Opinion ID: 1262081
Heading Depth: 1
Heading Rank: 6

Heading: Breach of Contract and Bad Faith Discharge Claims

Text: The City argues the Court of Appeals erred in reversing summary judgment because Conner failed to produce evidence of the existence of a contract with the City (other than at-will employment) or that the City breached such a contract. We hold the Court of Appeals correctly reversed. Summary judgment is appropriate only if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. E.g., Koester v. Carolina Rental Center, Inc., 313 S.C. 490, 443 S.E.2d 392 (1994); Rule 56(c), SCRCP. In determining whether any triable issues of fact exist for summary judgment purposes, the evidence and all the inferences which can be reasonably drawn from the evidence must be viewed in the light most favorable to the nonmoving party. Id. Moreover, since it is a drastic remedy, summary judgment should be cautiously invoked so that a litigant will not be improperly deprived of trial on disputed factual issues. Baughman v. American Tel. and Tel. Co., 306 S.C. 101, 112, 410 S.E.2d 537, 543 (1991). The City argues there was no contract created by the handbook because: (1) the procedures in the employee handbook did not alter Conner's at-will status, (2) the disclaimers in the handbook were conspicuous and therefore effective, and (3) Conner signed acknowledgments of her at-will status. Additionally, the City contends that even if the handbook did create a contract, it did not breach the contract because it followed the prescribed procedures. The general rule is that termination of an at-will employee normally does not give rise to a cause of action for breach of contract. Hudson v. Zenith Engraving Co., 273 S.C. 766, 259 S.E.2d 812 (1979). However, where the at-will status of the employee is altered by the terms of an employee handbook, an employer's discharge of an employee may give rise to a cause of action for wrongful discharge. Small v. Springs Indus., Inc., 292 S.C. 481, 357 S.E.2d 452 (1987). Because an employee handbook may create a contract, the issue of the existence of an employment contract is proper for a jury when its existence is questioned and the evidence is either conflicting or admits of more than one inference. See id. at 483, 357 S.E.2d at 454; Kumpf v. United Tel. Co. of Carolinas, Inc., 311 S.C. 533, 536, 429 S.E.2d 869, 871 (Ct.App. 1993). The Court in Small stated that [i]t is patently unjust to allow an employer to couch a handbook, bulletin, or other similar material in mandatory terms and then allow him to ignore these very policies as `a gratuitous, nonbinding statement of general policy' whenever it works to his disadvantage. Small, 292 S.C. at 485, 357 S.E.2d at 455. The Small Court instructed that if an employer wishes to issue written policies, but intends to continue at-will employment, the employer must insert a conspicuous disclaimer into the handbook. Id. However, in Fleming v. Borden, 316 S.C. 452, 450 S.E.2d 589 (1994), the Court indicated that whether the disclaimer is conspicuous is generally a question for the jury. Id. at 464, 450 S.E.2d at 596 (`the disclaimer is merely one factor to consider in ascertaining whether the handbook as a whole conveys credible promises that should be enforced.') (quoting Stephen F. Befort, Employee Handbooks and the Legal Effect of Disclaimers, 13 Indus.Rel.L.J. 326, 375-76 (1991-92)). Specifically, the Fleming Court stated that [i]n most instances, summary judgment is inappropriate when the handbook contains both a disclaimer and promises. Id. Relying primarily on Fleming, the Court of Appeals in the instant case found that summary judgment was inappropriate. We agree. While the City argues that its handbook contained disclaimers which were effective as a matter of law and that Conner signed acknowledgments of her at-will status, the fact remains that the handbook outlines numerous procedures concerning progressive discipline, discharge, and subsequent grievance. The language in the handbook is mandatory in nature [4] and therefore a genuine issue of material fact exists as to whether Conner's at-will status was modified by the policies in the handbook. See id. (summary judgment is not appropriate where disclaimers and mandatory promises are both found in handbook). The City also argues that if a contract exists, then as a matter of law, it did not breach the contract because it followed the procedures outlined in the handbook. The Court of Appeals found that because Conner disputes the City's version of the events resulting in her reprimands and subsequent termination, summary judgment was not proper on the issue of whether Conner was fired for cause. Although this is a closer question, we agree with the Court of Appeals that there is a genuine issue of material fact as to whether Conner was wrongfully terminated. The appropriate test on the issue of breach is as follows: If the fact finder finds a contract to terminate only for cause, he must determine whether the employer had a reasonable good faith belief that sufficient cause existed for termination. Prescott v. Farmers Telephone Co-op., Inc., 328 S.C. 379, 393, 491 S.E.2d 698, 705 (Ct.App.1997), rev'd on other grounds, 335 S.C. 330, 516 S.E.2d 923 (1999). [5] We note that the fact finder must not focus on whether the employee actually committed misconduct; instead, the focus must be on whether the employer reasonably determined it had cause to terminate. Id.; see also Small, 292 S.C. at 483-84, 357 S.E.2d at 454. Conner's basic argument is there was no just cause for her termination. Although it appears that the City followed its handbook procedures in effectuating Conner's termination, the grievance committee voted to reinstate Conner; i.e., the committee found no just cause for Conner's firing. Subsequently, the City Council overturned the committee's decision. While the committee and City Council both could have reached their respective conclusions reasonably and in good faith, it nonetheless appears that reasonable minds can differ as to whether just cause existed to support Conner's termination. Thus, there remains the ultimate question of whether the City had a reasonable good faith belief that sufficient cause existed for termination. Id. This is a question that generally should not be resolved on summary judgment, and therefore, the Court of Appeals correctly reversed the trial court's grant of summary judgment in favor of the City. See Baughman v. American Tel. and Tel. Co., supra (summary judgment is a drastic remedy which should be cautiously invoked to ensure a litigant will not be improperly deprived of trial on disputed factual issues).