Leonard Chaidez worked as City Administrator for the City of Hawaiian Gardens from 1988 until 1997.  Chaidez ultimately earned $7,374 per month and was a "miscellaneous" member of the Public Employees' Retirement System (PERS).  From 1999 until his retirement in 2007, Chaidez served as an elected City Council member for Hawaiian Gardens and earned $721.85 per month, during which time he was an "optional" member of PERS. 

Chaidez believed his retirement benefits would be calculated based on his City Administrator salary, the higher salary of his two positions, multiplied by all of his years of service as City Administer and elected councilmember.  However, PERS determined that his Chaidez's time as a City employee was governed by different Government Code sections than his time as an elected official.  Specifically, Chaidez's time as an elected official was governed by Section 20039, which provides that the final compensation used to determine the pension of an elected officer on a city council shall be based on the highest average annual compensation earned by the member during the period of service.  This required PERS to bifurcate the calculation of Chaidez' retirement benefits.   Chaidez's time as City Administrator, on the other hand, was governed by Government Code sections 20037 and 20042, which calculated his benefits by using his highest employee salary.  As a result, Chaidez' retirement benefits were lower than he expected.

Chaidez and the City filed writ petitions in the trial court alleging that PERS breached its fiduciary duty to him and that PERS was equitably estopped from applying Government Code section 20039 to his retirement benefits.  The trial court denied his petition. 

Chaidez appealed on the grounds that PERS did not inform him of the bifurcated calculations in a timely manner and PERS had a fiduciary duty to provide its members with information.  Chaidez argued that the California Constitution provides that a retirement board's duty to participants takes precedence over any other duty.  Citing City of Oakland v. Public Employees' Retirement System (2002) 95 Cal.App.4th 29, he contended that one of those duties is to provide timely and accurate information to members.  

The Court of Appeal stated that there was evidence that PERS did provide timely information about Section 20039 to Chaidez and the City.  The Court of Appeal found that PERS had duty to "ensure the rights of members and retirees to their full, earned benefits."  The Court of Appeal reasoned that benefits earned are decided by statute and PERS had no fiduciary duty to provide greater benefits that the statutes allow.   Government Code section 20039 is the statute that governs how an elected official's retirement benefits are calculated and cannot be construed to confer benefits to which an employee is not entitled.  The Court of Appeal concluded the Chaidez had no right to benefits he did not earn and affirmed the trial court's decision.


As with the Orange County case cited above, courts appear to be very reluctant to grant retirement benefits unless it is clear that such benefits are owed.  The Court also cited to a circular that PERS sent to the City in 1994 advising the City that "elected or appointed officers may now have more than one final compensation period . . .."  Similar information was provided in the PERS Procedures Manual.  

Chaidez v. Board of Administration of California Public Employees' Retirement System (2014) 223 Cal.App.4th 858.