John Welsh v. Board of Trustees, Police and Firemen's

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-0191-14T4
JOHN WELSH,
APPROVED FOR PUBLICATION
Appellant,
January 15, 2016
v. APPELLATE DIVISION
BOARD OF TRUSTEES, POLICE AND
FIREMEN'S RETIREMENT SYSTEM,
Respondent.
_______________________________________________
Submitted December 8, 2015 – Decided January 15, 2016
Before Judges Yannotti, St. John, and
Guadagno.
On appeal from the Board of Trustees of the
Police and Firemen's Retirement System,
Department of Treasury, PFRS No. 107244.
Feeley & LaRocca, LLC and The Blanco Law
Firm, LLC, attorneys for appellant (Pablo N.
Blanco, of counsel and on the brief; John D.
Feeley, on the brief).
John J. Hoffman, Acting Attorney General,
attorney for respondent (Melissa Dutton
Schaffer, Assistant Attorney General, of
counsel; Danielle P. Schimmel, Deputy
Attorney General, on the brief).
The opinion of the court was delivered by
GUADAGNO, J.A.D.
John Welsh appeals from the August 5, 2014 final
administrative determination of the Board of Trustees (Board) of
the New Jersey Police and Firemen's Retirement System (PFRS),
denying his request to reactivate and merge his former PFRS
pension account with his current PFRS account. We affirm.
The facts are not in dispute. Welsh first enrolled in the
Public Employee's Retirement System (PERS) on November 1, 1997
when he was working as a security guard with Passaic County. On
October 1, 1999, Welsh's job title changed to corrections
officer, and his membership in PERS was transferred to PFRS.
In March 2003, Welsh and another corrections officer were
accused of assaulting an inmate. After a hearing, Welsh was
suspended without pay. In April 2004, Welsh was charged with
third-degree aggravated assault. He resigned by letter dated
April 6, 2004.
Welsh maintained that the Passaic County Sheriff (Sheriff)
and County Prosecutor (Prosecutor) agreed to resolve the
criminal matter with Welsh being admitted into a pre-trial
intervention program without having to make any admission of
wrongdoing. Welsh further claimed that he received assurances
that he would eventually be allowed to return to serve as a
sheriff's officer if he successfully completed the pre-trial
intervention program.
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On April 7, 2004, a consent order was entered into with the
Prosecutor, admitting Welsh in the pre-trial intervention
program for a period of six months. The criminal matter was
dismissed at the conclusion of the six-month period, on November
10, 2004.
On December 12, 2004, the Sheriff wrote a letter to the
Prosecutor inquiring as to Welsh's reinstatement. On December
16, 2004, the Prosecutor advised the Sheriff that he did not
recommend Welsh being considered for a position in Passaic
County law enforcement.
Welsh's last PFRS pension contribution before he resigned
was on March 31, 2003. On December 15, 2004, the New Jersey
Division of Pensions and Benefits (Division) sent a letter to
Welsh explaining that his PFRS account would expire two years
after his last pension contribution, and noting an "Account
Expiration Date" of March 31, 2005.
In January 2005, Welsh filed an application with the New
Jersey Department of Personnel (DOP) seeking reemployment with
the Sheriff's Office, and was advised that his name had been
certified to the Sheriff by the DOP as being eligible for
reemployment as a corrections officer.
On June 17, 2005, the Sheriff advised the DOP that the
Sheriff's Office had submitted Welsh's recommendation in error.
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The Sheriff stated that he did not sign the application, but
instead, a facsimile stamp had been used without his approval.
He also requested the application be rescinded due to the fact
that Welsh voluntarily resigned for disciplinary reasons. On
July 12, 2005, the DOP approved the Sheriff's request and
rescinded Welsh's application.
Welsh appealed to the DOP, and, on December 23, 2005, the
DOP issued a final administrative determination upholding the
removal of Welsh's name from the reemployment list. Welsh
appealed to this court, and we affirmed. We noted that "there
is nothing in the record that disputes the Sheriff's
representation that the submission was not authorized by him,
nor is there anything in the record that would question the fact
that the Sheriff stated that it was not in the best interest of
the Department to re-employ the appellant." In re Varcadipane
and Welsh, No. A-3148-05 (App. Div. Mar. 12, 2007) (slip op. at 8).
Welsh filed a complaint alleging breach of contract and
breach of an implied covenant of good faith against the
Sheriff's Office. On August 13, 2007, Welsh entered into a
settlement agreement with the Sheriff's Office, which provided
that, upon passing a fitness for duty examination, he would be
reemployed as a corrections officer at the same pay rate he held
prior to his resignation. Welsh executed a release that
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provided "all of [Welsh's] monetary claims for back pay, pension
credits, health benefits, and/or monetary damages as alleged,
are hereby dismissed with prejudice." The agreement further
stated that "[t]here will be no monetary contributions,
payments, or settlement payments to [Welsh], as such [Welsh]
will not receive back pay; pension credits; outstanding medical
bills, or the like." The agreement was filed with the Law
Division on October 16, 2007.
On October 29, 2007, Welsh returned to work and was re-
enrolled in a new PFRS pension account, effective November 1,
2007. On June 9, 2008, the County Pension Administrator
inquired of the Division whether Welsh's former PFRS account
could be reinstated. The Division responded that Welsh's former
PFRS account could not be reinstated because it expired on March
31, 2005, two years after his last pension contribution on March
31, 2003.
On November 1, 2010, Welsh and the Sheriff's Office
executed a rider to the settlement agreement, which amended
Welsh's "date of reinstatement" from October 29, 2007 to January
28, 2005. On August 1, 2011, the Civil Service Commission1
(Commission) granted the Sheriff's Office's request to change
1
On June 30, 2008, a law took effect that abolished the DOP and
transferred all its powers and duties to the Civil Service
Commission.
5 A-0191-14T4
Welsh's reinstatement date to January 28, 2005, but with the
caveat that it was "for salary step placement and seniority-
based purposes only."
In March 2013, the Sheriff's Office requested that the
Division combine Welsh's former and current PFRS accounts,
"thereby recording his service from November 1, 1997 to present
with a break of service between April 6, 2004 [and] January 28,
2005." The County Pension Administrator joined in the request.
On November 7, 2013, the Division denied the request,
concluding that Welsh's prior PFRS account expired on March 31,
2005. The Division noted that Welsh's last pension contribution
was March 31, 2003; he formally resigned on April 6, 2004; and
despite the amended re-hire date, the settlement agreement did
not award any back pay or pension credits between April 3, 2003
and October 29, 2007. The Division advised that Welsh could
withdraw the prior account's funds and "purchase all, or a
portion of, the prior [PFRS] membership under his current PFRS
membership[.]"
Welsh appealed the Division's decision to the Board,
arguing that the Division erred because: (1) he was not seeking
pension credit for the period of the amended reinstatement date
(January 28, 2005) to the day he began working again (October
29, 2007); (2) he never withdrew funds from his former PFRS
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account; (3) he was only seeking to have the PFRS accounts
merged; and (4) that the Division mistakenly denied his request
because it believed that he was re-hired on October 29, 2007.
After meeting to consider Welsh's appeal, the Board denied
Welsh's request, concluding that he was not reinstated with back
pay and did not receive any service credit between April 1, 2003
and October 29, 2007. Welsh appealed and, on August 5, 2014,
the Board issued a final administrative determination denying
the appeal.
On appeal, Welsh claims that he should be permitted
reinstatement of his original pension account because the Board
failed to recognize that it is permitted to consider equitable
factors to craft a just remedy in these circumstances.
We begin by noting the well-established principles that
guide our review. Our review of an administrative agency
determination is limited. Mazza v. Bd. of Trs., 143 N.J. 22, 25
(1995). We will not upset an agency's factual findings unless
they are "arbitrary, capricious or unreasonable, or . . . lacked
fair support in the evidence[.]" Campbell v. Dep't of Civil
Serv., 39 N.J. 556, 562 (1963). We are not bound by an agency's
legal conclusions or its interpretation of a statute. Mayflower
Sec. Co. v. Bureau of Sec., 64 N.J. 85, 93 (1973). The party
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challenging the administrative determination bears the burden of
proof. Boyle v. Riti, 175 N.J. Super. 158, 166 (App. Div. 1980).
Welsh claims that because the rider to his settlement
agreement amended his reinstatement date to January 28, 2005,
his current PFRS account should be merged with his former PFRS
account, which expired on March 31, 2005. Welsh further argues
that the nunc pro tunc amendment had the effect of reversing the
expiration of his former PFRS account because it resulted in
shortening his absence from employment to less than two years.
In the alternative, Welsh argues that the Division erred because
it "failed to recognize that it is permitted to consider
equitable factors to craft a just remedy in these
circumstances."
The termination of a PFRS account is governed by N.J.S.A.
43:16A-3, which provides in pertinent part:
(3) Should any member withdraw his
aggregate contributions, or become a
beneficiary or die, or if more than 2 years
have elapsed from the date of his last
contributions to the system, he shall
thereupon cease to be a member.
(4) Should any member resign or be
dismissed from the police or fire service of
the employing agency and not make
application for the return of his aggregate
contributions, the retirement system shall
upon receiving conclusive advice of such
separation, terminate the membership. . . .
[N.J.S.A. 43:16A-3 (emphasis added).]
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It is not disputed that Welsh resigned on April 6, 2004,
after being charged with aggravated assault of an inmate and his
employer agreeing that he could leave in good standing. We are
satisfied that his resignation resulted in a termination of the
former PFRS membership under N.J.S.A. 43:16A-3(4).
In addition, Welsh's last pension contribution to his
former PFRS account was made on March 31, 2003, and there were
no contributions made between that time and March 31, 2005.
Welsh received notice that his former PFRS account would expire
on March 31, 2005. After more than two years elapsed with no
pension contributions, his former PFRS account expired pursuant
to N.J.S.A. 43:16A-3(3). See Cologna v. Bd. of Trs., Police and
Firemen's Ret. Sys., 430 N.J. Super. 362, 375 (App. Div. 2013)
(analyzing the legislative history of N.J.S.A. 43:16A-3, which
was adopted after a conditional veto rejecting a proposed
amendment that would have extended the return to service period
from two to three years because the amendment was unnecessarily
broad and would lead to a sharp rise in costs).
There are narrow exceptions to N.J.S.A. 43:16A-3 where a
PFRS account will not terminate. N.J.A.C. 17:1-2.18 is entitled
"Service and salary credit: award of back pay," and provides in
pertinent part:
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(a) A member who appeals the suspension or
termination of the member's employment and
who, by award or settlement, becomes
entitled to full pay for all or a portion of
that employment for the period of such
suspension or termination shall receive
service credit for the period covered by the
award or settlement provided a full normal
pension and, if applicable, the contributory
group life insurance contribution is
received from the member or is deducted from
the value of the award. The member must
receive full back pay, including normal
salary increases before mitigation and the
contributions will be computed on the base
salaries that the employee would have earned
for the reinstated suspended or terminated
period. In the event that the amount of
back payment, after mitigation, is
insufficient to deduct the value of the
normal pension contributions and, if
applicable, the contributory group life
insurance due, such contribution shall be
paid by the member to the respective
retirement system by certified check or
money order.
(b) If a member waives an award of back
pay, then the member cannot receive service
or salary credit for the period of the
award.
. . . .
(f) For those defined contribution
retirement programs administered by the
Division, the member is not entitled to the
employer contributions for the period of the
award unless the member receives an award
equal to full back pay pursuant to N.J.A.C.
17:1-2.18.
[N.J.A.C. 17:1-2.18.]
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Here, the settlement agreement between Welsh and the
Sheriff's Office, and its attached rider altering Welsh's
reinstatement date to January 28, 2005, do not prevent the
former PFRS account from expiring. Welsh's argument that his
"absence from employment was for less than two years, from April
6, 2004 to January 28, 2005" focuses on his adjusted resignation
and reinstatement dates, rather than the date of his last
pension contribution. As we have explained, N.J.S.A. 43:16A-
3(3) is unequivocal that the relevant date for purposes of the
two-year expiration period is the "date of [the member's] last
contributions to the system." Because Welsh failed to make any
contributions to his former PFRS account within two years of his
last contribution date, March 31, 2003, his PFRS membership
expired.
Moreover, Welsh does not qualify for an exception under
N.J.A.C. 17:1-2.18. As noted, the regulation requires that a
"full normal pension . . . contribution is received from the
member or is deducted from the value of the award." N.J.A.C.
17:1-2.18(a). Here, Welsh's settlement agreement expressly
prohibited any back pay or pension credit, and provided that
"all of [Welsh's] monetary claims for back pay, pension credits,
health benefits, and/or monetary damages . . . are hereby
dismissed with prejudice." The terms of the agreement provided
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that there "will be no monetary contributions, payments, or
settlement payments to [Welsh]" and he "will not receive back
pay; pension credits; outstanding medical bills, or the like."
The 2010 rider did not alter Welsh's disentitlement to back
pay, pension credit, or service credit under the agreement. The
rider only requested that Welsh's date of reinstatement be
changed to January 28, 2005. Further, when the Commission
granted the Sheriff's Office's request to change Welsh's
reinstatement date, it expressly limited the application of the
rider to apply to "salary step placement and seniority-based
purposes only." Therefore, neither the settlement agreement nor
its attached rider prevented the termination of Welsh's former
PFRS account.
Despite the clear intent of the controlling statute and
regulation, Welsh maintains that the Board has "stymied what
Welsh and his employer intended" in the settlement agreement,
and argues that we should disregard these provisions and remand
because the Board should exercise its equitable powers, namely
equitable estoppel, to craft an appropriate remedy in this case.
The doctrine of equitable estoppel is "rarely invoked
against a governmental entity." Middletown Twp. Policemen's
Benevolent Ass'n Local No. 124 v. Twp. of Middletown, 162 N.J.
361, 367 (2000) (quoting Wood v. Borough of Wildwood Crest, 319
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N.J. Super. 650, 656 (App. Div. 1999)). The doctrine can be
invoked "where interests of justice, morality and common
fairness clearly dictate that course." Ibid. (quoting Gruber v.
Mayor & Twp. Comm. of Raritan, 39 N.J. 1, 13 (1962)). In
Middletown, the Supreme Court explained:
The essential principle of the policy of
estoppel here invoked is that one may, by
voluntary conduct, be precluded from taking
a course of action that would work injustice
and wrong to one who with good reason and in
good faith has relied upon such conduct. An
estoppel . . . may arise by silence or
omission where one is under a duty to speak
or act. It has to do with the inducement of
conduct to action or nonaction. . . . The
repudiation of one's act done or position
assumed is not permissible where that course
would work injustice to another who, having
the right to do so, has relied thereon.
[Ibid. (quoting Summer Cottagers' Ass'n of
Cape May v. City of Cape May, 19 N.J. 493,
503-04 (1955)).]
Welsh relies on our opinions in Sellers v. Board of
Trustees of the Police and Firemen's Retirement System, 399 N.J.
Super. 51 (App. Div. 2008), and Francois v. Board of Trustees,
Public Employees' Retirement System, 415 N.J. Super. 335 (App.
Div. 2010), in arguing that an equitable remedy is appropriate
in this case. In both cases, we applied the doctrine of
equitable estoppel to the actions of New Jersey pension boards.
However, contrary to Welsh's arguments, both cases are
significantly distinguishable because the petitioners in those
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cases were able to show detrimental reliance on either their
employer's or the pension board's actions.
In Sellers, supra, a thirty-eight-year old dispatcher with
Essex County College left his job in order to take a position as
a firefighter with Bloomfield Township under the mistaken belief
that credit for prior service would exempt him from the
prohibitions in N.J.S.A. 43:16A-3, N.J.A.C. 17:4-2.5, and a
prohibition against hiring and enrolling in PFRS any officer
over thirty-five-years old. 399 N.J. Super. at 52-55.
We noted that changes in the Age Discrimination in
Employment Act, 29 U.S.C.A. § 623(a), triggered the development
of a practice "whereby the Board ha[d] exercised equitable
powers to waive the age requirement on a case-by-case basis[,]"
id. at 55, and that, several years before, the Board permitted
"at least nine individuals to enroll in PFRS . . . despite the
fact they exceeded the maximum age requirement[,]" id. at 57.
We also noted the unique overlap of the statutory scheme at
issue, which required the petitioner to be enrolled in PFRS in
order to be a firefighter, and therefore made the Township's
decision to hire him dependent on the Board's PFRS
determination. Id. at 60-61. We stated "[a] problem arises in a
case, such as this one, where the municipality believes that the
age requirement is met and the Board determines, after the
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employee has been permanently hired, that the age requirement
has not been met." Id. at 61.
Given that the petitioner left his job to be a firefighter,
and that he was hired and initially approved by the Board, we
remanded the case so that the Board could consider crafting a
solution that took into account the equities of the situation,
including whether "the government failed to 'turn square
corners' with [the petitioner]." Id. at 62. We noted:
People accepting the firefighter positions
in good faith should not be putting their
careers and the financial well-being of
their families in jeopardy by giving up
their current jobs and accepting public
employment only to find out later that they
do not meet the age requirements for the
positions, particularly when all of the
relevant information was available to the
State and municipality before the
commencement of employment.
[Ibid.]
Our decision in Francois is similar. There, the petitioner
was an employee of the New Jersey Economic Development Authority
(NJEDA), and served on "mobility assignment" for a two-year
period as director of the real estate department of the Port
Authority of New York and New Jersey (Port Authority). Francois,
supra, 415 N.J. Super. at 338.
When initially accepting the mobility assignment, and when
it was extended, the petitioner was sent memoranda from the
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NJEDA that advised that he "may continue to accrue service
credit with the New Jersey State Pension System . . . for
retirement purposes during the term of this assignment." Id. at
341, 343. The facts were "clear that . . . at age fifty-three
and after approximately twenty-seven years of creditable
service . . . [the petitioner] did not want to jeopardize or
sacrifice his pension benefits." Id. at 343.
The petitioner eventually advised the NJEDA that he
intended to retire and join the Port Authority. Id. at 344.
When applying for retirement, the Division did not credit the
petitioner's time on mobility assignment. Id. at 345.
In reversing the Division's decision, we cited Sellers and
explained that the petitioner received written assurances from
the NJEDA before taking the assignment, and that he was
"entitled to presume that he would not be penalized by accepting
the mobility assignment while remaining on the [NJEDA] payroll
and being paid by it." Id. at 353. We explained that there was
no authority that required an agency to obtain the approval of
the Division before making assignments, or gave the Division the
authority to monitor the work assignments of State employees.
Id. at 354. Although we limited the wages eligible for the
petitioner's pension benefits, we concluded that equitable
16 A-0191-14T4
considerations entitled him to service credit for the time spent
on the mobility assignment. Id. at 355-56.
The petitioners in Sellers and Francois both demonstrated
detrimental reliance on express assurances of employment
qualification or pension credit either by their employers or the
pension boards. In this case, however, Welsh has not shown
detrimental reliance, the essential principle undergirding
equitable relief.
Welsh asserts that he and the Sheriff's Office "entered
into a settlement agreement which both believed would result in
Welsh receiving pension credit for his prior service from
November 1, 1997 to August 6, 2004." The express terms of the
agreement, which Welsh and the Sheriff both signed, contradict
this claim. It was an express term of Welsh's release of his
lawsuit against the Sheriff's Office, and of his reemployment
with them, that he "will not receive . . . pension credits[.]"
There is no evidence that Welsh accepted his reinstatement in
reliance on receiving pension credit or that his former PFRS
account remain active.2
2
The only other conditions of Welsh's reinstatement included
passing a fitness for duty examination, an assessment of his
underlying conduct to ensure that he is not a safety threat, and
authorization to return to work from the Prosecutor.
17 A-0191-14T4
Welsh also argues that the 2010 rider amending his
reinstatement date to January 28, 2005 permitted reinstatement
of his former PFRS account. Again, there is no evidence that
the rider was executed in reliance on receiving pension credit,
or that the rider was meant to change the express terms of the
settlement agreement, which prohibited Welsh from receiving such
credit. There are no assurances in this case that Welsh would
continue receiving pension credit, or that his account would
remain active, after he resigned. The settlement agreement and
rider were executed well after Welsh's PFRS account properly
expired. Neither provided any assurances regarding
reinstatement or merging of his PFRS accounts, nor induced a
course of action by Welsh.
Welsh has not shown with any specificity why justice
requires an equitable remedy. Welsh continues to be employed by
the Sheriff's Office, still has his current PFRS membership
account, and is still entitled to withdraw the funds from his
former PFRS account and purchase his former service for credit
in his current account.
Affirmed.
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