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09/18/97 TAKAYOSHI MATSUDA v. COOK COUNTY

September 18, 1997

TAKAYOSHI MATSUDA, APPELLEE,
v.
THE COOK COUNTY EMPLOYEES' AND OFFICERS' ANNUITY AND BENEFIT FUND ET AL., APPELLANTS.



Appeal from the Appellate Court for the First District; heard in that court on appeal from the Circuit Court of Cook County, the Hon. Everette A. Braden, Judge, presiding.

The Honorable Justice Heiple delivered the opinion of the court.

The opinion of the court was delivered by: Heiple

The Honorable Justice HEIPLE delivered the opinion of the court:

At issue is whether appellants, the Cook County Employees' and Officers' Annuity and Benefit Fund and the Retirement Board of the County Employees' Annuity and Benefit Fund of Cook County (hereinafter the Funds), during the period relevant to this dispute, could set up an excess benefit fund as required by section 1-116 of the Illinois Pension Code (40 ILCS 5/1-116 (West 1996)) without violating section 415 of the Internal Revenue Code (26 U.S.C. § 415 (1988)). The trial court held that the Funds could not and granted their combined motion for summary judgment. The appellate court reversed. 278 Ill. App. 3d 378. For the reasons that follow, we affirm the appellate court's decision.

BACKGROUND

Appellee, Dr. Takayoshi Matsuda, an employee of Cook County Hospital for 24 years, retired on May 29, 1993, at age 55. As an employee of Cook County, Dr. Matsuda was a contributing member of the Annuity and Benefit Fund, an annuity and benefit fund established and operated under article 9 of the Illinois Pension Code. 40 ILCS 5/9-101 et seq. (West 1992).

On September 16, 1992, the Illinois General Assembly enacted section 9-134.2 of the Illinois Pension Code to provide early retirement incentives to certain members of the Annuity and Benefit Fund. Section 9-134.2 specifically provided that a contributing member would receive a specified increase in his retirement annuity without any reduction in benefits otherwise caused by retiring below age 60 if that member: (1) filed a written application with the Retirement Board before May 1, 1993, requesting early retirement benefits; (2) elected to retire between December 1, 1992, and May 29, 1993; (3) attained the age of 55 on or before the date of retirement; and (4) provided at least 10 years of service prior to retirement. 40 ILCS 5/9-134.2 (West 1996).

In November of 1992, the Funds mailed to Dr. Matsuda unsolicited information regarding the requirements and advantages of the new early retirement incentives, including an estimated personal benefit statement subject to final audit. On April 30, 1993, Dr. Matsuda, who met all the necessary requirements, filed an early retirement application stating that he would retire on May 29, 1993. The Funds subsequently sent Dr. Matsuda an estimated personal benefit statement dated May 13, 1993, calculating that if Dr. Matsuda took early retirement and made additional contributions of $60,317.84 his monthly annuity would amount to $9,967.31. On May 26, 1993, Dr. Matsuda contributed $60,317.84, and three days later he retired.

Several months later, the Funds notified Dr. Matsuda that his monthly annuity would amount to $7,219.85, substantially lower than the previous estimate of $9,967.31, because of the limitations set forth in section 415 of the Internal Revenue Code for qualified retirement plans. 26 U.S.C. § 415 (1988). On December 23, 1993, Dr. Matsuda filed a complaint against the Funds in the circuit court of Cook County, alleging, inter alia, that the Funds violated section 1-116 of the Illinois Pension Code by failing to establish an excess benefit fund to pay out his earned benefits that exceeded any limits set by section 415 of the Internal Revenue Code. The Funds responded by filing a joint motion for summary judgment in which they asserted that, as a matter of federal law, they were prohibited from establishing an excess benefit fund. The trial court granted the Funds' motion for summary judgment. The appellate court reversed and remanded, holding that section 415 of the Internal Revenue Code did not prohibit the Funds from setting up an excess benefit fund as required by section 1-116 of the Illinois Pension Code. 278 Ill. App. 3d 378.

Subsequent to this court's granting the Funds' petition for leave to appeal to this court, Congress amended section 415 of the Internal Revenue Code by adding section 415(m). 26 U.S.C. § 415(m) (1997). Both parties agree that section 415(m) of the Internal Revenue Code permits the Funds to provide Dr. Matsuda with benefits in excess of section 415's limitations. Moreover, both parties agree that Congress indicated that section 415(m) would apply beginning January 1, 1995, or 19 months after Dr. Matsuda retired. At issue, then, is whether section 415 prohibited the Funds from establishing an excess benefit fund pursuant to section 1-116 of the Illinois Pension Code during this interim 19-month period.

ANALYSIS

We commence by noting that interpreting or construing a statute is a matter of law for the court and appropriate for summary judgment; however, such a drastic measure should be granted only if the movant's right to judgment is clear and free from doubt. Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill. 2d 90, 102, 180 Ill. Dec. 691, 607 N.E.2d 1204 (1992). To this end, we conduct a de novo review. Delaney v. McDonald's Corp., 158 Ill. 2d 465, 467, 199 Ill. Dec. 696, 634 N.E.2d 749 (1994).

Article 9 of the Illinois Pension Code governs both the Fund and the Retirement Board. See 40 ILCS 5/9-101 et seq. (West 1992). Section 9-150(3) provides:

"Notwithstanding any other provision of this Article, any benefit payable under this Article which would otherwise exceed the maximum limitations on benefits provided by 'qualified plans' as set forth in Section 415 of the federal Internal Revenue Code of 1986, as now or hereafter amended, or any successor thereto, shall be paid ...


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