Bouchard v. Central Coventry Fire District

• Decision Date: 14 April 2017
• Docket Number: C.A. KB-2012-1150
• Parties: GIRARD BOUCHARD, in his capacity as President of the Board of Directors of the Central Coventry Fire District, Plaintiff, v. CENTRAL COVENTRY FIRE DISTRICT, Defendant.
• Court: Rhode Island Superior Court

GIRARD BOUCHARD, in his capacity as President of the Board of Directors of the Central Coventry Fire District, Plaintiff, v. CENTRAL COVENTRY FIRE DISTRICT, Defendant.

C.A. No. KB-2012-1150

Superior Court of Rhode Island, Kent

April 14, 2017

William J. Conley, Jr., Esq.

Michael P. Robinson, Esq.; David M. D'Agostino, Esq. Elizabeth A. Wiens, Esq. For Defendant:

DECISION

STERN J.

The Central Coventry Fire District (CCFD) asks this Court to make declarations as to CCFD's rights under certain collective bargaining agreements (CBAs) and whether taxes may be levied against the residents of the fire district to fund validly executed CBAs. CCFD argues that the CBAs are not binding on CCFD and that the taxpayers of the fire district are not required to fund the CBAs, either through a levy of taxes or by a line item in the annual budget. The firefighters of CCFD (the Firefighters), through their union, Local 3372 (the Union), object to CCFD's requested declarations, maintaining that the CBAs are valid and the taxpayers are obligated to fund said CBAs. Jurisdiction is pursuant to G.L. 1956 §§ 8-2-13 and 9-30-1.

I Facts^[1] and Travel

CCFD, created by legislative charter in 1959, is a quasi-governmental entity that provides fire suppression and emergency services to inhabitants of Coventry who reside within its designated fire district. First Am. Compl. ¶ 1. In 2012, Girard Bouchard (Bouchard), the then-president of CCFD's Board of Directors (the Board), recognized that CCFD faced a financial crisis and filed a petition for receivership on October 15, 2012. See id. at ¶ 9. The next day, the Court appointed a temporary Special Master, who was subsequently affirmed as permanent Special Master on November 13, 2012 pursuant to an "Order Appointing Permanent Special Master" (the Order) issued by the Court. Id. at ¶ 10. The Order imposed a stay upon all of CCFD's creditors, prevented the filing of new lawsuits, the continuation of existing lawsuits, or any collection activities against CCFD. See First Am. Compl., Ex. 3, ¶ 13.

The receivership proceeding moved forward until it was halted in May 2014 when the General Assembly amended the Fiscal Stability Act, G.L. 1956 §§ 45-9-1 et seq., to include fire districts (the Amendment). The Amendment prevented CCFD from "be[ing] placed into, or made subject to, either voluntarily or involuntarily, a state judicial receivership proceeding." Sec. 45-9-13. However, under the Fiscal Stability Act, the Director of Revenue (DOR) had the ability to appoint a fiscal overseer or receiver to an insolvent fire district. See §§ 45-9-3, 45-9-7, 45-9-8. The DOR exercised such right under the Fiscal Stability Act and appointed Steven P. Hartford, Esq. receiver of CCFD (Receiver Hartford). First Am. Compl. ¶ 14. Subsequently, on December 23, 2014, Receiver Hartford filed a Chapter 9 Bankruptcy Petition (the Bankruptcy Petition), placing CCFD into bankruptcy. Id. at ¶ 15. Shortly thereafter, on or about January 5, 2015, Mark A. Pfeiffer (Receiver Pfeiffer) was appointed successor receiver for CCFD. See id. at ¶ 14.

In the Bankruptcy Court, Receiver Pfeiffer filed a motion to reject (Motion to Reject) the existing collective bargaining agreement between CCFD and the Union. Id. at ¶ 17. Prior to the hearing on the Motion to Reject, the Receiver and Union negotiated two CBAs: (1) CCFD CBA FY 2015 (2015 CBA), and (2) CCFD CBA FY 2015-2020 (2015-2020 CBA). See id. at ¶ 18; see also First Am. Compl., Exs. 5, 6. The 2015 CBA was to be effective from April 19, 2015 through August 31, 2015, and the 2015-2020 CBA was to be effective from September 1, 2015 through August 31, 2020.^[2] See First Am. Compl. ¶ 18; see also First Am. Compl., Exs. 5, 6. Receiver Pfeiffer filed a motion to approve the 2015 CBA and the 2015-2020 CBA, but the Bankruptcy Court scheduled the approval of the two CBAs contemporaneous with approval and confirmation of the five-year plan of adjustment (the Five-Year Plan). However, the Five-Year Plan was never approved or confirmed because on September 17, 2015, the DOR submitted a letter to Receiver Pfeiffer informing him that the receivership was to terminate on September 30, 2015. See First Am. Compl., Ex. 7. Accordingly, on September 18, 2015, Receiver Pfeiffer filed a motion to dismiss the Bankruptcy Petition, which was granted.

On October 9, 2015, CCFD filed a motion to amend its petition for receivership to include three counts for declaratory relief. The three counts posed the following questions: (1) What is the obligation of the Board of Directors as to the terms of either of the two CBAs negotiated between the Union and Receiver Pfeiffer?^[3] (2) Must the taxpayers of CCFD's district fund, through the raising of taxes, CBAs entered into by the Board? and (3) Do the taxpayers of CCFD's district have a right, pursuant to the Charter, to determine the method of how fire suppression and emergency services are provided by CCFD?

Upon the matter's return to the Superior Court, this Court was tasked with determining whether any orders or motions-pending or otherwise-made or filed prior to the Amendment and removal to the Bankruptcy Court were valid or enforceable. In interpreting the Fiscal Stability Act, this Court found the statute to be a limitation on the Superior Court's jurisdiction, excluding the application of receivership laws to fire districts. Bouchard v. Cent. Coventry Fire Dist., No. PC20135097, 2015 WL 7871277, at *3 (R.I. Super. Nov. 25, 2015). However, this Court held that such exclusion of receivership laws would not prevent the matter from moving forward under the Court's other forms of jurisdiction-either at law or in equity-pursuant to § 8-2-13 or § 8-2-14. Id. at *6.

The Court held a hearing on CCFD's declaratory judgment action on March 14, 2016, during which counsel for CCFD and the Union presented arguments on the aforementioned three questions. The Court reserved judgment at the conclusion of the hearing. Subsequently, the parties requested that the Court not issue a Decision on this matter, pending further negotiations between the parties. However, in December 2016, the parties asked that this Court issue a Decision on the requested declarations. The Court has since issued a Bench Decision, declining to declare the rights of the taxpayers under the Charter on standing grounds.

II Standard of Review

The Uniform Declaratory Judgments Act, §§ 9-30-1 et seq., grants a court the power to "declare rights, status, and other legal relations" of litigants. Sec. 9-30-1. Specifically,

"[a]ny person interested under a deed, will, written contract, or other writings constituting a contract . . . may have determined any question of construction or validity arising under the instrument . . . and obtain a declaration of rights, status, or other legal relations thereunder." Sec. 9-30-2.^[4]

A declaratory judgment "is neither an action at law nor a suit in equity but a novel statutory proceeding." Newport Amusement Co. v. Maher, 92 R.I. 51, 53, 166 A.2d 216, 217 (1960). The purpose and intention of a declaratory judgment action is to "allow the trial justice to facilitate the termination of controversies." Bradford Assocs. v. R.I. Div. of Purchases, 772 A.2d 485, 489 (R.I. 2001). Accordingly, the Uniform Declaratory Judgments Act "confers broad discretion upon the trial justice as to whether he or she should grant declaratory relief." Cruz v. Wausau Ins., 866 A.2d 1237, 1240 (R.I. 2005); see also § 9-30-6; Woonsocket Teachers' Guild Local Union 951, AFT v. Woonsocket Sch. Comm., 694 A.2d 727, 729 (R.I. 1997); Lombardi v. Goodyear Loan Co., 549 A.2d 1025, 1027 (R.I. 1988). Despite such grant of discretion, our Supreme Court has cautioned that "[a] declaratory-judgment action may not be used 'for the determination of abstract questions or the rendering of advisory opinions, ' nor does it 'license litigants to fish in judicial ponds for legal advice.'" Sullivan v. Chafee, 703 A.2d 748, 751 (R.I. 1997) (first quoting Lamb v. Perry, 101 R.I. 538, 542, 225 A.2d 521, 523 (1967); next quoting Goodyear Loan Co. v. Little, 107 R.I. 629, 631, 269 A.2d 542, 543 (1970)).

III Analysis

A Whether the CBAs are Valid

The Board and CCFD first ask this Court to declare the rights duties, status and obligations of the Board under the two CBAs negotiated by Receiver Pfeiffer and the Union. Specifically, CCFD requests a declaration that the Board is not required to comply with the terms of either of the CBAs negotiated and executed between Receiver Pfeiffer and the Union because they are both void by operation of law. In support, CCFD argues that although Receiver Pfeiffer entered into the two CBAs under the aegis of authority granted to him under the Fiscal Stability Act, the requirements under § 45-9-9 were not met. In response, the Union contends that the negotiated and executed CBAs are valid and binding on the Board for several reasons: (1) Receiver Pfeiffer entered into the CBAs under a valid grant of statutory authority (2)Receiver Pfeiffer and Director Sullivan complied with the requirements of § 45-9-9; and (3)the CBAs did not need to be approved by the Bankruptcy Court.

Power of Receiver Pfeiffer under the Fiscal Stability Act

Under the Fiscal Stability Act, receivers may be appointed by the DOR in the event that he or she, "in consultation with the auditor general, [determines] that a . . . fire district is facing a fiscal emergency and that circumstances do not allow for appointment of a fiscal overseer or a budget commission prior to the appointment of a receiver ." Sec. 45-9-8. The period of a receiver's appointment under the Fiscal Stability Act falls within the discretion of the DOR. Sec. 45-9-7(a). The DOR may also "without cause, remove the receiver and appoint a...