FROM THE DISTRICT COURT OF SANTA FE COUNTY Francis J. Mathew,
VanAmberg, Rogers, Abeita & Gomez, LLP Ronald J.
VanAmberg Santa Fe, NM for Appellants.
Robles, Rael & Anaya, PC Charles H. Rennick Albuquerque,
NM New Mexico Public Employees Retirement Association Misty
M. Braswell Santa Fe, NM for Appellees
M. BOHNHOFF, Judge.
In 2011, Plaintiff Michael Gzaskow retired from employment
with the State of New Mexico and began receiving retirement
pension benefits pursuant to the Public Employees Retirement
Act (the Act), NMSA 1978, §§ 10-11-1 to -142 (1987,
as amended through 2016). At the time of his retirement he
was divorced, but he named Plaintiff Francoise Becker to
receive retirement benefits in the event of his death; a few
months after his retirement, Gzaskow married Becker. In late
2014, shortly before he took an extended overseas trip with
Becker, Gzaskow executed and delivered to the Public
Employees Retirement Association (PERA) a form that exercised
a "one-time irrevocable option to deselect" Becker
as his survivor beneficiary and designate his daughter,
Sabrina Gzaskow (Daughter), as the survivor beneficiary.
Following his return from the trip, Gzaskow advised PERA that
the deselection of Becker and designation of Daughter was a
mistake and requested that the action be voided. PERA
declined to do so, taking the position that the action was
not reversible. Gzaskow and Becker (collectively, Plaintiffs)
then brought suit in district court (the Complaint) against
the Public Employees Retirement Board (PERB), which is
responsible for administering PERA, asserting a right to
cancellation of the deselection of Becker as survivor
beneficiary and seeking declaratory, injunctive, and
equitable relief. PERB moved to dismiss the Complaint for
lack of subject matter jurisdiction, arguing that Plaintiffs
had failed to exhaust the administrative remedy afforded
under the Act. The district court granted PERB's motion
to dismiss and Plaintiffs now appeal. We affirm.
Through the Act, the New Mexico Legislature has established a
program whereby employees of the State of New Mexico and
other public agencies may receive retirement pensions.
Participating employees are "members" of PERA and
earn the right to receive a pension by meeting various age
and service credit requirements. See §§
10-11-2(M), -3(A); State ex rel. Helman v. Gallegos,
1994-NMSC-023, ¶ 5, 117 N.M. 346, 871 P.2d 1352. The Act
establishes PERB to administer the Act and manage the
retirement pension program and PERA. Section 10-11-130.
When a member who qualifies for a pension retires, he or she
must elect one of four payment options or "Forms."
Section 10-11-116(A). The Forms of Payment are set forth in
Section 10-11-117. Under Form of Payment A, the
"[s]traight life pension, " the retiree receives a
monthly payment and upon his or her death the payments cease.
Section 10-11-117(A). Under Form of Payment B, "[l]ife
payments with full continuation to one survivor beneficiary,
" the retiree receives a reduced monthly payment, but
upon his or her death a survivor beneficiary will receive the
same payment until the survivor's death. Section
10-11-117(B). Under Form of Payment C, "[l]ife
payment[s] with one-half continuation to one survivor
beneficiary, " the retiree receives a reduced monthly
payment in an amount greater than that received under Form of
Payment B, and upon his or her death a survivor beneficiary
will receive one-half of that payment. Section 10-11-117(C).
Under Form of Payment D, "[l]ife payments with temporary
survivor benefits for children, " the retiree receives a
reduced monthly payment, and upon his or her death each
"declared eligible child" of the retiree is paid a
share of the retiree's monthly payment until death or age
twenty-five, whichever occurs first. Section 10-11-117(D).
Form of Payment A is the default payment option if the
retiree is not married at the time of retirement and does not
elect another form of payment; Form of Payment C is the
default payment option if the retiree is married at the time
of retirement and does not elect another form of payment.
Section 10-11-116(A)(1), (2). Under each of the Forms of
Payment, the pension payments are calculated to have the same
overall "actuarial present value" as Form of
Payment A. Section 10-11-116(B).
In addition to selecting a form of payment (other than Form
of Payment A), when a member retires he or she will name the
survivor beneficiary (or beneficiaries, in the case of more
than one declared eligible child under Form of Payment D).
Section 10-11-116(A). If the member is married, PERA must
obtain the spouse's written consent to the election of
form of payment as well as the designation of survivor
beneficiary; in the absence of such consent, the election and
designation are not effective. Id.
"An election of form of payment may not be changed after
the date the first pension payment is made."
Id. Further, after the date of the first pension
payment, the survivor beneficiary (or beneficiaries) may not
be changed except as provided in Section 10-11-116(C), (D),
and (E). Subsection C provides that a retiree who is being
paid under Form of Payment B or C with his or her spouse as
the designated survivor beneficiary may, upon becoming
divorced, elect to have future payments made under
Form of Payment A. Alternatively, Subsection D provides that
a retiree who is being paid under Form of Payment B or C may,
upon the death of his or her designated survivor
beneficiary, "exercise a one-time irrevocable
option" to designate another individual as the survivor
beneficiary. Subsection E provides that a retiree who is
being paid under Form of Payment B or C with a living,
designated, survivor beneficiary other than his or her spouse
or former spouse "may exercise a one-time irrevocable
option to deselect the designated beneficiary" and
either designate another survivor beneficiary or have future
payments made under Form of Payment A. Section 10-1-116(E).
While a PERA member is employed, his or her spouse ordinarily
acquires a community property interest in the member's
pension benefit. See generally NMSA 1978, §
40-3-8(B) (1990) (defining community property); Ruggles
v. Ruggles, 1993-NMSC-043, ¶¶ 14-32, 116 N.M.
52, 860 P.2d 182 (discussing divorcing spouses' community
property interest in employer-sponsored retirement plans);
cf. Martinez v. Pub. Emps. Ret. Ass'n,
2012-NMCA-096, ¶¶ 28-36, 286 P.3d 613 (discussing
parameters of widowed spouse's statutory interest in PERA
survivor benefits). The Act recognizes a spouse's
interests in PERA benefits in various ways. First, as
mentioned above, Section 10-11-116(A)(2) provides that if a
member who is married at the time of his or her retirement
does not designate another form of payment, the default is
Form of Payment C, life payment with one-half continuation to
one survivor beneficiary, with the member's spouse as the
survivor beneficiary. Second, again as stated above, Section
10-11-116(A) provides that if the member is married, the
consent of member's spouse is necessary to an election of
the form of payment and designation of any survivor
beneficiary other than the spouse. Third, Section 10-11-136
provides that, at the time of divorce, the court handling the
divorce may provide for a division of the marital
community's interest in the PERA pension and other
Section 10-11-120 addresses denials of claims for benefits
under the Act. Benefit claimants shall be notified in
writing, with explanation, of a denial of a claim for
benefits. Following receipt of the notice,
[a] claimant may appeal the denial and request a hearing. The
appeal shall be in writing filed with the association within
ninety days of the denial. . . . The retirement board shall
schedule a de novo hearing of the appeal before the
retirement board or, at the discretion of the retirement
board, a designated hearing officer or committee of the
retirement board within sixty days of receipt of the appeal.
A final decision on the matter being appealed shall be made
by the retirement board.
Section 10-11-120(A). Regulations promulgated by the PERB
authorize representation by legal counsel, limited discovery
including depositions as authorized by the hearing officer,
issuance of subpoenas to compel the production of documents
and attendance of witnesses, direct and cross examination of
witnesses under oath, and transcription of the hearing by a
court reporter. 2.80.1500.10(C)(2), (3), (5) NMAC. A
dissatisfied claimant may appeal a final decision of PERB
pursuant to the provisions of NMSA 1978, Section 39-3-1.1
(1999), which generally provides for record review of
administrative agency decisions. Section 10-11-120(B).
See, e.g., Johnson v. Pub. Emps. Ret. Bd.,
1998-NMCA-174, ¶ 10, 126 N.M. 282, 968 P.2d 793.
("Appeals from decisions of the Board denying disability
retirement benefits are reviewed on the record made before
The Complaint alleges the following: Gzaskow retired from
employment as a physician with the State of New Mexico on
January 1, 2011. At that time Gzaskow was divorced. On his
PERA retirement application form he selected Form of Payment
C and designated Becker as his survivor beneficiary.
Plaintiffs were then married on April 15, 2011. Prior to the
marriage, Plaintiffs entered into a pre-nuptial agreement:
they agreed that Becker would be the designated survivor
beneficiary with respect to Gzaskow's PERA benefits, but
that she would distribute to Gzaskow's children a portion
of any such benefits that she received.
From time to time thereafter, Plaintiffs took extended trips.
Gzaskow claims that he spoke with PERA personnel and
discussed with them how to address his retirement benefits in
the event both he and Becker were to die while on these
trips. Gzaskow claims that he was told that he could pay PERA
a $100 fee and have his benefits provisionally recalculated
on the assumption that, pursuant to Section 10-11-116(E)(1),
he deselected Becker as survivor beneficiary and designated
Daughter as the new survivor beneficiary. Gzaskow also claims
that he was told that if he and Becker both died while on a
trip, Daughter would become the beneficiary if the
recalculation had been done. Gzaskow had his benefits
provisionally recalculated several times: each time PERA
would prepare and provide to Gzaskow a form to accomplish the
deselection and new designation. The form would show the
recalculated pension and survivor benefit payments for
Gzaskow and Daughter: because Daughter was younger than
Becker, and in accordance with the requirement in Section
10-11-116(E)(1)(b) that the pension benefit's overall
actuarial present value remain the same, Gzaskow's new
pension payment would be a reduced amount. The form stated in
This one-time change to a new beneficiary or change to Form
of Payment A is Irrevocable.
. . . .
I have read and understand that this is a one-time removal
and selection of a new beneficiary or selection of Form of
Payment A. By choosing one of the options above, this will
change my beneficiary or payment option until my death or the
death of my beneficiary.
preparing for extended travel, Gzaskow would execute and give
the form to Daughter, with the understanding that she would
deliver it to PERA in the event he and Becker died during
In October 2014, Plaintiffs planned a trip to Vietnam.
Gzaskow repeated the process of having PERA recalculate his
retirement benefits if he deselected Becker and designated
Daughter as the new survivor beneficiary. This time, however,
Gzaskow not only signed the form on October 14, 2014, but
also-he claims, mistakenly-delivered it to PERA.
On November 20, 2014, while Plaintiffs were in Vietnam, PERA
sent Gzaskow a letter, acknowledging receipt of the
deselection of Becker and new designation of Daughter as
Gzaskow's survivor beneficiary. The letter restated
Gzaskow's reduced pension payment that had been set forth
on the form that he had signed and delivered to PERA. The
monthly payment was approximately $1, 700 less than his
pre-October 14, 2014 pension benefit. Upon returning from the
trip and reading the letter, Gzaskow notified PERA that there
was a mistake, that he had not intended to make the
deselection of Becker and the new designation of Daughter,
and requested that the change be canceled. Gzaskow alleges
that PERA personnel knew that Gzaskow was attempting to
protect himself should he and Becker die in a common incident
by repeatedly initiating the process of deselecting Becker,
and that he did not intend to replace Becker as the survivor
beneficiary if she was still alive. Gzaskow asserted that
under his pre-nuptial agreement with Becker, Becker could not
be removed as his survivor beneficiary, and as a result of
his mistake he was in breach of that agreement. Gzaskow also
provided PERA with an affidavit signed by Daughter renouncing
the beneficiary designation. However, PERA declined to cancel
the deselection of Becker and designation of Daughter as the
new survivor beneficiary. PERA took the position that,
Gzaskow having delivered the executed form to PERA, the
action was irrevocable, and that under the Act and the
regulations PERB had promulgated to implement the Act,
nothing could be done to reverse the deselection.