Promises From Town Officials Cannot Alter Retirement Benefits

Stephen Ferrucci was hired in 1974 as a police officer with the Town of Middlebury, Connecticut. In 1988, at the age of 38, Ferrucci retired in order to take a job with the Service Employees International Union.

In 1995, seven years after he terminated his employment with the Town, Ferrucci spoke with the Town’s finance director about his retirement benefits. The finance director spoke with the Town’s actuary, and then notified Ferrucci that in 2004 he would be entitled to the “normal retirement provisions” under the Town’s police retirement system.

That changed in 2002, when Ferrucci actually sought to retire. Then, the Town determined that Ferrucci would only be entitled in 2004 to an “early retirement” amount roughly one-third the normal retirement benefit, and that he would not be eligible for the normal retirement benefit until 2014. Ferrucci sued, claiming that the Town was bound by the principles of “promissory estoppel” to honor the statements made in 1995 by the Town’s finance director and actuary.
The Connecticut Court of Appeals rejected Ferrucci’s lawsuit. The Court found no ambiguity in the provisions of the retirement plan itself, and concluded that under the plan Ferrucci would not be entitled to normal retirement benefits until 2014. The Court also found the Statements of the finance director and actuary could not change the provisions of the Plan. As the Court reasoned:

“Ferrucci’s claim of promissory estoppel rests on the representation made in the December 4, 1995 letter by the plan’s actuary, which was shared with the plaintiff by the defendant’s finance director, calculating that the plaintiff would become eligible for a monthly benefit of $658.89 pursuant to the normal retirement provisions of the plan on December 1, 2004. Neither the actuary nor the finance director possessed the authority to modify the terms of the plan. Under Connecticut law, agents of a municipality have no source of authority beyond the charter, and all who contract with a municipal corporation are charged with notice of the extent of the powers of municipal officers and agents with whom they contract. Every person who deals with a municipal corporation or its agent is bound to know the extent of its authority and the limitations of its powers. As a result, Ferrucci is charged with notice that neither the actuary who prepared the December 4, 1995 letter nor the finance director who shared its contents had the authority to modify the terms of the plan.”

Ferrucci v. Town of Middlebury, 25 A,.3d 728 (Conn. App. 2011)

This article appears in the November 2011 issue.