Board of Trustees of State Universities & Colleges v. Fineran

WILNER, Judge. James V. Fineran was appointed as Director of Public Relations for Salisbury State College, effective July 30, 1984. Although his initial salary ($30,000) was fixed on an annual basis, the letter from the college president confirming his appointment mentioned no specific term of employment. In mid-July, 1985, Fineran was informed by the ²⁹² president, Thomas E. Bellavance, that his salary for the ensuing fiscal year would be increased to $31,600.

On September 5, 1985, Dr. Bellavance rebuked Mr. Finer-an for some statements he had made to a reporter for the Salisbury Daily Times concerning the student housing shortage at the college and a proposed new school of business management. Dr. Bellavance made clear that he intended to terminate Mr. Fineran’s employment but offered Fineran the opportunity to resign. Mr. Fineran gave some thought to the matter and, in the belief that he had no fixed term of employment and that Dr. Bellavance indeed had the authority to fire him, he submitted his resignation on September 9. In accordance with Dr. Bellavance’s offer, the resignation was to take effect December 31, 1985; Mr. Fineran would continue to draw his salary until then but would immediately leave the college and perform no further duties for it.

After submitting his letter of resignation, Mr. Fineran consulted counsel. On October 4, 1985, his attorney wrote to Dr. Bellavance, asserting that the resignation was submitted under duress, that Dr. Bellavance had misrepresented his authority to discharge Mr. Fineran, and that Dr. Bellavance’s actions had denied Mr. Fineran various statutory and Constitutional rights. Counsel demanded a hearing “to deal with these claims and their proper resolution, including the reinstatement of Mr. Fineran to his position (should he be so willing)” and asked that the Board of Trustees of the State Colleges and Universities “place any comprehensive liability insurance carrier provided for under Section 14-109 [Md.Code Ann.Educ. art.] on notice of the claims set forth in this letter____” A copy of this letter was sent to James K. Archibald, chairman of the Board of Trustees. An Assistant Attorney General, W. Carter Lester, Jr., responded for the college on October 15.

The essence of the response was that (1) Dr. Bellavance sought Mr. Finer-an’s resignation not because of any untrue statements made to the media but because of a general dissatisfaction with ²⁹³ Fineran’s handling of public relations for the college, (2) Dr. Bellavance never asserted the authority to discharge Mr. Fineran but had made clear that dismissal authority lay with the Board of Trustees, (3) the resignation was the product of negotiation and was voluntary, (4) the Board was due to consider and act on the resignation at its next meeting on November 21, and (5) Fineran could withdraw the resignation before then, but that, if he did so, Dr. Bellavance would recommend and ask the Board to approve Fineran’s termination. Mr. Lester denied that Dr. Bellavance or the college had violated any of Mr. Fineran’s rights and contended that Fineran had no statutory or Constitutional right to a hearing. Mr. Fineran elected not to withdraw his resignation, and, at its November meeting, the Board approved it. In March, 1986, Fineran filed this action in the Circuit Court for Anne Arundel County against the Board of Trustees, each of its individual members, the college, and Dr. Bellavance.

Contemporaneously, he filed a claim under the State Tort Claims Act (Md.Code Ann.State Gov’t art., §§ 12-101—12-110) with the State Treasurer who, a month later, denied the claim on the ground that there was no insurance coverage for it. Fineran eventually filed an amended complaint to which, after some discovery, all defendants responded with a motion to dismiss or, in the alternative, for summary judgment. Although the motion raised the general defense that the complaint failed to state a claim upon which relief can be granted, the thrust of it, as made clear in argument, was that each of the defendants enjoyed an absolute or qualified sovereign or governmental immunity with respect to the various claims made by Mr. Fineran. After a hearing, the court denied the motion, and this appeal followed.

Claims And Issues There are three classes of defendants here—(1) the Board and the College, which are units of the State Government, (2) the individual members of the Board, and (3) Dr. Bella ²⁹⁴ vanee, who would be classed with the individual Board members but for the fact that he is sued separately in one count (Count XIII) of the amended complaint. The theories of liability pled against these defendants and the defenses raised by them are similar in some respects, different in others. As we shall see, in the 13 counts pled in his amended complaint Mr. Fineran has alleged the violation of many, many rights. They all seem to hinge, however, on two basic assertions: (1) that he was entitled to the protections of Md.Code Ann.Educ. art., § 14-110, which were denied him, and (2) that he was discharged in retribution for the exercise of his right of free speech.

For these violations, he claims, the defendants have no immunity, either because none exists or because the State, by law, has waived it. To set the stage for a discussion of what is before us, we must examine briefly some provisions in title 14 of the Education article, in particular § 14-110. Salisbury State College is one of six institutions of higher education that, during the period relevant here, were under the direction and control of the Board of Trustees of State Colleges and Universities. § 14-101. As part of its governing authority, the Board was empowered to “make all appointments to positions at each institution from nominations submitted by the president of the institution,” to “fix the salary and tenure of each faculty member,” and to “dismiss any faculty member as provided in § 14-110----” § 14-105.

Section 14-106, setting forth the duties and powers of the college presidents, authorizes them to “[n]ominate for appointment by the Board of Trustees, and ... recommend for dismissal by the Board, any faculty member or administrator not in the merit system.” Section 14-110, the statute most at issue here, provides that, on the written recommendation of the president, the Board may remove “any faculty member or professional assistant” for any of six enumerated reasons—immorality, dishonesty, official misconduct, insubordination, incom ²⁹⁵ petence, or willful neglect of duty. It requires, however, that, before removal, the Board must send the person a written copy of the charges against him and give him an opportunity for a hearing. Mr. Fineran asserts that, as a professional assistant and administrator, his position had a fixed term of 12 months, but that, whether or not he had such a term, he was subject to § 14-110 and could be terminated only (1) by the Board, (2) for one of the enumerated causes, and (3) after notice and an opportunity for a hearing. He urges that his “resignation” was the product of duress and misrepresentation and amounts in fact to a constructive discharge.

He claims that he was discharged for making truthful, though perhaps unpopular, statements about important matters of public concern, that there was no legitimate cause for this discharge, and that it was accomplished in defiance of his rights under § 14-110. On this basis, he complains: (1) In Count I, that the Board and the college breached an express contract to continue his employment either (i) through June 30, 1986, or (ii) indefinitely; (2) In Count II, that the Board and the college intentionally and wrongfully discharged him contrary to clearly stated public policy in § 14-110, the First and Fourteenth Amendments to the U.S. Constitution, and Md. Decl. of Rights, art. 24; (3) In Count III, that Dr. Bellavance and the Board members acted outside the scope of their official duties in willful or reckless disregard of his rights and wrongfully discharged him with reason to know that they were acting contrary to the clearly stated public policy set forth in the cited statute and Constitutional provisions; (4) In Counts IV, VI, IX, and XI, that the Board and the college violated his common law right of free speech under the First Amendment and Md. Deck of Rights, art. 24, that they deprived him of his liberty interest in freedom of speech and his property interest in continued employment without due process of law, and that they violated his right ²⁹⁶ of free speech and various rights, privileges, and immunities under the Fourteenth Amendment, all in contravention of 42 U.S.C. § 1983 ; (5) In Counts V, VII, VIII, and X, that Dr. Bellavance and the Board members also violated all of those rights, privileges, and immunities; (6) In Count XII, that all defendants violated his statutory rights under § 14-110; and (7) In Count XIII, that Dr. Bellavance, without justification, induced the other defendants to breach Fineran’s employment contract. In each count, Mr. Fineran sought compensatory money damages of $1,000,000. Additional punitive damages were sought in Counts III through XIII.

The defendants’ claim of immunity is grounded in the first instance on their status as units of the State government or as State officials exercising public and discretionary duties. More particularly, they assert: (1) As to Count I (breach of contract), the State has retained its sovereign immunity as to contract claims unless they are based on a written contract executed on behalf of the State by an employee acting within the scope of his authority and that Fineran’s claim does not arise from such a contract. (2) Any waiver of immunity as to Counts II and III (wrongful discharge) must be based on the State Tort Claims Act (Md.Code Ann.State Gov’t art., §§ 12-104 and 12-105) and that there is no waiver under those sections for tortious acts not within the scope of the public duties of the employee. Count III specifically charges that Dr. Bellavance and the Board members acted outside the scope of their official duties; hence, no waiver.

(3) As to the claims against the college and the Board based on the asserted violation of Fineran’s various Constitutional rights (Counts IV, VI, IX, and XI), those defendants, as units of the State government, enjoy a sovereign ²⁹⁷ immunity that has not been waived by the Tort Claims Act. The principal issue here is whether the waiver of immunity under that Act encompasses claims based on Constitutional violations or is limited to immunity for traditional common law torts. (4) As to the Constitutionally based claims against the individual defendants, they enjoy a qualified governmental immunity by reason of their discretionary duties that remains intact upon Fineran’s failure to establish that they (i) acted with malice or (ii) violated any of his “clearly established” rights. The Circuit Court did not address any of these issues with particularity.

It simply held that Fineran had stated a claim upon which relief could be granted and that the defendants had “not established that they are immune from suit.” The only specific finding made by the court was that “[i]n addition, as Defendant’s [sic] policy guidelines indicate that administrative positions are twelve month appointments, they have thus failed to establish that Plaintiff was an at will employee not entitled to a hearing.” Appellate Jurisdiction—Scope of Review Ordinarily, an immediate appeal does not lie from the denial of a motion to dismiss or for summary judgment. Where the effect of that denial is a rejection of the defendant’s claim of immunity from suit, however, such an appeal does apparently lie under the collateral order doctrine. State v. Hogg, 311 Md. 446 , 535 A.2d 923 (1988), and cases cited therein. Mr. Fineran acknowledges the defendants’ right to bring this appeal. 1 ²⁹⁸ The scope of review at this stage is not so easily delineated.

Normally, of course, when an appeal is allowed under the collateral order doctrine, review is limited to the issue(s) that justify the appeal in the first instance—those that would be effectively unreviewable following entry of final ²⁹⁹ judgment. Under that principle, and indeed under the order for appeal filed by the defendants, the only issues now before us are those relating to the defendants’ claims of immunity. Unfortunately, however, these claims of immunity cannot be entirely separated from the underlying issues in the case. Immunity as to Count I (breach of contract), as we shall see, depends on whether Fineran had a written contract embodying the terms he claims were breached.

Immunity with respect to the Constitutionally based claims depends in large measure on just what rights Mr. Fineran had, how “clearly established” they were, and what the various defendants did in contravention of them. There is no way that we can view the immunity claims in a vacuum, as Fineran demands. Nor, assuming our jurisdiction in the first instance, are we obliged to do so. Where the immunity issues are so bound up with the underlying claims, appellate courts have proceeded to consider those underlying claims even if, in doing so, the immunity issues themselves become moot.

See, for example, Martinez v. California, 444 U.S. 277, 283-85 , 100 S.Ct. 553, 558-59 , 62 L.Ed.2d 481 , reh. denied 445 U.S. 920 , 100 S.Ct. 1285 , 63 L.Ed.2d 606 (1980); Carlson v. Conklin, 813 F.2d 769 (6th Cir.1987); McSurely v. McClellan, 697 F.2d 309 (D.C.Cir.1982), ce rt. denied 474 U.S. 1005 , 106 S.Ct. 525 , 88 L.Ed.2d 457 (1985); and cf. Public Service Comm’n v. Patuxent Valley, 300 Md. 200, 218 , 477 A.2d 759 (1984). Breach Of Contract (Count I) As a matter of common law, no action may be brought against the State or any of its agencies unless (1) specific legislative authority has been given for the action and (2) either funds are available for satisfaction of a resulting judgment or the entity sued has the power to raise those funds. University of Maryland v. Maas, 173 Md. 554 , 197 A. 123 (1938); Chas. E. Brohawn & Bros. v. ³⁰⁰ Board, 269 Md. 164 , 304 A.2d 819 (1973); Calvert Associates v. Department, 277 Md. 372 , 357 A.2d 839 (1976).

By Md.Code Ann.State Gov’t art., § 12-201, the General Assembly has provided for a limited waiver of that immunity in breach of contract actions. Section 12-201(a) provides: “Except as otherwise expressly provided by law of the State, the State, its officers, and its units may not raise the defense of sovereign immunity in a contract action, in a court of the State, based on a written contract that an official or employee executed for the State or 1 of its units while the official or employee was acting within the scope of the authority of the official or employee.” That is the statute relied upon by Fineran in pressing Count I. He claims to have had a written contract for a 12-month employment signed by Dr. Bellavance on behalf of the Board. The State urges that no such contract has been shown. As Fineran’s claim is based solely on the assertion of a specific written contract—no oral agreement is alleged—resolution of the immunity issue will necessarily resolve the merits of the claim itself, for, if the evidence, taken in the light most favorable to Mr. Fineran, fails, to establish the contract he alleges, he had no contract and was therefore an “at will” employee.

In this regard, two things are clear, and really undisputed. No written contract setting forth the terms and conditions of his employment was ever offered to or signed by Mr. Fineran; nor, at any time prior to the tendering of his resignation, did he believe that he had any kind of contract at all. Throughout his deposition testimony, Mr. Fineran repeatedly acknowledged that, while he and various officials of the college, including Dr. Bellavance, had discussed the duties of the job and some of the penumbral perquisites and working conditions, neither a fixed term nor a particular grievance procedure had ever been discussed or offered. He expressed his view of the tenure question most succinctly: “In keeping with my previous testimony, I knew nothing about any recourse other than the fact that the atmo ³⁰¹ sphere at the college was that the President could fire who [sic] he chose, when he chose____ It was my understanding that the administrators felt that the President of the college could fire them for whatever reason he deemed appropriate.” In urging now a contrary view, that his appointment carried a 12-month term that was renewed for a like term, Fineran relies on three documents: (1) a provision in the Administrative Salary Plan adopted by the Board that “[a]ll administrative positions are twelve month appointments unless otherwise indicated,” (2) the letter of July 81, 1984, from Dr. Bellavance confirming his initial appointment, which mentions an “annual salary,” and (3) the memorandum of July 10,1985, from Dr. Bellavance informing him of his salary increase “From 1984/85 $30,000 to 1985/86 $31,-600.” We fail to see how any of those documents, individually or together, constitutes a written contract carrying a fixed 12-month term.

In Staggs v. Blue Cross of Maryland, 61 Md.App. 381, 388 , 486 A.2d 798 , cert. denied 303 Md. 295 , 493 A.2d 349 (1985), we noted that “unilateral pronouncements by an employer may create legally enforceable expectations on the part of its employees.” Our holding, however, expressed at 392, was that “provisions in such policy statements that limit the employer’s discretion to terminate an indefinite employment or that set forth a required procedure for termination of such employment may, if properly expressed and communicated to the employee, become contractual undertakings by the employer that are enforceable by the employee.” (Emphasis added.) We see nothing in the letter or memorandum from Dr. Bellavance properly expressing any commitment to a 12-month term; nor, as is clear from Mr. Fineran’s testimony, was the policy statement in the Board’s Administrative Salary Plan ever communicated to Fineran prior to the submission of his resignation. ³⁰² Nor would the mere mention of a 12-month salary in Dr. Bellavance’s 1984 letter or his 1985 salary memorandum suffice to create a 12-month term. As made clear in McCullough Iron Co. v. Carpenter, 67 Md. 554, 557 , 11 A. 176 (1887), and confirmed in Gill v. Computer Equip. Corp., 266 Md. 170, 179 , 292 A.2d 54 (1972), “[i]t is also well settled that a hiring at so much a week, month or year, no time being specified, does not, of itself, make more than an indefinite hiring.” On the record before us, then, the evidence compels the conclusion as a matter of law that Mr. Fineran not only did not have a written contract providing for a fixed term of employment but never thought that he had such a contract. From that, it becomes clear that the court erred in denying the motion as to Count I. Interference With Contract (Count XIII) Count XIII, as noted, charges Dr. Bellavance with willfully inducing the other defendants to breach Mr. Finer-an’s employment contract.

Having concluded that there was no such employment contract, we hold as well that the court erred in denying the motion as to Count XIII. Other Claims Mr. Fineran’s other claims, as embodied in the remaining 11 counts, are based on the predicate averments that his letter of resignation was coerced or fraudulently induced and that he was therefore constructively, and wrongfully, discharged. All of the arguments made by the parties go to the wrongfulness of the discharge—whether it was in retaliation for the exercise of First Amendment rights, whether it was in contravention of Education article, § 14-110, whether it breached other, more amorphous, rights found in the Fourteenth Amendment and the Md. Declaration of Rights. But none of that is relevant unless there was a discharge—actual or constructive—in the first instance.

Mr. Fineran has claimed that Dr. Bellavance asserted the right and the intention, on his own, to terminate Fineran’s ³⁰³ employment unless Fineran resigned, and that his action in this regard was without proper justification and in response to comments Fineran made, and had a right to make, to a newspaper reporter. Because the case reaches us in the context of a motion for summary judgment, we accept the factual component of those assertions as being true. The uncontradicted evidence shows, however, that, in response to Mr. Fineran’s claim, made through counsel, that Dr. Bellavance had misrepresented his authority, that the letter of resignation was submitted under duress and was invalid, and that Dr. Bellavance had trampled upon this spectrum of rights, the college and the Board, through its counsel, offered Fineran the opportunity to withdraw the resignation. The Assistant Attorney General agreed that Dr. Bellavance “does not have the power to actually terminate Mr. Fineran or to accept his resignation,” that “[bjoth of those actions must be taken by the Board of Trustees.” The letter concluded, in this regard: “Mr. Fineran does have the ability to withdraw the resignation prior to that Board meeting.

See Lemlich v. Board of Trustees of Harford Community College, 282 Md. 495 [ 385 A.2d 1185 ] (1978). Of course, if Mr. Fineran should withdraw his resignation, President Bellavance will request the Board to approve Mr. Fineran’s termination. Mr. Fineran would then lose the benefit of being paid through December 31 and his record at the College would reflect the termination. As has always been the case, it is Mr. Fineran’s choice as to whether he will resign or be terminated.” Counsel responded to that letter.

In his response, he acknowledged a telephone call from Mr. Lester, the Assistant Attorney General, adding that “Mr. Fineran could submit a letter outlining his position for the Board’s consideration at its meeting on November 21,1985 in connection with any recommendation of dismissal by Dr. Bellavance” but that such a submission “would not amount to a ‘hearing.’ ” Counsel informed Mr. Lester that, in order to preserve his compensation through December 31, “Mr. Fineran has con- ³⁰⁴ eluded not to withdraw his alleged resignation.” He added that the resignation would be withdrawn only if the Board agreed to “apply the requirements for dismissal set forth in Section 14-110(a)(l).” In light of that response, what came before the Board on November 21 was not a recommendation for termination but a letter of resignation that, on its face, seemed perfectly valid. The uncontradicted evidence, presented in the form of affidavits filed by each of the Board members other than Mr. Archibald, showed that: “Among the matters considered at that session were appointments and separations of college personnel,