Court Opinion

ID: 5139680
Source: CourtListenerOpinion
Date Created: 2021-12-22 16:14:43.70357+00
Date Added: 2024-06-11T08:24:19.101283
License: Public Domain

[J-67-2021] [MO: Wecht, J.]
                    IN THE SUPREME COURT OF PENNSYLVANIA
                                 MIDDLE DISTRICT

 RAYMOND J. WHALEN,                              :   No. 33 MAP 2021
                                                 :
                      Appellee                   :   Appeal from the Order of the
                                                 :   Commonwealth Court at No. 45 C.D.
                                                 :   2020 dated October 27, 2020
               v.                                :   Reversing the Order of the Public
                                                 :   School Employees' Retirement
                                                 :   Board at No. 2016-05 dated
 PUBLIC SCHOOL EMPLOYEES'                        :   December 6, 2019.
 RETIREMENT BOARD,                               :
                                                 :   ARGUED: October 26, 2021
                      Appellant                  :

                                  CONCURRING OPINION

JUSTICE DOUGHERTY                                       DECIDED: December 22, 2021

        I concur in the result. Specifically, I agree parties cannot bind the Public School

Employees’ Retirement Board through their private contracts to which the Board is not a

party. See Majority Opinion at 10. I further agree that for a settlement payment to be

“compensation” under the Retirement Code, it must have been based on a standard

salary schedule. See id. at 11. I write separately, however, to address the second issue

on which we granted review: the appropriate standard of review to be applied to the

Board’s adjudication and interpretation of the term “compensation” under the Retirement

Code.

        Related to the question of whether the Commonwealth Court applied the correct

standard of review here, is whether that court correctly affirmed the Board’s decision to
exclude certain evidence presented by appellee. In my view, the Commonwealth Court

erred in this regard.

       At the Board level, appellee Whalen asserted seven counterstatements of fact and

sought to admit exhibits supporting his interpretation of the settlement agreement. See

Board Opinion at 2-3. The counterstatement of facts included averments supporting his

claim the $15,000 settlement payment equaled the amount he would have earned but for

the District’s alleged age discrimination. The proffered exhibits included a July 8, 2014

letter from John Freund, the District’s attorney, which accompanied a copy of the deposit

for the settlement payment and stated that payment “reflect[ed] the $15,000 pay

adjustment[ and that t]his includes the new rate of pay from July 1 to September 24 based

upon his new adjusted salary.” Freund Letter (July 8, 2014). Appellee also produced a

letter from Joe Rodriguez, the District’s Finance Manager, stating it was his understanding

the settlement payment “was to be considered back wages[, and] Mr. Whalen was a

member of the WVW Act 93 Management Group at the time of his retirement.” Rodriguez

Letter (October 18, 2018). Appellee also proffered an affidavit outlining his understanding

of the settlement agreement, and a copy of the discrimination charge he filed with the

Pennsylvania Human Relations Commission and Equal Employment Opportunity

Commission. See Whalen Aff., Sept. 13, 2019; Whalen Charge of Discrimination, May

25, 2011.

       The Board did not accept the above-described exhibits, citing the parol evidence

rule. It explained contract law governs the interpretation of settlement agreements, and

when a fully integrated contract’s terms are clear and unambiguous, extrinsic evidence

will not be admitted to alter the express terms. See Board Opinion at 3-4. It further stated

                             [J-67-2021] [MO: Wecht, J.] - 2
the only exceptions to the parol evidence rule are in cases of fraud, accident, mistake,

and when the contract is ambiguous. See id. at 4. Because it found none of these

exceptions applied, the Board rejected appellee’s extrinsic evidence. See id. And,

without that evidence, the Board reasoned, there were no genuine issues of material fact,

and no evidentiary hearing was required under 2 Pa.C.S. §504.1 See id. On appeal, the

Commonwealth Court agreed with the Board, reasoning it was simply interpreting a

contract, and contractual interpretation is a purely legal inquiry. See Whalen v. Pub. Sch.

Emps.’ Ret. Bd., 241 A.3d 1242, 1249 n.8 (Pa. Cmwlth. 2020).

       In my view, the Commonwealth Court erred because the Board incorrectly applied

the parol evidence rule in these circumstances. I agree the settlement agreement is an

unambiguous, fully integrated contract. And though the parol evidence rule typically bars

the use of extrinsic evidence by the parties to a contract in order to alter that contract,

the parol evidence rule does not apply to exclude evidence regarding the duties or

obligations of a stranger to the contract, such as the Board in relation to the settlement

agreement here. See, e.g., Roberts v. Cauffiel, 128 A. 670, 671 (Pa. 1925) (“[I]t is a

matter of indifference whether or not the parol evidence is offered by one of the parties to

the writing; unless both parties, or their privies, are the real contestants, the rule of

evidence . . . has no application.”); Commonwealth v. Contner, 21 Pa. 266, 272 (Pa. 1853)

(“But this is not a contest between the parties themselves, and the rule which excludes

parol evidence does not apply to strangers.”); A. Simon & Sons v. Emery, 99 A. 78, 79

1 Section 504 provides: “[n]o adjudication of a Commonwealth agency shall be valid as to
any party unless he shall have been afforded . . . an opportunity to be heard.” 2 Pa.C.S.
§504. Section 505 further explains that “Commonwealth agencies shall not be bound by
technical rules of evidence at agency hearings, and all relevant evidence of reasonably
probative value may be received.” Id. at §505.

                             [J-67-2021] [MO: Wecht, J.] - 3
(Pa. 1916) (“As to strangers such rule does not apply.”); see also 11 W ILLISTON         ON

CONTRACTS §33:9 (4th ed.) (“The parol evidence rule is frequently held to apply only to

the contracting parties and their privies and not to third persons, often referred to as

strangers to the contract, . . . unless they seek to enforce rights under the contract.”)

(footnote omitted); id. (“[I]t does not follow from the parol evidence rule that the written

contract between two parties, which is conclusive as to them, must necessarily be

conclusive as to the proof of any rights or claims either one of them may have against a

third party merely because those claims grow out of the same transaction reflected in the

written contract.”)

       As the majority correctly notes, the Board was not a party to the contract between

appellee and the District, and it therefore could not be bound by its terms. See Majority

Opinion at 8-10. This being the case, however, the Board, as a stranger to the settlement

agreement, should not have applied the parol evidence rule to preclude evidence

pertaining to its own duties under the Retirement Code.2

       Even considering the excluded evidence, however, I nevertheless agree with the

majority’s conclusion appellee failed to prove the $15,000 payment constituted

“compensation” as defined under the Retirement Code. See id. at 10-11. That evidence

(most notably, the contemporaneous letter from Attorney Freund) suggests the District’s

payment may have been meant as back pay and in part covered appellee’s work during

the 2014-2015 school year. But as the majority correctly points out, appellee never

2 For this reason, I would not fault appellee for the fact the settlement agreement itself
does not say when the payment was earned. See Majority Opinion at 11 (“[T]he
agreement fails to mention when the ‘salary enhancement’ was earned, which makes it
impossible for PSERS to treat the payment as ‘compensation’ even if it wanted to do so.”).

                             [J-67-2021] [MO: Wecht, J.] - 4
produced a standard salary schedule. See id. at 11. I agree with the majority that “[t]his

is crucial, because the Code explicitly excludes from the retirement calculation any

remuneration not based on the employee’s standard salary schedule.” Id.

                             [J-67-2021] [MO: Wecht, J.] - 5