Fraternal Order of Police Lodge 73 v. City of Evansville, Indiana

ATTORNEYS FOR APPELLANTS ATTORNEYS FOR APPELLEES
Charles L. Berger Robert W. Rock
Jennifer L. Ulrich -Keppler David L. Jones
Evansville, Indiana Evansville, Indiana
ATTORNEY FOR AMICUS CURIAE
INDIANA ASSOCIATION OF CITIES
AND TOWNS AND INDIANA MUNICIPAL
LAWYERS ASSOCIATION
Jo Angela Woods
Indianapolis, Indiana
______________________________________________________________________________
In the
Indiana Supreme Court
_________________________________
No. 82S01-0410-CV-441
FRATERNAL ORDER OF POLICE,
LODGE #73, ET AL.
Appellants (Plaintiffs below),
v.
CITY OF EVANSVILLE, INDIANA, ET AL.
Appellees (Defendants below).
_________________________________
Appeal from the Vanderburgh Circuit Court, No. 82C01-9905-CP-202
The Honorable Carl A. Heldt, Judge
_________________________________
On Petition To Transfer from the Indiana Court of Appeals, No. 82A01-0311-CV-442
_________________________________
June 21, 2005
Boehm, Justice.
We hold that the contributions and benefits of first class patrolmen under the pension and
disability statute are to be calculated based on the base pay available to all officers of the same
rank, notwithstanding the fact that some, but not all, officers in that rank receive higher pay un-
der the collective bargaining agreement for assignments to specified units.
Facts and Procedural History
The Fraternal Order of Police Lodge 73 and three retired officers of the Evansville Police
Department brought this case as a class action against the City of Evansville and the Indiana
Public Employees Retirement Fund (“PERF”). 1 Their claim is for additional retirement benefits
for the three named plaintiffs and all other first class patrolmen. Police officers’ pension benefits
are calculated using the “monthly salary of a first class patrolman.” Ind. Code § 36-8-8-11
(2004). 2 The applicable statute defines the “salary of a first class patrolman or firefighter” as
“the base salary of a patrolman or firefighter plus all longevity increases.” I.C. § 36-8-1-11(a).
The collective bargaining agreement between Evansville and its police officers contains an
“Equal Pay for Equal Work” provision that requires paying a corporal’s salary to first class pa-
trolmen assigned to the Criminal Investigation Division (CID). The salary of a corporal is eight
percent higher than that of a first class patrolman. The plaintiffs contend that all first class pa-
trolmen’s pension benefits should be calculated using the “base salary” of the highest paid first
class patrolman, a corporal’s salary, because some first class patrolmen serve in the CID and re-
ceive corporal’s pay. Evansville disagreed, claiming that the additional eight percent paid to first
class patrolmen serving in the CID is “incentive pay” that is excluded from “base salary” by
Indiana Code section 36-8-1-11(a).
The trial court granted the defendants’ motion for summary judgment on every claim
raised in the plaintiffs’ complaint. The Court of Appeals reversed, agreeing with the plaintiffs
that under the statute pension benefits are to be based on the highest salary paid to any first class
patrolman. Fraternal Order of Police v. City of Evansville, 809 N.E.2d 470, 472 (Ind. Ct. App.
2004). In the case of the Evansville police, these were the patrolmen in the CID receiving a cor-
poral’s salary. We granted transfer. Fraternal Order of Police v. City of Evansville, 822 N.E.2d
977 (Ind. 2004). The Indiana Association of Cities and Towns and Indiana Municipal Lawyers
Association (collectively, “amici”) filed an Amicus Curiae brief aligned with the defendants.
1
The plaintiffs sought to represent a class of all patrolmen who have been denied pension benefits as pro-
vided in the statute. This definition of the class does not on its face limit the claims to those asserted in
the complaint. The trial court granted summary judgment in favor of the defendants on the merits without
addressing the propriety of a class action or defining the class.
2
Both parties agree that the rights of the plaintiffs are set by the statutes applicable to the “1977 Police
Officers’ and Firefighters’ Pension and Disability Fund.” I.C. §§ 36-8-8-1 to -22. No issues are raised
under the predecessor statute governing pension funds.
2
Standard of Review
On appeal, the standard of review of a summary judgment ruling is the same as that used
in the trial court: summary judgment is appropriate only where the evidence shows there is no
genuine issue of material fact and the moving party is entitled to a judgment as a matter of law.
Ind. Trial Rule 56(C); Shell Oil Co. v. Lovold Co., 705 N.E.2d 981, 983-84 (Ind. 1998). All
facts and reasonable inferences drawn from those facts are construed in favor of the non-moving
party. Colonial Penn Ins. Co. v. Guzorek, 690 N.E.2d 664, 667 (Ind. 1997). The review of a
summary judgment motion is limited to those materials designated to the trial court. T.R. 56(H);
Rosi v. Bus. Furniture Corp., 615 N.E.2d 431, 434 (Ind. 1993). We must carefully review deci-
sions on summary judgment motions to ensure that the parties are not improperly denied their
day in court. Estate of Shebel v. Yaskawa Elec. Am., Inc., 713 N.E.2d 275, 277 (Ind. 1999).
“Base Salary”
The parties remind us of principles of statutory construction and, as parties often do, cite
opposing maxims. The plaintiffs point out that pension laws should be liberally construed in fa-
vor of the intended beneficiaries. See Schock v. Chappell, 231 Ind. 480, 484, 109 N.E.2d 423,
424 (1952); State ex rel. Clemens v. Kern, 215 Ind. 515, 523, 20 N.E.2d 514 (1939). The defen-
dants reply that any construction of the pension laws must be consistent with the plain meaning
and legislative purpose of the statutes. U.S. Sav. Fund & Inv. Co. v. Harris, 142 Ind. 226, 231,
40 N.E. 1072, 1073 (1895). In this case we believe the defendants have properly construed the
law.
The plaintiffs rely on two cases for their contention that “base salary” is the salary of the
highest paid first class patrolman, i.e. the first class patrolman working in the CID and paid a
corporal’s salary. Both were decided under earlier versions of the pension statutes. In Kilfoil v.
Johnson, 135 Ind. App. 14, 191 N.E.2d 321 (1963), retired firefighters and the widows of retired
firefighters sued the City of Vincennes in an attempt to have longevity pay (pay that is based
upon the number of years of service) included in the calculation of a first class fireman’s wages
for the purpose of determining pensions. At that time, the relevant statute stated that the pension
of a first class fireman was to be “thirty [30] per cent of the monthly wage received by a fully
paid first class fireman.” Ind. Code. Ann. § 48-6528(c) (Bobbs-Merrill 1950) (emphasis added).
3
The statute contained no definition of “wage.” The retirees contended that longevity pay should
be included in the pension calculations. The Court of Appeals agreed that a “fully paid first class
fireman” was the fireman who received “the highest monthly wage or monthly compensation
being paid to any first class fireman working in the same Fire Department and City as himself.”
Kilfoil, 135 Ind. App. at 19, 191 N.E.2d at 324. This included longevity pay. Similarly, in City
of Vincennes v. McCarter, 142 Ind. App. 493, 494, 236 N.E.2d 76, 77 (1968), retired policemen
and widows and children of retired policemen sued to require the city to base its calculations on
the “actual remuneration received by the highest paid first class patrolman, rather than on the ba-
sis of the salary of a first class patrolman, as set by appellant’s Common Council.” Relying on
Kilfoil, the Court of Appeals held “pensions should have been computed on the basis of the
highest paid first class patrolman.” Id. at 78.
In 1977, the Indiana General Assembly established a new “1977 Police Officers’ and
Firefighters’ Pension and Disability Fund” which combined the pensions of firefighters and po-
lice and provided both retirement and disability benefits for police officers and firefighters hired
by Indiana municipalities after May 24, 1977. 3 1977 Ind. Acts 9 §§ 1-2. The 1977 Pension
Statute, now codified at Indiana Code chapter 36-8-8, includes a more fully developed actuarial
funding requirement with administration by PERF. The trial court concluded that under the
1977 legislation compensation must be paid to all patrolmen in order to be part of a patrolman’s
“base salary.” Eighty-six patrolmen in Evansville’s Motor Patrol Division have five or more
years of service, but do not receive corporal pay. Thus, “base salary” of a patrolman did not in-
clude amounts paid only to those patrolmen who serve in the CID. We agree.
3
The only factual reference in the record to the three named plaintiffs is found in the affidavit of Marvin
Guest, Chief of Police for the Evansville Police Department:
John Haller, Charles Patton, and Earl Chapman (collectively “Retirees”) are retired
members of the [Evansville Police] Department. During their employment with the De-
partment, they participated in the 1925 Police Pension Fund (”1925 Fund”). While em-
ployed with the Department, Mr. Chapman converted his pension benefits under the 1925
Fund to the 1977 Police Officers’ Pension Fund (“1977 Fund”) (the 1925 Fund and the
1977 Fund will be collectively referred to as the “Funds”). As participants in the 1925
Fund, Mr. Haller and Mr. Patton contributed six percent (6%) of the salary of a first-class
patrolman to the 1925 Fund. Likewise, Mr. Chapman contributed six percent (6%) of the
salary of a first-class patrolman to the Funds. The Retirees receive fifty percent (50%) of
the salary of a first-class patrolman with at least twenty (20) years of active duty in pen-
sion benefits.
After three years of service, Mr. Chapman was transferred to the CID. The record does not reveal how
many years he worked in the CID.
4
The 1977 revision preserved the earlier language providing that pensions are to be based
on “the monthly salary of a first class patrolman.” I.C. § 36-8-8-11(b). However, the revised
statute refined the definition of “salary of a first class patrolman” by explaining that it means
“base salary of a patrolman . . . plus all longevity increases.” I.C. § 36-8-1-11(a). The revision
to the pension statute thus preserved the specific holdings of Kilfoil and McCarter by including
longevity pay in the definition of “salary.” I.C. § 36-8-1-11. The statute also added a list of
items including “incentive pay” that are not included in “base salary.” 4 The parties debate
whether the incremental pay for first class patrolmen working in the CID is “incentive pay.” We
believe that a determination of what constitutes “base salary” resolves this case without address-
ing whether the additional eight per cent is “incentive pay.” In Hilligoss v. LaDow, 174 Ind.
App. 520, 368 N.E.2d 1365, 1370 (1977), the Court of Appeals expressly recognized that the
“longevity pay cases” did not stand as authority “for the proposition that other forms of compen-
sation necessarily constitute salary.” The Court of Appeals observed that the underlying goal of
construing the pension laws to favor beneficiaries “is not a license to read into the act obligations
against the pension trust funds and the taxpayers which the legislature did not intend.” City of
Ft. Wayne v. Ramsey, 578 N.E.2d 725, 728 (Ind. Ct. App. 1991) (citing Hilligoss, 174 Ind. App.
at 528, 368 N.E.2d at 1370). In Lugar v. State, 270 Ind. 45, 48, 383 N.E.2d 287, 290 (1978), this
Court approved the reasoning of the Court of Appeals in Hilligoss and held “[n]owhere in the
statute is there provided that salary includes anything other than base salary plus longevity pay.”
The plaintiffs cite the definition of “base pay” in Black’s Law Dictionary 104 (Abridged
6th ed. 1991), as evidence that the term “base salary” includes all wages and excludes only those
items listed in the pension statute. 5 The plaintiffs contend that any other interpretation of the
term “base salary” would render the statutory exclusions from the definition superfluous. We
think the exclusions from “base pay” in Black’s and in the statute itself are not exhaustive. No-
where does either the dictionary definition or the statute suggest that the specific exclusions are
more than merely illustrative of the kinds of things that are not included within base salary. The
4
The statute excludes “remuneration or allowances for fringe benefits, incentive pay, holiday pay, insur-
ance, clothing, automobiles, firearms, education, overtime, or compensatory time off.” I.C. § 36-8-1-
11(a).
5
That dictionary states “base pay” constitutes “wages, exclusive of overtime, bonuses, etc.” This term is
not defined in the current edition of Black’s Law Dictionary. See Black’s Law Dictionary (Garner 8th ed.
2004).
5
term “base salary” means just that, the salary all patrolmen receive, without enhancement for
longevity (which is included in “salary”) or any other items (which are not included). Because
only some, but not all, first class patrolmen receive the additional eight percent paid to corporals,
that amount is not included in the base salary of a first class patrolman.
Our interpretation of this provision is supported by the practical construction given it by
the parties, and, according to the amici, by others as well. Base salary determines not only the
amount paid to an officer upon retirement, but also the amount an officer contributes to the pen-
sion plan while he is working. I.C. § 36-8-8-8(a). According to the amici, for the last twenty or
more years many municipalities have used the salary paid to all patrolmen with similar longevity
as the annual certified wage and used that wage to compute, collect, and pay contributions. In
any case this is true of Evansville. The statute provides that a patrolman or firefighter is to con-
tribute “six percent (6%) of the salary of a first class patrolman or firefighter” to the 1977 Pen-
sion Fund. Id. In this case all three named plaintiffs contributed to the pension fund six percent
of the salary of a first class patrolman, not six percent of a corporal’s salary. Specifically, Mr.
Haller and Mr. Patton contributed six percent of their first class patrolman salary to the pension
fund. Mr. Chapman also contributed only six percent of the salary of a first class patrolman to
the pension fund, even though he was receiving a corporal’s salary. The result the plaintiffs seek
in this lawsuit is therefore an additional pension benefit for which they and the members of the
class they seek to represent made no contribution.
The plaintiffs argue that beneficiaries are entitled to the remuneration that the statute re-
quires, without regard to what the municipality chose to collect. Even if that is correct as a gen-
eral proposition, we do not agree that the statute dictates that “base pay” means what the plain-
tiffs claim it does. The practice of both the city collecting and the officers in contributing over
many years is merely evidence indicating to the contrary. Obviously, if we agreed with the
plaintiffs the city would be not only entitled but also obliged to withhold at the higher rate from
all current officers. Such a construction of the pension statute would require Indiana municipali-
ties to collect a percentage of every patrolman’s wage calculated on a corporal’s salary even
though many patrolmen are not receiving the higher wage. Either the officers or the taxpayers
would have to bear the burden of the municipalities’ past inadequate contributions. We do not
think the legislature intended either result.
6
In sum, we believe that the General Assembly’s use of the term “base salary” to define
“salary of a first class patrolman” indicates its intention that municipalities should calculate, col-
lect, and pay pension benefits from the salary received by all officers of the same rank, regard-
less of department. The specific statutory exclusions provide further evidence of this intent, but
are not an exhaustive list of the items that do not meet the criteria of “base salary.” Additional
pay given pursuant to the collective bargaining agreement to some first class patrolmen working
in the CID does not qualify.
Conclusion
For the reasons expressed in this opinion, we affirm the trial court’s grant of summary
judgment to the defendants.
Shepard, C.J., and Dickson, Sullivan, and Rucker, JJ. concur.
7