Title: Havill v. Woodstock Soapstone Co., Inc.

State: vermont

Issuer: Vermont Supreme Court

Document:

Havill v. Woodstock Soapstone Co, Inc. (2003-032); 177 Vt. 297; 865 A.2d 335

2004 VT 73

[Filed 13-Aug-2004]

       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.

       	
                                 2004 VT 73

                                No. 2003-032

  Lois Havill	                                 Supreme Court

                                                 On Appeal from
       v.	                                 Windsor Superior Court

  Woodstock Soapstone Company, Inc.	         November Term, 2003

  Alan W. Cook, J.

  Cathryn C. Nunlist of Stebbins Bradley Harvey & Miller, PA, Hanover, New
    Hampshire, for Plaintiff-Appellee.

  James M. Morrissey and Thomas Hayes of Eaton & Hayes, P.C., Woodstock, for
    Defendant-Appellant.

  PRESENT:  Amestoy, C.J., Dooley, Johnson and Skoglund, JJ., 
            and Allen, C.J. (Ret.), Specially Assigned

        
       ¶  1.  JOHNSON, J.   Defendant Woodstock Soapstone Company appeals
  the trial court's conclusions that plaintiff Lois Havill had an implied
  employment contract with defendant and that defendant breached that
  contract when it discharged plaintiff without adhering to the procedures
  for just cause firings detailed in defendant's personnel policies. 
  Defendant also appeals various aspects of the trial court's damage award of
  front and back pay as excessive or unwarranted.  Plaintiff cross-appeals
  the trial court's damage award because it makes no provision for bonuses
  and wages plaintiff might have earned but for her improper discharge and
  because plaintiff claims the court made other errors calculating her award. 
  We affirm the trial court's conclusions regarding the existence of the
  implied contract and defendant's liability for violating that contract, but
  remand for a recalculation of damages.

                          I.  Contractual Liability

       ¶  2.  Defendant manufactures wood-burning and gas-burning stoves. 
  Plaintiff began working for defendant in 1982.  She worked part-time at
  first and then full-time, until she was terminated in April 1987 when the
  company was experiencing financial difficulties.  Plaintiff resumed
  employment with defendant in 1990 working initially as an independent
  contractor from her home and later that year as a part-time employee in
  defendant's office.  Defendant made plaintiff a full-time employee in
  August 1994.  

       ¶  3.  In 1994, defendant also issued and distributed personnel
  policies, which were the functional equivalent of a personnel manual.  The
  policies detailed a process whereby an employee was entitled to two written
  warnings in a twelve-month period prior to termination for "willful or
  repeated violations, or exaggerated behavior not in the best interest of
  the company or its employees."  Most significantly, the policies
  established a "just cause" requirement for the termination of defendant's
  employees with problems such as unauthorized absences, violation of safety
  procedures, theft, careless or faulty work, and incompatibility with other
  employees.  According to the policies, employees' "responsibilities will
  often change, and responsibilities will often be broad and/or overlapping
  with responsibilities of other employees." 
   
       ¶  4.  The trial court found that when plaintiff resumed employment
  with defendant in 1990 her duties included data entry, database
  maintenance, and mailings to prospective customers.  The trial court's
  findings detail the expansion of plaintiff's responsibilities into the area
  of customer service and sales, primarily on the telephone and occasionally
  in the showroom.  The trial court estimated, based on testimony of both
  plaintiff and defendant, that sales and customer service activities were
  twenty-five percent of plaintiff's work by 1997.  Plaintiff received "very
  positive" performance reviews in 1995 and 1996 as well as a $1000 bonus in
  August 1997.  The performance reviews in evidence indicated that plaintiff
  was steadily improving at sales and customer service on the telephone,
  though she remained reluctant to do this work.  The reviews encouraged
  plaintiff to take a more active role in this regard.  Plaintiff also
  testified that during the slow work seasons when she offered to go home
  without pay, defendant's president required her to stay so she could work
  the telephones, reasoning that if she even made one sale it would be worth
  it to the company.  

       ¶  5.  Meanwhile, defendant's business was declining seriously for
  various market-related reasons.  Many of defendant's competitors went out
  of business.  This led defendant's president, Tom Morrissey, to reorganize
  the company by adding a line of gas burning stoves and outsourcing in-house
  functions, including many of the letter shop and order fulfillment
  functions that comprised much of plaintiff's workload.  As part of this
  reorganization, defendant hired Laura Scott to streamline the operation. 
  There is no dispute that this reorganization was warranted by outside
  economic factors, that it actually occurred, and that it had a positive
  effect on the business. 
   
       ¶  6.  All parties agree that tension developed between plaintiff
  and Scott soon after Scott's arrival.  Plaintiff felt humiliated by the way
  Scott dealt with her.  Scott and Morrissey began to perceive that plaintiff
  was resisting the reorganization.  The conflict between Scott and plaintiff
  manifested itself in instances of plaintiff's "rude" and "insubordinate"
  conduct towards Scott.  In response, Morrissey sent plaintiff a letter
  dated September 30, 1997, in which he stated, "As a courtesy to you, and in
  light of the length of time you have worked here, you are not being issued
  a written warning now," although a newer employee would have received one. 
  The letter goes on to reprimand plaintiff for her unacceptable behavior
  toward Scott the prior week, to indicate that she was being temporarily
  relieved of her customer service duties, and criticized her for not
  voluntarily participating in a team building lunch for all employees.

       ¶  7.  The letter was written forty-one days before plaintiff was
  terminated.  Nonetheless,  Morrissey's letter states that "[t]o accommodate
  any additional growth we need customer service people who are flexible,
  professional and cooperative team players.  I need to know if you will make 
  a commitment to accommodate our needs.  This decision is really yours to
  make." The letter also states that if plaintiff "cannot make this
  commitment now, and regularly in the future, then we will do everything we
  reasonably can to help [plaintiff] secure another job," but that Morrissey
  "would like to have [plaintiff] continue to work here" because Morrissey
  valued her hard work and dedication and considered her a friend. 
   
       ¶  8.  On October 1, 1997, plaintiff entered into a written
  agreement with Morrissey and Scott in which they all pledged to cooperate
  as team members in the best interests of the company.  Despite these
  efforts, defendant terminated plaintiff on November 10, 1997.  According to
  plaintiff's testimony as recounted in the court's findings, when plaintiff
  asked Morrissey the reason for her termination, he replied "I don't know
  why.  You just are."   Plaintiff did not receive any written warnings prior
  to termination.  Subsequently, plaintiff obtained her personnel file, which
  contained a memo dated November 10, 1997 indicating that her position had
  been eliminated due to lack of work.  The memo also indicated that
  defendant would not object to plaintiff's application for unemployment
  benefits and that the company would provide a written recommendation letter
  for plaintiff.

       ¶  9.  Defendant did in fact provide a recommendation letter for
  plaintiff authored by Morrissey.  The trial court noted that the letter
  speaks of plaintiff in "fairly glowing terms."  The letter lauds plaintiff
  as someone who would be a "big asset in a busy office which requires
  organization, dedication and sound office skills."  Two weeks after
  providing plaintiff with the letter, defendant placed an ad in the Valley
  News seeking an "office whiz" who would be "a well organized person with
  fast and accurate typing and keyboard ability, basic computer literacy, and
  sound office skills."  The advertisement indicated that the position was
  full-time with benefits, generous pay and incentives, and the company was
  growing.  The evidence shows that Heather Dahlin responded to this
  advertisement and was hired.  She worked for the company handling telephone
  inquiries, taking and processing orders, bookkeeping, and other
  miscellaneous tasks until she quit in November 1998.

       ¶  10.  By January 1998, defendant had hired three new customer
  service representatives.  The trial court found that the new employees
  performed some of the functions that plaintiff had previously performed,
  though they were expected to be more aggressive in turning routine
  inquiries into sales.  The new customer service representatives received
  training and certification in defendant's products.  Defendant did not
  offer plaintiff the opportunity to undergo such training.

               A.  Defendant's Intent to Be Bound by Policies
   
       ¶  11.  Plaintiff's theory of liability is that defendant wrongfully
  terminated her employment in violation of an implied contract.  As we
  stated in our earlier decision, the rule that employment contracts for
  indefinite terms are "at will" is one of construction, not one of
  substantive law.  Havill v. Woodstock Soapstone, Co., 172 Vt. 625, 627, 783 A.2d 423, 427 (2001) (mem.).  Thus, parties can modify the at will
  relationship according to the usual rules of contract.  Id.  We previously
  reversed and remanded the trial court's grant of summary judgment for
  defendant in this case with instructions for the court to determine whether
  defendant intended to be bound by the policies generally, and the just
  cause and progressive discipline provisions specifically.  Id. at 629, 783 A.2d  at 480.  The trial court correctly answered both of these questions in
  the affirmative.

       ¶  12.  Though defendant's president Morrissey testified that he is
  not and should not be bound by the terms of the personnel policies,
  defendant concedes in its brief on appeal that it "has never claimed that
  the just cause provision is not binding."  This concession comports with
  the trial court's finding that the language of the policies evinces
  defendant's intention to be bound by the provisions therein.  The trial
  court reached this conclusion after observing that the policies were devoid
  of any disclaimer to the contrary.  See id. at 628, 783 A.2d  at 428.
  (employer must clearly state its intent not to be bound by its promulgated
  policies in order to avoid creating contractual liability).  Instead,
  defendant's position on appeal is that the just cause provision in the
  policies applies only to employee misconduct, and not layoffs due to
  reorganization required by economic circumstances.  This position appears
  to be consistent with the language of the policies, as well as our case law
  on implied employment contracts.  See Taylor v. Nat'l Life Ins. Co., 161
  Vt. 457, 467-68,