Lower Bucks Cnty. Joint Mun. Auth. v. Koszarek
| Decision Date | 11 December 2020 |
| Docket Number | No. 686 C.D. 2020,686 C.D. 2020 |
| Citation | 244 A.3d 54 |
| Parties | LOWER BUCKS COUNTY JOINT MUNICIPAL AUTHORITY v. Patricia KOSZAREK, Appellant |
| Court | Pennsylvania Commonwealth Court |
Andrew D. Cotlar, Doylestown, for Appellant.
James A. Downey, III, Langhorne, for Appellee.
BEFORE: HONORABLE RENÉE COHN JUBELIRER, Judge, HONORABLE ANNE E. COVEY, Judge (P.), HONORABLE BONNIE BRIGANCE LEADBETTER, Senior Judge
OPINION BY JUDGE COVEY
Patricia Koszarek (Koszarek) appeals from the Bucks County Common Pleas Court's (trial court) April 6, 2020 decision (April 6, 2020 Decision) finding for the Lower Bucks County Joint Municipal Authority (Authority) and against Koszarek in the amount of $26,399.77, in an action seeking to recover employer overpayments the Authority made to Koszarek.1 Koszarek presents five issues for this Court's review: (1) whether the trial court erred by concluding that the Authority may recover alleged overpayments; (2) whether the trial court erred or abused its discretion by failing to conclude that the Authority was estopped from seeking repayment of wages and benefits it previously approved; (3) whether the trial court abused its discretion by finding that wage and benefit overpayments were made; (4) whether the trial court erred or abused its discretion by rejecting Koszarek's counterclaim based on a settlement agreement and release (Settlement Agreement) between Koszarek and the Authority; and (5) whether the trial court erred or abused its discretion by concluding that the Authority recouped overpayments from other employees. After review, this Court affirms.
The Authority initially employed Koszarek as its Finance Director2 on a temporary basis effective December 3, 2007. On May 21, 2008, the Authority promoted Koszarek to Financial Assistant to the Managing Director, paying her $72,189.00 annually, plus benefits.3 Koszarek was not an officer of the Authority, and had no power to make policy. Koszarek's duties included completing and signing any and all payroll forms and regular pay submissions, as well as tracking employees’ vacation and/or sick time and usage.
The Authority's Managing Director Vijay Rajput, Ph.D. (Rajput) was Koszarek's supervisor. Rajput testified that his expertise was in agriculture and civil engineering, not finance. Rajput explained that he deferred to Koszarek's expertise and trusted that the information she presented to him was accurate. He further noted that his reliance on Koszarek was normal, as he also supervised other departments and relied on the department managers and superintendents to perform their jobs and to present him with honest information.
On April 25, 2013, Koszarek submitted a resignation letter to the Authority (2013 Resignation letter), therein claiming to the Authority's Board of Directors (Board) that Rajput discriminated against and belittled her. See Reproduced Record (R.R.) 510a-512a. She also raised concerns regarding potential violations of the Family and Medical Leave Act,4 Consolidated Omnibus Budget Reconciliation Act of 1985,5 and the Fair Labor Standards Act of 1938.6 However, because the Board refused to accept her resignation, Koszarek continued in her position.
On September 25, 2013, Koszarek filed a discrimination charge against the Authority with the United States Equal Employment Opportunity Commission (EEOC), and subsequently filed a "whistleblower" claim with the EEOC. On March 13, 2014, Koszarek submitted a retirement letter to the Authority in which she stated that her last day in the office would be March 27, 2014. She requested a payout in her last paycheck for her remaining vacation time and further requested to use "personal, family illness and compensation time beginning March 28, 2014, as is consistent with Authority practice." R.R. at 475a. The Board approved her request in executive session without the need for an audit, because the Board trusted the accuracy of Koszarek's representations.
At the next public meeting, the Board publicly expressed its appreciation for Koszarek's service. After Koszarek retired in 2014 from the Authority's employment, Susan Wallover (Wallover) was assigned to assist with payroll. Upon discovering an employee payroll discrepancy resulting in the employee's overpayment, Wallover researched the payroll records for other employees and prepared a written report for Rajput listing the employee names and discrepancies she discovered in their pay. See R.R. at 669a-671a.
After reviewing Wallover's report, the Authority retained Certified Public Accountant (CPA) Louis Polaneczky (Polaneczky) to review Wallover's report. Polaneczky was familiar with the Authority's finances because he had previously been consulted in the Authority's financial statement preparation. Polaneczky reviewed the Wallover report and verified the information contained therein. On November 17, 2014, Polaneczky prepared and presented his own written report to the Authority's Board, in which he recommended that further research was required and a forensic accounting should be completed. Polaneczky also opined in his report that the number and extent of the payroll discrepancies suggested either gross incompetence or possible fraud.
The Authority retained Forensic Accountant Joseph Barbagallo, CPA (Barbagallo) who was given complete access to the Authority's financial records, reports, policies, procedures, contacts, and anything else he believed necessary for his investigation. Barbagallo's forensic analysis revealed that Koszarek had overpaid herself $26,399.77 from December 3, 2007 to April 27, 2014, as follows: (1) $4,646.13 regular pay; (2) $5,420.76 vacation pay; (3) $10,841.52 sick pay; (4) $3,500.91 compensatory time; and (5) $1,990.45 in other payments. Barbagallo also determined that Koszarek had failed to properly withhold more than $2,600.00 in total federal, state and local income taxes for the pay period ending March 30, 2014.
By April 30, 2015 letter, the Authority's Solicitor notified the Bucks County District Attorney's Office (District Attorney's Office) of the irregularities. See R.R. at 496a-497a. Also in April 2015, the State Ethics Commission's (Ethics Commission) Investigative Division (Investigative Division) received information pertaining to alleged overpayments to Koszarek. After an investigation, the Ethics Commission elected not to pursue the matter further because of "a good faith and legitimate concern as to the authenticity, completeness, accuracy, and/or sufficiency of those records maintained by the [Authority]."7 R.R. at 506a. On June 10, 2015, Koszarek executed the Settlement Agreement, settling her discrimination and whistleblower claims against the Authority in exchange for $70,000.00. By March 28, 2016 letter, Bucks County District Attorney David Heckler (D.A. Heckler) responded that, after conducting an investigation, the District Attorney's Office did not have sufficient evidence to charge Koszarek for criminal conduct.8 See R.R. at 498a-500a.
On April 1, 2016, the Authority commenced the instant action by writ of summons in the trial court. On February 17, 2017, the Authority filed its Complaint against Koszarek seeking repayment of the alleged overpayments totaling $28,999.77.9 Therein, the Authority averred that Koszarek had intentionally overpaid herself and failed to withhold necessary taxes. Koszarek filed an answer thereto and, subsequently, on July 26, 2018, filed an Amended Answer, New Matter, Affirmative Defenses, and Counterclaim. In her counterclaim, Koszarek alleged retaliation and abuse of process.
At trial, on January 28 and 29, 2020, the Authority presented witnesses including Rajput, Wallover, Polaneczky and Barbagallo, and documentary evidence that Rajput paid the Authority for an overpayment it made to him. The Authority indicated it was continuing its efforts to collect other overpayments. Koszarek disputed the Authority's evidence, maintaining that all payments to the listed Authority employees were appropriate. However, Koszarek did admit that she had overpaid herself $906.30, allegedly due to a coding error. See R.R. at 860a. Koszarek did not present any independent testimony from an accountant or other Authority employee in support of her assertions.
In the April 6, 2020 Decision, the trial court ruled:
Based upon the facts presented at trial, [the Authority] has proven by clear and substantial evidence overpayments to [Koszarek] from December 3, 2007 to April 27, 2014 totaling $26,399.77. These overpayments were in the following categories: (1) overpayment of regular pay, $4,646.13; (2) overpayment of vacation pay, $5,420.76; (3) overpayment of sick pay, $10,841.52; (4) overpayment of compensatory time pay, $3,500.91; and ([5]) other payments determined to be paid back to the Authority of $1,990.45. This amount totals $26,399.77. This Court concludes the evidence proves damages as owed to [the Authority] from [Koszarek] in the total amount of $26,399.77 representing total employer overpayments to her to which she was not entitled. [Koszarek's] overpayment is by far the highest amount due of the overpayments to employees.
April 6, 2020 Dec. at 4. On April 20, 2020, Koszarek filed a notice of appeal.10 ,11 ,12 Koszarek first contends that the trial court erred by concluding that the Authority may recover alleged overpayments. This Court disagrees.
Here, the trial court noted that Section 5607(b)(2) of the Municipality Authorities Act (Act)13 specifies that the purpose of each authority is to "benefit the people of the Commonwealth [of Pennsylvania (Commonwealth)] by, among other things, increasing their commerce, health, safety and prosperity ...." 53 Pa.C.S. § 5607(b)(2). In furtherance of that purpose, the trial court concluded that the Authority must spend its funds responsibly, and that when those funds are improperly used, the Authority must correct its error.14 The trial court explained that it "did not enter verdict on any theory of conversion, mistake,...
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