Franzel v. Kerr Mfg. Co.

• Decision Date: 29 June 1999
• Docket Number: Docket No. 201802.
• Citation: Franzel v. Kerr Mfg. Co., 600 N.W.2d 66, 234 Mich.App. 600 (Mich. App. 1999)
• Parties: Shirley FRANZEL, Plaintiff-Appellee/Cross-Appellant, v. KERR MANUFACTURING COMPANY, Defendant-Appellant/Cross-Appellee, and Rebecca Leinen, Defendant.
• Court: Court of Appeal of Michigan

600 N.W.2d 66

234 Mich. App. 600

Shirley FRANZEL, Plaintiff-Appellee/Cross-Appellant, v. KERR MANUFACTURING COMPANY, Defendant-Appellant/Cross-Appellee, and Rebecca Leinen, Defendant.

Docket No. 201802.

Court of Appeals of Michigan.

Submitted November 3, 1998, at Detroit.

Decided March 30, 1999, at 9:00 a.m.

Released for Publication June 29, 1999.

Allen J. Counard, P.C. (by Allen J. Counard), Trenton, for the plaintiff.

Kell & Lynch, P.C. (by M.V. Kell and Margaret A. Lynch), Birmingham, for Kerr Manufacturing Company.

Before: HOOD, P.J., and RICHARD ALLEN GRIFFIN and MARKEY, JJ.

PER CURIAM.

Kerr Manufacturing Company (hereafter defendant) appeals by right the jury verdict finding that while defendant did not wrongfully discharge plaintiff Shirley Franzel or commit sexual discrimination against her, defendant did breach the parties' contract that formed the basis for plaintiff's return to work in January 1987. Plaintiff cross appeals to determine whether the trial court erred in summarily dismissing plaintiff's claims under the Civil Rights Act (CRA) of intentional gender discrimination, M.C.L. § 37.2202(1); MSA 3.548(202)(1), hostile work environment sexual harassment, M.C.L. § 37.2103 (i); MSA 3.548(103)(i), retaliation for attempting to oppose a violation of the CRA, M.C.L. § 37.2701; MSA 3.548(701), gender discrimination by defendant Rebecca Leinen, Kerr's vice president of human resources, and her claim of intentional infliction of emotional distress. Plaintiff also cross appeals from the trial court's refusal to enter an order of judgment including costs, attorney fees, or mediation sanctions. We vacate the judgment in favor of plaintiff and affirm regarding the cross appeal.

FACTS

Plaintiff worked as a sales representative, district manager, and metro market manager for defendant, a dental products manufacturer, from 1981 through July 1986, and again from January 1987 through May 1987. Plaintiff aspired to the position of regional manager, but allegedly defendant and a host of its employees were committed to preventing a woman from reaching upper management. Plaintiff claims that defendant began discriminating and conspiring against her after three January 1986 incidents at a national sales meeting in Marco Island, Florida, where two comments were made during a slide show that insinuated plaintiff had slept her way to her current position, and where another manager, who was vying for the same regional manager promotion, pinched her on the buttocks. Rick Amos, plaintiff's supervising regional manager, terminated her employment in July 1986 for failing to satisfy the requirements of a February 1986 "performance improvement plan" (PIP), also known as probation.

In August 1986, plaintiff filed her complaint in state court against defendant Kerr, asserting claims of sexual harassment and sexual discrimination in violation of the CRA, breach of contract, wrongful discharge, negligent evaluation, and retaliatory treatment for filing the lawsuit, but the action was removed to the United States District Court for the Eastern District of Michigan on diversity grounds. After a lengthy trial before Judge Barbara K. Hackett, the federal court jury found that plaintiff's employment could be terminated for just cause only, but issued a verdict of no cause of action. The federal case was subsequently dismissed, however, when plaintiff filed a posttrial challenge to diversity jurisdiction and defendant did not oppose it. Thus, the parties refiled their pleadings in the Wayne Circuit Court and the instant lawsuit proceeded. Rebecca Leinen was also added as a defendant in the state court action.

While her federal lawsuit was pending, however, defendant made plaintiff an unconditional offer to return to work. After negotiations, plaintiff agreed and signed a December 11, 1986, letter setting forth the conditions of her reinstatement, including the geographical territories she would service (which did not include the same successful Michigan accounts she had in the past), that Amos would no longer oversee her work, and that she was subject to annual reviews like all other district managers. From the outset, the problems that had plagued plaintiff before her first termination involving extremely late paperwork and expense reports began to reoccur, and plaintiff was again placed on a PIP.

When plaintiff refused a direct order to (1) retrieve from home some "documentation" that she claimed existed to rebut the allegations in her PIP (and support many of the allegations she made against other employees who allegedly sexually harassed her and conspired against her), and (2) return to work with the documentation on the same day, she was suspended. Plaintiff then informed defendant that she could not return to work for medical reasons at the direction of her psychologist, but she refused to submit to an independent medical or psychological examination that defendant requested. Defendant once again terminated her employment, this time for insubordination.

In the state court action, the trial court granted defendant Rebecca Leinen's motion for summary disposition and dismissed plaintiff's claims of sexual harassment, hostile work environment sex discrimination, retaliation, and intentional infliction of emotional distress.¹ The jury was instructed with regard to the claims of (1) wrongful discharge, (2) sex discrimination in violation of the CRA, and (3) breach of contract for defendant's alleged violation of the unconditional offer to return to work.

The jury found no wrongful discharge (specifically finding that plaintiff was not an employee whose employment could be terminated for just cause only) and no sex discrimination, but it did find that defendant breached the contract between the parties that formed the basis for plaintiff's return to work in January 1987. The jury awarded plaintiff $425,000 in damages but reduced that amount by $200,000 for failure to mitigate. Defendant appealed, and plaintiff cross appealed to this Court.

I

A

First, defendant Kerr asserts that the trial court committed error requiring reversal in refusing to reduce the jury's damage award to a nominal amount. Defendant argues that the jury's damage award was purely speculative and that plaintiff was entitled to only nominal damages under Sepanske v. Bendix Corp., 147 Mich.App. 819, 384 N.W.2d 54 (1985), and Environair, Inc. v. Steelcase, Inc., 190 Mich.App. 289, 293, 475 N.W.2d 366 (1991). These cases support the proposition that even if defendant breached its contract with plaintiff regarding her return to work, nothing in the contract ensured her continued employment because, as the jury found, she was an at-will employee, not an employee whose employment could be terminated for just cause only. Notably, neither mental distress damages nor exemplary damages are available in an action for breach of contract, even if the breach is malicious or wilful. Walker v. Consumers Power Co., 824 F.2d 499, 504-505 (C.A.6, 1987); Valentine v. General American Credit, Inc., 420 Mich. 256, 259-263, 362 N.W.2d 628 (1984). We find that plaintiff was entitled to only nominal damages for breach of the at-will employment contract and the trial court erred in denying defendant's motion for remittitur.

In Sepanske, supra at 828-829, 384 N.W.2d 54, this Court affirmed the proposition that the breach of an at-will employment contract entitles the employee to receive only nominal damages because, regardless of the contract terms, the employee had no reasonable expectation of continued employment. In that case, plaintiff Sepanske returned to work after taking a company-approved social service leave of absence but was placed in a different job in a different department, contrary to company policy guaranteeing reinstatement to a former position or one of equal or greater responsibility. The defendant's personnel manager had also given Sepanske a letter stating that Sepanske was "`scheduled to return to [his] former position'" upon completion of his social service leave. Id. at 823, 384 N.W.2d 54. The jury found that Sepanske's responsibilities regarding his new job were neither greater than nor equal to those regarding his former job, and awarded him $75,206 in damages for future lost earnings. Id. at 824-825, 384 N.W.2d 54.

This Court vacated the jury's damage award and remanded to the district court for entry of a judgment in Sepanske's favor "for nominal damages only." Id. at 829, 384 N.W.2d 54. The Court stated:

We take an entirely different approach [than the parties] on the issue of damages. We think that plaintiff was entitled to nominal damages only for defendant's breach of the employment contract. This is not a case of wrongful discharge. Plaintiff's expectation under the contract was to be restored to his old job or to an at-will position which was equivalent to or better than his position in pension and payroll, but he had no actionable expectation that any such restoration would be permanent. The position was still at will—one which the employer was free to alter or terminate without consequence. The fact that defendant historically had not arbitrarily reclassified positions or terminated employees does not change its right to do so.... The jury's damage assessment in such a situation amounts to pure speculation. There is no tangible basis upon which damages may be assessed where plaintiff's expectation was for an at-will position which could have been changed or from which he could have been terminated without consequence. See Sax v. Detroit, G. H. & M. Ry. Co., 129 Mich. 502, 506, 89 N.W. 368 (1902).

[Id. (emphasis added).]

This Court recently reiterated that Sepanske should not be extended beyond breach of contract actions where at-will employees are entitled to only nominal damages. Hord v. Environmental Research Institute of Michigan, 228 Mich. App. 638, 643-644, 579 N.W.2d 133 (1998).

In Environair, supra at 293-294, 475 N.W.2d...