Albert A. Faella v. Town of Johnston Alan Ross v. Town of Johnston

• Court: Supreme Court of Rhode Island
• Decided: May 25, 2022
• Docket: 19-445, 447
• Status: Published

Opinion

May 25, 2022

Supreme Court

Albert A. Faella et al. :

v. : No. 2019-445-Appeal. (PB 10-311) Town of Johnston et al. :

Alan Ross :

v. : No. 2019-447-Appeal. (PB 10-60) Town of Johnston. :

NOTICE: This opinion is subject to formal revision before publication in the Rhode Island Reporter. Readers are requested to notify the Opinion Analyst, Supreme Court of Rhode Island, 250 Benefit Street, Providence, Rhode Island 02903, at Telephone (401) 222-3258 or Email opinionanalyst@courts.ri.gov, of any typographical or other formal errors in order that corrections may be made before the opinion is published. Supreme Court

v. : No. 2019-445-Appeal. (PB 10-311) Town of Johnston et al. :

Present: Suttell, C.J., Goldberg, Robinson, and Long, JJ.

OPINION

Justice Long, for the Court. In these consolidated appeals arising from two

consolidated Superior Court civil actions, the defendants, the Town of Johnston and

Joseph Chiodo, in his capacity as finance director for the Town of Johnston

(defendants or the town), appeal from a judgment of the Superior Court granting

declaratory judgment in favor of the plaintiffs, Andrea DiMaio, as duly appointed

Administratrix of the Estate of John DiMaio (Mr. DiMaio); Alan Ross (Mr. Ross);

-1- and Albert Faella (Mr. Faella) (collectively plaintiffs).1 The trial justice determined

that certain accounts bearing the names of the respective plaintiffs constituted

deferred compensation, governed by Internal Revenue Code § 457; declared the

accounts to be the plaintiffs’ property; and ordered the associated funds be remitted

to the plaintiffs. For the reasons stated herein, we reverse the judgment of the

Superior Court and remand these consolidated cases for entry of final judgment

consistent with this opinion.

A summary of the facts relevant to these appeals follows, and additional facts

are included in the discussion of the issues on appeal.

Facts and Procedural History

This case stems from a long-running dispute between plaintiffs and the Town

of Johnston regarding the entitlement to funds in accounts held first by Aetna Life

Insurance and Annuity Company and then by ING Life Insurance and Annuity

Company (ING)2 on behalf of the town (the funds). The facts of this case may be

familiar to the reader; these cases were previously before this Court in Faella v.

1 The original complaint in PB 10-311 was brought by plaintiffs Albert Faella and John DiMaio. John DiMaio passed away during the pendency of this case, and Andrea DiMaio, in her capacity as administratrix of his estate, was substituted as plaintiff. For the sake of clarity, we at times refer in this opinion to John DiMaio as plaintiff. 2 Aetna Life Insurance and Annuity Company (Aetna) was ING’s predecessor-in- interest with respect to the agreement at issue in this appeal. For purposes of clarity, we refer primarily to ING except where it is necessary to refer to Aetna. -2- Chiodo, 111 A.3d 351 (R.I. 2015). In those consolidated appeals, this Court vacated

the trial justice’s grant of summary judgment in favor of plaintiffs pursuant to a 1993

contract entitled “Town of Johnston Police Department Pension Plan” (the 1993

pension plan). Faella, 111 A.3d at 354, 356, 358. Following our opinion in that

case, a nonjury trial took place in the Superior Court, and the decision of the trial

justice is the subject of the present appeals. The following facts are largely

undisputed.

The plaintiffs were police officers employed by the town beginning between

1983 and 1985. During their tenures with the Johnston Police Department, plaintiffs

were members of their local chapter of the International Brotherhood of Police

Officers, a police union (the local IBPO). Throughout plaintiffs’ employment with

the police department, the local IBPO negotiated collective bargaining agreements

(CBAs) on behalf of union members.

The CBAs governed, among other items, police officers’ retirement benefits.

The CBAs indicated that the following pension scheme was in effect for officers

retiring after July 1, 1979. The CBAs provided for a pension equal to a percentage

of an officer’s annual salary at the time of retirement or separation from service, for

the remainder of the officer’s life. The percentage increased with time served on the

force. With respect to officers who were injured in the line of duty, the CBAs

provided for a disability pension equal to sixty-six and two-thirds percent of the

-3- officer’s annual salary at the time of retirement, even if that officer would not have

qualified for that rate if the officer retired other than on a disability pension.

Pursuant to these CBA provisions, between 2004 and 2008 plaintiffs began

receiving disability pensions after sustaining serious injuries in the line of duty that

left them unable to perform their duties as police officers.

While continuing to receive their disability pensions, plaintiffs also sought

distribution of funds held by ING that were attributable to their contributions and

the town’s matching contributions. The plaintiffs maintained that the ING accounts

held funds to which they were entitled as part of their retirement package with the

town. For their part, defendants disputed that plaintiffs were entitled to distribution

of the funds in the accounts because, defendants asserted, the accounts contained

contributions from police officers and the town to fund the town’s pension

obligations under the applicable CBAs. The defendants therefore refused to execute

procedures to remit the funds in the ING accounts, giving rise to this controversy.

The plaintiffs filed the instant actions in Superior Court in 2010, seeking

declarations that they were entitled to distribution of all amounts contributed to the

ING accounts, as well as mandatory injunctive relief to that effect. Originally named

as a party, ING subsequently filed a motion to interplead the funds, which the trial

-4- justice granted. ING thereafter deposited the funds into the registry of the court,

where the funds remain, and the trial justice dismissed ING from the actions.

As was the case when this Court reviewed the trial justice’s grant of summary

judgment in 2011, the parties disputed the history and purpose of the ING accounts

at trial. See Faella, 111 A.3d at 353. As evidence in support of plaintiffs’ view of

the ING accounts, they introduced and relied upon an agreement executed by ING

and the town, effective April 1984, pursuant to which ING created the accounts (the

ING agreement). The ING agreement was labeled on its face as the “Johnston Town

Hall Deferred Compensation Plan” and identified the contract holder as “Johnston

Town Hall.” The master application, which was incorporated into the ING

agreement, identified the name of the plan as “Town of Johnston Deferred

Compensation – Police Officers” and the type of plan as a “457” under the Internal

Revenue Code. The ING agreement established two “group contracts,” contract

number VB 1965 and contract number VB 1966. Each contract created an account,

one housing payroll deductions from police officers, and the other housing

contributions made by the town (collectively the accounts).

The accounts segregated contributions by social security number, and

plaintiffs received quarterly statements tracking contributions. They could also view

the accounts using a personal identification number provided by ING, and, at some

-5- point, they were permitted to decide how the individual contributions should be

invested.

According to plaintiffs, the ING agreement established a retirement savings

program for police officers that was separate and distinct from the police pension

plan established under the CBAs; plaintiffs maintained that, under this purported

separate retirement savings program, police officers who chose to participate

contributed six percent of each of their salaries to the accounts, and the town

contributed a twelve-percent match. In support of this assertion, plaintiffs relied

upon deposition testimony from Christina Menard, an ING employee who serviced

the accounts, wherein she stated that the ING agreement established a § 457 deferred

compensation plan.

In addition to relying on the deposition testimony of Ms. Menard, plaintiffs

also called as witnesses Dennis Quaranta, the town finance director in 1993; Robert

Civetti, a certified public accountant whose company provided auditing for the town

from 1994 through 2014; Ronald Capraro Jr., a CitiGroup Global Markets, Inc.

investment adviser who was a broker of record for the accounts from about 2006 to

2012; and Vincent Baccari Jr., who was the town clerk from 2007 through the time

-6- of his trial testimony in 2017. Additionally, plaintiffs provided testimony and

documentary evidence, such as enrollment forms and account statements.

The plaintiffs also sought relief under, and presented evidence concerning, the

1993 pension plan, which the trial justice initially admitted de bene. The 1993

pension plan was ultimately deemed inadmissible at trial, however, and the

relationship between the 1993 pension plan, the ING agreement, and the resulting

accounts remains opaque as developed in the trial record. The plaintiffs have not

taken issue on appeal with the trial justice’s ruling on this evidentiary matter.

At the close of plaintiffs’ case-in-chief, defendants moved for judgment on

partial findings pursuant to Rule 52(c) of the Superior Court Rules of Civil

Procedure. After considering the parties’ arguments, the trial justice reserved

decision on the motion.

In presenting their case-in-chief, defendants did not dispute that plaintiffs

contributed six percent of their salaries to the accounts, or that the town contributed

a twelve-percent match. Rather, defendants maintained throughout the trial that

plaintiffs were not entitled to distribution of the funds held in the ING accounts,

arguing that the accounts held mandatory contributions to, and were a funding

mechanism for, the town’s pension obligations under the CBAs. The defendants

further maintained that the CBAs established the pension benefit for all town police

-7- officers, and that it was pursuant to the CBAs that plaintiffs had been receiving a

disability pension since the time of their respective retirements.

At the close of trial, defendants renewed their Rule 52(c) motion for judgment

on partial findings; the parties agreed to close with posttrial memoranda.

In their posttrial memorandum, plaintiffs narrowed the relief they sought.

Because the 1993 pension plan was ultimately deemed inadmissible at trial, plaintiffs

withdrew their claims for relief pursuant to that document and relied solely on the

ING agreement as establishing entitlement to the funds. The plaintiffs further

withdrew their claims for a mandatory injunction with respect to the accounts,

conceding that the claim was moot because the funds were held in the court registry

and therefore an injunction was not necessary to distribute the funds if declaratory

judgment was granted in their favor. Thus, plaintiffs ultimately sought only one

form of relief: a declaration that plaintiffs were entitled to distribution of the funds

pursuant to the ING agreement, an outcome that would include an order to the Clerk

of the Court to distribute the funds accordingly.

The trial justice rendered a written decision in favor of plaintiffs in August

2019. The trial justice made findings of fact regarding the ING accounts, the ING

agreement governing the accounts, plaintiffs’ contributions to the accounts, and the

applicable CBAs. The trial justice found that the accounts contained deferred

compensation held pursuant to an I.R.C. § 457 deferred compensation plan. The

-8- trial justice awarded plaintiffs distribution of both the employee and employer

contributions attributable to each of plaintiffs, as follows:

VB 1965 VB 1966 Albert Faella $102,400.73 $176,106.94 John DiMaio $92,424.09 $169,768.15 Alan Ross $97,278.07 $187,502.74

The town timely appealed, and presents the following questions for consideration:

(1) whether the trial justice erred by reserving decision on defendants’ Rule 52(c)

motion at the close of plaintiffs’ case-in-chief, and (2) whether the trial justice erred

by granting declaratory judgment in favor of Mr. Ross, Mr. Faella, and Mr. DiMaio,

and awarding distribution of the funds pursuant to the ING agreement.3

Rule 52(c) Judgment on Partial Findings

The defendants assign error to the decision of the trial justice to reserve

judgment on the town’s motion for judgment on partial findings at the close of

3 While the trial justice’s decision with respect to all plaintiffs was entirely based on the declaratory-judgment counts, the final judgment in PB 10-60 entered in favor of Mr. Ross as to count three of his amended complaint, his request for mandatory injunction. This appears to be consistent with the written decision of the trial justice, which misstates the counts remaining with respect to Mr. Ross. Specifically, the written decision states that Mr. Ross withdrew all counts except that seeking mandatory injunction, while in fact Mr. Ross withdrew all counts except that count seeking declaratory judgment with respect to the ING agreement. When pressed on these inconsistencies at oral argument before this Court, however, counsel for Mr. Ross did not clarify the issue. We deem the references to count three of Mr. Ross’s amended complaint to be typographical errors, and we proceed with analyzing the propriety of declaratory judgment in his favor on count one of his amended complaint.

-9- plaintiffs’ case-in-chief. Rule 52(c) permits a party in a nonjury case to move for

judgment as a matter of law at the close of an opponent’s case. E.g., Hernandez v.

JS Pallet Co., Inc., 41 A.3d 978, 983 (R.I. 2012). However, the rule is discretionary

and specifically provides that “the court may decline to render any judgment until

the close of all the evidence.” Super. R. Civ. P. 52(c) (emphasis added); see Robert

B. Kent et al., Rhode Island Civil and Appellate Procedure § 52:7 (West 2022)

(“[T]he court is not obliged to entertain the motion and may defer judgment until the

close of all the evidence.”) (citing Shove Insurance, Inc. v. Tenreiro, 667 A.2d 532,

534 (R.I. 1995) (construing former Super. R. Civ. P. 41(b)(2), the predecessor to

Super. R. Civ. P. 52(c))). Accordingly, we summarily reject defendants’ first

assignment of error and hold that the trial justice did not err by reserving on the

town’s motion for judgment on partial findings at the close of plaintiffs’ case-in-

chief.

Declaratory Judgment

The Uniform Declaratory Judgments Act, chapter 30 of title 9 of the general

laws, “vests the Superior Court with the ‘power to declare rights, status, and other

legal relations whether or not further relief is or could be claimed.’” N & M

Properties, LLC v. Town of West Warwick ex rel. Moore, 964 A.2d 1141, 1144 (R.I.

2009) (quoting G.L. 1956 § 9-30-1). It is well-settled that the decision to grant or

deny declaratory judgment rests within the sound discretion of the trial justice. E.g.,

- 10 - Town of Barrington v. Williams, 972 A.2d 603, 608 (R.I. 2009). Nevertheless, this

discretion “is not absolute and is subject to appropriate appellate review.” Rhode

Island Republican Party v. Daluz, 961 A.2d 287, 293 (R.I. 2008) (quoting Sullivan

v. Chafee, 703 A.2d 748, 751 (R.I. 1997)). “[T]his Court reviews a declaratory

judgment to determine ‘whether the court abused its discretion, misinterpreted the

applicable law, overlooked material facts, or otherwise exceeded its authority.’”

Town of Barrington, 972 A.2d at 608 (quoting Sullivan, 703 A.2d at 751).

Moreover, “[i]t is the function of the trial justice to undertake fact-finding and

then decide whether declaratory relief is appropriate.” Town of Barrington, 972 A.2d

at 608. This Court accords great weight to the factual findings of a trial justice sitting

without a jury. E.g., Kilmartin v. Barbuto, 158 A.3d 735, 746 (R.I. 2017). These

factual findings are subject to appropriate appellate review, and this Court will

disturb the findings if clearly erroneous; the trial justice misconceived or overlooked

material evidence; or the decision fails to do substantial justice between the parties.

E.g., McBurney v. Roszkowski, 875 A.2d 428, 436 (R.I. 2005); Town of Barrington,

972 A.2d at 609; see Rhode Island Republican Party, 961 A.2d at 294 (“[T]his Court

reviews a declaratory judgment to determine ‘whether the court abused its discretion,

misinterpreted the applicable law, overlooked material facts, or otherwise exceeded

its authority.’”) (quoting Sullivan, 703 A.2d at 751).

- 11 - The trial justice granted plaintiffs’ request for declaratory judgment on the

basis of the ING agreement, which had been entered into between ING and the town,

finding that “[t]he plan at issue is a § 457 deferred compensation plan” that entitled

plaintiffs to immediate distribution of the funds. Based on our thorough review of

the record in this case, however, including the trial transcripts, we conclude that

(1) plaintiffs failed to satisfy their burden that they were entitled to declaratory

judgment on the basis of the ING agreement and (2) the trial justice abused his

discretion when he made clearly erroneous findings of fact.

The only exhibit at trial that referred to a § 457 plan was the ING agreement

between the town and ING. While giving due deference to the trial justice’s

findings, this Court cannot find an adequate factual basis for the trial justice’s

implicit inference that the ING agreement constituted an agreement to defer

compensation. See 26 C.F.R. § 1.457-2(k) (defining a “plan” for purposes of § 457

as “any agreement or arrangement between an eligible employer and a participant or

participants * * * under which the payment of compensation is deferred”). The ING

agreement did not contain an agreement between plaintiffs and the town to defer

compensation, and there is no indication in the record that plaintiffs ever saw the

ING agreement prior to their retirements.

As defendants strenuously argued at trial, the ING agreement between the

town and ING was just that—a contract between two entities to establish the

- 12 - accounts. The ING agreement was not an employment or compensation agreement

between plaintiffs and the town, and it did not set out the rights and obligations

between the town and police officers in its employ with respect to the funds.

In fact, plaintiffs failed to establish any competent evidence indicating that the

town and plaintiffs had an agreement to defer compensation or to establish any other

program that entitled plaintiffs to the immediate distribution of the funds. That

plaintiffs did not establish an entitlement to the funds—particularly through the ING

agreement—is best illustrated by the fact that neither the ING agreement nor any of

plaintiffs’ other evidence establishes any basis for the six-percent and twelve-percent

obligations. That is, the parties do not dispute that plaintiffs contributed six percent

of their salaries to the accounts or that the town contributed a twelve-percent match;

however, plaintiffs offered no evidence that establishes the town’s obligation to

make such a contribution, nor did they provide evidentiary support for their assertion

that the town established a separate and distinct retirement savings program to which

the town contributed.

The plaintiffs’ own testimony as to the circumstances surrounding their

authorization of the six-percent payroll deductions was equivocal. Mr. Ross testified

about and provided enrollment and participation forms, which indicated that he had

enrolled in a governmental “deferred compensation plan” pursuant to which he

contributed six percent of each paycheck. He testified that he signed the enrollment

- 13 - form with the understanding that he “would be enrolling in a deferred compensation

plan, savings plan, through Aetna[.]” Mr. Ross explained that the basis of his

understanding came from a representative of Aetna, who assisted him in authorizing

the withholdings. Mr. Ross did not know where the six-percent or twelve-percent

figures came from. Mr. Faella testified only that he understood the ING accounts to

be an annuity.

Mr. DiMaio’s deposition testimony—admitted as a full exhibit by stipulation

of the parties—was also equivocal. He testified that he was called to a meeting with

an ING representative, that the representative told him the six-percent withholdings

were required under his contract, and that eventually he would get a “return” on the

contributions. He also testified that, while he knew about a twelve-percent

contribution by the town, he understood that to be funding for the police pension

plan.

The plaintiffs’ reliance on Ms. Menard’s deposition testimony is similarly

unavailing. In their posttrial memorandum, plaintiffs emphasized that Ms. Menard

was an ING employee who had handled the accounts for some time and that she was

the person most familiar with the ING agreement and the accounts created pursuant

thereto. The plaintiffs highlighted the following exchange during Ms. Menard’s

deposition testimony:

“[Question:] And how would you—what is the type of plan that is set up [by virtue of the ING Agreement]? - 14 - “[Ms. Menard:] A 457 deferred—governmental deferred compensation plan.”

This testimony, though heavily relied upon by plaintiffs, also fails to establish

plaintiffs’ entitlement to the funds. There is no doubt that the ING agreement was

labeled as a “§ 457”; therefore Ms. Menard, an employee of ING—a party to the

ING agreement—testified as much. Nevertheless, Ms. Menard testified only to her

knowledge of the accounts. She did not testify to the relationship between plaintiffs

and the town. For example, Ms. Menard testified that, while the accounts were set

up as § 457 accounts on ING’s side, any plan documents between employer and

employee would supersede the ING agreement. Similarly, Ms. Menard made it clear

that ING did not play any intermediary role between plaintiffs and the town. The

following exchange is illustrative:

“[Question:] What about when a triggering event happens? An employee that’s a participant in the plan reaches, say, retirement age, a triggering event occurs, who’s entitled to those funds upon a triggering event occurring?

“* * *

“[Ms. Menard:] It’s—we don’t—ING doesn’t—we’re not interested—we don’t care. I mean, it could go—if they tell us to pay it to the town, we pay it to the town. If it’s paid to the employee, it’s checked off to pay the employee, we pay the employee. If it tells us to pay to another provider, we pay it to the other provider.

- 15 - “ING doesn’t track the status of employees because, again, we’re only the investment provider.”

By contrast, the town produced ample evidence—which was overlooked by

the trial justice—that did establish an agreement that governed the various rights and

obligations between plaintiffs and the town, including an obligation pursuant to

which plaintiffs contributed six percent of each paycheck, and the town contributed

a twelve-percent match. The defendants consistently maintained that the CBAs

established a pension plan of which plaintiffs were a part and that the ING agreement

established an investment vehicle to fund that pension plan. The parties presented

as a full exhibit the serially negotiated CBAs, which undisputedly since 1986 had

contained language that,

“[i]f an officer resigns between one (1) and ten (10) years of service on the Johnston Police Department, said police officer may withdraw from the retirement fund his or her six (6) percent contribution as well as the Town’s twelve (12) percent contribution into the fund, for a total of eighteen (18) percent.” (Emphasis added.)

The CBAs were the only documents admitted at trial establishing an

agreement governing the various rights and obligations as between plaintiffs and the

town. Those CBAs undisputedly stated that the police officers were to contribute

six percent of their paychecks to a pension fund, while the town contributed a twelve-

percent match. Further, the CBA in effect from 2005 through 2008—the CBA under

which both Mr. Faella and Mr. Ross retired—explicitly contained a section entitled

- 16 - “Pension Contributions,” which stated: “For years one (1) through thirty (30),

officers shall contribute six percent (6%) of their gross pay * * * .”

The defendants also provided testimony from two former town police officers.

They each testified that, during their tenures as police officers, contemporaneous

with plaintiffs’ service, they contributed six percent of each paycheck to fund police

officers’ pensions, while the town contributed a twelve-percent match. One officer,

David aRusso, also authenticated and testified about a letter he received in August

1984 from then-Mayor Ralph R. aRusso,4 which stated, in relevant part,

“On July 13, 1984 a committee including your Union Attorney and President, representing your interest, met with me and Aetna Insurance Co. personnel regarding the Town of Johnston Police Pension Fund. The following items have been cleared up.

“#1 The Town of Johnston is contributing 12% and police personnel are contributing 6% of salary toward funding your pension. This fact is part of your union contract.

“#4 Under the new program, if you should decide to terminate your employment with the town before retirement, the entire accumulation of 12% and 6% will be yours.

“#5 In order to impliment [sic] the new program, YOU MUST RETURN THE POLICY NOW IN YOUR

4 Mayor aRusso was David aRusso’s father. - 17 - POSSESSION, so that the funds can be rolled over into the new program.”

The defendants also supplied a second communication from Mayor aRusso sent to a

second officer—Peter Mancini—which provided identical information.

The plaintiffs have never disputed that they were bound by the applicable

CBAs and that at all times relevant hereto have received their pensions promised in

said CBAs.5 They did not submit any evidence that they had made an additional,

separate contribution of six percent of their salaries to a different fund. Nevertheless,

they have asserted that they are entitled to both continued receipt of their pension

and a full distribution of their six-percent contributions and the town’s twelve-

percent contributions.

We discern no factual entitlement to the funds in the record developed by

plaintiffs and conclude that the trial justice was clearly wrong when he found

otherwise. We are persuaded that the trial justice overlooked and misconceived

material evidence when he concluded that plaintiffs and the town had a deferred

compensation plan pursuant to which plaintiffs were entitled to immediate

distribution of the funds in addition to continued receipt of their pensions,

5 Mr. Faella receives a reduced disability pension following resolution of a dispute regarding the town’s decision to place him on disability retirement; in accordance with the settlement of that dispute, he receives a sixty-percent disability pension, rather than sixty-six and two-thirds percent. - 18 - particularly in light of the town’s uncontroverted evidence that plaintiffs were indeed

contributing to a police pension fund.

Having had the opportunity to establish an entitlement, plaintiffs failed to

meet their evidentiary burden to do so. The plaintiffs’ evidence—recited throughout

this opinion—did not establish the factual substance of any agreement between

plaintiffs and the town to treat the parties’ six-percent and twelve-percent

contributions as deferred compensation. The only remaining evidence was that

plaintiffs contributed six percent of their paychecks to a pension fund as part of the

applicable CBAs with the town.

The plaintiffs assert that the town conceded that the ING agreement

constituted, as a matter of federal law, an I.R.C. § 457 “plan” based on the town’s

statement in its papers before this Court that “[o]n or about April 26, 1984, the Town

established the Town of Johnston Deferred Compensation Plan with Aetna Life

[I]nsurance and Annuity Company[.]” (Emphasis omitted.) This assertion takes the

town’s argument out of context and elevates semantics over substance.

An examination of the town’s brief before this Court as a whole and in the

context of the trial proceedings makes clear that defendants were referring to the title

of the ING agreement, which, as elucidated previously, was labeled as a deferred

compensation plan. However, since the genesis of the present cases, the town has

disputed that there was ever an agreement between the town and plaintiffs to defer

- 19 - compensation or that plaintiffs had any other entitlement to the funds separate and

apart from their pensions.

We observe that the only other basis for relief articulated by plaintiffs is their

assertion that I.R.C. § 457 entitles them to distribution as a matter of law; plaintiffs

urge this Court to accept that provision as determinative of their right to the funds.

We decline plaintiffs’ invitation to rely on § 457—a provision of the Internal

Revenue Code contained in Subtitle A, Income Taxes; Chapter 1, Normal Taxes and

Surtaxes; Subchapter E, Accounting Periods and Methods of Accounting; Part II,

Methods of Accounting; Subpart B, Taxable Year for Which Items of Gross Income

Included—as establishing a property right, particularly in the absence of any citation

to regulations or caselaw that supports their assertion. Because of our previously

articulated conclusion that plaintiffs failed to establish as a factual matter that they

had an agreement with the town to defer compensation, we need not reach the issue

of the effects of I.R.C. § 457. However, we do not pass on the propriety of the

town’s actions relative to the various federal laws pertaining to retirement plans and

taxation; rather, we limit our opinion to the issue of the trial justice’s factual

conclusion that the town and plaintiffs agreed to defer compensation pursuant to

26 U.S.C. § 457.

Having concluded that there was no sufficient factual or legal basis for doing

so, we hold that the trial justice abused his discretion by granting the plaintiffs’

- 20 - request for declaratory judgment based on the ING agreement between the town and

ING.

Conclusion

For the foregoing reasons, we reverse the judgment of the Superior Court and

remand the cases to the Superior Court for entry of final judgment consistent with

this opinion.

Justice Lynch Prata did not participate.

- 21 - STATE OF RHODE ISLAND SUPREME COURT – CLERK’S OFFICE Licht Judicial Complex 250 Benefit Street Providence, RI 02903

OPINION COVER SHEET

Albert A. Faella et al. v. Town of Johnston et al. Title of Case Alan Ross v. Town of Johnston. No. 2019-445-Appeal. (PB 10-311) Case Number No. 2019-447-Appeal. (PB 10-60)

Date Opinion Filed May 25, 2022

Justices Suttell, C.J., Goldberg, Robinson, and Long, JJ.

Written By Associate Justice Melissa A. Long

Source of Appeal Providence County Superior Court

Judicial Officer from Lower Court Associate Justice Michael A. Silverstein

For Plaintiffs:

Michael J. Lepizzera, Esq Attorney(s) on Appeal Timothy J. Robenhymer, Esq. For Defendants:

William J. Conley, Esq.

SU-CMS-02A (revised June 2020)