Aguirre v. State, Docket No. 327022.

• Decision Date: 14 June 2016
• Docket Number: Docket No. 327022.
• Citation: 315 Mich.App. 706,891 N.W.2d 516
• Parties: AGUIRRE v. STATE OF MICHIGAN.
• Court: Court of Appeal of Michigan — District of US

315 Mich.App. 706

891 N.W.2d 516

AGUIRRE

v.STATE OF MICHIGAN.

Docket No. 327022.

Court of Appeals of Michigan.

Submitted June 7, 2016, at Lansing.

Decided June 14, 2016, at 9:10 a.m.

Deborah Gordon Law, Northville (by Sarah S. Prescott ) for plaintiffs.

Bill Schuette, Attorney General, Aaron D. Lindstrom, Solicitor General, Matthew Schneider, Chief Legal Counsel, and Jeanmarie Miller, Assistant Attorney General, for defendants.

Before: SAWYER, P.J., and HOEKSTRA and WILDER, JJ.

PER CURIAM.

Following a remand from this Court, plaintiffs, Robert Aguirre, Laurin Thomas, John Sullivan, James Atterberry, Sr., Ted Hammon, and Artina Hardman (collectively, the members), appeal as of right the trial court's order denying their motion for summary disposition, denying their motion to amend their complaint, and granting summary disposition in favor of defendants, the Department of Corrections (the Department) and the state of Michigan (collectively, the State). Because the members have failed to state a viable claim of a constitutional Contracts Clause violation and an amendment to add such a claim would be futile, we affirm.

I. FACTS

The basic facts giving rise to this dispute were succinctly set forth in this Court's previous opinion as follows:

In 1992, the Michigan Legislature established "a parole board consisting of 10 members" within the Department. In 2009, Governor Jennifer Granholm reorganized the Department, abolished the parole board, and created the 15– member Parole and Commutation Board.

The members were members of the Parole and Commutation Board. The members each received a letter of appointment from the Governor's office. Hardman's term was from April 19, 2009, to November 20, 2012, Sullivan, Aguirre, and Hammon's terms were from December 1, 2009, to November 30, 2013, and Thomas and Atterberry's terms were from December 1, 2010, to November 30, 2014.

* * *

In 2011, by [Executive Reorganization Order (ERO) ] 2011–3, Governor Rick Snyder abolished the Parole and Commutation Board and created a new Parole Board. ERO 2011–3 provided in § III(A) that the new Parole Board "shall consist of 10 members appointed by the Director of the Department of Corrections." Section II(A) of ERO 2011–3 transferred to the new Parole Board

[a]ll of the authority, powers, duties, functions, responsibilities, records, personnel, property, and unexpended balances of appropriations, allocations, or other funds of the Michigan Parole and Commutation Board[.]

Section V(B) provided that

[a]ll rules, orders, contracts, and agreements relating to the transfers under this Order lawfully adopted prior to the effective date of this Order shall continue to be effective until revised, amended, repealed, or rescinded.

ERO 2011–3 granted the director of the Department of Corrections the power to appoint Parole Board members. The director did not appoint any of the members to serve as members on the new Parole Board. [Aguirre v. Dep't of Corrections, 307 Mich.App. 315, 317–318, 859 N.W.2d 267 (2014) (citations omitted; some alterations in original).]

II. PROCEDURAL HISTORY

On January 5, 2012, the members filed suit against the State, alleging a breach of contract and a claim of promissory estoppel. Both parties moved for summary disposition. The trial court granted the members' motion for summary disposition and denied the State's motion for summary disposition. As summarized in this Court's previous opinion:

The trial court concluded that the members' letters of appointment continued to be effective after ERO 2011–3. The trial court also concluded that ERO 2011–3 transferred the members' contracts from the Parole and Commutation Board to the Parole Board. The trial court agreed that the Governor had authority to eliminate the members' positions, but concluded that their contracts remained valid and the termination breached their contracts. [Id. at 319, 859 N.W.2d 267.]

The State appealed, and this Court reversed and remanded for further proceedings. In doing so, this Court made two main holdings relevant to the dispute now before us. First, assuming for the sake of argument that the members had a contract with the State, this Court determined that ERO 2011–3 abolished the members' positions, and that this abolishment did not constitute a breach of contract.¹

Id. at 323–325, 327, 859 N.W.2d 267.

Second, this Court considered the members' constitutional challenges and determined that the abolishment of the members' positions was permissible. Id. at 322, 859 N.W.2d 267. Specifically, we rejected claims that eliminating positions violated the good-cause termination provisions found in Const. 1963, art. 5, § 10, and, instead, characterized Governor Snyder's actions as the reorganization of an executive department and the elimination of positions under the governor's plenary control over the organization of the executive branch under Const. 1963, art. 5, § 2. See Id. at 317, 321, 325–326, 859 N.W.2d 267.

While largely resolving the parties' dispute, this Court noted that the members had asserted, as an alternative ground for affirmance, that the reorganization of the Parole Board violated the Contracts Clause of the Michigan Constitution, Const. 1963, art. 1, § 10. However, we declined to address this issue on appeal because it had not been decided by the trial court and we reasoned that "[o]ur analysis of this issue would benefit from a decision of the trial court and full argument." Id. at 326, 859 N.W.2d 267. Consequently, while reversing the trial court's grant of summary disposition to the members and its denial of summary disposition to the State, we left open the question whether ERO 2011–3 violated the Contracts Clause of the Michigan Constitution, and we remanded for further proceedings consistent with our opinion.

On remand, the trial court granted summary disposition to the State "as to all issues in the Complaint except that preserved [in] the Court of Appeals on the issue of Unconstitutional Impairment of Contract. "² The parties then filed cross-motions for summary disposition in relation to the Contracts Clause issue, and the members filed a motion to amend their complaint to add a claim that ERO 2011–3 violated the Contracts Clauses of the Michigan Constitution and the United States Constitution, U.S. Const. art. I, § 10. Because this count was not contained in the members' original complaint, the trial court concluded that the State was entitled to summary disposition under MCR 2.116(C)(8). However, the court also considered whether the members should be allowed to amend their complaint under MCR 2.116(I)(5), and the court determined that such amendment would be futile. The court offered several reasons for this conclusion, most notably explaining that the governor's constitutional power to reorganize the executive branch in the future was an implicit term of any contract that the members might have with the State. Reasoning that the members must have contracted "with reference to this fundamental law," the court concluded that, under Harsha v. Detroit, 261 Mich. 586, 595, 246 N.W. 849 (1933), their contract could not have been impaired by Governor Snyder's exercise of his constitutional authority and, therefore, the members' Contracts Clause argument was without merit. Consequently, the trial court denied the members' motion to amend their complaint, denied the members' motion for summary disposition, and granted the State's motion for summary disposition. The members now appeal in this Court as of right.

III. STANDARD OF REVIEW

We review de novo a trial court's grant or denial of summary disposition. Detroit Edison Co. v. Stenman, 311 Mich.App. 367, 377, 875 N.W.2d 767 (2015). Constitutional questions are reviewed de novo. Studier v. Mich. Pub. Sch. Employees' Retirement Bd., 472 Mich. 642, 649, 698 N.W.2d 350 (2005). Likewise, whether a contract exists is a question of law to be reviewed de novo. Kloian v. Domino's Pizza LLC, 273 Mich.App. 449, 452, 733 N.W.2d 766 (2006). When a contract is found to exist, "questions involving the proper interpretation of a contract or the legal effect of a contractual clause are also reviewed de novo." Rory v. Continental Ins. Co., 473 Mich. 457, 464, 703 N.W.2d 23 (2005). Finally, a trial court's decision on a motion to amend a complaint is reviewed for an abuse of discretion. Diem v. Sallie Mae Home Loans, Inc., 307 Mich.App. 204, 216, 859 N.W.2d 238 (2014).

IV. ANALYSIS

On appeal, the members begin their argument with the assertion that they have fully enforceable contractual rights in their Parole and Commutation Board offices for the term of years set forth in their letters of appointment.³ Given these purported contractual rights, the members contend that Governor Snyder's elimination of their positions under ERO 2011–3 constituted an unconstitutional impairment of the members' contracts in violation of the Michigan and the United States Constitutions. Notably, in making these arguments, the members in no way dispute the legality of ERO 2011–3 insofar as it represented an exercise of the governor's plenary authority to reorganize the executive branch under Const. 1963, art. 5, § 2. Instead, the members characterize the issue as whether the State is liable for monetary damages when the governor exercises this constitutional authority to eliminate executive positions, thereby purportedly impairing the members' contractual right to their positions—and their related employment benefits—for the period defined in their letters of appointment. For the reasons stated later in this opinion, we hold that this argument is without merit.

A. THE CONTRACTS CLAUSE

"Both the Michigan and United States Constitutions prohibit laws that impair obligations under contracts." ⁴

AFT Mich. v. Michigan, 497 Mich. 197, 232–233, 866 N.W.2d 782 (2015). "These clauses provide that vested rights acquired under a contract may not be destroyed by subsequent state legislation."⁵ Seitz v. Probate Judges Retirement Sys., 189 Mich.App. 445, 455,...