White Deer Tp. v. Napp

• Decision Date: 27 December 2006
• Citation: 912 A.2d 781
• Court: Pennsylvania Supreme Court
• Parties: WHITE DEER TOWNSHIP, Appellee v. Charles NAPP, Helen Napp, Leonard Caris, Doris Caris, Charlotte Hartranft, and Donald Bird, Appellants.

912 A.2d 781

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

Supreme Court of Pennsylvania.

Argued May 10, 2006.

Decided December 27, 2006.

Jeffrey C. Dohrmann, Williamsport, Pamela L. Shipman, for Charles Napp, et al., appellants.

Thomas L. Wenger, Harrisburg, Peter Grayson Howland, for PSATS Trustees Ins., appellant amicus curiae.

Timothy James Nieman, Robert J. Tribeck, Harrisburg, for White Deer Tp., appellee.

BEFORE: CAPPY, C.J., CASTILLE, NEWMAN, SAYLOR, EAKIN AND BAER, JJ.

OPINION

Justice SAYLOR.

This appeal concerns whether the common pleas court correctly terminated a municipality's challenge to the receipt by Second Class Township supervisors and their spouses of post-retirement medical insurance benefits that the supervisors themselves authorized.

Charles Napp, Leonard Caris, and Carl Hartranft (deceased) are former supervisors and employees of White Deer Township, a municipality organized under the provisions of the Second Class Township Code.¹,² In December 1997, at a time when they had worked for the Township for more than twenty years, Messrs. Napp, Caris, and Hartranft adopted a resolution that resulted in an ordinance providing medical insurance for retirees employed for at least twenty years by the Township, supplemental to that available under the Medicare program.

In January 2004, under a new slate of supervisors, the Township filed a complaint for a declaratory judgment, naming as defendants Messrs. Napp and Caris and their spouses, Mr. Hartranft's widow, and Donald Bird, a retired Township employee, and asserting that they are all of the individuals who receive benefits under the ordinance. In the complaint, the Township requested a determination that the ordinance was void as there was no statutory basis supporting its enactment, or, alternatively, that the Township had legal authority to repeal the ordinance and terminate Appellants' supplemental medical insurance benefits. More specifically, the Township asserted that there is no authority in the Second Class Township Code to support the provision of insurance benefits to retired employees, and alternatively, the provision of such benefits to retired supervisors and their families violated specific prohibitions of Section 606 of the Second Class Township Code, 53 P.S. § 65606, entitled: "Compensation of supervisors."

Appellants filed preliminary objections in the nature of a demurrer, which were sustained by the common pleas court. In its decision, the common pleas court implicitly recognized that the Legislature removed certain matters involving personal pecuniary interest from the purview of local township supervisors by relegating the decision making authority to a board of auditors. See White Deer Twp. v. Napp, No. 04-0007, slip op. at 3 (C.P. Union June 30, 2004). The court found, however, that, under Section 606(c)(1) of the Second Class Township Code, 53 P.S. 65606(c)(1), participation by supervisor-employees in township-paid health insurance plans no longer required auditor approval. See id. at 3-4 (citing Summers v. Commonwealth, State Ethics Comm'n, 128 Pa.Cmwlth. 520, 523-24, 563 A.2d 1295, 1296-97 (1989) (holding that the provision of life and health insurance coverage to current supervisor-employees did not require auditor approval)). The court also referenced Newport Twp. v. Margalis, 110 Pa. Cmwlth. 611, 616-17, 532 A.2d 1263, 1265-66 (1987) (holding that a township which adopted a valid resolution to pay retired employees' medical insurance could not unilaterally terminate its obligation), for the proposition that the current slate of supervisors was not authorized to repeal the ordinance. Additionally, in a footnote, the common pleas court questioned whether any challenge to the procedure used in promulgating the ordinance was time-barred under Section 5571(c)(5) of the Judicial Code, 42 Pa.C.S. § 5571(c)(5), which prescribes, inter alia, 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[.]" Moreover, the court apparently interlineated its reservations concerning the timeliness of the Township's challenge into its holding. See Napp, No. 04-0007, slip op. at 6 ("Based upon the legal authority referenced and discussed above, we conclude that the Township is procedurally and substantively precluded from challenging the validity of Ordinance 4-97 and, alternatively, precluded from abolishing the medical benefits due to Defendants." (emphasis added)).

The Township filed an appeal in the Commonwealth Court, in which it pursued only the arguments related to the status of Messrs. 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 as such.³ The Commonwealth Court, however, reversed in a published opinion, holding that the Township lacked statutory authority to provide medical benefits to retired employees. See White Deer Twp. v. Napp, 874 A.2d 1258 (Pa.Cmwlth.2005). The court grounded its reasoning on a passage of Section 606(c) of the Second Class Township Code which provides: "supervisors while in office or while in the employ of the township may be eligible for inclusion in township-paid insurance plans." Id. at 1261 (quoting 53 P.S. § 65606(c)) (emphasis in original). Although this language is facially applicable only to supervisors, according to the Commonwealth Court, "the plain language of Section 606(c) provides that medical benefits are only available for current employees[.]" Id. at 1263. Thus, the court determined that the Township lacked the authority to grant post-retirement benefits, and it reversed and remanded to the common pleas court for an award of declaratory relief in favor of the Township. The Commonwealth Court did not address the common pleas court's conclusion that the Township's challenge was procedurally barred.

We initially allowed appeal on the issue arising directly from the holding of the Commonwealth Court, namely, whether the Second Class Township Code authorizes municipalities to provide post-retirement medical and health benefits to its employees. See White Deer Twp. v. Napp, 586 Pa. 46, 890 A.2d 368 (2005) (per curiam). Upon further examination, we enlarged our review to subsume the question whether the statute prohibits Second Class Townships from providing such benefits to supervisors who are also employees. The appellate review of this issue of statutory construction is plenary.

At the outset, we decline to utilize this case as a vehicle to resolve the question that we have now clarified was not presented to the Commonwealth Court by the Township as the appellant therein, namely, the availability of post-retirement medical insurance benefits to retired employees generally. We note only that we agree with both parties that the Commonwealth Court's reliance, in addressing that issue, on Section 606(c), which is applicable only to township supervisors, is unpersuasive.

On the question of whether supervisors are restricted from post-retirement medical insurance benefits under Section 606 of the Second Class Township Code, Appellants' overarching position is that the supervisors are entitled to such benefits as deferred compensation in their capacity as employees, and that nothing in Section 606 of the Second Class Township Code precludes them from being compensated on equal par with all other employees. The Township counters that Section 606 was crafted carefully by the legislature to minimize the potential for, and impact of, conflicts of interests arising out of the decision making authority of municipal supervisors. More specifically, the Township believes that Section 606 protects against the circumstances that underlie this appeal, which it characterizes as an eve-of-retirement vote by self-interested Second Class Township supervisors to provide themselves with an unauthorized lifetime benefit.

On review of Section 606, it is evident that the Township is correct that the statute was in fact designed to curtail decision making by local supervisors on matters affecting their own self-interest. In this regard, its provisions expressly limit the amount a supervisor may receive as compensation as established by ordinance, see 53 P.S. § 65606(a); shift the responsibility to determine the compensation of supervisors, when serving in other capacities as township employees, to the board of auditors, see id.; forbid supervisors from being compensated as employees for attending meetings of the board of supervisors, see id.; prescribe that any change in salary, compensation, or emoluments of the elected office become effective at the beginning of the next term of the supervisor, see id.; delineate specific parameters for supervisor participation in employee pension plans, including provisions requiring auditor approval, see 53 P.S. § 65606(b); and control supervisor participation in township-paid insurance plans, see 53 P.S. § 65606(c). In light of such provisions, the legislative intent to limit self-interested decision making by supervisors is, again, manifest. Therefore, although Appellants are correct that no portion of Section 606 expressly forbids supervisors from receiving post-retirement medical insurance benefits in their capacity as former employees, we do not believe that this is wholly dispositive of the Township's challenge. Rather, the Township more broadly has challenged the manner in which the benefits were authorized, by interested supervisors.

In this regard, as noted, the common pleas court found that Section 606 permitted self-interested supervisors to confer post-retirement medical insurance benefits upon themselves under Section 606(c), which provides for...