Court Opinion

ID: 9782037
Source: CourtListenerOpinion
Date Created: 2023-08-30 17:52:03.33331+00
Date Added: 2024-06-11T07:34:45.205282
License: Public Domain

RUSSON, Justice,
concurring in part and dissenting in part.
127 I concur with the majority opinion that the contract in question is proprietary in nature and could therefore bind the successor trustees of the hospital. However, I differ with the analysis of the opinion as to how the trial court is to determine the reasonableness of the duration of the contract on remand.
{23 Well-settled canons of contract construction and interpretation dictate that the trial court, when faced with a contract of employment that is silent as to its duration, and thus indefinite in length, but expressly terminable only for just cause, should determine by implication a reasonable term of duration under the cireumstances and then imply that reasonable term into the contract as a matter of law. Onee the trial court determines a reasonable term and implies it into the contract as a matter of law, the trial court then should evaluate the implied duration of the contract to determine if the duration of the contract was reasonable for purposes of deciding whether the successor trustees of the hospital are bound by the contract.
{29 The employment contract between Uintah Basin Medical Center and Dr. Hardy did not include a specific term of duration and therefore was of indefinite duration or perpetual in nature. It did, however, expressly indicate that the contract could be terminated only for just cause. Corbin on Contracts provides guidance on how to treat such a contract and indicates what legal ef-feet such a contract is to be given when it states:
When parties make a contract of employment without specifying the length of service, but indicate that it is not terminable at will, the legal effect is that the parties are bound for a "reasonable time." This is based upon "implication" [i.e., the implication of a reasonable term of duration].
Catherine M.A. McCauliff, 8 Corbin on Contracts § 34.11, at 262 (revised ed.1999) (emphasis added); see also Consol. Theatres, Inc. v. Theatrical Stage Employees Union Local 16, 69 Cal.2d 713, 73 Cal.Rptr. 213, 447 P.2d 325, 335 (1968) (en banc); Ansbacher-Siegle Corp. v. Miller Chem. Co., 137 Neb. 142, 288 N.W. 538, 541 (1939); Tavel v. Olsson, 91 Nev. 359, 535 P.2d 1287, 1288 (1975); Smith v. Knutson, 76 N.D. 375, 36 N.W.2d 323, 328 (1949), overruled on other grounds by Neibauer v. Well, 319 N.W.2d 143 (N.D.1982); Hall v. Hall, 158 Tex. 95, 308 S.W.2d 12, 15 (1957) ("Now it is doubtless true that, in contracts of the general type of the instant one [an employment contract for services], a term of reasonable duration may be implied, with the result that they are not void for lack of an essential provision and are not terminable at will."); Edwards v. Morrison-Knudsen Co., 61 Wash.2d 593, 379 P.2d 735, 738 (1963); 27 Am.Jur.2d Employment Relationship § 38 (1996) (citing Shah v. Am. Synthetic Rubber Corp., 655 S.W.2d 489 (Ky.1983)).1 *1173This is precisely the situation presented in the instant case.
"I 30 The determination of what constitutes a "reasonable time" of duration of the indefinite-length employment contract that is not terminable at will is either "(1) the time that seems reasonable in the light of the circumstances existing when the contract was made [or] (2) the time that seems reasonable in light of the cireumstances as they occur during the course of performance." McCauliff, 8 Corbin on Contracts § 34.11, at 262. The reasonableness of an implied duration term is a question of fact and is determined in reference to the circumstances surrounding the transaction, the situation of the parties, and the subject matter of the contract. See William B. Tanner Co. v. Sparta Tomah-Broad. Co., 716 F.2d 1155, 1159-60 (7th Cir.1983); Metal Assocs., Inc. v. E. Side Metal Spinning & Stamping Corp., 165 F.2d 163, 165 (2d Cir.1947); Consol. Theatres, Inc., 73 Cal.Rptr. 213, 447 P.2d at 335; Brown Loan & Abstract Co. v. Willis, 150 Ga. 122, 102 S.E. 814, 815 (1920); Ansbacher-Siegle Corp., 288 N.W. at 541; Tavel, 535 P.2d at 1288; Borough of W. Caldwell v. Borough of Caldwell, 26 N.J. 9, 138 A.2d 402, 412 (1958); Hall, 308 S.W.2d at 16-17; 17B C.J.S. Contracts § 440 (1999); Margaret N. Kuniffin, 5 Corbin on Contracts § 24.29 (revised ed.1998).
1 31 Corbin on Contracts' suggested treatment of contracts of this nature is based upon and supported by well-settled principles and rules of contract construction and interpretation. In the instant case, the employment contract was silent as to its duration and therefore indefinite or perpetual. Contracts of perpetual duration are generally disfavored by the law. See Paisley v. Lucas, 346 Mo. 827, 143 S.W.2d 262, 270 (1940) ("The courts are prone to hold against the theory that a contract confers a perpetuity of right or imposes a perpetuity of obligation." (quotation omitted)); see also Borough of W. Caldwell, 138 A.2d at 412; Farley v. Salow, 67 Wis.2d 8393, 227 N.W.2d 76, 82 (1975). Interpretations which avoid construing a contract to have an indefinite duration are preferable. See Borough of W. Caldwell, 138 A.2d at 412-13; Farley, 227 NW.2d at 82; Kovachik v. Am. Auto. Ass'n, 5 Wis.2d 188, 92 N.W.2d 254, 256 (1958). Because the law disfavors contracts of perpetual performance or duration, courts will interpret a contract as being of indefinite duration only where the parties to the contract have clearly and unambiguously indicated their intentions to create a contract of indefinite duration through the use of express and positive language to that effect in the contract.2 See William B. *1174Tanmer Co., 716 F.2d at 1159 ("Courts are reluctant to interpret contracts providing for some perpetual or unlimited contractual right unless the contract clearly states that that is the intention of the parties."); Mid-Southern Toyota, Ltd. v. Bug's Imps., Inc., 458 SW .2d 544, 549 (Ky.1970) ("The general rule is that a construction conferring a right in perpetuity will be avoided unless compelled by the unequivocal language of the contract."); Paisley, 148 S.W.2d at 271 ("A contract [for employment] for life will be upheld only where the intention, that the contract's duration is for life, is clearly expressed in unequivocal terms."); Borough of W. Caldwell, 138 A.2d at 412-18 ("[A) construction affirming a [contractual performance] right in perpetuity is to be avoided unless given in clear and peremptory terms," and "[i)t is not often that a promise will properly be interpreted as calling for perpetual performance" (internal quotations omitted)); 17B C.J.S. Contracts § 489 (1999) ("[A] construction conferring a right in perpetuity will be avoided unless compelled by the unequivocal language of the contract [and] a contract which purports to run in perpetuity must be adamantly clear that that is the parties' intent, in order to be enforceable."). Likewise, employment contracts that do not explicitly express the parties' intentions that the contract be for lifetime or permanent employment have been held to be unenforceable or merely terminable at the will of either party. See Chastain v. Kelly-Springfield Tire Co., 788 F.2d 1479, 1482, 1484 (11th Cir.1984); Littell v. Evening Star Newspaper Co., 120 F.2d 36, 37 (D.C.Cir.1941); 30 C.J.S. Employer-Employee Relationship § 28 (1992).
132 Where a contract is of indefinite or perpetual duration because of the lack of an explicit term, the law will imply into the contract a term that is reasonable under the cireumstances. See McCauliff, 8 Corbin on Contracts § 34.11, at 262; see also Metal Assocs., Inc., 165 F.2d at 165; Consol. The-atres, Inc., 73 Cal.Rptr. 218, 447 P.2d at 385; Brown Loan & Abstract Co., 102 S.E. at 815; Anne Arundel County v. Crofton Corp., 286 Md. 666, 410 A.2d 228, 232 (1980); Ansbach er-Siegle Corp., 288 NW. at 541; Tavel, 535 P.2d at 1288; Borough of W. Caldwell, 138 A.2d at 412-18; Erskine v. Chevrolet Motors Co., 185 N.C. 479, 117 SE. 706, 713-14 (1923); Harris v. Oho Oil Co., 57 Ohio St. 118, 48 N.E. 502, 505 (1897), Hall, 308 S.W.2d at 15; Farley, 227 NW.2d at 82; 17A Am.Jur.2d Contracts § 546 (1991); 27 Am. Jur2d Employment Relationship § 38 (1996) (citing Shah, 655 S.W.2d 489); 17B C.J.S. Contracts § 421 (1999); Kuniffin, 5 Cor-bin on Contracts § 24.29.
T33 The majority opinion criticizes this dissent for its lack of citation to Utah precedent in support of determining and implying a reasonable term of duration into the contract. This is empty criticism given that this case presents an issue of first impression in this jurisdiction.
T 34 The majority opinion incorrectly relies on Berube v. Fashion Centre, Ltd., TTl P.2d 1083 (Utah 1989), Brehany v. Nordstrom, Inc., 812 P.2d 49 (Utah 1991), and Johnson v. Morton Thiokol, Inc., 818 P.2d 997 (Utah 1991), as binding Utah authority that purportedly rejects the dissent's approach in this case. While the majority is correct in noting "that nothing in Johnson, Brehany, or Be-rube suggests that a court should sua sponte impose a term on an indefinite-length employment contract that provides for termination for cause," nothing in those decisions *1175would prohibit the implication of a reasonable term into the contract either. Those cases simply do not go as far as articulating a governing rule applicable to the ease at hand and are focused on a separate and discrete issue not present in the instant case.
11 35 Specifically, the majority opinion's assertion that in Berube we noted (and purportedly endorsed) the notion that "courts long ago repudiated a common law rule under which a term was implied when an employment contract did not specify a duration" is not entirely correct and overstates Berube. The central issue in Berube was whether the termination-related provisions of an employer's employee handbook could be implied into the employment contract as implied-in-fact contract terms between the employer and employee such that the original indefinite-length employment contract would escape application of the "at-will" employment doe-trine that provides an indefinite-length employment contract is terminable by either party for good cause, cause, or no cause at all.
136 In the "historical development" portion of Justice Durham's plurality opinion in Berube, to which the majority opinion in this case cites, Justice Durham merely traced the historical development and adoption of the "at-will" employment doctrine in the United States.
187 In any event, that section of Berube does not stand for the proposition offered by the majority opinion. The historical review section of the Berube plurality opinion simply described the nineteenth century English common law rule stating that English courts, when faced with employment contracts of indefinite duration, would imply an arbitrary one-year term into the contract. Berube, 77l P.2d at 1040-41; see also McCauliff, 8 Corbin on Contracts § 34.11, at 257. Berube's historical review merely noted that American courts rejected the arbitrary one-year term implied by English courts in favor of the "at-will" employment doctrine. Berube, 771 P.2d at 1040-41. Berube simply acknowledged the historical rejection of the implication of a term of duration in an "at-will" employment contract. See id. It does not, as the majority opinion claims, reject the notion that a reasonable term could or should be implied into an employment contract that is by its own terms outside the "at-will" employment doctrine because of a just cause provision such that the parties are bound for a "reasonable time." See McCauliff, 8 Corbin on Contracts § 34.11, at 262. In fact, Justice Durham's opinion in Berube notes that the rejection of the English common law implied one-year term and the adoption of the "at-will" employment doctrine in the United States was "adopted by many jurisdictions without careful or thorough examination." Berube, Til P.2d at 1040. Thus, the most Berube can be cited for in this regard is the proposition that American courts uncritically rejected the arbitrary one-year implied term rule used by the English courts, but not the apparently unconsidered, yet supportable, notion that a reasonable term could or should be implied into an indefinite-length employment contract that by its own terms is not terminable at will. See McCauliff, 8 Corbin on Contracts § 34.11, at 262. Therefore, the majority opinion's statement in applying purportedly controlling Utah precedent to this case that "[wle do not apply the long-since rejected rule that previously required the implication of a term" is based on a misinterpretation of Berube's historical review. Regardless, this portion of the plurality Berube opinion, despite being joined by a majority of the court, was at best dicta in that it was historical exposition. Berube and its progeny simply do not prohibit the implication of a reasonable term into the contract at hand and are not binding precedent that govern whether a term of duration should be implied into the contract at issue.
138 Finally; Johnson and Brehaony likewise do not govern the present case or bar the imposition of an implied reasonable term of duration into the contract. Brekhany and Johnson, like Berube, were employee handbook or implied-in-fact contract term cases but go no further than Berube in their holdings and no more state an on-point or governing rule applicable in this case than does Berube.
139 Berube, Brehany, and Johnson all involved indefinite-length employment contracts and claims of wrongful termination. *1176However, these cases merely explore and set rules for determining whether a plaintiff employee's claim for wrongful termination can escape the general "at-will" employment doe-trine. In other words, in those cases, this court was asked to determine whether an implied-in-fact term existed which would remove the contract from the general "at-will" employment doctrine under which a plaintiff employee could not sustain a wrongful termination action. If such an implied-in-fact term was found to exist, for example where an employer's employee handbook specified exclusive reasons for termination of its employees, then those provisions of the employment handbook were treated as implied-in-fact contract terms, removing the employment contract from the "at-will" employment doctrine rules and preventing the employer from terminating the contract for any or no cause.
€{40 The case at hand involves an indefinite-length contract which contained an express "just cause" provision. Because that provision was expressed, the analysis and rules in Berube, Brehany, and Johnson are not applicable; we already know that the express "just cause" provision takes us out of the general "at-will" employment doctrine rule. The issue here is how the trial court is to determine whether the duration of the contract is reasonable and how it is to arrive at such a reasonable duration. This is a question not previously addressed to this court and to which Berube, Brehany, and Johnson are not instructive. The legal propositions and rules of contract construction and interpretation presented in this dissent are more appropriate for use by the trial court in adjudicating this controversy on remand.
T41 Once the trial court determines the reasonable term under the cireumstances and that term is implied by law into the contract, the contract will necessarily be enforceable against the succeeding board under the see-ond prong of the Bair test articulated in the majority opinion because (1) the activity contracted for is proprietary and (2) the term or duration that was implied into the contract is de facto reasonable under the cireumstances.
€ 42 Having determined the reasonable duration of the contract, and therefore its enforceability, the trial court must then determine if the hospital breached the contract when it terminated Dr. Hardy. It could terminate him before the expiration of the implied term only for "just cause." If the trial court determines that the hospital had just cause to terminate the contract with Dr. Hardy, the hospital did not breach the contract and Dr. Hardy is not entitled to damages. If the trial court determines that the hospital did not have just cause to terminate the contract with Dr. Hardy, then the hospital breached the contract and Dr. Hardy is entitled to damages calculated consistent with the reasonable employment duration term implied into the contract. See Bad Wound v. Lakota Cmty. Homes, Inc., 1999 SD 165, ¶ 11, 603 N.W.2d 723, 726.
T 43 Under the majority opinion's analysis, Dr. Hardy's damages, assuming the hospital is Hable to Dr. Hardy for terminating him without just cause, would be speculative, at best, and undeterminable, at worst, absent a finite term of duration in the contract. See Benham v. World Airways, Inc., 432 F.2d 359, 360, 361-62 (9th Cir.1970); Sterling Drug, Inc. v. Oxford, 294 Ark. 239, 743 S.W.2d 380, 386-87 (1988). It is for this reason that the law disfavors contracts of perpetual duration and why, when faced with contracts of indefinite duration, courts will imply a reasonable term of duration. If on remand the perpetual contract is held to be enforceable and the trial court determines that the hospital did not have just cause to terminate the contract, how would Dr. Hardy's damages be calculated? Would Dr. Hardy be entitled to all of his loss of earnings under the indefinite contract? In other words, would he be entitled to compensation under the contract from the date of termination to the date of his death? To the date of his retirement? To the date of his inability to perform his job responsibilities, whenever that might be? Determining a reasonable term for the contract under the cireumstances and implying it into the contract would avoid the possibility of speculative or undeterminable damages.
*1177T44 The majority opinion disagrees that imposition of a definite term is justified and argues that the trial court would face similar "challenges" in determining a reasonable term of duration under the circumstances as it would in determining Dr. Hardy's speculative damages. The approach advocated in this dissent would focus the trial court's attention and efforts on the discrete task of discerning a reasonable term for the contract under the circumstances, thus centering the inquiry on the parties' intentions, the nature of the parties' relationship, and the overall cireumstances surrounding the formation of the contract at issue. See McCauliff, 8 Cor-bin on Contracts § 34.11, at 262. The majority opinion's suggestion for determining Dr. Hardy's potential damages would take the trial court's attention away from the contract itself and the context in which it was formulated and focus on myriad distant and less related factors, all of which remain at least to some extent speculative in nature. I would not send the trial court into the majority opinion's briar patch of thorny factors. In this case,3 it would be far less complicated and less speculative for the trial court to determine Dr. Hardy's potential damages in relation to an implied reasonable term.
[ 45 I would remand to the trial court but with instructions consistent with this concurring opinion.
[ 46 Justice HOWE concurs in Justice RUSSON's concurring and dissenting opinion.

. The majority opinion criticizes this dissent for its citation to applicable, persuasive authority from the highest courts of our kindred states and dismisses that authority as nonbinding. Where this court has not addressed a particular question of law and where authoritative precedent from our own jurisdiction is absent, this court has not been reluctant to seek out the experience, reasoning, and counsel of the decisions of other high courts as persuasive guidance in our deliberations.
The majority opinion also criticizes the dissent for its citation to certain cases involving contracts other than for the provision of employment or personal services. However, all of the cases cited in this paragraph involve contracts for employment or personal services.
This dissent does cite to other nonemployment contract cases later in 132 for the additional proposition that courts generally will imply a term of duration into indefinite-length contracts. The majority opinion maintains that those non-employment cases are inapposite and that this dissent's reliance on them is tenuous because the courts have developed "a unique set of rules for employment and personal services contracts." *1173To the extent that the cases mentioned by the majority opinion as recognizing special and different rules for employment contracts actually refer to special rules or policy considerations for employment contracts, they do so only in reference to the adoption of the general "at-will" employment doctrine and its exceptions. Those cases do not recognize special and different rules with respect to the propriety of implying a reasonable term into an employment contract that is silent as to its duration but dutside of the "at-will" employment doctrine because of the explicit inclusion of an express "just cause" provision, such as the contract at issue here. In this regard, the majority opinion misreads Berube v. Fashion Centre, Ltd., 771 P.2d 1033 (Utah 1989), Consolidated Theatres, Inc., Shah, and Paisley v. Lucas, 346 Mo. 827, 143 S.W.2d 262 (1940). The cases cited herein otherwise stand for the proposition for which they are cited and support the implication of duration for a reasonable period.

. The majority opinion notes that the parties have not argued in their appellate briefs that a term should be implied into the contract and that both parties contend that the contract should be evaluated as an indefinite-length contract limited only by the just cause provision. This incorrectly elevates the parties' arguments in the briefs to the level of an agreement between the parties on this point and treats it as a stipulation. Nothing in the record or the briefs indicates that the parties have stipulated in the manner the majority opinion claims. The parties do not deny that they did not include an explicit provision in the contract expressing their intentions purposely to create an indefinite-length contract. If the parties to a contract intend to create an indefinite-length contract, they must express their intentions to do so through clear, unambiguous, and unequivocal language in the contract. The parties' questionable "concession" in this regard in their briefs on appeal obviously fails to meet this standard and is contrary to the rule of law stated in the cited authority. Both Johnson and Shah may recognize the rights of parties to enter into indefinite-length contracts, but they do not dispute or contradict the requirement that the parties do so using explicit language in their contract.
In any event, under normal circumstances, we will treat particular facts or issues as stipulated to by the parties only where such a stipulation is clear and expressed. Rarely, if ever, do we find *1174a stipulation of this nature by implication. The notion of an implied stipulation is contrary to the very nature of a stipulation as a clear, definite, and certain agreement by the parties as to the truth or validity of a particular fact.
Finally, the majority opinion also admonishes the dissent that "[iJn the absence of adequate briefing, it would be ill-advised for the court to raise [the issue of implying a reasonable term] sua sponte, especially [where] this issue presents a question of first impression." This, however, ignores our settled position that this court has inherent authority to consider arguments and issues that the parties have not raised or recognized if it is necessary to a proper decision and to avoid bad law. See Kaiserman Assocs., Inc. v. Francis Town, 977 P.2d 462, 464 (Utah 1998) ("[Aln overlooked or abandoned argument should not compel an erroneous result [and][wle should not be forced to ignore the law just because the parties have not raised or pursued obvious arguments."). Simply because the parties did not recognize the issue on appeal or because they are in supposed agreement in their argumentative position, erroneous as it may be, on appeal, we will not ignore a genuine legal issue or acquiesce in the parties' error and apply incorrect legal principles.

. The majority opinion also argues that under the dissent's analysis courts will "inevitably and routinely need to determine damages associated with a breach of an indefinite employment contract." This is incorrect. The vast majority of cases involving issues of termination under indefinite-length employment contracts will be governed by the "at-will" employment doctrine. In those instances, the issue of damages would not arise because the employment relationship would be terminable by either party for any reason. The problematic issue of damages arises only in the very rare and unique case, such as the one at hand, where an expressed or implied "just cause" term is a part of the indefinite duration contract, thus removing the case from the application of the usual "at-will" employment doctrine rule.