Speckman v. City of Indianapolis, 49S04-8907-CV-516
| Decision Date | 06 July 1989 |
| Docket Number | No. 49S04-8907-CV-516,49S04-8907-CV-516 |
| Citation | 540 N.E.2d 1189 |
| Parties | 4 IER Cases 936 David L. SPECKMAN, Appellant (Plaintiff Below), v. CITY OF INDIANAPOLIS, Appellee (Defendant Below). |
| Court | Indiana Supreme Court |
Richard A. Waples, Indianapolis, for appellant.
Gary W. Bippus, Asst. Corp. Counsel, City-County Legal Div., Indianapolis, for appellee.
Appellant David Speckman contends that the City of Indianapolis violated federal due process by discharging him without holding a hearing. The Court of Appeals held that the trial court's dismissal of Speckman's claims was improper. Because Speckman states a cognizable contract claim to his job, we agree.
David Speckman worked for the Indianapolis Department of Parks and Recreation. He was originally discharged on December 19, 1979. The City executed a settlement agreement with Speckman on March 17, 1981. Speckman agreed to release the City from all claims of wrongful discharge in exchange for the City's agreement to reinstate him, to pay him for damages and accrued leave time, and to treat him in accordance with the City of Indianapolis Personnel Policies and Procedure Manual.
Speckman was reinstated as of March 17, 1981, and subsequently promoted to the position of director of Brookside Park. While Speckman was on vacation from December 5 through December 22, 1981, his assistant Barry Owens rented Brookside Center to a group from R.C.A. without obtaining a permit. Owens gave the R.C.A. group a receipt for $88.00 but failed to deposit the fees he received for the rental. The City gave Owens the option of resigning or being prosecuted. On January 29, 1982, Owens resigned.
On February 17, 1982, Speckman voluntarily paid the fee because he and Owens were friends and Owens still feared he would be prosecuted. Five days later, Speckman was presented a disciplinary report which discharged him immediately. According to the City, the paperwork necessary to terminate Speckman was presented to him so that he could acknowledge it with his signature. He refused to sign but received a copy of the employee disciplinary report. The report indicated that Speckman was discharged for "unlawful or negligent handling of public monies." Following Speckman's discharge, employees of the City made statements to the press and to other City employees indicating that Speckman had been dishonest or even criminal in his handling of the funds. The press disseminated those statements to the general public.
Speckman filed a wrongful discharge action against the City. As amended, his complaint alleged:
Count I: The City discharged Speckman in a manner that was defamatory and contrary to public policy.
Count II: The City breached its written contract of employment with Speckman.
Count III: The City's failure to give Speckman a pre-termination hearing deprived him of his property interest in continued employment and his due process rights under the Fourteenth Amendment.
Count IV: The City's failure to provide a pre-termination hearing deprived Speckman of his liberty interest in his good name and reputation and his due process rights under the Fourteenth Amendment.
Under Trial Rule 12(B)(6), Ind. Rules of Procedure, the City moved to dismiss counts II, III, and IV for failure to state a claim upon which relief could be granted. The trial court granted the City's motion to dismiss those counts. Speckman voluntarily dismissed count I so that the order dismissing the other counts would become final and appealable.
Speckman appealed the trial court's dismissal of counts II, III, and IV, arguing that each stated a cause of action. The Court of Appeals ordered each count reinstated, concluding that "Speckman's complaint alleged sufficient facts (1) to establish he had a valid, enforceable employment contract, (2) to establish that he was not an at-will employee, and (3) to survive the City's 12(B)(6) motion." Speckman v. City of Indianapolis (1987), Ind.App., 508 N.E.2d 1336, 1337. Development of Indiana law would be advanced by a decision rendered in this Court, so we grant the City's petition to transfer.
The City contends that the Court of Appeals erred in finding a valid contract between Speckman and the City. The City claims that the opinion of the Court of Appeals conflicts with existing precedent insofar as it allows a contract to be formed with a municipality absent strict compliance with the applicable statutes. The City contends that the mayor must sign all contracts. 1 As a corollary of this claim, the City contends that the Corporation Counsel did not have the authority to sign a contract binding the City. The City also argues that the Court of Appeals erroneously decided a new question by holding that officers and agents with apparent authority may bind the City.
We conclude these claims are without merit. The applicable statutes certainly do not preclude the mayor from delegating his duty to sign contracts, and it is impractical to require the mayor to sign every single written agreement to which the City is a party. The act creating the corporation counsel is sufficiently broad to permit the mayor to delegate authority to that person. Ind.Code Sec. 36-3-5-2 (Burns 1981 Repl.). Furthermore, counsel for the City are estopped from presenting arguments concerning the ability of the Corporation Counsel to bind the City in light of the representation which the Corporation Counsel made in the text of the agreement itself: "The legal division, City of Indianapolis, has reviewed the foregoing consent agreement and finds it to be proper in all respects." (Record at 24).
The City further claims that the Court of Appeals erroneously decided a new question of law by expanding the definition of "executed consideration" to support an employment contract by including the release of claims for intentional torts such as defamation. We presume this refers to the independent consideration found to support the contract, and discuss it in section II below.
Speckman's complaint contains three claimed grounds for relief which we address in turn: a contract claim, a property interest, and a liberty interest.
A. Contract Claim. As a general rule, Indiana employment relationships are terminable at the will of either party. If an employee gives independent consideration for an employment contract, however, the employer may terminate the employee only for good cause without incurring liability for its action. Ohio Table Pad Co. of Indiana, Inc. v. Hogan (1981), Ind.App., 424 N.E.2d 144. An example of independent consideration is an employee's assignment of a valuable coal lease to the employer in return for employment. Mt. Pleasant Coal Co. v. Watts (1926), 91 Ind.App. 501, 151 N.E. 7.
Independent consideration to support a contract of permanent employment also exists when an employee surrenders or releases a claim for personal injuries sustained at the hands of the contract employer. Ohio Table Pad, 424 N.E.2d at 146. Under the agreement between Speckman and the City, Speckman agreed to release all claims of wrongful discharge he had against the City.
The City contends that prior to this case sources of independent consideration for an employment contract were limited to the kinds recognized in Mt. Pleasant Coal and Ohio Table Pad. The City contends that the Court of Appeals erred in expanding the definition of "executed consideration" to include the release of intentional torts such as defamation, which could be committed by employees acting outside of the course and scope of their employment.
The City's contention is not persuasive because an employer receives the same benefit if an employee releases it from liability in either case. In both instances the employer bargains for an immunity from legal process for an act already committed. Speckman's settlement agreement provides independent consideration by releasing the City from a tort claim.
The presumption that employment is at will can also be rebutted by an agreement between the employer and the employee. Department of Natural Resources v. Evans (1986), Ind.App., 493 N.E.2d 1295. Evans was involved in litigation over the "Two Percent Club," a method of monetary contribution by public employees to the political party with power over their employment. Parties to the suit negotiated a settlement in which Evans agreed to release D.N.R. in exchange for a non-retaliation agreement. Evans then tried to get a job with D.N.R. but was not given political clearance. Evans sued based on the non-retaliation clause of the settlement agreement. The Court of Appeals upheld an award of damages for lost wages because of breach of the agreement. It found that if Evans had been hired by the Department, she would not have been a true at-will employee because her employment would have been conditioned by the settlement contract. If hired, the Department could have discharged Evans at anytime without liability only if the Department did not violate the settlement contract in doing so. Id. at 1302.
Similarly, in its settlement agreement with Speckman, the City agreed to treat Speckman in accordance with the City of Indianapolis Personnel Policies and Procedure Manual. That manual requires "just cause" be established before any disciplinary action is taken against an employee. Thus, Speckman's employment was not at will, but rather was conditioned by the settlement agreement.
While there is room to debate the scope of the rights afforded Speckman under the contract, such contracts are valid and enforceable. Speckman had stated a claim on which relief might be granted, subject to proper proof. Accordingly, count II of his complaint was not subject to dismissal under Trial Rule 12(B)(6), Ind. Rules of Procedure.
B. Property Interest. Count III of Speckman's complaint alleged that the City terminated him in violation of the fourteenth amendment by failing to afford him a hearing before his...
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