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Dimaria v. Board of Trustees of Public Employees'' Retirement System

Decided: May 31, 1988.

JOHN DIMARIA, PLAINTIFF-APPELLANT,
v.
BOARD OF TRUSTEES OF THE PUBLIC EMPLOYEES' RETIREMENT SYSTEM, RESPONDENT-RESPONDENT



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

Pressler, Bilder and Skillman. The opinion of the court was delivered by Skillman, J.A.D.

Skillman

Appellant intermittently held the position of borough attorney for the Borough of Lodi on a part-time basis for approximately twenty-five years. From 1980 to 1983 he received an annual salary of $18,000. Appellant also billed the borough on a voucher basis for any legal services which he rendered in addition to attendance at meetings, preparation of routine documents and legal advice. In October 1983 the Lodi Borough Council adopted an ordinance providing for the borough attorney to be paid a fixed annual salary of $55,000 per year for all the borough's legal services, commencing January 1, 1984. At that time, appellant was sixty-three years old. On January 1, 1986, appellant retired. A few months later, the Borough of Lodi adopted an ordinance which provided that the new borough attorney would be compensated by fees approved by the governing body.

In anticipation of his retirement, appellant applied to the Public Employees' Retirement System (PERS) for a pension based on the $55,948 salary earned during his last year as borough attorney.*fn1 However, the Board of Trustees of PERS (the Board) voted to limit the "compensation" to be used for calculating appellant's pension to the $18,000 salary paid him from 1980 to 1983 plus 15% increases for 1984 and 1985. The Board based its decision upon N.J.S.A. 43:15A-6(r), which provides that an employee's "compensation" for purposes of calculating the size of a PERS pension ". . . shall not include individual salary adjustments which are granted primarily in anticipation of the member's retirement."

At appellant's request, a hearing was held before an Administrative Law Judge (ALJ). On June 25, 1987, the ALJ issued an initial decision recommending that appellant's pension should be calculated on the basis of his last year's salary of $55,948. The

ALJ concluded that an administrative regulation adopted by the Board precluded it from even considering whether the increase in appellant's salary was "granted primarily in anticipation of retirement" unless an increase in excess of 15% was granted in his last year of employment. Since appellant's increase in salary from $18,000 to $55,000 occurred in the next to last year of his employment, the ALJ determined that the Board was powerless to consider whether that increase had been granted primarily in anticipation of his retirement.

The Board rejected this recommended decision, concluding that its regulations do not preclude consideration of whether an increase in salary prior to the last year of employment was granted primarily in anticipation of retirement. It further concluded, based on its own review of the record, that appellant's salary had been increased from $18,000 to $55,000 primarily in anticipation of his retirement. Therefore, the Board reaffirmed its original decision.

Appellant argues that (1) the Board failed to issue a final decision within the time allowed by N.J.S.A. 52:14B-10(c), and therefore the initial decision of the ALJ was automatically adopted as the decision of the agency; (2) the Board's own regulations only permit consideration of salary increases in the year immediately preceding retirement, and therefore the Board was precluded from considering whether appellant's salary increase two years before retirement was granted primarily in anticipation of retirement; and (3) there was a lack of substantial credible evidence to support the Board's finding that the increase in appellant's salary was granted primarily in anticipation of his retirement.

I

N.J.S.A. 52:14B-10(c) provides in relevant part that:

The ALJ's decision was received by the Board on June 26, 1987. On August 12, 1987, the Director of the Division of Pensions and the Director of the Office of Administrative Law entered an order extending the Board's deadline for issuing a final decision to August 24, 1987. The Secretary of the Board sent a letter to the parties on August 24, 1987, notifying them that the Board had rejected the ALJ's decision and reaffirmed its own original decision. However, this decision contained no findings of fact or conclusions of law. It merely announced the Board's ultimate conclusion and stated that "[t]he Board had directed the Secretary to draw up proposed findings of fact and conclusions of law consistent with its decision which will be presented to the Board at its next meeting for discussion and review." After rejecting an initial draft, the Board issued its "final administrative determination" on October 27, 1987, which included findings of fact and conclusions of law.

Appellant argues that the Board's decision issued on August 24, 1987 failed to comply with N.J.S.A. 52:14B-10(d) and thus cannot be relied upon to establish compliance with the time deadline imposed by N.J.S.A. 52:14B-10(c). N.J.S.A. 52:14B-10(d) provides in relevant part:

A final decision or order adverse to a party in a contested case shall be in writing or stated in the record. A final decision shall include findings of fact and conclusions of law, separately stated. . . .

Appellant argues that an agency must issue a "final decision" within the time allowed by N.J.S.A. 52:14B-10(c) and that a decision which does not include "findings of fact and conclusions of law," as required by N.J.S.A. 52:14B-10(d), is not a "final decision." See N.J.A.C. 1:1-18.6(a). Hence, appellant urges that the ALJ's decision must be deemed to have been adopted as the agency's final decision.

The objective of N.J.S.A. 52:14B-10(c) is "to encourage prompt consideration and disposition of ...


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