attorneys for petitioners - john jensen of fiduciary duties by calpers... · los angeles ca 90064...

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

John Michael Jensen, Esq., State Bar No. 176813Law Offices of John Michael Jensen11500 West Olympic Blvd., Suite 550Los Angeles CA 90064(310)312-1100

Attorneys for Petitioners

SUPERIOR COURT OF THE STATE OF CALIFORNIA,

COUNTY OF SACRAMENTO

Leonard CHAIDEZ, THE CITY OFHAWAIIAN GARDENS,

Petitioners, Real Parties inInterest, and Plaintiffs,

v.BOARD OF ADMINISTRATION OFCALIFORNIA PUBLIC EMPLOYEES'RETIREMENT SYSTEM, CALIFORNIAPUBLIC EMPLOYEES' RETIREMENTSYSTEM ("CalPERS"),

Case No. 07 CS 01248

OPPOSITION TO MOTION TO STRIKE

Motion Hearing Date: March 6, 2009Motion Time: 9:OOAM

Hearing Location: DEPT 31Gordon Schaber Dwnt CourthouseSacramento Superior Court720 9th Street, Sacramento CA 95814

Hearing Judge: Hon. Michael P KennyTelephone: 916-874-6184

Respondents and Defendants. } original Action filed: September 18, 2007

[Filed concurrently with Chaidez's Oppositionto Demurrer, Request for Judicial Notice,Exhibits]

Leonard Chaidez submits this Opposition to CalPERS' Motion to Strike (i) the Fourth

Amended Complaint; (ii) language that Chaidez added pursuant to Court's grant of leave to

amend in Minute Order of 10/24/08; and (iii) Chaidez's claim for money damages based on

CalPERS' breach of Constitutional Fiduciary Duties.

CHAIDEZ'S OPPOSITION TO CalPERS' MOTION TO STRIKE

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

TABLE OF CONTENTSSection Pase Number

Table o f Authorities . . . . . . . .Cases. . . . . . . . . .Statutes. . . . . . . . .Other Authorities. . . . . . . .

INTRODUCTION- Fiduciary Duties

ANALYSIS, FIDUCIARY DUTIESPlain Meaning of Art. 16, § 17 of the CA Constitution

Ordinary Meaning of "Fiduciary", "Beneficiaries" and other Words inConstitution . . . . . .

.iii

.iii

.vii

.vii

.1

.3

.3

.3

Resort to Ballot Language is only Permissible if Constitution is Ambiguous .4

Plain Meaning of the Constitution and Basic Law of Trust and Fiduciary

Duties . . . . . . . . . .4

Scope of CalPERS' Fiduciary Duties and Nature of Duties Defined by SpecialRelationship . . . . . . . .

Breach o f Fiduciary Duties . . . . .

Special Relationship and CalPERS' Heightened Duties to Public

Employees . .

Analogy t o Salahutdin e t a l Duties. . . . . .

.5

.5-6

.6

.7

Common Law of Trusts and Fiduciary Duties and Money Damages for Violationof Duty to Inform, To Disclose, and To Account

Common Law History. . . . . . .

California Cases. . . . . . . .

City of Oakland v. Public Employees Case Law:

CalPERS Duties to Correct Omission or Errors.

Plain Meaning of Amendment Prop. 162 (1992) 'The California PensionProtection A c t o f 1992 . . . . . .

Constitution i s Applicable t o CalPERS . . . .

Constitutional Tort Theory . . . . . .

CalPERS' WRONG ARGUMENTS ABOUT LEAVE TO AMEND . .

.9

10

10

.11

.11

.11

.12

.12

14

Court Granted Chaidez Leave to Amend Re Declaration of Constitutionality ofGC 20039, As applied; CalPERS Wishes to Strike the Amendment that theAllowed . . . . . . . . .

- ii-

Court14


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

Court's Grant of Leave to Amend Re Declaration of Constitutionality ofGC 20039, Equal Protection 14

Sufficient Facts Alleged to Support "As Applied" Challenge 15

Court's Grant of Leave to Amend to Assert a Cause of Action Based onBreach of Fiduciary Duties Based in Constitution, CalPERS Wishes toStrike Damages . . . . . . .15

CalPERS Motion to Strike Specific Lines

CONCLUSION

. 15

15

-111-


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

TABLE OF AUTHORITIES

Cases

Alhinov Starr (\9BG) 112 Cal.App.3d25 6

/frnfrewsv. Bush(\91Q) 109 Cal.App.511 6

Arriagav. Loma Linda University, 13 Cal.Rptr.2d 619 3

Askew v. Resource Funding, Ltd., 94 Cal. App. 3d 402, 156 Cal. Rptr. 208 (2d Dist. 1979) 5

Barbara A v John G. (1983) 145 Cal App.3d 369 7

Baydrop v. Second Nat Bank, 120 Conn. 322, 180 A. 469, 472 11

Bermingham v. Wilcox, 120 Cal. 467, 52 P. 822 (1898) 12

Blackmonv. Hale, 1 Cal. 3d 548, 83 Cal. Rptr. 194,463 P.2d 418 (1970) 11

Blauvelt v Ackerman, 23 N. J. Eq. 495 10

Board of Retirement v Santa Barbara County Grand Jury (App. 2 Dist. 1997) 68 Cal.Rptr.2d 607, 58 Cal.App.4th

1185 12

Bonev. Hayes (1908) 154 Cal. 759 6

Bone v Hayes 154 Cal. 759, 99 P. 172Cal. 1908 December 22, 1908 10

Bone v. Hayes, 154 Cal. 759, 766-767, 99 P. 172 11

Bone v Hayes, 154 Cal. 759, 99 P. 172 (1908); 11

Bourlandv. Hildreth (1864) 26 Cal. 161 5

Boxxv Board of Administration (1981) 114 Cal App.3d 79, 90, 170 Cal.Rptr. 538 12

Cargill, Metropolitan Water District of Southern California v Superior Court (Cargill) (2004) 32 Cal 4th 491, 496

1

City of Oakland v Public Employees Retirement System, 95 Cal.App.4th 29, 115 Cal.Rptr.2d 151 13

City of Oakland v. Public Employees'Retirement System (App. 3 Dist. 2002) 115 Cal.Rptr.2d 151, 95 Cal.App.4th

29 7

City ofOaklandv. Public Employees retirement System, 95 Cal.App.4th 29, 115 Cal.Rptr.2d 151 (2002) 12, 13

- iv-


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

17

18

19

20

21

22

23

24

25

CityofSimi Valley v. Superior Court, 4 Cal.Rptr.3d 468 2

Claypoolv. Wilson (App. 3 Dist. 1992) 6 Cal.Rptr.2d 77,4 Cal App.4th 646 5

Cooper v. Jevne (1976) 56 Cal.App.3d 860, 866 8

Cooper v. Jevne, supra., 56 Cal.App.3d at p. 866;.

Cornell v. //orra (App. 4 Dist. 1936) 15 Cal.App 2d 144, 59 P.2d 570 4

County of San Diego v. State (App. 4 Dist. 2008) 79 Cal.Rptr.3d 489, 164 Cal.App.4th 580 14

County of San Diego v State (App 4 Dist. 2008) 79 Cal.Rptr 3d 489, 164 Cal.App 4th 580, 13

County of San Diego v State (App. 4 Dist. 2008) 79 Cal.Rptr.3d 489, 164 Cal.App.4th 580, review denied 15

Cypress Lawn Cemetery Ass 'n v City and County of San Francisco (1930) 284 P. 506 4

Degrassiv Cook, 58 P.3d 360 2

Degrassi, supra, 29 Cal.4th at p. 335, 127 Cal.Rptr.2d 508, 58 P.3d 360.) 14

Dooley v Johnson (1933) 24 P.2d 540, 133 Cal.App. 459 4

Easton v. Strassburger (1984)152 Cal.App.3d 90, 199 Cal.Rptr. 383, 46 A.L.R.4th 521 9

Equitable Trust Co. v. Schwebel, 32 F.Supp 241, 243 11

Fordv. Cow/wj/e(1973)36Cal.App.3d 172 6Estate of Migliacciov. Midland Nat'l. Life Ins Co., 436 F.Supp.2d 1095 6

16' Fentonv Groveland Community Services Dist, 135 Cal.App.3d 797, 185 Cal.Rptr. 758 15

Cover v.Early (1923) 191 Cal 123 6

Gerhadt v. Weiss (1966) 247 Cal App.2d 114 6

Hammond v. McDonald (\942) 122 P.2d 332, 49 Cal.App.2d 671 4

Hannon Engineering, Inc v. Reim (1981)126 Cal.App.3d 415 5

Hittlev. Santa Barbara County Employees Retirement Assn (1985) 39 Cal.3d 374, 392-393, 5

In re Dartnall, [1895] 1 Ch. 474 10

In re De Laveaga's Estate, 50 Cal. 2d 480 11

In re Evans'Estate, 62 Cal. App. 2d 249 11

In re Fish [1893], 2 Ch. 413, 426 10

- v-


1

2

3

4

5

6

7

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

In re Wheeler's Estate, 287 Pa. 416, 135 A. 252, 253 11

In re Whitney's Estate, 78 Cal. App. 638, 248 P. 754 (1st Dist. 1926 12

Javor v. Taggart, 120 Cal.Rptr 2d 174 2

Kaiser v. Hopkins (1936) 58 P.2d 1278, 6 Cal.2d 537 4

Katzberg v. Regents of University of California (2002) 127 Cal.Rptr.2d 482, 29 CaUth 300, 58 P.3d 339 14

Katzberg v Regents of University of California, 58 P.3d 339 3

Katzberg v Regents of University of California, 58 P.3d 339 Cal.,2002 16

Katzberg v. Regents of University of California, 58 P 3d 339 Cal.,2002 14

Katzberg, v. The Regents of the University of California. 29 Cal.4th 300, 58 P 3d 339, 127 Cal.Rptr.2d 482 1, 3

Kennardv Glick(\960) 183 Cal.App.2d 246 6

Kinert v. Wright, 81 Cal.App.2d 919, 924-926, 185 P.2d 364; 11

Knapp v Knapp, 15 Cal. 2d 237 11

Laguna Publishing Co. v Golden Rain Foundation, 131 Cal.App.3d 816, 182 Cal.Rptr. 813 15

Laguna Publishing Co v. Golden Rain Foundation, 182 Cal.Rptr. 813 3

Landis v. Scott, 32 Pa. 495 10

Lingsch v. Savage (1963) 213 Cal.App.2d 729, 733 8

Lingsch v Savage [1963] 213 Cal.App.2d 8

Lingsch v Savage, supra ,213 Cal.App.2d at p. 735-736 8

Los Angeles County Metropolitan Transportation Authority v. Continental Development Corp. (1997) 66

Cal.Rptr.2d 630, 16 Cal.4th 694, 941 P.2d 809, rehearing denied 2

Los Angeles County v. Craig (App. 1 Dist. 1940)38 Cal.App.2d 58, 100P.2d818 4

Lupton v. White, 15 Ves. 432,440 10

Masters v. San Bernardino County Employees Retirement Assn. (1995) 32 Cal.App.4th 30, 43-45 5

McAdoo v Sayre, 145 Cal. 344, 78 P. 874 (1904) 10

McDaniel v Gile (1991) 230 Cal.App3d 363 et al 7

- vi-


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

Metropolitan Water District of Southern California v. Superior Court (Cargill) (2004) 32 CaUth 491, 496 7

MexicahRosev. Superior Court (\992) \ Cal.4m617 ............................................................................................... 6

Miller v. Dunn (1887) 14 P 27, 72 Cal 462, 1 AmStR. 67 ..................................................................................... 4

Motevalliv. Los Angeles Unified School Dist. 122 Cal.App.4th 97, 18 Cal.Rptr.3d 562 .......................................... 14

M Olivet Cemetery Ass'n v. City and County of San Francisco (App. 1 Dist 1930) 284 P. 509, superseded 2 1 1 Cal.

387, 295 P. 813 ................................................................................................................................................. 4

Mt San Jacinto Community College Dist. v Superior Court (2007) 54 Cal Rptr 3d 752, 40 Cal 4th 648, 151 P. 3d

1166

Nocton v. Lord Ashburton, [1914] A.C. 932 (H.L.) 2

Older v.Superior Court in andfor Kern County (1910) 157 Cal. 770, 109 P. 478 14

Ottley v. Gilby, 1845, 8 Beav. 602 10

Ottleyv. Gilby, 8 Beav. 602 10

Patelv US, N.D.Cal.1993, 823 F.Supp 1

People v. Zolotoff(App. 1941) 48 Cal.App.2d 360, 119 P 2d 745 4

Perry v. Gross (1916) 156 P. 1031, 172 Cal. 468 4

Pollack v. Lytle(l98\) 120 Cal.App.3d 931 6

Powers v. City of Richmond (1995) 40 Cal.Rptr.2d 839, 10 CaUth 85, 893 P.2d 1160 4

Purdy v Johnson, 174 Cal. 521, 163 P. 893 (1917) 11

Raffo v Foltz, 106 Cal. App. 51, 288 P. 884 (3d Dist. 1930) 5

Richards Realty Co. v Real Estate Comr. (1956) 144 Cal.App.2d 357, 362 [300 P.2d 893]; 9

Roman v. Lobe (1926) 243 N Y. 51, 54-55 [152 N.E 461,462-463; 50 A.L.R. 1329, 1332] 9

Rosev CityofCoalinga, 190 Cal.App.3d 1627, 1633, 236 Cal.Rptr. 124, 127(1987 1

Salahutdin v. valley of California (1994) 24 Cal.App.4th 555, 29 Cal.Rptr.2d 463 9

Salahutdmv. Valley of California Inc(\994) 24 Cal.App.4th 555 6

Shay v. Roth (App 2 Dist. 1923) 64 Cal App. 314, 221 P 967 4

- vn-


1

2

3

4

5

6

7

8 Statutes

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

Toedterv. Bradshaw(\95%) 164Cal.App.2d200 6

Twomey v. Mitchum, Jones & Templeton, Inc (App. 1 Dist 1968) 69 Cal.Rptr. 222, 262 Cal App.2d 690 2

Vaiv Bank of America (1961) 56 Cal.2d 329 6

Warner Const. Corp. v. City of Los Angeles (1970) 2 Cal.Sd 285, 293-294 [85 Cal.Rptr. 444, 466 P.2d 996] 8

Westlyv. California Public Employees' Retirement System Bd. of Administration (App 3 Dist. 2003) 130

Cal.Rptr.2d 149, 105 Cal.App 4th 1095, modified on denial of rehearing, review denied 5

Wolk v Green, N.D Cal.2007, 516 F.Supp 2d 1127 2

Art. 16, § 17 Cal Constitution 1

Art. 16. § 17 of the CA Constitution 3

Cal. Const. Art. 16, § 17 1, 5

Cal. Const., art. XVI, i!7(b) 13

GCS20160. subd. (b).) 12

GC§ 20160. subd. (e) 12

GCS20164. subd. (a) 12

Government Code sections 20160-4 1

Prob. Code, § 16012, subd. (b) 11

Prob. Code, § 16060 10

Prob. Code, § 16061 10

Probate Code 16000 et seq 2

Other Authorities

. 60 Cal. Jur 3d Trusts § 153 12

. BOGERTJHE LAW OF TRUSTS &TRUSTEES § 543(V), at 449 (2nd ed. rev. 1993) 11

§874, Restatement (Second) of'Torts 2

1992 Amendment 5

- viii-


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

2 Beach on Trusts, § 522 10

2 Miller & Starr, California Real Estate (2d ed. 1989) § 3:20, p. 119, fn. omitted 9

2 Miller & Starr, supra, § 3.17, pp. 97-98 9

2 Scott on Trusts, s 173, p 922 11

3 Pom. Eg. Jur. § 1063; 28 Am. & Eng. Ency L. [2d Ed.] 1076 10

4 Bogert on Trusts and Trustees, s 961 11

Jacobson, Broker's Liability for Sale of Defective Homes (1977) 52 L.A. Bar J 346, 347, 353 9

Ballot Pamp., Gen. Elect. (Nov. 3, 1992) Analysis of Leg. Analyst, p. 37 13

California**467 Real Property Remedies Practice (Cont.Ed Bar 1982) § 3.36, p. 88 9

Cicero De Offichs 3.26.99 6

Comment, A Reexamination of the Real Estate Broker-Buyer-Seller Relationship (1972) 18 Wayne L.Rev. 1343 9

Department of Real Estate set forth in Cal Admin. Code, tit 10, §2785, subd. (a)(3).) 8

In re Application of Smith (March 31, 1999) PERS Prec. Dec. No. 99-01 12

Justinian Digest 10.3 10

Note, Real Estate Brokers' Duties to Prospective Purchasers (1976) B. Y. U. L. Rev. 513, 514-515 9

Prop 162 1,2

Prop. 162 (1992) 'The California Pension Protection Act of 1992 13

Restatement (Second) of Torts §§ 874A, 874A comment 16

Robertson, Encyclopaedia of the Laws of England Vol. VIII, Second Edition Revised and Enlarged 1907 10

Second) of Trusts § 225 (2) (1957 11

Seton on Decrees, vol. ii., title " Administration 10

Theobald on Wills, 1905 ed 10/

Williams on Executors, 1905 ed , vol. ii 10

- ix-


9

10

11

12

13

22

23

24

25

INTRODUCTION- Fiduciary DutiesCalPERS (1) seeks to make meaningless and ineffectual Art. 16, § 17 of the Cal.

Constitution, (2) ignores that "fiduciary duties" have a long common law history of providing

damages for breach; (3) fails to recognize that a constitutional tort analysis does not apply to

"actions such as those based upon grounds established under common law tort principles" or

statutes; Katzberg v. Regents ofUniver. of Calif., 58 P.3d 339, 2002; (4) fails to appreciate the

plain meaning of Art. 16, § 17 as well as the implicit and explicit ballot language of Prop 162;

(4) fails to admit that PERS is obligated by Government Code sections 20160-4 to correct errors

because under Cargill all public employees must enroll in CalPERS and CalPERS solely

possessed the information, the obligation, and the power to address and to correct the errors and

misinformation; and (6) ignores that Chaidez has the right to rely on CalPERS' information

and that there is no other remedy available for damages caused by CalPERS' misinformation.

14 CalPERS first sought state immunity from damages for breach of its statutory fiduciary

duties (a judicial admission that damages would otherwise be appropriate). Statutory immunity

16does not restrict or immunize Constitutional rights or duties. In addition to statutory, adopted,

17and common law duties, CalPERS' fiduciary duties are constitutional.

18CalPERS now moves to strike Chaidez's request for money damages for Breach of

19Fiduciary Duties contained in the Cal. Const. Art. 16, § 17. CalPERS illogically argues that,

20

because the fiduciary duties reside in the California Constitution, there can be no damages for

breach. CalPERS ignores abundant examples, such as breach of contracts, just compensation

damages in constitutional eminent domain or inverse condemnation cases . Breach of fiduciary

1 Action for inverse condemnation arises directly from California Constitution and is independent of any right to sueunder traditional tort theories and, thus, extent of public entity's liability is fixed by California Constitution ratherthan by statutory rules or common law. Patel v U.S, N.D.Cal.1993, 823 F.Supp. Rose v City ofCoalmga, 190Cal.App.3d 1627, 1633, 236 Cal Rptr. 124, 127 (1987 Just compensation for governmental taking of property, as

CHAIDEZ'S OPPOSITION TO CalPERS' MOTION TO STRJKE

1

2

3

4

5

6

7

15

16

17

duties is the type of right recognized as providing for money damages in (i) plain meaning of the

Constitutional language; (ii) common law2, (iii) case law3, (iv) common law trust ancestry,4 (v)

common law tort5 principles, (vi) statute (Probate Code 16000 etseq), (vii) explicitly and

implicitly in the ballot language of Prop 162; (viii) foundational issues in a constitutional tort

analysis; and (ix) by the lack of any other remedy. Basic legal principles all lead to the

conclusion that a breach of Constitutional fiduciary duties entitles Members to money damages.

To attempt a back door escape, CalPERS clings to a "Constitutional Tort" analysis which

does not apply. Constitutional Tort theory involves damages for violation of constitutional rights

9that are without a history of providing monetary damages such as (i) state due process liberty

10interest (City ofSimi Valley v. Superior Court, 4 Cal.Rptr.3d 468); (ii) free speech (Degrassi v.

11Cook, 58 P.3d 360); (iii) state equal protection (Javor v. Taggart, 120 Cal.Rptr.2d 114); (iv) free

12press (Laguna Publishing Co. v. Golden Rain Foundation, 182 Cal.Rptr. 813), and (v) statutory

13

prohibitions against discrimination (Arriaga v Loma Linda University, 13 Cal.Rptr.2d 619).14

As a threshold issue, CalPERS misunderstands the Katzberg precedent and misconstrues

the explicit scope, analysis, and foundational reasoning of constitutional torts. Katzberg v.

19

20

21

22

23

24

25

mandated by State Constitution, requires a full indemnity and nothing more. Los Angeles County MetropolitanTransportation Authority v. Continental Development Corp. (1997) 66 Cal.Rptr.2d 630, 16 Cal.4th 694, 941 .2 True measure of damages for breach by stockbrokers of fiduciary duty to customers was that provided in thissection permitting recovery for all detriment suffered. Twomey v Mitchum, Jones & Templeton, Inc. (App. 1 Dist1968) 69 Cal.Rptr. 222, 262 Cal.App 2d 690.3 The elements of a cause of action for breach of fiduciary duty, under California law, are: (1) the existence of afiduciary duty; (2) the breach of that duty; and (3) damage proximately caused by that breach. Wolk v Green,N.D.Cal.2007, 516F.Supp.2d 1127.4 In the classic English example, Nocton v. Lord Ashburton, [1914] A.C. 932 (H.L.). a solicitor encouraged his clientto release a prior lien on property being developed by the client's brother, representing that the result would be "verysatisfactory," but did not disclose that he knew that the client's remaining security would be insufficient relative tothe amount of the debt owed the client by the developer. Although the court found that the solicitor "did notconsciously intend to defraud his client,"( Id. at 945 (Viscount Haldane) the consequence of his client's release wasto elevate the priority of a lien held by the solicitor himself on the same property. All might have ended well had thedeveloper not defaulted, leading to loss all around, not profit. Court upheld the client's claim against his solicitor fordamages sustained by virtue of the release. Id at 958 ("the proper mode of giving relief might have been to orderMr. Nocton to restore to the mortgage security what he had procured to be taken out of it, in addition to makinggood the amount of interest lost by what he did;"5 In §874, Restatement (Second) of Torts treats breach of fiduciary duty as a tort that subjects a fiduciary to liabilityto the beneficiary for harm caused by the breach. § 874 does not characterize breach of fiduciary duty as anintentional tort. Many breach fiduciary duties without intending to cause harm.

-2-


14

15

16

17

20

21

22

23

24

25

Regents of University of California, 58 P.3d 339. In the very first footnote, Katzberg clearly

enunciated that money damages are appropriate in cases with a common law history or statutory

basis such as breach of fiduciary duty:

We do not here [in Katzberg] consider the propriety of actions such as those basedupon grounds established under common law tort principles-for example, actionsfor false arrest, false imprisonment, wrongful termination based upon violation ofpublic policy, or the like. In such actions, a breach of duty or violation ofpublic policy may be established by demonstrating a violation of aconstitutional provision, and damages properly may be awarded to remedythe tort. We consider here only whether an action for damages is available toremedy a constitutional violation that is not tied to an established commonlaw or statutory action. [Emphasis added] Katzberg, v. The Regents of theUniversity of California. 29 CaUth 300, 58 P.3d 339, 127 Cal.Rptr.2d 482,

ANALYSIS. FIDUCIARY DUTIES

Plain Meaning of Art. 16, § 17 of the CA Constitution. The relevant section is:

[T]he retirement board of a public pension or retirement system shall have ...fiduciary responsibility for ... administration of the system, [and]:(a) ...sole andexclusive responsibility to administer the system in a manner that will assureprompt delivery of benefits and related services to the participants and theirbeneficiaries. The assets of a public pension or retirement system are trust fundsand shall be held for the exclusive purposes of providing benefits to participantsin the pension or retirement system and their beneficiaries ..[and] (b) Themembers of the retirement board of a public pension or retirement system shalldischarge their duties with respect to the system solely in the interest of, and forthe exclusive purposes of providing benefits to, participants and theirbeneficiaries,... A retirement board's duty to its participants and theirbeneficiaries shall take precedence over any other duty.

18

Ordinary Meaning of "Fiduciary". "Beneficiaries" and other Words in Constitution

Words used in constitution must be taken in ordinary and common acceptation because they are

presumed to have been so understood by framers and by people who adopted constitution. Kaiser

v. Hopkins (1936) 58 P.2d 1278, 6 Cal.2d 5376 Where language of constitutional provision is

plain, meaning thereof must be gathered solely from language used, giving words their ordinary

6 See also, Hammond v. McDonald (1942) 122 P.2d 332, 49 Cal.App.2d 671; Dooley v. Johnson (1933) 24 P.2d540, 133 Cal.App. 459; Perry v Gross (1916) 156 P 1031, 172 Cal 468, Miller v Dunn (1887) 14 P 27, 72 Cal.462, 1 Am.St.R. 67.

-3-


1

2

3

4

5

6

7

15

16

17

18

19

20

21

24

25

meaning. Cypress Lawn Cemetery Ass 'n v. City and County of San Francisco (1930) 284 P. 506.

Mt. Olivet Cemetery Ass'n v. City and County of San Francisco (App. 1 Dist. 1930) 284 P. 509,

superseded 211 Cal. 387, 295 P. 813.

Constitutions like laws must be construed so that full force and effect shall be given to

every portion thereof, and the legal intendment is that each sentence and clause has been inserted

for some useful purpose, and when rightly understood has some practical operation. People v.

Zolotojf(App. 1941) 48 Cal.App.2d 360, 119 P.2d 745. Constitutional provisions must be

O

liberally construed to give effect thereto and to achieve their real purpose. Cornell v. Harris

9 (App. 4 Dist. 1936) 15 Cal.App.2d 144, 59 P.2d 570.

10Adopting the language of trust and fiduciary duties can only mean to use those terms as

11they are understood in the law. To construct a different definition of fiduciary duties, where the

12

breach does not accrue damages, is to defeat the purpose and intent of the language and law.13

Resort to Ballot Language is only Permissible if Constitution is Ambiguous14

Resort to extrinsic aids to interpret constitutional provision is justified only when

Constitution's language is ambiguous. Powers v. City of Richmond (1995) 40 Cal.Rptr.2d 839,10

Cal.4th 85.. When the language of the constitution is unambiguous, it should not be construed in

opposition to the express words of the instrument. Bourlandv. Hildreth (1864) 26 Cal. 161.

Plain Meaning of the Constitution and Basic Law of Trust and Fiduciary Duties

Cal. Const. Art. 16, § 17and the 1992 Amendment adopt the language of settled

trust7, tort, and fiduciary duties law. California Constitution require [es] that PERS be governed

22by trust law.8 Claypool v. Wilson (App. 3 Dist. 1992) 6 Cal.Rptr.2d 77, 4 Cal.App.4th 646 .

23

7 Generally, a trust is any arrangement by which property is transferred with an intention that it be held andadministered by the person to whom it is transferred for the benefit of another. Raffo v Foltz, 106 Cal. App. 51, 288P. 884 (3d Dist. 1930); Askew v. Resource Funding, Ltd., 94 Cal. App. 3d 402, 156 Cal. Rptr. 208 (2d Dist 1979).8 For more on CalPERS' fiduciary responsibility to protect and deliver assets, benefits, and services, see Westly vCalifornia Public Employees'Retirement System Bd of Administration (App 3 Dist 2003) 130 Cal.Rptr2d 149,5..

-4-


1

2

3

4

5

6

7

opensioner-beneficiaries. In Masters v San Bernardino County Employees Retirement Assn.

9(1995) 32 Cal.App.4th 30, 43-45, the court acknowledged the existence of fiduciary duties owed

10by a retirement plan and its administrator to a pension plan beneficiary.

11Scope of CalPERS' Fiduciary Duties and Nature of Duties Defined by Special Relationship

15

16

17

18

19

Pension plans create a trust relationship between pensioner-beneficiaries and the trustees of

pension funds who administer retirement benefits and the trustees must exercise their fiduciary

trust in good faith and must deal fairly with the pensioner-beneficiaries. Hannon Engineering,

Inc. v. Reim (1981)126 Cal.App.3d 415 . The administrator of a pension is a fiduciary in its

relationship with its pensioner. In Hittle v. Santa Barbara County Employees Retirement Assn.

(1985) 39 Cal.3d 374, 392-393,_the Supreme Court concluded that trustees who administer

pension plan retirement funds owe fiduciary duties of good faith and fair dealing towards the

12

Since there is no express agreement detailing the scope of the CalPERS' constitutional13

fiduciary duties, the scope is defined by the parties' relationship. See below. However, it is clear14

that CalPERS' fiduciary duties include (i) exercising reasonable care and prudence in the

thdischarge of his duties (Mexicali Rose v. Superior Court (1992) 1 Cal.4 617); (ii) making full

disclosure of all transactions and facts that affect the "rQs";Pollack v. Lytle(\9Sl) 120 Cal.Ap.3d

93\,Alhino v. Starr (1980) 112 Cal.App.3d 258; (iii) not delegating improperly (Gaver v.Early

(1923) 191 Cal 123); (iv) not setting preferences (Toedter v. Bradshaw(\95%) 164 Cal.App.2d

20

continues); (vi) fully accounting (Bone v. Hayes (1908) 154 Cal. 759 , Kennardv. Click (I960)

200); (v) not taking advantage (which began in roman law (Cicero De Officiis 3.26.99 and

21

22183 Cal.App.2d 246) including on demand; and (vii) fully disclosing all material

23facts(Salahutdin v. Valley of California Inc (1994) 24 Cal.App.4th 555, Vai v. Bank of America

24(1961) 56 Cal.2d 329, Gerhadt v. Weiss (1966) 247 Cal.App.2d 114.

25

Breach of Fiduciary Duties

-5-


1

2

3

4

5

6

7

8 (1930) 109 Cal.App.511.

9For example, Chaidez was damaged by CalPERS informing him that his pension would

10be based on his years of service and his highest salary ever earned. As CalPERS told him this

11repeatedly, Mr. Chaidez relied on it as he sought and kept his employment with the City.

12Special Relationship and CalPERS' Heifihtened Duties to Public Employees

16

17

18

19

20

Under California law, in order to plead claim for breach of fiduciary duty, the claimant

must allege: (1) the existence of fiduciary relationship giving rise to fiduciary duty, (2) breach of

that duty, and (3) damage proximately caused by the breach. Estate ofMigliaccio v. Midland

Nat'l. Life Ins. Co., 436 F.Supp.2d 1095. Chaidez meets each of the elements to bring a breach of

fiduciary duties claim against CalPERS. Chaidez has the right to make decision based on

information provided by CalPERS. Pollackv. Lytle (1981) 120 Cal.App.3d 93l,AIhino v.

Starr (1980) 112 Cal.App.3d 258, Ford v. Cournale (1973) 36 Cal.App.3d 172, Andrews v. Bush

13

There is a unique heightened special relationship between public employees and14

CalPERS. The scope of CalPERS duties are defined by this relationship.9California law requires

CalPERS to enroll all common law public employees. GC 20283.(Metropolitan Water District of

Southern California v. Superior Court (Cargill) (2004) 32 Cal.4th 491, 496.) . Public employees

have no choice. CalPERS is their pension. CalPERS informs them of the "defined benefit"

pensions where the well known formula is based on (i) years of service, (ii) highest salary

earned, and (iii) some "magic" actuarial number or "benefit factor" that only CalPERS produces.

CalPERS explicitly encourages public employees to rely on CalPERS for retirement planning,

22information, and services. CalPERS is the one and only source from which information about an

23individual's pension is available. Public employees explicitly and implicitly rely on CalPERS

24information when choosing a job, staying on a job, and planning for the future. The government

25

9 See Barbara A. v John G. (1983) 145 Cal App.3d 369, McDamelv Gile(\99l) 230 Cal.App3d 363 et al.

-6-


15

18

19

20

21

22

24

25

had an ongoing duty to properly discharge its obligations ... that was not limited by statute. City

of Oakland v. Public Employees'Retirement System (App. 3 Dist. 2002) 115 Cal.Rptr.2d 151, 95

Cal.App.4th 29, rehearing denied, review denied.

Two of the most important life decisions are (i) choosing and continuing on a job and (ii)

calculating your retirement requirements. To public employees, pension benefits are a hugely

important part of compensation and perhaps the most attractive aspect of public employment.

However, to discover after your working life has ended that CalPERS has misinformed you for

oyears and that your benefits/or the rest of your life are 50% less than previously informed is

9simply shocking and egregious. Then to have CalPERS litigate that you have no recourse to sue

10for monetary damages (when there is no other true remedy available) is simply a travesty.

11Analogy to Salahutdin et al Duties.

12Although there are many special relationships with heightened fiduciary or other duties

13

that lead to money damages for breach, the relationship between a public employee and14

CalPERS is heightened and more similar to this analysis:

It is not disputed that current law requires a broker to disclose to a buyer materialdefects known to the broker but unknown to and unobservable by the buyer. (Cooper v. Jevne (1976) 56 Cal.App.3d 860, 866 [128 Cal.Rptr. 724]; Lingsch v.

17 Savage (1963) 213 Cal.App.2d 729, 733 [29 Cal.Rptr. 201, 8 A.L.R.3d 537]; seealso regulations of the Department of Real Estate set forth in Cal. Admin. Code,tit. 10, § 2785, subd. (a)(3).) The Cooper case contains the most complete judicialarticulation of the rule: 'It is the law of this state that where a real estate broker oragent, representing the seller, knows facts materially affecting the value or thedesirability of property offered for sale and these facts are known or accessibleonly to him and his principal, and the broker or agent also knows that these factsare not known to or within the reach of the diligent attention and observation ofthe buyer, the broker or agent is under a duty to disclose these facts to the buyer. (Lingsch v. Savage [1963] 213 Cal.App.2d ...).' (56 Cal.App.3d atp 866.) If abroker fails to disclose material facts that are known to him he is liable for theintentional tort of 'fraudulent concealment'or 'negative fraud.' (Warner Const.Corp v. City of Los Angeles (1970) 2 Cal.3d 285, 293-294 [85 Cal.Rptr. 444, 466P.2d 996]; Cooper v. Jevne, supra., 56 Cal.App.3d at p. 866; Lingsch v. Savage,supra., 213 Cal.App.2d at p. 735-736.) (lc)As noted, however, appellant'sliability was here grounded on negligence rather than fraud. The issue, then, is

-7-


whether a broker is negligent if he fails to disclose defects which he should have1 discovered through reasonable diligence. Stated another way, we must determine

whether the broker's duty of due care in a residential real estate transaction inclu-des a duty to conduct a reasonably competent and diligent inspection of propertyhe has listed for sale in order to discover defects for the benefit of the buyer.

Admittedly, no appellate decision has explicitly declared that a broker is under aduty to disclose material facts which he should have known. We conclude,

5 however, that such a duty is implicit in the rule articulated in Cooper and Lingsch,which speaks not only to facts known by the broker, but also and independently to

6 facts that are accessible only to him and his principal. ( Cooper, supra., 56Cal.App.3d at p. 866; Lingsch, supra., 213 Cal.App.2d at p. 735, italics added.)

As one commentator has observed: 'Real estate brokers are often in a very8 commanding position with respect to both sellers and buyers of residential

property. The real estate broker's relationship to the buyer is such that the buyer9 usually expects the broker to protect his interests. This trust and confidence

derives from the potential value of the broker's service; houses are infrequently10 purchased and require a trained eye to determine value and fitness. In addition,

financing is often complex. Unlike other commodities, houses are rarelypurchased new and there are virtually no remedies for deficiencies in fitness. Insome respects the broker-buyer relationship is akin to the attorney-clientrelationship; the buyer, like the client, relies heavily on another's acquired skilland knowledge, first because of the complexity of the transaction and secondbecause of his own dearth of experience.' (Comment, A Reexamination of the

,4 Real Estate Broker-Buyer-Seller Relationship (1972) 18 Wayne L.Rev. 1343.)Thus, as stated by Judge Cardozo, as he then was, in a different but still relevant

15 context: 'The real estate broker is brought by his calling into a relation of trustand confidence. Constant are the opportunities by concealment and collusion to

16 extract illicit gains. We know from our judicial records that the opportunities havenot been lost.... He is accredited by his calling in the minds of the inexperiencedor the ignorant with a knowledge greater than their own.' ( Roman v. Lobe (1926)243 N.Y. 51, 54-55 [152 N.E. 461, 462-463; 50 A.L.R. 1329, 1332] quoted in

18 Richards Realty Co. v. Real Estate Comr. (1956) 144 Cal.App.2d 357, 362 [300P.2d 893]; see also Jacobson, Broker's Liability for Sale of Defective Homes(1977) 52 L.A. Bar J. 346, 347, 353 and Note, Real Estate Brokers' Duties to

20 Prospective Purchasers (1976) B. Y. U. L. Rev. 513,514-515.)

Definition of the broker's duty to disclose as necessarily including the response-bility to conduct a reasonable investigation thus seems to us warranted * 101 by

22 the pertinent realities. Not only do many buyers in fad justifiably believe theseller's broker is also protecting their interest in securing and acting upon accurate

23 information and rely upon him, but the injury occasioned by such reliance, if it bemisplaced, may well be substantial. Easton v. Strassburger (1984)152 Cal.App.3d

24

25


1

2

Inform, To Disclose, and To Account3

11

12

13

14

15

16

17

20

21

22

90, 199 Cal.Rptr. 383, 46 A.L.R.4th 521. See Salahutdin v. valley of California(1994) 24 Cal.App.4th 555, 29 Cal.Rptr.2d 46310

Common Law of Trusts and Fiduciary Duties and Money Damages for Violation of Duty to

A 1908 California case referenced the history and common law of a duties (i) to account;

(ii) to inform; and (iii) to disclose.11. Trustees are under an obligation to render to their

beneficiaries a full account of all their dealings with the trust fund (J Pom. Eq. Jur. § 1063; 28

Am. & Eng. Ency. L. [2d Ed.] 1076), and where there has been a negligent failure to keep true

accounts, or a refusal to account, all presumptions will be against the trustee upon a settlement

(Lupton v. White, 15 Ves. 432, 440; Blauvelt v. Ackerman, 23 N. J. Eq. 495; Landis v. Scott, 32

Pa. 495 See also 2 Beach on Trusts, § 522; In re Fish [1893], 2 Ch. 413, 426; Ottley v. Gilby, 8

many other California cases. 12

10 "In addition to the traditional liability for intentional or actual fraud, a fiduciary is liable to his principal forconstructive fraud even though his conduct is not actually fraudulent. Constructive fraud is a unique species of fraudapplicable only to a fiduciary or confidential relationship." (2 Miller & Starr, California Real Estate (2d ed. 1989) §3:20, p. 119, fti. omitted.) "[A]s a general principle constructive fraud comprises any act, omission or concealmentinvolving a breach of legal or equitable duty, trust or confidence which results in damage to another even though theconduct is not otherwise fraudulent Most acts by an agent in breach of his fiduciary duties constitute constructivefraud. The failure of the fiduciary to disclose a material fact to his principal which might affect the fiduciary'smotives or the principal's decision, which is known (or should be known) to the fiduciary, may constituteconstructive fraud. Also, a careless misstatement may constitute constructive fraud even though there is nofraudulent intent. " (Id., at pp. 120-121, fns. omitted.) "A broker who is merely an innocent conduit of the seller'sfraud may be innocent of actual fraud [citations], but in this situation the broker may be liable for negligence on aconstructive fraud theory if he or she passes on the misstatements as true without personally investigating them.

19 [Citations.]" (California**467 Real Property Remedies Practice (Cont.Ed.Bar 1982) § 3.36, p. 88.) "[T]he brokerhas a fiduciary duty to investigate the material facts of the transaction, and he cannot accept information receivedfrom others as being true, and transmit it to the principal, without either verifying the information or disclosing tothe principal that the information has not been verified. Because of the fiduciary obligations of the broker, theprincipal has a right to *563 rely on the statements of the broker, and if the information is transmitted by the brokerwithout verification and without qualification, the broker is liable to the principal for negligent misrepresentation."(2 Miller & Starr, supra, § 3.17, pp. 97-98, iris, omitted.)11 The duties to inform, to disclose, and to account were even available in Roman law (Justinian Digest 10.3)12 California common law holds many trust cases. The trustee is chargeable with the whole of the estate committedto his or her hands,[ McAdoo v. Sayre, 145 Cal. 344, 78 P. 874 (1904).and must account for all moneys received anddisbursed.[ In re Evans' Estate, 62 Cal. App. 2d 249. Under California law, the duty to account is a continuing one,

24 so long as the trust remains in effect.[ Knapp v Knapp, 15 Cal. 2d 237; In re De Laveaga's Estate, 50 Cal 2d 480. Atrustee has the duty to the beneficiaries to give them upon their request at reasonable times complete and accurate

25 information relative to the administration of the trust. 2 Scott on Trusts, s 173, p. 922; 4 Bogert on Trusts andTrustees, s 961, p. 233; Bonev. Hayes, 154 Cal. 759, 766-767, 99 P. 172 Kinert v Wright, 81 Cal.App.2d 919, 924-926, 185 P.2d 364; Bay drop v. Second Nat Bank, 120 Conn. 322, 180 A. 469, 472 In re Wheeler's Estate, 287 Pa.

-9-


1In English common law, a residuary legatee, and a legatee whose legacy is payable, but is not

3

4

5

6

7

8

15

16

Common Law History.

going to be immediately paid, are entitled to be informed as to the state of investment of the

assets, and generally to information as to the outstanding liabilities, and to see the accounts, and

also to have copies at their own expense, but not at the expense of the estate (Ottley v Gilby,

1845, 8 Beav. 602; 50 E. E. 237 ; In re Dartnall, [1895] 1 Ch. 474) Theobald on Wills, 1905 ed.;

Seton on Decrees, vol. ii., title " Administration ;" Williams on Executors, 1905 ed., vol. ii. See

13Robertson, Encyclopaedia of the Laws of England Vol. VIII, 2nd Ed. Rev. and Enlarged 1907

9California Cases.

10As far as the other California cases about fiduciary duties including the delegation of

11duties, where a trustee has properly delegated14 a matter to an agent, co-trustee, or other person,

12

the trustee has a duty to exercise general supervision over the person performing the delegated13

matter Prob. Code, § 16012, subd. (b).and may be liable for a failure to so supervise. 60 Cal. Jur.14

3d Trusts § 153 See In re Whitney's Estate, 78 Cal. App. 638, 248 P. 754 (1st Dist. 1926). A

trustee must use at least that degree of care and diligence that an ordinarily prudent person would

17

19

20

21

22

24

25

416, 135 A. 252, 253 Equitable Trust Co. v Schwebel, 32 F.Supp. 241, 243. If the trustee refuses to account, ornegligently fails to keep true accounts, all presumptions are against him or her on a settlement.[ Bone v Hayes, 154Cal. 759, 99 P. 172 (1908); Purify v Johnson, 174 Cal. 521, 163 P. 893 (1917); Blackmon v Hale, 1 Cal. 3d 548, 83Cal. Rptr. 194, 463 P.2d 418 (1970).The trustee's good faith cannot save him or her from the consequences of his orher neglect to keep full and accurate accounts.[ Purdy v. Johnson, 174 Cal. 521, 163 P. 893 (1917).]13 The Probate Code requires the trustee to keep the beneficiaries of the trust reasonably informed of the trust and itsadministration. Prob Code. § 16060.The trustee must also provide the beneficiary, on his or her reasonable request,with a report of information about the assets, liabilities, receipts, and disbursements of the trust, the acts of thetrustee, and the particulars relating to the administration of the trust relevant to the beneficiary's interest, includingthe terms of the trust. Prob. Code. § 16061.14 (Second) of Trusts § 225 (2) (1957)(trustee subject to liability to beneficiary for act of agent that, if done bytrustee, would constitute a breach of trust if the trustee, inter aha, "directs or permits" or "approves or acquiesces inor conceals" the agent's act); GEORGE G. BOGERT &GEORGE T. BOGERTJHE LAW OF TRUSTS&TRUSTEES § 543(V), at 449 (2nd ed. rev. 1993)("[i]f the disloyalty of the trustee consists in authorizing hisagents to engage in disloyal transactions with respect to the trust property (for example, by purchasing claimsagainst the trust at a discount and collecting them at a higher figure), the trustee may be compelled to pay into thetrust fund an amount equal to the profits made by the agents, although the agent did not profit in any way by theiractivities"). Bogert & Bogert characterize this outcome as involving a "penalty" that emphasizes "the preventativeand deterrent features" of relief, as opposed to "the mere preservation of the trust property by an award of damages."Breach of Fiduciary Duty On Justifiable Expectations of Loyalty and Their Consequences Deborah A. DeMott,Duke Law School Year 2006 Paper 47

-10-


1

2

Cal. 467, 52 P. 822 (1898).3

4

5

6

7

9

10

11

12

13

22

23

24

25

use in connection with the particular transaction in the management of his or her own affairs or

in the care of his or her own property under the same circumstances. Bermingham v. Wilcox, 120

City of Oakland v. Public Employees Case Law: CalPERS has already been adjudicated to owe

fiduciary duties to members. Now CalPERS seeks to revise or to overturn this case.

PERS has a fiduciary duty to provide timely and accurate information to itsmembers. (See In re Application of Smith (March 31, 1999) PERS Prec. Dec. No.99-01 ["The duty to inform and deal fairly with members also requires that theinformation conveyed be complete and unambiguous"]; see also Boxx v. Board ofAdministration (1981) 114 Cal.App.3d 79, 90, 170 Cal.Rptr. 538 [once localagency entered into PERS contract, it, too, had duty to properly classifyemployee] (Boxx}.) City of Oakland v. Public Employees retirement System, 95Cal.App.4th 29, 115 Cal.Rptr.2d 151 (2002)

Courts must vigilantly protect rights of pensioners against powerful retirement boards.

Board of Retirement v. Santa Barbara County Grand Jury (App. 2 Dist. 1997) 68 Cal.Rptr.2d

607, 58Cal.App.4thll85.

CalPERS Duties to Correct Omission or Errors.

CalPERS now seeks to revise its duties to correct errors or omissions:

16"the board shall correct all actions taken as a result of errors or omissions of...any contracting agency ... or this system." (GC§ 20160, subd. (b).) Such an errorordinarily should be corrected retroactively, "such that the status, rights, andobligations of all parties ... are adjusted to be the same that they would have beenif the act that would have been taken, but for the error or omission, was taken atthe proper time." (GC§ 20160, subd. (e).) The PERS Board's (and the City's )obligations to PERS members lasts throughout their memberships or theirlifetimes if they have retired. (GC§ 20164. subd. (a).) The California Constitutioncharges that the "board's duty to its participants ... shall take precedence over any

21 other duty." (Cal. Const., art. XVI, § 17(b).) City of Oakland v Public EmployeesRetirement System, 95 Cal.App.4th 29, 115 Cal.Rptr.2d 151

Plain Meaning of Amendment Prop. 162 (1992) 'The California Pension Protection Act of 1992.'

"Section Two. Findings and Declarations. The People of the State of Californiahereby find and declare as follows:"(a) Retired citizens depend upon their pension benefits to meet basic necessitiessuch as food and shelter during their retirement years. For many elderly citizens

-11-


1

2

3

4

5

6

7

8

9

16

17

18

19

24

25

who are not eligible to participate in Social Security, pension benefits are theirsole source of financial support and security...."(h) In order to protect pension benefits and to avoid the prospect of higher taxes,the People must act now to shield the pension funds of this state from abuse,plunder and political corruption.

"Section Three. Purpose and Intent. The People of the State of California herebydeclare that their purpose and intent in enacting this measure is as follows:"(a) To protect pension funds so that retirees and employees will continue to beable to enjoy a basic level of dignity and security in their retirement years...."(d) To ensure that the assets of public pension systems are used exclusively forthe purpose of efficiently and promptly providing benefits and services toparticipants of these systems, and not for other purposes."(g) To affirm the legal principle that a retirement board's duty to itsparticipants and their beneficiaries takes precedence over any other duty."

The Ballot Pamphlet accompanying Proposition 162 warned "The requirement that10

pension system boards give highest priority to providing benefits to members and their11

beneficiaries could result in higher costs to employers." (See Ballot Pamp., Gen. Elect. (Nov. 3,12

1992) Analysis of Leg. Analyst, p. 37.) City of Oakland v. Public Employees retirement System,13

95 Cal.App.4th 29, 115 Cal.Rptr.2d 151 (2002) EXHIBITS 1 and 2 attached and incorporated.14

Constitution is Applicable to CalPERS15

Although it should not have to be said, the Constitution applies to CalPERS15: Every constitu-

tional provision is self-executing to the extent that everything done in violation of it is void.

Katzberg v. Regents of University of California (2002) 127 Cal.Rptr.2d 482, 29 CaUth 300..

Constitutional Tort Theory

20

action for money damages on the basis of an alleged violation of a provision of the California

In California ,the constitutional tort theory determines whether an individual may bring an

21

22Constitution, in the absence of a statutory provision or an established common law tort

2315 All branches of government [including CalPERS] are required to comply with constitutional directives orprohibitions. County of San Diego v. State (App. 4 Dist. 2008) 79 CaI.Rptr.3d 489, 164 Cal.App.4th 580, reviewdenied. A provision is self-executing if it supplies a sufficient rule by which the right given may be enjoyed andprotected, or the duty imposed enforced; and is not when it merely indicates principles without laying down rules bywhich they may be given force of law. Older v. Superior Court in and for Kern County (1910) 157 Cal. 770, 109 P.478.

- 12-


1

2

3

4

5

6

7

8

9duties in the constitution explicitly and implicitly authorize an action for damages, there is intent

10to put benefits first and there is no intent to withhold a damages action. Katzberg then reads:

11", and, second, if no affirmative intent either to authorize or to withhold a

12

13

14

22

23

24

25

authorizing such a damage remedy for the constitutional violation. (Degrassi, supra, 29 Cal.4th

at p. 335, 127 Cal.Rptr.2d 508, 58 P.3d 360.)

The following framework is appropriate for determining the existence of adamages action to remedy an asserted constitutional violation: first, courts shouldseek evidence from which they may find or infer, within the constitutionalprovision at issue, an affirmative intent either to authorize or to withhold adamages action, should consider the language and history of the constitutionalprovision at issue, including whether it contains guidelines, mechanisms, orprocedures implying a monetary remedy, as well as any pertinent common lawhistory Katzberg v. Regents of University of California, 58 P.3d 339 Cal., 2002See also County of San Diego v State (App. 4 Dist. 2008) 79 Cal.Rptr.3d 489,164 Cal.App.4th 580, review denied.

In this case, the language, the common law history, and plain meaning of trust and fiduciary

damages remedy is found, courts should undertake the constitutional tort analysisof Bivens and its progeny and consider the existence of an adequate remedy, theextent to which a constitutional tort action would change established tort law, andthe nature and significance of the constitutional provision; disapproving LagunaPublishing Co. v. Golden Rain Foundation, 131 Cal.App.3d 816, 182 Cal.Rptr.813 Fentonv. Groveland Community Services Dist., 135 Cal.App.3d 797, 185Cal.Rptr. 758

16Without receiving damages for breach of fiduciary duties, Chaidez is without any remedy even

17though the damages were solely caused by CalPERS. Equitable estoppel does not apply to help

18Chaidez. After retirement, there is no other adequate remedy to allow Chaidez the chance to earn

19a higher pension or increase his retirement allowance. He cannot viably find a third career to

20

offset the seven or more years of reduced formula. If it is considered a constitutional tort action,

finding damages for breach of fiduciary duty would reinforce and not change established tort law

at all. Clearly the nature of the 1992 constitutional Amendment was to put employees and their

retirements first ( above CalPERS' interests) and the 1992 amendment was significant enough to

warrant a Constitutional Amendment by initiative, which in California is significant.

-13-


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

CalPERS' argument that (if damages are allowed for breach of fiduciary

duties) CalPERS "would be inundated with claims by participants seeking to recover

damages" is a judicial admission that CalPERS is breaching its fiduciary duties on a

large scale. It must be held liable in order to have incentive to change and to stop

misinforming Members. In the end

Courts, exercising their authority over the common law, may, in appropriatecircumstances, recognize a tort action for damages to remedy a constitutionalviolation. Restatement (Second) of Torts §§ 874A, 874A comment. Katzberg v.Regents of University of California, 58 P.3d 339 Cal., 2002

CalPERS 'WRONG ARGUMENTS ABOUT LEAVE TO AMEND

Court Granted Chaidez Leave to Amend Re Declaration of Constitutionality of GC20039. As applied: CalPERS Wishes to Strike the Amendment that the Court Allowed

Even though Chaidez was granted leave to amend the Request for Declaratory

relief of the Constitutionality of GC 20039, CalPERS wishes to strike page 37 line 18 to

"Declare GC 20039 unconstitutional as applied to Chaidez."Clearly Chaidez amendment

is entirely correct and CalPERS motion must be denied, (see Pg 4, Minute Order of

10/24/08, Request for Declaratory Relief- 3rd Cause of Action).

Court's Grant of Leave to Amend Re Declaration of Constitutionality of GC 20039,Equal Protection, See Concurrently Filed Opposition to Demurrer, incorporated in full

CalPERS in addition argues that it is improper to amend the Equal Protection

Cause of Action to include an "as applied" violation. However, this amendment is to

further and remain consistent with the Court's grant of leave to amend the

Unconstitutionality issue as Declaratory Relief. Chaidez has so amended, (see Pg 4 of

Minute Order of 10/24/08 Request for Declaratory Relief- 3rd Cause of Action).

Any formal issue was for consistency. Whether stylized as Declaratory relief or

the unconstitutional as a violation of Equal Protection as applied to Chiadez", the court

granted leave to amend especially in furtherance of justice, as required here.

- 14-


7

9

10

11

12

13

23

24

25

1

2

3

4

5Fiduciary Duties Based in Constitution. CalPERS Wishes to Strike Damages

6

Sufficient Facts Alleged to Support "As Applied" Challenge, See Opp to Demurrer Attc

Chaidez has plead sufficient facts to support an "as applied" challenge. For example, "Had

Chaidez chosen to work as a state janitor rather than hold public office, Chaidez would have

been able to accrue a higher pension." GC 20039 violated Chaidez's protected rights.

Court's Grant of Leave to Amend to Assert a Cause of Action Based on Breach of

CalPERS seeks to strike all language relating to damages for breach of CalPERS'

constitutional fiduciary duties. However, the Court expressly granted leave to amend to

assert a cause of action for breach of CalPERS constitutional fiduciary duties, (see Pg 7

last line Minute Order of 10/24/08 Court Ruling On Submitted Matter).CalPERS alleges

that it is improper to amend to include a request for money damages, et al, under the

cause of action for breach of CalPERS' Constitutional fiduciary duties. CalPERS wants

to allow only a cause of action without any effect. Surely, every cause of action must be

able to request relief (i.e. money). Chaidez has requested relief commensurate with the

cause of action and which is implicit and explicit part of amending to allow a cause of

16action for breach of CalPERS constitutional fiduciary duties.

17CalPERS Motion to Strike Specific Lines, See Opp to Demurrer, incorp. In full herein

18CalPERS moves to strike 12 sections of Chaidez's Amended complaint that

19respond to the Court's grant for leave to amend. Each of CalPERS' request is wrong and

20

improper. Each of these should be denied.

22 CONCLUSION

The court should deny each and every part of CalPER^ Motion to Strike.

DATED: February 12, 2009 BY:ICHAKLJENSEN SB No 176813

(/- 15-


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

PROOF OF SERVICEI am an active member of the State Bar of California and am not a party to this action. My

business address is Law Offices of John Michael Jensen, 11500 West Olympic Blvd., Suite 550, LosAngeles CA 90064;

On February if, 2009,1 served the OPPOSITION TO MOTION TO STRIKE, CHANGEOF ADDRESS, OPPOSITION TO DEMURRER, REQUEST FOR JUDICIAL NOTICE,EXHIBITS and letter attached by the method indicated below, on the parties or counsel for parties inthis action listed below

James ZappMichael NewmanPAUL HASTINGS et al515 South Flower Street, 25th FloorLos Angeles CA 90071-2228

BY U.S. MAILBy placing D the original / a a true copy thereof enclosed in asealed envelope(s), with postage fully prepaid, addressed as per theattached service list, for collection and mailing at Robert! Jensen,LLP., following ordinary business practices. I am readily familiarwith the firm's practice for collection and processing of documentfor mailing Under that practice, the document is deposited with theUnited States Postal Service on the same day in the ordinary courseof business I am aware that upon motion of any party served,service is presumed invalid if the postal cancellation date or postagemeter date on the envelope is more than one day after date ofdeposit for mailing contained in this affidavit

y BY OVERNIGHT DELIVERYBy delivering the documents) listed above in a sealed envelope(s)or package(s) designated by the express service carrier, withdelivery fees paid or provided for, addressed as per the attachedservice list, to a facility regularly maintained by the express servicecarrier or to an authorized courier or driver authorized by theexpress service carrier to receive documents.

BY PERSONAL SERVICEa By personally delivering the.document(s) listed above to the

offices at the addressee(s) as shown on the attached service listn By placing the document(s) listed above in a sealed

envelope(s) and instructing a registered process server to personallydelivery the envelope(s) to the offices at the address(es) set forth onthe attached service list. The signed proof of service by theregistered process server is attached.

BY ELECTRONIC SERVICE(via electronic filing service provider)

By electronically transmitting the document(s)listed above to LexisNexis File and Serve, anelectronic filing service provider, atwww.fileandserve.lexisnexis.com pursuant to theCourt's Order mandatingelectronic service See Cal. R. Ct. R. 2053, 2055,2060. The transmission was reported as completeand without error

BY ELECTRONIC SERVICE(to individual persons)

By electronically transmitting the document(s)listed above to the email address(es) of theperson(s) set forth on the attached service list.The transmission was reported as complete andwithout error See Cal. Rule of Court 2060.

BY FACSIMILEBy transmitting the document(s) listed above fromRoberti Jensen, LLP., to the facsimile machinetelephone number(s) set forth in the Proof ofService Service by facsimile transmission wasmade pursuant to agreement of the parties,confirmed in writing.

I declare under penalty of perjury under the laws of the State of California that the foregoingis true and correct.

-16-


attorneys for petitioners - john jensen of fiduciary duties by calpers... · los angeles ca 90064...

Documents