Burlington Fire Fighters' Ass'n v. City of Burlington, 86-422

• Decision Date: 05 February 1988
• Docket Number: No. 86-422,86-422
• Citation: 149 Vt. 293,543 A.2d 686
• Court: Vermont Supreme Court
• Parties: BURLINGTON FIRE FIGHTERS' ASSOCIATION and Burlington Fire Fighters' Officers Association v. CITY OF BURLINGTON.

Page 686

543 A.2d 686

149 Vt. 293

BURLINGTON FIRE FIGHTERS' ASSOCIATION and Burlington Fire Fighters' Officers Association v. CITY OF BURLINGTON.

No. 86-422.

Supreme Court of Vermont.

Feb. 5, 1988.

Gilbert Myers and Hill and Unsworth, Essex Junction, for plaintiffs-appellants.

William H. Sorrell, Burlington, for defendant-appellee.

Before ALLEN, C.J., HILL, PECK and GIBSON, JJ., and BARNEY, C.J. (Ret.), Specially Assigned.

PECK, Justice.

Plaintiffs, Burlington Fire Fighters' Association and the Burlington Fire Fighters' Officers Association, challenge the validity of a retroactive provision of the City of Burlington's (City) retirement ordinance. Plaintiffs sought to enjoin the City from enforcing the terms of an amendment to the City's pension plan which requires retroactive contributions into the pension fund in exchange for increased benefits. The trial court denied the temporary injunction on November 15, 1984, and on March 25, 1986 it denied the permanent injunction. This appeal followed. We affirm.

Plaintiffs raise three issues on appeal: (1) whether the trial court erred by holding that lack of specific statutory authority to retroactively enforce an ordinance will not bar the City from doing so; (2) whether the trial court erred by finding no impairment of contract by the retroactively applied amendment, and; (3) whether the trial court erred by determining that equitable estoppel did not bar the City from retroactively enforcing the amendment.

The case was submitted to the trial court upon stipulated facts. In July, 1982, the City's Retirement Board began a substantial revision of the retirement ordinance. The revised ordinance provided increased benefits, required greater employee contributions and was applicable to both firefighters and police. ^* The revised ordinance applied these amendments retroactively to July 1, 1983, although the amendments were not officially enacted until October 29, 1984.

Late in June of 1983, the Burlington Board of Aldermen approved the retirement system budget for the coming year. Without officially adopting the proposed amendments, the Board of Aldermen included in its budget the cost of the additional benefits, taking into account the increased level of contributions. By memorandum dated July 7, 1983, the City Treasurer advised the police and fire departments to begin to withhold the increased contributions from the pay of firefighters and police. Initially, no individual firefighters authorized the City to withhold from them increased contributions. In September, 1983, three firefighters who were about to retire authorized the withholding.

On October 17, 1983, the Board of Aldermen, by interim resolution, put into effect numerous nondisability related retirement benefit increases retroactive to July 1, 1983. At this same meeting, plaintiffs' representative addressed the Board of Aldermen with the plaintiffs' objections to contributions retroactive to July 1, 1983. The representative expressed the plaintiffs' willingness to make increased contributions effective as of the date of the October 17, 1983 meeting.

By interim resolution on May 7, 1984, the Board of Aldermen put into effect the disability retirement benefits retroactive to July 1, 1983. On October 29, 1984, the Board of Aldermen unanimously adopted the amended retirement ordinance, including added benefits and increased contributions retroactive to July 1, 1983. The Retirement Board determined in September, 1984 that amounts not withheld prior to October 29, 1984, plus eight percent thereof representing amounts the retirement system would have earned on the increased contributions had they been withheld weekly during the retroactive period, would be collected from plaintiffs' salary over a sixteen-month period, equalling that period of time from July 1, 1983, to the October 29, 1984 date that the ordinance amendment was adopted.

Plaintiffs filed a petition in the Chittenden Superior Court for temporary and permanent injunctions in November, 1984. They sought to enjoin the City from enforcing the terms of the retirement system ordinance amendment to the extent it required retroactive application between July, 1983 and October, 1984. The temporary injunction was denied by the court in November, 1984, and the request for permanent injunction was denied in March, 1986. This appeal followed.

Plaintiffs first challenge the trial court's determination that the City may enforce an ordinance retroactively when it lacks specific statutory authority to do so. A municipality possesses and may exercise powers and functions specifically authorized by the Legislature, as well as "such powers as are necessarily and fairly implied in or are incident to the powers expressly granted, and such as are essential to the declared objects and purposes of the [municipal] corporation." Town of Brattleboro v. Nowicki, 119 Vt. 18, 20, 117 A.2d 259, 260 (1955). See also Hinesburg Sand & Gravel Co. v. Town of Hinesburg, 135 Vt. 484, 485-86, 380 A.2d 64, 66 (1977) (a municipality has powers specifically authorized by the Legislature and additional powers as may be "incident, subordinate or necessary to the exercise thereof."). In the instant case the City's authority to enact ordinances changing pension benefits was not challenged. See 24 V.S.A. § 1121. Plaintiffs argue, however, that the City had no authority to apply the legislation retroactively. We disagree.

Retrospective application of municipal enactments, while not favored in Vermont, is not expressly prohibited by constitutional provisions or statutes. See 24 V.S.A. § 1972; see also City of Montpelier v. Senter, 72 Vt. 112, 113, 47 A. 392, 393 (1900) (although retroactive municipal legislation is not favored it may be enforced). This Court has acknowledged that retrospective application of municipal legislation may be valid providing its language clearly indicates the Legislature's intent that it have retroactive effect. See Senter, 72 Vt. at 113, 47 A. at 393; see also Carpenter v. Department of Motor Vehicles, 143 Vt. 329, 332-33, 465 A.2d 1379, 1382 (1983) (Legislature has the power to enact a law which would operate retrospectively from its effective date); United States v. United States Fidelity & Guar. Co., 80 Vt. 84, 97, 66 A. 809, 814 (1907) (a statute will be retrospectively construed if "its language is so clear as to admit of no other construction.").

We find that in this case the City properly enforced its ordinance retroactively. The ordinance amendment was passed in October, 1984, but had an effective date of July 1, 1983, and the amendment admits of no construction other than a retroactive one.

The trial court properly concluded that retroactivity alone is an insufficient basis to prohibit the enforcement of the amended ordinance. We agree that absent express statutory or constitutional language to the contrary, the ability to enact retroactive provisions to the pension ordinance may be necessarily and fairly implied from the powers which have been expressly granted to the municipality to adopt firefighter pensions. See 24 V.S.A. §§ 1121, 1122; Senter, 72 Vt. at 113, 47 A. at 393; see also 6 McQuillin Mun. Corp. § 20.70 (3d ed. 1988) (in the absence of constitutional prohibition, retroactive municipal legislation is permissible unless it interferes with contract obligations or vested rights).

Plaintiffs next challenge the trial court's determination that the City's contract with plaintiffs was not impermissibly impaired by mandatory retroactive pension plan contributions. We note that where an employee makes mandatory contributions to a pension plan, that pension plan becomes part of the employment contract as a form of deferred compensation, the right to which is vested upon the employee's making a contribution to the pension plan. See Snow v. Abernathy, 331 So.2d 626, 631 (Ala.1976) (pension is vested contract right upon acceptance of plan); Olson v. Cory, 27 Cal.3d 532, 540, 636 P.2d 532, 537, 178 Cal.Rptr. 568, 573 (1980) (pension plans create vested contract rights accruing upon acceptance of employment); In re State Employees' Pension Plan, 364 A.2d 1228, 1235 (Del.1976) (pension is vested contract right for employees who fulfill pension's eligibility requirements); Halpin v. Nebraska State Patrolmen's Retirement System, 211 Neb. 892, 898, 320 N.W.2d 910, 914 (1982) (public employee pensions are deferred compensation and create " 'reasonable expectations which are protected by the law of contracts' ") (quoting Pineman v. Oechslin, 494 F.Supp. 525, 538 (D.Conn.1980)).

Plaintiffs agree that the City has the right to increase prospectively the required contributions to the plan so long as there is a corresponding increase in the benefits. See Olson, 27 Cal.3d at 541, 636 P.2d at 537, 178 Cal.Rptr. at 573 (no absolute right to fixed or specific benefits); In re State Employees' Pension Plan, 364 A.2d at 1235 (pension plan may be reasonably modified); Bakenhus v. City of Seattle, 48 Wash.2d 695, 701, 296 P.2d 536, 540 (1956) (an employee's vested contractual "pension rights may be modified prior to retirement...."). Plaintiffs argue, however, that where the employees' rights in the pension plan have vested, the City may not increase the benefits and required contributions retroactively. See Brazelton v. Kansas Public Employees Retirement System, 227 Kan. 443, 453-54, 607 P.2d 510, 517-18 (1980).

The Contract Clause of the United States Constitution prohibits states and their subdivisions from passing laws which impair the obligations of contract. U.S. Const. art. I, § 10; Broughton v. Pensacola, 93 U.S. (3 Otto) 266, 269, 23 L.Ed. 896 (1876). The Contract Clause, however, is not an absolute bar, preventing the states "from repealing or amending statutes generally, or from enacting legislation with retroactive effects." United States Trust Co. v. New Jersey, 431 U.S. 1, 17, 97 S.Ct. 1505, 1515, 52 L.Ed.2d 92 (1977).

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