Court Opinion

ID: 9769503
Source: CourtListenerOpinion
Date Created: 2023-08-29 14:52:54.1719+00
Date Added: 2024-06-11T07:31:04.800838
License: Public Domain

GREEN, Justice,
dissenting.
I disagree with the majority’s holding that an employment contract for one year was established through evidence that Rheem agreed to pay Saucedo a “base salary of $36,000 annually.” I therefore dissent to that portion of the opinion and to the judgment that is affected by it.
I am, however, somewhat uneasy in my disagreement because the majority opinion is grounded on long-standing legal precedent. I am aware of the so-called English Rule eases relied on by the majority which hold that when an employee is hired at a stated sum per week, month, or year, the employment is for the period stated. See Winograd v. Willis, 789 S.W.2d 307, 310 (Tex.App.— Houston [14th Dist.] 1990, writ denied). But *127for the reasons given below, I cannot agree that the English Rule is a legal principle that we should continue to follow.
The source of my disagreement with the English Rule is the existence of the presumption of at-will employment in this State, which presumption is only overcome by express agreement of the parties. See Federal Express Corp. v. Dutschmann, 846 S.W.2d 282, 283 (Tex.1993) (“The long-standing rule in Texas provides for employment at will, terminable any time by either party, with or without cause, absent an express agreement to the contrary.”) (emphasis added); American Lantern Co. v. Hamilton, No. 04-95-00517-CV, slip op. at 4, - S.W.2d -, -, 1997 WL 667167 (Tex.App.—San Antonio, Oct. 19, 1997, n.w.h.). A discharged employee who asserts that the parties have contractually agreed to limit the employer’s right to terminate the employee has the burden of proving an express agreement or written representation to that effect. Id. The presumption of at-will employment may only be rebutted by an agreement that directly limits, in a meaningful and special way, the employer’s right to terminate at will. Id. at 5, at-.
In determining whether Saucedo met his burden of proving the parties entered into an agreement to change his at-will status, we apply the usual rules of contract formation. A binding contract consists of an offer, an acceptance, an exchange of consideration, a meeting of the minds, and consent to the terms of the agreement. See id. at 7, at -. The intent of the parties is an objective determination based on the acts and communications between the parties and the surrounding circumstances. Id. The terms of the contract must be sufficiently certain so that there is no doubt what the parties intended. Id.
Saucedo points to the memorandum confirming his employment as containing an express agreement that limits, in a meaningful and special way, Rheem’s right to terminate at will. The memorandum lists several “highlights” of the offer of employment and concludes by noting that Saucedo has accepted the offer. One of the listed highlights is “Base salary of $36,000 annually.” Saucedo construes this provision as an agreement for a one-year term of employment renewable at the end of each year. See Winograd, 789 S.W.2d at 810.
Winograd supports Saucedo’s argument. It held that “a hiring based on an agreement of an annual salary limits in a ‘meaningful and special way’ the employer’s prerogative to discharge the employee during the dictated period of employment.” Id.; see Molnar v. Engels, 705 S.W.2d 224, 225 (Tex.App.—San Antonio 1985, writ ref'd n.r.e.). Significantly, however, neither Winograd nor Molnaraddress the question of whether by simply stating a salary rate the parties intended for a term of employment to be created.
The supreme court has not directly addressed this question either. But it has instead continued to state that the at-will presumption in Texas may only be overcome by the express agreement of the parties. See Goodyear Tire and Rubber Co. v. Portillo, 879 S.W.2d 47, 51 (Tex.1994) (“The at-will doctrine only applies absent a specific contractual provision to the contrary.”) (emphasis in original); Dutschmann, 846 S.W.2d at 283. Thus, there is an apparent inconsistency between the English Rule’s implied agreement to limit an employer’s light to terminate and the supreme court’s insistence that such an agreement be specific. If we follow the supreme court rule that the at-will presumption is only overcome by an employment contract that specifically and expressly indicates the mutual understanding and intent of the parties that the employer is giving up its right to terminate the employee at-will, then the mere expression of an employee’s compensation as a rate of pay is insufficient to alter the at-will status of the employee. That is, no term of employment is thus created.
Nothing in the memorandum of employment indicates that the language “Base salary of $36,000 annually” was intended by Rheem to evince an agreement that Saucedo was to have a one-year term of employment. At best, the language is equivocal and fails to satisfy Saucedo’s burden to overcome the at-will presumption. Moreover, the remainder of the memorandum belies any such intent on Rheem’s part. Other “highlights” listed in the memorandum include:
*128Additional monthly compensation for the extended [M]exiean work day and border crossing time. This will be paid in a separate cheek and calculates at 26.8% of your base pay.
Compensation for approved overtime at a straight hourly rate.
Monthly payment of $45.00 to help defray border bridge toll.
The memorandum thus sets out the different types of remuneration Saucedo would receive, with each form of remuneration classified by a time period. Construed in the context of these provisions, the language “Base salary of $36,000 annually” expresses a pay rate, not a term of employment. Cf. Travel Masters, Inc. v. Star Tours, Inc., 827 S.W.2d 830, 832-33 n. 2 (Tex.1992) (noting the mere fact that employee was paid on a monthly basis, without any other evidence, failed to establish that she was not an employee-at-will).
The English Rule cases ignore the realities of modern day hiring practices. Rarely, if ever, does an employer intend to hire an employee for a one-year term simply by offering a salary expressed as an annual rate of pay. The use of annual salary rates by employers is simply a means of quantifying on an annual basis the daily, weekly or monthly paychecks the employee will actually receive. The incongruity of the Rule is easily demonstrated. For example, if the phrase “annual salary” expresses an intent for a one-year term of employment, then it must follow that the phrase also means the employee has to work a full year before receiving a paycheck. Yet few would accept employment on those conditions. Moreover, the worst effects of the Rule can be avoided merely by expressing salary in terms of daily or weekly pay rates. Whatever the original reason for the English Rule, I believe it has outlived its purpose and should be abolished.
In summary, Rheem’s memorandum of employment fails to express the mutual intention of the parties that Saucedo was to be hired for a one-year term of employment. Consequently, the at-will presumption prevails. For this reason, I would overrule Sau-cedo’s single point of error in its entirety and would affirm the judgment of the trial court.
ON APPELLEE’S MOTION FOR REHEARING
In our opinion on original submission, we sustained Saucedo’s point of error number one as it related to his breach of contract claim. We held, based upon long-standing authority, that the memorandum of the employment agreement between Rheem and Saucedo, which provided for an annual salary, limited in a meaningful and special way the employer’s prerogative to discharge the employee during the dictated period of employment.
Within the same week as we issued our opinion, the Texas Supreme Court issued its opinion in the case of Montgomery County Hosp. Dist. v. Brown, 965 S.W.2d 501 (1998). That case involved an oral promise to an employee that she would be able to keep her job as long as she was doing her job and that she would not be fired unless there was good reason or good cause. The Court of Appeals had reversed a summary judgment that the trial court granted in favor of the employer, holding that the employer’s promise created a fact issue. The Texas Supreme Court, in reversing the judgment of the Court of Appeals, held that for a contract of employment to exist that would vary the status of employment at will, the employer must unequivocally indicate a definite intent to be bound not to terminate the employee except under clearly specified circumstances. 965 S.W.2d at 502-03. It held that the employer’s general comments that an employee will not be discharged as long as his or her work is satisfactory do not in themselves manifest such an intent. Id. It stated that, “An employee who has no formal agreement with his employer cannot construct one out of indefinite comments, encouragements, or assurances.” Id. We believe that the promise made by the employer in Montgomery County Hospital District is more definite regarding the terms of employment than the representation in this case of what Saucedo’s annual salary was to be. Consequently, we grant Rheem’s motion for rehearing, overrule Saucedo’s point of error number one *129and Saueedo’s motion for rehearing, and affirm the judgment of the trial court.