Basilides Cruz v. City of Columbia ( 2022 )

THE STATE OF SOUTH CAROLINA
In The Court of Appeals
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.
And
Larry Strickland, Denious L. Dimery, and Bailey G.
McClinton, Appellants,
v.
City of Columbia, Respondent.
Appellate Case No. 2019-000374
Appeal From Richland County
R. Scott Sprouse, Circuit Court Judge
Opinion No. 5932
Heard February 10, 2022 – Filed August 3, 2022
AFFIRMED
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
1
When this matter was remanded to the circuit court, causes of action for both
equitable estoppel and promissory estoppel were at issue. However, the circuit
court only ruled on the matter of promissory estoppel and that is the only cause of
action still being pursued by Appellants.
2
Bishop v. City of Columbia, 401 S.C. 651, 667-68, 738 S.E.2d 255, 263 (Ct. App.
2013).
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. Damages 3
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
3
We are combining Appellants' issues on appeal as they all inextricably relate to
the proof of damages in the case.
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 S.E.2d 759, 764 (Ct. App. 2018) (finding plaintiff did
not demonstrate an unambiguous promise for defendant to sell back to plaintiff
three parcels of land on which defendant had operated a liquor store, grill, and gas
station in the absence of any specific terms about the buyback); Rushing v.
McKinney, 370 S.C. 280, 295, 633 S.E.2d 917, 925 (Ct. App. 2006) (holding
promise too ambiguous to support claim when plaintiff could not "clearly
articulate" the terms of an alleged oral contract, including whether money involved
would be treated as a loan or capital contribution or how the parties would "settle
up"); Barnes, 402 S.C. at 471-73, 742 S.E.2d at 12-13 (denying promissory
estoppel claim because although plaintiff established a general understanding that
he could purchase a home and renovate and split the profits with a partner, "clear
and convincing evidence of several key terms was never clearly articulated");
Davis v. Greenwood Sch. Dist. 50, 365 S.C. 629, 634-35, 620 S.E.2d 65, 67-68
(2005) (holding teachers' reliance on pay raises if they attained additional
certification was not reasonable when district superintendent indicated raise was
subject to school board approval).
A few cases have produced successful promissory estoppel claims. The original
promissory estoppel case, Furman University v. Waller, 124 S.C. 68, 72, 117 S.E.
356, 357 (1923), involved charitable subscriptions.4 Waller pledged $10,000 to
Furman University during a campaign drive. Id. In reliance on the pledges
received through the campaign, Furman made numerous improvements and
additions to its campus. Id. at 73, 117 S.E.2d at 358. The court concluded Waller's
demurrer could not be granted, and Waller's estate was obligated to fulfill the
pledge. Id. at 86, 88, 117 S.E.2d at 362. The court, following the trend of other
jurisdictions, determined that under the right circumstances, what may appear to be
a naked promise, could become an enforceable obligation. Id. at 85, 117 S.E.2d at
362-63.
In Higgins Construction Company, the complaint alleged Southern Bell failed to
move telephone lines by the date Southern Bell promised, knowing Higgins would
rely upon their removal by that date. Higgins, 276 S.C. at 665, 281 S.E.2d at 469-
70. It also alleged Southern Bell's failure to remove the lines by the promised date
resulted in delay of the entire project, adding to Higgins' costs and interfering with
its normal construction program. Id. at 666, 281 S.E.2d at 470. The court granted
the promissory estoppel claim, but remanded for a calculation of damages because
"[t]he verdict did not take into account certain admitted benefits derived by
[Higgins] from wages paid to employees and expenses for equipment during the
period in question." Id. at 666-67, 281 S.E.2d at 470.
In Powers Construction Co. v. Salem Carpets, Inc., 283 S.C. 302, 305-06, 322
S.E.2d 30, 32-33 (Ct. App. 1984), the court considered the issue of a contractor's
bid in reliance on a subcontractor's bid. "A number of jurisdictions will permit a
general contractor to enforce a subcontractor's bid under the doctrine of promissory
estoppel where a general contractor's reasonable reliance upon a subcontractor's
4
Although Furman University does not use the term promissory estoppel, it is
recognized as one of the first South Carolina cases to employ the doctrine. See
Higgins, 276 S.C. at 665, 281 S.E.2d at 470 ("While this [c]ourt has never used the
term 'promissory estoppel,' it has applied the doctrine.").
bid results in a forseeable prejudicial change in position."5 Id. at 305-06, 322
S.E.2d at 33. A jury found for Powers for one-half the difference between what
Powers had to pay another subcontractor and the erroneous bid by Salem Carpets.
Id. at 310, 322 S.E.2d at 35.
Finally, in Satcher, the court considered a promise by a grandfather to his
grandson.
In reasonable reliance on that promise, [grandson] moved
to the house and provided Grandfather with
companionship and other services for more than twenty
years. In further reliance, [grandson] gave up his
opportunity to purchase a house, investing time and effort
in Slide Hill and Grandfather's care. All of this was
foreseeable and intended by Grandfather who did not
wish to live alone on the property. . . . Moreover, we
believe it would be an injustice not to apply the doctrine
of promissory estoppel here because of the extreme
amount of time and energy [grandson] has expended in
reliance on Grandfather's promise. Therefore, we find
[grandson] has proved his claim to Slide Hill and remand
this matter for further proceedings consistent with our
decision.
Satcher, 351 S.C. at 486, 570 S.E.2d at 539-40.
Of all the foregoing cases, Satcher is most instructive because it is similar in the
amount of time invested by the promisee in reliance on the promise. Appellants
worked numerous years for the City believing they were earning no-cost health
insurance for life. There were other reasons Appellants stayed in their jobs
including a high-quality pension and general quality of life. However, the promise
of free health insurance was one of several benefits that enticed Appellants to stay.
It is not essential that the specific promise of no-cost insurance be the sole
inducement for their continuing employment just as Waller's promised donation in
5
This is the only South Carolina promissory estoppel case that specifically
mentions a prejudicial change in position. However, in a contractor-subcontractor
bid situation, a prejudicial change in position would necessarily take place as the
subcontractor's bid would be an essential element on which the contractor's bid was
calculated.
Furman University did not have to be the sole reason Furman made the
improvements it made. See Furman University, 124 S.C. at 85, 117 S.E. at 362("[I]t is not essential . . . that the promise of the subscriber be the sole inducement
to the activities and expenditures of the beneficiary.").
It is noteworthy that the four cases cited above result in two different types of
damages. Furman and Satcher produced expectation damages—something the
City says cannot result from a promissory estoppel claim. Higgins and Salem
resulted in reliance damages. Our jurisprudence has recognized that either type of
damages may be appropriate depending on the case. See Thomerson v. DeVito,
430 S.C. 246, 260, 844 S.E.2d 378, 386 (2020) (stating "[a] trial court retains
broad discretion under promissory estoppel to fashion whatever remedies or
damages justice requires" (quoting 28 Am. Jur. 2d Estoppel and Waiver § 51
(2011))). In this case, like Satcher and Furman, the specific performance of the
promise would likely be the most logical and equitable method of discerning
damages. We recognize this is a complicated issue, but conclude requiring
Appellants to prove they would have been "better off" was too high a burden to
place on them under the circumstances of this case. Therefore, we reverse the
circuit court's ruling as to damages.
II. Additional Sustaining Grounds – Unambiguous Promise and
Reasonable Reliance
The circuit court did not address any other elements of the promissory estoppel
claim except damages. The City asserts several additional sustaining grounds for
affirming the circuit court's grant of summary judgment. One such ground is that
the promise in this case was not unambiguous. We agree.
[T]he presence of either an ambiguous promise or an
injury not arising out of the inconsistent disposition
precludes promissory estoppel's application, though
perceived inequities may exist. Thus, promissory
estoppel has broad applicability to prevent injustice, but
where a promise is unclear or the alleged harms are
unconnected to the inconsistent disposition, the doctrine
does not risk imposing its own inequity against the party
sought to be estopped.
Barnes, 402 S.C. at 470, 742 S.E.2d at 12 (citations omitted).
Because one may properly invoke promissory estoppel
absent elements typically required for a contract, such as
a meeting of the minds or exchanged consideration, the
doctrine still requires, by clear and convincing evidence,
a "promise unambiguous in its terms." See Satcher, 351
S.C. at 483-87, 570 S.E.2d at 538-40 (holding an unclear
agreement that lacked details was not shown by clear and
convincing evidence to be unambiguous); Rushing, 370
S.C. at 295, 633 S.E.2d at 925 (holding that an agreement
was ambiguous and not enforceable under promissory
estoppel because the party seeking enforcement of the
promise "could not clearly articulate [its] terms"). This
necessity for unambiguous terms, in the absence of a
contract, reflects balancing the availability of an
equitable remedy with ensuring the remedy's appropriate
application. See Satcher, 351 S.C. at 483-84, 570 S.E.2d
at 538-39 (stating promissory estoppel requires "a
promise unambiguous in its terms" and "[u]nlike a
contract, which requires a meeting of the minds and
consideration, promissory estoppel looks at a promise
[and] its subsequent effect on the promisee").
Consistent with this balancing of interests and the lack of
a contract specifically defining the agreement, an
inability "to clearly articulate the terms of [an] alleged
oral contract," including how an existing "capital
contribution" would be treated and specifically how the
parties "would settle up," renders an agreement
ambiguous. Rushing, 370 S.C. at 295, 633 S.E.2d at 925;
see Satcher, 351 S.C. at 487, 570 S.E.2d at 540 (finding,
despite testimony that some agreement existed, an
unclear, unspecific promise to be ambiguous); see
also 28 Am. Jur. 2d Estoppel and Waiver § 52 (2011)
("The promise must be clear and unambiguous and
sufficiently specific so that the judiciary can understand
the obligation assumed and enforce the promise
according to its terms.").
Id. at 471-72, 742 S.E.2d at 12.
In the present case, the promise of "no-cost health insurance for life" does not
establish clearly articulated and definite terms. The ambiguity inherent in such a
general promise is demonstrated by Appellants' expectations regarding exactly
what they believe they are entitled to receive. One appellant testified he believed
the City promised a high-quality health plan with prescription coverage better than
that provided by Medicare. When pressed further on the point, he stated, "The city
told me I would have a high quality health insurance plan, I don't care how they do
it, that's what I expect." Another appellant testified he was entitled to the benefits
that were in place on the date of his retirement, regardless of whether changes were
made to the City's plan. Another appellant also testified his benefits were fixed as
of the date of retirement regardless of changes in the City's plan that might lessen
his coverage.
Additionally, Appellants' reliance on the promise under all the circumstances
presented falls short of the reasonable reliance necessary to establish a claim for
promissory estoppel. None of the written materials presented as exhibits indicate
that the no-cost benefit was guaranteed for life. Appellants acknowledged their
retirement letters stated the current policy was to allow them, individually, to
participate in the City's health program and the City would cover the cost. They all
acknowledged the term current would indicate at the present time. The letter does
not indicate that offer was guaranteed for life nor could the Appellants have relied
on the letter during the period of their employment as they did not receive it until
the conclusion of their service to the City. The newsletters presented only
informed plan participants when new insurance booklets were being issued and
make no mention of the cost to participate much less indicating promises regarding
future costs or participation. Furthermore, several Appellants testified they
understood City Council was responsible for the budget and that City Council held
the authority to make changes as needed. Moreover, Appellants testified they
understood any individual who proclaimed no-cost health insurance was
guaranteed for life was not personally able to fulfill such an obligation.
Furthermore, the ambiguity of the promise renders its reliability questionable. See
A&P Enterprises, LLC, 422 S.C. at 589, 812 S.E.2d at 764 ("[R]eliance on any
alleged promise by [the promisor] was unreasonable in light [of] the ambiguities of
the alleged promise.").
As our case law recognizes, there must be a balancing in the consideration of
promissory estoppel claims. The proponent of the estoppel must demonstrate all
requirements by clear and convincing evidence so as to not "risk imposing its own
inequity against the party sought to be estopped." Barnes, 402 S.C. at 470, 742
S.E.2d at 12. Additionally, promissory estoppel is only invoked when the failure
to find it would essentially result in a fraud. This case does not reveal an intent on
the part of the City to defraud Appellants. It has not changed the premiums
charged to retirees on a whim. Instead, it is a response to the ever-increasing costs
of healthcare. Additionally, the City continues to pay approximately 90-95% of
the retiree's coverage depending on the coverage selected. Based on all of the
foregoing, we conclude the decision of the circuit court in favor of the City is
AFFIRMED.
WILLIAMS, C.J., and VINSON, J., concur.