The opinion
~ • A. TE OF MAINE SUPERIOR COURT
PENOBSCOT, SS. CIVIL ACTION
DOCKET NO. A~-~9-1?
JAl,\i -PEAJ- ~~fJI/;;oJ J
NORMAN E. BUDGE et al.,
Plaintiffs
v. DECISION AND ORDER
TOWN OF MILLINOCKET,
Defendant
Before the court is a motion of defendant, Town of Millinocket ("Town") for
summary judgment on Counts II, III, and IV of plaintiffs' complaint. 1
Count II of the complaint alleges a breach of contract on the part of the Town
when it "voted to phase out the provision of Retiring Insurance Benefits to Plaintiffs."
Count III alleges a taking without due process alleging the Town "deprived plaintiffs of
their property without just compensation when it voted to phase out the provisions of
Retiring Insurance Benefits to plaintiffs in violation of the Maine and the United States
.
Constitutions." Count IV is a count of promissory estoppel, alleging that the Town
promised and assured the plaintiffs that it would provide lifetime retiree insurance
benefits at Town cost and that plaintiffs' reasonably relied on defendant Town's
promises and assurances; by reason of the reasonable reliance, the plaintiffs suffered
damages and injustice may only be avoided by enforcing the defendant's promises to
provide paid lifetime retiree insurance benefits.
Of the thirty-one present plaintiffs, fifteen retired prior to August 8, 1991; seven
were hired prior to August 8, 1991, and retired prior to July 10, 1999; eight plaintiffs
1
Count I, petitiOning for judicial review of government action pursuant to M.R. Civ. P. 808 is
dismissed by this court's order of December 8, 2009.
were hired prior to August 8, 1991, and retired after July 10, 1999; and one plaintiff was
hired after August 8, 1991, and will retire after July 10, 1999. 2
In 1983, the Town of Millinocket adopted a personnel policy, effective February
11, 1983. Section 17 of that policy, is titled, "Retirement Plan and Group
Hospitalization." In that section, the Town declares that it is a participating member of
the Maine State Retirement System, that it has a life insurance and group hospitalization
plan, and that it is funded 100% by the "Municipality for employees, spouses, and
children." In 1987, the Town adopted a "Millinocket Code." This Code contained
Chapter A128, titled, "Personnel Policy." Section A128-17 of that Code provides that
the Town will continue to be a participating member of the Maine State Retirement
System, the Town holds a life insurance and group hospitalization plan and the plan is
funded 100% by the Municipality for employees, spouses, and children. On August 8,
1991, the Town amended the provision to add,
Employees, other than School Department employees, who retire from
Town service and qualify for retirement or disability benefits under the
Maine State Retirement System shall continue as members of the Towns
group hospitalization plan, at that the Town's expense, to the same extent
as current employees. The Town shall also pay for coverage for the
former employee's spouse. This benefit shall apply to former union
employees of the Town, as well as nonunion employees. The Town reserves
the right to change this benefit in the future as circumstances require. Any such
changes shall apply only to employees hired after August 8, 1991.
(Emphasis added.) This paragraph survived a 1995 amendment.
Effective July 10, 1999, the Town enacted, "Ordinance #1-99." The document
which was provided to the court as an exhibit shows an introductory comment to the
amendment of the personnel policy as "(Option 1-Employees Pay Portion, Retirees
2
The complaint was brought by thirty-three former employees of the Town of Millinocket seeking
recovery from the Town. Two plaintiffs have withdrawn.
2
pa1d 100% by Town.)." This amendment to the personnel policy contains the following
language,
The Town reserves the right to discontinue this benefit or to change
coverage and providers from time to time as well as the portion of the
premiums paid by the Town and its employees with our without prior
notice.
Until July 31, 1999, the Town shall pay the premium for employee
and dependent coverage.
As of August 1, 1999, the Town shall pay 90% of the premium for
employee and dependent coverage and the employee shall pay 10% of
such premium.
Section 2 of the personnel policy amendment states:
Employees hired prior to August 8, 1991, other than School
Department employees, who retire from Town service and qualify for
retirement or disability benefits under the Maine State Retirement System
shall continue as members of the Town's group hospitalization plan to the
same extent as current employees. . . . The Town shall pay the premium for
the former employee and spouse.
(Emphasis added.)
Effective January 1, 2002, the Town further amended the personnel policy under
Chapter A128. This amendment contained language calling for a declining scale of
premium payments by the Town for employees. This amendment contains the
sentence, "The Town reserves the right to discontinue this benefit or to change coverage
and providers from time to time as well as the portion of the premiums paid by the
Town and its employees with or without prior notice." However, paragraph D
provides special language for "employees hired prior to June 10, 1999". After reciting
special conditions, it states, "The Town shall pay the premiums." (Emphasis added.)
Chapter A128 of the personnel policy was further amended on May 14, 2009.
Provision A128-17 reiterates that beginning January 1, 2008, with payroll deductions,
3
the Town will pay 87% of the health insurance plan for qualified nonunion employees.
However, a paragraph was added as follows:
Beginning October 1, 2009, all retirees will pay a portion of their health
insurance costs. The Town will pay to each qualified retiree an amount
set by the Town that is based on a prorated percentage of a total Retiree
Health Insurance Pool (Pool) of $315,000 (including eligible Town and
Wastewater retirees) as of July 1, 2009. The amount of this pool will
decrease annually as attrition and the pool of qualified retirees occurs on a
dollar for dollar basis. The pool will also be prorated each year to account
for new retirees added to the pool.
The amendment goes on to provide that as of January 1, 2010, the Town would
contribute to the cost of retiree health insurance based upon its Point of Service Plan
(POS). It also provides that subsequent to January 1, 2010, any future premium
increases would be paid 100% by the retiree.
Because all but one of the plaintiffs were hired by the Town prior to August 8,
1991, at a time when the Town paid 100% of the premiums for the retiree health plan,
plaintiffs assert that the Town is obligated by law to continue to pay 100% of the
premium, and that subsequent changes of policy causing them to be responsible for
premium payments are contrary to the Town's legal obligations. Under the terms of the
policy, the plaintiffs assert that the Town created a contract with the employees then
hired and that changing that provision in future years, after the employees retired, is a
breach of that contract. They further argue that the removal of payment of 100% of the
hospitalization plan premiums amounts to a taking of their property without due
process of law, asserting, consistent with a breach of contract theory, that they have a
property right in the 100% payment of those premiums. Finally, the plaintiffs argue
promissory estoppel.
In addition to the ordinance/policy language, which plaintiffs argue provides a
clear intent on the part of the Town to guarantee full payment of premiums, the retirees
4
allege, as a matter of fact, promises made by persons with perceived authority. These
alleged promises, they believe, constitute a guarantee of the 100% premium payment.
Further, the promises were so numerous as to become "common knowledge," and the
promises were made by Town managers, department heads, and other supervisory
personnel. For purposes of this motion, the court will accept as fact that, over the years
and under various times of the policy, certain oral representations were made and the
plaintiffs believed, in good faith, that the Town had guaranteed to them full payment of
the premiums upon retirement for life.
By law, a town "official" means any elected or appointed member of a municipal
or county government or of a quasi-municipal corporation. 30-A M.R.S.A. § 2604(2).
Generally speaking, municipal officers are, in this case, the Town Council and the Town
Manager. As specifically provided by law, charter, or ordinance, the municipal officers
shall appoint all municipal officials and employees required by general law, charter, or
ordinance and may remove these officials and employees for cause, after notice and
hearing. 30-A M.R.S.A. § 2601(1). The defendant falls under the law as a form of
government called "The Town Manager Plan," as a town in which the voters have
adopted the plan at a meeting held at least ninety days before the annual meeting. 30-A
M.R.S.A. § 2631(1).
In accordance with 30-A M.R.S.A. § 2636, the town manager is the chief executive
and administrative official of the town responsible for administration of all departments
in regards to the ordinances of the town, and may serve as head of any department,
appoint department heads, appoint town officials, act as purchasing agent, attend all
meetings with the board of selectmen, make recommendations to the selectmen, attend
all town meetings, keep the board of selectmen and residents of the town informed as to
the town's financial condition, collect all data necessary to prepare the budget, assist
5
residents and taxpayers of the town, and has the explicit authority to remove for cause
all persons whom the manager is authorized to appoint.
Inasmuch as these general provisions and the municipal law are subject to
specific provisions in the charter, see S. Portland Civil Serv. Common v. City of S. Portland,
667 A.2d 599 (Me. 1995), the court must examine the charter of the Town of Millinocket
to determine the authority of the Town Manager and Town Council. Section II of the
Millinocket Code is titled, "Town Council in Full Session." Section C203 contains
powers and duties generally and provides members of the Town Council shall be and
constitute the municipal officers of the Town of Millinocket for all purposes required
by statute, except as specifically provided in the Charter, and shall "have all powers
and authority given to, and perform all duties required of, municipal officers in the
laws of this State .... " Section C204 provides that the Council shall appoint the Town
Manager, and by ordinance create and abolish offices and departments and assign
functions and duties. It further provides that the Council may vest in the manager all
powers and duties of any office except the School Department. Part of its enumerated
powers is to "make, alter and repeal ordinances." Section C212 provides that the
Council shall act "only by Ordinance, order or resolve." Section C216 provides for the
appointment of the Town Manager by the Council to perform the duties provided in the
Charter. By section C302, Powers and Duties,
The Town Manager shall be the Chief Administrative Officer and the head
of the administrative branch of the Town government and shall be
responsible to the Council for the appropriate administration of all affairs
of the Town. He shall have the power and shall be required to:
(A) Appoint, describe the duties of, and, when necessary for the
good of the service, remove all officers and employees of the
Town ....
(B) Prepare the budget annually, submit it to the Council, and be
responsible for its administration after adoption.
6
(E) See that all laws and ordinances governing the Town are
faithfully executed.
In this motion for summary judgment, the defendant argues that there are no
disputed material facts with respect to the plaintiffs' contracts, constitutional and
estoppel claims and the Town is entitled to a judgment on those claims as a matter of
law.
First, the defendant recites the economic history of the Town. While the
information appears in a number of pleadings, the court takes judicial notice that the
Town of Millinocket, once a thriving and busy industrial community, has lost
essentially all of its industry and has suffered significant and substantial losses in its
economy. The economic history follows side-by-side with the various amendments to
the retirement policy of the Town as it relates to the Municipal budget for the years in
question. As such, the court must take notice of the public interest and public policies
which the Town Manager and Town Council are charged with protecting. It further
notes that the Town had no written policy governing the terms and conditions of
employment by its employees until 1978 when the Town adopted the first personnel
policy. Defendant asserts that each policy included some language stating that any
amendments to the policy would be by order of the Town Council after annual review
by the Manager. The Town notes that the personnel policy adopted in 1991 would
remain in effect until 1999 and carried an exception to the reservation of right to change
relating to employees hired before August 8, 1991. It argues that the 1999 policy kept
the 1991language wherein it provided that the Town reserved the right to discontinue
the benefit as portion of the premiums without prior notice without reference to the
August 8, 1991 provision then in effect. While there appears to have been later union
7
contracts which contain language regarding retirees health insurance benefits, it is clear
from all of the evidence that the personnel policy applied to union and nonunion
personnel in so far as it related to the retiree beneftt. 3 (Emphasis added.)
To the assertions that representations or promises were made by the Town
Manager, the Police Chief, and the Fire Chief, during employment or during exit
interviews regarding the guarantee of a fully paid health policy for retirees, the Town
insists that the Charter makes clear that those individuals have no authority to amend
the terms laid out in the personnel policy, that the Town Manager's responsibility was
to administer the policies of the Town, and that any amendments to the policies must be
submitted to the Town Council for consideration.
As to the breach of contract claim, the defendant relies on Spiller v. State,
627 A.2d 513 (Me. 1993). The Spiller case involved a State statute, and states under
"honored rules of construction, a statute will not be presumed to create contractual
rights, binding future legislatures, unless the intent to do so is clearly stated." Id. at 515.
The case suggests that a policy continues unless the Legislature ordains otherwise. The
presumption is grounded in the elementary proposition, "that the principal function of
a legislature is not to make contracts, but to make laws that establish the policy of the
state." ld. at 516. The decision goes on to adopt the statement, "Policies, unlike
contracts, are inherently subject to revision and repeal, and to construe laws as contracts
when the obligation is not clearly and unequivocally expressed would be to limit
drastically the essential powers of a legislative body." Id.; see Nat'l R.R. Passenger Corp.
v. Atchison, Topeka & Santa Fe Ry. Co., 470 U.S.451, 465-66. Under the Charter, the
Council of the Town is its legislative body.
1
The union employees would be governed by the union contract with any matters not consistent or
contrary to the personnel policy. This did not contain retiree benefits, and upon retirement, the personnel
policy governed the status of the retiree and his or her spouse.
8
Quoting Fineman v. Oechslin, 488 A.2d 803 (Conn. 1985), it is defendant's position
that the promissory estoppel approach, "in focusing attention on the reasonable
expectations of an employee, ignores the distinction traditionally made between private
and public entities in determining the existence of contractual rights and obligations."
!d. at 809. It cites Kizns v. Webster, 707 F.2d 425, 535 (D.C. Cir. 1983), supporting the
proposition that the "courts have consistently refused to give effect to government-
fostered expectations that, had they arisen in the private sector, might well have formed
the basis for a contract or an estoppel." Kizas, 707 F.2d at 535. The Pinemrm Court views
the distinction as another way of articulating the requirement of an express legislative
intent to contract. The Town argues that there can be no consideration by the
employees or "injustice" flowing from the alteration of the benefit because, it asserts,
the 100(:;) premium payment of health insurance to retirees was gratuitous in the first
instance. The Municipality is not bound by statements of a Town official in connection
with the hiring of an employee expecting employee benefits upon retirement. In Spiller
it is clear that a retirement plan does not create an enforceable contract or right at the
time of hiring as it would otherwise unduly restrict the power of the Legislature.
The defendant further argues that the statute of frauds provides a bar to
plaintiffs' claim as these were employees at will wherein such terms of employment
could not be performed within one year.
As to the claim of an unconstitutional taking, the Town argues that such a claim
requires proof of a recognized property interest and an illegal deprivation by the State.
The defendant notes that such cases that discuss property rights in the pension context
relate to property rights in existing retirement funds, not the premium payments in a
defined benefit plan.
9
The plaintiffs' objection to the defendant's motion for summary judgment is, first
of all, predicated upon the language of the amendment. Under the circumstances
surrounding the amendments and establishing the intent of the Council when enacting
the policy changes, the plaintiffs argue that the language specifically identifying those
persons hired before August 8, 1991, is not subject to the right of the Council to change
the policy but a clear intent to bind future councils from ever changing their rights to
full payment of premiums in those retirees. This language intent would run counter to
the subsequent amendments in the policy which removed the specific exception for
hirees before August 8, 1991. It is the plaintiffs' position that they were guaranteed by
that language protection from the 1991 and all subsequent amendments.
The plaintiffs also assert that the specific instances of employees and retirees
being told by Tovvn officers of the right to paid health insurance in their pension has
created an estoppel in the Town from denying the benefit to the retirees. Plaintiffs
distinguish Spiller on the basis that Spiller found no express or clear indication of a
legislative intent to create contractual rights. The plaintiffs argue that the conduct upon
which plaintiffs are expected to rely can be more than express language, but may be
implied through conduct, relying strongly on statements from Town managers and the
fact that the Town has been paying 100% of retired players health insurance benefits for
years. They also believe that those circumstances provide genuine issues of material
fact, including whether the plaintiffs accepted lower wage increases or other benefits in
reliance on the promises of a lifetime health insurance payment.
Contrary to the action by the Town Council of Millinocket, plaintiffs argue that
the defendant's action are in violation of the Maine and United State Constitutions in
that they believe that plaintiffs' interest in their health and life insurance benefits being
paid 100% by the defendant for their lives is a property interest protected by those
10
Constitutions. Property, in this context, refers to more than actual ownership of real
estate, chattels, and money, but also to an interest that a person has acquired in a
specific benefit. Beitzell v. Jeffrey, 643 F.2d 870 (1st Cir. 1981). They argue that these
benefits are neither potential nor are they future profits or gratuitous governmental
benefits.
Finally, plaintiffs argue that the Charter of the Town provides the authority of
the Town Manager to make an enforceable promise, creating a contract or promissory
estoppel, emphasizing that the Town Manager is the Chief Administrative Officer and
has the power to "appoint, prescribe the duties of and, necessary for the good of the
service remove all officers and employees of the Town .... " Although the theory is not
expressly stated, it is implied from plaintiff's argument that each of the individual
plaintiffs have their own set of circumstances in which they believe there are genuine
issues of material fact vis-a-vis their employment and promises of retirement, which
must be heard, and thereby the defendant is not entitled to summary judgment.
It appears to be undisputed that the Town participated in the Maine State
Retirement System and had a life insurance and group hospitalization plan paid 100%
by the Town up to and as codified in the policy of 1983 and paid 100% premiums for
retirees up until August 8, 1991, at which time the policy became part of the Town
Code. This specifically provided for retirees to continue as members of the Town's
group hospitalization plan at the Town's expense to the same extent as the employees.
As a separate matter, the Code made clear that the Town reserved the right to change
the benefit but made that reservation apply only to employees hired after August 8,
1991. This limitation on the Town's reservation continued through the amendments in
1995. The changes in the personnel policy effective July 10, 1999, for the first time,
reserved in the Town a right to "discontinue this benefit or to change coverage and
II
providers from time to time as well as the portion of premiums paid by the Town and
its employees with or without prior notice.
The 1999 amendment reserved in the Town the right to discontinue the benefit or
to change coverage and providers as well as a portion of the premiums paid by the
Town and its employees with or without notice. This amendment introduced the
payment by the Town of 90% of the premium for employees and dependents, but
utilizing the same August 8, 1991 date, it provided that retirees would continue as
members of the Town's group hospitalization plan to the same extent as current
employees, and goes on further to say that, "the Town shall pay the premium for the
former employee and spouse." This is the first time there is a break in entitlement
between current employees and retirees hired prior to August 8, 1991. On the one hand
it states that the retirees shall continue in the plan "to the same extent as current
employees," who under the amendment would pay 90% of the premium. It goes on
further to say that the Town would pay the premium for the retirees. It is this court's
understanding that, in fact, the Town continued to pay 100% of the premiums of the
employees who were retired but had been hired prior to August 8, 1991.
The amendments to the personnel policy effective January 1, 2002, mentions
continuing "to contribute 90% toward the monthly premiums for qualified nonunion
employees or retirees who retired on or after January 1, 2002." It contains the
reservation of right to discontinue the benefit without reference to August 8, 1991,
however, it provides that regarding employees hired prior June 10, 1999, the Town shall
pay the premium for the former employee, spouse, and legally dependent children as
defined in the plan. With the amendment of May 14, 2009, the Council adopted the
policy that "beginning October 1, 2009, all retirees will pay a portion of their health
insurance cost."
12
The fundamental issue, then, is whether, as a matter of undisputed facts and law,
the plaintiffs who were hired prior to August 8, 1991, and one who will retire after
July10, 1999, are entitled to a continuation of the payment of 100% of their retirement
health plan from October 1, 2009, for the rest of their lives.
In 1982, the Law Court, in the matter of Sirois v. Town of Frenchville, 441 A.2d 291
(Me. 1982), addressed the issue of whether a member of the board of selectmen could
bind the town to a contract where his authority to act alone is not proven or actions not
subsequently ratified. In contracting with a town or city officers persons must take
notice of the power and the extent of the authority of such officers. "It is not the town's
burden to establish the actions of authority, but the plaintiff's burden to prove the
authority." Id. at 294 (citing Van Buren Light & Power Co. v. Inhabitants of Van Buren,
116 Me. 119, 123, 100 A. 371, 372 (1917)). More specifically, Sirois examined the
statutory authority of the town manager in existence at that time, referring to 30
M.R.S.A. § 2317 (1978). The court says the "legislature has listed in that statute fourteen
specific acts which the town manager is authorized to do; absent from that list is the
power to contract on behalf of the Town." Sirois, 441 A.2d at 294.
Sirois was followed in 1997 by Cottle Enterprises. Inc. v. Town of Farmington, 1997
ME 7R, 693 A.2d 330, in which the Court notes, the "unauthorized act of a municipal
officer cannot be grounds for equitably estopping the municipality." lrf. at 336 (citing
Siroi::., -1-.f 1 A.2d at 294-95 (same with respect to promissory estoppel)).
The language of the present statutory authority of a tmvn manager contained in
30-A M.R.S.A. § 2636, does not include the power to contract. Further, the charter of the
Town of Millinocket, in its chapter relating to the Town Manager, does not contain the
power to contract. Most appropriate to this proceeding, the Charter specifically
provides for the Town Manager to prepare an annual budget to be submitted to the
13
Town Council, and to be responsible for the administration of that budget after
adoption by the Town Council. Town payment of health plan premiums vvould require
budget approval as a fundamental principle of municipal law. To the extent that the
Town rYianager is considered an administrator, Webster's New World Dictionary of the
American Language, College Edition (1966), defines an administrator as "a person who
administers; person who has executive work or ability." To "administer is "To manage;
conduct; direct". Id at 19. Black's Law Dictionary, Seventh Edition defines
administration as, "the management or performance of the executive duties of
government, institutions or business." "In public law, the practical management and
direction of the executive department and its agencies".
There is nothing in the statute or charter providing the authority in the Town
l\1anager to contract on behalf of the Town. Needless to say, that would equally apply
to other officers of the Town such as the Chief of Police and the Chief of the Fire
Department. As stated, even an individual member of the Town Council would not
have that authority under a doctrine of promissory estoppel. To the extent that
plaintiffs are relying upon statements, promises, or assurances by officers of the Town,
either legislative or executive, the claim under a doctrine of promissory estoppel must
fail.
In making that finding, the court notes that other "courts have consistently
refused to give effect to government-fostered expectations, that, had they arisen in the
private sector, might well have formed the basis for a contract or an estoppel." I<izas v.
Webster, 707 F.2d 524, 535 (D.C. Ct. App. 1983). The court in Pineman v. Oeclzsli11,
48HA.2d 803 (Conn. 1985) states:
This distinction can be viewed as another way of articulating the
requirement of an express legislative intent to contract. When the
legislature intends to surrender its power of amendment and revision by
14
creating a contract and thereby binding future legislatures, it must declare
that intention in clear and unambiguous terms. A relinquishment of this
authority should not occur by legislative inadvertence or judicial
implication.
Irf. at 809.
Further, one cannot avoid the statute of fraud by resorting to a promrssory
estoppel theory. In Popmzz v. Peregrine Corp., 1998 ME 95, 710 A.2d 250, the Court
declined to accept promissory estoppel as permitting avoidance of the statute of frauds
in employment contracts that require longer than one year to perform. Steams v.
Emery-Waterhouse Co., 596 A.2d 72 . It relied on Rancourt v. Waterville Osteopathic Hasp.,
526 A.2d 1385, 1389 (Me. 1987), for the proposition that the employer's "oral promise
creates no more 'than a contract of employment for an indefinite period of time .
terminable at will by either party."'
Defendants argue that the removal of the full payment of health care premiums
amounts to an unconstitutional taking. In Kizas, the United State Court of Appeals of
the District of Columbia dealt with federal employees complaining of the modification
of a special preference program, which the employees asserted was a form of deferred
compensation. They argued that their legitimate expectations in receiving the
preference created an indefeasible property right. The court noted that plaintiffs, "for
purposes of procedural due process guarantees," argue that "a person has a 'property
interest' in a governmentally conferred benefit if he has a 'legitimate claim of
entitlement' to the benefit." Kizas, 707 F.2d at 539. The court goes on to say, "A
'legitimate claim of entitlement' to a government benefit does not transform the benefit
itse~f into a vested right. Rather, due process 'property interests' in public benefits are
'limited, as a general rule, by the governmental power to remove, through prescribed
procedures, the llllderlying source of those benefits.'" ld. (citing O'Bmmon v. Tmun Court
15
Nursinz;; Ctr., 447 U.S. 773, 796, 798, 100 S. Ct. 2467 (1980).
The plaintiffs seem to challenge on due process grounds, the actions of the Town
Council in amending the retirement policy. The implication is that the plaintiffs were
not given an opportunity to participate in the legislative procedure.~ Although
plaintiffs presented no evidence that the proceedings of the Town Council, particularly
the vote of the Town Council members, were not held in a public proceeding, nor that
notice of such issues which were to be considered by the Council was not given, nor
were plaintiffs deprived the opportunity to be heard. Records of the proceedings
suggest otherwise.
Maine law is clear that due process requires some kind of a hearing before a
government deprives a person of property. However, before that requirement becomes
part of a due process requirement, the party must establish that he had a property right
and entitlement in question. Struck v. Hackett, 668 A.2d 411 (Me. 1995). Plaintiffs
further support their claim under a theory of breach of contract, asserting that the
language of the amendments to the policy constituted a unilateral offer on the part of
the Tovvn, which evolved into an enforceable contract by the employees continuing to
work for the Town, and asserting factually, that they relinquished claims for increased
salary and wages in reliance upon the expectation of a free lifetime health plan upon
retirement. They note at least one court has opined that the promissory estoppel
approach is simply viewed as another way of articulating the requirement of an express
4
The court notes that the actions by the Town Council in changing the policy is a legislative
procedure and not an adjudicative procedure. "Although an ordinance enacted by a municipal body and
a statute is enacted by the Legislature, the process of an ordinance is equivalent to legislative action.
5 Eugene McQuillan, The Law of Municipal Corporations, § 15.01 (3d ed. 1989). Therefore, the rules of
statutory construction can be employed by us when construing an ordinance. "The meaning of terms in
an ordinance is a question of law for the court. Terms in the ordinance are to be 'construed reasonably
with regard to both the objective sought be obtained and the general structure of the ordinance as a
whole."' So. Portland Civil Serv. Comm'n v. City of So. Portland, 667 A.2d 599 (citations omitted).
16
legislative intent to contract. Fineman, 488 A.2d at 809.
The parties allude to Spiller v. State, 627 A.2d 513, for a discussion of Maine law
regarding the rights under legislative actions to a contract. Some months prior to Spiller,
was Me. Beer ["1' Wine Wholesalers Ass'n v. State, 619 A.2d 94 (Me. 1993), where the court
reiterates that
the "fundamental rule" in statutory construction is that the legislative
intent as divined from the statutory language controls the interpretation of
the statute. Unless the statute reveals a contrary intent, the words "must
be given their plain, common and ordinary meaning." ... To determine
legislative intent when there is an ambiguity in the statute, [however,] the
court may look beyond the words themselves to the history of the statute,
the policy behind it, and contemporary related legislation.
Id. at 97. 5
Spiller, is the result of a budgetary shortfall similar to the circumstances before
this court and the State legislature made modifications to the pension benefits of State
employees. Quoting Spiller, 627 A.2d at 515, "legislative enactments are presumed
constitutional, and the party challenging the constitutionality of a statute bears the
burden of proof." The court goes on to state that "[u]nder time honored rules of
construction, a statute will not be presumed to create contractual rights, binding future
legislatures, unless the intent to do so is clearly stated." Id. The Court found that the
legislative action did not create contractual rights, but "[r]ather, they state general
policy principles .... " Id. at 516. In addition, similar to language found in the present
case, the court notes that legislature provided language that retirement benefits "would
be "due to a ... on the date immediately preceding the effective date of the amendment" that
cannot be reduced by amendment to the retirement statute." Id.
5
For purposes of this analysis, the court is satisfied that the Town Council acts legislatively and the
Town Manager acts as executive. Further, the Town Council acts by the passage of ordinances and
orders. The court is satisfied that the policy statements with respect the retiree health plan is akin to State
statutes in this context whether by ordinance or order.
17
The Spiller court allows that "retirement benefits are more than a gratuity to be
granted or withheld arbitrarily at the whim of the sovereign state," id. at 517, noting
that the Court has said that State employees have "legitimate retirement expectations."
ld. at 517, n.12 (citing Huard v. Me. State Retirement Sys., 562 A.2d 694, 698 (Me. 1989)).
They go on to state that "[t]hose expectations may constitute property rights that the
legislature cannot deprive them of without due process of law," citing Fineman v.
Oechslin, 488 A.2d at 810. Further, alternatively, "the State may be estopped from
changing certain benefit provisions in the retirement statutes." Spiller, at 517 n.2 (citing
Christensen v. Minneapolis Mun. Employees Retirement Bd., 331 N.W.2d 740, 748 (Minn.
1983)).
In Parker v. Wakelin, 123 F.3d 1 (1st. Cir. 1997), the court was dealing with State
law in which the retirement terms of the Maine State Retirement System were amended
by the Maine State Legislature. In following Maine law, it stated that in order to deem a
State legislative enactment a contract for the purpose of the Contract Clause, there must
be a clear indication that the Legislature intends to bind itself in a contractual manner.
Unless there is some clear indication that the Legislature intends to binds itself
contractually, the presumption is that a law is not intended to create private contractual
or vested rights, but merely declares a policy to be pursued until the Legislature shall
ordain otherwise. "A statute may be treated as a binding contract 'when the language
and the circumstances evince a legislative intent to create private rights of a contractual
nature enforceable against the State."' Id. at 13. "This threshold requirement for the
recognition of public contracts has been referred to as the 'unmistakability doctrine."'
Id.
The rationale for the doctrine is found in Damon v. S.D. Warren Co., 2010 ME 24,
990 A.2d 1028, stating that for the Court to consider a statute by giving it legislative
18
intent, it must come from the plain meaning of the statutory language. The issue of
whether the statutory language is ambiguous is a question of law. This is further
expounded in Coastal Ventures v. Alsham Plaza, 2010 ME 63, 1 A.3d 416, which provides
that a "contractual provision is considered ambiguous if it is reasonably possible to give
that provision at least two different meanings."
In examining the ordinance and policy of the Town of Millinocket, during the
period of years in question and the various amendments enacted as a result of the
public interest and financial integrity of the municipal government, the court is satisfied
that the language is unambiguous and clearly indicates the intent of the Town Council
in taking the legislative action. Further, the court makes a distinction in the various
forms of the policy between an entitlement to the benefits of Town payment of health
insurance premiums and the reservation by the Town of the right to change the policy.
Generally speaking, it is clear from the language that the Town attempted to protect
those persons who were receiving a benefit at the time of the enactment of the policy
amendment to the point where it deemed the circumstances required a change in that
policy and the public interest. The court also views no ambiguous language
distinguishing the application of the amendments to the policy betw·een current
employees and those who had retired. The language which stated that retirees were to
hold membership in the health plan to the same extent as employees is specific to
benefits under the terms of the plan and not the obligation of the Town to pay
premiums or to reserve the right to change the policy.
That language is in the August 8, 1991 amendment, which unequivocally
provided that employees who retire, and qualified under the Maine State Retirement
System, "shall continue as members of the Town's group hospitalization plan, at the
Town's expense, to the same extent as current employees." This language is implicit
19
with respect to the obligation of the Town to meet the expense of the plan for the
retirees. The Town Council, recognizing a group of former employees who were hired
and some retired prior to the date of this amendment, decided, as a matter of policy, to
reserve the right to change that benefit only regarding employees hired after August 8,
1991. No change in the language took place in the 1995 amendment. In 1999, the Town
Council changed the policy with respect to employees, and provided separate language
with respect to employees hired prior to August 8, 1991. The language providing that
those employees shall continue as members of the Town's group hospitalization plan to
the sarne extent as current employees, omitted the previous language" ... at the Town's
expense .... " As part and parcel of the same paragraph, the amendment goes on to
state "the Town shall pay the premium for the former employee and spouse." In
addition, the policy stated the reservation in the Town to discontinue the benefit or to
change providers and coverage as well as a portion of the premiums paid without any
reference to the applicability of this reservation to employees hired prior to August 8,
1991. The absence of that language took it out of the reservation clause, since it was
specifically stated in the benefit clause that the Town would pay the premiums for the
former employees. However, whether intentional or not, the document containing the
amendment states that the language is "(Option 1, employees pay portion, retirees paid
100~~;) by Town.)" It is clear to this court that the plain language of the amendment
called for employees hired prior to August 8, 1991, who had retired, to continue to have
the benefit of the premiums paid by the Town. In fact, it is stipulated by the parties that
"until October 2009, the Town paid 100% of the premiums for that insurance." Fact
stipulation, <JI 74.
This brings us to the amendment of May 14, 2009, which states, "Beginning
October 1, 2009, all retirees will pay a portion of their health insurance cost." None of
20
this language constitutes a breach of a contractual obligation by the Town to be
enforced by this court that the Town Council unequivocally, and for the remainder of
the lives of the retirees, obligated it to pay 100% of the premiums of the retiree health
insurance plan for those persons hired prior to August 8, 1991. As a matter of law, the
presumption is, that it does not.
On other occasions, the Town protected employees hired prior to a certain date
as noted in the amendment effective January 1, 2002. In that case, it provided that with
regard to former employees hired prior to June 10, 1999, the Town shall "pay the
premium for the former employee, spouse, and legally dependent children as defined in
the plan." This was a continuation of the substantial change made in the 1999
amendment wherein the Town initiated a formula of partial payment of premiums for
employees.
It is clear that the Town Manager, in presenting the budget proposal to the Town
Council, considered the financial circumstances of the taxable base and that schedules
of modifications in the costs of the retirement health plan would be in order and
adopted by the Council. That analysis, obviously included a policy that persons hired
prior to the modifications in the policy should be protected as a matter of a moral
obligation of the municipal government to its employees. As noted in Spiller, 627 A.2d
at 517 n.12, the conclusion to be reached, in a reading of the policies in question, and
confining the determination solely to the written policies, disregarding the untenable
claims of unconstitutional taking and promissory estoppel, is that those employees who
were hired prior to August 8, 1991, were entitled to have full payment by the Town of
the premiums of the healthtinsurance plan on retirement up to October 1, 2009, at which
time the policy by the Town Council legislatively changed.
In accordance with the policy effective January 1, 2002, the one plaintiff who was
21
hired after August 8, 1991, and who will retire after July 10, 1999, is subject to the same
conclusion.
Accordingly, the entry will be:
Defendant's motion for summary judgment 1s
granted; judgment for the defendant.
July 21,2011
ALD H. MARDEN
JUSTICE, SUPERIOR COURT
22
Date Filed 6/10/09 Penobscot Docket No. AP-2009-12
County PAGE 2
Action M. R. Civ .P. 80B Appeal
ASSIGNED TO JUSTICE WILLIAM R. ANDERSON - RECUSED
JUSTICE M. MICHAELA MURPHY - RECUSED
ASSIGNED TO DONALD H. MARDEN
NORMAN BUDGE, ET ALS (See first page)
vs. TOWN OF MILLINOCKET
Plaintiff's Attorney Defendant's Attorney
EDMOND BEAROR, ESQ. Jeffrey T. Piampiano, Esq
JOHN K. HAMER, ESQ. Drummond Woodsum
RUDMAN & WINCHELL 84 Marginal Way
P 0 BOX 1401 Suite 600
BANGOR ME 04402-1401 Portland ME 04101-2480
Dean Beaupain, Esq.
PO Box 1404
Date of Bangor, ME 04402-1404
Entry
6/10/09 Complaint for Review of Government Action pursuant to M.R.R.Civ.P. 80B
filed by Plaintiffs.
6/10/09 Plaintiffs' Motion for an Order Specifying the Future Course of Proceedings
with proposed order filed by Plaintiffs.
6/10/09 Plaintiffs' Motion for Trial of the Facts with incorporated Memorandum of
Law filed by Plaintiffs with proposed order.
6/11/09 Notice and Briefing Schedule 80B Appeal of Governmental Actions forwarded
to attorney for Plaintiffs.
6/30/09 Acceptance of Service by Dean A. Beaupain, Esq. on behalf of
Defendant filed. (S.D. 6/26/09)
6/30/09 Consented-To Motion to Extend Deadlines for Responding to Motions and to
Answer or Otherwise Respond to Plaintiff's Complaint.
7/8/09 Order (Anderson, J) Upon review of the above entitled file, I must
Recuse myself from this matter. The case shall be assigned to another
Justice. Copy forwarded to all attorneys of record.
7/9/09 Amended complaint for Review of Government Action Pursuant to M.R.CIV.P.
80B Filed.
7/13/09 Order issued. (Murphy, J). upon review of the above entitled file, I
must recuse myself from this matter. The case shall be assigned to anothe1
Justice. Copy forwarded to all attorneys of record.
7/13/09 Plaintiffs' Amended Motion for an Order Specifying the Future Course
of Proceedings filed. (docketed 7/16/09)
7/14/09 1
Stipt.tla.ted Motilan to File Second 'Amended Complaint and Enlarge Time for
Defendant to· File Answer filed by Appellants.
7/14/09 Se~oiid- Amended Compiaint for Review of Gov~rnment Action Pursuant fo· ~·
M.R.Civ.P. 80B filed by Appellants~