O’Neill v. Sch. Comm. of N. Brookfield, 464 Mass. 374 (2013)

Facts: O’Neill (Plaintiff), while superintendent of schools in North Brookfield, entered into an employment contract with the School Committee (Defendant) which provided that Plaintiff would be annually reimbursed for a percentage of his health insurance premiums after his retirement. When Plaintiff retired, he continued to use the town’s health insurance plan through the Consolidated Omnibus Budget Reconciliation Act (COBRA). When the COBRA coverage expired, Plaintiff requested reimbursement from Defendant pursuant to the employment contract. Defendant denied Plaintiff’s request, stating that “since you are no longer an employee, the [t]own is under no obligation to continue to honor any terms of your prior contract upon your retirement.” Plaintiff filed an action for breach of contract, and specific performance. The Superior Court granted Plaintiff summary judgment and awarded him $46,052.57. Defendant appealed.

Issue: “[W]hether an employment contract between a school committee and a superintendent that contains a provision for annual reimbursement of health insurance premiums in the indefinite future is invalid and unenforceable because it exceeds the six-year limit on such contracts imposed by G.L. c. 71, § 41.”[1]

Defendant’s Argument: A continuing requirement to perform under a contract is evidence of an active, ongoing contract. As such, the obligation to reimburse Plaintiff for a percentage of his health insurance costs annually for life indicates that Plaintiff’s final employment contract was a lifetime agreement, and, therefore, exceeded the allowable six-year duration.

Plaintiff’s Argument: Annual reimbursement of a percentage of health insurance costs is just a benefit provided for in Plaintiff’s final employment contract. The fact that this benefit was to be paid annually after the contract expired does not necessarily mean that the contract extended beyond its stated term of three years.

Holding: Plaintiff wins.  The court disagrees with the defendant’s position that the reimbursement clause converts Plaintiff’s contract into a lifetime agreement that exceeds six years. The reimbursement clause entitles Plaintiff to reimbursement for a percentage of his health insurance costs going forward, but all the other provisions of the contract, such as those describing his duties and responsibilities as superintendent, ended when Plaintiff retired. As such, the rule that employment contracts between school committees and superintendents may not exceed six years does not absolve the defendants of their contractual obligation in this case.

Briefed By: John Gionis

[1] G.L. c. 71, § 41 provides that “[a] school committee may award a contract to a superintendent of schools or a school business administrator for periods not exceeding six years which may provide for the salary, fringe benefits, and other conditions of employment, including but not limited to, severance pay, relocation expenses, reimbursement for expenses incurred in the performance of duties or office, liability insurance, and leave for said superintendent or school business administrator” (emphasis added).

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