Morgan v. S.C. Budget & Control Bd.

• Decision Date: 13 March 2008
• Docket Number: No. 4356.,4356.
• Citation: 659 S.E.2d 263
• Parties: E. Bruce MORGAN, Appellant, v. SOUTH CAROLINA BUDGET AND CONTROL BOARD and South Carolina Retirement Systems, Respondents.
• Court: South Carolina Court of Appeals

659 S.E.2d 263

E. Bruce MORGAN, Appellant, v. SOUTH CAROLINA BUDGET AND CONTROL BOARD and South Carolina Retirement Systems, Respondents.

No. 4356.

Court of Appeals of South Carolina.

Heard February 5, 2008.

Decided March 13, 2008.

William E. Whitney, Jr., of Union, for Appellant.

Kelly H. Rainsford and David K. Avant, both of Columbia, for Respondents.

CURETON, A.J.

In this action to determine the cost to purchase non-qualified service credit (Non-Qualified Service) under South Carolina Retirement Systems (Retirement Systems), E. Bruce Morgan appeals the order of the Administrative Law Court (ALC) requiring the purchase price to be calculated based on Morgan's highest salary. We affirm.

FACTS

From 1982 to 1991, Morgan worked for the State of South Carolina and earned eight years of service credit in Retirement Systems. Morgan later withdrew these contributions. From 1991 to 1997, Morgan worked for the State of North Carolina and earned public service credit toward his retirement account (N.C. Public Service). Morgan rejoined Retirement Systems in November 2000 when he became Mayor of the City of Union, South Carolina.

In 2004, Morgan sought to increase his service credit in Retirement Systems. On August 20, 2004, Morgan submitted a request to Retirement Systems to purchase credit for his N.C. Public Service and additional credit equal to the amount he had previously earned between 1982 and 1991 for his South Carolina service, but had later withdrawn (Withdrawal Service). Retirement Systems acknowledged receipt of his request and informed him processing might take up to ninety days. On October 4, 2004, Retirement Systems notified Morgan he could purchase Withdrawal Service credit for $18,995.95 until April 2, 2005. After Retirement Systems received verification of Morgan's N.C. Public Service, it notified Morgan he could purchase N.C. Public Service credit for $35,562.91 until April 16, 2005.

Soon thereafter, Morgan visited Retirement Systems in person to discuss how it had calculated the price of his N.C. Public Service credit. During this visit, Morgan also inquired about purchasing Non-Qualified Service credit. Retirement Systems informed Morgan it had based the price of his Public Service credit on the $33,592.00 salary indicated in the Withdrawal Service invoice. Furthermore, Retirement Systems advised Morgan if he elected not to buy Withdrawal Service first, it could recalculate the purchase price of his Public Service credit and Non-Qualified Service credit using his then-current salary of $6,610.00. Retirement Systems stated Morgan could purchase up to five years of Non-Qualified Service based on the $6,610.00 salary. Retirement Systems did not advise Morgan he was currently not qualified to purchase Non-Qualified Service.¹

Subsequently, Morgan submitted a written request to purchase Non-Qualified Service credit and N.C. Public Service credit based on the $6,610.00 salary. Morgan's letter specified he would purchase Withdrawal Service credit later. Pursuant to this letter, Retirement Systems recalculated the price of Morgan's N.C. Public Service credit as $6,998.03. The October 28, 2004, invoice for Morgan's N.C. Public Service credit included a postscript indicating "you are not eligible to purchase non qualified service until you have reached 5 years of earned service." Four weeks later, Morgan purchased N.C. Public Service credit from Retirement Systems.

On November 29, 2004, Morgan again called Retirement Systems, which erroneously advised him he could purchase Non-Qualified Service credit after his N.C. Public Service credit purchase posted. Nine days later, Retirement Systems corrected this error by advising Morgan he must have five years of earned service before he could purchase Non-Qualified Service credit. Morgan stated he would first purchase his Withdrawal Service credit, which would satisfy the earned-service requirement, and would later submit his request to purchase Non-Qualified Service credit. However, instead of purchasing Withdrawal Service credit first, Morgan visited Retirement Systems and requested to purchase Non-Qualified Service credit. Despite the fact Morgan had already completed the purchase of N.C. Public Service credit, Retirement Systems instructed Morgan to complete a new written request to purchase that credit, and he did so.

On December 14, 2004, Morgan called Retirement Systems and inquired whether he could purchase just enough Withdrawal Service credit to make him eligible to purchase Non-Qualified Service credit. Retirement Systems informed him he could do so, but if he did, he would be unable to purchase the remainder of his Withdrawal Service until the following fiscal year.² Morgan submitted a written request to Retirement Systems to purchase Withdrawal Service credit, providing Retirement Systems with information about the Smith Barney IRA account he intended to use to fund the purchase. Two weeks later, Retirement Systems notified Morgan the information he had provided was insufficient because it failed to indicate whether the Smith Barney IRA consisted of pretax funds. On January 10, 2005, Morgan started a new state job at a career-high salary of $89,000.00.

Morgan did not contact Retirement Systems again until February 7, 2005, when he inquired about purchasing Withdrawal Service credit using rollover funds from his Wachovia account. In March 2005, Morgan purchased Withdrawal Service credit pursuant to the October 4, 2004, invoice using funds from a different account than before. Thereafter, Retirement Systems informed Morgan that Wachovia had overpaid, and Morgan requested Retirement Systems apply the overpayment to his purchase of Non-Qualified Service credit. When Morgan learned the cost, he declined to purchase the Non-Qualified Service credit. On April 21, 2005, Retirement Systems refunded the overpayment to Wachovia for deposit in Morgan's account.

In May 2005, with no other service available for Morgan to purchase, Retirement Systems confirmed the cost of Non-Qualified Service credit as $155,750.00, based on his $89,000.00 salary. Morgan appealed in a letter to the Director of Retirement Systems. Retirement Systems issued a final agency determination confirming $155,750.00 as the cost of Morgan's Non-Qualified Service credit. Morgan contested and requested the ALC hear this matter. The ALC affirmed Retirement Systems' final agency determination. This appeal followed.

STANDARD OF REVIEW

Review of a decision by the ALC is confined to the record. S.C.Code Ann. §§ 1-23-380(A)(4), 1-23-610(C) (Supp.2006). "The findings of the agency are presumed correct and will be set aside only if unsupported by substantial evidence." Kearse v. State Health & Human Servs. Fin. Comm'n, 318 S.C. 198, 200, 456 S.E.2d 892, 893 (1995). "`Substantial evidence' is not a mere scintilla of evidence nor the evidence viewed blindly from one side of the case, but is evidence which, considering the record as a whole, would allow reasonable minds to reach the conclusion that the administrative agency reached or must have reached in order to justify its action." Lark v. Bi-Lo, Inc., 276 S.C. 130, 135, 276 S.E.2d 304, 306 (1981).

LAW/ANALYSIS

Morgan argues the ALC erred in declining to estop Retirement Systems from calculating the cost of Morgan's Non-Qualified Service credit using his current, career-high salary because Retirement Systems' misinformation and delays prevented Morgan from completing his purchase before his salary increased. We disagree.

Under South Carolina law, active members of Retirement Systems may establish service credit for public service, non-qualified service and previously withdrawn service by making payments into the system. S.C.Code Ann. § 9-1-1140 (Supp.2007). Furthermore:

An active member who has five or more years of earned service credit may establish up to five years of nonqualified service by making a payment to the system to be determined by the board, but not less than thirty-five percent of the member's current salary or career highest fiscal year salary, whichever is greater, for each year of credit purchased.

§ 9-1-1140(E). Of the three types of purchasable service credit listed above, only previously withdrawn service credit may substitute for earned service. § 9-1-1140(J).

Misrepresentations by government officials acting within the proper scope of their authority may subject the government to estoppel. McCrowey v. Zoning Bd. of Adjustment of City of Rock Hill, 360 S.C. 301, 305-06, 599 S.E.2d 617, 619 (Ct.App. 2004) (citing S.C. Coastal Council v. Vogel, 292 S.C. 449, 453, 357 S.E.2d 187, 189 (Ct. App.1987)). However, estoppel is not appropriate where a government official or employee with limited authority erroneously provides advice beyond the scope of his authority. McCrowey, 360 S.C. at 305, 599 S.E.2d at 619 (citing DeStefano v. City of Charleston, 304 S.C. 250, 257-58, 403 S.E.2d 648, 653 (19...