Budge v. Town of Millinocket

JABAR, J.,

dissenting.

[¶ 30] I respectfully dissent.

[¶ 31] Although I agree with the Court’s conclusion that the language in this case does not rise to the level of an express contract as mandated in Spiller v. State, 627 A.2d 513, 515-17 (Me.1993), I do not agree that the employees failed to create a genuine issue of material fact regarding promissory estoppel. In Spiller, the leading case involving legislation concerning retirement benefits for public employees, the Court left open the possibility that public employees could prove their claim to promised benefits through the concept of promissory estoppel. Id. at 517 n. 12. The Spiller Court indicated that retirement benefits are more than gratuities and in a footnote stated: “We have said that state employees have legitimate retirement expectations .... [and] the State may be estopped from changing certain benefit provisions in the retirement statutes.” Id. The Court went further in the footnote to intimate, without expressly deciding, that changes to the retirement statute could implicate the doctrine of *493promissory estoppel. Id. In support of the promissory estoppel theory, the Court cited a Minnesota case: Christensen v. Minneapolis Municipal Employees Retirement Board, 331 N.W.2d 740 (Minn.1983). Spiller, 627 A.2d at 517 n. 12.

[¶ 32] I believe that we should follow the approach taken by the Minnesota Supreme Court in Christensen. As that court stated, it is “realistic, fair[,] and practical ... to judge the state’s promise by the doctrine of promissory estoppel.” Christensen, 331 N.W.2d at 748. The Minnesota court went on to state:

In the realities of the modern employment marketplace, the state reasonably expects its promise of a retirement program to induce persons to accept and remain in public employment, and persons are so induced, and injustice can be avoided only by enforcement of that promise. Promissory estoppel, like equitable estoppel, may be applied against the state to the extent that justice requires.

Id. at 749.

[¶ 33] In Christensen, the plaintiff was a participant in the Minnesota Municipal Employees Retirement Fund, under the age of sixty, and receiving pension benefits. Id. at 742-43. At the time the plaintiff retired, the pension plan did not include a minimum age requirement for elected officials. Id. at 743-44. In 1980, Minnesota enacted a new requirement that imposed a minimum age for entitlement to benefits. Id. at 744. In April 1980, the plaintiffs monthly pension benefits were suspended until he reached the age of sixty because the new law imposed a minimum age requirement as a prerequisite to receiving pension benefits. Id. at 742-43. The Minnesota court held that Christensen had a protectable pension entitlement and the promise of a pension to be paid when he retired was binding on the State. Id. at 749.

[¶ 34] The Christensen court said that in applying the doctrine of promissory es-toppel, “two factors must be kept in mind: (1) What has been promised by the state? and (2) to what degree and to what aspects of the promise has there been reasonable reliance on the part of the employee?” Id. Applying the rationale and principles set out in Christensen, the facts present in this case create genuine issues of material fact regarding the Town’s promise and the employees’ reliance on that promise.

A. Promise

[¶ 35] The alleged promise at issue here is the Town’s enactment of the 1991 personnel policy stating that retired town employees would receive the same health insurance benefits as current town employees, which at that time was 100% of current employees’ health insurance costs. The 1991 policy also stated that this healthcare benefit was subject to change, except for employees hired before August 8, 1991. The employees argue that this provision singled out a specific class of employees and highlighted the Town’s intention to “grandfather” these employees from any future changes in the policy. The evidence submitted by the employees supports this argument regarding the Town’s intent.

[¶ 36] The employees submitted depositions of previous Town officials in support of their reading of the 1991 policy. The Town Manager at the time of the 1991 enactment, William Ayoob, stated that his understanding of the language in the 1991 personnel policy was that “[w]hatever the benefits were at the time, [the employees hired prior to August 8, 1991,] would be grandfathered, ... the way I understood it.” Ayoob also stated that grandfathering those employees meant that changes to the *494policy would affect only employees hired on or after August 8, 1991. Similarly, a Town Council member at that time, Rodney Daigle, stated that “the people that were already working for [the Town], you know, prior to '91, we didn’t want to involve them because we wanted to ... grandfather them ... we thought they shouldn’t be subject to ... changes.” Dai-gle clarified that he meant that employees hired before that 1991 date would not be governed by subsequent changes made to the 1991 policy.

[¶ 37] Finally, the Town’s attorney at that time, Dean Beaupain, stated that the provision providing that future changes would not affect employees hired prior to August 8,1991,

was put in to serve two purposes, number one, to try and keep the faith with people who were currently working for the Town and had previously retired from the Town. This was a benefit the Town had offered over the years. We wanted to maintain that, but much more importantly it was to send a notice to future people hired by the Town ... that they should not expect a retiree benefit for health insurance when they retired.

[¶ 38] We have stated that the promise of a town official “cannot bind a town to a contract unless his authority to act alone is proved or his actions subsequently ratified.” Sirois v. Town of Frenchville, 441 A.2d 291, 294 (Me.1982). In Sirois, a town selectman made a promise that he did not have authority to make and that was not ratified by the town. Id. at 293-94. Here, however, unlike in Sirois, we have more than just the statements and promises of town officials. The enactment by the Town Council of the 1991 personnel policy as well as the continued payment of the benefits enumerated in that policy by the Town for eighteen years constitutes official action taken by the Town.

[¶ 39] In Otis v. Stockton, this Court determined that a party seeking to bind a town to an alleged promise made in the absence of express authority on behalf of town officials “must ... affirmatively prove[] that the town [itself] has subsequently approved and ratified [the acts of the town officials].” 76 Me. 506, 507-08 (1884). The Court posited that whether a town ratified a promise is largely fact dependent and is to be decided on a case-by-case basis. Id. at 508-09. The Court stated:

There must be something more than mere silence upon the part of the town to create an estoppel. Of course, that fact in connection with other facts may become material. There may be occasions when a town should act or speak, or when it does speak by the force of circumstances.... It would be difficult to formulate any general rule or definition of corporate ratification. It must largely depend upon the facts peculiar to the individual case.

Id. (emphasis added); see also Mason v. City of Augusta, 2007 ME 101, ¶ 30, 927 A.2d 1146 (noting that city council ratified an agreement by authorizing amendments to the agreement); Sch. Admin. Dist. No. 3 v. Me. Sch. Dist. Comm’n, 158 Me. 420, 425-28, 185 A.2d 744 (1962) (discussing ratification by municipalities); Lincoln v. Stockton, 75 Me. 141, 146 (1883) (“[Municipal] ratification may result from failure to disavow the unauthorized act of an agent.”). In this case, the Town Council took official action in enacting the 1991 personnel policy and in approving budgets that included these benefits. These official actions of the Town Council satisfy the requirement that any promises made by the Town must be subsequently ratified.

*495[¶ 40] The evidence submitted by the employees creates a genuine issue of material fact surrounding the Town’s promise to those employees hired before August 8, 1991.

B. Reasonable Reliance

[¶ 41] The second factor to consider in applying the doctrine of promissory estop-pel is whether there was reasonable reliance on the part of the employees, if in fact the Town made them a promise. The employees submitted evidence indicating that they relied upon this alleged promise in making their decisions to work for the Town.

[¶ 42] In their answers to interrogatories and testimony during deposition, some of the employees stated that they relied on the promise of health insurance for life in making the decision to stay with the Town instead of going to work at the local mill, where wages were higher. Many of the employees also stated that they knowingly took lower pay increases in exchange for these health insurance benefits. For summary judgment purposes, these statements create a genuine issue of material fact as it relates to the employees’ reliance on the Town’s alleged promise and whether this reliance was reasonable should be decided by a fact-finder, not by this Court as a matter of law.

[¶ 43] There is also evidence that the Town paid 100% of the retired employees’ health insurance costs from 1991 through 2009, a period of eighteen years, including the years following changes in the policy made by the Town in 1999, 2002, and 2006. The Court references these changes in the policy and asserts that this is evidence that the health insurance benefits for retirees established in the 1991 personnel policy were subject to change. However, if in fact the Town intended to grandfather those employees hired before August 8, 1991, these changes were not applicable to them. The Town’s continued payment of 100% of retirees’ health insurance premiums for eighteen years in spite of the multiple changes to the policy supports the employees’ argument that the Town intended to grandfather employees hired before 1991 and that the changes in the policy in 1999, 2002, and 2006 did not apply to them. This evidence establishes the reasonableness of the employees’ reliance.

[¶ 44] Whether the employees actually acted in reliance on the Town’s promise as they assert and whether that reliance was reasonable are factual issues to be determined by the fact-finder. As was said in Christensen, “[n]ot every promise in all its implications is necessarily enforceable under promissory estoppel.” 331 N.W.2d at 749. However, at the summary judgment stage we should not rule as a matter of law that the employees have not proved promissory estoppel.

[¶ 45] The trial court’s granting of summary judgment on the issue of promissory estoppel should be vacated. The employees have raised genuine issues of material fact as to the doctrine of promissory estoppel.