Kathleen Clough v. Mayor & Council of Hurlock
No. 15, September Term 2015



Local Government Law – Municipal Charters – Employment Agreements. A
municipal charter that provides that an appointed municipal official serves “at the
pleasure of the mayor” creates an at-will employment relationship between the
municipal official and the municipality. The governing body of the municipality lacks
authority to enter into an employment agreement with that official that confers a
term of years of employment.
Circuit for Dorchester County
Case No. 09C13020635
Argued: September 28, 2015

                                IN THE COURT OF APPEALS
                                     OF MARYLAND

                                          No. 15

                                   September Term, 2015


                                  KATHLEEN CLOUGH

                                            v.

                                   MAYOR & COUNCIL
                                     OF HURLOCK


                                       Barbera, C.J.
                                       Battaglia
                                       Greene
                                       Adkins
                                       McDonald
                                       Watts
                                       Harrell, Jr., Glenn T.
                                       (Retired, Specially
                                       Assigned),

                                           JJ.


                                  Opinion by McDonald, J.


                                       Filed: December 16, 2015
      The charter of the Respondent Town of Hurlock provides that the Mayor

is to appoint “the heads of all office, department, and agencies” of the Town with

the approval of the Town Council. Those officials then “serve at the pleasure of

the Mayor.”    In 2009, the Mayor-elect of the Town entered into a written

employment agreement with Petitioner Kathleen Clough under which Ms.

Clough would serve as one of those officials – Clerk-Treasurer of the Town – for

a four-year term. Two and one-half years later, however, the Mayor terminated

Ms. Clough from that position.

      Ms. Clough brought this action against the Town for breach of contract,

seeking damages and other relief. The Circuit Court dismissed her complaint,

holding, among other things, that the four-year term provided in the

employment agreement was contrary to the Town Charter and therefore

ineffective – a holding affirmed by the Court of Special Appeals. We agree. The

language of the Town Charter means that an official like the Clerk-Treasurer is

an at-will employee and that the Mayor and Council lack authority to enter into

an agreement conferring a fixed term of employment.

                                        I

                                 Background

A.    Employment Agreement, Appointment, and Termination

      As this matter was resolved on a motion to dismiss the amended

complaint, we assume the truth of the facts alleged in that complaint as we

assess the merits of the dismissal. RRC Northeast, LLC v. BAA Maryland, Inc.,
413 Md. 638, 643, 994 A.2d 430 (2010). The amended complaint alleged the

following facts:

      On November 25, 2009, the Mayor-elect of Hurlock, Joyce Spratt, met

with Ms. Clough and requested that she serve as the Clerk-Treasurer of the

Town. Ms. Clough stated that she was willing to serve, so long as she had the

security of an employment agreement. Ms. Spratt indicated that she did not

object to an employment agreement. The two agreed to terms of employment,

but Ms. Spratt cautioned that the Town Council would have to approve Ms.

Clough’s appointment and the employment terms.        Ms. Clough prepared a

written agreement, dated November 25, 2009, setting forth a four-year term of

employment, a wage rate, and certain other terms and conditions of

employment.

      On December 7, 2009, Ms. Spratt took office as Mayor of Hurlock. The

next day, the Town Council convened in executive session. During that session,

Mayor Spratt presented Ms. Clough to the Council for appointment to the

position of Clerk-Treasurer and notified the Council of the terms of the

employment agreement. Immediately following the executive session, the Town

Council approved the appointment of Ms. Clough as Clerk-Treasurer pursuant

to the terms of the employment agreement. Sometime afterwards, Ms. Clough

and Mayor Spratt executed the written employment agreement.

      According to Ms. Clough, she faithfully performed her duties as Clerk-

Treasurer. Nevertheless, on July 9, 2012, Mayor Spratt terminated Ms. Clough



                                      2
from the position of Clerk-Treasurer without cause. At that time, there were

approximately 18 months remaining of the four-year term in the written

employment agreement.

B.    Complaint, Dismissal, and Appeal

      On July 5, 2013, Ms. Clough filed her original complaint in the Circuit

Court for Dorchester County. The complaint alleged that the Town had violated

the employment agreement by terminating her appointment before the

expiration of the four-year term of the agreement.       The complaint sought

damages exceeding $75,000, and other unspecified relief, as a result of the

alleged breach of contract. After the Town moved to dismiss the complaint, Ms.

Clough filed an amended complaint alleging the same facts and cause of action

with minor changes and seeking the same relief.

      The Town moved to dismiss the amended complaint. One of the bases for

that motion – and the one at issue before us – was that the four-year term in the

employment agreement conflicted with the Town Charter and that, as a result,

the employment agreement was void ab initio — that is, void from the

beginning.1



      1
        The Town also argued, in its motion to dismiss, that Mayor Spratt had
executed the agreement before she assumed office and accordingly lacked
authority to enter into the contract on behalf of the Town. Legal skirmishing on
that issue led Ms. Clough to file the amended complaint and the Town to refile
its motion to dismiss. The Circuit Court agreed with the Town that the
employment agreement had been made prematurely in November 2009, but the
Court of Special Appeals held that the timing of the execution of the agreement
was a red herring, as the complaint clearly alleged that the Mayor and Town
Council had ratified the agreement in December 2009, after Mayor Spratt had
                                       3
      Following a hearing, the Circuit Court granted the Town’s motion to

dismiss the amended complaint. The court based its ruling in part on the ground

that the four-year term of employment in the agreement was inconsistent with

the Town Charter.

      Ms. Clough noted a timely appeal to the Court of Special Appeals. That

court affirmed the Circuit Court in an unreported opinion. The intermediate

appellate court reasoned that the provision of the Town Charter that “all agency

heads serve at the pleasure of the Mayor” meant that the position of Clerk-

Treasurer is an at-will position. The court thus held that it was inconsistent

with the Town Charter for the Town to enter into an employment agreement

that conferred a term of years on the Clerk-Treasurer.

      We granted Ms. Clough’s petition for certiorari to consider whether a

municipal charter provision that provides that certain employees serve “at the

pleasure of” the mayor precludes the municipality from entering into an

employment agreement with such an employee for a term of years.

                                        II

                                  Discussion

A.    Standard of Review

      Appellate review of a trial court decision to dismiss a complaint for failure

to state a claim concerns whether that decision was “legally correct.” RRC




taken office. Neither party has asked us to review that issue. Accordingly, it is
not before us.
                                        4
Northeast, LLC, 413 Md. at 644. In making that assessment, we consider the

issue anew and accord no special deference to the legal conclusions of the lower

courts. Patton v. Wells Fargo Financial Maryland, Inc., 437 Md. 83, 95, 85 A.3d

167 (2014).

B.    Whether the Town Charter Precludes Employment for a Term of
      Years

      1.      Municipal Charters

      A municipal charter is foundational law for a town in the same way that

a constitution is for a state or the nation.     A charter “is the organic, the

fundamental law, establishing basic principles governing relationships between

the government and the people, and among the various governmental branches

and bodies.” Cheeks v. Cedlair Corp., 287 Md. 595, 607, 415 A.2d 255 (1980). A

municipal charter is construed according to the same rules of construction that

govern the construction of statutes. O’Connor v. Baltimore County, 382 Md. 102,

113, 854 A.2d 1191 (2004).

      Maryland municipalities have had home rule under the Maryland

Constitution since the adoption of the municipal home rule amendment in 1954.

Chapter 53, Laws of Maryland 1954 (ratified November 2, 1954) adding Article

XI-E to the Maryland Constitution.2 As part of the implementing legislation



      2
         Prior to adoption of the home rule amendment, municipalities in
Maryland were entirely creatures of the Legislature. They were created by
special acts of the Legislature and “could exercise only such powers as were
conferred on them, either specifically or by necessary implication, by public local
or public general laws.” H. Warren Buckler, Jr., Municipal Home Rule in
Maryland 3 (Maryland Municipal League 1955). The principal purposes of the
                                        5
related to that constitutional amendment, the General Assembly enacted a

model municipal charter that municipalities were free to adopt. Chapter 258,

Laws of Maryland 1955, codified at Maryland Code, Article 23B, repealed by

Chapter 228, Laws of Maryland 1994.

      The model charter provided for a mayor-council form of government.

Among other things, the model charter set forth the basic structure of municipal

government, including the council’s powers, the mayor’s powers, and provisions

concerning municipal personnel, finance, special assessments, property, and

other matters. Approximately 40% of Maryland municipalities had adopted the

basic form and structure of the model municipal charter by the time the General

Assembly repealed the model in 1994. D. Wayne Rhodes & David Sann, A

Comparison of Charter Provisions in Maryland Municipal Corporations

(Institute for Governmental Service 1994) at 2.3

      2.     The Hurlock Charter

      The Town of Hurlock was incorporated as a municipality in 1892. In 1976,

the Town adopted its current charter, which closely tracks the model provided



home rule amendment were two-fold: (1) to provide broader autonomy to
municipalities; and (2) to reduce the large volume of municipal legislation
regularly enacted each year by the Maryland General Assembly. See M. Peter
Moser, County Home Rule – Sharing the State's Legislative Power with Maryland
Counties, 28 MD. L. REV. 327, 335 (1968).

      3 At the time of the repeal, an analysis of the model charter commissioned
by the House Commerce and Government Matters Committee concluded that
several model charters were readily available to municipalities and that a
statutory model, which was only intended to be optional, was unnecessary. D.
Wayne Rhodes, et al, supra, at 5.
                                       6
by the General Assembly.4 Since that time, the Hurlock Charter has remained

largely unchanged, except for the addition of provisions relating to land

annexation and urban renewal.

      Mayor and Town Council

      Consistent with the model charter, the Hurlock Charter provides for a

mayor-council form of government. The Town Council consists of five elected

councilmembers and exercises legislative authority. Hurlock Charter, §301.

The Mayor is the chief executive officer of the Town, has a veto power with

respect to legislation, and is charged generally to execute ordinances and to

oversee the administration of the Town government. Hurlock Charter, §404.

      Clerk-Treasurer

      The Town Charter also provides for the position of Clerk-Treasurer and

assigns various duties to that position. Hurlock Charter, §801. The office of

Clerk-Treasurer in a Maryland municipality has been described as follows:

              The functions of the clerk involve attending council meetings,
      recording and compiling meeting minutes, and acting as the
      custodian of municipal records. Depending on the charter, the clerk
      may have other duties as well, such as personnel and financial
      administration. Additionally, the treasurer may be the community’s
      chief financial officer who is responsible for collecting and managing
      all funds, accounting and financial reporting, and budget
      preparation. …

             It is not uncommon in small communities to find the positions
      of clerk and treasurer combined. … The clerk, treasurer, and clerk-


      4 In its 1994 study of the model charter and its adoption by various
municipalities, the Institute for Governmental Service concluded that the
Hurlock Charter followed the general form of the model charter. D. Wayne
Rhodes, et al., supra, Section on Dorchester County, at 2.
                                       7
        treasurer positions are visible and important in small
        municipalities …. This is particularly true when the elected officials
        are essentially part-time employees, meet infrequently, and have
        little time or expertise to devote to managing the day-to-day affairs
        of the municipality.

Maryland Municipal League, Appointed Officials in Maryland < http://www.

mdmunicipal.org/index.aspx?NID=416 > [http://perma.cc/KWC6-EJ2E] (last

visited December 14, 2015).

        That appears to be an apt description of the office of Clerk-Treasurer as

it appears in the Hurlock Charter. The Clerk-Treasurer serves as clerk to the

Mayor and Council, is to keep records of their proceedings, and is the custodian

of various other town records – including records setting the corporate limits of

the Town, municipal legislation, election results, and the Town budget. Hurlock

Charter, §§201, 310, 613, 702, 801. In regards to Town finances, the Clerk-

Treasurer is charged with making purchases on behalf of the Council, and is one

of two required signatories on Town checks.         Id., §§707, 718.    The Clerk-

Treasurer takes an oath of office and is to provide a surety bond. Id., §§1201(a),

1202.

        While the Hurlock Charter creates the position of Clerk-Treasurer and

assigns various duties to that official, it does not provide any special direction as

to the appointment or removal of an individual from that position.5 Accordingly,



        5
         In contrast, the provision of the Hurlock Charter that creates the
position of Town Attorney specifically provides for appointment by the Mayor
with the approval of the Council and further provides that the Town Attorney
serves at the pleasure of the Council. Hurlock Charter, §802.

                                         8
we look to the general provision concerning the appointment and removal of

office, department, and agency heads.

      Appointment and Removal of Agency Heads and Employees

      Like the model municipal charter, the Hurlock Charter generally provides

for the Mayor to appoint Town employees.          The Council also has a role,

depending on the type of employee. The respective roles of the Mayor and

Council are set out in §404(b) of the Charter, which provides:

              The Mayor, with the approval of the Council, shall appoint the
      heads of all offices, departments, and agencies of the Town
      government as established by this Charter or by ordinance. All
      office, department, and agency heads shall serve at the pleasure of the
      Mayor. All subordinate officers and employees of the offices,
      departments, and agencies of the Town government shall be
      appointed and removed by the Mayor, in accordance with rules and
      regulations which may be adopted by the Council.

Hurlock Charter, §404(b) (emphasis added).6 Thus, the Mayor is to appoint, with

the approval of the Council, the heads of all “offices, departments, and agencies”

of the Town’s government, who then “serve at the pleasure of the Mayor.” The

parties have focused on what it means to serve “at the pleasure of the Mayor.”7



      6
       Section 404(b) of Hurlock’s Charter is virtually identical to §21(b) of the
model charter that appeared in the repealed Article 23B of the Maryland Code.

      7
        In the Circuit Court and Court of Special Appeals, Ms. Clough suggested
that the Clerk-Treasurer is not the “head” of an office, department, or agency,
but a “subordinate employee.” The Court of Special Appeals elected not to
resolve the issue, reasoning that the complaint was based solely on the
employment agreement and that any remedy for removal of a subordinate
employee would instead involve reference to “rules and regulations … adopted
by Council.” Before us, Ms. Clough has not pressed the contention that the
Clerk-Treasurer is a “subordinate employee.”


                                        9
        3.    Analysis

`       The parties posit different interpretations of §404(b) of the Charter. The

Town contends that the provision that agency heads “serve at the pleasure of the

Mayor” means that they are at-will employees. While conceding that at-will

employment may be the norm under Maryland law, Ms. Clough contends that

§404(b) allows a mayor to exercise discretion by entering into an employment

agreement with an agency head for a fixed term. She suggests that a mayor may

voluntarily agree to such a limitation on his or her “pleasure” in order to attract

high quality employees for important agency positions. But, in our view, a

charter embodies policies deemed important to the functioning of the

municipality and may preclude an official from voluntarily surrendering the

discretion that the charter confers on an office.

        “Serves at the pleasure of”

        The first step in construing §404(b) is to consider the usual meaning of its

text.   The operative phrase — “serves at the pleasure of” — is commonly

understood to refer to employment at will. See, e.g., Forster v. State of Maryland

Office of the Public Defender, 426 Md. 565, 582, 45 A.3d 180 (2012) (under §11-

305(b)(1) of the State Personnel & Pensions Article, certain State employees “are

at-will employees who serve at the pleasure of the appointing authority”); Public

Service Comm’n v. Wilson, 389 Md. 27, 55, 882 A.2d 849 (2005) (“the addition of

[statutory] language stating that each … position ‘serves at the pleasure of the

Commission’ was necessary to indicate that, unlike some other specifically



                                         10
authorized appointed positions, these positions would not have any set term, but

rather would be subject to termination as the Commission saw fit.”); Clark v.

O’Malley, 186 Md. App. 194, 223, 973 A.2d 821 (2009), aff’d, 434 Md. 171, 73

A.3d 1086 (2013) (amendment of public local law to allow police commissioner to

be removed “at the pleasure of the Mayor” permitted termination of

commissioner without cause); 79 Opinions of the Attorney General, 419, 420

(1994) (explaining that the tenure of deputy sheriffs who serve “during the

pleasure of the sheriff” is subject to the discretion of the sheriff); cf. Adler v.

American Standard Corp., 291 Md. 31, 35, 432 A.2d 464 (1981) (“The common

law rule, applicable in Maryland, is that an employment contract of indefinite

duration, that is, at will, can be legally terminated at the pleasure of either party

at any time.”) (emphasis added).

      There is no indication that the phrase in the Hurlock Charter was

intended to have a different, peculiar meaning. As indicated above, §404(b) was

derived from a model municipal charter that was enacted in 1955. The phrase

“serve at the pleasure of” had the same meaning then as it does today. See, e.g.,

Gary v. Bd. of Trustees of Employees’ Retirement Sys., 223 Md. 446, 449 n.3, 165

A.2d 475 (1960) (“there are officers of the State who do not have a fixed term [of

office]. An example is the Clerk of the Court of Appeals, who serves at the

pleasure of the Court.”)




                                         11
      Altering the at-will relationship “at the pleasure of” the mayor

      Ms. Clough argues that the “pleasure” of the Mayor might encompass a

decision to enter into an employment contract with an agency head for a term of

years in order to attract a talented individual to the position. In other words,

Ms. Clough would extend the phrase “serve at the pleasure of the Mayor” from

the creation of an at-will employment relationship into an option for the Mayor

to alter the at-will employment relationship “at the pleasure of the Mayor.” But

this interpretation is inconsistent with the common understanding of the phrase

and effectively would allow a mayor to undermine the evident purpose of §404(b).

      Under Ms. Clough’s interpretation, one Mayor could enter into an

employment contract that would limit the discretion of a successor mayor

contrary to §404(b). For example, if Mayor Spratt had left office for some reason

less than two years into her term, pursuant to the Town Charter, the Town

would hold a special election to select a successor. 8       Under Ms. Clough’s

interpretation, the newly elected Mayor would not be able to exercise the power

granted by §404(b) of the Charter to appoint agency heads and would be forced



      8   Section 405 of the Town Charter provides:

      If, within a period of two years following any mayoral election, the
      office of Mayor becomes vacant due to the death, resignation, or any
      other incapacity, a special election shall be held to elect a successor
      to serve the remainder of the present term. If such a vacancy occurs
      after the first two years of the present term, the Council shall elect
      one of their new members to as Mayor until the next regularly
      scheduled election.

Hurlock Charter, §405.
                                        12
to accept the agency head selected by the predecessor Mayor for whatever period

of time remained under the agency head’s contract. Thus, under Ms. Clough’s

interpretation, a mayor might not only bind his or her own discretion, but also

that of a successor mayor, clearly contrary to the design of the Charter. In that

situation, the agency head would not be serving “at the pleasure of the Mayor,”

as provided by §404(b).

         The Minnesota Supreme Court reached a similar conclusion in a case

involving a school board, a governing statute that provided that the school

superintendent served “at the pleasure of” the school board, a contract between

the school board and an individual to serve as superintendent for a three-year

term, and the termination of that individual before the end of that term.      In

holding that the school board had no authority to voluntarily surrender the

discretion conferred by statute to employ a superintendent at-will in favor of a

term of employment, the Minnesota court explained:

         This right which the board has to release the superintendent at its
         pleasure is a public right, and exists for a public purpose. The
         school board cannot by contract deprive itself of such right.… It
         cannot renounce or agree not to exercise its power of removal at
         pleasure…. To hold that the contract in question is binding for the
         fixed term would be to allow the school board to deprive itself and
         its successors of governmental powers which have been granted to
         it by the Legislature for a public purpose.

Jensen v. Independent Consol. School Dist. No. 85, 199 N.W. 911, 913 (Minn.

1924).




                                        13
      The public purpose underlying the charter’s choice of at-will employment

      Vital to the success of the mayor-council form of government is that the

mayor have sufficient authority to execute his or her duties. The discretion to

assemble the key personnel who assist the mayor in carrying out those duties –

and to make substitutions when needed – is essential. This was explained well

by the Court of Special Appeals in its opinion in this case:

             The “serve at the pleasure of” language applies only to “office,
      department, and agency heads” and not to subordinate officers, who
      may only be removed “in accordance with [the] rules and regulations
      adopted by the [Town] Council” … The difference makes sense…
      [E]xecutives like the Mayor customarily (and appropriately) appoint
      and rely on a small group of trusted senior staff and advisors.
      Ideally, this inner circle serves well and for the executive’s term; in
      reality, these relationships sometimes falter, and the executive needs
      the administrative discretion to change course as circumstances
      require. This principle is not limitless . . . but it counsels against a
      reading of the Charter that restricts the Mayor’s ability to react and
      adapt. We do not know from the complaint why the Mayor decided
      to terminate Ms. Clough’s employment as Clerk-Treasurer—as
      postured, we are evaluating a termination decision not grounded in
      “just cause” or any stated cause at all. But for inner circle
      employees, it is enough that the executive no longer trusts or can
      rely upon the employee, that the two no longer get along, or that the
      employee isn’t committed to the executive’s mission, even if the
      employee otherwise is performing her role competently (or even
      well)[.]

No. 1917, slip op. at 16 (emphasis added).

      This policy has been incorporated into the Town Charter in the discretion

accorded to the Mayor with respect to the removal of agency heads. We agree

with the Court of Special Appeals that any interpretation that would limit the

mayor’s ability to react and adapt to local conditions would run counter to the




                                        14
design of the Charter. For these reasons, we hold that §404(b) precludes the

Town from employing “office, department, and agency heads” for a fixed term.

      Summary

      This Court has held that a municipality is not bound by those contracts

entered into by its agents beyond that authority granted by the municipal

charter or other governing law. River Walk Apartments, LLC v. Twigg, 396 Md.

527, 548, 914 A.2d 770 (2007) (city not bound by contracts entered into by mayors

without legislative authorization); see also Gontrum v. Mayor and City Council

of Baltimore, 182 Md. 370, 375, 35 A.2d 128 (1943) (municipality not bound by

contract if the officer entering into the contract lacked authority to enter into

such a contract); Horn v. City of Baltimore, 30 Md. 218, 223 (1869) (when a

municipality’s agents act outside of their authority “their acts, although done

colore officii, and upon pretence of law, are no more binding upon the corporators

than the acts of an agent in any other case can bind his principal, when done

beyond the scope of the authority conferred.”). As the Town Charter does not

allow the Town to appoint a Clerk-Treasurer for a term of years, neither Mayor

Spratt nor the Town Council had authority to enter into a contract with a fixed

term of years, and that contract is void and unenforceable.

                                       III

                                  Conclusion

      For the reasons stated above, the Mayor and Council of Hurlock lacked

authority under the Town Charter to enter into an employment contract with



                                       15
respect to the position of Clerk-Treasurer for a fixed term. Accordingly, as a

matter of law, Ms. Clough cannot recover damages or other relief based on an

allegation of breach of contract.   The Circuit Court properly dismissed the

amended complaint.



                                      JUDGMENT OF THE COURT OF SPECIAL
                                      APPEALS AFFIRMED. COSTS TO BE PAID
                                      BY PETITIONER.




                                      16
