On or about October 25, 1993, Mayor aRusso negotiated and signed a contract with the IBOP entitled "Town of Johnston Police Department Pension Plan" (hereinafter "1993 Contract"). The 1993 Contract set specific contribution amounts for both the Town and participants into their respective ING accounts. In pertinent part, the Contract stated:
"FORMULA FOR DETERMINING EMPLOYER CONTRIUBTION:
(a) On behalf of each Participant for each year of his participation in this Plan, the Employer shall contribute 12% of his annual Compensation.
(b) As a condition of Plan Participation each Participant shall . . . contribute 6% of his Compensation . . . [and] [s]uch Contributions shall be credited to his Participant's Account and shall share in Trust earnings and losses." 1993 Contract, Art. IV § 4.1.
Along with these requirements, the 1993 Contract specified how funds in the ING Accounts were to be disbursed on the occurrence of certain triggering events including early or normal retirement, death, disability, and unilateral termination. The 1993 Contract also set constraints within which the Plan's trustee, ING, was to begin making payments to beneficiaries. See 1993 Contract, Art. VI. Language specific to retirement due to disability states:
*5"DETERMINATION OF BENEFITS IN EVENT OF DISABILITY
In the event of a Participant's Total and Permanent Disability the Trustee shall distribute to such Participant all amounts credited to such Participant's Account.
Any disability benefits paid under this plan, as a result of Employer Contributions, shall reduce and offset any statutory disability benefits to which the Employee might otherwise be entitled." 1993 Contract, Art. VI, § 6.3.
Based on this provision, Plaintiffs assert that, as disabled retirees, they are entitled to distributions of the funds held their ING Accounts per the terms cited above. From the time the 1993 Contract was signed to the present day, both the Town of Johnston and plan participants have made their respective twelve (12) and six (6) percent contributions to their ING accounts in congruence with the 1993 Contract's requirements.
The next relevant change to CBA language occurred in the 1995-1998 CBA, which added a provision specifically addressing disability pensions. Under that section, in addition to a standard pension calculated under the CBA pension formula, a disabled officer also received:
"Section 4 — Disability Pension
All police officers . . . who are injured in the line of duty and qualify for a disability pension shall receive from the Town the difference between what is his or her pension payments and sixty-six and two-thirds (66 2/3) percent of what his or her salary was at the time of the injury." 1995-1998 CBA, Art. XV, § 4.
After this addition, no meaningful changes to the pension sections of the CBAs took place until 2005 when the 2005-2008 CBA added a section entitled "Pension Contributions" that required officers to contribute six (6) percent of their gross pay. Where these contributions were to be placed, however, was not specified. Notably, no similar language requiring a set contribution on the part of Johnston was included in this new section. 2005-2008 CBA, Art. XIV, § 5. The second addition was to the 2005-2008 *7 CBA's "Pension Committee" section referenced above, where a clause was inserted that stated:
"In the event any pension plan document, pension trust document or any other pension document conflicts with the provisions of this Agreement, the language of this Agreement controls and supersedes any language which is inconsistent or may be construed as inconsistent regarding the pension plan." 2005-2008 CBA, Art. XV, § 2.
As one of its arguments, Johnston asserts that this language applies to the 1993 Contract, such that Plaintiffs are only entitled to those benefits enunciated in the CBAs. It is unclear, however, what documents actually conflict with the CBAs because from 1983 to 2008, there are no records that the Town Council ever formally ratified the creation of the ING Accounts in 1984, the execution of the 1993 Contract, or twelve of the last fourteen CBAs between it and the IBOP.9 Under the Johnston Town Charter (hereinafter "Charter") the Town Council is "the policy determining body." CHARTER, § (3)-(8) (1963), and because of this, Johnston asserts the Town Council is the sole authority with the power to enter into an agreement such as the 1993 Contract. Thus, a major issue before the Court is whether the 1993 Contract is valid and if so, whether it is superseded by subsequent CBAs including the duly ratified 2001-2004 and 2005-2008 CBAs.
Two separate suits were filed by Plaintiffs, which have since been consolidated.10 Plaintiff Ross's Complaint seeks (1) declaratory judgment that he is entitled to *8 distributions from his ING Account and (2) injunctive relief compelling Johnston to make the distributions available to him. Faella and DiMaio filed jointly and seek the same relief as Ross as well as (3) attorneys' fees; and (4) damages for conversion.
Johnston has moved for summary judgment denying Plaintiffs' entitlement to separate distributions from the ING Accounts because the language of the 1993 Contract concerning these distributions was never ratified by the Town Council and because the language of the properly ratified 2001-2004 and 2005-2008 CBA's provide the only disability pension benefits to which Plaintiffs are entitled. Plaintiffs' cross-motion for summary judgment claims that Johnston is estopped from denying the validity of the 1993 Contract and that no language in any CBA, including the 2001-2004 and 2005-2008 CBAs, precludes Plaintiffs' entitlement to separate distributions from the ING Accounts.
During a summary judgment proceeding, "the justice's only function is to determine whether there are any issues involving material facts." Steinberg v. State,
Moreover, when passing upon a motion for summary judgment under Super. R. Civ. P. 56, if no genuine issues of material fact exist, the trial justice may determine whether the moving party "is entitled to judgment as a matter of law." Lynch v. SpiritRent-A-Car, Inc.,
The language of a town charter is interpreted according to the rules of statutory construction, and where a charter's provisions are clear and unambiguous "the court must interpret it literally, giving the words . . . their plain and ordinary meanings." Stewart v. Sheppard, *11
The Court's consideration of the 1993 Contract, however, does not end here. Plaintiffs accept that Mayor aRusso did not have actual authority to enter into the 1993 Contract on the Town's behalf. Despite this, however, Plaintiffs claim the Town is estopped from denying the 1993 Contract's validity. They argue that the Town Council's practice of approving annual budgets and allocating funds in a manner consistent with provisions of un-ratified CBAs as well as the un-ratified 1993 Contract, demonstrated to the IBOP that implicit approval through appropriations rather than formal voting was the Council's procedure of choice for entering into contracts. Examples of the Town's behavior include the fact that since 1993 the Town has made its requisite twelve (12) percent contributions into the ING Accounts as specified in the 1993 Contract. Given that no CBAs or other agreements besides the 1993 Contract have required the Town to do this, Plaintiffs question why the Town would make these contributions when, absent the 1993 Contract, the Town had no obligation to do so. A second example is the Town Council's commissioning of a 2002 review of the "police pension fund," which was performed by an outside consulting firm, Hooker Holocombe, Inc. (hereinafter "Firm"). In its report, the Firm stated that its review was based "on a plan document that *12 was signed October 25, 1993."11 They further question why the Town would hold the 1993 Contract out to the Firm as its pension plan if, as the Town argues, the 1993 Contract was not valid. Indeed, the Court questions this as well.
Relief under the doctrine of equitable estoppel against a municipality is "extraordinary and will not be applied unless the equities clearly must be balanced in favor of the parties seeking relief . . ." Greenwich Bay Yacht Basin Ass'n v. Brown,
The threshold issue, therefore, is whether the IBOP, when entering into the 1993 Contract, relied on representations from an agent of the Town with actual authority. While the Court agrees with Johnston that Mayor aRusso did not have actual authority to enter into the 1993 Contract, the Court also recognizes that it was not just Mayor aRusso's representations that induced the fflOP to enter into the 1993 Contract but also the actions, or lack thereof, of the Town Council, which at all times did possess the actual authority to bind the Town. In general, estoppel against a municipality has been denied where an agent's actions were either in contravention of state law or municipal ordinances or otherwise at odds with explicit or implicit municipal policies. See El Marocco Club,Inc. v. Richardson,
Here, the Town Council did have authority to ratify the 1993 Contract, as it did the ING Accounts in 1984 as well as the numerous non-ratified CBAs. Its silent *14
acquiescence to the actions of Mayor aRusso by annually appropriating funds to meet the twelve (12) percent obligation imposed by the 1993 Contract as well as its affirmative action in commissioning the 2002 study evaluating the ING Accounts as constituted under the 1993 Contract provisions can only be interpreted as a subsequent ratification of the 1993 Contract. In Murphy v. Duffy, the Supreme Court barred the West Warwick School Committee from reneging on a construction contract when despite not ratifying the contract, the Committee took affirmative steps in furtherance thereof such as procuring the contractor's services, allowing him and his employees access to school grounds to begin construction, and keeping track of the significant progress made by the contractor without objecting.
"[T]he conduct of the school committee by its acquiescence, its silence, when there was the imperative duty to speak, amounts to an approval; and, after he has expended large sums of money in reliance upon the reasonable interpretation of the conduct of the school committee, this complainant should not be allowed to [use the] lack of a formal or even an actual approval of the location of said schoolrooms [to bar the contract]. To permit that would be to aid in the perpetration of an injustice." Id.
, 46 R.I. 210 at 124 A. 103 108 .
Similarly, in Shiavulli v. School Committee of NorthProvidence where a teacher had taken leave without formal approval, the Supreme Court estopped the North Providence School Committee from denying her a new assignment upon her return.
"[s]ilence can be the basis for estoppel where there exists a duty not to remain silent as where the circumstances require one to speak lest such silence would reasonably mislead another to rely thereon to his detriment." Id.
, 114 R.I. at 449-50. 334 A.2d at 419
Here, it was not just the representations of Mayor aRusso upon which the IBOP relied when executing the 1993 Contract but also the Town Council's silence and subsequent conduct which implied ratification. Since 1993, the Town was aware that plan participants like the Plaintiffs were making their six (6) percent contributions as required by the 1993 Contract. Thus, if the Town Council objected to Mayor aRusso's signing of the 1993 Contract, it had a duty to make its rejection known then, not almost eighteen years after the fact.
Because the Court has determined that the IBOP relied on the passive conduct of the Town Council, which had actual authority to bind the Town, rather than Mayor aRusso's representations, the Court further finds ample evidence to support Plaintiffs' claim for estoppel. The Town Council's behavior in no way suggested to the IBOP that the 1993 Contract would be treated any differently from the numerous contracts adhered to before and after. Further, from that point forward, the Town Council authorized contributions to participant ING Accounts pursuant to the terms of the 1993 Contract. Thus, the IBOP reasonably relied on the Town Council's past and current practices, and plan participants like Plaintiffs suffered a detriment in so doing. Since 1993, Plaintiffs contributed six (6) percent of their pay on the promise that they would receive distributions from the ING Accounts upon retirement or other triggering event. The 1993 *16
Contract imposed the six (6) percent obligation, and absent reliance on the 1993 Contract, Plaintiffs presumably could have elected to contribute less and kept more money in their pockets. The Town of Johnston, however, has not only been able to retain and attract officers through its benefits plan but has also been able to keep Plaintiffs' six (6) percent contributions as an "asset" of the Town.12 The Court finds here that the doctrine of estoppel, even against a municipality, "should be available . . . where great injustice or loss would result." Ferrelli,
"In the event any pension plan document, pension trust document or any other pension document conflicts with the provisions of this Agreement, the language of this Agreement controls and supersedes any language which is inconsistent or may be construed as inconsistent regarding the pension plan." 2005-2008 CBA Art. XIV § 1 ¶ 2.
Given that the 1993 Contract itself is entitled "Town of Johnston Police Department Pension Plan," Johnston argues that it clearly falls within the language of the above cited section and is therefore preempted by the CBA terms.
In addition, the Town argues that it has consistently held out to police that their pensions are governed solely by relevant CBA provisions, which provide for a defined benefit plan. By definition, defined benefit plans provide benefits to retirees over the course of their lifetimes, and thus it would make no sense to also offer distributions from a deferred compensation plan.15 Despite being labeled and managed by ING as deferred compensation accounts, Johnston claims it has always referred to the ING Accounts as its pension plan and that ING understood this. See Dep. Menard 69:15-19. Johnston asserts that rather than an additional benefit, the ING Accounts are merely a funding mechanism for paying the CBA pensions. While the town acknowledges that using a deferred *18 compensation plan to fund a defined benefit plan is uncommon, it points to Menard's testimony that such an arrangement is possible.See id at 87:7-18.
According to Mr. Robert Civetti, an independent certified public accountant who since 1994 has audited Johnston's financial statements, it has been the practice of Johnston to pay its pensions out of the Town's General Fund which is driven by tax revenues. Dep. Civetti, 48:23-50:18 (March 29, 2011). In recent years, the Town has also paid CBA pensions with funds from an investment account earmarked "Pension Trust Fund." This investment account was originally established with monies from the Town General Fund. Id. While Plaintiffs harp on this practice to refute Johnston's claim that the ING Accounts fund the defined pension plans, Johnston argues that the ING Accounts indirectly fund the CBA pensions because they serve as a credit to offset the pension payments made out of the General Fund and the investment account. Johnston asserts that there is no requirement in the CBAs or elsewhere that pensions be paid directly from the ING Accounts, and how it chooses to meet its obligations is completely within its own discretion.
Plaintiffs respond that the ING Accounts have nothing to do with funding the defined pension plans under the CBAs and are in fact deferred compensation plans as represented to them in 1984 when the ING Accounts were established. They note that financial statements, contracts between Johnston and ING, as well as the participant enrollment forms all refer to the ING Accounts as 457 deferred compensation plans. See Dep. Civetti 40:18-41:15; Dep. Menard 24:20-23. According to Plaintiffs, Mr. Civetti brought to the Town Council's attention these discrepancies as well as the unorthodox practice of paying defined benefit pensions while also funding the ING Accounts as if *19 they were deferred compensation plans. Dep. Civetti 58:14-25. Additionally, Plaintiffs point to Ms. Menard's deposition testimony where she states that she has never heard of a municipality funding defined pension plans through deferred compensation accounts. Dep. Menard, 45:4-22. Lastly, Plaintiffs ask how the ING Accounts can be used to fund defined benefit pensions when enrollment in the ING Accounts was voluntary and participants have had the autonomy to direct where and how their accounts were to be invested. See Id. at 38:4-12; Dep. Faella 51:1-15 (April 25, 2011). Such a strategy, according to Plaintiffs, makes no sense if participants are already guaranteed a set pension amount.
Plaintiffs also contend that the CBA language does not supersede the prior 1993 Contract. Until the 2005-2008 CBA, there was no agreement absent the 1993 Contract that compelled participants to contribute a fixed percentage to their ING Accounts, and to this day there is no CBA language requiring Johnston to contribute its twelve (12) percent.16 Yet the Town has made those contributions on a continuing basis as required by the 1993 Contract. Plaintiffs further point to CBA language concerning early retirement which provides that participants who leave after one to ten years of service may "withdraw from the retirement fund his or her six (6) percent contribution as well as the Town's twelve (12) percent into the fund, for a total of eighteen (18) percent." 2001-2004 2005-2008 CBAs Art. XIV § 3(a). A subsequent provision gives participants who leave with between ten and eighteen years of service the option of receiving a lump sum of their six (6) percent and the Town's twelve (12) percent contributions, or "to leave his/her retirement intact, not withdrawing any amount until that amount has been in *20 for a period of twenty (20) years, then that employee will receive a pension beginning the 21st year. . . ."Id. at Art. XIV § 3(c). Plaintiffs argue that but for the 1993 Contract, the CBAs' references to six (6) percent employee and twelve (12) percent employer contributions have no meaning. Further, absent the 1993 Contract, there is no governing document for how these contributions are made, where they are placed, and whether police officers have any role in their management. Thus, rather than being preemptory, Plaintiffs argue that, in fact the CBA provisions rely on the 1993 Contract to give them their full effect.
In deciding whether the 1993 Contract is preempted, the Court must determine whether the Parties intended to make the defined pension benefit plans under the CBAs the only retirement benefit to which retirees would be entitled. As a preliminary matter, the Court recognizes that the Supreme Court acknowledges the "parallels between our system of labor regulations and the federal system" and finds federal law in this area to be persuasive authority.Western Lodge no. 10 v. Town of Westerly,
A plain reading of both CBAs' Art. XIV shows that the Town provides its police a defined pension benefit plan. Absent from both CBAs is any direct reference to deferred compensation benefits. In addition, § 1 ¶ 2 of this Article in the 2005-2008 CBA purports to invalidate any pension document that "conflicts with" or is "inconsistent" with the defined benefit plan of the CBA. Keeping both of these references in mind, the Court still finds that neither CBA sufficiently addresses the extent to which the 1993 Contract is preempted. With regard to the lack of reference to the ING Accounts in the language of the CBAs, the Court notes that deferred compensation and defined benefit plans are fundamentally different pension systems. In one, an employee directly participates in its success or failure, and the amount he or she eventually receives is not guaranteed. In the other, an employee has no role in investment decisions, and his or her benefit is a guaranteed amount calculated by a formula rather than an investment amount. It is not uncommon for both plans to coexist as a comprehensive retirement plan.See Dep. Rodio 44:15-44:23, 51:3-8 (April 26, 2011); Dep. Menard 52:14-24. See also In re *22 Almeida,
In addition, there is no language specifically addressing preemption, nor is there language in the CBAs referring to the ING Accounts as a funding mechanism for the defined pension plans as argued by the Town. There is, however, an ambiguous reference to six (6) percent employee and twelve (12) percent employer contributions to an account referred to solely as the "retirement fund." See § 3(A)-(C) of both CBAs. Unlike the extensive provisions for the CBA defined benefit plans, there is no further definition or explanation as to the terms of these contributions. This absence suggests that their terms may be provided for elsewhere, an inference that is consistent with established principles of contract interpretation. See
11 Lord, Williston on Contracts § 30:26 (4th ed.) (stating "[w]here the words employed to express some particular term of a contract are ambiguous and cannot be satisfactorily explained by reference to other parts of the contract and the parties have made other contracts in respect of the same subject matter . . . [and] general purpose, it is . . . permissible to examine all of them together . . . [to interpret] that particular term."); Seealso Int'l Org. Master, Mates and Pilots of America Local No. 2 v.Int'l Org. Master, Mates and Pilots of America, Inc.,
When interpreting the terms of an ambiguous collective bargaining agreement, it is necessary for a court to "consider the scope of other related collective bargaining agreements, as well as the practice, usage and customs pertaining to such agreements."Senior v. NSTAR Electric and Gas Corp.,
The Court first notes that at the time the 1993 Contract was signed, the 1993-1995 CBA also provided a defined pension benefit plan to retired officers. Thus, it would seem that at least in the beginning, the Parties understood that retirees would be eligible *24
for both plans. See Lifespan Corp.,
The Court further finds that both CBAs' references to contributions into a "pension fund" without any explanation as to what these contributions are or how they are governed confirms the idea that the two documents cannot be understood without reference to the other. See Int'l Org. Master, Mates and Pilots of America,Inc.,
Lastly, the Court dismisses Johnston's assertions that the ING Accounts are actually funding mechanisms for the CBA defined pension benefit plans. Regardless of how Johnston may have characterized the ING Accounts to ING, it is undisputed that to this day amounts have not been withdrawn from the ING Accounts to fund the defined pension plans under the CBAs. In addition, the Court notes that Ms. Menard is aware of specific occasions in which participants have withdrawn funds from their accounts upon triggering events other than retirement, 18 and the Court has already discussed the ability of participants to decide where and how their accounts were invested. The Court cannot comprehend why plan participants would have such autonomy over what Johnston argues are exclusively Town assets purportedly intended to pay Town liabilities. The Court further cannot comprehend what incentive plan participants would have in making sound investment decisions with the ING Accounts when upon retirement, their sole benefit is a set, formula driven, pension payment. The Court therefore finds that the deferred compensation and defined benefit plans are co-existing agreements and that the CBAs do not preempt the distributions guaranteed to Plaintiffs by the 1993 Contract.
Prevailing counsel may present an order consistent herewith which shall be settled after due notice to counsel of record.