Opinion
19-P-1389
02-18-2021
RETIREMENT BOARD OF STONEHAM & others v. MASSACHUSETTS TEACHERS' RETIREMENT SYSTEM & another.
NOTICE: Summary decisions issued by the Appeals Court pursuant to M.A.C. Rule 23.0, as appearing in 97 Mass. App. Ct. 1017 (2020) (formerly known as rule 1:28, as amended by 73 Mass. App. Ct. 1001 [2009]), are primarily directed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, such decisions are not circulated to the entire court and, therefore, represent only the views of the panel that decided the case. A summary decision pursuant to rule 23.0 or rule 1:28 issued after February 25, 2008, may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent. See Chace v. Curran, 71 Mass. App. Ct. 258, 260 n.4 (2008).
MEMORANDUM AND ORDER PURSUANT TO RULE 23.0
The plaintiffs, Retirement Board of Stoneham (SRB), Retirement Board of Waltham (WRB), Retirement Board of Needham (NRB), and Retirement Board of Clinton (CRB) (collectively, the boards) are public retirement systems. They brought this action against the Massachusetts Teachers' Retirement System (MTRS) alleging that MTRS violated G. L. c. 32, § 3 (8) (c), which governs the payment of funds between the Commonwealth's public retirement systems, by requiring reimbursement for certain individual retirees for periods of service beyond the six-year statute of limitations applicable to contract actions. The complaint also sought a declaration that "MTRS is not entitled to any payment due and owing pursuant to [s]ection 3 (8) (c) for any period exceeding six (6) years from the payment demand." MTRS filed a motion to join the Public Employee Retirement Administration Commission (PERAC), the entity responsible for calculating the payments between the various public retirement systems, as a codefendant. The plaintiffs assented to the motion, and it was allowed. Thereafter, MTRS and PERAC filed a motion to dismiss on the ground that the Contributory Retirement Appeal Board (CRAB) has primary jurisdiction over the boards' claims and the boards have not exhausted their administrative remedies.
General Laws c. 32, § 3 (8) (c), provides, in pertinent part, as follows:
"Whenever any retired member or beneficiary receives a pension . . . from a system pertaining to one governmental unit in a case where a portion of such pension . . . is attributable to service in a second governmental unit to which another system pertains, the first governmental unit shall be reimbursed in full . . . by the second governmental unit for such portion of the pension as shall be computed by the actuary. . . . All such payments due under the provisions of this paragraph from the second governmental unit shall be charged to the pension fund of the system pertaining thereto and as received they shall be credited to or appropriated for the pension fund of the system pertaining to the first governmental unit . . . . In default of any such payment, the first governmental unit may maintain an action of contract to recover the same; provided, that there shall be no such reimbursement if the two systems involved are the state employees' retirement system and the teachers' retirement system."
The defendants also argued that the boards' failure to file an affidavit of futility required dismissal of the complaint. See G. L. c. 231A, § 3 ("The failure to exhaust administrative relief prior to bringing an action under section one shall not bar the bringing of such action if the petition for declaratory relief is accompanied by an affidavit stating . . . that reliance on administrative relief would be futile" [emphasis added]).
Following a hearing, the boards' complaint was dismissed by a judge of the Superior Court without prejudice. The judge's ruling was entered on the docket as follows:
"After hearing and review, the defendants' motion to dismiss the complaint is ALLOWED without prejudice. The defendants' understanding of the key term of 'futility' is supported by the relevant statute and case law; the plaintiffs' position on the meaning of 'futility' under the relevant statute and case law is not. For purposes of clarity, the court agrees with the oral argument of defense counsel concerning both counts of the complaint, and therefore the entire complaint is DISMISSED without prejudice, so that the plaintiffs may re-file if necessary, pursuant to the applicable statute, once they have exhausted their administrative remedies. While it may seem a harsh result to require parties to wait a number of years before returning to court, that is a decision that was made by the legislature and there is no extraordinary reason to intervene in this case at this stage, when administrative proceedings are underway."We affirm the judgment of dismissal.
Background. We summarize the facts as alleged in the complaint, which we accept as true for purposes of this appeal. See Eigerman v. Putnam Invs., Inc., 450 Mass. 281, 282 (2007). Each of the boards and MTRS are subject to the provisions of G. L. c. 32, which governs the provision of pension benefits to retired public employees. Between 1999 and 2011, fourteen educators who were members of MTRS retired and began to draw their retirement allowance from MTRS. At various times, all fourteen individuals had earned creditable service with the boards. As a result, each board was responsible for contributing a portion of the retirees' annual pension to MTRS. PERAC determined the amount of money each board owed to MTRS with respect to the fourteen retirees. The boards were notified of PERAC's calculations between January and November 2017. Thereafter, between February and May 2018, MTRS sent reimbursement requests to each board. In each instance, the boards made partial payments. They reimbursed MTRS in full for the preceding six years (2012-2017), but refused to reimburse MTRS for years prior to 2012. The boards asserted, as they do on appeal, that they were not required to make any contributions for years that fell outside the six-year statute of limitations applicable to contract actions.
One of those retirees had previously accumulated creditable service with the SRB; two had done so with the WRB; seven had done so with the NRB; and four had done so with the CRB.
PERAC notified the WRB that it was required to reimburse the MTRS for the pension costs associated with a fifteenth retiree in June 2018.
MTRS challenged the boards' refusal to pay the full amounts of reimbursement and, following the procedure set forth in G. L. c. 32, § 16 (4), it appealed the boards' decisions to CRAB, which in turn referred the appeals to the Division of Administrative Law Appeals (DALA) to be heard in the first instance by a DALA magistrate in accordance with the statute. While MTRS's appeals were pending, the boards commenced this action.
Discussion. Once a DALA magistrate issues a decision, the aggrieved party may seek further appellate review before CRAB. See G. L. c. 32, § 16 (4). Then, a party aggrieved by CRAB's decision may seek judicial review under G. L. c. 30A, § 14. Here, a DALA magistrate has rendered a decision in MTRS's favor in two cases, one involving CRB and the other involving WRB. Both CRB and WRB have appealed to CRAB. CRAB has not yet issued a decision in any of the appeals filed by MTRS.
The boards filed their complaint on August 29, 2018. As noted, at that time, all of the appeals before DALA were pending. In one of the cases, Massachusetts Teachers' Retirement Sys. vs. Clinton Retirement Bd., Contributory Retirement Appeal Bd., No. CR-18-438, CRB filed a motion to stay proceedings pending the outcome of the Superior Court action. The motion was denied and DALA subsequently issued a decision in favor of MTRS on July 26, 2019, stating that "the six (6) year statute of limitations does not apply." The CRB then appealed the DALA decision to CRAB. CRAB denied another motion to stay brought by CRB, and the case was briefed and is pending. Following oral argument in this case, MTRS submitted a letter pursuant to Mass. R. A. P. 16 (l), as appearing in 481 Mass. 1628 (2019), stating that a DALA magistrate had entered a decision in the WRB case and that WRB had also appealed to CRAB.
The question before us is whether the boards must exhaust administrative remedies by appealing to CRAB and receiving CRAB's decision prior to seeking relief in the Superior Court. The answer is that they must, for the following reasons: first, CRAB has primary jurisdiction over the boards' claims; second, the administrative remedy offered by the statute is adequate; and third, the boards have not identified any applicable exception to the general rule that parties must exhaust their administrative remedies prior to seeking judicial relief. See Wilczewski v. Commissioner of Dep't of Envtl. Quality Eng'g, 404 Mass. 787, 792 (1989) ("[I]n the absence of a statutory directive to the contrary, the administrative remedies should be exhausted before resort to the courts" [citation omitted]). Here, CRAB should have the opportunity to resolve the disputes regarding reimbursement between the boards and MTRS and to address the boards' claim that a six-year statute of limitations governing contract actions applies to § 3 (8) (c) reimbursement requests before any review by the courts. See Lee v. International Data Group, 55 Mass. App. Ct. 110, 115-116 (2002) (where administrative adjudicator has "full power" to decide question, "parties have no right to try out the issue in a separate proceeding in court" [citation omitted]). See also Luchini v. Commissioner of Revenue, 436 Mass. 403, 404-405 (2002) ("As a general rule, we require parties to exhaust their administrative remedies prior to seeking judicial relief").
Our review is de novo. See Curtis v. Herb Chambers I-95, Inc., 458 Mass. 674, 676 (2011).
Given our conclusion, it follows that the boards' request for a declaratory judgment, which seeks the same relief, does not excuse them from the requirement of exhausting their administrative remedies.
This is particularly relevant where, as here, identical administrative proceedings are ongoing.
Furthermore, a final decision by CRAB is reviewed under a deferential standard. We are required to "give due weight to the experience, technical competence, and specialized knowledge of the agency [CRAB], as well as to the discretionary authority conferred upon it." Arlington Contributory Retirement Bd. v. Contributory Retirement Appeal Bd., 75 Mass. App. Ct. 437, 441 (2009), quoting Flint v. Commissioner of Pub. Welfare, 412 Mass. 416, 420 (1992). See Evans v. Contributory Retirement Appeal Bd., 46 Mass. App. Ct. 229, 233 (1999) ("In the notoriously difficult, sometimes tortuous field of retirement rights and calculations, there is particular reason for giving deference to the agency's expertness"). This standard cannot be applied if a party is permitted to bypass review by CRAB.
Lastly, we are not persuaded that the boards should be excused from exhausting their administrative remedies on the ground that the controversy involves a question of law. "While we review legal questions de novo, '[w]here an agency's interpretation of a statute is reasonable, the court should not supplant it with its own judgment.'" Arlington Contributory Retirement Bd., 75 Mass. App. Ct. at 487, quoting Boston Retirement Bd. v. Contributory Retirement Appeal Bd., 441 Mass. 78, 82 (2004). It remains to be seen how CRAB will interpret the statute and whether its interpretation will be deemed reasonable.
Nor can the boards avoid the administrative process by framing their complaint as alleging a violation of G. L. c. 32, § 24 (1), which gives the Superior Court equitable jurisdiction "to compel the observance and to restrain the violation of [G. L. c. 32, §§ 1-28]." We agree with PERAC that the right of action created by § 24 (1) is limited to the situation described in the statute; that is, where PERAC has determined that a governmental unit or retirement board (or member, officer, or employee thereof) has violated or neglected to comply with G. L. c. 32, §§ 1-28, and PERAC has given notice to the Attorney General and others. Once those prerequisites have occurred, PERAC or "any interested party" may seek equitable relief or enjoin that violation. But the boards make no allegation that these prerequisites occurred here.
The boards argue that the issue raised does not fall within CRAB's "experience, technical competence, and specialized knowledge." See Arlington Contributory Retirement Bd., 75 Mass. App. Ct. at 441. But, as previously noted, even if resolution of the issue does not require technical or specialized competence, CRAB has the authority to address questions of law pertaining to the application of the statute. In any event, before appellate courts ultimately resolve whether CRAB's interpretation of the statute should be upheld, it makes sense for CRAB to review the issue first.
In addition, contrary to the boards' assertion, an appeal to CRAB does not amount to an exercise in futility. See Athol Memorial Hosp. v. Commissioner of the Div. of Med. Assistance, 437 Mass. 417, 425 (2002) ("[T]he futility exception to the requirement for exhaustion applies 'where the power and authority of the agency themselves are in question, and not where the exercise of that agency's discretion is challenged'" [citation omitted]). Here, the boards' claim that exhaustion of administrative remedies is not required because CRAB "has already ruled on the sole legal question on which [they] seek a declaratory judgment." We do not believe that is the case. The boards' reliance on a decision issued by CRAB and subsequently affirmed by a judge of the Superior Court involving the Lynn Retirement Boards is misplaced. See Lynn Retirement Sys. vs. Contributory Retirement Appeal Bd., Mass. Super. Ct., No. 1484-cv-1402 (Mar. 19, 2015). First, that decision is not controlling, and, second, the judge in that case stated that a retirement board has the "permissive" right to maintain an action in contract in the Superior Court in a § 3 (8) (c) dispute. Id. at 4. Even if we were to presume that that is true, for the reasons we have discussed, CRAB should answer the specific question raised here before review by the courts.
Furthermore, it matters not that a DALA magistrate has ruled in favor of MTRS and concluded that the six-year statute of limitations does not apply to the reimbursement requests in question. As we have noted, it has yet to be seen how CRAB will rule on the boards' jurisdictional objections and on their argument that the six-year statute of limitations applies to reimbursement under G. L. c. 32, § 3 (8) (c).
Judgment affirmed.
By the Court (Vuono, Milkey & Ditkoff, JJ.),
The panelists are listed in order of seniority.
/s/
Clerk Entered: February 18, 2021.