Court Opinion

ID: 3215950
Source: CourtListenerOpinion
Date Created: 2016-06-22 16:09:23.703157+00
Date Added: 2024-06-11T09:36:26.372483
License: Public Domain

STATE OF MICHIGAN

                          COURT OF APPEALS

DUNCAN P. HOWARD,                                                 UNPUBLISHED
                                                                  June 21, 2016
              Petitioner-Appellee,

v                                                                 No. 326543 & 328099
                                                                  Ingham Circuit Court
CIVIL SERVICE COMMISSION,                                         LC No. 14-010466-AA

              Respondent-Appellant.

Before: MARKEY, P.J., and OWENS and BOONSTRA, JJ.

PER CURIAM.

        Respondent Civil Service Commission appeals by leave granted the circuit court’s order
of March 2, 2015, reversing its denial of petitioner’s grievance pertaining to the Department of
Corrections’ (DOC) abolishing the position of assistant director of the DOC’s bureau of health
care services (BHCS) (Docket No. 326543). Respondent also appeals by leave granted the
circuit court’s order of June 8, 2015, awarding petitioner costs and attorney fees (Docket No.
328099). This Court ordered the two appeals consolidated. We reverse.

                               I. FACTS AND PROCEEDINGS

         Petitioner Howard was the assistant director of the BHCS within the DOC, a level-18
position. In April 2011, petitioner was told that his position would be abolished. Petitioner
testified that on April 28, 2011, he received a voice mail from his direct supervisor, Lynda
Zeller: “Hi. This is Lynda Zeller. I’m just calling to tell you your position is abolished.”
Petitioner contacted the DOC’s human resources director to discuss options of exercising his
“bumping” rights to a level-14 position or taking a demotion to a level-15 position. Petitioner
volunteered to take the level-15 administrative position with the DOC in July 2011. The DOC
abandoned or assigned the assistant director duties to other employees.

        Plaintiff filed his initial grievance with respondent on May 2, 2012, alleging that “the
abolishment of my position was not for reasons of administrative efficiency.” Specifically, he
asserted that Zeller and others had conspired to make him the “scapegoat” for problems
uncovered by a pharmaceutical audit.

         Respondent held a hearing on August 14, 2012, to determine whether petitioner timely
filed his grievance. The DOC’s former deputy director of operations and support, Gary Manns,
testified that he was at a meeting with DOC’s director, Richard McKeon, concerning McKeon’s

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appearance before a legislative committee regarding the findings of the pharmaceutical audit.
Zeller and her supervisor, Denny Straub, were present. Manns testified that Zeller expressed a
desire during this meeting to “scapegoat” someone for the problems uncovered by the audit and
that she mentioned petitioner’s name. Petitioner testified that he met with Straub on June 8,
2011, and Straub told him that Zeller had “thrown [petitioner] under the bus.” According to
petitioner, Straub indicated that there would be an investigation, and if petitioner were
exonerated, he would get his position back. Petitioner stated that he received a letter from
Internal Affairs in November 2011 exonerating him, but by that time Straub had left the DOC.
He then unsuccessfully requested a meeting with then DOC Director Dan Heyns. Instead,
petitioner testified that he received a letter discussing his misconduct with respect to the
pharmaceutical audit. Petitioner then discovered that there was no document in his personnel file
about his former level 18 position being abolished.

         Respondent’s hearing officer issued an interim decision on September 19, 2012. The
hearing officer found it unusual that there was no paperwork indicating the exact date the
position was abolished, which led him to have civil service staff review the human resources
management network (HRMN) to determine whether the position was abolished and on what
date. The hearing officer determined that the HRMN showed that the level 18 position that
petitioner formerly occupied was not abolished, remained active, and could be filled by the DOC
if it so chose. The hearing officer concluded that because the DOC “engaged in ‘an intentionally
or fraudulently misleading action . . . that prevented the filing’ ” of the grievance in a timely
fashion, petitioner’s late filing was justified. The hearing officer ruled that a hearing on the
merits of petitioner’s grievance would be held concerning whether petitioner was “demoted for
disciplinary reasons?” and if so, “was the disciplinary demotion for just cause?”

        The DOC appealed this interim decision to respondent’s Employment Relations Board
(ERB), which issued a decision on December 18, 2012 overturning the hearing officer’s interim
decision. The ERB held that the hearing officer’s conclusion that a recording in the HRMN
system, which is administered by respondent, was a necessary step in abolishing a position
violated Const 1963, art 11, § 5, which provides that appointing authorities may abolish positions
for reasons of administrative efficiency without respondent’s approval. The ERB explained that
deactivation of a position on the HRMN is an administrative function that cannot always be
accomplished when a position is abolished because abolished positions often share the same
position code as non-abolished positions; consequently, deactivating the abolished position
would also deactivate a non-abolished position. The ERB concluded that petitioner’s grievance
“did not claim that he was demoted and there is no authority for the [hearing officer] to rewrite a
grievance appeal to insert new claims.” The ERB vacated the portions of the hearing officer’s
interim decision that found petitioner’s position was not abolished and that petitioner was
demoted and remanded the matter for a hearing on the merits of petitioner’s grievance. During
the subsequent grievance hearing, the hearing officer told the parties the issue was whether
petitioner’s position was abolished for reasons other than administrative efficiency.

        Steven Marschke testified that while he was working as an administrator of Internal
Affairs at the DOC he was present at a meeting with McKeon where an auditor general report on
overages in healthcare expenses were addressed. Marschke testified that an employee of his,
investigator Steve Wendry, who was also present at the meeting, told Marschke after the meeting
that “they want to fire” petitioner.

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         McKeon testified that he served as director of the DOC from January 2011 until June or
July of that year. McKeon testified that at the time the DOC had a shortage of $42 to $45
million. McKeon testified that he was given the task of cutting $200 million from the DOC’s
budget and that the only way to do this was to close prisons and lay people off. McKeon
testified that he made the decision to abolish petitioner’s position because in his experience,
regional health administrators reported to the healthcare administrator in the central office. So
he determined that petitioner’s position was not needed. McKeon stated that he decided to
abolish petitioner’s position in January or February of 2011.

         Tony Lopez, the DOC Human Resources Director during McKeon’s tenure as director,
recalled learning that petitioner’s position would be abolished in 2011 when he got a list from
McKeon and when Straub and Manns told him that petitioner would be contacting him. Lopez
testified that when petitioner contacted him, he told petitioner that if chose to “bump” he would
go to a departmental manager 3 (level 14) position. Lopez stated that petitioner asked him if
there were any alternatives. Lopez informed petitioner that it might be possible to be appointed
to a SAM-1 position (level 15) in Ionia for a smaller pay cut, but that he would have to be
appointed to the position as he could not “bump” into it. Lopez testified that in May 2011,
petitioner sent him an e-mail requesting placement in the SAM-1 position. In an e-mail dated
May 18, 2011, petitioner states that he would accept the SAM-1 position as “the lesser of all
evils involved.” Lopez explained that petitioner’s taking this position resulted in his not
receiving notice that his position was abolished because by taking the SAM-1 position, petitioner
was neither laid off nor did he exercise a “bump,” the two situations that would trigger a notice.

        The hearing officer concluded, however, that a reasonable person in petitioner’s position
likely would have drawn the conclusion that petitioner did, i.e., that he had been the scapegoat of
the pharmaceutical audit. Nevertheless, the hearing officer concluded that the evidence showed
that massive cuts in DOC personnel were necessary and that McKeon had identified petitioner’s
position as one to be abolished before he had any discussions with Zeller about petitioner. The
hearing officer specifically credited McKeon’s testimony that he found petitioner’s position to be
redundant and that it was abolished for reasons of administrative efficiency.

        Petitioner appealed to the ERB, which concluded that the hearing officer did not err in
concluding that petitioner had not shown that his position was abolished “for reasons other than
administrative efficiency.” The ERB found that the “evidence supports the [hearing officer’s]
conclusion that [petitioner] voluntarily accepted the 15-level position to minimize his pay
reduction due to the abolishment of his 18-level position.” On July 14, 2014, respondent
approved the recommendations of the ERB and adopted them as its final decision. Petitioner
then filed this action in the Ingham Circuit Court.

        During oral argument, the circuit court repeatedly asked respondent’s counsel whether
any document existed explicitly stating that petitioner’s position had been abolished.
Respondent’s counsel eventually conceded that there was not. The circuit court told
respondent’s counsel that it did not understand how a position could be abolished without any
documentation at all. The circuit court also reasoned that “nothing . . . shows that getting rid of
this job made things work better or saved a lot of money other than just getting rid of it.”
Ultimately, the court found “that there is not competent, material, or substantial evidence on the
record to support the finding that Petitioner’s position was actually abolished.” The circuit court

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determined that petitioner was entitled to written notification his position had been abolished
regardless of whether he transferred to a new position or exercised employment preference or
bumping rights. The circuit court reversed respondent’s final decision, ordered that petitioner be
reinstated to his level 18 position with back pay, and awarded “attorney fees and costs pursuant
to MCR 2.625.”

        After petitioner filed his bill of costs and fees, respondent objected. A hearing was held
where the circuit court reiterated its belief that the DOC had egregiously manipulated Civil
Service rules. The circuit court stated that attorney fees should be awarded under “the 7.11”
(presumably MCR 7.115). The circuit court later entered an order granting petitioner all the costs
and attorney fees listed in his bill of costs.

                                          II. ANALYSIS

                                 A. STANDARDS OF REVIEW

        “We review a circuit court’s decision on an administrative appeal to determine whether
the circuit court applied correct legal principles and whether the court misapprehended or grossly
misapplied the substantial-evidence test to the agency’s factual findings, which essentially
constitutes a clearly erroneous standard of review.” Nason v State Employees Retirement Sys,
290 Mich. App. 416, 424; 801 NW2d 889 (2010).

       A court’s decision to award attorney fees is reviewed for an abuse of discretion. Ewald v
Ewald, 292 Mich. App. 706, 724; 810 NW2d 396 (2011). The circuit court abuses its discretion
when its decision is outside the range of reasonable and principled outcomes. Id. at 725.

                               B. ADMINISTRATIVE DECISION

               All final decisions, findings, rulings and orders of any administrative
       officer or agency existing under the constitution or by law, which are judicial or
       quasi-judicial and affect private rights or licenses, shall be subject to direct review
       by the courts as provided by law. This review shall include as a minimum, the
       determination whether such final decisions, findings, rulings and orders are
       authorized by law; and, in cases in which a hearing is required, whether the same
       are supported by competent, material and substantial evidence on the whole
       record. . . . [Const 1963, art 6, § 28.]

This standard applies to review of final decisions issued by the Civil Service Commission.
Parnis v Civil Serv Comm, 79 Mich. App. 625, 628; 262 NW2d 883 (1977).

        The phrase “authorized by law” means “allowed, permitted, or empowered by law.”
Northwestern Nat’l Cas Co v Comm’r of Ins, 231 Mich. App. 483, 488; 586 NW2d 563 (1998).
Thus, “an agency’s decision that is in violation of statute or constitution, in excess of the
statutory authority or jurisdiction of the agency, made upon unlawful procedures resulting in
material prejudice, or is arbitrary and capricious, is a decision that is not authorized by law.” Id.
(citation, quotation marks and brackets omitted). “Substantial evidence is that which a
reasonable mind would accept as adequate to support a decision.” Tumble’s Rent-L-Center, Inc v
Employment Security Comm, 197 Mich. App. 229, 233; 495 NW2d 180 (1992). “Reviewing

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courts should not invade the fact-finding province of the administrative agency by displacing an
agency’s choice between two reasonably differing views of the evidence.” Goolsby v Detroit,
211 Mich. App. 214, 219; 535 NW2d 568 (1995).

        The parties disagree as to whether the dispositive issue should solely center on whether
petitioner’s position was abolished for reasons other than administrative efficiency as respondent
contends, or whether it should also include an analysis of whether petitioner’s position was
actually abolished, as petitioner contends. This disagreement is in reality little more than a
debate over differing versions of the facts.

        The circuit court’s conclusion that petitioner’s position was not actually abolished
stemmed primarily from petitioner’s contention that because there was no written document that
specifically stated that the position was abolished, there is no evidence it had been abolished.
The ERB countered that conclusion and instead explained that the reason no written notice was
given to petitioner was because he chose to be appointed to the SAM-1 position and not go
through the employment preference process, which would have triggered the abolition notice.

        During oral arguments before the circuit court, respondent’s counsel did acknowledge
that no document specifically stated that respondent’s position would be abolished. Petitioner’s
position was identified on the FY 2011 Spending Plan as one facing abolishment, but McKeon
acknowledged that several other positions similarly identified within the document had not
actually been abolished. Additionally, the letter appointing petitioner to the SAM-1 position
says nothing about the abolition of petitioner’s former position.

        Respondent’s regulations state that employees affected by a “reduction in force” because
of “lack of work, lack of adequate funding, change in mission, or reorganization of the work
force,” which would seem to include abolishment of a position for administrative efficiency,
“must be issued written notice . . . no less than 15 calendar days prior to the effective date.” Civ
Serv R 2.01(3)(B)(5) and (4)(M). Lopez testified that when a position is abolished, the employee
in that position generally is laid off or goes through the employment preference process, both of
which trigger a written notice that the position is abolished. Lopez explained, however, it is not
normal procedure to send notices to employees who accept alternate placements, as petitioner
did. Petitioner testified that he received a phone call from his supervisor that his position was
abolished and that he accepted the level 15 position.

        These facts establish that there was competent and substantial evidence for respondent to
conclude that petitioner had received oral notice that his position was being abolished from his
supervisor, that petitioner eventually made contact or was contacted by Lopez regarding an
alternate placement, and that by accepting an alternate placement that could not be achieved as
part of the employment preference or bumping process, petitioner took himself out of a process
that would have resulted in his receiving a written notice.

        As for the reason petitioner’s position was targeted, the hearing officer accepted the
testimony of McKeon that needed budget cuts necessitated that some positions be abolished and
that he specifically identified petitioner’s position because he determined it was administratively
unnecessary. The hearing officer concluded that Straub and others led petitioner to believe he
was being scapegoated to “ease the sting” of the loss of his position. The ERB concluded that

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the hearing officer did not err in relying on McKeon’s testimony over that of the other DOC
officials.

        The circuit court did not definitively address whether it believed the finding of
respondent that the position was abolished for reasons of administrative efficiency was supported
by competent, material, and substantial evidence because it had concluded that the position was
not actually abolished.

        Although there was evidence adduced to support petitioner’s contention that he was made
the scapegoat for the problematic pharmaceutical audit, there was also evidence presented that
petitioner’s position was abolished due to large budgetary shortfalls and the ensuing conclusion
that the operations of the DOC would not be impacted by its elimination. Respondent, through
the decisions of the hearing officer, the ERB, and ultimately its Commissioners, chose to credit
the evidence showing that the position was abolished for administrative efficiency.

        We must conclude that the circuit court erred in invading the fact-finding province of
respondent and grossly misapplied the substantial evidence test in substituting its own
interpretation of the evidence for the reasonable interpretation chosen by respondent. Goolsby,
211 Mich. App. at 219.

                               C. COSTS AND ATTORNEY FEES

       “Generally, attorney fees are not recoverable as an element of costs or damages unless
expressly allowed by statute, court rule, or common-law exception, or where provided by
contract of the parties.” Grace v Grace, 253 Mich. App. 357, 370-371; 655 NW2d 595 (2002).
Exceptions to this general rule must be narrowly construed. Brooks v Rose, 191 Mich. App. 565,
575; 478 NW2d 731 (1991).

        Initially, the circuit court justified its award of attorney fees and costs under MCR 2.625.
MCR 2.625 provides that under certain circumstances, costs are to be awarded to the prevailing
party in “an action” and provides rules for determining who the prevailing party is, as well the
procedure for taxing costs and billing costs. But MCR 2.625 says nothing about attorney fees.
Furthermore, MCR 2.625 is located in Chapter 2 of the Michigan Rules of Court. MCR 2.001
provides that the rules in Chapter 2 “govern procedure in all civil proceedings in all courts . . . .”
This action is not a civil action. It is an appeal to the circuit court of a decision made by
administrative agency; therefore, it is governed by Chapter 7. MCR 7.101(A).

        The circuit court appeared to recognize this error by later stating that attorney fees should
be awarded under MCR 7.115. In appellate proceedings before the circuit court, MCR 7.115
does entitle the prevailing party to costs, but it says nothing about attorney fees. In any event,
petitioner is no longer the prevailing party.1 We, therefore, reverse the decision of the circuit
court awarding petitioner costs and attorney fees.

1
 MCL 600.2591 states that “[u]pon motion of any party, if a court finds that a civil action or
defense to a civil action was frivolous, the court that conducts the civil action shall award to the

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       We reverse and vacate the circuit court’s opinion and order of March 2, 2015, and its
subsequent order of June 8, 2015. We do not retain jurisdiction. As the prevailing party,
respondent may tax its costs under MCR 7.219.

                                                           /s/ Jane E. Markey
                                                           /s/ Donald S. Owens
                                                           /s/ Mark T. Boonstra

prevailing party the costs and fees incurred by that party in connection with the civil action.”
However, petitioner did not file a motion claiming that respondent’s case was frivolous.
Additionally, the statute defines “prevailing party” as “a party who wins on the entire record.”
MCL 600.2591(3)(b). Because petitioner should not have been the party to win on the entire
record, he should not be considered the prevailing party and should not be awarded attorney fees
under MCL 600.2591.

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