Opinion ID: 2509899
Heading Depth: 3
Heading Rank: 2

Heading: The Elements of Estoppel

Text: Although the issue of estoppel may be disposed of under the State's first argument, for purposes of clarifying the necessary elements to prove estoppel against the government, we address this issue and find that Retirees failed to sufficiently prove these elements. To prove estoppel against the government, the relying party must prove (1) lack of knowledge and of the means of knowledge of the truth as to the facts in question, (2) justifiable reliance upon the government's conduct, and (3) a prejudicial change in position. Grant, 346 S.C. at 80-81, 551 S.E.2d at 232. In concluding that the State was estopped from requiring retirement contributions from Retirees, the circuit court judge applied a six element test derived from Brading v. County of Georgetown, 327 S.C. 107, 114, 490 S.E.2d 4, 7 (1997). Because the Grant elements have been specifically applied by this Court to claims against the government, we believe it is the appropriate test in this case. As to the first element, it is uncontested that the Retirement Systems provided forms, brochures and, in some cases, made oral statements representing that when the Retirees returned to work, they would not be required to make retirement contributions. However, it is difficult for Retirees to claim they did not know, or had no means of knowing that these terms would ever change. The form signed by many of the Retirees required them to attest their understanding that the terms of the working retiree program derived from the Retirement Act. Since the Retirement Act was enacted, the SCRS statute has been amended 29 times and the PORS statute 27 times. In fact, several Retirees testified that they were at least aware that laws could change, and nearly all of the Retirees whose testimony is included in the record stated that they never specifically asked a Retirement Systems agent if the law regarding contribution requirements could ever change. [8] While the majority of amendments to the Retirement Act have afforded working retirees more favorable terms, we do not believe this means that more favorable terms should be legally expected. In further support that Retirees had knowledge that the terms of the Working Retirees statutes could change, the Retirement Systems regularly published a pamphlet containing an overview of retirement benefits with the following disclaimer: The information contained in this brochure is meant to serve as a guide, but does not constitute a binding representation of the South Carolina Retirement Systems. The statutes governing the South Carolina Retirement Systems are found in Title 9 of the South Carolina Code of Law, and should there be any conflict between this brochure and the statutes, the statutes will prevail. Because state statutes are subject to change by the South Carolina General Assembly, please contact us for the most current information. Finally, even if the Retirees were not aware that the terms of the Working Retiree statutes could change, citizens are presumed to know the law and are charged with exercising `reasonable care to protect their interests.' Morgan v. S.C. Budget & Control Bd., 377 S.C. 313, 320, 659 S.E.2d 263, 267 (Ct.App.2008) ( quoting Smothers v. U.S. Fidelity & Guar. Co., 322 S.C. 207, 210-11, 470 S.E.2d 858, 860 (Ct.App.1996)). Second, Retirees did not prove justifiable reliance on representations made by the Retirement Systems. The testimony among the named plaintiffs is varied with regard to whether or not they would have retired had they known they would be required to make retirement contributions without accruing additional service credit. For many of the named plaintiffs, the motivating factor for retiring was the promise of receiving two sources of income, and they stated they would have retired nevertheless. Still, others avidly contended that if they had known contributions would be required, they would not have retired when they did. [9] The presence of reliance in these latter cases, however, is not dispositive unless that reliance was justified. Recognizing the well-established rule that citizens are presumed to know the law and are charged with using care to protect their interests, we find that any reliance created by the representations of the Retirement Systems was not justified; especially in light of the disclaimers included in the Retirement Systems' distributed material, and the Retirees' knowledge that laws are subject to change. Lastly, we find that any reliance created by the forms, brochures, or statements of the Retirement Systems and its agents did not cause a prejudicial change in position. We sympathize with Retirees' argument that if they had continued working as non-retired employees, the contributions made to the Retirement Systems would have increased the retirement benefits they would eventually receive. However, a comparison of the two options, either entering the working retiree program or continuing with employment, reveals that the monetary benefit of having five years additional service credit is minimal when compared to the effect of simultaneously receiving a salary and a retirement allowance. Therefore, we find that any change in position caused by the alleged misrepresentation was not prejudicial to the Retirees. The amount of retirement allowance that an SCRS retiree receives is set by statute at one and eighty-two hundredths percent of his average final compensation, multiplied by the number of years of his credible service. S.C.Code Ann. § 9-1-1550(B)(1) (Supp.2009). [10] To demonstrate this point, assume that Employee A and Employee B both work for the State making $40,000 per year and with 28 years of service credit. If Employee A becomes a working retiree, during the five year period of the program he would receive $101,920 in retirement benefits, [11] in addition to his salary. In the five years after Employee A discontinues working he will receive another $101,920 in retirement allowances for a ten year total of $203,840 in retirement benefits. Under the second scenario, Employee B does not retire and accrues five additional years of service credit and merit pay increases of two percent per year. With 32 years of service credit and an AFC of $44,163, Employee B will receive $128,603 in retirement allowances in the five years following retirement, [12] as compared to the $203,840 that Employee A has received in retirement benefits up to the same point in time. [13] In fact, it would take twenty-five years for Employee B to receive a higher lifetime retirement benefit than Employee A. In our opinion, a prejudice that takes twenty-five years to occur, if at all, does not merit an estoppel holding. Therefore, we do not believe the Retirees adequately proved the elements of estoppel. Consistent with our holding with regard to estoppel against the state, we reverse the circuit court's estoppel order and find that the State is not required to return contributions previously deducted.