Court Opinion

ID: 1039089
Source: CourtListenerOpinion
Date Created: 2013-08-28 22:27:33.866936+00
Date Added: 2024-06-11T12:39:16.359712
License: Public Domain

Supreme Court
                                                             No. 2012-155-Appeal.
                                                             (PC 11-2304)

       John A. Zambarano et al.           :

                  v.                      :

The Retirement Board of the Employees’    :
Retirement System of the State of Rhode   :
                Island.                   :

            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
            222-3258 of any typographical or other formal errors in order that
            corrections may be made before the opinion is published.
                                                                  Supreme Court
                                                                  No. 2012-155-Appeal.
                                                                  (PC 11-2304)

         John A. Zambarano et al.             :

                     v.                       :

 The Retirement Board of the Employees’       :
 Retirement System of the State of Rhode      :
                 Island.                      :

              Present: Suttell, C.J., Goldberg, Flaherty, Robinson, and Indeglia, JJ.

                                         OPINION

       Justice Indeglia, for the Court. Yet again, we are called upon to resolve a dispute

stemming from the consequences of public corruption. In this appeal, the Retirement Board of

the Employees’ Retirement System of the State of Rhode Island (defendant or board) asks us to

decide whether the trial justice erred in finding that it could not refuse a demand for

reimbursement of retirement contributions to John A. Zambarano (plaintiff or Zambarano). This

case came before the Supreme Court for oral argument on February 6, 2013, pursuant to an order

directing the parties to appear and show cause why the issues raised in this appeal should not be

summarily decided. After carefully considering the written and oral submissions of the parties,

we are satisfied that this appeal may be resolved without further briefing or argument. For the

reasons set forth in this opinion, we affirm the judgment of the Superior Court.

                                             -1-
                                               I

                                       Facts and Travel

       On August 19, 2010, a federal grand jury indicted Zambarano on eight felony counts

relating to his unethical conduct as a member of the North Providence Town Council. 1

Zambarano pled guilty to all counts on March 1, 2011, and was sentenced to a term of

imprisonment on May 17, 2011. On the day of his sentencing, an order of forfeiture entered in

the United States District Court for the District of Rhode Island which required Zambarano to

forfeit $46,000 to the federal government. According to the board, this order, which was also

entered as a money judgment against Zambarano, “represents the amount of bribe money which

[he] and his co-defendants received in exchange for agreeing to perform official acts as

[members] of the North Providence Town Council.” Zambarano was also ordered to pay a

special assessment of $800 and a fine of $10,000.

       On February 4, 2011, about one month before Zambarano pled to the charges, he

resigned from his position at the Rhode Island Department of Corrections (DOC). He had been

employed as a janitorial/maintenance supervisor at the DOC for approximately eight years and

nine months, during which time he contributed $30,554.20 to the Employees’ Retirement System

of Rhode Island (ERSRI). Over his approximately thirteen years and two months as a member

of the North Providence Town Council, he had also contributed $5,490.50 to the Municipal

Employees’ Retirement System (MERS). Both ERSRI and MERS are administered by the

board. See G.L. 1956 § 36-8-4.

1
 In a separate indictment, Zambarano was also charged with other crimes which did not relate to
his conduct as a member of the town council. Those charges are not at issue in this appeal.

                                            -2-
       On the day he resigned from his position at the DOC, Zambarano sent a letter to the DOC

requesting a refund of his contributions to ERSRI. In a letter dated April 18, 2011, the board

responded to Zambarano’s demand as follows:

              “In light of your plea agreement and the potential monetary
              judgments to be entered against you, pursuant to the Rhode Island
              Public Employee Pension Revocation and Reduction Act, [G.L.
              1956 chapter 10.1 of title 36,] it is our opinion that you are not
              entitled to a return of contributions. Consequently, at this time we
              cannot process your request.”

       Soon after, on April 25, 2011, Zambarano filed a complaint in Superior Court seeking

declaratory relief, injunctive relief, and monetary damages against the board. 2 He alleged that

G.L. 1956 § 36-10-8 entitled him to a refund of the contributions he had made to ERSRI. 3 In a

motion filed on April 27, 2011, Zambarano contended that the board’s refusal to return those

contributions amounted to conversion and breach of its fiduciary duty. He cited G.L. 1956 § 36-

10.1-4(c) in support of his argument that the board was obligated to return his contributions to

him. Section 36-10.1-4(c) provides as follows:

              “[N]o payments in return of contributions shall be made or ordered
              unless and until the [S]uperior [C]ourt determines that the public
              official or public employee whose retirement or other benefits or
              payments have been revoked or reduced under this chapter has
              satisfied in full any judgments or orders rendered by any court of
              competent jurisdiction for the payment of restitution for losses
              incurred by any person as a result of the subject crime related to
              public office or public employment.”

2
  Zambarano named the fifteen individuals who serve on the board as defendants (in their official
capacities).
3
  General Laws 1956 § 36-10-8 provides that “[a] member [of ERSRI] who withdraws from
service * * * shall be paid on demand a refund consisting of the accumulated contributions
standing to his or her credit in his or her individual account in the annuity savings account,
without interest.”

                                            -3-
Because the order to be entered against him in federal court would be an order of forfeiture, not

an order of restitution, Zambarano asserted that the board had no basis for refusing to return his

contributions.

          In an answer filed on May 31, 2011—after the order of forfeiture had entered against

Zambarano—the board denied the substantive allegations of the complaint, raised several

affirmative defenses, and asserted counterclaims against Zambarano.             On June 22, 2011,

Zambarano moved to amend his complaint. Among other things, he sought to add an “innocent

spouse” claim by his wife, Kathy A. Zambarano, who was also named as a plaintiff. 4 The board

assented to the filing of Zambarano’s amended complaint and filed its amended answer on June

29, 2011.

          A bench trial was held before a justice of the Superior Court on September 15, 2011. The

parties submitted a stipulated set of facts before the trial began. Two witnesses testified: Kathy

Zambarano and Frank Karpinski, the executive director of ERSRI. Because the board has not

appealed that portion of the judgment relating to Kathy Zambarano’s “innocent spouse” claim,

we will not summarize her testimony.

          Karpinski’s testimony confirmed certain facts regarding Zambarano’s length of

municipal and state service and his eligibility for pensions from MERS and ERSRI. Karpinski

testified that Zambarano would be entitled to a municipal pension benefit once he reached the

age of fifty-eight. This pension benefit would be about $175.55 per month, or about $154.45 per

4
    General Laws 1956 § 36-10.1-3(d) provides as follows:
                 “If the [S]uperior [C]ourt determines that the retirement or other benefits
         or payments of a public official or public employee should be revoked or reduced
         under this chapter, it may, in its discretion and after taking into consideration the
         financial needs and resources of any innocent spouse * * * order that some or all
         of the revoked or reduced benefits or payments be paid to [that] innocent spouse *
         * * as justice may require.”

                                                -4-
month if Zambarano’s period of dishonorable service was excluded from the calculation.

Karpinski stated that Zambarano’s municipal pension benefit could not be paid to another

individual before Zambarano attained the age of fifty-eight.        Karpinski also testified that

Zambarano was not entitled to a pension benefit for his service as a state employee because he

had been a state employee for less than ten years when he resigned from his position at the DOC.

         On December 13, 2011, after the parties presented arguments, the trial justice rendered a

bench decision. 5 Pursuant to § 36-10.1-3, the trial justice revoked Zambarano’s MERS pension

in its entirety, citing “the seriousness of the offense[s]” and Zambarano’s “grievous breach of

public trust.” The trial justice also ordered the board to return to Zambarano the contributions he

had made to ERSRI when he worked for the DOC. Interpreting § 36-10.1-4(c), he found that the

phrase “judgments or orders” was modified by the phrase “for the payment of restitution.” A

contrary reading, he explained, “would lead to an absurd result.” Based on the plain language of

the statute, the trial justice inferred that the law was intended to reach “situation[s] where

someone was injured, either economically or physically[,] by reason of conduct that occurred in

the course of public employment.” He noted that “[i]f the General Assembly wanted [the statute]

to apply * * * to any money owed for any purpose to anyone else, then they could have said

that.”

         The trial justice also found that Kathy Zambarano was “truly an innocent spouse within

the meaning of [§ 36-10.1-3(d)].” Accordingly, he awarded Kathy the MERS pension to which

her husband would have been entitled, excluding the period of Zambarano’s dishonorable

service. Finally, the trial justice ordered the board to return to Zambarano the contributions he

5
 Although the record indicates that the parties submitted post-trial memoranda, the record does
not include copies of those documents.

                                             -5-
had made to MERS during the period of his dishonorable service; these contributions totaled

$720.

        Judgment entered on January 3, 2012. The board timely appealed the Superior Court’s

decision. It also moved, under Rule 62 of the Superior Court Rules of Civil Procedure, for a stay

of the judgment pending appeal. The Superior Court granted that motion in an order entered on

January 31, 2012.

                                                   II

                                             Issue on Appeal

        The parties’ dispute centers on the application of § 36-10.1-4(c) to the facts of this case.

Zambarano acknowledges that he is obliged to forfeit $46,000 to the federal government, but

argues that he is nonetheless entitled to a return of his contributions to ERSRI and MERS. He

maintains that, because no “judgments or orders * * * for the payment of restitution” have been

entered against him, § 36-10.1-4(c) provides no basis upon which the board may refuse his

request for a return of his contributions.

        The board offers a different reading of § 36-10.1-4(c). It contends that the phrase “for the

payment of restitution” modifies the word “orders” but does not modify the word “judgments.”

Under this interpretation, the board argues that it may withhold Zambarano’s contributions until

the federal court’s order of forfeiture has been satisfied in full.

                                                   III

                                         Standard of Review

        This appeal presents us with a singular issue of statutory interpretation. We review such

questions de novo, “with the ‘ultimate goal’ of giving effect to that purpose which our

Legislature intended in crafting the statutory language.” McCain v. Town of North Providence,

                                                -6-
41 A.3d 239, 243 (R.I. 2012) (quoting Webster v. Perrotta, 774 A.2d 68, 75 (R.I. 2001)). It is

well settled that “the plain statutory language” is “the best indicator” of the General Assembly’s

intent. Id. (quoting DeMarco v. Travelers Insurance Co., 26 A.3d 585, 616 (R.I. 2011)). This

Court will not construe a statute “to achieve [a] meaningless or absurd result[ ].” Id. (quoting

Ryan v. City of Providence, 11 A.3d 68, 71 (R.I. 2011)). Rather, when interpreting statutes, a

court should construe “each part or section * * * in connection with every other part or section to

produce a harmonious whole.”       2A Norman J. Singer & J.D. Shambie Singer, Sutherland

Statutes and Statutory Construction § 46:5 at 189-90 (7th ed. 2007).

                                                IV

                                           Discussion

        The Legislature enacted the Rhode Island Public Employee Pension Revocation and

Reduction Act (PEPRRA), chapter 10.1 of title 36, in 1992. P.L. 1992, ch. 306, art. 1, § 8.

“PEPRRA was adopted because of the unfortunate misconduct of public officials.” Retirement

Board of the Employees’ Retirement System of Rhode Island v. DiPrete, 845 A.2d 270, 279 (R.I.

2004). The statute authorizes the Superior Court to revoke or reduce the retirement benefits of

public officials or employees who are convicted of crimes relating to their public office or

employment. Section 36-10.1-3(a). Under this statute, “[a]ny public official or public employee

whose retirement or other benefits or payments are revoked * * * shall be entitled to a return of

his or her contribution paid into the relevant pension fund(s), without interest.” Section 36-10.1-

4(a).

        At the outset, we note that § 36-10.1-4 may not apply to Zambarano’s contributions to

ERSRI. Because Zambarano had not yet accumulated sufficient years in state service to be

eligible for a state pension, the trial justice did not revoke (and could not have revoked) a

                                             -7-
pension based on this employment. Thus, this provision of PEPRRA may not apply to the

$30,554.20 in contributions that Zambarano made to ERSRI. It is unclear to us whether the

General Assembly intended § 36-10.1-4 to apply in all situations where the Superior Court has

revoked a pension of an ex-employee, whether or not that individual has made contributions

toward another pension that may not yet have vested. However, because the parties do not

contest that § 36-10.1-4 applies to Zambarano’s contributions to both MERS and ERSRI, we

assume (without deciding) that it does, and proceed to consider whether the trial justice erred in

interpreting the statute as applied to the facts of this case. 6

        As noted above, § 36-10.1-4(c) provides that “no payments in return of contributions

shall be made or ordered unless and until * * * the public official or public employee * * * has

satisfied in full” certain “judgments or orders.” The disjunctive phrase “judgments or orders” is

followed by four modifying phrases: (1) “rendered by any court of competent jurisdiction;” (2)

“for the payment of restitution;” (3) “for losses incurred by any person;” and (4) “as a result of

the subject crime related to public office or public employment.” Id. After reading § 36-10.1-

4(c) in its entirety, alongside PEPRRA’s other provisions, we conclude that all four of these

phrases modify the phrase “judgments or orders.”

        We have previously observed that “[b]ecause the language of the statute is clear,

PEPRRA must be applied literally.” Smith v. Retirement Board of the Employees’ Retirement

System of Rhode Island, 656 A.2d 186, 190 (R.I. 1995). If the phrase “for the payment of

restitution” is read to modify only the word “orders” and not the word “judgments,” then the

6
  Even if we were to decide that § 36-10.1-4 does not apply to Zambarano’s contributions to
ERSRI, we would affirm the trial justice’s decision on alternate grounds. Section 36-10-8 states,
in pertinent part, that “[a] member [of ERSRI] who withdraws from service or ceases to be a
member for any reason other than death or retirement shall be paid on demand a refund [of his or
her retirement contributions].” Under this statute, Zambarano was entitled to a return of his
contributions to ERSRI.

                                                 -8-
three other modifying phrases quoted above must also be read in like manner. The word

“judgments” would thus be unmodified, but the word “orders” would be modified by four

phrases. The General Assembly could not have intended such a result. The board concedes that

the phrase “as a result of the subject crime related to public office or public employment”

modifies both “judgments” and “orders,” but argues that “for the payment of restitution”

modifies only the word “orders.” Because this reading results in an illogical interpretation of the

statute, we must reject it. 7

        The board argues that Zambarano’s reading of § 36-10.1-4(c) “would render the word

‘judgment[s]’ mere redundant surplusage * * *.” We disagree. To us, the disjunctive phrase

“judgments or orders” shows that the Legislature intended the provision to apply in the event that

an order of restitution was not later entered as a judgment of restitution. The word “judgments”

is not surplusage; rather, it is an alternative means by which restitution can be required.

        To bolster its argument, the board also directs our attention to § 36-10.1-3(a), which

states that “any retirement or other benefit or payment of any kind * * * shall be revoked or

reduced” under certain circumstances. It contends that the phrase “of any kind” supports its

reading of § 36-10.1-4(c). Because §§ 36-10.1-3 and 36-10.1-4(c) deal with two different

subjects, this argument is unavailing. Section 36-10.1-3 authorizes the revocation or reduction of

the pension or other benefits of a public official or employee. Its broad scope is evidence of the

7
  In its papers to the Superior Court and to this Court, the board has repeatedly omitted the
phrase “for the payment of restitution” when paraphrasing the language of § 36-10.1-4(c). This
underscores our conclusion that the statute cannot be read as written according to the board’s
interpretation. Contrary to its argument, the Superior Court is not “fully empowered to
determine whether or not Mr. Zambarano has satisfied in full any judgments or orders related to
his criminal conduct * * *.” (Emphasis added.) As we have explained above, § 36-10.1-4(c)
sets forth specific limitations on the kinds of judgments or orders that must be satisfied before
payments in return of contributions are made or ordered.

                                              -9-
Legislature’s intent that those who betray the public trust receive no benefits whatsoever from

the public fisc upon their separation from state or municipal employment. Section 36-10.1-4

applies not to pension benefits, but to the contributions made by the ex-employee. Under the

plain language of § 36-10.1-4(c), the Superior Court may only consider whether certain specified

kinds of judgments or orders for the payment of restitution have been satisfied before ordering

the return of contributions to an ex-employee.

       We decline to treat the order of forfeiture to which Zambarano is subject as an order of

restitution. In so doing, we must briefly define and distinguish the concepts of restitution and

forfeiture. “The word restitution means restoration. Restitution is a return or restoration of what

the defendant has gained in a transaction.” 1 Dan B. Dobbs, Law of Remedies § 4.1(1) at 551

(2d ed. 1993). “Liability in restitution derives from the receipt of a benefit whose retention

without payment would result in the unjust enrichment of the defendant at the expense of the

claimant.” Restatement (Third) Restitution and Unjust Enrichment § 1 cmt. a. at 3 (2011). Once

liability is established, “the defendant must restore the benefit in question or its traceable

product, or else pay money in the amount necessary to eliminate unjust enrichment.” Id.

       Forfeiture is defined as “[t]he divestiture of property without compensation” or “[t]he

loss of * * * property because of a crime, breach of obligation, or neglect of duty.” Black’s Law

Dictionary 722 (9th ed. 2009). The federal government is authorized “to seek forfeiture of the

proceeds of virtually all serious federal crimes * * *.” Jimmy Gurulé et al., The Law of Asset

Forfeiture § 5-3(b). at 193 n.59 (2d ed. 2004). A forfeiture that is sought against a defendant in a

criminal prosecution is punitive in nature, not remedial. See United States v. Bajakajian, 524

U.S. 321, 332 (1998).

                                             - 10 -
       A key distinction between restitution and forfeiture is the recipient of payments made to

satisfy those orders. Payments made to satisfy orders of restitution are made to the individual at

whose expense the defendant was unjustly enriched. By contrast, payments made to satisfy

orders of forfeiture are made to the sovereign that sought the forfeiture—either the state or

federal government. Here, the federal court did not order Zambarano to restore the $46,000 that

he and his codefendants had accepted as bribe money to the individuals who had themselves

broken the law by bribing public officials; instead, it ordered Zambarano to forfeit his ill-gotten

gains to the federal government as part of the punishment it imposed for his crimes.

       As Zambarano observed in his brief to this Court, “[s]imply stated, forfeiture is not

restitution.” We cannot ignore the plain language of § 36-10.1-4(c); similarly, we cannot

transmute the order of forfeiture into an order or judgment of restitution. Having concluded that

the trial justice correctly found that “for the payment of restitution” modifies both “judgments”

and “orders,” we hold that, because the federal court issued neither a judgment nor an order of

restitution against Zambarano, § 36-10.1-4(c) provides the board no basis upon which it can

refuse his demand for a return of his contributions. 8

                                                  V

                                            Conclusion

       For the reasons set forth in this opinion, we affirm the judgment of the Superior Court, to

which we remand the record in this case.

8
  Although the outcome of this appeal may appear unseemly to some observers, the fact that
Zambarano is entitled to a return of his contributions does not change the reality that he remains
liable on the federal court’s $46,000 forfeiture judgment against him.

                                              - 11 -
                            RHODE ISLAND SUPREME COURT CLERK’S OFFICE

                                 Clerk’s Office Order/Opinion Cover Sheet

TITLE OF CASE:        John A. Zambarano et al. v. The Retirement Board of the
                      Employees’ Retirement System of the State of Rhode Island.

CASE NO:              No. 2012-155-Appeal.
                      (PC 11-2304)

COURT:                Supreme Court

DATE OPINION FILED: March 1, 2013

JUSTICES:             Suttell, C.J., Goldberg, Flaherty, Robinson, and Indeglia JJ.

WRITTEN BY:           Associate Justice Gilbert V. Indeglia

SOURCE OF APPEAL:     Providence County Superior Court

JUDGE FROM LOWER COURT:

                      Associate Justice Bennett R. Gallo

ATTORNEYS ON APPEAL:

                      For Plaintiff: Neil P. Philbin, Esq.

                      For Defendant: Michael P. Robinson, Esq.