DARREN M. NANCE VS. STATE OF NEW JERSEY, DEPARTMENT OF TREASURY, DIVISION OF PENSION AND BENEFITS(BOARD OF TRUSTEES, POLICE AND FIREMEN'S 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NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court."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 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-2973-15T3

DARREN M. NANCE,

Petitioner-Appellant, v.

STATE OF NEW JERSEY, DEPARTMENT OF TREASURY, DIVISION OF PENSION AND BENEFITS,

Respondent-Respondent. _______________________________

Submitted May 25, 2017 – Decided June 30, 2017

Before Judges O'Connor and Mawla.

On appeal from the Board of Trustees, Police and Firemen's Retirement System, PFRS No. 56220.

Darren M. Nance, appellant pro se.

Christopher S. Porrino, Attorney General, attorney for respondent (Melissa H. Raksa, Assistant Attorney General, of counsel; Danielle P. Schimmel, Deputy Attorney General, on the brief).

PER CURIAM

Appellant Darren Nance appeals from a February 8, 2016 administrative determination by the Board of Trustees, Police and Firemen's Retirement System (the Board) denying his request to waive interest payments on loans he took against his pension. Because we find no merit in appellant's arguments, we affirm the Board's determination.

The following facts are taken from the record. Appellant was employed as a police officer, first with Essex County and then with the City of Newark, and enrolled in the Police and Firemen's Retirement System (PFRS) on February 1, 1986. Appellant took nine PFRS loans over the course of his career, which totaled $12,991.32 as of September 3, 1996, the date he was terminated from employment. Appellant has made no payments on the loans since the date of his termination.

On December 18, 1997, appellant filed suit contesting his termination, asserting violations of the Federal Civil Rights Act, 42 U.S.C.A. § 1983, and the New Jersey Law Against Discrimination, N.J.S.A. 10:5-1 to -49. On June 24, 2010, a federal jury found in favor of appellant, awarding him $350,000 in compensatory and $250,000 in punitive damages. Appellant was not reinstated as a police officer and subsequent appeals from the determination to not reinstate him were denied by the Civil Service Commission. Notwithstanding, appellant reached a settlement with the City of Newark, resulting in the dismissal of all disciplinary charges, restitution of back pay, and an official designation his employment

2 A-2973-15T3 concluded by his resignation rather than termination. All litigation with the City of Newark concluded as of February 4, 2015.

On July 17, 2015, appellant applied to the Division of Pension and Benefits for deferred retirement benefits, which notified him of his outstanding loan balance and the interest accrued thereon. Appellant made no loan payments and, instead, applied for a waiver of the accrued interest on the loans; that application was denied by the Division. Appellant appealed from the Division's determination, but the Board upheld the denial of the waiver.

Appellant now challenges the February 8, 2016 Board determination. The Board concluded he was not eligible for a waiver of the interest on the loans because N.J.S.A. 43:16A-16.1, 16.2 and N.J.A.C. 17:⁴-4.4, which govern the terms of PFRS loans, mandate the accrual of four percent per annum interest on unpaid loan balances, and require the satisfaction of loan balances together with interest upon retirement. The Board found appellant agreed to pay the interest, and each loan application he completed contained a notice interest would accrue on the loans. The Board further found a waiver inappropriate because appellant received the $600,000 jury award and $18,438.46 in back pay from the settlement of the disciplinary charges. The Board also noted appellant enjoyed use of the borrowed funds.

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On appeal, appellant asserts the Board misapplied the law, maintaining N.J.S.A. 43:16A-16.1, 16.2 and N.J.A.C. 17:4-4.4 do not "prohibit" the Board from granting an employee a waiver of accrued interest if the employee proved the City of Newark violated his civil rights. Appellant also argues the lack of minority representation on the Board "negatively impacted" the outcome. Lastly, appellant asserts the Board's determination was arbitrary and capricious because the Board denied him a hearing, and treated him disparately from another PFRS member appearing before it on the same day as appellant.

Our review of agency determinations is limited. In re Stallworth, 208 N.J. 182, 194 (2011). We generally "defer to the specialized or technical expertise of the agency charged with administration of a regulatory system." In re Virtua-W. Jersey Hosp. Voorhees for a Certificate of Need, 194 N.J. 413, 422 (2008). We will "not disturb an administrative agency's determinations or findings 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." Ibid. "The burden of demonstrating that the agency's action was arbitrary, capricious or unreasonable rests upon the [party] challenging the administrative action." In re Arenas, 385 N.J. Super. 440, 443-44 (App. Div.), certif. denied, 188 N.J. 219 (2006).

We first address appellant's claim the Board erred by relying on N.J.S.A. 43:16A-16.1, 16.2 and N.J.A.C. 17:4-4.4 when it denied his request to waive the accrued interest on his PFRS loans. Appellant asserts these statutes and the regulation do not apply to him because he applied to "freeze" his PFRS account, when his civil rights lawsuit commenced. Appellant asserts he received no response to his request to freeze this account until he submitted his retirement application in 2015. He asserts he "reasonably believed that the PFRS Board had acted upon his request to deactivate his PFRS account." Thus, appellant argues:

[t]here is no known case law that the PFRS could cite which would prohibit the Board of Trustees from granting a waiver on outstanding loan interest, particularly where, as in the instant matter, the appellant had been the proven victim of both Federal and State law violations by a law enforcement agency.

Appellant's claim requires we examine both the statutory and the regulatory provisions challenged to determine whether the Board arbitrarily, capriciously or unreasonably applied them. "We interpret a regulation in the same manner we would interpret a statute." US BANK, N.A. v. Hough, 210 N.J. 187, 199 (2012). Our analysis begins with the plain language of the regulation in question. State v. Gelman, 195 N.J. 475, 482 (2008) (citing

5 A-2973-15T3 DiProspero v. Penn, 183 N.J. 477, 492 (2005)). "The Legislature's intent is the paramount goal when interpreting a statute and, generally, the best indicator of that intent is the statutory language." DiProspero, supra, 183 N.J. at 492. To determine the intent, we give the words of the regulation their "ordinary and common significance." Lane v. Holderman, 23 N.J. 304, 313 (1957). "Only if the statutory language is susceptible to 'more than one plausible interpretation' do we turn to such extrinsic aids as legislative history for help in deciphering what the Legislature intended." Gelman, supra, 195 N.J. at 482 (quoting DiProspero, supra, 183 N.J. at 492-93).

N.J.S.A. 43:16A-16.1 states:

Any member who has at least [three] years of service to his credit for which he has contributed as a member may borrow from the retirement system, an amount equal to not more than [fifty percent] of the amount of his aggregate contributions, but not less than [fifty dollars]; provided that the amount so borrowed, together with interest thereon, can be repaid by additional deductions from salary, not in excess of [twenty-five percent] of the member’s salary, made at the time the salary is paid to the member. The amount so borrowed, together with interest on any unpaid balance thereof, shall be repaid to the retirement system in equal installments by deductions from the salary of the member at the time the salary is paid or in such lump sum amount to repay the balance of the loan but such installments shall be at least equal to the member's rate of contribution to the retirement system and at least sufficient to

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repay the amount borrowed with interest thereon. Not more than two loans may be granted to any member in any calendar year. Notwithstanding any other law affecting the salary or compensation of any person or persons to whom this act applies or shall apply, the additional deductions required to repay the loan shall be made.

The rate of interest for a loan requested by a member prior to the effective date of [N.J.S.A. 43:16A-16.1 and 16.2 and N.J.A.C. 17:4-4.4] shall be [four percent] per annum on any unpaid balance thereof. . . .

Loans shall be made to a member from his aggregate contributions. The interest earned on such loans shall be treated in the same manner as interest earned from investments of the retirement system.

N.J.S.A. 43:16A-16.2 provides:

In the case of any member who retires without repaying the full amount so borrowed, the Division of Pensions and Benefits shall deduct from the retirement benefit payments the same monthly amount which was deducted from the compensation of the member immediately preceding retirement until the balance of the amount borrowed together with the interest is repaid. In the case of a pensioner who dies before the outstanding balance of the loan and interest thereon has been recovered, the remaining balance shall be repaid from the proceeds of any other benefits payable on the account of the pensioner either in the form of monthly payments due to his beneficiaries or in the form of lump sum payments payable for pension or group life insurance.

The applicable regulation, N.J.A.C. 17:4-4.4 also provides:

Interest will be calculated on a periodic basis on the unpaid loan balance. If

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scheduled payments are not paid timely, interest will be accrued and added to the remaining outstanding loan balance. If, at the end of the loan schedule, there is a balance of less than [fifty dollars], it will be written off. If the balance is equal to or greater than [fifty dollars], the member will be assessed.

Following consideration of appellant's argument in light of the statutory language, we are not persuaded. Clearly, there is no exception to the mandated accrual and payment of interest on unpaid loans, other than for balances less than fifty dollars. The plain language of the statutes and regulation supports the Board's determination; appellant has failed to show the Board determination was arbitrary, capricious, or unreasonable.

Likewise, it was not arbitrary, capricious, or unreasonable for the Board to deny appellant's request for a waiver based on the commencement of his civil rights suit. As respondent notes, the Board was not a party to his suit and the claims therein have no bearing on his separate obligation to the PFRS to repay the loans, including any accrued interest.

Although it is not entirely clear from appellant's brief, he seemingly argues the Board was estopped from enforcing the interest accrual because the PFRS handbook mandates loans must be paid within five years. He also asserts an estoppel-like argument because PFRS never declared the loans to be in default as indicated in its handbook. However, as noted by respondent, appellant's claim the loans were payable within five years of issuance under N.J.A.C. 17:4-4.9 ignores the fact the regulation, adopted in 2011, does not apply to appellant, who concluded his employment in 1996. Also, the regulation contains no language limiting PFRS's ability to collect loans beyond five years. In fact, the opposite is true, as unpaid loans are deemed distributions, which are reported to the IRS and would subject appellant to further interest and penalties. See 26 U.S.C.A. § 72(p).

Moreover, our Supreme Court has stated the language of a handbook does not trump statutory authority to the contrary. See Golden v. Cty. of Union, 163 N.J. 420, 432 (2000) (holding 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 former's pleasure). Thus, appellant's claim the handbook created rights superior to the plain language of the statutory and regulatory requirements governing PFRS loans is misplaced.

Lastly, appellant's claim the Board's racial makeup influenced its determination and his suggestion the Board treated his matter disparate from another PFRS member is unsupported by any facts in the record before us, and thus, is without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).

Affirmed.

Footnotes

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[10] A-2973-15T3