Opinion ID: 1130384
Heading Depth: 3
Heading Rank: 5

Heading: Beyond 1991, we will negotiate at the time for salary.

Text: The court of appeals, relying on Justice, 35 Colo.App. at 4, 530 P.2d at 985, concluded that a commitment on the duration of employment cannot be inferred from a contract provision fixing the rate of compensation during a given year.... [T]he same rule applies when an employment contract provides that the rate of compensation will be fixed during a series of years and then subject to modification. Dorman, slip op. at 3. However, the court of appeals misconstrued Justice. See Dorman, slip op. at 2-3. Justice involved a contract describing `a starting annual salary of $12,000 per year,' without any reference to specific years of employment. 35 Colo.App. at 3, 530 P.2d at 985. Furthermore, Justice concerned an employment contract that required the employee to reimburse the employer for payments made by the employer for the employee's travel and moving expenses if the employee resigned for any reason within a year, evidencing the parties' mutual intention that the employment relationship was terminable at will and was not subject to a definite term of one year. Id. Finally, Justice does not establish a bright line rule that `a contract which sets forth an annual salary rate but states no definite term of employment is considered to be indefinite employment, terminable at the will of either party without incurring liability for breach of contract.' Dorman, slip op. at 2-3 (quoting Justice, 35 Colo.App. at 4, 530 P.2d at 985). The sentence containing that quoted language begins with the phrase Unless the circumstances indicate otherwise.... Justice, 35 Colo. App. at 4, 530 P.2d at 985; accord Dorman, slip op. at 2. The court of appeals determined that nothing in the written employment contract commit[ed] either party to a fixed term of employment but then went on to inquire whether the evidence or circumstances established that both parties understood the contract to be for a term of one year. Id. at 4, 530 P.2d at 986. The court referred to the uncontradicted testimony by both parties that a one year term was never considered or intended to arrive at its conclusion that the contract was for an indefinite term and therefore terminable at will at any time by either party. Id. Justice therefore is supportive of the admissibility of extrinsic evidence to determine whether a contract of employment is for a definite term when an annual rate of compensation is specified but the term remains undefined. See also Bauer v. Goldman, 45 Colo. 163, 164, 166-67, 100 P. 435, 435-36 (1909) (in reviewing a contract for ambiguity after trial, this court references a conversation with defendant in Denver in which the terms of the contract were discussed and plaintiff's own testimony in supporting our conclusion of absence of ambiguity); Kansas Pac. Ry. v. Roberson, 3 Colo. 142, 143-44, 146 (1876) (this court reviews contract for ambiguity after trial, but finds no indication of ambiguity [i]n all that took place between the parties and the circumstances under which they acted). The letter agreement, drafted by Petrol Aspen, is fairly susceptible to the interpretation that Petrol Aspen was offering Dorman employment at least through January 1, 1994, based upon the compensation terms outlined in the employment contract and the stock option terms as previously discussed, supra part IV(A). However, Dorman has no obligation to prove a definite term of employment in order to survive this C.R.C.P. 12(b)(5) motion to dismiss, and must show only that the contractual terms are ambiguous. Again, even assuming that these contractual terms may be subject to differing interpretations, the provisions are at minimum ambiguous. Cases decided by other courts support our conclusion that the contractual provisions concerning compensation, coupled with the stock option, make the agreement ambiguous. For example, in Lloyd v. Grynberg , the United States Court of Appeals for the Tenth Circuit applied Colorado law to a dispute concerning an employment contract that provided for a monthly compensation rate and a future share of corporate ownership, and that expressed an understanding that we should be able to get the company going within a two-year period. 464 F.2d 622, 623 n. 1 (10th Cir.1972). The trial court had received oral evidence of the surrounding facts and circumstances of the execution of the contract... to give the jury a basis from which to determine the intention of the parties as to the period of time plaintiff would be employed by the defendant. Id. at 625. The jury returned an award based upon a two year employment term. Id. at 624. On appeal, the Tenth Circuit stated that [i]t may be conceded that the term of the employment is not set out as clearly as it might have been. From a legal standpoint, it lacks only a clarification as to this ambiguity in order to make it a plain, complete and binding contract. The jury, with appropriate instructions from the court, resolved any question as to the term of employment intended by the parties. Id. Similarly, in Garrett v. American Treaty Brokers, Inc., No. 91C3643, 1993 WL 420933, 1993 U.S. Dist. LEXIS 14653 (N.D.Ill. Oct. 15, 1993), the plaintiff employee alleged a breach of a fixed term employment contract based on premature discharge while the defendant employer contended that the contract was terminable at will. The contract was based in part on the employee's request for an annual salary of $87,500, followed by the employer's acceptance with the qualification that the salary would be paid in biweekly installments. Id. at , 1993 U.S. Dist. LEXIS 14653 at -. Both parties moved for summary judgment. Id. at , 1993 U.S. Dist. LEXIS 14653 at . The court found the contract ambiguous as to whether it was terminable at will and denied both motions. Id. at , 1993 U.S. Dist. LEXIS 14655 at . In discussing the effect of the compensation terms, the court stated that [o]ne could interpret [the employer's] reference to the first twelve months of employment as calculating the compensation based on a given salary rather than as specifying a particular yearly salary or guaranteed compensation. Therefore, the Court finds that the language [the employee] refers to creates a genuine issue of material fact which a trier of fact could construe as creating either an employment contract for a fixed term or one that is terminable at will. Id. at , 1993 U.S. Dist. LEXIS 14653 at . Again, in Lee v. Great Empire Broadcasting, Inc., 794 P.2d 1032 (Colo.App.1989), the Colorado Court of Appeals reversed a judgment awarded to a plaintiff employee based on breach of an employment agreement by the defendant employer. The oral contract, memorialized by written notes, reflected a March 27, 1986, starting date and provided that there was to be a guarantee of $4500 per month through September 1986. Id. at 1033. Among other grounds for reversal, the court of appeals held that the trial court erred in refusing to let a jury determine whether employment was for a definite term or at will. Id. at 1035-36. The court held that the contract could be interpreted as providing a guarantee of employment through September, 1986, therefore specifying employment for a definite term, or on the other hand, as merely establishing the employee's rate of compensation as long as the relationship continued. Id. Because the contract was ambiguous, the duration of employment should have been determined as a question of fact by a properly instructed jury. Id. at 1036. Finally, in Rosen v. Gulf Shores, Inc., 610 So.2d 366 (Miss.1992), an employee appealed from a summary judgment in favor of the employer on claims including wrongful discharge. The employment contract provided for an annual salary, allowed the employee to live in a company house of the employer until a date approximately one year from the beginning of employment, and expressed the employer's dependence on the employee to generate a specified amount of new business in a year's time. Id. at 367. The employee was required to move from California to Mississippi to undertake the employment. Id. He was discharged about three months after commencing work. Id. In reversing summary judgment for the employer, the court noted that Mississippi follows the common law rule that a contract of employment for an indefinite amount of time may be terminated at the will of either contracting party. Id. at 368. It also observed that many jurisdictions recognize the principle that a hiring at a specific sum per week, month or year is no more than an indefinite hiring, but stated that the employee was relying upon the annual salary provision in addition to other references to a definite term. Id. at 368-69. [5]