Simpson v. City of Topeka

• Decision Date: 14 October 2016
• Docket Number: No. 114,484,114,484
• Citation: 383 P.3d 165
• Parties: Teri Simpson; William Riphahn; David Specht; Clay Neal; Lynn Bishop; Bruce Andrews; Roger Wilcox; John Bell; Kathy Huseman; and Gena Brooks, Appellants/Cross-appellees, v. City of Topeka, Appellee/Cross-appellant.
• Court: Kansas Court of Appeals

383 P.3d 165

Teri Simpson; William Riphahn; David Specht; Clay Neal; Lynn Bishop; Bruce Andrews; Roger Wilcox; John Bell; Kathy Huseman; and Gena Brooks, Appellants/Cross-appellees,

v.City of Topeka, Appellee/Cross-appellant.

No. 114,484

Court of Appeals of Kansas.

Opinion filed October 14, 2016

Justin W. Whitney and Grant M. Glenn, of Woner, Glenn, Reeder & Girard, P.A., of Topeka, for appellants/cross-appellees.

Shelly Starr, chief of litigation, City of Topeka, for appellee/cross-appellant.

Before Powell, P.J., Pierron and Atcheson, JJ.

Powell

, J.:

The Plaintiffs are former City of Topeka (City) employees who worked in the City's Parks and Recreation Department before it was consolidated with the Shawnee County (County) Parks and Recreation Department and whose employment was transferred from the City to the County with no lost work time and no days unemployed. They later sued the City, seeking severance pay and damages pursuant to three theories of relief: breach of contract, negligent misrepresentation, and unpaid earned wages under the Kansas Wage Payment Act (KWPA), K.S.A. 44–313 et seq .

The district court granted the City summary judgment on the negligent misrepresentation claim but denied the parties' cross-motions for summary judgment on the other two theories of recovery. After a bench trial, the district court entered judgment in the City's favor on the Plaintiffs' remaining two claims.

The Plaintiffs now appeal, raising numerous points of error while the City cross-appeals, claiming, among other things, that the district court erred in not granting it summary judgment. Because we agree that the City was not required to pay severance to the Plaintiffs whose jobs were transferred to the County with comparable work conditions and benefits without any loss of work, we affirm the judgment of the district court.

FACTUAL AND PROCEDURAL BACKGROUND

The material and salient facts are not in dispute. In August 2011, the City and County decided to consolidate their parks and recreation departments effective January 1, 2012. In effecting the consolidation, the City and the County executed three contracts: City of Topeka Contract Nos. 41460, 41525, and 41666 (the consolidation contracts). Section 3 of Contract No. 41460, which was later amended by Contract No. 41666, provided in part that City employees had the option of becoming County employees on January 1, 2012. Under the consolidation contracts, transferring City employees could not suffer a reduction in salary or wages, be dismissed from employment, or suffer a reduction in regular working hours for a period of 6 months. Moreover, City employees (1) were still eligible to receive severance pay if the County fired them within 3 years of January 1, 2012; (2) could elect to transfer up to 300 hours of accrued, unused vacation leave to the County or have their unused vacation leave paid out in a lump sum; and (3) could transfer a maximum of 1,040 hours of accrued, unused sick leave.

Each of the Plaintiffs had been employed in the City's parks and recreation department. Many of them had worked for the City for a number of years, and all were management level employees not covered by the City's collective bargaining agreement. Before the consolidation, the terms and conditions of the Plaintiffs' employment with the City were governed by the Personnel Code of the City of Topeka (Personnel Code). The Personnel Code was adopted by city ordinance and is amendable by the Topeka City Council.

Article VIII of the Personnel Code pertains to nondisciplinary reductions in force. Section 2 of that article covers permanent reductions in force and severance pay and states that the purpose of severance pay “is to provide temporary relief to employees who have lost their job through no fault of their own,” including events such as being separated due to not being recalled from a layoff, waiving a right to recall from a layoff, the employee's work is eliminated or reassigned, or the qualifications for the employee's position change. Under Section 2, an employee is eligible to receive severance pay only if the employee's position has been eliminated and the employee has waived the right to be recalled, the employee has been employed by the City for over 1 year, the employee is not continuing to work for the City in an equal or greater job position, and the employee has executed an agreement and complete release of all claims against the City. The section also provides that an employee entitled to severance pay is to receive roughly 1 week of pay for every year worked, unless the employee has worked over 10 years with the City, then the employee is entitled to 2 weeks of pay for every year worked. In no instance is an employee's severance pay to be over 1 year's salary.

Before the consolidation took effect, the City's director of human resources sent a letter to the City employees impacted by the consolidation, including the Plaintiffs. The letter, dated November 10, 2011, stated in part:

“As a result of the consolidation you have the opportunity to transfer employment to Shawnee County employment within the consolidated Shawnee County Parks and Recreation Department. You have received information from Shawnee County regarding your position assignment should you elect to transfer to county employment. As part of this consolidation you have the opportunity to transfer employment to Shawnee County and as such the provisions [of] the City of Topeka Personnel Code, Article VIII, Non-disciplinary Reductions in Force [are] not applicable. If you elect not to transfer employment to Shawnee County, you will have the option to retire from City of Topeka employment if you meet the eligibility requirements under the KPERS retirement system for full or reduced retirement benefits. If you elect not to transfer to Shawnee County Employment and are not eligible for retirement or chose not to retire under the KPERS retirement system, you will be considered to have voluntarily resigned your employment with the City of Topeka effective December 31, 2011.”

The City did not offer to put the Plaintiffs on a reemployment eligibility or recall list. The Plaintiffs did not fill out County job applications nor did they interview for County positions. Each of the Plaintiffs submitted all the paperwork that the City required. On December 31, 2011, the Plaintiffs' employment with the City ended, and the next day they became County employees. At present, four of the Plaintiffs no longer work for the County: three retired in 2012, and one voluntarily left for another position in 2013. The remaining Plaintiffs continue to work for the Shawnee County Parks and Recreation Department.

In 2012, the Plaintiffs filed suit against the City for lost severance pay under the theories of breach of contract, negligent misrepresentation, and unpaid wages under KWPA. The City filed an answer admitting the Plaintiffs had not been paid severance but otherwise denying the allegations. After the Plaintiffs sought summary judgment on their breach of contract and KWPA claims, the City moved for summary judgment on all of Plaintiff's theories.

Highly summarized, the district court granted the City summary judgment on Plaintiffs' negligent misrepresentation claim on the grounds that the letter from the City's director of human resources to affected employees contained at most incorrect interpretations of the Personnel Code but no material misstatements of fact. The district court rejected the parties' cross-motions for summary judgment on the breach of contract and KWPA claims. While the district court found that the parties did not dispute that the Personnel Code constituted a contract, it found that the consolidation contracts between the City and County amended the Personnel Code creating a contract clause problem by impairing the existing contract between the City and its affected employees. In light of this, the district court ultimately concluded that summary judgment under the breach of contract claim was inappropriate because the balance of benefits and detriments occurring by the virtue of the consolidation contracts created a genuine issue of material fact. In addition, while the district court agreed with the Plaintiffs that they had been “discharged” within the meaning of KWPA and that severance pay constituted “wages” under KWPA, it concluded that there were disputed questions of material fact as to whether the benefits of continued employment offset the consolidation contracts' attempt to disqualify transferring employees from severance pay eligibility and the other detriments allegedly suffered by the Plaintiffs. The matter was set for trial.

The bench trial occurred over the course of 3 days. Several witnesses testified, including each individual plaintiff. Following the trial, both parties submitted posttrial briefs with proposed findings of fact and conclusions of law. The district court issued its ruling in a memorandum decision filed August 7, 2015. The court began by addressing the Plaintiffs' KWPA violation claim and noting that it had already determined that severance pay may be wages under KWPA. Thus, according to the district court, the only remaining question was whether the wages had been earned. The district court also found that the consolidation contracts modified the Personnel Code so that the Plaintiffs could not be considered terminated under Article VIII. It concluded that severance pay was contingent on a triggering condition that would have materialized but for the consolidation contracts. In other words, the Plaintiffs had to fulfill the condition precedent of losing their jobs before they could collect severance pay.

The district court next considered whether the consolidation contracts violated the Contracts Clause of the United States Constitution, beginning with determining whether the Plaintiffs' jobs with the County were comparable with their previous jobs with the City. It concluded that while there...