By Cherrie Anne E. Villahermosa
Variety News Staff

A retired government employee who sued the Retirement Fund has asked the Superior Court to vacate the agency’s Dec. 27, 2005 order, saying it was not supported by substantial evidence.
Michael C. Malone, who is now Saipan Mayor Juan B. Tudela’s consultant, said the Fund board’s order was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law of the commonwealth. 
The order of then-Fund Chairman Joseph C. Reyes directed the agency to take necessary and proper measures to recover any overpayments made to Malone.
Malone’s lawyer, Robert T. Torres, in a brief submitted to the Superior Court, said the Fund failed to recognize that equitable estoppel bars the government from recovering the overpayments.
Estoppel prevents “someone from denying the truth of a fact which has been determined in an official proceeding or by an authoritative body.”
Equitable estoppel “prevents one party from taking a different position at trial than he did at an earlier time if the other party would be harmed by the change.”
Torres said the Fund “failed to mention and account for undisputed facts establishing that the government is precluded from recovering the overpayments.”
He said the Fund’s order “contravenes Michael Malone’s fundamental statutory and constitutional rights to due process.”
According to Torres, his brief raised a single issue: Was the Retirement Fund’s decision to reject the hearing officer’s decision supported by substantial evidence and free from procedural defects so as to warrant the court’s affirmance? 
Torres said the answer is “a resounding ‘No.’ ” 
He said the Fund should be estopped from recovering the amounts paid toMalone as a retirement annuity during the period of his re-employment with the Office of the Saipan Mayor.
Malone retired from government service on Dec. 15, 2001 after 25 years in various capacities.
Shortly after his retirement and receipt of a 30 percent bonus payment, Malone returned to government service and entered into an employment relationship with the Saipan mayor.
The original period of employment was for 60 days.
 Prior to the expiration of the employment period, Mayor Tudela, with the concurrence of the Fund’s board of trustees, asked then-Gov. Juan N Babauta to exempt Malone from re-employment restrictions.
On March 26, 2002, the governor informed the Fund in writing that he was granting the mayor’s request. 
On April 26, 2002, the Fund board met and granted the governor’s request for Malone’s reemployment exemption.
On May 23, 2002, then-acting Fund Administrator Mariano Taitano wrote to Babauta, advising him that the board had voted to concur in the reemployment exemption for Malone at its April 26 meeting. 
In his transmittal letter, however, Taitano took the position that “these retirees including Malone may be re-employed and will have their pensions recalculated when they resume retirement status. Meanwhile, their pensions will be terminated during the period of reemployment.”
Notwithstanding Taitano’s letter, Torres said, the Fund never withheld or suspended Malone’s retirement benefits following the 61st day of his re-employment by the mayor’s office. Nor was Malone ever notified of the Fund’s position that benefits should have been terminated, Torres added.
On Aug. 13, 2002, then-Fund Administrator Karl T. Reyes notified Tudela in writing that the board had decided to rescind its earlier concurrence in Malone’s reemployment exemption.
No notice of hearing was provided to Malone prior to the board decision, nor was Malone informed of the board’s position prior to taking action, Torres said.
He added that the Fund administrator never bothered to notify Malone to cease employment, nor did the administrator inform Malone or the mayor that the Fund would be seeking to recover overpayment of retirement benefits paid to Malone. 
Malone continued to work in the mayor’s office without compensation, awaiting a legal opinion from the attorney general. 
On or about Sept. 24, 2002, the Attorney General’s Office issued its legal opinion. 
The AGO informed the Office of Personnel Management that Malone could be re-employed without losing his retirement benefits.
On Oct. 18, 2002, the director of personnel approved Malone’s hiring documents as a special advisor to the mayor of Saipan. 
Almost one year later, the Fund administrator took the position that the law prohibited Malone from receiving retirement benefits during the period of his “consulting contract” with the mayor’s office; that the Fund intended to apply the law to collect overpaid pension benefits; and that Malone could appeal the decision. 
The Fund took this position in a letter to Malone dated Sept. 9, 2003.
The letter cited the section of the law applicable to Malone’s case. 
According to Torres, it made no mention of CNMI Constitution Art. III, § 20(b) and/or 1 CMC § 8392, “nor did it correctly recite the factual basis upon which the Fund administrator was basing his decision to collect overpayments.” 
Instead, “the administrator claimed that the Fund’s action was warranted by Malone’s consulting contract.”
Malone timely appealed the Sept. 9, 2003 administrator’s letter on Oct. 6, 2003 and requested a hearing. 
Between Oct. 2003 and Dec. 2004, “there ensued a series of continuances, reschedulings, and other delays, including changes of legal counsel by both parties.” 
Throughout this period, Torres said, Malone was not informed of the specific factual basis for the Sept. 9, 2003 administrator’s letter or of the Fund’s intent to assert the CNMI Constitution’s Article III, § 20(b) and/or 1 CMC § 8392(c) as the legal basis for its attempt to recover pension benefits paid to Malone. 
On Dec. 27, 2005, the Fund board issued its decision and order rejecting the administrative hearing officer’s recommended decision of July 1, 2005, and adopting and incorporating the Fund’s proposed findings of fact and conclusion of law dated May 23, 2005. 
The board, Torres said, “articulated no basis for rejecting the hearing officer’s recommended administrative order. The board neither pointed to nor discussed the factual basis for its decision. Instead, the board simply adopted and incorporated in its entirety the Fund’s proposed findings of fact and conclusions of law. The board further directed the Fund to take necessary and proper measures to recover any overpayments to Malone.”