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Keywords

contractbreach of contractplaintiffdefendantdamagesattorneytrialmotionwillsustainedcompensatory damagesexemplary damages
contractplaintiffdefendantattorneymotionwrongful termination

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Mourad v. Automobile Club Ins. Ass’n, 186 Mich.App. 715, 465 N.W.2d 395, 59 USLW 2495, 121 Lab.Cas. P 56,861, 6 IER Cases 193

Facts

The plaintiff was employed as a legal area manager at Auto Club from 1980 until his demotion in 1983. Following his demotion, he claimed that it was due to his refusal to comply with unethical orders from his superiors, which would have violated the Code of Professional Conduct. After resigning in 1984, he filed a complaint alleging various claims against Auto Club, including breach of a just-cause contract and retaliatory demotion. The jury awarded him significant compensatory damages, but the trial court later overturned the exemplary damages for emotional distress.

In 1980, plaintiff was named legal area manager and in that capacity headed Auto Club's in-house legal department from August 1980 until March 1983 when he was demoted to an executive attorney position.

Issue

Whether the attorney could maintain an action for breach of a just-cause employment contract based on retaliatory demotion and constructive discharge, and whether damages for emotional distress were recoverable.

Whether the attorney can maintain an action for wrongful termination of a just-cause employment contract.

Rule

An employer's statements of company policy that an employee will be terminated only for cause can give rise to an enforceable contract right, and damages for mental anguish, humiliation, embarrassment, and sense of outrage or indignity are not recoverable in an action for breach of an employment contract.

The existence of a just-cause contract and whether defendants' actions constituted a breach of that contract is a question for the jury to determine.

Analysis

The court found that the jury did not err in determining that a just-cause contract existed and that the defendants breached that contract by demoting the plaintiff without just cause. The court also noted that the claims of retaliatory demotion and constructive discharge merged with the breach of contract claim, and thus the damages awarded for these claims could not be sustained independently. The court emphasized that the plaintiff's refusal to comply with unethical orders was a significant factor in the breach of contract determination.

The jury did not err in finding that there was a just-cause contract and that defendants, by demoting plaintiff for his failure to comply with policy decisions which plaintiff claimed would have violated the Code of Professional Conduct, breached that contract.

Conclusion

The court affirmed the jury's finding of a breach of contract but reversed the award for retaliatory demotion and emotional distress damages, concluding that these claims were indistinguishable from the breach of contract claim.

We hold that plaintiff can maintain an action for breach of a just-cause contract on the basis of retaliatory demotion and constructive discharge stemming from his refusal to take action which would have violated the code of professional conduct.

Who won?

The plaintiff prevailed in part, as the court upheld the jury's finding of breach of contract but reversed the awards for retaliatory demotion and emotional distress, indicating that the breach was the primary issue.

The plaintiff, an attorney, can maintain a cause of action against defendant, Automobile Club Insurance Association (Auto Club), his former client and employer, for breach of a just-cause contract.

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