COUNTY OF UNION v. HOSPITAL PROFESSIONALS AND ALLIED EMPLOYEES UNION

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-5450-04T15450-04T1

COUNTY OF UNION (RUNNELLS

SPECIALIZED HOSPITAL),

Plaintiff-Respondent,

v.

HOSPITAL PROFESSIONALS AND

ALLIED EMPLOYEES UNION,

Defendant-Appellant.

__________________________________

 

Argued April 5, 2006 - Decided July 31, 2006

Before Judges Wefing, Wecker and Fuentes.

On appeal from Superior Court of New

Jersey, Law Division, Union County,

No. L-0913-05.

Leon B. Savetsky argued the cause for

appellant (Loccke & Correia, attorneys;

Mr. Savetsky, of counsel and on the brief).

Douglas S. Zucker argued the cause for

respondent (Schenck, Price, Smith & King,

attorneys; Mr. Zucker, of counsel and on

the brief).

PER CURIAM

Defendant, Health Professionals and Allied Employees, AFT/AFL-CIO, Local 5112, appeals from a trial court order entered May 10, 2005, denying its application to confirm an arbitration award, granting plaintiff's application to vacate that award, and remanding the matter to the arbitrator for further proceedings. After reviewing the record in light of the contentions advanced on appeal, we reverse.

Defendant union represents the registered nurses and graduate nurses employed at Runnells Specialized Hospital, owned and operated by plaintiff County of Union. The dispute between the parties revolves around their negotiation and execution of a collective bargaining agreement for the period January 1, 2002. through December 31, 2004.

The Union was aware that other county bargaining units had private disability plans and that the County contributed $100 annually per member toward the cost of these plans. The Union did not have a comparable provision in its contract and one of its goals in the negotiations leading to the 2002-2004 contract was to achieve that benefit for its members.

According to the testimony of the witnesses for the Union, which the arbitrator accepted as credible, Gregory Hardoby, the County's Personnel Director, acted as a go-between for the Union and the insurance carrier in connection with the negotiations between those two entities. The Union outlined the terms and benefits it wished to obtain, Hardoboy relayed them to the carrier, and the carrier responded with the terms it would offer and the respective premiums.

One of the important considerations for the Union in making its selections among the options offered was the ability of a member to collect disability benefits without first exhausting accumulated sick leave. Only one of the options contained this benefit, at a cost of $29.50 a month per member. The Union was aware generally of the terms of the disability benefit plan available to Council 8, another bargaining unit. Council 8's plan only cost its members $5.60 every four weeks, but it required that a member exhaust accumulated sick leave before disability benefits would commence. Because of the importance it placed upon the provision permitting members to collect disability benefits without first using their sick leave, the Union opted to select the program costing nearly five times as much as the Council 8 program. Before making its decision in this regard, the Union president repeatedly inquired of Hardoboy whether this plan would require the members to use their sick leave before collecting disability benefits. He responded it would not.

The Union selected this option and executed the labor contract with the County, the County agreeing to contribute $100 per member annually toward the premium cost and to deduct the required premium contributions from members' paychecks.

Article 13 of the contract included the following language:

Employees on a leave of absence under circumstances that qualify under the Family Medical Leave Act 1993 (FMLA) and the New Jersey Family Leave Act (NJFLA) will have such leave considered to be taken under and in accordance with the applicable provisions of the FMLA or the NJFLA and the County of Union's Family Leave and Medical Leave Act Policy ("Policy"). A copy of the policy may be obtained from the Director of the Division of Personnel Management and Labor Relations.

Article IX of the County's Policy states in pertinent part,

An approved leave of absence under the FMLA and the FLA is unpaid leave. You must use all of your accrued, unused sick leave at the commencement of FMLA or FLA leave and the balance of the leave will be unpaid.

In October 2003, Martha Alexander, a member of the Union, sought disability benefits under this plan selected by the Union and for which the County had deducted $29.50 from her paycheck every month. She was informed by the County that she would have to first exhaust her sick leave before being permitted to collect disability benefits. The Union filed a grievance in due course.

When the grievance was not resolved, the Union requested arbitration through the State Board of Mediation in accordance with Article 21 of the contract. The State Board of Mediation appointed an arbitrator who conducted hearings and heard witnesses from both parties. At the conclusion of the proceedings, the arbitrator issued an extensive thirty-nine page decision sustaining the grievance and directing that Ms. Alexander be credited with the three weeks of sick time she had been required to use. Within that opinion, the arbitrator agreed with the County that the insertion into the contract of the clause under which the County agreed to contribute $100 annually per member to the cost of the disability insurance program did not modify Article 13 of the contract nor the article dealing generally with sick leave, Article 11. He also acknowledged the validity of the financial and staffing considerations underlying the County's policy requiring the use of accumulated sick leave before collecting disability benefits. The arbitrator also concluded, however, that in the factual complex presented, the County was estopped from requiring Union members to exhaust their sick days before collecting disability benefits.

The Union moved to confirm the arbitration award and the County to vacate it. The trial court, as we noted at the outset of this opinion, granted the County's application. According to the trial court the arbitrator improperly modified the terms of the collective bargaining agreement and thus exceeded the powers given to him. N.J.S.A. 2A:24-8(d). The trial court also concluded that estoppel was inapplicable because the County had not concealed anything from the Union during the course of the negotiations.

The doctrine of estoppel, however, is not restricted to instances of active concealment. Silence in the face of a duty to speak may suffice. Carlsen v. Masters, Mates & Pilots Pension Plan Trust, 80 N.J. 334 (1979). In that case, Justice Handler, writing for the Court, held that the silence of defendants estopped them from denying plaintiff's eligibility for a pension. Id. at 342.

It is clear that plaintiff was not fully apprised of his pension rights by either defendant. Estoppel may arise by silence or omission where one is under a duty to speak or act.

. . . .

This duty of complete disclosure encompasses not only objectively ascertainable facts bearing materially upon plaintiff's rights but also defendants' legal position with respect to those facts and their effect upon plaintiff's claims.

[Id. at 341 (citations omitted).]

New Jersey has long recognized this principle. It was articulated in Summer Cottagers' Ass'n of Cape May v. City of Cape May, 19 N.J. 493 (1955).

The essential principle of the policy of estoppel here invoked is that one may, by voluntary conduct, be precluded from taking a course of action that would work injustice and wrong to one who with good reason and in good faith has relied upon such conduct. An estoppel by matter in pais may arise by silence or omission where one is under a duty to speak or act. It has to do with the inducement of conduct to action or nonaction. One's act or acceptance may close his mouth to allege or prove the truth. The doing or forbearing to do an act induced by conduct of another may work an estoppel to avoid wrong or injury ensuing from reasonable reliance upon such conduct. The repudiation of one's act done or position assumed is not permissible where that course would work injustice to another who, having the right to do so, has relied thereon.

[Id. at 503-04 (citations omitted).]

We recognize, as did the trial court, that estoppel is generally not invoked against a public entity such as defendant County of Union. In appropriate circumstances, however, the Supreme Court has not hesitated to invoke estoppel against a public entity. Middletown Policemen's Benevolent Ass'n Local No. 124 v. Twp. of Middletown, 162 N.J. 361, 367 (2000) (defendant township equitably estopped from terminating post-retirement health benefits of a former municipal employee). There, the Court noted that "equitable estoppel will be applied in the appropriate circumstances unless the application would 'prejudice essential governmental functions.'" Ibid. (quoting Wood v. Borough of Wildwood Crest, 319 N.J. Super. 650, 656 (App. Div. 1999)). Applying estoppel in this matter against the County would not prejudice the County in the performance of its essential governmental functions.

We stress that our conclusion that estoppel may be an appropriate remedy in this circumstance rests upon the credibility assessments and factual findings of the arbitrator. The arbitrator accepted the testimony of the Union's witnesses that it had "repeatedly" asked whether the disability policy it was selecting would require exhaustion of sick leave and that the County's representative had assured the Union it would not. Williams Scotsman, Inc. v. Garfield Bd. of Educ., 379 N.J. Super. 51, 61 (App. Div. 2005) (noting it would be "anomalous" to hold plaintiff was obligated to consult with its own attorney to determine if the public bidding statutes applied when defendant repeatedly assured it they did not), certif. denied, 186 N.J. 241 (2006).

We turn now to the second basis for the trial court's opinion--its conclusion that the arbitrator's determination conflicted with Article 21 of the parties' contract. Article 21 specified that in the event of arbitration,

the arbitrator shall have no right or power to alter or modify the terms of this Agreement or to impose upon the parties any obligation or liability not expressly assumed by the parties under the provisions of this Agreement; nor may the arbitrator deprive the parties of any right reserved, expressed or implied, by them for their benefit hereunder.

It was the view of the trial court that the arbitrator's award imposed additional obligations upon the County beyond what it had agreed to in the collective bargaining agreement.

We view the matter from a different perspective. The arbitrator's award did not impose an affirmative obligation upon the County so much as it estopped the County from enforcing its Family Leave and Medical Leave Act Policy against Ms. Alexander.

Additionally, in our judgment, the arbitrator's award can be considered consonant with the duty of good faith and fair dealing, which is implied in every contract. R.J. Gaydos Ins. Agency, Inc. v. Nat'l Consumer Ins. Co., 168 N.J. 255 (2001); Wilson v. Amerada Hess Corp., 168 N.J. 236 (2001). We do not mean to imply that the County could have been found liable for breaching that covenant, for there is no evidence that it acted with bad motive or intent when it assured the Union that its members could collect disability benefits without exhausting sick leave. Brunswick Hills Racquet Club, Inc. v. Route 18 Shopping Ctr. Assocs., 182 N.J. 210, 225 (2005) (noting that "[p]roof of bad motive or intention is vital to an action for breach of the covenant") (quotation marks and citation omitted). The Union does not seek to hold the County liable for any breach, however; it only seeks to hold the County to its repeated assurances. Thus, holding the County to those assurances does not add any additional obligation upon the County.

The order under review is reversed.

 

The contract period has, of course, expired. It was brought out at oral argument that Ms. Alexander was the only member of the Union who sought disability benefits under this program during the term of the contract.

(continued)

(continued)

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A-5450-04T1

July 31, 2006