Weaver v. NEW YORK CITY EMP. RETIREMENT SYSTEM

• Decision Date: 21 July 1989
• Docket Number: No. 88 Civ. 2662 (MBM).,88 Civ. 2662 (MBM).
• Citation: 717 F. Supp. 1039
• Parties: Stephen WEAVER, by his Next Friend Rosalie WEAVER, Plaintiff, v. NEW YORK CITY EMPLOYEES' RETIREMENT SYSTEM, the City of New York, Harold E. Herkommer, personally and as Executive Director, New York City Employees' Retirement System, and Milad S. Eskalis, personally and as Assistant Deputy Director, New York City Employees' Retirement System, Defendants.
• Court: U.S. District Court — Southern District of New York

717 F. Supp. 1039

Stephen WEAVER, by his Next Friend Rosalie WEAVER, Plaintiff, v. NEW YORK CITY EMPLOYEES' RETIREMENT SYSTEM, the City of New York, Harold E. Herkommer, personally and as Executive Director, New York City Employees' Retirement System, and Milad S. Eskalis, personally and as Assistant Deputy Director, New York City Employees' Retirement System, Defendants.

No. 88 Civ. 2662 (MBM).

United States District Court, S.D. New York.

July 21, 1989.

COPYRIGHT MATERIAL OMITTED

Jonathan A. Weiss, Legal Services for the Elderly, New York City, for plaintiff.

Susan Rockford, Anne Carson and Peter L. Zimroth, Corp. Counsel of the City of New York, New York City, for defendants.

OPINION AND ORDER

MUKASEY, District Judge.

Plaintiff Stephen Weaver was a retired New York City employee who received a pension from defendant New York City Employees' Retirement System ("NYCERS"). Plaintiff died on December 29, 1988. This action, styled a § 1983 claim,¹ has been brought by his niece Rosalie Weaver, suing as his next friend, to challenge an alleged NYCERS policy of cutting off payments to a pensioner perceived to be incompetent until a committee or conservator is appointed. In the spring of 1988, NYCERS terminated plaintiff's pension checks after it determined that plaintiff was incompetent. Plaintiff claims that the practice of terminating benefits of incompetent claimants is arbitrary and therefore a violation of substantive due process under the Fourteenth Amendment; plaintiff asserts also that defendants did not afford him notice and a hearing regarding this termination, and shifted the burden to him to prove that he was not incompetent, thus violating his procedural due process rights under the Fourteenth Amendment. Plaintiff seeks compensatory damages plus interest from NYCERS. Plaintiff's prayer for injunctive relief is conceded by both sides to be moot because he is dead. Plaintiff requests punitive damages from the individual defendants.

Defendants Milad Eskalis, NYCERS Assistant Deputy Director, and Harold Herkommer, NYCERS Executive Director, now move for summary judgment claiming that they are protected by the doctrine of qualified immunity.²

Plaintiff, a pensioner since 1970, received his pension benefit payments monthly through February 1988. By form letter dated October 6, 1987, defendant Eskalis notified Rosalie Weaver, plaintiff's niece, that NYCERS suspected that Stephen Weaver was incompetent and, accordingly, all payments would be suspended until, inter alia, a conservator or committee was appointed. In order to give the reader the full flavor of this document, which defendants assert constitutes adequate notice apprising plaintiff of an opportunity to be heard, I reprint it in full (handwritten portions are underlined):

Date: 10/6/87 Rosalie Weaver 1 Haven Plaza apt 22B New York York Re: Stephen Weaver Pension No. 072234

Dear

This is in response to the visit conducted by our Hooper Holmes, Inc. investigator. He reported that "the pensioner cannot understand him or sign any papers. Also the niece stated Steven Weaver is incompetent."

This is sufficient to raise the issue of whether or not blank is legally competent to manage his/her affairs. His/Her observation could be negated by a certification of a medically qualified psychiatrist. If he/she is not competent, a Conservator appointed by a Court of competent jurisdiction would be necessary to act on his/her behalf.

Should he/she be declared judicially incompetent the appointment of a Committee becomes necessary instead of Conservator.

Accordingly, all checks will be suspended after 90 days from the date of this letter unless the appointment of a Conservator or Committee or in the alternative, a psychiatrist's statement establishing his competence to manage his/her affairs is received sooner.

If you have any questions, please contact this office.

Very truly yours /s/ Milad S. Eskalis Milad S. Eskalis Assistant Deputy Director

_________________________________________ I Rosalie Weaver on 10/6/87 received the above notice and am responsible to take care of the matter.

Rosalie Weaver different handwriting from above

(Carson Aff., Exh. 12) Eskalis never received any psychiatrist's report rebutting the finding that Weaver was incompetent, and, accordingly, ceased sending pension checks. Plaintiff alleges that Herkommer approved Eskalis' actions. (Complaint at ¶ 19)

Government officials performing discretionary functions are protected by qualified immunity. Harlow v. Fitzgerald, 457 U.S. 800, 102 S.Ct. 2727, 73 L.Ed.2d 396 (1982). Qualified immunity shields officials from liability for damages "insofar as their conduct does not violate clearly established statutory or constitutional rights of which a reasonable person would have known." 457 U.S. at 818, 102 S.Ct. at 2738. In order for an official to be held liable despite this qualified immunity, the right allegedly violated must be "sufficiently clear that a reasonable official would understand that what he is doing violated that right." Anderson v. Creighton, 483 U.S. 635, 640, 107 S.Ct. 3034, 3039, 97 L.Ed.2d 523 (1987). The action in question need not previously have been held unconstitutional, but the unlawfulness must be apparent in light of preexisting law. Id.; Neu v. Corcoran, 869 F.2d 662, 665 (2d Cir.1989).

Contrary to plaintiff's contention, the Supreme Court has held and the Second Circuit has repeatedly emphasized that qualified immunity defenses should be decided before the commencement of discovery, for example, as here, on a motion for summary judgment. Mitchell v. Forsyth, 472 U.S. 511, 526, 105 S.Ct. 2806, 2815, 86 L.Ed.2d 411 (1985); Eng v. Coughlin, 858 F.2d 889, 895 (2d Cir.1988); Francis v. Coughlin, 849 F.2d 778, 780 (2d Cir. 1988) (per curiam) and cases cited therein. This is because the test of whether an official acted in good faith is objective. Harlow, 457 U.S. at 817-819, 102 S.Ct. at 2737-38.

As is conceded by defendants,³ plaintiff's right to continued pension payments is a property right protected by the due process clause of the Fourteenth Amendment. Basciano v. Herkimer, 605 F.2d 605, 609 (2d Cir.1978), cert. denied, 442 U.S. 929, 99 S.Ct. 2858, 61 L.Ed.2d 296 (1979), and cases cited therein. State law fully supports this conclusion. Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532, 105 S.Ct. 1487, 84 L.Ed.2d 494 (1985); Board of Regents v. Roth, 408 U.S. 564, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972). Article 5, section 7 of the New York State constitution provides that

Membership in any pension or retirement system of the state or of a civil division thereof shall be a contractual relationship, the benefits of which shall not be diminished or impaired.

New York State courts have held that the right to a government pension is a property right protected by due process guarantees. Balash v. New York City Employees' Retirement System, 34 N.Y.2d 654, 311 N.E.2d 649, 355 N.Y.S.2d 577 (1974); see also Brown v. New York State Teachers' Retirement System, 107 A.D.2d 103, 485 N.Y.S.2d 871 (3d Dep't 1985).

Plaintiff's substantive due process claim asserts that defendants' practice of terminating benefits to incompetent claimants unless a committee or conservator is appointed is arbitrary. This policy is in sharp contrast to one followed by the Social Security Administration, which provides detailed regulations whereby the claimant may contest the finding of incompetence or, if the claimant is incompetent, provides an informal and inexpensive mechanism whereby a claimant's relative may be designated a "representative payee" and thus be able to cash claimant's check. See generally D. Sweeney & J. Lyko, Practice Manual for Social Security Claims, 157-59 (1980).

As these payments are not a "fundamental right," defendants' decision is reviewed under the most deferential standard of review and will not be overturned "unless the choice is clearly wrong, a display of arbitrary power, not an exercise of judgment." Mathews v. De Castro, 429 U.S. 181, 185, 97 S.Ct. 431, 434, 50 L.Ed.2d 389 (1976) (quoting Helvering v. Davis, 301 U.S. 619, 640, 57 S.Ct. 904, 908, 81 L.Ed. 1307 (1937)); Gutierrez v. Bowen, 702 F.Supp. 1050, 1061 (S.D.N.Y.1989).

Defendants had a fiduciary responsibility to make effective payment to plaintiff and, thus, may be absolutely liable to the named beneficiary if they make payment to a person other than the named beneficiary. Ellis v. Kelsey, 241 N.Y. 374, 150 N.E. 148 (1925); Scott on Trusts § 226 (4th Ed.1988); see also Pete v. United Mine Workers of America Welfare & Retirement Fund of 1950, 517 F.2d 1275, 1286 (D.C.Cir.1975). Moreover, defendants' agency, NYCERS, is explicitly prohibited from making retirement allowance payments to an assignee. See Administrative Code of the City of New York, § 13-181 (1986). Plaintiff denies violating this prohibition, reasoning that commercial assignments usually require a contract and no one contends that Rosalie Weaver and Stephen Weaver had one. However, assignments of retirement allowances may be effected by assignments that would not be considered valid in a commercial context. See, e.g., Federal Tax Regulations, § 1-401(a)-13(c)(ii) (West 1989). Therefore, defendants have a valid argument, based on the prohibition of assigning retirement allowances, to defeat the claim that they acted arbitrarily when they adopted a practice designed to head off apparently unlawful assignments.

Furthermore, New York law holds that a conservator should be appointed to manage the business affairs of an incompetent person. Matter of Klein, 57 A.D.2d 895, 394 N.Y.S.2d 282 (2d Dep't 1977) (fact that wife was acting as de facto conservator did not eliminate need for a conservatorship and was contrary to legislative intent of "having judicial supervision and control of conservatorships to insure conservatee's welfare will not be jeopardized by potentially adverse interests of the conservator"). Plaintiff argues that...