Case Name: SCHWARTZ v. MICHIGAN SUGAR COMPANY
Court: Michigan Court of Appeals
Jurisdiction: Michigan
Decision Date: 1981-05-20
Citations: 106 Mich. App. 471
Docket Number: Docket No. 50145
Parties: SCHWARTZ v MICHIGAN SUGAR COMPANY
Judges: Before: Bronson, P.J., and J. H. Gillis and C. L. Bosman, JJ.
Reporter: Michigan appeals reports; cases decided in the Michigan Court of Appeals.
Volume: 106
Pages: 471–492

Head Matter:
SCHWARTZ v MICHIGAN SUGAR COMPANY
Docket No. 50145.
Submitted December 11, 1980, at Lansing. —
Decided May 20, 1981.
Leave to appeal applied for.
Bruce H. Schwartz was discharged by the Michigan Sugar Company after 28 years of employment. He brought an action for wrongful discharge, alleging that there was an implied contract of employment to continue until he reached age 65 unless discharged for good cause, that his discharge was in retaliation for his effective performance as company safety director and therefore in violation of the Michigan Occupational Safety and Health Act, and that, as a long-term employee, by law he could be discharged for just cause only. The Saginaw Circuit Court, Fred J. Borchard, J., granted summary judgment in favor of the defendant, and plaintiff appeals. Held:
1. While rules and understandings promulgated and fostered by an employer may justify a legitimate claim to continued employment, a mere subjective expectancy on the part of an employee will not create such a legitimate claim. Here, the circumstances of the plaintiff’s employment, as revealed by his deposition testimony, do not show a common understanding or mutual intent to form a contract of continuing employment. Nor were there any statements of employee policy or procedure which would constitute a contract providing that discharge would be for cause only.
2. The plaintiff’s claim that his discharge was in violation of the Occupational Safety and Health Act should have been pursued by review under the provisions of that act. Plaintiff’s failure to pursue his administrative remedies precludes judicial review of his claim regarding violation of the act.
References for Points in Headnotes
[1, 2, 8,10]73 Am Jur 2d, Summary Judgment §§ 22, 23.
[3, 5, 6, 9] 53 Am Jur 2d, Master and Servant §§ 32, 34.
Employee’s arbitrary dismissal as breach of employment contract terminable at will. 62 ALR3d 271.
Validity and duration of contract purporting to be for permanent employement. 60 ALR3d 226.
17 Am Jur 2d, Contracts § 4.
2 Am Jur 2d, Administrative Law §§ 595-597.
53 Am Jur 2d, Master and Servant § 60.
2 Am Jur 2d, Administrative Law §§ 602, 608.
3. The Court of Appeals will not adopt the doctrine that every discharge must be in good faith, where the Supreme Court has had a recent opportunity to rule on such a claim and declined to do so.
Affirmed.
Bronson, P.J., dissented from that portion of the majority opinion regarding the existence of a contract implied in fact. He would hold that plaintiffs allegations that he had been led to believe that he would be discharged for just cause only but that the defendant maliciously discharged him anyway were sufficient as a matter of law to withstand a motion for summary judgment. Judge Bronson would also hold that reasonable jurors could conclude from all the circumstances that there was an implied contract for continued employment, and that summary judgment on that ground was improper. Judge Bronson concurred with the majority on the plaintiffs other claims. He would reverse in part, affirm in part, and remand for trial solely on the theory of breach of an implied contract.
Opinion op the Court
1. Motions and Orders — Summary Judgment — Failure to State a Claim — Court Rules.
A motion for summary judgment for failure to state a claim upon which relief can be granted tests the legal sufficiency of the plaintiffs pleadings; the test is whether the plaintiffs claim is so clearly unenforceable as a matter of law that no factual development can possibly justify a right to recovery (GCR 1963, 117.2[1]).
2. Motions and Orders — Summary Judgment — Genuine Issue op Fact — Court Rules.
A motion for summary judgment based upon the allegation that except as to damages there is no genuine issue of material fact tests the factual sufficiency of the plaintiffs claim; such a motion is to be granted only if it is impossible for the plaintiffs claim to be supported at trial because of a deficiency which cannot be overcome (GCR 1963, 117.2[3]).
3. Contracts — Employment Contracts.
Contracts for permanent employment are generally considered to be indefinite hirings terminable at the will of either party; however, a contract providing that an employee shall be discharged only for cause is enforceable.
4. Contracts — Implied Contracts — Employment Contracts.
A contract is implied in fact where the intention as to such contract is not manifested by direct or explicit words between the parties, but is to be gathered by implication or deduction from the conduct of the parties, language used or things done by them, or other pertinent circumstances attending the transaction; thus, rules and understandings promulgated and fostered by an employer may justify a legitimate claim by an employee to continued employment.
5. Contracts — Implied Contracts — Employment Contracts.
A subjective expectancy on the part of an employee that his employment was to be continuing is not sufficient to establish a contract implied in fact for continued employment but for good cause where the circumstances do not show a common understanding or mutual intent to create such a contract.
6. Master and Servant — Employment Contracts — Public Policy.
A termination of employment in contravention of a strong public policy is wrongful and is an exception to the general rule that contracts for permanent employment are terminable at will.
7. Administrative Law — Remedies — Failure to Pursue Remedies.
A plaintiffs failure to proceed with an administrative remedy, prior to seeking judicial review of his grievance, does not make the administrative remedy itself inadequate.
Partial Concurrence and Partial Dissent by Bronson, P. J.
8. Master and Servant — Wrongful Discharge — Summary Judgment.
A plaintiff’s allegations that he had been led to believe that he would be terminated from employment for just cause only but that his employer maliciously discharged him without just cause are sufficient, as a matter of law, to withstand a motion for summary judgment in an action for wrongful discharge from employment.
9. Contracts — Employment Contracts — Rule of Construction.
The general rule that contracts for permanent employment are indefinite hirings, terminable at the will of either party, is not a substantive limitation on the enforceability of employment contracts but is merely a rule of construction.
10. Judgments — Summary Judgment — Employment Contracts — Implied Contracts.
Summary judgment was not proper where a plaintiff in an action for wrongful discharge from employment offered deposition testimony from which reasonable jurors could conclude that there was an implied agreement that the plaintiff’s employment would be continued except for discharge for good cause.
11. Master and Servant — Wrongful Discharge — Public Policy.
Any termination from employment which contravenes a clear public policy is wrongful.
12. Administrative Law — Exhaustion of Remedies.
Generally, litigants must exhaust administrative remedies before resorting to a legal action in the courts of law.
13. Administrative Law — Related Claims — Limitation of Actions.
An employee seeking administrative review of his discharge under the Michigan Occupational Safety and Health Act and who also has other claims arising out of the same transaction should not be barred from raising those claims in a subsequent court action if the administrative procedure is not completed until the applicable statute of limitations has run and the employer was provided with written notification of those claims.
Cicinelli, Mossner, Majoros & Alexander, P.C. (by Eugene D. Mossner and William S. Pearson), for plaintiff.
Hill, Lewis, Adams, Goodrich & Tait (by Timothy D. Wittlinger), for defendant.
Before: Bronson, P.J., and J. H. Gillis and C. L. Bosman, JJ.
Circuit judge, sitting on the Court of Appeals by assignment.

Opinion:
J. H. Gillis, J.
Plaintiff, Bruce H. Schwartz, appeals from a February 13, 1980, order of the Saginaw County Circuit Court granting defendant summary judgment. Plaintiff had alleged that he was wrongfully and unjustly discharged from de fendant's employ on September 20, 1978, after working for defendant for 28 years.
Plaintiffs complaint can be broken down into three claims. First, he alleges the existence of an implied contract of employment to continue until age 65, absent termination for just cause. Second, plaintiff claims that his discharge was in retaliation for his effective performance as company safety director and that defendant thereby violated the Michigan Occupational Safety and Health Act (MIOSHA), MCL 408.1001 et seq.; MSA 17.50(1) et seq. Finally, plaintiff argues that, as a long-term employee, by law he could only be discharged for just cause.
Neither defendant's motion nor the subsequent opinion and order specified whether the summary judgment was based on GCR 1963, 117.2(1) or 117.2(3). Although defense counsel argued that plaintiff had failed to "state a claim upon which relief can be granted", the parties and court relied on various depositions and documents recorded with the court. Further, defendant's motion and accompanying memorandum argued that there was no genuine issue of material fact and that it was entitled to judgment as a matter of law. The lower court's opinion concluded:
"The court finds that under Michigan law that a contract of employment for an indefinite period, or a contract for permanent employment, is a contract for employment at will, and the employee involved may be terminated by the employer at any time, for any cause, or without cause. The court further finds that if the termination is in retaliation for actions of the employee on the job, or for attempting to 'do too good a job', the cases are uniform that the employer still retains the right to discharge the employee."
Out of necessity, we consider each of plaintiffs claims under GCR 1963, 117.2(1) and 117.2(3). Cf., Partrich v Muscat, 84 Mich App 724, 728-729; 270 NW2d 506 (1978).
A motion for summary judgment under GCR 1963, 117.2(1) tests the legal sufficiency of the plaintiffs pleadings, which for purposes of the motion are considered to be true. Weckler v Berrien County Road Comm, 55 Mich App 7, 9; 222 NW2d 9 (1974). The appropriate test is whether the plaintiffs claim is so clearly unenforceable as a matter of law that no factual development can possibly justify a right to recovery. Crowther v Ross Chemical & Manufacturing Co, 42 Mich App 426, 431; 202 NW2d 577 (1972).
A motion for summary judgment under GCR 1963, 117.2(3) tests the factual sufficiency of the plaintiff's claim. The court is to consider affidavits, pleadings, depositions and other documentary evidence submitted by the parties. Sanders v Clark Oil Reñning Corp, 57 Mich App 687, 692; 226 NW2d 695 (1975). Thé court is to give the benefit of any reasonable doubt to the party opposing the motion and thereafter grant the motion only if it is impossible for the claim to be supported at trial because of a deficiency which cannot be overcome. Rizzo v Kretschmer, 389 Mich 363, 372; 207 NW2d 316 (1973).
Contracts for permanent employment are generally considered to be indefinite hirings terminable at the will of either party. Lynas v Maxwell Farms, 279 Mich 684, 687; 273 NW 315 (1937). Nonetheless, a contract providing that the employee shall be discharged for cause only is enforceable. Toussaint v Blue Cross & Blue Shield of Michigan, 408 Mich 579, 598, 609-610; 292 NW2d 880 (1980). Enforceable contractual rights of this nature may result from statements of company policy and procedure. Id. For example, in Toussaint, the employer's personnel policy manual stated that it was company policy to release employees "for just cause only". Id., 597-598. Moreover, the plaintiff in that case inquired as to job security upon hiring and was told he would remain as long as he did his job. Id.
In the instant case, there were no such statements of employee policy or procedure. Plaintiff readily conceded in his deposition that he was never told he would be employed until the age of 65, absent termination for cause. Furthér, he admitted that his superiors never made statements that would have led him to believe as much. He argues, however, that the circumstances of his employment require that such a contractual agreement be implied in fact.
The requirements for a contract implied in fact were discussed in Erickson v Goodell Oil Co, Inc, 384 Mich 207, 211-212; 180 NW2d 798 (1970):
"A contract implied in fact arises under circumstances which, according to the ordinary course of dealing and common understanding, of men, show a mutual intention to contract. In re Munro's Estate (1941), 296 Mich 80. A contract is implied in fact where the intention as to it is not manifested by direct or explicit words between the parties, but is to be gathered by implication or proper deduction from the conduct of the parties, language used or things done by them, or other pertinent circumstances attending the transaction. Miller v Stevens (1923), 224 Mich 626."
Thus, an employer's conduct and other pertinent circumstances may establish an unwritten "common law" providing the equivalent of a just cause termination policy. Rules and understandings, promulgated and fostered by the employer, may justify a legitimate claim to continued employment. Toussaint, supra, 617-618, quoting Perry v Sindermann, 408 US 593, 601-603; 92 S Ct 2694; 33 L Ed 2d 570 (1972). Nonetheless, a mere subjective expectancy on the part of an employee will not create such a legitimate claim. Perry, supra.
A review of plaintiffs deposition testimony reveals that his claim of an implied contract for continued employment was based on his own subjective expectancy regarding his relationship with the company. Plaintiff based his belief on the fact that the company was originally a closeknit family operation, not known for its high salaries, with virtually no employee turnover. The company, though it had no established sick leave policy, usually paid sick employees for extended periods of time. Further, literature on the company's pension plan indicated that all employees would be eligible unless the particular employee "was injurious or detrimental to the interests of the company". Plaintiff concluded that it was a "foregone conclusion that if you perform your job competently and are an asset to the company, the natural expectation is that you will continue to be employed by the company".
These circumstances do not evidence a common understanding or mutual intent to contract that employment be continuing but for cause. The pension plan condition does not manifest an employment guarantee, but evidences that pension benefits can be lost through detrimental employee actions. For example, a long-term employee could be precluded from receiving a pension if he took employment with a competing firm. Plaintiff conceded that he attached no independent significance to the brochures. Likewise, although the company paid relatively low salaries, that was not perceived as a tradeoff for continued employment. Plaintiff indicated that each year a Mr. Rennert would conduct a salary review. In some years plaintiff's salary increase would keep up with the rising cost of living and in other years it would not. In the bad years, Rennert would be apologetic and say that the company was ready to "take off", insinuating that plaintiff had a "terrific future" with the company. However, plaintiff never viewed Rennert's representations as an agreement for continued work but for cause. Rather, he saw Rennert as "a Pollyanna type of fellow that promised you things were going to be better tomorrow".
Plaintiff's deposition testimony made it clear that he felt he could only be discharged for cause not because of any representations or policies promulgated, but because of his own personal belief that an employee doing competent work would be retained as a company asset. Plaintiff considered this "a convenience in almost any company". Such a subjective belief is insufficient to establish a contract implied in fact. Thus, although plaintiff's complaint sufficiently pled a cause of action on this theory, in fact, plaintiff's basis for the claim is not the objective circumstances of his employment, but his own personal view of what the law should be.
Plaintiff's second theory is that he was discharged because of his effective performance as safety director. In effect, plaintiff contends that his rigorous enforcement of MIOSHA regulations precipitated his dismissal.
We agree that a termination in contravention of a strong public policy is wrongful and an exception to the general rule that such employment contracts are terminable at will. Cf., Trombetta v Detroit, T & I R Co, 81 Mich App 489; 265 NW2d 385 (1978), Sventko v The Kroger Co, 69 Mich App 644; 245 NW2d 151 (1976). In pertinent part, §65(1) of MIOSHA, MCL 408.1065(1); MSA 17.50(65)(1) provides:
"A person shall not discharge an employee or in any manner discriminate against an employee because the employee filed a complaint or instituted or caused to be instituted a proceeding under or regulated by this act or has testified or is about to testify in such a proceeding or because of the exercise by the employee on behalf of himself or herself or others of a right afforded by this act."
It is apparent that the Legislature intended to protect employees, like plaintiff, allegedly discharged in an employer's attempt to avoid the MIOSHA restrictions. If plaintiffs allegations are correct, his termination contravened the policy evidenced by the subsection.
Nonetheless, plaintiffs action must fail since he declined to pursue the administrative remedies contained in MIOSHA itself prior to resorting to this legal action. Judges of the 74th Judicial Dist v Bay County, 385 Mich 710, 727-728; 190 NW2d 219 (1971), School Dist of the City of Benton Harbor v State Tenure Comm, 372 Mich 270; 126 NW2d 102 (1964). In this instance, the time period for filing a complaint with the Department of Labor has passed. MCL 408.1065(2); MSA 17.50(65)(2). Still, plaintiffs failure to proceed does not make the administrative remedy itself inadequate. Jamison v Stetson, 471 F Supp 48, 54-55 (ND NY, 1978). Summary dismissal of plaintiffs second theory was appropriate.
Plaintiffs final theory for recovery is that the law now prohibits discharge for malicious or retal iatory reasons, that is, that even when an employment contract is terminable at will any discharge must be in good faith. Monge v Beebe Rubber Co, 114 NH 130, 133; 316 A2d 549, 551-552 (1974).
This issue was recently before the Michigan Supreme Court in Prussing v General Motors Corp, 403 Mich 366; 269 NW2d 181 (1978), where the Court declined to rule on the specific question. Because we consider such a doctrine a radical departure from the common law and Michigan precedent, we believe that if it is to be judicially mandated that change should come from the Supreme Court. We, therefore, affirm the lower court dismissal of plaintiff's complaint under that theory as well.
Affirmed.
C. L. Bosman, J., concurred.
See MCL 408.1065(2)-(8); MSA 17.50(65)(2K8).