Finch v. Illinois Community College Board

Case Date: 07/21/2000
Court: 5th District Appellate
Docket No: 5-98-0811

NO. 5-98-0811

IN THE

ILLINOIS APPELLATE COURT

FIFTH DISTRICT


JANET FINCH,

         Plaintiff-Appellee,

v.

ILLINOIS COMMUNITY COLLEGE
BOARD, as administrative received of
Metropolitan Community College,

         Defendant-Appellant.
Appeal from the
Circuit Court of
St. Clair County.

No. 98-L-684A



Honorable
Jerome F. Lopinot,
Judge, presiding.


JUSTICE HOPKINS delivered the opinion of the court:

The defendant, Illinois Community College Board (ICCB), as administrative receiverof Metropolitan Community College (Metropolitan), appeals the trial court's grant of asummary judgment to the plaintiff, Janet Finch (Finch), on her complaint for the breach ofher employment contract with Metropolitan. On appeal, ICCB contends that the trial court'sgrant of summary judgment was erroneous, as there was a genuine issue of material fact asto whether Finch materially breached the employment contract, and alternatively, ifMetropolitan breached Finch's employment contract, her damages should be limited, becauseperformance under the contract is impossible. We reverse and remand.

FACTS

Metropolitan became a community college district pursuant to statute on July 1, 1996. See 110 ILCS 805/2-12.1 (West 1996). On August 1, 1996, Metropolitan's board oftrustees entered into an employment contract with Finch. The terms of the contract, whichwas made retroactive to July 1, 1996, required that Finch fulfill the duties of president of thecommunity college, and in exchange, she would be paid $90,000 per year. The contract'sduration was for four years, and article 4 of the contract provided that Finch's employmentcould be terminated by Metropolitan before the expiration of her contract on June 30, 2000, only if she became mentally or physically disabled. Also under article 4, Finch couldterminate the contract by giving Metropolitan 90 days' notice, in writing, prior to June 30of each year of her contract. Finch's duties were stated in a broad, general manner in thecontract and with somewhat more detail in a job description for the position of president, adocument incorporated by reference in the employment contract. In the job description thefirst two duties of the president were listed as follows:

"1. The President is the Chief Executive Officer and educational leader of thecollege. The President has overall responsibility for the instructional, financial, andstudent operation functions.

2. Exercises broad discretionary authority consistent with board policies,admininstrative [sic] procedures, and applicable federal and state mandates."

In addition to the foregoing terms, article 5 of the contract stated as follows:

"PURCHASE OF REMAINING TERM

Should the Board desire to terminate this Agreement prior to the stated termof this Agreement other than for reasons set forth in Article 4, the Board herebyagrees to cause a purchase of the remaining term of this Agreement. Such purchaseprice shall be no less than the amount of salary that is owed and would be owed if thePresident were permitted to serve the entire term of this Agreement. In addition, thePresident shall be entitled to payment for unused vacation as of the date oftermination. Such termination shall be effective upon: 1. the written confirmationof the Board's decision, addressed and delivered to the President; and 2. writtenagreement of the President, addressed and delivered to the Board."

This provision, which is the subject of this lawsuit, is referred to by the parties as a buyoutprovision.

In April 1998, ICCB conducted an investigation of Metropolitan becauseMetropolitan's annual audit for fiscal year 1997, which was due in October 1997, had notbeen received. Also in April 1998, Metropolitan suspended Finch for a week, with pay. Subsequently, as a result of ICCB's investigation, Metropolitan was placed on "Recognitionwith Conditions" status by ICCB in May 1998. Under this status, ICCB asserted financialoversight of Metropolitan and required Metropolitan to undertake certain remedial measures. Finch was suspended again, but without pay, by Metropolitan on August 7, 1998. OnAugust 14, 1998, Finch filed a complaint for the breach of her employment contract andasked for damages under the buyout provision of the contract. In her complaint, Finchasserted that she and Metropolitan entered into a contract on July 1, 1996, and thatMetropolitan breached the contract by suspending her without pay, effectively terminatingher services in violation of the contract. Finch did not attach a copy of the contract to hercomplaint, and the only affidavit attached to her complaint was her attorney's affidavit,stating that it was his belief that Finch had suffered damages in excess of $50,000.

Metropolitan filed a motion to dismiss Finch's complaint for breach of contract onSeptember 18, 1998. Metropolitan's motion to dismiss stated several reasons, including thatFinch failed to plead the necessary elements for a breach of contract cause of action and thatFinch's services were terminated under an "implied just cause termination clause."

On September 24, 1998, Metropolitan terminated Finch's employment. On October8, 1998, Finch filed a motion for summary judgment. In her motion, Finch asserted that sheand Metropolitan entered into a contract and that Metropolitan breached the contract byfailing to pay her the remainder of her salary and her unused vacation as of the date oftermination pursuant to the buyout provision of the contract. Finch claimed that there wereno issues of material fact to be decided and that she was entitled to a summary judgment.

A motion hearing was held on October 28, 1998, wherein Metropolitan's motion todismiss and Finch's motion for summary judgment were argued. At the motion hearingMetropolitan filed its memorandum in opposition to Finch's motion for summary judgment. Attached to Metropolitan's memorandum were two affidavits from members ofMetropolitan's board of trustees. In the affidavits, it was asserted that the grounds forFinch's termination were, among other reasons, as follows:

"(a) General nonfeasance and misfeasance on the part of Dr. Finch with regards toa statutorily required financial audit for the fiscal year 1997, which was due October15, 1997[,] and not provided, leading to the intervention of the Illinois CommunityCollege Board.

(b) Dr. Finch failed to properly report student enrollments for State fundingprograms.

(c) Dr. Finch failed to develop a financial accounting system which includes trialbalances and financial statements that are essential for sound fiscal management ofthe institution.

(d) Dr. Finch's nonaccounting of inventory."

Metropolitan argued that Finch was required, under article 8 of the employment contract,to comply with State law and with ICCB's rules and regulations. Metropolitan advised thecourt that Finch failed to establish financial oversight of the college, a critical failure, andthat specifically, Metropolitan failed to file an annual audit that was statutorily required. Metropolitan argued in pertinent part as follows:

"Once she [Finch] breaches Article 8, once she breaches the ICCB regulations andstate law that was the cause of the financial oversight in position in May of 1998,we're-we have no continuing duty to pay anything. At that point we can terminate.

* * *

If we cannot terminate the CEO of this college for glaring, absolutelyincredible financial problems, then *** you've got a public policy question. How cana contract operate as a matter of law to *** keep a CEO in place or to pay her througha termination buyout when, in fact, the audit was a year old, violation of stateregulations and state law, when, in fact, there was a seven-hundred-thousand-dollarovercredit of student hours, another violation of state regulations, and when, in fact,the *** audit was continuously delayed, another violation[?]"

On October 29, 1998, the trial court entered an order denying Metropolitan's motionto dismiss and giving Metropolitan seven days to file an answer to Finch's complaint. Metropolitan filed its answer, which included its affirmative defenses, on November 5,1998. Among Metropolitan's affirmative defenses was that Finch was due no furthercompensation, including the provisions of the buyout clause, because she breached article8 of the contract requiring her to comply with the laws of Illinois and with "all relevantpolicies and resolutions." Metropolitan also asserted as an affirmative defense that it had"just cause" to terminate Finch's services.

In October 1998, ICCB determined that Metropolitan would be dissolved as acommunity college effective December 31, 1998.

The trial court granted Finch's motion for summary judgment in a written orderentered on November 10, 1998. The court awarded Finch $190,346 in damages, whichincluded a payment for 54 unused vacation days. Metropolitan moved to vacate thesummary judgment on November 20, 1998; Finch filed her reply to Metropolitan'saffirmative defenses on November 25, 1998; and ICCB petitioned to intervene on November25, 1998. The trial court denied Metropolitan's motion to vacate and ICCB's petition tointervene. This timely appeal followed.

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ANALYSIS

ICCB contends that the trial court's grant of a summary judgment was erroneousbecause there is a genuine issue of material fact-whether Finch breached the employmentcontract and whether Finch's breach was a material breach sufficient to allow Metropolitanto terminate the contract without fulfilling its obligations under the contract, including thebuyout provision. ICCB also contends that, even if Metropolitan breached the contract bynot paying Finch under the buyout provision, the court's award of damages was erroneous,as after December 31, 1998, Metropolitan was dissolved as a community college. ICCBargues that because Metropolitan was nonexistent after December 1998, Finch's damagesshould be limited to the payment of her salary and her unused vacation prior to this date,under the doctrine of impossibility.

The disposal of a case by summary judgment is an expeditious procedure; however,it is a drastic measure and should only be allowed where the right of the moving party isclear and free from doubt. See Jewish Hospital v. Boatmen's National Bank, 261 Ill. App.3d 750 (1994). In deciding a motion for summary judgment, a court must construe thepleadings, depositions, admissions, and affidavits strictly against the moving party andliberally in favor of the opponent. See Jewish Hospital, 261 Ill. App. 3d at 754. A plaintiffshould present evidence to support every element of the cause of action pled in order tosustain her motion for summary judgment or to resist a defendant's motion for summaryjudgment. See Jewish Hospital, 261 Ill. App. 3d at 755. On appeal, a summary judgmentis reviewed de novo. See Jewish Hospital, 261 Ill. App. 3d at 755. A reviewing court'sfunction is not to resolve disputed factual issues, but it is to determine if disputed factualissues exist. See Jewish Hospital, 261 Ill. App. 3d at 755. A reviewing court considersanew the facts, any reasonable inferences to be drawn therefrom, and the law related to acase to determine if the trial court was correct. See Jewish Hospital, 261 Ill. App. 3d at 755. If a genuine issue of material fact exists, then the moving party is not entitled to summaryjudgment as a matter of law and summary judgment must be overturned. See JewishHospital, 261 Ill. App. 3d at 755.

A complaint for the breach of a contract must allege the following elements: theexistence of a contract, the plaintiff's performance of all contractual conditions required ofher, the defendant's breach of the contract, and the damages that resulted from the breach. See Nuccio v. Chicago Commodities, Inc., 257 Ill. App. 3d 437 (1993). When reviewinga contract, a court must consider the contract as a whole and must determine the intent of theparties. See Wilson v. Wilson, 217 Ill. App. 3d 844 (1991). A court will not imply factualconditions that are not expressed in a contract, but a court cannot construe a contract outsidethe legal conditions underlying a transaction, and existing laws and statues become impliedterms of a contract as a matter of law. See Mitchell Buick & Oldsmobile Sales, Inc. v.McHenry Savings Bank, 235 Ill. App. 3d 978 (1992).

If a party fails to perform his duties under a contract, without a valid excuse, he isliable for a breach of contract, and the remedies for the breach would depend on whether thebreach was material or minor. See Circle Security Agency, Inc. v. Ross, 107 Ill. App. 3d 195(1982); Restatement (Second) of Contracts