BERNARD SHALKOWSKI VS. STATE POLICE RETIREMENT SYSTEMÂ (BOARD OF TRUSTEES, STATE POLICE RETIREMENT SYSTEM)

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court."
Although it is posted on the internet, this opinion is binding only on the
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SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-3057-15T2
BERNARD SHALKOWSKI,
Petitioner-Appellant,
v.
STATE POLICE RETIREMENT
SYSTEM,
Respondent-Respondent.
_______________________________
Argued June 1, 2017 - Decided June 30, 2017
Before Judges Whipple and Mawla.
On appeal from the Board of Trustees, State
Police Retirement System, PFRS No. 8-10-3975.
Lauren Sandy argued the cause for appellant
(Loccke, Correia & Bukosky, attorneys; Ms.
Sandy, of counsel and on the briefs).
Robert E. Kelly, Deputy Attorney General,
argued the cause for respondent (Christopher
S. Porrino, Attorney General, attorney;
Melissa H. Raksa, Assistant Attorney General,
of counsel; Mr. Kelly, on the brief).
PER CURIAM
Appellant Bernard Shalkowski appeals from a March 23, 2016
determination by the Board of Trustees of the State Police
Retirement System (Board) affirming a January 8, 2016 decision by
the Office of Administrative Law (OAL) finding he was not entitled
to an additional three percent of final compensation on his
pension. Having considered appellant's claims, we affirm the
Board's decision.
The following facts are taken from the record. Appellant,
born June 12, 1956, joined the New Jersey State Police on January
15, 1987. He served for twenty-four years and six months before
mandatorily retiring at the age of fifty-five. Upon retirement,
appellant made a written request for an administrative review and
final determination of his final pension compensation. Appellant
sought the request because he was "under the mistaken impression
that he would receive a pension of fifty percent compensation plus
three percent for each year over twenty, up to twenty-four years,
eleven months service credit." The Division of Pension and
Benefits (Division) informed appellant he was not entitled to
receive the additional three percent upon retirement because he
was not a member of the State Police Retirement System (SPRS) as
of August 29, 1985, the date on which the Legislature conferred
the additional retirement benefit pursuant to N.J.S.A. 53:5A-8.
Appellant sought review of the Division's determination and
argued the Board was equitably estopped from applying the statute
to him because during his recruitment, training and employment
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with the State Police he had reasonably relied upon representations
contained in correspondence, handbooks and newsletters issued by
SPRS promising he (and others similarly situated) would receive
the additional three percent benefit. Appellant also claimed he
turned down more lucrative employment with municipal law
enforcement agencies in detrimental reliance upon the
representations contained in State Police literature.
As noted above, both the OAL and the Board agreed with the
Division's application of the statute. The Board adopted the
OAL's findings and concluded the plain language of N.J.S.A. 53:5A-
8 made clear it did not apply to appellant. It also accepted the
OAL's findings appellant did not prove the elements of equitable
estoppel and did not establish the decision was arbitrary,
capricious, or unreasonable. The Board also found persuasive the
reasoning of a Law Division decision dismissing a separate class
action age discrimination lawsuit filed by appellant, and thus
denied appellant's claim.
Appellant now appeals the Board's determination asserting the
same arguments, namely, the Board improperly denied his equitable
estoppel claims and its decision was arbitrary, capricious and
unreasonable. For the following reasons, we affirm.
Our scope of review in the case of an administrative agency’s
final decision is limited. In re Hermann, 192 N.J. 19, 27 (2007).
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"An agency’s determination on the merits 'will be sustained unless
there is a clear showing that it is arbitrary, capricious, or
unreasonable, or that it lacks fair support in the record.'"
Saccone v. Bd. of Trs. of Police & Firemen's Ret. Sys., 219 N.J.
369, 380 (2014) (quoting Russo v. Bd. of Trs., Police & Firemen’s
Ret. Sys., 206 N.J. 14, 27 (2011)). To determine whether agency
actions are arbitrary, capricious, or unreasonable, we must
consider:
(1) whether the agency's action violates
express or implied legislative policies, that
is, did the agency follow the law; (2) whether
the record contains substantial evidence to
support the findings on which the agency based
its action; and (3) whether in applying the
legislative policies to the facts, the agency
clearly erred in reaching a conclusion that
could not reasonably have been made on a
showing of the relevant factors.
[In re Stallworth, 208 N.J. 182, 194 (2011)
(quoting In re Carter, 191 N.J. 474, 482-83
(2007)).]
However, we are not bound by an agency’s determination of purely
legal issues. Pinelands Pres. All. v. State, Dept. of Env't Prot.,
436 N.J. Super. 510, 524 (App. Div.) certif. denied, 220 N.J. 40
(2014).
The statute at issue here states:
Any member of the retirement system may retire
on a service retirement allowance upon the
completion of at least 20 years of creditable
service as a State policeman, which includes
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the creditable service of those members
appointed to the Division of State Police
under section 3 of P.L. 1983, c. 403 (C. 39:2-
9.3) and the creditable service of those
members appointed to the Division of State
Police under section 1 of P.L. 1997, c. 19 (C.
53:1-8.2). Upon the filing of a written and
duly executed application with the retirement
system, setting forth at what time, not less
than one month subsequent to the filing
thereof, he desires to be retired, any such
member retiring for service shall receive a
service retirement allowance which shall
consist of:
(1) An annuity which shall be the
actuarial equivalent of his
aggregate contributions; and
(2) A pension in the amount which,
when added to the member’s annuity,
will provide a total retirement
allowance of 50% of his final
compensation.
[N.J.S.A. 53:5A-8(b).]
Also, N.J.S.A. 53:5A-8(f) states:
Any member of the retirement system as of the
effective date of P.L. 1985, c. 175 who is
required to retire pursuant to subsection c.
of this section and who has more than 20 but
less than 25 years of creditable service at
the time of retirement shall be entitled to
the retirement allowance provided for by
subsection b. of this section plus 3% of his
final compensation multiplied by the number
of years of creditable service over 20 but not
over 25.
The three percent benefit was increased from two percent in
1993. Ibid. The statute provides those enrolled in the SPRS on
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or before the enactment of the statute in 1985 are entitled to a
three percent annual benefit after twenty years of service.
N.J.S.A. 53:5A-8(f).
Neither party disputes the meaning of the statute, only
whether it applies to appellant. He argues equitable estoppel
applies and he should receive the benefit of the statute's three
percent increase to his pension because he reasonably relied upon
written representations he would receive the additional sums to
his detriment.
"Equitable estoppel is rarely invoked against a governmental
entity, . . . particularly when estoppel would 'interfere with
essential governmental functions.'" In re Johnson, 215 N.J. 366,
378 (citation omitted) (quoting Vogt v. Borough of Belmar, 14 N.J.
195, 205 (1954)). "Nonetheless, equitable considerations are
relevant to assessing governmental conduct, . . . and may be
invoked to prevent manifest injustice[.]" Id. at 379 (citation
omitted).
"The essential elements of equitable estoppel are a knowing
and intentional misrepresentation by the party sought to be
estopped under circumstances in which the misrepresentation would
probably induce reliance, and reliance by the party seeking
estoppel to his or her detriment." Ibid. (citing Horsemen's
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Benevolent & Protective Ass'n v. Atlantic City Racing Ass'n, 98
N.J. 445 (1985).
In this matter, we lack a basis to second guess the Board and
the OAL's reasoning. As noted by the Board, no evidence was
presented demonstrating SPRS knowingly or intentionally
misrepresented the retirement benefits to appellant. As the Board
noted, the errors contained in the handbooks and literature
appellant received do not prove these representations were made
with the requisite knowledge or intent necessary to invoke
equitable estoppel. The record, particularly the testimony of
Division personnel, establishes the errors, while overt, were just
errors, not a willful misrepresentation. Moreover, as the Board
noted, it was not reasonable for appellant to rely upon the
mistaken representations contained in the pension literature where
he had ready access to the clearly worded statute at all times.
Appellant likens this matter to Vogt and Middletown
Policeman's Benevolent Association Local No. 124 v. Township of
Middletown, 162 N.J. 361 (2000). However, these cases are
dissimilar to the facts presented here.
In Vogt, supra, 14 N.J. at 197, 203-04, the Supreme Court
applied the doctrine of estoppel to a municipality, which sought
to deny workers' compensation to a junior firefighter who had been
injured returning from a fire call. The municipality claimed it
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did not have to pay workers' compensation because the firefighter
was a minor (seventeen years old) and by ordinance only
firefighters twenty-one years or older were considered active
firefighters entitled to the workers' compensation benefit. Id.
at 202. The Vogt Court found estoppel applied because the
municipality had routinely waived the limitation of the ordinance
to only active firefighters and applied it to junior members. Id.
at 204. Here, there was no evidence the SPRS had actually waived
the applicability of N.J.S.A. 53:5A-8(f) by applying it to members
hired after August 29, 1985.
Middletown Policemen's Benevolent Association Local No. 124
is also distinguishable. There, the Supreme Court applied
equitable estoppel where a municipality not only made
representations to an employee offering him post-retirement
medical benefits thereby inducing him to retire, but also had
granted the benefits to the employee for a decade after retirement
before suddenly terminating them. Middletown Policemen's
Benevolent Association Local No. 124, supra, 162 N.J. at 372. As
a result, the Court stated:
When weighing "the reliance factor," we find
that equitable considerations prohibit the
Township from terminating [the former
employee's] post-retirement health benefits.
But for the Township's representations to [the
employee] that his health benefits would be
continued after retirement, [he] could have
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waited and retired two and a half years later
to guarantee those benefits.
[Ibid.]
Here, SPRS extended no benefits to appellant under N.J.S.A.
53:5A-8(f) and did not pay him the additional three percent of his
pension. As we discuss below, appellant did not meet his burden
of proof to establish detrimental reliance as well.
Appellant expresses disagreement with the Board's conclusion
he did not prove detrimental reliance. He argues he remained
employed as a trooper for an "extra 4 years and 4 months" longer
than necessary, believing it would secure him the additional three
percent pension benefit. He asserts the loss of the three percent
equates to a loss of $16,000 per year in pension receipts. He
also asserts he declined other offers of employment with municipal
law enforcement agencies, which would have allowed him to remain
employed longer and provided pensions payable at a rate of sixty-
five and seventy percent of salary.
These arguments were presented to the OAL, which considered
and rejected them, and the Board by adopting the OAL's findings
similarly found them unpersuasive. The OAL stated:
I cannot conclude that the petitioner turned
down other job offers based upon his belief
that he would receive a 63% pension at the age
of 55. The petitioner himself noted that he
had always wanted to be a trooper, to be one
of the best in the country. He knew that he
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would also be eligible to retire at the age
of 55, and would not have had to work until
he was 65.
On appeal, appellant repeats the claims already considered
and rejected by two tribunals. We find no basis to overturn the
Board's findings, especially in light of the deference we accord
to the Board's findings of fact.
Lastly, appellant asserts the Board's determination was
arbitrary, capricious and unreasonable because it referenced a
trial judge's findings relating to collateral estoppel in
appellant's class action litigation in the Law Division, whereas
the State had agreed the issue would be adjudicated before the
OAL. Appellant also faults the Board's findings as unsupported
by substantial evidence because: it concluded the handbooks were
only accurate for troopers near retirement and thus not intended
for all troopers, the Board found a lack of evidence of detrimental
reliance where in fact there was such evidence, and it adopted the
OAL's findings appellant relied on third parties for information
regarding the pension benefits when in fact the information came
from SPRS.
Appellant's claim the Board improperly engrafted the Law
Division findings from the class action suit onto its findings
here is unavailing. The Board's determination states:
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In dismissing that claim on the merits, Judge
Andrew Smithson notes:
Appellants maintain that, despite the
statutory codification in the Pension Act to
the contrary, appellants detrimentally relied
on a newsletter from 1999 and two handbooks
granting entitlement benefits to a pension
benefit.
This position is unsupportable. "The terms
and conditions of public service in office or
employment rest in legislative policy rather
than contractual obligation." Spina v.
Consolidated Police & Fireman's Pension Fund
Commission, 41 N.J. 391, 400 (1964)[.]
Defendants maintain that officers were fully
informed of the statutory pension provisions
that showed they were not eligible for the
pension benefit in question.
The aforementioned not to the contrary, "It
is a well settled and fundamental principle
that ignorance of the law excuses no man." In
re Wittreich, 5 N.J. 79, 87 (1950). Parties
dealing with the state are bound by statutory
language (even if they have received incorrect
information and rely on it, to their
detriment). Mitchell v. Harris 496 F. Supp.
230, 232 (D.N.J. 1980). Specifically on
point, New Jersey courts have held that "one
accepting a public office or position is
presumed to do so with full knowledge of the
law as to salary, compensation and fees . . .
all limitations prescribed must be strictly
observed. Shalita v. Township of Washington,
270 N.J. Super. 84, 91 (App. Div. 1994). "The
statute trumps whatever implied contract may
have existed between the parties." Golden v.
Union, 163 N.J. 420, 431 (2000).
Pursuant to Spina and as appellants'
employment rights are controlled by statute,
appellants cannot maintain a supportable
contract claim against the state.
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The Board's reliance on the Law Division judge's findings
were merely noted as persuasive. They were not, as appellant
implies, res judicata of appellant's claims, which were considered
in full. Notwithstanding, the law relied upon by the Law Division
judge is compelling. He cited Golden v. County of Union, 163 N.J.
420 (2000), which is applicable here. In Golden, the Supreme
Court held an employee handbook requiring a disciplinary hearing
did not supersede a prosecutor's statutory at will right to retain
or terminate assistant prosecutors serving at the prosecutor's
pleasure. Id. at 433-35. Thus, appellant's claim the handbook
created rights superior to the plain language of the statutes
governing his pension is squarely rebutted by law the Board found
persuasive. Finally, the holding in Golden demonstrates even if
the Board incorrectly found the handbooks were only accurate for
troopers near retirement and there was error in finding appellant
relied on third parties for information regarding the pension
benefits, it would not affect the outcome.
Affirmed.
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