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Cottman v. City of Wildwood Housing Authority

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


August 31, 2010

WILLIAM G. COTTMAN, SR., PLAINTIFF-APPELLANT,
v.
CITY OF WILDWOOD HOUSING AUTHORITY, DEFENDANT-RESPONDENT.

On appeal from Superior Court of New Jersey, Law Division, Cape May County, Docket No. L-427-06.

Per curiam.

FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued April 14, 2010

Before Judges Axelrad, Sapp-Peterson and Espinosa.

Plaintiff retired from the Wildwood Housing Authority (WHA) on March 1, 2001 after serving as its Executive Director from 1969 to 2001. He filed a complaint against WHA, alleging breach of contract, equitable estoppel, statutory and due process violations, for its failure to provide certain benefits to him and his wife following his retirement and for the cancellation of his contract to act as WHA's representative on the New Jersey Public Housing Authority Joint Insurance Fund (JIF). He appeals from an order granting summary judgment to WHA. We affirm.

The facts are set forth in the written opinion of Judge Valerie Armstrong, A.J.S.C., and need not be repeated here at length.

The WHA is a federally subsidized housing authority which is organized under our Local Redevelopment and Housing Law, N.J.S.A. 40A:12A-1 to -73. Plaintiff was elected the WHA's first Executive Director and served in that position from 1969 until he retired in 2001. Pursuant to N.J.S.A. 40A:12A-17(a), the housing authority consists of seven members (the Board), who exercise the authority vested in the WHA. In the years leading up to his retirement, plaintiff suggested that the WHA consider certain modifications to the benefits provided to employees who retired after twenty-five years of service, including providing post-retirement health insurance and post-retirement long-term care insurance. In addition, he negotiated with the WHA for a buyout of his unused sick and vacation time for $120,000, an amount that exceeded the existing WHA policy cap of $15,000 compensation for unused sick and vacation time. Resolution 99-40, which was passed at the Board's August 19, 1999 meeting, approved payment of the accumulated leave and provided for installment payments from 1999 through 2004. Plaintiff has received all payments.

The WHA offers health insurance to its employees through the State Health Benefits Plan (SHBP). Under the SHBP statute, local employers are permitted to pay the post-retirement health insurance costs of certain long-term employees, including those with at least twenty-five years of service, N.J.S.A. 40A:10-23, and those over the age of sixty-two with at least fifteen years of service, N.J.S.A. 52:14-17.38. At plaintiff's suggestion, the WHA Board passed Resolution 97-17 that announced the WHA's support for post-retirement health benefits and its intention to make such coverage available to certain employees. Although the resolution acknowledged that the WHA had the discretion to assume the entire cost of such coverage and pay the premiums for both eligible employees and "their dependents, if any, under uniform conditions as the governing body of the local unit shall prescribe[,]" the Resolution did not represent a commitment to paying such premiums for dependents. The only commitment contained in the resolution was the payments of premiums in accordance with N.J.S.A. 40A:10-23 and "that the payment of such premiums currently be made only to retirees with twenty-five years or more of service." (Emphasis added). Therefore, as of 1997, when this resolution was passed, the WHA did not authorize payment of health care premiums for the spouses of retired employees. One year later, the Board approved an updated personnel manual designed to reflect the changes in post-retirement health coverage. This manual also did not state that spouses were to be included in the health benefits plans available to retiring employees.

However, when plaintiff submitted a Retired Status Application to the WHA, he included his wife as a covered dependent. The WHA notified plaintiff that it would not pay the cost of his wife's health insurance. Although plaintiff agreed she should not have been on the plan, plaintiff included his wife as an eligible dependent when he resubmitted his Retired Status Application in February 2002. He also asserted that spousal coverage was provided and that the WHA should pay the premium for her coverage. The Board convened in an executive session at the WHA's regular May 22, 2002 meeting to discuss plaintiff's position and concluded that the WHA would not provide medical coverage for plaintiff's wife. Plaintiff was so advised. A subsequent request for the WHA to assume the cost of plaintiff's wife's medical coverage was rejected by the Board at a meeting on June 22, 2005 with the adoption of Resolution 2005-24. Plaintiff did not receive notice in advance that the Board intended to discuss this issue at the meeting.

At plaintiff's request, the WHA had also considered offering long-term care insurance to retiring employees and, in January 2001, adopted Resolution 2001-02, which approved a six-year long-term care insurance policy for plaintiff at an annual cost of $2,713.50. However, plaintiff added his wife to the policy, which caused his premiums to increase to $3,321. When questioned about this, plaintiff agreed that the WHA should not have to pay for the increase in premium and that he would pay the difference himself. Ultimately, the WHA issued a check for $2,713.50 to cover its share of the first year's premium but plaintiff never paid the difference. As a result, the policy was cancelled in June 2001. After receiving advice from the WHA's auditor and legal counsel that plaintiff's long-term care insurance premiums were not an allowable cost under HUD, the Board voted to rescind the check it wrote to cover its share of the policy premium and, four years later, passed a resolution on December 14, 2005 that formally revoked its prior approval of plaintiff's long-term care plan. Plaintiff did not receive notice in advance that the Board would consider this issue at the December 14, 2005 meeting.

On February 27, 2001, the WHA executed an agreement with plaintiff, designating him as the WHA's representative on the New Jersey Public Housing Authority Joint Insurance Fund (JIF) board, see N.J.S.A. 40A:10-36, for a two-year period and for which he would receive a $100 stipend to cover his expenses. This contract was renewed for two additional periods of three years and one year. After plaintiff's attorney sent a letter to the WHA in June 2006, threatening to sue the WHA if it refused to (1) provide health coverage for plaintiff's wife and (2) reinstate plaintiff's long-term care policy, the Board passed a resolution on June 21, 2006 terminating this contract with plaintiff. Plaintiff did not receive notice that the Board would be discussing rescission of his contract at this meeting.

Plaintiff filed a complaint against the WHA, alleging breach of contract and equitable estoppel. He also asserted that the WHA violated the Open Public Meetings Act (OPMA), N.J.S.A. 10:4-6 to -21, and his due process rights by terminating his insurance benefits and canceling the JIF contract without notice and an opportunity to be heard. The trial judge rejected each of these arguments and granted summary judgment in favor of the WHA for reasons she explained in a written decision.

In this appeal, plaintiff raises the following issues:

POINT I.

APPLICABLE STANDARD OF REVIEW.

POINT II.

THE TRIAL COURT ERRED IN GRANTING SUMMARY JUDGMENT FOR THE HOUSING AUTHORITY AND DISMISSING MR. COTTMAN'S CLAIM THAT THE HOUSING AUTHORITY IS EQUITABLY ESTOPPED FROM TERMINATING MR. COTTMAN'S POST-RETIREMENT SPOUSAL INSURANCE BENEFITS.

A. MR. COTTMAN REASONABLY RELIED UPON THE REPRESENTATIONS OF THE HOUSING AUTHORITY THAT HE WOULD RECEIVE POST-RETIREMENT SPOUSAL HEALTH INSURANCE BENEFITS.

1. RESOLUTION 97-17 APPROVES AND ADOPTS THE HOUSING AUTHORITY'S PAYMENT OF INSURANCE PREMIUMS FOR RETIRED EMPLOYEES WITH 25 YEARS OF SERVICE, AND THE EMPLOYEE'S DEPENDANTS.

2. THE HOUSING AUTHORITY'S CONSULTANT, KEVIN YECCO, ADVISED MR. COTTMAN THAT THE HOUSING AUTHORITY WOULD PAY THE HEALTH INSURANCE PREMIUMS FOR MR. COTTMAN'S WIFE UPON MR. COTTMAN'S RETIREMENT.

3. THE HOUSING AUTHORITY'S BOARD REPRESENTED TO MR. COTTMAN THAT THE HOUSING AUTHORITY WOULD PAY THE HEALTH INSURANCE PREMIUMS FOR MR. COTTMAN'S SPOUSE UPON HIS RETIREMENT.

4. THE TRIAL COURT ERRONEOUSLY CONSIDERED RESOLUTION 2001-60 IN DECIDING THAT MR. COTTMAN DID NOT REASONABLY RELY UPON THE ACTIONS OF THE HOUSING AUTHORITY.

B. MR. COTTMAN SUFFERED A DETRIMENT BY RELYING ON THE WILDWOOD HOUSING AUTHORITY'S ASSURANCES THAT HE WOULD RECEIVE POST-RETIREMENT HEALTH INSURANCE BENEFITS FOR HIS WIFE.

C. APPLYING EQUITABLE ESTOPPEL AGAINST THE WILDWOOD HOUSING AUTHORITY WILL NOT FRUSTRATE AN ESSENTIAL GOVERNMENT FUNCTION.

POINT III.

THE TRIAL COURT ERRED IN GRANTING SUMMARY JUDGMENT FOR THE HOUSING AUTHORITY AND DISMISSING MR. COTTMAN'S CLAIM THAT THE HOUSING AUTHORITY'S PERSONNEL POLICY MANUAL GAVE RISE TO A CONTRACTUAL OBLIGATION FOR THE HOUSING AUTHORITY TO PROVIDE POST-RETIREMENT SPOUSAL INSURANCE BENEFITS TO MR. COTTMAN UPON RETIREMENT.

POINT IV.

THE TRIAL COURT ERRED IN GRANTING SUMMARY JUDGMENT FOR THE HOUSING AUTHORITY AND DISMISSING MR. COTTMAN'S CLAIM THAT THE HOUSING AUTHORITY BREACHED ITS CONSULTING SERVICES CONTRACT WITH MR. COTTMAN.

POINT V.

THE TRIAL COURT ERRED IN GRANTING SUMMARY JUDGMENT FOR THE HOUSING AUTHORITY AND DISMISSING MR. COTTMAN'S CLAIM THAT THE HOUSING AUTHORITY IS EQUITABLY ESTOPPED FROM TERMINATING MR. COTTMAN'S LONG TERM CARE INSURANCE BENEFITS.

A. MR. COTTMAN REASONABLY RELIED UPON THE REPRESENTATIONS OF THE HOUSING AUTHORITY THAT HE WOULD RECEIVE LONG-TERM CARE INSURANCE BENEFITS UPON RETIREMENT.

B. MR. COTTMAN SUFFERED A DETRIMENT BY RELYING ON THE HOUSING AUTHORITY'S ASSURANCES THAT HE WOULD RECEIVE LONG-TERM CARE BENEFITS UPON HIS RETIREMENT.

C. APPLYING EQUITABLE ESTOPPEL AGAINST THE HOUSING AUTHORITY WILL NOT FRUSTRATE AN ESSENTIAL GOVERNMENT FUNCTION.

POINT VI.

THE TRIAL COURT ERRED IN GRANTING SUMMARY JUDGMENT FOR THE HOUSING AUTHORITY AND DISMISSING MR. COTTMAN'S CLAIMS THAT THE HOUSING AUTHORITY BREACHED ITS CONTRACT WITH MR. COTTMAN TO PROVIDE MR. COTTMAN WITH LONG-TERM CARE INSURANCE BENEFITS UPON RETIREMENT.

POINT VII.

THE TRIAL COURT ERRED IN FAILING TO VOID THE ACTIONS OF THE HOUSING AUTHORITY UPON ITS FINDING THAT THE HOUSING AUTHORITY VIOLATED THE OPEN PUBLIC MEETINGS ACTS.

POINT VIII.

THE TRIAL COURT ERRED IN GRANTING SUMMARY JUDGMENT FOR THE HOUSING AUTHORITY AND DISMISSING MR. COTTMAN'S CLAIMS OF DUE PROCESS VIOLATIONS.

When reviewing a grant of summary judgment, we employ the same standards used by the trial court, which grants summary judgment if the record shows that "there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law." R. 4:46-2(c). Burnett v. Gloucester County Bd. of Chosen Freeholders, 409 N.J. Super. 219, 228 (App. Div. 2009); Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998). First, we determine whether the moving party has demonstrated that there are no genuine disputes as to material facts, and then we decide whether the motion judge's application of the law was correct. Atl. Mut. Ins. Co. v. Hillside Bottling Co., 387 N.J. Super. 224, 230-31, (App. Div.), certif. denied, 189 N.J. 104 (2006). In so doing, we view the evidence in a light most favorable to the non-moving party. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 523 (1995). We review issues of law de novo and accord no deference to the motion judge's conclusions on issues of law. Zabilowicz v. Kelsey, 200 N.J. 507, 512-13 (2009).

After carefully considering the record, briefs and argument of counsel, we are satisfied that none of these arguments have merit and affirm, substantially for the reasons set forth in Judge Armstrong's comprehensive and well-reasoned opinion.

Even when viewed in a light most favorable to plaintiff, the evidence is plainly insufficient to create a genuine issue of fact that WHA represented that it would provide post-retirement insurance benefits to plaintiff's spouse; that plaintiff relied upon such assurances to his detriment; or that the personnel policy manual updated in 1998 created a contractual obligation for the WHA to provide such benefits. Further, as Judge Armstrong observed, plaintiff was subject to the Local Government Ethics Law, N.J.S.A. 40A:9-22.1 to -22.25, and as a result, the WHA appropriately terminated his JIF contract when a conflict of interest was created by his threatened lawsuit.

Turning to plaintiff's claim based upon OPMA, as the trial court concluded, even if the failures to provide plaintiff with notice pursuant to Rice v. Union County Regional High School Board of Education, 155 N.J. Super. 64, 73 (App. Div. 1977), certif. denied, 76 N.J. 238 (1978) constituted violations, plaintiff was not deprived of substantive or procedural due process rights or his rights under the New Jersey Civil Rights Act, N.J.S.A. 10:6-1 to -2, because he had the remedy of pursuing the instant action and there was no basis to void the Board's actions.

The evidence does support a finding that the WHA represented that it would provide plaintiff with long-term health care insurance following his retirement. Nonetheless, we agree with the trial court's analysis that the doctrine of equitable estoppel is not appropriately applied here. The Board made this commitment without the advice of its accountant or attorney that plaintiff's long-term care insurance was not an "ordinary and necessary expense" or "fringe benefit" and therefore "should not be paid with federal funds and be charged to the federal programs of the housing authority." Because the WHA's representation that plaintiff would receive long-term care insurance benefits was an action that was ultra vires in the secondary sense, the doctrine of equitable estoppel may be applied "in the interest of equity and essential justice." See Summer Cottagers' Ass'n. of Cape May, N.J. v. City of Cape May, 19 N.J. 493, 504 (1955). Equitable estoppel is employed to preclude a party from repudiating an act or position when to do so "would work injustice and wrong to one who with good reason and in good faith has relied upon such conduct." Middletown Twp. Policemen's Benevolent Ass'n Local No. 124 v. Twp. of Middletown, 162 N.J. 361, 367 (2000) (quoting Summer Cottagers' Ass'n, supra, 19 N.J. at 503-04). In Middletown Township Policemens' Benevolent Association, the Court found that the doctrine should be applied to estop the governmental entity from terminating benefits previously approved and relied upon by the employee. Id. at 372.

The facts of this case are clearly distinguishable. Plaintiff claimed that he detrimentally relied upon the promise of long-term care insurance because he would not have accepted $120,000 as payment for his accumulated unused time if he had known that the WHA was not going to honor this representation. The evidence does not support this argument because the resolution approving the commitment to fund a long-term care insurance policy for plaintiff was not made until January 18, 2001, long after the approval of his buyout in August 1999. Further, plaintiff's claim that he was entitled to more than the $120,000 he received is ill-founded. Since the applicable policy capped compensation for unused time at $15,000, he was not entitled to be compensated for anything more than that. Moreover, the lapse in coverage was due, in part, to plaintiff's failure to pay that portion of the coverage that was admittedly his responsibility. Therefore, the evidence here is insufficient to support plaintiff's claim of reasonable reliance to his detriment.

Affirmed.

20100831

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