SUPERIOR COURT OF NEW JERSE Y APPELLATE DIVISION DOCKET NO. A - 4234
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PAUL BARILA, WILLIAM J. LUDWIG, CANDACE R. KANTOR, and DENNIS ENRICO, Plaintiff s - Respondent s ,

v . BOARD OF EDUCATION OF CLIFFSIDE PARK, BERGEN COUNTY, Defendant
- Appellant.

___________________________________ ___ Argued June 5, 2018

– Decided July 10 , 2018 Before Judges Reisner, Ma yer, and Mitterhoff On appeal from Superior Court of New Jersey, Chancery Division, Bergen County , Docket No. C - 000 161
- 16. Robert D. Lorfink argued the case for appellant (Fogarty & Hara, attorneys; S tephen R. Fogarty, of counsel and on the briefs; Robert D. Lorfink, on the briefs ) . Richard A. Friedman argued the cause for r espondent (Zazzali, Fagella, Nowak, Kleinbaum & Friedman, PC, a ttorney s; Richard A. F riedman and Genevieve M. Murphy

- Bradacs , of counsel and on the brief ) . NOT FOR PUBLICATION WITHOUT THE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
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PER CURIAM Defendant Board of Education of Cliffside Park (Board)
appe als from a September 19 , 2016 order denying defe ndant's motion to dismiss and May 16, 2017 order s denying defendant's motion for summary judgment and granting summary judgment in
favor of plaintiffs Paul Barila, William J. Ludwig, Candice R.
Kantor and Den nis Enrico's (plaintiffs) as to Count I of plaintiffs' Amended Complaint. We affirm. This matter arises from a collective bargaining agreement negotiated by the Board and the Cliffside Park Education Association (Association) for all teaching staff mem ber s employed by the District. The parties stipulate to the facts as
follows. Plaintiffs are current a nd former teachers employed by
the Board. P laintiff s were employed by the Board prior to July 1, 2015, and each had worked for the Board for at least ten years as of July 1, 2015. Plaintiffs are in the bargaining unit
and are also members of the Ass o ciation , which is the exclusive collective bargaining representative for all teaching staff members employed by the District. Plaintiffs, the Board, and the Association were all parties to a collective bargaining agreement that was in effect from July 1, 2012, through June 3 0, 2015 (the 2012 Agreement ). Article VIII of the 2012 Agreement, which addressed sick leave,3 A - 4234
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provided: "In accordance with the prov isions of N.J.S.A.
18A:30
- 2, each Teacher shall be entitled to ten (10) sick leave days with full pay in each school year. Unused sick leave days shall, in accordance with the provisions of N.J.S.A. 18A:30
- 3, be accumulated from year to year with no maxim um limit." Article VIII of the 2012 Agreement provided further:

Any teacher, who, as of the end of any school year beginning with 09

- 10, has either served the District at least ten (10) years and has retired under the Teachers' Pension and Annuity Fund up on such retirement or has served the District at least twenty - five (25) years and leaves the employ of the Board for any reason, shall be paid according to the table: Formula for unused sick leave: First 100 days x $125 .00 /day Second 100 days x $0.00/day Up to next 72 days x $1.75/day Maximum is $25,000.00 Accordingly, any t eacher who had eith er been employed by
the B oard for at least ten years and retir ed under the Teachers'

P ension and Annuity Fund, or who had been employed by the Board
f or twenty - five years and left the e mploy of the Board for any

r e aso n, was entitled to compensation , as calc ulated by a specific formula, for accumulated but un used sick leave, up to a maximum amount of $25,000. Although the 2012 Agreement specified that c ompensation for accumulated unused sick leave
was to begin with the 2009

- 2010 school year, the parties agree4 A - 4234
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that an identical provision has appeared in previous collective negotiations agreements for the pa s t twenty years.
As t he 2012 Agreement expired a t the end of June 2015, the Association and the Board negotiated a successor collective negotiations agreement, which became effective on Ju ly 1, 2015 (the 2015 Agreement ). The 2015 Agreement modified Article VIII in two significant ways. First, the 2015 Agreement changed the formula for unused sick leave by providing for up to a maximum of 100 days at the rate of $150/day. Consequently, the maximum amount of compensation that a teacher could receive for accumulated but unused sick leave upon retirement under the

Tea c hers' Pension and Annuity Fund , or after t w enty - five years of employment , was $15,000. Accordingly, the 2015 Agreement decreased the maximum amount of compensation from $25,000 to $15,000, decreased the maximum number of days of a ccumulated,
but unused , sick days for which te a chers could be compensated to 100 days, but increased the rate per day for these 100 days from $125 to $150. The parties agree that the Association knowingly bargained for the modified accumulated sick leav e provision in the 2015 Agreement. The parties also agree that the Association did not seek or secure plaintiffs' permission prior to negotiating the modification to Article VIII. To the contrary, several5 A - 4234
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teachers, including plaintiffs, objected to the m odifications upon learning of the changes to Article VIII. Notwithstanding these objections, the Association ratified the 2015 Agreement by adopting a resolution approving it on April 27, 2016. None of the plaintiffs voted to ratify the 2015 Agreement and they continued to object to the new Article VIII. Additionally, the parties stipulate as to the particular impact of Article VIII of the 2015 Agreem ent on each of the plaintiffs. Prior to July 1, 2015, plaintiff Kanto r had accrued 233 sick days, which equated to $18,27 5 under the 2012 Agreement. Plaintiff Barila had accrued 308.5 sick days, which equated to $25,00 0 under the 2012 Agreement. Plaintiff Enrico had accumulated 282.5 sick days, which equated to $25,00 0 under the 2012 Agreement. Likewise, p laintiff Ludwig accumulated 263 sick days, which equated to $25,0 0 0 under the 2012 Agreement. Since this litigation commenced, p laintiffs Kantor a nd Barila have retired and were paid for their unused, accumulated sick leave pursuant to the formula set for th in Artic le VIII of the 2015 Agreement. The Board has taken the position that when plaintiffs Enrico and Ludwig retire, they too will be compensated for their unused, accumulated sick leave pursuant to the formula set forth in Article VIII of the 2015 A greement.6 A - 4234
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On June 9, 2016, plaintiffs filed a complaint challenging the retroactive divestiture of their accumulated but unpaid sick
leave. On July 26, 2016, defendant filed a motion t o dismiss in lieu of an answer. Plaintiffs then file d a cross - motion to file a supplemental pleading on September 8, 2016. By order dated September 19, 2 016, the trial judge denied the motion to dismiss and granted the motion to amend the pleading. Plaintiffs filed a motion for summary judgment on March 21,
2017. The Board filed a cross

- motion for summary judgment seeking to dismiss Count I of plaintiff s ' amended complaint alleging breach of contract . The Board alleged that the trial court had no jurisdiction to decide the case as N.J.S.A. 34:13A
5.4(d) of the New Jersey Employer
- Employee Relations Act confers exclusive jurisdiction on the Public Employment Relat ions Commission (PERC ) to decide scope of negotiations issues . In addition, the Board argued that it had the right to neg otiate away plaint i ffs ' right to accumulated sick leave, even if those rights had vested. In an extremely detailed and thorough t hirty

- nine page opinion, Judge Robert P. C o ntillo rejected defendant's arg ument that plaintiffs ' claims involved a scope of ne gotiation issue.

As a resu l t, the judge found that he had jurisdiction to hear and decide the merits of the case. On the merits, the judge7 A - 4234
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concluded that compensation for accumulated but unpaid sick leave was a form of deferred compensation that, once ea rned, could not be divested retroactively through negotiated collective bargaining agreements.
On appeal, d efendant challenges the trial court's decision
that p laintiffs' claim s did not impli cate a scope of negotiations issue . D efendant also contend s th at Count I, although phrased as a violation of contractually vested rights, is actually a challenge to the ability of the Board and the Association to negotiate changes to the accumulated sick leave provisions . We affirm substantially for the reasons artic ulated in the judge's opinion, adding the following comments. In reviewing orders for summary judgment, an appellate court uses the same standard as the trial court. Globe Motor Co. v. Igdalev , 225 N.J. 469 , 479 (2016) ; Prudential Prop. &
Ca s . Ins. Co. v. Boylan , 307 N.J. Super. 162, 167 (App. Div. 1998). We decide first whether there was any genuine issue of
mater ial fact. If there was not, we then decide whether the trial court's ruling on the law was correct. Walker v. A tl . Chrysler Plymouth , 216 N .J. S uper. 255, 258 (App. Div. 1987). Because the facts in this case are stipulated, the issues on appeal are purely legal in nature. Accordingly, our review of the trial court's rulings are de novo. Est a te of Hanges v.8 A - 4234
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Metro . Prop. & Cas. Ins. Co. 202 N .J. 369 , 382
- 83 (2010); see also Manalap a n Realty L P v. Twp. Comm. o f Manalapan , 140 N.J.
36 6, 378 (1995) ("A trial court's interpretation of the law and the legal consequences that flow from established facts are not entitle d to any special deference.") . I. Subject matter jurisdiction. Subject matter jurisdiction is the power of the court to hear and determine "cases of the class to which the proceeding in question belongs. It rests solely upon the court's having been granted such power by the Constitution or by valid legislation . . . ." State v. Osborn , 32 N.J. 117, 122 (1960). While state courts are generally granted "expansive authority" to resolve a wide range of disputes, Thompson v. City of Atlantic City , 190 N.J. 359, 378
- 79 (2007), subject matter jurisdiction is not without li mits. See , e.g . Bd. of Educ. of Plainfield v. Plainfield Educ. Ass'n , 144 N.J. Super. 521, 525 (App. Div. 1976). Our Supreme Court has held that PERC has primary jurisdiction over scope of negotiations issues: "[U]nder
N.J.S.A. 34:13A
- 5.4(d) PERC is the forum for the initial determination of whether a matter in dispute is within the scope of collective negotiations. PERC's jurisdiction in this area is primary." State v. State Supervisory Emps. Ass'n , 78 N.J. 54,9 A - 4234
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83 (1978) (citations omitted). "[W]orki ng hours, compensation, physical arrangement a n d facilities and customary fringe benefits [are consid e red] th e essential components of term s and conditions of employment. " Id. at 67 (citing Bd . of Educ . v. Englewood Teachers Ass 'n . , 64 N.J. 1 (1973)). W hen a
controvers y "concerns the propriety of the parties n egotiating and agreeing on the i tem in dispute, [the trial judge] should

r e frain from pa s sing on the merits of the issue," because "P ERC has primary jurisdiction." Ridgefield Park Educ. Ass'n v. Ri dgefield Park B d. of Educ. , 78 N.J. 144, 153
- 54 (1978). As the trial court correctly note d , however, the question of who may initia te such an inquiry is not entirely clear. In Loigman v. Township Committee of the T ownshi p of Middletown , 297 N.J. Super. 287, 303 (App. Div. 1997) , we found that N.J.S.A.
34:13A
- 5.4(d) "allows only public employers and majority representatives to request scope

- of
- negotiations decisions. "
See also Petersen v. Township of Raritan , 418 N.J. Super. 125 (App. Div. 2011) (holding an individual plaintiff could sue his employer, the defendant township, alleging that the defendant's elimination of traditional health care benefits to retirees violated 1997

- 1999 collective negotiations agreement).10 A - 4234
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N otwithstanding this ambiguity, as t he trial court found, it is clear that plaintiffs could not file an action with PERC. Tellingly, neither defendant nor the Association expressed an interest in obtaining a scope of negotiations determination from
PERC . The judge noted that, "the Associat ion has expressed no interest in initiating such a process. Nor has it sought to intervene in this case." That neither the Board nor the Association sought a determination from PERC, knowing there were dissenting employees at the time of the negotiations , undercuts their argument that the trial court was not empowered to resolve the dispute.

T he trial judge also correctly rejected defendant's argument that Count I alleges a scope of neg otiations issue. We observe, as did the trial judge , that plaintiffs do not dispute that the Board and the Association are empowered to negotiate changes to the accumulated sick leave provisions. See Maywood
Educ . Ass ' n v. Maywood Bd. Of Educ. , 131 N.J. Super. 551 (Ch. Div. 1974) . The question in Count I wa s not whether the Board and the Association could include sick pay benefits as a negotiable item in their collective bargaining, but more narrowly whether th e Board and the Association cou ld retroactively divest plaintiff of their vested right to deferred compensation in an amount that exceeds $15,000. Given the11 A - 4234
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inability of plaintiff s to pursue a PERC determination , defendant's apparent disinterest in filing a PERC claim, and the narrow issue under review, t he trial c ourt did not err in determining that i t had subject matter juris diction to adjudicate plaintiffs' br e ach of contract claim . II. The negotiability of vested sick leave time. We have recognized that payment for accumulated sick leave ,

a s a form of deferred compensation , is to be protected. In Matter of Morris School District Board of Education , 310 N.J. Super. 332 (App. Div. 1998), we held that although the parties collectively agreed to be bound by a fact finder's determination in advance, a retroactive cap on vested or accumulated compensation could not be upheld absent a knowing and intentional waiver by the pers ons adversely affected. The court in Morris was "satisfied that the Commission's policy barring divestment absent a knowing waiver was reasonable and within its statutory powers." Id . at 34 3 . In so holding, we noted that "our Supreme Court has protected similar rights against invasion." Ibid . (citing Gauer v Essex C ty. Div. of Welfare , 108 N.J. 140, 144 (1987) ) . Furthermore, the Supreme Court opined in Owens v. Press Publishing Co. , 20 N.J. 537 (1956) that the right to severance pay survived the expira tion of a12 A - 4234
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collective bargaining agreement. As we recognized in Morris School Distict , Owens held :

deferred compensation ' was not conditioned upon the employee's discharge from service within the term of the collective bargaining agreement. ' The Court rea soned that ' once the right came into being it . . . survive[d] the ter mination of the agreement.' In contrast, the Court concluded that the plaintiffs' claims for severance pay allegedly earned in the intervening period between expiration of the collectiv e bargaining agreement and their respective discharge was ' ill

- founded .' [ Morris School Dist ., 310 N.J. Super. a t 344 (quoting Ow e ns , 20 N.J. at 348
- 49)(alterations in original)]. In the instant matter, the trial c ourt applied similar reasoning in its opinion noting that the

[B ] oard was authorized to negotiate over the accumulated sick leave provisions prospectively , or going forward . In contrast, a board of education is generally not permitted to divest teachers of their vested rights earned under pr ior collective negotiation agreements. As did the t rial judge , we agree that Morris and Owens stand for the proposition that compensation for accumulated sick leave is "earned" during the service performed by the teachers during the term of any parti cular collective negotiation agreement. Once vested, the right to compensation is a form of deferred compensation that cannot retroactively be negotiated13 A - 4234
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away. Morris School Dist. , 310 N.J. Super. at 347
- 48. In that regard, New Jersey courts have consist ently protected various forms of deferred compensation from retroactive divestment through collective bargaining negotiations absent consent of the affected employees. See e.g. State Troopers Fraternal Assoc. v.
State , 149 N.J. 38 (1997) ( retroactive pay adjustments); Gauer , 108 N.J. at 144 (reimbursement of health insurance and Medicare premiums); Owens , 20 N.J. at 442 (severance pay ) . In this case, plaintiffs did not consent to the retroactive divestment of their vested rights. Accordingly, the trial court correctly held that the B oard and Association impermissibly applied the 2015 Agreement to retroactively divest plaintiffs' right to earned compensation. There was no error in the trial court's decision to deny defendant's motion for summary judgmen t . We affirm the orders on appeal .