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Carlsen v. Masters

Decided: June 19, 1979.


On certification to the Superior Court, Appellate Division.

For reversal and remandment -- Chief Justice Hughes and Justices Mountain, Jacobs, Pashman, Clifford, Schreiber and Handler. For affirmance -- None. The opinion of the court was delivered by Handler, J.


This case arises from the denial by the defendants union and union pension fund of a retirement pension claimed by plaintiff, Henrik K. Carlsen. The appeal, coming before the Court on motions for summary judgment, raises a number of questions concerning the proper interpretation and validity of certain of the pension fund's regulations. The determinative issue, however, is whether the defendants should be equitably estopped by their conduct from asserting that plaintiff had forfeited accumulated pension credits and thereby lost his pension.


The record furnishes a sufficient evidential foundation to draw this rather uncomplicated factual picture. From 1943 to 1963 plaintiff, Carlsen, was employed as a ship's captain by Isbrantsen Lines. In February 1945 plaintiff became a member of the defendant union, International Organization of Masters, Mates and Pilots, to which he began paying dues. In 1955 plaintiff also became a participant in the union's pension plan administered by defendant, Masters, Mates and Pilots Pension Plan Trust. This pension plan was, and is, funded wholly by employer contributions. Plaintiff continued, through the defendant union, to work as a ship's captain, accumulating pension credits for each year until 1963. In that year plaintiff's employer merged with another line. The successor employer had a collective bargaining agreement with a different labor union which had its own pension system, also funded entirely by employer contributions. Carlsen under these circumstances joined the new union and its pension plan; at this time he ceased to pay dues to the defendant union.

As of December 6, 1963, the year in which this shift occurred, Carlsen had accumulated 18-3/4 years of vested pension credits. This was certified by the pension fund's trustees in a letter of December 10 sent by the administrator of the pension fund. That letter further stated that in order for Carlsen to maintain his vesting rights "he must be a member of the [Union] Organization during any period he works in a deck officer capacity on any vessel whatsoever"; also, if he did not work in such a capacity, plaintiff would have the option of remaining a member of or withdrawing from the union.

In 1965 plaintiff first applied for an early retirement pension. In a letter dated November 19, 1965 the pension fund informed Carlsen that he was not then eligible for such a pension but that he would be eligible when he had accumulated 20 years of credit or had reached the age of 60. At that time plaintiff was only 51 years of age. Significantly there was no reference either to the possibility that the pension credits which plaintiff had already accumulated -- only one year and four months shy of the 20 years minimum -- would be forfeited or, alternatively, to the possibility that these past service credits might not be recognized because of a discontinuance of union membership before plaintiff's reaching the minimum retirement age of 60.

On September 9, 1970 Carlsen, fearing he may have jeopardized his pension by his failure to pay dues, sought reinstatement in the defendant union. The union accepted plaintiff's reinstatement application and required him to pay a $2,000 reinstatement fee, which he did. This fee was greater in amount than all of plaintiff's unpaid dues from 1963. Carlsen also paid both local and international union dues and continued to pay such dues until 1976, although he worked under the collective bargaining agreement of a different union. At no time, either upon rejoining defendant union or during the succeeding period in which he paid his dues regularly, was plaintiff advised that his membership did not suffice to maintain his vested rights in

the pension plan. Pointedly, he was never informed that his previous break in membership would have any consequence adverse to the pension credits he had previously acquired.

On March 11, 1976, at age 62, plaintiff again applied for an early retirement pension. Again, plaintiff was denied a pension. In this instance, however, the trustees of the pension fund denied Carlsen's application on the basis that his previously earned credits had been forfeited under the terms of the pension agreement and regulations. These regulations, accepting defendants' characterization of their legal effect, essentially provided that an employee with at least 15 years of pension credits would not forfeit such credits if he either was working in "covered employment" or remained "available" for work in such employment. "Covered employment" meant, according to the regulations, employment for which an employer was obligated to contribute to the pension plan. While the regulations provided that an employee could not be considered "available" during any period in which he worked aboard a vessel not covered by a collective bargaining agreement with defendant union, they further specified that continuance of union membership would be deemed satisfactory evidence of availability for work in covered employment. Defendants took the position that under these regulations plaintiff was not working in covered employment nor was he available for such work because he had ceased for a period of time to be a union member upon his failure to pay dues.

After denial of his pension and the exhaustion of his internal administrative remedies, plaintiff brought suit in the Superior Court, Law Division. Defendants filed a motion for summary judgment and plaintiff responded with a cross-motion. By letter decision the lower court granted summary judgment in favor of defendants. The result did not change on rehearing and the Appellate Division affirmed per curiam. This Court granted certification. 79 N.J. 463 (1978). We now ...

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