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Faella v. Chiodo

Supreme Court of Rhode Island

March 30, 2015

Albert A. Faella et al.
v.
Joseph Chiodo, in his capacity as Finance Director for the Town of Johnston et al. Alan Ross
v.
Town of Johnston et al

Page 352

Providence County Superior Court. (PB 10-311). (PB 10-60). Associate Justice Michael A. Silverstein.

For Plaintiffs: Michael J. Lepizzera, Jr., Esq., Timothy J. Robenhymer, Esq.

For Defendant: William J. Conley, Esq.

Present: Suttell, C.J., Goldberg, Robinson, and Indeglia, JJ. Justice Flaherty did not participate.

OPINION

Page 353

Indeglia, Justice

The defendant, Town of Johnston (Johnston or town)[1] appeals the grant of summary judgment in favor of John DiMaio (DiMaio), Albert A. Faella (Faella), and Alan Ross (Ross) (collectively plaintiffs). Additionally, the town appeals the denial of its motion for summary judgment[2] in these consolidated cases arising out of a dispute between the town and the plaintiffs, who are all former Johnston police officers who retired on injury disability. For the reasons set forth in this opinion, we vacate the judgment of the Superior Court.

I

Facts and Travel

At the heart of this litigation is plaintiffs' claimed entitlement to distributions from certain accounts maintained by ING Life Insurance and Annuity Company (ING). The intended purpose of these accounts and how they may have been altered by subsequent agreements is highly disputed.

The accounts were established in response to the execution of a document between the town and the Aetna Life Insurance and Annuity Company[3] with an effective date of April 26, 1984. The document (ING Agreement),[4] which is titled " Town of Johnston Police Officers Deferred Compensation Plan," was signed on the master application sheet by the then-mayor, Ralph aRusso (Mayor aRusso),[5] on behalf of the town; and was signed by an

Page 354

agent for ING. The master application sheet indicated that the agreement was to qualify under section 457 of the Internal Revenue Code (Code) and that there would be both employee and employer contributions made under the agreement. The master application sheet also indicated that the agreement was intended to replace or otherwise modify an existing contract.

Under the ING Agreement, two accounts were established on behalf of each police officer participant: (1) a fixed account into which the town would contribute a percentage of each participant's annual compensation; and (2) a participant account into which the participant would contribute a percentage of his compensation (collectively ING Accounts).[6] Although the town has been listed as the owner of both sets of accounts, the accounts have been maintained with the participant's name and social security number. The town acknowledges that the town and plaintiffs have consistently made contributions in the amount of 12 percent and 6 percent, respectively, into the ING Accounts.

At the time the ING Agreement was to become effective (April 26, 1984), a collective bargaining agreement (CBA) was in place between the town and the International Brotherhood of Police Officers Local 307 (IBPO). In place until June 30, 1985, that CBA makes no mention of employer or employee contributions or the ING Accounts. However, a subsequent CBA, which covered the period from July 1, 1986 to June 30, 1987, contains references to employer and employee contributions into a retirement fund at 12 percent and 6 percent, respectively. The references are under a section titled " Early Retirement Provisions," which provides for employees' withdrawal of contributions from the retirement fund under certain conditions. Additionally, the section states that " [t]he giving back of retirement funds dates back only to the time the Pension Plan became effective, which was approximately 1977 or thereabouts." The language from this section has appeared in every subsequent CBA.

Another document which is the cause of much contention between the parties is titled " Town of Johnston Police Department Pension Plan." The document (1993 Plan) purports to have been executed on October 25, 1993, between Mayor aRusso and a representative from the " Town of Johnston Police Union." The 1993 Plan was also signed by the town's finance director, ex officio, as " Trustee." ...


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