Alaska Supreme Court Opinions made Available byTouch N' Go Systems and Bright Solutions

Touch N' Go
, the DeskTop In-and-Out Board makes your office run smoother.


You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Metcalfe v. State (11/4/2016) sp-7132

Metcalfe v. State (11/4/2016) sp-7132

          Notice:   This opinion is subject to correction before publication in the P                    ACIFIC  REPORTER.  

          Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts,  


           303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email  



                      THE  SUPREME  COURT  OF  THE  STATE  OF  ALASKA  

PETER  METCALFE,  Individually  and  on )  

behalf  of  All  Others  Similarly  Situated,                      )     Supreme  Court  Nos.  S-15528/S-15557  



                               Appellant,                          )     Superior Court No.  1JU-13-00733 CI  



                                                                   )     O P I N I O N  



STATE OF ALASKA,                                                                                                  

                                                                   )     No. 7132 - November 4, 2016  


                               Appellee.                           )  




                     Appeal from the Superior Court of the State of Alaska, First  


                     Judicial District, Juneau, Trevor Stephens, Judge.  


                     Appearances:  Jon Choate, Choate Law Firm LLC, Juneau,  


                     for Appellant. Kevin T. Wakley, Assistant Attorney General,  


                     and  Michael  C.  Geraghty,  Attorney  General,  Juneau,  for  



                     Before:  Fabe, Chief Justice, Winfree and Maassen, Justices.  


                     [Stowers and Bolger, Justices, not participating.]  


                     WINFREE, Justice.


                     FABE, Chief Justice, concurring in part and dissenting in part.

----------------------- Page 2-----------------------

I.          INTRODUCTION  

                        We  previously  have  held  that  the  legislature  cannot  diminish  a  state  


employee's  accrued  retirement benefits.1  


                                                                               We  also  previously  have held  that if the  


legislature diminishes retirement benefits, those affected may choose between  their  



existing benefits and the new benefits.                                     The primary issue in this case is whether a  


breach  of  contract  damages  claim  can  arise  when  existing  retirement  benefits  are  


diminished.  We hold there can be no such claim.  The secondary issue is whether a  


claimfor declaratoryandinjunctivereliefagainst thediminishmentofexisting retirement  


benefits is subject to a statute of limitations defense. We hold it is not. Here the superior  


court dismissed a contract damages claim and a claim for declaratory and injunctive  


relief based on a statute of limitations defense.   We affirm dismissal of the contract  


damages claim on the alternative ground that no such claim exists; we reverse and  


remand the declaratory and injunctive relief claim for further proceedings.  




                        Peter Metcalfe was employed briefly by the State in the early 1970s and  


contributed to thePublicEmployees' Retirement System(PERS). In 1981 Metcalfetook  


a  refund  of  his  PERS  contributions.                                  Under  a  statute  in  effect  during  Metcalfe's  


employment  and  when  he  took  his  PERS  refund,  if  Metcalfe  later  secured  State  

            1           Hammondv.Hoffbeck                      ,627P.2d1052, 1055-57                        (Alaska1981) (holdingthat                  

when accrued state retirement benefits are modified any adverse effects must be offset                                                             

by comparable new advantages to survive art. XII,  7 challenge).                                                        

            2           McMullen v. Bell, 128 P.3d 186, 190-91 (Alaska 2006) ("Where the state  


has changed the benefits system after an employee's enrollment in the system, the  


employee may choose to accept the new system or may opt to keep the benefits in effect  


at enrollment."); see also Hammond, 627 P.2d at 1059 (holding retirement benefits  


modifications constitutionally infirm, and thus inapplicable, to members electing to  


receive unmodified benefits).  


                                                                            -2-                                                                    7132

----------------------- Page 3-----------------------

employment and returned his refund to PERS with interest, he was entitled to reinstate                                                                                            


at his prior PERS service tier and credit.                                                                                                                                                  

                                                                                                      But in 2005 the legislature repealed that  


statute, leaving a five-year grace period for regaining State employment and reinstating  

                                                       4     The State then sent notice to former PERS members that  



to a prior PERS status. 

"[d]efined benefit members who do not return to covered employment before July 1,  


2010 will forfeit their defined benefit tier and all service associated with the refund."  


                              In 2012 Metcalfe inquired about his PERS status.  He was informed that  


even if he were to regain State employment, he could not reinstate to his prior PERS  


service tier and credit because AS 39.35.350 had been repealed in 2005 and the grace  


period for reinstatement had ended in 2010.  In June 2013 Metcalfe brought a putative  


class action lawsuit against the State, alleging that the 2005 legislation:  (1) violated  


                                                                                                                       5   (2)  deprived  a  class  of  former  

article  XII,  section  7  of  the  Alaska  Constitution;                                                                                                                           


employees of their vested interest in the contractual "benefit to be reinstated to state  


                                                                                                                6 and (3) effectively breached theclass  

employment at the tier level they previously held";                                                                                                                                        


               3              See  former AS 39.35.350(b) (1980) ("An employee may reinstate credited                                                                              

service associated with a refund by repaying the total amount of the refund. Interest will                                                                                                   

accrue from the date of the refund until repayment of the refund or retirement, whichever                                                                                     

occurs first."); former AS 39.35.350 (1970) ("[T]he employee is entitled to the credited                                                                                           

service he had accumulated at the time of his last termination, if the employee makes a                                                                                                            

contribution   to   the   system   equal   to   the   amount   of   the   refund   paid   upon   his   last  

termination . . . together with interest . . . .").                                          

               4               Ch. 9,  133, 149 FSSLA 2005.  


               5              Article XII,  7 provides:  "Membership in employee retirement systems  


of  the  State  or  its  political  subdivisions  shall  constitute  a  contractual  relationship.  


Accrued benefits of these systems shall not be diminished or impaired."  


               6               Cf. Hammond, 627 P.2d at 1057 ("[B]enefits under PERS are in the nature  


of deferred compensation and . . . the right to such benefits vests immediately upon an  



                                                                                               -3-                                                                                       7132

----------------------- Page 4-----------------------

members' employment contracts.                                Metcalfe sought damages, but he also asked for a                                     

seemingly mutually exclusive declaratory judgment that the State must comply with                                                            

                                      7  The class was never certified.  

former AS 39.35.350.                                                          

                       The State moved to dismiss Metcalfe's lawsuit for failure to state a claim  


upon which relief could be granted,8  arguing that:  (1) Metcalfe did not have standing to  


sue  because  article  XII,  section  7  of  the  Alaska  Constitution  protects  only  PERS  


members and Metcalfe no longer was a PERS member after he took a refund of his  


contributions;  (2)  Metcalfe's  claim  was  not  ripe  because  he  had  not  secured  


reemployment with the State and thus failed to meet former AS 39.35.350's PERS  


reinstatement requirements; and (3) the contract statute of limitations barred Metcalfe's  


claim because the legislation was passed in 2005 but Metcalfe did not sue until 2013.9  


The superior court tentatively rejected the argument that Metcalfe failed to state a claim  


            6          (...continued)  


employee's enrollment in that system.").  



                       Cf. McMullen, 128 P.3d at 191 ("Where the state has changed the benefits  


systemafter an employee's enrollment in the system, the employee may choose to accept  


the new system or may opt to keep the benefits in effect at enrollment.").  

            8          See  Alaska  R.  Civ  P.  12(b)(6)  (allowing  certain  dismissal  motions,  


including those for "failure to state a claimupon which relief can be granted," to be made  


in lieu of an answer).  


            9            See AS 09.10.053 ("Unless the action is commenced within three years,  


a person may not bring an action upon a contract or liability, express or implied, except  


as  provided  in  AS  09.10.040,  or  as  otherwise  provided  by  law,  or,  except  if  the  


provisions of this section are waived by contract.").  


                                                                        -4-                                                                 7132

----------------------- Page 5-----------------------

upon which relief could be granted, rejected the argument that Metcalfe's claim was not                                                                                 

ripe and that he lacked standing, but dismissed Metcalfe's claim as time barred.                                                                                10  

                           Metcalfe appealed the superior court's dismissal of his claim based on the  


statute  of  limitations.                          The  State  cross-appealed  the  superior  court's  ruling  that  


Metcalfe's claim was ripe and argued that the superior court's decision could be upheld  


on the ground that Metcalfe lacked standing to sue.  After oral argument we requested  


supplementalbriefing primarilyaddressingtwo questions: (1) canaclaimfor diminution  


in value of a contract right exist in this context, and (2) can a statute of limitations  


defense apply to a claimfor declaratory and injunctive relief prohibiting the enforcement  


of a statute alleged to be in violation of article XII, section 7?  




             A.            Arguments In The Superior Court  


                           Metcalfe's  complaint  contained  a  lengthy  recitation  of  facts  and  law  


assertingthat the2005 legislation violated the Alaska Constitution. ButMetcalfe's claim  


primarily was that he was entitled to damages because the 2005 legislation breached his  


PERS contract. A single reference to declaratory judgment was included in the ultimate  


prayer  for  relief,  essentially  asking  the  court  to  order  the  State  to  honor  former  



AS 39.35.350. 

              10           The parties agreed and the superior court concluded that the three-year                                                        

contract statute of limitations applied to Metcalfe's claim.                                                          See supra             note 9.   

              11           Cf. Laverty v. Alaska R.R. Corp., 13 P.3d 725,  729-30  (Alaska 2000)  


(noting Alaska's Declaratory Judgment Act (AS 22.10.020(g)) authorizes courts "to  


declare rights without granting a separate legal or equitable remedy" and that it may be  


appropriate "to determine the validity and construction of statutes," but that a requested  


declaration must "be associated with an actual case or controversy" and "not open the  


door for hypothetical adjudications, advisory opinions, or answers to moot questions").  


                                                                                    -5-                                                                             7132

----------------------- Page 6-----------------------


                    When the State moved to dismiss Metcalfe's claim, Metcalfe affirmatively  


asserted that his "claim is for breach of contract" and that it has "significant value,"  


without any reference to a separate declaratory judgment that the State must honor  


former AS 39.35.350. Metcalfe argued that former AS 39.35.350's provision for future  


reinstatement at previous PERS service and tier levels was a constitutionally based  


contract right that - despite his withdrawal from the PERS system - had not been  


relinquished, giving him standing to sue the State for impairment of that right.   He  


contended that the  State  had breached the contract on June 30, 2010 when former  


AS  39.35.350  finally  was  extinguished  based  on  the  earlier  2005  legislation.                                        He  


reasoned that the contract claim became ripe on July 1, 2010, and therefore that his June  


27,  2013  lawsuit  was  within  the  three-year  statute  of  limitations.                                         Although  


acknowledging that "the value of [his contract right] may seem abstract," Metcalfe  


argued that projected State savings from the statutory change, in excess of $100 million  


per year for medical insurance premiums alone, "grounds the financial value firmly in  



                    The superior court made a "tentative" determination that Metcalfe had a  


vested reinstatement right under former AS39.35.350,butnotedneed for further briefing  


on this issue if the case were to proceed.  The court then concluded that this assumed  


vested right gave Metcalfe standing to sue and that, given the allegation that the 2005  


legislationbreached Metcalfe's PERScontractanddiminishedtheassumedvestedright's  


value, his claim was ripe.   The court also noted that to the extent Metcalfe sought  


declaratory relief, it was for the court to determine whether the State had breached his  


PERS contract. But the court concluded that Metcalfe's breach of contract claimaccrued  


in 2005 when former AS 39.35.350 was repealed - not at the close of the five-year  


grace period - because the alleged lifetime reinstatement right had been diminished  


immediately  when  the 2005 legislation  limited it to  the five-year  grace period  and  

                                                               -6-                                                         7132

----------------------- Page 7-----------------------

Metcalfe reasonably should have discovered the ability to bring his claim then.                                                                                                                                                                                                                                                                                                             The  

court noted that Metcalfe had at least constructive notice of his claim                                                                                                                                                                                                                                                  in 2005 and had not                                                         

argued either that he did not have notice or that the statute of limitations should be tolled.                                                                                                                                                                                                                                                                                                                          

The court therefore dismissed Metcalfe's claim as barred by the three-year statute of                                                                                                                                                                                                                                                                                                                   


                                                              Metcalfe then filed a reconsideration motion asserting that the superior                                                                                                                                                                                                                                     

court had overlooked a critical proposition of law. Metcalfe argued specifically that the                                                                                                                                                                                                                                                                                                            

2005   legislation   actually   had   not   been   a   breach   of   his   contract  but   rather   was   a  

repudiation of that contract allowing him to sue either when he chose to assert the breach                                                                                                                                                                                                                                                                                           

or   when   the State's performance                                                                                                                               was due.                                          Metcalfe's new legal theory, based                                                                                                                                               on  

                                                                                                                                                                                              12                                                                                                                                                                                                             13  

                                                                                                                                                                                                       and Franconia Associates v. United States,  

Restatement (Second) of Contracts  250                                                                                                                                                                                                                                                                                                                                       

                                12                             The Restatement (Second) of Contracts defines repudiation as:                                                                                                                                                                                                                          

                                                               (a) a statement by the obligor to the obligee indicating that                                                                                                                                                                                                       

                                                              the obligor will commit a breach that would of itself give the                                                                                                                                                                                                           

                                                               obligee a claim for damages for total breach . . . , or                                                                                                                                                                

                                                               (b)   a   voluntary   affirmative   act   which  renders   the   obligor  

                                                              unable   or  apparently   unable   to   perform   without   such   a  


RESTATEMENT  (SECOND) OF  CONTRACTS    250 (A                                                                                                                                                                                             M. L                AW  INST . 1981).   

                                13                             536 U.S. 129 (2002).                                                                                   In  Franconia  property owners had received low-                                                                                                                                                                       

interest  federal   loans   to   provide   low-income   rental   housing,   subject   to   various  

restrictions;   the   promissory   notes  allowed   prepayment   and   release   from   those  

restrictions.     Id.   at   132-35.     Concerned   with   low-income   housing   loss   due   to   loan  

prepayments, Congress amended relevant laws to prohibit acceptance of prepayment                                                                                                                                                                                                                                                                           

unless the property owner agreed to maintain the low-income rental use of the property                                                                                                                                                                                                                                                                                     

 for a specified period of time.                                                                                                            Id.  at 135-36.                                                     Nine years after the statutory amendment                                                                                                     

and related regulations were implemented some property owners sued, arguing that                                                                                                                                                                                                                                                                                                                

 (1)  the new law was a repudiation of their contracts and an inverse condemnation of their                                                                                                                                                                                                                                                                                                   

property rights, and (2) they had the right to execute their options to prepay their loans                                                                                                                                                                                                                                                                                                


                                                                                                                                                                                                    -7-                                                                                                                                                                                      7132

----------------------- Page 8-----------------------

was different fromhis pleaded allegations, his opposition to the State's dismissal motion,                                                                                                                                                                                                                     

and   his   prior  litigation   position   that   the repeal                                                                                                                                  of   former   AS   39.35.350   was   a   fait  

accompli supporting a contract damages claim. And Metcalfe still made no reference to                                                                                                                                                                                                                                                

declaratory judgment in connection with his new theory.                                                                                                                                                                      

                                                   The State opposed reconsideration, responding that Metcalfe's repudiation                                                                                                                                                                     

argument was inconsistent with his claim that "his rights were diminished                                                                                                                                                                                                                   immediately  

upon the enactment of SB 141."                                                                                               (Emphasis in original.)                                                                      It also argued that                                                     Franconia  

was distinguishable and that Metcalfe's new repudiation argument was at odds with his                                                                                                                                                                                                                                            

position   that   the   2005   legislation   had   devalued   his   contract   right   and   caused   him  

immediate harm.   

                                                   The superior court denied Metcalfe's reconsideration motion.                                                                                                                                                                                    The court   

concluded  Franconia  was not controlling and was distinguishable because it did not                                                                                                                                                                                                                                           

involve retirement system contract rights, and noted the majority federal rule that a claim                                                                                                                                                                                                                         

for wrongful changes to a retirement program accrues when a clear                                                                                                                                                                                                                   repudiation of   

retirees' rights is made known. More importantly the court did not believe that the 2005                                                                                                                                                                                                                                 

legislation was a "mere anticipatory repudiation":                                                                                                                                                

                                                                              [I]n   any   event,   the   court   is   not   persuaded   that   the  

                                                   passage    of    [the    2005    legislation]    constituted    a    mere  

                                                    anticipatory repudiation.                                                                      The gist of Mr. Metcalfe's claim is                                                                                            

                                                   that [the 2005 legislation] violated [a]rticle XII,  7.                                                                                                                                                  Such a   

                                                   violation would have occurred when [the 2005 legislation]                                                                                                                                 

                                                   was enacted as [it] would have immediately diminished an                                                                                                                                                                    

                          13                        (...continued)  


and escape the prepayment restrictions.  Id. at 133, 138.  The Court of Federal Claims  


dismissed  the  suit  based  on  a  six-year  statute  of  limitations  and  the  Circuit  Court  


affirmed.   Id.  at  138.                                                                      The  Supreme  Court  reversed,  concluding  that  the  statutory  


amendment was not an immediate breach of contract, but rather a repudiation allowing  


the property owners to elect to treat the repudiation as a breach before the government's  


performance date or to await the performance date.  Id. at 142-44.  

                                                                                                                                                                 -8-                                                                                                                                                     7132

----------------------- Page 9-----------------------


                    accrued   retirement   benefit.                    Moreover,   if   viewed   in  


                    conventional  contract  terms,  if  Mr.  Metcalfe  has  a  state  


                    Constitution based retirement benefit accruing at the time of  


                    his initial State hire to repay his PERS contribution and be  


                    reinstated to his former retirement tier if ever rehired by the  


                     State at any time, [the 2005 legislation] breached the contract  


                    when  enacted  as  it  immediately  removed  this  "any  time"  


                    right.      This  view  is  consistent  with  Mr.  Metcalfe's  own  


                    arguments with respect to the State's lack of ripeness and  


                    lack of standing claims.  To the extent that Franconia holds  


                    otherwise the court does not find it persuasive.   (Footnote  



                    The superior court stated that its order "appears to conclude this litigation,"  


and it concurrently entered a separate final judgment. Nothing in the record reflects that  


Metcalfe challenged the final judgment that concluded the superior court litigation;  


Metcalfe did not argue that he had any claims not yet litigated, such as a claim for a  


declaratory judgment that the State must honor former AS 39.35.350.  


          B.        Arguments On Appeal  


                    Metcalfe initially argued in his briefing to us that two theories prevent his  


contract damages claim being barred by the statute of limitations.  One is that through  


the 2005 legislation the State violated its contractual obligation not to diminish or impair  


his reinstatement right without an equivalent offsetting benefit; this resulted in a contract  


breach on June 30, 2010, the final grace period day for reinstatement under former  


AS  39.35.350.            The other  is that the State has repudiated  but not yet breached  its  


contractualobligation to reinstateMetcalfeupon hisfuturereemploymentand repayment  


of his refunded PERS contributions - and that this repudiation allows him to sue for  


damages any time before the State's performance otherwise would be due and to seek  


contract  damages  even  though  he  has  not  been  rehired  by  the  State  (or  tendered  


repayment of his withdrawn PERS contributions).  But he nonetheless characterizes the  

                                                                -9-                                                         7132

----------------------- Page 10-----------------------

damages for each contract claim in the same manner:                                                                                                                        the diminution in value of his                                                        

alleged lifetime PERS reinstatement rights under former AS 39.35.350.                                                                                                                                                         

                                         The   phrase   "declaratory   judgment"   cannot   be   found   anywhere   in   the  

argument   sections   of   Metcalfe's   opening   and  reply  briefs.     He   did   not   contest   the  

superior court'sdeterminationthat                                                                         hisrequest                       for declaratory reliefwas only                                                             areiteration   

of his contention that his contract had been breached and he was entitled to damages.                                                                                                                                                                                         

Nor did he argue that the superior court erred by not entering a declaratory judgment that                                                                                                                                                                      


the State must honor former AS 39.35.350.                                                                                                   

                                         On the other hand the superior court expressly noted that Metcalfe was  


bringing  a  claim  for  declaratory  relief  regarding  the  2005  legislation.                                                                                                                                                           The  court  


determined that Metcalfe had standing to seek declaratory relief because he presented an  


actual controversy ripe for decision - his claim was based on an asserted constitutional  


interest already subject to diminishment.  And in its cross-appeal the State argued that  


if the superior  court erred  in  its  statute of limitations  ruling,  we should  affirm the  


dismissal of Metcalfe's lawsuit because he did not have standing to bring a claim for  


declaratory judgment and his claimwas not ripe for declaratory relief. Metcalfe disputed  


the State's arguments but his response did not focus directly on its argument against  


declaratory relief.  


                                         In response to our order for supplemental briefing, Metcalfe directed us to  


article XII, section 7 cases in which we have either permitted a breach of contract claim  


alongside a claim for declaratory and injunctive relief or applied contract-law principles  


in deciding the case.  Metcalfe characterized his claim for damages and declaratory and  


                     14                   Cf. Laverty                       , 13 P.3d at 730, 738 (noting laches-based denial of associated                                                                                                

equitable relief "does not necessarily mean that an accompanying claim for declaratory                                                                                                                                                  

relief should also be blocked"and concluding superior court                                                                                                                           had not abused its discretion                          

in reaching declaratory judgment claim).                                                                

                                                                                                                               -10-                                                                                                                        7132

----------------------- Page 11-----------------------

injunctive relief as seeking remedies for two separate harms:                                                                                                          a remedy at law for one                                  

harm, a breach of contract and resulting injury occurring while the 2005 legislation has                                                                                                                                         

been in effect; and an equitable remedy for the other harm, a declaratory and injunctive                                                                                                                       

relief prohibiting future enforcement of the 2005 legislation.                                                                                                       Metcalfe asserted that no                                     

statute of limitations applies to his claim for declaratory and injunctive relief because                                                                                                                            

such a claim seeks to prevent a future harm.                                                                          The State countered that even if Metcalfe's                                             

declaratory and injunctive relief claim could survive dismissal based on the statute of                                                                                                                                             

limitations, the claim could not survive the State's other defenses.                                                                                                                      Both parties also                    

urged us to decide the actual merits of Metcalfe's statutory diminution claim if we                                                                                                                                              

determine the claim was dismissed in error.                                                                             

                  C.	               Decision  


                                     1.	              Metcalfe has no right to diminution of value damages based on  


                                                      a claim that  the  2005  legislation was a breach of  the PERS  




                                    We have not previously recognized a constitutional claim for damages for  

                                                                                               15      In Hammond v. Hoffbeck16  we interpreted article  


a violation of article XII, section 7. 

XII, section 7 to mean that members' retirement system rights accrue upon employment  


and  enrollment17                                   and  noted  our  view  that  the  protected  benefit  rights  include  


"requirements for eligibility."18                                                         We recognized that retirement systems require some  


                  15                "[W]e  apply  our  independent j  udgment  to  questions o                                                                                          f  law  presented  by  

constitutional   issues."   Majaev   v. State,   223   P.3d   629,   631   (Alaska   2010)   (citations  


                  16                627 P.2d 1052 (Alaska 1981).  


                  17                Id. at 1055-57.  


                  18                Id. at 1058; see also Sheffield v. Alaska Pub. Emps.' Ass'n , 732 P.2d 1083,  


 1087 (Alaska 1987) (stating that constitutionally protected retirement benefits include  



                                                                                                                -11-	                                                                                                        7132

----------------------- Page 12-----------------------

flexibility for successful operations, holding that the constitution does not preclude                                                                     

modifications to systemrights after employment and enrollment, but that it does "require                                                                     

that any changes in the system that operate to a given employee's disadvantage must be                                                                                  

offset by comparable new advantages to that employee."                                                           19  

                           The merits of and remedies in Hammond are instructive. The case involved  


amendmentstoPERSeliminatingdistinctionsbetweenpublicsafety employees and other  


PERSparticipants,effectivelyreducing certainoccupationaldisabilityanddeathbenefits  


and increasing certain eligibility requirements for occupational pension benefits for the  


public safety employees.20   A public safety employees' union sued, alleging the PERS  


changes were unconstitutional; the superior court agreed and prospectively enjoined the  


changes in their entirety.21                            The State argued that any benefit diminishment had been  


offset by  other  advantages from the  PERS amendments and that the changes were  


constitutionally sound.22  


                           We noted that our task on appeal was to determine whether the PERS  


modifications had disadvantageous effects on the public safety employees and, if so, to  


weigh those disadvantages against any advantages that may have accompanied them.23  


             18            (...continued)  


not just dollar amounts, but "the practical effect of the whole complex of provisions"  


(emphasis omitted) (quoting Opinion of the Justices, 303 N.E.2d 320, 327 (Mass. 1973)  


(construing Mass. Gen. Laws ch. 32,  25(5) (amended 1956)))).  

             19           Hammond, 627 P.2d at 1057.  


             20           Id. at 1053-54.  


             21           Id. at 1055.  


             22            See id. at 1058.  


             23           Id. at 1057-58.  


                                                                                  -12-                                                                            7132

----------------------- Page 13-----------------------

We concluded that the superior court correctly determined that the PERS modifications                                                                   

were an effective diminishment of vested systemrights and violated article XII, section 7                                                                                         

                                                                                                                      24     But we explained that the  

as to those public safety employees adversely affected.                                                                                                                       

ultimate determination whether vested rights have been diminished must be made on a  


case-by-case basis.25                          We specifically concluded that the superior court had erred by  


prospectively invalidatingthePERSmodificationswhentherewouldbenoconstitutional  


infirmity in applying them to persons employed and enrolled after their effective date.26  


We also noted that persons employed before the PERS modifications' effective date who  


wished to be covered by the new system could elect to do so.27                                                                      We held that the PERS  


modifications were only unconstitutional in relation to persons employed before the  


modifications' effective date who chose to receive benefits under the system in effect at  


                                                           28       Thus  the  available  remedy  for  the  modifications'  

the  time  they  were  hired.                                                                                                                       


constitutional infirmity was an in-system benefits choice.29  


                            More  recently,  in  McMullen  v.  Bell  we  reiterated  both  that  under  the  


constitution the legislature may not impair accrued state retirement system benefits and  


that benefit rights vest on employment and enrollment.30                                                                Further:  


              24            Id.  at   1059.  

              25            Id.  (citing  Betts  v.  Bd.  of  Admin.  of  the  Pub.  Emps.'  Ret.  Sys.,  582  P.2d  614,  

617  (Cal.   1978)  (en  banc)).  

              26            Id.   

              27            Id.  &  n.13.  

              28            Id.  at   1059-60.  

              29            Id.  &  n.13.  

              30            128  P.3d   186,   190  (Alaska  2006).  

                                                                                      -13-                                                                                7132

----------------------- Page 14-----------------------

                         An   employee's   vested  benefits   arise   by   statute,   from   the  

                         regulations    implementing    those    statutes,    and    from    the  

                         division's practices. Where the state has changed the benefits                                     

                         system after              an  employee's enrollment in the system, the                                     

                         employee may choose to accept the new system or may opt                                                    

                         to keep the benefits in effect at enrollment.                                    [31]  

This suggests Metcalfe's proper remedy is allowing him to keep the retirement benefits  


available to him - whatever those benefits might be - not breach of contract damages.  


                         Although  we  have  used  contract-law  principles  to  decide  article  XII,  


section 7 cases32  and have even affirmed a related breach of contract finding in a case,33  


breach of contract damages are not an appropriate remedy for the alleged constitutional  


violation here:   In Lowell v. Hayes  we declined to allow "a constitutional claim for  


damages,  'except  in  cases  of  flagrant  constitutional  violations  where  little  or  no  


alternative remedies are available.' "34                                   We later stated that declaratory and injunctive  


relief are appropriate remedies with respect to potentially unconstitutional statutes if the  


circumstances of the case do not meet the exception described in Lowell v. Hayes and  


             31          Id.   at   190-91   (footnote   omitted)   (citing   Hammond,   627   P.2d   at   1059  

(explaining employee's right to choose between benefit systems)).                                         

             32          See, e.g., Statev.Allen, 625 P.2d844,848 (Alaska1981) (applying contract  


principle of "condition subsequent" to resolve article XII, section 7 claim).  


             33          Municipality of Anchorage v. Gentile, 922 P.2d 248, 260 n.13 (Alaska  


 1996) ("The trial court also held that by diminishing the medical benefits, MOA violated  


article XII, section 7 of the Alaska Constitution.  Because the class members' [related  


union] contract claim fully resolves the question of whether the medical benefits vested  


when  the  covered  employees  retired,  it  is  unnecessary  to  consider  claimants'  


constitutional claim.").  


             34           117 P.3d 745, 753 (Alaska 2005) (quoting Dick Fischer Dev. No. 2, Inc. v.  


State, Dep't of Admin., 838 P.2d 263, 268 (Alaska 1992)).  


                                                                             -14-                                                                        7132

----------------------- Page 15-----------------------


damages are unavailable.                                          Our general reluctance to allow a constitutional claim for                                                                         

damages   where   other   remedies   exist,   viewed   in   concert   with   our   past  article   XII,  

section 7 decisions, convinces us that Metcalfe has no cognizable claim for breach of                                                                                                                  

contract   damages   -   Metcalfe's   remedy   here   has   been   outlined   in   Hammond   and  

McMullen .   

                                Because in his current status Metcalfe has no cognizable claim for breach                                                                                   

of contract damages, we affirm the dismissal of the claim without reaching whether the                                                                                                               

claim is barred by the statute of limitations.                                                        36  

                                2.	            We  remand Metcalfe's claim for declaratory  and injunctive  


                                               relief for further proceedings.  


                                               a.	             Statute of limitations  


                                A declaratory judgment is neither strictly legal nor strictly equitable.37  


When deciding whether a time-limitation defense applies to a declaratory and injunctive  


relief claim, we have noted that courts often consider the substance of the relief sought.38  


                35             Krause v. Matanuska-Susitna Borough                                                         , 229 P.3d 168, 175 (Alaska 2010)                                  

(reversing the dismissal of a claim for declaratory and injunctive relief, noting that the                                                                                                           

plaintiffs   "are   not   entitled   to   money   damages   for   the   alleged   violations  of   their  

constitutional rights, but they may seek declaratory and injunctive relief").                                                                                 

                36              "We may affirm a judgment on any grounds that the record supports, even  


if not relied on by the superior court."  Snyder v. Am. Legion Spenard Post No. 28, 119  


P.3d 996, 1001 (Alaska 2005).  


                37              See Laverty v. Alaska R.R. Corp., 13 P.3d 725, 730 (Alaska 2000) ("We  


have similarly described the Declaratory Judgment Act as adding 'another remedy to  


existing legal and equitable remedies.' " (quoting Jefferson v. Asplund, 458 P.2d 995,  


997 (Alaska 1969))).  


                38              See  id.  ("Courts  often  resolve  this  problem [of  declaratory  judgments  


arising either at law or equity] by looking to the circumstances surrounding the claimand  


applying laches if the claimwould have arisen in equity before declaratory judgment was  



                                                                                                 -15-	                                                                                          7132

----------------------- Page 16-----------------------

We have held that equitable relief claims are not subject to statutes of limitations and are                                                     


instead   controlled   by   the   doctrine   of   laches.                                                                           

                                                                                        Aside  from  declaratory  judgment,  


Metcalfe may seek only equitable relief here because, as explained above, he currently  


has no cognizable claim for a remedy at law.  


                       In State v. Alex we considered whether time-limiting defenses applied to a  


 suit challenging a statute's constitutionality and seeking damages, declaratory judgment,  

                                40   We determined that the damages claim was governed by a statute  

and an injunction.                                                                                               

of limitations because it was an action at law, and we found no error in the trial court's  


determination that the laches doctrine did not apply to the request for declaratory relief  


and  an  injunction  because  laches  is  inapplicable  when  relief  is  "prospective  in  


application and seek[s] to prevent future threatened harm."41   Metcalfe's claim similarly  


is  prospective  in  nature  and  seeks  to  challenge  future  enforcement  of  a  statute  as  


constitutionally infirm.  Laches - not a statute of limitations - is the appropriate time- 


limiting defense here, but, as in Alex , it is inapplicable to Metcalfe's claim.  


                       It was error to dismiss Metcalfe's declaratory and injunctive relief claim as  


barred by AS 09.10.053.  


            38         (...continued)  





                       Moffitt v. Moffitt, 341 P.3d1102, 1105 (Alaska2014) (reversing asummary  


judgment  order  concerning  equitable  claims  because  the  order  applied  a  statute  of  

limitations to bar the claims).                       

            40         646 P.2d 203, 215 (Alaska 1982).  


            41         Id. (stating that it was "simply inappropriate" to apply laches analysis to a  


declaratory judgment and injunctive relief claim challenging statute's constitutionality  


because relief sought was "prospective in application").  


                                                                        -16-                                                                 7132

----------------------- Page 17-----------------------

                                   b.         Ripeness  

                       The superior court determined that Metcalfe's claim was ripe because he  


alleged an injury caused by the 2005 legislation.   The State challenges the superior  


court's determination, asserting that Metcalfe must regain a PERS-benefitted position  


before his claim will be ripe for decision.  


                       "The ripeness doctrine requires a plaintiff to claimthat either [an] . . . injury  


has been suffered or that one will be suffered in the future."42                                           There is "no set formula"  


to  identify  whether  a  case  is  ripe  for  decision.43                                     When  considering  a  claim  for  


declaratory relief regarding a statute's constitutionality, courts should "balance . . . the  


plaintiffs' 'need for decision against the risks of decision.' "44                                           The "need for decision"  


is judged as "a function of the probability that [the plaintiff] will suffer an anticipated  




injury."          The "risks of decision" are measured "by the difficulty and sensitivity of the  



issues presented, and by the need for further factual development to aid decision." 


                       Here  Metcalfe  seeks  a  declaratory  judgment  identifying  the  2005  


legislation's effect on his asserted PERS rights.  Although we have rejected his claim of  


monetary injury, Metcalfe nonetheless has raised a claim that his asserted PERS rights  


have been wrongfully diminished, and he has demonstrated a need for decision:  As the  

            42         Brause v. State, Dep't of Health & Soc. Servs.                                   , 21 P.3d 357, 359 (Alaska   

2001) (citing          Bowers Office Prods., Inc. v. Univ. of Alaska                               , 755 P.2d 1095, 1099 (Alaska           


            43         Id. at 359.  


            44         Id. at 360 (quoting 13A CHARLES  ALAN WRIGHTETAL                                            .,F  EDERAL PRACTICE  


        PROCEDURE  3532.1, at 115 (2d ed. 1984)).                                      


            45         Id.    

            46         Id.  (citing W         RIGHT,  supra  note 43,  3532.1, at 115).                             

                                                                        -17-                                                                  7132

----------------------- Page 18-----------------------

superior court recognized, Metcalfe and others in his position need to know their PERS                                                                                                                        

status to make decisions about pursuing employment opportunities with the State. And,                                                                                                                           

as explained above, substantial case law guides a court deciding an article XII, section 7                                                                                                                                

claim, rendering the risk of decision low. The superior court did not abuse its discretion                                                                                                          

in determining that Metcalfe's declaratory judgment claim was ripe for decision.                                                                                                                             47  


                                                   c.               Other issues  


                                  The superior court "tentatively" determined that Metcalfe had a vested  


PERS right under former AS 39.35.350 before moving on to the ripeness and statute of  


limitations issues.   The court noted that it would need further briefing before deciding  


whether Metcalfe actually had a vested PERS interest in light of his complete departure  


from the retirement system in the 1980s.  Both parties ask us to decide this question, as  


well as other issues that go to the merits of Metcalfe's claim that the 2005 legislation  


unconstitutionally  diminished  PERS  rights.                                                                           We  decline  the  invitation  because  -  


without need for further specificity - we are divided on the fundamental question.  


                                  Although Metcalfe brought this case as a class action, the motion to dismiss  


preceded  serious  class  certification  efforts.                                                                      Here  a  divided  decision  affirming  the  


superior court's dismissal of Metcalfe's case on the alternative basis that Metcalfe has  


no vested PERS right to assert in this context - as the dissenting opinion urges -  


would resolve the issue for Metcalfe but not for anyone else in the putative class, and  

                                                                                    48     On the other hand, reaching out to render a divided  


could lead to inconsistent results. 

                 47               We review a superior court's decision regarding a controversy's ripeness                                                                                              

for abuse of discretion.                                     Id.  at 358-59.   

                 48               See Alaska R. App. P. 106(b) ("In an appeal that is decided with only three  


of  five supreme court justices participating, any issue or point on appeal that the court  


decides by a two-to-one vote is decided only for purposes of that appeal, and shall not  


have precedential effect.").  


                                                                                                         -18-                                                                                                   7132

----------------------- Page 19-----------------------


decision that Metcalfe has a vested PERS right to assert in this context would not only  


resolve the issue in Metcalfe's favor, but also ultimately could lead to resolving the issue  


in the putative class's favor on remand.  This seems imprudent and unfair to the State.  


We deem it best to allow the superior court the opportunity to resolve both the class  


action issues and the remaining declaratory judgment issues in the first instance.  

IV.            CONCLUSION  

                               We AFFIRM the dismissal of Metcalfe's monetary damages claim and                                                                                               

REMAND for further proceedings on his declaratory judgment and injunctive relief                                                                                                          


                                                                                               -19-                                                                                        7132

----------------------- Page 20-----------------------

FABE, Chief Justice, concurring in part and dissenting in part.                                                                                                                         

                                          Although I agree with the court's decision affirming on alternative grounds                                                                                                                                   

the superior court's dismissal of Metcalfe's claim for money damages, I respectfully                                                                                                                                                     

disagree   with   the   decision   to   remand   this   case   to   the   superior   court  for  further  

proceedings. In my view, the superior court's dismissal of this case in its entirety should                                                                                                                                                                 

be affirmed because article XII, section 7 of the Alaska Constitution does not encompass                                                                                                                                                       

Metcalfe's claim.                                        Metcalfe is not a member of PERS within the meaning of the PERS                                                                                                                  

statutes,   so   the   constitutional   prohibition   on   impairing   or   diminishing   membership  

benefits does not apply to him.                                                                   The statutory change therefore falls outside the scope of                                                                                                                

Metcalfe's article XII, section 7 protections, and Metcalfe has stated no claim for relief                                                                                                                                                                       

under that provision.                                              Because we may affirm the superior court on any grounds briefed                                                                                                                         

                                                                                                                                     1  I would affirm the superior court's decision  

by the parties and supported by the record,                                                                                                                                                                                                            

to dismiss Metcalfe's claim on these alternate grounds.  


                                          By  its  plain  terms,  article  XII,  section  7  applies  only  to  members  of  


employee  retirement  systems:                                                                             It  first  provides  that  "[m]embership  in  employee  


retirement systems of the State or its political subdivisions shall constitute a contractual  


relationship" before going on to explain that "[a]ccrued benefits of these systems shall  


not be diminished or impaired."2   Because the provision only governs "[m]embership in  


employee retirement systems," the anti-diminishment provision protects only members  


of such systems.  


                                          The definition of PERS membership is governed by AS 39.35.680, which  


provides that the term "member" refers to "a person eligible to participate in the plan and  


                     1                    See Snyder v.Am.Legion Spenard Post No. 28                                                                                                     , 119 P.3d 996, 1001 (Alaska                                    

2005) (first citing                                         Marshall v. First Nat'l Bank of Alaska                                                                                        , 97 P.3d 830, 835 (Alaska                                    

2004); then citing                                       Ransom v. Haner                                          , 362 P.2d 282, 285 (Alaska 1961)).                                                       

                     2                    Alaska Const. art. XII,  7 (emphasis added).  


                                                                                                                                  -20-                                                                                                                            7132

----------------------- Page 21-----------------------

who is covered by the plan," including active members as well as various categories of                                                   

inactive, vested, or retired members.3                                                                                          

                                                              On the other hand, the statute defines a "former  


member" as "an employee who is terminated and who has [requested or] received a total  

                                                                                                         4  It  also  specifically  



refund  of  the  balance  of  the  employee  contribution  account." 

provides that the term " 'member' . . . does not include former members."5                                                   A nearly  


identical version of this statute was in effect when Metcalfe received a refund of his  


retirement contributions in 1981, similarly providing that the term " 'member' . . . does  


not  include  former  members,"  and  that  the  term  "former  member"  encompasses  


employees who have "received a total refund" of their employee contribution accounts.6  


                      When a statute is clear and unambiguous, we have explained that it "will  


not  be  modified  or  extended  by  judicial  construction."7                                       Here,  the  language  of  


AS 39.35.680 is unequivocal.  And as the State correctly notes, all of our past decisions  


on diminishment of benefits under PERS or other public employee retirement systems  


                                                                 8   We have never held that article XII, section 7  

have addressed the benefits of members.                                                                                                    


           3          AS  39.35.680(22)(A)-(B).  

           4          AS  39.35.680(20).  

           5          AS  39.35.680(22)(C)(i).   

           6          Former  AS  39.35.680(19),  (21)  (1981);  see  ch.   128,    54,  SLA   1977.    

           7          State  v.  Pub.  Safety  Emps.  Ass'n ,  93  P.3d  409,  415  (Alaska  2004)  (quoting  

Tesoro  Petroleum  Corp.  v.  State,  42  P.3d  531,  537  (Alaska  2002)).  

           8          See  Alford  v.  State,  Dep't  of  Admin.,  Div.  of  Ret.  &  Benefits,  195  P.3d  118  

(Alaska  2008)  (regarding  the  State's  recapture  of early  retirement  benefits  after  members  

retired,  retained PERS membership, and then re-entered public employment);  Bd.  of  Trs.,  

Anchorage  Police  &  Fire  Ret.  Sys.  v.  Municipality  of  Anchorage ,  144  P.3d  439  (Alaska  

2006)  (regarding  "surplus benefits" for  current  members of the municipality's  retirement  

system);  McMullen  v.  Bell,   128  P.3d   186  (Alaska  2006)  (reviewing  the  calculation  of  a  


                                                                   -21-                                                             7132

----------------------- Page 22-----------------------

applies to non-members of PERS, and such a decision would contradict the clear text of                                                                                                                            

AS 39.35.680 and of article XII, section 7 itself. Thus, the statutory text and our existing                                                                                                        

precedent both demonstrate that the anti-diminishment provision of article XII, section 7                                                                                                                           

does not apply to former members of PERS.                                                                        

                                 Because former members are not members of PERS within the meaning of                                                                                                                    

AS 39.35.680 and the constitutional anti-diminishment provision, Metcalfe is not a                                                                                                                                 

member   of   PERS   and   was   not   a   member   when   the   disputed   statute   was   repealed.   

Metcalfe chose to relinquish his membership status by taking a full refund of his PERS                                                                                                                  

                                                                                                                                                                            9  or the definition  

contributions in 1981.                                  Using either the definition in effect at that time                                                                                     

in effect in 2005,10 Metcalfe's decision to "receive[] a total refund" of his PERS account  


meant that he became a former member within the meaning of the PERS statutes.  And  


once he had become a former member, Metcalfe could no longer claimentitlement to any  


                 8               (...continued)  


 specific PERS member's benefits); Duncan v. Retired Pub. Emps. of Alaska, Inc., 71  


P.3d 882 (Alaska 2003) (regarding PERS and TRS members' health insurance benefits);  


Municipality of Anchorage v. Gallion, 944 P.2d 436 (Alaska 1997) (reviewing a change  


to the "accrued benefits" of some members of a municipal retirement plan); Municipality  


of Anchorage v. Gentile, 922 P.2d 248, 260 n.13 (Alaska 1996) (declining to consider  


the constitutional claim brought by members of a municipal retirement plan); Sheffield  


v. Alaska Pub. Emps.' Ass'n , 732 P.2d 1083 (Alaska 1987) (regarding a change in  


calculating PERS members' accrued benefits); State ex rel. Hammond v. Allen, 625 P.2d  


 844 (Alaska 1981) (reviewing the repeal of benefits for members of the Elected Public  


Officers' Retirement System); Hammond v. Hoffbeck, 627 P.2d 1052 (Alaska 1981)  


(reviewing  a change in  benefits as applied  to  PERS members who were adversely  


affected and employed on the date of the change).  

                 9               Former AS 39.35.680(19) (1981).  


                 10              AS 39.35.680(20).  


                                                                                                      -22-                                                                                                7132

----------------------- Page 23-----------------------


of the benefits of PERS membership.                                                                                                Metcalfe's right to PERS benefits thus divested                                                                                     

at the time of his refund in 1981.                                                                             So by the time the disputed change occurred in 2005,                                                                                                             

Metcalfe had not been a PERS member for roughly 24 years, and he therefore possessed                                                                                                                                                                              

nomembership benefits thatcould                                                                                   havebeen unconstitutionally diminishedbytherepeal                                                                                                            

of AS 39.35.350.                                             

                                             In sum, because he was not a member at the time of the change,                                                                                                                                                                            and  

because article XII, section 7 of the Alaska Constitution protects only the benefits of                                                                                                                                                                                                    

members against diminishment                                                                             or impairment,                                    Metcalfe has no claimfor relief under this                                                                                   

provision.   The parties have had an opportunity to brief this issue, and "[w]e may affirm                                                                                                                                                                                    

a judgment on any grounds that the record supports, even if not relied on by the superior                                                                                                                                                                              

                        12  Here the record adequately supports the conclusion that Metcalfe's claim does  


not fall within article XII, section 7, because he is not a member of PERS. Accordingly,  


it is unnecessary to remand this case for any further factual development.  Instead, I  


would affirm the superior court's dismissal of the case on the ground that Metcalfe has  


stated no claim for relief under article XII, section 7 of the Alaska Constitution.  


                       11                    See  AS 39.35.680(22)(C)(i).   



                                             Snyder v. Am. Legion Spenard Post No. 28, 119 P.3d 996, 1001 (Alaska  


2005) (first citing Marshall v. First Nat'l Bank of Alaska, 97 P.3d 830, 835 (Alaska  


2004); then citing Ransom v. Haner, 362 P.2d 282, 285 (Alaska 1961)).  

                                                                                                                                           -23-                                                                                                                                    7132

Case Law
Statutes, Regs & Rules

IT Advice, Support, Data Recovery & Computer Forensics.
(907) 338-8188

Please help us support these and other worthy organizations:
Law Project for Psychiatraic Rights