Dean Born v. City of Slidell , 2015 La. LEXIS 2184 ( 2015 )

Supreme Court of Louisiana
FOR IMMEDIATE NEWS RELEASE NEWS RELEASE #050
FROM: CLERK OF SUPREME COURT OF LOUISIANA
The Opinions handed down on the 14th day of October, 2015, are as follows:
BY CRICHTON, J.:
2015-C -0136 DEAN BORN v. CITY OF SLIDELL (Parish of St. Tammany)
After twenty-four years of service with the City of Slidell, Mr.
Born retired on August 1, 2008, and having met the necessary
requirements, he elected to continue his health insurance
coverage under §21-21(b)(1) of the Code of Ordinances of the City
in accordance with his agreement with the City. Not only do we
find plaintiff’s suit was not prescribed, we further conclude
that Ordinance 3493 cannot be retroactively applied to plaintiff
in this instance, as such an application serves to divest the
plaintiff of his vested right in the benefits which he was owed
under his contract with the City of Slidell. AFFIRMED.
GUIDRY, J., dissents in part and concurs in part and assigns
reasons.
10/14/15
SUPREME COURT OF LOUISIANA
NO. 15-C-0136
DEAN BORN
v.
CITY OF SLIDELL
ON WRIT OF CERTIORARI TO THE COURT OF APPEAL,
FIRST CIRCUIT, PARISH OF ST. TAMMANY
CRICHTON, J.
We granted certiorari in this matter to determine whether a retiree of the City
of Slidell, plaintiff Mr. Dean Born, may continue participating in the City of
Slidell‟s health insurance plan following the City‟s adoption of Ordinance No.
3493, which requires each city retiree to apply for Medicare coverage upon
reaching the age of sixty-five. For the reasons that follow, we affirm the Court of
Appeal‟s finding that the City cannot terminate plaintiff‟s desired plan coverage
and require him to accept Medicare coverage, where plaintiff retired before the
effective date of the Ordinance.
FACTS AND PROCEDURAL HISTORY
Plaintiff was employed by the City of Slidell from April 30, 1984, until his
retirement on August 1, 2008, at the age of sixty (60). Upon his retirement,
plaintiff began drawing retirement benefits from the City of Slidell‟s Municipal
Employee‟s Retirement System. Also at the time of plaintiff‟s retirement, §21-
21(a) and (b)(1) of the Code of Ordinances of the City of Slidell provided, in
pertinent part:
(a) The city shall contribute to a program of health insurance for all full-
time city employees, all elected officials and all city retirees.
(b) Retired city employees and retired elected city officials shall
participate in the city‟s health insurance program under the following
conditions:
1
(1) A city employee or city elected official who:
a. Separates from city service after a minimum of ten years of
service;
b. Within 18 months after such separation receives retirement
benefits under any retirement plan authorized by the city;
c. Participated in the city‟s health insurance plan for a
minimum of 12 months immediately prior to such
separation; and
d. Participates in the city‟s health insurance plan from the time
of separation to the time retirement benefits are received;
may elect to continue to participate in the city‟s health insurance plan.
The city shall pay 100 percent of the cost of the individual or family
coverage elected by the former employee or elected official beginning
at the time retirement benefits are received.
This provision shall not apply to a city employee who voluntarily
separates from city service in order to avoid disciplinary action.
Effective August 26, 2008, through Ordinance No. 3493, the City of Slidell
amended §21-21 to require city retirees, upon reaching the age of sixty-five, to
apply for Medicare Coverage, with the City to pay Medicare Advantage at no cost
to the retiree.1 The additional section states as follows:
(3) Each City retiree shall, upon reaching the age of sixty-five, apply
for Medicare coverage Parts A and B. The City shall provide
Medicare Advantage coverage at no cost to the retiree. Those
retirees who are ineligible for Medicare shall be allowed to
continue participation in the City‟s health insurance program to the
same extent as prior to reaching age sixty five.
1
In the record presented to this court, plaintiff‟s exhibits include an opinion request from the
Mayor of Slidell, Ben O. Morris, to the Attorney General, asking whether any ordinance
providing for retirement benefits that is in effect at the time of an employee‟s retirement operates
as a contract between the City and the retiree. In finding the City is bound to honor contractual
or vested rights which inure to the benefit of its retirees, if any, the Attorney General answered in
the affirmative, stating:
[h]ealth insurance coverage for retirees is a benefit provided by the City to its
employees, and is part of the contract of employment between the employer and
the employee. . . . .the nature of retiree health benefits provided by the City are
defined by the City ordinance. As such, it is our opinion that the ordinance
providing for retirement benefits that is in effect at the time of an employee‟s
retirement operates as a contract between the City and the retiree.
Op. Atty. Gen., No. 07-0287 (11/26/07).
Although attorney general opinions are merely advisory and not binding on this Court, we
recognize that they do have persuasive authority. City of New Orleans v. Bd. of Directors of La.
State Museum, 98-1170 (La. 3/2/99), 739 So. 2d 748, 753 n.11.
2
Plaintiff received a letter from the City of Slidell on May 1, 2013, informing
him that because of his impending sixty-fifth birthday on July 1, 2013, he would
no longer be eligible for the City of Slidell‟s medical service, as “[a]ll retirees and
spouses 65 and older with Medicare Parts A and B must enroll in Humana Group
Medicare.” The letter also stated that if plaintiff was not eligible for Medicare, he
must present the City with adequate documentation to that effect. Plaintiff
objected to the City‟s course of action and exchanged several letters with the City
communicating his desire to remain on the City‟s retirement health plan (“the
plan”). When the City reiterated to Mr. Born its intention to remove him from the
plan and require him to elect Medicare coverage, on July 25, 2013, he filed a
“Petition for Declaratory Judgment, Temporary Restraining Order, Preliminary
Injunction and Permanent Injunction” in the 22nd Judicial District Court.
In his Petition, plaintiff asserted he met the requirements listed under §21-
21(b)(1) of the Code of Ordinances of the City of Slidell, which were in effect at
the time of his retirement on August 1, 2008, and consequently, he was entitled to
elect to continue to participate in the City‟s health insurance plan with the City
paying 100% of the cost for plaintiff‟s family coverage under the plan. Plaintiff
argued he had a vested right to the benefit promised by the City of Slidell in §21-
21, and the City was intending to breach its contract with plaintiff, thereby
depriving him of his vested right to the promised benefit. As a result, plaintiff
requested a declaration of his right to continue participating in the plan and an
injunction prohibiting the City from removing plaintiff from his desired health
insurance plan with the City of Slidell.
In response, the City filed a peremptory exception of prescription, arguing
that plaintiff‟s suit, one for compensation for services rendered and filed five (5)
years after the passage of Ordinance No. 3493, was subject to a liberative
prescriptive period of three (3) years and was therefore prescribed. Following a
3
joint stipulation of facts submitted on October 18, 2013, and a hearing on the
matter on October 23, 2013, the trial court took the matter under advisement.
On November 4, 2013, the trial court issued written reasons for judgment,
denying the City‟s Exception of Prescription, and granting plaintiff‟s request for a
declaratory judgment that Mr. Born and his family are entitled to continue to
participate in the City‟s plan, with the City paying 100% of the premium
associated with the coverage afforded to plaintiff and his family under the plan.
Specifically, regarding the City‟s prescription argument, the trial court found that
by removing plaintiff from the City‟s health insurance plan, the City would be
breaching its agreement with plaintiff for continued participation in the plan,
thereby depriving him of his vested right to benefits. As a result, the trial court
found prescription in this matter would begin to run at the time the City removed
plaintiff from the City‟s health insurance plan. The court concluded the plaintiff‟s
suit was timely filed, which was just after plaintiff‟s sixty-fifth birthday.
The trial court also found dispositive the case of Singletary v. Slidell, 211-
CA-1538 (La. App. 1 Cir. 6/8/12), writ not considered, 12-2068 (La. 11/16/12),
102 So. 3d 28, wherein the First Circuit Court of Appeal found the same Slidell
City retirement plan to be a contract between the City and the plaintiff, and that the
City could not apply Ordinance 3493 retroactively to require plaintiff in that matter
(who had retired prior to the time the Ordinance became effective), to accept
coverage under the Humana Medicare Advantage plan rather than the City‟s health
insurance plan. The Singletary court stated that should the City force the plaintiff
to accept the Medicare plan, it would be in contravention to the federally
recognized right of beneficiaries to freely decide the type of Medicare coverage
decided by them. Applying Singletary in this instance, the trial court found
Ordinance No. 3493 may not be applied retroactively to retirees who have met the
conditions of §21-21, as it impermissibly divests plaintiff of his vested rights.
4
After the trial court‟s judgment was issued, the City of Slidell timely appealed this
judgment to the Court of Appeal, First Circuit.
In a unanimous opinion, the court of appeal affirmed the trial court‟s ruling,
agreeing with the trial court‟s finding that plaintiff‟s claim is not prescribed, as
well as its finding that plaintiff met the requisite conditions set forth in §21-21 at
the time of his retirement, and as a result, the City could not apply Ordinance 3493
retroactively to remove plaintiff from the plan. In so ruling, the appellate court
agreed with the trial court that the prescriptive period for plaintiff‟s claim did not
begin to run until he was removed from the City plan, concluding that
contributions to retirement plans, including health benefits, are a form of deferred
compensation, and such contributions are subject to the three-year prescriptive
period found in La. C.C. art. 3494.2 This prescription begins to run from the day
payment is exigible. La. C.C. art. 3495. As a result, plaintiff‟s claim for post-age
sixty-five coverage under the City plan became exigible when plaintiff reached the
age of sixty-five, and the City failed to provide the promised benefit. Plaintiff‟s
claim, the court of appeal concluded, was therefore not prescribed.
Concerning the City‟s ability to remove plaintiff from its plan upon his
sixty-fifth birthday, the court of appeal also referred to its previously discussed
decision in Singletary, supra, wherein it considered this exact amended ordinance
to find that its application to retirees before its enactment impermissibly divested
the retired councilman of his vested right to benefits. Here, the appellate court
specifically pointed to its finding in Singletary that when an employer promises a
benefit to employees, and employees accept that offer, or benefit, by their actions
2
The court of appeal relied upon the reasoning in Fishbein v. State ex rel. Louisiana State
University Health Sciences Center, 04-2482 (La. 4/12/05), 898 So. 2d 1260, 1269 (holding the
liberative prescription of three years for action to recover compensation for services rendered
applied to physician‟s claims that her supplemental salary she earned was part of her average
earnable compensation upon which her retirement benefits were calculated; three-year
prescriptive period commenced to run the first month the university paid the physician
supplemental salary and failed to remit its share of employer contributions to the Teachers
Retirement System of Louisiana based on her supplemental salary).
5
in meeting the conditions, the result is not a mere gratuity or illusory promise but a
vested right in the employee to the promised benefit. Singletary, supra, at 1089-
90, citing Knecht v. Board of Trustees for State Colleges and Universities and
Northwestern State University, 591 So. 2d 690, 695 (La. 1991).3 Consequently, the
court of appeal found the plan document to be a contract between the City and
plaintiff, which, although reserving a right to the City to “terminate, suspend,
discontinue or amend the Plan,” the court concluded was not being terminated,
suspended, or discontinued by the City.4 Rather, the court found, the City is
attempting to remove plaintiff from the City plan that covers its employees and
requiring him to enroll in a wholly different plan. The appellate court concluded
the plaintiff, having met all necessary conditions at the time of his retirement to
participate in the City plan, maintains the right to continue to participate in the
plan.
Following the court of appeal‟s denial of rehearing, the City of Slidell timely
applied for writs, and this court subsequently granted. Born v. City of Slidell,
2015-C-0136 (La. 4/24/15), 168 So. 3d 406.
LAW AND DISCUSSION
In its brief to this court, the City argues that the court of appeal erred in not
finding the plaintiff‟s claim to be prescribed, and in finding the City was not
terminating, suspending, discontinuing or amending the Employee Medical Plan.
The City‟s prescription argument mirrors its assertions in the courts below, in that
the City believes plaintiff‟s claim against it for modification of his retirement
3
The city of Slidell argued below that Singletary is not controlling because it did not address the
“Plan Document and Summary Plan Description for City of Slidell Medical Plan,” which the
City acknowledges it failed to bring to the appellate court‟s attention in Singletary.
4
The plan document was submitted into evidence, and indicates on the first page of the plan that
“[t]he employer fully intends to maintain this Plan indefinitely. However, it reserves the right to
terminate, suspend, discontinue, or amend the Plan at any time and for any reason.”
6
benefit became exigible when Ordinance 3493 became effective on August 26,
2008, shortly after plaintiff‟s retirement. According to the City, such a claim for
deferred compensation is subject to a three-year prescriptive period under La. C.C.
art. 3495. The City also relies on Ledoux v. City of Baton Rouge, 99-2061 (La.
2/29/00), 755 So. 2d 877, wherein this court reinstated a trial court‟s denial of
prescription in a suit for payment for compensatory leave earned prior to the
employee‟s retirement, and found that since plaintiff was retired, “a claim for
payment for compensatory leave did not become exigible until [plaintiff] retired.”
Id. at 880. The City further points to the Ledoux court‟s statement, citing comment
(b) to La. C.C. art. 3495, that “[o]n principle, liberative prescription commences to
run from the day a cause of action arises and its judicial enforcement is possible.”
Id. at 879. As such, the City asserts, because plaintiff filed suit in this instance on
July 25, 2013, almost five years after the enactment of Ordinance 3493, or five
years after the date the City alleges plaintiff‟s action became exigible, his suit is
prescribed.
The City avers that through its modification of delivery of health benefits it
continues to satisfy its obligation to its employees, which also includes the
responsibility to manage the public money it controls. Moreover, the City asserts
the court of appeal specifically acknowledged its right to “terminate, suspend,
discontinue or amend the plan,” yet the court curiously found it was doing none of
those things, despite the court‟s discussion of the “amended . . . . Plan document.”
Dean Born v. City of Slidell, 2014-CA-0264 (La. App 1 Cir. 10/29/14), 157 So. 3d
726, 731-2, reh’g denied, 12/22/2014. The City, in modifying the delivery of
benefits for Medicare eligible retirees, was consistent with its agreements with
plaintiff, and was continuing its efforts to be a good steward of public funds.
In contrast, plaintiff Born asserts §21-21 was a contract between him and the
City, which states by its clear language that if plaintiff elected to participate in the
7
City plan when he retired, he was entitled to do so for the rest of his life. That
contractual obligation limits the City‟s ability to amend the City plan in a way that
would take away a retiree‟s vested rights. Furthermore, retroactive application of
Ordinance 3493 strips plaintiff of the vested rights that he acquired at the time he
retired on August 1, 2008. Concerning the City‟s prescription argument, plaintiff
avers that the City incorrectly, and without any statutory or jurisprudential support,
asserts that prescription began to run on Mr. Born‟s claims on August 26, 2008, the
date of the enactment of Ordinance No. 3493. Plaintiff avers that this argument
ignores the simple premise that the three year liberative prescriptive period
applicable here begins to run on the date that payment is “exigible.” Under these
facts, according to plaintiff, prescription began to run when plaintiff was removed
from the City plan at the age of sixty-five, which is the point at which the City
failed to do what it was obligated to do (provide retirement benefits). Prescription
could not have begun to accrue prior to that failure. In this instance, contrary to
the City‟s argument, plaintiff did not sit on his rights for five years, but acted
immediately upon notification that termination of his coverage was imminent.
Prescription
This court has consistently held that the prescriptive period applicable to an
action is determined by the character of the action disclosed in the pleadings.
Fishbein v. State of La. through Louisiana State University Health Sciences
Center, 04-C-2482 (La. 4/12/05), 898 So. 2d 1260, 1265, citing Starns v. Emmons,
538 So. 2d 275, 277 (La. 1989). As discussed above, plaintiff in the instant matter
seeks a declaration of his right to continue his participation in the City of Slidell‟s
retirement plan. Historically speaking, this court, as well as other jurisdictions, has
found that retirement and pension benefits are a form of deferred compensation.
Andrepont v. Lake Charles Harbor & Terminal Dist., 602 So. 2d 704, 708 (citing
Hare v. Hodgins, 586 So. 2d 118, 122 (La.1991) (partition of community property);
8
Robert C.S. v. Barbara J.S., 434 A.2d 383 (Del.1981) (divorce); T.L. James & Co.,
Inc. v. Montgomery, 332 So. 2d 834, 851 (La.1976) (succession); Taylor v.
Multnomah County Deputy Sheriff's Retirement Bd., 265 Or. 445, 510 P.2d 339
(1973) (deputy sheriff's participation in retirement plan); Hanson v. City of Idaho
Falls, 92 Idaho 512, 446 P.2d 634 (1968) (policemen's retirement fund)). We do
not intend to deviate from that finding, and in fact, reiterate the conclusion that
retirement benefits are a form of deferred compensation.
In light of this established principle, we turn to La. C.C. art. 3494, which
sets forth those actions subject to a three-year liberative prescriptive period:
(1) An action for the recovery of compensation for services rendered,
including payment of salaries, wages, commissions, tuition fees,
professional fees, and fees and emoluments of public officials. . . .
Having previously established that retirement benefits are considered a form of
deferred compensation for services rendered, under the plain terms of art. 3494, we
find plaintiff‟s claim to remain eligible for certain retirement benefits provided by
the City of Slidell fits squarely under the three year period provided therein.
The next step in our analysis necessitates a determination of when the
applicable prescriptive period began. La. C.C. art. 3495 sets forth the
commencement for the three year prescriptive period prescribed in art. 3494:
This prescription commences to run from the day payment is exigible.
It accrues as to past due payments even if there is a continuation of
labor, supplies, or other services.
We also find comment (b) to article 3495 instructive:
(b) On principle, liberative prescription commences to run from the
day a cause of action arises and its judicial enforcement is possible.
See 2 M. Planiol, Traité élémentaire de droit civil 3 Pt. 2, at 358
(Louisiana State Law Institute trans. 1959):
Liberative prescription begins to run as soon as the action accrues, or,
as Pothier said “the day on which the creditor could institute his
demand.” It cannot commence sooner, because the time given for
prescription should be a time during which the action can be
exercised, and one cannot reproach the creditor for not having acted at
a time when he did not have the right to do so. Otherwise, it could
9
happen that the right would be lost before it could be exercised, which
would be as unjust as absurd (Cass.Civ., 11 Dec. 1918, D. 1923.1.96,
P. and S. 1921.1.161).
The City asserts plaintiff‟s claim was prescribed at the time his suit was filed,
arguing that plaintiff‟s right against the City for modification of his retirement
benefit was exigible when Ordinance 3493 became effective shortly before
plaintiff‟s retirement in 2008. The City therefore argues plaintiff‟s suit was
prescribed when he filed it in 2013. We decline to adopt the City‟s argument in
this regard and find its reliance on Ledoux, supra, misplaced. In Ledoux, this
court, in finding an airport employee‟s claim for unpaid compensatory time was
not prescribed, stated the employee‟s claim was subject to the three year
prescriptive period set forth in La. C.C. art. 3494. Furthermore, the Ledoux court
reasoned that the running of prescription on plaintiff‟s claim did not begin to run
until the plaintiff could “act on his claim for payment thereof.” Ledoux, supra, at
880. The compensatory time payment policy governing plaintiff‟s employment
was changed well before he retired, where the policy prohibited plaintiff from
using or being paid for his accrued compensatory time until he retired or was
terminated. Therefore, plaintiff could not act on his claim for payment until he
retired or was terminated, and the filing of his suit shortly after his retirement was
timely.
We find the court of appeal below correctly determined that plaintiff‟s claim
was not exigible until the plaintiff turned sixty-five and the City attempted to
remove him from the City plan. Indeed, had plaintiff attempted to enforce his right
to remain on the City plan prior to his sixty-fifth birthday, his claim likely would
have been dismissed as premature under La. C.C.P. art. 423:
An obligation implies a right to enforce it which may or may not
accrue immediately upon the creation of an obligation. When the
obligation allows a term for its performance, the right to enforce it
does not accrue until the term has elapsed. If the obligation depends
10
upon a suspensive condition, the right to enforce it does not accrue
until the occurrence of performance of that condition.
When an action is brought on an obligation before the right to enforce
it has accrued, the action shall be dismissed as premature . . . .
Plaintiff‟s claim demanding coverage after his sixty-fifth birthday, in accordance
with his contract with the City to continue providing retirement benefits as
originally promised, became exigible upon his sixty-fifth birthday. Thus, his suit
filed shortly after he turned sixty-five was timely filed and in no way prescribed.
We find this assignment of error to be without merit.
The Retirement Plan
We must now examine whether the court of appeal, in relying upon its
previous decision in Singletary v. City of Slidell, 11-1538 (La.App. 1 Cir. 6/18/12),
97 So. 2d 1087, writ not considered, 12-2068 (La. 11/16/12), 102 So. 3d 28,
correctly determined that the City did not terminate, discontinue, or amend the
plan, and therefore, whether its attempt to remove plaintiff from the plan and
require him to enroll in a different plan was appropriate.
“A contract is an agreement by two or more parties whereby obligations are
created, modified, or extinguished, and is formed by the „consent of the parties
established through offer and acceptance.‟” La. C.C. art. 1906 and 1927. Article
1927 further provides:
. . . . Unless the law prescribes a certain formality for the intended
contract, offer and acceptance may be made orally, in writing, or by
action or inaction that under the circumstances is clearly indicative of
consent.
Unless otherwise specified in the offer, there need not be conformity
between the manner in which the offer is made and the manner in
which the acceptance is made.
As this court has stated, “when an employer promises a benefit to employees, and
employees accept by their actions in meeting the conditions, the result is not a
mere gratuity or illusory promise but a vested right in the employee to the
11
promised benefit.” Knecht v. Board of Trustees for State Colleges and Universities
and Northwestern State University, 591 So. 2d 690, 685 (La. 12/2/91), citing T.L.
James & Co. v. Montgomery, 332 So. 2d 834 (La.1976).5 See also, Singletary,
supra. The City of Slidell offers to its retirees participation in the City‟s health
plan if they meet certain requirements as provided under §21-21(b)(1) of the Code
of Ordinances of the City of Slidell. As noted above, those conditions require a
city employee to i.) separate from city service after a minimum of ten years of
service; ii.) within 18 months after such separation, receive retirement benefits
under any retirement plan authorized by the city; iii.) participate in the city‟s health
insurance plan for a minimum of 12 months immediately prior to such separation;
and iv.) participate in the city‟s health insurance plan from the time of separation to
the time retirement benefits are received.
In the joint stipulation of facts submitted to the trial court in this matter, the
parties stipulated that: i.) plaintiff was employed by the City of Slidell for twenty-
four (24) years, and thus, had more than ten years of service with the City; ii.)
plaintiff began drawing retirement benefits from the City on August 1, 2008, and
hence, within 18 months after his retirement, he received retirement benefits under
the retirement plan authorized by the City of Slidell; iii.) plaintiff and his family
participated in the City‟s health insurance plan for more than twelve (12) months
immediately prior to plaintiff‟s retirement on August 1, 2008; and iv.) plaintiff
participated in the City‟s health insurance plan from the time of his retirement on
August 1, 2008, to the date he began receiving retirement benefits on August 1,
5
Many other jurisdictions have found similarly: Hoffman La–Roche v. Hugh Campbell, 512
So. 2d 725 (Ala.1987); Gesina v. General Electric Corp., 780 P.2d 1376 (Ariz.Ct.App.1989);
Sterling Drug Inc. v. Oxford, 294 Ark. 239, 743 S.W.2d 380 (1988); Libby v. Calais Regional
Hospital, 554 A.2d 1181 (Me.1989); Toussaint v. Blue Cross & Blue Shield of Michigan, 408
Mich. 579, 292 N.W.2d 880, 893 (1980); Southwest Gas Corp. v. Ahmad, 99 Nev. 594, 668 P.2d
261 (1983); Gilman v. County of Cheshire, 126 N.H. 445, 493 A.2d 485 (1985); Cantor v.
Berkshire Life Insurance Co., 171 Ohio St. 405, 171 N.E.2d 518 (1960); Bellomini v. State
Employees' Retirement Board of Pa., 498 Pa. 204, 445 A.2d 737 (1982); Textile Workers Union
of America, Local # 513 v. Brookside Mills, 203 Tenn. 71, 309 S.W.2d 371 (1957); Ferraro v.
Hyatt Corp., 124 Wis. 2d 154, 368 N.W.2d 666 (1985).
12
2008. Based upon these stipulated facts, this court finds, in accord with the
decisions of the lower courts, that plaintiff met the conditions provided for in §21-
21(b)(1) of the Code of Ordinances of the City of Slidell, the provision in effect at
the time of plaintiff‟s retirement. Through his acceptance and compliance with
those conditions offered by the City of Slidell, plaintiff and the City entered into a
contract, which is not a “mere gratuity or illusory promise” but resulted in
plaintiff‟s vested right to the promised benefit, his participation in the City‟s health
plan as originally chosen. See, Knecht, supra, at 695. Through the enactment and
retroactive application of City Ordinance 3493, the City of Slidell is
inappropriately attempting to move plaintiff from his promised retirement plan to a
plan that requires him (“shall apply”) to select Medicare Coverage.
Regarding the application of Ordinance 3493 to this plaintiff, a court
interprets a municipal or City ordinance using the same guidelines as those used in
construing a statute. Fransen v. City of New Orleans, et al., 08-CA-76, 08-CA-
0087 (La. 7/1/08), 988 So. 2d 225, reh’g denied, 8/29/08. In this same vein, to
determine whether statutes or laws may be applied retroactively, we are guided by
La. C.C. art. 6, which provides:
In the absence of contrary legislative expression, substantive laws
apply prospectively only. Procedural and interpretive laws apply both
prospectively and retroactively, unless there is legislative expression
to the contrary.
Segura v. Frank, 630 So. 2d 714, 720-1 (La. 1/14/94).
This court has also explained that La. C.C. art. 6 requires the court to engage in a
two-fold inquiry. “First, we must ascertain whether in the enactment the
legislature expressed its intent regarding retrospective or prospective application.
If the legislature did so, our inquiry is at an end. If the legislature did not, we must
classify the enactment as substantive, procedural or interpretive.” Cole v. Celotex
Corp., 599 So. 2d 1058, 1063 (La. 1992). This court has further stated many times:
13
. . . . the principle contained in La. C.C. art. 6 has constitutional
implications under the due process and contract clauses of both the
United States and Louisiana Constitutions. Thus, even where the
legislature has expressed its intent to give a substantive law
retroactive effect, the law may not be applied retroactively if it would
impair contractual obligations or disturb vested rights.6
In this matter, in order to determine whether Ordinance 3493 is substantive,
procedural, or interpretive, we are also guided by well-settled principles enunciated
by this court:
Substantive laws establish new rules, rights, and duties or change
existing ones. St. Paul Fire & Marine Ins. Co. v. Smith, 609 So. 2d
809, 817 (La.1992); Ardoin v. Hartford Acc. & Indem. Co., 360 So. 2d
1331, 1339 (La.1978). Procedural laws prescribe a method for
enforcing a substantive right and relate to the form of the proceeding
or the operation of the laws. Graham v. Sequoya Corp., 478 So. 2d
1223, 1226 (La.1985); Terrebonne v. South Lafourche Tidal Control
Levee Dist., 445 So. 2d 1221, 1224 (La.1984). Interpretive laws
merely establish the meaning the interpreted statute had from the time
of its enactment. St. Paul Fire & Marine, 609 So. 2d at 817; Ardoin,
360 So. 2d at 1339.
Segura, supra, at 723.
A plain reading of Ordinance 3493 as it applies in this instance reveals that through
its enactment, the City of Slidell created a mandate that city retirees who reach the
age of sixty-five must apply for Medicare coverage Parts A and B, and will be
removed from the City‟s retirement health plan. This is clearly a substantive law,
and as such, a retroactive application of this Ordinance, as the City urges this court
to enforce, would substantially impair the contractual obligations secured through
plaintiff‟s retirement with the city prior to the enactment of the Ordinance. La.
C.C. art. 6. Stated differently, plaintiff retired on August 1, 2008, with the
understanding the City was obligated to provide the retirement benefits under §21-
21(b)(1) of the Code of Ordinances of the City, as promised to him at the time of
6
Segura, supra, at 721, citing See St. Paul Fire & Marine Ins. Co. v. Smith, 609 So. 2d 809, 816
n. 11 (La.1992); Board of Comm'rs v. Dept. of Natural Resources, 496 So. 2d 281, 291
(La.1986); Cahn v. Cahn, 468 So. 2d 1176, 1181 (La.1985); Graham v. Sequoya Corp., 478
So. 2d 1223, 1226 (La.1985); Terrebonne v. South Lafourche Tidal Control Levee Dist., 445
So. 2d 1221, 1224 (La.1984); Block v. Reliance Ins. Co., 433 So. 2d 1040, 1044 (La.1983); Lott v.
Haley, 370 So. 2d 521, 523 (La.1979); Burmaster v. Gravity Drainage Dist. No. 2, 366 So. 2d
1381, 1387 (La.1978).
14
his retirement. To retroactively apply to plaintiff an Ordinance that substantively
changed §21-21(b)(1) three weeks after his retirement is to improperly divest
plaintiff of a vested right in the benefit originally promised to him. As a result, we
find the court of appeal was correct in its determination that plaintiff is entitled to
remain on the City‟s retirement health plan, and the City therefore cannot remove
him from his originally chosen retirement plan.
As also noted by the appellate court below, we are cognizant of the fact that
the plan document reserves to the City “the right to terminate, suspend,
discontinue, or amend the Plan at any time and for any reason.” The plaintiff
worked for the City of Slidell for twenty-four (24) years with the understanding
that his participation in the retirement plan was a promised benefit he would
receive at the end of his lengthy employment with the City. We agree with the
appellate court‟s statement that Ordinance 3493 was not a mere amendment as
contemplated by the aforementioned reservation of rights. Its application to
plaintiff in this instance completely removes him from the plan originally promised
to him through his contract with the City of Slidell for retirement benefits, thereby
divesting him of his right to continue participation in the plan.7
7
As discussed above, the First Circuit in Singletary v. City of Slidell, 2011-CA-1538 (La.App. 1
Citr. 6/8/12), 97 So. 3d 1087, reh’g denied, 8/15/12; writ not considered; not timely filed, 2012-
C-2068 (La. 11/16/12), 102 So. 3d 28, examined this exact Ordinance 3493, and its application
to the plaintiff in that matter, Alvin Singletary, who retired in September, 2002, on his 60th
birthday. In accordance with §21-21, Mr. Singletary elected to continue to participate in the
City‟s health insurance plan. After the City enacted Ordinance 3493 on August 26, 2008, it sent
a letter to all retirees in October, 2008, informing them they will be requiring them to move to
Medicare coverage. Plaintiff filed a petition for declaratory judgment, seeking judgment that the
Ordinance did not apply to him. The court of appeal ultimately found in his favor, finding that
the amended ordinance was in violation of the federally recognized right of beneficiaries to
freely decide the type of Medicare coverage desired by them, and it represented a material
modification of the terms of the parties‟ agreement, as contained in §21-21. As such, applying
Ordinance No. 3492 retroactively impermissibly divests Singletary of his vested right to benefits.
The Singletary court did not address the reservation of rights clause in the plan, because,
as the City acknowledges in the instant proceedings (and mentioned above), it failed to bring the
plan language to the court‟s attention in Singletary.
15
CONCLUSION
After twenty-four years of service with the City of Slidell, Mr. Born retired
on August 1, 2008, and having met the necessary requirements, he elected to
continue his health insurance coverage under §21-21(b)(1) of the Code of
Ordinances of the City in accordance with his agreement with the City. Not only
do we find plaintiff‟s suit was not prescribed, we further conclude that Ordinance
3493 cannot be retroactively applied to plaintiff in this instance, as such an
application serves to divest the plaintiff of his vested right in the benefits which he
was owed under his contract with the City of Slidell.
AFFIRMED.
16
10/14/15
SUPREME COURT OF LOUISIANA
No. 2015-C-0136
DEAN BORN
VERSUS
CITY OF SLIDELL
ON WRIT OF CERTIORARI TO THE COURT OF APPEAL
FIRST CIRCUIT, PARISH OF ST. TAMMANY
GUIDRY, J., concurs in part and dissents in part, and assigns reasons.
While I agree with the majority’s finding that plaintiff’s suit was not
prescribed, I disagree with its conclusion the City of Slidell’s reservation of rights
in the Plan Document was ineffectual as to plaintiff’s claim that he had a vested
right to continue indefinitely under the same terms the City Plan had at the time he
retired.
The Plan Document at the time plaintiff retired required retired city
employees to meet the qualifications “as defined in City Ordinance, Section 21-
21.” The ordinance was later amended to require retired employees who attain the
age of 65 to apply for Medicare Coverage Parts A and B, with the provision the
City would provide Medicare Advantage coverage at no cost to the retiree.
Because the Plan Document clearly reserves to the City the right “to terminate,
suspend, discontinue or amend the Plan at any time and for any reason,” I see no
impediment to the City’s decision to revise the plan’s eligibility requirements per
the referenced ordinance rather than per amendment of the Plan Document. The
Plan Document specifically allows the city to change the Plan as follows:
“Changes in the Plan may occur in any or all parts of the Plan, including benefit
coverage, deductibles, co-payments, exclusions, limitations, definitions, eligibility
1
and the like.” Here, the City’s Plan Document, which all parties agree was the
contract between them, specifically referenced Ordinance Section 21-21 and
permitted the City to change the plan at any time. That the City utilized an
amendment to the ordinance governing eligibility referenced in the Plan, rather
than amend the Plan Document itself, seems to me to be of no moment. Nothing in
the Plan Document precluded the City from amending the ordinance to accomplish
the changes it sought to make in the Plan.
Accordingly, I respectfully dissent from the majority’s reasoning that
amendment of the ordinance providing for eligibility, which ordinance was
specifically referenced in the Plan Document and incorporated therein, was not a
proper manner for the City to exercise its right to revise eligibility requirements.
2