Court Opinion

ID: 9534438
Source: CourtListenerOpinion
Date Created: 2023-08-07 04:39:42.853518+00
Date Added: 2024-06-11T13:30:38.290020
License: Public Domain

Justice ERICKSON
dissenting:
We granted certiorari to review the unpublished opinion of the court of appeals in Dorman v. Petrol Aspen, Inc., No. 93CA1714 (Colo.App. Dec. 15, 1994), in which the court of appeals affirmed the summary dismissal of Ben M. Dorman’s complaint against Petrol Aspen, Inc., for failure to state a claim upon which relief could be granted. The majority here reverses that decision and returns this case to the court of appeals with directions to remand to the trial court for further proceedings. In so doing, the majority concludes: (1) that extrinsic evidence is necessarily admissible to determine whether an employment contract is for a definite term when the contract specifies an annual rate of compensation but does not define the term of employment, see maj. op. at 913-914; and (2) that the employment contract between Dor-' man and Petrol Aspen is ambiguous in its terms, see maj. op. at 913. I cannot agree with either conclusion. Rather, I conclude that, to determine whether a contract is ambiguous upon a motion to dismiss, extrinsic evidence should be used for only a limited purpose and is not necessary in this case. I also conclude that the contract at issue here unambiguously established an employment contract which was terminable at the will of either party. Accordingly, I dissent.
I
The majority discusses what evidence the court should consider in determining whether a contract is ambiguous. However, the majority fails to distinguish between the extrin-. sic evidence which is conditionally admissible to aid the court’s determination of whether a contract is ambiguous and the extrinsic evidence which is admissible to assist the fact-finder’s interpretation of the contract once the court has determined that the contract is ambiguous.
The majority cites three cases in support of its proposition that the court should consider extrinsic evidence in determining whether a contract is ambiguous: Bauer v. Goldman, 45 Colo. 163, 164, 166-67, 100 P. 435, 435-36 (1909); Kansas Pac. Ry. v. Roberson, 3 Colo. 142, 143-44, 146 (1876); Justice v. Stanley Aviation Corp., 35 Colo.App. 1, 4, 530 P.2d 984, 985 (1974), cert. denied, No. C621 (Colo. Feb. 3, 1975). This court reviewed each of the first two cases after trial, not, as here, on review of the trial court’s grant of a motion to dismiss. The court of appeals in Justice likewise reviewed that case after trial on the merits.
In Bauer, 45 Colo. 163, 100 P. 435, the contract at issue was evidenced by a series of letters and telegrams. The trial court there allowed the plaintiff to testify as to “a conversation with defendant in Denver in which the terms of the contract were discussed” before “the employment was consummated.” Id. at 164, 100 P. at 435. However, this court held that “this conversation, as testified to by her, in no wise changes the force and effect of the engagement as they appear in the letters and telegram in evidence.” Id. This court further concluded that the trial court should have determined the effect of the contract, rather than submitting the question to the jury. The trial court also admitted the “plaintiffs own testimony” as to trade custom, and this court did not dispute that ruling. Id. at 167, 100 P. at 436. However, at the time Bauer was decided, the doctrine of employment at will was just coming into being, and “American courts generally adopted the English rule that the custom in a particular trade would determine the *918duration of employment.” See Charles G. Bakaly, Jr. & Joel M. Grossman, The Modern Law of Employment Relationships, § 1.5, at 10 (2d ed. 1989). Thus, the admission of plaintiffs testimony as to that custom was perfectly appropriate.
Likewise, in Roberson, 3 Colo. 142, the contract at issue was not evidenced by a single written document but, rather, consisted of various questions and answers contained in correspondence between the parties. Id. at 143-44. This court stated that “no usage or custom was shown respecting the employment ..., and without it a general hiring cannot be regarded as a contract for a year’s service.” Id. at 146.
This court has specifically stated that, “in deciding whether a contract is ambiguous, a court ‘may consider extrinsic evidence bearing upon the meaning of the written terms, such as evidence of local usage and of the circumstances surrounding the making of the contract.’” Cheyenne Mountain Sch., 861 P.2d at 715 (quoting KN Energy, Inc. v. Great Western Sugar Co., 698 P.2d 769, 777 (Colo.) (citations omitted), cert. denied, 472 U.S. 1022, 105 S.Ct. 3489, 87 L.Ed.2d 623 (1985)) (emphasis added). More specifically, “to put the court in the same position as the parties, the circumstances under which the contract was made should always be admissible so far as they tend to show the local meaning of the language of the contract, whether or not that language is ambiguous if judged by the normal or ordinary meaning of the words.” 4 Samuel Williston, A Treatise on the Law of Contracts, § 629 at 918 (1961) (emphasis added); see Cheyenne Mountain Sch., 861 P.2d at 715; Williston, supra, § 601 at 311. In determining whether a contract is ambiguous, the use of extrinsic evidence should be limited to these purposes.
The conditional admission of extrinsic evidence does not convert the question of whether the contract is ambiguous into a question of fact for the jury, see Williston, supra, § 601 at 311, nor is the conditional admission of extrinsic evidence required in every instance. Further, in determining whether a contract is ambiguous, “the court may not consider the parties’ own extrinsic expressions of intent.” Cheyenne Mountain Sch., 861 P.2d at 715 (citation and internal quotation marks omitted) (dictum). To the extent that Justice holds otherwise, 35 Colo. App. at 4, 530 P.2d at 986, it conflicts with Cheyenne Mountain School District and should not be followed by this court.1
Neither party disputes that the employment offer letter, reproduced in Appendix A to the majority opinion, set forth the terms of Dorman’s employment. Neither party contends that the trade custom or surrounding circumstances would vary the ordinary meaning of the contractual terms. Rather, Dorman bases his argument of contractual ambiguity on the terms of the contract, as written, and contends that the court should submit those terms to the jury to determine their force.2 I disagree with Dorman’s argument and conclude that no extrinsic evidence is necessary to construe the contract’s terms.
II
We “must enforce an unambiguous contract in accordance with its terms,” Griffin v. United Bank, 198 Colo. 239, 242, 599 P.2d 866, 868 (1979), and without reference to extrinsic evidence. Fibreglas Fabricators, Inc. v. Kylberg, 799 P.2d 371, 374 (Colo.1990). The construction of unambiguous contractual language is a question of law. Union Rural Elec. Ass’n v. Public Utils. Comm’n, 661 P.2d 247, 251 (Colo.1983). Whether an ambiguity exists is also a question of law. Fibreglas Fabricators, 799 P.2d at 374. This court need not defer to the district court’s construction of unambiguous *919contractual language or to its finding of contractual ambiguity. Id. However, once a contract is adjudged ambiguous, the meaning of the ambiguous term is a question of fact to be determined and reviewed in the same manner and with the same deference as other questions of fact. Union Rural Elec., 661 P.2d at 251 n. 5.
A contractual provision is ambiguous when it is fairly susceptible of multiple interpretations. Fibreglas Fabricators, 799 P.2d at 374. In determining whether a provision is ambiguous, we must construe the language in accordance with its generally accepted meaning and refer to all of the contract’s provisions. Id. We must also consider the subject matter of the contract. Cheyenne Mountain Sch., 861 P.2d at 715.
Ill
Dorman’s contract did not expressly identify a term of employment. Thus, the court should determine whether a term of employment may be unambiguously implied from the .context of the offer letter or whether the letter’s terms are sufficiently ambiguous to require the admission of extrinsic evidence. Dorman here contends that Smith’s letter unambiguously created a contract for term employment or that, alternatively, the letter was ambiguous as to the intended duration of Dorman’s employment with Petrol Aspen because the letter: (1) did not specify a term of employment; (2) stated that “the operation is a long-term proposition;” (3) proposed a definite salary through 1993; (4) offered Dorman a stock purchase option in 1994; and (5) contained a renegotiation clause. I conclude that the letter’s provisions were unambiguous and, upon Dorman’s acceptance, created a contract for employment at will.
Silence in a contract as to a particular matter does not create ambiguity as a matter of law unless that matter naturally falls within the scope of the contract. Cheyenne Mountain Sch. 861 P.2d at 715. Dorman argues that his contract is ambiguous because it does not specify a term of employment and because the duration of employment is a matter naturally within the scope of an employment contract. However, an employee who is hired in Colorado for an indefinite period of time is presumptively an at will employee who may be terminated without cause or notice at any time and without legal recourse. Continental Air Lines, Inc. v. Keenan, 731 P.2d 708, 711 (Colo.1987). In the absence of an express or implied term of employment, the presumption of at will employment determines the nature and terminability of the employment relationship.
The majority states that “the contract implied that the employment relationship was not terminable at will because Petrol Aspen expected Dorman’s long-term participation as an employee.” Maj. op. at 915. However, the letter stated that “excepting unforeseen conditions, ... the operation is a long-term proposition.” (Emphasis added.) This statement was contained in a paragraph which addressed Petrol Aspen’s objectives as an entity but did not mention in any way the relationship between Petrol Aspen and Dor-man. See Appendix A. The statement specifically referred only to the operation of the corporation, not to the proposition of employment, and made no guarantees or promises as to the duration of either the corporation or of Dorman’s employment. Even a contract which envisions “permanent” employment, absent special consideration or an express term of employment, does not establish anything “more than an indefinite, general hiring terminable at the will of either party.” See Justice, 35 Colo.App. at 5, 530 P.2d at 986.3
The compensation provisions of Dorman’s contract are not ambiguous and do not create an employment contract for a definite term. The offer letter suggested a salary of $42,000 per year for the years 1992 and 1993, subject to renegotiation as discussed below. Provision in an employment contract for a set amount of compensation per time period does not simultaneously set the term of employ*920ment at that length of time. Justice, 35 Colo.App. at 3^4, 530 P.2d at 985. Otherwise, an at will employment contract which specified a salary of $7.50 per hour would be converted into a contract for a definite term of one hour. Dorman concedes that, under the terms of the letter, his salary level for 1992 and 1993 was not definite, but was subject to renegotiation “at the time.” The letter set forth a proposal for the amount of compensation Dorman would receive if he remained in the employ of Petrol Aspen for two years. However, the letter proposed only compensation, not duration of employment, and created neither a contract for a definite term nor an ambiguity as to the nature of the employment relationship. Petrol Aspen did not guarantee Dorman a set amount for a period of years, and Dorman should not now be allowed to claim that it did. Cf. Lee v. Great Empire Broadcasting, Inc., 794 P.2d 1032, 1035-36 (Colo.App.1989) (holding that a written “guarantee” of a certain amount for a certain time created an ambiguity as to whether the contract was at will or for a definite term).4
Likewise, contrary to the majority’s conclusion, the contractual provision for Dor-man’s option to purchase stock in January 1994 created neither a contract for a fixed term nor contractual ambiguity. The stock option was contained in a list of seven compensation “suggestions” and constituted a form of deferred compensation. See Commissioner v. LoBue, 351 U.S. 243, 248-49, 76 S.Ct. 800, 803-04, 100 L.Ed. 1142 (1956) (holding that employee received taxable income when he exercised a non-transferable stock option). The stock option would have served as inducement for Dorman, as an at will employee, to remain in Petrol Aspen’s employ, and his continued employment would have constituted adequate consideration for the additional compensation. See Olsen v. Bondurant & Co., 759 P.2d 861, 864 (Colo.App.1988). At most, the existence of the stock option “would give rise to a duty of good faith on the part of [Petrol Aspen] not to terminate the employment or otherwise frustrate the exercise of the options for that purpose or reason.” See Harrison v. Jack Eckerd Corp., 342 F.Supp. 348, 350 (M.D.Fla.), aff'd without opinion, 468 F.2d 951 (5th Cir.1972); see also Haney v. Laub, 312 A.2d 330, 334 (Del.Super.Ct.1973) (agreeing with Harrison and holding that stock options alter the employment relationship where options expressly provide that the options are terminable only upon dismissal for cause).
Although a renegotiation clause may create contractual ambiguity in some circumstances, it does not do so here. Contractual ambiguity may exist where an employment contract provides for renegotiation of salary after “yearly” performance reviews; provides for a “yearly” salary; and envisions “a long term commitment toward each other.” See Williams v. Computer Resources, Inc., 123 Idaho 671, 851 P.2d 967, 969 (1993) (internal quotation marks omitted). However, the renegotiation clause in this case does not create an ambiguity as to the nature of Dorman’s employment. The offer letter “suggested]” annual salary terms while simultaneously *921providing that, beyond Dorman’s initial six months of employment, the parties would “negotiate at the time for salary.”5 Unlike Williams, in this case: (1) the renegotiation clause was not accompanied with assurances of a “long term commitment toward each other” see Williams, 851 P.2d at 969 (emphasis added), but, rather, assured only “that the operation is a long-term proposition,” (emphasis added); and (2) the offer letter did not provide for a specific yearly salary but, rather, merely suggested annual salary terms which would be subject to renegotiation at the beginning of the period in which Dorman would have' received the proposed salary. See-Williams, 851 P.2d at 969.
The alleged ambiguities in the offer letter neither singularly nor collectively create ambiguity in the contract, and the contract provides for at will employment. As such, Dorman should not be allowed to introduce extrinsic evidence to vary the terms of the contract. See Cheyenne Mountain Sch., 861 P.2d at 715.
IV
Today, in Colorado, a general hiring is presumed to be a hiring for employment at will, unless the employee establishes an exception to the terminability of that contract. See Keenan, 731 P.2d at 711-12 (stating that the “presumption of ‘at will’ employment” may be rebutted); Schur v. Storage Tech. Corp., 878 P.2d 51, 53 (Colo.App.1994), cert. denied, No. 94SC185 (Colo. Aug. 8, 1994) (stating that the Keenan presumption is substantive, not merely evidentiary). Dorman argues that, even if his employment contract is terminable at will, both an express and an implied covenant of good faith and fair dealing except his contract from that terminability. Because I conclude that Dorman’s contract is terminable at the will of either party, I also conclude that the majority errs in refusing to consider whether Dorman has established an exception to that terminability-
Accordingly, I respectfully dissent.
VOLLACK , C.J., and KOURLIS, J., join in this dissent.

. Once the court has determined that the contract is ambiguous, the interpretation of the contract becomes a question of fact, and the trial court may admit parol evidence to aid in its interpretation. Cheyenne Mountain Sch., 861 P.2d at 715. However, even then, “[a] court should use parol evidence only when the agreement is so ambiguous that the intent of the parties is not clear.” Id.

. Dorman does argue that a representative of Petrol Aspen made "verbal assurances of fair treatment” which establish the formulation of an implied covenant of good faith and fair dealing. However, parol evidence is admissible only in limited circumstances, see supra note 1, and should not be used to create ambiguity.

. The majority details five contractual provisions which it contends establish Petrol Aspen’s anticipation of Dorman’s "long-term participation as an employee." Maj. op. at 915. Four of the five were to have occurred before January 1992, when Petrol Aspen terminated Dorman's employment. The remaining provision indicated that Dorman would have input into “long range planning.” This provision is inadequate to establish a definite term of employment.

. The majority cites Lloyd v. Grynberg, 464 F.2d 622 (10th Cir.1972) in support of its conclusion that Dorman’s employment contract is ambiguous. Lloyd is inapposite. Lloyd involved an appeal after a judgment from a jury verdict. Id. at 623. In Lloyd, the court held that the contract was ambiguous and then considered parol evidence offered to the jury. Id. at 624. The court noted as important the submission of "appropriate and adequate jury instructions.” Id. However, these instructions are erroneous under current Colorado law because they allowed the jury to determine whether the contract was ambiguous, id. at 625; in Colorado, the determination of ambiguity is a question of law for the court. Fibreglas Fabricators, 799 P.2d at 374.
The majority also cites Rosen v. Gulf Shores, Inc., 610 So.2d 366 (Miss.1992), which is likewise inapposite. In Rosen, the court treated the employer's motion for dismissal as a motion for summary judgment. Id. In reversing the trial court's grant of the motion, the Supreme Court of Mississippi relied, in part, on the doctrine of “additional consideration.” Id. at 369-70. Under that doctrine, a court may look to the employee’s detrimental reliance on a writing to determine whether an enforceable contract has been formed. Id. at 369. In Rosen, the court noted that "a man who is enticed to move 1000 miles on promises of an annual salary, free housing for a year, and a job measured by the amount of sales he can produce in a years time” should have a cause of action. Both Rosen and the doctrine of additional consideration are inapplicable in this case.

. The court of appeals implicitly concluded that the contractual provision for salary negotiation mistakenly provided for negotiation in 1991 by setting forth the contractual salary negotiation clause as follows: “Beyond 1991[sic], we will negotiate at the time for salary." However, Dor-man does not argue scrivener’s error, see Dor-man's Opening Brief at 10, and the court of appeals determination does not bind this court. See Fibreglas Fabricators, 799 P.2d at 374.