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Argued May 15, 2013 Decided


Before Judges Axelrad, Sapp-Peterson and Haas.


On appeal from Board of Trustees of the Police and Firemen's Retirement System, Department of Treasury, Docket No. PFRS 3-10-038016.


John P. Belardo argued the cause for appellant (McElroy, Deutsch, Mulvaney & Carpenter, L.L.P., attorneys; Mr. Belardo, on the brief).


Danielle P. Schimmel, Deputy Attorney General, argued the cause for respondent (Jeffrey S. Chiesa, Attorney General, attorney; Lewis A. Scheindlin, Assistant Attorney General, of counsel; Ms. Schimmel, on the brief).


Appellant Bernards Township appeals from the June 19, 2012 decision of the Board of Trustees of the Police and Firemen's Retirement System (Board), which found the Township had provided an unauthorized early retirement incentive (ERI) to its police chief, Dennis Mott. Because the Board's June 19 decision is not final as to all the issues in dispute between the parties, we dismiss this appeal as interlocutory.

The following facts are pertinent to our review. In 1986, the Township hired Mott as a police officer. It appointed him to the position of police chief in January 2007. Soon thereafter, the Township decided it had made a mistake and, in late 2008, it determined to remove Mott from his position on charges of "incompetency, inefficiency and insubordination." The charges, however, were held in abeyance and settlement discussions were held between the Township and Mott.

Mott had accrued almost twenty-three years in municipal service by December 2008. He had previously served in the military. If he purchased twenty-six months of his military service, he would be able to retire from his police officer's position with twenty-five years of service. If this occurred, Mott would be "able to achieve a 'special retirement' benefit, allowing him to collect a pension of sixty-five percent of his salary, rather than a service retirement, which would have

entitled him to a fifty percent pension." In order to persuade Mott to retire, rather than contest the proposed disciplinary charges, the Township offered to pay Mott $61,301, the cost of purchasing twenty-six months of his military service. Mott quickly accepted and, using the funds given to him by the Township, he purchased his military service.

Mott filed an application for retirement with the Board in January 2009. On January 12, 2009, the Division of Pension and Benefits asked the Township to provide details of the settlement and the Township promptly did so. On March 9, 2009, the Division approved Mott's retirement application.

On April 21, 2009, the Division sent a letter to the Township advising it that the Division had determined the settlement with Mott constituted

an unauthorized [ERI], the prohibition of which has been confirmed by the NJ State Supreme Court as set forth in Fair Lawn Ed. Assn. v. Fair Lawn Bd. of Education, 79 N.J. 574 (1979), in which the [Court] held invalid an early retirement plan because it posed a potential for financial harm to the State administered retirement system and was not authorized by State Law.


The Division determined that "[t]he present value of the additional pension liability associated with the Township's retirement incentive agreement with Mr. Mott has been actuarially determined to be $237,620[.]" The Division demanded

that the Township reimburse this amount to the Police and Firemen's Retirement System (PFRS), together with $6,371 in "actuarial fees . . . incurred to prepare the analysis" of how much the Township's agreement with Mott would cost the pension fund.

In a May 4, 2009 letter, the Township contested the Division's determination that its agreement with Mott constituted an ERI and it contested the amount of the assessment the Division was attempting to collect. The matter was then considered by the Board. On October 19, 2009, the Board concluded the Township had provided an improper ERI to Mott and should reimburse PFRS for the total cost of the ERI, $237,620, plus $6,371 in actuarial fees. The Board advised the Township it could appeal the determination and request a hearing before the Office of Administrative Law (OAL). The Township did so and the Board transmitted the matter to the OAL for a contested case hearing.

The matter was heard before an Administrative Law Judge (ALJ) on January 4, and April 27, 2011. The Township produced two witnesses, Bruce McArthur, the Township Administrator, and John Carpenter, a member of the Township Committee. The Board relied upon the testimony of Mott and that of Michael Czyzyk, the supervisor of the Division's external audit unit. The only

issue covered by the testimony presented by the parties' witnesses concerned whether the Township's agreement with Mott constituted an unauthorized ERI.

No testimony was presented at the hearing about the amount of the assessment the Board was attempting to collect. At the conclusion of the hearing on April 27, 2011, the ALJ conducted a lengthy discussion with counsel concerning this omission. The Township made it clear it did not agree with the amount of the assessment the Board was seeking and it argued the Board had the burden of establishing the amount it alleged was owed. The Township further alleged the Board's calculation was "based on an erroneous formula." The ALJ concluded the hearing on April 27 by confirming that the amount sought was an open issue and advised the Board's attorney, "I think the prudent thing to do would be to bring your actuary down here. So, ultimately, I am not ordering you to do that and then it is an issue of whether or not you have met the burden. You can meet the burden on one issue, but then that other issue is still out there . . . ."

No further hearing dates were scheduled. At some point, the ALJ who had presided at the hearing left the OAL and a second ALJ was assigned to the matter. The new ALJ, with the consent of the parties, issued an "order" on April 12, 2012, limited to the issue of whether the Township's settlement with

Mott constituted an improper ERI. The ALJ concluded that it was.

On April 12, the ALJ transmitted his order to the Board for review with a cover letter which stated:

The [former ALJ] entered a letter order of May 11, 2012,1 bifurcating the issues in this case and leaving open for later the possibility of a fact hearing on the correctness of the actuarial calculation made by the Division . . . .


I am sending you the entire file, including transcripts and exhibits, together with my interlocutory order of April 12, 2012, with respect to the issue of liability and request expeditious review of the order.


[(Emphasis added).]


In a decision dated June 19, 2012, the Board adopted "the ALJ's Order that [the] Township is liable to reimburse the PFRS for additional cost of funding Dennis Mott's pension and for the cost to the actuary for calculating the additional funding." Because the issue had not been decided, no mention was made in the Board's decision as to the amount it sought to collect from the Township.

On July 27, 2012, the Township filed a Notice of Appeal from the Board's June 19, 2012 decision. On September 27, 2012,

while the appeal was pending, the ALJ sent the parties a "letter order" that stated, "[y]our joint request to stay the second phase of hearing in this matter pending decision in the Appellate Division on phase one, is GRANTED."

Appeals as of right may only be taken from a final agency decision. R. 2:2-3(a)(2). Administrative agency decisions become final when the decision-making process is complete and "its effects [are] felt in a concrete way by the challenging parties." Civil Serv. Ass'n v. State, 88 N.J. 605, 612 (1982); see also In re Donohue, 329 N.J. Super. 488, 494 (App. Div. 2000) (stating that the "administrative determination must be final as to all parties and all issues" to be appealable). The Board's June 19, 2012 decision was not final as to all issues because it did not address the significant open question of the amount, if any, the Township would have to reimburse to the Board. Therefore, the June 19 decision was clearly interlocutory, a point made clear in the ALJ's April 12, 2012 transmittal letter.

If an order is interlocutory, upon good cause shown and an absence of prejudice, we may "[g]rant leave to appeal as within time from an interlocutory order, decision or action, provided that the appeal was in fact taken within the time for appeals from judgments, decisions or actions." R. 2:4-4(b)(2). We

decline to grant such leave under the circumstances of this case. As stated almost forty years ago:

[T]he grant of leave to appeal [as within time] is most extraordinary relief and . . . the haphazard employment of it can have but a deleterious impact on appellate practice and the overall administration of justice. Piecemeal reviews, ordinarily, are anathema to our practice, as expressed in the rules which require the final disposition of all issues at one hearing on the trial level followed by orderly appellate review. The interruption of the litigation at the trial level, by the taking, as here, of an unsanctioned "appeal", disrupts the entire process and is wasteful of judicial resources.


[Frantzen v. Howard, 132 N.J. Super. 226, 227-28 (App. Div. 1975).]


The specific amount the Board seeks to collect from the Township is sharply contested. Not only does the Township contest the amount of the assessment, it questions whether, because of estoppel, the "square corners doctrine," and other possible legal impediments, the Board may recover anything at all. If the Board is unable to meet its burden of proving the amount it alleges it is due, that would likely resolve this entire matter because it is unlikely the Township would challenge a decision that it created an ERI if there were no financial penalties to it for doing so. At the same time, it cannot be seriously disputed that the Township will again appeal any adverse decision it receives concerning the amount of the

assessment. If the Township had sought leave to appeal, it would have been denied and if the Board had sought to dismiss the appeal, it would have been granted. Thus, we now decline to consider this matter in a piecemeal fashion.

In so ruling, we recognize that the Board's June 19, 2012 decision states that the Township has the right "to appeal this final administrative action to the Superior Court of New Jersey, Appellate Division, within 45 days of this letter in accordance with the Rules Governing the Court of the State of New Jersey." This information was clearly incorrect because the June 19 decision was plainly not "a final administrative action" that was appealable as of right. In any event, it is well established that a trial court or administrative agency lacks the authority to convert a plainly interlocutory order into a final one. Grow Co. v. Chokshi, 403 N.J. Super. 443, 458-59 (App. Div. 2008).

Similarly, the ALJ's September 27, 2012 order granting the parties' "joint request to stay the second phase of hearing in this matter pending decision in the Appellate Division on phase one" was insufficient to "imbue [the] interlocutory order with the cloak of finality." Id. at 459. The order merely makes clear that this matter is not final as to all issues disputed by

the parties. Accordingly, this interlocutory appeal must be dismissed.


1 The parties have not provided us with a copy of this letter order. Because the Initial Decision is dated April 12, 2012, it is likely the date of the former ALJ's "letter order" was May 11, 2011.