COMMONWEALTH OF MASSACHUSETTS

Suffolk, ss. Division of Administrative Law Appeals

Antonio Fermano,

Petitioner

v. Docket No. CR-03-179

Malden Retirement Board,

Respondent

Appearance for Petitioner:

Antonio Fermano, pro se

24 Thacher Street
Malden, MA 02148

Appearance for Respondent:

Michael Sacco, Esq.

Law Offices of Michael Sacco
285 College Hwy., P.O. Box 479
Southampton, MA 01073-0479

Administrative Magistrate:

Kenneth J. Forton, Esq.

DECISION ON RESPONDENT'S MOTION TO DISMISS AND ORDER OF DISMISSAL

The Petitioner, Antonio Fermano, timely appeals, pursuant to G.L. c. 32, § 16(4), the March 26, 2003 decision of the Respondent, Malden Retirement Board, to exclude the personal use value of his employer-supplied automobile from the calculation of Mr. Fermano's superannuation retirement allowance.

On June 30, 2008, the Respondent, Malden Retirement Board, moved to dismiss Mr. Fermano's appeal, arguing that the recent Supreme Judicial Court case, Pelonzi v. Retirement Bd. of Beverly, 451 Mass. 475 (2008), controls the sole issue in this appeal. The Petitioner filed no opposition to the motion. Pursuant to 801 CMR 1.01(7)(a)(2), I have determined that the presentation of testimony or oral argument would not advance the presiding Magistrate's understanding of the issues involved; therefore, no hearing on the motion was held.

FINDINGS OF FACT

Pursuant to 801 CMR 1.01(7)(a)(2), I make the following findings of fact:

1. Antonio Fermano retired from the Malden Police Department on November 10, 1979. At the time of his retirement, Mr. Fermano was Police Chief.

2. While he was Police Chief, the Department assigned Mr. Fermano an unmarked automobile to be used in connection with his official duties.

3. When Mr. Fermano retired, the personal use value of the automobile was not included in regular compensation for purposes of calculating his retirement allowance.

4. Effective March 31, 2002, Mr. Fermano's retirement allowance was adjusted to include the personal use value of the automobile in his regular compensation. After the adjustment, the Malden Retirement Board issued Mr. Fermano a check for $13,751.96, which covered the retroactive period. His monthly retirement allowance also increased $51.28.

5. Mr. Fermano remitted to the Board $397.32, which represents the contributions he would have made to the retirement system if the personal use value of the automobile had been included in his regular compensation. Ultimately, the Board refunded the $397.32 to Mr. Fermano, citing Internal Revenue and U.S. Treasury regulations.

6. On March 26, 2003, counsel for the Board informed Mr. Fermano that the Board had reconsidered its earlier decision to include the personal use value of the automobile in calculating his retirement allowance. Accordingly, the Board reduced Mr. Fermano's monthly retirement allowance by $51.28, the same amount that it had been increased by the Board a year earlier.

7. Mr. Fermano filed a timely appeal of the Board's decision with the Contributory Retirement Appeal Board on April 2, 2003.

CONCLUSION AND ORDER

The Respondent's Motion to Dismiss is granted. Personal use value of an employer-supplied automobile is not regular compensation and may not be included, thus, when calculating Mr. Fermano's superannuation retirement allowance. This being Mr. Fermano's only ground for appeal, the appeal must be dismissed.

G.L. c. 32, § 5(2)(a) provides that a superannuation retirement allowance shall be "based on the average annual rate of regular compensation received by such member" (emphasis added) during the member's last three years, or highest paid three years, of creditable service. Regular compensation as defined in G.L. c. 32, § 1 is "the salary, wages or other compensation in whatever form, lawfully determined for the individual service of the employee by the employing authority, not including bonus, overtime, severance pay for any and all unused sick leave, early retirement incentives, or any other payments made as a result of giving notice of retirement . . . ."

The Petitioner contends that the personal use value of the automobile issued to him by the Malden Police Department should have been included as regular compensation in calculating his superannuation retirement allowance, since the payments meet the definition of regular compensation outlined in G.L. c. 32, § 1. The Respondent contends that Pelonzi v. Retirement Bd. of Beverly, 451 Mass. 475 (2008), specifically excludes personal use value of an employer supplied automobile from regular compensation, and, accordingly, Mr. Fermano's appeal must be dismissed.

I conclude that this issue is controlled by Pelonzi, a case where the petitioner was the former Commissioner of Public Safety and Fire Chief for the City of Beverly. Id. at 476.

There, the Commissioner was issued an unmarked automobile to be used in connection with his official duties and his professional growth. Id. The automobile could also be used for personal reasons, since the Commissioner was on-call in the event of an emergency. Id. The Beverly Retirement Board determined that the personal use value of the Commissioner's automobile should not be included as regular compensation. The commissioner appealed the Board's decision. Ultimately, the Supreme Judicial Court issued a decision in the case.

The Pelonzi court was clear. "Although § 1's definition of regular compensation may be broad, there is nothing in the entire statutory scheme that would indicate a legislative intent to include an employer-supplied automobile that is required by the fundamental nature of an employee's job." Id. at 482. "Compensation, in the context of § 1," the Court held, "can only be understood to mean payment for services rendered to an employer." Id. at 480. The Court reasoned that the automobile was contemplated as "a tool, or piece of equipment, that would enable the plaintiff to perform his job more effectively," not as compensation for the Commissioner's service to the city. Id.

Mr. Fermano's automobile likewise was a tool that was designed to help him perform his job more effectively. Mr. Fermano was on-call and needed to respond to emergencies. Thus, use of the automobile was not intended to compensate Mr. Fermano for his service to the Malden Police Department, and the value of the personal use of the automobile cannot be included as regular compensation when calculating Mr. Fermano's superannuation retirement allowance.

For the above-stated reasons, the Respondent's Motion to Dismiss is granted, pursuant to 801 CMR 1.01(7)(g)(3). This appeal is, therefore, dismissed with prejudice.

This is a final agency decision. Any objections to this decision must be made in writing to the Contributory Retirement Appeal Board within fifteen (15) days, in accordance with G.L. c. 32, § 16(4).

SO ORDERED.

DIVISION OF ADMINISTRATIVE LAW APPEALS

Kenneth J. Forton
Administrative Magistrate

DATED: 7/24/08


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