Colleen Bodnar v. St John Providence IncColleen Bodnar v. St John Providence Inc
SHAPIRO, J. (concurring in part and dissenting in part).
I respectfully dissent from the majority‘s decision to affirm summary disposition of plaintiffs’ breach of contract claim. I conclude that, under Cain v Allen Elec & Equip Co, 346 Mich 568; 78 NW2d 296 (1956), defendant St. John Providence, Inc.‘s policies amounted to an offer of severance pay that plaintiffs accepted by continuing to work at the hospitals. The scope of the disclaimer language and the meaning of the phrase “current pay rate” are ambiguous and therefore present questions of fact to be resolved by a jury.1 I also conclude that there are material question questions of fact as to plaintiffs’ promissory estoppel claim and that plaintiffs should be allowed to engage in discovery to determine whether defendant Ascension Health is a proper party to this action.2
I. BREACH OF CONTRACT
A. EXISTENCE OF CONTRACT
The basic elements of a contract are an offer, an acceptance, and consideration. Kirchhoff v Morris, 282 Mich 90, 95; 275 NW 778 (1937). Plaintiffs rely primarily on Cain, 346 Mich 568, in which the Supreme Court unanimously held that the plaintiff had a contractual right to severance pay as defined in the employer‘s written policy. In Cain, the plaintiff was an at-will employee. Id. at 570. The employer had a policy providing that an employee would be paid “separation pay.” Id. The policy also provided that an executive, as the plaintiff was, “having 5 to 10 years employment should be entitled to 2 months termination pay.” Id. at 571 (quotation marks omitted). In October, the plaintiff submitted his resignation effective December 15; the
The Supreme Court first acknowledged the benefits that employers derive from offering “dismissal compensation.” Id. at 574-576. The Court extensively quoted a treatise on that subject, which provided in part that “[p]ublic opinion, the needs of the employees and the desire for a permanent, loyal, and efficient working force have united in making dismissal compensation seem the proper course for a number of American companies.” Id. at 576, quoting Hawkins, Dismissal Compensation (1940), p 25. The Court also reviewed out-of-state caselaw holding that the offer of such compensation was binding on the employer.3 Id. at 576-579. After this review, the Cain Court first determined that the employer‘s severance pay policy constituted an offer:
We cannot agree that all we have here is a mere gratuity, to be given, or to be withheld, as whim or caprice might move the employer. An offer was made, not merely a hope or intention expressed. The words on their face looked to an agreement, an assent. The co-operation desired was to be mutual. Did the offer consist of a promise? “A promise is an expression of intention that the promisor will conduct himself in a specified way or bring about a specified result in the future, communicated in such manner to a promisee that he may justly expect performance and may reasonably rely thereon.” (Corbin on Contracts, § 13.) The essence of the announcement was precisely that the company would conduct itself in a certain way with the stated objective of achieving fairness, and we would be reluctant to hold under such circumstances that an employee might not reasonably rely on the expression made and conduct himself accordingly. [Id. at 579.]
“As for consideration,” the Court stated: “Suffice in this respect, upon the authority of a multitude of cases, to point out that not only were there rewards to the employee, but, in addition, substantial rewards to the employer, arising, in part, out of the accomplishment of ‘the daily work of the organization in a spirit of co-operation and friendliness.’ ” Id. at 579. The Court then concluded that the plaintiff had accepted the employer‘s offer by continuing his employment “beyond the five-year period specified” in the policy, id. at 580, qualifying him for an executive‘s severance pay. Id. at 571.
Cain is binding precedent that we must follow. Associated Builders & Contractors v Lansing, 499 Mich 177, 191; 880 NW2d 765, 772 (2016). And, as the majority acknowledges,
In ruling that plaintiffs’ contract claim fails as a matter of law, the majority focuses on the disclaimer language found in the “Staff Reduction in Force/Workforce Transition” policy (RIF Policy), which provides in full:
St. John Providence is an “at-will” employer. This means that no associate has a guarantee of employment for any definite duration of time. In addition, no associate is guaranteed that they will only be removed from employment if there is just cause for their removal. Any associate may be removed at any time and for any or no reason. As such, this policy provides guidelines only and does not constitute a contract of any type, or guarantee of continued employment in any position for any duration.
Cain was silent as to the presence of a provision disclaiming a legal right or claim under the policy.4 Regardless, the statement that the RIF Policy “does not constitute a contract of any type” must be read in context of the full text of the provision. See Auto Owners Ins Co v Seils, 310 Mich App 132, 148; 871 NW2d 530 (2015). It is clear that the import of this provision is to reiterate to St. John‘s employees that they may be terminated at will and that the RIF Policy is not creating a contract of just-cause employment. However, this is irrelevant because plaintiffs do not assert that the policies provided them with just-cause employment.
Further, I do not see why a disclaimer in the RIF Policy should be seen as controlling the “Severance Pay and Benefits for Staff (Non-Management) Associates” policy (Severance Pay Policy). While the RIF policy provides the general procedure to implement staff reduction and reassignment, the Severance Pay Policy, as one might imagine, pertains solely to eligibility for and computation of severance pay. The disclaimer language provides only that “this policy,” i.e., the RIF Policy, does not create an employment contract. Further, the primacy of the
To summarize, Cain broadly held that severance pay policies are contractually binding. Cain did not address the effect of policy language disclaiming the creation of an employment contract, but under the circumstances present here, I would decline to rule as a matter of law that defendant was not making a contractual offer to plaintiffs. Considering the ambiguous contract language, the benefit that the policies conferred upon St. John, and the fact that St. John never revoked the Severance Pay Policy, I would hold that there is a material question of fact for a jury regarding whether St. John made plaintiffs a contractual offer.
B. THE MEANING OF THE CONTRACT
The next issue is whether there is a question of fact about the meaning of the phrase “current pay rate.” It is undisputed that the policies do not define that phrase. In affidavits, St. John‘s HR manager and vice president stated that St. John considers only the “hourly pay rate,” in determining whether a comparable job offers an employee 80% of current pay rate. Plaintiffs argue, however, that other policy provisions show that when St. John wants to refers to an employee‘s hourly pay rate, it knows how to do so. For example, severance pay is calculated by “multiplying the associate‘s current base hourly rate x current standard weekly hours.” (Emphasis added). In addition, a chart in the Severance Pay Policy refers to “Weeks of Base Pay.” Given that, reasonable minds could conclude that an employee‘s “current pay rate” is distinct from, and broader than, an employee‘s base or hourly pay rate.
The majority concludes that “current pay rate” is unambiguous, reasoning in part that a “common understanding” of that phrase would not include benefits. I would not be so bold as to determine the meaning of that phrase as a matter of law given the different iterations found in the policy, as discussed above. However, I suspect that, when confronted with the circumstances faced by plaintiffs, reasonable people would consider more than hourly pay in determining the “pay rate” of the prospective employment. The majority also concludes that interpreting “current pay rate” to include all wages and benefits would lead to unreasonable computational issues. In an age of advanced analytics, I am skeptical that assigning a numerical value to an employee‘s total compensation is “virtually impossible.” In any event, whether such problems are real or fanciful, they are not grounds for summary disposition before an answer has even been filed and discovery conducted. “Generally, summary disposition under
II. PROMISSORY ESTOPPEL
The elements of promissory estoppel include: “(1) a promise, (2) that the promisor should reasonably have expected to induce action of a definite and substantial character on the part of the promisee, and (3) that in fact produced reliance or forbearance of that nature in circumstances such that the promise must be enforced if injustice is to be avoided.” Novak v Nationwide Mut Ins Co, 235 Mich App 675, 686-687; 599 NW2d 546 (1999). “[T]he sine qua non of the theory of promissory estoppel is that the promise be clear and definite. . . .” Derderian v Genesys Health Care Sys, 263 Mich App 364, 381; 689 NW2d 145 (2004). “In determining whether a requisite promise existed, we are to objectively examine the words and actions surrounding the transaction in question as well as the nature of the relationship between the parties and the circumstances surrounding their actions.” Novak, 235 Mich App at 687.
Under the doctrine of promissory estoppel, “[t]he existence and scope of the promise are questions of fact . . . .” State Bank of Standish v Curry, 442 Mich 76, 84; 500 NW2d 104 (1993). Similar to my analysis of plaintiffs’ contract claim, I would conclude that a reasonable jury could find that St. John‘s highly detailed policies governing payment of severance pay constituted a promise that was intended to induce action on behalf of the employees, i.e., to remain and seek comparable employment through St. John. The effect of the no-contract disclaimer language in the RIF Policy upon the Severance Pay Policy is a question of fact because (1) promissory estoppel assumes the absence of a contract; (2) a reasonable person could conclude that St. John was emphasizing that it was an at-will employer rather than disclaiming a promise to pay severance pay and benefits; and (3) a reasonable person could conclude that the RIF Policy disclaimer did not apply to the Severance Pay Policy. Thus, I would reverse the trial court‘s decision to grant summary of plaintiffs’ promissory estoppel claim.
III. ASCENSION
Lastly, I agree with plaintiffs that the trial court erred by dismissing Ascension on the ground that it was not a proper party to the action. If Ascension is merely St. John‘s parent company, then it should be dismissed from the case. However, given that no discovery has occurred, summary disposition on this disputed issue is premature. Marilyn Froling Revocable Living Trust, 283 Mich App at 292. Plaintiffs are entitled to conduct discovery on the nature of the corporate relationship after which the trial court could determine whether Ascension is a proper party. Therefore, I would reverse the trial court‘s grant of summary disposition to Ascension.
/s/ Douglas B. Shapiro