NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court."
Although it is posted on the internet, this opinion is binding only on the
parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-2049-14T2
ALFRED J. PETIT-CLAIR, JR.,
Plaintiff-Appellant,
v.
CITY OF PERTH AMBOY,
Defendant-Respondent.
__________________________________
Argued January 8, 2018 – Decided September 7, 2018
Before Judges Sabatino, Ostrer and Whipple.
On appeal from Superior Court of New Jersey,
Chancery Division, Middlesex County, Docket
No. L-3703-13.
Alfred Petit-Clair, Jr., appellant, argued the
cause pro se.
Michael S. Williams argued the cause for
respondent (Cruser Mitchell Novitz Sanchez
Gaston & Zimet, LLP, attorneys; Douglas V.
Sanchez, of counsel; Michael S. Williams, on
the brief).
PER CURIAM
Plaintiff Alfred Petit-Clair, Jr. complains that the City of
Perth Amboy lacked the power in 2009 to terminate retiree medical
benefits for part-time employees like himself, who were already
eligible to retire but had not done so. Plaintiff appeals from
the Chancery Division's order granting the City of Perth Amboy
summary judgment and dismissing his complaint. Plaintiff
essentially argues he obtained a contractual right to the retiree
health benefits because the City's mayor had assured him in 1990,
before he was hired, that he would receive them, and the City
adopted a resolution in 1994 formalizing such benefits. He also
argues the City was equitably estopped from denying him benefits,
and barred by N.J.S.A. 40A:10-23 from treating part-time employees
differently from full-time employees.
We are unpersuaded. Absent a clear and unmistakable
expression of intent to create a contractual obligation, the City
was free to withdraw previously granted employee benefits. Also,
the City was not equitably estopped from withdrawing the benefits,
as plaintiff's reliance on the mayor's assurances was
unreasonable. Furthermore, the City was free to treat part-time
and full-time employees differently, because they were not
similarly situated. We therefore affirm.
I.
In a previous opinion, we reviewed facts regarding
plaintiff's employment with the City. Petit-Clair v. Bd. of Trs.,
No. A-2048-16 (Mar. 1, 2018) (slip op. at 2-4) (Petit-Clair I).
2 A-2049-14T2
We focused on his claimed entitlement to pension credits under the
Public Employees' Retirement System (PERS), after over twenty-five
years of service as the part-time attorney for the City's zoning
board of adjustment (ZBA). Here, we highlight facts relevant to
plaintiff's claimed entitlement to retiree health benefits from
the City. We extend to plaintiff all favorable inferences. See
Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995).
Before the ZBA formally selected plaintiff as its part-time
attorney in 1990, see N.J.S.A. 40:55D-71(b), the mayor assured
plaintiff he would be eligible for health benefits when he later
retired. In January 1994, the City adopted a resolution formally
granting retiree health benefits to both part-time and full-time
employees. After noting its authority under N.J.S.A. 40A:10-23,
the resolution stated:
NOW, THEREFORE, IT IS HEREBY RESOLVED BY THE
COUNCIL OF THE CITY OF PERTH AMBOY:
1. That health and hospital benefit
coverage shall, upon adoption of this
resolution, be provided, at City expense, as
set forth in the City's health benefits plan
for retirees, to employees and their
dependents who retire after 25 years' or more
of service with the City of Perth Amboy and
employees, and their dependents, who have
retired and reached the age of 62 or older
with at least 15 years of service with the
City of Perth Amboy.
3 A-2049-14T2
In the years following the 1994 resolution, the City provided for
retiree health benefits in collective negotiation agreements,
which did not cover plaintiff. See Perth Amboy Ordinance No.
1464C-2009 (Adopted May 27, 2009).
In 2009, the City withdrew retiree health benefits from part-
time employees who were not covered by collective negotiation
agreements, but left them in place for certain full-time workers.
The change was accomplished in three steps. In January 2009, the
City rescinded the 1994 resolution, thereby denying retiree health
benefits to all employees not covered by such agreements. Ibid.
Four months later, the City restored retiree health benefits for
employees who had worked for the City continuously since 1994, but
only if they did so full-time. The May 2009 ordinance states:
SECTION 2. Pursuant to N.J.S.A. 40A:10-
23, the City will assume the premium cost of
the controlling group health and hospital
insurance coverage for employees who retire
and satisfy the following conditions:
A. The employee commenced full-time
employment for the City of Perth Amboy prior
to July 1, 1994 and remained continuously
employed full-time by the City through the
date of qualifying retirement under a State
of New Jersey administered retirement plan;
and
1. The employee retired:
a. On a State disability pension
as a result of an on-the-job
injury sustained while
4 A-2049-14T2
performing services for the
City of Perth Amboy; or
b. After 25 years or more of
employment service in the City
of Perth Amboy; or
c. With at least 15 years of
employment service in the City
of Perth Amboy and reached the
age of 62 years or older.
B. The level of insurance will be the
prevailing group coverage that is in effect
for the non-unionized employees of the City
and the qualifying retiree will be subject to
and responsible for any employee contributions
and/or co-pays in effect from throughout
retirement.
[Ibid.]
Five months later, the City amended the ordinance in its
entirety, to expand the class of eligible full-time employees by
covering full-time employees who started working for the City
before January 1, 2008, instead of July 1, 1994. See Perth Amboy
Ordinance No. 1484-2009 (Adopted Oct. 14, 2009), codified at Perth
Amboy Municipal Code, art. V, § 85-8 to 85-9 (2018). Part-time
employees remained ineligible.1
When the City adopted the May 2009 ordinance, plaintiff was
already eligible to retire. He was sixty-five years of age, and
had worked eighteen years for the ZBA. At that time, however,
1
We take judicial notice of the October 2009 ordinance, which is
not a part of the record. See N.J.R.E. 201(a); N.J.R.E. 202(b).
5 A-2049-14T2
plaintiff was unaware of the ordinance's consideration and
passage. The City conceded at oral argument that plaintiff would
have received retiree health benefits had he retired before they
were rescinded. He became aware of the change in policy in 2011,
when he submitted retirement papers, and was informed he would
need to procure his own insurance. In order to retain insurance
for himself and his adult disabled son, plaintiff withdrew his
retirement application and continued working as the ZBA attorney.2
The City contends that it restricted retiree health benefits
in 2009, and adopted other cost-cutting measures, to address a
structural budget deficit. Among other austerity measures, the
City raised taxes twenty-six percent; increased water and sewer
rates by seventy percent for industrial users and forty-six percent
for residential users; laid off about one hundred employees and
reduced payroll through attrition; and increased deductibles and
copayments under the health insurance plan.3
As noted in Petit-Clair I, slip op. at 3, plaintiff received
assurances from a different mayor in 2011. The mayor told
2
At oral argument, plaintiff stated he was still the attorney for
the ZBA, but was uncertain about the future.
3
The City contends it was on the brink of bankruptcy. Plaintiff
responds that the City never hired bankruptcy counsel, let alone
filed a bankruptcy petition.
6 A-2049-14T2
plaintiff that his problem with retiree health benefits would be
worked out. But, it was not.
II.
Plaintiff initially filed his verified complaint against the
City on September 24, 2012. He withdrew that complaint with the
City's consent pending his pension appeal, and then filed a
complaint in lieu of prerogative writs on June 5, 2013. He alleged
the May 2009 ordinance was "ultra vires as an 'irregular exercise
of basic power'"; the City was equitably estopped from depriving
him of retiree health benefits; and the City's actions were
arbitrary and capricious. After a period of discovery, the parties
filed cross-motions for summary judgment.
During oral argument, the City asserted plaintiff's action
was time-barred by Rule 4:69-6. Substantively, the City contended
the 2009 ordinance was not ultra vires, and it was empowered to
distinguish between full-time and part-time employees, and benefit
only the former. The City also argued plaintiff unreasonably
relied on the mayor's promise in 1990 that he would receive retiree
health benefits.
Plaintiff argued that the City was barred from withdrawing
the benefits because he relied for many years on the prospect of
receiving them, and they were a form of earned compensation, not
a gratuity. He contended the City was equitably estopped from
7 A-2049-14T2
withdrawing the benefits, because he reasonably relied, to his
detriment, on the promises of payment. Plaintiff also argued the
City's distinction between classes of employees violated the
uniformity requirement in N.J.S.A. 40A:10-23(a).4
The trial court granted the City summary judgment on both
procedural and substantive grounds. In a written decision, Judge
Frank M. Ciuffani found plaintiff's action was time-barred by Rule
4:69-6. Plaintiff filed it roughly two years after he discovered
in 2011 that he was ineligible for retiree health benefits, in
violation of the Rule, which generally imposes a forty-five day
time-bar.
Substantively, the court rejected plaintiff's argument that
the City's actions were an irregular exercise of its delegated
powers. The plain language of N.J.S.A. 40A:10-23 grants
municipalities broad discretion in providing retiree health
benefits. The court relied on Fair Lawn Retired Policemen v.
Borough of Fair Lawn, 299 N.J. Super. 600, 606 (App. Div. 1997),
in which we recognized that a municipality in its discretion could
elect to assume only a portion of the cost of retirement health
4
The statute states that a public employer may provide retirement
insurance benefits to employees "who have retired and reached the
age of 62 years or older with at least 15 years of service with
the employer . . . under uniform conditions as the governing body
of the local unit shall prescribe." N.J.S.A. 40A:10-23.
8 A-2049-14T2
coverage. Judge Ciuffani reasoned, just as "a municipality may
elect to share in the costs of providing retirement health benefits
rather than take an all or nothing approach, a municipality might
naturally also decide to limit the provision of such benefits to
full time employees."
The court then rejected plaintiff's argument that the City
should be equitably estopped from denying plaintiff retirement
health benefits. The court found that plaintiff unreasonably
relied on the mayor's 1990 promise, as the mayor lacked the
authority to make it, and it presumed plaintiff would be
reappointed ZBA attorney each year for at least fifteen years.
The court also found plaintiff failed to demonstrate that he
detrimentally changed his position based on the promise, because
he continued to maintain his law practice while he served as ZBA
attorney and only declined a small number of cases due to a
conflict of interest.
The court also held that N.J.S.A. 40A:10-23's "uniform
conditions" requirement did not prevent the City from rescinding
retirement health benefits from part-time employees. Citing Fair
Lawn, and Gauer v. Essex County Division of Welfare, 108 N.J. 140
(1987), the court found the City exercised its discretion to grant
retiree health benefits only to full-time employees, and the
"uniform conditions" proviso did not "require strict uniformity
9 A-2049-14T2
across all classes . . . . Instead, [the] requirement is satisfied
so long as employers have a meritorious basis to distinguish a
certain class of employees from another." Thus, the court granted
the City's motion for summary judgment and denied plaintiff's.
Plaintiff then filed a motion for reconsideration, seeking
Judge Ciuffani's recusal. The judge denied the motion orally.
This appeal followed.5 Plaintiff renews and refines the
arguments presented to the trial court. He also contends the
trial court erred in not relaxing the deadline for filing the
action in lieu of prerogative writs, and denying his recusal
motion.6
III.
On appeal from an order granting summary judgment, we exercise
de novo review, applying the same standard as the trial court.
Henry v. N.J. Dep't of Human Servs., 204 N.J. 320, 330 (2010). As
we discern no genuine issue of material fact, our task is to
determine whether the motion judge correctly applied the law.
Ibid. We discern no error.
5
The case was initially argued in September 2015, and then
adjourned so it could be reargued, back-to-back with the pension
appeal.
6
The parties also filed supplemental briefs on whether the PERS
Board's decision on plaintiff's eligibility for pension service
credit should have collateral estoppel effect in this case. We
need not reach that issue given our disposition on other grounds.
10 A-2049-14T2
Plaintiff challenges the May 2009 ordinance on three
principal grounds: it violates the uniformity requirement of
N.J.S.A. 40A:10-23; it withholds what he contends is a "vested"
right to a form of compensation; and principles of equitable
estoppel should bar application of the ordinance to him. His
challenge must be viewed against a presumption that local
ordinances are valid and an appropriate exercise of local
governmental power. See Bell v. Stafford, 110 N.J. 384, 394
(1988). Plaintiff bears a heavy burden to establish invalidity.
Ibid.
A.
The City's disparate treatment of part-time employees does
not violate N.J.S.A. 40A:10-23, which authorizes local governments
to pay the cost of retiree health benefits "under uniform
conditions." The provision states:
The employer may, in its discretion, assume
the entire cost or a portion of the cost of
such coverage and pay all or a portion of the
premiums for [eligible] employees . . .
including the premiums on their dependents,
if any, under uniform conditions as the
governing body of the local unit shall
prescribe.
[N.J.S.A. 40A:10-23 (emphasis added).]
11 A-2049-14T2
Eligible employees include, among others, employees "who have
retired and reached the age of 62 years or older with at least 15
years of service with the employer." N.J.S.A. 40A:10-23(a)(d).7
The uniformity requirement has been interpreted to permit
disparate treatment of discrete classes of employees. In Gauer,
Essex County misread the statute to require it to rescind benefits
granted to former employees of the County Welfare Board, who were
absorbed into the County Division of Welfare when the County
recognized its form of government in 1979. 108 N.J. at 144. In
1974, the Board adopted a resolution granting retiree health
benefits to employees with twenty-five years of service. Id. at
143. After reorganization, the County continued paying those
benefits to (1) Board retirees who had been receiving them, as
well as (2) former Board employees who became Division employees,
if they retired with twenty-five years or more service in a state
or local pension system in accordance with the Board's resolution.
Id. at 144. Plaintiff was in the latter group, having retired in
1981. Ibid. However, effective January 1, 1985, in the name of
"uniform" treatment under N.J.S.A. 43:10A-23, the County stopped
7
There is no dispute that he satisfied N.J.S.A. 40A:10-23(a)(d).
Also eligible are employees who, among other things, must have "25
years or more of service credit in a State or locally administered
retirement system," N.J.S.A. 40A:10-23(a)(b) and -23(a)(c).
However, plaintiff's service credit in PERS remains at issue. See
Petit-Clair I.
12 A-2049-14T2
payments to former Board employees in both categories, so all
County welfare workers were treated equally. Ibid.
The Supreme Court held that the County was mistaken. The
Court defined the question to be "whether any group of county
employees is uniquely or specially situated so that particularized
treatment may be accorded such employees without violating the
uniformity standard." Id. at 147. The County mistakenly focused
on the fact the same entity employed former Board workers, as well
as workers who began service with the Division. Id. at 147-48.
"The issue is not whether the employer is the same, albeit a
successor in form, but whether successive employees are similarly
situated." Ibid.
The Court held that the former Board employees who were
already retired and receiving benefits were in a distinct class
who could receive disparate treatment. Referring to employees
like Gauer, who already retired after working for both agencies
and had been receiving the benefit, the Court said, "Employees who
worked for the former Board as well as the successor Division were
hired and/or served out their employment and retired under a
particular compensation scheme governing employment." Id. at 148.
They were entitled to be treated differently from new Division
hires, or Board employees who stayed after the new system denying
retiree health benefits was put in place. Ibid. "They stand on
13 A-2049-14T2
a distinctively different footing from any employees who were
thereafter hired or continued to be employed up to the point of
retirement under a different compensation/benefit scheme." Ibid.
To emphasize that the Court was addressing former Board employees
who had already retired when the 1985 policy was implemented, the
Court stated, "The retired former employees thus constitute a
distinct group and will represent, in the future, an ever-
diminishing class." Ibid. (emphasis added).8
Fair Lawn addressed a December 1988 ordinance that, in
conformity with applicable collective negotiation agreements,
separately treated four categories of retirees: (1) full-time
employees who retired before December 31, 1987; (2) full-time
employees who had not retired by December 31, 1987; (3) full-time
employees hired between January 1 and April 25, 1988; and (4)
employees, whether full-time, part-time, or temporary, hired after
April 26, 1988. 299 N.J. Super. at 603. The Borough paid for
half the cost of health benefits for retirees in the first
category. Ibid. A 1975 ordinance that preceded enactment of
N.J.S.A. 40A:10-23 provided for such a benefit to any retiree with
twenty years of service. Id. at 602. The 1988 ordinance paid all
8
If the group also included not-yet-retired former Board
employees, it is conceivable the class would not be "ever-
diminishing," but might temporarily grow.
14 A-2049-14T2
the cost for benefits for persons in the second and third category;
and none for those in the fourth category. Id. at 603.
The plaintiff, a group of retirees in the first category,
complained that the 1988 ordinance violated the uniformity
requirement of N.J.S.A. 40A:10-23 — apparently because they
continued to pay for half of the cost of their benefits, while
others paid nothing. See ibid. The trial court agreed that
everyone had to be treated the same, but ordered that "all retirees
are limited to the payment of 50% of their health care premiums
. . . ." Id. at 604. Also, all retirees receiving the benefit
had to have twenty-five years of service, consistent with N.J.S.A.
40A:10-23, rather than twenty years as the 1988 ordinance required.
Ibid.
Relying on Gauer, we held that the municipality was empowered
to treat the already-retired employees separately. Id. at 605-
06. "As regards employees who worked and retired under different
compensation/benefit conditions, the ordinance continues to give
effect to the scheme in effect at their retirement." Ibid. They
formed a distinct group who could receive disparate treatment.
Ibid. "Those retired former employees 'stand on a distinctively
different footing from any employees who were thereafter hired or
continued to be employed up to the point of retirement under a
different compensation/benefits scheme.'" Id. at 606 (quoting
15 A-2049-14T2
Gauer, 108 N.J. at 148). Also, nothing in the statute, as it then
existed, barred the municipality from paying only a portion of the
retirees' benefits. Id. at 606.9 We found "no logical reason to
hold that the legislature intended to restrict municipalities to
an all or nothing election" to provide benefits to eligible
employees. Ibid.
Applying Gauer and Fair Lawn, we conclude the uniformity
requirement of N.J.S.A. 40A:10-23 did not prohibit the City from
providing, in its May 2009 ordinance (and its October 2009
ordinance), retiree health benefits to certain full-time
employees, but not part-time employees. The City was not bound
to cover all employees, or none of them. Part-time workers form
a "specially situated" class of employees "so that particularized
treatment may be accorded such employees without violating the
uniformity standard." Gauer, 108 N.J. at 147.
B.
Even if the uniformity requirement did not require the City
to provide plaintiff retiree health benefits, he contends
"benefits cannot be rescinded, once they were authorized in the
first place." He argues the City lacked the authority to withdraw
9
Eventually, the Legislature amended N.J.S.A. 40A:10-23 to provide
that a municipality may pay "a portion of the cost" of coverage.
L. 2010, c. 2, § 15.
16 A-2049-14T2
those benefits once promised — by the mayor and the 1994 resolution
— because they were a form of compensation; his right to receive
them "vested" when he became eligible; and the City was barred
from withdrawing them, notwithstanding that plaintiff had not
retired before they were withdrawn.
Plaintiff misplaces reliance on Gauer, Fair Lawn, and a third
decision, Bonzella v. Monroe Township, 367 N.J. Super. 581 (App.
Div. 2004). Furthermore, plaintiff's position is at odds with
Berg v. Christie, 225 N.J. 245 (2016), in which the Supreme Court
upheld the Legislature's power to suspend future pension cost of
living increases (COLA) absent "unmistakable" or "unequivocal
intent to create a non-forfeitable right to yet unreceived COLAs
. . . ." Id. at 253. If the Legislature can deny future COLAs,
despite their prior authorization, then the City can deny yet
unreceived retiree health benefits to part-time employees like
plaintiff.
We turn first to the pre-Berg cases of Gauer, Fair Lawn, and
Bonzella. As discussed, Gauer addressed Essex County's decision
to cease paying retiree health benefits to persons who had worked
for the former Welfare Board and retired as Board employees, or
continued working for the Division after reorganization and
thereafter retired. Concluding that N.J.S.A. 40A:10-23 did not
compel that action, the Court also addressed "whether the County
17 A-2049-14T2
may nonetheless unilaterally terminate such benefits." 108 N.J.
148. The Court answered in the negative.
In reaching that conclusion, the Court "consider[ed] the
nature of the benefit; is it, in other words, a mere gratuity, or
are there sufficient policy reasons to require continuation of
payment in the absence of proof of a loss of fiscal integrity in
the plan?" Ibid. The Court declined to characterize the benefits
simply as "compensation," but referred to their "compensatory
nature," and the "compensatory aspect of their nature. . . ." Id.
at 149-50. As the benefits were "intended at least in part as
compensation," the Court was "satisfied that, like pensions, these
retirement benefits were sufficiently compensatory to afford the
plaintiff some interest in their preservation." Id. at 150.10
10
The Court cited three cases, but none held retiree benefits were
non-modifiable, earned compensation. See Gauer, 108 N.J. at 149
(citing Uricoli v. Bd. of Trs., Police and Firemen's Retirement
Sys., 91 N.J. 62 (1982); Masse v. Bd. of Trs., Pub. Emps.
Retirement Sys., 87 N.J. 252 (1981); and Geller v. Dep't of the
Treasury, 53 N.J. 591 (1969)). The Uricoli Court noted that
pensions "are contractual in nature and constitute deferred
compensation for services rendered," but stopped short of adopting
other jurisdictions' view that "pensions [are] a vested
contractual right," 91 N.J. at 71. The Court noted that it
eschewed such a bright-line rule in Spina v. Consolidated Police
and Firemen's Pension Fund Commission, 41 N.J. 391 (1964).
Instead, the Uricoli Court held that the pension's compensatory
nature should be a factor in considering whether Uricoli's
misconduct should be grounds for loss of pension. 91 N.J. at 77-
78.
18 A-2049-14T2
However, the Court's holding was limited to honoring benefits
that former Board employees, like Gauer, had already begun
receiving when the County withdrew them. The Court held the County
was obliged to honor the prior policy "with respect to employees
who were hired by the Board and/or served out their employment and
retired under the resolution's provision . . . ." Ibid. (emphasis
added).11
In Masse, the Court referred to the compensatory nature of
pension benefits, but only in interpreting whether the Legislature
would have stripped pension credits from an employee who committed
a crime unrelated to employment without expressly requiring it.
87 N.J. at 260-63. The Court endorsed the view that the right to
a pension was "not contractual in nature." Id. at 260 (quoting
Salz v. State House Comm'n, 18 N.J. 106, 111 (1955)).
The Geller Court stated that pension benefits "are in the
nature of compensation for services previously rendered and act
as an inducement to continued and faithful service," 53 N.J. at
597, but simply to support the liberal construction of the statute,
and the conclusion that a teacher was entitled to buy back pension
credits at a prior offering price, where the pension system
erroneously failed to make required deductions. Id. at 598.
11
The use of "and/or" followed by "and" injects an element of
ambiguity. We interpret the sentence to refer to three classes
of persons: (1) those who were hired by the Board, served out
their employment with the Division, and retired — all under the
resolution; (2) those who were not hired by the Board under the
resolution, presumably because they started working for the Board
before the resolution's adoption, but served out their employment
and retired under the resolution; and (3) those who were hired by
the Board and retired, both under the resolution, without serving
under the Division. This is consistent with the statement,
"Employees who worked for the former Board as well as the successor
Division were hired and/or served out their employment and retired
under a particular compensation scheme governing their
19 A-2049-14T2
Furthermore, Gauer recognizes that retiree benefits are not,
without qualification, compensation; for if that were so,
rescission after an employee qualified for the benefit would be a
breach of contract. See ibid. As the Gauer Court noted, pension
benefits may be reduced "unilaterally when the underlying
motivation is . . . preservation of the integrity of the benefit
system . . . ." 108 N.J. at 150. Here, the City changed the
rules in 2009 because it claimed it could no longer afford the
cost of providing retiree health benefits as broadly as it had
previously. Although plaintiff emphasizes that the City did not
file for bankruptcy or even retain bankruptcy counsel, the City's
budgetary predicament was evidently serious, given the other
austerity measures the City adopted. In short, the integrity of
the City's finances was at stake.
Fair Lawn, which followed Gauer, also only addressed the
rights of persons who had already retired and were receiving an
awarded benefit when the municipality adopted its ordinance. 299
N.J. Super. at 602. For those members who retired under the 1975
ordinance with twenty years of service, before N.J.S.A. 40A:10-23
was enacted, which required twenty-five years of service, we stated
employment." Id. at 148. Those employees were distinguished from
"employees who were thereafter hired or continued to be employed
up to the point of retirement under a different
compensation/benefit scheme." Ibid. (emphasis added).
20 A-2049-14T2
that "Gauer protects them from retroactive modification" of their
retiree health benefits. Id. at 606. However, those members who
retired with less than twenty-five years, subsequent to enactment
of N.J.S.A. 40A:10-23, should be treated differently, unless they
had reached the age of sixty-two with fifteen years as service
with their employer. Ibid. We held, "As to non-disabled retirees
with less than twenty-five years of service who retired subsequent
to enactment of N.J.S.A. 40A:10-23, the provision of a fifty
percent payment is ultra vires and in derogation of the statute,
unless they had reached the age of sixty-two with fifteen years
of service with the employer at retirement." Ibid. Thus, the
Legislature was empowered to change the rules – by enlarging the
requisite years of service – for those not yet retired, regardless
of whether they would have qualified for the benefit had they
retired with over twenty years' service before the enactment.
In short, Fair Lawn does not support the proposition that the
City was barred from restricting eligibility for the benefit plan
once it was put in place. Rather, Fair Lawn confirmed the
Legislature's power to tighten eligibility requirements for a
benefit that had already been "promised" by a prior ordinance.
Furthermore, Fair Lawn addressed only the claim of parties who had
already retired before the municipal action, unlike plaintiff
21 A-2049-14T2
here, who remained on the job after the municipality rescinded the
benefit.
Nor are we persuaded that Bonzella compels a result favorable
to plaintiff. We held that Theresa and Thomas Bonzella, married
municipal employees, "had a contractual right to the [retiree
health] benefits provided by" a municipal resolution. 367 N.J.
Super. at 588. In 1982, Monroe Township passed a resolution
stating, "We hereby agree to pay the premium" for retiree health
benefits for persons with twenty-five or more years of service,
under the State Health Benefits Program (SHBP), in which the
township participated. In 1993, after opting out of SHBP, the
township adopted a second resolution stating it "shall provide
. . . insurance coverage for all employees retired after 25 years
or more of service . . . ." When the Bonzellas sought to retire,
taking their own coverage, naming their spouse as a dependent, the
township refused, invoking an administrative policy that barred
double-coverage. We relied on Gauer in holding that the coverage
was part of the plaintiffs' compensation. Id. at 588.
We acknowledge that the panel in Bonzella rejected the
township's argument that "Gauer is distinguishable because [the
Bonzellas] have not yet received any spousal medical benefits."
Id. at 589. Quoting another use of "and/or" in Gauer, the panel
held that the "Gauer Court did not distinguish between those who
22 A-2049-14T2
had already retired and those who continued to work under the
original compensation package. It held that benefits could not
be rescinded for those 'who had been hired — and/or retired — by
the predecessor agency under different employment conditions.'"
Ibid. (quoting Gauer, 108 N.J. at 147).
The quoted sentence from Gauer refers to three groups: persons
whom the Board hired under its benefit plan — that is, hired on
or after December 3, 1974; persons who were so hired and retired
by the Board; and persons who were hired by the Board, but not
under the plan – in other words, persons hired before December 3,
1974 — who nonetheless retired by the Board under its benefit
plan. The first group conceivably could include persons who had
not yet retired at all. But, Gauer goes on to clarify that it was
referring only to those who were not "retired . . . by the
predecessor agency[,]" but were retired by the Division, after the
1979 reorganization and before the 1984 policy change. 108 N.J.
at 147-48. Gauer fell into that category. As we have previously
noted, the Court specifically stated that Gauer stood on a
"different footing from any employees who were thereafter hired
or continued to be employed up to the point of retirement under a
different compensation/benefit scheme." Id. at 148 (emphasis
added).
23 A-2049-14T2
In any event, a strong argument could be made that the
township in Bonzella explicitly bound itself contractually, unlike
the City, to pay benefits to the married plaintiffs based on the
express language of the 1982 ordinance. It stated that the
township "hereby agree[d]" to pay the benefits. 367 N.J. Super.
at 584. Such a clear undertaking may have shielded the Bonzellas
from a subsequent change, unlike the 1994 resolution in plaintiff's
case, which merely "authoriz[ed]" the City's "wish[] to provide"
the benefits at issue.
C.
Plaintiff's contention that he had an unalterable contractual
right to retiree health benefits also is at odds with the
principle, recently confirmed in Berg, that the legislative
creation of a contractual right must be unequivocal or
unmistakable. See 225 N.J. at 253. Absent such a clear expression
of intent, the Legislature, and impliedly a municipal governing
body, retain the power to adjust benefits previously granted. See
ibid.
In Berg, the Supreme Court held that pension benefits COLAs
were not contractual obligations of the State because the
Legislature did not make them unmistakably so. See id. at 272-
73. Consequently, the Legislature was free to eliminate new COLAs
for current retirees – even those who retired in reliance on them
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being there. See id. at 278. The Berg Court adopted the standard
that the Legislature's contractual undertaking must be
"unmistakable." Id. at 263-64. The Court also held that a claim
of a contractual undertaking must be subject to rigorous review
because of the "harsh" ramifications: "To find a contract created
by statute means that the Legislature binds itself to a policy
choice and surrenders the power of future elected representatives
to cut back on that choice." Id. at 260.
Berg dealt with the meaning of the non-forfeitable-right
statute — which made at least base pension benefits a contractual
right. See N.J.S.A. 43:3C-9.5. However, the statute expressly
excluded medical benefits: "For purposes of this section, a 'non-
forfeitable right to receive benefits' means that the benefits
program, for any employee for whom the right has attached, cannot
be reduced. The provisions of this section shall not apply to
post-retirement medical benefits which are provided pursuant to
law." N.J.S.A. 43:3C-9.5(a). As medical benefits are not a non-
forfeitable right, they are subject to forfeiture by Legislative
action.
The Berg Court hearkened to Spina, which upheld a legislative
revision of a pension formula, lengthening the service period
required for benefits, see 41 N.J. at 393. The Court noted that
the Legislature was "free to rewrite the formula" for the pensions,
25 A-2049-14T2
Berg, 225 N.J. at 261 (quoting Spina, 41 N.J. at 402), absent a
clear contractual undertaking that "cut[] off the legislative
prerogative to revisit its policy choices," ibid. "Writing for
the Court, Chief Justice Weintraub explained that a contractual
restriction on future legislative action 'should be so plainly
expressed that one cannot doubt the individual legislator
understood and intended it.'" Ibid. (quoting Spina, 41 N.J. at
405).
We add that the Spina Court eschewed characterizing an
employee's pension right as a "'gratuity,' 'compensation,'
'contract,' [or] 'vested rights.'" 41 N.J. at 401. "None fits
precisely and it would be a mistake to choose one and be driven
by that choice to some inevitable consequence." Ibid. The Court
cited approvingly the statement in Dodge v. Board of Education,
302 U.S. 74, 78 (1937) that there is a presumption that "a law is
not intended to create private contractual or vested rights but
merely declares a policy to be pursued until the legislature shall
ordain otherwise." Spina, 41 N.J. at 400. The Court noted that
our cases have long held that the "Legislature may revise pension
plans which governmental employees are required to join." Id. at
398. The Berg Court rejected an argument, much like plaintiff's
here, that once the Legislature adopted a COLA statute, it could
not be suspended. See 225 N.J. at 276.
26 A-2049-14T2
In sum, we reject plaintiff's contention that the City created
a vested contractual right to retiree health benefits, which the
City could not rescind. The City did not unequivocally or
unmistakably intend to create such a right. Therefore, it retained
the authority to withdraw plaintiff's retiree health benefits
before he began receiving them.
D.
Plaintiff's remaining arguments require only brief comment.
Just as the Berg Court rejected the plaintiffs' equitable estoppel
argument, see id. at 279, we are constrained to reject plaintiff's
argument here. The Court held a plaintiff must show that the
party to be estopped "'engaged in conduct, either intentionally
or under circumstances that induced reliance,'" by engaging in a
"'knowing and intentional misrepresentation' . . . ." Ibid. (first
quoting Knorr v. Smeal, 178 N.J. 169, 178 (2003), then quoting
O'Malley v. Dep't of Energy, 109 N.J. 309, 317 (1987)). The party
to be estopped in this case is not the mayor in 1990, but the
City. The mayor had no authority to bind the City to pay plaintiff
retiree health benefits many years in the future. The City's
passage of the 1994 resolution did not unambiguously guarantee the
retiree health benefits into the future. The City did not engage
in knowing and intentional misrepresentation.
27 A-2049-14T2
Furthermore, as the trial court found, plaintiff's reliance
was not reasonable. Plaintiff could not reasonably expect that
the provision of retiree health benefits to part-time employees
would remain forever unchanged, absent an unequivocal and
unmistakable expression that it would. See ibid. ("The retirees
could not reasonably expect perpetual COLAs when the non-
forfeitable-right statute specifically notes that any benefit not
guaranteed by the statute, a category that we hold includes COLAs,
is subject to change by the Legislature.").
We need not reach plaintiff's argument that the trial court
erred in enforcing the forty-five day deadline under Rule 4:69-
6(a) for filing in lieu of prerogative writ actions. We have
addressed the merits of his claims, presuming for the sake of
argument, "it is manifest that the interest of justice so requires"
expansion of the time for filing. See R. 4:69-6(c). Also,
plaintiff's argument the trial judge should have recused himself
from this matter lacks sufficient merit to warrant discussion in
a written opinion. R. 2:11-3(e)(1)(E).
We close by acknowledging the harsh result that plaintiff
must bear. He served as the part-time ZBA attorney for over
twenty-five years, anticipating health benefits upon retirement.
Had he retired before the City rescinded the 1994 resolution, the
City would have provided that benefit. Nonetheless, the City
28 A-2049-14T2
retained the power to withdraw those benefits for employees who
had not yet retired, including employees like plaintiff who already
qualified for them.
Affirmed.
29 A-2049-14T2