Townsend v. Neenah Joint Sch. Dist.

• Decision Date: 03 August 2016
• Docket Number: No. 2015AP2240.,2015AP2240.
• Citation: 371 Wis.2d 760,886 N.W.2d 593 (Table)
• Parties: Robert B. TOWNSEND, Timothy Hopfensperger, Jeffrey L. Martis, Monica Schoen, David E. McCarthy and Bruce P. Moriarty, Plaintiffs–Appellants, v. NEENAH JOINT SCHOOL DISTRICT, Defendant–Respondent, Community Insurance Corporation, Intervenor.
• Court: Wisconsin Court of Appeals

371 Wis.2d 760

886 N.W.2d 593 (Table)

Robert B. TOWNSEND, Timothy Hopfensperger, Jeffrey L. Martis, Monica Schoen, David E. McCarthy and Bruce P. Moriarty, Plaintiffs–Appellants,

v.NEENAH JOINT SCHOOL DISTRICT, Defendant–Respondent,Community Insurance Corporation, Intervenor.

No. 2015AP2240.

Court of Appeals of Wisconsin.

Aug. 3, 2016.

¶ 1 REILLY

, P.J.

Plaintiffs, a group of teachers employed by Defendant Neenah Joint School District (Neenah), appeal from two orders of the circuit court granting summary judgment to Neenah. Plaintiffs filed this action for promissory estoppel, unjust enrichment, negligent misrepresentation, and strict responsibility misrepresentation after Neenah voted to amend the retirement benefits plan provided for in the district's collective bargaining agreement (CBA) after the enactment of 2011 Wis. Act 10. The circuit court granted Neenah's motion for summary judgment on the theory of governmental immunity pursuant to WIS. STAT. § 893.80(4)

(2013–14),¹ thereby dismissing Plaintiffs' claims. We affirm the circuit court, based not on a theory of governmental immunity, but on the ground that having repeatedly bargained for two-year agreements, which set forth all material terms of the bargain, Plaintiffs may not now replace their contract claim with tort, quasi contract or unjust enrichment claims.

BACKGROUND

¶ 2 Neenah provided a supplemental retirement plan to its teachers under a series of CBAs between Neenah and the Neenah Education Association (NEA),² the material terms of which changed over time due to negotiations.³ The final CBA was effective July 1, 2009, through June 30, 2011.⁴ The retirement plan had two components: (1) a monetary stipend and (2) a medical benefit. A teacher who met the age and years of service requirements could retire and receive a supplemental retirement stipend equal to fifty percent of his or her base salary in his or her final year multiplied by eight or ten, depending on certain factors.⁵ The CBA also included a provision called the “evergreen clause,” which provided that “[s]hould the parties fail to reach agreement on a new Agreement ... this Agreement shall continue in full force and effect until such time that the terms and conditions of the new Agreement are fully resolved.” This clause was recognized as an important provision preventing Neenah from unilaterally terminating or changing the retirement plan after a CBA expired.

¶ 3 In 2011, the Wisconsin Legislature passed 2011 Wis. Act 10 (Act 10), which, among other things, specifically prohibited employees from collectively bargaining on issues other than base wages. WIS. STAT. § 111.70(4)(mb)1.

Plaintiffs concede that Act 10 effectively voided the protective provisions of the evergreen clause. The constitutionality of the public policy changes contained in Act 10 were upheld by our supreme court. Madison Teachers, Inc. v. Walker, 2014 WI 99, ¶ 164, 358 Wis.2d 1, 851 N.W.2d 337.

¶ 4 As of June 30, 2011,⁶ Act 10 prohibited Neenah from bargaining or contractually agreeing to any provisions other than base wages. WIS. STAT. § 111.70(4)(mb)1.

In response, Neenah drafted an employee policy manual, which established policies and procedures to address benefits and the terms and conditions of employment that had previously been addressed in the CBA. Neenah provided that the retirement plan would not change for the 2011–2012 school year to allow teachers eligible for retirement to receive the benefits provided for in the CBA.⁷

¶ 5 Subsequently, Neenah voted to amend the retirement plan benefits. The amended plan took effect on October 2, 2012, and applied to those retiring on or after that date. Neenah does not dispute that the amended plan provides reduced supplemental retirement benefits compared to those provided in the CBA.⁸

¶ 6 Plaintiffs brought suit based on claims of promissory estoppel, unjust enrichment, negligent misrepresentation, and strict responsibility misrepresentation. Plaintiffs assert that Neenah negotiators promised the CBA retirement plan to the teachers in return for lower salaries and benefits, which resulted in the teachers being paid lower wages over the life of their careers with the promise of the retirement plan as called for in the CBA. Neenah filed a motion for summary judgment seeking dismissal of all Plaintiffs' claims.

¶ 7 The circuit court determined that all Plaintiffs' claims were barred by governmental immunity pursuant to WIS. STAT. § 893.80(4)

and granted summary judgment.⁹ Plaintiffs appeal.¹⁰

DISCUSSION

¶ 8 While the circuit court granted summary judgment on the grounds of governmental immunity,¹¹ and we agree, we affirm on more narrow grounds. See State v. Blalock, 150 Wis.2d 688, 703, 442 N.W.2d 514 (Ct.App.1989)

(we decide cases on narrowest possible grounds). Plaintiffs acknowledge that the CBA did not include a provision that vested any of the retirement benefits after the expiration of the CBA. They admit that Neenah did not breach the CBA with the teachers. Instead, Plaintiffs' claim is strictly for breach of a promise to continue a negotiable and expired contract term that can no longer exist given the prohibitions on what can be bargained for under Act 10. Act 10 changed the game for everyone and Neenah is not liable for acting within the confines of the law.

Standard of Review

¶ 9 Whether the circuit court properly granted a motion for summary judgment is a question of law we review de novo. Linden v. Cascade Stone Co., 2005 WI 113, ¶ 5, 283 Wis.2d 606, 699 N.W.2d 189

. We utilize the same methodology as the circuit court. M & I First Nat' l Bank v. Episcopal Homes Mgmt., Inc., 195 Wis.2d 485, 496–97, 536 N.W.2d 175 (Ct.App.1995). Summary judgment is appropriate when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. WIS. STAT. § 802.08(2).

¶ 10 As with other contracts, we interpret CBAs independently of the determinations made by the circuit court. Roth v. City of Glendale, 2000 WI 100, ¶ 15, 237 Wis.2d 173, 614 N.W.2d 467

. Plaintiffs allege four causes of action in the complaint: (1) promissory estoppel, (2) unjust enrichment, (3) negligent misrepresentation, and (4) strict responsibility misrepresentation. We address each.

Promissory Estoppel

¶ 11 Plaintiffs' promissory estoppel¹² claim rests on Neenah's repeated promises before employment and during the CBA negotiations that the retirement benefits would be available to teachers upon retirement. According to Plaintiffs, the teachers acted in reliance on those promises and in exchange “provided services, accepted salaries below fair-market value, and declined employment with other employers, all to the benefit of Neenah.” Plaintiffs claim that injustice can only be avoided by enforcing the promises Neenah made to Plaintiffs.

¶ 12 The fatal flaw to Plaintiffs' promissory estoppel claim is that a claim for promissory estoppel arises only when there is no contract. Scott v. Savers Prop. & Cas. Ins. Co., 2003 WI 60, ¶ 53, 262 Wis.2d 127, 663 N.W.2d 715

(“Promissory estoppel, however, rests on a theory separate from contract; a claim for promissory estoppel only arises when there is no contract.”). Retirement benefits were a material term under each two-year CBA, and there was no contractual guarantee of the amount of the future payment of retirement benefits beyond the term of the CBA.

¶ 13 Plaintiffs argue that “promissory estoppel is always based on a plaintiff's immediate detrimental reliance on a defendant's promise to do something in the future .... even though such promise is not in a contract.” Plaintiffs point to Hoffman v. Red Owl Stores, Inc., 26 Wis.2d 683, 133 N.W.2d 267 (1965)

, where Hoffman was induced to take actions in reliance on Red Owl granting him a franchise. Id. at 697, 133 N.W.2d 267. When Red Owl failed to honor its promises, Hoffman prevailed on a promissory estoppel theory. Id. at 698–99, 133 N.W.2d 267.

¶ 14 We distinguish this case from Hoffman on one key factual issue: There was no contract in Hoffman. Here, Neenah and the teachers negotiated all the material terms of the agreement and there was no guarantee that the retirement benefits would be available beyond the term of the CBA.

¶ 15 Plaintiffs also argue that the circuit court failed to apply our supreme court's holding in Kramer v. Alpine Valley Resort, Inc., 108 Wis.2d 417, 321 N.W.2d 293 (1982)

, which created an exception to recovery on a promissory estoppel claim when a valid contract was created between the parties. In Kramer, the court found that the lease agreement represented one small aspect of a larger business relationship; thus, since the lease agreement did not incorporate the obligations of the separate business endeavor, plaintiff was allowed to recover under promissory estoppel. Id. at 424, 321 N.W.2d 293. Plaintiffs assert that under certain circumstances, parties can rely on promises not memorialized in a contract. According to Plaintiffs, the circuit court erred by failing to determine the scope of the contract and whether it represented the “total business relationship.” We disagree.

¶ 16 Here, the CBA incorporated the very obligation that Plaintiffs seek to continue: the retirement benefit agreement. The CBA presented a clear contractual relationship that addressed all the essential elements of the “total business relationship.” The CBA was a fully formed, written agreement that included the entirety of the terms between the parties, not a vague agreement as in Kramer. Under Wisconsin law, alleged promises made during CBA negotiations cannot form the basis of a promissory estoppel claim if there is a contract that addresses the essential elements of the business relationship. See McLellan v. Charly, 2008 WI App 126, ¶¶ 52–53, 313 Wis.2d 623, 758 N.W.2d 94

(accepting the circuit court's reasoning that “the doctrine of promissory estoppel was not intended to convert contract negotiations into an enforceable promise”).

¶ 17 Each CBA was a limited-term contract....