Miller v. City of Portland

255 Or.App. 771

298 P.3d 640

John MILLER, Randy Olson, Herbert Goss, Douglas Babcock, Henry Jackson, and Michael Palin, Plaintiffs–Appellants,

v.CITY OF PORTLAND, an Oregon municipal corporation, Defendant–Respondent.

081014715; A145318.

Court of Appeals of Oregon.

Argued and Submitted on July 19, 2012.

Decided March 27, 2013.

Montgomery W. Cobb argued the cause for appellants. With him on the briefs was Montgomery W. Cobb, LLC.

Franco A. Lucchin argued the cause for respondent. With him on the brief was Harry Auerbach.

Before ORTEGA, Presiding Judge, and SERCOMBE, Judge, and HADLOCK, Judge.

SERCOMBE, J.

This case arises out of the City of Portland's adoption and implementation of a return-to-work program for disabled firefighters. Plaintiffs, disabled firefighters who were required to return to work under the program, filed an action for breach of contract against the city in circuit court. In addition, plaintiffs alleged that the city, in its implementation of the return-to-work program, had breached its duty of good faith and fair dealing in the administration of their employment contracts. The city moved for summary judgment, asserting, among other things, that plaintiffs had failed to exhaust available administrative remedies and that plaintiffs' allegations, if proved, would not amount to a breach of contract. The court agreed with the city and granted summary judgment on both of those grounds. Plaintiffs now appeal, asserting that the court erred in concluding that they were required to exhaust administrative remedies and that their allegations did not amount to a breach of contract. For the reasons explained below, we affirm the trial court's judgment in part and reverse and remand in part.

The basic background facts on summary judgment are as follows. Chapter 5 of the charter for the City of Portland establishes the Fire and Police Disability, Retirement and Death Benefit Plan. The charter provides for creation of a Fire and Police Disability and Retirement Fund (FPDR) and a board of trustees to supervise and control the fund. As permitted by the charter, administration of the fund is delegated to a “Fund Administrator.” Section 5–306 of the plan provides for service-connected and occupational disability benefits for members.

Plaintiffs were employees of Portland Fire & Rescue. As plan members who suffered disabling injuries in the course of their duties, plaintiffs each received disability benefitspursuant to the plan. Plaintiffs each received those benefits over a number of years.

In 2006, plaintiffs received written notice that, as part of the city's return-to-work program, they were required to attend mandatory EMT training. Furthermore, plaintiffs were notified that FPDR would continue their disability benefits during training but that, in the event that they failed to attend the training, “the Fund w[ould] begin the process of suspension or termination of [their] benefits.” Thereafter, as part of the return-to-work program, plaintiffs were required to return to work in light-duty positions (such as “low hazard fire inspector”) that had not existed when they became disabled. Although their job assignments were different when they returned to work, plaintiffs' positions were in the same job classifications as the positions that they had held when they became disabled.¹ The city sought and obtained approval from plaintiffs' physicians for plaintiffs to work in those positions. In addition, FPDR subsidized the wages paid to plaintiffs once they returned to work.

One plaintiff, Olson, did not comply with the requirements of the return-to-work program. Accordingly, he received written notice dated April 12, 2007, that his disability benefits were terminated effective April 5, 2007, because he was “no longer disabled or eligible.” The notice advised Olson:

“You have 14 days from the date of this letter to provide a written response for the Director's consideration.

“If the Director does not hear from you within the 14–day time frame, this denial is affirmed and you then have 60 days from April 26, 2007 to appeal to a hearings officer. * * * An untimely request for hearing may be accepted by the Director, upon a finding of good cause.”

(Boldface omitted.) In a letter dated April 26, 2007, Olson sought reconsideration of the termination of his benefits. However, he received no response to that request for reconsideration. Aside from Olson, plaintiffs complied with the requirement that they return to work in the assigned light-duty positions.

Ultimately, plaintiffs filed an action against the city seeking damages and injunctive relief. In their second amended complaint, they alleged that they were entitled to receive disability benefits under the plan “because they were unable to perform the required duties of their chosen occupation—Firefighter—as the particular Disabled Firefighter's duties and qualification requirements were defined at the date of injury or disability.” Furthermore, they were entitled “to receive a minimum benefit of 25% of normal full time wages regardless of medical status or subsequent earnings from other employment.” Plaintiffs asserted that the plan (and particularly section 5–306 of the charter), along with the city's course of dealing and oral and written promises, constituted a contract and that the city “promised and was contractually obligated to continue the Disabled Firefighters' entitlement to disability benefits until each of the Disabled Firefighters' death or retirement” and was “prohibited by law from unilaterally changing the terms of the Plan.” The complaint alleged that the city had promised each plaintiff that “he would not be required to return to work for the City,” and that each plaintiff had relied on that promise to his detriment. In plaintiffs' view, the city had breached its contractual obligations to them through implementation of the return-to-work program.² They also alleged that the city had breached its duty of good faith and fair dealing in various ways. Plaintiffs asserted that, as a result of the city's breaches, each of them had been damaged in the sum of $800,000; they sought a judgment of a total of $4.8 million, and “an order requiring the City to reinstate the Disabled Firefighters' rights to disability benefits under the Plan, vacating the ‘return to work program,’ permanently enjoining the City from terminating the disability benefits of the Disabled Firefighters, and from requiring them to return to work in non-Firefighter positions,” along with attorney fees.

The city moved for summary judgment on a number of grounds. In particular, it asserted that it was entitled to summary judgment because (1) the breach of contract claim was based on representations not contained in the charter or authorized by ordinance and the city “cannot be contractually bound by oral promises or writings that were not adopted by ordinance”; (2) the charter did not create a contract with plaintiffs; (3) even if Chapter 5 of the charter did create a contract, the city did not breach the contract; (4) it could not breach the contract or breach the duty of good faith and fair dealing by taking actions that were expressly authorized by the terms of the contract; (5) the court did not have subject matter jurisdiction over the dispute because plaintiffs failed to exhaust their administrative remedies; and (6) plaintiffs had waived all other remedies by applying for and accepting disability benefits.

The trial court agreed with the city that plaintiffs “had the obligation to exhaust their administrative remedies before turning to the court for relief.” Because it concluded that plaintiffs had “failed to exhaust their administrative remedies as required by law,” it granted summary judgment. In the alternative, the court noted that it “could not relate the breach to anything in the actual contract” and, therefore, concluded that defendant had not breached its contract with plaintiffs and that summary judgment on that basis was appropriate. However, the court determined that there were genuine issues of material fact regarding whether there was a contract between the parties and whether defendant had breached its duty of good faith and fair dealing and, therefore, would have denied summary judgment on those bases. Furthermore, the court declined to reach the issue of waiver or any of the other issues raised on summary judgment. Based on its rulings, the court entered a general judgment in favor of the city. Plaintiffs now appeal that judgment, raising two assignments of error.

On appeal, we review the trial court's grant of summary judgment to determine whether we agree that “there is no genuine issue as to any material fact and that the moving party is entitled to prevail as a matter of law.” ORCP 47 C; O'Dee v. Tri–County Metropolitan Trans. Dist, 212 Or.App. 456, 460, 157 P.3d 1272 (2007). There is no genuine issue of material fact if, “based upon the record before the court viewed in a manner most favorable to the adverse party, no objectively reasonable juror could return a verdict for the adverse party on the matter that is the subject of the motion for summary judgment.” ORCP 47 C. Furthermore, “[t]he adverse party has the burden of producing evidence on any issue raised in the motion as to which the adverse party would have the burden of persuasion at trial.” Id.

In their first assignment of error, plaintiffs contend that the trial court erred in granting summary judgment on the ground that plaintiffs had failed to exhaust their administrative remedies. Plaintiff Olson makes separate arguments on the exhaustion issue from the remaining plaintiffs. We begin by addressing the assertions of plaintiffs other than Olson. Those plaintiffs contend that there was never a decision that they could have challenged through the administrative process. Specifically, plaintiffs argue that the adoption and implementation of the return-to-work program was not an...