PETER P. HORVATH v. LOCAL FINANCE BOARD

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-2748-04T32748-04T3

PETER P. HORVATH,

Petitioner-Appellant,

v.

LOCAL FINANCE BOARD,

Respondent-Respondent.

______________________________________________________

 

Submitted November 30, 2005 - Decided May 11, 2006

Before Judges Stern, Parker and Grall.

On appeal from the State of New Jersey,

Department of Community Affairs, Local

Finance Board, Docket No. CFB-1506-04.

Pojanowski & Trawinski, attorneys for

appellant (Joseph A. Pojanowski, III, of

counsel; Anthony DiSalvo, on the brief).

Peter C. Harvey, Attorney General, attorney

for respondent (Michael J. Haas, Assistant

Attorney General, of counsel; Daniel P.

Reynolds, Senior Deputy Attorney General, on

the brief).

PER CURIAM

Petitioner, Peter Horvath, the former Mayor of the Borough of Sussex, appeals from a "final agency decision" of the Local Finance Board (Board) in the Department of Community Affairs, entered on January 12, 2005, and concluding that Horvath's nomination of his brother-in-law as borough attorney and nomination and appointment of his daughter to positions in the municipal government, and personal use of the Borough's telephone, constituted violations of N.J.S.A. 40A:9-22.5(c) and (d), and imposing an aggregate fine of $1,200. The Board rejected the initial decision of Administrative Law Judge Jeffrey Gerson (ALJ).

The facts are not in dispute, and the Local Finance Board adopted the findings of the ALJ:

In January 1997, 1998, 1999, 2000 and 2001, Horvath nominated his brother-in-law for appointment to the position of Municipal Attorney. Each time, Joseph A. Pojanowski III was confirmed by the council.

Mr. Horvath also nominated his daughter to the Borough's Board of Recreation Commissioners on five occasions as well as appointing her to the Borough's Board of Health on two occasions. The appointment of his daughter to the Planning Board, which is without council confirmation, was pursuant to the Municipal Land Use Act, N.J.S.A. 40:55D[-1 et seq.] which sets out the manner in which members of the Planning Board shall be appointed and provides for the Mayor and Coun[]cil to fill the Planning Board seats.

The final charge against Mr. Horvath is that he used a telephone line installed by the Borough for the use in Borough matters for a private business purpose contrary to the Local Government Ethics Law, N.J.S.A. 40A:9-22.5. On or about December 31, 1997, a fax was sent from the Pinkel Funeral Home, a business in which Mr. Horvath held an interest. Submitted in evidence was a fax sent by the Mayor's daughter on funeral parlor stationery discussing Borough business. Upon being notified that the fax was sent, though contending it was done inadvertently, he compensated the Borough in the amount of $17.35, the cost of the fax.

Based on these findings, the Board found that Horvath violated N.J.S.A. 40A:9-22.5 which provides in relevant part:

(c) No local government officer or employee shall use or attempt to use his official position to secure unwarranted privileges or advantages for himself or others[.]

(d) No local government officer or employee shall act in his official capacity in any matter where he, a member of his immediate family, or a business organization in which he has an interest, has a direct or indirect financial or personal involvement that might reasonabl[y] be expected to impair his objectivity or independence of judgment[.]

The Board concluded that:

[T]he actions of Horvath in nominating his brother-in-law on five different occasions to the position of municipal attorney in the Borough of Sussex violated N.J.S.A. 40A:9-22.5(d) since, in doing so, Horvath acted in his official capacity in circumstances in which he had a direct or indirect financial or personal involvement, by virtue of his relationship with his brother-in-law, which reasonably could be expected to impair his objectivity or independence of judgment. Further, the actions of Horvath, in nominating his daughter to various local government positions in the Borough of Sussex, violated N.J.S.A. 40A:9-22.5(d) since, in doing so, Horvath acted in his official capacity in circumstances in which he had a direct or indirect personal or financial involvement, by virtue of his relationship with his daughter, which also reasonably could be expected to impair his objectivity or independence of judgment. Lastly, Horvath's official position as Mayor gave him access to the Borough telephone line and when he used the Borough telephone line for personal business he obtained an unwarranted privilege and advantage for himself in violation of N.J.S.A. 40A:9-22.5(c). The Board thereby concludes that Peter P. Horvath has violated N.J.S.A. 40A:9-22.5(c) and (d), and affirms its Notice of Violation dated August 13, 2003, including fines imposed of $1,200.00.

Petitioner argues that his daughter, Alexis, and his brother-in-law (his present counsel, Joseph Pojanowski) were not "'immediate family members' under N.J.S.A. 40A:9-22.1 et seq.," and that by finding the violations the Board "expand[ed] the legislative intent" of the statute. He further asserts that he "did not secure any unwarranted privilege or advantage," within the meaning of the statute. According to petitioner, "the statute is triggered by the official's vote and not the official's nomination of an individual to a position."

The specific arguments include the following:

POINT I THE LOCAL FINANCE BOARD CLEARLY ERRED IN

CLASSIFYING ALEXIS HORVATH AND JOSEPH A. POJANOWSKI, III, ESQ. AS IMMEDIATE

FAMILY MEMBERS UNDER N.J.S.A. 40A:9-22.1

et seq. AND CLAIMING THAT BY THOSE

APPOINTMENTS CREATED A CONFLICT OF INTEREST

POINT II THE LOCAL FINANCE BOARD ERRED BECAUSE

PETER HORVATH DID NOT SECURE ANY

UNWARRANTED PRIVILEGE OR ADVANTAGE BY

APPOINTING ALEXIS HORVATH TO VARIOUS

POSITIONS OR NOMINATING JOSEPH A.

POJANOWSKI, III, ESQ., AS BOROUGH ATTORNEY

POINT III WHETHER THE LOCAL FINANCE BOARD PROPERLY

APPLIED N.J.S.A. 40A:9-22.1 ET SEQ. TO

. . . THIS MATTER SINCE THE STATUTE

IS TRIGGERED BY THE OFFICIAL'S VOTE AND

NOT THE OFFICIAL'S NOMINATION OF AN

INDIVIDUAL TO A POSITION

POINT IV THE LOCAL FINANCE BOARD'S CLAIM THAT JOSEPH A.

POJANIOWSKI, III, ESQ., AND ALEXIS HORVATH ARE

IMMEDIATE FAMILY MEMBERS IS EXPANDING THE

LEGISLATIVE INTENT OF N.J.S.A. 40A:9-22.1

ET SEQ. AND THEREFORE IS INAPPROPRIATE

The ALJ concluded as follows:

The purpose of the Local Government Ethics Law was to foster public trust in government, provide remedies for conflicts between private interest and public duties and to ensure standards of ethical conduct and financial disclosure requirements that would be enforceable State wide. The Local Finance Board cites the Supreme Court in Wyzykowski v. Rizas, 132 N.J. 509, 524-25 (1993) with regard to the types of conflicts that can arise. Four types were described in Wyzykowski and fell into the categories of either direct pecuniary interest, indirect pecuniary interest, a direct personal interest or an indirect personal interest. There is little doubt that N.J.S.A. 40A:9-22.5(d) was intended to prevent government officers and employees from acting in their official capacity to confer a benefit on themselves or their immediate family. Financial benefit would be obvious but there was still other benefits that could accrue to a government officer or employee as exemplified by the case of [Barrett v. Union Twp. Comm'n, 230 N.J. Super. 195, 196-97 (App. Div. 1989)] in which a zoning variance was invalidated because a councilman's mother resided in the nursing home to which the variance was awarded.

The Board finds some magic in the term "personal involvement" in that Horvath appointed relatives to fill Borough positions. By focusing on the term personal involvement, the issue of a pecuniary interest, either direct or indirect, is avoided and the focus becomes either a direct or indirect personal interest.

If the Legislature intended to prevent nepotism in local government, they could have. They have in fact passed a statute preventing nepotism at the State level. See N.J.S.A. 52:14-7.1.

. . . .

Horvath appointed his brother-in-law to be the Borough's attorney. He was approved five times by the Council. The Board contends that this is "personal involvement that must be reasonably expected to impair his objectivity or independence of judgment[."] There would necessarily be a personal involvement with any appointment made by an appointing authority at a local level and to torture the language of the statute to extend it to the appointment of relatives not even characterized as "immediate family" by definition in the statute is an attempt to force a square peg into [a] round hole.

Nepotism is favoritism based on kinship. Merriam-Webster Online Dictionary. The appointment of relatives to a government position is not unethical, nor does it create a conflict between private interest and public duties unless a direct or indirect pecuniary interest or a direct or indirect personal interest is benefited. Neither has been proven here.

We agree with the decision of ALJ Gerson that the nominations and appointments at issue do not violate the statute and that the record does not permit a finding that there was a statutory violation.

We recognize that we review the final administrative determination of the Board, not the ALJ, DeBlasi v. Bd. of Trs., PERC, 315 N.J. Super. 298, 301 (App. Div. 1998); Adamar v. Dep't. of Law, 250 N.J. Super. 275, 295 (App. Div. 1991), and that we must affirm the agency's determination "unless its conduct is arbitrary, capricious or unreasonable." Ibid.; see also Henry v. Rahway State Prison, 81 N.J. 571, 579-80 (1980); Campbell v. Dep't. of Civil Serv., 39 N.J. 556, 562 (1963). Moreover, we must give deference to an agency's interpretation of a statute it administers. G.S. v. Dep't. of Human Services, 157 N.J. 161, 170 (1999); P.F. v. N.J. Div. of Developmental Disabilities, 139 N.J. 522, 529-30 (1995); Blecker v. State, 323 N.J. Super. 432, 442 (App. Div. 1999). However, with regard to questions of law, as here, the agency has "no superior ability to resolve purely legal questions, and that a court is not bound by an agency's determination of a legal issue is well established." Greenwood v. State Police Training Ctr., 127 N.J. 500, 513 (1992). We simply "are not bound by an agency interpretation of a strictly legal issue . . . when that interpretation is inaccurate or contrary to legislative objectives." G.S. v. Dep't. of Human Servs., 157 N.J. 161, 170 (1999). See also Mayflower Sec. Co. v. Bureau of Sec., 64 N.J. 85, 93 (1973) (holding that "[a]n appellate tribunal is . . . in no way bound by the agency's interpretation of a statute or its determination of a strictly legal issue").

We reverse the determinations of the Board with respect to the appointment of petitioner's daughter and brother-in-law.

The Board asserts before us that Horvath "had an indirect financial interest and a direct personal interest by virtue of his relationship with his brother-in-law and his daughter," which could be said "to impair his objectivity and independence of judgment." See N.J.S.A. 40A:9-22.5(d). Horvath's brother-in-law was paid, and hence the claim of "financial involvement" as to him, as well as "personal interest" as to both. However, N.J.S.A. 40A:9-22.5(d) relates to "members" of the official's "immediate family," and N.J.S.A. 40A:9-22.3(i) defines "member of immediate family" as "the spouse or dependent child of a local government officer or employee residing in the same household." Neither the brother-in-law nor an emancipated adult child living outside the official's home is a "member of [his] immediate family." The undisputed testimony is that she was married, living outside petitioner's home for eleven years, and was not a "dependent for tax purposes."

We agree with the Board that N.J.S.A. 40A:9-22.5(d) can be read to prohibit an official's act under circumstances in which personal involvement with a nominee or appointee, including a familial relationship, "might reasonably be expected to impair his objectivity or independence of judgment" by conduct totally unrelated to an "immediate family member" or "a business organization in which he has an interest." See In re Matter of John F. Zisa, __ N.J. Super. __ (App. Div. 2006). However, the Board's conclusory findings do not explain how such violation occurred in this case, and we find nothing in the record with respect to the nominations and appointments which can reasonably be understood to permit such a finding.

In light of our conclusion, we need not address whether a mayor with appointing authority, as in Sussex, may appoint a relative or family member to a position upon notice to the confirming governing body of the relationship. See N.J.S.A. 40A:9-22.5(d). We are inclined to see no problem with such an appointment, at least if no salary or other compensation is involved. Municipal government should not be deprived of qualified personnel, and particularly those who serve without compensation, because they are related to an appointing authority.

Finally, there was a $500 penalty for personal use of the borough telephone line, in violation of N.J.S.A. 40A:9-22.5(c). Irrespective of how the practice began, or whose fault it was, or the number of calls made, this type of practice is inappropriate and can constitute a violation of N.J.S.A. 40A:9-22.5(c), and Horvath does not challenge that assessment here, at least in any point heading or argument he advances.
Accordingly, we reverse that portion of the final agency determination which finds a violation and imposes a fine with respect to the appointments of his daughter and brother-in-law but affirm the assessment of $500 with respect to the improper use of the telephone in violation of N.J.S.A. 40A:9-22.5(c) which is not contested on this appeal.

Affirmed in part; reversed in part.

 

In light of our disposition, we do not address any issues regarding notice in the initial complaint or the procedure utilized.

Before the ALJ, the Attorney General "recognize[d that] the positions that Alexis Horvath was nominated for were not paid positions." Horvath testified that Alexis' positions were all "non-paying," and that he could not find citizens "coming forward to apply" for service. He also testified that he never received "any direct or indirect financial or personal benefit from her appointment."

The complaint and findings concerning the appointments were based exclusively on N.J.S.A. 40A:9-22.5(d). Accordingly, we address only that provision concerning the appointments, and do not consider whether an appointment or nomination can ever constitute a violation of N.J.S.A. 40A:9-22.5(c).

There was no finding in this case that the Council was not advised of Pojanowski's relationship to petitioner.

Horvath testified "there came a point in time in 1997" when he learned that his funeral home "used the Borough's line for business." Only one fax by Alexis to the borough clerk was discussed. The ALJ found that an unintended "one time inadvertent use of the Borough's telephone line" for personal reasons did not constitute a violation. We are inclined to agree, but here the Board noted that the Borough paid for the "telephone line . . . advertised on the funeral home's fax cover sheet," and petitioner does not contest the relevant finding or assessment.

(continued)

(continued)

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A-2748-04T3

May 11, 2006