Cruz v. City of Columbia

437 S.C. 204

877 S.E.2d 479

Basilides F. CRUZ, Joseph A. Floyd, Sr., Arthur C. Gillam III, Alma C. Hill, Barry N. Martin, Charles F. Morris, Sr., and Joseph A. Smith, Appellants,

v.CITY OF COLUMBIA, Respondent.

Larry Strickland, Denious L. Dimery, and Bailey G. McClinton, Appellants,

v.City of Columbia, Respondent.

Appellate Case No. 2019-000374

Opinion No. 5932

Court of Appeals of South Carolina.

Heard February 10, 2022

Filed August 3, 2022

Rehearing Denied September 22, 2022

Lucy Clark Sanders and Nancy Bloodgood, both of Bloodgood & Sanders, LLC, of Mt. Pleasant; Susan K. Dunn, Legal Director for American Civil Liberties Union Foundation of South Carolina, of Charleston; and Christopher James Bryant, of Yarborough Applegate, LLC, of Columbia, all for Appellants.

W. Allen Nickles, III, of Nickles Law Firm, of Columbia, for Respondent.

KONDUROS, J.:

This case comes back to our court following remand to the circuit court for a determination of whether the plaintiffs could prove their claims for equitable estoppel and promissory estoppel.¹ The circuit court found in favor of the City of Columbia (the City), concluding the plaintiffs could not establish the necessary damages to prevail on their claim. We disagree with the circuit court's reasoning as to damages, but affirm its finding in favor of the City on additional sustaining grounds.

FACTS/PROCEDURAL BACKGROUND

In 2009, Kirby Bishop and several firefighters and policeman, all retired and under the age of 65, sued the City regarding the City's promise to provide them no-cost health insurance for their lifetimes. That year, the City began charging a $33.18 or $63.17 monthly premium, depending on the level of coverage, for retirees under 65 to participate in the City's health insurance program. The Bishop plaintiffs alleged causes of action for breach of contract, unfair trade practices, promissory estoppel, equitable estoppel, and declaratory judgment. The circuit court granted summary judgment on all causes of action except promissory estoppel, holding the plaintiffs’ reliance on a promise of no-cost health insurance was not reasonable based on their knowledge that the City's health plan was subject to change. Additionally, the circuit court held their reliance was unreasonable because the municipality could not be bound by the acts of individuals who told the plaintiffs about no-cost health insurance because that would illegally usurp the function of city council. The plaintiffs appealed, and this court affirmed the grant of summary judgment as to all claims with the exception of the equitable estoppel and promissory estoppel claims. The Bishop opinion² remanded the case to the circuit court to determine if the promises made by City representatives—supervisors and human resource officers—could be sufficient to give rise to an estoppel claim even though the City's representative's statements were not legally sufficient to create a contract between the City and the plaintiffs.

In 2013, the City stopped paying the full cost for health insurance for retirees 65 and older. As a result, Larry Strickland and a group of other retirees, 65 or older, filed suit alleging similar claims to those in the Bishop case. The Strickland plaintiffs sought class certification. That request was denied in August 2016. The court found the criteria for class certification were not met because each member would have to demonstrate individually how he was prejudiced or his position was made worse in reliance on a promise by the City.

The remanded Bishop case and the Strickland case were consolidated.

After a two-day bench trial, the circuit court found for the City. The circuit court concluded the plaintiffs failed to establish proof of damages for the promissory estoppel claim because they "failed to prove they would have been better off." This appeal followed.

STANDARD OF REVIEW

"Promissory estoppel is equitable in nature. In an action at equity, this court can find facts in accordance with its view of the preponderance of the evidence." Craft v. S.C. Comm'n for Blind , 385 S.C. 560, 564, 685 S.E.2d 625, 627 (Ct. App. 2009) (citation omitted). "However, this court is not required to disregard the findings of the trial court who saw and heard the witnesses and was in a better position to judge their credibility." Id.

LAW/ANALYSIS

I. Damages³

The doctrine of promissory estoppel was first recognized in South Carolina in Higgins Construction Co. v. Southern Bell Telephone & Telegraph Co. , 276 S.C. 663, 281 S.E.2d 469 (1981). It states, "[the] doctrine holds ‘an estoppel may arise from the making of a promise, even though without consideration, if it was intended that the promise should be relied upon and in fact it was relied upon, and if a refusal to enforce it would be virtually to sanction the perpetration of fraud or would result in other injustice.’ " Id. at 665, 281 S.E.2d at 470 (quoting 28 Am. Jur. 2d Estoppel and Waiver § 48 (1966) ). In order to establish a promissory estoppel claim, a claimant must demonstrate: "(1) the presence of a promise unambiguous in its terms; (2) reasonable reliance upon the promise by the party to whom the promise is made; (3) the reliance is expected and foreseeable by the party who makes the promise; and (4) the party to whom the promise is made must sustain injury in reliance on the promise."

Satcher v. Satcher, 351 S.C. 477, 483-84, 570 S.E.2d 535, 538 (Ct. App. 2002) (quoting Woods v. State, 314 S.C. 501, 505, 431 S.E.2d 260, 263 (Ct. App. 1993) ). "The applicability of the doctrine depends on whether the refusal to apply it ‘would be virtually to sanction the perpetration of a fraud or would result in other injustice.’ " Id. at 484, 570 S.E.2d at 538 (quoting Citizens Bank v. Gregory's Warehouse, Inc., 297 S.C. 151, 154, 375 S.E.2d 316, 318 (Ct. App. 1988) ). "Notably, neither meeting of the minds nor consideration is a necessary element." Barnes v. Johnson , 402 S.C. 458, 469, 742 S.E.2d 6, 11 (Ct. App. 2013). "Thus, in the interest of equity, the doctrine ‘looks at a promise, its subsequent effect on the promisee,’ and where appropriate ‘bars the promisor from making an inconsistent disposition of the property.’ " Id. (quoting Satcher , 351 S.C. at 484, 570 S.E.2d at 538 ) (emphasis in original).

Appellants assert the circuit court used an incorrect standard in evaluating damages because it stated Appellants failed to establish they "would have been better off" had the City not made the promise regarding the life-long provision of free health insurance. The circuit court referenced the order denying class certification when using the "better off" language. That order denying class certification for the Strickland plaintiffs relied on Craft v. South Carolina Commission for Blind for the proposition that Craft's promissory estoppel claim failed because he could not show he would have been better off but for the Commission's promise. Craft worked as the canteen vendor at Greenville's County Square, but was promised a canteen position at the Perry Correctional Institute closer to his home. Id. at 563, 685 S.E.2d at 626. Craft quit his job in Greenville, and the Commission withdrew its promise for the Perry position. Id. The Greenville canteen closed, without explanation, and Craft was without a job. Id. at 563-64, 685 S.E.2d at 626-27. The court denied Craft's promissory estoppel claim reasoning the broken promise did not cause Craft's injury because he would have been unemployed with the unexplained closing of the Greenville canteen anyway. Id. at 568, 685 S.E.2d at 629. The lack of nexus between Craft's injury and the promise was the fatal flaw. Therefore, extrapolating Craft into a requirement that Appellants prove they would have been better off is not quite fitting.

Determining whether the application of the "better off" standard was erroneous can be better considered by comparing the elements of equitable estoppel and promissory estoppel. "To prove [equitable] estoppel against the government, the relying party must prove: (1) the lack of knowledge and of the means of knowledge of the truth of the facts in question; (2) justifiable reliance upon the government's conduct; and (3) a prejudicial change in position." S.C. Dep't of Transp. v. Horry County., 391 S.C. 76, 83, 705 S.E.2d 21, 25 (2011). See also Town of Kingstree v. Chapman , 405 S.C. 282, 313, 747 S.E.2d 494, 510 (Ct. App. 2013) ("The elements of equitable estoppel for ‘the party claiming the estoppel are: (1) lack of knowledge and of means of knowledge of truth as to facts in question; (2) reliance upon conduct of the party estopped; and (3) prejudicial change in position.’ " (quoting Zabinski v. Bright Acres Assocs. , 346 S.C. 580, 589, 553 S.E.2d 110, 114 (2001) )). A successful equitable estoppel claim clearly requires a plaintiff to show a prejudicial change in position. By contrast, promissory estoppel requires an injury in reliance on an unambiguous promise. Admittedly, determining exactly what that means in a particular case can be difficult, and every promise cannot be enforced based solely on the promisee's hope the promisor will follow through. However, the proof of an injury in reliance in promissory estoppel appears to be something at least slightly different than a prejudicial change in position. The circuit court's order conflates the two concepts indicating Appellants needed to prove with specificity that but for the promise of free health coverage they would have found other, better employment. In this case, the promise arguably induced long-term conduct. For someone relying on an ongoing promise, the ability to establish their reliance in terms of what they specifically forewent may be very difficult.

Many of the cases involving promissory estoppel do not end in a finding for the party asserting it either because the promise at issue was ambiguous or the reliance on it was unreasonable. See A&P Enters., LLC v. SP Grocery of Lynchburg, LLC , 422 S.C. 579, 589-90, 812...