Gzaskow v. Pub. Emps. Ret. Bd. & Each Member of the Bd. in His Or Her Official Capacity

• Decision Date: 05 June 2017
• Docket Number: NO. A-1-CA-35161.,A-1-CA-35161.
• Citation: 403 P.3d 694
• Parties: Michael GZASKOW and Francoise Becker, Plaintiffs-Appellants, v. PUBLIC EMPLOYEES RETIREMENT BOARD and Each Member of the Board in his or her Official Capacity, Defendants-Appellees.
• Court: Court of Appeals of New Mexico

403 P.3d 694

Michael GZASKOW and Francoise Becker, Plaintiffs-Appellants,

v.PUBLIC EMPLOYEES RETIREMENT BOARD and Each Member of the Board in his or her Official Capacity, Defendants-Appellees.

NO. A-1-CA-35161.

Court of Appeals of New Mexico.

Filing Date: June 5, 2017

VanAmberg, Rogers, Abeita & Gomez, LLP, Ronald J. VanAmberg, Santa Fe, NM, for Appellants.

Robles, Rael & Anaya, PC, Charles H. Rennick, Albuquerque, NM, New Mexico Public Employees Retirement Association, Misty M. Braswell, Santa Fe, NM, for Appellees.

OPINION

HENRY M. BOHNHOFF, Judge

{1} In 2011, Plaintiff Michael Gzaskow retired from employment with the State of New Mexico and began receiving retirement pension benefits pursuant to the Public Employees Retirement Act (the Act), NMSA 1978, §§ 10-11-1 to - 142 (1987, as amended through 2016). At the time of his retirement he was divorced, but he named Plaintiff Francoise Becker to receive retirement benefits in the event of his death; a few months after his retirement, Gzaskow married Becker. In late 2014, shortly before he took an extended overseas trip with Becker, Gzaskow executed and delivered to the Public Employees Retirement Association (PERA) a form that exercised a "one-time irrevocable option to deselect" Becker as his survivor beneficiary and designate his daughter, Sabrina Gzaskow (Daughter), as the survivor beneficiary. Following his return from the trip, Gzaskow advised PERA that the deselection of Becker and designation of Daughter was a mistake and requested that the action be voided. PERA declined to do so, taking the position that the action was not reversible. Gzaskow and Becker (collectively, Plaintiffs) then brought suit in district court (the Complaint) against the Public Employees Retirement Board (PERB), which is responsible for administering PERA, asserting a right to cancellation of the deselection of Becker as survivor beneficiary and seeking declaratory, injunctive, and equitable relief. PERB moved to dismiss the Complaint for lack of subject matter jurisdiction, arguing that Plaintiffs had failed to exhaust the administrative remedy afforded under the Act. The district court granted PERB's motion to dismiss and Plaintiffs now appeal. We affirm.

I. BACKGROUND

A. The Act

{2} Through the Act, the New Mexico Legislature has established a program whereby employees of the State of New Mexico and other public agencies may receive retirement pensions. Participating employees are "members" of PERA and earn the right to receive a pension by meeting various age and service credit requirements. See §§ 10-11-2(M), -3(A); State ex rel. Helman v. Gallegos , 1994-NMSC-023, ¶ 5, 117 N.M. 346, 871 P.2d 1352. The Act establishes PERB to administer the Act and manage the retirement pension program and PERA. Section 10-11-130.

{3} When a member who qualifies for a pension retires, he or she must elect one of four payment options or "Forms." Section 10-11-116(A). The Forms of Payment are set forth in Section 10-11-117. Under Form of Payment A, the "[s]traight life pension," the retiree receives a monthly payment and upon his or her death the payments cease. Section 10-11-117(A). Under Form of Payment B, "[l]ife payments with full continuation to one survivor beneficiary," the retiree receives a reduced monthly payment, but upon his or her death a survivor beneficiary will receive the same payment until the survivor's death. Section 10-11-117(B). Under Form of Payment C, "[l]ife payment[s] with one-half continuation to one survivor beneficiary," the retiree receives a reduced monthly payment in an amount greater than that received under Form of Payment B, and upon his or her death a survivor beneficiary will receive one-half of that payment. Section 10-11-117(C). Under Form of Payment D, "[l]ife payments with temporary survivor benefits for children," the retiree receives a reduced monthly payment, and upon his or her death each "declared eligible child" of the retiree is paid a share of the retiree's monthly payment until death or age twenty-five, whichever occurs first. Section 10-11-117(D). Form of Payment A is the default payment option if the retiree is not married at the time of retirement and does not elect another form of payment; Form of Payment C is the default payment option if the retiree is married at the time of retirement and does not elect another form of payment. Section 10-11-116(A)(1), (2). Under each of the Forms of Payment, the pension payments are calculated to have the same overall "actuarial present value" as Form of Payment A. Section 10-11-116(B).

{4} In addition to selecting a form of payment (other than Form of Payment A), when a member retires he or she will name the survivor beneficiary (or beneficiaries, in the case of more than one declared eligible child under Form of Payment D). Section 10-11-116(A). If the member is married, PERA must obtain the spouse's written consent to the election of form of payment as well as the designation of survivor beneficiary; in the absence of such consent, the election and designation are not effective. Id.

{5} "An election of form of payment may not be changed after the date the first pension payment is made." Id . Further, after the date of the first pension payment, the survivor beneficiary (or beneficiaries) may not be changed except as provided in Section 10-11-116(C), (D), and (E). Subsection C provides that a retiree who is being paid under Form of Payment B or C with his or her spouse as the designated survivor beneficiary may, upon becoming divorced , elect to have future payments made under Form of Payment A. Alternatively, Subsection D provides that a retiree who is being paid under Form of Payment B or C may, upon the death of his or her designated survivor beneficiary, "exercise a one-time irrevocable option" to designate another individual as the survivor beneficiary. Subsection E provides that a retiree who is being paid under Form of Payment B or C with a living, designated, survivor beneficiary other than his or her spouse or former spouse "may exercise a one-time irrevocable option to deselect the designated beneficiary" and either designate another survivor beneficiary or have future payments made under Form of Payment A. Section 10-1-116(E).

{6} While a PERA member is employed, his or her spouse ordinarily acquires a community property interest in the member's pension benefit. See generally NMSA 1978, § 40-3-8(B) (1990) (defining community property); Ruggles v. Ruggles , 1993-NMSC-043, ¶¶ 14-32, 116 N.M. 52, 860 P.2d 182 (discussing divorcing spouses' community property interest in employer-sponsored retirement plans); cf. Martinez v. Pub. Emps. Ret. Ass'n , 2012-NMCA-096, ¶¶ 28-36, 286 P.3d 613 (discussing parameters of widowed spouse's statutory interest in PERA survivor benefits). The Act recognizes a spouse's interests in PERA benefits in various ways. First, as mentioned above, Section 10-11-116(A)(2) provides that if a member who is married at the time of his or her retirement does not designate another form of payment, the default is Form of Payment C, life payment with one-half continuation to one survivor beneficiary, with the member's spouse as the survivor beneficiary. Second, again as stated above, Section 10-11-116(A) provides that if the member is married, the consent of member's spouse is necessary to an election of the form of payment and designation of any survivor beneficiary other than the spouse. Third, Section 10-11-136 provides that, at the time of divorce, the court handling the divorce may provide for a division of the marital community's interest in the PERA pension and other benefits.

{7} Section 10-11-120 addresses denials of claims for benefits under the Act. Benefit claimants shall be notified in writing, with explanation, of a denial of a claim for benefits. Following receipt of the notice,

[a] claimant may appeal the denial and request a hearing. The appeal shall be in writing filed with the association within ninety days of the denial.... The retirement board shall schedule a de novo hearing of the appeal before the retirement board or, at the discretion of the retirement board, a designated hearing officer or committee of the retirement board within sixty days of receipt of the appeal. A final decision on the matter being appealed shall be made by the retirement board.

Section 10-11-120(A). Regulations promulgated by the PERB authorize representation by legal counsel, limited discovery including depositions as authorized by the hearing officer, issuance of subpoenas to compel the production of documents and attendance of witnesses, direct and cross examination of witnesses under oath, and transcription of the hearing by a court reporter. 2.80.1500.10(C)(2), (3), (5) NMAC. A dissatisfied claimant may appeal a final decision of PERB pursuant to the provisions of NMSA 1978, Section 39-3-1.1 (1999), which generally provides for record review of administrative agency decisions. Section 10-11-120(B). See, e.g. , Johnson v. Pub. Emps. Ret. Bd ., 1998-NMCA-174, ¶ 10, 126 N.M. 282, 968 P.2d 793. ("Appeals from decisions of the Board denying disability retirement benefits are reviewed on the record made before the Board.").

B. Factual History

{8} The Complaint alleges the following: Gzaskow retired from employment as a physician with the State of New Mexico on January 1, 2011. At that time Gzaskow was divorced. On his PERA retirement application form he selected Form of Payment C and designated Becker as his survivor beneficiary. Plaintiffs were then married on April 15, 2011. Prior to the marriage, Plaintiffs entered into a pre-nuptial agreement: they agreed that Becker would be the designated survivor beneficiary with respect to Gzaskow's PERA benefits, but that she would distribute to Gzaskow's children a portion of any such benefits that she received.

{9} From time to time thereafter, Plaintiffs took extended trips. Gzaskow claims that he spoke with PERA personnel and discussed with them...