JOSEPH PANDY JR V BOARD OF WATER AND LIGHT
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STATE OF MICHIGAN
COURT OF APPEALS
JOSEPH PANDY, JR.,
UNPUBLISHED
November 28, 2006
Plaintiff-Appellee,
v
No. 259784
Ingham Circuit Court
LC No. 03-001116-CZ
BOARD OF WATER AND LIGHT,
Defendant-Appellant.
Before: Cooper, P.J., and Hoekstra and Smolenski, JJ.
PER CURIAM.
Defendant appeals by leave granted an order denying its motion for summary disposition
on plaintiff’s breach of contract claim. This dispute arises out of defendant’s termination of
plaintiff’s employment. We reverse and remand to the trial court to grant defendant’s motion for
summary disposition of the breach of contract claim and for consideration of plaintiff’s
remaining claims.
Plaintiff was hired as the Director of the Lansing Board of Water and Light (BWL) in
1984. In 1990, plaintiff and the BWL Board of Commissioners (Board) entered into an
employment contract1 “for a period of five (5) years commencing July 1, 1990, and continuing
until June 30, 1995.” The contract specified that the arrangement was “at will,” and could be
terminated “at any time, with or without cause, upon ninety (90) days written notice by the
Board.” The contract also included these two provisions on severance compensation:
1
The 1990 Employment Agreement states in the Term of Agreement that Pandy “is hereby
appointed to the position of General Manager.” However, the preamble to the Agreement states
that Pandy “has been employed by the BWL as its Director and General Manager for five (5)
years,” and also states that “the Board desires to continue to employ” Pandy. Reading the
document in its entirety, it is clear that Pandy was employed as Director and General Manager.
The 1992 Agreement confirms this, noting that Pandy “has been employed by the BWL as its
Director and General Manager for seven (7) years.”
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If the Board desires to terminate this Agreement without cause prior to its
term, it shall compensate Joseph Pandy, Jr. for the salary and benefits . . . through
the completion of the full term of the Agreement . . . .
If the Board desires to terminate this Agreement for cause, it shall
compensate Joseph Pandy, Jr. only for the remainder of the current BWL fiscal
year. . . .
In 1992, the parties executed a second contract. The new agreement provided for
automatic renewal on July 1 of each year, so that the active term would always be five years:
The Board hereby employs Joseph Pandy, Jr. commencing July 1, 1992,
and continuing until June 30, 1997, provided, however, that if Joseph Pandy, Jr. is
employed on the first day of July in any subsequent year, the expiration date of
this agreement shall be automatically extended to June 30 in the year five years
following said first day of July. Joseph Pandy, Jr. is hereby appointed to the
position of General Manager for the fiscal year beginning July 1, 1992, as
provided in the Board’s administrative rules.
The contract again specified that the arrangement was “at will,” and included the same severance
provisions verbatim.
On September 10, 2002, the Board held a meeting to discuss the employment agreement
with Joseph Pandy, Jr. The Board resolved to declare the employment contract invalid,
reasoning that a Board cannot bind successor Boards, and the contract essentially left future
Boards stuck with keeping Pandy on as Director or paying him for the entire term of the contract.
The Board terminated Pandy’s employment without cause, and declined plaintiff severance pay
on the contract.
Plaintiff filed suit, alleging breach of contract, among other claims. Defendant moved for
summary disposition, pursuant to MCR 2.116(C)(8) of the breach of contract claim. The court
denied the motion without prejudice. After further discovery, defendant renewed the motion
under MCR 2.116(C)(8) and (10). The court again denied the motion, and defendant applied for
leave to file this appeal.
We review summary disposition rulings de novo. Joliet v Pitoniak, 475 Mich 30, 35; 715
NW2d 60 (2006). A motion pursuant to MCR 2.116(C)(10) entitles the movant to summary
disposition where there is no genuine issue of material fact. Miller v Purcell, 246 Mich App 244,
246; 631 NW2d 760 (2001). Issues of contract interpretation are questions of law we review de
novo. Rory v Continental Ins Co, 473 Mich 457, 464; 703 NW2d 23 (2005). Our primary
obligation is to discern and effectuate the intent of the parties. Quality Products & Concepts Co
v Nagel Precision, Inc, 469 Mich 362, 375; 666 NW2d 251 (2003). We enforce unambiguous
contract language as written. Id.
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Defendant argues that the contract violates the Lansing Charter by impairing the Board’s
discretion to appoint and remove the BWL Director “at its pleasure.” Lansing Charter, § 5-202.
We agree.2 We note that it is axiomatic that a contract in violation of a city charter is void. See
Smith v Garden City, 372 Mich 189; 125 NW2d 269 (1963); Knights of the Iron Horse v Detroit,
300 Mich 467; 2 NW2d 466 (1942); Ferle v Lansing, 189 Mich 501; 155 NW 591 (1915).
Although the Board’s conclusion that the employment agreement exceeds its authority is
correct, its reasoning is not. We find that the issue is essentially this: the Charter grants the
Board authority to enter into at-will employment agreements, but the contract at issue here is a
for-cause agreement, irrespective of the at-will language included in the contract. First, the
Charter language that the Board may appoint and remove the Director “at its pleasure” confirms
that a Board has authority only to enter into at-will employment arrangements. Next, the term of
the employment agreement specifying that if Pandy is terminated without cause, he is entitled to
the full compensation and benefits he would have received for the length of the contract if he had
not been terminated confirms that the contract is essentially a for-cause employment agreement.
Although employment agreements are presumptively at-will, that presumption may be
overcome:
The presumption of employment at will is overcome with proof of either a
contract provision for a definite term of employment, or one that forbids
discharge absent just cause. Courts have recognized the following three ways by
which a plaintiff can prove such contractual terms: (1) proof of "a contractual
provision for a definite term of employment or a provision forbidding discharge
absent just cause"; (2) an express agreement, either written or oral, regarding job
security that is clear and unequivocal; or (3) a contractual provision, implied at
law, where an employer's policies and procedures instill a "legitimate
expectation" of job security in the employee. Lytle v Malady, 458 Mich 153, 164;
579 NW2d 906 (1998) (citations omitted).
Here, we find that the fact that Pandy would receive the entire benefit of the bargain
whether terminated or not effectively “instill[s] a legitimate expectation of job security.” Id.
There is no case law directly on point for this issue. However, we here hold that where
an employment contract defines a minimum although renewable term of employment, and
provides that an employee will receive full compensation for the entire minimum term of
employment defined in the contract even if terminated, the contract is a for-cause agreement
rather than an at-will agreement. The provision requiring full performance under the contract
from the employer creates for the employee a legitimate expectation of job security for at least
the minimum defined term of the contract.
2
While the City Charter limits the Board’s authority to enter into employment agreements
specifically with the “Director,” we find that here although the Agreement identifies the position
as “General Manager,” the Agreement also confirms that Pandy was employed as Director and
General Manager. See fn 1.
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Because the Board had authority only to engage a Director on an at-will basis, the
contract as written was invalid, and defendant’s motion for summary disposition on the breach of
contract claim should have been granted. See Manning v City of Hazel Park, 202 Mich App 685,
693; 509 NW2d 874 (1993) (“The city charter clearly and unambiguously applies to the city
manager and provides that the city manager holds office at the pleasure of the city council.
Accordingly, the charter creates an unequivocal at-will employment policy with regard to the
city manager.”).
In addition, the Board had authority only to engage a Director for the length of its own
term of office.
where the nature of an office or employment is such as to require a municipal
board or officer to exercise a supervisory control over the appointee or employee,
together with the power of removal, such employment or contract of employment
by the board, it has been held, is in the exercise of a governmental function, and
contracts relating thereto must not be extended beyond the life of the board.
[Johnson v Menominee, 173 Mich App 690, 694; 434 NW2d 211 (1988).]
The Board therefore affirmatively lacked the authority to bind successor Boards to the
employment agreement.
Reversed and remanded to the trial court to grant defendant’s motion for summary
disposition of the breach of contract claim and for consideration of plaintiff’s remaining claims.
We do not retain jurisdiction.
/s/ Jessica R. Cooper
/s/ Joel P. Hoekstra
/s/ Michael R. Smolenski
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