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Crum v. Stalnaker (4/25/97), 936 P 2d 1254
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NOTICE: This opinion is subject to formal correction before publication in the Pacific
Reporter. Readers are requested to bring errors to the attention of the Clerk of the
Appellate Courts, 303 K Street, Anchorage, Alaska 99501; (907) 264-0608, fax (907)
264-0878.
THE SUPREME COURT OF THE STATE OF ALASKA
GERALD E. CRUM, )
) Supreme Court No. S-7258
Appellant, )
) Superior Court No.
v. ) 3AN-94-4595 CI
)
ROBERT STALNAKER, in his ) O P I N I O N
official capacity as the )
administrator of the ) [No. 4812 - April 25, 1997]
Teachers' Retirement System, )
)
Appellee. )
______________________________)
Appeal from the Superior Court of the State of Alaska, Third
Judicial District, Anchorage,
Milton M. Souter, Judge.
Appearances: Joe P. Josephson, Josephson & Blair, Anchorage,
for Appellant. John B. Gaguine, Assistant Attorney General, and
Bruce M. Botelho, Attorney General, Juneau, for Appellee.
Before: Compton, Chief Justice, Rabinowitz, Matthews, Eastaugh,
and Fabe, Justices.
FABE, Justice.
I. INTRODUCTION
This appeal arises from the denial of a claim by Gerald Crum for unused sick
leave credit in the Teachers' Retirement System. The Division of Retirement and Benefits
(Division) rejected the claim because Crum filed it after the statutory deadline. The Teachers'
Retirement System Board of Directors (Board) and the superior court upheld the denial. We
reverse, holding that the Division is estopped from rejecting Crum's claim as late.
II. FACTS AND PROCEEDINGS
After twenty-one years of teaching, Gerald Crum retired on July 1, 1992. During
his years as a teacher, Crum accumulated 183 days of unused sick leave credit, equivalent to
about one year of service under AS 14.25.115. (EN1) Crum estimated that loss of the credit
would decrease his retirement benefits by more than $100 per month and decrease his wife's
benefits, if he dies before her, by about sixty dollars per month.
When Crum decided to retire, he began his retirement paperwork at the offices
of the Matanuska-Susitna Borough (Borough) in June 1992. Crum testified that
they sat me down at a þ at a desk and the lady who was filling
out the retirement forms then pulled out a form, one after the
other, and wanted me to either fill in the top or the bottom as was
appropriate, and then after that was finished I would either sign þ
some of them had to be signed, some of them didn't and when she
finished filling the forms out and þ and putting them in front of
me, that was the end of þ of the process there at the Mat-Su
Borough.
On July 8, 1992, the Division sent to Crum a form letter containing several inserts
and enclosures. A Division employee placed check marks in various boxes on the form and
filled in applicable dates and deadlines. One of the marked sentences stated: "If you want to
enroll in the optional Long Term Care (LTC) insurance plan, the enclosed enrollment form must
be received before _____." The Division employee filled in the blank with the date "August 30,
1992"and added a note: "If you do not wish to elect Long Term Care please check the
appropriate box and return. Thank you." The Division employee also checked the box next to
the following sentences: "If you wish to receive credit for your unused sick leave, your claim
must be verified and received by us before _____. Please read the insert, 'Minimum
Requirements for Retirement and Service Credit' for more information." The date of "July 1,
1993"was inserted in the blank. At the bottom of the form letter, the employee added the
following handwritten comment: "Please fill out the enclosed form 'Retiree Information Form'
and return along with the Long Term Care form. Thank you very much."
The "Minimum Requirements for Retirement and Service Credit"insert referred
to in the letter stated in part:
You may receive additional credit by claiming your unused
sick leave when you retire if you were in T[eachers'] R[etirement]
S[ystem] membership service after June 30, 1977. . . .
Your unused sick leave claim must be verified by your last
employer and must be received by the TRS no later than one year
after you are appointed to retirement.
Crum testified and the Division does not contest that neither the Division nor the Borough ever
provided Crum a form for claiming the sick leave benefit.
Crum read the letter and the insert but he did not take any action to claim the
unused sick leave credit. He testified as to his belief regarding the application process:
A As I understood that process right there, it was my
understanding that there had been already accomplished
when I did my mustering out process through the
Matanuska-Susitna Borough a (indiscernible) out through
the Matanuska-Susitna Borough they made out one form
that I was aware of, although I never got to see it or sign
it, on the verification of all of my service with the Borough
itself. And my thinking at this time when I both read were
she had done the check mark and also in that [insert], my
concept of that was that I had already completed that
particular portion of the retirement process, and, therefore
it was þ it was completed.
Q In other words, you knew that they were verifying your
years for retirement credit.
A That is correct.
Q And you inferred that they were þ that that involved a
verification of the sick leave as an aspect of that.
A That is correct.
Crum first became aware of his failure to claim the credit in September 1993
when he went to the Division's office in Anchorage and asked why the unused sick leave had
not been credited to his retirement account. After a Division employee explained the situation
to him, Crum obtained a claim form, completed it with the assistance of the Borough, and
returned it to the Division. The Division received the claim on September 13, 1993,
approximately two-and-a-half months after the statutory deadline.
Robert Stalnaker, the administrator of the Teachers' Retirement System, rejected
the claim. Crum appealed to the Board. After a hearing, the Board upheld Stalnaker's decision
by a vote of three to two. The superior court affirmed, and Crum appeals.
III. DISCUSSION (EN2)
Crum argues that the Division was estopped from rejecting his late application for
unused sick leave credit because it failed to provide him with a claim form or clearly instruct
him that he needed to obtain the form. (EN3) We have stated that estoppel may apply against
the government and in favor of a private party if four elements are present: (1) the governmental
body asserts a position by conduct or words; (2) the private party acts in reasonable reliance
thereon; (3) the private party suffers resulting prejudice; and (4) the estoppel serves the interest
of justice so as to limit public injury. Wassink v. Hawkins, 763 P.2d 971, 975 (Alaska 1988).
The Board rejected Crum's estoppel argument, concluding that while "principles
of estoppel could apply under certain circumstances,"it was
not satisfied that the Division, by action or inaction, asserted a
position (i.e., that Mr. Crum did not need to make a claim for
unused sick leave credit within one year from the date of his
termination) or that Mr. Crum had a reasonable basis upon which
to rely on a misrepresentation or omission by the government.
The Board also concluded that the
preponderance of the evidence indicates that, more probably than
not, Mr. Crum received and had the opportunity to timely review
information regarding claims for sick leave and received specific
instructions that he verify and claim unused sick leave credit by
July 1, 1993. Further, the preponderance of the evidence indicates
that Mr. Crum had the opportunity and obligation to be familiar
with the provisions of AS 14.25.115 and the explanations of how
claims for unused sick leave credit are to be made.
Although we have not applied equitable estoppel to require a government agency
to accept a late application because of its failure to provide the proper form, courts in other
jurisdictions have done so. (EN4) For example, in Iowa Dep't of Transp. v. Nebraska-Iowa
Supply Co., 272 N.W.2d 6, 14 (Iowa 1978), overruled in part on other grounds by Estate of
Grossman v. McCreary, 373 N.W.2d 113 (Iowa 1985), the Iowa Supreme Court applied
equitable estoppel to prevent the state Department of Transportation (DOT) from removing
several billboards. The owner of the billboards argued that he had not been able to file
applications for billboard permits by the statutory deadline because application forms had not
been available at the DOT's district office. Id. at 9, 14-15. The court determined that the
statutory requirement that "the application for a permit shall be on a form provided by the
department"imposed a duty on the DOT to make the necessary forms available. Id. at 14
(emphasis supplied in original). The court concluded that
the inability of the defendant to obtain the requisite forms and
make timely applications resulted from the failure of DOT to meet
its statutory obligation. Since the defendant made a good faith
effort to comply with the statute and was frustrated by DOT, it
necessarily follows that DOT should be estopped from removing
the billboards without compensation.
Id.
Similarly, in Hartway v. State, Bd. of Control, 137 Cal. Rptr. 199, 200 (Cal.
App. 1976), the California Court of Appeal held that a city police department's failure to
provide claim forms estopped the state from denying late claims under a state law providing
indemnification to needy crime victims. The Hartway court determined that the indemnification
statute "placed an obligation on the law enforcement agency investigating the crime to provide
forms"to eligible individuals. Id. The court held that the
failure . . . to provide claim forms is a valid basis upon which
estoppel may be asserted. While the trial court found that
"[r]espondents did nothing to mislead [appellants] into not filing
their claim . . . within one year,""[w]hen one is under a duty to
speak, and has an opportunity to do so, knowing the circumstances
require it, an estoppel may arise from his silence."
Id. (citations omitted).
As in the above cases, the Division had an obligation to provide Crum with the
proper form to claim the credit. The regulation implementing AS 14.25.115 requires that the
claim for unused sick leave credit "be in a form approved by the administrator [of the Teachers'
Retirement System]." 2 Alaska Administrative Code (AAC) 36.290(a) (1994). Additionally,
the Division's own "Information Handbook"for the Teachers' Retirement System states that the
"form [for claiming the unused sick leave credit] will be provided to the member by the Division
of Retirement and Benefits."(EN5)
The Division, like the state agency in Hartway, argues that because it never made
any statements "inconsistent"with the statute, it did not mislead Crum into filing his claim late.
It contends that its "omission does not rise to the level of misconduct necessary for estoppel."
We disagree. In light of the Division's obligation, its "omission"in failing to provide a form
or clear notice of the claims procedure satisfies the first element of the four-part test outlined
above for applying estoppel against the government.
Furthermore, Crum's failure to file a timely claim form in reliance on the
Division's omission and poorly written instructions satisfies the second element of the estoppel
test because it was reasonable. The Division's statements, written in the passive tense and
emphasizing the verification of the claim rather than the initial application, gave the definite
impression that the employer, not the employee, bears the burden of completing and filing the
necessary forms. The contrast between the checkmarked statement regarding the optional
insurance plan and the statement about unused sick leave credit reinforced this impression.
While the latter states only that the "claim"must be "verified and received"by the Division, the
former draws attention to Crum's need to return the "enclosed enrollment form." The
Division's handwritten note at the bottom of the letter further accentuated the contrast. While
clearly directing Crum to file the insurance form and a "Retiree Information Form,"it ignored
the unused sick leave credit form, thus seeming to confirm Crum's mistaken belief that he need
not act to claim the credit.
Crum's claim meets the third and fourth elements of the estoppel test because his
reliance resulted in prejudice, and application of the equitable estoppel doctrine in this case
"serves the interest of justice so as to limit public injury." In discussing this final element, we
observed in Municipality of Anchorage v. Schneider, 685 P.2d 94, 97 (Alaska 1984), that
even where reliance has been foreseeable, reasonable, and
substantial, the interest of justice may not be served by the
application of estoppel because the public interest would be
significantly prejudiced. However, this is not true in every case.
When the public will not be significantly prejudiced, and the other
elements of the theory are present . . . foreclos[ing] the use of
estoppel causes arbitrary and unjust results.
In Schneider, we also noted with approval a commentator's statement that "courts should be
encouraged to weigh in every case the gravity of the injustice to the citizen if the doctrine is not
applied against the injury to the commonweal if the doctrine is applied." Id. at 97 n.6 (citing
2 C. Antieu, Municipal Corporation Law sec. 16A.06, at 16A-15 (1984)). In this case, estoppel
will prevent Crum from suffering a substantial and unfair hardship while causing no harm to the
public.
We determine that the Board erred in its legal conclusion that equitable estoppel
is unavailable under the facts of this case. The Division's failure to provide Crum with the
proper form constituted "silence"where the Division "was under a duty to speak." Hartway,
137 Cal. Rptr. at 200. Relying on this silence and the Division's poorly written instructions,
Crum reasonably assumed to his detriment that a claim for unused sick leave would be made and
verified along with the verification of his years of service. Therefore, following the rationale
of Hartway and Nebraska-Iowa Supply, we hold that the Division is estopped from denying his
claim as late.
IV. CONCLUSION
For the above reasons, we REVERSE the decision of the trial court and
REMAND this case for further proceedings consistent with this opinion.
ENDNOTES:
1. Alaska Statute 14.25.115 provides in part:
(a) A teacher in membership service on or after July 1,
1977, who is appointed to retirement on or after July 1, 1978, may
elect to apply unused sick leave credit in computing the total
number of years of credited service under AS 14.25.110(d) . . . .
To obtain service credit for unused sick leave, a teacher must
apply to the administrator no later than one year after appointment
to retirement. Unused sick leave shall be credited on a
day-for-day basis in accordance with the table for service after July
1, 1969, contained in AS 14.25.220(43). Teacher contributions
may not be required for credited unused sick leave.
2. We review an agency's findings of fact under the substantial evidence test, State, Pub.
Employees Retirement Bd. v. Cacioppo, 813 P.2d 679, 683 n.6 (Alaska 1991), and its resolution
of questions of law not involving agency expertise under the substitution of judgment standard.
Earth Resources Co. v. State, Dep't of Revenue, 665 P.2d 960, 965 (Alaska 1983). When a
superior court acts as an intermediate court of appeal, we give no deference to its decision.
State, Dep't of Pub. Safety, Div. of Motor Vehicles v. Fann, 864 P.2d 533, 535-36 (Alaska
1993).
3. Crum also argues that the deadline imposed by AS 14.25.011 should be considered
"directory"rather than "mandatory." Because we reverse on other grounds, we do not address
this argument.
4. We applied equitable estoppel in the factual context of a late application in Mortvedt v.
State, Dep't of Natural Resources, 858 P.2d 1140 (Alaska 1993). In that case, we considered
whether the Department of Natural Resources (DNR) abused its discretion when it denied
Mortvedt's application as untimely. Id. at 1142. After noting that estoppel may be invoked
against a public entity, we concluded
that the case should be remanded to the DNR for the purpose of
requiring DNR to make explicit findings of fact as to the four
elements of equitable estoppel . . . .
. . . .
In the event DNR concludes that Mortvedt has established
the elements of equitable estoppel then DNR should proceed to
determine the merits of Mortvedt's application for a [permit].
Id. at 1144 (footnotes omitted).
5. The Division asserts that Crum failed to argue that the Division violated its written policy
by not providing him with a form. We will consider new arguments on appeal if the issue is
(1) not dependent on any new or controverted facts; (2) closely related to the appellant's trial
court arguments; and (3) could have been gleaned from the pleadings. State, Dep't of Revenue
v. Gazaway, 793 P.2d 1025, 1027 (Alaska 1990). The Board squarely addressed the issue of
equitable estoppel, and its decision reflects that it was aware of Crum's argument that the
Division failed to give him the proper form. Therefore, we hold that this issue is properly
before us.
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