Opinion
No. 883 C.D. 2014
01-28-2015
Joanne G. Hartline, Joan B. Kummerer, Helen Marie Moyer, Regina Hilt, Nadine K. Lydic, Carol L. Culp, Carol S. Kline, Jeannette A. Rautzhan, David G. Slider, Doreen Y. Cechak, Karen A. Katrinak, Kathryn A. Kirk, Jane A. Prutzman, Richard A. Sachs, Brenda G. Marion, Ronald D. Butt, Susan C. Ondo, Cynthia Case Wampler, Margaret M. Schellinger, Paula T. Fenerty, Patricia M. Thompson, Susan Vishio Forry, Terry Walsh, Pamela Ferraro, Susan M. Fix, Cynthia R. Werstler, Roxanne Fox, Glen A. Brumbach, Petitioners v. Public School Employees' Retirement Board, Respondent
BEFORE: HONORABLE RENÉE COHN JUBELIRER, Judge HONORABLE PATRICIA A. McCULLOUGH, Judge HONORABLE ROCHELLE S. FRIEDMAN, Senior Judge
OPINION NOT REPORTED
MEMORANDUM OPINION BY JUDGE COHN JUBELIRER
Following twenty-eight employees' (Claimants) retirement from the Boyertown Area School District (School District), the Public School Employees' Retirement System (PSERS) notified Claimants that any salary increases received during the 2011-2012 school year, pursuant to the Salary Schedule set by the "Boyertown Area School District Collective Bargaining Agreement," would be considered severance payments and, thus, not includable in each Claimants' "final average salary" for retirement benefit calculations. In August 2012, Claimants filed individual appeals and requests for administrative hearings with the Public School Employees' Retirement Board (Board), alleging that their salary increases should be considered retirement-covered compensation. The Board consolidated Claimants' appeals. On November 7, 2013, PSERS filed a Motion for Summary Judgment (Motion), pursuant to the Board's regulations, and Claimants timely responded. On May 1, 2014, the Board entered an Order granting PSERS' Motion. On appeal, Claimants argue that: (1) the Board erred in determining that Claimants did not overcome the presumption that the monies they received were prima facie severance payments; and (2) the Board abused its discretion by entering summary judgment against Claimants and dismissing their request for an administrative hearing. Discerning no error, we affirm.
While Claimants initially filed their appeals pro se, they are now represented by counsel.
22 Pa. Code § 201.6(b). Section 201.6(b) provides that: "(b) Summary Judgment. The System or the claimant may file a motion for summary judgment directly with the Board. The motion must conform to Pa. R.C.P. Nos. 1035.1—1035.5." Id.
I. BACKGROUND
Claimants were employed by the School District and belonged to the bargaining unit (Bargaining Unit) that is represented by the Boyertown Area Education Association (Association). (Board Op., Findings of Fact (FOF) ¶¶ 7-8.) The School District and Association entered into a new Collective Bargaining Agreement, dated May 18, 2011, that outlined the salary schedules and increases for Bargaining Unit employees for the 2011-2012, 2012-2013, and 2013-2014 school years (Revised CBA). (FOF ¶ 9.) The Revised CBA contained, in separate exhibits, two salary schedules for each of the 2011-2012 and 2012-2013 school years. (FOF ¶ 10.) Exhibit A set forth the salary schedule containing the salary provisions in effect from July 1, 2011, until June 30, 2014, for '"Bargaining Unit Employees who did not give an irrevocable notice of resignation as set forth in the [Revised CBA]."' (FOF ¶ 10 (quoting Revised CBA at Art. I, § 1.1, R.R. at 32).) Exhibit B (2011-2012 and 2012-2013) set forth the salary schedule with the salary provisions for those '"Bargaining Unit Employees retiring at the end of the 2011-2012 or 2012-2013 School Years . . . [who] provided an irrevocable retirement notification to the [School] District as of August 1, 2011."' (FOF ¶ 10 (quoting Revised CBA at Art. I, § 1.2, R.R. at 32).)
Under the Revised CBA any employee with either 25 years of experience, who had reached the age of 55, or with five years of experience, who had reached the age of 62 by July 1, 2013, was eligible to submit an irrevocable notice of retirement and be subject to the higher salary schedule outlined in Exhibit B (2011-2012 and 2012-2013). (FOF ¶ 11.) All employees were subject to the lower salary schedule, outlined in Exhibit A, unless '"they provide[d] the irrevocable retirement notification to the [School] District on or before August 1, 2011."' (FOF ¶ 12 (quoting Revised CBA at Ex. A, R.R. at 47).) The higher schedule applied '"ONLY if such Bargaining Unit Employees provided an irrevocable retirement notification to the [School] District between Contract ratification and August 1, 2011."' (FOF ¶ 13 (quoting Revised CBA at Ex. B (2011-2012 and 2012-2013), R.R. at 48).) Thus, the salaries scheduled for employees who submitted an irrevocable notice of retirement were higher than for non-retiring employees. (FOF ¶¶ 12-13.)
The Revised CBA also contained a third salary schedule, set forth in Exhibit B (2013-2014), that took effect in the 14th pay period of the 2013-2014 school year. (FOF ¶ 14.) This third salary schedule allowed non-retiring employees to receive a salary increase in the 14th pay period of the 2013-2014 school year, stating as follows: "[u]ntil the 14th pay of the 2013-2014 School Year, the 2011-2012 and 2012-2013 salary schedules shall apply without any horizontal or vertical movement," but "[a]s of the 14th pay of the 2013-2014 School Year, Bargaining Unit Employees whose salary was frozen on step as set forth in the 2011-2012 and 2012-2013 salary schedule will be eligible to move only one (1) step as of the 14th pay of the 2013-2014 School Year." (FOF ¶ 14 (quoting Revised CBA at Ex. B (2013-2014), R.R. at 49).) Thus, non-retiring employees received the lower salaries outlined in Exhibit A during the 2011-2012 and 2012-2013 school years and for the first 13 pay periods of the 2013-2014 school year, then were eligible to receive salary increases beginning in the 14th pay period of the 2013-2014 school year as outlined in Exhibit B (2013-2014). (FOF ¶¶ 12, 14; Board Op. at 16.)
Claimants all submitted irrevocable retirement notices to the School District before August 1, 2011, informing the School District that they would retire before July 1, 2013. (FOF ¶ 15.) Because Claimants notified the School District that they intended to retire, Claimants received the higher salaries identified in Exhibit B (2011-2012 and 2012-2013) for the two school years preceding July 1, 2013. (FOF ¶¶ 16-17; Board Op. at 12.) Bargaining Unit employees who did not submit irrevocable notices of retirement remained subject to the lower salary schedule, outlined in Exhibit A, "up through the 13th pay of the 2013-2014 school year." (FOF ¶ 18.)
In October 2011, PSERS learned of Claimants' salary increases for the 2011-2012 school year and informed the School District that the salary increases were severance payments. (FOF ¶ 21.) Consequently, the School "District adjusted the base wages that it had" previously reported to PSERS for Claimants. (FOF ¶ 22.) Claimants individually appealed PSERS' determination that the salary increases were severance payments to the Board and PSERS filed its Motion.
The Board concluded that, under Section 8102 of the Public School Employees' Retirement Code (Retirement Code) and judicial interpretation thereof, the "salary increases constitute[d] 'prima facie severance payments"' because Claimants received higher salaries than non-retiring Bargaining Unit employees during the 2011-2012 and 2012-2013 school years for the sole reason that they submitted retirement notices. (Board Op. at 10-12.) The Board determined that Claimants had failed to provide any evidence to rebut PSERS' prima facie case. (Board Op. at 12.) The Board also addressed Claimants' argument that the Revised CBA was ambiguous and, therefore, PSERS' Motion should be denied. (Board Op. at 13-15.) The Board reviewed the language of the Revised CBA and determined that its language "is not susceptible to differing interpretations." (Board Op. at 14-15.) Accordingly, because the Board concluded that Claimants had failed to raise any genuine issue of material fact, the Board granted PSERS' Motion. (Board Op. at 17.) Claimants now petition this Court for review of the Board's Order.
24 Pa. C.S. § 8102.
This Court's scope of review from a final adjudication of the Board "is limited to a determination of whether the [B]oard committed an error of law, whether there has been a violation of constitutional rights, or whether necessary factual findings are supported by substantial evidence." Christiana v. Public School Employes' Retirement Board, 669 A.2d 940, 943 (Pa. 1996). Further, '"[o]ur scope of review of an order granting or denying a motion for summary judgment is limited to determining whether . . . the Board, committed an error of law or abused its discretion."' Mento v. Public School Employees' Retirement System, 72 A.3d 809, 812 n.3 (Pa. Cmwlth. 2013) (quoting Allen v. Public School Employees' Retirement Board, 848 A.2d 1031, 1033 n.7 (Pa. Cmwlth. 2004)).
II. DISCUSSION
A. Whether the Board erred in determining that Claimants did not overcome the presumption that the monies they received were prima facie severance payments.
Claimants assert that the Board improperly determined that Claimants' salary increases were severance payments and not includable in the calculation of their retirement benefits. Claimants argue that the Board has "perverted the definition of 'severance payments' as set forth" in the Retirement Code and case law. (Claimants' Br. at 24.) In particular, Claimants contend that the monies they received were "customary salaries" under Section 8102 of the Retirement Code and, therefore, not severance payments. (Claimants' Br. at 26 (emphasis omitted).) Claimants maintain that their salaries were customary because they were initially contemplated in the original CBA (Original CBA), which preceded the Revised CBA, and non-retiring employees expected to receive the same salary increases after the deferral period ran in the Revised CBA. Since Claimants demonstrated that their salaries were customary, they assert that they have successfully rebutted PSERS' prima facie case.
Under Section 8102 of the Retirement Code, retirement benefits for public school employees are calculated using an employee's "final average salary," defined as "[t]he highest average compensation received as an active member during any three non[-]overlapping periods of 12 consecutive months . . . ." 24 Pa. C.S. § 8102 (emphasis added). Compensation is defined in the Retirement Code as "[p]ickup contributions plus any remuneration received as a school employee excluding reimbursements for expenses incidental to employment and excluding any . . . severance payments." Id. (emphasis added). Further, the Retirement Code defines severance payments as follows:
Any payments for unused vacation or sick leave and any additional compensation contingent upon retirement including payments in excess of the scheduled or customary salaries provided for members within the same governmental entity with the same educational and experience qualifications who are not terminating service.Id. (emphasis added). In Christiana v. Public School Employes' Retirement Board, 669 A.2d 940 (Pa. 1996), our Supreme Court concluded that "[t]he restrictive definitions of compensation under the Retirement Code . . . reflect the Legislature's intention to preserve the actuarial integrity of the retirement fund by 'exclud[ing] from the computation of employes' final average salary all payments which may artificially inflate compensation for the purpose of enhancing retirement benefits.'" Id. at 944 (alteration in original) (quoting Dowler v. Public School Employes' Retirement Board, 620 A.2d 639, 642 (Pa. Cmwlth. 1993)).
"Whether or not a payment must be considered a severance payment is a question of law." Dowler, 620 A.2d at 643. Pursuant to the Retirement Code, "'all payments, other than for regular professional salary, which are part of an agreement in which a professional member agrees to terminate school service by a date certain, are prima facie severance payments.'" Christiana, 669 A.2d at 945 (emphasis added) (quoting Dowler, 620 A.2d at 643). PSERS' prima facie case may only be rebutted "'by showing that the payment is in accord with the scheduled or customary salary scale within the School District for personnel with the same educational and experience qualifications who are not terminating service.'" Id. (quoting Dowler, 620 A.2d at 643).
In the instant case, it is undisputed that Claimants all submitted irrevocable notices of retirement to the School District before August 1, 2011. (FOF ¶ 15.) Moreover, Claimants received the higher salaries identified in Exhibit B (2011-2012 and 2012-2013) of the Revised CBA during the 2011-2012 and 2012-2013 school years, solely because they retired before July 1, 2013. (FOF ¶¶ 16-17; Board Op. at 12.) It is also undisputed that all regular Bargaining Unit employees who did not submit irrevocable notices of retirement before August 1, 2011, received the lower salaries identified in Exhibit A of the Revised CBA during the 2011-2012 and 2012-2013 school years. (FOF ¶¶ 12, 18.) Therefore, Claimants received higher salaries that were contingent upon retirement, and "in excess of the scheduled or customary salaries" for non-retiring employees, during the two school years in question. 24 Pa. C.S. § 8102. Under Christiana, the higher salaries given to Claimants as part of their agreement to "terminate school service by a date certain" are prima facie severance payments. Christiana, 669 A.2d 945.
In rebuttal to PSERS' prima facie case, Claimants argue that the salary increases they received were customary salaries. Claimants "readily admit that they were not receiving the same salaries that the non-retiring employees received under the [Revised CBA]" and that Claimants' salaries during the 2011-2012 school year were higher than for "similarly educated and experienced non-retiring employee[s]." (Claimants' Br. at 26-27.) However, Claimants argue that the higher salaries were customary because they originated in the Original CBA, which contained a single salary schedule for both retiring and non-retiring employees. Further, Claimants maintain that the salary increases were customary because non-retiring employees with the same educational and experience qualifications eventually received the same salary increases as Claimants after the 13th pay period of the 2013-2014 school year, pursuant to Exhibit B (2013-2014) of the Revised CBA.
The Revised CBA shows that Claimants received higher salaries—pursuant to the different salary schedule outlined in Exhibit B (2011-2012 and 2012-2013)—than non-retiring employees during the 2011-2012 and 2012-2013 school years. (Revised CBA at Exs. A-B (2011-2012 and 2012-2013), R.R. at 47-48.) Claimants were only subject to the higher salary schedule because they submitted irrevocable notices of retirement. As the Board correctly concluded, in order to rebut the prima facie case, Claimants "needed to assert in their response to PSERS' [M]otion that non-retiring [Bargaining Unit] employees with the same experience and education earned the same salary as Claimants did for the years at issue." (Board Op. at 12 (emphasis in original).) See also Christiana, 669 A.2d at 945 (quoting Dowler, 620 A.2d at 643) (holding that a prima facie case may only be rebutted by showing that a "'payment is in accord with the scheduled or customary salary scale within the School District'" for non-retiring employees). Claimants, however, did not present any evidence to demonstrate that they received the same salaries as non-retiring employees during the 2011-2012 and 2012-2013 school years.
Claimants' reference to the Original CBA and to non-retiring employees' future salary increases also does not support their argument. First, because the Revised CBA superseded and replaced the Original CBA, any salary schedules contained in the Original CBA are irrelevant to determining whether Claimants' salary increases for the 2011-2012 and 2012-2013 school years are severance payments. Second, a comparison between the Original CBA and Revised CBA provides additional evidence that Claimants' salary increases were severance payments. Under the Original CBA, all Bargaining Unit employees were subject to the same salary schedule and received the same salary increases. (Original CBA at Art. II, § A and Ex. A, R.R. at 3, 18-20.) The salary increases in the Original CBA were also not contingent upon retirement. (Original CBA at Art. II, § A and Ex. A, R.R. at 3, 18-20.) In contrast, once the Revised CBA took effect, only those employees who submitted irrevocable notices of retirement received the higher salaries identified in Exhibit B (2011-2012 and 2012-2013) during the 2011-2012 and 2012-2013 school years.
Although Claimants are correct that non-retiring employees would become eligible for a salary increase after the 13th pay period of the 2013-2014 school year, in order to prevail Claimants would have to demonstrate that non-retiring employees also received the same salary increases as retiring employees during the 2011-2012 and 2012-2013 school years. Because Claimants have not provided any evidence that non-retiring employees received the same salary increases for those two school years, the Board did not err in determining that Claimants had not overcome the presumption that their salary increases were prima facie severance payments.
B. Whether the Board erred or abused its discretion in entering summary judgment against Claimants and dismissing their request for a hearing.
a) Ambiguities in the Revised CBA
Claimants next argue that the Board abused its discretion in entering summary judgment and dismissing Claimants' request for an evidentiary hearing. Claimants contend that there is an ambiguity in the Revised CBA that creates a genuine issue of material fact for which summary judgment should have been denied. Specifically, they point to the Revised CBA's use of the two words "deferral" and "freeze" to argue that the agreement is ambiguous. They argue that the Board erred in finding the two terms synonymous and that "[a] determination of whether the contract sets forth a deferral versus a freeze is a key to the determination of whether the [Claimants] can rebut the prima facie presumption that the money they received was a severance payment and, as such, [is] not includable in their pension calculation." (Claimants' Br. at 20-21.)
The question of whether a contract contains an ambiguity is determined by the Court as a question of law. State Highway and Bridge Authority v. E.J. Albrecht Company, 430 A.2d 328, 330 (Pa. Cmwlth. 1981); see also Erie Insurance Company/Erie Insurance Exchange v. Flood, 649 A.2d 736, 738 (Pa. Cmwlth. 1994) (holding that "it is strictly a legal determination as to whether written contract terms are ambiguous"). A contract is found to contain an ambiguity "if, and only if, it is reasonably or fairly susceptible to different constructions, is capable of being understood in more senses than one, is obscure in meaning through indefiniteness of expression, or has a double meaning." Flood, 649 A.2d at 738; see also Murphy v. Duquesne University, 777 A.2d 418, 430 (Pa. 2001) (holding that whether a contract is ambiguous is not resolved in a vacuum but that contractual terms are ambiguous when there is "more than one reasonable interpretation when applied to a particular set of facts").
Moreover, "[a] contract is not ambiguous if the court can determine its meaning without any guide other than a knowledge of the simple facts on which, from the nature of language in general, its meaning depends." Flood, 649 A.2d at 738. "Courts do not assume that a contract's language was chosen carelessly, nor do they assume that the parties were ignorant of the meaning of the language they employed." Murphy, 777 A.2d at 429. Therefore, "[w]hen a writing is clear and unequivocal, its meaning must be determined by its contents alone" and the Court may not consider extrinsic evidence. Id. Merely because parties do not agree on the proper construction of a contract does not render it ambiguous. Id. Further, the contract must be taken together, as a whole, in determining contractual intent. Id.
Here, Claimants argue that the language of the Revised CBA is ambiguous and requires an evidentiary hearing. The following language of the Revised CBA is at issue:
Any full-time Bargaining Unit Employee . . . who further provides for an irrevocable notice of retirement between June 15, 2011, and August 1, 2011 . . . and retiring effective on or before July 1, 2013, shall not be subject to the salary schedules/agreed upon salary deferral for the School Years 2011-2012 and 2012-2013 and will be subject to the salary schedule set forth in Exhibit "B [(2011-2012 and 2012-2013)]" attached hereto and made a part hereof so long as the Bargaining Unit Employee provides for the irrevocable notice of retirement as set forth in this provision . . .(Revised CBA at Arts. IX, XX, and Ex. B (2013-2014), R.R. at 43-44, 49 (emphasis added).)
This Agreement represents a complete salary deferral for the 2011-2012 and 2012-2013 School Years and a partial salary deferral for the 2013-2014 School Year and shall not be precedent setting . . .
As of the 14th pay of the 2013-2014 School Year, Bargaining Unit Employees whose salary was frozen on step as set forth in the 2011-2012 and 2012-2013 salary schedule will be eligible to move only one (1) step as of the 14th pay of the 2013-2014 School Year.
Claimants argue that salary freezes and salary deferrals have two different meanings and that the Board erred in finding them synonymous. Specifically, Claimants contend that "[d]efer denotes an intentional delay until a future date," while a "freeze, alternatively, denotes specific actions, processing, provisions, rates, rights, or rules that are stopped for a limited time period." (Claimants' Br. at 22 (quotation omitted).) Claimants argue that the use of the word "deferral" implies that the employees will eventually get the salary increases, while the use of the word "freeze" implies that they will not. Because these two terms are reasonably susceptible to two very different meanings, Claimants contend that the Board should have held a hearing to determine the intention of the parties who negotiated and drafted the Revised CBA.
The language of the Revised CBA is not ambiguous because, when the language of the Revised CBA is taken together as a whole, there is only one reasonable meaning. Murphy, 777 A.2d at 429. First, the Article IX provision—which states that retiring employees are "not [] subject to the salary schedules/agreed upon salary deferral" for the 2011-2012 and 2012-2013 school years— simply means that unlike non-retiring employees who remained subject to the lower salary schedules in Exhibit A, retiring employees were eligible to earn the higher salaries identified in Exhibit B (2011-2012 and 2012-2013) for those two school years. (Revised CBA at Art. IX, R.R. at 43.) Second, the Exhibit B (2013-2014) provision—which states that "Bargaining Unit Employees whose salary was frozen on step as set forth in the 2011-2012 and 2012-2013 salary schedule will be eligible to move only one (1) step"— is also not ambiguous. (Revised CBA at Ex. B (2013-2014), R.R. at 49.) This provision indicates that the non-retiring employees, who were not entitled to receive salary increases and whose salaries were frozen in place for the previous two school years, became eligible to move up only one step on the salary schedule as of the 14th pay period of the 2013-2014 school year. (Revised CBA at Ex. B (2013-2014), R.R. at 49.) The fact that non-retiring employees were able to move up only one step after they became subject to the salary schedule featured in Exhibit B (2013-2014), eliminates the possibility that non-retiring employees had any part of their salaries deferred for the 2011-2012 and 2012-2013 school years when they earned lower salaries than retiring employees. For example, if non-retiring employees had a portion of their salaries deferred until a later date, the Revised CBA would have permitted those employees to move up more than one step on the Exhibit B (2013-2014) salary schedule to account for the deferral.
Although Claimants argue that the Revised CBA's use of the term "deferred" leaves open the possibility that non-retiring employees may eventually receive the same salary increases awarded to Claimants for the 2011-2012 and 2012-2013 school years, nothing in the Revised CBA suggests this interpretation. In fact, interpreting the Revised CBA to mean that non-retiring employees would eventually receive the same salary increases as the retiring employees, for those two school years, yields an absurd result. Applying Claimants' interpretation to the extreme, if "salary deferral" meant that non-retiring employees would eventually earn the same amount as Claimants, then Article XX's language that the Revised CBA "represents a complete salary deferral for the 2011-2012 and 2012-2013 School Years and a partial salary deferral for the 2013-2014 School Year" would mean that non-retiring employees' salaries would be completely deferred for the 2011-2012 and 2012-2013 school years and partially deferred for the 2013-2014 school year. (Revised CBA at Art. XX, R.R. at 44 (emphasis added).) Thus, under Claimant's interpretation, non-retiring employees would earn nothing for those two and a half school years, but have their salaries deferred until an unspecified later date. However, Exhibit B (2013-2014) of the Revised CBA makes clear that non-retiring employees' salaries were not deferred during those school years, stating that "[u]ntil the 14th pay of the 2013-2014 School Year, the 2011-2012 and 2012-2013 salary schedules shall apply without any horizontal or vertical movement." (Revised CBA at Ex. B (2013-2014) (emphasis added).) Because Claimants' interpretation of the Revised CBA is unreasonable, the Revised CBA is not "reasonably or fairly susceptible" to their different construction. Flood, 649 A.2d at 738.
In order to survive summary judgment, any ambiguity in the Revised CBA would need to suggest that the non-retiring employees may have earned the same salary as Claimants during the 2011-2012 and 2012-2013 school years. However, there is no provision in the Revised CBA suggesting that non-retiring employees would earn the same salary as Claimants during the 2011-2012 and 2012-2013 school years. The Revised CBA does not provide that non-retiring employees would be paid the difference between the Exhibit B (2011-2012 and 2012-2013) and Exhibit A salaries after the 13th pay of the 2013-2014 school year. Moreover, nothing in the Revised CBA suggests that the School District intended to defer the salary increases of non-retiring employees in those two years and retroactively pay them at a later date. From the two salary schedules for the 2011-2012 and 2012-2013 school years, i.e., Exhibit A and Exhibit B (2011-2012 and 2012-2013), it is clear that Claimants were paid more than non-retiring employees during those two school years. Because the Revised CBA is not reasonably susceptible to a different interpretation, and there is no genuine issue of material fact regarding whether Claimants' increased salaries were severance payments, the Board did not err as a matter of law or abuse its discretion in granting PSERS' Motion.
b) The Revised CBA's characterization of Claimants' salary increases
Finally, Claimants argue that due to another provision in the Revised CBA—which provides lump sum payments to Claimants upon their retirement—a genuine issue of material fact exists for whether the salary increases are severance payments. Under Article IX of the Revised CBA, retiring employees received lump sum payments of $275 per year of service up to 35 years. (Revised CBA at Art. IX, § 9.1, R.R. at 42.) Article IX, however, prohibits the lump sum payments from being credited for retirement purposes. (Revised CBA at Art. IX, § 9.4, R.R. at 43.) Because the Revised CBA prohibits the lump sum payments from being considered for retirement, while containing no such language for Claimants' salary increases for the 2011-2012 and 2012-2013 school years, Claimants argue that it is evidence of a reasonable inference that the salary increases were intended to be included in the retirement calculation, and not as severance payments. Claimants contend that the Board erred in ignoring this argument.
In Hoerner v. Public School Employees' Retirement Board, 684 A.2d 112 (Pa. 1996), the appellee similarly argued that salary increases received pursuant to a termination agreement were not severance payments because they were classified as salary, rather than severance payments, in the agreements. Our Supreme Court held that PSERS is not bound by characterizations of payments made to a PSERS member in a contractual agreement to which it is not a party. Id. at 117 n.10. Likewise, the absence of language describing Claimants' salary increases as a severance payment would not be dispositive for determining its characterization under the Retirement Code. Therefore, the Board did not err by not considering Claimants' argument regarding Article IX of the Revised CBA and properly granted PSERS' Motion.
For the foregoing reasons, the Board's Order is affirmed.
/s/ _________
RENÉE COHN JUBELIRER, Judge Judge Simpson did not participate in this decision. ORDER
NOW, January 28, 2015, the Order of the Public School Employees' Retirement Board, entered in the above-captioned matter, is AFFIRMED.
/s/ _________
RENÉE COHN JUBELIRER, Judge BEFORE: HONORABLE RENÉE COHN JUBELIRER, Judge HONORABLE PATRICIA A. McCULLOUGH, Judge HONORABLE ROCHELLE S. FRIEDMAN, Senior Judge
OPINION NOT REPORTED
DISSENTING OPINION BY SENIOR JUDGE FRIEDMAN
I respectfully dissent. Because I cannot agree with the majority's conclusion that Claimants' salary increases, received pursuant to the School District's and the Association's Revised CBA, constituted severance payments and not compensation under the Public School Employees' Retirement Code (Retirement Code), and because the Revised CBA is ambiguous, I would reverse the trial court's order and remand for an evidentiary hearing.
The Original CBA provided for salary increases to all employees. The Revised CBA continued that practice for employees who were retiring; however, it "deferred" the salary increases for non-retiring employees. All of this was set forth in a scheduled, customary scale in the Revised CBA. Because Claimants' increased salaries were "based on the standard salary schedule for which [Claimants were] rendering service," the salaries were "customary" under section 8102 of the Retirement Code, 24 Pa. C.S. §8102, and, therefore, not severance payments. See Christiana v. Public School Employes' Retirement Board, 669 A.2d 940, 946 (Pa. 1996).
Further, the Revised CBA is ambiguous because it uses the distinct terms "deferred" and "frozen" interchangeably. "Defer" means "[to] postpone; to delay." Black's Law Dictionary 486 (9th ed. 2009). "Freeze" means "[t]o cause to become fixed and unable to increase." Id. at 737. These terms are not synonymous. A deferral merely puts an event off into the future, whereas a freeze stops an event. Claimants' salaries continued to increase per the Original CBA, whereas the salaries of the employees who were not retiring either were "deferred" and would increase at a later date or were "frozen" and would remain the same pursuant to the Revised CBA.
A contract is ambiguous if it is reasonably susceptible to different constructions and is capable of being understood in more than one way. Juniata Valley Bank v. Martin Oil Company, 736 A.2d 650, 662 (Pa. Super. 1999). Whether a contract is ambiguous is a question of law. Id. --------
If the salary increases were "deferred" for some employees per the Revised CBA, their salaries would increase at the same rate as Claimants' at a later time, the 14th pay period of the 2013-2014 school year. Therefore, because the Revised CBA contained both terms, it was ambiguous, and Claimants are entitled to an administrative hearing. Thus, I would conclude that the PSERS erred in granting summary judgment because there is a clear potential for conflict between the definitions. See El Concilio De Los Trabajadores De La Industria De Los Hongos v. Department of Environmental Resources, 484 A.2d 817, 820 (Pa. Cmwlth. 1984).
Accordingly, I would reverse the entry of summary judgment and remand for an evidentiary hearing.
/s/_________
ROCHELLE S. FRIEDMAN, Senior Judge Judge Simpson did not participate in this case.