Gzaskow v. Public Employees Ret. Bd., 2017 NMCA 64

Background

Retiree Michael Gzaskow (retired 2011) selected PERA Form C and named Francoise Becker as survivor beneficiary; they married after his retirement and executed a premarital agreement preserving Becker as beneficiary.
To address the risk of both spouses dying while traveling, Gzaskow repeatedly had PERA provisionally recalculate benefits if he deselected Becker and designated his daughter; he would sign forms and normally leave them with his daughter to deliver only if both died.
On October 14, 2014, Gzaskow signed and (he alleges mistakenly) delivered a deselection form to PERA, resulting in PERA’s November 20, 2014 acknowledgment and a roughly $1,700/month reduction in his pension.
Upon return he asked PERA to void the change; PERA refused, treating the change as irrevocable under Section 10-11-116(E) and its regulations.
Plaintiffs sued PERB in district court seeking declaratory, injunctive, and equitable relief (including voiding the deselection as mistaken or invalid for lack of spousal consent or required documentation).
District court dismissed for lack of subject matter jurisdiction, concluding Plaintiffs failed to exhaust administrative remedies under Section 10-11-120; the Court of Appeals affirmed.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether plaintiffs were required to exhaust PERA/PERB administrative remedies before suing in district court	Gzaskow/Becker argued Smith’s declaratory-judgment exception and alleged PERB lacks equitable authority, so administrative exhaustion is not required	PERB argued Section 10-11-120 provides an exclusive, adequate administrative remedy (hearing before PERB, then judicial review)	Held: Plaintiffs must exhaust administrative remedies under Section 10-11-120; dismissal affirmed
Whether Smith v. City of Santa Fe declaratory-judgment exception applies	Plaintiffs: declaratory action permits bypassing administrative process for statutory interpretation and rights	PERB: exception limited to purely legal issues without agency factfinding or exclusive statutory scheme	Held: Smith exception not available here because disputed factual issues and an exclusive, comprehensive administrative scheme exist
Whether PERB (or PERA) can grant the equitable relief sought (rescission/cancellation)	Plaintiffs: PERB has only quasi-judicial powers and lacks authority to grant equitable relief, so courts should hear the claim	PERB: Whether PERB can reverse depends on statutory construction of Section 10-11-116(E); PERB can provide a complete remedy if statute allows reversal	Held: Court did not decide whether PERB has equitable power; if statute permits reversal, PERB provides adequate remedy; if statute forbids reversal, courts cannot grant equitable relief beyond statutory authority
Whether deselection was void ab initio for lack of spousal consent or missing required documentation	Plaintiffs: deselection is invalid because Becker did not consent and required NMAC documents were not submitted	PERB: factual disputes exist about consent and documentary compliance; those are for the administrative process to resolve	Held: These factual and legal questions belong in the PERB administrative process first; Plaintiffs must exhaust administrative remedies

Key Cases Cited

Smith v. City of Santa Fe, 171 P.3d 300 (2007) (N.M. Supreme Court recognizing a limited declaratory-judgment exception to exhaustion for purely legal issues but cautioning limits)
New Energy Econ., Inc. v. Shoobridge, 243 P.3d 746 (2010) (discussing separation-of-powers and the exhaustion doctrine)
State ex rel. Helman v. Gallegos, 871 P.2d 1352 (1994) (context on PERA membership and retirement benefits)
Pangilinan v. Immigration & Naturalization Service, 486 U.S. 875 (1988) (Supreme Court: equity cannot override or create remedies in contravention of statute)
Dydek v. Dydek, 288 P.3d 872 (2012) (equity will not act where a complete and adequate legal remedy exists)