Matter of McCauley v New York State & Local Employees' Retirement Sys.
Annotate this CaseDecided on August 13, 2012
Supreme Court, Albany County
In the Matter of the Application of Maureen J. McCauley, Petitioner, For a Judgment Pursuant to Article 78 of the Civil Practice Law and Rules
against
New York State and Local Employees' Retirement System, Respondents.
8143-11
MAUREEN J. McCAULEY
Self-Represented Petitioner
HON. ERIC T. SCHNEIDERMAN
Attorney General for the State of New York
(ADAM W. SILVERMAN, Esq. of Counsel)
Assistant Attorney General
For the Respondent
Patrick J. McGrath, J.
In this Article 78 proceeding, petitioner seeks a Judgment annulling and setting aside respondent's August 30, 2011 determination denying petitioner's application for her ex-husband's death benefits. Respondent opposes the petition and petitioner has submitted a Reply.
Petitioner's ex-husband ("the member") was a member of the NYS Retirement System.
During the member's Retirement System membership, he completed three forms designating beneficiaries for his death benefit. The most recent beneficiary designation filed by the member is [*2]the designation form on his May 14, 1992 application for membership in the Retirement System. On this form he designated Petitioner as primary beneficiary and his parents as contingent beneficiaries. This is the last Designation of Beneficiary Form the member filed with the Retirement System prior to his passing away on October 20, 2009. On August 30, 1999 the member and Petitioner entered into a separation agreement which resulted in a final divorce decree signed on May 28, 2004. In Article 4 of the separation agreement, the member and Petitioner agreed to sever their rights in each others' estate and particularized their mutual waivers by stating "(1) Each of the parties has been, during the course of the marriage, and is now, a participant in the New York State pension plan. (2) Each party hereby waives any claim in and to the pension of the other. Each pension shall hereafter be the sole and separate property of the respective parties and each waives his or her claim to any and all other rights, including survivor benefits."
Before the member passed away, EPTL 5-1.4 was amended by the Matrimonial Law Chapter 173 of the laws of 2008 to include the following:
"Revocatory effect of divorce, annulment or declaration of nullity, or dissolution of marriage on disposition, appointment, provision, or nomination regarding a former spouse:(a) Except as provided by the express terms of a governing instrument, a divorce (including a judicial separation as defined in subparagraph (f)(2)) or annulment of a marriage revokes any revocable (1) disposition or appointment of property made by a divorced individual to, or for the benefit of, the former spouse, including, but not limited to, a disposition of appointment by will, by security registration in beneficiary form (TOD), by beneficiary designation in a life insurance policy or (to the extent permitted by law) in a pension or retirement benefits plan, or by revocable trust, including a bank account in trust form, (2) provision conferring a power of appointment or power of disposition on the former spouse, and (3) nomination of the former spouse to serve in any fiduciary or representative capacity, including as a personal representative, executor, trustee, conservator, guardian, agent, or attorney-in-fact. (b)(1) Provisions of a governing instrument are given effect as if the former spouse had predeceased the divorced individual as of the time of the revocation. (2) A disposition, appointment, provision, or nomination revoked solely by this section shall be revived by the divorced individual's remarriage to the former spouse."
The Laws 2008, ch 173, § 2, provides as follows:
"This act shall take effect immediately and shall apply only where the marriage of a person executing a disposition, appointment, provision or nomination in a governing instrument, as defined in EPTL 5-1.4(f)(5), such section as added by section one of this act, to or for the benefit of a former spouse ends in a divorce or annulment, as defined in EPTL 5-1.4(f)(2), on or after such effective date or, where such a marriage ends prior to such effective date, only where such a disposition, appointment, provision or nomination takes effect only at the death of the person who executes it and such person dies on or after the effective date of this act."
At the administrative hearing below, petitioner alleged that she was the named beneficiary [*3]of the member's death benefits on file with Respondent and that she was entitled to the member's death benefits. In opposition, the Executrix of the member's estate argued that EPTL 5-1.4 revoked the designation of Petitioner's entitlement to the member's death benefit. A hearing was held on November 22, 2010. On June 2, 2011, Administrative Law Judge Herbert R. Johnston, Jr. denied Petitioner's application. On August 30, 2011, the determination was adopted by Executive Deputy Comptroller Kevin F. Murray for Respondent who determined and directed that Petitioner's application for the member's death benefits was denied.
Petitioner now asserts that the Respondent's application of New York State Estates, Powers and Trusts Law 5-1.4 ("EPTL 5-1.4") was arbitrary and capricious as it "abrogates existing contracts" as well as respondent's own mandate to pay death benefits to the duly named beneficiary. She claims there is no basis in law to apply EPTL "retroactively", as the statute contains no express language allowing such application, and that retroactive application is generally disfavored by New York Courts. Additionally, she claims that respondent failed to give members notice that it was "substituting a new law for prior law."
Further, that Respondent's application of EPTL 5-1.4 violates the New York State Administrative Procedure Act ("SAPA") because respondents did not file a SAPA notice preceding their interpretation of EPTL 5-1.4 and its application to the payment of death benefits.
Petitioner also argues that the United States Supreme Court has determined that paying a beneficiary pursuant to an automatic divorce revocation statute instead of a designation conflicted with the goals of an ERISA plan, but also concedes that the pension at issue is not an ERISA plan.
Finally, she alleges that the hearing officer below was biased, noting that the Hearing Officer has decided 42 out of 45 cases assigned to him by respondent in respondent's favor, and that this constitutes a "presumptive bias."
Respondent first argues that the petition must be dismissed for petitioner's failure to join a necessary party, specifically, the beneficiary of the member's death benefit. A party whose interests may be inequitably affected by a judgment must be made a party to the action. See CPLR 1001 [a]. This rule applies to CPLR article 78 proceedings. See Matter of Dudley v Kerwick, 52 N.Y2d 542, 547, 552 (1981). If a person who should be made a party was not, the court may simply order joinder (CPLR 1001 [b]) or it may allow the case to proceed without the necessary party. In this case, the Court agrees with respondent that the beneficiary would be a necessary party, but the proper remedy would be to order joinder rather than dismiss the case. As such, the motion to dismiss on these grounds is denied.
Turning to the merits, respondent argues, and the Court agrees, that EPTL 5-1.4 directed its actions. Respondent argues that the unambiguous language provided by the statute leaves no question as to the legislative intent that this law applies to Petitioner's set of circumstances. While the member designated Petitioner as a beneficiary and was divorced from Petitioner prior to the enactment of Chapter 173, the member passed away following its creation. ("This act shall take [*4]effect immediately...or, where such a marriage ends prior to such effective date, only where such a disposition, appointment, provision or nomination takes effect only at the death of the person who executes it and such person dies on or after the effective date of this act."). As the law, by its own terms, applies to all deaths on or after July 7, 2008, petitioner's claim has no merit.
The Court also agrees that respondent was not required to give notice mandated by SAPA and the New York State Constitution. Article IV § 8 of the New York State Constitution provides that "[n]o rule or regulation made by any state department, board, bureau, officer, authority or commission, except such as relates to the organization or internal management of a state department, board, bureau, authority or commission shall be effective until it is filed in the office of the department of state. The legislature shall provide for the speedy publication of such rules and regulations by appropriate laws." It is well settled that "only a fixed, general principle to be applied by an administrative agency without regard to other facts and circumstances relevant to the regulatory scheme . . . constitutes a rule or regulation required by NY Constitution, article IV, § 8 to be filed in the office of the Department of State." Matter of Roman Catholic Diocese of Albany v. New York State Dept. of Health, 66 NY2d 948, 951. Where the purpose of a statutory scheme is specific, as here, all that is required to effect its mandate is conformity with the statutory language and policy. There is no constitutional compulsion to translate the Legislature's standards into formal and detailed rules. Mtr of Occidental Chem. Corp. v New York State Envtl. Facilities Corp., 113 AD2d 4, 6, lv den 67 NY2d 604; Mtr of O'Neil v Metropolitan Transit Authority, 143 AD2d 739 (2d Dept 1988); Mtr of Richard I, Inc. v. Ambach, 61 NY2d 784 (1984). In this case there was no need for a "rule," since EPTL 5-4.1 prescribes by law that the death benefit in question was revoked upon the dissolution of the member's marriage to Petitioner. EPTL 5-4.1 is self-implementing.
Respondent notes that Petitioner has cited the internal policy and procedure enacted by Respondent following the enacted of Chapter 173, but it is apparent that those documents are internal memorandum meant to explain how Respondent's employees should proceed under the newly enacted law. The memoranda rely on existing regulations and laws for its stated conclusions. It thus is interpretive and falls within the exception provided in SAPA. See SAPA § 102[2][b][iv]; Matter of Rubin v. New York State Educ. Dept., 210 AD2d 550, 552; see also Matter of Town of Middletown v. State Bd. of Real Prop. Servs., 272 AD2d 657, 660; Matter of Burns v. New York State Off. of Vocational & Educ. Servs. for Individuals with Disabilities, 233 AD2d 781, 782—83, lv. dismissed 89 NY2d 1002.
With respect to petitioner's claim of bias, the Court agrees with respondent that she has failed to "set forth a factual demonstration supporting the allegation as well as prove that the administrative outcome flowed from it." Matter of Sunnen v. Administrative Review Bd. for Professional Med. Conduct, 244 AD2d 790, 791 (1997), lv. denied 92 NY2d 802 (1998) [citations omitted]; see Matter of Moss v. Chassin, 209 AD2d 889, 890 (1994), lv. denied 85 NY2d 805 (1995), cert. denied 516 U.S. 861 (1995).
For all of the foregoing reasons, the petition is dismissed. [*5]
This shall constitute the Decision, Order and Judgment of the Court. The original Decision, Order and Judgment is being returned to the counsel for the respondent, who is directed to enter this Decision, Order and Judgment and to serve counsel for the petitioners with a copy of this Decision, Order and Judgment with notice of entry. The signing of the Decision, Order and Judgment and delivery of a copy of the Decision, Order and Judgment shall not constitute entry or filing under CPLR Rule 2220. Counsel is not relieved from the applicable provisions of that rule respecting filing, entry and notice of entry.
SO ORDERED AND ADJUDGED,
ENTER
Dated: Albany, New York
August 13, 2012
____________________________________
Patrick J. McGrath
Supreme Court Justice
Papers considered:
1.Notice of Petition, dated December 28, 2011; Verified Petition, dated December 28, 2011, with annexed Exhibits A-E.
2.Answer, dated February 21, 2012; Affirmation, Adam W. Silverman, Esq., dated February 21, 2012; Memorandum of Law, dated February 21, 2012.
3.Petitioner's Memorandum of Law in Response to Respondent's Opposition to Petition, dated May 1, 2012.
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