Court Opinion

ID: 4880926
Source: CourtListenerOpinion
Date Created: 2021-09-02 14:07:45.536076+00
Date Added: 2024-06-11T08:03:09.249279
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE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 NOS. A-3612-18
                                                                    A-5576-18
                                                                    A-1884-19
                                                                    A-2899-19

LYN ZIEVE,

          Petitioner-Appellant,

v.

BOARD OF TRUSTEES,
TEACHERS' PENSION AND
ANNUITY FUND,

     Respondent-Respondent.
_____________________________

CAROL FLYNN,

          Petitioner-Appellant,

v.

BOARD OF TRUSTEES,
TEACHERS' PENSION AND
ANNUITY FUND,

     Respondent-Respondent.
_____________________________
LYNN TOPP,

     Petitioner-Appellant,

v.

BOARD OF TRUSTEES,
TEACHERS' PENSION AND
ANNUITY FUND,

     Respondent-Respondent.
_____________________________

KRISTEN BARRON-GEUBTNER,

     Petitioner-Appellant,

v.

BOARD OF TRUSTEES,
TEACHERS' PENSION AND
ANNUITY FUND,

     Respondent-Respondent.
_____________________________

           Argued August 23, 2021 – Decided September 2, 2021

           Before Judges Whipple and Natali.

           On appeal from the Board of Trustees of the Teachers'
           Pension and Annuity Fund, Department of the
           Treasury.

           Kathleen Naprstek Cerisano argued the cause for
           appellants (Zazzali, Fagella, Nowak, Kleinbaum &
           Friedman, PC, attorneys; Kathleen Naprstek Cerisano,
           of counsel and on the briefs).

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                                    2
            Matthew Melton, Deputy Attorney General, argued the
            cause for respondent (Andrew J. Bruck, Acting
            Attorney General, attorney; Melissa H. Raksa,
            Assistant Attorney General, of counsel, Juliana C.
            DeAngelis, Deputy Attorney General, and Matthew
            Melton, on the briefs).

PER CURIAM

      In Zilberberg v. Bd. of Trs., Tchrs.' Pension & Annuity Fund, ___ N.J.

Super. ___ (App. Div. 2021) (slip op. at 1), appellant Zilberberg appealed from

an administrative determination of the Board of Trustees Teachers' Pension and

Annuity Fund (TPAF) rejecting her request that a portion of interest payments

owed on her pension loan be waived. In 2004, Zilberberg secured a $26,860

pension loan from TPAF and retired after having made two payments through

payroll deduction. The Division of Pensions and Benefits (Division) did not

deduct Zilberberg's loan payments from her distributions once she had retired,

and she did not inquire about her loan repayment status between 2004 and 2017.

      In September 2017, the Division notified Zilberberg that an audit of

pension loans revealed she owed an outstanding balance of $25,973.83 plus

additional accrued interest of $21,227, for a total of $47,200.83. It also informed

Zilberberg that it would begin deducting loan payments from her monthly

retirement allowance to cover the repayment of principal and interest. She

offered to repay the remaining balance and five years of interest, at four percent,

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                                        3
in a lump-sum payment if the Board of Trustees for TPAF (Board) would waive

the interest accrued after the original five-year term. The Board rejected her

offer and denied her request to waive the accrued interest assessed on her

outstanding loan obligation. Notably, the State had entered into a closing

agreement with the Internal Revenue Service (IRS) under which outstanding

pension loans, plus interest, would be repaid to State-administered retirement

systems, including TPAF, to protect their tax-qualified status.

      Zilberberg appealed the Board's determination, and we affirmed the

Board. "The Internal Revenue Code, § 72(p), N.J.S.A. 18A:66-35, N.J.S.A.

18A:66-35.1, and N.J.S.A. 18A:66-63 controlled the interest obligation, even

though it was the Division's fault the payments were not deducted from

appellant's pension checks." Zilberberg, slip op. at 2.

      When a pension loan is not repaid within five years of its distribution, the

loan funds are essentially converted to taxable income as a "deemed

distribution." I.R.C. § 72(p)(2)(B) "sets forth an exception from a taxable

deemed distribution for a loan from a qualified employer plan, provided the loan

is repaid within five years." Zilberberg, slip op. at 2; I.R.C. § 72(p)(1) ("If

during any taxable year a participant or beneficiary receives, directly or

indirectly, any amount as a loan from a qualified employer plan, such amount

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                                        4
shall be treated as having been received by such individual as a distribution

under such plan."). TPAF must be repaid to maintain the plan's tax-qualified

status.

      The Board's decision was not arbitrary, capricious, or unreasonable. The

Board's decision in Zilberberg comported with the IRS mandate that TPAF repay

the amount borrowed with interest thereon. We rejected Zilberberg's additional

arguments as well.

      In these four appeals, which we consolidate for the purposes of this

opinion, we are presented with the same scenarios. Pursuant to Rule 2:8-3(b)

and upon consideration of each record and the arguments presented in the briefs

and during oral arguments, the court being satisfied that the issues may be

summarily decided, we affirm for the reasons stated in Zilberberg.

                                      I.

Zieve v. Bd. of Trs., Tchrs.' Pension & Annuity Fund, Docket No. A-3612-18

      Lyn Zieve is a retired teacher who was formerly employed by the Howell

Township Board of Education. She retired on August 1, 2004. In April 2004,

shortly before her retirement, she applied for and received a pension loan from

TPAF in the amount of $27,321. In accordance with the procedure to pay back

the loan, two deductions of $314.90 were taken from each of Zieve's semi-

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                                       5
monthly paychecks. When Zieve retired, the Division did not continue the

deductions into her pension checks and Zieve did not make any further payments

to satisfy her debt once she retired. On October 13, 2017, the Division notified

Zieve of this issue and informed her that she owed an outstanding balance of

$26,938.91 on the principal and that $18,936.57 in interest had accrued since

2004. The Division informed her that she had to pay the outstanding balance

plus interest within five years. In furtherance of that objective, the Division

began to make deductions of $1,203.43 from her retirement benefits to meet the

five-year requirement.

      Zieve wrote to the Board challenging the additional interest that had

accrued from 2004 to 2017 as well as the Division's decision to make the

deductions from her pension checks. She did not inquire about the status of the

repayment of her loan for the thirteen years in which interest accrued. Zieve

later disputed the validity of the actions and requested that the Board waive the

accrued interest because of the Division's error. The Board denied her request,

citing the closing agreement between TPAF and the IRS. As noted, supra, the

agreement set out steps for TPAF to take so that it could comply with I.R.C. §

72(p) to protect its tax-qualified status. Zieve challenged the Board's decision,

and on March 11, 2019, in its Final Administrative Determination, the Board

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                                       6
again denied her request to waive the accrued interest. The Board also denied

her request for information and documentation underlying the decision and did

not include a copy of the closing agreement with the IRS (TPAF later provided

the agreement in the appendix to its brief for this appeal). She appealed. For

the reasons outlined in Zilberberg, we affirm.

                                       II.

Flynn v. Bd. of Trs., Tchrs.' Pension and Annuity Fund, Docket No. A -5576-18

      Carol Flynn is a retired teacher who was formerly employed by the

Burlington City Board of Education. She retired on January 1, 2007, after taking

a November 8, 2006 loan with TPAF in the amount of $23,620. The Division

made only one deduction from Flynn's pre-retirement paychecks. From her

retirement in 2007 until October 2017, no deductions were taken from her

retirement benefits, and she made no payments on the loan for ten years. In

October 2017, the Division notified Flynn that an audit of her TPAF account

revealed an outstanding loan balance of $23,256.20 plus an additional

$14,992.65 in interest that accrued over the ten-year period. To satisfy these

debts, she was required to pay back the loan within five years, and, in

furtherance of that objective, the Division began to deduct $944.97 from her

pension checks.

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                                       7
      She appealed to the TPAF Board of Trustees, challenging the additional

interest that accrued from 2007 to 2017, as well as the Division's decision to

make deductions from her pension checks.         She also requested an updated

balance on the principal and interest figures to reflect the monthly deductions

taken from her checks between her January 2007 retirement and November 1,

2017. She then offered to make a one-time lump-sum payment toward the

outstanding principal and requested a recalculation of interest. She sent a formal

request that disputed the validity of the Board's actions and asked the Board to

waive the accrued interest because of its error. The Board denied the appeal in

its initial determination, and Flynn again challenged the ruling (based on the

same reasons stated above in Zieve). On July 12, 2019, the Board issued its

Final Administrative Determination denying Flynn's request to waive the

additional accrued interest. This appeal followed. For the reasons outlined in

Zilberberg, we affirm.

                                       III.

Topp v. Bd. of Trs., Tchrs.' Pension and Annuity Fund, Docket No. A-1884-19

      Lynn Topp is a former teacher and member of TPAF who was employed

by the Caldwell-West Caldwell Board of Education. Prior to her July 1, 2006

retirement, in April 2006, she applied for and received a pension loan for $8,000.

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                                        8
One deduction was taken from appellant's final pre-retirement paycheck toward

satisfying the debt. As in Zilberberg, Zieve, and Flynn, Topp's payments were

not carried into her retirement and therefore were not deducted from her pension

checks. From her retirement date on July 1, 2006, until September 12, 2017, the

Board made no deductions toward satisfying Topp's pension loan. Topp was

notified by the Division on September 12, 2017, of the error. As a consequence,

she continued to owe $7,638.14 on the principal of the loan and $4,456.23 in

interest that accrued over the eleven-year span. To satisfy this debt, appellant

was required to pay back the loan within five years, and, in furtherance of that

objective, the Division began to make $1,240.70 deductions from each of her

pension checks.

      On June 11, 2019, she appealed to the Board, challenging the additional

interest that had accrued from 2006 to 2017 as well as the Division's decision to

make the deductions from her pension checks. She requested that the Board

waive the additional interest and reimburse her for the accrued interest taken

from her pension checks from October 1, 2017, through July 1, 2018. The Board

denied the appeal. Topp appealed again on October 4, 2019, and the Board

summarily denied the appeal in its Final Administrative Determination.

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                                       9
      The factual background here is virtually identical to the preceding two

cases and Zilberberg, and for those reasons, we affirm.

                                      IV.

Barron-Geubtner v. Bd. of Trs, Tchrs' Pension and Annuity Fund, Docket No.
A-2899-19

      Kristen Barron-Geubtner has been employed as a teacher for the

Brigantine City Board of Education since September 1989. In May 2000, she

applied for and received a pension loan from TPAF for $5,000. In November

2002, she applied for and received a second pension loan in the amount of

$8,350. Salary deductions were taken from her paychecks through June 30,

2010. During that eight-year span, Barron-Geubtner twice went on unpaid

maternity leave (July 1, 2004, to August 31, 2006, and again from December 1,

2006, to August 31, 2008). Deductions were not made during either period of

her maternity leave. However, interest did accrue. After June 30, 2010, no

repayments were deducted from her salary checks. 1

      Barron-Geubtner asserts she believed that between June 30, 2010, and

January 2018 the loans had been fully repaid. However, she made no inquiries

1
 Unlike in the other cases, appellant Barron-Geubtner did not retire. The reason
why the Division stopped taking deductions from her paychecks after June 30,
2010, is unclear.
                                                                          A-3612-18
                                      10
to confirm her belief. In January 2018, the Brigantine City Board of Education

notified her that the Division discovered an outstanding balance of $1,690.37 on

the principal of the loans and $665.83 of additional interest that accrued from

July 1, 2010, through January 31, 2018.       The Division directed that three

monthly deductions of $785.40 be taken from Barron-Geubtner's salary to

satisfy the loans. Barron-Geubtner appealed the Division's determination to the

Board and requested that the additional interest be waived and requested the

interest payments deducted from her paychecks be reimbursed. The rest of the

procedural history in this case is identical to those discussed above.

      Barron-Geubtner's arguments are the same as those raised in the other

cases. Although there are factual differences that distinguish this case from the

others, it is identical in nearly every other way. Zilberberg directly addresses

the issues posed.

      Affirmed.

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                                       11