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A Better Partnership
June 15, 2016

COA holds that members of the Parole and Commutation Board do not have vested contractual rights to hold their positions

In Aguirre v. Dep't of Corrections, No. 327022, the Court of Appeals held that appointments to public office do not create a contractual right to hold that office, and when an office is abolished, or an officer lawfully removed, he or she is not entitled to payment for future services which would have been rendered but for the elimination of the office.
 
The plaintiffs in this case were members of the Parole and Commutation Board (“PCB”), a subdivision of the Department of Corrections (“DOC”) that was created by then Governor Jennifer Granholm. The PCB was created in 2009 when Governor Granholm reorganized the DOC and abolished the prior parole board. The plaintiffs were appointed to terms ranging from three to four years. In 2011, by ERO 2011–3 Governor Rick Snyder abolished the PCB and created a new Parole Board. The plaintiffs were not included as members of the newly established Parole Board. The plaintiffs contended that they had fully enforceable contractual rights in their Parole and Commutation Board offices for the term of their appointment and given these purported rights, the elimination of their positions under ERO 2011-3 constituted an unconstitutional impairment of the members’ contracts in violation of the Michigan and the United States Constitutions. Both parties filed for summary disposition of the claim and the trial court granted summary disposition in favor on the defendants.
 
In affirming the decision of the trial court the Court held that the plaintiffs were correct in asserting that there is a constitutional right that protects against the impairment of contractual obligations by subsequent laws, even contractual obligations of the State. However, the Court noted that this protection is limited. The Court noted that “[r]ather the prohibition must be accommodated to the inherent police power of the State to safeguard the vital interests of its people.” Health Car Ass'n Workers Comp Fund v Dir of the Bureau of Worker's Comp, Dep’t of Consumer & Indus Services, 265 Mich. App 236, 240-241; 694 NW2d 761 (2005). The court then stated that in order to determine if a state law substantially impairs an existing contract, courts apply a three pronged balancing test, “with the first prong being a determination whether the state law has, in fact, operated as a substantial impairment of a contractual relationship. In re Certified Question, 447 Mich 765, 777; 527 NW2d 468 (1994). Under the first prong of the balancing test it must be determined if; [1] whether there is a contractual relationship, [2] whether a change in law impairs that contractual relationship, and [3] whether the impairment is substantial.” Gillette Commercial Operations N Am & Subsidiaries v. Dep't of Treasury, 312 Mich. App 394, 408 (2015). Only after a court determines that there is in fact substantial impairment of a contractual right can the court then consider the last two prongs of the balancing test which are “the legislative disruption of contract expectancies be necessary to the public good” and whether “the means chosen by the Legislature to address the public need are reasonable.” In re Certified Question, 447 Mich 765, 777. The Court then determined that, in Michigan, appointment to public office does not create a contractual right to hold that office, and any holder of public office necessarily accepts the position with the knowledge that he or she may be removed as provided by law, and an express contract interfering with the power to abolish an office in the manner provided by law would be void as against public policy. In support of that conclusion the Court cited Michigan case law stating that “nothing seems better settled than that an appointment or election to a public office does not establish contract relations between the person appointed or elected and the public.” Attorney Gen v Jochim, 99 Mich 358, 368; 58 NW 611 (1894). Therefore, if the abolishment of the PCB for the creation of a new Parole Board was done in a lawful manner, then the plaintiffs have no recourse. On this point even the plaintiffs agreed that the reorganization of the DOC was well within the power of the Governor. As a result the trial court decision to grant summary disposition for the defendants was affirmed.

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