Ameruso v. City of New York

OPINION OF THE COURT

I hold that the right of New York City employees to receive, upon retirement, payment of a lump sum for their unused leave is not absolute. It is contingent upon faithful service

The plaintiff was the Commissioner of the New York City Department of Transportation from January 1, 1978 to March 1, 1986, when his retirement became effective. At some point after he left his position, he requested payment for accrued unused annual leave. The right of a city managerial employee to such payment is governed by Personnel Orders promulgated by the Mayor pursuant to authority granted him by General Municipal Law § 92. Prior to plaintiff’s tenure, Personnel Order No. 16/74 had been in effect. Section 4 of that order provided that: "Employees and officials with less than 10 years of service on final separation without fault or delinquency on their part, may be granted a lump-sum payment in lieu of terminal leave” (emphasis added). Personnel Orders Nos. 78/9 and 86/2, effective during plaintiff’s tenure, omitted the phrase regarding fault and delinquency. Sections 5.0 and 7.0 of these orders, respectively, provided: "Upon termination or separation from employment, an employee covered by these regulations shall be paid a lump sum for unused accrued annual leave.”

During the plaintiff’s tenure he was investigated by the Martin Commission regarding allegations of impropriety in his private investments. The Commission found that while the plaintiff was the Commissioner of the Department that regulated parking lot locations he had invested in a corporation that sold a piece of Manhattan property on which the parking lot was located, which action could have affected the profitability of the parking lot on that property.

After the plaintiff declared his intention to retire, it was discovered that he had failed to disclose substantial additional investment in a company which owned property in New Jersey. The plaintiff was subsequently indicted by a Grand Jury on three counts of perjury in the first degree, based in part on his failure to disclose this latter investment. After a trial the plaintiff was found guilty on the latter two counts and was convicted. Appeal of that conviction was pending at the time these motions were made.

The extensive amendment and expansion of old section 7.0 was the result of the discovery that Order No. 78/9 omitted the "fault or delinquency” provision. It appears that the City Personnel Director’s staff concluded that the omission was inadvertent, and that the order should be amended to include the provision. However, the amendment was not promulgated until October 30, 1986, by which time Order 86/2 had also been issued without the provision.

In July 1987 the plaintiff was convicted of perjury. Somewhat after the fact, in September 1987, the city requested that the plaintiff sign two affidavits required under Order 86/14, certifying: (1) that the plaintiff was not under pending indictment or investigation for charges relating to misconduct while in office; and (2) that the plaintiff would return any payment if convicted of a crime relating to the performance of his city duties.

The plaintiff claims that his right to the payment was vested, and that by requiring the certification the city is depriving him of his property without due process of law. The plaintiff seeks a declaratory judgment that: (1) Order 86/14 violates his right to due process under the Fourteenth Amendment of the US Constitution; (2) Order 86/14 violates the Contract Clause in article I, § 10 of the US Constitution; and (3) he is entitled to a judgment in the amount of $87,354.71 as his lump-sum payment, with attorney’s fees, interest, costs and disbursements.

The question I must decide is whether the plaintiff can be bound by an amendment which took effect after he left office, though in response to an omission recognized during the

Moreover, a construction which tends to sacrifice or prejudice the public interest is to be avoided (McKinney’s Cons Laws of NY, Book 1, Statutes § 152; Matter of Wilson v Board of Educ., 39 AD2d 965 , 967 [2d Dept 1972], mod on other grounds 32 NY2d 636 [1973]). The public has an interest in faithful service by government employees, which interest is not well served by rewarding employees who have engaged in misconduct with payments for accrued leave. Long-term faithful service is an implied condition for the receipt of such deferred compensation as pension, sick leave and vacation benefits (Robbins v Police Pension Fund, 321 F Supp 93 , 98 [SD NY 1970]; Matter of Giannettino v McGoldrick, 295 NY 208 , 212 [1946]; Matter of Mahoney v McGuire, 107 AD2d 363 , 366 [1st Dept 1985], affd 66 NY2d 622 [1985]; Matter of Teachers Assn., Cent. High School Dist. No. 3 [Board of Educ.], 34 AD2d 351 , 353-354 [2d Dept 1970]). Plaintiff’s construction of Order 86/2 as authorizing payment with no restrictions would prejudice this public interest in faithful service and contradict the policy behind deferred compensation. Therefore Order 86/2 must be read with an implied condition of faithful service.

Although the entire elaborate scheme of Order 86/14 cannot be read into Order 86/2, as that would constitute improper retroactive application of the order, in view of the city’s use of the "fault or delinquency” provision in the earlier Personnel Order, it is appropriate to imply that provision in its successor, Order 86/2.

Plaintiff’s third cause of action claims an absolute right to the lump-sum payment and he now seeks an inquest.

However, as discussed above, any right to that payment is contingent upon his having retired "without fault or delin

Although the actual perjury occurred almost a month after plaintiffs resignation, the investigation had begun prior to that time and the inquiry concerned transactions which occurred while plaintiff was Commissioner. I conclude that there is sufficient nexus between the misconduct and plaintiffs duties as Commissioner to warrant a finding that his resignation was not "without fault or delinquency”, and to support the denial of the benefit.

In light of the foregoing, it is clear that plaintiff lacks a "legitimate claim of entitlement” to the applied-for lump-sum payment. For that reason, his first cause of action must fall (see, Board of Regents v Roth, 408 US 564 , 577). His second cause of action, relying on the Contract Clause of US Constitution, article I, § 10, must also fall, since any contractual rights bestowed by Personnel Order 86/2 cannot be said to have been substantially impaired by the city’s actions (see, Energy Reserves Group v Kansas Power & Light, 459 US 400 , 411).

Accordingly, the plaintiffs motion is denied and the cross motion for summary judgment dismissing the complaint is granted in its entirety.