Title: Taylor v. National Life Insurance Co.

State: vermont

Issuer: Vermont Supreme Court

Document:

TAYLOR_V_NATIONAL_LIFE_INSURANCE_CO.92-339; 161 Vt. 457; 652 A.2d 466

[Opinion Filed 17-Dec-1993]

[Motion for Reargument Denied 17-Mar-1994

 NOTICE:  This opinion is subject to motions for reargument under V.R.A.P. 40
 as well as formal revision before publication in the Vermont Reports.
 Readers are requested to notify the Reporter of Decisions, Vermont Supreme
 Court, 109 State Street, Montpelier, Vermont 05609-0801 of any errors in
 order that corrections may be made before this opinion goes to press.


                                 No. 92-389


 Charles S. Taylor                            Supreme Court

                                              On Appeal from
      v.                                      Washington Superior Court

 National Life Insurance Co.,                 May Term, 1993
 John H. Harding & Mark J.
 Levesque


 Stephen B. Martin, J.

 Leslie C. Pratt and Robert Mello, South Burlington, for plaintiff-appellant

 Robert S. Burke, Montpelier, for defendants-appellees


 PRESENT:  Allen, C.J., Gibson, Dooley, Morse and Johnson, JJ.


      DOOLEY, J.   Plaintiff Charles Taylor brought a wrongful discharge suit
 against defendants National Life Insurance Company and two of its officers
 individually.  Plaintiff's complaint included seven different bases for
 recovery:  claims resting on theories of discrimination on the basis of age
 or handicap condition under both disparate treatment and disparate impact
 doctrines, on theories of contract and promissory estoppel, and on the basis
 of negligence and intentional infliction of emotional distress.  The court
 allowed the claims based on age and disability discrimination to go to the
 jury, which found for defendant National Life and the individual
 defendants.  The court granted a directed verdict on the latter four claims.
 Plaintiff now appeals solely the grant of a directed verdict to National

 

 Life on the breach of contract and promissory estoppel claims.(FN1) We affirm
 in part and reverse in part.
      Plaintiff began his career with National Life in January 1966.  By
 1986, he had risen to officer status in the corporation and was running
 National Life's User Information Center servicing National Life's computer
 operations.  He developed heart disease and had a triple bypass operation
 in October of 1985, but returned to work within a month.  In February 1986,
 the plaintiff's department was reorganized and renamed the Automation
 Support Department.  National Life split responsibility for its computer
 operations between plaintiff and Greg Doremus; plaintiff continued to
 oversee internal computer operations while Doremus took on management of
 National Life's field staff computer operations.  A year later, the
 Automation Support Department was again reorganized.  Plaintiff was placed
 in an enhanced job that carried with it greater responsibility.  Award of
 the new job title and associated increased salary, however, was made
 contingent upon plaintiff's satisfactory performance of the job in the
 ensuing six months.  Plaintiff's supervisor told him that he would be
 evaluated after six months and either be given the additional salary or be
 given another position at a lower job grade.
      Prior to 1986, National Life enjoyed sound financial health, but in
 1986, its financial picture began to change.  It suffered losses of $38
 million in fiscal year 1986, and by the third quarter of fiscal year 1987

 

 had losses of an additional $47 million.  As a result, in early 1987,
 National Life implemented a program aimed at reducing operating expenses by
 about ten percent, or close to $8 million in total savings.  Plaintiff was
 aware of and participated in the expense reduction efforts, including
 discussions about reducing his own staff.
      In September 1987, National Life offered an early retirement plan to
 163 employees; ninety-two persons accepted the offer.  Plaintiff, age forty-
 nine at the time, was eligible for the plan, but chose not to take early
 retirement because his pension would have been small.  National Life then
 began to reduce staff through layoffs,  eliminating forty-nine jobs,
 including the one occupied by plaintiff.  Plaintiff's work overseeing
 internal computer operations was merged with Doremus' work overseeing field
 computer operations in a new position.  Plaintiff's supervisor chose
 Doremus, who was in his early thirties at the time, for the new position.
 Two assistant director jobs reporting to Doremus became available in
 computer operations at this time, but they were filled by other people.
      Because plaintiff's position was eliminated, he was laid off.  He was
 neither offered the chance to apply for nor did he seek either of the
 assistant director jobs that were filled by others.  He did not find another
 job within National Life or with any other company.  He was given a
 severance package and was also able to elect the early retirement plan to
 receive a pension.
                                     I.
      On appeal plaintiff contends that the trial court improperly granted
 National Life's motion for a directed verdict on his breach of contract and
 promissory estoppel claims.  "When reviewing a trial court's grant of a

 

 directed verdict, we must view the evidence in the light most favorable to
 the nonmoving party, excluding any modifying evidence; a directed verdict is
 not proper if any evidence fairly and reasonably supports the nonmoving
 party's claim."  Meller v. Bartlett, 154 Vt. 622, 623-24, 580 A.2d 484, 485
 (1990).  Further, "we will uphold the trial court when the nonmoving party
 has failed to present evidence on an essential element of [the] case."  Id.
 at 624, 580 A.2d  at 485.
      Plaintiff contends that the jury could find that his employment
 agreement with National Life was not at-will, and had, in fact, been
 transformed from an at-will agreement to a contract for employment that
 precluded National Life from terminating him during its 1987 staff
 downsizing.  For purpose of analysis, it is helpful to break down
 plaintiff's overall claim into four main issues:  (1) whether the written
 offer of employment to plaintiff, oral representations made to plaintiff,
 and National Life's personnel manual were sufficient to present a jury issue
 on whether there was an implied contract that plaintiff could be terminated
 only for good cause; (2) whether the economic conditions faced by National
 Life created good cause; (3) whether the jury could find plaintiff was
 terminated for a different reason; and (4) whether the events surrounding
 plaintiff's 1987 conditional promotion and layoff could be found to have
 created a special contract that was breached.  We address each of these
 issues in turn.  We start with the basic implied-contract issue.

                                     II.
      Plaintiff bases his overall contract theory on three main items.  The
 first is his 1966 employment letter, which stated, in part:  "Continuous

 

 employment with [National Life] is subject to one's performing in an
 entirely satisfactory manner . . . ."  Plaintiff argues that such language
 indicates that he could be terminated only if his performance was
 unsatisfactory.  National Life responds with additional language from the
 letter:  "It is understood that employment may be terminated by the employee
 or by the Company upon reasonable notice if the employment arrangement has
 not worked out satisfactorily."  It argues that the additional language
 shows an at-will employment contract, allowing the employer to terminate for
 any reason or no reason.
      Second, plaintiff relies on statements made at the time of his hiring
 that National Life was a stable employer and "if you did your job . . . you
 could expect . . . to stay there and . . . retire from there."  Consistent
 with these statements, National Life's Vice President of Human Relations
 testified that if there was no misconduct, "job security could be expected,
 I would say that was a cultural expectation."
      Third, plaintiff relies on statements in the personnel policy manual.
 The most important of these are:
      (1)  "It is paramount that each individual be treated fairly,
           uniformly, and impartially . . . ."

      (2)  "It is Company policy to make every effort to avoid
           involuntary terminations.  Discharge is of course the
           severest form of disciplinary action and requires
           careful consideration before being resorted to."

      (3)  "Only after every possibility has been explored should
           you 'give up' on an employee and consider termination .
           . . ."  [The manual lists three steps to be taken before
           termination].

      (4)  "The following are circumstances which may warrant
           termination."  [The manual lists and describes
           "Misconduct," "Attendance" and "Inadequate
           Performance."]

 


      (5)  "Unless a serious wrong has been committed, the
           supervisor should take progressive disciplinary actions,
           with the severity increasing with each offense."

      (6)  When discipline is imposed the supervisor must "[g]ive
           the employee the right to appeal."

 The personnel policy manual made no reference to termination because of
 downsizing or reductions in force.
      It is helpful to recapitulate our decisions on employment contracts and
 grounds for termination.  A basic precept of employment contract
 construction is that "an employment contract for an indefinite term is an
 'at-will' agreement, terminable at any time, for any reason."  Foote v.
 Simmonds Precision Prods. Co., 158 Vt. 566, 570, 613 A.2d 1277, 1279 (1992).
 This is, however, "simply a rule of contract construction" that can "be
 overcome by evidence to the contrary."  Id.
      We began to define what could be "evidence to the contrary" in Sherman
 v. Rutland Hosp., Inc., 146 Vt. 204,