WILDER, J.
Defendant, HP Pelzer Automotive Systems, Inc., appeals as of right an order granting summary disposition to plaintiffs, Douglas J. Klein and Amy Neufeld Klein.
In 2009, during the "economic downturn," defendant undertook a radical restructuring of its business. The restructuring resulted in layoffs of some of defendant's employees, and it was a stressful time for defendant's staff. However, defendant's chief executive officer and president, Dean Youngblood, wanted to retain some "key individuals," including plaintiffs, during the restructuring. Consistently with this desire, Youngblood sent a letter dated November 2, 2009, to plaintiffs, stating in relevant part:
Youngblood sent a virtually identical letter to Douglas Klein the same day. Plaintiffs continued to work for defendant during the restructuring. Subsequently, in a letter dated June 7, 2011, defendant's then president and chief operations officer, John Pendleton, stated the following to Amy Klein, in relevant part:
Again, Douglas Klein received a virtually identical letter. At the conclusion of the letters to plaintiffs, Pendleton reminded them that defendant is an at-will employer.
On June 8, 2011, plaintiffs' counsel sent a hand-delivered letter to Pendleton and the corporate human resources manager at defendant, which provided in relevant part:
The June 8, 2011 letter also provided, "Mr. and Mrs. Klein are seriously considering retirement from HP Pelzer and would like a computation from the company of the amount of the severance payment they can each expect to receive based on the referenced letter agreements." On July 19, 2011, plaintiffs sent separate letters of resignation to Pendleton and the corporate human resources manager resigning from defendant and stating that their resignations were effective on August 2, 2011.
Plaintiffs filed a three-count complaint against defendant, alleging breach of express contract, breach of implied contract, and promissory estoppel. Plaintiffs' complaint alleged that, under Youngblood's 2009 letters, they were entitled to severance payments from defendant based on the "year" of earnings before their resignations.
Before the close of discovery, plaintiffs filed a motion for summary disposition pursuant to MCR 2.116(C)(10), alleging that there was no genuine issue of material fact, except for damages, with respect to Count I (breach of express contract). Plaintiffs argued that the 2009 letters were unilateral offers by defendant of severance payments, which they accepted by continuing to work after the offers were made. Citing Cain v. Allen Electric & Equip. Co., 346 Mich. 568, 78 N.W.2d 296 (1956), plaintiffs argued that the alleged offers could not be revoked once they were accepted. Defendant opposed the motion for summary disposition, arguing inter alia that (1) because it did not terminate or end plaintiffs' employment, plaintiffs were not entitled to severance payments, (2) the 2009 letters articulated a severance-pay policy that could be revoked or amended by defendant at any time and that the policy was revoked by the June 7, 2011 letters, and (3) Youngblood lacked actual authority to bind defendant to the alleged promises for severance payments, but further discovery was required regarding this factual question.
The trial court concluded that the 2009 letters were clear and unambiguous offers to make severance payments. However, the trial court also determined that summary disposition was premature and permitted additional discovery on the question
After discovery was completed, both parties filed motions for summary disposition. In their second motion for summary disposition, plaintiffs argued that defendant had failed to produce any evidence that Youngblood lacked actual authority to bind defendant to the alleged severance-pay contracts. Defendant responded that Youngblood lacked actual authority to make an irrevocable promise to provide severance payments because he was obligated to follow defendant's policies, including the policy that compensation, benefits, and policies could be modified or revoked at any time.
In defendant's motion for summary disposition, defendant argued that the trial court had decided the first motion for summary disposition prematurely because plaintiffs' depositions were not part of the record at that time. Defendant cited plaintiffs' admissions in their depositions that Youngblood never promised they would receive severance payments if they resigned. Defendant further argued that the plain language of the 2009 letters did not allow for severance upon resignation and that it is clear that the 2009 letters were designed to encourage plaintiffs not to resign — not to encourage them to resign and collect severance pay. Defendant further argued that any benefits were only intended to be paid during the restructuring period and continued employment was a condition of the agreement, if any agreement existed, and that plaintiffs knew that their compensation and benefits could be revoked or changed at any time because the 2009 letters did not require performance. Defendant also contended that if plaintiffs could accept the severance provision in the 2009 letters by continuing to work, they also accepted the June 7, 2011 letters (rescinding the severance provision) by continuing to work. Finally, defendant again argued that Youngblood lacked actual authority to make an irrevocable promise on behalf of defendant to provide severance payments and that, with respect to their claim of promissory estoppel, plaintiffs did not forbear from resigning.
The trial court found that defendant had offered no evidence to refute plaintiffs' assertion that Youngblood had actual authority to bind defendant to pay the severance at issue, and once again concluded that Youngblood's 2009 letters to plaintiffs were promises to pay severance, which entitled plaintiffs to severance payments upon their resignations from defendant. Citing Cain, the trial court held that the fact that each plaintiff continued to work after Youngblood's offer of severance payments to them constituted acceptance of his offers and that defendant was therefore precluded from subsequently revoking the severance offers. In its May 30, 2012 order, the trial court awarded Amy $106,744.90 and Douglas $91,222.02. The trial court also dismissed Counts II (breach of implied contract) and III (promissory estoppel) as moot.
On appeal, defendant argues that the trial court erred by concluding that a unilateral severance-pay contract existed. We agree.
The existence and interpretation of a contract are questions of law, which this Court reviews de novo. Kloian v. Domino's Pizza, LLC, 273 Mich.App. 449, 452, 733 N.W.2d 766 (2006). This Court also reviews de novo the trial court's grant of summary disposition. Spiek v. Dep't of
Plaintiffs moved for summary disposition pursuant to MCR 2.116(C)(10), which tests the factual sufficiency of the complaint. Urbain v. Beierling, 301 Mich.App. 114, 122, 835 N.W.2d 455 (2013). In evaluating a motion for summary disposition brought under Subrule (C)(10), a reviewing court considers affidavits, pleadings, depositions, admissions, and other evidence submitted by the parties in the light most favorable to the party opposing the motion. MCR 2.116(G)(5); Tienda v. Integon Nat'l Ins. Co., 300 Mich.App. 605, 611-612, 834 N.W.2d 908 (2013). Summary disposition is properly granted if the proffered evidence fails to establish a genuine issue regarding any material fact and the moving party is entitled to judgment as a matter of law. Tienda, 300 Mich. App. at 611, 834 N.W.2d 908; MCR 2.116(C)(10).
"`A contract must be interpreted according to its plain and ordinary meaning.'" Wells Fargo Bank, NA v. Cherryland Mall Ltd. Partnership (On Remand), 300 Mich.App. 361, 386, 835 N.W.2d 593 (2013), quoting Holmes v. Holmes, 281 Mich.App. 575, 593, 760 N.W.2d 300 (2008).
Again, the trial court concluded, and plaintiffs maintain on appeal, that a unilateral severance-pay contract existed.
Both parties and the trial court relied heavily on Cain, 346 Mich. 568, 78 N.W.2d 296. In Cain, the employer issued a personnel policy, which among other provisions included a termination policy that provided that "an `executive' having 5 to 10 years employment should be entitled to 2 months termination pay." Id. at 571, 78 N.W.2d 296. The personnel policy also included the following caveat: "Of course such policies cannot be complete and are subject to change or amendments either through necessity created by laws or for other reasons that may come to our attention.'" Id. at 570, 78 N.W.2d 296. The
Our Supreme Court held that the termination policy was an offer of a contract, which the employee accepted by continuing employment beyond the five-year term required by the policy. Id. at 579-580, 78 N.W.2d 296. Because the employee accepted the offer, the company was called upon to perform, preventing the company from changing the policy as the board of directors tried to do with its motion to deny termination pay to the employee. Id. at 580, 78 N.W.2d 296.
In Gaydos v. White Motor Corp., 54 Mich.App. 143, 146, 220 N.W.2d 697 (1974), employees were promised severance pay (in lieu of two weeks' termination notice) if they had more than six months of service with the employer. This Court concluded that, by the employees' continuing to work after the promulgation of the policy, "consideration was supplied for a unilateral contract, upon which the employees had the right to rely." Id. at 148, 220 N.W.2d 697.
The facts of this case are distinguishable from Cain and Gaydos. The 2009 letters at issue here did not create unilateral severance-pay contracts because the letters did not require plaintiffs' action or forbearance in reliance on the employer's promise. Sniecinski, 469 Mich. at 138 n. 9, 666 N.W.2d 186. In Cain, the employee was required to work between 5 and 10 years to earn 2 years of termination pay. In Gaydos, the employees were required to work 6 months to earn severance pay. In this case, although Youngblood wrote that the purpose of the 2009 letters was to express defendant's commitment to plaintiffs' continued employment with defendant, plaintiffs need not have continued their employment to collect the severance payments. Again, the letters provided:
The phrase "ended in any manner in the future" renders Youngblood's "promise" a gratuity and not a unilateral offer of a contract. As defendant correctly argues, plaintiffs were not required to work at all after receiving the letters. Rather, the plain language of the letters enabled plaintiffs to resign immediately and collect the severance pay offered.
The facts of this case are similar to the facts in Kolka v. Atlas Chem. Indus., 13 Mich.App. 580, 164 N.W.2d 755 (1968). In Kolka, the plaintiff had been on disability leave for approximately one year when the employer instituted a separation-pay policy. Id. at 581, 164 N.W.2d 755. Although the plaintiff was on inactive payroll, he was in "no position to comply with or give consideration for an offer of" separation
In the instant case, defendant's severance-pay policy required no consideration (performance or forbearance) by plaintiffs. Because no consideration was required to accept the severance pay offered in the 2009 letters, no unilateral contract was formed. Instead, the 2009 letters created a policy that could be modified or revoked. As in Kolka, there was no event here, such as continued employment for a certain number of years, see Cain, 346 Mich. at 571, 78 N.W.2d 296, that could result in the vesting of the right of severance payments. Absent a vested right to severance payments, defendant could revoke the policy as it did by letter on June 7, 2011.
The trial court found that an express contract existed and did not reach plaintiffs' claims in Count II (breach of implied contract) or Count III (promissory estoppel). This Court generally does not review an issue undecided by the trial court unless it is a question of law and all the facts needed for resolution are present. Candelaria v. B C Gen. Contractors, Inc., 236 Mich.App. 67, 83, 600 N.W.2d 348 (1999). Because the interpretation of the 2009 letters is a question of law, this Court may review those claims also.
Plaintiffs' breach-of-implied-contract claim is derived from the discharge-for-cause doctrine enunciated by Toussaint v. Blue Cross & Blue Shield of Mich., 408 Mich. 579, 292 N.W.2d 880 (1980). In Toussaint, the Michigan Supreme Court held that a provision of an employment contract providing that an employee shall not be discharged except for cause is legally enforceable, even if the contract is indefinite or not for a definite term. The provision could become part of the contract either (1) by express agreement, oral or written, which required negotiation, or (2) as a result of an employee's legitimate expectations grounded in an employer's policy statements. The Supreme Court in Toussaint held that both plaintiffs had presented sufficient evidence of an express agreement. For example, one plaintiff was told that if he was "doing the job," he would not be discharged. The Supreme Court further held that a jury could find that one of the two plaintiffs also had legitimate expectations (or an implied contract) grounded in his employer's written
In Certified Question, 432 Mich. at 441, 443 N.W.2d 112, the Supreme Court next answered in the affirmative that a written discharge-for-cause personnel policy (an implied contract) could be unilaterally modified by an employer without explicit reservation of that right at the outset. The Supreme Court noted:
The Supreme Court concluded that a policy should be a "flexible framework for operational guidance" rather than "a perpetually binding contractual obligation," which would allow businesses to be "adaptable and responsive to change," id. at 456, 443 N.W.2d 112, and as such, an employer may unilaterally make changes in a written discharge-for-cause policy, but "reasonable notice of the change must be uniformly given to affected employees," id. at 456-457, 443 N.W.2d 112. The Court noted that discharge-for-cause is not a right that can accrue or vest and suggested that employers may not so easily change policies that do accrue or vest. Id. at 457, 443 N.W.2d 112.
Our Supreme Court has since declined to extend Toussaint's legitimate-expectations test to a compensation plan: "Were we to extend the legitimate-expectations claim to every area governed by company policy, then each time a policy change took place contract rights would be called into question." Dumas v. Auto Club Ins. Ass'n, 437 Mich. 521, 531, 473 N.W.2d 652 (1991) (opinion by RILEY, J.).
Again, the trial court did not reach the question whether an implied contract existed. Michigan courts have not extended the legitimate-expectations test to severance-pay policies, and we decline to do so here. Employers should enjoy flexibility in modifying their policies. See Certified Question, 432 Mich. at 456, 443 N.W.2d 112. But even if we were to conclude that plaintiffs had legitimate expectations of severance payments, defendant properly revoked the severance-pay policy with the June 7, 2011 letters. Pendleton explained that the economic downturn and restructuring that spurred the 2009 letters had ended, so the severance-pay policy was no longer necessary. There has been no allegation by plaintiffs that defendant failed to provide reasonable notice of the June 7, 2011 change. Id. at 457, 443 N.W.2d 112. In fact, when plaintiffs were originally hired by defendant, they signed personnel forms that provided that changes to employment, compensation, and benefits could be modified or eliminated at any time upon simple written notice, which they received from Pendleton.
Plaintiffs claim that they rejected the June 7, 2011 letters revoking the severance-pay
Just as plaintiffs had no legitimate expectations that the severance-pay policy would not be revoked, plaintiffs had no claim in promissory estoppel. The elements of promissory estoppel are
First, the 2009 letters articulated not a promise, but a severance-pay policy that could be changed at will. Moreover, even if defendant had made a promise by the 2009 letters, before revoking the severance-pay policy, defendant could not have reasonably expected that its revocation of the "promise" by the June 7, 2011 letters would induce plaintiffs to resign within a month and thereafter attempt to collect the severance pay referred to in the "promise." Therefore, plaintiffs' promissory estoppel claim could not have survived summary disposition.
In summary, no unilateral contract for severance pay existed, and defendant properly revoked the severance-pay policy on June 7, 2011. Thus, when plaintiffs subsequently resigned, they were not entitled to severance payments. The trial court erred by finding that defendant breached an express contract to make severance payments to plaintiffs and granting summary disposition in favor of plaintiffs for that breach of contract. In light of the June 7, 2011 letters revoking the policy, plaintiffs' claims in Counts II (breach of implied contract) and III (promissory estoppel) also could not have survived summary disposition.
We reverse the trial court's grant of summary disposition to plaintiffs on Count I (breach of express contract), denial of defendant's motion for summary disposition, and dismissal of plaintiffs' remaining claims as moot. We vacate the trial court's award of damages to plaintiffs and remand to the trial court for entry of an order granting summary disposition in favor of defendant on all counts. We do not retain jurisdiction.
Defendant, as the prevailing party on appeal, may tax costs pursuant to MCR 7.219.
O'CONNELL, P.J., and METER, J., concurred with WILDER, J.