Link to PDF file
647 S.E.2d 711
IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA
January 2007 Term
NANCY K. HUDKINS,
Petitioner Below, Appellee
STATE OF WEST VIRGINIA
CONSOLIDATED PUBLIC RETIREMENT BOARD,
Respondent Below, Appellant
Appeal from the Circuit Court of Kanawha County
Hon. Paul Zakaib, Jr.
Case No. 03-AA-89
Submitted: May 9, 2007
Filed: June 13, 2007
Fred F. Holroyd, Esq. Erica M. Mani, Esq.
Holroyd & Yost
Bowles Rice McDavid Graff & Love
Charleston, West Virginia
Charleston, West Virginia
Attorney for Appellee
Attorney for Appellant
The Opinion was delivered PER CURIAM.
SYLLABUS BY THE COURT
1. On appeal of an administrative order from a circuit court, this Court
is bound by the statutory standards contained in W.Va. Code, 29A-5-4(a) and reviews
questions of law presented de novo; findings of fact by the administrative officer are
accorded deference unless the reviewing court believes the findings to be clearly wrong. Syllabus Point 1, Muscatell v. Cline, 196 W.Va. 588, 474 S.E.2d 518 (1996).
2. In cases where the circuit court has amended the result before the
administrative agency, this Court reviews the final order of the circuit court and the ultimate
disposition by it of an administrative law case under an abuse of discretion standard and
reviews questions of law de novo.Syllabus Point 2, Muscatell v. Cline, 196 W.Va. 588, 474
S.E.2d 518 (1996).
3. The doctrine of estoppel should be applied cautiously, only when
equity clearly requires that it be done, and this principle is applied with especial force when
one undertakes to assert the doctrine against the state. Syllabus Point 7, Samsell v. State
Line Development Company, 154 W.Va. 48, 174 S.E.2d 318 (1970).
4. The general rule governing the doctrine of equitable estoppel is that
in order to constitute equitable estoppel or estoppel in pais there must exist a false
representation or a concealment of material facts; it must have been made with knowledge,
actual or constructive of the facts; the party to whom it was made must have been without
knowledge or the means of knowledge of the real facts; it must have been made with the
intention that it should be acted on; and the party to whom it was made must have relied on
or acted on it to his prejudice. Syllabus Point 6, Stuart v. Lake Washington Realty Corp.,
141 W.Va. 627, 92 S.E.2d 891 (1956).
The West Virginia Consolidated Public Retirement Board (Board) (See footnote 1)
a circuit court order which reversed the Board's administrative decision denying appellee
Nancy K. Hudkins' right to convert unused sick leave to retirement service credit for
purposes of calculating her pension benefits. For the reasons discussed in this decision, we
affirm the circuit court.
Nancy K. Hudkins was a member of the Public Employees Retirement System
(PERS) by virtue of her employment with the West Virginia Department of Health and
Human Resources (Department). Ms. Hudkins had worked for the Department for twenty-
seven years and 217 days and had accumulated 1,752.2 hours of sick leave before she
decided to separate from her employment on March 31, 2000. At the time of her separation
from employment she was not yet fifty-five years of age and therefore was not eligible for
immediate retirement benefits under PERS.
In March of 2000, before deciding to separate from her employment, Ms.
Hudkins undertook to determine if she could convert her unused sick leave to service credit
which, if the conversion were allowed, would increase her retirement income when she
reached retirement age (See footnote 2)
on April 1, 2004. As a part of Ms. Hudkins' inquiry she contacted
the Board to confirm her right to convert her accumulated sick leave to service credit. An
employee of the Board assured Ms. Hudkins that she could freeze her sick leave and use it
on April 1, 2004, as additional service credit when she filed for retirement benefits. In
addition to the assurance given to Ms. Hudkins by the Board employee, she was also given
written assurance by the community services manager for the Department that she could
freeze her unused sick leave and use the accumulated 1,752.2 hours to extend her service
credit upon applying for retirement. (See footnote 3)
On March 31, 2000, based upon the assurances given her by the Board and the
Department community service manager that she could convert her unused sick leave to
service credit upon her planned retirement, Ms. Hudkins resigned from her employment with
In September 2002, more than two years following separation from her
employment, Ms. Hudkins learned for the first time that she might not be permitted to
convert her unused sick leave to service credit. (See footnote 4)
In an attempt to determine the accuracy of
what she had been told, Ms. Hudkins contacted the Board in writing (See footnote 5)
and inquired about the
Board's sick leave to service credit policy. In her inquiry she also indicated that she
wanted to appeal any decision not to honor her original understanding of the policy. By
correspondence dated October 4, 2002, the Board advised Ms. Hudkins that only employees
who actually retire and begin drawing retirement benefits at the time of their termination of
employment could convert unused sick leave to service credit, and that unused sick leave
could not be converted to service credit by employees who terminated their employment
before they become eligible for retirement benefits. (See footnote 6)
In January 2003, prior to the date of her retirement eligibility, Ms. Hudkins
initiated administrative proceedings seeking to secure the right to convert her unused sick
leave to service credit _ as she had been assured prior to her decision to separate from her
On April 16, 2003, a hearing was conducted before a Board hearing officer.
Subsequent to the hearing, the hearing officer recommended to the Board that Ms. Hudkins'
appeal be denied. On May 28, 2003, the Board adopted the recommended decision and
denied her appeal.
In June 2003, Ms. Hudkins appealed the decision of the Board to the circuit
court of Kanawha County under the judicial review provisions of the West Virginia
Administrative Procedures Act. (See footnote 7)
The circuit court, after a hearing, reversed the decision of
the Board. (See footnote 8)
It is from the circuit court decision reversing the Board that the appellant
Review of appeals from circuit court orders in administrative appeals is
governed by W.Va. Code, 29A-6-1 (1964), which provides as follows:
Any party adversely affected by the final judgment of the
circuit court under this chapter may seek review thereof by
appeal to the supreme court of appeals of this state, and
jurisdiction is hereby conferred upon such court to hear and
entertain such appeals upon application made therefor in the
manner and within the time provided by law for civil appeals
The standard of review by this Court of an appeal of an administrative case
from the circuit court is found in Syllabus Points 1 and 2 respectively of Muscatell v. Cline,
196 W.Va. 588, 474 S.E.2d 518 (1996). We held in Syllabus Point 1 that:
On appeal of an administrative order from a circuit court, this
Court is bound by the statutory standards contained in W.Va.
Code, 29A-5-4[g] and reviews questions of law presented de
novo; findings of fact by the administrative officer are accorded
deference unless the reviewing court believes the findings to be
W.Va. Code, 29A-5-4(g) and (h) (1998) provide as follows:
(g) The court may affirm the order or decision of the agency or
remand the case for further proceedings. It shall reverse, vacate
or modify the order or decision of the agency if the substantial
rights of the petitioner or petitioners have been prejudiced
because the administrative findings, inferences, conclusions,
decision or order are:
(1) In violation of constitutional or statutory provisions; or
(2) In excess of the statutory authority or jurisdiction of the
(3) Made upon unlawful procedures; or
(4) Affected by other error of law; or
(5) Clearly wrong in view of the reliable, probative and
substantial evidence on the whole record; or
(6) Arbitrary or capricious or characterized by abuse of
discretion or clearly unwarranted exercise of discretion.
(h) The judgment of the circuit court shall be final unless
reversed, vacated or modified on appeal to the supreme court of
appeals of this state in accordance with the provisions of section
one [§ 29A-6-1], article six of this chapter.
Syllabus Point 2 of Muscatell, supra, further provides:
In cases where the circuit court has amended the result before
the administrative agency, this Court reviews the final order of
the circuit court and the ultimate disposition by it of an
administrative law case under an abuse of discretion standard
and reviews questions of law de novo.
Inasmuch as the instant case presents a legal issue
relating to the application
of equitable estoppel, we find the issue appropriate for de novo review under W.Va. Code,
With these standards in mind we proceed with our analysis.
In this case we address a state employee's attempt to convert unused sick leave
to extend service credit for the purpose of calculating retirement benefits. The statutory
authority for an employee using unused sick leave to extend his or her service credit is found
in W.Va. Code, 5-10-15a (1988), which states:
Any member accruing annual leave or sick leave days may,
after the effective date of this section [June 27, 1988], elect to
use such days at the time of retirement to acquire additional
credited service in this retirement system. Such days shall be
applied on the basis of two workdays credit granted for each one
day of such accrued annual or sick leave days, with each month
of retirement service credit to equal twenty workdays and with
any remainder of ten workdays or more to constitute a full
month of additional credit and any remainder of less than ten
workdays to be dropped and not used, notwithstanding any
provisions of the code to the contrary, including section twelve
[§ 5-16-12], article sixteen of this chapter. Such credited service
shall be allowed and not deemed to controvert the requirement
of no more than twelve months credited service in any year's
Prior to Ms. Hudkins' separation from
employment and before the passage of W.Va. Code
, 5-10-15a (1988), the West Virginia Department of Personnel had a provision
in its rules which stated that Separation from Employment _ All accumulated sick leave
shall be cancelled as of the effective date of separation of employment or last day worked
during the notice period. WVSCR 143-1-16.04(e)(1) (1981). (See footnote 9)
After the passage of W.Va.
, 5-10-15a (1988), this particular language of the personnel regulations continued to be
included in the West Virginia Department of Personnel rules and remained substantially the
same as the version predating passage of W.Va. Code
, 5-10-15a (1988).
In 2002, over two years after Ms. Hudkins' decision to separate from her
employment, the West Virginia Consolidated Retirement Board, for the first time,
promulgated rules relating to service credit for unused sick leave. The rules and the timing
of their adoption appear to be the result of the Board discovering the existence of the
cancellation provision in the Division of Personnel rules. The new Board Rules read, in
part, as follows:
Service Credit for Accrued Unused Sick and Annual Leave. _
Members of the Public Employees Retirement System may elect
to receive additional service credit in exchange for accrued and
unused sick and annual leave at the time of retirement.
Members who make this election are eligible for any additional
service credit to which the member is entitled based upon the
number of member's accrued unused sick and annual leave days
which stand to the member's credit with the member's last
participating public employer at the time of retirement. . . .
WVCSR, 162-8-4.1 (2002). These service credit rules were amended in 2006, but the
quoted language remained unchanged. See WVCSR, 162-8-4.1 (2006).
The history of legislative and regulatory action that is relevant to the instant
case suggests that upon the 1988 passage of W.Va. Code, 5-10-15a, the Board allowed
employees to extend service credit for unused sick leave, regardless of whether the employee
terminated his or her employment to immediately draw retirement benefits, or, as in the case
of Ms. Hudkins, separated from employment before being eligible to draw retirement. This
was confirmed at oral argument by counsel for the appellant. Appellant's counsel also
indicated that a Board investigation is underway to determine how many other former
employees, similarly situated to Ms. Hudkins, currently receive the benefit of extended
service credit for unused sick leave.
We believe that this case can be decided upon principles of equitable
The appellant, however, argues that the application of the doctrine of equitable estoppel should not be applied.
In Syllabus Point 7 of Samsell v. State Line Development Company, 154 W.Va.
48, 174 S.E.2d 318 (1970) this Court acknowledged that the doctrine of estoppel may be
applied against the State, but held that:
The doctrine of estoppel should be applied cautiously, only
when equity clearly requires that it be done, and this principle is
applied with especial force when one undertakes to assert the
doctrine against the state.
The general rule prohibiting the application of the doctrine is not without
exceptions. This Court in its prior decisions never intended to preclude the application of
equitable estoppel against the State in every case. We therefore agree with the trial court's
acknowledgment that the general rule that equitable estoppel does not apply against a
governmental agency is not without exceptions.
The trial court's findings are supported by 28 Am. Jur. 2d Estoppel and Waiver § 140 which states as follows:
§ 140. What must be shown to estop government.
In recognition of the heavy burden bourne by one seeking to
estop the government, courts have held that the doctrine of
estoppel may be raised against the government only if, in
addition to the traditional elements of estoppel, the party raising
the estoppel proves affirmative misconduct or wrongful conduct
by the government or a government agent. Likewise, courts
have held an estoppel against the government may be raised
only when _
_ the injury to the public interest if the government is
estopped is out weighed by the injury to the plaintiff's personal
interest or the injustice that would arise if the government is not
_ raising the estoppel prevents manifest or grave
_ raising the estoppel will not defeat a strong public
interest or the operation of public policy.
_ the exercise of government functions is not impaired
or interfered with.
_ circumstances make it highly inequitable or oppressive
not to estop the government.
_ the government's conduct works a serious injury and
the public's interest will not be harmed by the imposition of
See also, Wisconsin Department of Revenue v. Moebius Printing Company, 89 Wis.2d 610,
279 N.W.2d 213 (1979) (taxpayer was entitled to claim the benefit of estoppel based upon
tax representative's incorrect advice).
That estoppel may operate against a state government with regard to unused
sick leave is supported by Crum v. Stalnaker, 936 P.2d 1254 (Alaska 1997). In Crum, a
retired teacher was denied his claim for unused sick leave credit in the Teacher's Retirement
System after twenty-one years of teaching. The teacher had accumulated 183 days of unused
sick leave credit, equivalent to about one year of service. The estimated value of the loss of
the sick leave credit was more than $100.00 per month in retirement benefits. The evidence
showed that the retirement system had failed to provide the teacher with the proper form with
which to claim credit for his unused sick leave. As a result the teacher was denied his claim.
On appeal the Alaska court stated in Crum that:
. . . [E]stoppel may apply against the government and in favor of
a private party if four elements are present: (1) the government
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).
Crum, 936 P.2d at 1256. In Crum the Alaska Supreme Court held that the four elements of Wassink were satisfied.
This Court held in Syllabus Point 6 of Stuart v. Lake Washington Realty Corp.,
141 W.Va. 627, 92 S.E.2d 891 (1956) that in disputes between private parties:
The general rule governing the doctrine of equitable estoppel
is that in order to constitute equitable estoppel or estoppel in
pais there must exist a false representation or a concealment of
material facts; it must have been made with knowledge, actual
or constructive of the facts; the party to whom it was made must
have been without knowledge or the means of knowledge of the
real facts; it must have been made with the intention that it
should be acted on; and the party to whom it was made must
have relied on or acted on it to his prejudice.
After a complete review of the record in this case, we are compelled to
conclude that the elements of equitable estoppel have been met by Ms. Hudkins. It is not
disputed that a Board employee made the representation that Ms. Hudkins was eligible to
claim service credit for her unused sick leave given her years of service and age.
Furthermore, as disclosed in oral argument, the Board has had a long history of extending
service credit for unused sick leave without regard to whether or not the employee was
separating from employment to immediately draw retirement benefits. The Board employee
who advised Ms. Hudkins clearly had in her possession all of the facts necessary to correctly
advise Ms. Hudkins as to her entitlement to convert her unused sick leave. We are also
satisfied that the representations by the Board employee were made with the intention that
Ms. Hudkins would act upon those representations, and that Ms. Hudkins did, in fact, act in
reliance upon the representations of the Board employee.
Furthermore, it is also uncontroverted that Ms. Hudkins would not have
separated from her employment with the Department but for the representations made by the
Board employee and the representations made by Mr. Najmulski, the community service
manager for the Department in which Ms. Hudkins was employed, that Ms. Hudkins could
convert her unused sick leave to extended service credit for purposes of calculating her
retirement benefits. That Ms. Hudkins relied upon these representations to her prejudice is
clearly expressed in her September 13, 2002 letter to the Board when she stated, Since I
have already resigned approximately 2 ½ years ago, I do not have the option of thinking it
over. Her reliance upon those representations is uncontroverted.
We also note that the Board employee upon whom Ms. Hudkins relied before
her separation from employment was simply doing that which had apparently become a
common practice of the Board, namely, allowing employees who separate from their
employment to freeze their unused sick leave. Furthermore, we note that since the Board
had not even addressed in their rules the matter of the unused sick leave credits until 2002
_ more than two years following Ms. Hudkins' separation from her employment, Ms.
Hudkins could not have been aware of the methodology used by the Board even if she had
thoroughly examined the Board's rules. Finally, we observe that the Board's staff was
dedicated to the business of advising employees concerning retirement benefits. This is an
activity that the Board undertakes everyday. We believe that Ms. Hudkins had every right
to rely upon the advice of the Board representative regarding her right to freeze her unused
sick leave for purposes of calculating her retirement benefits. This is especially true since
the Board had apparently established the practice of giving the same advice to other
employees both before and after Ms. Hudkins separated from her employment.
We believe the principles set forth in 28 Am. Jur. 2d Estoppel and Waiver §
140 and in Syllabus Point 6 of Stuart v. Lake Washington Realty Corp., supra, and the
cautious advice provided in Syllabus Point 7, Samsell v. State Line Development Company, supra, have been met. The record reflects that the financial impact of this decision is
approximately $51.00 per month. Given the likelihood that Ms. Hudkins will be required to
live on a fixed income for the remainder of her life, we find that the injury and injustice to
Ms. Hudkins outweighs the public interest by estopping the Board in this case. We therefore
conclude that by permitting estoppel to operate in this case, we will prevent a manifest and
Finally, we do not believe that a strong public interest or operation of public
policy will be defeated by this decision. By expressly limiting our decision to the specific
facts of this case, we further find that the exercise of government functions will not be
impaired or interfered with, nor will the public interest be harmed.
Based upon the foregoing, we affirm the decision of the circuit court.
The Board is a public body established pursuant to W.Va. Code
, 5-10D-1, et seq
(2007) and serves as the statutory administrator of the West Virginia Public Employees
Retirement System (PERS).
Retirement age under the Public Employees Retirement System is fifty-five years. See W.Va. Code
Ms. Hudkins was given a letter from John Najmulski, Community Service Manager,
Department of Health and Human Resources, dated March 28, 2000, which states:
TO WHOM IT MAY CONCERN:
Nancy K. Hudkins resigned from Department of Health
and Human Resources effective March 31, 2000. This was her
last working day and last day on payroll. She was paid a lump
sum for her 358.5 hours annual leave. Her 1752.2 hours sick
leave were frozen to use for extended service credit upon
applying for retirement.
Should additional information, please do not hesitate to
John J. Najmulski, MSW
Community Service Manager
Sometime during the period after Ms. Hudkins had terminated her employment and
September 2002, the Board learned of a pre-existing West Virginia Division of Personnel
regulation, which provided that if an employee separates from his or her employment for any
reason other than retirement, then all unused sick leave is cancelled.
The exasperation of Ms. Hudkins is demonstrated in her September 13, 2002, letter
to the Board:
September 13, 2002
Attn: Michael Adkins
State of West Virginia
Consolidated Public Retirement Board
Building 5, Room 1000
Charleston, WV 25305
Dear Mr. Adkins:
My name is Nancy Karleen Hudkins. I worked for the
Department of Health and Human Resources for 27 years and
217 days. I resigned from my job 03-31-00. Prior to resigning
I spoke to Jo Ann Edwards and was advised I could freeze my
1752.2 hours of sick leave and use it for extended service credit
upon applying for retirement in 2004. Upon hearing this, I
decided I would resign 03-31-00, freeze my time and sick leave
and was paid a lump sum for my vacation and comp time.
Yesterday I was informed this promise was not going to
be honored by the Department of Personnel. I am very angry
and disappointed as I was told I could use my sick leave for
extended time and in good faith, believing I could trust the
establishment that I worked for for so many years, I resigned.
Since I have already resigned approximately 2 ½ years ago, I do
not have the option of thinking it over.
I want to appeal the Department of Personnel's decision
not to honor information I was given regarding my sick leave
hours that were frozen to use for extended service credit upon
applying for my retirement in 2004.
Nancy Karleen Hudkins
The October 4, 2002 letter received by Ms. Hudkins states, in part, as follows:
The provision that does not allow for the banking of
sick leave upon leaving employment with the State of West
Virginia is not a new provision. It is my understanding that the
rule regarding this matter have been effective for more that
fourteen (14) years.
West Virginia Administrative Rule, Division of
Personnel, Section 14.4(e)(2) states:
2. All Other Separations - All accumulated sick leave
shall be cancelled as of the date of separation. . . .
The only exception to the above rule is when the State of
West Virginia employee leave activity employment and enters
immediately into retirement. . . .
J. Michael Adkins
Interim Co-Executive Director
The circuit court order, as a basis for its decision, states, in part, as follows:
Although generally, estoppel does not apply against a
governmental agency in carrying out its statutory duties, there
are exceptions. In this particular case, this Court finds estoppel
does apply. To deny estoppel in this case would permit manifest
The 1981 language in this personnel regulation was subsequently modified in 1987
and again in 1993. The language of the 1993 version was carried into later versions of the
regulations and was the operative language of the regulation when Ms. Hudkins separated
from her employment in March 2000, and retired on April 1, 2004, when she began receiving
her retirement benefits. The 1993 operative language is as follows: All Other Separations
_ All accumulated sick leave shall be cancelled as of the effective date of separation.
WVSCR 143-1-15.04 (e)(2) (1993).