Petersen v. TOWNSHIP OF RARITAN
12 A.3d 250
| N.J. Super. Ct. App. Div. | 2011Background
- Petersen retired from the Raritan Township Police Department in 1999 as a PBA member under a 1997-1999 CBA that funded health/medical benefits for employees and some retirees.
- At retirement, Petersen received health insurance under the employer's plan at no cost, and the CBA required continuation of current coverages at specified plan levels (Patriot V/X Plan, Delta Dental, Bollinger) with certain co-pay adjustments.
- Section 5 of Article XXIII required retirees with 25+ years of service to continue health benefits for life at the employer's expense, but did not specify a particular plan.
- In 2008, the Township, with PBA approval, shifted from a traditional indemnity plan to a POS plan and offered current enrollees the option to switch or pay the excess premium to remain in the traditional plan.
- Petersen stayed in the traditional plan, incurring a premium differential; the change was incorporated into a 2009-2012 CBA, but not all retirees could remain under the traditional plan.
- Petersen sued claiming the CBA guaranteed lifetime traditional-plan benefits at no cost; the trial court granted summary judgment for the Township, holding no contractual entitlement to the traditional plan beyond the terms of the CBA and noting equitable estoppel did not apply.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did the CBA mandate lifetime, no-cost coverage in the traditional plan for Petersen? | Petersen contends Sec.1 and Sec.5 together lock in traditional plan for life at no cost. | Defendant asserts Sec.5 obligates benefits for life but not a specific plan; changes to plan are permitted with PBA consent. | No; CBA did not tie Sec.5 to the traditional plan, allowing plan modification. |
| Was the 2008 plan change a permissible modification of benefits under the CBA? | Petersen claims modification breached the contract and benefits could not be altered. | Changes were negotiated with the PBA and limited to plan type; retirees could switch or pay the differential. | Yes; modification was permissible and retirees could choose the POS plan with employer-paid premiums. |
| Is equitable estoppel available to bar modification of retiree benefits? | Petersen relied on assurances that benefits would continue; estoppel prevents modification. | Equitable estoppel requires clear representations and reasonable reliance; none exist here. | No; estoppel not applicable. |
Key Cases Cited
- Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520 (1995) (summary judgment standard; contract interpretation on record)
- Middletown Twp. Policemen's Benev. Ass'n Local No. 124 v. Twp. of Middletown, 162 N.J. 361 (2000) (equitable estoppel; compelling circumstances in municipalities)
- Bonzella v. Monroe Township, 367 N.J. Super. 581 (2004) (vested benefits and uniform health care coverage; cannot be unilaterally abrogated)
- Gauer v. Essex Cnty. Div. of Welfare, 108 N.J. 140 (1987) (benefits cannot be rescinded unilaterally when not preserving benefit integrity)
- Maglies v. Estate of Guy, 193 N.J. 108 (2007) (do not add terms to unambiguous contracts)
- Great Atl. & Pac. Tea Co., Inc. v. Checchio, 335 N.J. Super. 495 (2000) (contract interpretation; when to leave interpretation to a jury)