Matter of Olick v D'Alessandro
Annotate this CaseDecided on April 25, 2011
Supreme Court, New York County
In the Matter of the Application of Alice D. Olick, Petitioner,
against
Diane D'Alessandro AS EXECUTIVE DIRECTOR OF THE NEW YORK CITY EMPLOYEES RETIREMENT SYSTEM AND THE NEW YORK CITY EMPLOYEE'S RETIREMENT SYSTEM, Respondents.
115369/10
MOSES & SINGER, LLP
Attorneys for Petitioner
405 Lexington Avenue
New York, NY 11042
MICHAEL A. CARDOZO
Corporation Counsel of the City of New York
Attorneys for Respondent
100 Church Street
New York, NY 10007
Manuel J. Mendez, J.
Petitioner petitions the court for an order pursuant to Article 78 of the CPLR, annulling and vacating Respondents determination of a (I) reduction in the annual amount of petitioner's pension, (ii) deduction from petitioner's future pension payments of certain sums that Respondents have already paid to petitioner over the past seven (7) years since her retirement and for such other and further relief as may be just, proper and equitable.
BACKGROUND FACTS
In September 1957 Petitioner became a teacher in the New York State Public [*2]School System and simultaneously became a Tier 1 member of the New York State Teacher's Retirement System. This membership continued for five years until 1962 when she retired from teaching and withdrew from the system. In September 1979 she commenced employment as an attorney in the office of the Corporation Counsel of the City of New York. In October 22, 1979 she became a member of the New York City Employee's Retirement System (NYCERS) and was entered into the system as a tier 3 member. Around 1994 Tier 3 employees were converted to Tier 4 status. Pursuant to Chapter 646 of the Laws of 1999 certain current employee retirement system members were allowed to shift to an earlier tier status if they were previously a member of a New York State Public Employee retirement system during an earlier tier. Since Petitioner had been a member of the New York State Teacher's Retirement System from 1957 to 1962 she was able to change from Tier 4 status to Tier 1 status, and did so on October 18, 2000.
On August 28, 2002 she filed an application with NYCERS to retire from her position in the office of the Corporation Counsel, effective October 18, 2002. At that time she was advised as to her pension plan eligibility. By letter dated February 6, 2003 Greta John, Deputy Director of NYCERS advised her of her best pension options. After an exchange of correspondence and a personal visit to NYCERS office by Petitioner, on March 25, 2003 she filed a Retirement Option Election Form electing option 3. This option reduced her lifetime retirement allowance but provided that should she predecease her beneficiary, one-half of her retirement allowance would continue to be paid to him for his life. By selecting option 3 Her Annual retirement allowance was reduced from $69,105 to $62,381.
She received a document dated May 2, 2003 titled A PERMANENT RECORD OF YOUR RETIREMENT RESOLUTION. This document advised her that "YOUR RETIREMENT BENEFIT HAS BEEN PROCESSED AND YOUR RETIREMENT IS TO BE APPROVED BY THE NEW YORK CITY EMPLOYEE'S RETIREMENT SYSTEM'S BOARD OF TRUSTEES AT ITS JUNE 2003 MEETING." This document set her total Annual Retirement Allowance at $62,381. Her retirement resolution was adopted by NYCERS Board in June of 2003.
For More than seven (7) years since her retirement she received an annual pension of $62,381. On March 16, 2009 she was advised that she would receive a
" revised benefits letter" with a larger Annual Retirement Allowance. In addition in conversations had with NYCERS employees she was advised that she would receive a bulk payment for each of the seven years since her retirement.In December 2009 she received a telephone call from Ms. Greta Johns informing her that her pension was not being increased, instead it was being decreased and she was responsible for the return of excess payments in the amount of $32,879.82 made to her over the past seven years. Shortly thereafter she received a letter dated December 23, 2009 stating [*3]the details of Ms. Johns conversation. The letter set forth the new calculations, the reduced pension amount, and the overpayment of $32,879.82 which would be deducted from the new pension amount over the next five years. In the letter Ms. Johns attributed the original mistaken pension calculation to " a programming error in the original EBLS estimated computer run." Petitioner's monthly gross pension payment was reduced by almost $1,000 from $5,264.44 to $4,333.12.
Petitioner appealed NYCERS' reduction of her pension. Petitioner felt that the decision was arbitrary and capricious because it only provided her with eight days notice of the reduction, it did not take into account that she had paid taxes on the $32,879.82 alleged overpayment, and she had received notice from NYCERS on May 2, 2003 that her pension calculation was permanent. She further argued that NYCERS did not take into account that in reliance on the original calculation she and her husband had planned and budgeted for their retirement, making life altering decisions relying on the certainty that her pension would be $62,381, plus Social Security. [See notice of Petition, Affidavit of Alice D. Olick, and accompanying exhibits].
Respondents admit that petitioner was given mistaken information regarding the Annual Pension Allowance. However, this mistake was made due to a programming error in the original EBLS estimated computer run. Respondents state that petitioner engaged the services of a former New York City Actuary, Jonathan Schwartz, who spoke with Mr. Mourad Ibrahim, NYCERS' Deputy Director of Benefit Certification. Mr. Ibrahim answered Mr. Schwartz questions and sent him the worksheets explaining the calculations of petitioner's benefits. Mr. Schwartz had no further questions after reviewing the worksheets.[ See Affidavit of Greta Johns in opposition].
Petitioner argues that Respondents Should be Estopped from reducing her pension and from recovering any alleged overpayment. She states that Respondents informed her that her Annual Pension Allowance was permanent, that she relied on this calculation to make decisions that affected her life and that of her husband, that she paid taxes on this amount and that she received the Annual Pension Allowance for seven years before any alleged error was detected .
Respondents argue that Estoppel is not available against a governmental agency seeking to recoup overpayment of a benefit.
DISCUSSION
The applicable statute is New York City Administrative Code § 13-182 Retirement and Pensions. The statute states in pertinent part: " Should any change or error in records result in any member or beneficiary receiving from the retirement system more or less than he or she would have been entitled to receive otherwise, on the discovery of any such error such Board shall correct such error, and as far as practicable, shall adjust the payments in such a manner that the actuarial equivalent of the benefit to which he or she was entitled shall be paid." [*4]
Under this statute payment of public or trust funds in excess of what the beneficiary is entitled to can be recovered ( Creasy v. Roche, 72 AD2d 681, 421 N.Y.S.2d 217 [1st. Dept. 1979], Board entitled to recoup overpayment of $7,284.83 in pension benefits; Galanthay v. New York State Teachers Retirement System, 50 NY2d 984, 409 N.E.2d 945, 431 N.Y.S.2d 472 [1980], original erroneous calculation cannot be the basis for an estoppel, as such the board is entitled to correct an error giving teacher retirement benefit and to seek repayment of funds already given). If an overpayment is made the agency has authority to recoup the overpayment by withholding or reducing the current pension benefits to which the retiree would otherwise be entitled ( Brennan v. Regan, 145 Misc 2d 889, 548 N.Y.S.2d 848 [Supreme Court Albany County 1989], Retirement System gave erroneous benefit to judge in the amount of $93,286.37, inclusive of interest, court granted comptroller authority to recoup overpayment by withholding current pension benefits to which retiree would otherwise be entitled.).
The doctrine of estoppel can only be applied against a governmental entity if failure to apply the doctrine would defeat a right legally and rightfully obtained
( Owens v. Mcguire, 121 AD2d 292, 503 N.Y.S. 2d 387). An Alleged statement by city representative of City Board of Education and Department of Personnel to City Police Pension fund member that his new job with the Board of Education would not reduce his police pension did not estop the police pension fund from reducing the member's pension benefits or from recouping benefits previously overpaid to the member ( Freda v. Board of Education of the City of New York, 224 AD2d 360, 638 N.Y.S.2d 83 [1st. Dept. 1996]).
Petitioner received in error an amount she was not entitled to. Once the error was discovered, under the statute, NYCERS is entitled to recover the amount paid in excess of what petitioner is entitled to receive. This amount can be recovered by withholding or reducing the current pension benefit petitioner is receiving. That Petitioner relied on letters and statements made by NYCERS employees is of no consequence. Petitioner cannot allege that the agency is estopped from recouping any overpayment because she received the pension for seven years before NYCERS discovered the error ( see Freda v. Board of Education of the City of New York, Supra, agency entitled to recoup overpayment of erroneous amount made over 14 years; Marin v. Teacher's Retirement System of the City of New York, 24 Misc 3d 1223 (A), 897 N.Y.S.2d 670 [Supt. Ct. New York, County 2009] agency entitled to recoup overpayment of erroneous amount made over 12 years).
Marin v. Teacher's Retirement System, supra, is a case on point. In Marin the petitioner received a series of letters prior to her retirement in 1995, advising her of the amount she would receive as her regular pension. She received her pension benefits for twelve years until in January of 2007 she was advised that during a routine audit TRS had discovered a calculation error which had resulted in an overpayment in the amount of $300,184.75 and gave her three options to repay (1) repay the full amount in one lump sum; (2) take no action and TRS would, after 90 days, automatically deduct 25% monthly (3) appeal. Ms. Marin filed a Petition under Article 78. In denying and dismissing her petition the court held that " Ms. Marin does not, and cannot, reasonably dispute that the TRS made a calculation error. As such TRS has a duty to correct its erroneous calculations, and no claim of estoppel based on detrimental reliance is available to Ms. Marin" [*5]
Similarly here, after seven years NYCERS discovered the error in its calculations. NYCERS has a duty to correct its erroneous calculations and no claim of estoppel based on detrimental reliance is available to Petitioner. " The retirement system's statutory responsibility, supported by broad public policy considerations, requires that it take all necessary steps to insure the financial integrity of the pension fund."( Galanthay v. New York State Teacher's Retirement System, Supra)
CONCLUSION
In an Article 78 proceeding such as this one, the court's function is limited to a determination whether the administrative determination is arbitrary and capricious in that it is "without sound basis in reason and is generally taken without regard to the facts"( Matter of Pell v. Board of Education, 34 NY2d 222[ 1974]). Unless the decision is arbitrary, the court cannot substitute its judgment, even if it would have reached a different result if presented with the issue in the first instance ( Cuccia v. Martinez & Rihorta, P.C., 61 AD3d 609 [1st. Dept. 2009]). Applying this standard, the petition must be denied.
Accordingly, it is hereby ORDERED and ADJUDGED that the petition is denied and the proceeding is dismissed without costs or disbursements, and it is further
ORDERED, that the clerk is directed to enter judgment accordingly.
This constitutes the decision and judgment of this court.
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