VERSACE v. CITY OF MOUNT VERNON

Tuesday, March 5, 2002

Supreme Court

Westchester County

Justice Lefkowitz

VERSACE v. CITY OF MOUNT VERNON ” The issue presented is whether the cost of living adjustment (“ COLA”) enacted by the Legislature in 2000 (Laws of 2000, ch. 125), applicable to pensioners and disability pensioners, entitles municipalities, who are paying the difference between what would have been full wages to disabled firefighters and the pension allowance received, to an offset for the COLA amounts.

Section 207-a subdivisions 1 and 2 of the General Municipal Law essentially provide that municipalities who employed the firefighters pay them full wages less the amount paid by reason of an accidental disability retirement allowance, a retirement for disability allowance or similar accidental disability pension. Specifically, subdivision 2 of section 207-a states that until the disabled firefighter reaches retirement age the municipality shall pay “ the difference between the amounts received under such allowance (i.e., the disability or accident allowance paid by the state retirement system) and the amount of his regular salary or wages” (emphasis added).

Sections 78-a and 378-a of the Retirement and Social Security Law were added in 2000 to provide cost of living adjustments. The legislative history reveals that the statutes were “designed to increase the pensions of public retirees” and “to mitigate the impact inflation has on their benefits”. 2000 NYS Annual, p. 93. Clearly, the statutory scheme is to add money to those eligible to receive COLA benefits.

Two appellate decisions have addressed the issue at bar. In Farber v. City of Utica, 282 AD2d 39 (4th Dep’t 2001), lv. to app. granted. 96 NY2d 720 (2001) the Appellate Division, Fourth Department dealt with a supplemental retirement allowance paid to a disabled firefighter pursuant to section 78 of the Retirement and Social Security Law and held that neither section 207-a of the General Municipal Law nor any other statute authorized a reduction or offset by the municipality even if the effect was that the disabled firefighter was earning more than active firefighters. We are advised by counsel that the case was scheduled for argument in the Court of Appeals on February 13, 2002.

On January 10, 2002, the Appellate Division, Third Department in Matter of Wise v. Jennings, __AD2d__ disagreed with the holding in Farber, supra, reached the opposite conclusion finding that the words “the difference”, quoted earlier as they appear in section 207-a (2) of the General Municipal Law, authorized a reduction in the amount the municipality had to pay the disabled firefighter.

While it is apparent that the conflict in the two appellate decisions will be resolved in the near future by the Court of Appeals, this Court must adjudicate the rights of the parties to this controversy at this time. Plaintiffs are disabled firefighters formerly employed by defendant City of Mount Vernon. Defendant City has advised plaintiffs that the amount it will pay them this year will be reduced by the COLA amount plaintiffs receive.

In this Court’s opinion, the focus of the inquiry should be upon the phrase “such allowance” in section 207-a (2) of the General Municipal Law as that clearly refers to the retirement or disability allowance paid by the state to disabled firefighters. The municipality is liable for the difference measured by “such allowance” and the full wages that otherwise would have been paid.

But “such allowance” clearly does not include supplemental sums or adjustments like COLA as those are add-ons and not part of “such allowance”. “[S]uch allowance” is the allowance set forth in sections 363(e) and 363-c(f) as an actuarial equivalent of accumulated contributions and other factors without the mention of a cost of living adjustment.

Consequently, the Court concludes that giving effect to the legislative intention the plaintiffs are correct and defendant may not reduce its payment by the COLA amount. It should also be noted, as claimed by plaintiffs, that even adding COLA to the amount paid each disabled firefighter will not necessarily result in that firefighter earning more than active firefighters when you take into account that active firefighters accrue or earn overtime pay, vacation and sick time and holiday pay. Moreover, even if the disabled firefighter does receive amounts in excess of the salary wages of active firefighters, the legislative intent discerned by the most recent statutory enactments providing for cost of living benefits, is to give such disabled firefighter the cost of living adjustment in any event. Cf. Totero v. Levitt, 51 AD2d 109, 112-114 (3rd Dep’t 1976) (Greenblott, J.P. dissenting), rvd. on dissenting opn. 41 NY2d 1002 (1977).

Plaintiffs’ motion for summary judgment is granted and defendant’s cross-motion for that relief is denied. Plaintiffs may enter judgment declaring the rights of the parties as follows: that COLA payments be made retroactive to September 1, 2001 without reduction or offset to amounts otherwise to be paid by defendant City and defendants are enjoined from offsetting such COLA payments.

Submit judgment on notice, to include costs and disbursements.