Clinic v. Hamann

• Citation: 33 IER Cases 285,808 N.W.2d 828
• Decision Date: 07 December 2011
• Docket Number: No. A10–0658.,A10–0658.
• Parties: PARK NICOLLET CLINIC, Appellant, v. Arlyn A. HAMANN, M.D., Respondent.
• Court: Supreme Court of Minnesota (US)

33 IER Cases 285

808 N.W.2d 828

PARK NICOLLET CLINIC, Appellant,

v.Arlyn A. HAMANN, M.D., Respondent.

No. A10–0658.

Supreme Court of Minnesota.

Dec. 7, 2011.

Syllabus by the Court

Where the complaint alleges that performance on a contract was due in April 2005, claims based on the failure to perform on that contract accrued in April 2005.

Kerry L. Middleton, Rhiannon C. Beckendorf, Littler Mendelson, P.C., Minneapolis, Minnesota, for appellant.

David P. Jendrzejek, Taylor D. Tarvestad, Moss & Barnett, P.A., Minneapolis, Minnesota, for respondent.

OPINION

GILDEA, Chief Justice.

This case arises from an employment relationship between appellant Park Nicollet Clinic and respondent Dr. Arlyn Hamann. The district court dismissed Hamann's complaint against Park Nicollet, holding that the statute of limitations barred his claims. The court of appeals reversed. Because we conclude that Hamann's claims accrued in April 2005, when Park Nicollet committed the allegedly wrongful conduct at issue, we conclude that the statute of limitations bars Hamann's claims and reverse.

This case comes to us on review from a motion to dismiss, so we rely on Hamann's complaint for a recitation of the facts relevant to this dispute. According to the complaint, Hamann began his employment with Park Nicollet in 1974, as a physician in the Obstetrics and Gynecology Department (“Department”) of Park Nicollet's Saint Louis Park clinic. Hamann's job duties included seeing obstetrics patients at night and on weekends, which involved working before or after normal business hours.¹

In 1995, Park Nicollet adopted a Length of Service Recognition Policy (“Policy”), and disseminated a copy to all Department physicians. The purpose of the Policy was “[t]o reward length of service” and to encourage physicians to “continue to practice with Park Nicollet over a long period of time.” To receive benefits under the Policy, a physician had to: (1) be at least 60 years old; (2) have “[a]t least 15 years of taking OB [night] call;” (3) be working at least two-thirds of a full-time position; and (4) have the approval of physicians in the “call rotation.” Once a physician met the criteria he “would be exempted from night call” and “receive no salary reduction for not taking night call.” After the adoption of the Policy, at least one physician exercised his rights under the Policy, and ceased taking night call with no salary reduction.

In early 2004, Hamann informed the Department Chair that he planned to exercise his rights under the Policy after he turned 60 years old later in 2004. The Department Chair confirmed the existence of the Policy and Hamann's eligibility to receive benefits under the Policy. But because a number of Department physicians were on maternity leave at the time, the Department Chair requested that Hamann postpone exercising his rights under the Policy until April 2005, to prevent short staffing in the interim. Hamann agreed.

In April 2005, Hamann again informed the Department Chair that he wished to exercise his rights under the Policy and be exempt from night call with no salary reduction. The Department Chair told Hamann “the Policy no longer existed and would no longer be honored.” Hamann alleges that the Department Chair made it clear to Hamann in the April 2005 discussion that Hamann “had to continue to take OB night call” and “his salary would be cut if he refused.” Based on his conversation with the Department Chair, Hamann alleges that he was “compelled to continue to take OB night call,” and that he continued to do so rather than face a decrease in salary. And Hamann alleges that continuing to take night call after April 2005, when he was in his early sixties, “adversely affected his health.”

In February 2008, Hamann withdrew from taking night call for health reasons. Because Hamann stopped taking night call, Park Nicollet reduced Hamann's salary. After Park Nicollet reduced his salary, Hamann commenced this action.

In the complaint, Hamann asserts claims for breach of contract and promissory estoppel.² Hamann alleges that Park Nicollet breached the Policy by refusing to allow him “to be exempt from night call without salary reduction.” Hamann claims damages in the form of lost salary, reduction in benefits, and mental anguish and emotional distress. Hamann also alleges that in reliance on the Policy he did not pursue other employment opportunities available to him, but instead “continued to practice with Park Nicollet for over nine years, including bearing the burden of OB night call.” In lieu of answering, Park Nicollet filed a motion to dismiss for failure to state a claim pursuant to Minn. R. Civ. P. 12.02(e), arguing that the statute of limitations had expired.

The district court granted Park Nicollet's motion to dismiss, holding that Hamann's cause of action accrued, and the 2–year statute of limitations began to run, in April 2005 when Park Nicollet informed Hamann it would not honor its obligations under the Policy. Hamann appealed, and the court of appeals reversed. Hamann v. Park Nicollet Clinic, 792 N.W.2d 468 (Minn.App.2010). The court of appeals recognized that “Park Nicollet repudiated [the P]olicy in April 2005.” Id. at 471. But the court concluded that “each pay period during which Park Nicollet failed to satisfy its obligations under the [P]olicy constitutes a separate alleged breach” that gave rise to a new cause of action. Id. Based on its determination that a new cause of action accrued “each time a payment was due but not paid,” the court held that the statute of limitations did not bar Hamann's claims. Id. at 472. We granted Park Nicollet's petition for review.

We review “[t]he construction and application of a statute of limitations, including the law governing the accrual of a cause of action,” de novo. MacRae v. Grp. Health Plan, Inc., 753 N.W.2d 711, 716 (Minn.2008). The procedural posture of this case—review of the grant of a motion to dismiss—also dictates that we apply a de novo review. Bodah v. Lakeville Motor Express, Inc., 663 N.W.2d 550, 553 (Minn.2003) (noting that an appellate court reviews de novo “whether the complaint sets forth a legally sufficient claim for relief”). Finally, in reviewing the decision to dismiss the complaint, we “consider only the facts alleged in the complaint, accepting those facts as true and must construe all reasonable inferences in favor of the nonmoving party.” Id.

I.

The question presented in this case is whether the statute of limitations bars Hamann's breach of contract and promissory estoppel claims. Statutes of limitation are

based to a great extent on the proposition that if one person has a claim against another ... it would be inequitable for him to assert such claim after an unreasonable lapse of time, during which such other has been permitted to rest in the belief that no such claim existed.

Bachertz v. Hayes–Lucas Lumber Co., 201 Minn. 171, 176, 275 N.W. 694, 697 (1937) (citation omitted) (internal quotation marks omitted). Requiring parties to bring claims within the limitations period decreases the likelihood that actions will be brought after “papers may be lost, facts forgotten, or witnesses dead.” Id. at 176, 275 N.W. at 697 (citation omitted) (internal quotation marks omitted).

When addressing a question as to the statute of limitations, we typically first determine which statute of limitations applies to the claims asserted. That determination is unnecessary in this case because the parties agree that the statute of limitations set forth in Minn.Stat. § 541.07(5) (2010) governs each of Hamann's claims. Under this statute, actions “for the recovery of wages” shall be brought within 2 years.³ Minn.Stat. § 541.07(5). We have consistently applied this statute of limitations period whenever “the gravamen of the action is the breach of an employment contract.” See Portlance v. Golden Valley State Bank, 405 N.W.2d 240, 243 (Minn.1987).⁴

With the applicable statute of limitations determined, we turn to the question of when the statute began to run. The statute of limitations begins to run on a claim when “the cause of action accrues.” Minn.Stat. § 541.01 (2010); see Bachertz, 201 Minn. at 176, 275 N.W. at 697. A cause of action accrues when all of the elements of the action have occurred, such that the cause of action could be brought and would survive a motion to dismiss for failure to state a claim. Dalton v. Dow Chem. Co., 280 Minn. 147, 153, 158 N.W.2d 580, 584 (1968). Moreover, “the running of the statute [of limitations] does not depend on the ability to ascertain the exact amount of damages.” Herrmann v. McMenomy & Severson, 590 N.W.2d 641, 643 (Minn.1999) (footnote omitted); see also Bachertz, 201 Minn. at 176, 275 N.W. at 697 (noting that a cause of action for breach of contract accrues at the time of the breach, even if “actual damages resulting therefrom do not occur until afterwards” (citation omitted) (internal quotation marks omitted)).

With these general principles in mind, we turn to the parties' arguments. Hamann argues that his claims did not accrue until February 2008, when Park Nicollet first reduced his salary due to his failure to take night call, and he contends that a new claim accrued with each paycheck Park Nicollet issued thereafter. Park Nicollet contends that Hamann's claims accrued in April 2005, because that is when Hamann attempted to invoke the Policy and learned that the Policy was no longer in existence. We agree with Park Nicollet that Hamann's claims accrued in April 2005.

A.

Based on the allegations in the complaint, we conclude that Hamann's claims for breach of contract and promissory estoppel would have survived a motion to dismiss for failure to state a claim in April 2005. Noske v. Friedberg, 670 N.W.2d 740, 742 (Minn.2003) (“The showing a plaintiff must make in order to survive a motion to dismiss under Minn. R. Civ. P. 12.02(e) is minimal.”). In order to state a claim for breach of...