Manuel Andrews, Jr. v. James Lombardi, in his capacity as Treasurer of the City of Providence, Rhode Island ( 2020 )

June 30, 2020
Supreme Court
No. 2017-262-Appeal.
No. 2017-263-Appeal.
No. 2017-264-Appeal.
No. 2017-269-Appeal.
(KC 13-1129)
Manuel Andrews, Jr. et al. :
v. :
James Lombardi, in his capacity as Treasurer :
of the City of Providence, Rhode Island.
NOTICE: This opinion is subject to formal revision before
publication in the Rhode Island Reporter. Readers are requested to
notify the Opinion Analyst, Supreme Court of Rhode Island, 250
Benefit Street, Providence, Rhode Island 02903, at Telephone (401)
222-3258 or Email opinionanalyst@courts.ri.gov, of any
typographical or other formal errors in order that corrections may be
made before the opinion is published.
Supreme Court
No. 2017-262-Appeal.
No. 2017-263-Appeal.
No. 2017-264-Appeal.
No. 2017-269-Appeal.
(KC 13-1129)
(Concurrence begins on page 31)
Manuel Andrews, Jr. et al. :
v. :
James Lombardi, in his capacity as Treasurer :
of the City of Providence, Rhode Island.
Present: Suttell, C.J., Goldberg, Flaherty, Robinson, and Indeglia, JJ.
OPINION
Chief Justice Suttell, for the Court. Annual cost-of-living adjustments (COLAs) to the
pension benefits for members of the Providence police and fire departments have been the subject
of protracted litigation for many years. Such litigation has resulted in several settlement
agreements and consent judgments entered in the Providence County Superior Court and opinions
issued by this Court resolving legal issues raised by changes to retirement benefits to employees
of the City of Providence. Over a decade ago we expressed our fervent hope that we were marking
the final chapter in this saga with our opinion in Arena v. City of Providence, 919 A.2d 379 (R.I.
2007).1 Arena, 919 A.2d at 381. Alas, the 21st century has brought several economic challenges
and the fiscal condition of the City of Providence (the City) in 2011 necessitated changes in several
areas of the City’s services and obligations. In 2011, when Angel Taveras took office as Mayor
1
The readers who are not familiar with the long and protracted history of pension benefits—and
litigation related thereto—for the members of the City of Providence’s police and fire departments
may wish to refer to this Court’s opinion in Arena v. City of Providence, 919 A.2d 379 (R.I. 2007),
for a relatively thorough history that may help to place the current case in context.
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of the City, the realities of the City’s pension obligations to its retirees and the condition of its
pension fund were soon uncovered and led the City’s administration to the conclusion that the
system as structured for the then-retirees was unsustainable.
In response, the City enacted an ordinance in 2012 suspending the COLAs for retired
members of its police and fire departments until the pension fund achieved a 70 percent funding
level. Retiree groups and union groups initiated litigation to bar enforcement of the new ordinance.
After engaging in court-ordered mediation, most retirees entered into a settlement which allowed
for a ten-year suspension of their COLA benefit. The settlement ripened into a consent judgment
after the trial justice determined that the proposed settlement was fair and reasonable. Several
dozen individuals opted out of the settlement agreement, however, and instead pursued their civil
claims through the litigation process. These claims culminated in a bench trial on the so-called
“opt-out” plaintiffs’ claims for breach of contract and violation of the Contract Clauses of the
United States and Rhode Island Constitutions. The trial justice ultimately found in favor of the
City on all of plaintiffs’ claims.
The plaintiffs now appeal from the final judgment, arguing that the trial justice erred by
finding in favor of the City on plaintiffs’ Contract Clause claim and by granting summary judgment
prior to trial in favor of the City on plaintiffs’ claims for violation of the Takings Clause and for
promissory estoppel. For the reasons set forth herein, we affirm the judgment in part and vacate
the judgment in part.
I
Facts and Procedural History
In 1988, Buck Consultants, LLC (Buck), the actuarial consulting firm that the City had
retained, reported that the retirement system was at a 62 percent funding level, with plan assets
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valued at $196.46 million and an unfunded actuarial liability of $119.9 million. In 1989, the
Providence Retirement Board made changes to its employees’ pension benefits, including an
increase in the minimum monthly payment and an increase in the compounding COLA to 5 and 6
percent per year. In January 2011, Angel Taveras was sworn in as the City’s Mayor. He convened
a Municipal Finances Review Panel (MFRP) “to review the City’s budget for fiscal years ending
June 30, 2011 and June 30, 2012.” The five MFRP members included Michael D’Amico, then the
City’s Director of Administration; Ernest Almonte, former Rhode Island Auditor General; Dennis
Hoyle, the Rhode Island Auditor General; Alex Prignano, then Director of Finance for the City;
and Kenneth Richardson, certified public accountant.
At the end of February 2011, the MFRP released a report concluding that: (1) 27 percent
of the City’s retirees were receiving 5 or 6 percent compounding COLAs, (2) the June 2010
actuarial valuation of the City’s pension system was 34 percent funded, (3) the fiscal year ending
in June 2011 reflected a $69.9 million structural budgetary deficit, and (4) the fiscal year ending
in June 2012 reflected a projected $109.9 million structural budgetary deficit. The report also
suggested several ways to address the underfunded pension system. In response, Mayor Taveras
took several actions to increase revenue and cut costs to the City, “including, but not limited to,
the following:
“a. Reduced the budget for the Mayor’s office;
“b. Reduced the budget for the fire and police departments;
“c. Laid off personnel;
“d. Closed schools;
“e. Revised employment contracts with education and municipal
employees;
“f. Negotiated with tax exempt institutions to include, without
limitation, Brown University, Johnson & Wales University and the
Rhode Island School of Design to increase the payments in lieu of
taxes that these institutions had been making to the City;
“g. Ordered enhanced enforcement of parking regulations;
“h. Increased city parking fees;
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“i. Increased residential and commercial property taxes; and
“j. Increased the motor vehicle excise tax.”2
As this Court has recently summarized:
“In 2011, the General Assembly passed the Rhode Island Retirement
Security Act (RIRSA), G.L. 1956 chapter 65 of title 45, legislation
focused on promoting the sustainability of municipal pension
systems. See § 45-65-2. Pursuant to § 45-65-4, a municipality’s
pension plan would be in ‘critical status’ if ‘as determined by its
actuary, as of the beginning of the plan year, a plan’s funded
percentage for such plan year is less than sixty percent (60%).’ A
municipality administering a plan in ‘critical status’ is required,
under RIRSA, (1) to give notice of such status to plan participants
and other listed individuals and entities and (2) to submit a funding
improvement plan detailing the municipality’s strategy for emerging
from that status. Section 45-65-6. A commission within the
Department of Revenue that had been set up under the statute
established guidelines for the funding improvement plans,
suggesting that, ‘generally, the funding improvement period should
not exceed 20 years with the plan emerging from critical status
within that timeframe.’ Municipalities not in compliance with the
statute faced a reduction in state aid. Section 45-65-7.” Cranston
Police Retirees Action Committee v. City of Cranston, 208 A.3d 557,
566 (R.I. 2019) (Cranston) (brackets omitted), cert. denied, 140 S.
Ct. 652 (2019).
In October 2011, the City formed a five-member Subcommittee on Pension Sustainability
(SPS). The SPS issued a report and recommendations in April 2012, finding that the Mayor’s
actions had resulted in a reduction to the City’s structural deficit by $70 million. The SPS’s seven
recommendations included:
“1. Suspend all COLAs on all pensions until the retirement pension
system reaches a funding level of 70% ($15.6 million in annual
savings);
“2. Require that contributions from all pension system members to
continue beyond the current requirement of 25 years of service
and, instead, continue as long as members continue to accrue
pension credits ($1.5 million in annual savings);
2
The cited quotation is from the parties’ Joint Statement of Undisputed Facts, filed prior to the
bench trial.
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“3. Adjust the base pension benefit to an average of the highest 5
consecutive years of earnings during the final 10 years of a
member’s employment ($1.3 million in annual savings);
“4. Broad reform of the city’s disability pension system, including
adjusting current benefits for accidental disability pensions for
all active participants from 66 2/3% of the participant’s final
compensation to 50% of the participant’s final compensation,
but in no event shall the benefit be less than the participant’s
service retirement allowance ($500,000 in annual savings);
“5. Place a dollar cap on pension benefits at a level not to exceed
one and one-half times the State’s median household income;
“6. Require all retirees and their spouses who receive health care
benefits to pay a 20% co-pay of all health care costs until retirees
and their spouses reach the age of 65 (at which time they will be
Medicare eligible); and
“7. Adopt, by ordinance, a formal process for considering and
accepting an assumed rate of return on pension investments.”
(Emphases omitted.)
On April 30, 2012, the Providence City Council passed an ordinance, amending Chapter 17,
Article VI of the Providence Code of Ordinances, “suspend[ing] future COLAs for all retired City
employees and any beneficiary of a retired City employee who receives a service or disability
pension allowance until the system achieved a seventy (70%) funded level” (the 2012 Pension
Ordinance or the ordinance). See City of Providence Ch. 2012-20, Ordinance No. 276 (Apr. 30,
2012). The City’s pension fund had not been at a 70 percent funding level since at least 1970 and
the system’s “unfunded liability was approaching $900 million[.]” The 2012 Pension Ordinance
stated, in pertinent part, that:
“Notwithstanding any other ordinance, collective bargaining
agreement, or interest arbitration award, all retired employees and
any beneficiary of such employee who receives any service or any
ordinary disability retirement allowance or any accidental disability
retirement allowance pursuant to the provisions of this article,
except for retirement allowances provided for in Sections 17-
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189(7)(d) and 17-189(9), shall have their cost-of-living adjustment
suspended as of December 31 following the plan year in which the
actuary’s annual valuation determines the retirement system to be in
critical status. Suspension of the annual cost of living adjustment
shall continue until such time as the actuary determines in the annual
actuarial valuation study that the plan’s funded percentage is greater
than or equal to seventy percent (70%). Within thirty (30) days of
the actuary reporting in the annual actuarial valuation study that the
plan’s funded percentage is greater than or equal to seventy percent
(70%), written notice shall be provided to all members that the cost-
of-living adjustment shall be restored on the following January 1.”
Ch. 2012-20, Ordinance No. 276, Providence Code of Ordinances,
Sec. 17-194(3) (Apr. 30, 2012).
A legal challenge to this ordinance and an existing challenge to the City’s ordinance that
changed the health care benefits for the same retirees (the 2011 Medicare Ordinance) were ordered
into mediation by the trial justice. The parties reached a settlement of both matters, whereby the
retirees’ COLAs would be suspended for ten years (2013 to 2022) and additional health care
benefits would be provided to the retirees over and above those provided in the 2011 Medicare
Ordinance. The trial justice entered a final consent judgment in April 2013 which reflected the
terms of the settlement agreement, and the City amended the 2012 Pension Ordinance to reflect
the settlement agreement. See Chapter 2013-9, Ordinance No. 162 (Apr. 9, 2013).
Several dozen plaintiffs opted out of the settlement agreement, however, and they initiated
the instant cause of action in October 2013 that challenged the constitutionality of the 2012 Pension
Ordinance.3 The plaintiffs sought a declaratory judgment that: (1) the City breached its contractual
obligations to each plaintiff by refusing to pay the COLAs to which each is entitled; (2) the 2012
3
At the same time, these plaintiffs initiated a cause of action challenging the constitutionality of
the 2011 Medicare Ordinance (the Medicare Case) in KC 13-1128. The cases proceeded together
through discovery, pretrial motions, trial, and on appeal. The resolution of the issues raised on
appeal in the Medicare Case, however, is set forth in a separate opinion. See Andrews v. Lombardi,
Nos. 17-255; 17-256; 17-257; 17-260, --- A.3d --- (R.I. 2020), concerning plaintiffs’ claims on
appeal regarding the 2011 Medicare Ordinance.
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Pension Ordinance is both unconstitutional on its face and as applied because it violates the
Contract Clauses, Due Process Clauses, and Takings Clauses of the United States Constitution and
Rhode Island Constitution; and (3) plaintiffs are entitled to relief under a promissory estoppel
theory. The plaintiffs requested an injunction prohibiting the City’s treasurer from suspending the
COLAs to which plaintiffs were allegedly entitled.4 The plaintiffs filed a First Amended
Complaint on February 24, 2014, which added a few plaintiffs but did not alter the substantive
claims or counts.
The City filed a Motion for Partial Summary Judgment seeking summary judgment on
plaintiffs’ claims (1) that the 2012 Pension Ordinance was unconstitutional because it violated the
Takings Clause and the Due Process Clause, (2) that “certain legislative enactments are facially
unconstitutional,” and (3) for promissory estoppel. The plaintiffs did not oppose the entry of
summary judgment on their due process challenges to the ordinance or on the facial challenges to
the constitutionality of the ordinance; however, they did object to summary judgment on their as-
applied challenge to the ordinance’s constitutionality with respect to the Takings Clause and on
their claim of promissory estoppel. In a written decision filed on March 16, 2016, the hearing
justice granted the City’s motion for partial summary judgment with respect to the Takings Clause
and promissory estoppel claims.
4
Three of these plaintiffs also filed a petition to hold the City in contempt for its alleged violation
of a 2004 consent judgment and 1991 consent decree—both of which arose out of prior litigation
cited above (the Contempt Case), KC 13-1127. The hearing justice ultimately denied the petition
on the parties’ cross-motions for summary judgment, concluding that the proper way to challenge
the 2012 Pension Ordinance was through a constitutional challenge, not by petition for contempt.
The plaintiffs appealed, and this Court’s resolution of the issues raised in the Contempt Case appeal
is set forth in a separate opinion. See Quattrucci v. Lombardi, Nos. 17-248; 17-249, --- A.3d ---
(R.I. 2020).
-7-
The case proceeded to a bench trial in April 2016 on the remaining claims: violation of the
Contract Clause and breach of contract. The plaintiffs’ challenges to the 2011 Medicare Ordinance
were tried simultaneously. The parties submitted a Joint Statement of Undisputed Facts before the
trial began, detailing the history of the COLAs and some of the City’s actions prior to enacting the
2012 Pension Ordinance. The parties also stipulated to the separation of plaintiffs into twelve
categories, grouped by the claimed source of their entitlement to the pension benefits, such as
consent judgments, settlement agreements, final court judgments, collective bargaining
agreements (CBAs), interest arbitration awards, or implied-in-fact contracts.5
5
Category A is comprised of nine retired firefighters who were parties to the 1991 Consent Decree
between the City, the police union, and the fire union providing annual COLAs to these retirees.
Category B is comprised of five retired police officers who were parties to the same 1991 Consent
Decree as plaintiffs in Category A. Category C represents twenty-four retired police officers and
firefighters who claim an entitlement to an annual COLA pursuant to a collective bargaining
agreement (CBA) or were covered by an interest arbitration award (IAA). Category D includes
three retired firefighters and one retired police officer who were not covered by a CBA at their
respective dates of retirement and who claim an entitlement to an annual COLA pursuant to an
implied-in-fact contract. Category E includes two retired police officers and two retired
firefighters who, like plaintiffs in Category C, claim an entitlement to an annual COLA pursuant
to a CBA, but unlike plaintiffs in Category C, litigated a prior suspension of their COLA payments
and had their COLA payments reinstated as a result of the litigation. Three of the plaintiffs in
Category E are the plaintiffs before this Court in the Contempt Case. Category F is comprised of
nine retired firefighters and one retired police officer who were among the Arena plaintiffs. See
Arena, 919 A.2d at 395 (holding these plaintiffs had a vested right to receive 5 percent COLAs).
Category G represents four retired police officers who were plaintiffs in prior litigation (Abad v.
City of Providence, PC 01-2223) and claim an entitlement to COLAs pursuant to individual
settlement agreements with the City. Category H includes two retired firefighters who were
plaintiffs in prior litigation (Bock v. City of Providence, PC 09-599) and claim an entitlement to
COLAs pursuant to individual settlement agreements with the City. Category I has one plaintiff,
a retired firefighter who was a plaintiff in prior litigation (Battista v. City of Providence, PC 09-
6047) and claims an entitlement to COLAs pursuant to a settlement agreement. Category J
represents two retired firefighters who were plaintiffs in prior litigation (Mahar v. City of
Providence, PC 05-5041 and Thomas v. City of Providence, PC 05-4547) and claim an entitlement
to COLAs pursuant to individual settlement agreements. Category K includes one retired
firefighter who, like the plaintiff in Category I, claims an entitlement to COLAs pursuant to an
individual settlement agreement stemming from the Battista litigation, but unlike the plaintiff in
Category I, had no CBA or IAA in place on the date of his retirement. Finally, Category L
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During the course of approximately four weeks of trial days, more than fifty plaintiffs
testified as well as two experts in the field of actuarial science as it related to municipal pensions
(one for plaintiffs and one for the City) and four fact witnesses who had been working for the City
at the time the 2012 Pension Ordinance was passed (former Mayor Angel Taveras, former Chief
of Staff Michael D’Amico, former Auditor General Ernest Almonte, and former Manager of
Benefits for Providence/Deputy Director of Human Resources Margaret Wingate).
In February 2017, the trial justice issued a written decision in which she denied and
dismissed plaintiffs’ claims for breach of contract and concluded that the 2012 Pension Ordinance
had not violated the Contract Clauses of the United States or Rhode Island Constitutions. Final
judgment entered in the City’s favor on February 24, 2017, and plaintiffs timely appealed. Several
notices of appeal were filed, covering the sixty-seven individual plaintiffs; the Court consolidated
them into three groups of appeals (the Contempt Case, the Pension Case, and the Medicare Case).
This opinion shall address the arguments raised with respect to the 2012 Pension Ordinance, the
Pension Case. Two other opinions, issued on even date herewith, resolve the issues raised in the
appeals from judgments in the Contempt Case, see supra note 4, and the Medicare Case, see supra
note 3.
II
Issues on Appeal
On appeal, plaintiffs make four broad arguments.6 First, they argue that the 2012 Pension
Ordinance specifically excluded certain categories of plaintiffs from its reach and that some of
represents one retired firefighter relying on an implied-in-fact contract theory for his claimed
entitlement to an annual COLA.
6
While the individual plaintiffs are represented by three separate attorneys, each of the three
attorneys representing his respective group of individual plaintiffs incorporate his brothers’
arguments by reference. We have therefore considered each of the arguments raised on appeal as
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those plaintiffs were absolutely immunized from any changes to their COLAs because of prior
judicial adjudications (the 1991 Consent Judgment, the 2004 Consent Judgment, and this Court’s
opinion in Arena, cited supra). Second, plaintiffs collectively challenge the trial justice’s
conclusion after trial that the 2012 Pension Ordinance did not violate the Contract Clause of either
the United States Constitution or the Rhode Island Constitution. The plaintiffs’ final two
arguments challenge the trial justice’s decision to grant summary judgment in favor of the City on
plaintiffs’ claim of violation of the Takings Clause and claim for promissory estoppel.
A
Effect of 2012 Pension Ordinance on Prior Judicial Adjudications
The plaintiffs approach their argument that the 2012 Pension Ordinance does not apply to
some categories of plaintiffs from two different angles. In one line, plaintiffs contend that the
2012 Pension Ordinance could not modify or supersede a consent judgment entered in Superior
Court in 1991 providing a 6 percent COLA to the settlement’s beneficiaries (the 1991 Consent
Judgment), a consent judgment entered in Superior Court in 2004 providing the precise COLA to
which each settlement beneficiary was entitled pursuant to the CBA in place at the date of
retirement (the 2004 Consent Judgment), or the final judgment in Arena, because to modify or
vacate these specific judicial adjudications by legislative action would constitute a violation of the
separation of powers doctrine. In the second line, plaintiffs contend that the plain language of the
2012 Pension Ordinance excludes those plaintiffs who claim an entitlement to an annual COLA
applicable to each of the individual plaintiffs. We will refer to the collective “plaintiffs” without
distinguishing between the way in which plaintiffs are grouped according to their respective
appellate attorney.
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pursuant to one of the prior judicial adjudications just described (Categories A, B, E-K, see supra
note 5).
We begin our discussion by noting that the City Council of Providence has repeatedly
attempted to change the COLAs promised to its retirees. See Arena, 919 A.2d at 381-82; City of
Providence v. Employee Retirement Board of City of Providence, 749 A.2d 1088, 1091-92 (R.I.
2000) (Mansolillo II); Mansolillo v. Employee Retirement Board of City of Providence, 668 A.2d
313, 314 (R.I. 1995) (Mansolillo I). In Mansolillo I, the Superior Court posed the following
question to this Court: Whether the 1991 consent decree was “final and binding so that it cannot
be vacated, modified, negated, amended and/or affected without the mutual consent of the parties
thereto and/or those affected thereby.” Mansolillo I, 668 A.2d at 315. This Court replied in the
affirmative, id. at 317, and there is no dispute that, in the instant case, some plaintiffs were
beneficiaries of the settlement memorialized in the 1991 Consent Judgment (Categories A and B,
see supra note 5).
In Mansolillo II, this Court affirmed the trial court’s judgment denying the City’s motion
to vacate the 1991 Consent Judgment and concluding that the 1991 Consent Judgment applied to
those retirees who retired on or before the date of entry of the 1991 Consent Judgment only.
Mansolillo II, 749 A.2d at 1100. In Arena, this Court held that retiree-plaintiffs had a vested
interest in the COLAs provided in the City’s ordinance that had memorialized the COLAs at the
root of the litigation resulting in the 1991 Consent Judgment. Arena, 919 A.2d at 382-83, 384, 395.
It is well settled that, when a legal dispute is resolved by agreement of the parties and
memorialized by a settlement agreement or consent order and the terms of such agreement or order
receive the trial court’s imprimatur through a consent judgment signed by a justice and entered by
the court clerk, the effect of the judgment is absolute unless all parties agree that the consent
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judgment should be vacated or one party demonstrates that the consent judgment should be vacated
or modified pursuant to Rule 60 of the Superior Court Rules of Civil Procedure based on fraud,
mutual mistake, lack of consent, or some other extraordinary circumstance. See In re McBurney
Law Services, Inc., 798 A.2d 877, 882 (R.I. 2002) (“When parties to litigation resolve issues
through compromise and in good faith, it is well settled that ‘courts will enforce the compromised
settlement without regard to what the result might, or would have been, had the parties chosen to
litigate.’”) (brackets omitted) (quoting Mansolillo I, 668 A.2d at 316). “A party may not escape
its obligations simply because one of the parties may not consider the agreement to be as palatable
to them as when they entered into it.” Id.
While “[t]his [C]ourt has at times likened a consent decree * * * as being ‘in the nature of
a solemn contract or agreement of the parties made under the sanction of the court[,]’” Mansolillo
I, 668 A.2d at 316 (quoting Durfee v. Ocean State Steel, Inc., 636 A.2d 698, 703 (R.I. 1994)),
“[w]e have long recognized the sanctity of final judgments entered by the various courts in this
state and, in particular, consent judgments.” Id. “We have said that absent fraud, mutual mistake,
or actual absence of consent, a judgment entered by consent cannot ‘be opened, changed or set
aside without the assent of the parties.’” Id. (quoting DeFusco v. Giorgio, 440 A.2d 727, 729 (R.I.
1982)). “The integrity of any decree or judgment is necessarily derived from its entry by the
particular court in the exercise of its judicial function.” Id. “The fact that it was consented to does
not in any way detract from its efficacy. It is to be given the same force and effect thereafter by
everyone, including the court, as though it had been entered after a hearing.” Id. (quoting Burns v.
Burns, 92 R.I. 278, 281-82, 168 A.2d 141, 143 (1961)).
Although the contractual nature of a consent judgment is beyond dispute, the consent
judgment has more weight than contracts that have not received a court’s imprimatur as the agreed-
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upon solution to a legal dispute. “The consent judgment * * * is clearly protected by the
impenetrable posted authority that we know as separation of powers, based upon articles 5 and 10
of the Rhode Island Constitution.”7 Mansolillo II, 749 A.2d at 1098. A legislative body is “utterly
powerless to enact legislation that would serve to interfere with, set aside, or reopen a judgment
that had been entered by the [trial court].” Id. (citing Taylor v. Place, 4 R.I. 324 (1856)).
The City argues before us that plaintiffs waived their separation-of-powers argument
because they did not properly raise it below. The plaintiffs respond that this argument was raised
to the trial justice in their motion for summary judgment filed and argued in the Contempt Case
prior to the dispositive motions argued in the Pension Case and Medicare Case, and that this issue
was indeed addressed by the trial justice in her Contempt Case bench decision denying plaintiffs’
motion for summary judgment and granting the City’s cross-motion for summary judgment. The
transcripts for the arguments and subsequent bench decision support plaintiffs’ response. During
the October 2014 argument, plaintiffs argued that:
“There’s only one circumstance under which the Court looks at
[equitable] factors, and that circumstance is under the conditions of
a Rule 60(b) motion. No such motion has been brought here, and I
don’t think it would be proper for the Court to simply ignore the fact
that they haven’t followed the Rules of Civil Procedure in terms of
how you get relief from an injunction. Because, Your Honor, if the
Court does that, it sets a precedent that any municipality at any point
in time can violate a court injunction, provided it is confident that
later on someday down the road if somebody notices and somebody
decides to do something about it, they will be able to defend
themselves in court. That’s not the way the court system is supposed
to work. It’s not the way the separation of powers is supposed to
work. Cities are not entitled to simply vacate court judgments by fiat
hoping that nobody will notice or that, if somebody does, some court
will allow them to do so later on.”
7
Article 5 of the Rhode Island Constitution provides: “The powers of the government shall be
distributed into three separate and distinct departments: the legislative, executive and judicial.”
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In the trial justice’s December 2014 bench decision resolving the cross-motions for summary
judgment in the Contempt Case, she stated:
“[T]his Court cannot conclude that the 2004 consent judgments
were either intended to, nor could they have the effect of limiting
the action of the City in entering into the CBA[]s with its police and
fire. The Court’s authority in approving the 2004 consent judgments
was limited to the actual terms of the CBA[]s in effect at the time.
The Court in 2004 could not have had either the authority or the
ability to foresee that at some time in the future the City would
choose to enact an ordinance effectively amending the terms of the
CBA. The City’s authority to enact the ordinance was not, nor could
it have been, affected by the 2004 consent judgments. The consent
judgments did not purport to restrain the City from taking actions
with regard to the COLA[]s or pensions of any other retired police
or firefighters or any other individuals aside from the individuals
named in the judgments.”
The unique nature of this trio of cases filed on the same day involving similar plaintiffs8 and the
same defendant and litigated more or less at the same time or (as with the Medicare and Pension
Cases) as a consolidated unit, leads us to conclude that the issue was indeed addressed by the trial
justice. Therefore, we shall consider the separation-of-powers arguments presented to us in the
instant appeal to be properly before us for consideration.
To be sure, the City was well within its authority to make a legislative change to the
retirees’ benefits; courts “cannot properly interfere with, or in advance restrain, the discretion of a
municipal body while it is in the exercise of powers that are legislative in their character.” New
Orleans Water Works Co. v. City of New Orleans, 164 U.S. 471, 481 (1896). “If an ordinance be
passed, and is invalid, the jurisdiction of the courts may then be invoked for the protection of
private rights that may be violated by its enforcement.” Id.; see id. at 482 (“If the ordinances
already passed are in derogation of the plaintiff’s contract rights, their enforcement can be
8
The three plaintiffs who appealed from the final judgment in the Contempt Case are all plaintiffs
in this Pension Case.
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prevented by appropriate proceedings instituted directly against the parties who seek to have the
benefit of them.”). The circumstances of the instant case, however, reach beyond the City
Council’s simple exercise of its legislative authority. The City’s past legislative reductions of
some of plaintiffs’ COLAs had been challenged and resulted in either a consent judgment, a
judicially approved settlement agreement, an opinion by this Court, or some combination thereof.
The 2012 Pension Ordinance purports to legislate over and around these final judgments, which is
an undeniable violation of the doctrine of separation of powers. See Taylor, 4 R.I. at 338-39.
In Taylor, the defendants sought and secured a legislative do-over to a judgment entered
against them in what was then known as the Providence County Court of Common Pleas. After a
lengthy discussion regarding the scope and effect of judicial power, Chief Justice Samuel Ames,
writing for this Court, stated:
“To interfere with this jurisdiction; to disturb and control the
exercise of this power in such a case; to take the case out of the
settled course of judicial proceeding in that court; to set aside its
verdict; to open its past judgment; and to give the defendants leave
to amend their affidavits, was, therefore, not only the exercise of
judicial power on the part of the general assembly over this court
and case, but of judicial power of the most eminent and controlling
character.” Taylor, 4 R.I. at 339.
The 2012 Pension Ordinance purported to override the final consent judgments that delineated the
COLAs to which some plaintiffs are entitled. As former Mayor Taveras indicated in his testimony,
he knew “there would be an issue” by “enacting the COLA [ordinance].”
As we have stated above, there are at least two reasons why the legislative change cannot
have any effect over plaintiffs who were parties to cases in which a settlement agreement was
reached and a consent judgment entered. First, the City has neither sought nor successfully
litigated a motion to vacate the final judgment in any of the cases plaintiffs previously brought to
challenge the change to their COLAs. As the trial justice found in her decision after the bench
- 15 -
trial in this case, several plaintiffs were included in either the 1991 Consent Judgment, this Court’s
opinion in Arena, or in individual settlement agreements reached in several different cases initiated
and resolved in Superior Court. Second, with regard to these plaintiffs, the 2012 Pension
Ordinance has no force or effect because—as we have made clear supra—a final judgment,
especially one that is the result of a negotiated agreement between the adversarial parties, is the
ultimate exercise of judicial power. The City Council’s attempt to override these final judgments
was a violation of the doctrine of the separation of powers. See R.I. Const., art. 5; Mansolillo II,
749 A.2d at 1098; Taylor, 4 R.I. at 338-39.9
There are twenty-nine plaintiffs who were not affected by prior judicial adjudications
because they were not parties to either the 1991 Consent Judgment, an individual settlement
agreement resolving prior litigation in Superior Court, or this Court’s opinion in Arena (Categories
C, D, and L, see supra note 5). We shall proceed to examine their arguments with respect to the
trial justice’s decision that the 2012 Pension Ordinance did not violate the Contract Clause.
9
The plaintiffs also argue that those who were a party to a prior judicial adjudication (Categories
A, B, E-K, see supra note 5) were purposely excluded from the reach of the 2012 Pension
Ordinance because the language of the ordinance did not include consent decrees, consent
judgments, litigation settlement agreements, or the resolution in Arena in the “notwithstanding”
clause of the ordinance; also, Resolution No. 277, adopted by the City Council the day after the
2012 Pension Ordinance passed, singled out police and firefighters subject to the 1991 Consent
Judgment and indicated the City’s intent to try again to evade the 1991 Consent Judgment. The
plaintiffs contend that the 2012 Pension Ordinance and Resolution No. 277 are in pari materia and
therefore lead to the conclusion that the City had not intended for these categories of retirees to be
affected by the 2012 Pension Ordinance because the City indicated its intent in Resolution No. 277
to find a way to invalidate the 1991 Consent Judgment. The City counters that the 2012 Pension
Ordinance clearly applies equally to all retired employees and their beneficiaries without any
intentional carve-out for plaintiffs who had sought prior judicial adjudication of changes to the
pension benefits. We need not address these arguments in light of our analysis regarding the
violation of the separation of powers doctrine and our well settled precedent regarding the effect
of final judgments.
- 16 -
B
Contract Clause
1
Nonjury Trial Standard of Review
After the bench trial, the trial justice concluded that the 2012 Pension Ordinance had not
violated the Contract Clauses of either the United States or Rhode Island Constitutions. The
plaintiffs raise several arguments challenging the trial justice’s findings and conclusions on this
issue. We have a somewhat multifaceted standard of review to consider when reviewing the
findings and conclusions from a nonjury trial for a claim of violation of a constitutional right.
We “apply a de novo standard of review to questions of law that may implicate a
constitutional right.” Cranston, 208 A.3d at 571 (quoting Goetz v. LUVRAJ, LLC, 986 A.2d 1012,
1016 (R.I. 2010)). This Court “will not disturb the factual findings made by a trial justice sitting
without a jury ‘unless such findings are clearly erroneous or unless the trial justice misconceived
or overlooked material evidence.’” Id. (quoting Gregoire v. Baird Properties, LLC, 138 A.3d 182,
191 (R.I. 2016)). “[W]e accord great weight to [the] trial justice’s determinations of credibility,
which, inherently, are the functions of the trial court and not the functions of the appellate court.”
Gregoire, 138 A.3d at 191 (quoting South County Post & Beam, Inc. v. McMahon, 116 A.3d 204,
210 (R.I. 2015)). “When the record indicates that competent evidence supports the trial justice’s
findings, we shall not substitute our view of the evidence for his or hers even though a contrary
conclusion could have been reached.” Id. (brackets omitted) (quoting McMahon, 116 A.3d at 210).
However, “[a] judgment in a nonjury case will be reversed on appeal when it can be shown that
the trial justice misapplied the law * * *.” Cote v. Aiello, 148 A.3d 537, 544 (R.I. 2016) (quoting
Lamarque v. Centreville Savings Bank, 22 A.3d 1136, 1139 (R.I. 2011)).
- 17 -
2
Contract Clause Framework
“The Contract Clauses of the United States and the Rhode Island Constitutions prevent the
state from enacting laws ‘impairing the obligation of contracts.’” Cranston, 208 A.3d at 571
(brackets omitted) (quoting U.S. Const. Art. I, § 10, cl. 1; R.I. Const., art. 1, § 12); see Hebert v.
City of Woonsocket, 213 A.3d 1065, 1085 (R.I. 2019). “[T]he prohibition is not an absolute one
and is not to be read with literal exactness like a mathematical formula.” Id. (quoting United States
Trust Company of New York v. New Jersey, 431 U.S. 1, 21 (1977)). “[T]he Clause routinely has
been applied to contracts between states and private parties” and “has been interpreted to apply to
municipalities as well.” Id. at 572 (quoting Nonnenmacher v. City of Warwick, 722 A.2d 1199,
1202 (R.I. 1999)). The applicable three-prong analysis under which we analyze claims of violation
of the Contract Clause is well established. We must first “determine whether a contract exists.”
Id. (quoting Nonnenmacher, 722 A.2d at 1202). “[I]f a contract exists, the court then must
determine whether the modification [complained of] results in an impairment of that contract and,
if so, whether this impairment can be characterized as substantial.” Id. (quoting Nonnenmacher,
722 A.2d at 1202). “Finally, if it is determined that the impairment is substantial, the court then
must inquire whether the impairment, nonetheless, is reasonable and necessary to fulfill an
important public purpose.” Id. (quoting Nonnenmacher, 722 A.2d at 1202); see Hebert, 213 A.3d
at 1087 (reaffirming the burden on this third prong of the Contract Clause analysis).
As we discussed in Cranston, the municipality bears a “burden of production as to the
reasonable-and-necessary element of the analysis.” Cranston, 208 A.3d at 573. The trial court is
to accord some deference to the government’s “proffered evidence for the reasonableness and
necessity” of the contractual impairment, but not complete deference because the government’s
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“self-interest is at stake.” Id. at 574 (citing Baltimore Teachers Union, American Federation of
Teachers Local 340, AFL-CIO v. Mayor and City Council of Baltimore, 6 F.3d 1012, 1019 (4th
Cir. 1993), then quoting United States Trust, 431 U.S. at 26). Furthermore, the government must
proffer credible evidence, not just admissible evidence, on this point. See id. at 574 n.7 (noting
trial justice’s rejection of the City of Cranston’s request for an “any admissible evidence standard”
because a proffer of any admissible evidence would not allow for any level of judicial scrutiny).
If the government meets its burden on this third prong, then the burden shifts back to the plaintiff
to prove that the contractual impairment was not reasonable and necessary to fulfill a legitimate
and significant purpose. See id. at 572, 574.
The plaintiffs argue that the trial justice erred by requiring them to prove beyond a
reasonable doubt that the 2012 Pension Ordinance was not reasonable and necessary to fulfill a
significant and legitimate purpose. We addressed an argument regarding the burden of proof for
the Contract Clause analysis in Cranston, where the same trial justice conducted a Contract Clause
analysis of the City of Cranston’s ten-year suspension of the COLA for some retirees. Cranston,
208 A.3d at 574. We approved her allocation of the burdens of production as well as her
application of the “beyond a reasonable doubt” burden of proof, borne by the plaintiff, on the third
prong of the analysis once the government had met its burden to proffer credible evidence
justifying its impairment of its contractual obligation. Id. at 572, 574. Moreover, it is well settled
that legislative action, whether state or municipal, “is presumed constitutional and will not be
invalidated by this Court unless the party challenging the [legislation] proves beyond a reasonable
doubt that the legislative enactment is unconstitutional.” Parella v. Montalbano, 899 A.2d 1226,
1232-33 (R.I. 2006); see Town of Glocester v. Olivo’s Mobile Home Court, Inc., 111 R.I. 120, 124,
300 A.2d 465, 468 (1973).
- 19 -
3
Discussion
The trial justice concluded that each plaintiff proved beyond a reasonable doubt that they
were entitled to pension benefits from the City, including COLAs, by way of an express contract
or an implied-in-fact contract.10 The plaintiffs have not challenged the trial justice’s factual
findings or conclusions with respect to the original source of their right to their pension benefits.
The plaintiffs are also not challenging the trial justice’s findings or conclusions with respect to the
substantial impairment prong of the analysis. The trial justice found that plaintiffs proved beyond
a reasonable doubt that they specifically and reasonably relied on the compounded COLAs and,
as a result, the 2012 Pension Ordinance substantially impaired their COLA rights.
The plaintiffs’ appellate arguments with respect to the trial justice’s Contract Clause
analysis and conclusions are focused on the third prong: whether the 2012 Pension Ordinance
suspending the COLAs until the pension fund reaches a 70 percent funding level was a reasonable
and necessary action to achieve an important public purpose.
The trial justice found that the City’s fact witnesses and expert witness provided credible
evidence establishing that “the ever-increasing unfunded pension liability resulting from the
escalating, unmanageable [annual required contribution] payments created an unprecedented fiscal
emergency for the City” and that plaintiffs had failed to rebut the City’s credible evidence beyond
a reasonable doubt that the City had a legitimate public purpose for suspending the COLAs. The
10
As previously stated and as set out supra at note 5, the parties stipulated to the separation of
plaintiffs into twelve categories, grouped by the claimed source of their entitlement to the pension
benefits, such as consent decrees, settlement agreements, final court judgments, CBAs, IAAs, or
implied-in-fact contracts. The trial justice examined each of the twelve categories and determined
that each category had proved a vested benefit pursuant to either an express contract or an implied-
in-fact contract.
- 20 -
trial justice concluded that the 2012 Pension Ordinance was, therefore, passed for a “significant
and legitimate public purpose.”
To determine whether the City established that the 2012 Pension Ordinance was
“reasonable and necessary,” the trial justice examined the evidence before her through three factors
culled from United States Trust, cited supra, and set forth by the Second Circuit Court of Appeals
in Buffalo Teachers Federation v. Tobe, 464 F.3d 362 (2d Cir. 2006), cert. denied, 550 U.S. 918
(2007):
“Ultimately, for impairment to be reasonable and necessary under
less deference scrutiny, it must be shown that the state did not (1)
‘consider impairing the * * * contracts on par with other policy
alternatives’ or (2) ‘impose a drastic impairment when an evident
and more moderate course would serve its purpose equally well,’
nor (3) act unreasonably ‘in light of the surrounding
circumstances[.]’” Buffalo Teachers Federation, 464 F.3d at 371
(quoting United States Trust, 431 U.S. at 30-31).
With respect to the first factor, the trial justice found that the Taveras administration took several
actions to address the budget deficit before passing the 2012 Pension Ordinance that suspended
the COLAs and that the Mayor and his former staff and advisors provided credible evidence that
they had considered several alternative measures, some of which were not implemented for a
variety of reasons. The trial justice concluded that the COLA suspension had not been considered
“on par with other policy alternatives.”
With respect to the second factor, the trial justice found that the City appropriately targeted
retiree pension benefits because the unfunded liability of the pension fund was primarily due to
the retirees, not to the active employees. The trial justice also found that the ultimate economic
loss to plaintiffs was minimal and that the deprivation of the COLA part of the pension benefit
was temporary in nature. She ultimately concluded that the City met its burden to show “there
was no more moderate course available to adequately address the City’s fiscal crisis * * *.”
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Considering the third factor, the entirety of the circumstances surrounding the suspension
of the COLA benefit, the trial justice concluded that the “City presented sufficient credible
evidence that the Pension Ordinance was circumscribed, temporary, prospective, and, again,
necessitated by a fiscal emergency.” She also concluded that the temporary nature of the
suspension weighed in favor of finding the impairment of the benefit was reasonable and
necessary. Finally, she found that plaintiffs failed to rebut the City’s evidence beyond a reasonable
doubt.
The plaintiffs argue that the City failed to meet its burden to show credible evidence that
the 2012 Pension Ordinance was reasonable and necessary to achieve an important public purpose.
The plaintiffs also argue that the trial justice erred when she concluded the 2012 Pension Ordinance
was reasonable and necessary because, according to plaintiffs, the City created its own fiscal
emergency when it formed contracts with the unions representing the members of the police and
fire departments promising 5 and 6 percent COLAs at a time when the pension fund was drastically
underfunded and the annual requirement contribution (ARC) payments were growing substantially
every year. In addition, plaintiffs argue that the trial justice erred because the City did not
demonstrate that other more moderate options, such as a time-limited suspension, a reduction of
existing COLAs, or implementing a waiting period for COLAs, would not effectively address the
problem before the City suspended the COLAs entirely for an indefinite period. Finally, plaintiffs
argue that the trial justice erred by concluding that the COLA suspension, projected to last
approximately twenty-four years, was temporary and therefore reasonable.
The City counters that it presented evidence that the City was in a fiscal emergency in 2011
and 2012 and that such emergencies are widely held to constitute a legitimate public purpose for
impairing contractual obligations. To be sure, it has long been settled that a state or local
- 22 -
government may exercise its police power to protect the collective public in a time of fiscal strife.
See Home Building & Loan Ass’n v. Blaisdell, 290 U.S. 398 (1934). The United States Supreme
Court stated long ago that, “[w]ith a growing recognition of public needs and the relation of
individual right to public security, the court has sought to prevent the perversion of the [Contract
C]lause through its use as an instrument to throttle the capacity of the states to protect their
fundamental interests.” Id. at 443-44, 444 (upholding Minnesota statute passed during economic
emergency which allowed homeowners to apply to the courts for a delay of a mortgage foreclosure
sale of a home and an extension for the period of redemption as a reasonable exercise of legislative
power to protect the welfare of its citizenry). “The principle of this development is * * * that the
reservation of the reasonable exercise of the protective power of the state is read into all contracts
* * *.” Id. at 444. Regardless of how the City landed in the fiscal position it was in when Mayor
Taveras took office in January 2011, there is no doubt that drastic financial measures had to be
taken to address the situation.
After a careful review of the trial record, we have reservations about the trial justice’s
conclusion that the 2012 Pension Ordinance was reasonable and necessary to achieve the City’s
important purpose of financial solvency. In Cranston, we held that a definitive ten-year suspension
of COLAs was temporary in nature. Cranston, 208 A.3d at 578. In the case at bar, however, we
agree with plaintiffs that “the [2012] Pension Ordinance’s lack of a definitive deadline by which
COLAs will be reinstated necessarily undermines a finding that it is only ‘temporary.’”
In upholding the ordinance suspending COLA benefits in Cranston, we placed great
emphasis on the fact that the suspension was for a finite period of time:
“[W]e agree with the trial justice’s conclusions that the 2013
ordinances were narrowly tailored to the problem and that the
impairment was temporary and prospective in nature because the
2013 ordinances suspended a future benefit for a finite period of
- 23 -
time. The 2013 ordinances did not eliminate the COLA benefit
altogether, and only affected COLAs not yet made available to
retirees.” Cranston, 208 A.3d at 578.
Here, the COLA suspensions were for an indefinite period of time, i.e., until the pension plan
becomes 70 percent funded. We deem this to be unreasonable.
Based on the actuarial evidence presented at trial, the period of COLA suspensions would
be approximately twenty-four years from the enactment of the 2012 Pension Ordinance. In
addition, William B. Fornia, an expert in “[a]ctuarial science as it relates to municipal pensions[,]”
testified that mortality tables indicated that more than half of the plaintiffs, thirty-eight of the sixty-
seven, will have died by the time the pension plan attains 70 percent funding. The suspension of
COLAs can hardly be called temporary for those pensioners.
Although we affirm the trial justice’s findings that the City faced “an unprecedented fiscal
emergency” and that the 2012 Pension Ordinance was passed for a “significant and legitimate
public purpose,” we conclude that she erred in finding that the length of time of the COLA
suspension was reasonable and necessary to fulfill an important public purpose.11 We remand the
11
We also note our disagreement with the trial justice’s attribution to plaintiffs’ actuarial expert
witness William B. Fornia of the year 2036 as the likely year in which the pension fund would
reach a 70 percent funded level. A careful review of Fornia’s testimony reveals that, when he
referenced the year 2036, he was referring to a report authored by Buck, the City’s actuarial
consulting firm, and not to his own data calculations. At the City Council’s request, Buck had
“calculated the funding impact on the Employees’ Retirement System of the City of Providence of
alternative proposed changes in the * * * COLAs” and, in a report dated March 27, 2012, proposed
four options and the projected effect of each. Moreover, the testimony of City witness Michael
D’Amico also reflected that the City did not anticipate the reinstatement of the COLAs for
plaintiffs until 2036. Based on our review of the evidence, the source of the year 2036 as the
earliest year in which the City might achieve the 70 percent funding level was from the Buck
report, issued prior to the City’s decision to pass the 2012 Pension Ordinance, and not from
Fornia’s own calculations.
We also mention that the trial justice’s conclusion that Fornia’s calculations were not
credible because he testified on cross-examination that he was not concerned about some of the
raw data discrepancies in the data set he used to analyze the effect of the COLA suspension on the
retirees is belied by the City’s expert Daniel Sherman’s testimony that he had engaged in similar
- 24 -
case, therefore, to the Superior Court with instructions to determine a reasonable length of time
for which the COLA suspension may remain in effect with respect to plaintiffs who were not
affected by prior judicial adjudications. See Hebert, 213 A.3d at 1088 (remanding case for trial
justice to apply the correct standard on the third prong of the Contract Clause analysis).
C
Takings Clause
A few weeks before the bench trial started, the trial justice granted the City’s motion for
summary judgment on plaintiffs’ Takings Clause claim. The plaintiffs argue on appeal that she
erred as a matter of law when she concluded that the 2012 Pension Ordinance did not constitute a
taking pursuant to the Takings Clause of either the Rhode Island or United States Constitutions.
1
Standard of Review
“[T]his Court will review the grant of a motion for summary judgment de novo, employing
the same standards and rules used by the hearing justice.” Cranston, 208 A.3d at 580 (quoting
Cancel v. City of Providence, 187 A.3d 347, 349 (R.I. 2018)). “[T]he trial court’s decision will be
affirmed ‘only if, after reviewing the admissible evidence in the light most favorable to the
nonmoving party, we conclude that no genuine issue of material fact exists and that the moving
party is entitled to judgment as a matter of law.’” Id. at 580-81 (quoting Cancel, 187 A.3d at 350).
“In a motion for summary judgment, ‘the nonmoving party bears the burden of proving by
competent evidence the existence of a disputed issue of material fact and cannot rest upon mere
analytical methods and concurred with Fornia’s calculations. Although we accord great weight to
a trial justice’s determinations of witness credibility, see Gregoire v. Baird Properties, LLC, 138
A.3d 182, 191 (R.I. 2016), our review of the record has called this particular credibility
determination into doubt.
- 25 -
allegations or denials in the pleadings, mere conclusions or mere legal opinions.’” Id. at 581
(quoting Cancel, 187 A.3d at 350).
2
Discussion
“The Takings Clauses of the United States and Rhode Island Constitutions provide that a
government may not take private property for public use ‘without just compensation.’” Cranston,
208 A.3d at 581 (quoting U.S. Const. Amend. V; R.I. Const., art. 1, § 16). “The first step in the
analysis of a takings claim is to determine whether a recognizable property right is at stake.” Id.
(citing Parella v. Retirement Board of Rhode Island Employees’ Retirement System, 173 F.3d 46,
58 (1st Cir. 1999)). The trial justice concluded that, pursuant to this Court’s discussion and holding
in Arena, plaintiffs had “a constitutionally protected property interest in COLAs,” and the City has
not filed a cross-appeal. Similar to our approach in Cranston, therefore, “we assume, without
deciding, that plaintiff[]s * * * have a protected property interest in future COLA payments.” Id.
The issue plaintiffs raise before us is whether the 2012 Pension Ordinance should be
examined as a physical taking or a regulatory taking. The plaintiffs argue that the trial justice’s
application of the Takings Clause was flawed and she erred by concluding that the City was entitled
to summary judgment on this claim. The plaintiffs urge us to consider the long-term suspension
of COLAs in the 2012 Pension Ordinance to be a per se physical taking, rather than a regulatory
taking. The plaintiffs claim that the City’s appropriation of an identifiable fund of money from
private citizens renders the action akin to the per se taking found by the United States Supreme
Court in Horne v. Department of Agriculture, 135 S. Ct. 2419 (2015), among other cases. The
City argues that the trial justice appropriately examined the 2012 Pension Ordinance as a
regulatory taking and did not err when she granted summary judgment in its favor.
- 26 -
As we recently stated, “[p]hysical takings (or physical invasion or appropriation cases)
occur when the government physically takes possession of an interest in property for some public
purpose.” Cranston, 208 A.3d at 581 (quoting Buffalo Teachers Federation, 464 F.3d at 374).
“Physical takings ‘are takings per se and always necessitate compensation.’” Id. (quoting Brunelle
v. Town of South Kingstown, 700 A.2d 1075, 1081 (R.I. 1997)). In Horne, the United States
Supreme Court clarified that the physical taking of property can occur with personal and real
property, and that all physical takings of property require just compensation pursuant to the Fifth
Amendment to the United States Constitution. Horne, 135 S. Ct. at 2424, 2425, 2426, 2428
(holding that the Department of Agriculture’s requirement that raisin growers set aside a
government-determined percentage of some year’s crops for the government to distribute was a
per se physical taking requiring compensation in the same way that taking real property requires
just compensation). The Supreme Court held that the government could not avoid its duty to pay
compensation for per se physical takings by “reserving to the property owner a contingent interest
in a portion of the value of the property, set at the government’s discretion.” Id. at 2428.
“In contrast, ‘a regulatory taking transpires when some significant restriction is placed
upon an owner’s use of his property for which justice and fairness require that compensation be
given.’” Cranston, 208 A.3d at 581-82 (brackets omitted) (quoting Philip Morris, Incorporated v.
Reilly, 312 F.3d 24, 33 (1st Cir. 2002)). “Regulatory takings are further subdivided into categorical
and non-categorical takings.” Id. at 582 (quoting Sherman v. Town of Chester, 752 F.3d 554, 564
(2d Cir. 2014)). “‘Anything less than a complete elimination of value, or a total loss, is a non-
categorical taking, which is analyzed under the framework created in’ Penn Central
Transportation Company v. City of New York, 438 U.S. 104 (1978).” Id. (quoting Sherman, 752
F.3d at 564). “In Penn Central, the United States Supreme Court listed three factors it considered
- 27 -
of ‘particular significance’ in the regulatory taking analysis: (1) ‘the economic impact of the
regulation on the claimant’; (2) ‘the extent to which the regulation has interfered with distinct
investment-backed expectations’; and (3) ‘the character of the governmental action.’” Id. (brackets
omitted) (quoting Penn Central, 438 U.S. at 124) (the Penn Central factors).
Since identifying the Penn Central factors, the Supreme Court has held that “the fact that
legislation disregards or destroys existing contractual rights does not always transform the
regulation into an illegal taking.” Connolly v. Pension Benefit Guaranty Corporation, 475 U.S.
211, 217, 224, 225-27 (1986) (brackets omitted) (citing Bowles v. Willingham, 321 U.S. 503, 517
(1944)) (holding legislation enacting a fine for employers that withdrew from a multiemployer
pension plan was not a regulatory taking pursuant to the Penn Central factors). “This is not to say
that contractual rights are never property rights or that the Government may always take them for
its own benefit without compensation.” Id. at 224.
There is no doubt that the COLA suspension in this case represents the denial of an
expectancy on the part of plaintiffs, and not the removal of tangible property already given to them.
We recently stated that the prospective nature of the change to a plaintiff’s contractual right to an
annual COLA was different from a government entity taking back “a payment already made to
retirees to appropriate the money for its own use.” Cranston, 208 A.3d at 582. In Cranston, this
Court considered the suspension of the contractual right to an annual COLA to be subject to the
regulatory taking analysis rather than as a per se physical taking. Id. Here, the trial justice
considered the 2012 Pension Ordinance to be analogous to the city employee wage freeze in
Buffalo Teachers Federation, cited supra, where the Second Circuit Court of Appeals held that the
wage freeze put in place for City of Buffalo employees was to be examined pursuant to the Penn
Central factors as a potential regulatory taking rather than a per se physical taking. See Buffalo
- 28 -
Teachers Federation, 464 F.3d at 367, 374, 375. While plaintiffs urge us to consider the COLA
suspension as akin to the physical taking of the raisins in Horne, we see no reason to deviate from
the precedent established last term in Cranston.
In Cranston, we affirmed the grant of summary judgment on a Takings Clause claim
concerning COLA benefits. Cranston, 208 A3d at 583. In doing so, we relied on the undisputed
facts that the ordinances at issue in that case “effectuate[d] only a limited suspension of a small
part of the overall pension retirement benefits, and * * * were prospective[.]” Id. In other words,
the COLA suspension was “temporary[,]” “impact[ed] only part of the total pension benefits
received[,]” did not affect any COLA payments previously made, and “was motivated by a critical
need to improve the health of the City’s pension system.” Id.
In light of our mandate to remand this case for the trial justice to determine a reasonable
length of time for which the COLA suspension may remain in effect, we are satisfied that the same
factors obtain and that Cranston is controlling with respect to plaintiffs’ Takings Clause claim.
D
Promissory Estoppel
When the trial justice granted summary judgment in the City’s favor on plaintiffs’ claim
for violation of the Takings Clause, she also granted summary judgment in the City’s favor on
plaintiffs’ claim for promissory estoppel. She concluded that the City was entitled to judgment
as a matter of law on this claim because, in her words, this Court made clear that “promissory
estoppel is not applicable to public pension cases.” (Citing Retired Adjunct Professors of State of
Rhode Island v. Almond, 690 A.2d 1342, 1346 (R.I. 1997)). The plaintiffs argue before us that
- 29 -
the trial justice erred as a matter of law when she concluded that promissory estoppel was not
available in a public pension case.
Promissory estoppel, as defined by this Court, is “a promise which the promisor should
reasonably expect to induce action or forbearance on the part of the promisee or a third person and
which does induce such action or forbearance, and therefore is binding if injustice can be avoided
only by enforcement of the promise.” Cote, 148 A.3d at 547 (brackets omitted) (quoting Filippi v.
Filippi, 818 A.2d 608, 625 (R.I. 2003)). “Application of the doctrine of promissory estoppel also
has been extended ‘to situations in which the promisee’s reliance on the promise was induced, and
injustice may be avoided only by enforcement of the promise.’” Id. (quoting Filippi, 818 A.2d at
625).
However, this Court has often declined the invitation to address arguments or claims based
on a theory of promissory estoppel when an enforceable contract exists between the parties. See,
e.g., Haviland v. Simmons, 45 A.3d 1246, 1260 (R.I. 2012) (“Because we are satisfied that an
express, enforceable contract arose between the parties, we need not reach plaintiff’s contention
that she is entitled to relief based on a theory of promissory estoppel.”); DeAngelis v. DeAngelis,
923 A.2d 1274, 1280 n.9 (R.I. 2007) (“[S]ince we have upheld the validity of the oral contract,
defendant’s contention concerning promissory estoppel is of no real-world significance in this
case.”). Based on our de novo review of this issue, the City was entitled to summary judgment on
the plaintiffs’ claim for promissory estoppel because the trial justice found that each plaintiff had
a contract with the City (whether express or implied-in-fact) and these findings have not been
challenged on appeal. With contracts in place for each plaintiff, we need not consider whether the
City is liable to the plaintiffs pursuant to the theory of promissory estoppel. See Haviland, 45 A.3d
- 30 -
at 1260; DeAngelis, 923 A.2d at 1280 n.9. The entry of summary judgment on the plaintiffs’
promissory estoppel theory is, therefore, affirmed.
III
Conclusion
For the reasons set forth throughout this opinion, the judgment of the Superior Court is
affirmed in part, vacated in part, and reversed in part. The entry of summary judgment in the
City’s favor on the plaintiffs’ claims under the Takings Clause and for promissory estoppel is
affirmed. We reverse the judgment with respect to all of the plaintiffs who were also a party in
prior litigation regarding their COLA benefits and who were included in either the 2004 Consent
Judgment, 1991 Consent Judgment, an individual settlement agreement, or were a plaintiff in
Arena (Categories A, B, E, G, H, I, J, K, see supra note 5). The 2012 Pension Ordinance is
unenforceable as to these individuals for the reasons articulated above, and we direct the Superior
Court to enter judgment in favor of these plaintiffs. With respect to the plaintiffs’ challenge to the
2012 Pension Ordinance based upon the Contract Clauses of the United States and Rhode Island
Constitutions, we vacate the judgment and remand for a determination of a reasonable length of
time for the COLA suspension to remain in effect. The record of this case shall be returned to the
Superior Court.
Justice Robinson, concurring. I concur in the laudably well-reasoned and well-written
majority opinion in this case. It unquestionably applies existing Contracts Clause jurisprudence
accurately to the facts of this case; and, in hewing to that jurisprudence, it quite understandably
finds fatally flawed the temporally unlimited legislation being reviewed.
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However, I feel compelled to say that, while sincerely respecting the judicial craftsmanship
that underlies the Court’s opinion, I am able to concur in its Contracts Clause analysis only
unenthusiastically and in a decidedly dubitante frame of mind. I feel that it is important for me to
reiterate my previously expressed view that the time for revisiting our Contracts Clause
jurisprudence is overdue. See Cranston Police Retirees Action Committee v. City of Cranston, 208
A.3d 557, 592-95 (R.I. 2019) (Robinson, J., concurring).
I simply wish to state in a respectful tone my deeply held belief that the United States
Supreme Court has erred by straying too far from the clear constitutional prohibition against laws
that impair the obligations of contracts. I see no need to repeat here everything that I wrote last
year in that regard in Cranston (see id.), but I remain as concerned today with the general drift of
Contracts Clause jurisprudence over the past several decades as I was then. And I would once
again direct the reader’s attention to the powerful and thought-provoking dissent of Justice Neil
Gorsuch of the United States Supreme Court in the case of Sveen v. Melin, 138 S. Ct. 1815, 1826-
31 (2018) (Gorsuch, J., dissenting). See Douglas W. Kmiec & John G. McGinnis, The Contract
Clause: A Return to the Original Understanding, 14 Hastings Const. L.Q. 525 (1987). While I
personally would be sympathetic to truly extraordinary situations in which an “absolutist”
approach to the prohibition against the impairment of the obligation of contracts would be
inappropriate, it is my view that the instant situation should not properly be so classified—although
I repeat that this Court’s opinion today is consistent with currently prevailing precedent.
I conclude by observing that one of the most distressing features of decisions like the one
in Cranston or in the instant case is that they in effect reward or immunize prior governmental
ineptitude. To be blunt, the elimination of annual cost-of-living adjustments (COLAs) that has
brought this case to this Court was deemed to be necessary because of what the fiscal
- 32 -
irresponsibility of previous municipal administrations had brought about. That regrettable fact
radically distinguishes the instant case from what was at issue in the famous decision of the United
States Supreme Court in Home Building & Loan Association v. Blaisdell, 290 U.S. 398 (1934).
The Minnesota statute (enacted in 1933) that resulted in the impairment of the obligation of certain
contracts that a 5-4 majority of the Supreme Court held not to be unconstitutional was an attempt
by the legislature to alleviate the impact of the Great Depression on presumptively innocent
mortgagors. Blaisdell, 290 U.S. at 415-18, 447-48, 483. It was not a post hoc attempt to rob Peter
to pay Paul by targeting a finite number of retired municipal employees who had a contractual
entitlement to COLAs—all for the purpose of restoring a degree of municipal fiscal integrity after
a period of gross governmental fiscal irresponsibility.
I will say no more, but I do remain profoundly concerned about the distance we have
traveled from the clear language in both the United States Constitution and the Rhode Island
Constitution prohibiting the impairment of the obligation of contracts. I conclude by repeating
what I said a year ago in the Cranston case:
“I for one yearn for the day when the courts will revert to something
substantially closer to an ‘absolutist’ understanding of the Contracts
Clause. In the meantime, however, I bow obediently, but
discontentedly, to the result that prevailing precedent dictates.”
Cranston, 208 A.3d at 594 (Robinson, J., concurring).
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STATE OF RHODE ISLAND AND PROVIDENCE PLANTATIONS
SUPREME COURT – CLERK’S OFFICE
OPINION COVER SHEET
Manuel Andrews, Jr. et al. v. James Lombardi, in his
Title of Case capacity as Treasurer of the City of Providence,
Rhode Island.
No. 2017-262-Appeal.
No. 2017-263-Appeal.
Case Number No. 2017-264-Appeal.
No. 2017-269-Appeal.
(KC 13-1129)
Date Opinion Filed June 30, 2020
Suttell, C.J., Goldberg, Flaherty, Robinson, and
Justices
Indeglia, JJ.
Written By Chief Justice Paul A. Suttell
Source of Appeal Kent County Superior Court
Judicial Officer From Lower Court Associate Justice Sarah Taft-Carter
For the Plaintiffs:
Lauren E. Jones, Esq.
Kevin F. Bowen, Esq.
Thomas M. Dickinson, Esq.
Thomas J. McAndrew, Esq.
Robert S. Thurston, Esq.
For the Defendant:
Attorney(s) on Appeal
Nicholas L. Nybo, Esq.
Kenneth B. Chiavarini, Esq.
William M. Dolan, Esq.
Matthew T. Jerzyk, Esq.
Jeffrey M. Padwa, Esq.
William K. Wray, Jr., Esq.
Jeffrey T. Dana, Esq.
SU-CMS-02A (revised June 2016)