Colleen Bodnar v. St John Providence Inc

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
revision until final publication in the Michigan Appeals Reports.
STATE OF MICHIGAN
COURT OF APPEALS
COLLEEN BODNAR, GREG BOZIMOWSKI, FOR PUBLICATION
CAROL BURKE, GLENDA CALVIN, KEVIN March 5, 2019
CARDWELL, LESLIE CARDWELL, ANDREA
CHELOTTI, JANA CHRUMKA, JOHN
CIROCCO, CECILIA DURONIO, SHARON
ESGUERRA, MARIANNA FLATT, MARIA
GAMBLE, CHERYL ROBB-GENEVICH, KIM
GLANDA, BECCA GRAHAM, MARY
MARGARET GULOWSKI, ANGELIQUE
GWIN, CHRISTYNE ISON, STEVE KISH,
HEATHER KWIATKOWSKI, ROBERT LOSEY,
KATHLEEN MCNELIS, JESSICA MAST, GREG
O’DELL, OSCAR ONG, CHRISTINA POTKAY,
KIMBERLY RAFFLER, BRUCE REED, NANCY
RICHARDS, KSENIA SCEKIC, SARAH SIMS,
CINDY THORNE, KELLY TRETHEWEY,
YOLANDA WILKINS, MARIE WILLIAMS,
SHEILA WILLIAMSON, KENNETH ANDREW
WILLARD, and RUTHANNE WIRTH,
Plaintiffs-Appellants/Cross-
Appellees,
and
TRACY CHASE,
Plaintiff/Cross-Appellee
v No. 337615
Oakland Circuit Court
ST. JOHN PROVIDENCE, INC. and LC No. 2016-152330-CB
ASCENSION HEALTH,
Defendants-Appellees/Cross-
Appellants.
Before: SHAPIRO, P.J., and SERVITTO and GADOLA, JJ.
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 N.W. 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
1
I disagree with the majority that we should review the trial court’s ruling as being made under
MCR 2.116(C)(8) (failure to state a claim). I would review the trial court’s summary disposition
ruling under MCR 2.116(C)(10) because the court found that plaintiffs failed to create a genuine
issue of material fact on multiple issues and it relied on documents outside of the complaint. See
Cuddington v United Health Servs, Inc, 298 Mich. App. 264, 270; 826 NW2d 519 (2012). MCR
2.116(C)(10) allows a trial court to grant summary disposition when “[e]xcept as to the amount
of damages, there is no genuine issue as to any material fact, and the moving party is entitled to
judgment or partial judgment as a matter of law.” MCR 2.116(C)(10). “To determine if a
genuine issue of material fact exists, the test is whether the kind of record which might be
developed, giving the benefit of reasonable doubt to the opposing party, would leave open an
issue upon which reasonable minds might differ.” Skinner v Square D Co, 445 Mich. 153, 162;
516 NW2d 475 (1994) (quotation marks and citation omitted). In making this determination, we
view the record in a light most favorable to the nonmoving party. See Maiden v Rozwood, 461
Mich. 109, 120; 597 NW2d 817 (1999).
2
I agree, however, with the majority’s ruling that the trial court correctly granted summary
disposition of plaintiffs’ conversion claims. I also concur with the majority’s ruling as to
defendants’ cross-appeal.
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employer then terminated the plaintiff’s employment effective immediately. Id. at 571. The
employer denied the plaintiff severance pay and suit followed. Id. at 572. The trial court ruled
in the plaintiff’s favor and, on appeal, the employer argued that its policies did not establish a
contract and instead were “a mere gratuitous statement of policy or intention” that “contained no
suggestion of agreement, nothing of promise, no offer of any sort . . . .” Id. at 573. Because
there was no offer, the argument ran, “there could have been no acceptance and hence no
contract.” Id. at 573-574.
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,
3
See e.g., Hercules Powder Co v Brookfield, 189 Va 531; 53 S Ed 2d 804, 808 (1949) (holding
that an employer’s offer of “dismissal pay” was binding when it was made in anticipation of
“reductions of forces.”). Though decided in 1949, Hercules Powder Co remains good law.
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Cain was decided under traditional contract principles. Applying Cain to this case, I think it is
clear that St. John’s highly detailed polices constituted an offer for severance pay that plaintiffs
accepted by continuing to work at St. John’s hospitals. I would also conclude that there is
adequate consideration to uphold the contract. The timing of the revision to the policies is no
coincidence. St. John was in the process of outsourcing its anesthesiology services and the
revised polices provided assurances to the plaintiffs that they would be offered severance pay in
the event that that a comparable job was not offered to them. The benefit received by St. John,
of course, is that the polices prevented an exodus of certified registered nurse anesthetists in the
event that rumor and speculation surfaced regarding St. John’s plan to outsource anesthesiology
services. Further, plaintiffs had to perform in several ways in order to qualify for the severance
pay including participating in St. John’s transition plan, working through the defined date of
termination, and meeting multiple other requirements. I also note that the amount of severance
pay was directly linked to the employee’s years of service, a clear indication that the payment
constituted deferred compensation, i.e., payment to be made later for work done previously. See
Dumas v Auto Club Ins Ass’n, 437 Mich. 521, 529-530; 473 NW2d 652 (1991).
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
4
The majority characterizes as a “disclaimer” the policy language in Cain providing that the
policy may be amended at any time.
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Severance Pay Policy is made clear in its text: “[t]his policy supersedes any other policy or
procedure that may conflict with this policy, with the exception of Employment at Will. It is
administered in conjunction with Policy – Staff Reduction in Force. Where differences exist, this
policy takes priority for those eligible for coverage.” (Emphasis added). Read together, the RIF
and Severance Pay Policies are, at a minimum, ambiguous as to whether defendant was
disclaiming the terms of severance or merely reiterating that employees did not have a just-cause
contract for employment. Scott v Farmers Ins Exch, 266 Mich. App. 557, 561; 702 NW2d 681
(2005) (“A contract is ambiguous when its words may be reasonably understood in different
ways.”). Therefore, the meaning and scope of the disclaimer language is a question of fact for a
jury. Farmer’s Ins Exch v Kurzmann, 257 Mich. App. 412, 418; 668 NW2d 199 (2003)
(“Ambiguities in a contract generally raise questions of fact for the jury[.]”).
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 MCR 2.116(C)(10) is premature if
it is granted before discovery on a disputed issue is complete.” Marilyn Froling Revocable
Living Trust v Bloomfield Hills Country Club, 283 Mich. App. 264, 292; 769 NW2d 234 (2009).
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For those reasons, I would conclude that the phrase “current pay rate” is ambiguous and presents
a question of fact for a jury. 5
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
5
However, I agree with the majority that the RIF policy does not support plaintiffs’ claim that
they were entitled continued employment for a “placement period” of six months.
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