Breach of Contract Cases

LORRAINE K. DOYLE, Plaintiff v. ASHEVILLE ORTHOPAEDIC ASSOCIATES, P.A., Defendant No. COA01-159 (Filed 28 December 2001) Employer and Employee— employment contract — termination provision — constructive discharge The trial court erred in a breach of contract action by allowing recovery for plaintiff doctor for constructive discharge from employment based on the termination provision of plaintiff’s employment contract, because: (1) the jury found that neither party breached the employment contract, and the evidence does not show that defendant employer deliberately made plaintiff’s working conditions intolerable; (2) plaintiff does not allege in her complaint that she was constructively terminated based on intolerable working conditions, nor does she set forth any instances that would support stating that she was terminated based on intolerable working conditions; and (3) there is no evidence that the alleged conditions were deliberately created in an attempt to force plaintiff to terminate her employment. Appeal by defendant from judgment entered 11 April 2000 and order entered 11 May 2000 by Judge James U. Downs in Superior Court, Buncombe County. Heard in the Court of Appeals 5 December 2001. Adams Hendon Carson Crow & Saenger, P.A., by George W. Saenger and Joy Gragg, for plaintiff-appellee. McGuire, Wood & Bissette, P.A., by Joseph P. McGuire, for defendant-appellant. WYNN, Judge. In this appeal Asheville Orthopaedic Associates, P.A., argues that the trial court erred in submitting issues to the jury and allowing recovery to Dr. Lorraine K. Doyle for constructive discharge from employment. Asheville Orthopaedics correctly points out that North Carolina has not explicitly recognized constructive discharge in the context of employment as an independent basis for recovery. Indeed, in Wagoner v. Elkin City Schools’ Board of Education this Court held: Assuming that plaintiff was wrongfully constructively discharged, she is nonetheless not entitled to assert the tort of wrongful discharge because the tort of wrongful discharge arises only in the context of employees at will. See Coman v. Thomas Mfg. Co., 325 N.C. 172, 381 S.E.2d 445 (1989); Sides, 74 N.C. App. 331, 328 S.E.2d 818. Breach of contract is the proper claim for a wrongful discharged employee who is employed for a definite term or an employee subject to discharge only for “just cause.” 113 N.C. App. 579, 588, 440 S.E.2d 119, 125, disc. review denied, 336 N.C. 615, 447 S.E.2d 414 (1994). However, Dr. Doyle responds that she did not claim damages arising under the independent action of constructive discharge based on a violation of public policy which applies to employees at will. Rather, Dr. Doyle asserts that her claim arises under her employment contract with Asheville Orthopaedic. She points out that her employment contract provided for damages to be paid to her in the event that Asheville Orthopaedic terminated her involuntarily. She alleges that despite the fact that she resigned from her employment, her resignation was procured by Asheville Orthopaedic’s conduct which amounted to constructive discharge. Dr. Doyle is a board certified orthopaedic surgeon, who after signing an employment contract with Asheville Orthopaedics started working on 3 October 1988. The employment contract provided that Dr. Doyle would receive basic compensation in the amount of $80,000 during her first contract year, the same basic compensation of $80,000 plus one-half of her productivity during her second contract year, and compensation based on her productivity during her third and subsequent contract years, with her compensation based on productivity to “be calculated in the same manner as is applicable to all other physician employees of the Employer.” Regarding termination, the employment contract under paragraph 12 a. provided that: The Employee may terminate this Contract only after having given a preliminary written notice to terminate twelve (12) months before the effective termination date, followed by a final written resignation six (6) months before said termination date. Subject to paragraph 12 c., the Employer may terminate this Contract only after having given written notice at least six (6) months before the effective termination date. The Employer will not terminate this Agreement unless such action has' been approved by a majority vote of all members of the Board of Directors who are then actively practicing medicine for the Employer. The Contract of Employment further provided that: Upon termination pursuant to paragraph 12 a., Employee shall be paid only: (i) the Basic Benefits set forth herein, reduced by 1/25 for each year of service with the Employer less than twenty-five (25) years; and (ii) his Basic Compensation without any further Productivity Compensation. At a meeting on 11 October 1995, the Board of Directors for Asheville Orthopaedics considered Dr. Doyle’s deficit, how she could repay that deficit and the viability of her continuing in the practice. After the meeting, Linda Stein Murphy, the business manager, informed Dr. Doyle that the Board of Directors had decided that it could not go on paying someone who was not producing. Later that same day, Ms. Murphy met with two of the partner doctors, who decided that Dr. Doyle would not receive a paycheck or disability payment; Medical Mutual would be called about the cost of tail coverage for Dr. Doyle, which is the amount required to be paid to cover a doctor who leaves a practice in the event that any claims arise subsequent to the doctor’s departure; Dr. Doyle should cancel some of her vacation and not attend a professional meeting in February; and the credit card limit for all of the physicians would be reduced from $5,000 to $500. The next day, Ms. Murphy met with Dr. Doyle and told her that she would not receive any pay. After discussing with Ms. Murphy whether there would be a problem if she left at the end of December, Dr. Doyle sent a letter dated 30 November 1995 stating that she intended to withdraw from the partnership and her last day would be 31 December 1995. Following a trial, the jury considered and decided on the following issues: 1. Did the defendant breach the employment agreement? ANSWER: NO 2. What answer of damages is the plaintiff entitled to recover from the defendant? ANSWER: _ 3. Did the defendant constructively terminate the employment of the plaintiff? ANSWER: YES 4. What amount of damages, if any is the plaintiff entitled to recover from the defendant? ANSWER: $14,752 5. Did the plaintiff breach the employment contract? ANSWER: NO 6. What amount of damages is the defendant entitled to recover from the plaintiff? ANSWER: _ Accordingly, the trial court entered judgment on the jury’s finding of constructive discharge in the amount of $14,447.30, plus prejudgment interest from 1 January 1996 and court costs. On appeal, Dr. Doyle disavows that she seeks relief under a claim of constructive discharge in violation of public policy which arises only in the context of employees at will. She asserts instead that her claim of constructive discharge arose in the context of deciding whether she was entitled to termination payments under the contract. We recognize the viability of her claim in the context of interpreting whether constructive termination by her employer triggered the termination payment provision of the employment contract. In general, evidence establishing constructive discharge “must demonstrate that the employer deliberately made working conditions intolerable and thereby forced [the plaintiff ] to quit.” Graham v. Hardee’s Food System, Inc., 121 N.C. App. 382, 385, 465 S.E.2d 558 (1996) (citing E.E.O.C. v. Clay Printing Co., 955 F.2d 936, 944 (4th Cir. 1992)). “Deliberateness exists only if the actions complained of ‘were intended by the employer as an effort to force the employee to quit.’ ” Id. (Citations omitted). In this case, the jury found that neither Asheville Orthopaedics nor Dr. Doyle breached the employment contract. Thus, to show that her employer constructively discharged her and thereby triggered the payment provision of the employment contract, Dr. Doyle must point to evidence, other than that showing a breach of contract, which demonstrates that Asheville Orthopaedics deliberately made her working conditions intolerable. The record shows that Dr. Doyle’s evidence of constructive discharge consisted of her allegations that she received limited referrals of hand patients from Asheville Orthopaedics’ other physicians. However, the record also shows that Dr. Doyle did receive some hand patient referrals and was offered to serve as back-up on call. Dr. Doyle also points to Asheville Orthopaedics’ adoption of a different compensation formula in November 1994 which allocated overhead in a detrimental impact on her income. However, this change occurred during a period when Asheville Orthopaedics experienced a financial crunch and considered ways to hold costs down and encourage production. Additionally, Dr. Doyle, aboard member, voted on the modified compensation formula. Also, the record shows that Asheville Orthopaedics approved Dr. Doyle as a shareholder and in later years elected her to serve in various offices including secretary, treasurer and vice-president. This evidence falls short of showing that Asheville Orthopaedics deliberately made Dr. Doyle’s working conditions intolerable. Moreover, we note that in her Complaint, Dr. Doyle does not allege that she was constructively terminated because of intolerable working conditions nor does she set forth any instances that would support stating that she was terminated because of intolerable working conditions. After a careful review of the record, we can find no evidence that the alleged conditions were deliberately created in an attempt to force Dr. Doyle to terminate her employment. In the absence of facts, other than those showing a breach of contract, to support Dr. Doyle’s claim for páyment under the termination provision of her employment contract that she was constructively discharged, we must reverse the judgment. Reversed. Judges WALKER and THOMAS concur.

ARMSTRONG v YPSILANTI CHARTER TOWNSHIP Docket No. 222924. Submitted June 6, 2001, at Lansing. Decided December 7, 2001, at 9:05 am Duke L. Armstrong brought an action in the Washtenaw Circuit Court against Ypsilanti Charter Township and five individual members of the township board, asserting various claims for damages resulting from the individual defendants’ votes to pass a motion that eliminated the line-item funding for the plaintiff’s position as administrative assistant to the township supervisor. The elected township supervisor, who is the sixth member of the township board, voted against the motion. The court, Donald E. Shelton, J., denied the plaintiff’s motion to disqualify the trial judge, and the chief judge of the circuit court, Timothy P. Connors, affirmed that denial. The court entered a judgment and order granting summary disposition in favor of the defendants on several grounds. The plaintiff appealed, and the individual defendants cross appealed from the denial of their motion to quash the plaintiff’s first amended complaint. The Court of Appeals held: 1. The separation of powers doctrine contained in Const 1963, art 3, § 2 applies to state government only and does not apply to township government. 2. Section 9 of the Charter Township Act, MCL 42.9, allows a township board to abolish any position within township government as long as the position is not the offices of the township clerk or the township treasurer. The plaintiff’s position may be abolished by the township board. 3. MCL 42.9 does not requires the township supervisor’s recommendation before a position may be abolished by the township board. 4. The Charter Township Act gives the township board full and absolute control over the township budget and does not provide that the board can reduce appropriations only when there has been a reduction in income. 5. The court properly dismissed the plaintiff’s tort claims against the individual defendants on the basis that the defendants were protected from liability by governmental immunity provided by state and federal law. 6. The court’s ruling on the motions for summary disposition did not evidence deep-seated favoritism or antagonism toward the plaintiff that would support the plaintiff’s claim of actual bias. 7. The trial judge had no economic, pecuniary, or other financial ties to the individual defendants. There were no grounds to support the motion to disqualify the trial judge. Affirmed. 1. Townships — Constitutional Law — Separation of Powers. The separation of powers doctrine in Const 1963, art 3, § 2 applies to state government only, not to local municipal or township government. 2. Townships — Charter Township Boards. Section 9 of the Charter Township Act allows a township board to abolish any position within the township government other than the township clerk and the township treasurer; the township supervisor’s recommendation is not required before a position may be abolished by the township board (MCL 42.9). 3. Townships — Charter Township Boards. A charter township board has full and absolute control over the township’s budget and may reduce appropriations without a showing that there has been a reduction in income (MCL 42.27, 42.28, 42.29). 4. Judges — Disqualification. Judicial rulings, in and of themselves, generally do not constitute a valid basis for a motion alleging judicial bias unless the rulings display a deep-seated favoritism or antagonism that would make fair judgment impossible and overcome the heavy presumption of judicial impartiality. Jeffrey A. McKeever, P.L.C. (by Jeffrey A. McKeever), for the plaintiff. Garan Lucow Miller, PC. (by Rosalind Rochkind and Thomas F. Myers'), for the defendants. Amicus Curiae: Bauckham, Sparks, Rolfe, Lohrstorfer & Thall, P.C. (by John H. Bauckham), for the Michigan Townships Association. Before: Hood, P.J., and Whitbeck and Meter, JJ. Per Curiam. Plaintiff Duke Armstrong appeals the trial court’s order granting summary disposition to defendants Ypsilanti Charter Township, Ruth Jamnick, Brenda Stumbo, Darcus Sizemore, Karen LovejoyRoe, and William Gagnon. Armstrong also challenges the trial court’s denial of his motion to disqualify the trial judge and the later order of the chief judge affirming that denial. Jamnick, Stumbo, Sizemore, Lovejoy-Roe, and Gagnon cross appeal the trial court’s denial of their motion to quash Armstrong’s first amended complaint. We affirm. 1. basic facts and procedural history A. OVERVIEW Ypsilanti Township is a charter township, organized under the Charter Township Act. Jamnick, Stumbo, Sizemore, Lovejoy-Roe, and Gagnon are all members of the township board. A sixth member of the township board, although not a defendant here, Wesley Prater, was the elected township supervisor. Armstrong had served as Prater’s administrative assistant since 1991, but on May 30, 1996, the township board, with only Prater voting against the motion, eliminated the line-item funding for Armstrong’s administrative assistant position, thereby effectively eliminating his job. It is undisputed that the elimination of the line-item funding was not part of the normal budgetary cycle; rather it occurred during, instead of before or at the commencement of, the township’s fiscal year. B. ARMSTRONG’S COMPLAINT Armstrong’s first amended complaint contained thirteen counts. Count I asserted a claim based on defamation against the board members. Count n asserted a claim based on violation of the Michigan Handicappers’ Civil Rights Act. Armstrong claimed that he had been diagnosed with “stress reaction,” which required a temporary medical leave. Count m asserted a violation of the Michigan Civil Rights Act. Armstrong claimed that his age was at least one factor in the decision to terminate his employment. Count iv asserted a violation of the National Labor Relations Act. Armstrong claimed that his involvement in the attempted organization of his fellow employees in a labor union was at least one factor in the decision to terminate his employment. Count v was a claim of breach of an implied employment contract. Armstrong claimed that the township’s management made statements to him and other employees that it was the township’s policy not to discharge employees as long as the employees performed their jobs. Count VI asserted wrongful discharge contrary to public policy. Armstrong claimed that during his employment, the township established policies and procedures that created a legitimate expectation that his employment could be terminated only for just cause. Count vil asserted interference with a business relationship. Armstrong claimed that the board members interfered with his business relationship with the township, which relationship had a reasonable likelihood of future economic benefit to him. Count vni asserted the board members were grossly negligent concerning their conduct and treatment of Armstrong, including alleged false accusations and statements made by the board members concerning him. Count IX was a claim of intentional infliction of emotional distress concerning defendants’ conduct and treatment of Armstrong during his employment. Count x asserted violation of Armstrong’s constitutional rights. Armstrong claimed that, before his employment was terminated, he engaged in constitutionally protected speech on a matter of public concern by speaking with administrative assistants of various departments regarding forming a union and that his exercise of his constitutional rights was one reason for the termination of his employment. Count XI asserted a separate violation of Armstrong’s constitutional rights. Armstrong claimed that, before depriving him of his constitutionally protected property interest in continued employment, defendants did not conduct a hearing or otherwise afford him either notice of the grounds for the termination of his employment or a meaningful opportunity to respond. Count xn asserted a violation of the Michigan Constitution with respect to due process and fair treatment in investigations. Armstrong claimed that defendants failed to adequately investigate the facts and circumstances surrounding alleged false accusations. Count xttt was a conspiracy claim. Armstrong contended that the tortious conduct asserted in the complaint was done in concert by the board members in order to violate his legal and constitutional rights. In mid-March 1999, the township moved for summary disposition pursuant to MCR 2.116(C)(7), (8), and (10). In early April, the trial court held a hearing on this motion but delayed ruling until a final decision was made on the judicial disqualification matter hereinafter outlined. In late April 1999, the board members filed a motion for summary disposition pursuant to MCR 2.116(C)(7) and (8). In early June 1999, the trial court held a hearing on this motion and took the matter under advisement. C. THE TRIAL COURT’S RULING The trial court addressed and granted both motions for summary disposition in an order and opinion entered on September 29, 1999, stating: Plaintiff... alleges that defendants wrongfully eliminated funding for the Administrative Assistant to the Ypsilanti Township Supervisor, a position which plaintiff held. The four individual defendants were Township board members who voted for the resolution. . . . * * * For his claim against the township, plaintiff argues that the Township Supervisor position is analogous to that of a chief executive position and that [the] board’s action to eliminate funding thereby violates the separation of powers doctrine. He urges the Court to find that the Supervisor is the chief executive with the exclusive authority to abolish plaintiff’s position. The Township of Ypsilanti has adopted the Charter Township Act (“the Act”). Pursuant to that Act, all legislative authority and powers of the township are vested in the township board. MCL 42.5(1). [At this point, the trial court quoted MCL 42.5 and MCL 42.9.] Plaintiff asserts that this section of the statute only allows the board to create a position and does not explicitly grant the board authority to abolish a position. Plaintiff further claims that even if this section is construed to confer authority to abolish a position on the board, that authority would only concomitantly arise at the township supervisor’s recommendation. Plaintiff argues that since in this case the supervisor voted against the elimination of the funding for plaintiff’s position, the board had no authority to do so. The construction of the statute urged by plaintiff is without merit. The legislature clearly provides . . . that the entire elected township board, which by definition includes the supervisor, has the authority to create employment positions at taxpayer expense. That authority is not conferred by the statute on the supervisor. Inherent in the board’s authority to create such a position is its authority to abolish it. The ensuing sentence in this section of the Act fortifies the inteipretation that the board has the power to abolish employment positions in the township. That sentence expressly states that the board may not “abolish” the offices of township clerk or treasurer. The express designation of the offices of township clerk and township treasurer as offices that may not be abolished by the township board is recognition that the legislature intended that the board has the power to abolish other positions not so designated. . . . Plaintiff also claims that the board’s role is to check the power of the supervisor by approving a budget that includes the appropriation of funds for the supervisor’s use. He claims that when [the] board eliminated funding for plaintiff’s position, the board encroached on the executive’s authority. On the contrary, it is the board that has the exclusive authority over budget, appropriation and expenditure for a township under the Act. MCL 42.27, 42.28. There was no usurpation of supervisor authority by the actions of the board in this case. As to plaintiffs tort claims against the individual board members, the defendants assert that they are immune from plaintiffs tort claims under Michigan law. The highest elective officials of all levels of government are immune from tort liability when acting within their authority. Ross v Consumers Power Co (On Rehearing), 420 Mich 567, 633 (1984). The same was codified in 1986 [at this point, the trial court quoted MCL 691.1407(5)]. These defendants are clearly the highest elective officials in the township and are immune if they were acting within their authority when they eliminated plaintiffs position. ... As indicated by the analysis of the board’s actions above, the legislature gave the board as a whole the authority to create, combine, and abolish administrative offices as set forth in MCL 42.9. The actions of the individual trustees were therefore within their legislative authority and they are immune from plaintiffs tort actions by virtue of MCL 691.1407(5). D. DISQUALIFICATION OF THE TRIAL COURT The trial court record does not contain a motion to disqualify the judge, but the record does reflect that a hearing was held on such a motion on April 7, 1999. At the hearing, the following discussion ensued: Mr. McKeever (plaintiff’s counsel]: Judge, as we just mentioned at the bench, I found out yesterday that I think four of the individually named defendants were involved with— as well as Mr. Winters was involved in setting up fundraisers for Your Honor, as well as selling tickets and what have you. And because of those facts— The Court: You mean when I ran for the Supreme Court [in 1996]? Mr. McKeever. That’s right, Judge. And I just — as I mentioned at the bench, due to those facts, at my client’s request, I bring this motion for Your Honor to disqualify himself. And as I mentioned previously, I certainly mean no disrespect, Judge. Armstrong submitted his own affidavit, which asserted that the board members “participated in raising election funds for the Honorable Donald E. Shelton.” The trial court denied Armstrong’s motion for disqualification from the bench and stated: Well, there were a number of people, obviously, who were kind enough to assist in the campaign when I ran for the Supreme Court. But, to my knowledge, the successful candidates do not disqualify themselves from hearing cases in which contributors to their campaigns were involved, nor do I think that I’m required to do so, nor do I think it would be appropriate to punish people for participating in the process in that way. More importantly — so I’m going to deny the motion on the basis of any economic interest. More importantly is the question of whether I have any bias in favor of the defendants. I would gather that, if the Township of Ypsilanti were to — or its officials were to take a vote on whether I was generally in favor of them or generally against them in terms of my rulings, it would be a close issue. It probably would be a divided vote, and as it should be. I have not — I don’t have — I don’t hesitate in my rulings to rule against the local governments or their elected officials when I think that justice of the cause requires that. And I would expect that the township officials in this township as well as other municipal bodies would, with chagrin, agree with that. So I’m going to deny the motion to disqualify. If you would like to appeal that before we take up other matters, you can take it to the chief judge. Shortly thereafter, the chief judge of the circuit court held a hearing to review the trial court’s decision to deny the motion for disqualification, ruling: You have to show actual bias or prejudice. Again, you know, this is — I think the only way you’re ever going to avoid this is if you go to something like the Missouri plan. And I’m not saying that’s necessarily the best way, either, because there’s arguments that, then, you don’t have accountability to the general public. So there’s countervailing public policy reasons to go the way that we are. But as long as we have this system, you’re going to have contributors and you’re going to have people who don’t contribute. And the logical extension of your argument is, literally, be — I mean, we might have just a few lawyers left practicing. And I don’t think you’ve been able to demonstrate, sir, based on that record, that there’s actual bias or prejudice; and, therefore, the appeal of Judge Shelton’s decision to me — the appeal is denied. His decision is affirmed. He’s in the best position to say whether his relationship is such that he would not be able to do that. H. SUMMARY DISPOSITION A. STANDARD OF REVIEW This Court reviews de novo rulings on motions for summaiy disposition. Statutory interpretation is a question of law that we review de novo. We also review constitutional issues de novo. Whether there has been a violation of the separation of powers doctrine is a question of law, which we also review de novo. B. GROUNDS FOR SUMMARY DISPOSITION (1) MCR 2.116(C)(7) MCR 2.116(C)(7) provides, in part, that summary disposition is appropriate when a claim is barred because of immunity granted by law. In reviewing a motion for summary disposition under MCR 2.116(C)(7), this Court accepts a plaintiffs well-pleaded allegations as true and construes them in a light most favorable to the plaintiff. In determining whether a plaintiffs claim is barred by governmental immunity, this Court must consider all documentary evidence, including any pleadings, depositions, admissions, or any other documentary evidence submitted by the parties. In order to survive a motion for summary disposition under MCR 2.116(C)(7), a plaintiff is required to allege facts in the complaint that justify application “ ‘of an exception to governmental immunity.’ ” (2) MCR 2.116(C)(8) MCR 2.116(C)(8) provides for summary disposition of a claim on the ground that the opposing party has failed to state a claim on which relief can be granted. A motion under MCR 2.116(C)(8) tests the legal sufficiency of a claim by the pleadings alone and all factual allegations contained in the complaint must be accepted as trae as well as any reasonable inferences or conclusions that can be drawn from the facts. (3) MCR 2.116(C)(10) MCR 2.116(C)(10) provides for summary disposition where there is no genuine issue regarding any material fact and the moving party is entitled to judgment or partial judgment as a matter of law. The Michigan Supreme Court has held that a trial court “ ‘may grant a motion for summary disposition under MCR 2.116(C)(10) if the affidavits or other documentary evidence show that there is no genuine issue in respect to any material fact, and the moving party is entitled to judgment as a matter of law.’ ” In addition, all affidavits, pleadings, depositions, admissions, and other documentary evidence filed in the action or submitted by the parties is viewed “in the light most favorable to the party opposing the motion.” C. ARMSTRONG’S ISSUES ON APPEAL Armstrong’s appeal requires us to address three separate, but interrelated, issues. The first issue is whether defendants’ actions violated the separation of powers doctrine. The second issue is whether defendants’ actions violated the Charter Township Act. The third issue is whether defendants were protected by governmental immunity. We will address each of these issues. D. SEPARATION OF POWERS (1) THE SEPARATION OF POWERS DOCTRINE In Hopkins, this Court, discussing the separation of powers doctrine, stated: The Michigan Constitution provides for the separation of the three branches of government as follows: “The powers of government are divided into three branches: legislative, executive and judicial. No person exercising powers of one branch shall exercise powers properly belonging to another branch except as expressly provided in this constitution.”[] This separation of powers intends to preserve the independence of the three branches of government. In re 1976 PA 267, 400 Mi