738 S.E.2d 255
S.C. Ct. App.2013Background
- Retirees, former city employees with 20+ years of service, relied on City-supplied health insurance being free after retirement.
- Prior to July 1, 2009, the City paid the full cost of retiree health insurance; newsletters and handbooks stated it would be free.
- Employee handbook repeatedly promised continued health coverage at no cost with eligibility rules; however, it included conspicuous disclaimers stating it was not a contract.
- Retirees’ health benefits were discussed in an insurance benefits booklet and City newsletters, which allegedly supported free lifetime coverage, contrasted with a later plan to require employee contributions starting July 1, 2009.
- In 2009 the City Council voted to require financial contributions for group health insurance beginning July 1, 2009; thirteen retirees filed suit August 10, 2009 seeking various remedies.
- Circuit court granted summary judgment to City on breach of contract, promissory estoppel, and equitable estoppel; seven retirees appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did the handbook create a contract for free retiree health insurance? | Retirees rely on the handbook's policies for continued free coverage. | Handbook contains conspicuous disclaimer; Marr governs; no binding contract. | No contract formed; disclaimer effective. |
| Did the insurance benefits booklet create a binding right to free retiree health insurance? | Booklet promised continued coverage to eligible retirees. | Booklet does not promise continuing free health insurance. | No contract from booklet. |
| Can representations by City employees create a binding unilateral contract for life-long free health insurance? | HR staff and supervisors promised free coverage and acted within authority. | City employees lack authority to bind the City; no contract via unilateral promises. | Facts create a genuine issue; not bound by summary judgment on this theory. |
| Are promissory estoppel and equitable estoppel viable where reliance on City employee promises occurred? | Retirees reasonably relied on employees’ promises to provide free health insurance. | Reliance on pre-disclaimer materials and general statements cannot bind the City; causation is lacking. | Estoppel survives regarding employee representations; estoppel claims based on handbook/booklet are defeated. |
Key Cases Cited
- Marr v. City of Columbia, 307 S.C. 545 (1992) (handbook with conspicuous disclaimer, not a contract; summary judgment appropriate)
- Prescott v. Farmers Tel. Co-op., Inc., 335 S.C. 330 (1999) (unilateral contract elements; jury question when in doubt)
- Grant v. Mount Vernon Mills, Inc., 370 S.C. 138 (Ct. App. 2006) (disclaimer effectiveness and contract formation assessments)
- Hancock v. Mid-South Mgmt. Co., Inc., 381 S.C. 326 (2009) (summary judgment standard and evidentiary considerations)
- S.C. Dept. of Transportation v. Horry Cnty., 391 S.C. 76 (2011) (estoppel against state; elements and reliance considerations)
- Oswald v. Aiken Cnty., 281 S.C. 298 (Ct. App. 1984) (authority to bind municipality via official acts and policy)