White Deer Tp. v. Napp, No. 29 MAP 2008

• Decision Date: 28 December 2009
• Docket Number: No. 29 MAP 2008
• Parties: WHITE DEER TOWNSHIP, Appellee v. Charles NAPP, Helen Napp, Leonard Caris, Doris Caris, Charlotte Hartranft and Donald Bird, Appellants.
• Court: Pennsylvania Supreme Court

985 A.2d 745

WHITE DEER TOWNSHIP, Appellee v. Charles NAPP, Helen Napp, Leonard Caris, Doris Caris, Charlotte Hartranft and Donald Bird, Appellants.

No. 29 MAP 2008

Supreme Court of Pennsylvania.

Argued December 3, 2008.

Decided December 28, 2009.

Jeffrey C. Dohrmann, Pamela L. Shipman, Williamsport, for C. & H. Napp, L. & D. Caris, C. Hartranft & D. Bird.

Timothy James Nieman, Robert J. Tribeck, Rhoads & Sinon, L.L.P., Paul J. Bruder, Jr., Harrisburg, for White Deer Township.

BEFORE: CASTILLE, C.J., SAYLOR, EAKIN, BAER, TODD, McCAFFERY, GREENSPAN, JJ.

OPINION

Justice BAER.

We granted allowance of appeal to determine whether a township's challenge to a board of supervisors' authority to enact an ordinance is procedurally time barred, and, if it is not, whether the board of supervisors of a second class township is authorized by the Second Class Township Code to provide post-retirement medical insurance, supplemental to Medicare, to supervisors who are also employees and who have been employed by the township for a minimum of twenty years. As to the first question, we conclude that the Commonwealth Court properly held that the township's challenge is not procedurally time-barred. Regarding the second question, we conclude that the board of supervisors has the authority to provide auditor-approved, post-retirement medical insurance to its supervisor-employees with twenty years of service, and, thus, respectfully reverse the Commonwealth Court.¹

White Deer Township (Township) is a municipality organized under the provisions of the Second Class Township Code (Township Code), Act of May 1, 1933, P.L. 103 (as amended 53 P.S. § 65101-68701). Appellant Charles Napp was a Township supervisor from January 1, 1965 through December 30, 1997, and an employee of the Township from January 2, 1968 through December 30, 1997. Appellant Leonard Caris served as a Township supervisor from January 1, 1965 through December 30, 1997, and was employed by the Township from January 1, 1969 through December 30, 1999.² Carl Hartranft (deceased) served as a Township supervisor from January 3, 1978 through June 10, 1998, and was employed by the Township from January 3, 1978 through June 10, 1998. Appellant Donald Bird was employed by the Township from 1985 through 2000.³ Appellants Helen Napp, Doris Caris, and Charlotte Hartranft are the spouses of these former Township supervisor-employees.

On December 18, 1997, the Township supervisor-employees, consisting of Appellants Napp and Caris, as well as Hartranft, enacted Ordinance No. 4-97 (Ordinance), which established that the Township would provide medical insurance supplemental to that available under the Medicare program for all retired employees of the Township who had been employed by the Township for at least twenty years.⁴ The supervisors had all been employees of the Township for twenty years when they enacted the Ordinance (with the exception of Hartranft, who reached his twenty years of service two weeks later, on January 3, 1998).

The Township Code provides that "[t]ownships shall be governed and supervised by boards of supervisors. Boards of supervisors shall consist of three members or, if approved by the electors under section 402(b), five members." 53 P.S. § 65601. The board of supervisors has the authority to provide insurance for its employees and supervisors pursuant to Section 1512(d) of the Township Code, which provides, in relevant part: "The board of supervisors may contract with any insurance company ... to insure its supervisors under section 606, employes and their dependents under a policy or policies of group insurance covering life, health, hospitalization, medical service or accident insurance." 53 P.S. § 66512(d). Section 606 provides for the provision of compensation to supervisors, specifically including those holding the dual roles of supervisor and employee, like Napp, Caris, and Hartranft, as follows:

§ 65606. Compensation of supervisors

(a) Supervisors may receive as compensation an amount established by ordinance .... Salaries are payable monthly or quarterly for the duties imposed by this act ... The compensation of supervisors, when employed ... in any employe capacity ... shall be determined by the board of auditors, at an hourly, daily, ... or monthly basis, which shall be comparable to compensation paid in the locality for similar services....

(b) Any benefit provided to or for the benefit of a supervisor employed by the township in any employe capacity under this act in the form of inclusion in a pension plan paid for in whole or in part by the township is compensation within the meaning of this act to the extent that benefit is paid for by the township and is determined by the board of auditors ....

* * *

(c) In addition to the compensation authorized under this section, supervisors while in office or while in the employ of the township may be eligible for inclusion in township-paid insurance plans....

53 P.S. § 65606(a)-(c).

Following the retirement of Appellant supervisor-employees, the new board of supervisors concluded that Appellants lacked the legal authority to enact the Ordinance, and that the new board of supervisors could properly repeal it. On January 6, 2004, the Township filed a declaratory judgment action asserting that Appellants represent all individuals who receive benefits under the Ordinance. The Township first sought a determination that there is no authority in the Township Code to support the provision of insurance benefits to retired employees generally, and then asserted alternatively that the provision of post-retirement medical insurance benefits to retired supervisors and their families in particular violated specific prohibitions of Section 606 of the Township Code.⁵ Finally, the Township argued that it was able legally to repeal the Ordinance providing such benefits to its retired supervisor-employees and their families. Appellants filed a preliminary objection in the nature of a demurrer challenging the legal sufficiency of the complaint, alleging that the Township supervisors did, in fact, have authority to enact the Ordinance and that the Township could not terminate their or their families' benefits.

The trial court sustained Appellants' preliminary objection and dismissed the Township's complaint. See White Deer Twp. v. Napp, No. 04-0007, slip op. at 3 (C.P. Union June 30, 2004). Although not raised by either party, the trial court, in a footnote, questioned whether the Township was precluded from challenging the validity of the Ordinance because more than thirty days had passed since the Ordinance was adopted. See 42 Pa.C.S. § 5571(c)(5) (deleted 2008) (prescribing that "questions relating to an alleged defect in the process of enactment or adoption of any ordinance ... shall be raised by appeal or challenge commenced within 30 days after the intended effective date of the ordinance ...."); Borough of Nanty Glo v. Fatula, 826 A.2d 58 (Pa.Cmwlth.2003) (holding that a municipality could not challenge the validity of the enactment of ordinances relating to pension benefits for retired police officers insofar as more than thirty days had passed since the ordinances had been enacted). Nevertheless, the trial court addressed the merits.

On the merits, to dispense with the Township's argument that the Township Code did not authorize the benefits at issue, the trial court relied on Summers v. Com., State Ethics Comm'n, 128 Pa. Cmwlth. 520, 563 A.2d 1295 (1989), where supervisor-employees voted in their supervisor capacities to provide group life insurance to all municipal employees (including themselves) while employed. The Summers court held that under the former version of Section 606(c)(1), auditor approval was not required for this type of benefit because the supervisors received the same benefits available to all employees and had not discriminated in favor of themselves.⁶ Summers, 563 A.2d at 1296. The trial court read Summers as generally supporting the participation by supervisor-employees in health insurance plans without auditor approval, without recognizing a distinction between benefits received while employed and post-employment retirement benefits.

Addressing the Township's alternative argument, the trial court relied on Newport Township v. Margalis, 110 Pa. Cmwlth. 611, 532 A.2d 1263, 1265-66 (1987) to conclude that the Township could not repeal the Ordinance and eliminate the benefits provided thereunder. In Newport Township, a first class township provided its employees post-retirement health insurance, and then sought to revoke that benefit. The Commonwealth Court held that an employee who has complied with all conditions necessary to receive a retirement allowance cannot be adversely affected by subsequent legislation that changes the terms of the retirement contract. Id. at 1265. In reaching this conclusion, the Commonwealth Court noted that retirement benefits are deferred compensation resulting from an employee's labor, which cannot be abolished or reduced after the employee has entered into the retirement system. Id. In accord with Newport Township, the trial court in the instant case held that the post-retirement medical insurance was deferred compensation for the supervisor-employees that the Township could not reduce or abolish after those supervisor-employees retired. Thus, the trial court held that the Ordinance was valid and could not be repealed by the new board of supervisors.

The Township appealed to the Commonwealth Court, and pursued only the arguments related to the status of Napp, Caris, and Hartranft as supervisors, but did not further advance the position that the Township lacked authority to provide post-retirement medical insurance benefits to retired employees generally.⁷ Rather, the Township argued that, notwithstanding their employee status, because Napp, Caris, and Hartranft were also supervisors, they were precluded from receiving post-retirement medical...