Case Title: City Council of Laramie v. Kreiling

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 1996-02-20T00:00:00Z

Document:
City Council of Laramie v. Kreiling1996 WY 22911 P.2d 1037Case Number: 95-170Decided: 02/20/1996Supreme Court of Wyoming

CITY COUNCIL OF LARAMIE, Wyoming,  

Appellant (Defendant), 

 

v. 

 

KIRK KREILING,  

Appellee (Plaintiff).

 

 

Appeal 
from the District Court of Albany County 

Honorable 
Arthur T. Hanscum, Judge.

 

Representing 
Appellant: 

Alan B. Minier and Andrea L. 
Richard of Rothgerber, Appel, Powers & Johnson, Cheyenne, for 
appellant.

 Representing 
Appellee: 

Mary Elizabeth Galvan, Tracy 
L. Zubrod and Linda S. Basom of Mary Elizabeth Galvan, P.C.; and Mary J. 
Chinnock, Laramie.

 

Before GOLDEN, C.J., and 
THOMAS, MACY, TAYLOR, and LEHMAN, JJ.

GOLDEN, Chief Justice. 

[¶1]      Appellant City 
Council of Laramie (Laramie) appeals a bench trial verdict awarding police 
officer Kreiling (Kreiling) damages pursuant to 42 U.S.C. § 1983 and 
reinstatement.

 

[¶2]      We 
reverse.

 

ISSUES

 

[¶3]      Appellant states 
these issues:

 

I. "Promotional Procedures" are not a property 
interest protected by the United States Constitution or actionable under 42 
U.S.C. § 1983.

 

II. The District Court improperly limited the City's 
statutory and legislative authority to set employee 
salaries.

 

III. The District Court erred in concluding that the 
City breached its implied contract with Kreiling.

 

[¶4]      Appellee presents 
these issues:

 

I. The District Court's conclusion that Officer 
Kreiling had a contractually protected interest in promotion through the 
Patrolman I, II and III ranks and in the grievance procedures of the Personnel 
Rules is supported by the overwhelming weight of the evidence, and clear 
principles of contract law.

 

II. The Personnel Rules provide an independent source 
of mutually explicit "rules or understandings" underlying Officer Kreiling's 
protected property interest in Appellant's promotional procedures and their 
attendant benefits which were, as the District Court found, based on competent 
evidence, arbitrarily undermined by the application of the 1990 reclassification 
to Officer Kreiling's status as an employee. 

 

III. The District Court did not limit Appellant's 
statutory or legislatively granted authority to set employees' salaries by 
holding Appellant to its constitutional and contractual obligations to its 
employees in implementing such reclassification.

 

FACTS

 

[¶5]      For economic 
reasons, the City of Laramie amended its pay plan for patrol officers in the 
police department in 1990. Patrolman Kreiling claimed that the amendment as 
applied to him deprived him of contractual rights and he filed a grievance. The 
city manager of Laramie determined that the personnel rules did not permit a 
grievance hearing against a pay plan amendment and denied Kreiling's request for 
a hearing. Kreiling filed suit alleging breach of contract, promissory estoppel, 
and violations of federal procedural due process, substantive due process, and 
equal protection. Only the breach of contract and federal procedural and 
substantive due process claims survived pretrial motions and Kreiling does not 
appeal those pretrial decisions.

 

[¶6]      The due process 
claims arose from an asserted property interest in Kreiling's government 
employment. Kreiling relied on Wyoming's state civil service statutes, the City 
of Laramie Personnel Rules, the police department's General Order 89-3, and an 
employment contract between himself and the police department as the basis for 
his asserted property interest. That reliance necessitates that we understand 
the applicable provisions of those statutes, rules and policies, and the 
contract.

 

State Statutes

 

[¶7]      In Wyoming, the 
governing body of all cities and towns may establish and regulate a police 
department, pass ordinances relating to the department and adopt job 
descriptions for all department personnel. WYO. STAT. § 15-1-103(a)(xxxiv) 
(1992). In accordance with Wyoming's civil service statutes, Laramie has 
established a police commission to employ and promote only those candidates the 
commission rules eligible by virtue of merit and experience. WYO. STAT. §§ 
15-5-102, -105, -119 (1992). WYO. STAT. § 15-5-106(a) (1992) sets out the 
respective responsibilities of the commission and the city regarding position 
classifications:

 

(a) The commissions shall classify the various 
positions in the departments into classes or schedules based upon the nature of 
the service to be rendered or duties to be performed. The governing body shall 
then establish uniform working hours and wages for all employees in each class 
or schedule and may regulate the rate of wages and the number of employees in 
any class or schedule as necessary. . . .

 

See also 
WYO. STAT. § 15-5-119(a)(i)(A) (1992). WYO. STAT. § 15-5-112(b) (1992) provides 
for discharge or reduction in pay or rank only upon cause and after notice and 
an opportunity to respond unless the action is pursuant to a classification 
program under WYO. STAT. § 15-5-106 (1992).

 

[¶8]      Under state 
statutes, the city manager controls and manages the police department. WYO. 
STAT. § 15-4-206(a) (1992). Although the city manager has further powers 
regarding other city employees, see WYO. STAT. §§ 15-4-202(g), -206(b) (1992), 
the state statutes treat police officers differently and vests most powers with 
the police commission, if established, and the city council. WYO. STAT. § 
15-5-101 to -121 (1992).

 

City of Laramie Police Department Civil Service 
Rules

 

[¶9]      These rules 
establish the Police Department Civil Service Commission. As directed by 
statute, the commission has organized positions in the police department into 
two classes: patrol officer and lieutenant. Other non-classified positions are 
established by the city council. City of Laramie Police Department Civil Service 
Rules, Chapter VI. Chapters V through XVI of the rules set out eligibility, 
employment, promotion, and discharge procedures.

 

City of Laramie Personnel 
Rules

 

[¶10]   As permitted by the state statute, 
Laramie has promulgated a handbook of personnel rules applicable to all 
classified employees and administered by the city manager. City of Laramie 
Personnel Rules, §§ 1.22, 2.31. Police officers classified as patrol officers or 
lieutenants are classified employees under the personnel rules and subject to 
those rules. Id. at § 1.22. Section 
1.27 permits a department head to promulgate rules which are consistent with the 
personnel rules.

 

[¶11]   In accordance with the civil 
service statute, the rules require that positions be classified on the basis of 
the kind and level of their duties and responsibilities and all positions within 
a class must be sufficiently alike to permit use of the same job description, 
the same qualifications, and the same pay scale. Id. at § 3.11. The rules further provide 
that the city manager may revise the classification plan by adding, abolishing, 
consolidating, dividing, or amending existing classes. Id. at § 3.31. In addressing 
compensation, the rules state that there shall be salary ranges and those salary 
ranges shall be linked to the position-classification plan and shall be 
determined with due regard to ranges of pay for other classes, requisite 
qualifications, and other factors. Id. at § 4.12. The pay plan may be 
amended from time to time by the city council on its own initiative or on 
recommendations by the city manager, either through adjustment of rates or by 
reassignment of job classes to different pay ranges. Id. at § 4.13. Deviation from the pay 
plan for a new hire is permitted if the city manager deems it necessary to 
recognize exceptional qualifications of an applicant or if there are no 
available applicants at the minimum rate. Id. at § 4.21. The rules state that an 
employee's grade may be reduced as a consequence of reclassification of his 
position. Id. at § 
11.51.

 

[¶12]   The rules also provide for six 
kinds of disciplinary action for a list of specified conduct constituting 
unsatisfactory performance. Id. at §§ 
12.12, 12.22. Written notice and an opportunity to be heard is required before 
dismissal. Id. at § 12.42. However, 
the city has reserved the right for summary dismissal. Id. at § 13.51. The rules also reserve 
the city's right to abolish positions or conduct a reduction-in-force, id. at § 
13.31, subject to a scheme which any employee laid off may utilize to retain 
employment. Id. at §§ 
13.3-13.35.

 

[¶13]   Finally, grievance procedures and 
appeal procedures are set out at length in Section 14; however, the procedures 
are separate and distinct. Id. at §§ 
14.1-14.48. Sections 14.11 through 14.14 assure classified employees that all 
grievances will be promptly considered by the department head who shall report 
the grievance to the city manager. Id. at § 14.12. The city manager is 
charged with the responsibility of determining if the grievance has been settled 
to the satisfaction of the employee and, if not, the employee may request the 
city manager to investigate or the city manager may initiate an investigation of 
his own. Id. at § 14.13. In case an 
agreement is not reached with the city manager, the employee may ask for a 
hearing of his grievance before the personnel board. Id. at § 14.14.

 

[¶14]   Although grievances are not limited 
to specified subjects, an appeal is confined to disciplinary actions, id. at § 14.21, specified 
as

 

reduction-in-grade, a suspension of more than ten 
(10) calendar days, a dismissal, and any other actions affecting the status of 
the employee, on the grounds that the action or decision complained of resulted 
from one or both of the following factors:

(a) Failure to observe or correctly apply the 
provisions of these rules or the terms of his appointment.

(b) Incomplete consideration of the 
facts.

Id. at § 
14.41.

 

Pay Classification System

 

[¶15]   Since 1987, the Laramie City 
Council has operated a pay classification system which provided salary increases 
to police officers based upon time in service and satisfactory performance. 
Under that pay classification system, an entry level police officer was 
classified as a Patrolman I, Grade 15, Step A. Upon successful completion of a 
six month probationary period, the officer's pay increased to that of Grade 15, 
Step B. Thereafter, the officer's pay increased every twelve months through 
Steps C, D, and E if performance was satisfactory. An officer's progression 
continued at twelve month intervals to Patrolman II, Grade 17, Steps 17D and 
17E, and Patrolman III, Grade 19, which consisted of Steps D and E with the same 
twelve month progression. The next position classification under the pay scheme 
was lieutenant; however, a police officer's promotion to a lieutenant's position 
only resulted from a competitive selection process.

 

[¶16]   Kirk Kreiling was hired by the City 
of Laramie Police Department on January 2, 1989, as a Patrolman I. Before his 
employment with the City of Laramie, Kreiling had served as a deputy sheriff and 
police officer in McDonough County and Urbana, Illinois for three and one-half 
years. Because of this prior service, the parties agreed that Kreiling should be 
hired at a higher rate of pay. On January 2, 1989, a beginning Patrolman I was 
classified at a Grade 15, Step A. Under the terms of his contract, one month 
after receiving his POST certification, Kreiling received an increase to Grade 
15, Step B, and later in 1989, Kreiling moved to Grade 15, Step C. Specifically, 
the district court found that

 

[b]ecause of his prior law enforcement experience, 
plaintiff was promised that he would be hired as a Patrolman I, Grade 15B, where 
he was to serve his probationary 6 months, and then advance through the steps 
and grades at 12 month intervals. He was, however, hired at Patrolman I, Grade 
15A, and held there for one month, until he had his POST certification. 
Plaintiff does not contest this modification of his original hiring 
terms.

 

The district court also 
found that the evidence showed that the effect of the contract was his early 
advancement through the steps in Grade 15 with concomitant early advancement to 
Grade 17 (Patrolman II) and then to Grade 19 (Patrolman 
III).

 

[¶17]   On August 21, 1989, the chief of 
police for Laramie issued General Order 89-3 which stated its purpose was to 
establish and clarify the policies of the department regarding organization, 
rank and seniority. That order confirmed the following order of 
rank:

 

1. Chief of Police

2. Captain

3. Lieutenant

4. Patrolman III

5. Patrolman II

6. Patrolman I

 

[¶18]   The order stated the following 
concerning seniority:

 

* * * * * *

 

B. Seniority within the patrolman ranks shall be 
determined first by rank and second by continuous time in 
service.

C. Special situations or operations may necessitate a 
lower ranking and/or less senior officer being placed in command. These 
situations will be specifically outlined or authorized by the Chief of 
Police.

 

[¶19]   At trial, the chief of police 
testified that the civil service statute and the personnel rules authorized the 
issuance of such an order by the chief of police. Section 1.27 of the personnel 
rules for the City of Laramie authorizes a department head's establishment of 
such rules. One purpose served by the ranking system was to designate 
supervision for officers below the rank of lieutenant. When supervision by a 
lieutenant was unavailable, the police department established a procedure to 
have supervision limited to Patrolman III officers but also authorized Patrolman 
II officers to act as supervisors on a case by case basis. A second purpose 
served was in selecting overtime assignments. When overtime was available, 
Patrolman III's were offered the first opportunity for an 
assignment.

 

[¶20]   The ranking system also served the 
purpose of determining eligibility for promotion to a lieutenant's position. In 
1991, a vacancy occurred in a lieutenant's position for the first time in 
approximately ten years. The police department requested that the civil service 
commission certify a pool of applicants who would be eligible to take the 
lieutenant's examination. The police department recommended that the pool of 
applicants be limited to officers in the Patrolman III grade. A memo was issued 
that only Patrolman III officers were eligible to test for lieutenant. However, 
the City of Laramie Police Department Civil Service Rules, Chapter X, Section 9, 
do not limit by rank, but instead limit by time in service. Section 9 states 
that "[a]ll internal candidates for Lieutenant shall have three years of 
service, two of which must be in the Laramie Police Department, as of the date 
the promotional examination commences." Despite the fact that Kreiling had three 
years of time in service and met the rules' requirement, he was considered 
ineligible to test for the lieutenant's position because he was not a Patrolman 
III.

 

[¶21]   On July 1, 1990, the Laramie City 
Council, the duly organized governing body of the City of Laramie, amended its 
pay plan and implemented a city-wide reclassification plan. Under the new 
system, Patrolman I was reclassified to Grade 17. Kreiling was reclassified as 
Patrolman I, Grade 17, Step A. The city council implemented the new plan on an 
equal pay method except at those steps that would not exist under the new plan 
and at Step E of the grades, claiming this method "spread the cost of 
implementation and reduce[d] the cost of immediate implementation." This plan 
resulted in persons moving ahead one grade and back one step in order for the 
pay to remain the same. Laramie asserts that the reclassification was done to 
attract higher quality employees to entry level city positions and the parties 
agree the reclassification was not done for an improper 
motive.

 

[¶22]   Kreiling was reclassified as Grade 
17, Step A, but believed he should have been reclassified as Grade 17, Step B. 
Kreiling discussed the misapplication with his supervisor. That supervisor 
advised the chief of police that there appeared to have been an inconsistency 
which might be remedied with a minor modification, but no action was taken. 
Kreiling then filed a grievance. The city manager of Laramie determined that 
Kreiling could not challenge a pay plan reclassification and determined that the 
matter was neither grievable nor appealable. Kreiling filed 
suit.

 

[¶23]   The district court found as 
follows:

 

6. Because of his prior law enforcement experience, 
plaintiff was promised that he would be hired as a Patrolman I, Grade 15B, where 
he was to serve his probationary 6 months, and then advance through the steps 
and grades at 12 month intervals. He was, however, hired at Patrolman I, Grade 
15A, and held there for one month, until he had his POST certification. 
Plaintiff does not contest this modification of his original hiring 
terms.

 

* * * * * *

 

9. Plaintiff testified that based on his early 
advancement through Patrolman I, Section 4.41 of the Personnel Rules, and the 
understandings under which he was hired, the effect of his early advancement to 
Grades 15B and 15C would have been concomitant early advancement to Patrolman 
II, Grade 17D by August 1992 (after 43 months); and Patrolman III, Grade 19D by 
August 1994.

 

* * * * * *

 

17. The effect of reclassification on plaintiff, 
therefore, was the negation [of] the early advancement earned by him upon being 
hired by virtue of his prior experience; loss of the wage increase afforded all 
other officers in Grade 15, and has delayed his promotion through the grades to 
the rank of Patrolman II by 23 months and the rank of Patrolman III for a full 
year; concomitant losses of salary by being held back in grade from promotion; 
and privileges attendant on seniority, including the opportunity for supervisory 
authority and experience, and eligibility to compete for promotion when a 
vacancy at the lieutenant's rank becomes open.

 

* * * * * *

 

29. Flip McConnaughey neither determined whether the 
grievance had been settled to the employees' satisfaction, nor considered the 
specific concerns of the employees as expressed in their grievance, but instead, 
determined that the reclassification as it applied to plaintiff was neither 
grievable nor appealable.

 

* * * * * *

 

36. The testimony of [police officers established] 
that the order of rank, as defined in General Order 89-3, is necessary for the 
orderly function of the chain of command in a paramilitary 
organization.

 

* * * * * *

 

38. The weight of the evidence is persuasive that 
General Order 89-3, promulgated pursuant to the powers conferred on the Police 
Chief by Section 1.27 of the Personnel Rules, is more than an "internal memorial 
of preferred procedure" and that it governs the definition of rank, and that 
Patrolman I, II, and III are recognized separate ranks within the Police 
Department.

 

39. Based on the consideration for early advancement 
promised plaintiff at the time of his initial hire, the order of rank within the 
Police Department, as defined by General Order 89-3 and the promotional policies 
of the Personnel Rules, plaintiff had a reasonable expectation that absent 
disciplinary cause, he would be promoted to the rank of Patrolman II on 
September 1, 1992, and to the rank of Patrolman III on September 1, 
1994.

 

* * * * * *

 

43. As a result of the negative impact of the 
reclassification as it applied to him, plaintiff lost salary at each step of the 
Patrolman I rank and grade, and in his delayed promotion to the rank of 
Patrolman II.

 

[¶24]   Based on these findings of fact, 
the district court made these conclusions of law:

 

6. Here, the Personnel Rules creates [sic] an implied 
contract of employment with respect to its grievance and promotion policies 
which were breached by Flip McConnaughey's denial of plaintiff's right to pursue 
his grievance of the negative impact of the 19911 reclassification as it applied to 
plaintiff, and by the reclassification's negative impact on plaintiff's 
promotion, and consequent salary increases, to the ranks of Patrolman II and 
Patrolman III, and the denial of the wage increase afforded to other police 
officers in the reclassification.

 

7. Clearly, the Personnel Rules are intended to be 
published to defendant's employees with the expectation that employees will 
understand that the Personnel Rules govern the terms and conditions of their 
employment, and that they confer on both the employer and the employee rights 
and privileges as well as concomitant responsibilities and obligations. The 
Personnel Rules are more than a simple recital of benefits; they make 
commitments to the employees that they will be followed. In exchange for the 
reliance on the rights and privileges conferred on the employee, defendant 
secures an orderly, cooperative work force.

 

* * * * * *

10. Clearly, plaintiff's grievance was based on the 
effect of the reclassification on his status as an employee. He was denied a 
wage increase afforded similarly situated officers; he was effectively demoted 
from midway through the Patrolman I grade to entry level status, both in terms 
of salary and step in grade, and he was detained at the Patrolman I rank 
twenty-five months longer than he should have been.

 

11. [The] denial of plaintiff's right to prosecute 
his grievance violated the grievance procedures of the Personnel Rules and 
constitutes a breach of that contractual provision.

 

* * * * * *

 

17. As a direct and proximate result of the breach of 
contract with respect to promotion procedures, plaintiff is entitled to 
immediate promotion to the rank of Patrolman III, together with full 
compensation for salary losses incurred between the time of the reclassification 
in July 1991 [sic], through the date of his promotion to Patrolman III at an 
interest at 10% per annum.

 

* * * * * *

 

20. As a matter of law, the Personnel Rules of the 
defendant constitute rules and understandings which define certain benefits in 
employment to defendant's employees; in this case, through its promotion 
procedures and with respect to the ranks incorporated into the Personnel Rules 
through General Order 89-3. The Personnel Rules, as a matter of law, have been 
designed and promulgated to induce defendant's employees to rely on its 
commitments that, absent disciplinary cause, police officers will be promoted 
through the Patrolman ranks based on time in service. The entitlement to 
promotion through the ranks [is] more, therefore, than a unilateral expectation 
by plaintiff that he would have been promoted to Patrolman III by September 
1994. As a matter of law, plaintiff had a protected property interest in the 
promotion procedures guaranteed by the Personnel Rules and in his expectation of 
orderly promotion through the Patrolman ranks.

 

[¶25]   Following a bench trial, the 
district court ruled that the personnel rules created an implied contract with 
respect to its promotional procedures which Laramie had breached. The court 
awarded damages for this breach. The district court ruled that an interest in 
promotional procedures is a recognized property interest as a matter of law and 
awarded damages pursuant to 42 U.S.C. § 1983 and held Kreiling was entitled to 
an attorney fees award. The district court ruled that the personnel rules also 
created an implied contract with respect to its grievance procedures which 
Laramie had breached but did not specify damages. Instead, the court ruled that 
that breach was the basis for concluding that Laramie had denied Kreiling due 
process.

 

[¶26]   The district court, however, 
distinguished between the classification system's "promotional procedures" for a 
patrolman and a promotion to lieutenant. Finding that a promotion to lieutenant 
was discretionary, the district court ruled that Kreiling had no property 
interest in sitting for the lieutenant's examination for promotion or in the 
position. Kreiling was awarded damages and ordered reinstated. This appeal 
followed.

 

DISCUSSION

 

Standard of Review

 

[¶27]   In response to Laramie's WYO. 
R.CIV.P. 52(a) motion, the district court entered findings of fact and 
conclusions of law. On appeal, the district court's findings of fact will not be 
overturned unless they are inconsistent with the evidence, clearly erroneous, or 
contrary to the great weight of the evidence. M & M Welding, Inc. v. Pavlicek, 713 P.2d 236, 239 (Wyo. 1986). The district court's conclusions of law are reviewed 
de novo. Hopper v. All Pet Animal Clinic, 
Inc., 861 P.2d 531, 538 (Wyo. 1993).

 

Property Interest

 

[¶28]   The district court's decision 
awarding back pay and reinstatement was based in part upon its conclusion that 
because police officers were entitled to promotions through the Patrolman ranks 
based on time in service, police officers had a protected property interest in 
the promotion procedures guaranteed by the personnel rules and in the 
expectation of orderly promotion through the Patrolman ranks. A deprivation of 
Kreiling's property rights in rank and promotional procedures without due 
process entitled him to damages.

 

[¶29]   Laramie's argument for reversal on 
this issue is simple: Officer Kreiling had no rank and, therefore, had no 
property interest incident to rank or contractual rights regarding rank. Laramie 
contends that the grade and step nomenclature was merely pay table terminology 
and did not confer rank. In its view, Kreiling's property interest exists only 
in his continued employment in the position of patrol officer. Laramie further 
asserts that the general order did not transform pay table terminology to rank 
but merely established a "pecking order" which does not rise to the level of a 
constitutionally protected property interest or alter the personnel rules' terms 
of employment. In addressing the district court's finding that Kreiling and the 
police department had contracted for early advancement at the time of his 
initial hire, Laramie asserts that the record does not support a finding that 
Kreiling would continue to benefit from early advancement. Instead, according to 
Laramie, it merely supports a finding that Kreiling received his salary 
increases sooner because the City saved the cost of academy 
training.

 

[¶30]   Continuing, Laramie asserts that 
the district court erred in holding that Kreiling had a property interest in 
promotional procedures for two reasons: 1) progressions along the pay table at 
twelve month intervals are not promotions, and 2) even if deemed promotions, 
progressions are not a constitutionally protected property interest. 

 

1. Rank

 

[¶31]   Courts can only determine whether a 
deprivation of a constitutionally protected interest has occurred without due 
process of law and cannot provide a forum for resolution of personnel disputes, 
mistakes, or unfair administrative actions. See Bishop v. Wood, 426 U.S. 341, 
349-50, 96 S. Ct. 2074, 2080, 48 L. Ed. 2d 684 (1976). Accordingly, we initially 
determine whether Kreiling was deprived of a protected property 
interest.

 

[¶32]   The Due Process Clause of the 
Fourteenth Amendment provides procedural safeguards against the government's 
arbitrary deprivation of life, liberty, or property interests. Board of Regents v. Roth, 408 U.S. 564, 569, 92 S. Ct. 2701, 2705, 33 L. Ed. 2d 548 (1972). The district court ruled 
that Kreiling was deprived of property interests in his employment with Laramie 
by the arbitrary action of the city manager.

 

[¶33]   The threshold issue then is to 
determine the property interest in city employment. As this court stated in Abell v. Dewey, 870 P.2d 363 (Wyo. 
1994), the United States Supreme Court has recognized that the federal 
constitution does not create a property interest, but one may arise through 
independent sources such as state statutory law, regulations or the terms of 
employment. Abell, 870 P.2d  at 370 
(citing Roth, 408 U.S.  at 577-78, 92 
S.Ct. at 2709). The property interest arises when these sources create for an 
employee a "legitimate claim of entitlement" to certain benefits of employment. 
Abell, 870 P.2d  at 370. "Although the 
underlying substantive interest is created by `an independent source such as 
state law,' federal constitutional law determines whether that interest rises to 
the level of a `legitimate claim of entitlement' protected by the Due Process 
Clause." Memphis Light, Gas & Water 
Div. v. Craft, 436 U.S. 1, 9, 98 S. Ct. 1554, 1560, 56 L. Ed. 2d 30 (1978) 
(quoting Roth, 408 U.S.  at 577, 92 
S.Ct. at 2709); Perry v. Sindermann, 
408 U.S. 593, 602-03, 92 S. Ct. 2694, 2700, 33 L. Ed. 2d 570 (1972). The nature and 
scope of this property interest (that is, the number and sort of benefits) 
depend upon the state law creating the claim of entitlement, Mandel v. Allen, 889 F. Supp. 857, 865 
(E.D.Va. 1995), but the federal constitution protects against the arbitrary 
deprivation of benefits that fall within the scope of the property interest 
conferred by state law. Roth, 408 U.S.  at 577, 92 S. Ct.  at 2709. The property interest may extend to rights that 
are incident to employment. Mandel, 
889 F. Supp.  at 865; Roth, 408 U.S. 
at 576, 92 S. Ct.  at 2708; Schultz v. 
Regents of University of Cal., 160 Cal. App. 3d 768, 206 Cal. Rptr. 910, 913-14 
(1984).

 

[¶34]   The district court determined that 
policies and a contract had conferred a ranking system and that Kreiling had a 
property interest in his rank. An interest attains the status of "property" by 
virtue of the fact that it has been initially recognized and protected by 
federal or state rules of law. Bishop, 426 U.S.  at 344-45, 96 S. Ct.  at 
2077-78. A mutually recognizable entitlement will receive constitutional 
protection. Perry, 408 U.S.  at 602, 
92 S. Ct.  at 2700; Roth, 408 U.S.  at 
577, 92 S. Ct.  at 2709. In considering whether Kreiling has a "property interest" 
in being classified as Patrolman I, Grade 17, Step B, the court must consider 
the relevant state law and regulations, or other mutually explicit 
understandings. See Brown v. 
Ledbetter, 569 F. Supp. 170, 172-73 (N.D.Ga. 1983); Roth, 408 U.S.  at 577, 92 S. Ct.  at 2709. 
The district court ruled that the disseminated written policies created 
expectations that they would be followed causing the policies to become 
contractual in nature. Laramie agrees that the personnel rules create an implied 
contract of employment and its terms create contractual 
obligations.

 

[¶35]   The thrust of the district court's 
decision is that under the personnel rules, General Order 89-3 permissibly 
transformed the pay table terminology of Patrolman I, II, and III into a ranking 
system. Kreiling acquired a property interest in that "rank" by virtue of his 
contract for early advancement. The district court found that, as applied to 
Kreiling, the reclassification caused him to be "demoted." Although the 
reclassification actually raised Kreiling's grade with no loss of position or 
pay suffered and maintained his time in service, we accept the court's 
terminology for purposes of analysis. See 
Schultz, 206 Cal. Rptr.  at 913 (difference between demotions and 
reclassification is one of substance). Laramie's personnel rules distinguish 
between a demotion due to disciplinary action and a demotion due to an amendment 
to the pay plan. The former may only occur for cause, thus establishing a 
property interest in continued employment. See Lucero v. Mathews, 901 P.2d 1115, 
1120 (Wyo. 1995). The latter type of demotion may occur in accordance with the 
government's right to address its organizational needs and does not establish a 
property interest. Mandel, 889 F. Supp.  at 866. This rule is viewed as fairly balanced towards preserving the 
government's right to achieve efficiency and economic considerations while 
preserving the employee's right to protection against job actions directed 
specifically at him. Mandel, 889 F. Supp.  at 866. Because the personnel rules 
did not create a legitimate expectation that the pay table could not be amended, 
Kreiling does not have a property interest in his step classification. Mandel, 889 F. Supp.  at 
873.

 

[¶36]   The police department's general 
order did not change the distinction and could not alter the personnel rules' 
reservation of the right to amend, including reducing steps or pay, as part of a 
compensation scheme reorganization. In the absence of disciplinary proceedings, 
Kreiling had only a unilateral expectation of continued progression on the pay 
scale which did not rise to the level of a property interest. See Mandel, 889 F. Supp.  at 
867.

 

[¶37]   The district court recognized the 
above; however, it believed that Kreiling was an exception to this rule by the 
contractual rights he gained upon his hiring. This court has 
said:

 

[E]very breach of a public contract is not actionable 
as a violation of constitutional rights. Therefore, the federal courts 
distinguish between "mere" contract rights and property rights created by 
contract. [citations omitted]

 

Even though every contract may confer some legal 
rights under state law, that fact alone need not place all contracts within 
federal due process protection. "Although the underlying substantive interest is 
created by `an independent source such as state law,' federal constitutional law 
determines whether that interest rises to the level of a `legitimate claim of 
entitlement' protected by the Due Process Clause." Memphis Light, Gas & Water Division v. 
Craft, 436 U.S. 1, 9, 98 S. Ct. 1554, 1560, 56 L. Ed. 2d 30 (1978) (quoting Roth, 408 U.S.  at 577, 92 S. Ct.  at 2709; 
Perry, 408 U.S.  at 602, 92 S.Ct. at 
2700), . . . . Federal law accordingly may differentiate between contractual 
rights. Our problem, then, is to determine what kinds of contracts with the 
state create rights that are protected by the Fourteenth 
Amendment.

 

Abell, 
870 P.2d  at 372 (quoting San Bernardino 
Physicians' Services Medical Group, Inc. v. San Bernardino County, 825 F.2d 1404, 1408-09 (9th Cir. 1987)).

 

[¶38]   Under the personnel rules, the 
minimum rate of pay is to be paid to new employees. However, the rules also 
provide that a higher rate of pay may be offered to a new hire who possesses 
exceptional qualifications. The testimony at trial established that, when hired, 
Kreiling received a higher rate of pay because of prior experience. The 
testimony also established that the effect of the higher rate was to place him 
at a higher position on the pay plan structure, Grade 15, Step B and that, 
ordinarily, an officer will spend one year at that step before advancing to Step 
C. Kreiling, with the approval of the city manager, only spent six months at 
Step B before he was advanced to Step C.

 

[¶39]   There was no evidence, however, 
that any agreement was struck which granted Kreiling additional time in service 
for purposes of pay plan classification and no evidence that any agreement 
existed to exempt Kreiling from a pay plan amendment. See Schultz, 206 Cal. Rptr.  at 914. 
Without this evidence, the district court's determination that Kreiling had a 
contract for early advancement is clearly erroneous. Kreiling had contracted to 
start employment at a higher rate of pay.

 

[¶40]   In view of the above, neither 
statute, rule, written policy nor contract were mutually explicit understandings 
supporting a legitimate claim of entitlement in a benefit. Roth, 408 U.S.  at 577, 92 S. Ct.  at 2709; 
Perry, 408 U.S.  at 602-03, 92 S. Ct. 
at 2700. Kreiling could not reasonably expect that the pay table would not be 
reclassified at the sole discretion of the city council. See Schultz, 206 Cal. Rptr.  at 
915.

 

2. 
Promotional Procedures

 

[¶41]   Kreiling claimed that the personnel 
rules guaranteed the timing of his advancement through the grades and steps of 
the pay plan and this substantive interest rose to the level of a 
constitutionally protected property interest. He claimed that the 
reclassification delayed that timing, depriving him of that property interest 
without due process. Kreiling makes no argument that he was entitled to a 
predeprivation hearing, only a postdeprivation hearing.

 

[¶42]   Using the terminology "promotional 
procedures," the district court determined that Kreiling did have a property 
interest in his progression on the pay scale and was deprived of that interest 
when the reclassification plan was applied to Kreiling without regard to his 
early advancement. Critical to this ultimate conclusion was the district court's 
initial determination that, absent disciplinary cause, police officers will be 
promoted through the Patrolman ranks based on time in service. This 
determination is clearly erroneous because progression on the pay scale includes 
a discretionary feature, namely, a supervisor must determine performance is 
satisfactory, preventing the promotional procedures from rising to the level of 
a property interest. At most, Kreiling had only a unilateral expectation that he 
would progress through the pay table at twelve month 
intervals.

 

[¶43]   Assuming without deciding that the 
pay table progression is a promotion, research indicates that courts have 
acknowledged the possibility that a property interest in promotion might exist. See Bigby v. City of Chicago, 766 F.2d 1053, 1059 (7th Cir. 1985), cert. 
denied, 474 U.S. 1056, 106 S. Ct. 793, 88 L. Ed. 2d 771 (1986) (collecting 
cases which "assume" the possibility of a property interest in promotion); see also Schwartz v. Thompson, 497 F.2d 430, 433 (2d Cir. 1974) (circumstances are conceivable where a promotion would 
be virtually a matter of right). However, a property interest does not exist 
when a promotion depends upon the discretion of a supervisor. See Olim v. Wakinekona, 461 U.S. 238, 
249, 103 S. Ct. 1741, 1747, 75 L. Ed. 2d 813 (1983) (without substantive 
limitations on official discretion, no liberty interest was created); Swartz v. Scruton, 964 F.2d 607, 610 
(7th Cir. 1992) (no entitlement to a merit pay increase per se when based on 
multiple layers of contingency).

 

[¶44]   There was much argument between the 
parties as to whether International Ass'n 
of Firefighters, Local 2069 v. City of Sylacauga, 436 F. Supp. 482 (N.D.Ala. 
1977), supported the district court's determination that promotional procedures 
are a recognized property interest as a matter of law. In that class action, 
before determining that the property interest was constitutionally protected, 
the court determined that applicable state law required that promotion of fire 
fighters occur only after competitive examination. Since it was likely that a 
member of the class would be promoted following testing, the court found a 
property interest in the promotional procedures. Sylacauga, 436 F. Supp.  at 490. Those 
are not the facts of this case. Kreiling would progress through the pay table at 
regular intervals if his performance were satisfactory. There is no question but 
that his performance was satisfactory; however, the discretionary feature of the 
pay table prohibits our determination that a property interest exists in 
progression, meaning that Kreiling had only a unilateral expectation that he 
would progress through the pay table at regular intervals.

 

3. Misapplication of the Reclassification 
Plan

 

[¶45]   Next, we address the district 
court's determination that the amended pay plan was misapplied as to Kreiling 
and caused him not to receive the pay increase which the reclassification had 
given to other officers. The district court found:

 

15. Within the Laramie Police Department, all 
officers at Grade 15, including plaintiff, were reclassified to Grade 17. All 
officers at Grades 15A and 15B were reclassified to Grade 17A and received a 
wage increase as a result of the reclassification; all officers at Grade 15E 
were reclassified to Grade 17E and received a wage increase as a result of the 
reclassification. A year of service time was removed from Patrolman II, now 
reclassified to Grade 18E, and Patrolman III was reclassified to Grade 20D 
through 20E.

 

16. Although plaintiff, at Grade 15C, was eighteen 
months through Grade 15, he was reclassified back to the entry level grade for 
Laramie Police Officers and received no wage increase as a result of the 
reclassification.

 

17. The effect of reclassification on plaintiff, 
therefore, was the negation [of] the early advancement earned by him upon being 
hired by virtue of his prior experience; loss of the wage increase afforded all 
other officers in Grade 15, and has delayed his promotion through the grades to 
the rank of Patrolman II by 23 months and the rank of Patrolman III for a full 
year; concomitant losses of salary by being held back in grade from promotion; 
and privileges attendant on seniority, including the opportunity for supervisory 
authority and experience, and eligibility to compete for promotion when a 
vacancy at the lieutenant's rank becomes open.

 

[¶46]   As a matter of law, the city 
council's decision to treat pay increases differently is not a due process 
violation for the reason that there is no property interest in the discretionary 
pay increase which resulted from the reclassification. Mandel, 889 F. Supp.  at 
866. The state statutes and Laramie's rules only provide for due process when 
pay is reduced for cause meaning that Kreiling only had a unilateral expectation 
his pay would increase as a result of the reclassification. The district court's 
determination that the property interest in rank entitled Kreiling to the pay 
increase has already been held to be error and as such no legal remedy under 42 
U.S.C. § 1983 is available to Kreiling for this decision to treat pay increases 
differently.

 

Breach of Contract

 

1. Breach of 
Promotional Procedures

 

[¶47]   Under the personnel rules, 
progression along the pay table was a function of both time in service and 
quality of performance. In the absence of reclassification or disciplinary 
action, a police officer was guaranteed to progress through the pay table at 
least at twelve month intervals. The district court determined that the 
reclassification, as applied to Kreiling, breached the promotional procedures. 
This ruling is reversed based on the language of the personnel rules which 
permits alteration of these procedures for the purpose of reclassification. 
Furthermore, we find no basis in the record for determining that Kreiling had a 
contractual right to his step classification which would exempt him from 
reclassification.

 

2. Breach of 
Grievance Procedures

 

[¶48]   The district court ruled that the 
failure to properly prosecute Kreiling's grievance was itself a breach of 
contract; however, the court did not specify damages for this breach. Personnel 
Rules 14.13 and 14.14 state:

 

14.13 The City Manager, upon receipt of the report of 
the Department Head, shall determine whether the matter has been settled to the 
satisfaction of the employee, and, if not, the employee may request that the 
City Manager consider the matter, or the City Manager on his own initiative may 
make an investigation or cause an investigation to be 
made.

 

14.14 In case an agreement is not reached with the 
City Manager by the employee, the employee may ask for a hearing of his 
grievance before the Personnel Board.

 

[¶49]   The city manager 
testified:

 

I 
denied Officer Kreiling's request for a grievance hearing because he was asking 
me and/or the Personnel Board to overrule the City Council's determination of 
classification and salary, which I do not understand that either I or the 
Personnel Board have any power to do. That left nothing for the Board to 
consider in a grievance appeal.

 

[¶50]   The district court found that the 
city manager had not complied with Rule 14.13 when he did not consider the 
employees' specific concerns. The district court ruled that the failure to 
permit Kreiling to pursue his grievance of the negative impact of the 
reclassification as it applied to Kreiling breached the contract's grievance 
procedures. Contract construction and interpretation are done by the court as a 
matter of law and, primarily, must determine the parties' intent. Bingham v. Boreing, 799 P.2d 284, 285 
(Wyo. 1990). If an agreement is in writing and the language is clear and 
unambiguous, the writing as a whole should be considered, taking into account 
relationships between various parts. Id. We conclude that the denial of a 
grievance hearing did not constitute a breach of contract under the personnel 
rules.

 

 

[¶51]   Significantly, other than 
permitting the employee to ask for a hearing before the personnel board, the 
section governing grievances is silent as to what procedures the city manager 
should utilize upon receipt of the grievance hearing request. That silence does 
not limit the possible actions only to holding a grievance hearing, but, 
instead, indicates that other possibilities exist including permitting the city 
manager to deny a hearing request. While the city manager's choice of action in 
the form of a denial may constitute a denial of due process when a property 
interest is alleged, that same choice in the form of a denial when no property 
interest exists cannot constitute a breach of contract under the express 
language of the personnel rules.

 

[¶52]   A different case would be presented 
had Kreiling directed a request to the personnel board. The personnel rules 
state that the board's duty and function is to receive, investigate, and render 
a decision on all employee appeals, as outlined in Section 14 of these rules. 
City of Laramie Personnel Rules, § 2.28(c). Given the language permitting 
grievance requests to the personnel board, it would appear that the board would 
have had a duty to hold the requested grievance hearing. Id. § 14.14. Kreiling testified that he 
made no such request. Accordingly, we hold that the city manager's denial of 
Kreiling's request for a grievance hearing was not a breach of 
contract.

 

CONCLUSION

 

[¶53]   The district court's decision 
failed to consider the state statute's and the employment contract's reservation 
of the right to amend a pay table for economic reasons. Under this law and 
contract term, mutually explicit understandings regarding rank and pay did not 
exist which would give rise to a constitutionally protected property interest. 
Nor was there a breach of the employment contract in implementing a 
reclassification plan which resulted in a step reduction for Kreiling and which 
did not give him the same pay increase given other police officers. The district 
court's decision that Kreiling is entitled to damages for violations of 42 
U.S.C. § 1983 and for breaching the promotional procedures of the contract is 
reversed. The district court's decision that the city manager's actions breached 
grievance procedures of the contract is also reversed for the reasons just 
discussed.

 

Footnotes

1 The correct year is 
1990.