Court Opinion

ID: 9482260
Source: CourtListenerOpinion
Date Created: 2023-08-05 08:44:55.652886+00
Date Added: 2024-06-11T17:48:52.074964
License: Public Domain

KEARSE, Circuit Judge,
dissenting:
I respectfully dissent from the majority’s conclusion that the contract between plaintiff Jerry M. Arledge and defendant Strat-mar Systems, Inc. (“Stratmar”), was terminable at will as a matter of law. I would vacate the summary judgment and remand for trial because, as I read the agreement and the record, there is an issue of fact as to whether Stratmar agreed to employ Ar-ledge as long as his performance was satisfactory, an agreement that, under New York law, would mean that the contract was not terminable at will.
Though under New York law an employment contract that makes no specific provision for duration is presumed to be terminable at will, Murphy v. American Home Products Corp., 58 N.Y.2d 293, 300-01, 448 N.E.2d 86, 89, 461 N.Y.S.2d 232, 235 (1983), the parties can, by their agreement, limit the employer’s right to so terminate. See, e.g., id. at 305, 448 N.E.2d at 91, 461 N.Y.S.2d at 237; O’Connor v. Eastman Kodak Co., 65 N.Y.2d 724, 725, 481 N.E.2d 549, 550, 492 N.Y.S.2d 9, 10 (1985); Weiner v. McGraw-Hill, Inc., 57 N.Y.2d 458, 463-65, 443 N.E.2d 441, 444-45, 457 N.Y.S.2d 193, 196-97 (1982). Such a limitation may be found in an agreement that the employer will not terminate so long as the employee’s performance is satisfactory. See, e.g., Baker v. Chock Full O’Nuts Corp., 30 A.D.2d 329, 292 N.Y.S.2d 58 (1st Dep’t 1968); Sinclair v. Positype Corp., 237 A.D. 525, 261 N.Y.S. 900 (1st Dep’t 1933).
In Sinclair v. Positype Corp., for example, the court noted that the complaint before it did not allege a contract of employment for a specified time; but it ruled that the plaintiff could amend his pleading to *850allege that the employment was to be for a “term, the duration of which was to extend so long as his services were satisfactory.” 237 A.D. at 528, 261 N.Y.S. at 904. In Baker v. Chock Full O’Nuts Corp., the court considered a three-stage contract for advertising services that was silent as to term. The court held that to the extent that the contract implicitly made movement to the next stage of advertising contingent on satisfactory performance of the prior stage, the contract was not terminable at the will of the client. Upon such an inference,
[i]f the termination ... occurred without there being any showing that the work was unsatisfactory and if, for example, the discharge was merely for the purpose of avoiding further payments to the plaintiff, then we must say that the contract was terminated improperly....
30 A.D.2d at 332, 292 N.Y.S.2d at 62. The court noted that “ ‘[i]t will not always be found easy to determine by interpretation whether a power to terminate is “at will,” or is conditional on honest dissatisfaction with the performance....’” Id. (quoting 3A Corbin on Contracts § 647, at 104). Since the inference that the advertising contract was terminable only for unsatisfactory performance was a permissible one, the interpretation of the contract was an issue for the trier of fact. Thus, the Baker court, reviewing a judgment entered after trial, remanded not for a legal ruling but for additional findings of fact and, if necessary, for additional evidence. See 30 A.D.2d at 333, 292 N.Y.S.2d at 62; see also Leifer v. Scheinman, 179 A.D. 665, 666, 167 N.Y.S. 105, 106 (1st Dep’t 1917) (reinstating jury verdict for plaintiff based on parol evidence as to whether “written contract, being silent as to term, was one of hiring at will, terminable by either party at any time [or whether] the parties agreed to a yearly hiring [that] could only be terminated for proper cause”).
A contract should be interpreted in a way that ascribes meaning, if possible, to all of its terms, see, e.g., United States Naval Institute v. Charter Communications, Inc., 875 F.2d 1044, 1049 (2d Cir.1989); Spaulding v. Benenati, 57 N.Y.2d 418, 425, 442 N.E.2d 1244, 1247, 456 N.Y.S.2d 733, 736 (1982), and where it is susceptible to more than one reasonable interpretation, its construction is a question of fact for trial, and summary judgment is inappropriate, see, e.g., Rothenberg v. Lincoln Farm Camp, Inc., 755 F.2d 1017, 1019 (2d Cir.1985); Amusement Business Underwriters v. American Int’l Group, 66 N.Y.2d 878, 880, 489 N.E.2d 729, 732, 498 N.Y.S.2d 760, 763 (1985) (mem.). In ruling on a motion for summary judgment, of course, the court is required to resolve all ambiguities and to draw all reasonable inferences in favor of the nonmoving party. See, e.g., Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). These principles have not been followed here.
The relationship at issue in the present case was formalized by a January 30, 1989 contract in the form of a letter from Strat-mar to Arledge and signed by both. The first substantive paragraph of that contract stated: “1. Your contractual agreement will go into effect as of February 1, 1989 and is subject to periodical reviews based on performance.” Since the contract nowhere specified its precise duration, it would not be unreasonable to read the performance-review provision, which the parties placed in the paragraph defining the start of the relationship, as indicating the conditions under which the employer could end the relationship. Thus, I think a permissible interpretation of this provision is that Stratmar agreed to continue Arledge’s employment unless his performance proved unsatisfactory.
Further, there is evidentiary support for the proposition that the parties regarded Arledge’s employment not as terminable at will but rather as terminable if his performance were not satisfactory. Thus, the April 12, 1989 memorandum to Arledge from Stratmar’s president terminating the relationship stated in part as follows:
As you recall, I agreed to continue your relationship with Stratmar with the provision that you would either generate contractual agreements aggregating $250,000, or alternately, two national *851participations in the September Shoppers PayDay program by April 15.
Whether reflecting the original agreement or a modification of it, this memorandum plainly indicates that Stratmar had at some point agreed to a limitation on its power to terminate the relationship. Such a limitation contradicts the notion that the relationship was terminable at will. It would surely be permissible to view the Stratmar memorandum as support for the proposition that the January 30, 1989 contract meant that Stratmar agreed not to terminate the relationship so long as Arledge’s performance was satisfactory, and as evidence that at some point Stratmar had sought to give Arledge precise objective information as to what he need do to perform satisfactorily. If a jury, looking at the language of the contract and at this memorandum, found that the contract was not terminable at will, the court could not properly enter a judgment in favor of Stratmar notwithstanding the verdict. See, e.g., Auwood v. Harry Brandt Booking Office, Inc., 850 F.2d 884, 889 (2d Cir.1988) (on motion for judgment notwithstanding the jury’s verdict, court must view the evidence in light most favorable to nonmoving party and draw all reasonable inferences that the jury might have drawn in his favor). Since the same standard applies to a motion for summary judgment, see generally 9 C. Wright & A. Miller, Federal Practice and Procedure § 2524, at 541-42 (1971) (standard for judgment notwithstanding verdict mirrors standard for directed verdict); Anderson v. Liberty Lobby, Inc., 477 U.S. at 250-51, 106 S.Ct. at 2511-12 (standard for directed verdict mirrors standard for summary judgment), summary judgment in favor of Stratmar on the present record was improper.
Arledge might, of course, have had a difficult time proving that his performance was satisfactory, for “[i]n most situations, the employer need not have an objective basis for his dissatisfaction with an employee; the only requirement, and indeed the only relevant point of inquiry by a court, is whether the employer’s dissatisfaction was genuine,” Golden v. Worldvision Enterprises, Inc., 133 A.D.2d 50, 51, 519 N.Y.S.2d 1, 2 (1st Dep’t 1987). Nonetheless, the satisfaction question remained an issue of fact for trial. See, e.g., Hortis v. Madison Golf Club, Inc., 92 A.D.2d 713, 714, 461 N.Y.S.2d 116, 117 (4th Dep’t 1983) (upholding fact findings against the employer).
In sum, the language of the contract here is subject to more than one reasonable interpretation, and there is evidence from Stratmar itself to support the interpretation that it agreed to continue Arledge’s employment unless his performance was unsatisfactory. Summary judgment dismissing the complaint was therefore inappropriate.