Kari v. General Motors Corp.

• Decision Date: 11 October 1977
• Docket Number: Docket No. 30523
• Citation: Kari v. General Motors Corp., 261 N.W.2d 222, 79 Mich.App. 93 (Mich. App. 1977)
• Parties: John R. KARI, Plaintiff-Appellant, v. GENERAL MOTORS CORPORATION, Defendant-Appellee. 79 Mich.App. 93, 261 N.W.2d 222, 86 Lab.Cas. P 55,195
• Court: Court of Appeal of Michigan

Page 222

261 N.W.2d 222

John R. KARI, Plaintiff-Appellant, v.GENERAL MOTORS CORPORATION, Defendant-Appellee.

Docket No. 30523.

79 Mich.App. 93, 261 N.W.2d 222, 86 Lab.Cas. P 55,195

Court of Appeals of Michigan.

Oct. 11, 1977.

Rehearing Denied Nov. 23, 1977.

Released for Publication Jan. 13, 1978.

[79 MICHAPP 94]Jack C. Chilingirian, Mount Clemens, for plaintiff-appellant.

Clark, Hardy, Lewis & Fine, P.D., by Terence V. Page, Birmingham, for defendant-appellee.

Before RILEY, P. J., and BASHARA and MAHINSKE, ^* JJ.

MAHINSKE, Judge.

This case presents the question of whether statements in an employment handbook may constitute an offer to contract for severance pay, despite the presence of express disclaimers in the handbook and in its description of the severance pay plan.We hold that under the facts of this case no offer or enforceable promise was made by the handbook.

Plaintiff began working for defendant in 1955 as a process engineer.He continued in defendant's employ until March, 1972, when he requested an educational leave of absence from April to September, 1972.This leave was granted; its terms did not guarantee plaintiff his job upon his return.In September, 1972, plaintiff's leave was extended by mutual agreement until July 1, 1975.On that date, however, plaintiff's former position or one comparable to it was not available, and plaintiff was "separated" from defendant.

Plaintiff commenced the instant action in March, 1976, seeking recovery of a separation allowance allegedly guaranteed by defendant's employment handbook.This handbook, entitled "Working With General Motors", was issued to plaintiff at the time of his employment.It contains a section entitled "Separation Allowance", the first paragraph of which reads as follows:

"A Separation Allowance Plan has been established [79 MICHAPP 95] for the benefit of salaried employes laid off or separated from the payroll under certain circumstances.The primary purpose of this Plan is to provide a source of income to eligible employes beyond the date of their layoff or separation.The inclusion of a schedule of separation allowances in this booklet, together with the conditions governing their payment, however, is not intended nor is it to be interpreted to establish a contractual relationship with the employe.Where payments are made to a laid-off employe under this Plan, the term 'Separation Allowance' will include layoff payments under the Separation Allowance Plan."

On the last page of the handbook is a general disclaimer, italicized and outlined in red:

"The contents of this handbook are presented as a matter of information only.While General Motors believes wholeheartedly in the plans, policies and procedures described here, they are not conditions of employment.General Motors reserves the right to modify, revoke, suspend, terminate, or change any or all such plans, policies, or procedures, in whole or in part, at any time, with or without notice.The language used in this handbook is not intended to create, nor is it to be construed to constitute, a contract between General Motors and any one or all of its employes.

Plaintiff asserted that the provisions of the separation allowance plan constituted an offer by defendant of a unilateral contract, which offer was accepted by plaintiff's action of working for defendant.Defendant answered that due to the disclaimers, the separation allowance provisions could not possibly be construed as an offer that would reasonably be relied upon.

Defendant moved for summary judgment pursuant to GCR 1963, 117.2(3) on the ground that no genuine issue existed as to any material fact.The trial court granted defendant's motion on September[79 MICHAPP 96] 27, 1976.That court reasoned that due to the disclaimers in the handbook, no contractual duty to pay a separation allowance arose on the part of the defendant.For the reasons outlined below, we affirm the trial court's judgment.

Plaintiff's basic theory, that statements in a policy, plan, or other communication to employees may constitute an offer to contract, is sound.But it just does not apply to the facts of this case.In Cain v. Allen Electric & Equipment Co., 346 Mich. 568, 78 N.W.2d 296(1956), the Court held that the adoption of a severance pay policy as part of a corporate personnel policy created an offer to contract which was accepted by plaintiff's action of continuing in defendant's employ.More recent cases decided upon this theory include Gaydos v. White Motor Corp., 54 Mich.App. 143, 220 N.W.2d 697(1974), lv. den., 392 Mich. 800(1974), andClarke v. Brunswick Corp., 48 Mich.App. 667, 211 N.W.2d 101(1973), lv. den., 391 Mich. 765(1974).

A review of the above cases and those from other jurisdictions dealing with various types of employee benefits ¹ reveals that the question of whether a contract exists is governed by ordinary principles of offer, acceptance, and consideration.In Cain, supra, for example, the Court found that the severance pay policy looked toward an agreement, and was not a mere gratuity or expression of a hope or intention.The Cain Court decided that the offer was a promise, relying on the following definition from 1 Corbin on Contracts, § 13, p. 29:

[79 MICHAPP 97]"A promise is an expression of intention that the promisor will conduct himself in a specified way or bring about a specified result in the future, communicated in such a manner to a promisee that he may justly expect performance and may reasonably rely thereon."

From this definition it is clear that the theory of promissory estoppel ² may also be used to find an enforceable contract.

However, when the employer-employee communication fails to contain the elements of an offer, and when the requisites of promissory estoppel are not present, courts will not hesitate to find that no contract was ever formed.The following...