Court Opinion

ID: 4097185
Source: CourtListenerOpinion
Date Created: 2016-11-10 08:08:25.45499+00
Date Added: 2024-06-11T14:33:38.488077
License: Public Domain

STATE OF MICHIGAN

                            COURT OF APPEALS

ANTHONY ROBERTS,                                                     UNPUBLISHED
                                                                     November 8, 2016
               Plaintiff-Appellant,

v                                                                    No. 329325
                                                                     Oakland Circuit Court
HBPO NORTH AMERICA, INC.,                                            LC No. 2015-147367-CL

               Defendant-Appellee.

Before: STEPHENS, P.J., and SAAD and METER, JJ.

PER CURIAM.

      In this breach of contract action, plaintiff appeals of right the trial court’s order granting
summary disposition in favor of defendant under MCR 2.116(C)(8) and dismissing plaintiff’s
complaint. We affirm.

                                       I. BACKGROUND

        Plaintiff was employed by defendant as its Director of Operations. Defendant, at its
discretion, provided a bonus system for its employees, under which a “variable component”
of an employee’s “overall salary” was “individually calculated and based on financial results
and individual performance.” Under the bonus policy, plaintiff was required to meet or
exceed certain metrics and personal and organizational targets established by defendant in order
to qualify for a bonus. The bonus policy also included the following eligibility requirement,
which is at issue in this case:

       You must be an active employee at the time of the bonus payout to be eligible to
       receive a bonus. HBPO will NOT pay a bonus to employees who have left the
       Company on their own free will.

        During 2014, plaintiff allegedly met and exceeded his targets and earned a bonus under
the system in the amount of $68,084. Plaintiff’s bonus was to be paid on April 30, 2015, in
accordance with the bonus policy, specifying that the bonus will be paid on or about the last day
of April. On April 22, 2015, eight days before the bonus payout date, defendant terminated
plaintiff’s employment following an investigation regarding his alleged violation of
company policy. Defendant did not pay plaintiff the 2014 bonus, after which plaintiff
instituted this breach of contract action against defendant.

                                                -1-
        In lieu of filing an answer to plaintiff’s complaint, defendant moved for summary
disposition pursuant to MCR 2.116(C)(8) (failure to state a claim upon which relief can be
granted). Defendant argued that, under the policy’s clear and unambiguous language, an
employee’s eligibility to receive a bonus is predicated on his employment with the company at
the time of the bonus payout, and thus, plaintiff, who admitted that his employment was
terminated before the payout date, is clearly ineligible to receive a bonus, making summary
dismissal of his breach of contract claim appropriate. Plaintiff opposed the motion, arguing that
the eligibility provision is ambiguous and its meaning must be resolved by a jury, making
summary disposition inappropriate. Plaintiff relied on the second sentence of the eligibility
provision—“HBPO will NOT pay a bonus to employees who have left the Company on their
own free will”—and interpreted the provision as precluding employees who are not employed
with the Company at the time of the bonus payout from receiving a bonus, but only if those
employees voluntarily left defendant’s employ before the bonus payout. Thus, plaintiff argued,
where an employee, such as himself, is involuntarily terminated before the bonus payout, the
requirement of active employment at the time of the bonus payout does not apply, and thus, he
remains entitled to receive a bonus, even though he was not an active employee at the time of the
payout. Otherwise, according to plaintiff, the second sentence of the provision, pertaining to
voluntary terminations is meaningless, rendering that language surplusage. The trial court found
the language of the policy to be unambiguous and granted summary disposition in favor of
defendant and dismissed plaintiff’s claim.

                                II. STANDARD OF REVIEW

        “This Court reviews the grant or denial of summary disposition de novo to determine if
the moving party is entitled to judgment as a matter of law.” Maiden v Rozwood, 461 Mich. 109,
118; 597 NW2d 817 (1999). “A motion under MCR 2.116(C)(8) tests the legal sufficiency of
the complaint.” Id. at 119. “All well-pleaded factual allegations are accepted as true and
construed in a light most favorable to the nonmovant.” Id. “A motion under MCR 2.116(C)(8)
may be granted only where the claims alleged are ‘so clearly unenforceable as a matter of law
that no factual development could possibly justify recovery.”’ Id., quoting Wade v Dep’t of
Corrections, 439 Mich. 158, 162; 483 NW2d 26 (1992). “When deciding a motion brought under
this section, a court considers only the pleadings.”1 Maiden, 461 Mich. at 119, citing MCR
2.116(G)(5).

       “[W]hether contract language is ambiguous is a question of law that [this Court]
review[s] de novo.” Klapp v United Ins Group Agency, Inc, 468 Mich. 459, 463; 663 NW2d 447
(2003), citing Farm Bureau Mut Ins Co v Nikkel, 460 Mich. 558, 563; 596 NW2d 915 (1999).
Further, “the proper interpretation of a contract is also a question of law that [this Court]
review[s] de novo.” Klapp, 468 Mich. at 463, citing Henderson v State Farm Fire & Cas Co, 460
Mich. 348, 353; 596 NW2d 190 (1999). “In interpreting a contract, it is a court’s obligation to

1
  In a contract-based action, a contract attached to the pleadings is considered part of the
pleadings. See MCR 2.113(F)(1),(2); Liggett Restaurant Group, Inc v City of Pontiac, 260 Mich
App 127, 133; 676 NW2d 633 (2003).

                                               -2-
determine the intent of the parties by examining the language of the contract according to its
plain and ordinary meaning.” In re Smith Trust, 480 Mich. 19, 24; 745 NW2d 754 (2008), citing
Frankenmuth Mut Ins Co v Masters, 460 Mich. 105, 112; 595 NW2d 832 (1999). “If the
contractual language is unambiguous, courts must interpret and enforce the contract as written,
because an unambiguous contract reflects the parties’ intent as a matter of law.” Smith Trust,
480 Mich. at 24, citing Frankenmuth Mut Ins, 460 Mich. at 111. On the other hand, “the meaning
of an ambiguous contract is a question of fact that must be decided by the jury.” Klapp, 468
Mich. at 469 (citation omitted). In interpreting a contract, “courts must . . . give effect to every
word, phrase, and clause in a contract and avoid an interpretation that would render any part of
the contract surplusage or nugatory.” Id. at 468 (citation and quotation marks omitted). Further,
“contract terms should not be considered in isolation and contracts are to be interpreted to avoid
absurd or unreasonable conditions and results.” Hastings Mut Ins Co v Safety King, Inc, 286
Mich. App. 287, 297; 778 NW2d 275 (2009). This Court “cannot read words into the plain
language of a contract.” Northline Excavating, Inc v Livingston Co, 302 Mich. App. 621, 628;
839 NW2d 693 (2013).

        A contract ‘“is ambiguous when its provisions are capable of conflicting
interpretations.”’ Klapp, 468 Mich. at 467, quoting Farm Bureau, 460 Mich. at 566; see also
Stone v Williamson, 482 Mich. 144, 150-151; 753 NW2d 106 (2008) (stating that ambiguity
exists where language is “equally susceptible to more than a single meaning.”) Additionally, the
language of a contract is ambiguous where “there is no way to read the provisions of th[e]
contract in reasonable harmony.” Klapp, 468 Mich. at 468-469. On the other hand, contract
terms are not ambiguous where there is only one reasonable interpretation of the terms when
considered in accordance with their commonly used meanings and in context. Hastings, 286
Mich. App. at 297.

                                         III. ANALYSIS

        Applying the rules of contract construction, we find that the trial court did not err in
deciding that the eligibility provision at issue was clear and unambiguous and properly construed
the provision in defendant’s favor as a matter of law. Smith Trust, 480 Mich. at 24. We agree
with defendant that the provision is not reasonably capable of two competing interpretations.
Klapp, 468 at 467. Instead, it plainly and unequivocally states that plaintiff “must be an active
employee at the time of the bonus payout to be eligible to receive a bonus.” This unambiguous
language evidences the parties’ clear intent to require an employee to be actively employed at the
time of the bonus payout. Smith Trust, 490 Mich. at 24 (“[A]n unambiguous contract reflects the
parties’ intent.”).

        We disagree with plaintiff’s argument that the second sentence, stating that defendant
will not pay bonuses “to employees who have left the Company on their own free will,” creates
ambiguity. Both sentences at issue are plain and unambiguous and clearly do not “irreconcilably
conflict.” Klapp, 468 Mich. at 467. Instead, when read in context, we find the unambiguous
language of the second sentence to be complimentary to, and not conflicting with, the
requirement that an employee must be employed at the time of the bonus payout to be eligible to
receive a bonus. The second sentence simply reiterates or emphasizes that an employee who
voluntarily leaves the company before the payout date will not receive a bonus. Thus, contrary

                                                -3-
to plaintiff’s assertion, the two sentences can be read together to reach a harmonious result and
do not render the second sentence meaningless or superfluous. Klapp, 468 Mich. at 468-469.

         Moreover, plaintiff’s interpretation does not comport with the provision’s clear and
unambiguous language. Although the second sentence clearly pertains to voluntary terminations,
it does not contain any language to reasonably suggest an intent to limit, narrow, or modify the
scope of the policy’s requirement of continued employment at the time of the bonus payout to
apply only to those employees who voluntarily terminate their employment before the payout
and not to those employees, such as plaintiff, who are involuntarily terminated before the payout.
In the absence of any such language, there is no basis to impose a limitation on the scope of the
eligibility requirement as plaintiff suggests. Plaintiff’s interpretation, thus, requires us to
impermissibly read limiting language into the policy that does not exist. Courts “cannot read
words into the plain language of a contract,” Northline Excavating, 302 Mich. App. at 628, and
we must interpret and enforce the clear and unambiguous terms of the policy as written, Smith
Trust, 480 Mich. at 24, which requires active employment at the time of the bonus payout to be
eligible to receive a bonus.

        We conclude that the policy language, being clear and unambiguous, reflects the parties’
intent and must be enforced as written. Smith Trust, 480 Mich. at 24. That language explicitly
precludes employees who are not actively employed on the date of the bonus payout from being
eligible to receive a bonus. Although plaintiff argues this result is harsh, resulting in a loss of the
2014 bonus he allegedly earned, courts must honor the policy’s clear and unambiguous
language.2 See MCL 408.471(e); MCL 408.473 (providing that under Michigan law, fringe
benefits, including a bonus, shall be paid “in accordance with the terms set forth in the written
contract or policy.”)

        Thus, as a matter of law, plaintiff’s breach of contract claim fails and the trial court did
not err in granting summary disposition under MCR 2.116(C)(8) in defendant’s favor.

       Affirmed.

                                                               /s/ Cynthia Diane Stephens
                                                               /s/ Henry William Saad
                                                               /s/ Patrick M. Meter

2
 We also note that the bonus plan is discretionary and defendant expressly reserved the right to
modify or terminate the plan with or without notice.

                                                 -4-