ARIZONA STATE UNIVERSITY BOARD OF REGENTS, Plaintiff/Appellant,
ARIZONA STATE RETIREMENT SYSTEM, Defendant/Appellee.
from the Superior Court in Maricopa County No.
LC2012-000689-001 The Honorable Crane McClennen, Judge
Maledon PA, Phoenix By Thomas L. Hudson, Eric M. Fraser
Arizona State University, Office of General Counsel, Tempe By
Lisa K. Hudson Co-counsel for Plaintiff/Appellant
Arizona Attorney General's Office, Phoenix By Jothi
Beljan Counsel for Defendant/Appellee
Presiding Judge Peter B. Swann delivered the opinion of the
court, in which Judge Kent E. Cattani and Judge Donn Kessler
In Arizona State University v. Arizona State Retirement
System, 237 Ariz. 246 (App. 2015) (hereinafter
"ASU v. ASRS"), we held that the Arizona
State Retirement System ("ASRS") wrongly collected
$1, 149, 103 from Arizona State University (the
"University"). This appeal concerns the rate of
prejudgment interest that applies to ASRS's liability for
the refund. The superior court held that the refund was in
the nature of a "judgment, " and not a
"debt" - a distinction that determines the
applicable interest rate under A.R.S. § 44-1201. We
disagree, and hold that ASRS's over-collection of money
created a debt that was not dependent on the existence of a
judgment. We therefore reverse and remand for entry of
judgment with prejudgment interest computed at 10%.
AND PROCEDURAL HISTORY
The underlying litigation arose from an invoice ASRS sent to
the University for a purported actuarial unfunded liability
resulting from 17 employees' participation in the
University's termination incentive program. See
generally A.R.S. § 38-749; ASU v. ASRS,
237 Ariz. 246. ASRS determined the unfunded liability to be
$1, 149, 103 and demanded payment within 90 days. ASU v.
ASRS, 237 Ariz. at 249, ¶ 9. It also asserted under
§ 38-749 that ASU would owe ASRS 8% interest on any
"balance" until the $1, 149, 103 was paid in full.
The University paid the invoice and then pursued an
administrative appeal. Id. at 223, ¶ 9.
In ASU v. ASRS, we concluded that ASRS was required
to follow the Administrative Procedure Act's rulemaking
procedures before enforcing the policy under which it charged
the University. 237 Ariz. at 253-54, ¶ 32. We remanded
the case to the superior court with instructions "to
enter an order directing ASRS to refund $1, 149, 103 to the
University, with interest thereon if and as authorized by law
- an issue the superior court should address on remand."
Id. at 254, ¶ 33.
The superior court entered judgment for the original invoice-
$1, 149, 103 - together with prejudgment interest at the rate
of 4.25%. The only issue before us in this appeal is whether
the court chose the correct interest rate.
The parties agree that the interest rate is determined by
A.R.S. § 44-1201. That statute provides in pertinent
A. Interest on any loan, indebtedness or other obligation
shall be at the rate of ten per cent per annum, unless a
different rate is contracted for in writing, in which event
any rate of interest may be agreed to. Interest on any
judgment that is based on a written agreement evidencing a
loan, indebtedness or obligation that bears a rate of
interest not in excess of the maximum permitted by law ...