Bakotich v. Swanson

• Decision Date: 12 June 1998
• Docket Number: No. 21472-5-II,21472-5-II
• Citation: 91 Wn.App. 311,957 P.2d 275
• Parties: James BAKOTICH, a single man, Appellant, v. Carl SWANSON and "Jane Doe" Swanson, husband and wife, and the marital community thereof, and Chuck Swanson and "Jane Doe" Swanson, husband and wife and the marital community thereof, d/b/a/ Swanson Foods, Respondents.
• Court: Washington Court of Appeals

Page 311

91 Wn.App. 311

957 P.2d 275

James BAKOTICH, a single man, Appellant, v. Carl SWANSON and "Jane Doe" Swanson, husband and wife, and the marital community thereof, and Chuck Swanson and "Jane Doe" Swanson, husband and wife and the marital community thereof, d/b/a/ Swanson Foods, Respondents.

No. 21472-5-II.

Court of Appeals of Washington Division 2.

June 12, 1998.

James Emmett Freeley and Joseph Lawrence Coniff, Olympia, for Appellant

Thomas Avery Brown, Brown, Lewis, Janhunen & Spencer, Aberdeen, for Respondents.

HUNT, Judge.

James Bakotich appeals the trial court's exclusion of evidence of his damages resulting from Carl Swanson's breach of an alleged employment contract. We affirm.

FACTS

Carl Swanson and his brother, Chuck Swanson, sold supplies to the Kentucky Fried Chicken (KFC) restaurant in Hoquiam, where James Bakotich worked as a manager. Carl Swanson told Bakotich that he and his brother planned to open a canned food outlet; they discussed Bakotich's coming to work as the manager.

The parties dispute whether they reached an agreement that Bakotich would work for the Swansons at the outlet. But, for purposes of this appeal, the parties assume that there was an oral agreement for "at-will" employment.

In reliance on this oral employment agreement, Bakotich quit his position at KFC and reported to work at the Swansons' outlet store. Carl Swanson informed Bakotich that At trial, the Swansons filed a motion in limine to exclude certain evidence. The trial court granted the motion and excluded evidence of damages, including loss of earnings, future loss of earnings, and loss of pension and benefits. Believing this ruling precluded a meaningful presentation of his case, Bakotich agreed to dismissal of the case.

the outlet plans had fallen through and that there was no job. He offered Bakotich a delivery position, which Bakotich refused. Bakotich filed a breach of contract action, seeking damages for lost income and benefits.

ANALYSIS

A. Standard of Review

We review under the abuse of discretion standard for evidentiary rulings. Jacobs v. Brock, 73 Wash.2d 234, 238, 437 P.2d 920 (1968) ("Relevancy of evidence is a matter within the discretion of the trial court."). ¹

B. "At-Will" Employment

1. Termination

Generally, an employment contract indefinite in duration is terminable at-will by either the employee or the employer. Roberts v. Atlantic Richfield Co., 88 Wash.2d 887, 894, 568 P.2d 764 (1977). The rule governing termination of at-will employees is generally that "employers [can] discharge employees for no cause, good cause or even cause morally wrong without fear of liability." Thompson v. St. Regis Paper Co., 102 Wash.2d 219, 225-26, 685 P.2d 1081

                (1984) (emphasis added). 2  Normally an employer will not be held liable for any damage or lost income resulting from termination of an at-will employee.  Thompson, 102 Wash.2d at 225-26, 685 P.2d 1081
                

2. Damages for Breach

Bakotich argues: (1) that normal employment-at-will standards should not apply here because he never started his employment with the Swansons, and (2) that standard contract law applies instead, namely the doctrines of repudiation and anticipatory breach. Under these principles, an obligee may recover damages if the obligor repudiates the contract prior to performance. Lovric v. Dunatov, 18 Wash.App. 274, 567 P.2d 678 (1977).

Washington law is clear on the parties' rights under an at-will employment contract after employment begins: Generally, an employee cannot recover damages when terminated from at-will employment. Washington cases, however, have not addressed whether these rules apply when the prospective employee has not yet begun employment.

Other jurisdictions are split on the issue. For example, in Heinritz v. Lawrence Univ., 194 Wis.2d 606, 535 N.W.2d 81 (1995), the Wisconsin court held that an employer is not liable for breach of an at-will employment contract for withdrawing an offer of employment before the prospective employee commenced employment. Similarly, in Robert J. Patterson, P.C. v. Leal, 942 S.W.2d 692, 694 (Tex.App.1997), the Texas court determined that there is no distinction between termination of at-will employment before or after starting to work.

Conversely, in Comeaux v. Brown & Williamson Tobacco Co., 915 F.2d 1264, 1 A.L.R. 5th 1087 (9th Cir.1990), the federal court confronted an employer who had breached an agreement with a prospective employee by failing to assign him work and salary after he had quit his current job and moved his residence in reliance upon the employer's offer.

                The court determined that the employer could be held liable for the employee's reliance damages.   The court so held, even though, had actual employment commenced, it would have been governed by an at-will term in the contract.  The court further held that the employee was not entitled to expectancy damages because the employer could have terminated his eventual employment at-will
                

Washington courts have been reluctant to extend contract principles to employment at-will. For example, in Thompson, plaintiff argued that the court should apply to employment at-will contracts the principle that in all contracts there is an implied covenant of good faith. Thompson, 102 Wash.2d at 227, 685 P.2d 1081. But the court rejected the argument, stating:

[W]hile an employer may agree to restrict or limit his right to discharge an employee, to imply such a restriction in that right from the existence of a contractual right, which, by its terms has no restrictions, is internally inconsistent. Such an intrusion into the employment relationship is merely a judicial substitute for collective bargaining which is more appropriately left to the legislative process.

Thompson, 102 Wash.2d at 228, 685 P.2d 1081 (citation omitted).

Yet Washington courts have allowed limited exceptions to the employment-at-will doctrine. For example, the terms of an employee manual can become equivalent to an employment contract, converting an at-will employment relationship to just-cause employment. See Thompson, 102 Wash.2d at 233, 685 P.2d 1081.

3. Exclusion of Evidence of Damages

Even assuming, without deciding, that Bakotich can recover under breach of contract and repudiation principles, the trial court did not abuse its discretion when it excluded evidence of lost wages and benefits damages on this claim.

Bakotich bargained for at-will employment. At most the contract required Swanson to allow Bakotich to begin employment. Thereafter, Swanson could have terminated Bakotich's employment at any time. As Swanson points

                out, an at-will employment contract anticipates that the employer may repudiate at any time without ramification. 3  See Thompson, 102 Wash.2d at 225-[957 P.2d 279] 26, 685 P.2d 1081.   Accordingly, any lost wages or benefits were highly speculative and properly excluded by the trial court. 4
                

C. Conversion to a Just-Cause Employment Contract

Bakotich's next argument lacks merit in that the at-will contract was not converted to a contract for employment terminable for cause when he offered additional consideration--his KFC pension. ⁵ Bakotich argues he agreed to cash-out his pension plan with KFC and to invest it in the Swansons' pension plan. But there is no evidence in the record that such a bilateral agreement existed, other than in Bakotich's mind.

Consideration sufficient to change the character of an at-will employment contract must be "consideration in addition to required services which results in a detriment to the employee and a benefit to the employer. " Roberts, 88 Wash.2d at 895, 568 P.2d 764 (emphasis added). And, "the consideration must be an integral part of the employment agreement...." Malarkey Asphalt Co. v. Wyborney, 62 Wash.App. First, there is no evidence in the record that such pension fund agreement, if it existed, was an integral part of the employment agreement. Bakotich cites Malarkey for support, but there the plaintiff invested $9,900 into the company, loaned the company $31,758, and divested himself of an existing business partnership. Malarkey, 62 Wash.App. at 499, 814 P.2d 1219. The court found that these acts burdened the plaintiff, benefited the company, and were an integral part of the employment relationship. Here, there is nothing in the record to suggest that the Swansons would have refused Bakotich a position if he did not roll-over his KFC pension fund into the Swansons' pension fund. Additionally, the Swansons did not receive any benefit from Bakotich's promised investment.

                495, 506, 814 P.2d 1219, 821 P.2d 1235 (1991) (emphasis added). 6  Such consideration has not been established here
                

Further, Bakotich understood that any agreement was for employment at-will and that the Swansons could terminate him at any time. Therefore, any "agreement" to invest his pension with the Swansons could not have been of the type that Bakotich would have made in exchange for just-cause employment. Bakotich cannot argue after the fact that it was additional consideration which he believed Additionally, an act normally done when changing employers, like giving up a current position or plan, is not sufficient consideration. For example, in Roberts, the court found that standard acts--such as leaving a long-term job, foregoing other job opportunities, moving when transfer was necessary or ordered, and deferred compensation (future pension benefits)--were not additional consideration sufficient to convert at-will employment to just-cause employment. Roberts, 88 Wash.2d at 895-96, 568 P.2d 764. Rolling-over a 401K or pension plan is a normal act when changing employers, but here, such offer neither conferred an extra benefit on the Swansons nor demanded an extra burden from Bakotich.

made his employment terminable only for cause, when in fact he never believed that to be the case.

Accordingly, the trial court did not err by finding the agreement was for at-will employment and by rejecting...