Luis Fermin v. Board of Trustees, Etc.

• Court: New Jersey Superior Court Appellate Division
• Decided: November 19, 2024
• Docket: A-1270-22
• Status: Unpublished

Opinion

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court ."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 parties in the case and its use in other cases is limited. R. 1:36-3.

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-1270-22

LUIS FERMIN,

Petitioner-Appellant,

v.

BOARD OF TRUSTEES, POLICE AND FIREMEN'S RETIREMENT SYSTEM,

Respondent-Respondent. _________________________

Argued October 9, 2024 – Decided November 19, 2024

Before Judges Mayer and Rose.

On appeal from the Board of Trustees of the Police and Firemen's Retirement System, Department of the Treasury, PFRS No. xx2576.

Eric V. Kleiner argued the cause for appellant.

Robert J. Papazian argued the cause for respondent (Gebhardt & Kiefer, PC, attorneys; Leslie A. Parikh and Linda M. Brown, on the brief).

PER CURIAM Petitioner Luis Fermin, a former police officer with the City of Paterson

(City) Police Department, appeals from a November 16, 2022 final decision

of the Board of Trustees (Board) of the Police and Firemen's Retirement

System (PFRS), rejecting the administrative law judge's (ALJ) initial

decision, which reversed the Board's denial of Fermin's request to apply for

accidental disability retirement benefits (ADRB). Because we conclude the

record supports the Board's decision that Fermin irrevocably resigned from

his employment with the City pursuant to the terms of their settlement

agreement, we affirm.

I.

The facts are straightforward and, for purposes of this appeal, largely

undisputed. Fermin commenced his employment with the City as a Paterson

Police Officer in January 2005. During the early morning hours of January

1, 2018, Fermin was seated in the passenger side of a car driven by a "female

civilian companion" when an unidentified man approached the vehicle at a

traffic light. Believing the man reached for a gun, Fermin fired three rounds

from his service weapon and the man fled. Fermin was off-duty at the time

of the incident.

A-1270-22 2 Following an internal affairs investigation, Fermin was issued a

preliminary notice of disciplinary action (PNDA) on January 2, 2019,

recommending his termination. According to the PNDA, "Fermin left the

scene without": "reporting the incident to police headquarters"; "attempting

to identify or contain the identified male"; and "without reporting he fired the

shots from his service weapon to police headquarters." Further, "Fermin

returned to the scene in a different vehicle [from] the one involved in the

incident, thereby contaminating the scene."

The PNDA charged Fermin with the following acts of misconduct under

N.J.A.C. 4A:2-2.3(a)(1), (3), (6), (7), and (12): "[i]ncompetency, inefficiency

or failure to perform duties"; "[i]nability to perform duties"; "[c]onduct

unbecoming a public employee"; "[n]eglect of duty"; and "[o]ther sufficient

cause." The PNDA also charged Fermin with misconduct and suspended him

without pay under N.J.A.C. 4A:2-2.5(a)(1) based on the City's determination

that he was "unfit for duty and an immediate suspension [wa]s necessary to

maintain safety, health order and/or effective direction of public service."

A-1270-22 3 On November 26, 2019, Fermin and the City signed a Memorandum of

Agreement (MOA).1 Pertinent to this appeal, the City agreed to withdraw all

pending disciplinary charges without prejudice. Fermin agreed to

"immediately meet with the City's Personnel Office to begin the process for

filing for a disability retirement pension with the PFRS." The MOA further

provided:

5. If Fermin withdraws his pension application or fails to comply with all State of New Jersey and City requirements for processing his disability retirement in an expeditious manner, Fermin's current disciplinary charges shall be reinstated, and Fermin will be terminated.

6. The City does not object to and/or takes no position as to Fermin's accidental disability claim and shall cooperate with any requests for information or documentation from the New Jersey Division of Pensions. The City shall provide the parties to the disability application with standard police reports and incident reports related to the incident . . . wherein Fermin claims he discharged his weapon in self- defense.

7. Fermin hereby understands and agrees that from February 1, 2020 forward[,] he is forever barred from taking any actions as a law enforcement officer for the Paterson Police Department.

1 The MOA was re-executed on March 12, 2020, with certain revisions that did not substantively alter the relevant terms. We set forth the terms of the March 12, 2020 MOA. A-1270-22 4 Fermin applied for ADRB on November 26, 2019, the same day he signed the

initial MOA.

On October 21, 2020, the Division's Disability Review Section

determined Fermin was ineligible to apply for disability benefits under

N.J.A.C. 17:1-6.4(b), which "requires that disability applicants must prove

that the retirement is due to a total and permanent disability and that the

disability is the reason the member left employment." After reviewing

Fermin's application and the MOA, the Division reasoned Fermin could not

comply with N.J.S.A. 43:16A-8(2) because "there would be no position for

[him] should [his] alleged disability diminish at some point in the future to

the point that [he] could return to employment."

On January 13, 2021, the Board denied Fermin's ensuing request to

apply for ADRB for the same reasons stated by the Division. Fermin appealed

the Board's decision and the matter was transmitted to the Office of

Administrative Law as a contested case. Fermin and the City filed cross-

motions for summary decision. See N.J.A.C. 1:1-12.5(a) ("A party may move

for summary decision upon all or any of the substantive issues in a contested

case."). The sole issue presented on the undisputed facts was whether the

MOA "preclude[d] Fermin from applying for [ADRB]."

A-1270-22 5 On August 2, 2022, the ALJ issued an initial decision reversing the

Board's legal determination. The ALJ concluded "the plain language of

N.J.S.A. 43:16A-8(2) does not contemplate barring a member from applying

for benefits" and any interpretation otherwise "conflict[s] with the plain

language of N.J.S.A. 43:16A-7(a)(1)" (permitting a PFRS member to apply

for ADRB). Citing the terms of the MOA, the ALJ noted: "It seems somewhat

contradictory to reference a document that specifically states Fermin is to

apply for [ADRB] as a reason to bar Fermin from applying for said benefits."

Further, "in the less-than-likely hypothetical situation relied on by the Board,

wherein Fermin receives benefits, recovers, and is then denied reemployment,

the Board, upon determining that Fermin is fully recovered from his

disability, could simply discontinue benefits and Fermin could seek

employment elsewhere."

The Board rejected the ALJ's initial decision, maintaining its

determination that, pursuant to the terms of the MOA and the governing law,

Fermin is not eligible to apply for ADRB. This appeal followed.

II.

Well-settled principles guide our review. "Judicial review of agency

determinations is limited." Allstars Auto Grp., Inc. v. N.J. Motor Vehicle

A-1270-22 6 Comm'n, 234 N.J. 150, 157 (2018). An agency decision will be upheld

"unless there is a clear showing that (1) the agency did not follow the law; (2)

the decision was arbitrary, capricious, or unreasonable; or (3) the decision

was not supported by substantial evidence." In re Virtua-West Jersey Hosp.

Voorhees for a Certificate of Need, 194 N.J. 413, 422 (2008). "When an

agency's decision meets those criteria, then a court owes substantial deference

to the agency's expertise and superior knowledge of a particula r field." In re

Herrmann, 192 N.J. 19, 28 (2007). "The burden of demonstrating that the

agency's action was arbitrary, capricious or unreasonable rests upon the

person challenging the administrative action." In re Arenas, 385 N.J. Super.

440, 443-44 (App. Div. 2006); see also Lavezzi v. State, 219 N.J. 163, 171

(2014).

"Because an agency's determination on summary decision is a legal

determination, our review is de novo." L.A. v. Bd. of Educ. of Trenton, 221

N.J. 192, 204 (2015). We also exercise de novo review of the interpretation

of a settlement agreement as it is subject to ordinary principles of contract

law. See Thompson v. City of Atlantic City, 190 N.J. 359, 374 (2007);

Polarome Int'l, Inc. v. Greenwich Ins. Co., 404 N.J. Super. 241, 260 (App.

Div. 2008).

A-1270-22 7 A reviewing court is "not bound by the agency's interpretation of a

statute or resolution of a question of law." In re Carroll, 339 N.J. Super. 429,

437 (App. Div. 2001); see also Allstars, 234 N.J. at 158. However, "[w]e will

overturn an agency's interpretation of a statute it implements only when it is

'plainly unreasonable.'" In re Comm'r's Failure to Adopt 861 CPT Codes, 358

N.J. Super. 135, 149 (App. Div. 2003) (quoting Merin v. Maglaki, 126 N.J.

430, 437 (1992)). A reviewing court therefore "affords a 'strong presumption

of reasonableness' to an administrative agency's exercise of its statutorily

delegated responsibilities." Lavezzi, 219 N.J. at 171 (quoting City of Newark

v. Nat. Res. Council, Dep't of Env't Prot., 82 N.J. 530, 539 (1980)). That

presumption is particularly strong when an agency is dealing with specialized

matters within its area of expertise. See Newark, 82 N.J. at 540.

An agency is empowered to reject and modify an ALJ's initial decision,

but its authority to do so is not boundless. When an agency rejects an ALJ's

decision, regulations require the agency to clearly state the basis for its

rejection and cite specific evidence supporting its final decision and

interpretation of the law. N.J.A.C. 1:1-18.6(b). The Board's discretion

includes the authority to adopt, reject, or modify the ALJ's findings of

credibility of expert witnesses. In re Adoption of Amends. to Ne., Upper

A-1270-22 8 Raritan, Sussex Cnty., 435 N.J. Super. 571, 584 (App. Div. 2014). However,

"[t]he agency head may not reject or modify any findings of fact as to issues

of credibility of lay witness testimony unless it is first determined from a

review of the record that the findings are arbitrary, capricious [,] or

unreasonable or are not supported by sufficient, competent, and credible

evidence in the record." N.J.S.A. 52:14B-10(c).

The "separation for service rule . . . generally requires disability

retirement applicants to prove that their asserted disability is 'the reason the

member left employment.'" In re Adoption of N.J.A.C. 17:1-6.4, 454 N.J.

Super. 386, 397 (App. Div. 2018) (quoting N.J.A.C. 17:1-6.4(a)). Relevant

here, "[t]he rule also bars members from applying for a disability retirement

if they voluntarily or involuntarily terminate service" by "[r]emoval for cause

or total forfeiture of public service" and "[s]ettlement agreements reached due

to pending administrative or criminal charges, unless the underlying charges

relate to the disability." Id. at 397-98 (quoting N.J.A.C. 17:1-6.4(b)(1) and

(2)). "[A]lthough a person eligible for benefits is entitled to a liberal

interpretation of a pension statute, 'eligibility [itself] is not to be liberally

permitted.'" Id. at 399 (quoting Smith v. Dep't of Treasury, Div. of Pensions

& Benefits, 390 N.J. Super. 209, 213 (App. Div. 2007)). "Members who leave

A-1270-22 9 public service for reasons unrelated to a disability are not entitled to disability

retirement benefits in the first instance." Id. at 404.

The "restoration to active service" statute provides, in pertinent part:

Any beneficiary under the age of 55 years who has been retired on a disability retirement allowance under this act, on his [or her] request shall, or upon the request of the retirement system may, be given a medical examination and he [or she] shall submit to any examination by a physician or physicians designated by the medical board once a year for at least a period of five years following his retirement in order to determine whether or not the disability which existed at the time he was retired has vanished or has materially diminished. If the report of the medical board shall show that such beneficiary is able to perform either his former duty or any other available duty in the department which his employer is willing to assign to him, the beneficiary shall report for duty; such a beneficiary shall not suffer any loss of benefits while he awaits his restoration to active service. If the beneficiary fails to submit to any such medical examination or fails to return to duty within 10 days after being ordered so to do, or within such further time as may be allowed by the board of trustees for valid reason, as the case may be, the pension shall be discontinued during such default.

[N.J.S.A. 43:16A-8(2) (emphasis added).]

Against these guiding legal principles, we reject Fermin's argument that

the Board misapplied the law, including his contention agencies typically

"follow the ALJ's recommendations." As this matter was resolved on

A-1270-22 10 summary decision, the issue presented turned on the legal interpretation of

the MOA and the governing rule and statute. The Board clearly stated its

reasons for rejecting the ALJ's initial decision. See N.J.A.C. 1:1-18.6(b).

We are likewise unpersuaded by Fermin's overlapping arguments that

the Board's decision "was arbitrary and capricious and was not supported by

the factual record." More particularly, Fermin argues the Board mistakenly

interpreted the MOA. He maintains the MOA was not a quid pro quo

agreement because its purposes primarily were limited to the City's obligation

to: resolve the outstanding money owed him under his contract in view of his

total disability; "fully cooperate and support" his disability application; and

dismiss the disciplinary charges "solely" based on his permanent disability.

Thus, Fermin claims the Board erroneously relied on our decision in

Cardinale v. Board of Trustees, Police and Firemen's Retirement System, 458

N.J. Super. 260 (App. Div. 2019), which was not cited by the ALJ, to resolve

his eligibility issue.

Contrary to Fermin's contentions, our decision in Cardinale – issued

eight months before Fermin signed the initial MOA – supports the Board's

decision in the present matter even though the facts are not on all fours. In

Cardinale, a former police officer voluntarily and irrevocably retired from his

A-1270-22 11 position pursuant to a settlement agreement following his suspension for a

positive random drug test. Id. at 264-65. Unlike the MOA in the present

matter, the settlement agreement in Cardinale "acknowledged [the petitioner]

would proceed with his application for ordinary disability benefits at his 'sole

risk.'" Id. at 265. Also, unlike Fermin, Cardinale testified at the hearing

before the ALJ and "conceded that he was recovering and no longer disabled."

Ibid.

The ALJ in Cardinale determined "the settlement agreement did not

bind the Board," a non-party to the contract. Id. at 266. The Board adopted

the initial decision, reasoning "the only obstacle to [the petitioner's]

reemployment was not the purported disability, but rather, his irrevocable

resignation." Thus, "assuming Cardinale was disabled but later became

rehabilitated," the Board concluded "it would have no statutory authority to

stop paying benefits." Id. at 265.

We affirmed the Board's decision, holding "when a PFRS member . . .

voluntarily irrevocably resigns from active service, such a separation from

employment automatically renders the individual ineligible for ordinary

disability benefits." Id. at 263 (emphasis added). Of particular relevance to

this appeal, we concluded the petitioner's claimed disability was "irrelevant

A-1270-22 12 to our holding that his irrevocable resignation made him ineligible for benefits

in the first place." Id. at 268.

Citing the "unambiguous[]" terms of the restoration to active duty

service, we noted a PFRS member who retired due to disability, but then

recovered sufficiently to "perform either his former duty or any other

available duty in the department which his employer is willing to assign to

him . . . shall report for duty." Id. at 269 (quoting N.J.S.A. 43:16A-8(a)).

The statute's purpose "is to return the previously disabled retiree to work as

if that individual had never suffered a disability or interruption of service."

Id. at 270. The statute "balances a worker's interest with those of an employer

and the public by requiring PFRS workers – upon rehabilitation – to forgo the

benefits and return to work." Ibid. We concluded "Cardinale's permanent

inability to return to duty [wa]s fatal." Ibid. We therefore recognized:

Importantly, a member's irrevocable resignation presents a practical problem that strains the workability of the system. N.J.S.A. 43:16A-8(2) envisions only one circumstance when disability benefits may cease. That situation, which does not apply to members who irrevocably resign from work, arises when the Board grants retirement benefits to a PFRS retiree, that retiree's disability vanishes or materially diminishes, and then that retiree fails to return to duty after the Board orders the retiree to do so.

A-1270-22 13 [Id. at 270-71.]

Thus, the process set forth in the statute, when a recipient recovers from his

or her disability and returns to work, provides the sole means for the Board

to terminate disability benefits. Id. at 271.

We therefore concluded permitting public employees to seek disability

benefits when they have irrevocably retired would prevent the State from ever

terminating disability benefits, even upon the member's recovery, because the

member could never "return" to his or her former employment. Such an

outcome "would violate public policy, contravene the rehabilitation statute,

and encourage abuse of the disability retirement system." Id. at 273.

Accordingly, Cardinale's irrevocable resignation rendered him ineligible for

participation in the disability pension scheme. Ibid.

Here, as the Board correctly concluded, similar to the settlement

agreement in Cardinale, the terms of the MOA prevent Fermin from

complying with N.J.S.A. 43:16A-8(2). Specifically, should the medical board

determine Fermin "is able to perform either his former duty or any other

available duty in the department" he must "report for duty" but he cannot do

so because, pursuant to the terms of the MOA he is "forever barred from

future employment with [the City]." Thus, assuming Fermin were entitled to

A-1270-22 14 ADRB, should he fully recover, he could not "simply discontinue benefits and

. . . seek employment elsewhere," as the ALJ suggested. See Cardinale, 458

N.J. Super. at 269. Rather, Fermin's "permanent inability to return to duty is

fatal." Id. at 270.

Having conducted a de novo review of the record and governing legal

principles, L.A., 221 N.J. at 204, we are satisfied the Board properly rejected

the ALJ's initial decision. We conclude the Board's decision "is supported by

sufficient credible evidence on the record as a whole." R. 2:11-3(e)(1)(D).

To the extent we have not addressed a particular argument, it is because either

our disposition makes it unnecessary, or the argument was without sufficient

merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).

Affirmed.

A-1270-22 15