Hill v. Ri State Employees' Retirement Bd.

• Citation: 935 A.2d 608
• Decision Date: 16 November 2007
• Docket Number: No. 2006-225-Appeal.,2006-225-Appeal.
• Parties: Donald C. HILL v. RHODE ISLAND STATE EMPLOYEES' RETIREMENT BOARD et al.
• Court: Rhode Island Supreme Court

935 A.2d 608

Donald C. HILL v. RHODE ISLAND STATE EMPLOYEES' RETIREMENT BOARD et al.

No. 2006-225-Appeal.

Supreme Court of Rhode Island.

November 16, 2007.

Walter Stone, Providence, for petitioner.

Michael Field, Esq., for respondent.

Present: WILLIAMS, C.J., GOLDBERG, FLAHERTY, SUTTELL, and ROBINSON, JJ.

OPINION

Justice GOLDBERG, for the Court.

This case came before the Supreme Court on September 25, 2007, on appeal by the plaintiff, Donald C. Hill (plaintiff or Hill), from two summary judgments entered in favor of the defendants, Rhode Island State Employees' Retirement Board (Retirement Board) and Nancy Mayer (Mayer), in her capacity as former General Treasurer of the State of Rhode Island (hereinafter referred to collectively as state or defendants). For the reasons stated in this opinion, we affirm the summary judgments entered by the Superior Court.

Facts and Travel

The plaintiff filed suit against the state on January 24, 2001, and alleged negligence, intentional infliction of emotional distress, and malicious prosecution arising from a criminal prosecution based on events that occurred in 1990, when plaintiff, as executive director of the National Education Association of Rhode Island (NEARI), wrote a letter to the Retirement Board about the employment status of Ronald DiOrio (DiOrio). DiOrio had been president of NEARI from approximately 1971 until 1985, when he became director of policy for Governor Edward DiPrete. The events leading up to this prosecution are as follows.

In 1987, the General Assembly enacted legislation that allowed full-time union employees who represented state and municipal workers to participate in the state retirement system, notwithstanding that these employees did not work for the state or its subdivisions (the 1987 Act).¹ The 1987 Act provided that, to be eligible to join the system, the union must forward a certified vote of acceptance by the union's governing authority to the Retirement Board. Thereupon, all current employees would become members of the retirement system; significantly for this case, any employee on an "official leave of absence" from his or her job with the union was eligible to purchase retirement credits for the period during which he or she was on an "official leave of absence." On December 8, 1987, while DiOrio was still working for Governor DiPrete, NEARI adopted a resolution electing to join the retirement system. On June 9, 1988, the General Assembly repealed the 1987 legislation in its entirety. P.L. 1988, ch. 486.

Within months of the 1988 repeal, DiOrio returned to NEARI, but the nature and duration of this relationship was subject to dispute. Notwithstanding, in February 1989, DiOrio founded a consulting firm, Strategy Corporation. He vacated the NEARI office building, purchased his own office equipment and furniture, hired staff, and was paid a retainer by NEARI. The union did not issue DiOrio an IRS Form W-2, the hallmark of a wage-earning employee. Rather, he received an IRS Form 1099, signifying compensation as an independent contractor. See, e.g., Mazzei v. Rock-N-Around Trucking, Inc., 246 F.3d 956, 964 (7th Cir.2001).

Meanwhile, during its 1990 session, the General Assembly enacted legislation providing for early retirement benefits for members of the retirement system, including union representatives. P.L. 1990, ch. 65, art. 80, § 1.² This legislation allowed an "active" employee to receive pension benefits as long as the employee separated from service during a one-month window, between June 30, 1990 and July 28, 1990. Id. § 2. To qualify for a taxpayer-financed pension, DiOrio had to establish that he was an employee of NEARI, who in accordance with the 1987 Act, had been on an "official leave of absence" and then resigned from the union.

On July 23, 1990, DiOrio applied to the retirement system for an early retirement. Days before his purported resignation, DiOrio obtained a letter from NEARI President Harvey Press to Donald Hickey, the executive director of the Employees' Retirement System, verifying that he had been employed at NEARI from September 1, 1973 to October 1, 1985. Additionally, on July 26, 1990, DiOrio obtained a letter from Hill to the Retirement Board that declared:

"This is to certify that Ronald L. DiOrio, Social Security [number deleted] returned to our payroll at the National Education Association Rhode Island in October 1988 at an annualized rate of pay of $50,000. He took an unpaid leave of absence to start his consulting firm in February 1989. Mr. DiOrio has resigned his leave effective July 27, 1990."

DiOrio then submitted a resignation from his purported employment with NEARI on July 27, 1990.

On August 1, 1990, James Reilly, acting director of the Employees' Retirement System, advised DiOrio that to become pension eligible, he could purchase retirement credits. DiOrio did so and collected a state pension until an investigation revealed that he was not entitled to participate in the retirement system.

In 1993, at Mayer's direction, the General Treasurer's Office began to review pensions for union employees and wrote to Hill requesting employment contracts, IRS Forms W-2, and any union documentation relative to leaves of absence for ten people, including DiOrio. In response, the union produced nine IRS Forms W-2 and one IRS Form 1099, which was for DiOrio. That IRS Form 1099 indicated that DiOrio had received non-employee compensation.

On February 17, 1994, Joann E. Flaminio, the executive director of the Employees' Retirement System, notified DiOrio that her records indicated that he was ineligible to receive retirement benefits because he was not a union employee at the time NEARI voted to adopt the provisions of the 1987 Act. He was given an opportunity to submit evidence of his employment, but he failed to do so. However, DiOrio continued to collect his pension until the General Assembly enacted the Eviction Act in 1994, P.L. 1994, ch. 413, § 1, which meant that people who became members of the retirement system based on the 1987 Act were no longer entitled to membership and could not receive any benefits. See G.L.1956 §§ 36-9.1-1 and 36-9.1-2.

At the behest of the General Treasurer's Office, the Rhode Island State Police began investigating alleged abuse of the pension system, including the circumstances surrounding DiOrio's pension and Hill's letter to the Retirement Board. The veracity of Hill's letter, and in particular whether DiOrio was a NEARI employee who was on an "official leave of absence" in accordance with the 1987 Act, was the focus of a grand jury investigation. An indictment was returned against DiOrio and Hill, charging DiOrio with obtaining money under false pretenses, conspiring with Hill to obtain money under false pretenses, and filing a false document. Hill was charged with conspiring to obtain money under false pretenses and aiding and abetting DiOrio in obtaining money under false pretenses.

In a jury-waived criminal trial, DiOrio was acquitted of all charges. Thereafter, on July 26, 1999, the two counts against Hill were dismissed by the state.

The plaintiff filed this action on January 24, 2001, alleging: (1) negligence, (2) intentional infliction of emotional distress, and (3) malicious prosecution. On November 18, 2003, a justice of the Superior Court granted defendants' motion for summary judgment on the malicious-prosecution allegation. The defendants then sought summary judgment with respect to the remaining counts, based upon the statute of limitations. This motion was heard and granted on May 16, 2006, and plaintiff filed a timely notice of appeal to this Court.

Standard of Review

"In passing on a grant of summary judgment by a justice of the Superior Court, this court conducts a de novo review." United Lending Corp. v. City of Providence, 827 A.2d 626, 631 (R.I.2003). Summary judgment is proper if there are no genuine issues of material fact evident from "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any" and the motion justice finds that the moving party is entitled to judgment as a matter of law. Lavoie v. North East Knitting, Inc., 918 A.2d 225, 227-28 (R.I.2007) (quoting Super. R. Civ. P. 56(c)). In conducting de novo review, our task is to "determine whether the admissible evidence viewed in a light most favorable to the nonmoving party reveals a genuine issue of material fact." Sturbridge Home Builders, Inc. v. Downing Seaport, Inc., 890 A.2d 58, 62 (R.I.2005) (citing Carlson v. Town of Smithfield, 723 A.2d 1129, 1131 (R.I.1999)). "The party opposing the motion for summary judgment `carries the burden of proving by competent evidence the existence of a disputed material issue of fact and cannot rest on allegations or denials in the pleadings or on conclusions or legal opinions.'" Taylor v. Mass. Flora Realty, Inc., 840 A.2d 1126, 1129 (R.I.2004) (quoting United Lending Corp., 827 A.2d at 631).

Malicious-Prosecution Claim

The plaintiff assigns error to the grant of summary judgment with respect to the malicious-prosecution count.³ In his decision, the motion justice found that plaintiff failed to produce any evidence that would overcome the principle that a grand jury indictment serves as prima facie evidence of probable cause to initiate the prosecution. It is plaintiff's contention that the motion justice erred in this finding.

Rhode Island long has recognized the tort of malicious prosecution. Solitro v. Moffatt, 523 A.2d 858, 861 (R.I. 1987). To recover damages for malicious prosecution, a party must "prove that (1) defendants initiated a prior criminal proceeding against him, (2) they did not have probable cause to initiate such a proceeding, (3) the proceeding was instituted maliciously, and (4) it terminated in [plaintiff's] favor." Id. at 861-62 (citing Nagy v. McBurney, 120 R.I. 925, 392 A.2d 365 (1978)). Historically, actions for malicious prosecution have been...