CHRISTOPHER SHELNUTT v. THE MAYOR AND ALDERMEN OF THE CITY OF SAVANNAH
333 Ga. App. 446
| Ga. Ct. App. | 2015Background
- 50 Savannah firefighters (plaintiffs) sued the City of Savannah and City Manager Stephanie Cutter claiming the City’s written Pay Policy created enforceable contractual rights to specified promotional pay increases that were not paid.
- The Pay Policy (revised multiple times since 1998) set automatic percentage increases on promotion (e.g., 5%, 7.5% for exempt supervisors, later 10%), and at times included a provision requiring a promoted supervisor be paid at least 5% above the highest paid subordinate (added 2005, removed 2009, reinserted 2013).
- The City and Cutter moved to dismiss / for judgment on the pleadings, relying on (a) Pay Policy language permitting the City Manager to make exceptions and (b) Handbook disclaimers stating the Handbook is informational and not a contract. The trial court treated the Pay Policy and Handbook as a single document and granted dismissal.
- On appeal, the Court of Appeals reviewed de novo, treated well-pled facts as true, and concluded the Pay Policy and Handbook must be analyzed separately because earlier Handbooks did not incorporate the Pay Policy.
- The Court held the Pay Policy’s mandatory phrasing ("shall receive"/"will receive") could create enforceable compensation promises for at-will employees upon promotion, and that the City Manager’s authority to make "exceptions" when "necessary" required good-faith exercise of discretion rather than unfettered discretion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Pay Policy and Handbook combine such that Handbook disclaimers bar contract claims | Pay Policy (as written and used) created enforceable pay promises; Handbooks did not incorporate Pay Policy pre-2014 | Handbook’s broad disclaimer (informational only; policies can be changed) negates contractual effect | Pay Policy and Handbook are separate pre-2014; Handbook disclaimers do not automatically negate Pay Policy promises |
| Whether Pay Policy can create contractual rights to promotion pay for at-will employees | Pay Policy sets definite percentage increases at promotion, made at or near start of employment terms, thus enforceable for earned compensation | Salary/pay policies cannot create enforceable contracts for basic wages; Tackett and similar precedent limit enforceability | Pay Policy language could give rise to contractual claims for earned compensation on promotion; dismissal premature |
| Whether City Manager’s exception clause renders Pay Policy nonbinding | Pay Policy’s mandatory language creates entitlement; exception clause is limited | Exception clause grants City Manager discretion to ignore policy, making it nonbinding | Exception clause permits exceptions when "necessary"; requires good-faith exercise, not unfettered discretion; factual inquiry needed |
| Whether dismissal/judgment on pleadings was appropriate | Complaint alleges promotions occurred and raises were withheld, plus biased discretion; facts sufficient to proceed | Policy language and disclaimers show no enforceable contract as a matter of law | Dismissal was improper; factual issues (e.g., good faith, whether conditions met) preclude judgment on pleadings |
Key Cases Cited
- Pryce v. Rhodes, 316 Ga. App. 523 (standard of review for judgment on the pleadings)
- Austin v. Clark, 294 Ga. 773 (motion to dismiss standard: complaint must show claimant cannot succeed under any provable facts)
- Tackett v. Georgia Dept. of Corrections, 304 Ga. App. 310 (distinguishing permissive personnel policies from enforceable compensation promises)
- Arby’s, Inc. v. Cooper, 265 Ga. 240 (promise of future compensation to at-will employee must be definite to be enforceable)
- Walker Elec. Co. v. Byrd, 281 Ga. App. 190 (at-will employment can still create enforceable rights to compensation earned under contract)
- Rigby v. Boatright, 330 Ga. App. 181 (decisions left to one party’s discretion must be exercised in good faith)
- Goddard v. City of Albany, 285 Ga. 882 (absence of definite term indicates at-will employment)