Clough v. Mayor & Council of Hurlock

McDonald, j. The charter of the Respondent Town of Hurlock provides that the Mayor is to appoint “the heads of all office, department, and agencies” of the Town with the approval of the Town Council. Those officials then “serve at the pleasure of the Mayor.” In 2009, the Mayor-elect of the Town entered into a written employment agreement with Petitioner Kathleen Clough under which Ms. Clough would serve as one of those officials—Clerk-Treasurer of the Town—for a four-year term. Two and one-half years later, however, the Mayor terminated Ms. Clough from that position.

Ms. Clough brought this action against the Town for breach of contract, seeking damages and other relief. The Circuit ³⁶⁶ Court dismissed her complaint, holding, among other things, that the four-year term provided in the employment agreement was contrary to the Town Charter and therefore ineffective—a holding affirmed by the Court of Special Appeals. We agree. The language of the Town Charter means that an official like the Clerk-Treasurer is an at-will employee and that the Mayor and Council lack authority to enter into an agreement conferring a fixed term of employment.

I Background A. Employment Agreement, Appointment, and Termination As this matter was resolved on a motion to dismiss the amended complaint, we assume the truth of the facts alleged in that complaint as we assess the merits of the dismissal. RRC Northeast, LLC v. BAA Maryland, Inc., 413 Md. 638, 643 , 994 A.2d 430 (2010). The amended complaint alleged the following facts: On November 25, 2009, the Mayor-elect of Hurlock, Joyce Spratt, met with Ms. Clough and requested that she serve as the Clerk-Treasurer of the Town. Ms. Clough stated that she was willing to serve, so long as she had the security of an employment agreement.

Ms. Spratt indicated that she did not object to an employment agreement. The two agreed to terms of employment, but Ms. Spratt cautioned that the Town Council would have to approve Ms. Clough’s appointment and the employment terms. Ms. Clough prepared a written agreement, dated November 25, 2009, setting forth a four-year term of employment, a wage rate, and certain other terms and conditions of employment. On December 7, 2009, Ms. Spratt took office as Mayor of Hurlock.

The next day, the Town Council convened in executive session. During that session, Mayor Spratt presented Ms. Clough to the Council for appointment to the position of Clerk-Treasurer and notified the Council of the terms of the ³⁶⁷ employment agreement. Immediately following the executive session, the Tow Council approved the appointment of Ms. Clough as Clerk-Treasurer pursuant to the terms of the employment agreement. Sometime afterwards, Ms. Clough and Mayor Spratt executed the written employment agreement.

According to Ms. Clough, she faithfully performed her duties as Clerk-Treasurer. Nevertheless, on July 9, 2012, Mayor Spratt terminated Ms. Clough from the position of Clerk-Treasurer without cause. At that time, there were approximately 18 months remaining of the four-year term in the written employment agreement. B. Complaint, Dismissal, and Appeal On July 5, 2013, Ms. Clough filed her original complaint in the Circuit Court for Dorchester County.

The complaint alleged that the Tow had violated the employment agreement by terminating her appointment before the expiration of the four-year term of the agreement. The complaint sought damages exceeding $75,000, and other unspecified relief, as a result of the alleged breach of contract. After the Tow moved to dismiss the complaint, Ms. Clough filed an amended complaint alleging the same facts and cause of action with minor changes and seeking the same relief. The Tow moved to dismiss the amended complaint.

One of the bases for that motion—and the one at issue before us— was that the four-year term in the employment agreement conflicted with the Tow Charter and that, as a result, the employment agreement was void ab initio—that is, void from the beginning. 1 ³⁶⁸ Following a hearing, the Circuit Court granted the Town’s motion to dismiss the amended complaint. The court based its ruling in part on the ground that the four-year term of employment in the agreement was inconsistent with the Town Charter. Ms. Clough noted a timely appeal to the Court of Special Appeals. That court affirmed the Circuit Court in an unreported opinion.

The intermediate appellate court reasoned that the provision of the Town Charter that “all ... agency heads shall serve at the pleasure of the Mayor” meant that the position of Clerk-Treasurer is an at-will position. The court thus held that it was inconsistent with the Town Charter for the Town to enter into an employment agreement that conferred a term of years on the Clerk-Treasurer. We granted Ms. Clough’s petition for certiorari to consider whether a municipal charter provision that provides that certain employees serve “at the pleasure of’ the mayor precludes the municipality from entering into an employment agreement with such an employee for a term of years. II Discussion A. Standard of Review Appellate review of a trial court decision to dismiss a complaint for failure to state a claim concerns whether that decision was “legally correct.” RRC Northeast, LLC, 413 Md. at 644 , 994 A.2d 430 .

In making that assessment, we consider the issue anew and accord no special deference to the legal conclusions of the lower courts. Patton v. Wells Fargo Financial Maryland, Inc., 437 Md. 83, 95 , 85 A.3d 167 (2014). ³⁶⁹ B. Whether the Town Charter Precludes Employment for a Term of Years 1. Municipal Charters A municipal charter is foundational law for a town in the same way that a constitution is for a state or the nation. A charter “is the organic, the fundamental law, establishing basic principles governing relationships between the government and the people, and among the various governmental branches and bodies.” Cheeks v. Cedlair Corp., 287 Md. 595, 607 , 415 A.2d 255 (1980).

A municipal charter is construed according to the same rules of construction that govern the construction of statutes. O’Connor v. Baltimore County, 382 Md. 102, 113 , 854 A.2d 1191 (2004). Maryland municipalities have had home rule under the Maryland Constitution since the adoption of the municipal home rule amendment in 1954. Chapter 53, Laws of Maryland 1954 (ratified November 2, 1954) adding Article XI-E to the Maryland Constitution. 2 As part of the implementing legislation related to that constitutional amendment, the General Assembly enacted a model municipal charter that municipalities were free to adopt.

Chapter 258, Laws of Maryland 1955, codified at Maryland Code, Article 23B, repealed by Chapter 228, Laws of Maryland 1994. The model charter provided for a mayor-council form of government. Among other things, the model charter set forth the basic structure of municipal government, including the council’s powers, the mayor’s powers, and provisions concern ³⁷⁰ ing municipal personnel, finance, special assessments, property, and other matters. Approximately 40% of Maryland municipalities had adopted the basic form and structure of the model municipal charter by the time the General Assembly repealed the model in 1994.

D. Wayne Rhodes & David Sann, A Comparison of Charter Provisions in Maryland Municipal Corporations (Institute for Governmental Service 1994) at 2. 3 2. The Hurlock Charter The Town of Hurlock was incorporated as a municipality in 1892. In 1976, the Town adopted its current charter, which closely tracks the model provided by the General Assembly. 4 Since that time, the Hurlock Charter has remained largely unchanged, except for the addition of provisions relating to land annexation and urban renewal. Mayor and Town Council Consistent with the model charter, the Hurlock Charter provides for a mayor-council form of government.

The Town Council consists of five elected councilmembers and exercises legislative authority. Hurlock Charter, § 301. The Mayor is the chief executive officer of the Town, has a veto power with respect to legislation, and is charged generally to execute ordinances and to oversee the administration of the Town government. Hurlock Charter, § 404.

Clerk-Treasurer The Town Charter also provides for the position of Clerk-Treasurer and assigns various duties to that position. Hur ³⁷¹ lock Charter, § 801. The office of Clerk-Treasurer in a Maryland municipality has been described as follows: The functions of the clerk involve attending council meetings, recording and compiling meeting minutes, and acting as the custodian of municipal records. Depending on the charter, the clerk may have other duties as well, such as personnel and financial administration.

Additionally, the treasurer may be the community’s chief financial officer who is responsible for collecting and managing all funds, accounting and financial reporting, and budget preparation .... It is not uncommon in small communities to find the positions of clerk and treasurer combined.... The clerk, treasurer, and clerk-treasurer positions are visible and important in small municipalities.... This is particularly true when the elected officials are essentially part-time employees, meet infrequently, and have little time or expertise to devote to managing the day-to-day affairs of the municipality.

Maryland Municipal League, Appointed Officials in Maryland < http://www.mdmunicipal.org/index.aspx7NID=416 > [http://perma.cc/KWC6-EJ2E] (last visited December 14, 2015). That appears to be an apt description of the office of Clerk-Treasurer as it appears in the Hurlock Charter. The Clerk-Treasurer serves as clerk to the Mayor and Council, is to keep records of their proceedings, and is the custodian of various other town records—including records setting the corporate limits of the Town, municipal legislation, election results, and the Town budget. Hurlock Charter, §§ 201, 310, 613, 702, 801.

In regards to Town finances, the Clerk-Treasurer is charged with making purchases on behalf of the Council, and is one of two required signatories on Town cheeks. Id., §§ 707, 718. The Clerk-Treasurer takes an oath of office and is to provide a surety bond. Id., §§ 1201(a), 1202.

While the Hurlock Charter creates the position of Clerk-Treasurer and assigns various duties to that official, it does ³⁷² not provide any special direction as to the appointment or removal of an individual from that position. 5 Accordingly, we look to the general provision concerning the appointment and removal of office, department, and agency heads. Appointment and Removal of Agency Heads and Employees Like the model municipal charter, the Hurlock Charter generally provides for the Mayor to appoint Town employees. The Council also has a role, depending on the type of employee. The respective roles of the Mayor and Council are set out in § 404(b) of the Charter, which provides: The Mayor, with the approval of the Council, shall appoint the heads of all offices, departments, and agencies of the Town government as established by this Charter or by ordinance.

All office, department, and agency heads shall serve at the pleasure of the Mayor. All subordinate officers and employees of the offices, departments, and agencies of the Town government shall be appointed and removed by the Mayor, in accordance with rules and regulations which may be adopted by the Council. Hurlock Charter, § 404(b) (emphasis added). 6 Thus, the May- or is to appoint, with the approval of the Council, the heads of all “offices, departments, and agencies” of the Town’s government, who then “serve at the pleasure of the Mayor.” The parties have focused on what it means to serve “at the pleasure of the Mayor.” 7 ³⁷³ 3. Analysis The parties posit different interpretations of § 404(b) of the Charter.

The Town contends that the provision that agency heads “serve at the pleasure of the Mayor” means that they are at-will employees. While conceding that at-will employment may be the norm under Maryland law, Ms. Clough contends that § 404(b) allows a mayor to exercise discretion by entering into an employment agreement with an agency head for a fixed term. She suggests that a mayor may voluntarily agree to such a limitation on his or her “pleasure” in order to attract high quality employees for important agency positions. But, in our view, a charter embodies policies deemed important to the functioning of the municipality and may preclude an official from voluntarily surrendering the discretion that the charter confers on an office. “Serves at the pleasure of ’ The first