Case Title: Springer v. Blue Cross and Blue Shield of Wyoming

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 1997-09-23T00:00:00Z

Document:
Springer v. Blue Cross and Blue Shield of Wyoming1997 WY 116944 P.2d 1173Case Number: 96-129Decided: 09/23/1997Supreme Court of Wyoming

WILLIAM SPRINGER, 

Appellant (Plaintiff),

 

v. 

 

BLUE CROSS AND BLUE SHIELD OF WYOMING, a Wyoming 
corporation, 

Appellee (Defendant).

 

Appeal 
from the District Court of Laramie County

The 
Honorable Edward L. Grant, Judge

 

Representing 
Appellant: 

Donald J. Sullivan (argued) and Bert T. Ahlstrom, 
Jr., Cheyenne.

 Representing 
Appellee: 

John B. "Jack" Speight, Brent R. Kunz (argued) and 
Dominique D.Y. Cone, Hathaway, Speight & Kunz, 
Cheyenne.

 

Before TAYLOR, C.J., and 
THOMAS, MACY, GOLDEN and LEHMAN, JJ.

LEHMAN, Justice. 

[¶1]      William Springer 
(Springer) filed this wrongful termination action against his former employer, 
Blue Cross and Blue Shield of Wyoming (Blue Cross), claiming breach of 
employment contract, breach of the implied covenant of good faith and fair 
dealing, and intentional and negligent infliction of emotional distress. After a 
bench trial, the district court found in favor of Blue Cross on all claims and 
entered an Order of Dismissal with Prejudice. In this appeal, Springer 
challenges the district court findings regarding breach of contract and breach 
of the implied covenant of good faith and fair 
dealing.

 

[¶2]      We 
affirm.

 

[¶3]      Appellant 
Springer presents the following issues for our 
consideration:

 

1. Whether the trial court erred in holding that the 
Employment Handbook, either alone or in combination with the Disciplinary Rules, 
did not constitute an enforceable contract of employment.

2. Whether the trial court erred in holding that the 
employer's failure to follow its own internal Disciplinary Rules did not 
constitute a breach of the employment contract.

3. Whether the trial court erred in holding that the 
manipulation of the employee's duties for the purpose of creating an excuse to 
fire him did not violate the inherent contractual covenant of good faith and 
fair dealing. 

4. Whether the trial court erred in holding that the 
employer's claim of a subjective "loss of confidence" constituted good cause for 
termination of the employment.

 

[¶4]      Appellee, Blue 
Cross and Blue Shield of Wyoming, states the issues as:

 

A. Whether the trial court erred in concluding that 
Blue Cross and Blue Shield of Wyoming had cause to terminate William Springer's 
employment.

B. Whether the trial court erred in concluding that 
Blue Cross and Blue Shield of Wyoming's progressive disciplinary provisions were 
not mandatory and did not apply to Mr. Springer.

C. Whether the trial court erred in concluding that 
Blue Cross and Blue Shield of Wyoming did not have a special relationship with 
Mr. Springer so that the tort of breach of the covenant of good faith and fair 
dealing would be actionable.

 

FACTS

 

[¶5]      Blue Cross hired 
Springer as a staff attorney on September 15, 1986. As staff attorney, his 
primary responsibilities included coordination of benefits, subrogation and 
refunds oversight. In December 1990, Springer was placed on active duty in the 
Air Force because of Desert Storm. Upon his return to work on April 29, 1991, he 
was placed in the position of Director of Claims and Staff Assistant to the 
Senior Director of Benefits Administration. On August 1, 1993, Springer was 
reassigned to the position of staff attorney. Blue Cross terminated Springer's 
employment on January 3, 1994, giving him three months salary plus pay for his 
accrued vacation to that date.

 

[¶6]      In July 1995, 
Springer filed a complaint against Blue Cross seeking compensatory and punitive 
damages. He claimed that a contractual relationship existed between him and Blue 
Cross by virtue of representations made in the employee handbook and company 
policies and that Blue Cross breached the contract. Springer also claimed breach 
of the implied covenant of good faith and fair dealing, and intentional and 
negligent infliction of emotional distress.

 

[¶7]      The district 
court held a three-day bench trial in late 1995. During the trial, the court 
heard testimony from Springer, as well as several members of the Blue Cross 
senior management team, including Charles Chapman, president, and Karen Dobson, 
vice president. Springer reported directly to either Chapman or Dobson during 
his entire tenure at Blue Cross. The court received into evidence numerous 
exhibits from both parties. The documentary evidence included several memos from 
Chapman and Dobson to Springer during the course of his employment indicating 
management concerns with Springer's performance and the need for improvement. 
The exhibits reveal that management had spoken with Springer on more than one 
occasion about his absenteeism and had discussed with him revisions to his work 
by outside counsel.

 

[¶8]      The district 
court entered a Decision Letter and Findings of Fact and Conclusions of Law in 
favor of Blue Cross. The court did not decide the question, but assumed for 
purposes of its decision that an implied-in-fact contract existed between the 
parties by virtue of the handbook. The court determined that Blue Cross had good 
cause to terminate Springer and that the progressive discipline procedure 
outlined in the employee handbook was not mandatory. As a result, the court 
concluded that Blue Cross did not breach the employment contract. The court also 
found that Springer did not show the existence of a special relationship 
necessary to give rise to an action for breach of the covenant of good faith and 
fair dealing. Springer's claims for intentional and negligent infliction of 
emotional distress failed as he did not establish the elements of those torts. 
Because he did not prevail on the tort claims, the court found Springer had no 
claim for punitive damages. As indicated in the statement of issues, Springer 
seeks our review only of the district court's findings relating to the breach of 
contract and breach of the covenant of good faith and fair dealing 
claims.

 

STANDARD OF 
REVIEW

 

[¶9]      The trial court 
made express findings of fact and conclusions of law. The factual findings of a 
judge are not entitled to the limited review afforded a jury verdict. Hopper v. All Pet Animal Clinic, Inc., 
861 P.2d 531, 538 (Wyo. 1993). While the findings are presumptively correct, the 
appellate court may examine all of the properly admissible evidence in the 
record. Id. Due regard is given to 
the opportunity of the trial judge to assess the credibility of the witnesses, 
and our review does not entail weighing disputed evidence. Id. Findings of fact will not be set 
aside unless the findings are clearly erroneous. Id. A finding is clearly erroneous when, 
although there is evidence to support it, the reviewing court on the entire 
evidence is left with the definite and firm conviction that a mistake has been 
committed. Id. We review a district 
court's conclusions of law de novo on 
appeal. Id.

 

DISCUSSION

 

Breach of 
Contract

 

[¶10]   Ordinarily when an employee claims 
breach of an implied-in-fact contract based on provisions in an employee 
handbook, we begin our analysis by determining whether those provisions altered 
the presumption of at-will employment. However, in this case the district court, 
without deciding the matter, started by assuming an employment contract was in 
place between Springer and Blue Cross by virtue of the handbook. The court then 
determined that, even assuming an implied-in-fact contract existed, Blue Cross 
did not commit a breach.

 

[¶11]   Several versions of the Blue Cross 
employee handbook were introduced into evidence. In its decision letter, the 
district court pointed out several unresolved factual issues regarding later 
versions of the handbook - for example, the effect of disclaimers and Springer's 
signed acknowledgments of receipt, as well as whether there was consideration 
for changes to the handbook and whether consideration was in fact necessary. 
Because these questions were left unanswered, we must assume the district court 
based its decision on its interpretation of the July 1982 handbook given to 
Springer when he was hired.

 

[¶12]   We start, then, from the premise 
that the terms of the 1982 employee handbook constituted an implied-in-fact 
contract. Deciding whether a breach of contract has occurred involves 
interpreting the contract. Whether a contract is ambiguous is a question of law, 
as is interpretation of an unambiguous contract. Garcia v. Uniwyo Federal Credit Union, 
920 P.2d 642, 645 (Wyo. 1996). When the meaning of a contract is ambiguous or 
not apparent, it may be necessary to determine the intention of the parties from 
evidence other than the contract itself, and interpretation becomes a mixed 
question of law and fact. Sanchez v. Life 
Care Centers of America, Inc., 855 P.2d 1256, 1257 (Wyo. 1993). Springer 
claims that Blue Cross breached the contract in two respects: 1) Blue Cross did 
not have good cause to terminate his employment, and 2) Blue Cross did not 
follow its disciplinary procedures prior to terminating his employment. We 
address each of those arguments in turn.

 

A. 
Discharge for cause

 

[[¶13]  The district court concluded Blue Cross 
had cause to terminate Springer's employment. Under the heading "Terminations," 
and the subheading "Involuntary," the employee handbook contains a list of 
"[s]ome of the reasons, but not all of the reasons, for termination." First on 
that list is unsatisfactory work performance. We find sufficient evidence in the 
record, reiterated in the district court's findings, to establish that 
Springer's work performance was unsatisfactory. Springer's termination letter 
stated that he was being fired because "management ha[d] lost faith and 
confidence in [his] judgment and resultant work product." The trial testimony 
and exhibits revealed several instances during the course of his employment 
where Springer had been informed of deficiencies in his performance and of the 
need for improvement. The district court did not err in determining that Blue 
Cross had cause to terminate Springer.

 

B. 
Progressive discipline

 

[¶14]   The district court's findings of 
fact with regard to Blue Cross' progressive discipline policy are problematic 
because they quote language from the employee handbook dated November 1993 
rather than the handbook in effect when Springer was hired. In addition, the 
court concluded that the progressive discipline policy only applies where an 
employee has "a defined area in need of quantifiable improvement." In examining 
the relevant provisions of the July 1982 handbook and the corporate procedure 
regarding progressive discipline, we find no language to support the district 
court's interpretation. The employee handbook provides:

 

Employees discharged for cause will, in all cases, be 
counseled and forewarned prior to discharge and written documentation prepared 
and communicated to the affected employee, in accordance with our Progressive 
Discipline Policy.

 

Under the heading 
"Disciplinary Action," the handbook provides, in relevant 
part:

When working as a team, we are usually able to 
accomplish both company and individual goals. Some reasons for not accomplishing 
our mutual goals might be absenteeism, tardiness, failure to follow instructions 
or poor work performance. When this happens, counseling becomes necessary. When 
counseling fails, then disciplinary action is taken.

 

The handbook next outlines 
the steps of progressive discipline, which include two oral warnings, a written 
warning and, finally, demotion or termination. The handbook then 
states:

Depending on the seriousness of the problem or in 
cases of chronic offenders, individual steps of the disciplinary procedure may 
be bypassed resulting in suspension or immediate 
termination.

 

[¶15]   Blue Cross also had in place 
Corporate Procedure 415 entitled "Progressive Discipline." The record reveals 
that corporate procedures are not disseminated to all employees, but Springer, 
as a supervisory employee, had a copy of the Progressive Discipline procedure at 
his disposal. The procedure provides "[i]n most, but not all cases, an employee 
will not be terminated without first going through the following stages referred 
to as progressive discipline." The procedure describes the steps of progressive 
discipline, which consist of up to two verbal warnings, up to two written 
warnings and, ultimately, suspension or termination. Under the heading 
"Suspension/Termination," the following language appears: "Depending upon the 
seriousness of the problem, immediate termination may be necessary without going 
through the various stages of progressive discipline."

 

[¶16]   The handbook language unambiguously 
requires that, in all cases where discharge is for cause, the Progressive 
Discipline Policy must be followed. However, both the handbook summary of 
progressive discipline and the corporate procedure itself contain an express 
exception allowing immediate termination for serious problems without going 
through the progressive discipline steps. The record contains ample evidence 
that the problems Blue Cross experienced with Springer's work performance were 
serious and chronic. The district court, in its decision letter, summarized the 
evidence in this way:

 

The evidence, especially but not exclusively that of 
Mr. Chapman, is that he and others of the "management team" for a variety of 
reasons and over an extended period of time concluded on the basis of their 
observations and experience that plaintiff's job performance was unacceptable, 
that work product was poor and often times had to be redone, that it exhibited a 
lack of concentration and follow-through, that his judgment was suspect and his 
advice unreliable such that they lost all trust and confidence in him as a legal 
advisor and as one who was to perform a variety of legally oriented tasks. There 
was nothing unreasonable about their conclusions or implausible about their 
testimony concerning the bases for those conclusions.

 

The district court had the 
opportunity to assess the credibility of the witnesses and weigh the evidence 
and found nothing to discredit the testimony presented on behalf of Blue Cross. 
Therefore, although the district court erroneously interpreted the progressive 
discipline procedure as optional, the findings support the court's ultimate 
conclusion that there was no breach of contract with respect to progressive 
discipline, and we affirm. 

 

Implied 
Covenant of Good Faith and Fair Dealing

 

[¶17]   Springer contends that Blue Cross 
breached the implied covenant of good faith and fair dealing. Wyoming recognizes 
a limited tort claim for breach of an implied covenant of good faith and fair 
dealing in employment contracts. Loghry 
v. Unicover Corp., 927 P.2d 706, 712 (Wyo. 1996). Only in those rare and 
exceptional cases in which a special relationship of trust and reliance exists 
between the employer and employee is a duty created which can give rise to tort 
liability. Id. A special relationship 
sufficient to support a cause of action can be found by the existence of 
separate consideration, rights created by common law or statute, or rights 
accruing with longevity of service. Id.

 

[¶18]   Springer's argument focuses on the 
"bad faith" aspect of his tort claim - he contends that the manner in which Blue 
Cross terminated his employment plainly constituted bad faith, resulting in 
breach of the covenant of good faith and fair dealing. Springer failed, however, 
to present any evidence of a special relationship between him and Blue Cross 
sufficient to give rise to a duty enforceable in tort. Springer did allege in 
his complaint that his employment relationship with Blue Cross constituted a 
special relationship of trust, but that is not enough. Our case law makes clear 
that the special relationship necessary to permit recovery is not established 
merely by virtue of the employer-employee relationship. Wilder v. Cody Country Chamber of 
Commerce, 868 P.2d 211, 221 (Wyo. 1994); Drake v. Cheyenne Newspapers, Inc., 891 P.2d 80, 82 (Wyo. 1995). Springer did not claim the existence of separate 
consideration or rights created by common law, statute, or length of service on 
which a special relationship of trust and reliance could be based. Without a 
special relationship, no duty exists on the part of Blue Cross. Without a duty, 
there can be no breach. The district court properly denied Springer's tort claim 
for breach of the covenant of good faith and fair dealing.

 

CONCLUSION

 

[¶19]   In sum, we uphold the district 
court's determination that, assuming the existence of an implied employment 
contract by virtue of the employee handbook, Blue Cross did not breach the terms 
of the contract. Blue Cross had cause to terminate Springer's employment, and 
the progressive discipline policy allowed for immediate termination for serious 
problems without going through the steps of the disciplinary procedure. 
Additionally, Springer did not establish a special relationship of trust and 
reliance between him and Blue Cross which would support his tort claim for 
breach of the implied covenant of good faith and fair dealing. Accordingly, the 
district court's Order of Dismissal with Prejudice is 
affirmed.