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Watters v. City of Billings

Supreme Court of Montana

August 28, 2017

ERNIE WATTERS, et al., and all others similarly situated, Plaintiffs and Appellees,
v.
CITY OF BILLINGS, Defendant and Appellant.

          Submitted on Briefs: May 3, 2017

         APPEAL FROM: District Court of the Thirteenth Judicial District, In and For the County of Yellowstone, Cause No. DV 09-43 Honorable Brenda R. Gilbert, Presiding Judge

          For Appellant: James H. Goetz, Goetz, Baldwin & Geddes, P.C., Bozeman, Montana W. Anderson Forsythe, Afton E. Ball, Moulton Bellingham P.C., Billings, Montana

          For Appellees: L. Randall Bishop, Bishop & Heenan, Billings, Montana Lawrence A. Anderson, Attorney at Law, Great Falls, Montana

          OPINION

          JIM RICE, JUSTICE

         ¶1 Appellant City of Billings (City) appeals the orders and judgment of the Thirteenth Judicial District Court, Yellowstone County, holding the City incorrectly paid "longevity" wage benefits under successively negotiated Collective Bargaining Agreements (CBAs), and awarding damages to Appellees Ernie Watters, et al., and all others similarly situated (Officers). The City raises six issues, but we reverse and remand for further proceedings on the issue stated below, and do not address the additional issues:

         Did the District Court err by holding the CBAs were unambiguous and excluding extrinsic evidence concerning interpretation of those agreements?

         FACTUAL AND PROCEDURAL BACKGROUND

         ¶2 Officers are current and retired police officers, and members of the Montana Public

         Employees Association-Billings Police (Union). The Union, on behalf of the Officers, collectively bargains with the City to adopt an agreement governing the terms of the Officers' employment. The central dispute in this case is the correct interpretation of the longevity pay provisions in the 2000-2003, 2003-2006, and 2006-2009 CBAs entered by the City and the Union. Those provisions stated, in full:

         2000-2003 CBA:

Longevity shall be added to each officer's hourly rate based upon the following formula:
.45 x .01 x the hourly rate of an officer at the beginning of year 1 x years of service.

         2003-2006 CBA:

Beginning July 1, 2003, longevity shall be added to each officer's hourly rate based upon the following formula:
.45 x .01 x the hourly rate of an officer from year 1 to 15 years of service.
.50 x .01 x the hourly rate of an officer after year 15.

         2006-2009 CBA:

(Same language as in the 2003-2006 CBA, but with nearly appropriately corresponding dates.)

         ¶3 The City paid longevity pay to the Officers in accordance with its understanding of the contractual formula provided in the 2000-2003 CBA, including the language "x [or, times] the hourly rate of an officer at the beginning of year 1 x [times] years of service." The internal wording, "the hourly rate of an officer at the beginning of year 1, " placed between two multiplication signs, was read by the City as a singular phrase that set the base wage to be used in the calculation, that being an officer's hourly wage rate "at the beginning of year 1." Further, the City understood the phrase coming after the second multiplication sign, "years of service, " also provided in the 2000-2003 CBA, to mean years that an officer had actually served or completed. For example, the City would calculate longevity pay for an officer beginning his or her sixth year of employment based upon five years of completed service. Even though the phrase "at the beginning of year 1, " and the multiplier based on "years of service, " were not included in the 2003-2006 and 2006-2009 versions of the CBA, the City continued to calculate longevity pay pursuant to these terms, believing it had agreed with the Union to do so, and thus paid this longevity benefit over the entire period in dispute. The Union agreed with this calculation and is not a party in this proceeding.

         ¶4 The Officers filed suit in 2009, claiming the City had incorrectly calculated longevity pay under the CBAs. Specifically, the Officers claimed that the CBA required the City to pay "accumulated longevity enhancements." The Officers claimed that, instead of basing longevity on an officer's hourly wage rate at the beginning of year 1, the City was required to cumulatively "add longevity increases to each police officer's hourly rate" in order to calculate the "full longevity increase owed." The Officers claimed other damages associated with their longevity claim, including retirement contributions. The Officers asserted that the longevity provisions of the CBAs were "complete and unambiguous, and none of these provisions requires the introduction of extraneous evidence in order to interpret them." Officers requested, and the District Court certified, the matter as a class action.

         ¶5 The City answered, asserting it had initially paid and thereafter continued to pay the longevity benefit as negotiated with the Union under the CBA. Noting the changes in language in the successive CBAs, the City specifically denied Officers' assertion that the longevity provisions were unambiguous, and affirmatively asserted "that the introduction of extrinsic evidence is necessary to interpret them." Further, in a counterclaim, the City noted that later versions of the CBA had eliminated the multiplier for an officer's years of service and, pursuant to the Officers' assertion that the CBAs were unambiguous and amenable to a plain reading, the City had overpaid longevity to the Officers and, under such a reading, would be entitled to a refund. The District Court dismissed the City's counterclaims as a matter of law, reasoning that they were dependent upon extrinsic evidence that was inappropriate to consider.

         ¶6 Officers moved for summary judgment on their claims and, in response to Officers' accumulation theory, the City cited Raw v. City of Helena, 139 Mont. 343, 347, 363 P.2d 720, 722 (1961), for the proposition that "it is to the base salary and not to the base salary plus longevity that longevity is added." However, the District Court did not expressly address the Officers' accumulation theory, but rather focused on whether the CBAs were subject to a plain reading, reasoning that "[t]he Court finds that the language, 'longevity shall be added to each officer's hourly rate. . .' is clear, unambiguous, and easily understandable. It is not ambiguous nor reasonably subject to two different interpretations." (Emphasis original.) Rejecting the City's argument that extrinsic evidence was necessary to properly understand the longevity provisions of the contracts, the District Court ruled that "[t]here can be no reasonable argument that the [CBAs] and the attachments thereto plainly state and mean anything other than that longevity shall be added to each officer's hourly rate. . . . There is no need for extraneous or parol evidence." (Emphasis in original.)

         ¶7 Then, the District Court, in a few sentences at the end of its order, offered determinative examples about how longevity was to be calculated under the CBAs, and in so doing incorporated calculation issues that had not been pleaded or briefed by the parties, stating as follows:

As an example, in 1994, an officer who is in his 11th year of service would calculate his longevity addition according to the formula:
.45 x .01 x $10.8898 x 11 = .539
For the same officer, who in 1995 would be in his 12th year of service, the longevity addition would be:
.45 x .01 x $11.2709 x 12 = .609

         Although offering equations, the District Court did not reference any language in the CBAs or discuss any governing legal principles to explain its determination of the components therein, including its use of a years-of-service multiplier for periods when the CBAs included no multiplier, or, critically, its implied rejection of the City's long use of completed years of service in that multiplier. It did not analyze the specific language differences in the successive versions of the CBAs or the City's use of the contractual phrase "the hourly rate of an officer at the beginning of year 1" to calculate the base wage in the formula. The District Court simply reasoned that the CBAs "are complete, unambiguous, and easily understandable on their faces and ...


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