MICHAEL BROWN v. TEACHERS' PENSION AND ANNUITY FUND
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
DOCKET NO. A-0031-05T20031-05T2
TEACHERS' PENSION AND
Submitted May 9, 2006 - Decided May 25, 2006
Before Judges Kestin, Lefelt and
On appeal from a Final Decision of
the Board of Trustees, Teachers'
Pension and Annuity Fund, Docket
Debra Foca, attorney for appellant.
Zulima V. Farber, Attorney General,
attorney for respondent (Patrick
DeAlmeida, Assistant Attorney
General, of counsel; Susanne Culliton,
Deputy Attorney General, on the brief).
Petitioner, Michael Brown, sought to reopen and modify the retirement option chosen by his deceased ex-wife so that he could receive a portion of her teacher's pension. Petitioner now appeals from a final decision of the Board of Trustees of the Teachers' Pension & Annuity Fund (Board), which refused to reopen the retirement option. We affirm.
Petitioner and his ex-wife, Ellen Brown, had been married for almost thirty years and had three children. During their marriage, Ms. Brown served as a public school teacher while petitioner "worked as a real estate appraiser for a private company," and in 1997 assumed the position of Deputy Tax Assessor in Mt. Laurel Township.
In 1999, after the couple had separated, Ms. Brown was diagnosed with cancer. By June 2002, the couple divorced. The parties' property settlement agreement instructed that after having their respective retirement accounts valued, the party with the greater combined account would transfer to the other one-half of the difference, via a Qualified Domestic Relations Order (QDRO). After the divorce, however, neither party took any step toward valuing or equalizing the retirement accounts.
By late 2003, Ms. Brown had undergone intensive treatment for cancer and her condition had worsened. A few weeks before her fifty-fourth birthday, and a year-and-one-half after the divorce, Ms. Brown elected to apply for early retirement and chose a benefit option that provided maximum pension payments with "no pension benefit to beneficiary." Because Ms. Brown was divorced, the Board was not obligated to notify petitioner of the chosen selection, and notably, Ms. Brown never informed the Board of the judgment or the intended equalization of the parties' respective retirement accounts.
The Board approved Ms. Brown's early retirement and she retired on January 1, 2004. Her pension benefits became due and payable on February 8, 2004. The Board's approval letter informed her that she had thirty days to make any changes to her retirement option. Ms. Brown made no changes. A few months after her retirement, however, she unfortunately passed away on March 28, 2004.
In a May 12, 2004 letter, the Board advised Ms. Brown's son, whom she had designated as her beneficiary for the pension, that in accordance with the selection his mother had made, he was "entitled to receive the balance of the employee contributions and regular interest since the total amount of benefits paid to [Ms. Brown] was less than the amount established at the time of retirement." Including interest the "unrecovered" balance of Ms. Brown's contributions amounted to over $83,000.
After petitioner learned of his ex-wife's retirement benefit selection, he attempted, on May 12, 2004, to stop "[a]ll disbursements of [Ms. Brown's retirement] account," and to reallocate the benefits in accordance with the property settlement agreement. The dispute eventually came before an Administrative Law Judge who rejected petitioner's claim in an initial decision. However, the judge held open the possibility that petitioner could re-present his claim to the Board if he were able to obtain a QDRO, which equalized the retirement accounts pursuant to the property settlement agreement.
Upon review of the initial decision, the Board agreed with the judge's decision declining to reopen the pension benefit selection but rejected the possibility of changing the result through a QDRO. The Board stated that "it has been established that the pension laws do not permit honoring a QDRO in the instant matter. Additionally, it is now far too late for Ms. Brown's option selection to be changed, particularly since payment of her pension (including the post-mortem return of her unused employee contributions)" had been made. The Board recognized that decedent made no change in her benefit selection and never indicated that the selection was inappropriate in any way. Furthermore, the Board noted that "petitioner had recourse to the judicial system for enforcement of his divorce decree. Having failed to avail himself of that legal remedy, petitioner is not entitled to the equitable remedy now being sought." This appeal followed.
Petitioner argues on appeal that the Board's decision should be reversed because it frustrates the divorce judgment, declines to liberally construe the pertinent laws, and erroneously and inequitably rejects petitioner's application, which was clearly based upon good cause, to re-open his ex-wife's pension selection.
Our review of an administrative agency's decision is limited. Only those administrative decisions which are arbitrary, capricious, unreasonable, or violative of expressed or implicit legislative policies may be reversed by a reviewing court. Campbell v. Dep't of Civil Serv., 39 N.J. 556, 562 (1963). Unfortunately for petitioner, the Board's decision in this case is neither arbitrary nor violative of any legislative policy.
Because Ms. Brown selected the maximum pension benefit option, the pension law required notification of the retiree's spouse that the option was "payable during the member's lifetime only and that no benefits, other than any applicable life insurance benefits, shall be payable to the beneficiary after the member's death." N.J.S.A. 18A:66-47.1. Here, however, petitioner was no longer married to Ms. Brown as they had been divorced for almost one-and-one-half years. Thus, the Board was under no obligation to inform petitioner of his ex-wife's pension selection.
The pertinent rule also provides that "[a] member's retirement allowance shall not become due and payable until 30 days after the date the Board approved the application for retirement or 30 days after the date of retirement, whichever is later." N.J.A.C. 17:3-6.2(a). Members may withdraw, cancel or change their applications for retirement before the retirement becomes due and payable. N.J.A.C. 17:3-6.3. "Once a retirement benefit becomes due and payable as defined by N.J.A.C. 17:3-6.2, the option cannot be changed." N.J.A.C. 17:3-6.1(c).
Even assuming that petitioner is among those persons intended to be benefited by the pension laws and therefore must have the pension laws liberally construed in his favor, Outland v. Bd. of Trustees, 326 N.J. Super. 395, 400 (App. Div. 1999), we still cannot find the Board's decision arbitrary. It was not the Board that "frustrated" the divorce judgment. As the Board was under no obligation to notify petitioner of Ms. Brown's retirement selection, it cannot be held accountable for petitioner's inaction in implementing or enforcing the judgment. The Board's actions in accepting Ms. Brown's pension selection and making the required payments were without knowledge of the court order and a conflicting claim by petitioner. See Prudential Ins. Co. v. Prashker, 201 N.J. Super. 553, 555-56 (App. Div.), certif. denied, 101 N.J. 334 (1985).
Instead, it was the petitioner who ignored the dictates of the judgment. Petitioner had sufficient time to notify the Board of his interest in Ms. Brown's pension as well as to comply with the terms of the property settlement agreement and obtain a QDRO. Although petitioner might not have realized the terminal nature of his ex-wife's physical condition, he knew that the melanoma had spread to her lymph nodes, that she was undergoing cancer treatment, and that she could not use her arm as a result of her illness and treatment.
If any frustration of the divorce judgment occurred, it was accomplished by Ms. Brown also ignoring the judgment's directive to value and equalize the parties' retirement accounts. The record suggests, however, that Ms. Brown, unlike the situation in Outland, supra, 326 N.J. Super. at 404, was properly informed of the consequences of her retirement option selection. There is no support in the record for the proposition that the selection made by Ms. Brown was not her informed and intentional decision. Unlike the decedent in Harris v. Bd. of Trustees, 378 N.J. Super. 459, 462-63 (App. Div. 2005), Ms. Brown did not execute a statement expressing her wish that petitioner be named beneficiary or that her selection be changed to one more beneficial to petitioner. Ms. Brown's original intent was never thwarted, as was the appellant's in In re Van Orden, 383 N.J. Super. 410, 419-22 (App. Div. 2006). There, we reacted favorably to appellant's attempt merely to effectuate his original selection. Ibid. That is not the case here, especially because agreeing in the divorce judgment to equalize the parties' retirement accounts and selecting a type of pension benefit are not necessarily inconsistent actions.
Moreover, there is nothing to suggest that "the effects of [Ms. Brown's] terminal illness on her mind and body rendered her incapable of making the [retirement selection] change during the thirty-day [statutory] period." Harris, supra, 378 N.J. Super. at 462-63. We cannot infer from this record that Ms. Brown would have elected to change her original retirement selection were it not for her terminal illness. See Bumbaco v. Bd. of Trustees, 325 N.J. Super. 90, 97 (App. Div. 1999), certif. denied, 163 N.J. 75 (2000).
In short, our review of the record reveals that the Board properly approved Ms. Brown's retirement application and selection of benefits, which ultimately became due and payable. The circumstances surrounding Ms. Brown's untimely and unfortunate death do not defeat the irrevocable nature of her selection.
May 25, 2006