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Fasolo v. Board of Trustees of Division of Pensions of New Jersey Treasury

Decided: August 1, 1983.


On appeal from a Final Determination of the Board of Trustees of Public Employees' Retirement System.

Matthews, Antell and Francis. The opinion of the court was delivered by Matthews, P.J.A.D.


[190 NJSuper Page 575] In 1981 this court found that PERS had required Fasolo to overpay certain contributions into the PERS fund and that PERS had also underpaid Fasolo for pension payments due to him. The matter was remanded to PERS for computation of the appropriate pension and for adjustments in his contributions. During the period of recalculations Fasolo requested that he be paid the interest that his improperly retained moneys had earned while in the PERS fund. The Board of Trustees refused to pay that interest as well as any postjudgment interest. It is from that determination that Fasolo now appeals. He essentially argues that the equities justify an award of pre and postjudgment interest. Respondent argues that the doctrine of res

judicata bars Fasolo from raising the issue of interest in this second appeal and, alternatively, that interest cannot be awarded against a governmental entity in the absence of statute.

On July 2, 1981 we decided Fasolo v. Pensions Div. Trustees, 181 N.J. Super. 434 (App.Div.1981). In that appeal from a decision of the Board of Trustees of the Public Employees Retirement System (PERS), we addressed the issue of whether certain payments to Fasolo, an attorney of New Jersey, by his public employers, should be considered "compensation" for the purposes of computing his pension payments on retirement. Id. at 436. After deciding which of the specific payments made to Fasolo by certain municipalities would be considered compensation, the court remanded the matter "to PERS for computation of the appropriate pension and for the adjustments in Fasolo's contributions to be made as required by this opinion." Id. at 445.

On October 1, 1981 Fasolo wrote a letter to the Board of Trustees of PERS stating that he had just received a check of over $32,000. He stated that the amount did not appear to be accurate but that he would deposit the check "without prejudice and under protest for the purpose of reserving my right . . . ." Fasolo continued that he particularly reserved his rights to "the interest on all sums withheld from me prior and subsequent to the Superior Court's judgment, or to the income, in lieu of interest, derived from my aforesaid funds retained by your Division in a public trust for the benefit of me."

In its letter of February 4, 1982 to Fasolo, the Board of Trustees denied his request for interest "based upon the fact that there is no provision in N.J.S.A. 43:15A-1 et seq. to pay interest on the refund of moneys other than those so specified when a member withdraws from the retirement system." On March 16, 1982 Fasolo notified the Board of Trustees that he was thereby appealing from the Board's denial of his request for both prejudgment and postjudgment interest.

On July 2, 1982 the Board of Trustees informed Fasolo that it was specifically denying his request for a hearing on the issue of interest on moneys returned. The Board stated that "no substantial facts are in dispute" that would necessitate a hearing and they notified Fasolo of his right to appeal to this court.

It is necessary for the understanding and resolution of this case to review some of the facts from Fasolo's earlier appeal. Between 1951 and 1974 Fasolo was at various times employed by the Boroughs of Demarest and New Milford as borough attorney and additionally by Demarest as sewer attorney. 181 N.J. Super. at 436. Each municipality paid Fasolo as borough attorney a retainer fee. Id. at 438. He additionally received certain "vouchered fees" for work as borough attorney. As sewer attorney he received a salary. Id.

Fasolo first applied for membership in PERS in April 1964. He was admitted on the basis of certain of these positions. Id. at 436-437. The record indicated numerous discussions between PERS and Fasolo before 1975 with respect to which of the moneys he had received from the municipalities would be treated as compensation within N.J.S.A. 43:15A-6 r for the purposes of determining his pension. Id. at 438. As a result of these discussions, in December 1974 PERS advised Fasolo that he owed over $12,000 for contributions on previously unassessed income. It appears that these payments were for the vouchered fees as well as part of his salary as sewer attorney. Fasolo made the payments within three weeks of the request. Id. at 438.

Fasolo reached retirement age in May 1975 and submitted a retirement application in June 1975. In January 1976 his retirement was approved by PERS retroactive to August 1975. Ibid. During that same time PERS requested a formal opinion from the Attorney General as to the status of Fasolo's contributions. The Attorney General advised PERS that the salary as sewer attorney and the voucher fees should not be considered for pension credit. Id. at 439. PERS adopted the Attorney General's

opinion and adjusted Fasolo's pensions accordingly. Id. Fasolo did not accept the ruling of PERS and requested a hearing on the matter which resulted in a decision finding his $60,000 salary as sewer attorney was to be considered for pension purposes, but that the vouchered fee should not be considered such compensation. Id. at 439-440. PERS accepted the hearing officer's determination that vouchered fees were excluded and rejected his decision that the sewer attorney's salary should be included. Id. at 440. That decision was rendered in August 1980, five years after Fasolo had retired. He appealed from PERS' decision. Id.

In July 1981 we affirmed PERS' decision with respect to the vouchered fees and reversed with respect to the $60,000 sewer attorney fee. Id. at 444-445. Thus, the vouchered fees were excluded from, and the sewer attorney salary was included in the basis for pension computation. We remanded the matter to PERS for computation of the appropriate pension and account corrections. Id. at 445.

The following facts are extracted from a series of letters written by Fasolo and various members of the Division of Pensions included in the appellant's and respondent's appendices. Almost four weeks after we rendered our decision, Fasolo noted in a letter that he had been informed by the Division that nothing had been done regarding his matter and that his file could not be located. On September 1, two months after the decision, Fasolo again noted in a letter that he had received no information on his case from the Division. On September 9, the Secretary of PERS informed Fasolo that the recalculations were very involved but that he would be sent a check in the near future. On September 16 Fasolo was informed of the revised amounts to be included in his subsequent check but was not informed of the methods by which the Division arrived at these amounts. He was notified that a complete audit would be made of his account at a future date.

Fasolo responded on October 1 acknowledging the receipt of a check of $32,141.22 for pension arrearages but noted he had not received any statement or information as to the calculation of this amount. Fasolo informed the Division that he would deposit the check without prejudice and under protest and that he reserved the right to all other sums due him after an accurate audit had been made. He particularly reserved his right to the return of $13,000 that he paid in January 1975 at the specific request of the Division and also to prejudgment and postjudgment interest on all sums that had been withheld from him, or to the income, in lieu of interest, derived from his money retained by the Division. He asked for a conference with the person doing the computations as well as the attorney handling his matter "in order to try to resolve our problems." The Chief of the Bureau of Retirement responded by return mail. She noted that PERS had issued two checks to Fasolo in early 1977: $6,653, representing the difference between his excess contributions and overpayments previously made to him based on PERS' recalculations at that time; and $1,193 representing excess contributions for insurance benefits. She further noted that he had returned those checks to the Division. She again repeated that clarification of the amounts due could only be made after a complete audit had been made.

Fasolo responded on October 7 and supplied his estimates of the proper payments. He repeated that the delay was forcing him to incur interest payments on a bank loan and reasserted his request for a conference and for the interest and for pre and postjudgment interests. On October 15 Fasolo wrote to the deputy handling his matter. He repeated his previous request and asked for help in expediting his case. He reiterated his demand for the income earned on his money while it had been in the possession of the Board of Trustees.

On November 17 the Chief of the Bureau of Retirement notified Fasolo that the audit had been completed and informed him of the total amounts to be refunded to him. Fasolo apparently received a check for $13,017.77 approximately on December

1, 1981 for pension contributions he overpaid at the request of PERS in 1975. Again the method of calculating these amounts was not specified. Fasolo responded by letter on December 4 and re-established his particular requests that had been unanswered: a statement or a computer sheet of his account; the income that had been earned by the money he had overpaid into the fund in 1975; the income that had been earned by the pension arrearages due but not paid to him, and finally postjudgment interest on all money due him because of the unreasonable delay. On December 24 the Secretary of PERS expressed surprise that Fasolo alleged that there had been an unjust delay. On January 6, 1982 Fasolo responded to the Secretary with his first letter indicating his total outrage with the situation. He asked for prompt attention to the ...

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