STEWART v. CITY OF MUNCIE et al

Filing 27

ENTRY ON DEFENDANTS' 13 MOTION FOR JUDGMENT ON THE PLEADINGS - For the foregoing reasons, the Court GRANTS in part and DENIES in part Defendants' Motion for Judgment on the Pleadings (Filing No. 13 ). Stewart's claims for breach of contract and breach of contract--third party beneficiary are dismissed without prejudice. His other four claims: Fourteenth Amendment Due Process Violation under 42 U.S.C. § 1983, promissory estoppel, violation of Indiana's Wage Payment Statute, Ind. Code § 22-2-5-1, and constructive discharge remain before this Court. (See Entry.). Signed by Judge Tanya Walton Pratt on 12/4/2018. (NAD)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION
STEPHEN D STEWART,
Plaintiff,
v.
CITY OF MUNCIE, and DENNIS TYLER,
Mayor, in his individual and official capacities,
Defendants.

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Case No. 1:17-cv-03645-TWP-TAB

ENTRY ON DEFENDANTS’ MOTION FOR JUDGMENT ON THE PLEADINGS
This matter is before the Court on Defendants City of Muncie’s (“Muncie”) and Dennis
Tyler’s (“Mayor Tyler”) (collectively, the “Defendants”) Motion for Judgment on the Pleadings
Pursuant to Federal Rule of Civil Procedure 12(c) (Filing No. 13). After resigning his position as
Chief of Police for the city of Muncie, Indiana, Plaintiff Stephen D. Stewart (“Stewart”) filed this
action under Title 42 U.S.C. § 1983, asserting claims that the City of Muncie and its mayor violated
his right to due process, breached the collective bargaining agreement between Muncie and the
police union, violated Indiana’s Wage Payment Statute, and constructively discharged him. He
seeks compensatory and punitive damages, as well as unpaid wages. Defendants filed a Motion,
asserting among other things that Stewart failed to plead certain elements of his § 1983 claim and
that the breach of contract claims should be resolved in an arbitration proceeding. For reasons
explained below, Defendants’ Motion is granted in part and denied in part.
I.

BACKGROUND

The following facts are not necessarily objectively true, but as required when reviewing a
motion for judgment on the pleadings, the Court accepts as true all factual allegations in the

complaint and draws all inferences in favor of Stewart as the non-moving party. See Emergency
Servs. Billing Corp. v. Allstate Ins. Co., 668 F.3d 459, 464 (7th Cir. 2012).
Stewart began working for the Muncie Police Department in 1985. (Filing No. 1 at 2.) He
held numerous positions in the Police Department, and in 2012 Mayor Tyler appointed him Chief
of Police. Id. The highest rank he had held prior to being appointed Chief was Sergeant. Id. In
addition to becoming Chief of Police, in 2013 Stewart began serving as the Chairman of the local
Democrat Central Committee at the request of Mayor Tyler and others. Id.
In late 2015 or early 2016, Defendants learned that a long-time Muncie city employee
might be cooperating with the Federal Bureau of Investigations (“FBI”) in its investigation of
corruption within the City of Muncie. Id. at 3-4. Shortly after the employee was terminated in
February or early March 2016, Mayor Tyler told Stewart that he thought the employee had
committed crimes. Id. at 4. He did not identify any specific crimes. Id.
Stewart told Mayor Tyler that if he had any evidence of the employee committing crimes,
Mayor Tyler needed to bring it to him. Id. Mayor Tyler then told Stewart over the telephone that
the former employee’s computer contained evidence of criminal activity. Id. Stewart instructed
the Deputy Chief of Police to impound the computer and place it in the property room. Id. Shortly
thereafter, Sarah Beach (“Beach”), a member of Mayor Tyler’s staff, came to Stewart’s office with
a large stack of emails obtained from the former employee’s computer. Id. Beach told Stewart
the emails contained evidence of possible crimes but did not identify what crimes specifically. Id.
Stewart told Beach he would look into the emails. Id.
Stewart was concerned regarding the ethics of Mayor Tyler’s request to investigate the
former employee based on unsubstantiated accusations. After speaking with another law
enforcement official, Stewart decided it would be unethical and inappropriate to investigate the

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former employee merely because that employee may be a cooperating witness in an FBI
investigation. Id. at 5. Stewart received a telephone call from an FBI agent requesting the emails
the Mayor’s office had given him. Id. He turned over those emails to the FBI and informed the
agent that the former employee’s computer had been secured and placed in the police department’s
property room. Id. Stewart then notified Mayor Tyler that he had turned over the emails to the
FBI. Id.
Mayor Tyler immediately asked when the FBI was going to retrieve the computer from the
evidence room. Id. Additionally, Stewart learned that a Muncie police officer had been instructed
to make an exact copy of the computer’s hard drive so that the city of Muncie and its employees
would still have access to the information on it after the FBI confiscated it. Id.
In the late spring or early summer of 2016, Mayor Tyler requested that Stewart attend a
meeting with him and two other police officers. Id. During that meeting, Mayor Tyler explained
to Stewart that he thought it necessary that the police department investigate the former employee
because the employee was cooperating with the FBI and the FBI would not disclose anything about
the investigation to the city of Muncie. Id. at 6. Mayor Tyler requested Stewart carry out the
investigation. Id. Stewart was again uncomfortable due to the ethical implications of the Mayor’s
request. Stewart arranged a meeting with the FBI agent who had come to collect the former
employee’s emails. At that meeting, which occurred approximately a week after his meeting with
Mayor Tyler, Stewart asked the FBI agent if the FBI would like any assistance at all, to which the
FBI agent replied, “Thanks for the offer, but no thanks.” Id.
Throughout the summer of 2016, Mayor Tyler continued to pressure Stewart to investigate
the former employee. Id. Stewart understood from this pressure that refusal was grounds for his
termination or removal as Chief of Police. Id. Each time the subject came up, Stewart informed

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Mayor Tyler that he was not going to investigate the former employee because any investigation
would interfere with the ongoing FBI investigation. Id. Mayor Tyler also asked Stewart to conduct
investigations of other employees with the sole purpose of getting to the former employee without
directly investigating the former employee. Id. at 6-7.
In early September 2016, Stewart met with the Mayor and another man named Phil Nichols
(“Nichols”)—whose occupation the complaint does not disclose—at the Democrat Central
Committee headquarters. Id. at 7. At that meeting, Nichols yelled and screamed at Stewart, telling
him that Stewart would conduct the investigation of the former employee as requested. Id. Later
that day, Stewart attended another meeting at which Nichols, attorneys, and two other Muncie
police officers were present. Id. Nichols asked Stewart if he was going to conduct the requested
investigation or not. Id. Stewart reiterated that he would not conduct the investigation and the
reasons for his refusal. Id. Nichols told him there would be another meeting in the morning and
Stewart would not like the outcome of that meeting. Id.
On September 2, 2016, Stewart resigned as Chairman of the local Democrat Central
Committee. Id. Following his resignation from that position, Mayor Tyler requested another
meeting with him, during which he again asked Stewart to investigate the former city employee.
Id. In mid-September, Stewart and the local prosecutor met with Mayor Tyler and explained to
him why the police department would not investigate the former employee. Id. at 8. Over the next
seven weeks, Mayor Tyler continued to periodically request that Stewart conduct an investigation,
and Stewart refused each time. Id.
On October 30, 2016, Stewart discovered that Mayor Tyler had asked someone to make
false allegations against him. Id. Stewart resigned as Chief of Police the following day, at which
point he returned to his status of merit officer with the rank of Sergeant. Id. Upon receiving

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Stewart’s letter of resignation, Mayor Tyler called Stewart to a meeting in his office. Id. At the
meeting, which Stewart’s personal attorney attended, Stewart broached the issue of Mayor Tyler
asking an individual to make false allegations about him. Id. Mayor Tyler told Stewart he did not
like the proposed letter of resignation and that Stewart would “pay for this.” Id. at 9. Stewart
submitted his letter of retirement from the Muncie Police Department on November 1, 2016. Id.
Shortly after his resignation, the Administrative Assistant to the Chief of Police completed
Stewart’s final Personnel Information Form. Id. According to the Administrative Assistant’s
records, under the collective bargaining agreement between the Fraternal Order of Police (“FOP”)
and Muncie, Stewart was to be paid out for a total of five hundred and twenty (520) days as follows:
forty-five (45) severance days, two hundred and thirty (230) sick days, and two hundred and fortyfive (245) vacation days. Id. Stewart’s benefits would have started on Nov. 1, 2016 and ended on
Oct. 26, 2018, according to the Administrative Assistant. Id. On November 22, 2016, Stewart
submitted an Application for Participation in the State of Indiana’s Deferred Retirement Option
Plan (“DROP”). Id.
After the Administrative Assistant completed his Personnel Information Form and he made
his DROP elections, Stewart was informed that Beach would recalculate his benefits. Id. at 10.
Beach determined that Stewart should be paid for a total of two hundred and seventeen (217) days:
thirty (30) severance days, one hundred and seventy-two (172) sick days, and fifteen (15) vacation
days. Id. This would result in his benefits ending on August 30, 2017, rather than October 26,
2018. The recalculation resulted in a financial loss to Stewart of over $65,802.51 for 303 days of
paid time he was denied, $65,000.00 for the longer DROP period he was denied, and $34,000.00
for the DROP program he would be ineligible for. Id. Stewart challenged this recalculation, but
his grievances were denied. Id. at 11.

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II.

LEGAL STANDARD

Federal Rule of Civil Procedure 12(c) permits a party to move for judgment after the parties
have filed a complaint and an answer. Rule 12(c) motions are analyzed under the same standard
as a motion to dismiss under Rule 12(b)(6). Pisciotta v. Old Nat’l Bancorp., 499 F.3d 629, 633
(7th Cir. 2007); Frey v. Bank One, 91 F.3d 45, 46 (7th Cir. 1996). The complaint must allege facts
that are “enough to raise a right to relief above the speculative level.” Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 555 (2007). Although “detailed factual allegations” are not required,
mere “labels,” “conclusions,” or “formulaic recitation[s] of the elements of a cause of action” are
insufficient. Id. Stated differently, the complaint must include “enough facts to state a claim to
relief that is plausible on its face.” Hecker v. Deere & Co., 556 F.3d 575, 580 (7th Cir. 2009)
(internal citation and quotation marks omitted). To be facially plausible, the complaint must allow
“the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556).
Like a Rule 12(b)(6) motion, the Court will grant a Rule 12(c) motion only if “it appears
beyond doubt that the plaintiff cannot prove any facts that would support his claim for relief.” N.
Ind. Gun & Outdoor Shows, Inc. v. City of S. Bend, 163 F.3d 449, 452 (7th Cir. 1998) (quoting
Craigs, Inc. v. Gen. Elec. Capital Corp., 12 F.3d 686, 688 (7th Cir. 1993)). The factual allegations
in the complaint are viewed in a light most favorable to the non-moving party; however, the court
is “not obliged to ignore any facts set forth in the complaint that undermine the plaintiff’s claim or
to assign any weight to unsupported conclusions of law.” Id. (quoting R.J.R. Serv., Inc. v. Aetna
Cas. & Sur. Co., 895 F.2d 279, 281 (7th Cir. 1989)). “As the title of the rule implies, Rule 12(c)
permits a judgment based on the pleadings alone. . . . The pleadings include the complaint, the
answer, and any written instruments attached as exhibits.” Id. (internal citations omitted).

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III. DISCUSSION
Stewart brings six claims against Defendants: (1) a Fourteenth Amendment Due Process
Violation under 42 U.S.C. § 1983, and state law claims for (2) breach of contract, (3) breach of
contract – third party beneficiary, (4) promissory estoppel, (5) violation of Indiana’s Wage
Payment Statute, Ind. Code § 22-2-5-1, and (6) constructive discharge. (Filing No. 1.)
A.

Count 1 – Fourteenth Amendment Due Process Violation
Stewart alleges Defendants violated his Fourteenth Amendment right to due process by

disseminating false and defamatory statements about him after he resigned from the police force.
To state a claim under 42 U.S.C. § 1983, a plaintiff must allege: (1) that he had a cognizable
liberty interest under the Fourteenth Amendment; (2) that he was deprived of that liberty interest;
and (3) that the deprivation was without due process. Mann v. Vogel, 707 F.3d 872, 877 (7th Cir.
2013). In analyzing due process claims, the court’s inquiry involves two steps: “[T]he first asks
whether there exists a liberty or property interest which has been interfered with by the State; the
second examines whether the procedures attendant upon that deprivation were constitutionally
sufficient.” Dupuy v. Samuels, 397 F.3d 493, 503 (7th Cir. 2005).
Citing to paragraph 63 and paragraphs 86-88 of his Complaint, Stewart identifies a liberty
interest the Defendants have interfered with: they made false public claims to the media that
Stewart committed crimes of dishonesty and moral turpitude that will damage his standing and
associations in the community and impose a stigma that interferes with his ability to obtain other
employment in the field of law enforcement. (Filing No. 20 at 3.) Stewart alleges he was denied
procedural due process because Defendants did not abide by the grievance procedure outlined in
the operative collective bargaining agreement between Muncie and the police union. (Filing No.
20 at 5.)

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Defendants argue Stewart has failed to allege an actionable § 1983 claim because he did
not plead a protected liberty interest, did not plead publication of the Defendants’ supposed false
claims, did not adequately plead the claims were false, and failed to plead a deprivation of
constitutionally sufficient procedures. (Filing No. 14 at 7-14.)
1.

Protected Liberty Interest

Mere defamation by the government does not deprive a person of a liberty interest
protected by the Fourteenth Amendment, even when it causes serious impairment of one’s future
employment. Brown v. City of Michigan City, Ind., 462 F.3d 720, 730 (7th Cir. 2006) (quoting
Hojnacki v. Klein-Acosta, 285 F.3d 544, 548 (7th Cir. 2002)). However,
when a state fires an employee for stated reasons likely to make him all but
unemployable in the future, by marking him as one who lost his job because of
dishonesty or other job-related moral turpitude, the consequences are so nearly
those of formally excluding him from his occupation that the law treats the state’s
action the same way, and insists that due process be provided.
Lawson v. Sheriff of Tippecanoe Cnty., Ind., 725 F.2d 1136, 1139 (7th Cir. 1984). The United
States Supreme Court has created a realm of § 1983 claims termed “stigma-plus”—the stigma
accompanying defamatory remarks alone is insufficient to give rise to a claim under § 1983; rather,
the plaintiff “must allege more than just defamation or stigmatic-harm, he must also state a ‘plus’:
He must allege that the defendants’ defamatory statements ‘alter or extinguish a right or status
previously recognized by state law.’” Santana v. Cook Cnty. Bd. Of Review, 679 F.3d 614, 621
(7th Cir. 2012) (quoting Brown, 462 F.3d at 730).
Stewart alleges the Defendants accused him of crimes of dishonesty and moral turpitude
that would stigmatize him in the law enforcement community. (Filing No. 1 at 11-12; Filing No.
20 at 3.) He does not allege the “plus” factor required for a valid § 1983 claim. That “plus” factor
sometimes comes when a plaintiff is terminated from his job because the state has made

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defamatory remarks about him. E.g., Codd v. Velger, 429 U.S. 624 (1977). Stewart does not
allege that Defendants’ defamatory remarks caused him to lose his job, rather, he admits that he
was not discharged from his position at all. He chose to resign from his position as Chief of Police
and then retire from the police force entirely. (Filing No. 1 at 8-9.) The fact that he was not
terminated puts Stewart on even footing with the plaintiffs in Hinkle v. White, 793 F.3d 764 (7th
Cir. 2015) and Fritz v. Evers, --- F.3d --- (7th Cir. 2018) (2018 WL 5262736), two recent cases in
which the Seventh Circuit held that the plaintiff had not stated a claim under § 1983 because he
had not passed the “stigma-plus test.”
Although it comes elsewhere in his Complaint, Stewart alleges the Defendants
constructively discharged him by continuously asking him to conduct an investigation that would
constitute criminal interference with an FBI investigation. (Filing No. 1 at 14-15.) A constructive
discharge might qualify as an alteration of Stewart’s legal status, satisfying the stigma-plus test.
The Third Circuit, the only circuit to address that question, has held that constructive discharge
can be sufficient to satisfy the “plus” component of the stigma-plus test. Hill v. Borough of
Kutztown, 455 F.3d 225, 238 (3d Cir. 2006). “Constructive discharge occurs when an employee
resigns because working conditions are so intolerable that a reasonable employee would feel
compelled to quit.” Lifton v. Bd. Of Educ. Of City of Chicago, 416 F.3d 571, 578 (7th Cir. 2005)
(citing Hunt v. City of Markham, 219 F.3d 649, 655 (7th Cir. 2000)). “The doctrine of constructive
discharge is limited to egregious cases, such as, for example, where an employee is subjected to
threats or repeated racist taunting.” Id.
Stewart’s pleadings support his contention that he was constructively discharged for
purposes of his § 1983 claim. Stewart alleges that throughout the spring and summer of 2016
Mayor Tyler pressured him to investigate a former city employee who was cooperating with an

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FBI investigation of Muncie. According to his Complaint, Stewart had an “implicit understanding
that to do otherwise was grounds for removal and/or termination.” (Filing No. 1 at 6.) Later,
Stewart and two other officers left a meeting with Mayor Tyler “thinking Plaintiff Stewart was
going to be fired as Police Chief.” Id. at 7. The Complaint lays out the longevity and the temerity
of Mayor Tyler’s campaign to coerce him into investigating the former Muncie employee,
including a meeting where Mayor Tyler was present during which Stewart was “yelled and
screamed at” to “conduct the investigation as requested.” Id. Stewart’s assumptions that he would
be terminated if he did not conduct the investigation are conjecture, and thus not entitled to a
presumption of truth at this stage. 1 But Stewart’s claim for constructive discharge does not rest
merely upon his assumption that he would be terminated. The Complaint describes a work
environment in which Stewart was constantly directed by his immediate superior to conduct an
investigation he believed was illegal. When he raised his ethical concerns to Mayor Tyler, the
requests for him to conduct the investigation only increased until the point where he was being
screamed at in a meeting with Mayor Tyler present. It is possible that such circumstances would
have induced a reasonable person in Stewart’s position to quit. Thus, the Complaint includes
sufficient factual allegations to support a claim that Stewart was constructively discharged and this
element of his § 1983 claim survives judgment on the pleadings.
2.

Deprivation of a Liberty Interest

The next element Stewart must plead to establish his § 1983 claim is that the government
deprived him of his protected liberty interest. Defendants’ assert two arguments concerning this
element: (1) that Stewart failed to plead the Defendants published their allegedly defamatory

See Roake v. Forest Pres. Dist. Of Cook Cnty., 849 F.3d 342, 347 n.4 (7th Cir. 2017) (“Roake’s conclusory and
hypothetical assertion that he ‘would have been terminated’ had he not resigned is pure conjecture; it is not a wellpleaded factual allegation entitled to a presumption of truth on a motion to dismiss.”)
1

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statements, and (2) that Stewart failed to plead the Defendants’ allegedly defamatory statements
were false. (Filing No. 14 at 12-13.) These arguments center on the specificity, or lack thereof,
in the Complaint. According to Defendants, “Stewart merely asserts that the Defendants created
false and defamatory impressions about the reasons for Stewarts [sic] resignation ‘to the local
media and others,’ without identifying such impressions or stating how they were disseminated.”
Id. at 13 (quoting Stewart’s Complaint). And “Stewart’s Complaint insufficiently pleads falsity by
simply referring to ‘false and defamatory impressions’ and accusations, without specifically
identifying the alleged defamatory impressions/accusations and alleging the untruth of such
identified content.” Id.
Stewart responds that the Complaint is sufficiently specific to state a § 1983 claim. The
Complaint alleges that near the time of his retirement, Defendants gave local media the false
impression that Stewart committed insubordination, fraud, and sexual harassment, and these were
the reasons he resigned as Chief of Police. (Filing No. 1 at 11-12.) The Court agrees. The
Complaint sufficiently pleads facts stating the Defendants deprived Stewart of his protected liberty
interest. Stewart alleges that, before he resigned as Chief of Police, Mayor Tyler “had gone to an
individual, requesting that the individual make false allegations against Plaintiff Stewart.” Id. at 8,
¶ 63. He also alleges that Defendants created false and defamatory impressions about the reasons
for his resignation to local media and others, and that Mayor Tyler attempted to recruit other
employees to make false accusations about Stewart. Id. at 11, ¶ 87-88. The allegation that
Defendants created a false impression to the media is not merely a restatement of the legal
standard, because allegations about Mayor Tyler recruiting city employees to smear Stewart are
specifically pled, and thus the Court cannot grant Defendants’ Motion on that basis.

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3.

Deprivation without Due Process

Finally, to survive judgment on the pleadings, the Complaint must allege that Defendants
deprived Stewart of his liberty interest without due process. Defendants argue the Complaint “fails
to allege any constitutionally insufficient procedures related to the defamatory statements,” and
because The Complaint did not specifically say what defamatory statements were made about him,
“it remains unclear what procedure the City could have provided him.” (Filing No. 14 at 14.)
“The basic rights guaranteed by constitutional due process are notice of the intended
adverse government action and an opportunity to be heard in response, although more elaborate
procedural rights—such as the rights to present evidence, to confront adverse witnesses, and to be
represented by counsel—may apply in cases in which vital private interests are at risk.” Simpson
v. Brown County, 860 F.3d 1001, 1006 (7th Cir. 2017) (citing Golberg v. Kelly, 392 U.S. 254
(1970)). Stewart’s only mention of the process he received laments the way the Defendants treated
him, saying “Plaintiff Stewart attempted to grieve [the recalculation of his retirement benefits]
pursuant to the 2016 Agreement and/or the 2013 Agreement. His grievance was denied at each
level, including being denied the right to a face-to-face meeting with Defendant Tyler.” (Filing
No. 1 at 11, ¶ 82.) In his response to Defendants’ Motion, Stewart asserts he had no opportunity
to grieve his constructive discharge and the Defendants’ defamatory statements because
Defendants made those statements after he retired, when he was no longer employed by Muncie.
(Filing No. 20 at 5.) He also argues alleging the denial of the grievance procedure required by the
collective bargaining agreement is sufficient to establish that he was denied procedural due
process. Id.
Stewart admits that although the Complaint could have been clearer, it does specifically
state that Defendants rebuffed his requests to grieve the actions alleged in the Complaint. More

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importantly, the Complaint alleges he was denied a face-to-face meeting with Mayor Tyler, as
guaranteed by the collective bargaining agreements (“CBA”). This allegation implicates a
fundamental aspect of procedural due process—the right to a hearing. The Court cannot say that
Stewart would be unable to prove his § 1983 claim at trial. Accordingly, Defendants’ Motion for
Judgement on the Pleadings is denied as to Count 1.
B.

Counts 2 and 3 – Breach of Contract and Breach of Contract – Third Party
Beneficiary
The contract referred to in these counts is the collective bargaining agreement between the

Muncie and the Fraternal Order of Police Lodge #87, which governed Stewart’s payout upon his
retirement. Two versions of that agreement are at issue here, the CBA in effect between January
1, 2013-December 31, 2015 (“2013 CBA”) (Filing No. 1-1), and the CBA in effect between
January 1, 2016-December 31, 2016 (“2016 CBA”) (Filing No. 1-2).
Stewart asserts that the 2016 CBA was in effect when he retired and governs his benefits
and severance. Mayor Tyler signed the 2016 CBA is his capacity as Mayor of Muncie and Stewart
signed it in his capacity as Chief of Police. Other city officials and FOP higher-ups signed the
agreement as well. Article 46 of the 2016 CBA states:
This article is retroactive to January 1, 2012.
The Chief of Police is entitled to all benefits granted in this contract during their
term. When the term ends for the Chief of Police and he/she is still receiving
compensation from the Muncie Police Department he/she shall receive rank pay
equivalent to that of a Captain or the highest merit rank pay, whichever is greatest.
Defendants contend that the 2016 CBA was never ratified in accordance with its own
internal mandate and thus “holds no legal effect.” (Filing No. 14 at 18.) Therefore, under the
Defendants’ theory of the case, the 2013 CBA “continued in effect until a new CBA has been
agreed to by the FOP and Muncie and the same obtains passage and adoption by the Muncie City

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Council,” which, according to Defendants, occurred on January 1, 2017. Id. at 3 (citing 2013
CBA, Art. 49 and Muncie Ordinance 41-93, section 5(B)).
Additionally, Defendants argue that either the 2013 CBA or the 2016 CBA, whichever was
in effect at the time of Stewart’s retirement, requires arbitration. Id. at 14. Because the CBA
mandates arbitration, Defendants argue this Court lacks subject matter jurisdiction over counts 2
and 3 under the Federal Arbitration Act, 9 U.S.C. § 1, et seq. Id.
Both CBAs contain the same language regarding when a grievance is subject to arbitration.
In the Article titled “Grievance Procedure,” after listing the first two steps of the Police
Department’s grievance procedure, each CBA states:
Step 3: If the grievance is not settled in Step 2, the grievance may be presented at
Step 3. The grievance shall be presented by the aggrieved and/or the F.O.P.
grievance committee in Step 2. Step 3 shall be heard by the Mayor or his designee.
The Mayor shall arrange for a meeting to receive and hear information concerning
the grievance and the meeting shall occur within 15 working days after receipt of
the written grievance by the office of the Mayor. The aggrieved member,
representatives of the grievance committee, the Chief of Police and any other
persons allowed by the Mayor shall be entitled to attend said meeting. The meeting
will be informal and parties shall endeavor to settle their differences. The Mayor’s
final determination shall be rendered in writing within 10 working days after the
meeting date. Copies shall be sent to the Mayor, the Chief of Police, and the
aggrieved member and the F.O.P. representative. All time limits specified in this
Article 10 may be extended solely by written agreement of the Chief of Police and
the F.O.P.
Step 4: If the grievance is not settled in Step 3, the aggrieved member and/or the
F.O.P. grievance committee may appeal the grievance by submitting the grievance
to final and binding arbitration within 20 workdays after the City’s Step 3 answer.
Notwithstanding the preceding, all of the terms decided by the arbitrator requiring
the expenditure of funds that have not been previously appropriated must be
submitted to the City Council for ratification.
(Filing No. 1-1 at 8, Filing No. 1-2 at 9.) The next Article, identical in the two CBAs, contains the
arbitration procedures, which include selection of the arbitrator, the arbitrator’s power, how parties

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will resolve disputes over arbitrability, and which party bears the cost of arbitration. (Filing No.
1-1 at 8-9, Filing No. 1-2 at 9-10.)
The Seventh Circuit has said that “both the law and public policy strongly favor
arbitration.” International Bhd. Of Elec. Workers Local 2150 v. NextEra Energy Point Beach,
LLC, 762 F.3d 592, 594 (7th Cir .2014). The party seeking arbitration is entitled to the benefit of
the doubt, and where the arbitration clause is broad, the court will presume arbitrability of disputes.
Id. Where any ambiguity as to the scope of the clause exists, the court will construe it in favor of
the party seeking arbitration. Id. The court will compel arbitration “unless it may be said with
positive assurance that the arbitration clause is not susceptible of an interpretation that covers the
asserted dispute. United Steel, Paper and Forestry, Rubber, Mfg., Energy, Allied Indus. and Serv.
Workers Intern. Union v. TriMas Corp., 531, 535 (7th Cir. 2008) (internal quotations omitted).
Stewart contends the language of the CBAs does not require arbitration for two reasons:
(1) the language is permissive, allowing the aggrieved employee to pursue arbitration if he is
unsatisfied with the grievance procedure but not requiring he take that route, and (2) Stewart, as
Chief of Police, was not an “employee” under the agreement at the time of the events detailed in
the Complaint, and thus the arbitration agreement would not apply to him anyway. (Filing No. 20
at 6-9.)
Stewart is correct that the arbitration clause in dispute here is not broad. The provision
allows the aggrieved employee to appeal an adverse decision from the Mayor by submitting the
grievance to arbitration, but it does not appear to require the aggrieved employee to settle his
grievance that way. In contrast with other arbitration clauses examined recently in this Court, the
CBAs here do not call arbitration the exclusive venue for final resolution of grievances, nor do
they say that all disputes arising out of the agreement must be settled in arbitration. E.g.

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Akinlemibola v. Dohardmoney.com, No. 1:17-cv-03998-TWP-DML, 2018 WL 4491209 (S.D. Ind.
2018) (finding arbitration required where a contract stated “All disputes, controversies or claims
arising from or relating to this agreement shall be submitted to binding arbitration….”); Leslie v.
Hooters of America, LLC, No. 1:17-cv-02873-SEB-MJD, 2017 WL 6620884 (S.D. Ind. 2017)
(requiring arbitration where an arbitration agreement covered “any and all disputes…which relate
in any manner whatsoever as to [sic] [Plaintiff’s] employment, including but not limited
to…claims or charges based upon…[the ADEA]. [Title VII], and any other civil rights statute[.]”)
(brackets original). Stewart argues that because of its permissive language, the “Grievance
Procedure” Article of the CBAs is not an arbitration agreement at all; it is merely an invitation for
aggrieved employees to submit unresolved grievances to an arbitrator and an agreed-upon set of
rules they must follow should they choose to do so.
That reading of the clause is appealing and would likely be enough to survive a motion for
judgment if not for the law’s strong presumption in favor of arbitration. When assessing an
arbitration clause, the Court may follow general principles of contract interpretation “only to the
extent that they comport with the federal policy in favor of arbitration. United Steel, 531 F.3d at
536. The arbitration clause at issue here has two reasonable interpretations. The first, taken by
Stewart, is that the clause merely allows an aggrieved employee to submit a grievance to arbitration
as one among several ways of attempting to resolve that grievance. The second, taken by
Defendants, is that the clause explains the exclusive final procedure available to an aggrieved
employee should he wish to appeal the Mayor’s decision. Although Stewart’s interpretation may
well be what the parties wanted when they signed the CBAs, the Court cannot say with positive
assurance that the arbitration clause is not susceptible of Defendants’ interpretation.

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Second, Stewart argues he is not an employee under the CBAs, and thus the arbitration
clause does not apply to him. Article 1, Section 1.02 of both CBAs says the following:
Section 1.02. Bargaining Unit. The bargaining unit shall consist of all regular and
retired police officers of the Police Department of the City of Muncie, but excluding
the Police Chief, Deputy Chiefs, Reserve Police Officers, Auxiliary Police Officers
and civilian personnel.
The term “employee”, “employees”, and “regular police officer” in this agreement
mean only those employees of the City who are in the bargaining unit defined
above.
(Filing No. 1-1 at 2, Filing No. 1-2 at 3.) The two agreements differ with respect to what a
“member” is. Under the 2013 CBA, “The term ‘member’ and ‘members’ is defined as any member
of the FOP Lodge #87.” (Filing No. 1-1 at 2.) Under the 2016 CBA, “The term ‘member’ and
‘members’ is defined as any full time police officer of the Muncie Police Department who is also
a member of the FOP Lodge #87.” (Filing No. 1-2 at 3.) This distinction is irrelevant for the
purposes of this case because Stewart was both a full-time officer and a member of the FOP Lodge
#87 at all relevant times. Stewart argues that because the Police Chief is not a member of the
“bargaining unit,” he is not an employee under the CBAs and thus the arbitration clause does not
cover his dispute with Muncie and Mayor Tyler. It is clear that Stewart, as Chief of Police, was
not an “employee” under either CBA but is a “member” under both CBAs.
The Grievance Procedure Articles in both CBAs are imprecise with their use of the terms
“employee” and “member”. The Articles start by purporting to ensure “employees” a fair working
environment, but when describing the actual grievance procedure, refer to the “aggrieved
member.” (Filing No. 1-1 at 7-8, Filing No. 1-2 at 8-9.) 2 But the crucial sentence reads: “If the

For example, the Articles begin, “The City and the F.O.P. agree that employees covered by this agreement shall be
treated fairly, uniformly, and with dignity. The grievance procedure is a formal mechanism intended to assure that
employee grievances that may develop in the day-to-day activities of public service are promptly heard, answered,
and action taken where appropriate.” Later, when describing how to submit a grievance, the Articles say, “Step 1: The
2

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grievance is not settled in Step 3, the aggrieved member and/or the F.O.P. grievance committee
may appeal the grievance by submitting the grievance to final and binding arbitration within 20
workdays after the City’s Step 3 answer.” (Filing No. 1-1 at 8, Filing No. 1-2 at 9.) Because the
sentence introducing the opportunity to arbitrate refers to an “aggrieved member” and not an
employee, the Court cannot say with confidence that it was meant to exclude the Chief of Police.
Thus, Stewart’s complaints arising out of either the 2013 or the 2016 fall under the arbitration
clause in those agreements.
Defendants’ contend the arbitration clause deprives this Court of subject matter jurisdiction
to hear Plaintiff’s breach of contract claims, and thus the Court should dismiss those counts. (Filing
No. 14 at 17. This Court and the Seventh Circuit have viewed motions to dismiss based on an
arbitration clause as “an objection to venue, and hence properly raised under Rule 12(b)(3).”
Akinlemibola v. Dohardmoney.com, 2018 WL 4491209 at *2 (S.D. Ind. 2018) (quoting
Faulkenberg v. CB Tax Franchise Sys., LP, 637 F.3d 801 at 807 (7th Cir. 2011)).
The Court grants Defendants’ Motion with regards to counts 2 and 3 and dismisses those
counts without prejudice. Dismissal for improper venue is without prejudice because it is not an
adjudication on the merits. Fed. R. Civ. P. 41(b); see also In re IFC Credit Corp., 663 F.3d 315,
320 (7th Cir. 2011). Stewart may decide whether to pursue these two claims through arbitration.
C.

Count 4 – Promissory Estoppel
Stewart asserts the 2016 CBA governs his payout upon retirement and entitles him “to all

benefits granted in this contract during [his] term” as Chief of Police. (Filing No. 1-1 at 38.)
Defendants contend the 2013 CBA, which contains no such provision guaranteeing the Chief of

aggrieved member shall submit details of the grievance in written form to any member of the F.O.P. grievance
committee within 10 working days after the aggrieved member becomes aware or should have become aware of the
occurrence of the event or circumstance giving rise to the grievance.”

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Police certain benefits when his term ends, controls because the Muncie City Council never ratified
the 2016 CBA. (Filing No. 14 at 18.) Stewart argues that even if the 2016 had no legal effect
because the Muncie City Council failed to ratify it, he is entitled to recover the amount owed
according to the 2016 CBA under the doctrine of promissory estoppel.
Under Indiana law, a party asserting promissory estoppel must establish five elements: (1)
a promise by the promisor (2) made with the expectation that the promisee will rely thereon (3)
which induces reasonable reliance by the promisee (4) of a definite and substantial nature and (5)
injustice can be avoided only by enforcement of the promise. Biddle v. BAA Indianapolis, LLC,
860 N.E.2d 570, 581 (Ind. 2007). Although “[e]stoppel is not generally applicable against
government entities for the actions of public officials,” it may be appropriate “where the party
asserting estoppel has detrimentally relied on [a] governmental entity’s affirmative assertion or on
its silence where there was a duty to speak. Id.
Defendants argue that because the Muncie City Council never ratified the agreement, it
“fails to stand as a valid and enforceable contract,” and thus “cannot be the basis for a promissory
estoppel claim.” (Filing No. 14 at 18-19.) But a promise need not be a valid and enforceable
contract in order to serve as the basis of a promissory estoppel claim. See, e.g., Yoost v. Zalcverg,
925 N.E.2d 763, 769 (Ind. Ct. App. 2010) (“An oral promise not enforceable under the Statute of
Frauds may nonetheless be enforced under the equitable doctrine of promissory estoppel.”). It
makes logical sense that promissory estoppel offers an equitable remedy in the absence of a
contract because, were the contract valid and enforceable, the promisee would have a legal remedy
available via a breach of contract action and would not need to bring an action for promissory
estoppel.

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At this early stage of litigation, Stewart has met the threshold for pleading a promissory
estoppel action. He has identified a promise. (Filing No. 1 at 13, ¶ 104 (“The 2016 Agreement is
a promise by the Defendants to pay certain wages and provide specific benefits to Plaintiff Stewart
as Chief of Police and as a merit officer”).) He alleges that promise induced his reliance. Id. at
¶106 (“Plaintiff Stewart relied upon the wages and benefits contained in the 2016 Agreement.”).
And he claims that as a result he suffered injustice that can be avoided by enforcing the promise.
Id. at ¶108 (“Only then did Defendants claim the 2016 Agreement was somehow unenforceable
and denied Plaintiff Stewart wages and benefits to which he is otherwise entitled.”).
Although the bar a plaintiff must clear proving promissory estoppel against a government
entity is high, the Court cannot find, based purely on the pleadings before it, that Stewart will not
be able to clear that bar. Thus, Defendants’ Motion for Judgment on the Pleadings is denied as to
Count 4.
D.

Count 5 – Violation of Indiana’s Wage Payment Statute
The Complaint alleges Defendants’ conduct violated Indiana’s Wage Payment Statute, Ind.

Code § 22-2-5-1. The Wage Payment Statute requires employers to pay an employee who
voluntarily leaves employment any amount due to him at “the next usual and regular day for
payment of wages” or before. Stewart alleges Muncie failed to pay his wages upon his retirement.
Defendants move for judgment on the pleadings, arguing that Stewart did not leave his
employment voluntarily because he was constructively discharged. (Filing No. 14 at 19 (citing
Filing No. 1 at 15, ¶124-125).) According to Defendants, Stewart must proceed under the Indiana
Wage Claim Statute, which governs employees who were discharged. Ind. Code § 22-2-9-2. The
Wage Claim Statute requires an aggrieved former employee to file an administrative claim with

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the Indiana Department of Labor before he can bring a private action to recover alleged unpaid
wages, which Stewart did not do.
Stewart’s assertion that he was constructively discharged is a separate legal claim, not a
statement of fact. The Federal Rules allow Stewart to plead legally inconsistent theories. Fed. R.
Civ. P. 8(e). Were this matter before the Court on a motion for summary judgment, the Court
would be in the position to determine which of two mutually exclusive legal claims should survive.
But dismissal on a 12(c) motion is not warranted merely because the plaintiff states a legal
conclusion inconsistent with this claim elsewhere is his complaint. Thus, Defendants’ Motion is
denied with regards to count 5.
E.

Count 6 – Constructive Discharge
The Complaint alleges Defendants constructively discharged Stewart in violation of

Indiana law. That Indiana law, according to Stewart, arises out of the exception to the at-will
employment doctrine for termination when an employee refuses to commit a criminal act, outlined
in McClanahan v. Remington Freight Lines, Inc., 517 N.E.2d 390, 393 (Ind. 1996). (Filing No.
20 at 14.) Cases like Tony v. Elkhart County, 851 N.E.2d 1032 (Ind. Ct. App. 2006) and Baker v.
Tremco Inc., 917 N.E.2d 650 (7th Cir. 2009), have recognized that exception to the at-will
employment doctrine can arise in constructive discharge scenarios as well.
Defendants move for judgment on the pleadings, arguing the Complaint fails to include
facts supporting a conclusion that undertaking the investigation Mayor Tyler requested would have
been a criminal act. (Filing No. 14 at 22.) In particular, Defendants argue Stewart cannot show
that undertaking the investigation would have clearly violated Indiana’s obstruction of justice
statute, Ind. Code § 35-44.1-2-2. Id.

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Under Indiana law, “A constructive discharge occurs when an employer purposefully
creates working conditions [that] are so intolerable that an employee has no other option but to
resign.” Tony, 851 N.E.2d at 1037 (quoting Cripe, Inc. v. Clark, 834 N.E.2d 731, 735 (Ind. Ct.
App. 2005)) (brackets in original). The constructive discharge doctrine transforms what is
ostensibly a resignation into a firing. Id. In Indiana, under the public policy exception to the
employment-at-will doctrine, a person may not be terminated for “refusing to commit an illegal
act for which he would have been personally liable.” McClanahan, 517 N.E.2d at 393, see also
Rodriguez v. Westside Ltd. Partnership, 2008 WL 5247340 at *2 (S.D. Ind. 2008). This Court has
held that Indiana’s obstruction of justice statute qualifies as one for which a violator can incur
personal criminal liability. Rodriguez at *3-4.
In their Motion, Defendants argue that “Stewart’s mere belief that that [sic] the activity he
was allegedly ordered to perform could be illegal is, without more, insufficient to support a
McClanahan exception.” (Filing No. 14 at 25.) But Stewart alleges specific facts in his complaint
that explain why he had good reason to think investigating the former city employee would
constitute illegal obstruction of justice. Stewart met with the FBI on multiple occasions and was
told it would be inappropriate to investigate the employee and that the FBI did not need any
assistance in its investigation. (Filing No. 1 at 5, ¶ 32 and 6, ¶ 45.) The local prosecutor also
counseled against parallel investigations. (Filing No. 1 at 7-8, ¶ 59-60.) Additionally, Stewart was
a long-serving police officer who no doubt had a good understanding of the interplay between law
enforcement agencies and knew that investigating a witness in an FBI investigation would violate
Ind. Code § 35-44.1-2-2. Accordingly, the Complaint is sufficient to state a claim for wrongful
constructive discharge, and judgment on the pleadings is not warranted. Defendants’ Motion is
denied as to Count 6.

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IV. CONCLUSION
For the foregoing reasons, the Court GRANTS in part and DENIES in part Defendants’
Motion for Judgment on the Pleadings (Filing No. 13). Stewart’s claims for breach of contract
and breach of contract—third party beneficiary are dismissed without prejudice. His other four
claims: Fourteenth Amendment Due Process Violation under 42 U.S.C. § 1983, promissory
estoppel, violation of Indiana’s Wage Payment Statute, Ind. Code § 22-2-5-1, and constructive
discharge remain before this Court.
SO ORDERED.
Date: 12/4/2018

DISTRIBUTION:
Brian M. Pierce
BRIAN M. PIERCE, ATTORNEY AT LAW
[e-mail]
David J. Carr
ICE MILLER LLP (Indianapolis)
[e-mail]
Kayla Ernst
ICE MILLER LLP (Indianapolis)
[e-mail]
Paul Conrad Sweeney
ICE MILLER LLP (Indianapolis)
[e-mail]

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