April 29, 2010
SAMUEL MARZARELLA, APPELLANT,
BOARD OF TRUSTEES OF THE PUBLIC EMPLOYEES' RETIREMENT SYSTEM, RESPONDENT.
On appeal from the Board of Trustees of the Public Employees' Retirement System.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued April 14, 2010
Before Judges Graves, Sabatino, and J. N. Harris.
Samuel Marzarella--an attorney at law of New Jersey since 1986--began his most recent employment as an assistant prosecutor with the Ocean County Prosecutors Office on March 25, 2002. He appeals from a final administrative decision of the Board of Trustees (Board) of the Public Employment Retirement System (PERS), which declined to recognize Marzarella's full prior public service*fn1 credit in the Prosecutors Part of the PERS. Finding neither an equitable basis nor any other principled foundation (such as a constitutional shortcoming) upon which to order a hearing or to overturn the Board's determination, we affirm.
On January 7, 2002, Chapter 366 of the Laws of 2001, codified at N.J.S.A. 43:15A-155 to -161, was approved and became effective immediately. The statute established, for the first time, a separate Prosecutors Part within the PERS with the intention of providing prosecutors enhanced pension benefits. The statute has been amended, effective May 21, 2010, closing the Part to any new participants and only continuing to provide those enrolled as of the effective date of the amendment with the higher pension benefits. See L. 2010, c. 1, § 30.
On June 21, 2004, pursuant to its authority in N.J.S.A. 43:15A-17, the Board promulgated regulations that governed the administration of the Prosecutors Part. See 36 N.J.R. 3068(a)(June 21, 2004). Those regulations disqualified Marzarella's claim for prior public service credits by declaring that: "[a] person who was not employed as a prosecutor on January 7, 2002 is not eligible to have any portion of his or her Public Employees' Retirement System account credited to the Prosecutors Part except as provided under the definition of 'service' in N.J.A.C. 17:2-8.1." N.J.A.C. 17:2-8.4 (emphasis added).
Pursuant to N.J.A.C. 17:2-8.1, the Board established that:
"[s]ervice" as a prosecutor as defined by N.J.S.A. 43:15A-155 shall include service as the following. For members employed as prosecutors on January 7, 2002, service shall also include any Public Employees' Retirement System service credited to a member's account on January 7, 2002.
1. A county prosecutor, first assistant prosecutor, or assistant prosecutor as defined in N.J.S.A. 2A:158-1 et seq. [(Emphasis added).]
Although Marzarella had been offered a full-time assistant prosecutor's position in the Ocean County Prosecutors Office as early as June 27, 2001, he was not administered the required oath*fn2 until March 25, 2002. Marzarella had immediately accepted this job offer in the summer of 2001, and ultimately phased out of his private law practice by July 3, 2001. A document entitled "Personnel Action Request Form (New Employee)," prepared by the Ocean County Prosecutors Office in relation to Marzarella's anticipated joining the office, did not initially reflect an effective date of his employment. Another "Personnel Action Request Form (New Employee)," dated August 29, 2001, contained a crossed-out effective date of October 15, 2001, with a handwritten notation changing that date to November 8, 2001. The form also cryptically indicated that the "[a]additional position was approved in 2001 budget per Nellie 9/4/01." A third "Personnel Action Request Form (New Employee)," dated January 28, 2002, indicated an effective date of March 25, 2002, which was finally fulfilled when Marzarella took the oath on that day and embarked upon his resumed prosecutorial duties.
From the foregoing, it is clear that the administration of the required oath to Marzarella and his commencement of the duties of an assistant prosecutor were delayed for several months. In fact, the record shows that several swearings-in were actually scheduled, but were adjourned for various reasons that are not readily apparent. It is also evident from the record that Marzarella was not actually an assistant prosecutor on the inception date of the newly-minted Prosecutors Part; he joined that part some seventy-seven days later, through no fault of his own.
After several failed informal attempts were made on Marzarella's behalf to implore the Board to add his prior public service credits to his Prosecutor's Part account, Marzarella decided to commence a tort action for damages in the Law Division against several public entities, including the Board, and the former Prosecutor of Ocean County who had initially offered the job. Marzarella and the Board ultimately agreed to a dismissal of all claims against it in the Law Division, with Marzarella still retaining the right "to pursue all administrative remedies available before the Board." In due course, the Law Division dismissed all of Marzarella's remaining claims, and we affirmed. See Marzarella v. Ocean County Bd. of Chosen Freeholders, No. A-3189-06 (App. Div. Mar. 20, 2008), certif. denied, 196 N.J. 86 (2008).
The administrative phase of Marzarella's quest began on January 30, 2008, with the filing of a letter with the Board, formally seeking Marzarella's enrollment in the Prosecutors Part to be treated retroactively to at least January 7, 2002, thereby allowing Marzarella to transfer his prior PERS service credit into the Prosecutors Part. On March 19, 2008, after an exchange of correspondence, the Board denied the request for Marzarella to be enrolled in the Prosecutors Part retroactive to the pertinent date. On May 21, 2008, the Board denied Marzarella's request for an evidentiary hearing in the Office of Administrative Law (OAL). On June 19, 2008, the Board issued its final administrative determination, from which this instant appeal ensued.
We do not write upon an entirely blank slate in our consideration of Marzarella's legal and equitable challenge to the action of the Board. Numerous deputy attorneys general and assistant prosecutors had previously filed an appeal challenging the validity of the Board's regulations. We upheld those challenged regulations in an unpublished opinion. Ouslander v. Pub. Employees Ret. Sys., No. A-6287-03 (App. Div. June 22, 2005).*fn3 However, in that appeal, we preserved the right of any PERS member affected by the regulations to challenge their validity "as applied if that member could show that the circumstances of the particular case warrant it." Ouslander, supra, slip op. at 35. The Supreme Court subsequently denied the appellants' petition for certification. Ouslander v. Public Employees Ret. Sys., 185 N.J. 595 (2005).
Marzarella, who was neither a party to nor an intervenor in Ouslander, has prosecuted both facial and as-applied challenges to the Board and to its Prosecutors Part regulations. In the current appeal, Marzarella has raised the following points for our consideration:
POINT I A HEARING WAS REQUIRED IN THIS CASE AS TO THE FACTS WHICH COMPRISE THE EQUITIES, AND IT WAS ERROR FOR THE BOARD TO IGNORE THE EQUITIES.
POINT II MARZARELLA'S PRIOR PERS SERVICE MUST BE CREDITED TO THE "PROSECUTOR'S PART" OF PERS UNDER THE PLAIN LANGUAGE OF THE STATUTES.
A. THE PLAIN LANGUAGE OF THE STATUTE, N.J.S.A. 43:15A-156, STATES IN UNCONDITIONAL TERMS THAT ANY PRIOR PERS SERVICE IN ANY POSITION SHALL BE ESTABLISHED IN THE PROSECUTOR'S PART OF PERS WITHOUT FURTHER COST.
B. ADDITIONALLY, PRIOR PERS SERVICE AS AN "ASSISTANT PROSECUTOR" MUST BE TRANSFERRED IN ACCORDANCE WITH THE PLAIN LANGUAGE OF THE STATUTE AND ADMINISTRATIVE CODE.
POINT III THE BOARD'S CONCLUSION THAT PRIOR PERS SERVICE COULD NOT BE TRANSFERRED TO ANOTHER PART OF PERS, THE PROSECUTORS PART VIOLATES THE CONSTITUTIONS OF THE UNITED STATES AND OF THIS STATE.
A. AN UNCONSTITUTIONAL IMPAIRMENT OF "VESTED RIGHTS" AND/OR A "MANIFEST INJUSTICE" WILL OCCUR IF THE PERS TRANSFER OF SERVICE STATUTE IN EFFECT AT THE TIME MARZARELLA BECAME A VESTED EMPLOYEE IS NOT APPLIED TO HIS PRIOR SERVICE.
B. THE BOARD'S CONCLUSION THAT MARZARELLA COULD NOT TRANSFER HIS PRIOR TIME INTO THE PROSECUTORS PART VIOLATES THE CONTRACT CLAUSE OF THE UNITED STATES CONSTITUTION.
POINT IV THE EQUITIES REQUIRE THAT THE ENTIRETY OF MARZARELLA'S ACCUMULATED TIME BE RECOGNIZED IN PERS PROSECUTOR'S PART.
A. POWER TO GRANT EQUITABLE OR STATUTORY RELIEF.
B. EQUITABLE ESTOPPEL.
C. SUBSTANTIAL COMPLIANCE.
POINT V THE DUE PROCESS CLAUSES OF THE STATE AND FEDERAL CONSTITUTIONS PROHIBIT THE STATE PENSION SYSTEM FROM TAKING ARBITRARY ACTION.
POINT VI THE BOARD'S DECISION AMOUNTS TO A TAKING UNDER THE TAKING CLAUSE.
POINT VII THE REGULATIONS ADOPTED BY THE BOARD WHICH PROHIBIT MARZARELLA FROM GAINING SERVICE CREDIT FOR PRIOR PERS SERVICE BECAUSE HE WAS NOT SWORN IN AS A PROSECUTOR ON JANUARY 7, 2002, OR FROM TRANSFERRING HIS PRIOR PERS SERVICE INTO THE PROSECUTORS PART, ARE VOID "AS APPLIED" TO HIM IN THESE CIRCUMSTANCES.
After an independent review of all of these contested points, we are persuaded that with one exception, Marzarella's arguments lack sufficient merit to warrant further discussion in a written opinion. R. 2:11-3. Our role as an appellate court militates in favor of acknowledging and deferring to the broad discretion of the Board, particularly in the arcane sphere of public pensions. Hemsey v. Bd. of Trustees, Police & Fireman's Ret. Sys., 198 N.J. 215 (2009). Thus, although we empathize with Marzarella's plight, we cannot subscribe to his arguments that demand us to award either a further hearing or equitable remedies.
Marzarella asserts that he should be deemed to have been equitably hired on or before the January 7, 2002 inception date required for the Prosecutors Part. As badges of equity, he catalogs the June 2001 offer of employment and his acceptance of the assistant prosecutor's position; the multiple adjournments of his swearing-in; the promulgation of the several "Personnel Action Request Forms (New Employee);" and the economic hardship he will endure if his prior PERS service credit is not made subject to the enhanced benefits of the Prosecutors Part. He claims that the Board erred when it refused to provide him with an evidentiary forum--a contested case proceeding under the stewardship of the OAL--to allow him to develop the whys and wherefores of the six-month putative foot-dragging between June 2001 and January 2002. We have carefully considered all of Marzarella's claims of inequity and rough justice, but we cannot agree that the Board erred either procedurally or substantively in rendering its decision.
We unflinchingly acknowledge that our role in reviewing an administrative agency's action is restricted. Our constrained appellate function is to determine whether the administrative action was arbitrary, capricious, or unreasonable. Hemsey, supra, 198 N.J. at 223-24. The actions of administrative agencies are entitled to a presumption of reasonableness. East Orange Bd. of Educ. v. N.J. Schools Constr. Corp., 405 N.J. Super. 132, 143 (App. Div.), certif. denied, 199 N.J. 540 (2009) (citing City of Newark v. Natural Res. Council, 82 N.J. 530, 539 (1980)). We will only decide whether the findings could reasonably have been reached upon the credible evidence in the record, considering the proofs as a whole. Tlumac v. High Bridge Stone, 187 N.J. 567, 573 (2006). We are not otherwise authorized to substitute our judgment for that of the agency.
Div. of Alcoholic Beverage Control v. Maynards, Inc., 192 N.J. 158, 184 (2007).
Consequently, our role in reviewing a final decision of an administrative agency is limited to four inquiries: (1) whether the agency's decision comports with Federal and State constitutional requirements; (2) whether the agency's action violates express or implied legislative policies; (3) whether the factual findings that provide a foundation for the agency's decision are based on substantial evidence; and (4) whether in applying the legislative policies to the facts, the agency clearly erred in reaching a conclusion that could not reasonably have been made on a showing of the relevant factors. In re Taylor, 158 N.J. 644, 656 (1999).
We find nothing in the proceedings before the Board to give us pause or concern that Marzarella was deprived of an appropriate opportunity to reasonably develop his equitable arguments. The facts are undisputed and need no further embellishment through either discovery or a plenary hearing. The unyielding bulwark that Marzarella cannot surmount through his argument is that until he was sworn in, and thereafter actually performed a public function, his offer of employment was rescindable at any time; he enjoyed no inchoate rights until he uttered the mandatory oath--administered by a judge of the Superior Court--required by N.J.S.A. 2A:158-15.
While pension statutes "should be liberally construed and administered in favor of the persons intended to be benefited thereby[,]" Geller v. Dep't of Treasury, Div. of Pensions & Annuity Fund, 53 N.J. 591, 597-98 (1969), "eligibility is not to be liberally permitted." Smith v. State, Dep't of Treasury, Div. of Pensions & Benefits, 390 N.J. Super. 209, 213 (App. Div. 2007). "Instead, in determining a person's eligibility to a pension, the applicable guidelines must be carefully interpreted so as not to 'obscure or override considerations of . . . a potential adverse impact on the financial integrity of the [f]und.'" Ibid. (quoting Chaleff v. Teachers' Pension & Ann. Fund Trustees, 188 N.J. Super. 194, 197 (App. Div.), certif. denied, 94 N.J. 573 (1983)). Indeed, a pension fund owes a fiduciary duty to its members, a duty that would be thwarted if it were to accept the membership of one who is not eligible to receive its benefits. Mount v. Trustees of Pub. Employees' Ret. Sits., 133 N.J. Super. 72, 86 (App. Div. 1975).
This is not a case where a public employee in actual service was not enrolled in PERS due to the oversight of the public employer. We have previously held that an employee does not waive his or her right to enrollment in PERS when there is no proof that the employee had knowledge that he or she was not properly enrolled by the employer. See Gladden v. Bd. of Trustees of the Public Employees' Ret. Syst., 171 N.J. Super. 363, 371 (App. Div. 1979). We have also held that where failure to enroll an eligible employee in PERS is attributable to the employer, PERS must permit the employee to be retroactively enrolled. See Chapel v. Board. of Trustees, 258 N.J. Super. 389, 391 (App. Div. 1992); Gladden, supra, 171 N.J. Super. at 371-72.
Equitable estoppel, the primary argument advanced by Marzarella in support of his entitlement to a hearing and equitable relief, is a remedy rarely invoked against a government entity, although it has been applied in "appropriate circumstances unless the application would 'prejudice essential governmental functions.'" Middletown Twp. Policemen's Benevolent Ass'n Local No. 124 v. Twp. of Middletown, 162 N.J. 361, 367 (2000) (quoting Wood v. Boro. of Wildwood Crest, 319 N.J. Super. 650, 656 (App. Div. 1999)); Sellers v. Bd. of Trustees of the Police & Firemen's Ret. Sys., 399 N.J. Super. 51, 58 (App. Div. 2008). The prevention of a "manifest injustice provides an exception to the general rule." Aqua Beach Condo. Ass'n v. Dep't of Cmty. Affairs, 186 N.J. 5, 20 (2006)(quoting Casamasino v. City of Jersey City, 158 N.J. 333, 354 (1999)).
The Board is vested with "the general responsibility for the proper operation of the retirement system," N.J.S.A. 43:16A-13(1), and has the authority to apply equitable principles in order to provide a remedy when justice so demands, provided the power is used rarely and sparingly and does no harm to the overall pension scheme. Sellers, supra, 399 N.J. Super. at 58. In the exercise of this restricted capability of equitable adjustment, the Board must carefully balance the relevant public and private interests. It was required to observe the equities from Marzarella's point of view and consider whether the governmental actors failed to "turn square corners" with him. It must parse whether Marzarella acted in good faith and assess the degree of harm he will sustain if the effective date requirement is strictly enforced. Lastly, the Board ought to have contemplated other factors that go to the fairness of applying the restriction to him after he was offered the position and left a previous job to take the public post.
Contrary to Marzarella's contentions, the entirety of the data was available and inevitably contributed to the Board's final administrative decision rendered on June 19, 2008. We will neither second-guess the Board's balancing of the requisite factors that were presented to it, nor conjure up additional avenues of inquiry that the Board should have approached. Even if a reasonable decision-maker could reach a lucid or logical conclusion that Marzarella was entitled to the application of equitable estoppel and thereby obtain public benefits before he served a single day on the job, our role is not to substitute one version of rationality for another.
Indubitably, Marzarella's financial loss caused by not including his previous PERS service credit in his Prosecutors Part account carries an economic sting. Marzarella must still feel the frustration of waiting in vain for that final call for his swearing-in before January 7, 2002. Notwithstanding the blamelessness of Marzarella, we decline to usurp the determination of the Board because it is supported by credible evidence and is not the product of whimsy, surprise, or caprice. We further do not believe that an evidentiary hearing would develop any relevant evidence because the universe of factors that the Board was required to consider was well-developed and available for its review at the time its determination was rendered. The regulation is clear and we are constrained to adhere to it. That Marzarella remains unswayed by the Board's succinct rationale and terse--yet reasonable--determination is not a sufficient basis for our intervention.