C.M. Erb v. City of Lancaster ( 2020 )

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Christopher M. Erb, :
Appellant :
:
v. :
: No. 647 C.D. 2019
: Argued: December 10, 2019
City of Lancaster :
BEFORE: HONORABLE RENÉE COHN JUBELIRER, Judge
HONORABLE PATRICIA McCULLOUGH, Judge
HONORABLE ANNE COVEY, Judge
OPINION NOT REPORTED
MEMORANDUM OPINION BY
JUDGE COHN JUBELIRER FILED: January 6, 2020
Christopher M. Erb (Erb) appeals from the Court of Common Pleas of
Lancaster County’s (trial court) Order granting summary judgment in favor of the
City of Lancaster (City) on Erb’s promissory estoppel claim and dismissing Count
II of Erb’s Complaint. After the trial court issued its Order, this matter proceeded
to a bench trial on Count I of Erb’s Complaint, which was for breach of contract.
The trial court entered judgment in Erb’s favor on the contract claim, which the
City appealed to this Court. In Erb v. City of Lancaster (Pa. Cmwlth., No. 1421
C.D. 2017, filed October 11, 2018), petition for allowance of appeal denied, (Pa.,
No. 732 MAL 2018, filed November 1, 2018) (Erb I), we reversed the trial court’s
order entering judgment on the contract claim and remanded for the trial court to
dismiss the breach of contract claim, which it did. Erb now seeks to appeal the
dismissal of his promissory estoppel claim. He argues that the trial court erred in
dismissing the claim because the promise required to establish a claim for estoppel
was separate and apart from the contract claim. Upon review, we affirm.
I. BACKGROUND
In Erb I, this Court set forth the underlying facts of this case as follows:
In April 2016, Erb, a police officer with the City from
September 5, 1989, until December 31, 2009, filed a Complaint
against the City seeking damages for breach of contract and estoppel
based on the City having allegedly promised to pay him, as part of its
Early Retirement Incentive Program, a monthly pension benefit of
$4382.30 beginning on September 5, 2014. However, Erb alleged, the
City has been paying him a monthly pension benefit of only $3342.12.
The City filed a Motion for Summary Judgment, which the trial
court granted in part and denied in part. The trial court dismissed
Erb’s cause of action for estoppel. Thereafter, the matter proceeded to
a one-day, non-jury trial on the contract claim only.
At trial, the following testimony and evidence was presented.
In November 2009, due to the national fiscal crisis resulting in the
loss of revenue to the City and “the loss of a police service contract
with Lancaster Township,” the City, in an attempt to reduce its staff
and avoid layoffs of police, devised the Early Retirement Incentive
Program. The Early Retirement Incentive Program was offered to two
groups of officers, those with 25 years or more of service, and those,
such as Erb, with more than 20 years of service but less than 25 years
of service. Police officers with 25 years or more of service were
offered an incentive to retire of $1000 per year of service payable in a
lump sum and would begin to collect their pensions upon their
retirement. Police officers with more than 20 years of service but less
than 25 years of service were offered payment for accrued unused
paid time off (PTO), post-employment medical benefits, and a
Retirement Incentive Payment (Option A). The Confidential
Separation Agreement and General Release (the Contract), provided
to Erb, described the terms of the Early Retirement Incentive Program
as follows:
2. Payments and Benefits. In consideration of the
releases herein by Releasors and the warranties and
2
representations of Employee, Employer [(the City)]
agrees as follows:
a. Retirement Incentive Payment. Employer agrees
to pay Employee the lump sum of $140,073.795,
less payroll taxes and other legally mandated
withholdings (“the Retirement Incentive
Payment”). The precise calculation and formula
used to determined [sic] the amount of your
Retirement Incentive Payment is attached
hereto as Exhibit A.
***
c. Payment for Accrued Unused PTO. Employer
agrees to pay Employee for any accrued but
unused PTO to which Employee may be entitled
. . . . Pursuant to the terms of this Paragraph, you
shall receive an estimated payment in the amount
of $14,263.12, less payroll taxes and other legally
mandated withholdings, for all accrued, unused
PTO to which you are entitled.
d. Benefits. Employees entitled to post-employment
medical benefits pursuant to an applicable
collective bargaining agreement will continue to
receive their Employer-sponsored health benefits
for any term outlined in the applicable collective
bargaining agreement . . . .
***
f. No Other Benefits. Employee shall have no right
to receive any further payment or benefit arising
from his or her employment relationship with
Employer except those benefits and payments
described herein, those required by law . . . or
vested benefits under any Employer retirement
plan.
***
3
3. Adequate Consideration. You agree that (i) the
consideration and payments made to you by Employer
pursuant to this Agreement represent the sole and
exclusive payments and undertakings to be provided to
you; (ii) said payments include any and all outstanding
and accrued compensation, wages, and benefits that may
be due and owing you; (iii) with the exception of any
vested retirement benefits, Employer has no further
obligation to provide Employee with any compensation
of any sort, or any non-monetary or monetary benefits in
addition to that which is set forth in Paragraph No. 2,
above; and (iv) the aforementioned payments are in
excess of what you otherwise would have been entitled to
and constitute good and sufficient consideration for this
Agreement.
Attached to the Contract were three exhibits. Relevant here
was Amended Exhibit A, entitled “Retirement Incentive Payment
Calculation.” Erb’s Retirement Incentive Payment was $137,862.45,
which, as Amended Exhibit A indicated, was calculated based on
multiplying Erb’s monthly pension benefit as of December 31, 2009
($3342.12), the date of his retirement, by the number of months to his
25th service anniversary date (55). This figure ($183,816.60) was
then multiplied by 75% to equal the amount of the Retirement
Incentive Payment. Also on Amended Exhibit A under a separate
heading, “Pension Calculation,” was Erb’s 25th service anniversary
date, listed as September 5, 2014, and “Monthly Pension Benefit
Amount To Be Received Commencing On 25 Year Anniversary
Date” (25 Year Pension Benefit) listed as $4382.30. Erb
acknowledged that there was nothing in the Contract that
indicated the amount of his monthly pension benefit; that figure
appeared only on Amended Exhibit A.
The idea behind the Retirement Incentive Payment, the City’s
Business Administrator Patrick Hopkins (Hopkins) explained, was to
“bridge the gap” from the time these officers retired until [] they
started receiving their pensions on their 25th service anniversary date.
Hopkins testified that there was nothing in the Contract that proposed
awarding an officer a greater pension benefit, or commencing
payment of an officer’s pension benefit, before the officer’s 25th
service anniversary date. The City designed the Early Retirement
4
Incentive Program so that it would not impact the pension plan,
Hopkins testified.
In early December 2009, Hopkins held an information session
with officers who were eligible to retire early. Erb, who was then the
President of the City’s Police Officers’ Association (POA) and
involved in bargaining over the Early Retirement Incentive Program,
attended the session. According to Hopkins, during the session it
became apparent that the officers were confused about the figure
listed as the 25[-]Year Pension Benefit. Hopkins explained to the
officers, he testified, that the 25[-]Year Pension Benefit “is not your
pension benefit. This is what your pension benefit would be if you
didn’t take this plan and if you left after 25[-]years of service and we
add[ed] three-percent annual increases.” Hopkins explained during
trial that the 25[-]Year Pension Benefit figure was included in the
Contract on legal advice, so that officers would be aware of the
difference in their pension benefit based on whether they accepted
early retirement or waited until their 25th service anniversary date.
According to Erb, however, while Hopkins claimed “that there was
confusion, it wasn’t on [Erb’s] part. [He] understood what [Hopkins]
said in that meeting and so did other [officers].”
Following the information session, discussions between the
POA and the City, in which Erb participated, resulted in the City
proposing an alternative, known as Option B, to incentivize early
retirement. Under Option B, officers were offered payment for
accrued unused PTO and permitted to retire on January 31, 2010, at
which point they would immediately begin receiving their pension
benefits based on a calculation of those officers having served 25
years. The City would contribute to the pension fund for the cost of
Option B. Hopkins explained that in order to change a pension
benefit, as Option B proposed, the City had to have an actuarial
evaluation and the City Council had to amend the City Code. Option
B did not include the Retirement Incentive Payment as Option A did.
On January 15, 2010, the deadline, Erb signed the Contract,
accepting Option A. However, on January 18, 2010, believing that he
was eligible for Option B, Erb e-mailed Hopkins what he believed
would be his monthly pension benefit, listing it as $3817.08.
5
On January 19 or 20, 2010, after he signed the Contract, Erb
met with a Human Resources Generalist to review his paperwork.
The Human Resources Generalist reviewed the Contract and, turning
to Amended Exhibit A, put a box in ink around the $4382.30 figure
and told him that this would be his pension benefit.
Ultimately, the City Council approved Option B but only for
officers with 21 years of service or more, which excluded Erb. By the
time Option B was adopted, Erb testified, he was retired.
In August 2014, Erb met with the Chief of Finance for the City
to sign paperwork needed for Erb to begin receiving his monthly
pension benefit. Erb asked the Chief of Finance what his pension
benefit would be for September since it was prorated based on his
25th service anniversary date falling on September 5. The Chief of
Finance reviewed Erb’s file and, while looking at Amended Exhibit
A, said his pension benefit for September would be the $4382.30
figure, prorated for 25 days, which, after deductions, was the amount
Erb received in September.
In October, however, Erb received a gross amount of only
$2452.92. Erb inquired and received a memorandum from Hopkins
explaining the discrepancy. In that memorandum, after outlining the
Early Retirement Incentive Program and the calculation of Erb’s
Retirement Incentive Payment, Hopkins explained that the Payroll
Department used the wrong figure on Amended Exhibit A. The
Payroll Department used the $4382.30 figure, which, Hopkins stated,
was the figure Erb would have received had he not retired early and
continued working until his 25th service anniversary date, when the
Payroll Department should have used the $3342.12 figure, which was
Erb’s pension benefit as of December 31, 2009. The $4382.30 figure,
Hopkins stated, was based on Erb receiving a three-percent salary
increase each year until he reached his 25th service anniversary date.
Going forward, Erb would receive the gross amount of $3342.12.
Erb testified that had he known his pension benefit was going to
be only $3342.12, he would not have retired early. Erb made his
decision to retire early, he testified, based on him receiving $4382.30.
Erb noted that the Retirement Incentive Payment he received was less
than had he continued working for another five years. Erb also noted
6
that he would have preferred to retire early under Option B, which, he
agreed with the City’s Counsel, was a better financial outcome for
him.
The City presented expert testimony from Thomas Zimmerman,
the actuary for the City’s pension plans, who testified that the correct
calculation of Erb’s monthly pension benefit was $3342.12 and, if the
City was ordered to pay Erb a monthly pension benefit of $4382.30,
the auditor general would find the City in violation of its pension plan
because that benefit would be contrary to the collective bargaining
agreement and the City Code. Further, if Erb was awarded a pension
benefit of $4382.30, in order for the City to cover the increased cost, it
would have to contribute, based on actuarial projections of Erb’s life
expectancy, another $20,450 per year for 14 years.
Erb I, slip op. at 2-8 (alterations in original) (internal record citations and footnotes
omitted).
Following the trial, the trial court concluded that the Contract contained a
patent ambiguity of what pension amount Erb was to receive and resolved the
ambiguity in favor of Erb. We summarized the trial court’s findings as follows:
[t]he trial court credited Erb’s testimony that he “would not have
chosen to retire early had he known” he was to receive a monthly
pension benefit of only $3342.12, and concluded that Erb had
“reasonably relied on the written offer” the City made to him which
“induced [Erb] to accept the offer[.]” Then, the trial court, after
reciting the principles of law governing whether a contract is
ambiguous, concluded that the Contract and its exhibits “contain[ed] a
patent ambiguity of what pension amount Erb [was] to receive[,]”
whether it was $4382.30 or $3342.12.
Id. at 9 (quoting trial court Findings of Fact (FOF) ¶¶ 42-43 and Conclusion of
Law ¶ 3) (alterations in original) (internal record citations omitted). In addition,
the trial court stated that the proposed Contract’s Amended Exhibit A included a
7
monthly pension benefit of $4382.30 and that a City Human Resources Generalist
hand drew an ink box around the $4382.30 on Amended Exhibit A, which induced
Erb to accept the offer on January 15, 2010, by executing the Contract. (FOF
¶¶ 32, 40, 43.) Accordingly, the trial court, by order dated September 11, 2017,
entered judgment in Erb’s favor for more than $37,000 for past benefits plus
interest, which the City appealed to this Court.
We reversed. After summarizing general contract law principles, we
concluded that the Contract and its exhibits “are clear and unequivocal and do not
provide for the payment of a monthly pension benefit of $4382.30.” Erb I, slip op.
at 14. We explained the Contract provided for “three forms of consideration:
(1) payment for accrued unused PTO; (2) post-employment medical benefits; and
(3) a lump sum payment of $140,073.795 in the form of a Retirement Incentive
Payment.” Id. (emphasis omitted). This Court also ruled, contrary to the trial
court, that Amended Exhibit A was not a promise and whether Erb was induced
was not part of the court’s consideration of his breach of contract claim.
Specifically, we stated:
The only reference to a monthly pension benefit of $4382.30,
again, is in Amended Exhibit A, where under a separate heading,
“Pension Calculation,” Erb’s 25th service anniversary date is listed as
September 5, 2014, and “Monthly Pension Benefit Amount To Be
Received Commencing On 25 Year Anniversary Date” is listed as
$4382.30. This sole reference to $4382.30, in the absence of any
promise to pay anything other than the three forms of consideration
listed in the Contract, does not amount to a promise to pay. Reading
the Contract and its exhibits together, the reference to $4382.30 and
its accompanying language was for informational purposes, and not a
promise to pay.
We can understand, in the absence of any explanation, how Erb,
in reading this Contract and its exhibits, might have expected his
8
monthly pension benefit to be $4382.30 when he reached his 25th
service anniversary date. Both Erb and the trial court, in part,
respectively litigated and adjudicated this matter as if Erb was
claiming that he had been negligently induced into accepting the
Contract. However, the only claim at issue before the trial court, and
before us, is Erb’s breach of contract, which is governed by the terms
of the [C]ontract, not reliance or inducement. The trial court had
dismissed Erb’s estoppel claim on the City’s Motion for Summary
Judgment from which there has been no cross-appeal. Again, when
the entire Contract and its exhibits are carefully examined, it is clear
that there is no promise in the Contract or its exhibits to pay Erb a
monthly pension benefit of $4382.30, and this figure was included on
Amended Exhibit A for informational purposes.
Id. at 15-17 (footnotes and citations omitted). Accordingly, we reversed the trial
court’s order and remanded with instruction to dismiss the cause of action for
breach of contract.
Following our decision in Erb I, Erb filed a petition for allowance of appeal
to the Supreme Court. In the interim, on October 23, 2018, the trial court, in
response to this Court’s order in Erb I, issued an order dismissing the breach of
contract cause of action, which Erb attempted to appeal. This Court vacated the
trial court’s October 23, 2018 order on the basis that the trial court lacked
jurisdiction to enter it because the record had not been remanded since Erb filed a
petition for allowance of appeal with the Supreme Court. The Supreme Court
ultimately denied Erb’s petition for allowance of appeal. The trial court, upon
remittance of the record, entered an order on April 29, 2019, dismissing Erb’s
breach of contract claim, in accordance with this Court’s order in Erb I. On May
29, 2019, Erb filed a notice of appeal.
9
II. ARGUMENTS
On appeal, Erb argues the trial court erred in granting summary judgment in
favor of the City on his promissory estoppel claim. 1 Specifically, Erb asserts that
the trial court found the essential elements of promissory estoppel have been met
and still dismissed Erb’s claim on the mistaken assumption that an estoppel claim
cannot lie where there is a consideration for a contract. Erb asserts that this Court,
in Erb I, “made it clear . . . that, had the estoppel claim been properly before it at
the time, it would have sustained the claim.” (Erb’s Brief (Br.) at 13.) According
to Erb, the trial court concluded
estoppel would not lie here because while there was a promise that
could have been reasonably expected to induce reliance, and Erb both
relied on that promise and took the expected action, the promise as to
the [pension’s] amount . . . was integral to the [C]ontract that it found
to have existed.
(Id. at 14.) Furthermore, Erb asserts that the trial court erred when it
“misperceived that the promise was not separate from the [C]ontract.” (Id. at 11.)
Erb asserts that this Court “confirmed the existence of the [C]ontract, but contrary
to the perception of the trial court, the Commonwealth Court also held the promise
of an ‘enhanced’ pension was not part of that [C]ontract.” (Id. at 15 (emphasis
omitted).) In addition, Erb argues there are two promises that were made outside
of the Contract that induced him to “substantially change position as to the
continuation of his employment.” (Id. at 16.) These promises were: (1) Amended
In our review of a trial court’s grant of summary judgment, this Court is to determine
1
whether there was an error of law or an abuse of discretion. Irish v. Lehigh Cty. Hous. Auth.,
751 A.2d 1201, 1203 n.4 (Pa. Cmwlth. 2000). Upon review, “we must examine the record in a
light most favorable to the non-moving party, accepting as true all well-pleaded facts and
reasonable inferences to be drawn therefrom.” Id.
10
Exhibit A and (2) the Human Resources Generalist’s reiteration of the amount in
Amended Exhibit A. (Id. at 16 n.2.) Erb argues that the trial court
misapprehended the scope of the agreement and the limitation of consideration,
and thus did not consider the promises that were separate and distinct from the
agreement. Erb concludes that all of the elements of estoppel were met and the
promise is separate from the Contract; therefore, the trial court erred in dismissing
the promissory estoppel claim.
The City notes that this Court has held that the Contract was complete and
supported by consideration. The City argues that this Court also ruled that
Amended Exhibit A was not a promise and cannot support a claim of promissory
estoppel. In addition, the City also argues that Erb’s allegation that the Human
Resources Generalist’s circling of the $4382.30 figure constitutes a promise is not
correct. The City asserts that Erb signed the Contract before he met with the
Human Resources Generalist; therefore, the circling of the amount cannot
constitute a promise that established his reliance. The City also contends that the
Human Resources Generalist did not specifically state that Erb was entitled to the
$4382.30, but instead only circled the number. The City asserts that Erb’s
promissory estoppel claim cannot succeed. In its brief, the City additionally argues
that Erb has waived his right to appeal the trial court’s Order because he did not
file a cross-appeal of the Order in Erb I when the Order was initially before this
Court. (City’s Br. at 10.)
III. DISCUSSION
Promissory estoppel, or detrimental reliance, allows a person or entity to
enforce a “contract-like promise,” which would not be “[]enforceable under
11
contract law principles” because of the lack of consideration. Peluso v. Kistner,
970 A.2d 530, 532 (Pa. Cmwlth. 2009). In order to succeed on a claim of
promissory estoppel, the aggrieved party must prove that: “(1) the promisor made
a promise that would reasonably be expected to induce action or forbearance on the
part of the promisee; (2) the promisee actually took action or refrained from taking
action in reliance on the promise; and (3) injustice can be avoided only by
enforcing the promise.” Id. at 533 (citing Crouse v. Cyclops Indus., 745 A.2d 606,
610 (Pa. 2000)). The three elements are to be “strictly enforced to guard against
the ‘loose application’ of promissory estoppel.” Id. (quoting Fried v. Fisher, 196
A. 39, 43 (Pa. 1938)).
The parties in this case focus on whether a promise was made outside the
language of the Contract, meaning a promise was made in Amended Exhibit A
itself, or by the City’s Human Resources Generalist. In the trial court’s Order, the
trial court stated the following, in part, about the promissory estoppel claim:
Even accepting as true [] Erb's allegations, the court finds that
his claim for estoppel fails as a matter of law. The representation
made by human resources regarding the amount of [] Erb’s monthly
pension was done within the larger context of the [Contract]–and for
this there was adequate consideration on both sides. A claim for
estoppel is therefore inappropriate, and this portion of the City’s
motion shall be granted.
(Reproduced Record at 129a.)
In Erb I, we held that Amended Exhibit A made no promise for a monthly
pension benefit of $4832.30, instead it was just “for informational purposes.” Erb
I, slip op. at 16-17. We held:
12
This sole reference to $4382.30, in the absence of any promise to pay
anything other than the three forms of consideration listed in the
Contract, does not amount to a promise to pay. Reading the
Contract and its exhibits together, the reference to $4382.30 and its
accompanying language was for informational purposes, and not a
promise to pay.
Id. at 16 (emphasis added). Because we have previously determined that
Amended Exhibit A is not a promise, contrary to Erb’s position here, Amended
Exhibit A cannot be a promise to satisfy the first element of promissory estoppel.
In addition, Erb argues that the Human Resources Generalist’s actions, after
he signed the Contract, constituted a promise upon which he relied. The Human
Resources Generalist reviewed the Contract and, on Amended Exhibit A, drew a
box around the $4382.30 figure. Upon doing this, the Human Resources
Generalist also “told [Erb] that this would be his pension benefit.” Id. at 7.
However, this promise could not have reasonably been relied upon to induce Erb’s
action. The box drawn by the Human Resources Generalist was completed at a
meeting that occurred after Erb signed the Contract; therefore, he could not have
relied on the Human Resources Generalist to induce his own action in signing the
Contract. Id. at 6-7.
Erb quotes the following language from our opinion in Erb I in support of
his promissory estoppel claim: “We can understand, in the absence of any
explanation, how Erb, in reading this Contract and its exhibits, might have
expected his monthly benefit to be $4382.30 . . . .” (Erb’s Br. at 13 (quoting Erb I,
slip op. at 16 (emphasis added)).) Erb states that, based off this language, “had the
estoppel claim been properly before [us] at the time, [we] would have sustained the
claim.” (Id.) Our prior opinion only speaks to Erb’s potential expectation, not that
there was a promise and reliance on that promise, as promissory estoppel requires.
13
“[I]t is clear that there is no promise in the Contract or its exhibits to pay Erb a
monthly pension benefit of $4382.30.” Erb I, slip op. at 17. Therefore, Erb cannot
use our prior opinion in Erb I to conclude that we would have sustained his claim.
Like Erb I, we understand his expectations and the miscommunications
surrounding this case; however, we cannot conclude that Erb has succeeded in
proving promissory estoppel in this case for lack of promises by the City.
The City has also argued that Erb waived his right to appeal the trial court’s
Order because Erb did not file a cross-appeal in the first instance in Erb I. We
need not address this argument because this appeal does not succeed on its merits.
IV. CONCLUSION
Accordingly, this Court concludes that, because there was no promise upon
which Erb could rely, the elements for promissory estoppel are not satisfied. The
trial court did not err in granting summary judgment on Erb’s promissory estoppel
claim.
_____________________________________
RENÉE COHN JUBELIRER, Judge
14
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Christopher M. Erb, :
Appellant :
:
v. :
: No. 647 C.D. 2019
:
City of Lancaster :
ORDER
NOW, January 6, 2020, the Order of the Court of Common Pleas of
Lancaster County, entered in the above-captioned matter, is AFFIRMED.
_____________________________________
RENÉE COHN JUBELIRER, Judge