Town of Scituate v. Employees' Ret. Sys. of R.I.
| Decision Date | 04 April 2013 |
| Docket Number | C.A. No. PC-2011-6345 |
| Parties | TOWN OF SCITUATE v. EMPLOYEES' RETIREMENT SYSTEM OF RHODE ISLAND, and RHODE ISLAND STATE EMPLOYEES' RETIREMENT BOARD |
| Court | Rhode Island Superior Court |
DECISION
In this administrative appeal, Appellant Town of Scituate (Town) challenges a decision by the Retirement Board of the Employees' Retirement System of the State of Rhode Island (Retirement Board) authorizing intervening Defendant Richard Iverson to purchase retirement credits for his previous service on the Scituate Town Council from the Employees' Retirement System of the State of Rhode Island (ERSRI).1 The Town also seeks declaratory relief under the Uniform Declaratory Judgments Act, G.L. 1956 §§ 9-30-1, et seq. Jurisdiction is pursuant to §§ 9-30-1 and 42-35-15.
Intervenor2 Richard Iverson (Mr. Iverson) was first elected to the Scituate Town Council (Town Council) in November 1982. See Letter from Richard Iverson to Teresa Rusbino, Mar.12, 2009, Rec. Ex. 1. From 1983 through 1992, he served on the Town Council for five consecutive two-year terms. See id. During his tenure on the Town Council, Mr. Iverson did not exercise his option to become a member of the Municipal Employees Retirement System (MERS). MERS is the mandatory, contributory deferred benefit pension plan established under G.L. 1956 §§ 45-21-1, et seq. The intention of the legislature in creating MERS was to establish an actuarially financed retirement system for municipal employees. See Sec. 45-21-1. MERS participants are required to contribute a statutorily-set percentage of their annual salary. Mr. Iverson was not a participant in MERS until 1994. (Hr'g Tr. 5, Mar. 19, 2009, Rec. Ex. 2.) Neither he nor the Town made contributions on his behalf while he served on the Town Council. See id.
In 1994, Mr. Iverson was appointed Director of the Town of Scituate Department of Public Works. Id. When Mr. Iverson began his Directorship in January 1994, he applied for membership in MERS. See Membership Application, Rec. Ex. 2H. His contributions to the system began on or about January 21, 1994. See id. Around that time, the Town's Deputy Treasurer informed Mr. Iverson that he was entitled to receive retirement credits for the ten years he had previously served on the Town Council. (Hr'g Tr. 5, 18, Mar. 19, 2009, Rec. Ex. 2.) Prompted by that conversation, Mr. Iverson sent a request for the credits to ERSRI. Id. at 72-73.
In a letter dated June 13, 1995, ERSRI informed Mr. Iverson that he could purchase retirement credits for his ten years of service on the Town Council for a cost of $1049.93. (Letter from ERSRI to Richard Iverson, June 13, 1995, Rec. Ex. 2A.) To effectuate the purchase, Mr. Iverson was required to submit payment to ERSRI on or before July 13, 1995. Id. After July 13, 1995, the "[i]nterest charges [would] have to be recomputed." Id. A letter dated June 13, 1995 was also mailed to the Finance Director of the Town of Scituate informing himthat the Town's contribution towards Mr. Iverson's retirement credits for the ten year period he served on the Town Council was $1220.72. (Letter from ERSRI to Finance Director, June 13, 1995, Rec. Ex. 2C.) Neither Mr. Iverson nor the Town made payment to ERSRI. (Hr'g Tr. 8-9, 21, 23, Mar. 19, 2009, Rec. Ex. 2.).
Sometime later in 1995, Mr. Iverson telephoned the Retirement Board, again inquiring about the purchase of credits. Id. at 6. During that telephone call, he was informed that he could purchase credit for five years of service on the Town Council, not ten years. Id. ERSRI issued a second "Statement for Purchase of Service," dated December 11, 1995, to Mr. Iverson, indicating that he could purchase five years of retirement credits for $326.36. (Statement for Purchase of Service, Dec. 11, 1995, Rec. Ex. 2B.) Similar to the previous letter, the Statement indicated that payment was due on or before January 11, 1996. Id. Failure to make the requested payment by that date would result in the accrual of additional interest. Id. Again, Mr. Iverson did not tender payment. (Hr'g Tr. 9, 22, Mar. 19, 2009, Rec. Ex. 2.)
Mr. Iverson took no further action to purchase the retirement credits until he began planning for his retirement from his position as Director of the Department of Public Works in May 2008. Id. at 9. At a meeting with a benefits analyst from ERSRI, Mr. Iverson was informed that he could purchase retirement credits for only five out of the ten years he had served on the Town Council. Id. To effectuate the purchase, on March 7, 2008, Mr. Iverson executed a form affidavit, provided by ERSRI, swearing that his failure to contribute to MERS during the ten years he served on the Town Council "was due to the inadvertence and mistake on behalf of the Town of Scituate and [him]self." (Employee Affidavit at ¶ 4, Rec. Ex. 2E.) On the same day, then-Treasurer for the Town of Scituate, Theodore Przybyla (Mr. Przybyla), executed a similar affidavit swearing that "the failure of Richard Iverson to be a contributing member of MERS[from 1983 to 1992] was due to the inadvertence, mistake and excusable neglect on behalf of the Town of Scituate and/or the employee, Richard Iverson[.]" (Employer Affidavit at ¶ 5, Rec. Ex. 2F.) Mr. Przybyla further swore that the Town "acknowledges that the Town and [Mr. Iverson] shall be responsible for all costs and fees associated with the purchase . . . ." Id. at ¶ 6.
In correspondence dated March 19, 2008, ERSRI sent Mr. Iverson a "Purchase of Service Agreement Letter" indicating his ability to purchase retirement credits for the full ten years of his previous service on the Town Council for a cost of $1926.27. See Purchase of Service Agreement Letter, Mar. 19, 2008, Rec. Ex. 2D; Letter from Richard Iverson to Teresa Rusbino, Mar. 12, 2009, Rec. Ex. 1. The letter indicated that payment was due no later than April 19, 2008. Id. ERSRI sent the Town an invoice dated the same day, March 19, 2008, for the Town's share of the cost of the full actuarial value of Mr. Iverson's retirement credits, totaling $183,225.42. (Invoice, Mar. 19, 2008, Rec. Ex. 2J.)
Immediately thereafter, by letter dated March 24, 2008, the Town informed ERSRI that in light of "recently uncovered documentation," it wished to withdraw the affidavit that Mr. Przybyla had executed. (Letter from Theodore Przybyla to Gayle Mambro-Martin, Mar. 24, 2008, Rec. Ex. 2K.) In late April 2008, Mr. Iverson telephoned Frank Karpinski (Mr. Karpinski), the Executive Director of ERSRI, to inquire about the status of his purchase. See Letter from Richard Iverson to Teresa Rusbino, Mar. 12, 2009, Rec. Ex. 1. During that telephone conversation, Mr. Karpinski informed Mr. Iverson that the payment was not due on April 15, 2008, because ERSRI was awaiting the receipt of additional information it had requested from the Town. See id.; Hr'g Tr. 11, Mar. 19, 2009, Rec. Ex. 2.
On May 1, 2008, Town Council President, Robert Budway (Mr. Budway), executed an employer affidavit. (Budway Affidavit, May 1, 2008, Rec. Ex. 2G.) In his affidavit, Mr.Budway swore that "[b]ased on information presented to me, the failure of Richard Iverson to be a contributing member of MERS [from 1983 through 1992] was due to inadvertence, mistake and excusable neglect on behalf of the Town of Scituate and/or the employee, Richard Iverson." Id. at ¶ 5. As in the previous affidavit, Mr. Budway swore that the Town "acknowledges that the Town and the . . . employee shall be responsible for costs and fees associated with the purchase . . . ." Id. at ¶ 6.
Approximately two months later, Mr. Iverson received a letter from Mr. Karpinski dated November 3, 2008, informing him that his request to purchase retirement credits for his prior service on the Town Council was denied. (Letter from Frank Karpinski to Richard Iverson, Nov. 3, 2008, Rec. Ex. 2L.) Mr. Karpinski recounted that in 1995, ERSRI had initially billed Mr. Iverson and the Town for the purchase of credits for the full ten years that he had served on the Town Council but that "due to a change in the law,"3 ERSRI subsequently rebilled Mr. Iverson and the Town for only five years. Id. Mr. Karpinski explained that after Mr. Iverson had made his subsequent purchase request in 2008, ERSRI "determined that [his] request did not fit within the meaning of a purchase, but instead would fall under inadvertence, mistake, and excusable neglect."...
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