FSM SUPREME COURT TRIAL DIVISION

CIVIL ACTION NO. 2006-1024

SINISIA JOHN, on behalf of her children and as the surviving spouse of the late Ronny John,
Plaintiff,

vs.

CHUUK PUBLIC UTILITY CORPORATION,
Defendants.

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FINDINGS OF FACT AND CONCLUSIONS OF LAW

Dennis K. Yamase
Associate Justice

Trial: October 8, 2008
Decided: December 29, 2008

APPEARANCES:

For the Plaintiff: Salomon M. Saimon, Esq.
Micronesian Legal Services Corporation
P.O. Box D
Weno, Chuuk FM 96942

For the Defendant: Joses Gallen, Esq.
Chuuk Attorney General
Office of the Chuuk Attorney General
P.O. Box 1050
Weno, Chuuk FM 96942

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HEADNOTES

Insurance
 When the group insurance plan is non-contributory  when the employee does not contribute anything towards payment of the insurance premiums  the employee is not entitled to notice that the employer has ceased paying the premiums. John v. Chuuk Public Utility Corp., 16 FSM Intrm. 226, 227 (Chk. 2008).

Equity  Estoppel
 Detrimental reliance is subsumed within estoppel. A party seeking to invoke the equitable estoppel doctrine must prove that 1) a defendant made representations or statements; 2) the plaintiff reasonably relied upon the representations; and 3) the plaintiff will be harmed if estoppel is not allowed. John v. Chuuk Public Utility Corp., 16 FSM Intrm. 226, 228 (Chk. 2008).

Equity  Estoppel
 To claim promissory estoppel a party must prove that 1) a promise was made; 2) the promisor should reasonably have expected the promise to induce actions of a definite and substantial character; 3) the promise did in fact induce such action; and 4) the circumstances require the enforcement of the promise to avoid injustice. Elements 3 and 4 are sometimes referred to collectively as "detrimental reliance." Detrimental reliance requires, at the very least, that a party has changed its position for the worse as a consequence of the defendant's purported misconduct. John v. Chuuk Public Utility Corp., 16 FSM Intrm. 226, 228 (Chk. 2008).

Equity  Estoppel; Insurance
 When there is no evidence before the court that, if it were not for the employer's maintaining life insurance for the employees, the employee would have either quit his job and taken a job with a different employer that provided life insurance benefits or that he would have purchased his own life insurance policy from another source, the employee's widow cannot recover on a promissory estoppel or detrimental reliance theory since she cannot show that the employee relied on the employer's alleged promise to provide life insurance and her mere assertion, first made in her closing argument, that had they known they might have found another policy is insufficient to prove reliance. John v. Chuuk Public Utility Corp., 16 FSM Intrm. 226, 228 (Chk. 2008).

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COURT'S OPINION

DENNIS K. YAMASE, Associate Justice:

 On October 8, 2008, this came on for trial on the issues of: 1) whether state employees in 1997 were afforded life insurance benefits and on what terms (contributory, non-contributory; on the job only, 24-hour; etc.); 2) whether the Chuuk Public Utility Corporation ("CPUC") had since established its own merit system and then altered the benefits; and 3) whether, if notice of the lapse of life insurance coverage was required, it had been given for the July 2004 policy lapse. See John v. Chuuk Public Utility Corp., 16 FSM Intrm. 66, 69 (Chk. 2008). After the call of the case, the parties' submitted, by stipulation, all exhibits as evidence and agreed that each would submit a closing argument in writing and that either side could submit a written rebuttal. On November 10, 2008, the plaintiff, Sinisia John, filed her closing argument. CPUC filed its closing argument on November 11, 2008, and on December 1, 2008, filed a rebuttal. The matter was then considered submitted for decision.

I.

 The parties stipulated: 1) that in 1997 the state was not statutorily required to provide its employees with life insurance benefits; 2) that no law required CPUC to provide its employees with life insurance benefits or with notice when its non-contributory group life insurance lapsed because it stopped paying the premiums; 3) that CPUC employee Ronny John died after the group life insurance policy had been canceled; and 4) that there was no law that required an employer (CPUC) to provide its employees with notice of the employer's lapse of insurance payments.

 The court previously ruled that when the group insurance plan is non-contributory  when the employee does not contribute anything towards payment of the insurance premiums  the employee is not entitled to notice that the employer has ceased paying the premiums. See John, 16 FSM Intrm. at 68. Accordingly, the plaintiff, Sinisia John, Ronny John's widow, cannot, and no longer seeks to, recover on a breach of contract claim.

 John contends that she alleged, and may still recover, on a detrimental reliance or promissory estoppel basis, the $18,000 that the canceled life insurance policy would have paid as a death benefit. "Detrimental reliance is subsumed within estoppel. A party seeking to invoke the equitable estoppel doctrine must prove that 1) a defendant made representations or statements; 2) the plaintiff reasonably relied upon the representations; and 3) the plaintiff will be harmed if estoppel is not allowed." AHPW, Inc. v. Pohnpei, 14 FSM Intrm. 188, 191 (Pon. 2006).

"[T]o claim promissory estoppel a party must prove that (1) a promise was made; (2) the promisor should reasonably have expected the promise to induce actions of a definite and substantial character; (3) the promise did in fact induce such action; and (4) the circumstances require the enforcement of the promise to avoid injustice. Elements 3 and 4 are sometimes referred to collectively as "detrimental reliance."

Id. at 191-92 (quoting Production Credit Ass'n v. Farm Credit Bank, 781 F. Supp. 595, 607 (D. Minn. 1991)). "Detrimental reliance requires, at the very least, that a party has changed its position 'for the worse' as a consequence of the [defendant]'s purported misconduct." Id. at 191-92 (quoting In re Crain, 158 B.R. 608, 613 (W.D. Pa. 1993)).

II.

 There is no evidence before the court that CPUC promised either Ronny John or his wife that Ronny John would be provided with life insurance benefits if he remained employed by CPUC or that CPUC expected that this "promise" would induce Ronny John to remain in its employ. Even assuming that CPUC made such a promise, there is no evidence that Ronny John or Sinisia John relied on that promise or changed their position for the worse based on that promise. That is, there is no evidence before the court that, if it were not for this "promise," Ronny John would have either quit his CPUC job and taken a job with a different employer that provided life insurance benefits or that he would have purchased his own life insurance policy from another source. Sinisia John's mere assertion, first made in her closing argument, that had they known they might have found another policy is insufficient to prove reliance.

 Accordingly, John cannot recover on a promissory estoppel or detrimental reliance theory since she cannot show that CPUC employee Ronny John relied on CPUC's alleged promise. Carlos Etscheit Soap Co. v. Epina, 8 FSM Intrm. 155, 163 (Pon. 1997) (parties cannot prevail on promissory estoppel claims when it does not appear that they relied on the other party's promise to their detriment). Nor is there any evidence that CPUC made any promise to Sinisia John that induced her to take or forgo any action to her detriment.

 This is not a case where the employee paid part or all of the insurance premiums through the employer's deduction of the required premiums from an employee's paycheck and would thus be entitled to notice of the policy's cancellation. Without deciding whether a plaintiff would prevail in such a case, the court notes that such a claim would be much stronger.

III.

 Accordingly, the clerk shall enter judgment in Chuuk Public Utility Corporation's favor and in the favor of the previously dismissed insurance company.

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