Beggs v. City of Portales, 26,903.
| Decision Date | 29 June 2007 |
| Docket Number | No. 26,903.,26,903. |
| Citation | 167 P.3d 953,2007 NMCA 125 |
| Parties | Hillrey BEGGS, individually, Melvina Lancaster Crockett, individually, Jose M. Gutierrez, individually, Arly V. Hamner, individually, Pete O. Lucero, individually, Miguel S. Lucero, individually, Betty L. Olson, individually, Peggy Newbanks, individually, Ralph Pellicott, individually, Marcario Saiz, individually, Curtin Wagner, individually, Gary Watkins, individually, Alan Wofford, individually, Jim Wood, individually, Plaintiffs-Appellants, v. The CITY OF PORTALES, a municipality existing under the laws of the State of New Mexico, Defendant-Appellee. |
| Court | Court of Appeals of New Mexico |
Eric D. Dixon, Portales, NM, for Appellants.
Hinkle, Hensley, Shanor & Martin, L.L.P., Richard E. Olson, Rebecca Nichols Johnson, Roswell, NM, Doerr & Knudson, P.A., Stephen Doerr, Randy Knudson, Portales, NM, for Appellee.
{1} Plaintiffs appeal from the district court's grant of summary judgment in favor of Defendant on Plaintiffs' petition for declaratory judgment and breach of contract claim. Plaintiffs are fourteen retired employees of Defendant City of Portales (City) who are challenging the City's decision to discontinue partial reimbursement of retiree health care insurance premiums. Below, the district court concluded that summary judgment was appropriate because Plaintiffs had no contractual or vested rights in the payment of retiree health insurance benefits. We agree and affirm.
{2} In 1994, the Portales City Council adopted revisions to the city personnel ordinance (also referred to as the personnel policy). Section 629 of the ordinance, entitled "RETIREE HEALTH CARE INSURANCE," indicated that the City would offer retired employees the option of continuing group health and life insurance coverage, provided that the retirees were enrolled in the group health plan at least one year prior to their retirement. Section 629 further provided that the City would pay the same percentage of the premium for the insurance as it was paying for current employees. Upon their retirement, all fourteen Plaintiffs elected to continue their group health insurance coverage through the City.
{3} Effective January 1, 2001, the City opted into the New Mexico Retiree Health Care Act, NMSA 1978, §§ 10-7C-1 to -19 (1990, as amended through 2006) (the Act), as a cost-saving measure. The City had originally opted out of the Act in 1990. As a condition of opting into the Act, the City paid nearly a quarter million dollars to cover the premiums for all of the employees during the period of time that the City did not participate. Even after opting into the Act, however, the City continued to reimburse its retired employees for health insurance premiums.
{4} On May 3, 2005, the City adopted a new personnel policy that omitted Section 629, which had previously provided for reimbursement of health insurance premiums for retirees. Plaintiffs, who had all retired prior to the adoption of the new policy, still continued to receive reimbursement for their health insurance premiums.
{5} Around the time of the City's decision to adopt the new personnel policy, there was some discussion regarding the propriety of the City's practice of paying retiree health insurance premiums. In August 2005, the City Council, by a vote of three to two, rejected a resolution prepared by the City attorney stating that the City's decision to opt into the Retiree Health Care Act effectively "terminated, canceled and rescinded Section 629 of the City of Portales Personnel Policy and other provisions pertaining to retiree health[ ]care insurance."
{6} Notwithstanding the defeated resolution, the City's position was that it was no longer obligated to pay retiree health benefits after May of 2005, if it indeed was permitted to pay them after electing to opt into the Retiree Health Care Act. The City soon began mailing letters to Plaintiffs informing them that the City would no longer reimburse Plaintiffs for their health insurance premiums. Plaintiffs filed a petition for declaratory judgment and for breach of contract on October 11, 2005. The district court granted the City's motion for summary judgment on the grounds that Plaintiffs had neither a vested right nor a contractual right to reimbursement of health insurance premiums. This appeal follows.
{7} "Summary judgment is appropriate where there are no genuine issues of material fact and the movant is entitled to judgment as a matter of law." Self v. United Parcel Serv., Inc., 1998-NMSC-046, ¶ 6, 126 N.M. 396, 970 P.2d 582. Roth v. Thompson, 113 N.M. 331, 334-35, 825 P.2d 1241, 1244-45 (1992) (citation omitted). On appeal, we review de novo whether the movant was entitled to judgment as a matter of law. See Self, 1998-NMSC-046, ¶ 6, 126 N.M. 396, 970 P.2d 582.
{8} On appeal, Plaintiffs contend that the district court erred in concluding that Plaintiffs had no contractual rights to the City's reimbursement of their health care insurance premiums. Plaintiffs assert that there are material issues of fact in dispute concerning the existence of an implied contract. Additionally, Plaintiffs argue that their right to reimbursement of health care insurance premiums is a vested right that could not be unilaterally terminated by the City. Finally, Plaintiffs assert that even if they do not have contractual or vested rights in the reimbursement of their insurance premiums, estoppel precludes the City from terminating their benefits. Addressing each issue in turn, we conclude that the district court properly granted summary judgment in favor of the City.
{9} Although curiously not cited by either party in their briefs, we believe that our analysis in the present case is guided by Pierce v. State, 1996-NMSC-001, 121 N.M. 212, 910 P.2d 288. In Pierce, retired state employees sued the State of New Mexico after the legislature repealed "long-standing tax exemptions for state retirement benefits." Id. ¶¶ 1-2. In determining whether the district court properly granted summary judgment in favor of the State, the New Mexico Supreme Court recognized that it first had to decide whether the retirees had contractual or vested rights in their retirement benefits. Id. ¶ 17. The Court noted that if it concluded that retirees had contractual or vested rights in their retirement benefits, the next step would be to decide the scope of those rights. Id. ¶¶ 17, 45. Following this analysis, the Court in Pierce concluded that the retirees did not have contractual rights in their retirement benefits and also that the retirees did not have a vested right to a tax exemption for state retirement benefits. Id. ¶ 57.
{10} Although the present case involves a municipal ordinance, as opposed to a state statute, we follow the analysis described in Pierce in order to determine whether summary judgment was properly granted in favor of the City. Cf. Rutherford v. City of Albuquerque, 113 N.M. 573, 574, 829 P.2d 652, 653 (1992) (). Accordingly, we first consider whether Plaintiffs had a contractual right or a vested right in the City's reimbursement of retiree health insurance premiums. See Pierce, 1996-NMSC-001, ¶ 17, 121 N.M. 212, 910 P.2d 288. If either right exists, we then must decide the scope of the right. Id. We conclude that neither a contractual nor a vested right to health insurance benefits exists in the present case, and we therefore affirm the district court.
{11} "It is well established that statutes fixing the compensation or terms of public employment are presumed merely to establish public policy subject to legislative revision, and not to create contractual or vested rights." Whitely v. N.M. State Pers. Bd., 115 N.M. 308, 312, 850 P.2d 1011, 1015 (1993); see also Dodge v. Bd. of Educ., 302 U.S. 74, 79, 58 S.Ct. 98, 82 L.Ed. 57 (1937) (). The purpose of such a presumption
is to recognize that the function of a legislative body is to make laws that declare the policy of a governmental body, which laws are subject to repeal when a subsequent legislature decides to alter that policy. And because the legislature certainly would not countenance posing a possible contract clause violation every time it made a policy alteration, it stands to reason that unless the legislature has clearly evidenced that any of its laws were intended to create a contractual relationship, no such relationship exists.
Unterschuetz v. City of Chicago, 346 Ill. App.3d 65, 281 Ill.Dec. 367, 803 N.E.2d 988, 993 (2004). Thus, in order to find that Plaintiffs have a contractual or vested right to retiree health insurance benefits, Plaintiffs must demonstrate that the City clearly and unambiguously intended to create such rights in its personnel policy ordinance. See Pierce, 1996-NMSC-001, ¶ 18, 121 N.M. 212, 910 P.2d 288.
{12} As discussed in Pierce, the pertinent ordinance will only be found to confer a contractual right if the language of the ordinance "expressly so states, or the [ordinance] by clear and unambiguous terms indicates that the [City] specifically entered into a bargain with a party `in fact as found in their language or by implication from other circumstances, as affected by rules of law.'" 1996-NMSC-001, ¶ 17, 121 N.M. 212, 910 P.2d 288 (...
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