period of approximately 6 years to be deducted from his
monthly pension benefit payments; a lump sum repayment; or a
reduction of his prospective monthly pension benefit payment
until said amount had been repaid in full.”
October 13, 2015, plaintiff filed a pro se petition
for a writ of mandate pursuant to California Code of Civil
Procedure § 1094.5 challenging the CCCERA's
administrative decision. Id. at ¶ 8. The
complaint alleges “[t]hat matter has not proceeded
beyond the filling of a response by CCCERA. Nowicki has filed
a dismissal of that matter, without prejudice,
contemporaneous with the initiation of the present
lawsuit, plaintiff alleges three federal causes of action
against CCCERA and the Fire District: (1) deprivation of
property without due process of law in violation of the
Fourteenth Amendment to the U.S. Constitution and 42 U.S.C.
§ 1983 (first cause of action); (2) denial of equal
protection of the law in violation of the Fourteenth
Amendment to the U.S. Constitution and 42 U.S.C. § 1983
(second cause of action); and (3) impairment of contracts in
violation of Article I, Section 10 of the U.S. Constitution
(sixth cause of action). The ninth cause of action for
declaratory relief requests the Court to declare “that
Defendants' denial of Nowicki's retirement benefits
violates Nowicki's rights under the United States and
California Constitutions as well as breached the contracts
between Nowicki and Defendants.” Id. at ¶
56. In addition, plaintiff alleges five claims under
California law: (1) deprivation of property without due
process of law in violation of Article 1, Section 7 of the
California Constitution (third cause of action); (2) denial
of equal protection of the law in violation of Article 1,
Section 7 of the California Constitution (fourth cause of
action), (3) breach of contract in violation of Cal. Code of
Civ. Proc. § 1549 et seq. (fifth cause of
action), (4) impairment of contracts in violation of Article
1, Section 9 of the California Constitution (seventh cause of
action), and (5) breach of the duty of good faith and fair
dealing (eighth cause of action).
sets of defendants move to dismiss the complaint for lack of
subject matter jurisdiction and failure to state a claim upon
which relief can be granted.
I. Rule 12(b)(1)
is a fundamental precept that federal courts are courts of
limited jurisdiction. The limits upon federal jurisdiction,
whether imposed by the Constitution or by Congress, must be
neither disregarded nor evaded.” Owen Equip. &
Erection Co. v. Kroger, 437 U.S. 365, 374 (1978).
“A federal court is presumed to lack jurisdiction in a
particular case unless the contrary affirmatively
appears.” General Atomic Co. v. United Nuclear
Corp., 655 F.2d 968, 969 (9th Cir. 1981) (citations
Rule of Civil Procedure 12(b)(1) allows a party to challenge
a federal court's jurisdiction over the subject matter of
the complaint. As the party invoking the jurisdiction of the
federal court, the plaintiff bears the burden of establishing
that the court has the requisite subject matter jurisdiction
to grant the relief requested. See Kokkonen v. Guardian
Life Ins. Co. of America, 511 U.S. 375, 377 (1994)
(internal citations omitted). A complaint will be dismissed
if, looking at the complaint as a whole, it appears to lack
federal jurisdiction either “facially” or
“factually.” Thornhill Publ'g Co., Inc.
v. General Tel. & Elecs. Corp., 594 F.2d 730, 733
(9th Cir. 1979); Safe Air for Everyone v. Meyer, 373
F.3d 1035, 1039 (9th Cir. 2004) (“A Rule 12(b)(1)
jurisdictional attack may be facial or factual.”). When
the complaint is challenged for lack of subject matter
jurisdiction on its face, all material allegations in the
complaint will be taken as true and construed in the light
most favorable to the plaintiff. NL Indus. v.
Kaplan, 792 F.2d 896, 898 (9th Cir. 1986). In deciding a
Rule 12(b)(1) motion which mounts a factual attack on
jurisdiction, “no presumptive truthfulness attaches to
plaintiff's allegations, and the existence of disputed
material facts will not preclude the trial court from
evaluating for itself the merits of jurisdictional claims.
Moreover, the plaintiff will have the burden of proof that
jurisdiction does in fact exist.” Mortensen v.
First Fed. Sav. & Loan Ass=n, 549 F.2d 884, 891 (3d
Federal Rule of Civil Procedure 12(b)(6), a district court
must dismiss a complaint if it fails to state a claim upon
which relief can be granted. To survive a Rule 12(b)(6)
motion to dismiss, the plaintiff must allege “enough
facts to state a claim to relief that is plausible on its
face.” Bell Atl. Corp. v. Twombly, 550 U.S.
544, 570 (2007). This “facial plausibility”
standard requires the plaintiff to allege facts that add up
to “more than a sheer possibility that a defendant has
acted unlawfully.” Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009). While courts do not require
“heightened fact pleading of specifics, ” a
plaintiff must allege facts sufficient to “raise a
right to relief above the speculative level.”
Twombly, 550 U.S. at 555, 570.
deciding whether the plaintiff has stated a claim upon which
relief can be granted, the court must assume that the
plaintiff's allegations are true and must draw all
reasonable inferences in the plaintiff's favor. See
Usher v. City of Los Angeles, 828 F.2d 556, 561 (9th
Cir. 1987). However, the court is not required to accept as
true “allegations that are merely conclusory,
unwarranted deductions of fact, or unreasonable
inferences.” In re Gilead Scis. Sec. Litig.,
536 F.3d 1049, 1055 (9th Cir. 2008).
Court dismisses the complaint, it must then decide whether to
grant leave to amend. The Ninth Circuit has “repeatedly
held that a district court should grant leave to amend even
if no request to amend the pleading was made, unless it
determines that the pleading could not possibly be cured by
the allegation of other facts.” Lopez v.
Smith, 203 F.3d 1122, 1130 (9th Cir. 2000) (citations
and internal quotation marks omitted). Dismissal of a
complaint without leave to amend is proper only if it is
“absolutely clear that the deficiencies of the
complaint could not be cured by amendment.” Noll v.
Carlson, 809 F.2d 1446, 1448 (9th Cir. 1987) (quoting
Broughton v. Cutter Labs., 622 F.2d 458, 460 (9th
Cir. 1980)); see also Akhtar v. Mesa, 698 F.3d 1202,
1212 (9th Cir. 2012).
CCCERA and Fire District defendants move to dismiss the
federal claims for failure to state a claim. Defendants also
contend that if the Court dismisses the federal claims, the
Court should decline supplemental jurisdiction over
plaintiff's state law claims. The Fire District also
argues that the complaint generally lacks factual allegations
against the Fire District defendants.
Deprivation of Property without Due Process of Law in
Violation of the Fourteenth Amendment to the
U.S. Constitution and 42 U.S.C. § 1983
Plaintiff's first cause of action alleges that defendants
violated his Fourteenth Amendment right to due process by
retroactively denying him the property right of his pension
and retirement benefits as determined in a procedurally
flawed administrative hearing. Compl. at ¶ 33. Plaintiff
alleges that the Board severely limited his time to present
his case, failed to make witnesses available, and that the
Board improperly relied on counsel who served in a
“dual role as the attorney against him and as an
advisor to the Board, who in turn gave faulty legal
contend that the complaint's allegations of due process
violations are conclusory and fail to state a claim.
Defendants argue that the pleadings and the hearing
transcript, which was submitted by plaintiff and CCCERA,
demonstrate that plaintiff was provided with sufficient due
process. Defendants note that on August 5, 2015, the Board
provided plaintiff with notice that it was evaluating whether
his retirement benefits should be adjusted due to pension
spiking and that it would hold a hearing on the matter on
September 9, 2015; plaintiff was provided the opportunity to
submit written materials in advance of the hearing; plaintiff
did not request a continuance of the hearing; and plaintiff
attended and spoke at the hearing for approximately four
hours, and he was represented by counsel at the hearing.
Defendants also emphasize that in addition to the
pre-deprivation hearing, plaintiff also had the opportunity
to pursue judicial review through a petition for
administrative mandamus in California Superior Court.
order to state a claim under the Fourteenth Amendment, the
complainant must allege facts showing not only that the State
has deprived him of a . . . property interest but also that
the State has done so without due process of law.”
Gearhart v. Thorne, 768 F.2d 1072, 1073 (9th Cir.
1985) (quoting Marrero v. City of Hialeah, 625 F.2d
499, 519 (5th Cir. 1980)) (internal quotation marks omitted).
“The determination of what procedures satisfy due
process [in a given situation] depends upon an analysis of
the particular case in accordance with the three-part
balancing test outlined in Mathews v. Eldridge, 424
U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976).”
Orloff v. Cleland, 708 F.2d 372, 378-79 (9th
Cir.1983) (parallel citations omitted). In Mathews,
the Supreme Court stated:
[I]dentification of the specific dictates of due process
generally requires consideration of three distinct factors:
first, the private interest that will be affected by the
official action; second, the risk of an erroneous deprivation
of such interest through the procedures used, and the
probable value, if any, of additional or substitute
procedural safeguards; and finally, the Government's
interest, including the function involved and the fiscal and
administrative burdens that the additional or substitute
procedural requirement would entail.
Id. at 333. The particular degree or amount of
process required, however, “is not a technical
conception with a fixed content unrelated to time, place and
circumstances.” Id. at 334.
is well settled that ‘the root requirement of the Due
Process Clause [is] that an individual be given an
opportunity for a hearing before he is deprived of any
significant property interest.'” Clement v.
Airport Auth. of Washoe Cty., 69 F.3d 321, 331 (9th Cir.
1995) (quoting Cleveland Bd. of Educ. v. Loudermill,
470 U.S. 532, 541(1985)). “Although the pre-termination
hearing need not be elaborate, ‘some kind of
hearing' must be afforded the employee prior to
termination. The essential requirements of this
pre-termination process are notice and an opportunity to
respond.” Clement, 69 F.3d at 331 (quoting
Loudermill, 470 U.S. at 544-45).
there is no dispute that plaintiff has a significant property
interest in his pension payments. Thus, the Court must
evaluate whether plaintiff has stated a claim that he was
denied due process during the pre-deprivation hearing he was
provided. In conducting this analysis, the Court will
consider both the complaint as well as the facts asserted in