Opinion
No. ED 85119
June 28, 2005
Appeal from the Circuit Court of St. Louis County, Honorable Robert S. Cohen, Judge.
James N. Foster, Jr., William B. Jones (co-counsel) St. Louis, Missouri, Corey L. Franklin (co-counsel), for respondent.
Donald K. Murano, University City, Missouri, for appellant.
Before Clifford H. Ahrens, P.J., Glenn A. Norton, J., Nannette A. Baker, J.
OPINION
Gene Kunzie appeals the judgment dismissing his petition for wrongful discharge. We reverse.
I. BACKGROUND
Kunzie was terminated as the director of public works and building commissioner for the City of Olivette. Kunzie filed a petition against the City, alleging that his termination was in retaliation for reporting the City's violations of various laws and public policy and for having refused to participate in the alleged wrongdoing. He also alleged that the City's actions constituted unlawful employment practices and discrimination. The petition also included a claim for breach of Kunzie's "post-employment contractual rights" to certain benefits under the City's ordinances and employee handbook. The City moved to dismiss the petition on the grounds that (1) the court lacked subject matter jurisdiction because Kunzie had failed to exhaust his administrative remedies under the City's ordinances and (2) the claims in the petition were barred by the doctrine of sovereign immunity. The City's motion to dismiss was granted without explanation, and Kunzie appeals.
II. DISCUSSION
We will affirm the judgment if it is sustainable on any ground stated in the motion. Farm Bureau Town and Country Insurance Co. v. Angoff, 909 S.W.2d 348, 351 (Mo. banc 1995).
A. Exhaustion of Administrative Remedies
Exhaustion of administrative remedies is a jurisdictional requirement, and a circuit court does not have subject matter jurisdiction when available administrative remedies have not been exhausted. See Brazilia, L.L.C. v. Collector of St. Louis County, 117 S.W.3d 704, 706 (Mo.App.E.D. 2003). Although the parties disagree about whether the City's ordinances provided an adequate administrative remedy, there is no dispute about the facts: it is undisputed that the ordinances created an appeals board to review certain employment decisions and that Kunzie did not appeal his termination to that board. Whether the court had subject matter jurisdiction, therefore, is a question of law that we review de novo. Missouri Soybean Association v. Missouri Clean Water Commission, 102 S.W.3d 10, 22 (Mo. banc 2003).
By ordinance, the city manager was authorized to take disciplinary action and terminate employees. The ordinances in effect at the time of Kunzie's termination also provided for an appeals board to which employees had the right to appeal the city manager's decisions on certain employment matters, including discharge. The appeals board served as an "advisory body to hear and make written recommendations to the city manager." Upon the filing a notice of appeal, the appeals board was required to designate a time for public hearing. The employee was allowed to be represented by counsel and to present evidence at the hearing. The city manager had the right to be heard at the hearing, and other city employees or officers could also be compelled to attend. The appeals board had the power to order the production of city records relating to the appeal. At the conclusion of the hearing and after considering the evidence, the appeals board was required to file with the city manager a written statement setting forth its findings and recommendations. The recommendation was to be made on the affirmative vote of three members of the five-member appeals board. The city manager was required to make a final decision within five days of receiving the appeals board's recommendation.
The City argues that under these ordinances it was an agency authorized to adjudicate contested cases and, therefore, the Missouri Administrative Procedure Act required that Kunzie exhaust the appeals board process before seeking judicial review of his termination. We disagree. A contested case is "a proceeding before an agency in which legal rights, duties or privileges of specific parties are required by law to be determined after hearing." Section 536.010(2) RSMo 2000. It is undisputed that Kunzie was an at-will employee. The fact that he had a right to a hearing did not automatically create a property interest in continued employment with the City. See Physician No. 3491 v. North Kansas City, 51 S.W.3d 101, 106 (Mo.App.W.D. 2001). Because Kunzie could be terminated for cause or for no cause at all, the hearing was not one in which "legal rights, duties or privileges" were to be determined. See McCoy v. Caldwell County, 145 S.W.3d 427, 428-29 (Mo. banc 2004); see also Schlientz v. Rock Township Ambulance District, 146 S.W.3d 404, 405 (Mo.App.E.D. 2004). Therefore, this was not a "contested case" to which MAPA's exhaustion requirement applies.
On appeal, the City asserts that Kunzie's status as an at-will employee defeats his breach of contract claim. This was not raised in the City's motion to dismiss, and we decline to address it here. For the same reason, we will not address the City's argument on appeal that Kunzie's petition fails to establish his status as a "whistleblower" to support his retaliatory discharge claims.
The cases cited by the City in which the plaintiffs were required to exhaust their administrative remedies before filing suit involving an adverse employment action are distinguishable because the employees in those cases were not at-will. See Kline v. Board of Parks Recreation Commissioners, 73 S.W.3d 63, 64-65 (Mo.App.W.D. 2002) (plaintiff was a permanent employee); Muth v. Board of Regents of Southwest Missouri State University, 887 S.W.2d 744, 750 (Mo.App.S.D. 1994) (plaintiff had a contract for employment); Krentz v. Robertson, 228 F.3d 897, 902 (8th Cir. 2000) (plaintiff had a contract of employment).
Moreover, the appeals board process was not an adequate remedy. The exhaustion requirement presupposes that the administrative remedy is adequate in that the agency is empowered to grant relief. Angoff, 909 S.W.2d at 352; State ex rel. Maynes Construction Company, Inc. v. City of Wildwood, 965 S.W.2d 949, 952 (Mo.App.E.D. 1998). If the administrative review procedure is "purely advisory," then the agency is not empowered to grant relief and the remedy is not adequate because "advisory" connotes the power "to do nothing more than counsel, advise or recommend." City of Wildwood, 965 S.W.2d at 952. In City of Wildwood, the plaintiff had the right to appeal the planning and zoning commission's decision to an administrative review board. Id. The board was required to make a recommendation to the city council following a formal hearing. Id. The city council then was required to take action on the board's recommendation within a certain period of time. Id. Although the board's recommendation was advisory, it was clear to this Court that the city council's action on that recommendation was not. Id. Thus, the plaintiff could have obtained full relief had it pursued and exhausted the review process and, thus, the procedure was not "purely advisory." Id.
But here, the city manager's decision was reviewed only by an advisory appeals board and its recommendation was not made to another entity that was required to act on the recommendation — as did the board's recommendation to the city council in City of Wildwood. Rather, here, the initial decision and the final decision regarding Kunzie's termination rested with the city manager. The only actual review was purely advisory and to be made only after a hearing at which the city manager was entitled to be heard and defend his decision. This process amounted to no more than a chance for the employee to have the city manager reconsider his decision and is not an adequate administrative remedy.
It was not proper to dismiss Kunzie's petition on the ground that he failed to exhaust his administrative remedies. Point II is granted. As a result, points I and III — regarding whether Kunzie was ethically prohibited from pursuing his administrative remedy and whether dismissal of one count for failure to exhaust that remedy warranted dismissal of all counts on that basis because they were inextricably intertwined — are moot.
B. Sovereign Immunity
When reviewing a trial court's order dismissing a petition for failure to state a claim based on the doctrine of sovereign immunity, all facts alleged in the petition are treated as true and all allegations are construed favorably and broadly to the plaintiff. Stevenson v. City of St. Louis School District, 820 S.W.2d 609, 611 (Mo.App.E.D. 1991). Municipal corporations have limited immunity only for governmental functions; they do not enjoy sovereign immunity in tort while performing proprietary functions. Junior College District of St. Louis v. City of St. Louis, 149 S.W.3d 442, 447 (Mo. banc 2004). Governmental functions are those "performed for the good of all." Id. Proprietary functions, on the other hand, are those "performed for the special benefit or profit of the municipality acting as a corporate entity." Jungerman v. City of Raytown, 925 S.W.2d 202, 204 (Mo. banc 1996). Governmental functions also have been described as part of a municipality's delegated police powers, as compared to proprietary actions, which are part of a municipality's private corporate enterprises. See City of Hamilton v. Public Water Supply Dist. No. 2 of Caldwell County, 849 S.W.2d 96, 102 (Mo.App.W.D. 1993). Moreover, "a municipality cannot escape responsibility for the careful performance of a duty which is substantially one of a proprietary nature even though the duty may in some general way also relate to a function of the government or although it may inure incidentally to the advantage of the public." Davis v. City of St. Louis, 612 S.W.2d 812, 814 (Mo.App.E.D. 1981).
The City's motion to dismiss in this case was based on its characterization of the act of terminating Kunzie as a "discretionary duty." The City cites Jungerman as support for the proposition that a municipality is not liable for the manner in which its officers perform their discretionary duties. 925 S.W.2d at 205. But the Court in Jungerman only reached the issue of the city's immunity for its police officer's discretionary conduct after having first concluded that operating a police department is a governmental function. Id. at 205. Here, however, the decision to terminate Kunzie was not made as part of the City's governmental function. Rather, while internal employment decisions may incidentally benefit the public to the extent that the City can only act through its employees, those decisions are made, not for the good of all, but for the benefit of the City acting in its corporate capacity. The City cannot be immune from suit for terminating Kunzie — even if the city manager exercised discretion in making that decision — because it was part of the City's proprietary function.
It was not proper to dismiss Kunzie's petition on the ground that the City was entitled to immunity. Point V is granted.
C. Alternative Basis for Dismissal
Kunzie argues in point IV that, contrary to the City's argument before the trial court, a cause of action exists for discharge in retaliation for whistleblower activity. The City did not argue in its motion to dismiss — nor does it argue on appeal — that there is no cause of action for whistleblower retaliation. Rather, as an alternative basis to support dismissal, the City contended that one of the counts in Kunzie's petition attempted to state a private cause of action for the City's violations of the law and that no such cause of action existed. Although that count was originally entitled "Violation of Olivette Municipal Code, City Ordinances, Policies, Handbooks," the title was amended to reflect that the allegations of that count assert that Kunzie was wrongfully terminated for having reported the City's violations. That count seeks to recover for the wrongful termination, not for the violations themselves, and it could not properly be dismissed on that basis.
III. CONCLUSION
The City has moved to dismiss the appeal, correctly noting that Kunzie's brief does not comply with Rule 84.04. The deficiencies in the brief have not impeded our review of the merits of this case, and the motion is denied.
Clifford H. Ahrens, P.J. and Nannette A. Baker, J. concurring