WILLIAM G. ERNEY, JR. v. BOARD OF TRUSTEES POLICE AND FIREMEN'S RETIREMENT SYSTEM

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0094-04T10094-04T1

WILLIAM G. ERNEY, JR.,

Petitioner-Appellant,

v.

BOARD OF TRUSTEES OF THE POLICE

AND FIREMEN'S RETIREMENT SYSTEM,

Respondent-Respondent.

 

Argued: September 28, 2005 - Decided:

Before Judges Fall, Grall and Levy.

On appeal from the final administrative decision of the Board of Trustees of the Police and Firemen's Retirement System, PFRS #3-10-26763.

Charles P. Allen, Jr. argued the cause for appellant.

David Dembe, Senior Deputy Attorney General, argued the cause for respondent (Peter C. Harvey, Attorney General, attorney; Patrick DeAlmeida, Assistant Attorney General, of counsel; Dawn M. Harris, Deputy Attorney General, on the brief).

PER CURIAM

Petitioner William G. Erney, Jr. appeals from a final administrative decision issued by the Board of Trustees of the Police and Firemen's Retirement System (PFRS), finding that he was not eligible to collect a retirement pension under PFRS, and requiring him to reimburse the PFRS for all retirement monies he had been paid prior to cessation of his pension benefit. The following factual and procedural history is relevant to our consideration of the arguments advanced on appeal.

Effective January 27, 1986, petitioner was appointed provisionally as a full-time Combustibles Inspector in the Township of Lawrence. It is not disputed that this title was not an eligible title for enrollment in the PFRS. Effective April 2, 1986, petitioner's title was changed to Fire Prevention Specialist, as directed by the Civil Service Commission. On December 10, 1986, a payroll notice indicated that petitioner's title was changed to Fire Prevention Specialist/UFD; that change was made in conjunction with a total reorganization of the Township's emergency operations. At or about that time, petitioner sought enrollment in the PFRS, but was unable to do so because he was overage. See N.J.S.A. 43:16A-3 (requiring that applicants for PFRS membership be under age 35 at the time of enrollment).

On April 28, 1987, a payroll notice issued by the Township indicated that petitioner was serving in the position of Fire Prevention Specialist, presumptively as a result of the classification determination by the Civil Service Department on December 26, 1986.

By letter to the Division of Pensions and Benefits dated January 8, 1988, the Township's Personnel Officer stated, in pertinent part:

The Township of Lawrence has two (2) Fire Prevention Specialists/UFD and I would like to bring their Police and Firemen's Retirement System (PFRS) applications to your attention.

* * * *

The other employee is William Erney, Jr. He is not in either the PERS or PFRS. He became a permanent employee on April 28, 1987. He has applied for PFRS inclusion, but in a memo from Delores J. Shwara dated June 15, 1987 she had stated that Mr. Erney was overage. I contend that . . . Mr. DeNicholas' [December 7, 1987] letter stated above will enable Mr. Erney to become a member of the PFRS. I have enclosed his pertinent data for your information as well.

By letter dated January 20, 1988, the Division responded, stating that

the title of Fire Prevention Specialist/UFD is not covered by the PFRS. The only titles covered by PFRS in a municipality are uniformed policemen, firemen, detectives, linemen, fire alarm operators, or inspectors of combustibles of a police or fire department or township fire district. If these individuals are holding the titles of Fire Protection Specialist/UFD, they must participate in the Public Employees' Retirement System (PERS).

* * * *

With respect to Mr. Erney, a PERS enrollment application should be submitted so this office can enroll him without further delay.

A payroll notice issued by the Township dated October 21, 1988, indicated that petitioner was serving in the full-time position of Fire Marshal, followed by a letter to petitioner from the Township's Acting Municipal Manager dated October 24, 1988, informing him that he had been "chosen for the position of Fire Marshal for the Township[,]" effective October 31, 1988, at an annual salary of $32,878.

On October 31, 1988, petitioner completed an application for enrollment in PFRS under the title of Fire Marshal. The Township certified petitioner's application, stating that he was currently employed in the position of Fire Marshal as of October 21, 1988, and had been employed by the Township since January 27, 1986. That application was filed with the Division of Pensions on December 7, 1988.

By letter to the Township dated December 16, 1988, the Division of Pensions and Benefits stated that petitioner's application could not be processed because his position of Fire Marshal was not covered by the PFRS, and that petitioner must file a PERS enrollment application.

On January 30, 1989, petitioner completed yet another application for enrollment in PFRS. The certification on that PFRS enrollment application completed by the Township erroneously stated that petitioner's title since October 21, 1988, was "Fire Inspector." The application was filed with the Division on February 6, 1989. The Division issued an "Enrollment Confirmation" dated February 22, 1989, enrolling petitioner in the PFRS. Based on that enrollment, petitioner and the Township made payroll contributions into the PFRS system.

On May 2, 1989, petitioner was appointed by the Township as Fire Subcode Official. On June 20, 1989, petitioner submitted a "Duties Questionnaire" to the Department of Civil Service, stating that he held the titles of Fire Marshal, Fire Subcode Official and Deputy Director of Emergency Management with the Township. Those titles were not covered by the PFRS.

A payroll notice issued by the Township dated September 22, 2000, stated that effective July 1, 1992, petitioner took a leave of absence without pay from the position of Fire Marshal, from July 1, 1992 to July 1, 2001, to assume the position of Construction Official. The title of Construction Official is not eligible for PFRS enrollment. Petitioner remained in that position until his effective date of retirement on July 1, 2001.

Ordinance Number 1316-92 was adopted by the Township on July 15, 1992. It, inter alia, amended Section 2-91(l) of the Township Code to state that the Division of Construction Code Enforcement shall "[r]espond to and conduct investigation of all fires."

Lawrence Township is serviced by three volunteer fire companies; petitioner was not a member of those companies. Petitioner was never a member of the local IAFF, the firefighter's collective bargaining unit; rather, he was a member of the local chapter of CWA, a civilian collective bargaining unit.

For reasons not relevant to this appeal, a payroll notice issued by the Township on November 2, 2000, stated that effective October 27, 2000, petitioner was suspended without pay from the position of Construction Official.

Beginning on November 9, 2000, petitioner submitted several "Applications To Purchase Service Credit" in the PFRS to the Division of Pensions. Eventually, after several modifications, that application was approved. Meanwhile, on May 29, 2001, petitioner completed an "Application for Retirement Allowance" from the PFRS, with a proposed retirement date of July 1, 2001. On June 26, 2001, petitioner paid $114,876.03 to the PFRS in payment for his purchase of thirteen years of service credits. In order to partly fund that purchase, petitioner and his wife borrowed the sum of $92,000 from Yardville National Bank over a term of seven years, with equal monthly payments of principal and interest at an initial annual interest rate of 9% for the first five years, to be adjusted thereafter.

On August 6, 2001, the PFRS issued petitioner a "Quotation of Retirement Benefits" stating he had 25 years of service credited with a monthly retirement benefit of $3,941.85. His application for retirement was approved by the Board of Trustees of the PFRS on August 20, 2001, and benefits were paid as of July 1, 2001.

However, by letter to petitioner dated October 18, 2001, the Division stated in pertinent part:

This is to advise you that the Board of Trustees of the Police and Firemen's Retirement System will be reviewing your pension membership account at their November 19, 2001 meeting to determine if you are eligible to continue to receive a retirement benefit from the retirement system. Due to your retirement, an audit was performed on your account and it appears that you may have retired from a Civil Service position that is not covered by the PFRS.

In an internal memorandum to the PFRS Board dated October 30, 2001, the Board Secretary stated:

On July 1, 2001, William Erney retired from PFRS. Shortly thereafter, it was brought to the attention of the Board Office that Mr. Erney might not have served in a position covered by the PRFS. For that reason, records were requested from his employer, Lawrence Township, and the Department of Personnel.

From our review, it appears that Mr. Erney was originally hired in the position of Fire Marshall. The application for PFRS enrollment was submitted by the employer and rejected by the Division, as it was not a covered title. Shortly thereafter, another application was submitted for the position of Fire Prevention Specialist in 1986, which was a covered title and Mr. Erney was enrolled in PFRS. The record indicates that Mr. Erney was placed on a leave of absence from this position. Though documentation was provided to the Division of Personnel, the employer continued to remit contributions to PFRS. Earlier this year, Mr. Erney purchased 13 years of service credit and filed for a special retirement benefit effective July 1, 2001. Mr. Erney is currently receiving a monthly retirement allowance of $3,941.

Please determine whether Mr. Erney is eligible for benefits under PFRS.

The Department of Community Affairs issued petitioner a letter dated November 8, 2001, stating in pertinent part:

This is to inform you that according to our records, you held the position of Fire Official, Fire Marshal and Fire Sub-Code Official for the Township of Lawrence from November 1988 through October 2000.

Thereafter, the Board issued a letter to petitioner's attorney dated November 21, 2001, stating in relevant part:

Following its review, it was the Board's determination that Mr. Erney was correctly enrolled in the Police and Firemen's Retirement System as a result of his appointment as a Fire Prevention Specialist on November 1, 1988; the date of his permanent appointment. However, a further review of his record shows that he received a regular appointment as a Fire Protection Subcode Official on May 2, 1989. This title is not covered by the PFRS. Furthermore, Department of Personnel records further indicate that Mr. Erney did not return to any title covered by the PFRS.

Based on these facts, the Board of Trustees finds that Mr. Erney is not eligible for enrollment in PFRS and is not entitled to

. . . retirement benefits. The Retirement Bureau will be notified to terminate Mr. Erney's retirement allowance, and he will be requested to reimburse the PFRS all retirement money received since July 1, 2001. As Mr. Erney was in a title covered by the Public Employees' Retirement System ("PERS"), his service credit erroneously accrued in PFRS will be moved to his current PERS account. The contribution rate difference between PFRS and PERS will be refunded to him or used to offset the overpayment of retirement benefits.

The Board noted that Mr. Erney made a substantial purchase of service credit. If he chooses, he may elect to have the entire amount refunded to him or transfer[] the service to his current PERS account. If Mr. Erney chooses to transfer the purchase of credit to PERS, he is entitled to a refund in the purchase cost between PFRS and PERS. Please notify me within 30 days of this letter of his decision so the proper adjustment can [be] made to Mr. Erney's account.

Petitioner filed an appeal from the determination of the PFRS Board, and in January 2002, the matter was transmitted as a contested case to the OAL for a hearing before an Administrative Law Judge (ALJ).

While the matter was pending in the OAL, the ALJ originally assigned to hear the matter found that "newly discovered documents were considered significant enough to merit reconsideration by the [PFRS] Board." The OAL hearing was postponed and the matter remanded back to the PFRS Board of Trustees for reconsideration. In letter to counsel for petitioner dated December 17, 2002, the Board stated in pertinent part:

Upon review of the additional documents, the Board voted to refer this matter to the Director of the Division of Pensions and Benefits in accordance with N.J.S.A. 43:16A-1.2 (also known as a Chapter 204 review). In this particular case, under the Chapter 204 review, the titles of Fire Protection Sub-code Official and Construction Official will be reviewed as to whether or not these positions are covered under the PFRS. It is anticipated that the Director will forward his recommendation to the Board for its next meeting on January 27, 2003.

In separate memoranda to the PFRS Board, the Director of the Division of Pensions and Benefits recommended that the positions of "Fire Protection Subcode Official" and "Construction Official" not be approved for PFRS participation on the basis that neither position reported to a firefighting unit, those positions had no fire suppression duties, and do not require any firefighting training.

By letter to petitioner's counsel dated January 28, 2003, the Secretary for the PFRS Board stated, in relevant part:

In a separate action, the Board determined that the positions of Fire Protection Subcode Official and Construction Official are not eligible for participation in the PFRS. The Board determined these positions do not meet the definition of "firemen" as stipulated in N.J.S.A. 43:16A-2(b). The employees in these positions do not report to a firefighting unit, and have no requirement to participate in firefighting training and finally the primary duties do not include the control and extinguishment of fires. All of these requirements are necessary in order for positions to qualify for membership in the PFRS. The Board affirmed its original decision denying Mr. Erney's enrollment in the PFRS and the subsequent eligibility for PFRS retirement benefits.

The matter was then transferred back to the OAL, and a hearing was conducted before an ALJ on February 5, 2003 and October 1, 2003. On May 12, 2004, the ALJ issued an Initial Decision, recommending that PFRS reinstate petitioner "as a beneficiary of all rights and privileges of a retiree of the Police and Firemen's Retirement System." In so concluding, the ALJ stated in pertinent part:

Petitioner was employed by Lawrence Township (Township) from 1986 until his retirement in June 2001. During that period he was given various job titles, some of which were recognized by the PFRS as valid for qualification in that pension system and some of which were not. In 1988 petitioner held the recognized job title of Fire Prevention Specialist and he was admitted into the PFRS system. . . . Until his retirement all necessary monetary contributions were made into that system. From at least 1988 on, regardless of his job title, petitioner had the obligation to report to every active fire in the Township and to take part in the extinguishment of that fire. In 1992 the Township gave Mr. Erney the job title of Construction Official, which had the effect of increasing his duties and altering the source of his salary. However, it did not decrease his firefighting duty. The Township has at least one paid fireman who works a normal nine-to-five, Monday through Friday workweek and he supplements the fire suppression obligation of the volunteer firemen who provide[] coverage on evenings and weekends. Mr. Erney, although he had other job duties as well, was also charged with the responsibility of responding to fire calls during his workday along with the paid fireman. He was qualified for this duty since he had experience as a firefighter from being a volunteer in other municipalities and had an associate's degree in Fire Science Technology. The Township also sent him to seminars and conventions to increase his knowledge in fire suppression. To assist him in his fire suppression duties, he was supplied with a Township vehicle that was equipped with emergency lights, a siren and a communication radio so he could be located at any time for fire response. He was also supplied with custom turnout gear to wear on his fire calls. His obligation to fight fires while working was mandatory and if he chose not to respond to a fire alarm, he would have been subject to discipline by his employer. This obligation was formalized in Township Ordinance Article V, Section 2-91 . . . which required the petitioner as part of the Division of Code Enforcement to respond to all fires. The Township's manager confirmed this section of the ordinance to mean petitioner was obligated to report to and suppress all active fires. The petitioner also recognized this as one of his job responsibilities.

On or about November 2000, petitioner considered retirement and at various times thereafter spoke with employees at the Pension Board. He was advised of the process and amount needed to buy certain time needed for retirement eligibility. Petitioner was also informed as to the benefits he would receive if he elected to buy additional years of service. Based on that information, he mortgaged his property in the approximate amount of $92,000, took savings of approximately $23,000 and paid respondent $114,876 to purchase the necessary service credits needed for retirement. When his application for retirement was approved, he left his position in Lawrence Township. Petitioner started receiving monthly pension benefits. He then assumed another position in another municipality and was enrolled in the Public Employees' Retirement System. . . .

* * * *

Petitioner argues he is entitled to stay in the PFRS because he is a firefighter as defined in the statute; but even if he is not, he was rightfully in the system at one time and since his duty to fight fires continued throughout his employment, he is a grandfathered participant. He also argues the PFRS is equitably estopped from denying his benefits at this time.

* * * *

The term "fireman" is defined in N.J.S.A. 43:16A-1(2)(b), as a permanent, full-time employee of a firefighting unit whose primary duties include the control and extinguishment of fires and who is subject to training and physical and mental requirements applicable to the job. It is undisputed that petitioner was a permanent and full-time employee of the Township of Lawrence. It is also undisputed that the Township required him to attend training sessions on fire suppression activities. The term "firefighting unit" is not defined. Respondent takes the position Lawrence Township is not a firefighting unit because the job titles it uses do not have a "UFD" suffix. This is not entirely true because documents have been presented which show petitioner held the title of Fire Prevention Specialist/UFD . . . in 1986. In his testimony, the Township Manager stated the municipal organization was more concerned with functionality in its daily activities than pro forma Department of Personnel titles. He also stated petitioner always held a position with firefighting responsibilities and although his job title changed from time-to-time and for various reasons, his duty to actively fight fires continued until his retirement. It is not disputed that Lawrence Township employs at least one paid fireman who works a normal forty-hour week. This is an indication the Township has elected to assume the responsibility of suppressing fires within its borders. Since the Township has assumed that responsibility for its citizens, I CONCLUDE Lawrence Township is a firefighting unit within the meaning of the aforesaid statute.

* * * *

Petitioner also makes the argument he is entitled to PFRS benefits under the "grandfather" provision of the Police and Firemen's Retirement statute. N.J.S.A. 43:16A-1.2a. Petitioner cites the sentence which states "a member whose position was covered prior to the effective date [December 20, 1989] of this amendatory and supplementary act shall continue to be eligible for membership in the retirement system while in the same position." The Township Manager clearly testified petitioner's duties were increased over time, but he always retained the obligation to fight fires. Petitioner entered the PFRS as a Fire Prevention Specialist. . . . The Township Manager testified that position has fire suppression duties and petitioner maintained that position and assumed additional positions and job titles as time went by. There has been no indication petitioner ever lost the title of Fire Prevention Specialist, just that he assumed additional job titles with associated additional duties. Petitioner also argues that if one were to analyze his duties, they would understand that a more accurate job title would have been Fire Protection Subcode Official/UFD, as this title encompassed many of his duties and did not contain any duties which he did not have. He argues, but for the funding issue pertaining to his salary, he would have held that job title.

* * * *

For the reasons set forth herein, I CONCLUDE one of petitioner's primary duties was to fight fires during his employment by the Township of Lawrence. I further CONCLUDE the Township of Lawrence is a firefighting unit as set forth in N.J.S.A. 43:16A-1(2)(b). I further CONCLUDE petitioner maintained the position and duties of Fire Prevention Specialist until his retirement and is grandfathered into the PFRS.

Exceptions to the Initial Decision were filed with the PFRS Board by both parties.

In its final administrative decision dated August 9, 2004, the PFRS Board of Trustees rejected the recommended Initial Decision of the ALJ, finding petitioner ineligible for PFRS retirement benefits. In reaching that conclusion, the Board stated in pertinent part:

N.J.S.A. 43:16A-3 sets forth the requirements for eligibility for enrollment in the Police and Firemen's Retirement System (PFRS). Only firemen, as that term is defined in N.J.S.A. 43:16A-1(2)(b) may be enrolled. The title of construction official, which Petitioner held at the time this matter was first addressed by the Board, does not meet the definition of a firefighter as set forth in N.J.S.A. 43:16A-1(2)(b). The fact that he may sometimes perform some of these duties is not enough to satisfy the statutory mandate, nor is the fact that some employees have been trained for some of these duties in other distinct positions. Thus, Mr. Erney is not eligible for continued enrollment in the system while continuing to be employed in this title.

The law, on its face, requires that a determination be made as to the primary duties of a firefighter, and if these primary duties include the control and extinguishment of fires. In order to be eligible for PFRS membership, each of the criteria in N.J.S.A. 43:16A-1(2)(b) must be satisfied. Further, the Board does not have the jurisdiction to re-classify Mr. Erney's title or to create a new title for him. That is strictly within the purview of the Department of Personnel. If Mr. Erney believed he was working as a Firefighter then he should have appealed to the Department of Personnel for a title change.

* * * *

The testimony is clear that Mr. Erney's primary purpose for reporting to a scene of a fire was as an inspector and not as a firefighter. . . .

* * * *

In essence, Mr. Erney is a first responder to a fire scene primarily in the capacity as an inspector, and only if there are not a sufficient number of people to fight the fire does he participate in fighting the fire. Thus, the duty to suppress and extinguish fires is not a primary job function to justify Mr. Erney's membership in the PFRS pursuant to N.J.S.A. 43:16A-1.2.

* * * *

In determining whether Lawrence [Township] qualified as a "firefighting unit" under the law, the evidence presented shows that Lawrence is not a "firefighting unit." In determining whether Mr. Erney's duties qualified him as a "firefighter," it is clear . . . that a "firefighter's" primary duties must be the control and extinguishment of fires. . . . [A] member's "occasional" involvement in extinguishing and controlling fires, especially small ones, is not sufficient for PFRS membership if the member's main area of responsibility and the great majority of his or her duties lie in the area of public safety. . . . Mr. Erney . . . , even initially as a Fire Prevention Specialist, did not have the primary duty of extinguishing fires. Rather, the primary duties associated with the Fire Prevention Specialist position are civilian: inspecting building premises to detect and eliminate fire hazards.

Thus, the evidence presented clearly shows that Mr. Erney's primary job duties with Lawrence Township were to inspect fires and handle code matters--both civilian job duties. The evidence does not support the ALJ's finding that "Mr. Erney's obligation to fight fires was mandatory . . . and would have suffered consequences if he did not respond to the fire." . . . Furthermore, the evidence in the record is insufficient for Mr. Erney to prove that he continued to qualify as a "firefighter" pursuant to N.J.S.A. 43:16A-1.2, as he accepted more civilian job responsibilities during his employment with Lawrence Township. Lastly, from a policy standpoint, the decision to allow Mr. Erney to be reinstated in the PFRS flies in the face of the legislative intent of Chapter 204, P.L. 1989 [to restrict and reduce membership in PFRS]. For the foregoing reasons, the Initial Decision of the ALJ is rejected and Mr. Erney's pension membership should be properly transferred to the Public Employees' Retirement System.

The PFRS Board also ruled that the ALJ incorrectly determined that Mr. Erney had held a UFD title. The Board noted that the fact that petitioner never held a UFD job with the Township was confirmed by the testimony of the Township Manager, stating that "[t]he significance of UFD positions is that the job titles that are UFD specifically include a primary duty of extinguishing and suppressing fires[.]" The Board also found significant the fact that petitioner was not a member of any of the three volunteer fire companies within the Township, nor was he ever a member of the local IAFF, the firemen's collective bargaining unit, noting that petitioner was a member of the local CWA chapter, a civilian collective bargaining unit.

On appeal, petitioner presents the following arguments for our consideration:

POINT I

THE BOARD IS IN ERROR ON THE LAW AND VIOLATED ITS OWN ADMINISTRATIVE RULES AND REGULATIONS AND SO IS NOT ENTITLED TO DEFERENCE BY THIS REVIEWING COURT AND IS PER SE ARBITRARY IN DENYING APPELLANT MEMBERSHIP BENEFITS.

POINT II

A. THE BOARD COMMITTED NUMEROUS ERRORS MANDATING REVERSAL. AT ALL TIMES, APPELLANT WAS PERFORMING THE SAME FIRE SUPPRESSION DUTIES AS THOSE WHICH ORIGINALLY QUALIFIED HIM FOR MEMBERSHIP AND WAS AT ALL TIMES A MEMBER OF PFRS IN FACT; AND, THE BOARD ERRED IN DETERMINING THAT LAWRENCE TOWNSHIP IS NOT A FIREFIGHTING DISTRICT; IN DETERMINING THAT APPELLANT'S MEMBERSHIP CEASED WHEN HE TOOK A NEW JOB TITLE; IN FAILING TO CONDUCT AN ANALYSIS AS REQUIRED BY P.L.1989, c. 204; AND FURTHER, IN TERMINATING APPELLANT'S MEMBERSHIP.

B. APPELLANT QUALIFIES FOR RETIREMENT BY VIRTUE OF THE "GRANDFATHER" CLAUSE OF THE STATUTE.

POINT III

EQUITABLE ESTOPPEL APPLIES AGAINST THE BOARD IN THIS MATTER.

POINT IV

THE DOCTRINE OF SUBSTANTIAL COMPLIANCE IS APPLICABLE AGAINST THE BOARD IN THIS MATTER.

POINT V

APPELLANT HAS MET HIS BURDEN OF PROOF AND COUNSEL FEES SHOULD BE ASSESSED AGAINST THE BOARD.

We first address the proper procedures applicable to an analysis of this pension dispute. Administrative agencies have the inherent authority to reopen and modify previous decisions. In re Kallen, 92 N.J. 14, 24 (1983); Skulski v. Nolan, 68 N.J. 179, 195 (1975); Ruvoldt v. Nolan, 63 N.J. 171, 183 (1973); In re D'Aconti, 316 N.J. Super. 1, 10-11 (App. Div. 1998). However, in the exercise of that authority, there must be reasonable diligence exerted by the agency. Skulski, supra, 68 N.J. at 195-96; Handlon v. Belleville, 4 N.J. 99, 106-07 (1950); D'Aconti, supra, 316 N.J. Super. at 11..

What constitutes "reasonable diligence" depends on the interplay of the time element with a number of other factors, such as the reason for the administrative reexamination; the fraud or illegality that led to the original administrative action and any contribution by the pensioner to that fraud or illegality; and the extent of any reliance or justified change of position by the pensioner. Skulski, supra, 68 N.J. at 196; Ruvoldt, supra, 63 N.J. at 183-84.

In applying these principles in Ruvoldt, the Court found it would be unjust to reopen the pensioner's case eight years after the grant of his pension. 63 N.J. at 184-85. Accordingly, there are indeed limits placed on the authority of an administrative agency to reconsider previously-granted pensions. Skulski, supra, 68 N.J. at 197.

In weighing the conflicting considerations of the general policy against dissipation of public funds through unauthorized pension grants, the reliance of the pensioner on the pension grant, and the issues of time and reasonable diligence, "[t]here is no easy formula to resolve issues of this kind. The ultimate objective is fairness to both the public and the individual [pensioner]." Tremarco Corp. v. Garzio, 32 N.J. 448, 457 (1960); accord Sautto v. Edenboro Apartments, Inc., 84 N.J. Super. 461, 420 (App. Div.), certif. denied, 43 N.J. 353 (1964); Winn v. Margate, 204 N.J. Super. 114, 123 (Law Div. 1985). See also Skulski, supra, 68 N.J. at 197 (applying this principle in Tremarco to the reopening of the grant of a pension).

Thus, "even with respect to public entities, equitable considerations are relevant in evaluating the propriety of conduct taken after substantial reliance by those whose interests are affected by subsequent actions." Skulski, supra, 68 N.J. at 198. See also Summer Cottagers' Assn v. Cape May, 19 N.J. 493, 504 (1955) (noting that the doing or forbearing to do an act induced by the conduct of another may work an estoppel to avoid wrong or injury ensuing from reasonable reliance upon such conduct).

In Skulski, supra, the Court adopted a two-step approach in applying these equitable considerations, stating in pertinent part:

The first phase of the inquiry concerns the threshold question of the propriety of reexamining the merits of a prior pension grant. Except to the extent noted below, the merits of the arguments for or against entitlement itself are not pertinent to this phase of the proceedings. With respect to this aspect of the inquiry, the pensioner will have the burden of coming forward with evidence of such facts and circumstances as will justify the conclusion that the merits of his entitlement to pension benefits should not be reexamined. This determination will be based on proofs by pensioner which may include the following:

(1) the applicant's subjective good faith belief that he was entitled to benefits;

(2) the extent of the applicant's change of position in reliance on the initial pension grant; and

(3) the extent to which the applicant's reliance has foreclosed alternate opportunities for pension benefits.

* * * *

With respect to the time period between the initial grant and the [agency's] reconsideration, the [agency] will have the burden of both coming forward and burden of proof (persuasion) that action was taken within a reasonable period and with due diligence. . . .

* * * *

If, but only if, the [agency] sustains [its] burden of proving that the pension award should be reconsidered, the second phase of the inquiry becomes material, that is, a determination as to whether the applicant was . . . entitled to a pension pursuant to the statute.

At the said second phase, the original decision of the [agency] in awarding the pension is still entitled to a presumption of validity and, accordingly, the [agency] should bear the onus of proving that the applicant was not entitled to the pension at the time of the original grant. It may satisfy this burden by a preponderance of the evidence as to the invalidity of the original action. . . .

[68 N.J. at 199-201.]

Thus, the threshold issue in cases of this nature is "whether the pension grant[] should be reopened at all and if so, whether the [agency] has sustained [its] burden of showing that the [pensioner was] not entitled to benefits measured against" these standards. Skulski, supra, 68 N.J. at 201. It is only after a determination has been made that it is appropriate for the agency to reopen its decision awarding a pension that the merit of the pensioner's entitlement to a PFRS pension is considered. Stated differently, the proper procedure is to first consider whether equitable principles would preclude the agency from reopening its previous grant of a PFRS pension. Here, petitioner should have first been required to come forward with evidence to demonstrate that the merit of his entitlement to a PFRS pension should not be reexamined. That would include the pensioner demonstrating: (1) whether he had a subjective good faith belief that he was entitled to a PFRS retirement benefit; (2) whether he had changed his position in reliance on the pension grant; and (3) the extent to which that reliance had foreclosed alternate opportunities for pension benefits.

Here, however, both the ALJ and the PFRS Board initially addressed the merits of petitioner's pension entitlement, instead of first considering whether there were equitable considerations that precluded the reopening and modification of the pension grant by the Board. Notwithstanding this divergence from the Court's procedural dictates in Skulski, we cannot conclude that our review has been adversely affected since an adequate record was developed in the OAL proceedings and all arguments were considered. See Stevens v. Board of Trustees of the Public Employees' Retirement System, 309 N.J. Super. 300, 305 (App. Div. 1998) (holding that improper allocation of burden of proof on employee to establish his entitlement to continued pension benefits did not affect the result where the Board of Trustees had fully and thoroughly analyzed all of the evidence).

It is, of course, unfortunate that the ineligibility determination was made after the pension grant. Seemingly, the intensity and length of this litigation could have been avoided had the issue of petitioner's "eligibility" requirements been reviewed or audited prior to embarking on the processing and approval of his requests to purchase PFRS service credits, and prior to the approval of his pension-benefit retirement application. See Skulski, supra, 68 N.J. at 201 (noting that there should be prompt, diligent inquiry into the merits of each pension application). The Board's October 18, 2001 letter to petitioner states that an audit was performed on his account "[d]ue to [his] retirement," indicating it may be the procedure of the PFRS Board to only audit an account after it has already granted a retirement application. If so, we urge the Board to examine whether such a procedure should be modified to comport with the expectations expressed by the Court in Skulski, ibid.

Applying the criteria outlined in Skulski, supra, 68 N.J. at 200, the record discloses that petitioner certainly had a good faith belief that he was entitled to a PFRS pension benefit. The PFRS Board had enrolled him in the PFRS many years ago, accepted his PFRS pension contributions over the years, issued his annual enrollment statements, and approved his application for service credits, accepting the sum of $114,876 from him in return for those credits. Thereafter, the PFRS Board approved his retirement application and paid him several months in benefits before reconsidering and terminating benefits.

With respect to petitioner's change of position in reliance on the initial pension grant, petitioner borrowed significant funds to purchase service credits, left his position with Lawrence Township in order to retire, took a position with Ewing Township, and enrolled in the PERS. However, petitioner's reliance has not foreclosed alternate opportunities for him to receive pension benefits because he can certainly eventually obtain a pension benefit through the PERS upon meeting the eligibility requirements of that pension system. Moreover, PFRS has offered to refund all of the monies petitioner paid to acquire service credits or, at petitioner's option, recalculate a purchase of PERS service credits and refund the difference to him. The Division of Pensions and Benefits also agreed to recalculate the appropriate amount of contributions under the PERS and refund the difference.

Balanced against these considerations are the reasons advanced by the PFRS for reexamination of the pension grant; whether there was any illegality in the action of the PFRS and, if so, whether petitioner bears some responsibility in that action; and the length of time between the reexamination and the action taken.

The PFRS Board of Trustees is the agency vested with the general responsibility for proper operation of the PFRS. N.J.S.A. 43:16A-13(1). Public pension systems are bound up in the public interest, and provide employees significant rights which are deserving of conscientious protection. See Zigmont v. Board of Trustees, Teachers' Pension and Annuity Fund, 91 N.J. 580, 583 (1983); Uricoli v. Police & Firemen's Retirement Sys., 91 N.J. 62 (1982). Among those interests is the responsibility of the PFRS Board to guard against disruption of that pension system's funding mechanism and protection of the actuarial soundness of its pension system. Fraternal Order of Police v. Board of Trustees, Police and Firemen's Retirement Sys., 340 N.J. Super. 473, 480 (App. Div. 2001); Wilson v. Board of Trustees of the Police & Firemen's Retirement Sys., 322 N.J. Super. 477, 483 (App. Div. 1998); Turbidy v. Consolidated Police & Firemen's Pension Fund Comm'n, 84 N.J. Super. 257, 263 (App. Div. 1964).

We also note that petitioner's enrollment in the PFRS, the consequential grant of his application to purchase PFRS service credits, and the approval of his PFRS retirement benefit application were based on his PFRS enrollment as a Fire Prevention Specialist. However, petitioner only held that title from November 1, 1988 to May 1, 1989. As of May 2, 1989, petitioner became the Township's Fire Subcode Official, an ineligible position for PFRS membership, and he never held thereafter a PFRS-eligible position. Moreover, the "grandfathered" provisions of P.L.1989, c. 204, codified as N.J.S.A. 43:16A-1.2, became effective December 20, 1989. By that time, petitioner was no longer serving in a PFRS-eligible title; therefore, the protection accorded by that enactment was inapplicable.

The PFRS Board approved petitioner's retirement application at its August 20, 2001 meeting. Approximately two months later, by letter dated October 18, 2001, the PFRS Board informed petitioner it appeared he "may have retired from a Civil Service position that is not covered by the PFRS." Therefore, the reopening and change of decision occurred shortly after the grant of the application for retirement.

Our review of a final administrative decision "is quite circumscribed." Fraternal Order of Police, supra, 340 N.J. Super. at 479 (citing In re Taylor, 158 N.J. 644, 656 (1999)). Essentially, our scope of review is limited to whether the agency's decision offends the State or Federal Constitution; whether it violates express or implied legislative policies; whether there is substantial evidence in the record to support the findings on which the agency decision was based; and 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 relevant factors. In re Taylor, supra, 158 N.J. at 565; Brady v. Board of Review, 152 N.J. 197, 210-11 (1997).

Weighing these factors in light of our standard of review, we conclude that the action of the PFRS Board in reviewing the grant of a PFRS pension to petitioner was a reasonable exercise of its authority to reopen and modify its previous determination, and was undertaken with due diligence and within a reasonable time.

We begin our analysis of the merits with a review of the relevant statutory language. N.J.S.A. 43:16A-1(3) defines a "Member" of PFRS to "mean any policeman or fireman included in the membership of the retirement system[.]" N.J.S.A. 43:16A-1(2)(b) defines the term "fireman" to

mean a permanent, full-time employee of a firefighting unit whose primary duties include the control and extinguishment of fires and who is subject to the training and physical and mental fitness requirements applicable to the position of municipal firefighter established by an agency authorized to establish these requirements on a Statewide basis, or comparable training and physical and mental fitness requirements as determined by the board of trustees. The term shall also include an administrative or supervisory employee of a firefighting unit whose duties include general or direct supervision of employees engaged in fire control and extinguishment activities or training responsibility for these employees and a requirement for engagement in fire control and extinguishment activities if necessary. As used in this paragraph, "firefighting unit" shall mean a municipal fire department, a fire district, or an agency of a county or the State which is responsible for control and extinguishment of fires.

[Emphasis added.]

All public employees actively employed in positions meeting the definition of "fireman" shall be members of PFRS. N.J.A.C. 17:4-2.1(a). N.J.S.A. 43:16A-1(2)(b)

was part of a series of amendatory laws intended to increase the retirement allowance of police officers and firefighters and restrict and reduce membership in PFRS. . . .

The articulated objective was to encourage police officers and firefighters to "retire[] at a younger age, in order to protect the public." Hearing on S. 2602 Before The Assembly State Gov't Comm., 203rd Legis., 2d Sess., at 18 (Feb. 6, 1989) (Statement of Douglas Forrester, Director, Div. of Pensions). It was said in the legislative hearings that police officers and firefighters were to be given enhanced benefits "because the nature of [their] duties . . . requir[ed] a level of physical attributes [and energy] which [are] found, statistically speaking, among younger members." Ibid. The underlying idea was to "facilitate" early retirement and "turnover within the system" by "giv[ing] better benefits." Ibid. In signing the bill, the Governor also emphasized the objective of "restrict[ing] eligibility for membership" by allowing only "police and fire personnel" to participate in the system. Governor's Press release for S. 2602, at 2 (Dec. 19, 1989).

[In re Union County Prosecutors, 301 N.J. Super. 551, 559-60 (App. Div. 1997) (Emphasis added).]

For these reasons, "[f]rom its inception, the PFRS . . . provided police and firefighters with a more generous pension than the State's other pension systems, such as the Pubic Employee's Retirement System (PERS). . . . Consequently, there was considerable impetus for employees to try to qualify for membership." Kossup v. Board of Trustees, PFRS, 372 N.J. Super. 468, 473 (App. Div. 2004). In light of the clear legislative intent to limit PFRS membership, the finding of the PFRS Board that petitioner's primary duties did not include the control and extinguishment of fires, a requirement for membership, is supported by the record on appeal. Irrespective of the titles petitioner held during his employment with Lawrence Township, it cannot be reasonably concluded that his "primary duties include[d] the control and extinguishment of fires[,] N.J.S.A. 43:16A-1(2)(b), nor can it be reasonably found that petitioner was "an administrator or supervisory employee of a firefighting unit whose duties included general or direct supervision of employees engaged in fire control and extinguishment activities or training responsibility for these employees[,]" ibid. Therefore, petitioner cannot be considered a "fireman" eligible for PFRS membership pursuant to N.J.S.A. 43:16A-3. Petitioner was at fire scenes for reasons other than the control and extinguishment of fires. Although he was issued firefighting gear, "firefighting" was not a primary duty. To the extent his various job titles included "fire," those positions had little to do with the work of actually fighting fires.

Accordingly, we affirm the determination by the PFRS Board that petitioner was not entitled to a PFRS pension benefit, substantially for the reasons articulated by the Board in its written final administrative decision dated August 9, 2004. We also agree with the Board that because there were no material factual disputes, it was not required to accord deference to the findings and conclusions of the ALJ. The Board's interpretation and application of N.J.S.A. 43:16A-1(2)(b) comports with the clearly-expressed legislative purpose.

Although, in its August 9, 2004 decision the PFRS Board did not directly deal with the issue of the refund of the pension payments made to petitioner prior to the Board's determination of ineligibility after its reopening and reversal of its grant of the pension, it is evident from the Board's November 21, 2001 determination that petitioner "will be requested to reimburse the PFRS all retirement money received since July 1, 2001." In all likelihood, since there was no stay of the Board's November 21, 2001 initial determination, the Board may have already accomplished the "requested" reimbursement, perhaps offset by "[t]he contribution rate difference between PFRS and PERS" as suggested in the November 21, 2001 letter.

It is here that we part company with the PFRS Board. We conclude that the equitable considerations discussed above weigh heavily in favor of petitioner when applied to the period between the effective date of the original pension grant July 1, 2001 and the reversal of that determination on November 21, 2001. The failure of the PFRS Board to properly determine petitioner's eligibility for a pension prior to granting his pension application led to these circumstances. Therefore, it would be inequitable to permit the PFRS Board to recoup payments made prior to its re-determination on November 21, 2001. Therefore, to the extent the final administrative decision can be construed to require petitioner to repay those PFRS pension benefits he received subsequent to the grant of his pension benefit, and prior to that determination, it is reversed.

In summary, the final administrative determination of the PFRS Board is affirmed to the extent of petitioner's ineligibility for receipt of a PFRS pension as of the November 21, 2001 re-determination date, but is reversed to the extent it requires petitioner to repay pension benefits paid to him between July 1, 2001 and November 21, 2001. Petitioner shall inform the PFRS Board as to whether he desires a refund of the $114,876.03 paid by him for the purchase of thirteen years of service credits, or whether he desires the transfer of the purchased service credits to his PERS account, in which event the PFRS Board shall refund petitioner the difference between a PERS service-credit purchase, and the $114,876.03 cost for the PFRS service-credit purchase. As noted in the November 21, 2001 initial decision of the PFRS Board, "[t]he contribution rate difference between PFRS and PERS will be refunded to [petitioner]." The matter is remanded to the PFRS Board to effectuate the terms of this opinion.

 
Affirmed in part, reversed in part, and remanded. We do not retain jurisdiction.

"UFD" means "Uniform Fire District."

At the hearing held in this matter in the Office of Administrative Law (OAL), both petitioner and William Guhl, Municipal Manager of Lawrence Township, testified that petitioner never held a "UFD" title with the Township. Additionally, although a "Request for Personnel Action" signed by petitioner on December 5, 1986, requested provisional appointment by the Civil Service Department as a "Fire Prevention Specialist/UFD," on December 26, 1986, an authorized representative of the Department countersigned the Request for Personnel Action, and classified petitioner's duties as "Fire Prevention Specialist."

That barrier to PFRS enrollment was overcome when petitioner's military service tenure was subtracted from his age at the time of employment.

During the OAL hearing conducted in this matter, petitioner testified that he did not have the position of Fire Inspector when he made this application. However, he contended that one of his duties in the position of Fire Prevention Specialist was as a fire inspector.

Ultimately, the Board determined that, as of November 1, 1988, petitioner had been properly enrolled in PFRS as a result of his permanent appointment as Fire Prevention Specialist, a title in which he worked from November 1, 1988 through May 1, 1989.

(continued)

(continued)

36

A-0094-04T1

January 30, 2006