JOSEPH J. SANTIAGO et al. v. CITY OF TRENTON

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-5702-04T55702-04T5

JOSEPH J. SANTIAGO and

CITY OF TRENTON,

Plaintiffs-Respondents,

v.

BOARD OF TRUSTEES OF THE

POLICE AND FIREMEN'S

RETIREMENT SYSTEM,

Defendant-Appellant,

and

TRENTON POLICEMEN'S BENEVOLENT

ASSOCIATION LOCAL 11 and

TRENTON SUPERIOR OFFICERS'

ASSOCIATION,

Defendants-Intervenors.

__________________________________

 

Argued December 7, 2005 - Decided February 16, 2006

Before Judges Skillman, Axelrad and Miniman.

On appeal from Superior Court of New Jersey, Law Division, Mercer County, Docket No. L-618-05.

Michael J. Haas, Assistant Attorney General, argued the cause for appellant (Peter C. Harvey, Attorney General, attorney; Nancy Kaplen, Assistant Attorney General, of counsel; Mr. Haas, on the brief).

Stephen E. Trimboli argued the cause for respondents (Laufer, Knapp, Torzewski & Dalena, attorneys for Joseph Santiago; R. Denise Lyles, City Attorney, attorney for the City of Trenton; Mr. Trimboli and Ms. Lyles, of counsel and on the brief; James T. Prusinowski, also on the brief).

No other parties participated in this appeal.

PER CURIAM

Defendant Board of Trustees (Board) of the Police and Firemen's Retirement System (PFRS) appeals, by leave of court, from the issuance of a preliminary injunction staying a proceeding before it related to plaintiff Joseph Santiago, which was scheduled for April 11, 2005. The PFRS Board contends that the trial court ignored longstanding precedents which hold that only the Appellate Division may review the actions of a state administrative agency. It also contends that the trial court ignored the portion of R. 2:2-3(a)(2) that requires that administrative remedies be exhausted before an agency's action is reviewed by any court. We reverse the issuance of the injunction on both grounds.

Santiago began his career as a policeman in Essex County and eventually became the Police Director for the City of Newark. He was enrolled in PFRS until he retired in March 2002. Santiago had also established membership in the Public Employees' Retirement System (PERS) before March 2002. After retirement he assumed the position of Superintendent of the Division of State Police until November 1, 2002, and was permitted to continue his membership in PERS. On February 19, 2003, he became the Police Director of the City of Trenton where he continued to contribute to the PERS and to receive his PFRS retirement benefits.

The Board is a state administrative agency charged with the responsibility of administering the PFRS and of ensuring that qualified members receive all the benefits to which they are entitled. N.J.S.A. 43:16A-13. PFRS members adversely affected by a Board decision have the right to request an administrative hearing conducted by the Office of Administrative Law. N.J.A.C. 17:4-1.7(c). The Board's actions and decisions are also subject to review by the Appellate Division pursuant to R. 2:2-3(a)(2).

On January 27, 2005, the State Police Benevolent Association (PBA) sent a "Petition to Re-Enroll Trenton Police Director" to Board Secretary Jamison. Acting on behalf of Trenton PBA Local 11 and the Superior Officers Association (SOA), the State PBA asserted that Santiago was "performing the duties of positions covered by the PFRS." The State PBA asked PFRS to "investigate this matter and re-enroll [Santiago] as a member of the PFRS."

Jamison brought this petition to the Board's attention at its open public meeting on February 14, 2005. The Board decided to obtain additional information from the City of Trenton regarding Santiago's employment. Before it even formally requested that information, Santiago and the City filed a declaratory judgment action in the Law Division on March 4, 2005, against the Board seeking a declaration that Santiago should not be re-enrolled in PFRS. The complaint asked that the Board be restrained and enjoined from depriving Santiago of PFRS retirement benefits.

On March 10, 2005, the Board sent a letter to the City requesting certain information about Santiago's employment. The City, Santiago, and Santiago's attorney were all advised that the Board would consider the matter at its April 11, 2005 open public meeting. Santiago and the City provided the requested information on March 23 and 24, respectively, and the State PBA filed a response with the Board on March 29, 2005.

On March 31, 2005, Santiago and the City obtained an order directing the Board to show cause on April 6, 2005, why its decision to review Santiago's pension status should not be stayed and the Board enjoined from taking any action regarding same. In an opinion and order issued on April 8, 2005, the trial court granted the requested injunction. A motion for reconsideration was denied on May 26, 2005.

In his opinion granting the injunction and subsequently in denying reconsideration, the trial judge concluded that he could proceed in the matter despite R. 2:2-3(a)(2), which vests exclusive jurisdiction in the Appellate Division to review final decisions or actions of an administrative agency or officer. The judge gave three reasons for this conclusion. First, the rule was not triggered because the lawsuit was filed before the Board gave notice of a public meeting; thus, there was no final decision or action to review. Second, exhaustion of administrative remedies was not required because the Board did not have primary and exclusive jurisdiction under N.J.S.A. 43:16A-17. Third, exhaustion of administrative remedies did not preclude taking jurisdiction over the dispute because enrollment in PFRS was an issue of law under applicable statutes and regulations. In addition, the trial judge was concerned about a running dispute between Santiago and Trenton PBA Local 11 and about comments that three PFRS Board members had made on the merits.

I.

At one time, all prerogative-writ cases - certiorari, quo warranto, mandamus, and prohibition - were heard in the former Supreme Court. Cent. R.R. Co. v. Neeld, 26 N.J. 172, 184 (1958); Carls v. Civil Serv. Comm'n of N.J., 17 N.J. 215, 218-221 (1955); Ward v. Keenan, 3 N.J. 298, 303-305 (1949). The 1947 New Jersey Constitution superseded prerogative writs and provided for review, hearing and relief in the Superior Court "on terms and in the manner provided by rules of the Supreme Court, as of right . . . ." N.J. Const. art. VI, 7, 2.

The early rules adopted by the Supreme Court "contemplated that every proceeding to review the action or inaction of a local administrative agency would be by complaint in the Law Division . . . and that every proceeding to review the action or inaction of a state administrative agency would be by appeal to the Appellate Division." Cent. R.R. Co., supra, 26 N.J. at 184-85.

Our current rules provide for review as of right of any final decision or action of any state administrative agency or officer by the Appellate Division. R. 2:2-3(a)(2). On leave granted, we may also review "an interlocutory decision or action of a state administrative agency or officer, if the final . . . decision or action thereof is appealable as of right pursuant to R. 2:2-3(a) . . ." R. 2:2-4.

The exclusiveness of appellate jurisdiction has been clearly stated in our decisions:

Under our present practice, the Law Division and the Appellate Division each has jurisdiction over all [actions in lieu of prerogative writs], no matter by what writs they would have been prosecuted at common law, the only difference being that if the defendant is a state agency, plaintiff should proceed in the Appellate Division, . . . while against all other agencies he must sue in the Law Division. In other words, regardless of the essential sameness of the claim, it is only the identity of the defendant that determines whether one division or the other has jurisdiction.

[DeNike v. Bd. of Trs., 62 N.J. Super. 280, 291 (App. Div. 1960), aff'd 35 N.J. 430 (1961).]

Commencement of a Law Division declaratory judgment action in lieu of appeal to the Appellate Division was specifically disapproved by the Supreme Court. Carls, supra, 17 N.J. at 219-220; see also Mutschler v. N.J. Dep't of Envtl. Prot., 337 N.J. Super. 1, 9 (App. Div.), certif. denied, 168 N.J. 292 (2001) ("The Appellate Division's exclusive jurisdiction does not turn on the theory of the challenging party's claim or the nature of the relief sought."); Equitable Life Mortgage v. N.J. Div. of Taxation, 151 N.J. Super. 232, 237 (App. Div.), certif. denied, 75 N.J. 535 (1977) (a declaratory judgment action contravenes a state constitutional imperative that a challenge to agency action be "sought by way of a review in lieu of prerogative writs" and also contravenes "the mandate of the implementing rules of practice in allocating the business of the courts that such review be initiated in this court, and not in the trial division of the Superior Court").

The trial court cannot consider the merits of the action when the Appellate Division has exclusive jurisdiction, but must either dismiss it or transfer it to us. Equitable Life, supra, 152 N.J. Super. at 238; R. 1:13-4(a). Mutschler has reiterated that proposition:

If a challenge to the action or inaction of a state administrative agency is brought in a trial court, that court has the responsibility to transfer the matter to this court on the motion of a party or "on its own initiative." R. 1:13-4(a). If a trial court fails to transfer a challenge to state agency action to this court and instead decides the merits, we may exercise our original jurisdiction on appeal from the judgment and review the underlying agency action as if the challenging party had appealed directly to this court. See Degnan v. Nordmark & Hood Presentations, Inc., 177 N.J. Super. 186, 191 (App. Div.), appeal dismissed, 87 N.J. 427 (1981). In that event, we review only the agency's action, not the trial court's determination of a matter over which it had no jurisdiction.

[Mutschler, supra, 337 N.J. Super. at 10.]

There are exceptions to exclusive appellate review. In Baldwin Constr. Co. v. Essex County Bd. of Taxation, 27 N.J. Super. 240, 242 (App. Div.), supplemented after reargument, 28 N.J. Super. 110 (App. Div. 1953), aff'd, 16 N.J. 329 (1954), we held that where the administrative body's authority was confined to a single locality, such as a county, the proceeding should be brought in the Law Division. In Pfleger v. N.J. State Highway Dept., 104 N.J. Super. 289 (App. Div. 1968), we held that the Law Division had jurisdiction over inverse condemnation actions because the Highway Department had no administrative machinery for condemning land and making a record which could be reviewed by us. We also excepted actions for access to information pursuant to the Open Public Records Act, N.J.S.A. 47:1A-1, from exclusive Appellate Division jurisdiction because of the need for trial and fact-finding. Hartz Mountain v. NJSEA, 369 N.J. Super. 175, 187-88 (App. Div.), certif. denied, 182 N.J. 147 (2004). None of these exceptions applies here.

The trial court justified taking jurisdiction on the ground that the Board had not given notice of a public meeting when the declaratory judgment action was filed, had not yet met when the injunction was issued, and certainly had not taken final action. The trial court thus reasoned that R. 2:2-3(a)(2) did not apply because no final agency action had been taken. However, we have jurisdiction even where the agency has taken no action at all because Rules 2:2-3(a)(2) and 2:2-4 contemplate that every proceeding to review state agency action or inaction be by appeal to the Appellate Division. Hosp. Ctr. at Orange v. Guhl, 331 N.J. Super. 322, 329 (App. Div. 2000). Plaintiffs' preemptive strike to avoid agency action cannot defeat our exclusive jurisdiction. Furthermore, the agency did take action when it determined on February 14, 2005, to obtain additional information from the City of Trenton with respect to the petition the Board Secretary received on January 27, 2005, and to address the matter at the next public meeting. These interlocutory actions were reviewable on leave to appeal under R. 2:2-4.

II.

The requirement for exhaustion of administrative remedies finds its genesis in the creation of the Interstate Commerce Commission in 1887 and the creation of commissions with commingled legislative, executive and judicial powers. Ward, supra, 3 N.J. at 302. It is designed to permit administrative bodies to achieve simplicity and uniformity. Ibid. R. 2:2-3 specifically recognizes this legal principle. It provides that review of final decisions or action of any state administrative agency or officer "shall not be maintainable so long as there is available a right of review before any administrative agency or officer, unless the interest of justice requires otherwise." R. 2:2-3(a)(2).

Two early exceptions to exhaustion were recognized in Ward. They were (1) a challenge on persuasive grounds to the jurisdiction of the statutory tribunal; and (2) a palpably defective charge that renders jurisdiction of the statutory tribunal merely colorable. Ward, supra, at 308-09. Over time, other exceptions have arisen:

The exhaustion doctrine is not an absolute. Exceptions exist when only a question of law need be resolved, Nolan v. Fitzpatrick, 9 N.J. 477, 487 (1952); when the administrative remedies would be futile, Naylor v. Harkins, 11 N.J. 435, 444 (1953); when irreparable harm would result, Roadway Express, Inc. v. Kingsley, 37 N.J. 136, 142 (1962); . . . or when an overriding public interest calls for a prompt judicial decision, Baldwin Const. Co. v. Essex Cty. Bd. of Taxation, 24 N.J. Super. 252, 274 (Law Div. 1952), aff'd, 27 N.J. Super. 240 (App. Div. 1953).

[Garrow v. Elizabeth Gen. Hosp., 79 N.J. 549, 561 (1979).]

The trial court concluded that exhaustion of administrative remedies in this case was not required for three reasons: the issue involved a pure question of law, irreparable harm would result from re-enrolling Santiago in PFRS, and the Board did not have exclusive jurisdiction.

We are not persuaded that the issue presented with respect to Santiago is purely a question of law, as the trial judge concluded. He overlooked an important portion of N.J.S.A. 43:16A-1(2)(a)(iv):

The term ["Policeman"] shall also include an administrative or supervisory employee of a law enforcement unit or the State whose duties include general or direct supervision of employees engaged in investigation, apprehension or detention activities or training responsibility for these employees and a requirement for engagement in investigation, apprehension or detention activities if necessary, and who is authorized to carry a firearm while in the actual performance of his official duties and has police powers.

[Ibid.]

This presents a mixed question of law and fact. The facts must be determined, and the provision must be interpreted and applied to the facts.

Even if the issue of Santiago's re-enrollment was purely a question of law, exhaustion may still be required. Triano v. Div. of State Lottery, 306 N.J. Super. 114, 122-23 (App. Div. 1997). Moreover, our Supreme Court has held that "[a]ppellate courts must defer to an agency's expertise and superior knowledge of a particular field." Greenwood v. State Police Training Ctr., 127 N.J. 500, 513 (1992). This is particularly appropriate here because the Board has expertise in determining membership under the statute. "New Jersey courts generally defer to the interpretation that an agency gives to a statute that agency is charged with enforcing." Koch v. Dir., Div. of Taxation, 157 N.J. 1, 8 (1999). Accordingly, the Board must develop the facts and determine the issues in the first instance.

The trial court's conclusion that irreparable harm will result if exhaustion is required had no support in the facts before the court. No harm is inflicted at all from the action of the Board in deciding to consider the petition here at issue. Santiago may or may not be harmed by final agency action. The possibility of future harm, irreparable or otherwise, does not justify an exception to the requirement of exhaustion. Once the Board acts, if Santiago believes that irreparable harm will result before all administrative remedies can be exhausted, he may seek relief from this court, such as a stay under R. 2:2-4.

The trial judge relied on Magliochetti v. State by Comm'r of Transp., 276 N.J. Super. 361, 376-77 (Law Div. 1994), for the proposition that the exhaustion rule has limited application where administrative jurisdiction over the subject matter is not primary and exclusive. He then concluded that N.J.S.A. 43:16A-17 did not grant primary and exclusive jurisdiction to the Board, but it is not clear how he came to that conclusion.

Exclusive agency jurisdiction is readily determined when the Legislature expressly so provides, as in N.J.S.A. 5:12-133 (The Casino Control Commission "shall have exclusive jurisdiction over all matters delegated to it or within its powers under the provisions of this act."), and N.J.S.A. 21:1A-139 ("The commissioner shall have exclusive jurisdiction over the regulation of the manufacture, sale, transportation, storage and use of explosives."). Otherwise, legislative intent to grant exclusive jurisdiction to a state agency must be gleaned from the general statutory scheme creating the agency. Browning-Ferris Indus. of North Jersey, Inc. v. City of Passaic, 116 N.J. 83, 90 (1989); Juzek v. Hackensack Water Co., 48 N.J. 302, 312-13 (1966); DeFazio v. Haven Sav. and Loan Ass'n, 22 N.J. 511, 518-19 (1956); and Town of Kearny v. Hackensack Meadowlands Dev. Comm'n, 344 N.J. Super. 55, 60 (App. Div. 2001). Accordingly, we review the statute creating the Board.

N.J.S.A. 43:16A-13 provides "the general responsibility for the proper operation of the retirement system is hereby vested in a board of trustees." The Board is charged with responsibility to annually establish rules and regulations. N.J.S.A. 43:16A-13(7). It has exercised that authority. See N.J.A.C. 17:4-1.1 to 17:4-7.3. The Board must determine which positions shall continue to be covered under the retirement system upon recommendation of the Director of the Division of Pensions. N.J.S.A. 43:16A-1.2(a), -3. In addition, the Board must determine entitlement to benefits. N.J.S.A. 43:16A-5. Although the Division of Pensions pays out benefits, it does not share any of the responsibilities delegated to the Board.

In light of this general statutory scheme, we conclude that the Legislature intended to grant primary and exclusive jurisdiction to the Board over issues relating to membership and entitlement to benefits in PFRS. Accordingly, the trial court erred when it concluded that exhaustion was not required because the Board did not have primary and exclusive jurisdiction.

The trial court expressed concern about the ongoing disputes between Santiago and PBA Local 11 and the SOA as justifying immediate intervention in this matter. However, any such disputes are not relevant to the issue here, i.e., agency review of Santiago's pension status.

As to Board members commenting on the merits before proofs were submitted, the Board has sought the legal advice of the Attorney General as to whether these members should be disqualified from sitting on this matter. At this juncture we can only assume that the advice given will be accepted by the Board.

The preliminary injunction is reversed, and the matter is remanded to the trial court for dismissal of the action.

 

(continued)

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A-5702-04T5

February 16, 2006