Court Opinion

ID: 8203922
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:50:04.007988+00
Date Added: 2024-06-11T08:47:59.545495
License: Public Domain

N. PATRICK CROOKS, J.
¶ 40. {concurring). This is an employment contract dispute that centers on the contract's termination clause, and it requires the application of well-established contract principles. The analysis in such a case starts with the terms of the contract. The termination clause in this case contains a highly unusual and crucial provision: it states that the employee "shall not be discharged during the term of this contract, without good and sufficient cause, which shall be determined by the [employer]." What is unusual, of course, is that the contract explicitly and by agreement leaves the determination of "good and sufficient cause" to be determined by one party: the employer. Those words are the key to the proper analysis of this case because, when viewed in light of well-established principles of contract law, they reveal the termination clause to be a textbook case of an illusory promise — "words in promissory form that promise nothing."1 Wisconsin precedent on this score is clear: "If a party to a purported contract has, in fact, made only illusory promises and therefore not constrained him- or herself in any way, he or she has given no consideration and therefore no contract exists. Because no contract exists, neither party has a cause of action for breach."2 In other words, as described in one treatise on contracts citing case law, where the contract indicates that a party may at its own option decide to *110terminate, termination is not a breach but is "merely the exercise of the reserved power to terminate."3
¶ 41. To resolve a contract case, we start by looking at the contract terms, and we give effect to its terms unless they are ambiguous.4 In the purported contract at issue here the parties, Kathleen DeBruin and her employer, St. Patrick Congregation (the Parish), unambiguously reserved solely to the employer the right to determine what is just cause for termination. For that reason, I would affirm the circuit court's dismissal of the complaint, but on the grounds that the purported contract is based on an illusory promise which cannot serve as consideration for a contract, and therefore no enforceable contract exists. The promissory estoppel claim fails for an almost identical reason: a promissory estoppel claim is based on a promise, and where there is nothing but an illusory promise, there is no basis for reliance.5
*111¶ 42. The circuit court granted the Parish's motion to dismiss on constitutional grounds, while seeming to conclude that the contract of employment was terminable at will and was based on an illusory promise.6 The circuit court, in granting the motion to dismiss, referred to the constitutionally based ministerial employee test discussed in Coulee Catholic Schools v. LIRC, 2009 WI 88, 320 Wis. 2d 275, 768 N.W.2d 868, as well as the contract language reserving to the Parish the right to determine good cause for termination:
It's admitted that the Catholic churchfs] . . . mission is to propagate the faith and that [DeBruin's] particular job was to be the - again, Director of Faith Promotions [sic] so she fits into the two issues [relating to the organization's religious mission and the nature of the *112duties of the particular employee] and with that then the Court can't make further inquiry. But the Court does note that the contract called for gives the parish the right to terminate for cause only they - and they are the ones that can determine cause... and therefore even if the Court were to make further inquiry it would appear that there was the right of the parish anyways but I don't think I get that far.
Because we do not normally reach constitutional issues in cases that are resolvable on other grounds,7 I would not reach the constitutional arguments that are raised by the Parish. For these reasons, as explained herein, I respectfully concur.
¶ 43. As the employer, the Parish, noted in its brief, leaving the determination of what constitutes good and sufficient cause for termination to the employer has the "practical effect" of nullifying the contractual limitation on the employer.8 As noted previously, under the applicable principles of contract law and our precedent, this contract fails because it rests on an illusory promise. A Wisconsin case describes how an illusory promise, under application of contract law principles, leads to a conclusion that the contract fails for lack of consideration:
An illusory promise is a promise in form only: one that its maker can keep without subjecting him- or herself *113to any detriment or restriction. An archetypal example of an illusory promise is the statement that "I promise to do as you ask if I please to do so when the time arrives." A promisor can keep that promise by either doing as the promisee asks or not, and so the promisor maintains total freedom to do as he or she wants. Since the maker of an illusory promise assumes no detriment or obligation, an illusory promise is not regarded as consideration. If a party to a purported contract has, in fact, made only illusory promises and therefore not constrained him- or herself in any way, he or she has given no consideration and therefore no contract exists. Because no contract exists, neither party has a cause of action for breach.
Devine v. Notter, 2008 WI App 87, ¶ 4, 312 Wis. 2d 521, 753 N.W.2d 557 (internal citations omitted).
¶ 44. In another Wisconsin case discussing illusory promises, Gerruth Realty Co. v. Pire, 17 Wis. 2d 89, 115 N.W.2d 557 (1962), this court concluded that the purported contract at issue was void for indefiniteness, a conclusion tantamount to a determination that the promise involved was illusory. In that case, we stated, "[A]ny interpretation, which allows one party to a contract to determine without limitation and in a subjective manner the meaning of an ambiguous term, comes dangerously close to an illusory or aleatory contract, if it does not in fact reach it." Id. at 92. While we are not dealing with an ambiguous term here, the result is the same — no enforceable contract.
¶ 45. These cases apply well-settled contract law principles. The treatises on contract law describe the concept of illusory promise in slightly different terms, but there is agreement on the essence of the concept. The writers of the treatise Corbin on Contracts describe such a "promise" as follows:
*114[A]n illusory promise is not a promise at all as that term has been herein defined. If the expression appears to have the form of a promise, this appearance is an illusion.. .. The fundamental element of a promise is a promisor's expression of intention that the promisor's future conduct shall be in accord with the present expression, irrespective of what the promisor's will may be when the time for performance arrives. In the supposed case [in which C promises to forbear from suing P as long as C wishes to forbear] [t]he clear meaning of the expression is that C's future conduct will be in accord with his or her own future will, just as it would have been had nothing at all been said.
1 Joseph M. Perillo, Corbin on Contracts § 1.17, at 47 (rev. ed. 1993) (emphasis added). Another well-regarded treatise, Williston on Contracts, puts it this way:
Where an illusory promise is made, that is, a promise merely in form, but in actuality not promising anything, it cannot serve as consideration. ... In such cases, where the promisor may perform or not, solely on the condition of his whim, his promise will not serve as consideration.... [A] promise to employ as long as it suits the employer will not serve as consideration for the employee's return promise.
3 Richard A. Lord, Williston on Contracts § 7.7, at 111-12, 127-32 (4th ed. 2008). The Restatement of Contracts (Second) § 2, comment e, focuses on the lack of enforceability in an illusory promise:
e. Illusory promises; mere statements of intention. Words of promise which by their terms make performance entirely optional with the "promisor" whatever may happen, or whatever course of conduct in other respects he may pursue, do not constitute a promise. . . . Even if a present intention is manifested, the reservation of an option to change that intention means *115that there can be no promisee who is justified in an expectation of performance.
Restatement (Second) of Contracts § 2 (1981).
¶ 46. Courts have applied this principle in a variety of contexts, relying on the canon of construction under which courts give effect to the terms agreed upon by the parties to the contract. In a case that concerned a contract between an employer and an employee, the court examined a letter where the employer stated, "I propose to employ you to work for me for 15 months at my option." Middleton v. Holecroft, 270 S.W.2d 90, 93 (Mo. Ct. App. 1954). The court found that "[t]he plaintiff, by inserting the clause 'at my option,' reserved the right to give the defendant work if he saw fit and if he did not, there was no obligation on him to do so, and the defendant would be without remedy." Id. The court concluded, "In other words, the defendant could not have enforced the contract." Id. In a commercial breach of contract case, a Michigan federal district court held that where the terms exempted a party from liability for breach, the party's "promise to perform is, therefore, entirely illusory . . . ." Commercial Movie Rental, Inc. v. Larry Eagle, Inc., 738 F. Supp. 227, 230-31 (W.D. Mich. 1989). The court then reasoned that "the entire contract is void for lack of consideration" and the defendant was entitled to judgment "because the contract it allegedly breached never existed." Id. at 231.
¶ 47. It is difficult to imagine a clause that more perfectly illustrates these principles than the one presented by the contract between the employee, DeBruin, and the employer, the Parish, in this case. This is made clear from the first document filed in this case, the complaint, in which DeBruin alleges that the Parish "terminated Ms. DeBruin's employ without good and *116sufficient cause as that term is defined by the Contract of Employment." Compl., ¶ 5. There is, however, no separate clause in the contract that defines "good and sufficient cause" or, for that matter, any other term in the contract. The term "good and sufficient cause" is, by the terms of the contract, defined as having a meaning "which shall be determined by the Parish." In this case, the Parish's "promise" was no more than that its "future conduct will be in accord with [its] own future will, jiísí as it would have been had nothing at all been said." See 1 Perillo, Corbin on Contracts § 1.17, at 47. For this reason, both of DeBruin's claims, breach of contract and promissory estoppel, which are based on an illusory promise, must fail.
¶ 48. In the purported contract at issue here the parties unambiguously reserved solely to the employer the right to determine what is just cause for termination. For that reason, I would affirm the circuit court's dismissal of the complaint, but on the grounds that the purported contract is based on an illusory promise which cannot serve as consideration for a contract, and therefore no enforceable contract exists. The Plaintiffs promissory estoppel claim fails for an almost identical reason: a promissory estoppel claim is based on a promise, and where there is nothing but an illusory promise, there is no basis for reliance.
¶ 49. The circuit court granted the Parish's motion to dismiss on constitutional grounds, while seeming to conclude that the contract of employment was terminable at will and was based on an illusory promise. The circuit court, in granting the motion to dismiss, referred to the constitutionally based ministerial employee test discussed in Coulee as well as the contract language reserving to the Parish the right to determine good cause for termination. Because we do not normally *117reach constitutional issues in cases that are resolvable on other grounds, I would not reach the constitutional arguments that are raised by the Parish. For these reasons, as explained herein, I respectfully concur.

 2 Joseph M. Perillo & Helen Hadjiyannakis Bender, Corbin on Contracts § 5.28, at 142 (rev. ed. 1995).

 Devine v. Notter, 2008 WI App 87, ¶ 4, 312 Wis. 2d 521, 753 N.W.2d 557 (internal citations omitted).

 1 Joseph M. Perillo, Corbin on Contracts § 4.2, at 556 (rev. ed. 1993).

 The primary goal in contract interpretation is to give effect to the parties' intent, as expressed in the contractual language. We interpret the language consistent with what a reasonable person would understand the words to mean under the circumstances. Where the terms of a contract are clear and unambiguous, we construe the contract according to its literal terms.
Maryland Arms Ltd. P'ship v. Connell, 2010 WI 64, ¶¶ 22-23, 326 Wis. 2d 300, 786 N.W.2d 15 (internal citations omitted).

 Goodpaster v. Pfizer, Inc., 665 P.2d 414, 416 (Wash. 1983) describes its analysis of a similar promissory estoppel claim:
[The plaintiff] premises his arguments on the assumption that [the defendant] had an implied obligation to pay the bonus in 1978. Before a promise to pay a bonus can be enforced, however, a real promise must exist.. . . Action in reliance upon a supposed *111promise creates no obligation on a corporation whose promise is illusory. A supposed promise may be illusory because it is so indefinite that it cannot be enforced, or by reason of provisions contained in the promise which make its performance optional or entirely discretionary by the promisor.
(emphasis added) (internal citations omitted).

 In preparing to grant the motion to dismiss, the circuit court stated:
But the Court does note that the contract called for gives the parish the right to terminate for cause only they — and they are the ones that can determine cause so in effect this makes this a contract at will, and therefore even if the Court were to make further inquiry it would appear that there was the right of the parish anyways but I don't think I get that far.
In attempting to sum up the argument of the parish, the circuit court commented:
So you're stating then that according to the Coulee case this Court cannot make any inquiry beyond those two steps as to the grounds for the termination or whether good cause was found or even if the contract is illusory because as you — as you recite the terms of the contract good cause is required for firing the teacher but it's up to the church to determine good cause. So that's illusory.

 Labor & Farm Party v. Elections Bd., 117 Wis. 2d 351, 354, 344 N.W.2d 177 (1984) ("This court does not normally decide constitutional questions if the case can be resolved on other grounds."). See also Adams Outdoor Adver., Ltd. v. City of Madison, 2006 WI 104, ¶ 91, 294 Wis. 2d 441, 717 N.W.2d 803; In re Guardianship of James D.K., 2006 WI 68, ¶ 3 n.3, 291 Wis. 2d 333, 718 N.W.2d 38; and Jensen v. Wisconsin Patients Comp. Fund, 2001 WI 9, ¶ 16, 241 Wis. 2d 142, 621 N.W.2d 902.

 Br. of Resp't at 2 n.l.