Budge v. Town of Millinocket

Decision Date25 October 2012
Docket NumberDocket No. Pen–11–419.
Citation2012 ME 122,55 A.3d 484
PartiesNorman E. BUDGE et al. v. TOWN OF MILLINOCKET.
CourtMaine Supreme Court

OPINION TEXT STARTS HERE

Paul W. Chaiken, Esq., and John K. Hamer, Esq. (orally), Rudman Winchell, LLC, Bangor, for appellants Norman E. Budge et al.

Melissa A. Hewey, Esq., and Jeffrey T. Piampiano, Esq. (orally), Drummond Woodsum, Portland, for appellee Town of Millinocket.

Panel: SAUFLEY, C.J., and ALEXANDER, LEVY, SILVER, GORMAN, and JABAR, JJ.

Majority: SAUFLEY, C.J., and ALEXANDER, LEVY, SILVER, and GORMAN, JJ.

Dissent: JABAR, J.

GORMAN, J.

[¶ 1] Norman E. Budge and twenty-eight additional parties 1 (collectively, employees) appeal from a summary judgment of the Superior Court (Penobscot County, Marden, J.) in favor of the Town of Millinocket. This appeal concerns three issues: (1) whether a 1991 personnel policy adopted as a town ordinance created an enforceable contract between the Town and its employees; (2) whether the Town is bound to pay the employees' retirement group hospitalization and life insurance premiums by virtue of promissory estoppel; and (3) whether the Town's reduction in benefits resulted in a taking without just compensation in violation of the Maine and United States Constitutions, U.S. Const. amends. V, XIV, § 1; Me. Const. art. I, § 21. We affirm the judgment.

I. BACKGROUND

[¶ 2] On July 14, 2009,2 the employees filed a complaint for review of government action pursuant to M.R. Civ. P. 80B. This complaint included four counts: (1) review of government action pursuant to Rule 80B, (2) breach of contract, (3) unconstitutional taking, and (4) promissory estoppel. On December 8, 2009, the Superior Court granted the Town's motion to dismiss count one, but denied the Town's motion with respect to the remaining three counts. On April 15, 2011, the Town filed a motion for summary judgment, a statement of material facts, and an affidavit of the Millinocket town manager. The employees opposed the motion and, after a hearing, the court granted a summary judgment to the Town on all three remaining counts.

[¶ 3] The undisputed material facts establish that the Town has included a personnel policy in its Municipal Code since 1978. As of 1987, the first sections of the personnel policy stated:

1. PURPOSE

It is the purpose of these rules and regulations to provide a uniform and standard system of personnel administration and to inform fully the non-union employees of the Town of Millinocket the conditions of work.

2. ADMINISTRATION

These rules shall be administered by the Town Manager. He may, through the department heads and foremen, specify procedure for the administration of this policy to insure a minimum of disruption of Town operations. However, in no way are the administrative procedures to alter or dilute the meaning or intent of this policy in the application of said procedures.

3. AMENDMENTS

Amendments to these rules shall be by order of the Town Council. The Personnel Policy shall be reviewed ANNUALLY by the Manager and a delegate of the non-union employees. Revisions shall be submitted to the Town Council for consideration.

Millinocket, Me., Personnel Policy § 1 (Jan. 1, 1987). This introduction states that the purpose of the policy is to inform employees of the Town's uniform system for conditions of work. It also announces the method by which the policy would be reviewed for possible revision on an annual basis.

[¶ 4] Before 1991, section 17 of the policy addressed the Town's retirement plan by stating that the Town was a participating member of the Maine State Retirement System.3 Millinocket, Me., Personnel Policy § 17 (Jan. 1, 1987). It also stated that the Town had life insurance and group hospitalization plans that were “funded 100% by the Municipality for employees, spouse and children.” Millinocket, Me., Personnel Policy § 17(2) (Jan. 1, 1987). It made no mention of whether or how the life or group hospitalization plans would apply to retirees.

[¶ 5] On August 8, 1991, the Town amended its personnel policy to address for the first time group hospitalization insurance benefits for its retirees. The three paragraphs quoted above still comprised the introduction to the personnel policy in the Municipal Code, and the policy continued to state that the Town's life insurance and group hospitalization plans were funded 100% by the Town for its employees, their spouses, and their children. Millinocket, Me., Personnel Policy § A128–17(B) (Oct. 25, 1991). In the amendment made that year, the Town added the following language:

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 town's group hospitalization plan, at 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.

Millinocket, Me., Personnel Policy § A128–17(D) (Oct. 25, 1991) (emphasis added). The emphasized language is the basis for the employees' breach of contract claim in this case. The trial court determined, however, that their contract-based claim was undermined by the changes the Town Council made to the policy in the following years.

[¶ 6] In 1999, the three paragraphs quoted above still comprised the introduction to the personnel policy, but the Town amended the policy in three ways that affect this case. First, it altered section A128–17(B) to reduce the portion of the premium the Town was obliged to pay for employee and dependent coverage from 100% to 90%. Millinocket, Me., Personnel Policy § A128–17(B) (July 10, 1999). Second, also in section A128–17(B), the Town included the following language for the first time: “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.” Millinocket, Me., Personnel Policy § A128–17(B) (July 10, 1999). Third, the Town amended section A128–17(D), replacing the emphasized language quoted above from the 1991 policy with the following language:

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 also provide coverage for the former employee's spouse if the employee so elects. This benefit shall apply to former union employees of the town as well as non union employees.... The town reserves the right to discontinue this benefit or to change providers and coverage from time to time as well as the portion of premiums paid by the town and former employee with or without prior notice.

Millinocket, Me., Personnel Policy § A128–17(D) (July 10, 1999) (emphasis added).

[¶ 7] Although pursuant to the 1999 policy, the Town reduced its payment of employee premiums from 100% to 90%, the Town continued making payments of 100% for its retirees after this amendment. See Millinocket, Me., Personnel Policy § A128–17(B) (July 10, 1999). The record does not explain why no change was made vis-à-vis the premiums for retirees at that time.

[¶ 8] Three years later, the Town amended its policy by including language that was even more explicit in explaining that no promises were being made nor contracts created:

Statement of Intent. This policy is intended as informational guidance only and the Town reserves the right to interpret, delete, or amend the provisions contained herein with reasonable notice to employees. This policy and its contents should not be interpreted as promises of specific treatment or as contractual rights for any employee.

Millinocket, Me., Personnel Policy § A128–1(A) (Jan. 1, 2002). The Town also completely revamped the retirement and group hospitalization plan provisions contained in section A128–17. With reference to retirees, it stated:

The town reserves the right to change providers and coverage from time to time as well as the portion of premiums paid by the town and former employee with or without prior notice. This benefit will apply in the following manner:

1. For employees who have retired prior to January 1, 2002, this benefit will be provided by the Town at 100% of its cost.

2. For employees who were employed full time by the Town on or before June 10, 1999 and who become eligible for retirement after January 1, 2002, those employees will make a contribution to their health insurance benefit (co-payment) at the same rate as that for current employees.

3. Unionized employees hired prior to August 8, 1991 and not retired prior to January 1, 2002 shall be eligible for this benefit as described in paragraph D–2 above.

4. For employees hired into full time positions on or after June 10, 1999, this retirement benefit shall not be available.

Millinocket, Me., Personnel Policy § A128–17(D) (Jan. 1, 2002).

[¶ 9] The Town amended its personnel policy again in 2006 and 2009. The Town amended section A128–17(B) of the policy to reduce the Town's obligation for paying for the health insurance plan for its employees, and amended section A128–17(D) to establish a new policy for the health insurance offered to retirees. Millinocket, Me., Personnel Policy § A128–17(B), (D) (May 14, 2009). As of 2009, the retirees' benefits no longer operate in tandem with current employees' benefits. After the 2009 amendment, the Town reduced its payment of the retirees' premiums, which gave rise to this suit.

[¶ 10] The employees allege that, regardless...

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