Ahrens v. State

Justice HEARN.

I concur in the majority’s resolution of the issues of estoppel, class certification, summary judgment as to the additional causes of action, and exhaustion of remedies. However, I part company with the majority on whether a contract existed and respectfully dissent. In my view, the old working retirees statutes, together with the mandatory forms signed by the working retirees, created a binding contract between the State and the working retirees which could not be unilaterally rescinded by the State with the passage of Act 153.

In its simplest terms, a contract is formed when a legitimate offer is accepted, accompanied by a valuable consideration. Here, the original working retiree statutes permitted participants to retire, return to work for the State, and continue to *359receive their retirement. The only retirement contributions required were those by the employer: “An employer shall pay to the system the employer contribution for active members prescribed by law with respect to any retired member____” S.C.Code Ann. § 9-l-1790(B) (as amended through 2004); see also id. § 9-11-90.

The old working retirees statutes thus constituted an offer to eligible program participants to retire, be re-hired, and receive their retirement benefits without contributing any further payments into the retirement system. While this Court in Layman v. State, 376 S.C. 434, 658 S.E.2d 320 (2008), quite rightly found the old working retirees statutes did not in and of themselves establish a contract, they most certainly constituted a legally significant offer to those qualified for the program.

In order to return to work and accept the offer contained in the old working retirees statutes, participants were required to sign a form stating their election of non-membership in the retirement system. The Participating Employer Procedures Manual, published by the South Carolina Retirement Systems, states that “[a] service retiree (TERI or non-TERI) ... must complete an Election of Non-Membership (Form 1104) upon returning to work for an employer covered by the Retirement Systems.” This mandatory form, entitled “ELECTION OF NON-MEMBERSHIP,” stated: “I take this action under the provisions of the Retirement Act with full knowledge that I will not be credited with retirement service for this period of employment since I have elected non-membership and, as such, will not be making contributions.”

When signed by the participant and his employer, this mandatory form constituted the participant’s acceptance of the State’s offer of re-employment contained in the working retirees statutes. The benefits flowing to the State from being able to re-hire experienced workers without having them accrue additional retirement benefits and the detriment to the participants in foregoing further retirement benefits from the State clearly satisfied the requirement of consideration for the formation of a binding contract.14 See McLeod v. Sandy *360Island Corp., 265 S.C. 1, 13, 216 S.E.2d 746, 751 (1975) (citing Furman University v. Waller, 124 S.C. 68, 117 S.E. 356 (1923)) (“A valuable consideration may consist either in some right, interest, profit, or benefit accruing to the one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other.”).

There is nothing in the form which the working retirees had to execute prior to re-hiring that indicates their election of non-membership in the retirement system was anything other than permanent. Indeed, Peggy Boykin, head of the South Carolina Retirement Systems, testified that if “[the working retirees] retired prior to July 1, 2005, they did not have to make any contributions.” The old adage that the proof is in the pudding hits the bulls-eye here, given the undisputed fact that not one of the working retirees who executed the form and returned to work prior to the passage of Act 153 had any monies taken out of their paychecks. All parties — the working retirees, their State employers, and the State retirement system — all recognized that a legally binding contract existed.

As this Court correctly stated in Layman: “Once the bargain is formed, and the obligations set, a contract may only be altered by mutual agreement and for further consideration.” 368 S.C. at 640, 630 S.E.2d at 269. Consistent with Layman, I would hold that the State may not unilaterally alter its agreement with the working retirees by forcing them to contribute to the retirement system. With all due respect to the majority, I cannot, in good conscience, treat the working retirees differently than this Court treated the TERI participants in Layman.

Nor do I agree with the majority’s reliance on McKinney v. South Carolina Police Officers Retirement System, 311 S.C. 372, 429 S.E.2d 797 (1993), for the proposition that no viable contract could be formed through execution of the forms here. McKinney held that certain correspondence from the state retirement system could not create a binding contract with the plaintiff for benefits not authorized by the statute. Id. at 375, *361429 S.E.2d at 798. That is a totally different situation than what is presented here where the retirement system generated forms to carry out the intent and purpose of the original statutes, and the participants were required to execute those forms prior to being rehired. While I agree with the reasoning expressed in McKinney that mere letters from the retirement system could not provide benefits not authorized by statute, I am at a loss to see its application to the facts of this case.

Consistent with the principles enunciated in Layman, I would hold that the State created a binding contract with the working retirees through its unambiguous statutory scheme and the participants’ execution of mandatory forms which could not be altered unilaterally by the State to the detriment of the working retirees.

. As stated by Cy Wentworth, the Human Resources Manager for the South Carolina Judicial Department, himself a working retiree: "The *360employee agreed to retire and not make any further contributions to the Retirement System and the State continued to be able to employ a seasoned, experienced employee for a cost which saved the State money.”