Opinion
Index No. 527105/2022
04-12-2024
In the Matter of the Application of MARGERY PERLMUTTER, R.A., ESQ., Petitioner, v. MELANIE WHINNERY, EXECUTIVE DIRECTOR, ILYSE SISOLAK, GENERAL COUNSEL, PRESTON NIBLACK, CHAIRPERSON CONSTITUTING EXECUTIVE STAFF AND CHAIR OF THE BOARD OF TRUSTEES OF THE NEW YORK CITY EMPLOYEES' RETIREMENT SYSTEM, Respondents.
Unpublished Opinion
PRESENT: HON. RICHARD VELASQUEZ, JUSTICE
DECISION AND ORDER
RICHARD VELASQUEZ, JUDGE
At an IAS Term, Part 66 of the Supreme Court of the State of New York, held in and for the County of Kings, at the Courthouse, at 360 Adams Street, Brooklyn, New York, on the 12 day of April, 2024.
The following e-filed papers read herein:
NYSCEF Doc Nos.:
Notice of Motion/Order to Show Cause/ Petition/Cross Motion and Affidavits (Affirmations) Annexed___
1-15, 20-21
Opposing Affidavits (Affirmations) ______
22-38
Affidavits/ Affirmations in Reply ____
42-43
Other Papers: ________
Upon the foregoing papers, petitioner Margery Perlmutter (petitioner) moves for a judgment, pursuant to Article 78 of the Civil Practice Law and Rules (CPLR) annulling and setting aside a final written determination of the respondent New York City Employees' Retirement System (NYCERS) denying petitioner's right to vest her retirement benefits after nearly eight years of continuous service with the City of New York (the City) as a mayoral appointee.
Background and Procedural History
On July 18, 2014, petitioner was appointed by then-mayor Bill DeBlasio as the Commissioner and Chair of the New York City Board of Standards and Appeals (BSA),and on August 21, 2014, the City Council gave its advice and consent to the appointment. Petitioner began working in this capacity on September 7, 2014. Petitioner states that she is a licensed architect, as well as a land use attorney. Prior to this appointment, she had owned an architecture firm, was a partner in the land use practice of Bryan Cave LLP and served as one of the unpaid commissioners to the City's Landmarks Preservation Commission. Petitioner notes that in order to accept the position of BSA Commissioner and Chair, she had to resign from the Bryan Cave partnership at the age of 60 and received a significant reduction in income as a first-time New York City employee.Petitioner notes that BSA commissioners are appointed for a term of six years but continue to serve in their positions until replaced by a new mayoral appointment. However, the BSA chair is generally replaced when a new administration takes office, and thus serves for either four or eight years.
The BSA is New York City's zoning board of appeals, an agency of last administrative resort for land use determinations made by the Department of Buildings and Fire Department, and with authority to waive certain land use related New York State regulations. The BSA Board is made up of five commissioners, all of whom must be appointed by the mayor with the advice and consent of the City Council and must include a licensed and experienced architect, planner, and engineer, one of whom may serve as its chair.
Pursuant to the New York City Charter at ch. 27 § 659 and ch. 2 § 31, no BSA commissioner, including the chair, may hold other employment outside of their service as a BSA commissioner.
NYCERS is a non-mayoral agency that manages New York City government employees' retirement and disability benefits program and funds. All City employees working in a competitive or labor class of the civil service must join NYCERS. However, certain positions, including the BSA chair and commissioner, are characterized as "exempt" and are not legally required to enroll in the NYCERS retirement benefit program. As such, petitioner was not required to, and did not join NYCERS when she started her employment in 2014, believing it would be futile as her tenure as BSA Chair would be either four or eight years maximum, consistent with the term of Mayor DeBlasio, and there was a minimum vesting period of ten years to receive retirement benefits at that time.
Exempt positions typically involve "a close and confidential relationship with the appointing authority and/or his or her deputies, for which the appointing authority is entitled to determine the qualifications and to evaluate merit and fitness ..." Civil Service System - Department of Citywide Administrative Services (nyc.gov)
On September 14, 2021, NYCERS' Executive Director Melanie Whinnery sent an email to the heads of various New York City agencies who had been appointed by Mayor DeBlasio, and would soon be leaving their position when the next mayor's term commenced, informing them that if they had not joined NYCERS they could do so before leaving City service in order to preserve their pension tier and date of membership in the event they were to return to City service in the future. In mid-June 2022, petitioner was informed that Mayor Adams intended to appoint a new BSA Chair, and she began planning for a departure date from her position as of July 1, 2022. Petitioner states that a few days before her planned departure, she learned that recent amendments to the pension laws had reduced the minimum period to vest New York City employee retirement benefits from ten years to five. On June 24, 2022, petitioner contacted NYCERS' Executive Director Whinnery who had helped facilitate petitioner's enrollment in NYCERS. On that same date, she received an email from the Director of NYCERS' Membership and Service Division informing her that "Purchased service is credited when the buy-back is paid for and you have completed two full years of membership service, which includes service rendered while a NYCERS member, transferred service, and purchased military service." This prompted petitioner to inquire as to what the two-year requirement was based on and if there was any discretion in this regard. Petitioner was informed that it was based upon Retirement and Social Security Law (RSSL) § 609 [b] [1] relating to previous service and that there was no discretion in this regard. Petitioner had further discussions and email exchanges with the NYCERS' Deputy General Counsel Ilyse Sisolak on this issue. In the interim, petitioner was granted an extension as to her resignation deadline. On July 15, 2022, petitioner received an email from NYCERS informing her that her buy-back application had been processed and that the years of service she was buying back would be credited upon her completion of two years of credited membership service (NYSCEF Doc No. 9). On July 20, 2022, she received a letter informing her of the cost to purchase the previous service years that she was buying back and reiterating that "[y]ou can only receive credit for purchased service if you have been credited with at least two full years of Membership Service, that is, service rendered in a NYCERS-eligible position while a NYCERS member (Membership Service also includes Transferred Service and Military Service)" (NYSCEF Doc No. 10).
Petitioner received a letter from NYCERS dated June 27, 2022, confirming her pension enrollment and membership number and date (NYSCEF Doc No. 6).
RSSL § 609 b. Previous service. 1. A member shall be eligible to obtain retirement credit hereunder for previous service with a public employer if retirement credit had previously been granted for such service or if such service which would have been creditable in one of the public retirement systems of the state, as defined in subdivision twenty-three of section five hundred one of this chapter, at the time such service was rendered, if the individual had been a member of such retirement system and the member has rendered a minimum of two years of credited service after July first, nineteen hundred seventy-six or after last rejoining a public retirement system, if later; provided, however, retirement credit may be granted for service which predates the date of entry into the retirement system if such service is otherwise creditable and the member satisfied the minimum service requirements set forth in this subdivision and was rendered by an employee of a public employer during which employment he was ineligible to join a public retirement system provided that such public employer was participating in a public retirement system of the .. state at the time of such employment, or is so participating at the time that such credit for such previous service is being sought.
Petitioner subsequently retained counsel who drafted a letter to NYCERS' General Counsel Sisolak outlining the legal arguments in support of petitioner's position that the "two-year minimum" policy was inapplicable in petitioner's case and that respondents' determination that it applied was discriminatory, as petitioner was then 68 years old and it would be difficult to obtain a comparable position in City government at a salary level equivalent to what she was earning as the BSA Chair and/or that would make use of her unique and rare skill sets (NYSCEF Doc No. 12). Petitioner's counsel and NYCERS' General Counsel Sisolak further discussed the issue on July 29, 2022. On August 1, 2022, Ms. Sisolak emailed petitioner's counsel indicating that NYCERS disagreed with petitioner's interpretation of the relevant statutes and opined that "based on the plain meaning of the law, the legislative history and case law, a member needs 2 years of credited service after joining the system before pre-membership service counts." (NYSCEF Doc No. 3). Petitioner then sent emails to the New York City Comptroller's
Office and to the Chair of NYCERS' Board of Trustees, who was also the Commissioner of the Department of Finance, to determine whether the August 1, 2022, email from the NYCERS' General Counsel would constitute a final determination and exhaust petitioner's administrative remedies. She was informed that there would be no further determination made on this matter.
By Notice of Petition and Verified Petition dated September 15, 2022, petitioner commenced the instant Article 78 proceeding seeking to annul and set aside the NYCERS' determination denying her right to vest her retirement benefits. On or about June 1, 2023, respondents submitted a verified answer.
Petitioner contends that respondents' determination that she would need to serve for two more years before she would be credited with the years of service she intended to buy back is contrary to the plain meaning of RSSL § 609 and New York State legislation approved on April 9, 2022 (Chapter 56 of the Laws of 2022, Part TT, S8006-C/A9006-C, pages 218-219) (hereafter, "Amendment Part TT"), amending, inter alia, RSSL §§ 502 (a), 516 (a), 602 (a), (b), (b-1) and 612 (a), to reduce the minimum period to vest retirement benefits from ten years to five. Specifically, petitioner argues that respondents incorrectly interpret RSSL § 609 to require that petitioner could only receive credit for purchased service if she has "been credited with at least two full years of Membership Service, that is, service rendered in a NYCERS-eligible position while a NYCERS member" (NYSCEF Doc No. 10). Thus, such interpretation requires that petitioner earn two additional years of creditable service commencing after the date that she joined NYCERS, which was June 24, 2022. Instead, petitioner argues that her specific situation is solely governed by RSSL § 602 [b-1][2], which provides that: "[notwithstanding the provisions of subdivision a or b of this section or any other provision of law to the contrary, a member who first joins a public Retirement system of the state on or after April first, two thousand twelve shall not be eligible for service retirement benefits hereunder until such member has rendered a minimum of five years of credited service."
In support of her petition, petitioner notes that the New York State Legislature enacted Amendment Part TT to provide reforms to Tier 5 and Tier 6 of the retirement system to reduce the minimum vesting requirements to five years instead of ten. She argues that respondents ignore the clear language in Amendment Part TT which does not subject petitioner to RSSL § 609 [b]. As such, she argues that an employee such as petitioner, who was joining the pension system for the first time after April 1, 2012, now only needed five years of credited service to qualify for retirement benefits, rather than the ten year requirement that had been in place at the start of her City employment in 2014. Moreover, petitioner contends that respondents' determination that RSSL § 609 [b][1] requires that she must be actively employed for an additional two years after she
I joined NYCERS on June 24, 2022, is incorrect and that this provision does not apply to her as she is only joining the pension system for the first time in 2022. In this regard, petitioner asserts that RSSL § 609 [b][1] applies only to employees upon their return from a hiatus in government service who seek to buy back service time rendered prior to a break in public service, and does not apply where, as here, an employee is joining the pension system for the first time and buying back service that was rendered immediately prior to joining.
Petitioner further argues that even if it could be found that RSSL § 609 [b][1] applies to her, respondents ignore the Second clause of this paragraph which she contends exempts NYCERS members from the two-year minimum membership requirement where a member was ineligible for retirement benefits. In this regard, she asserts that as a mayoral appointee with a maximum term of eight years, she was not eligible to receive retirement benefits because she could not have served as Chair of the BSA for the ten years previously required to vest, when she began her City service. Petitioner also argues that respondents' application of RSSL § 609 [b] [1], and the two-year NYCERS membership requirement to a Mayoral appointee, such as petitioner, is discriminatory. She contends that respondents ignore the disparate impact on persons that are not career government employees and are less than two-years away from the mandatory retirement age of 70, and thus unable to complete two additional years of City service. Finally, petitioner contends that respondents' final determination violates Article V, § 7 of the New York State Constitution and deprives her of her pension rights. In this regard, she contends that upon her enrollment in NYCERS and the buyback program she entered a contractual relationship which is being impaired and diminished by imposing the two-year membership requirement.
In opposition, respondents argue that NYCERS' final determination was rational, reasonable and in accordance with RSSL § 609 [b] [1], Respondents note that although Amendment Part TT lowered the minimum numbers of years required for a Tier 5 and Tier 6 member to vest for service retirement from 10 years to 5 years of credited service, it did not change the longstanding requirement that a NYCERS member must serve at least two years as a NYCERS member before such member can be credited with any previous service that they bought back. Specifically, respondents contend that pursuant to RSSL § 609 [b] [1], in order for any purchased pre-m ember service to be applied to petitioner's account, she must first render a minimum of two years of credited service after joining NYCERS. In this regard, respondents point to the following language in RSSL § 609 [b], which relates to the buying back of retirement credit for years of previous service:
1. A member shall be eligible to obtain retirement credit hereunder for previous service with a public employer ... if such service which would have been creditable in one of the public retirement systems of the state . . . at the time such service was rendered, if the individual had been a member of such retirement system and the member has rendered a minimum of two years of credited service after July first, nineteen hundred seventy-six ... (emphasis added)
2. . . . Anything in this paragraph to the contrary notwithstanding, in order to obtain credit for previous service, members who first join a public retirement system of the state on or after April .first, two thousand twelve shall pay six percent of wages earned for service which predates the date of entry into the retirement system together with interest at the rate of five percent per annum compounded annually from the date of such service until the date of payment
In further support of their position that RSSL § 609 [b] [1] applies to petitioner, respondents point to the court's holding in Sprinzeles v New York, (184 A.D.2d 245, 246 [1st Dept 1992]), which involved a petitioner who started working for the City in 1984. and joined NYCERS in 1987, at which time she purchased service credit for the period of 1984-1987. Sprinzeles then left City service in 1989. At that point in time, RSSL 609 § [b] required that an employee serve at least five years after joining or rejoining NYCERS before previous service could be credited. Sprinzeles challenged NYCERS' determination that she was not eligible to receive a pension. The First Department held that NYCERS' determination that Sprinzeles had not accumulated enough credited service to be pension eligible was rational pursuant to RSSL §§ 602 and 609. Specifically, the court held that "[p]revious years of service can be credited only after the member has served at least 5 years upon rejoining the retirement system." In so holding, the court noted that Sprinzeles did not serve the five-year service requirement as she only joined NYCERS in 1987 and left City service two years later in 1989.
Moreover, respondents assert that there is nothing in the legislative history of Amendment Part TT demonstrating an intent to alter the two-year service requirement. Respondents further point to the legislative history underlying the change to RSSL § 609 [b] in 2000, which provided that an employee could receive pension service credit for prior service with any public employer in New York State, where previously they could only buy back such prior service from the same employer he or she worked for when joining the pension system. Specifically, respondents point to the report from the New York State Division of Budget determining the budget implications of the proposed legislation, which noted, in pertinent part, that the "bill would reduce, from five to two, the years of membership in a retirement system that must be rendered before such previous service can be credited. Members of Tiers 3 and 4 would be required to pay three percent of their salary for each year of prior service credit" (NYSCEF Doc No. 37 at 7). The change from a five-year to a two-year requirement for membership in the retirement system before previous service can be credited is reiterated in several of the other documents included in the bill jacket related to this legislative change. Respondents also point to the following language contained in a memorandum from the Office of the State Comptroller to the Governor's Office:
"[w]e believe the reduction of the five year requirement will remove another unreasonable obstacle to the purchase of prior service credit. And the two year prerequisite should ensure that individuals will not enter into brief 'sham employment' arrangements by returning to service and membership for the sole purpose of obtaining credit for past service" (id. at 18).
Respondents further argue that NYCERS' application of RSSL § 609 [b][1] to petitioner is not discriminatory as it applies to every employee joining NYCERS who seeks to obtain credit for previous service, and that it would be improper to exempt petitioner from the two-year requirement based upon her education, salary, experience or age. Finally, respondents contend that NYCERS' determination does not violate the New York State Constitution as there has been no breach of a contractual obligation owed to petitioner. In this regard, respondents note that any contractual pension obligation is subject to the applicable laws, including RSSL § 609 [b][1], which is nondiscretionary and applies equally to all members of NYCERS. Respondents note that NYCERS made it clear in its communications with petitioner that she would need to obtain two years of membership service before any service she bought back would be credited. Thus, respondents argue that NYCERS' determination was rational and consistent with all applicable laws and was neither arbitrary nor an abuse of discretion.
Discussion
This court is limited by CPLR article 78 to a review of the record before respondent and to the question of whether its determination was arbitrary and capricious based upon that record (see Matter of Borenstein v New York City Employees 'Retirement Sys., 88 N.Y.2d 756, 761 [1996]; Matter of Boyd v New York City Employees' Retirement Sys., 202 A.D.3d 1082, 1083 [2d Dept 2022]; Matter of Gray v New York State Div. of Hous. & Community Renewal, 177 A.D.3d 738, 740 [2d Dept 2019]). "Arbitrary action is without sound basis in reason and is generally taken without regard to the facts" (see Matter of Pell v Board of Educ., 34 N.Y.2d 222, 231 [1974]). If a rational basis exists for its determination, the decision of the administrative body must be sustained (see Matter of Pell, 34 N.Y.2d at 230; Matter of Clark v New York State Div. of Hous. & Community Renewal, 193 A.D.3d 726, 727 [2d Dept 2021]; Matter of Lucas v Board of Educ. of the E. Ramapo Cent. Sch. Dist., 188 A.D.3d 1065, 1067 [2d Dept 2020]). A court cannot substitute its judgment for that of the agency so long as the agency's decision is rationally based on the record (see Matter of Borenstein, 88 N.Y.2d at 761; Matter of Hilbertz v City of New York, 210 A.D.3d 1089, 1091 [2d Dept 2022]; Matter of Clarke v Board of Trustees of N.Y.City Fire Dept., Art. 1-B Pension Fund, 46 A.D.3d 559, 560 [2d Dept 2007]).
Here, RSSL § 609 [b][1] specifically provides that prior service can be bought back and will be credited when the. employee has rendered a minimum of two years of credited service after joining the pension system (see Majewski v Broadalbin-Perth Cent. School Dist., 91 N.Y.2d 577, 583 [1998] [holding that "the clearest indicator of legislative intent is the statutory text, the starting point in any case of interpretation must always be the language itself, giving effect to the' plain meaning thereof']). Moreover, the legislative history demonstrates that the time period was specifically reduced from five down to two years, rather than totally eliminated. Further, there is nothing in the language of Amendment Part TT, or its legislative history, indicating that RSSL § 609 [b][1]'s two-year service membership requirement was eliminated or not applicable to an employee such as petitioner who was joining the pension system for the first time.
To the extent that petitioner asserts that even if she is subject to RSSL § 609 [b]
, her particular situation is governed by the second clause relating to persons ineligible to join the retirement system, the court notes that this section specifically states:
. . retirement credit may be granted for service which predates the date of entry into the retirement system if such service is otherwise creditable and the member satisfied the minimum service requirements set forth in this subdivision and was rendered by an employee of a public employer during which employment he was ineligible to join a public retirement system provided that such public employer was participating in a public retirement system of the state at the time of such employment" (emphasis added).
Initially, the court notes that this section also contains the two-year membership service requirement. In addition, although petitioner's position as BSA Chair was considered exempt and did not mandate that she join the pension system, she was not prohibited from doing so. Indeed, although the maximum term of her position at the time, BSA Chair, was eight years, which was two years short of the 10-year requirement to vest in the pension system, petitioner was in fact eligible to join the pension system when she started her employment in 2014.
Based upon the plain language of the applicable statutes, the legislative history relating to said statutes and the limited caselaw interpreting the statutes, NYCERS' determination was not arbitrary or capricious and there was no abuse of discretion. Thus, the court finds that a rational basis exists for NYCERS' determination that petitioner was required to serve two years after enrolling in the NYCERS pension system in order for the years of service she was buying back to be credited. Although petitioner was able to benefit from Amendment TT's reduction in the number of years required to vest from the previously required 10 years down to 5 years, she was still subject to RSSL § 609 [b] [1]'s two-year membership requirement. While the court is sympathetic that this requirement may be particularly onerous to petitioner based upon her age, qualifications, and salary history, NYCERS was required to follow all applicable laws and cannot carve out exceptions.
Conclusion
Based on the foregoing, it is hereby ORDERED that petitioner's request for an order annulling and setting aside NYCERS' final written determination denying petitioner's right to vest her retirement benefits until she has served two years as a member of NYCERS is DENIED.
The foregoing constitutes the decision, order and judgment of the court.