Carroll v. City of Philadelphia

• Decision Date: 16 June 1999
• Citation: 735 A.2d 141
• Parties: Richard A. CARROLL, Jr., Appellant, v. CITY OF PHILADELPHIA, BOARD OF PENSIONS AND RETIREMENT MUNICIPAL PENSION FUND.
• Court: Pennsylvania Commonwealth Court

735 A.2d 141

Richard A. CARROLL, Jr., Appellant, v. CITY OF PHILADELPHIA, BOARD OF PENSIONS AND RETIREMENT MUNICIPAL PENSION FUND.

Commonwealth Court of Pennsylvania.

Argued March 8, 1999.

Decided June 16, 1999.

Publication Ordered August 9, 1999.

Richard A. Carroll, Jr., appellant, pro se.

Mark R. Zecca, Philadelphia, for appellee.

Before DOYLE, J., McGINLEY, J., and JIULIANTE, Senior Judge.

DOYLE, Judge.

Richard A. Carroll, Jr. appeals from an order of the Court of Common Pleas of Philadelphia County, which affirmed a decision of the City of Philadelphia Board of Pensions and Retirement (Board) denying his request to change the classification of his pension plan.

Carroll began working for the City of Philadelphia (City) in 1977 as a Clerk Typist for City Council. In that position, he was enrolled in Pension Plan J (Plan J),¹ which gave Carroll the opportunity to retire at age 55 and receive pension payments equal to approximately 50% of his final salary. Carroll left his clerk typist position on January 14, 1978, and he received a refund of his pension contributions.

On February 21, 1978, Carroll was appointed and classified as a Prosecutor II with the City's District Attorney's Office. He again became a member of Plan J. Carroll resigned from that position approximately nine years later, on January 29, 1987, and he again applied for and received a refund of his Plan J pension contributions.²

However, on January 8, 1987, shortly before Carroll left City employment, City Council enacted an ordinance entitled Municipal Retirement System Benefit Plan 1987 (87 Plan). At that time the City's pension system was financially distressed, and the City enacted the 87 Plan to reduce pension costs and to qualify for financial assistance from the Commonwealth. The new pension plan would generally apply to all employees hired or appointed after January 1, 1987. Under the terms of the 87 Plan, employees who separated from City employment and did not leave their contributions in Plan J, and who were then re-employed with the City after January 8, 1987, would belong to Pension Plan M (Plan M).³ Plan M is less generous than Plan J, paying a retiree 40% of his or her final earnings and setting an employee's retirement age at 60 years.

On May 18, 1987, Carroll was rehired by the District Attorney's Office and should have been enrolled in Plan M. The City's Finance Department, however, erroneously began to make pension payroll deductions at the Plan J rate, rather than the Plan M rate, and his pay stubs indicated that he was in Plan J. The payroll deduction for Plan J is higher than the deduction for Plan M.

When the City rehired Carroll, he was told by the District Attorney's Office that he was to return to City employment under the same terms that governed his employment prior to his January 1987 resignation. But, the City made no specific representations to Carroll regarding his pension plan.

Approximately eight months after Carroll was rehired, on January 6, 1988, the Board Clerical Support Unit sent Carroll a memorandum informing him of the following:

Because your re-employment occurred on 5-18-87, you have been placed in a new pension plan which is different from the plan to which you previously belonged. As a result, rather than repay the amount which you withdrew, you will be charged at the contribution rate of the new plan.

...

In order to avail yourself of this opportunity to buy back your prior service credit, you must return the memorandum at the bottom of this letter before 5-17-88. After that date, you will lose forever the right to buy credit for your prior service.

(Board Memorandum at 1; Reproduced Record at 26a.) (Emphasis in the original.) Carroll never responded to this memorandum.

On April 2, 1996, Carroll sent a letter to the Board asking to repurchase approximately nine years of his employment time at the District Attorney's office, as well as three years of military service time. Upon receipt of this letter, the Board reviewed its records and discovered that Carroll was erroneously listed as a member of Plan J and should have been recorded as being a member of Plan M. The Board corrected its records to place Carroll in Plan M. Further, because Carroll was erroneously being charged at the Plan J rate and had overpaid his retirement contributions since he was rehired in 1987, the Board refunded to Carroll $11,096.22, the difference between the higher Plan J payroll deductions and the Plan M deduction. The Board, however, did not pay Carroll interest on the excess monies that it had collected. Despite Carroll's failure to respond to the Board's 1988 memorandum and make a timely request to purchase his prior service with the District Attorney's office, the Board's Executive Director gave him special permission to repurchase his prior years of municipal service in addition to his military time and apply those years to Plan M. Carroll took advantage of this opportunity and purchased a little more than nine years of his prior municipal service plus military time and vested in Plan M On September 19, 1996, Carroll sent a letter to the Executive Director of the Board challenging the Board's determination that he was a member of Plan M. He requested that his pension and retirement status be governed by the terms of Plan J. The Board conducted a hearing at which time Carroll argued that the principle of equitable estoppel precluded the Board from denying him membership in Plan J. He asserted that he relied to his detriment on a notation on his pay stub indicating that he was in Plan J and denied ever receiving the Board's January 6, 1988 memorandum. Carroll also argued that he was entitled to interest on the excess pension contributions he made at the Plan J rate. The Board denied his appeal.

Carroll then appealed the Board's order to the Common Pleas Court. The Court affirmed the Board's decision to deny Carroll membership in Plan J, but determined that Carroll was entitled to six-percent interest on the approximately $11,000 in overpaid pension contributions. This appeal followed.

On appeal, Carroll contends that the Board should, under the doctrine of equitable estoppel, be precluded from denying him admission into Plan J, because the Board, contrary to the City's pension ordinances, withheld Plan J pension contributions from his salary. He asserts that the Board misrepresented his pension plan status as Plan J for almost a decade, inducing him to remain employed by the City, and that he relied on the misrepresentation to his detriment. Carroll also contends that the Common Pleas Court erred in fixing interest on his excess pension contribution at six-percent and that the Board, in order to prevent the unjust enrichment of the pension fund, should be required to pay interest consistent with the fund's earnings.

In Quinn v. Department of State, Bureau of Professional & Occupational Affairs, 168 Pa.Cmwlth. 447, 650 A.2d 1182 (1994), we explained the doctrine of equitable estoppel as follows:

... [E]quitable estoppel prevents a party from acting differently than the manner in which it induced another party to expect.... The doctrine may be applied to a Commonwealth agency when the party asserting estoppel establishes by clear, precise unequivocal evidence that: (1) the agency intentionally or negligently misrepresented a material fact; (2) the agency knew or had reason to know that the party would justifiably rely on the misrepresentation; and (3) the party acted to his or her detriment by justifiably relying on the misrepresentation....

Mere argument or doubtful inference is insufficient to establish the critical element of changing one's position to his or her detriment....

Id. at 1184 (citations omitted). Further, because equitable estoppel is a doctrine of equity and fundamental fairness, its applicability depends on the specific facts of each case. Id.

Generally, a party may not assert equitable estoppel to prevent the application of a statutory provision. Finnegan v. Public School Employes' Retirement Board, 126 Pa.Cmwlth. 584, 560 A.2d 848 (1989), aff'd, 527 Pa. 362, 591 A.2d 1053 (1991). With regard to that principle, our Supreme Court has stated:

[T]he Commonwealth or its subdivisions and municipalities cannot be estopped by `the acts of its agents and employees if those acts are outside the agents' powers, in violation of positive law, or acts which require legislative or executive action.'

Central Storage & Transfer Co. v. Kaplan, 487 Pa. 485 at 489, 410 A.2d 292 at 294 (1979) (quoting Kellams v. Public School Employees Retirement Board, 486 Pa. 95, 100, 403 A.2d 1315, 1318 (1979)). Allowing a party to prevent the application of a statute based on an error of a government employee is tantamount to giving the employee's error the effect of amending the statute. Finnegan. In Finnegan, a teacher wished to purchase 15 years of service in order to qualify for an early retirement window available to employees with 30 or more years of service. Although the relevant statute allowed employees to purchase a maximum of 12 years service, representatives of the pension fund erroneously told Finnegan that she could purchase 15 years of service. Relying on the statements of the pension fund representatives, Finnegan submitted an application to purchase 15 years of service and retired on the belief that she would have, with the addition of the 15 purchased years, a total of 30 years of service. Thereafter, the pension fund allowed her to purchase only 12 years of service, which prevented her from qualifying for the early retirement window and reduced her monthly benefits.

Despite the fact that Finnegan established every element of equitable estoppel, the Finnegan Court held the pension fund could not be estopped from asserting the statutory provision that limited employees to purchasing a maximum of 12 years of service. We reasoned that the erroneous statements of the pension fund...