JONES v. CHICAGO STATE UNIVERSITY (2009)

ORDER

This matter is before the Court on Respondent's Motion to Dismiss. Claimant has also filed a Motion for Partial Summary Judgment.

In 2005, Claimant and Chicago State University (CSU) entered into a written agreement entitled Head Basketball Coach Contract (Contract) whereby Claimant would serve as the head coach for CSU's basketball team from July 1, 2005, through June 30, 2010.

In a letter dated March 13, 2007, Elnora Daniel, President of CSU, terminated Claimant's employment effective March 15, 2007, pursuant to Article 6.1 of the Contract. That provision states as follows:

6.1 Termination of this Agreement by Chicago State University may occur without cause only by the decision of the President. Chicago State University shall pay to, as liquidated damages, an amount equal to 3 months of his annual salary, to be paid on a monthly basis prorated over the remained (sic) of the term of the Agreement, or in a lump sum payment at the election of CSU. Kevin Jones shall be entitled to continue health insurance and group life insurance at his expense for up to one month after the effective date of termination. Chicago State University shall not be liable for any liquidated damages or loss of any collateral business opportunities or any other benefits, perquisites, or income from any sources that might ensue as a result of Chicago State University's termination of his Agreement with or without cause.

Claimant was also given the right to terminate the Contract prior to the expiration of its term as set forth in provision 6.3:

6.3 Kevin Jones recognizes that the promise to work for the Chicago State University during the entire term of this Agreement is the essence of this Agreement. Kevin Jones recognized (sic) that Chicago State University is making a highly valuable investment in his employment by entering into this Agreement and that the Chicago State University's investment would be lost if Kevin Jones were to resign or otherwise terminate employment with Chicago State University before the end of the contract term. Nonetheless, it is agreed that at any time after commencement of this Agreement, Kevin Jones may terminate this Agreement by giving 60 days written notice to Chicago State University, such termination to become effective no earlier than 60 days after receipt of such written notice.

On April 6, 2007, Claimant filed a two count complaint alleging breach of contract and violation of the Illinois Wage Payment and Collection Act (IWCA) seeking $255,000 in damages. Claimant withdrew Count II of the complaint in its Memorandum in Opposition to Respondent's Motion to Dismiss, conceding Respondent's position that IWCA does not apply to State employees.

Respondent contends that CSU “did nothing more than adhere to the terms of the Contract” when it terminated Claimant. Specifically, Claimant was terminated by the President of CSU and was paid three (3) months salary as liquidated damages as set forth in the Contract. As such, no breach of contract occurred as a matter of law. We agree.

The contract provisions regarding termination are set forth clearly. Both sides had a contractual right to unilaterally terminate the Contract within specific terms. This Court has consistently interpreted similar language to give the State the right to unilaterally terminate an agreement. See Monroe Development Agency v. State, 54 Ill. Ct. Cl. 426 (2002) and Baker's Pharmacy v. State, 52 Ill. Ct. Cl. 442 (1999). In each of those cases, there was a provision in the contract at issue that allowed termination of the contract without cause as long as certain notice requirements were met. This Court found such terms to be clear and unambiguous and no breach of contract to have occurred as a matter of law.

Claimant argues that he was in fact terminated for cause and, therefore, provision 6.1 does not apply. Claimant's literal interpretation of the “without cause” provision defies common sense. Claimant is asking this Court to render an absurd interpretation of otherwise clear and unambiguous terms in the termination clause. Claimant's employment agreement created an “at will” employment relationship wherein both parties could terminate the Contract without cause. To argue that a for cause termination would somehow subject the State to a different, higher standard is without merit. When a contract provides that an employee can be terminated for no reason, it logically follows that he can also be fired for a good reason.

Claimant also argues that the liquidated damages provision is, in practice, a penalty clause and unenforceable and, as such, renders the entire section void. In general, a liquidated damages provision is valid and enforceable when “(1) the parties intended to agree in advance to the settlement of damages that might arise from the breach, (2) the amount of liquidated damages was reasonable at the time of contracting, bearing some relation to the damages which might be sustained, and (3) actual damages would be uncertain in amount and difficult to prove.” Grossinger Motorcorp, Inc. v. American Nat. Bank and Trust Co., 240 Ill. App. 3d 737, 607 N.E.2d 1337 (1st Dist. 1992). Respondent maintains that these conditions were met in the termination provision because, (1) both sides agreed in advance on the settlement of damages, (2) three months salary was a fair calculation of the damages that Claimant would sustain by a breach, (3) actual damages sustained by the Claimant would be difficult to assess since mitigation of damages would come into play. Again, we agree.

Once again, it is illogical to interpret the provision that gives Claimant three months salary upon termination a penalty. Given the clear and unambiguous interpretation of the Contract and Respondent's adherence to those terms, this Court finds that there was no breach as a matter of law.

Accordingly, Respondent's Motion to Dismiss is GRANTED rendering Claimant's Motion for Partial Summary Judgment MOOT. Claimant's complaint is DISMISSED WITH PREJUDICE.

IT IS SO ORDERED.

ORDER

This matter is before the Court on Claimant's Motion for Rehearing as well as Respondents answer thereto, the Court being advised in the premises.

Claimant asserts that the Court erred in its application of Illinois law in granting Respondent's Motion to Dismiss.

The Claimant argues that the Court erred because it altered or modified the terms of the subject agreement to provide a better bargain to suit the Respondent (Claimant's brief at page 5). The Claimant complains that this Court rewrote the subject agreement in a manner that limited Claimant's ability to sue for breach and to collect the damages he claims.

The Court rejects these arguments. This Court has before it an agreement that is clear and unambiguous in its terms. The Court did not rewrite the subject agreement. Rather it made its decision based upon the clear and unambiguous language of same.

Claimant's Motion for Rehearing is accordingly DENIED.

IT IS SO ORDERED.

BIRNBAUM, J.

Birnbaum, J.