Simpson v. City of Topeka

No. 114,484
IN THE COURT OF APPEALS OF THE STATE OF KANSAS
TERI SIMPSON; WILLIAM RIPHAHN; DAVID SPECHT; CLAY NEAL;
LYNN BISHOP; BRUCE ANDREWS; ROGER WILCOX;
JOHN BELL; KATHY HUSEMAN; and GENA BROOKS,
Appellants/Cross-appellees,
v.
CITY OF TOPEKA,
Appellee/Cross-appellant.
SYLLABUS BY THE COURT
1.
Summary judgment is appropriate when the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, show that there is no
genuine issue as to any material fact and that the moving party is entitled to judgment as
a matter of law. In order to preclude summary judgment, the facts subject to the dispute
must be material to the conclusive issues in the case. On appeal, the appellate court
reviews the matter independently, without any required deference to the district court.
2.
An appellate court exercises unlimited review over the interpretation and effect of
written instruments, and it is not bound by the lower court's interpretation over those
instruments.
3.
A court's goal when interpreting a contract is to ascertain the parties' intent. If the
terms of the contract are clear, the intent of the parties may be ascertained from the
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language of the contract without applying rules of construction. A contract should be
construed while considering the entire document and without isolating particular
sentences or provisions. Courts should also avoid results that vitiate the purpose of a
contract's terms to an absurdity, and reasonable interpretations are favored. Whether a
written instrument is ambiguous is a question of law subject to de novo review.
4.
While the question of whether a party has defaulted on a contractual obligation is
typically one of fact, if the relevant circumstances before the district court are undisputed,
then fact questions may be resolved by the appellate court de novo.
5.
Under the facts of the present case, where the purpose of the City's severance pay
policy is to provide temporary relief to employees who have lost their jobs through no
fault of their own under scenarios where the employee's job or work has been
permanently eliminated, the fact that the Plaintiffs all transferred to the County in
comparable jobs with comparable benefits without any loss of employment did not
constitute a permanent reduction in force or layoff due to work or job elimination under
the City's severance pay policy, a necessary precondition to their receipt of severance
pay.
Appeal from Shawnee District Court; REBECCA W. CROTTY, judge. Opinion filed October 14,
2016. Affirmed.
Justin W. Whitney and Grant M. Glenn, of Woner, Glenn, Reeder & Girard, P.A., of Topeka, for
appellants/cross-appellees.
Shelly Starr, chief of litigation, City of Topeka, for appellee/cross-appellant.
Before POWELL, P.J., PIERRON and ATCHESON, JJ.
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POWELL, J.: The Plaintiffs are former City of Topeka (City) employees who
worked in the City's Parks and Recreation Department before it was consolidated with the
Shawnee County (County) Parks and Recreation Department and whose employment was
transferred from the City to the County with no lost work time and no days unemployed.
They later sued the City, seeking severance pay and damages pursuant to three theories of
relief: breach of contract, negligent misrepresentation, and unpaid earned wages under
the Kansas Wage Payment Act (KWPA), K.S.A. 44-313 et seq. The district court granted
the City summary judgment on the negligent misrepresentation claim but denied the
parties' cross-motions for summary judgment on the other two theories of recovery. After
a bench trial, the district court entered judgment in the City's favor on the Plaintiffs'
remaining two claims.
The Plaintiffs now appeal, raising numerous points of error while the City cross-
appeals, claiming, among other things, that the district court erred in not granting it
summary judgment. Because we agree that the City was not required to pay severance to
the Plaintiffs whose jobs were transferred to the County with comparable work conditions
and benefits without any loss of work, we affirm the judgment of the district court.
FACTUAL AND PROCEDURAL BACKGROUND
The material and salient facts are not in dispute. In August 2011, the City and
County decided to consolidate their parks and recreation departments effective January 1,
2012. In effecting the consolidation, the City and the County executed three contracts:
City of Topeka Contract Nos. 41460, 41525, and 41666 (the consolidation contracts).
Section 3 of Contract No. 41460, which was later amended by Contract No. 41666,
provided in part that City employees had the option of becoming County employees on
January 1, 2012. Under the consolidation contracts, transferring City employees could not
suffer a reduction in salary or wages, be dismissed from employment, or suffer a
reduction in regular working hours for a period of 6 months. Moreover, City employees
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(1) were still eligible to receive severance pay if the County fired them within 3 years of
January 1, 2012; (2) could elect to transfer up to 300 hours of accrued, unused vacation
leave to the County or have their unused vacation leave paid out in a lump sum; and (3)
could transfer a maximum of 1,040 hours of accrued, unused sick leave.
Each of the Plaintiffs had been employed in the City's parks and recreation
department. Many of them had worked for the City for a number of years, and all were
management level employees not covered by the City's collective bargaining agreement.
Before the consolidation, the terms and conditions of the Plaintiffs' employment with the
City were governed by the Personnel Code of the City of Topeka (Personnel Code). The
Personnel Code was adopted by city ordinance and is amendable by the Topeka City
Council.
Article VIII of the Personnel Code pertains to nondisciplinary reductions in force.
Section 2 of that article covers permanent reductions in force and severance pay and
states that the purpose of severance pay "is to provide temporary relief to employees who
have lost their job through no fault of their own," including events such as being
separated due to not being recalled from a layoff, waiving a right to recall from a layoff,
the employee's work is eliminated or reassigned, or the qualifications for the employee's
position change. Under Section 2, an employee is eligible to receive severance pay only if
the employee's position has been eliminated and the employee has waived the right to be
recalled, the employee has been employed by the City for over 1 year, the employee is
not continuing to work for the City in an equal or greater job position, and the employee
has executed an agreement and complete release of all claims against the City. The
section also provides that an employee entitled to severance pay is to receive roughly 1
week of pay for every year worked, unless the employee has worked over 10 years with
the City, then the employee is entitled to 2 weeks of pay for every year worked. In no
instance is an employee's severance pay to be over 1 year's salary.
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Before the consolidation took effect, the City's director of human resources
sent a letter to the City employees impacted by the consolidation, including the
Plaintiffs. The letter, dated November 10, 2011, stated in part:
"As a result of the consolidation you have the opportunity to transfer employment to
Shawnee County employment within the consolidated Shawnee County Parks and
Recreation Department. You have received information from Shawnee County regarding
your position assignment should you elect to transfer to county employment. As part of
this consolidation you have the opportunity to transfer employment to Shawnee County
and as such the provisions [of] the City of Topeka Personnel Code, Article VIII, Non-
disciplinary Reductions in Force [are] not applicable. If you elect not to transfer
employment to Shawnee County, you will have the option to retire from City of Topeka
employment if you meet the eligibility requirements under the KPERS retirement system
for full or reduced retirement benefits. If you elect not to transfer to Shawnee County
Employment and are not eligible for retirement or chose not to retire under the KPERS
retirement system, you will be considered to have voluntarily resigned your employment
with the City of Topeka effective December 31, 2011."
The City did not offer to put the Plaintiffs on a reemployment eligibility or recall
list. The Plaintiffs did not fill out County job applications nor did they interview for
County positions. Each of the Plaintiffs submitted all the paperwork that the City
required. On December 31, 2011, the Plaintiffs' employment with the City ended, and the
next day they became County employees. At present, four of the Plaintiffs no longer
work for the County: three retired in 2012, and one voluntarily left for another position
in 2013. The remaining Plaintiffs continue to work for the Shawnee County Parks and
Recreation Department.
In 2012, the Plaintiffs filed suit against the City for lost severance pay under the
theories of breach of contract, negligent misrepresentation, and unpaid wages under
KWPA. The City filed an answer admitting the Plaintiffs had not been paid severance but
otherwise denying the allegations. After the Plaintiffs sought summary judgment on their
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breach of contract and KWPA claims, the City moved for summary judgment on all of
Plaintiff's theories.
Highly summarized, the district court granted the City summary judgment on
Plaintiffs' negligent misrepresentation claim on the grounds that the letter from the City's
director of human resources to affected employees contained at most incorrect
interpretations of the Personnel Code but no material misstatements of fact. The district
court rejected the parties' cross-motions for summary judgment on the breach of contract
and KWPA claims. While the district court found that the parties did not dispute that the
Personnel Code constituted a contract, it found that the consolidation contracts between
the City and County amended the Personnel Code creating a contract clause problem by
impairing the existing contract between the City and its affected employees. In light of
this, the district court ultimately concluded that summary judgment under the breach of
contract claim was inappropriate because the balance of benefits and detriments
occurring by the virtue of the consolidation contracts created a genuine issue of material
fact. In addition, while the district court agreed with the Plaintiffs that they had been
"discharged" within the meaning of KWPA and that severance pay constituted "wages"
under KWPA, it concluded that there were disputed questions of material fact as to
whether the benefits of continued employment offset the consolidation contracts' attempt
to disqualify transferring employees from severance pay eligibility and the other
detriments allegedly suffered by the Plaintiffs. The matter was set for trial.
The bench trial occurred over the course of 3 days. Several witnesses testified,
including each individual plaintiff. Following the trial, both parties submitted posttrial
briefs with proposed findings of fact and conclusions of law. The district court issued its
ruling in a memorandum decision filed August 7, 2015. The court began by addressing
the Plaintiffs' KWPA violation claim and noting that it had already determined that
severance pay may be wages under KWPA. Thus, according to the district court, the only
remaining question was whether the wages had been earned. The district court also found
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that the consolidation contracts modified the Personnel Code so that the Plaintiffs could
not be considered terminated under Article VIII. It concluded that severance pay was
contingent on a triggering condition that would have materialized but for the
consolidation contracts. In other words, the Plaintiffs had to fulfill the condition
precedent of losing their jobs before they could collect severance pay.
The district court next considered whether the consolidation contracts violated the
Contracts Clause of the United States Constitution, beginning with determining whether
the Plaintiffs' jobs with the County were comparable with their previous jobs with the
City. It concluded that while there were various changes in the Plaintiffs' jobs, the
changes did not represent substantial or material changes. The district court also briefly
discussed the public policy considerations related to modification. After a lengthy
discussion of the issue, the district court stated its findings:
"(1) Defendant has successfully demonstrated the existence of numerous benefits under
the Consolidation contracts; not only were the Plaintiffs able to continue with
uninterrupted employment, but they maintained their benefits such as health insurance,
KPERS and accrued vacation and sick time, (2) the Plaintiffs have failed to prove that the
loss of the right to severance pay outweighed the benefits received in the Consolidation
contracts, (3) rendering the Consolidation contracts—and their modification of the
Code—constitutional under the Contract Clause and, thus, (4) necessitating the entry of
judgment against the Plaintiffs on their claims for breach of contract and wages under the
KWPA, for the reasons enumerated in the Memorandum Decision and Order from July
18, 2014 on pages 26, 35-36."
The district court also stated that it had the authority to determine that the case should be
tried to the court instead of a jury because of the equitable nature of the case with the
central issue involving the constitutionality of the consolidation contracts.
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The Plaintiffs timely appeal the district court's adverse judgment, raising
numerous points of error which can be distilled down to four claims that the district court
erred (1) by finding that the Plaintiffs had not earned their severance pay; (2) by finding
that the City had not breached the Personnel Code in failing to pay the Plaintiffs
severance pay; (3) by denying the Plaintiffs their right to a jury trial on their claims; and
(4) by not considering the evidence surrounding the City's negotiations with the union
representing employees affected by the consolidation. The City cross-appeals, contending
the district court erred by (1) finding that the consolidation contracts modified the
Personnel Code and impacted the Plaintiffs' right to severance pay; (2) finding that the
Plaintiffs' transfer from the City parks and recreation department to the County parks and
recreation department constituted an elimination of their positions by the City; and (3)
not granting the City's motion for summary judgment.
DID THE CITY BREACH ITS CONTRACTUAL OBLIGATION
BY FAILING TO PAY THE PLAINTIFFS SEVERANCE PAY?
The Plaintiffs' principal claim in this litigation is that the City breached its
contractual obligations under the Personnel Code by failing to pay severance pay once
the Plaintiffs transferred to the County. The City disputed this point on the grounds that
because the Plaintiffs' employment had transferred to the County, no severance pay was
owed. Both parties moved for summary judgment in their favor, which the district court
denied. The City now cross-appeals the district court's denial while the Plaintiffs do not.
Because answering this question will likely be dispositive of the other issues on appeal,
we consider it first.
Standard of Review
The standards for summary judgment are well known.
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"'"Summary judgment is appropriate when the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, show that there is no
genuine issue as to any material fact and that the moving party is entitled to judgment as
a matter of law. . . . In order to preclude summary judgment, the facts subject to the
dispute must be material to the conclusive issues in the case."' [Citations omitted.]"
Stanley Bank v. Parish, 298 Kan. 755, 759, 317 P.3d 750 (2014).
"On appeal, we review the matter independently, without any required deference to the
district court." Smith v. Kansas Orthopaedic Center, 49 Kan. App. 2d 812, 815, 316 P.3d
790 (2013).
Both parties agree that the Personnel Code constitutes the contract which governs
the question over whether the Plaintiffs are entitled to severance pay. In considering this
question, we exercise unlimited review over the interpretation and effect of written
instruments, and we are not bound by the lower court's interpretation over those
instruments. Prairie Land Elec. Co-op v. Kansas Elec. Power Co-op, 299 Kan. 360, 366,
323 P.3d 1270 (2014).
Our goal when interpreting contracts "is to ascertain the parties' intent. If the terms
of the contract are clear, the intent of the parties may be ascertained from the language of
the contract without applying rules of construction." Anderson v. Dillard's, Inc., 283 Kan.
432, 436, 153 P.3d 550 (2007). A contract should be construed while considering the
entire document and without isolating particular sentences or provisions. See Waste
Connections of Kansas, Inc. v. Ritchie Corp., 296 Kan. 943, 963, 298 P.3d 250 (2013).
Courts should also avoid results that vitiate the purpose of a contract's terms to an
absurdity, and reasonable interpretations are favored. 296 Kan. at 963. Whether a written
instrument is ambiguous is a question of law subject to de novo review. 296 Kan. at 964.
While the question of whether a party has defaulted on a contractual obligation is
typically one of fact, 296 Kan. at 964, if the relevant circumstances before the district
9
court are undisputed, fact questions may be resolved by the appellate court de novo. See
First Nat'l Bank of Omaha v. Centennial Park, 48 Kan. App. 2d 714, 725, 303 P.3d 705
(2013) (where relevant circumstances undisputed, appellate court may determine if party
substantially performed under contract); see also Micheaux v. Amalgamated Meatcutters
& Butcher Workmen, 231 Kan. 791, 796, 648 P.2d 722 (1982) (where facts undisputed,
question of whether employees of local union were terminated when parent union
assumed its operations by appointment of receiver is question of law).
Consolidation contracts did not amend the Personnel Code
Before we can answer the question of whether the Plaintiffs are owed severance
pay under the Personnel Code, we must first determine whether the severance pay
provisions of the Personnel Code were amended by the consolidation contracts. The
Plaintiffs argued before the district court, and reprise those arguments before us, that the
consolidation contracts amended the Personnel Code to their detriment in violation of the
Contract Clause of the United States Constitution. See Dennis v. Higgins, 498 U.S. 439,
457, 111 S. Ct. 865, 112 L. Ed. 2d 969 (1991) (Kennedy, J., dissenting) ("The Contracts
Clause of Art. I, § 10, provides that '[n]o State shall . . . pass any . . . Law impairing the
Obligation of Contracts.'"). The City, on the other hand, argues that the consolidation
contracts did not amend the Personnel Code. The district court became bogged down on
this question, holding that because the consolidation contracts made the transfer of City
employees to the County possible as part of the consolidation of both departments and
because the Plaintiffs had vested rights to severance pay at the time the consolidation
contracts were entered into, the consolidation contracts impacted the Plaintiffs' right to
severance pay, necessitating a comparison of the relative benefits of consolidation with
the detriment of losing severance pay.
Article VIII of the Personnel Code sets forth the City's policies concerning
permanent reductions in force and severance pay:
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"A. General. The purpose of the severance pay policy is to provide temporary relief
to employees who have lost their job through no fault of their own. Such
separation occurs for reasons such as, but not limited to, the following:
1. An employee is not recalled from lay off within the time limit set forth in
Section 1 C1;
2. An employee voluntarily waives the right to recall, as described in
Section 1 C2b;
3. Work is eliminated and is not anticipated to be necessary in the
foreseeable future;
4. Work is reassigned to other employees; or
5. The qualifications for a position change.
....
"C. Severance Pay.
1. Eligibility. Severance pay set forth herein is available only to employees
who meet all of the following eligibility requirements:
a. Employee's position has been eliminated pursuant to the
provisions of this Article, Section 1 or 2, and the employee has waived
the right to recall from the reemployment eligibility list;
b. Employee has been employed with the City for one or more
continuous years;
c. Employee is not continuing to work for the City in a position of
equal or greater job classification; and
d. Employee has executed an agreement and complete release of all
claims against the City.
Consolidation Contract No. 41460, as amended by Contract No. 41666, states in relevant
part:
"1. GENERAL. All operations, functions, and programs of the City of Topeka
Parks and Recreation Department and Cypress Ridge Golf Course (formerly known as
Topeka Public Golf Course) shall be consolidated with the Shawnee County Parks and
Recreation Department, under the direction and control of the County to be named and
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referred to as the Shawnee County Parks and Recreation Department, effective January 1,
2012. . . .
....
"3. PERSONNEL.
....
b. All City Parks and Recreation employees excluding the Forestry
Division and Zoo employees, will have the option to become employees of the
County on January 1, 2012, and if they choose to do so, will be protected by the
personnel policies and procedures of the County.
c. For purposes of this Agreement, a transferred or transferring employee is
defined as an employee described in paragraph 3.b above who (i) leaves
employment with the City of Topeka effective December 31, 2011, and joins
employment with the County effective January 1, 2012; and (ii) does not exercise
any rights which may be available to the employee under Article 8 of City of
Topeka Contract #39722 and/or City Personnel Code, except the Article 8 rights
of AFT bargaining unit employees agreed upon between the City and AFT as set
forth within the attached 'Agreement Regarding Article 8 Rights.'
d. Except as provided herein, no transferred City Parks and Recreation
employees will receive a reduction in salary or wages, be dismissed from
employment or receive a reduction in regular working hours other than pursuant
to a legitimate disciplinary reason for at least six (6) months after January 1,
2012. Reductions shall thereafter occur only pursuant to County Personnel Rules
and Regulations and any applicable civil service or union contract.
e. Any transferred City Parks and Recreation Department employee who is
not retained by the County for three (3) years after January 1, 2012, and who
loses their employment as a direct result of this consolidation, shall be entitled to
severance pay as provided by the City personnel policies. Any severance
payments made to such employee shall be the financial responsibility of the
County."
Our review of these provisions reveals no amendment to the Personnel Code.
While the consolidation contracts define a "transferred" or "transferring" City employee
as one who left employment with the City effective at the end of 2011, began work with
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the County the next day, and did not exercise the right to severance pay, according to our
review of the record, the Plaintiffs all transferred to the County, received the benefits
under the consolidation contracts enjoyed by "transferred" employees, and did not sign
any forms waiving their claims for severance pay. In fact, nothing in the language of the
consolidation contracts, in the election forms employees filled out, or in actual practice
conditioned a City employee's transfer to the County upon such employee's waiver of
severance pay. Accordingly, we agree with the City and hold there was no amendment to
the Personnel Code.
The Plaintiffs are not entitled to severance pay under the Personnel Code
Turning now to the main issue, the City contends that the Plaintiffs are not entitled
to severance pay, pointing to both the policy behind severance pay and the language in
the Personnel Code. The City submits that since the purpose of severance pay is to
provide temporary relief to those employees who have lost their jobs through no fault of
their own, the terms "loss of job," "elimination of work," and "position elimination" do
not apply to this situation because all affected employees were given the opportunity to
transfer to comparable jobs and none of the Plaintiffs suffered any loss of work.
Conversely, the Plaintiffs argue that because they left their employment with the City
without any recall rights through no fault of their own they are entitled to severance pay.
They bolster their argument by pointing out that the Personnel Code does not reduce
severance pay in the event a laid-off employee becomes immediately employed
elsewhere.
To aid us in our task of faithfully interpreting the provisions of the Personnel Code
under the facts presented, we researched prior caselaw from our appellate courts for
assistance. We found only two cases that have some factual similarity to ours, but they
are of limited value. First, in Micheaux, 231 Kan. 791, a labor union local was taken over
by its parent union due to a plant closing that affected most of its members. The parent
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union appointed a receiver to control the operations and employees of the local union.
Two employees of the local union continued as employees under the supervision of the
receiver but eventually left their employment and subsequently filed wage claims, with
one of the employees seeking severance pay. Our Supreme Court framed the question as
whether the employees had been terminated as employees of the local, for if so, they
were entitled to their claims. The court held that since the parent union took over the
local pursuant to its constitution and by-laws, operated that local by a receiver, and the
employees continued to work under the receiver for the same wages and benefits, there
was no termination of their employment and the employees were not entitled to their
claims, which included severance pay. Micheaux, 231 Kan. at 796-97.
Second, a panel of our court appeared to adopt the opposite conclusion under a
different set of facts in A.O. Smith v. Kansas Dept. of Human Resources, 36 Kan. App. 2d
530, 144 P.3d 760 (2005), rev. denied 281 Kan. 1377 (2006). There, the company sold its
plant and negotiated with the successor the retention of nearly all the plant's employees at
the same jobs, for the same rates of pay, and for nearly identical benefits. Employees
sued for unpaid vacation pay under KWPA. The panel held that under these
circumstances the employees were "'discharged'" under K.S.A. 44-315 and they were
owed their vacation pay. 36 Kan. App. 2d at 536-39. Most significantly, the panel
distinguished a line of federal cases cited by the employer, which we discuss below,
recognized the difference between severance pay provisions and wage payment
statutes—noting that severance pay, unlike vacation pay, typically served to protect
employees from the economic hardship of joblessness and to reward past service—and
determined that the severance pay policies at issue in the cases cited by the employer
provided that severance pay was only due in the event of a permanent job loss. 36 Kan.
App. 2d at 536-38.
More helpful are numerous federal court decisions that have considered the
propriety of severance pay under similar factual scenarios, often in the context of ERISA
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litigation, with some courts reasoning that severance pay was not owed and others taking
the opposite view. In Awbrey v. Pennzoil Co., 961 F.2d 928, 931 (10th Cir. 1992), a case
most factually similar to ours, the Tenth Circuit Court of Appeals rejected claims for
severance pay by employees who transferred to the successor company. There, Pennzoil
operated a potash mine and sold the mine to another company. The new owner continued
operations without interruption, and the employees went to work for the buyer in the
same positions and salaries with comparable benefits and no loss of work. Pennzoil's
severance policy allowed for severance pay if the employee's job had been eliminated.
Making arguments similar to the ones before us, the employees argued they were entitled
to severance pay because their employment had been terminated. The company asserted
that no severance pay was due because no permanent jobs had been eliminated and the
employees were offered comparable jobs. The Tenth Circuit agreed with the company,
holding that no severance pay was due as there was no requirement that comparable
employment had to be with the same company, that comparable employment did not
mean identical employment, and none of the employees suffered any loss of income or
missed any work. 961 F.2d at 931; see also Garvin v. American Tel. & Tel. Co., 174 F.3d
1087, 1095-96 (10th Cir. 1999) (employees not laid off due to lack of work as they
continued working for successor); Headrick v. Rockwell Intern. Corp., 24 F.3d 1272,
1276 (10th Cir. 1994) (Although employees under the company's policy were entitled to
severance pay when they were "'laid off for lack of work,' . . . when an employee retains
his job despite a transfer, he has not suffered for 'lack of work.'").
Other federal circuits in cases with similar fact patterns have also rejected
severance pay claims by affected employees. See, e.g., Allen v. Adage, Inc., 967 F.2d
695, 700 (1st Cir. 1992) (reduction in force does not include instance where employees
continually employed by successor doing roughly comparable work for roughly
comparable pay); Bradwell v. GAF Corp., 954 F.2d 798, 800 (2d Cir. 1992) (no
severance where employee kept in same job despite change in ownership because no lack
of work and no permanent lay off); Harper v. R.H. Macy & Co., 920 F.2d 544, 545 (8th
15
Cir. 1990) ("The plan's language does not permit an interpretation that employees who
continue to work without interruption on comparable terms for the purchaser of their
employer's business have been 'permanently terminated' by the sale."); Rowe v. Allied
Chemical Hourly Employees' Pension Plan, 915 F.2d 266, 269 (6th Cir. 1990) (plaintiff's
separation from Allied and immediate employment with Armco upon sale of plant did not
constitute layoff); Sejman v. Warner-Lambert Co., Inc., 889 F.2d 1346, 1347 (4th Cir.
1989) (employees not entitled to severance pay due those terminated as a result of job
elimination where employees transferred to successor company instead), cert. denied 498
U.S. 810 (1990).
Three rationales underlie the reasoning in most, if not all, of these cases. First, and
most importantly, the courts in these cases construed the plain language of the various
severance plans at issue which provided for severance pay in the event of a layoff due to
a lack of work or job elimination as not encompassing a job transfer to a successor
employer with comparable duties, wages, and benefits and where the employee suffered
no lack of work. Headrick, 24 F.3d at 1276. As perhaps best stated by the First Circuit
Court of Appeals in Allen, 967 F.2d at 700:
"Whatever the exact ramifications of the highly nuanced phrase 'reduction-in-force,' that
term would rarely be thought to cover, for severance pay purposes, the selling of a
division to another company under circumstances in which the work force is kept solidly
in place by the purchaser, doing roughly comparable work for roughly comparable
wages."
See also Garvin, 174 F.3d at 1095 (plain language of termination allowance provision
prohibits employee recovery where employee retains job despite a transfer); see, e.g.,
Bradwell, 954 F.2d at 800 (plain language of severance policy does not entitle employees
to severance pay for being "'permanently laid off because of lack of work'" because
employees kept in existing job by new owner); Harper, 920 F.2d at 545 (severance policy
"does not permit an interpretation that employees who continue to work without
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interruption on comparable terms for the purchaser of their employer's business have
been 'permanently terminated' by the sale"); Rowe, 915 F.2d at 269 (under de novo
review of employer plan separation from company and immediate reemployment by
successor did not constitute layoff).
Second, the primary intention behind severance pay is "to help former employees
minimize the privations of temporary unemployment while they seek new work."
Headrick, 24 F.3d at 1276. The Second Circuit Court of Appeals emphasized this point in
Bradwell, 954 F.2d at 800:
"The allowance of severance pay even if an employee takes another job does not
alter the basic eligibility requirement. Employees kept on by a plant owner's successor
are in a different position from those who are laid off but find alternate employment. The
former are not faced with the same risk of unemployment as are those who are
permanently laid off because of lack of work. The [Severance Pay] Policy provision
ensures that those laid off will not be discouraged from seeking alternative employment;
it does not place [the employees] in the same position as laid off employees who may or
may not find other jobs."
See also Garvin, 174 F.3d at 1097 ("[W]hile an employee who is 'laid off' due to lack of
work but is fortunate enough to find a fully equivalent job on his own . . . is entitled to
benefits, an employee who is simply transferred from one owner to another without any
of the concomitant risks of unemployment or changes in job duties and benefits is not.").
Third, awarding severance pay to employees who merely transferred from one
owner to another with no job loss or lost work time amounts to a windfall and a
disincentive for employers to provide severance pay at all. In Headrick, 24 F.3d at 1276-
77, the Tenth Circuit ridiculed the idea that employees who retained work in the new
company would be entitled to severance pay: "[R]ather than softening the blow of a
period of unemployment, it would only serve to provide [the employees] a happy period
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of double income." The same court noted in Awbrey, 961 F.2d at 932 (quoting Schwartz
v. Newsweek, Inc., 827 F.2d 879, 883 [2d Cir. 1987]): "'[A] recovery by [employees] in
these circumstances would reduce the incentives for employers to attempt to secure
positions for employees with the purchaser of a division when those employees might
well prefer such employment over a relatively small amount of severance pay.'" The First
Circuit stated in Allen, 967 F.2d at 702:
"It is surpassingly difficult to fathom why an employer would provide a trouvaille for
employees who, when separated from its service, are simultaneously transferred en
masse, by prearrangement, to another employer's payroll, without any temporal hiatus or
significant diminution of earnings or benefits. [Citations omitted]. We think it beggars
credulity to impute such altruistic beneficence to an employer without some clear
indication to that effect in the plan documents."
See also Bradwell, 954 F.2d at 801 ("[I]n the context of the sale of a business where the
buyer retains the former owner's employees, it would give a windfall to award severance
pay to employees who never changed their jobs and were never out of work."); Sejman,
889 F.2d at 1349 (overly generous severance pay policies "discourage employers . . .
from seeking to ensure that their former employees retain their old positions or encourage
such employers to forego severance payments altogether").
Those federal courts taking the opposite view largely agree with the Plaintiffs'
position and emphasize that there are no hard and fast rules governing severance pay as
each case turns on the specific provisions of an employer's severance policy. Moreover,
they reject the view that a period of unemployment is required to receive severance pay if
not so conditioned in the employer's severance pay policy as an employer has the ability
to write the policy to include such a requirement, plus an employer should be held to the
strict terms of its policy. They also hold that termination by its plain terms means
cessation of employment from the original employer. See, e.g., Anstett v. Eagle-Picher
Industries, Inc., 203 F.3d 501, 504-06 (7th Cir. 2000) (employees employed by successor
18
after sale entitled to severance pay despite no loss of employment because policy not
conditioned upon period of unemployment); Bellino v. Schlumberger Technologies, Inc.,
944 F.2d 26, 31 (1st Cir. 1991) (where severance policy not conditioned upon period of
unemployment, transferring employees entitled to severance pay); Ulmer v. Harsco
Corp., 884 F.2d 98, 102-03 (3d Cir. 1989) (continuing employment means working for
original company not successor); Harris v. Pullman Standard, Inc., 809 F.2d 1495, 1498
(11th Cir. 1987) (termination of employment means not working for original company);
Blau v. Del Monte Corp., 748 F.2d 1348, 1354-55 (9th Cir. 1984) (employees who went
to work for successor corporation entitled to severance pay as termination of employment
under policy means termination of employment with original company).
While we agree that there are no hard and fast rules governing severance pay,
those courts rejecting severance pay under similar circumstances have the better
arguments as they more faithfully follow the severance pay provisions in the Personnel
Code. Our reading of the Personnel Code compels us to deny severance pay to the
Plaintiffs under the circumstances presented here. They were transferred to the County in
comparable jobs with comparable pay and benefits and with no loss of work. Article VIII
of the Personnel Code stresses that the purpose of severance pay "is to provide temporary
relief to employees who have lost their job through no fault of their own" under scenarios
where the employee's job or work has been permanently eliminated. In our view, the
severance pay policy envisions a period of unemployment or at least the risk of a period
of unemployment. In addition, we construe the term "temporary relief" to mean relief
from both the economic and emotional stress that comes with a possible period of
unemployment. None of the Plaintiffs suffered a period of unemployment or the
possibility of such a period of unemployment as the City ensured they would have
comparable positions with the County after consolidation.
Moreover, the Personnel Code conditions severance pay in the event of a
permanent reduction in force or layoff where the employee's position or job is
19
permanently eliminated. Given the fact that the Plaintiffs all transferred to the County in
comparable jobs with comparable benefits without any loss of employment, we cannot
say that the Plaintiffs lost their jobs or that their work or jobs were permanently
eliminated, a necessary precondition to the receipt of severance pay as provided in the
Personnel Code. The City negotiated a transfer of their positions to the County, and the
Plaintiffs were not required to apply for work at the County. To award severance pay in
this instance would amount to a windfall to the Plaintiffs at the expense of taxpayers and
would serve to punish instead of rewarding the City's efforts at ensuring its employees
were allowed to transfer to the County. Therefore, the City was entitled to summary
judgment on the Plaintiffs' claims for breach of the Personnel Code.
As for the Plaintiffs' other causes of action, because we hold that their claims for
severance pay are without merit, their negligent misrepresentation claim cannot survive
given that no damages can be established. See Stechschulte v. Jennings, 297 Kan. 2, 22,
298 P.3d 1083 (2013) (elements of negligent misrepresentation claim include damages).
The same is true for their KWPA claims. Even if severance pay could be considered
wages pursuant to KWPA under these facts, the Plaintiffs' claims for severance pay under
KWPA fail because they did not meet the necessary preconditions required under the
Personnel Code. See Morton Bldgs., Inc. v. Department of Human Resources, 10 Kan.
App. 2d 197, 199-200, 695 P.2d 450 (conditions precedent to receipt of fringe benefit
provided by employer's policies must be met before one may make successful claim for
wages), rev. denied 237 Kan. 887 (1985). As for the Plaintiffs' claims for a jury trial, as
our earlier discussion of our standard of review suggests, the grant of summary judgment
to the City eliminates the notion that any disputed material facts need to be decided by a
jury. Also implicit in our decision is that any evidence concerning the City's negotiations
with the union representing the affected employees is irrelevant because there are
sufficient uncontroverted material facts in the record to support our determination that the
City did not breach the Personnel Code when it denied the Plaintiffs severance pay. See
generally Kansas Turnpike Authority v. Wheeler, 243 Kan. 602, 614, 760 P.2d 1213
20
(1988) (where court relied only upon language of trust agreement to grant summary
judgment, it properly did not consider extrinsic evidence); American Ramp Co. v. City of
Leavenworth, No. 105,630, 2012 WL 1352833, at *8 (Kan. App. 2012) (district court did
not abuse discretion by denying discovery of other facts sought by losing party and
properly granted summary judgment as controlling facts necessary for summary
judgment were uncontroverted), rev. denied 297 Kan. 1243 (2013).
Accordingly, we affirm the judgment of the district court denying the Plaintiffs'
claims for severance pay, albeit under reasons which differ from those of the district
court. See State v. Bryant, 272 Kan. 1204, 1210, 38 P.3d 661 (2002) ("[T]he trial court
will not be reversed if it is right, albeit for the wrong reason."); Micheaux, 231 Kan. at
798 ("If the district court's decision was correct for any reason, it must be affirmed.").
Affirmed.
***
ATCHESON, J., concurring: The plaintiffs contend they should receive severance
pay from the City of Topeka because they stopped working there and started working for
Shawnee County when the City essentially transferred its parks and recreation system,
along with those employees, to the County. The City says not. The dispute depends on
the contractual rights the plaintiffs had to severance pay at the time of the transfer. Those
rights derive from the City's personnel policies and the contracts governing the transfer.
The personnel policies and the transfer contracts, along with the rest of the evidence
before the Shawnee County District Court, establish that the plaintiffs relinquished any
right to severance pay they had under the policies in exchange for new and different
benefits available to them under the contracts. Accordingly, I agree with the ultimate
disposition the majority reaches in finding the plaintiffs now have no enforceable
contractual rights to severance pay. But I respectfully take issue with the way the
majority gets to that result.
21
Before the transfer in 2012, the City had in place detailed personnel policies.
Pertinent here is what we have referred to as Article VIII that addresses reductions in
force and severance pay. For purposes of summary judgment, the City conceded Article
VIII created contractual rights for its employees. The 10 plaintiffs in this case, therefore,
could receive severance pay consistent with the terms of Article VIII by virtue of their
employment in the parks and recreation department. The plaintiffs, however, were not
covered by the labor agreement between the City and the American Federation of
Teachers union, so their relevant rights derived solely from Article VIII.
(Notwithstanding its name, the AFT represents groups of public employees besides
teachers, including many of the City's rank-and-file workers.)
To carry out the transfer of the parks and recreation department, the City and the
County entered into a series of contracts that included provisions for how employees
moving from the City to the County would be treated. The relevant contracts created two
options for the employees—one of which allowed them to receive severance pay and one
of which did not. As I discuss momentarily, the option without severance pay substituted
different benefits and incentives. The plaintiffs' claims depends upon the interplay of
Article VIII and the transfer contracts.[1]
[1]Although the parties acknowledge Article VIII creates enforceable rights for
municipal employees, it is not a contract in a conventional sense. None of the plaintiffs
negotiated for severance pay when they started working for the City. They simply receive
on a take-it-or-leave-it basis the benefits the City makes available. That doesn't defeat the
plaintiffs' entitlement to what benefits the City has conferred or the application of
contract law in resolving disputes about those benefits. Similarly, the plaintiffs neither
negotiated nor are parties to the transfer contracts between the City and the County. But
they are third-party beneficiaries of the agreed-upon terms of transfer.
The majority fails to correctly construe Article VIII and simply finds that it did not
provide for severance pay to the plaintiffs. The sections of Article VIII delineating the
specific criteria for receiving severance pay and listing the reasons employees cease to be
22
eligible for severance pay establish the plaintiffs did have a right to that benefit as a result
of the transfer of the department from the City to the County. The majority misapplies the
rules of contract interpretation and offers specious supporting policy rationales for its
contrary conclusion. As a result, the majority never considers the impact the transfer
contracts had on severance pay. Each plaintiff made an election under those contracts to
trade off severance pay for other benefits. And having made those elections, the plaintiffs
cannot now sue for severance pay.
To analyze the legal dispute, I first look at the language of Article VIII and explain
why it permits severance pay in this situation. I then consider the language of the
pertinent transfer contract and show how it allowed the plaintiffs to swap their right to
severance pay for a period of wage protection and other benefits after they started
working for the County.
I pause to mention several pertinent principles of contract interpretation. Whether
a written contract is ambiguous presents a question of law for a court rather than an issue
of fact for the finder of fact. Waste Connections of Kansas, Inc. v. Ritchie Corp., 296
Kan. 943, 964, 298 P.3d 250 (2013). If a contract is unambiguous, it may be construed as
a matter of law. Osterhaus v. Toth, 291 Kan. 759, 768, 249 P.3d 888 (2011); Levin v.
Maw Oil & Gas, 290 Kan. 928, Syl. ¶ 2, 234 P.3d 805 (2010) ("The interpretation and
legal effect of a written instrument are matters of law."). A contract is unambiguous "if
the language . . . is clear and can be carried out as written." Simon v. National Farmers
Organization, Inc., 250 Kan. 676, Syl. ¶ 2, 829 P.2d 884 (1992). Conversely, an
ambiguous contract "must contain provisions or language of doubtful or conflicting
meaning." 250 Kan. 676, Syl. ¶ 2. Typically, the words used in a contract should be given
their common or customary meaning. Pfeifer v. Federal Express Corporation, 297 Kan.
547, 550, 304 P.3d 1226 (2013); Gold Mine Investments v. Mount Vernon Fire Ins. Co.,
48 Kan. App. 2d 818, 824, 300 P.3d 1113 (2013). Ambiguity then arises only if "the face
of the instrument leaves it genuinely uncertain which one of two or more meanings is the
23
proper meaning." Catholic Diocese of Dodge City v. Raymer, 251 Kan. 689, 693, 840
P.2d 456 (1992); Kincaid v. Dess, 48 Kan. App. 2d 640, 647, 298 P.3d 358 ("A contract
is ambiguous when the words . . . may be understood in two or more ways."), rev. denied
297 Kan. 1246 (2013); Antrim, Piper, Wenger, Inc. v. Lowe, 37 Kan. App. 2d 932, 937-
38, 159 P.3d 215 (2007). A contract is not ambiguous simply because the parties disagree
about its meaning. Waste Connections, 296 Kan. at 964; Antrim, 37 Kan. App. 2d at 938.
The governing provisions of Article VIII and the transfer contracts are
unambiguous. What we have before us is a controlling question of law that the City
presented to the district court in its motion for summary judgment and that the City has
preserved by cross-appealing the district court's denial of that motion.
Article VIII sets out four requirements an employee must satisfy to get severance
pay: (1) The "[e]mployee's position has been eliminated" as part of a short-term
reduction in force or a permanent reduction in force; (2) the employee has worked for the
City for more than a year; (3) the employee "is not continuing to work for the City in a
position of equal or greater job classification"; and (4) the employee has signed a release
of any potential claims against the City. As to those requirements, everyone agrees all of
the plaintiffs worked for the City for more than a year and they did not continue working
for the City in equal or greater job classifications after the transfer. Likewise, the City has
not argued the plaintiffs should be denied severance pay because they failed to sign
releases.[2]
[2]The record on appeal at least suggests the plaintiffs did not sign releases. But if
the City did not tender releases to them, the requirement would likely be waived or
forfeited. See M West, Inc. v. Oak Park Mall, 44 Kan. App. 2d 35, 54-55, 234 P.3d 833
(2010). In any event, the requirement for releases is not an issue on appeal.
The remaining condition requires elimination of the employee's "position." In
context, position refers to the specific City job by title and classification—a common
24
usage consistent with the rest of Article VIII. The word "position" in Article VIII doesn't
mean a comparable job for some other employer. See Merriam-Webster's Collegiate
Dictionary 968 (11th ed. 2003) ("position" defined as "an employment for which one has
been hired"). Here, after the transfer, the City no longer had positions for persons
interested in working at recreational facilities or in parks and would not have accepted
applications for such work. The positions for which the City had hired or employed the
plaintiffs had been eliminated. That meaning of position is also consistent with the third
criterion for severance pay. An employee could receive severance pay if he or she were
placed in another "position" with the City in a lower job classification. So for purposes of
the benefit under Article VIII, severance entails displacement from a particular municipal
job.
The City certainly could have conditioned severance pay on some other
requirement—it was pretty much free to define eligibility for the benefit as it chose. For
example, the City could have required a loss of employment or a stated period of
unemployment. Likewise, the City could have excluded the transfer of a municipal
department or function to another government entity or a private-sector provider from the
severance pay provision altogether. In Article VIII, the City specifically identified
employees ineligible for severance pay as those "who resign, voluntarily retire or are
fired for cause." The absence of any other disqualifying circumstances cuts against
implying an additional one to fit the facts of this case. See Supica v. Metropolitan Life
Ins. Co., 137 Kan. 204, 206, 19 P.2d 465 (1933); see also Lawson v. Sun Microsystems,
Inc., 791 F.3d 754, 763-64 (7th Cir. 2015) (applying Indiana contract law); Abraham v.
Washington Group Intern., Inc., 766 F.3d 735, 740 (7th Cir. 2014) ("It is the court's job
to respect the terms of the contract and not manufacture additional terms that are
missing.").
Those provisions define eligibility for and exclusion from severance pay under
Article VIII. And they unambiguously extend the benefit to the plaintiffs. The majority's
25
reliance on the general statement of purpose for the severance pay policy is misplaced.
The stated purpose or intent behind the policy would be legally useful in construing
otherwise ambiguous language in Article VIII in the same way extrinsic evidence would
be. See Waste Connections of Kansas, 296 Kan. at 963 (use of parol evidence). But if the
operative contractual terms are clear, a court discerns "intent" from that language.
Osterhaus, 291 Kan. at 768. In other words, a court cannot rely on a general statement of
contractual purpose to alter the plain meaning of the operative terms of a particular
substantive provision of the agreement. In re Universal Service Fund Telephone Billing
Practices Litigation, 619 F.3d 1188, 1204-05 (10th Cir. 2010) (recognizing that recitals
of purpose in contract do not override clear substantive terms); United States v. Hamdi,
432 F.3d 115, 123 (2d Cir. 2005) (same); 17A Am. Jur. 2d, Contracts § 373 (if operative
contractual language is clear, it controls over recital of purpose). Giving primacy to those
general statements over specific contractual terms and conditions would amount to an
impermissible rewrite of the parties' contract. Quenzer v. Quenzer, 225 Kan. 83, 85, 587
P.2d 880 (1978) (court may not rewrite contract or make new contract for parties under
guise of construing their agreement); Lauck Oil Co. v. Breitenbach, 20 Kan. App. 2d 877,
879, 893 P.2d 286 (1995) (When a contract is unambiguous, the court's "function is to
enforce the contract as made" and "not [to] make another contract for the parties."). If the
parties have deployed an inefficient or untargeted means of accomplishing their stated
purpose, the court has no license to impose a better means—to one party's advantage—to
resolve some later legal dispute between them. Claassen v. City of Newton, No. 111,445,
2015 WL 4366475, at *5 (Kan. App. 2015) (unpublished opinion), rev. denied 303 Kan.
1077 (2016) ("[C]ourts are to enforce unambiguous contracts as they are written and
cannot refashion the language to favor a disappointed party's mistaken expectations.").
The majority posits other misdirected arguments to bolster its interpretation of the
severance pay provision in Article VIII. First, the majority cites a number of cases
involving severance pay benefits for workers with private sector employers. But those
decisions are highly fact dependent and, therefore, lend virtually no weight to the proper
26
outcome here. Because severance pay policies of private employers amount to "employee
welfare benefit plans," they are regulated under the Employee Retirement Income
Security Act (ERISA), 29 U.S.C. § 1001 (2012) et seq. Those plans have to be in writing,
and an employer must designate an administrator to oversee a plan's operation, including
approving or denying requests for benefits. A claimant denied benefits may seek judicial
review of the determination as provided in ERISA, 29 U.S.C. § 1132(a)(1)(B) (2012).
The overarching principle the courts apply in ERISA benefits cases involving
severance pay is simply that the plan language governs employee eligibility. Anstett v.
Eagle-Picher Industries, Inc., 203 F.3d 501, 503, 506 (7th Cir. 2000) (court recognizes
action for severance benefits under ERISA plan functionally presents "a claim to enforce
a contract," so the plan language controls); Weir v. Federal Asset Disposition Ass'n, 123
F.3d 281, 287 (5th Cir. 1997) (There is "'no hard and fast rule that an individual must
suffer a period of unemployment to qualify for severance benefits under ERISA[;]'"
rather, those courts denying benefits "'have predicated their decisions on the particular
terms of the ERISA plan at issue[.]'") (quoting Bellino v. Schlumberger Tech., Inc., 944
F.2d 26, 31 [1st Cir. 1991]); Headrick v. Rockwell Intern. Corp., 24 F.3d 1272, 1277
(10th Cir. 1994) (court rejects notion that period of unemployment or loss of income is
"an immutable precondition to recovery of severance pay" and turns to terms of plan to
determine eligibility); see also 1 Emp. Coord., Benefits § 15:249 (2016) ("employees
have been [determined to be] eligible for severance pay . . . depending on the particular
terms of the ERISA plan at issue and its application to the specific facts"). That's a basic
tenet of contract law, no different from what applies here.
The ERISA cases the majority cites illustrate instances in which employers have
drafted plan language to preclude severance benefits upon the transfer of a corporate
division or facility to another company with no break in employment for the affected
workers. There are other cases in which the courts have held particular plans did permit
benefits in those circumstances. See, e.g., Anstett, 203 F.3d at 504-06; Ulmer v. Harsco
27
Corp., 884 F.2d 98, 103-04 (3d Cir. 1989). The Anstett decision collects cases that found
severance benefits were due and others that did not. 203 F.3d at 505-06.
On balance, the ERISA caselaw isn't especially helpful for either the City or the
plaintiffs in this case. The plans in those cases took a wide variety of approaches to
severance pay and correspondingly used varied language to define eligibility for the
benefits. All of that sheds little light on the proper interpretation of what's in Article
VIII.[3]
[3]The precedential value of a given ERISA case also depends on the standard of
review the court has applied to the administrator's decision interpreting the plan language
or denying a claim for benefits. If the plan itself affords the administrator discretionary
authority to construe the language or make benefits determinations, then the court applies
a deferential abuse-of-discretion standard to those decisions. Otherwise, the court reviews
the decisions de novo and, thus, without deference. See Firestone Tire & Rubber Co. v.
Bruch, 489 U.S. 101, 115, 109 S. Ct. 948, 103 L. Ed. 2d 80 (1989); Alexandra H. v.
Oxford Health Insurance, Inc. Freedom Access Plan, ___ F.3d ___, 2016 WL 4361936,
at *8-9 (11th Cir. 2016) (applying Firestone); Singletary v. United Parcel Service, Inc.,
828 F.3d 342, 346-47 (5th Cir. 2016) (applying Firestone and noting that under abuse-of-
discretion review an administrator's decision will be upheld even if it falls on "the low
end" of what might be considered "a continuum of reasonableness"). An ERISA case
decided using an abuse-of-discretion standard wouldn't be especially strong precedent for
the best reading to be given comparable language in another plan or contract.
The majority also offers two policy considerations to support its reading of the
City's severance pay benefit—one of them is questionable and the other specious.
Borrowing from some of the ERISA cases, the majority suggests a judicial finding that
Article VIII allows the plaintiffs severance pay in this case would discourage employers
from providing the benefit at all. In other words, an employer will have no severance
policy rather than risk being inadvertently on the hook to pay employees who move with
a division or facility sold to another outfit without any break in employment. Perhaps
some employers would make that choice, but it would place them at a modest
competitive disadvantage in hiring. For a government employer, offering an array of
28
fringe benefits and promoting a work environment cultivating quality-of-life attributes
may provide the required edge in recruiting against private sector employers that can pay
more. Severance pay is part, albeit a distinctly secondary one, of that pitch.
More significantly, severance pay can be used as an inducement to a departing
employee to release potential legal claims against the employer, as the City has done with
Article VIII. So rather than give up on severance pay, the savvy employer ought to make
sure it has a well-drafted plan or policy that clearly specifies those circumstances calling
for payment. The majority's Chicken-Little thesis seems questionable, especially without
some empirical support.
Turning to the specious, the majority says Article VIII should be construed in the
City's favor because to do otherwise would hand "the Plaintiffs a windfall at the expense
of taxpayers." I am aware of no principle of contract law that says government entities
should receive a deferential reading of their agreements if doing so will save the
taxpayers money. The majority cites none. The idea that one party to a contract ought to
be given special consideration in a legal dispute over the meaning of the agreement
because of its source of revenue waltzes between rather stupefying and genuinely strange.
There really is nothing more to say about that policy argument.
In sum, the plaintiffs were entitled to severance pay under the terms of Article
VIII. But, as I have indicated, that is not the end of the legal dispute. The transfer
contracts between the City and the County offered the plaintiffs the option of giving up
their severance pay for other benefits. The plaintiffs accepted that offer, so they
relinquished their Article VIII rights to severance pay.
The relevant transfer contract addressing personnel permits all City parks and
recreation employees to become County employees immediately subject to all of the
County's policies and procedures. Those employees presumably would be entitled to
29
severance pay if they otherwise met the eligibility criteria in Article VIII. The contract,
however, gives each parks and recreation employee the choice to become a "transferred
employee." As defined in the contract, a transferred employee agrees "not [to] exercise
any rights . . . available . . . under Article 8," meaning he or she relinquishes any claim
for severance pay. But "transferred employees" are contractually guaranteed that their
salary or wages will not be reduced for 6 months and that they will not be discharged by
the County during that time except for legitimate disciplinary reasons. In addition, the
City agrees to pay those employees for their accrued vacation time, and they are allowed
to transfer their accumulated sick leave for use with the County. And a "transferred
employee" receives some limited right to severance pay from the County if he or she
leaves within 3 years, although the scope of that benefit is something less than clear from
its description in the contract.
Basically, then, a City parks and recreation employee moving to the County could
opt for severance pay under Article VIII. But that employee would be treated more or less
as a new hire with the County. Or the employee could give up any severance pay and
become a "transferred employee" with wage and work protection and other benefits they
would not otherwise enjoy with the County.
The plaintiffs apparently did not sign any documents with the City or the County
specifically acknowledging their elections to become "transferred employees." At least
there are no such documents in the record. But in response to requests for admission from
the City, propounded under K.S.A. 60-236, each plaintiff admitted he or she is a
"transferred employee" within the meaning of the transfer contracts between the City and
the County. Those admissions were submitted to the district court in support of the City's
motion for summary judgment and are part of the appellate record. The admissions bind
the plaintiffs for purposes of this case. See K.S.A. 2015 Supp. 60-236(b) (matter admitted
considered "conclusively established"); see Armour v. Knowles, 512 F.3d 147, 153-54 &
30
n.13 (5th Cir. 2007) (discussing binding effect of admission under comparable Fed. R.
Civ. P. 36).
As I have already discussed, "transferred employees" effectively traded any right
to severance pay for other valuable benefits. The plaintiffs, as "transferred employees,"
cannot now sue to obtain the severance pay they bargained away when they moved from
the City to the County. Accordingly, the district court and the majority reach the correct
legal result in denying the plaintiffs' claims, if for less than entirely correct reasons.
My resolution does not depart from the majority's determination of plaintiffs' other
claims. The City did not constitutionally impair the plaintiffs' right to severance pay.
Under the transfer contracts, the plaintiffs could have chosen to receive any severance
due them. So any protections they might have under the Contracts Clause in Article I, §
10 of the United States Constitution were not implicated in this case. The claim under the
Kansas Wage Payment Act, K.S.A. 44-313 et seq., fails because the City didn't refuse to
pay the plaintiffs compensation they were due. Rather, they forsook severance pay and
substituted other benefits having value to them. And having done so, they no longer had a
legal claim to severance pay. Finally, the plaintiffs can't base a claim for negligent
misrepresentation against the City on their election regarding severance pay, since the
letter from the human resources director did not make misrepresentations of pertinent
facts. Stechschulte v. Jennings, 297 Kan. 2, 22, 298 P.3d 1083 (2013) ("Negligent
misrepresentation addresses negligence of knowledge of material fact and the transmittal
of already known material facts."). The letter may have offered an arguably incomplete
opinion or recommendation about the plaintiffs' options under Article VIII and the
transfer contracts. But that's not the same as providing incorrect representations of
material fact, especially when the plaintiffs had access to Article VIII and the transfer
contracts in making their decisions. See Davis v. City of Topeka, No. 113,131, 2016 WL
852881, at *5 (Kan. App. 2016) (unpublished opinion) (statement of opinion not
actionable as negligent misrepresentation).
31