City of Mishawaka v. Squadroni

• Decision Date: 26 December 1985
• Docket Number: No. 3-485A110,3-485A110
• Citation: 486 N.E.2d 1088
• Parties: CITY OF MISHAWAKA, et al., Defendants-Appellants, v. Quinto SQUADRONI, et al., Plaintiffs-Appellees.
• Court: Indiana Appellate Court

Page 1088

486 N.E.2d 1088

CITY OF MISHAWAKA, et al., Defendants-Appellants, v. Quinto SQUADRONI, et al., Plaintiffs-Appellees.

No. 3-485A110.

Court of Appeals of Indiana,

Third District.

Dec. 26, 1985.

Rehearing Denied Feb. 14, 1986.

John P. Gourley, James J. Olson, Mishawaka, for defendants-appellants.

Timothy W. Woods, South Bend, for plaintiffs-appellees.

HOFFMAN, Judge.

Appellants, the City of Mishawaka, its Mayor, Fire Chief and Police Chief, all in their official capacities, and the Boards of Trustees of the City's Firemen's and Policemen's Pension Funds (collectively referred to herein as the City) appeal the adverse judgment rendered in favor of appellees Quinto Squadroni, et al. (retired firemen and policemen and/or their dependents, referred to as the retirees herein), requiring the City to recompute the pension due the retirees for the years 1978, 1979 and 1980, and awarding a judgment to the retirees for the difference between the pensions paid them and the pensions due them as determined by the recomputation for those three years and for all subsequent years. The evidence most favorable to the judgment is as follows.

In 1977, discussions took place between the City, the Fraternal Order of Police, Lodge 91, and the Mishawaka Fire Fighters, Local 360, regarding an incentive bonus plan for police and firefighters. The 1978 wage package probably would not have been accepted if some incentive bonus program was not going to be implemented. The original draft of an incentive bonus ordinance was not passed because the city council was concerned that it might be construed as a longevity pay plan and thus would be applicable in the computation of the retirees' pension benefits. The ordinance was rewritten and introduced as Ordinance No. 2120. It was designed to provide the incentive pay plan required by the unions, and was proposed and drafted by the unions.

The heading of Ordinance No. 2120 stated: "AN ORDINANCE CREATING AN INCENTIVE BONUS PROGRAM AND AN INCENTIVE BONUS COMMITTEE FOR THE POLICE DEPARTMENT AND THE FIRE DEPARTMENT." Section 1 of the ordinance created the incentive bonus committee and Section 2 created the incentive bonus program. Section 2 provided:

"... with payment to be made to members of the department who are otherwise eligible according to the standards established by this ordinance and who have more than five (5) years of service.... The Incentive Bonus Committee of each department shall determine which members of the department are eligible for the bonus according to the standards established by this ordinance, which standards shall include the following factors:

1. Departmental Rules and Regulations concerning appearance.

2. Participation in continuing education and training relating to each of the respective departments.

3. The presence or lack of unexcused absences from duty.

4. The presence or lack of disciplinary infractions or violations.

5. Commendations from the Mayor, Chief, citizens or local Service Bodies or Organizations."

The ordinance was adopted and became effective retroactive to January 1, 1978.

The administrative personnel for the respective departments prepared budgets for the incentive bonuses from seniority lists, using the date each employee was hired, and forwarded a list of eligible employees to the incentive bonus committee. The administrative personnel did not receive any communications from the incentive bonus committee during those years, and the incentive bonus budget was expended in 1978, 1979 and 1980. Every police officer and firefighter who had completed five or more years of service during those years received the incentive bonus. The City, in response to the retirees' request for admissions, stated that "[d]isciplinary action [sic] taken against members were considered but were found not to be of such a serious nature as to be able to deny any such member his incentive bonus." However, there is no evidence that the bonus committee did meet or function until sometime after March 12, 1980, when it began to meet on a quarterly basis.

On March 10, 1981, a list of criteria was published for all police officers and firefighters. This list clarified the criteria stated in Ordinance No. 2120 to be used in awarding incentive bonuses.

On March 25, 1980, the retirees instituted this lawsuit. The retirees alleged that the City was failing to include in their pension benefits, pay to First-Grade Patrolmen based on length of service. They contend that Ordinance No. 2120 has been administered as a longevity pay program since its inception, and that as a result, their pension benefits for the years 1978, 1979 and 1980 should be recomputed and that all future pension benefits need to be computed using the pay to a First-Grade Patrolman based on length of service.

After trial, the trial court entered its findings of fact and conclusions of law. The City challenges the judgment raising the following issues for this Court's consideration:

(1) whether the retirees' claim is precluded by their failure to file a notice of claim as required by the Indiana Tort Claims Act (ITCA);

(2) whether the findings of fact and conclusions of law are supported by the evidence;

(3) whether the City of Mishawaka, the Chief of the Fire Force, the Chief of the Police Department and the Mayor of the City were proper party-defendants to this lawsuit;

(4) whether the trial court erred in failing to find for the defendants on the issue of waiver and/or estoppel; and

(5) whether the trial court erred in not limiting its judgment to the years 1978, 1979 and 1980.

The City initially contends that the retirees' claim falls within the scope of the ITCA and since they failed to file a notice of claim within 180 days as required by the Act, they are precluded from recovering. IND.CODE Sec. 34-4-16.5-1 provides that the ITCA applies only to a claim or suit in tort. Thus, in order to determine whether the ITCA applies to the retirees' claim, this Court must determine the character of their claim. See: Indiana Dept. of Public Welfare v. Clark (1985), Ind.App., 478 N.E.2d 699.

Pursuant to IND.CODE Secs. 36-8-6-4 and 36-8-7-8, the funds for the police and firefighters' pension funds come from several sources, including gifts, proceeds from the sale of recovered property, penalties for violations of department rules, and deductions from salaries. Under such compulsory contribution plans, a police officer or firefighter has no vested rights in pension payments until retirement. Klamm et al. v. State of Indiana ex rel. Carlson (1955), 235 Ind. 289, 126 N.E.2d 487. When the statutory conditions for retirement, existing when the application for benefits is made, are met, and the award of the pension has been made, or as of right should have been made, the pensioner's interest becomes vested and takes on the attributes of a contract. Klamm, supra; Aikens v. Alexander (1979), Ind.App., 397 N.E.2d 319. Any disputes over the payments due after the interest has vested are contract disputes. As the retirees herein have thus acquired a vested interest in their pension benefits, their claim is a contract claim. Therefore, the provisions of the ITCA do not apply.

The City next challenges several findings of fact and conclusions of law made by the trial court. This Court must determine only whether the findings and judgment are clearly erroneous. Ind.Rules of Procedure, Trial Rule 52(A); First Fed. Sav. & Loan Ass'n v. Stone (1984), Ind.App., 467 N.E.2d 1226.

A finding or judgment is clearly erroneous only if a review of the record leaves this Court with a definite and firm conviction that a mistake has been made. Milwaukee Guardian Ins. v. Reichhart (1985), Ind.App., 479 N.E.2d 1340.

The first finding questioned provides:

"3. Ordinance 2120 provided for payment of compensation in addition to base salary to eligible members of the two forces based on their length of service, i.e., in 1978 each eligible member of the force was paid $50.00 for each year of service over five (5), in 1979 each eligible member was paid $90.00 for each year of service over five (5), and, in 1980 and ever since each eligible member was paid $120.00 for each year of service over five (5)."

The City claims this finding is not supported by the evidence. However, the evidence establishes that such bonuses were to be paid to eligible employees and that the amount of the bonus was to be determined by the employee's length of service as found. It is evident, then, that Finding No. 3 is not clearly erroneous.

The City also contends that Findings Nos. 7-12 are clearly erroneous. Those findings provide:

"7. The committee created by Section 1 of the Ordinance did not meet or begin to function until March, 1980.

8. The standards established by Section 2 of the Ordinance were never published...