Opinion
DOCKET NO. A-3859-12T3
06-18-2014
ENGLEWOOD PBA/SOA LOCAL 216, Plaintiff-Appellant, v. CITY OF ENGLEWOOD, Defendant-Respondent.
Loccke, Correia, Limsky & Bukosky, attorneys for appellant (Marcia J. Tapia, on the briefs). Ruderman & Glickman, P.C., attorneys for respondent (Denise Errico Esmerado, on the brief).
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges Espinosa and Koblitz.
On appeal from Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-7067-12.
Loccke, Correia, Limsky & Bukosky, attorneys for appellant (Marcia J. Tapia, on the briefs).
Ruderman & Glickman, P.C., attorneys for respondent (Denise Errico Esmerado, on the brief). PER CURIAM
The PBA appeals from a March 22, 2013 order dismissing its second amended complaint against the City of Englewood, which it filed after an arbitration award against the PBA, deciding substantially the same issues, was confirmed by the Law Division. The arbitrator concluded that the collective bargaining agreement provided health benefits for the retiree and spouses of retired officers only, not other dependents. He also concluded that the "past practices" provision of the agreement did not vest retired officers with the right to dependent coverage merely because the City had erroneously paid retirees' dependent coverage for nearly six years before catching the mistake in 2010. The complaint repeats arguments raised in the arbitration, and, to the extent that the complaint added any new issues, they could have been raised in the arbitration. We therefore affirm the dismissal of the complaint.
From 2004 to 2010, the City of Englewood paid medical benefits to all dependents of retired police officers despite the fact that this coverage was not required by the PBA collective bargaining agreement with the City. The City Council passed the following resolution in 2004, three years after the City switched to the State Health Benefits Program from a private insurer:
BE IT RESOLVED by the City Council of the City of Englewood that the C. 48 Resolution addendum respecting the State of New Jersey Health Benefits Program adopted by the resolution of the City Council on January 23, 2001 shall be modified by deleting: ". . . for the retiree and spouse only", respecting post-retirement medical coverage and adding: ". . . for the retiree and dependents."This resolution was passed in order to alleviate an administrative burden on the City caused by defective State billing software. The State advised the City to simplify billing by paying the State for retirees' dependent health coverage and then seeking reimbursement from the retirees for the difference between spousal coverage and dependent coverage. This plan was designed to allow the City to pay one insurance bill for all retirees, their spouses and their other dependents on one "amalgamated invoice." After passing the 2004 resolution, the City mistakenly did not seek reimbursement from retirees for the non-spouse dependent premiums.
Three years after the 2004 resolution, the PBA and the City entered into a collective bargaining agreement, which was effective January 1, 2007 through December 31, 2010, that expressly stated retired police officers were only entitled to spousal coverage. In September 2010 the Assistant City Manager discovered that the City was paying the premiums of all police officer retirees' dependents without requesting reimbursement from the retirees. After this discovery, the City sought reimbursement for non-spousal dependent premiums paid after October 1, 2010. The City then notified retirees that it would no longer cover non-spousal dependents. The PBA filed a grievance claiming that the City had "announced that it has altered, repudiated and/or modified the terms and conditions of employment as they currently exist between the parties . . . [including] the manner in which retiree health benefits or similar benefits have been, or will be, paid or administered."
The PBA arbitrated the matter after the Chief of Police denied the grievance. The PBA urged the arbitrator to read three of the 2007 contract provisions together in order to arrive at the conclusion that the agreement was always intended to "extend paid dependent benefits to retirees." Section 18.3, the "Prior Practices and Conditions" provision states that "[a]ll previous practices and conditions of employment which inure to the benefit of any Member and which are not herein enumerated or modified shall continue in full force and effect." Section 18.8 states that active police officers "shall receive the current 1420 level of benefits including equivalent coverage recognition. The City guarantees payment and equivalent coverages for any payments due within the coverage without payment by the employee." Section 18.9 of that agreement states:
The 1420 level of benefits includes fully paid dependent coverage, rather than spousal coverage only.
Effective January 1, 1991 the City shall provide the currently existing health insurance benefits, Employee and spouse coverage, to all post January 1, 1991
retirees until they reach the age of sixty-five . . . .
[(Emphasis added).]
The PBA representative testified that he and the police officer retirees read these provisions to mean that "spouse" coverage was "synonymous with dependent coverage" because "no retired PBA member was ever denied paid dependent care benefits" under the 2007 agreement. The PBA also claimed to have "vested rights in the continued receipt of health benefits without additional contribution" in accordance with "past practice."
The arbitrator disagreed. He gave the term "spouse" its ordinary meaning and found that the 2007 agreement was clear. After reviewing the history of the agreement, the arbitrator concluded that "the parties unambiguously negotiated a retiree-spouse limitation on the City's obligation to pay the cost of retiree health benefit premiums for all post January 1991 retirees, including the class of individual grievants in this matter." In addressing the "past practice" argument, the arbitrator refused "to elevate the alleged contrary past practice experienced from 2004-2010 over the express language" of the 2007 collective bargaining agreement.
The PBA filed a complaint and order to show cause to vacate the award. At oral argument on the order to show cause, the PBA lawyer explained that the PBA "hung our hat" on the "past practices" clause which, according to the PBA, "means if you have a practice that's going on, it's incorporated into the contract . . . ." The PBA also argued that many officers relied on the City's payment of dependent benefits and would not have retired but for the City's payment of these premiums for their dependents. Based on this theory, the PBA argued that the City could not deprive retirees of this relied-upon benefit, nor require reimbursement of the premiums paid for dependents. The judge denied the order to show cause and granted the City's motion to confirm the award. The judge delayed action on the second count of the complaint, which alleged that the retirees had been promised dependent health benefits "through the [2007] agreement."
Because confirmation of the arbitration award was not appealed, we do not review the merits of the award in this opinion.
The PBA then filed an amended complaint, which it later amended again, seeking recovery under a theory of promissory and equitable estoppel. The PBA stated that the 2004 City resolution provided the promise and that retirees relied on that promise to their detriment, and therefore the City should continue providing retirees dependent coverage without reimbursement.
The City argued that the PBA's equitable claims arose from the "same circumstances, same transactions" and "same set of facts" that were litigated in arbitration. The motion judge ruled that the estoppel claims were derivative of issues resolved at arbitration and granted the City's motion to dismiss.
We agree with the motion judge's determination that the complaint raises issues already decided at arbitration. The amended complaint is precluded by the doctrine of res judicata. Res judicata, or claim preclusion, requires:
(1) the judgment in the prior action must be valid, final, and on the merits; (2) the parties in the later action must be identical to or in privity with those in the prior action; and (3) the claim in the later action must grow out of the same transaction or occurrence as the claim in the earlier one."Claim preclusion applies not only to matters actually determined in an earlier action, but to all relevant matters that could have been so determined." Ibid. (citing Angel v. Bullington, 330 U.S. 183, 192-93, 67 S. Ct. 657, 662, 91 L. Ed. 832, 838-39 (1947); Culver v. Insurance Co. of N. Am., 115 N.J. 451, 463 (1989)). "[C]auses of action are deemed part of a single 'claim' if they arise out of the same transaction or occurrence. If, under various theories, a litigant seeks to remedy a single wrong, then that litigant should present all theories in the first action. Otherwise, theories not raised will be precluded in a later action." Watkins, supra, 124 N.J. at 413 (citation omitted).
[Watkins v. Resorts Int'l Hotel & Casino, Inc., 124 N.J. 398, 412 (1991) (citations omitted).]
The preclusionary doctrine of res judicata requires common elements that are all present here: parties, subject matter, issues and evidence. A final judgment on the merits was rendered in the arbitration agreement. See Velasquez v. Franz, 123 N.J. 498, 506 (1991) ("For a judicial decision to be accorded res judicata effect, it must be a valid and final adjudication on the merits of the claim."). The estoppel claims in the amended complaint and the "past practices" arbitration are functionally identical, even though the "past practices" claim is couched in terms of contract interpretation, while the estoppel claims were pleaded as equitable claims. All are premised on the PBA's theory that its entitlement to health benefits should be based on the City's payment of dependent coverage for six years. Thus, res judicata bars the PBA's subsequent estoppel claims.
The PBA's amended complaint is also barred by the entire controversy doctrine. This equitable doctrine requires litigants in a civil action to raise all issues arising from a single controversy that each party might have against another party, including counterclaims and cross-claims. See R. 4:30A. It is a preclusionary device, intended to prevent fractionalized litigation by requiring the assertion of all issues arising from a single controversy in a single action. Prevratil v. Mohr, 145 N.J. 180, 190 (1996). The two goals of the entire controversy doctrine are "ensuring fairness to parties and achieving economy of judicial resources." Kent Motor Cars, Inc. v. Reynolds & Reynolds, 207 N.J. 428, 443 (2011). Because the "doctrine embodies the principle that the adjudication of a legal controversy should occur in one litigation in only one court[,] . . . all parties involved in a litigation should at the very least present in that proceeding all of their claims and defenses that are related to the underlying controversy." Cogdell v. Hosp. Ctr. at Orange, 116 N.J. 7, 15 (1989).
R. 4:30A, entitled "Entire Controversy Doctrine," states as follows:
Non-joinder of claims required to be joined by the entire controversy doctrine shall result in the preclusion of the omitted claims to the extent required by the entire controversy doctrine, except as otherwise provided by R. 4:64-5 (foreclosure actions) and R. 4:67-4(a) (leave required for counterclaims or cross-claims in summary actions).
An arbitrator's authority to resolve a dispute stems from the agreement between the parties. City Ass'n of Sup'rs and Adm'rs v. State Operated School Dist. of City of Newark, 311 N.J. Super. 300, 310 (App. Div. 1998) (citing Ridgefield Park Educ. Ass'n v. Ridgefield Park Bd. of Educ., 78 N.J. 144, 155 (1978)). "An agreement can set the limits of the powers delegated to the arbitrator." Ibid. (citing State Dep't of Law and Public Safety v. State Troopers Fraternal Ass'n, 91 N.J. 464, 473 (1982)). In this case, Article IV of the 2007 collective bargaining agreement permits the PBA to submit a grievance against the City "with respect to the interpretation, application, or violation of agreements between the City and the [PBA] and policies and administrative decisions of the City directly affecting the [PBA] . . . ." It also states that if the grievance is denied, the PBA may submit it to arbitration. The PBA's promissory and equitable estoppel issues relate to "interpretation, application, or violation" of the 2007 agreement, along with "policies and administrative decisions" such as the 2004 resolution.
The arbitrator was not prohibited from adjudicating the equitable and promissory estoppel issues. The estoppel issues are functionally similar to the "past practices" argument decided at arbitration. These estoppel issues were born from the same controversy between the same parties. Both rely on a backwards-looking theory that ties reliance on the City's prior mistaken payment of dependent benefits to the interpretation of the 2007 agreement.
To the extent that the amended complaint represents a different spin on the same facts, the complaint must be dismissed because the PBA had a fair opportunity to raise all estoppel issues in the arbitration forum. See McNeil v. Legislative Apportionment Comm'n., 177 N.J. 364, 395 (2003) (explaining that "[i]t does not matter whether the two claims were filed in two different forums" when determining whether they are deemed part of a single claim), cert. denied, 540 U.S. 1107, 124 S. Ct. 1068, 157 L. Ed. 2d 893 (2004).
The motion judge properly dismissed the estoppel claims because they were repetitive and derivative of the issues adjudicated on the merits by the arbitrator.
Affirmed.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION