2020 Mass. App. Div. 1

February 15, 2019 - February 4, 2020

Appellate Division Northern District

Court Below: District Court, Framingham Division

Present: Coven, P.J., Nestor & Karstetter, JJ.

Dennis R. Brown for the plaintiff.

Kevin S. Freytag and Michael J. Maccaro for the defendant.

NESTOR, J. This dispute arises out of a two-year agreement between the town of Natick ("Natick") and a committee of Natick town employee organizations known as the Public Employees Committee ("PEC"). The agreement provided that Natick would pay a portion of each employee's health insurance. The parties also agreed on an opt-out provision for those participants who had health insurance coverage from some other source. Participants could opt out of the provided health insurance program, and instead of receiving a portion of their health insurance cost, the participant would get a cash stipend.

Thomas E. Forance ("Forance") was a Natick employee. Forance signed and executed the Opt-Out form on April 28, 2016. Forance was an employee of the town of Natick when he made that decision to opt out. He opted out of the agreement and chose to receive the cash stipend rather than the agreed-upon percentage of his health insurance cost. Forance retired before the end of the first year of the two-year agreement. His retirement from the Natick fire department became effective on April 6, 2017. Natick paid Forance a cash stipend that was pro rated to the time that Forance was an employee and deemed him ineligible to receive benefits for any additional time period because he was no longer an employee of the town but a retiree.

Forance and Local 1707 of the International Association of Firefighters ("Local 1707") filed an action on July 28, 2017 in Framingham District Court seeking damages and a declaratory judgment that Forance was entitled to a cash stipend for the entire two-year period of the agreement and not just the time he was actually an employee in Natick. In short, he sought the cash stipend during the period of time that he was a retiree.

Natick filed a motion for summary judgment; Local 1707 and Forance opposed the town's motion for summary judgment and filed a cross motion for summary judgment. The court denied Natick's motion for summary judgment and allowed Local 1707 and Forance's motion for summary judgment.

Natick filed a motion for reconsideration, which was denied. Natick then timely filed this appeal.

Pursuant to G.L. c. 32B, § 19, Natick provided health insurance coverage to its subscribers, including its current employees and retirees. Natick and PEC entered into the agreement. PEC is a committee of various town employee organizations authorized to negotiate on behalf of Natick employees. The agreement provided that Natick would provide a percentage of the cost of family and individual heath plans during fiscal years 2017 and 2018. The fiscal year extends from July 1st to June 30th. As previously stated, Natick employees could opt out of this arrangement and receive a cash stipend rather than Natick's agreed-upon percentage contribution to their health plan.

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Paragraph 12 of the agreement states:

"The Town will continue to offer a two-year 'opt-out' program for employees who have been enrolled in a Town offered health benefit plan for at least one year prior to the date of this Agreement, with program details provided on the Opt-Out Form; payments to be $2000 Opt-Out Stipend for those on the individual plan and $4,500 Opt-Out Stipend for those on family plan per plan year for each year of this agreement. Individuals who initially participated in the Opt-Out benefit in FY 2016 shall receive the above amounts in FY 2017 for their second year Opt-Out Stipend."

"Retirees" are not referenced in paragraph 12 of the agreement. In contrast, the word "retirees" is included in paragraphs 8 and 9 of the agreement, suggesting that, in fact, retirees are not eligible. However, the Opt-Out form introduces a new and distinct word into the agreement: "subscriber."

In order to exercise his or her rights and opt out under the agreement, a participant needed to file an Opt-Out form. The form is referenced in the agreement reached between PEC and the town of Natick. As previously noted, paragraph 12 of the Agreement specifically states:

"The Town will continue to offer a two-year 'opt-out' program for employees who have been enrolled in a Town offered health benefit plan for at least one year prior to the date of this Agreement, with program details provided on the Opt-Out Form. ... "

The Opt-Out form states, in part:

"Subscribers who are eligible and participate in the opt-out program will receive $2,000 per plan year for an individual plan or $4,500 per plan year for a family plan (or a pro-rated amount depending on date of participation) if they no longer take insurance through the Town" (emphasis in original).

"Where the language of a contract is clear and unambiguous, summary judgment is an appropriate vehicle for judicial interpretation because the court may interpret the meaning of the contract as a matter of law without resort to extrinsic evidence or determinations of fact." Sullivan v. Southland Life Ins. Co., 67 Mass. App. Ct. 439, 440 (2006). Moreover, "[a] fully integrated agreement is a statement which the parties have adopted as a complete and exclusive expression of their agreement." Starr v. Fordham, 420 Mass. 178, 188 n.8 (1995). The parol evidence rule bars the introduction of a prior or contemporaneous agreement to contradict or vary the terms of a fully integrated contract. Commerce Bank & Trust Co. v. Hayeck, 46 Mass. App. Ct. 687, 691 (1999); Kobayashi v. Orion Ventures, Inc., 42 Mass. App. Ct. 492, 496 (1997). Where the writing shows on its face that it is the entire agreement of the parties and "comprises all that is necessary to constitute a contract, it is presumed that they have placed the terms of their bargain in this form to prevent misunderstanding and

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dispute, intending it to be a complete and final statement of the whole transaction." Bendetson v. Coolidge, 7 Mass. App. Ct. 798, 802-803 (1979), quoting Glackin v. Bennett, 226 Mass. 316, 319-320 (1917). Evidence of prior agreements, negotiations, or conduct thus is not admissible to vary or to broaden the written terms of the fully integrated agreement. Restatement (Second) of Contracts § 213(2) (1981). See also Amerada Hess Corp. v. Garabedian, 416 Mass. 149, 155 (1993) (evidence of contract negotiations is immaterial where final written agreement is unambiguous).

On the other hand, contract language is ambiguous "where the phraseology can support reasonable difference of opinion as to the meaning of the words employed and the obligations undertaken." Suffolk Constr. Co. v. Lanco Scaffolding Co., 47 Mass. App. Ct. 726, 729 (1999), quoting Fashion House, Inc. v. K Mart Corp., 892 F.2d 1076, 1083 (1st Cir. 1989). Once the contract is determined to be ambiguous, "the court is free to look to extrinsic evidence in order to give a reasonable construction in light of the intentions of the parties at the time of formation of the contract." President & Fellows of Harvard College v. PECO Energy Co., 57 Mass. App. Ct. 888, 896 (2003). When such evidence is considered, "it may be that a logical answer consistent with the purposes of the agreements and the intentions of the parties will emerge." Id.

In this case, the Opt-Out form is referenced in the agreement between the parties and should be considered in determining who is eligible for benefits under the plan. The agreement defines the rights of employees and retirees, while the Opt-Out form uses the word subscribers, creating an ambiguity.

The allowance of the motion for summary judgment on behalf of Local 1707 and Forance is reversed, the judgment is vacated, and this case is returned for trial.


[Note 1] Thomas E. Forance.