Brock v. Mutual Reports, Inc.

• Decision Date: 10 January 1979
• Docket Number: No. 13120.,13120.
• Citation: 397 A.2d 149
• Parties: Paul H. BROCK, Appellant, v. MUTUAL REPORTS, INC., Appellee.
• Court: D.C. Court of Appeals

397 A.2d 149

Paul H. BROCK, Appellant, v. MUTUAL REPORTS, INC., Appellee.

No. 13120.

District of Columbia Court of Appeals.

Argued November 9, 1978.

Decided January 10, 1979.

John Perazich, Washington, D. C., for appellant.

Allen T. Eaton, Washington, D. C., with whom Jeanette Michael, was on brief, for appellee.

Before KERN, YEAGLEY and FERREN, Associate Judges.

FERREN, Associate Judge:

This case presents a central question: whether appellee Mutual Reports, Inc. (Mutual) committed a breach of a one-year employment contract with appellant Paul H. Brock (Brock) when it removed him from his managerial responsibilities as vice president in charge of news operations for the Mutual Black Network and reassigned him, at the same salary, to a regular news shift.

After a non-jury trial, the court held that Brock had failed to prove that Mutual had committed a breach, and then denied Brock's claim for lost salary and other compensation. Brock accordingly appeals the trial court's judgment, asserting that Mutual's conduct amounted to a constructive discharge and that Mutual had insufficient cause to discharge him. Alternatively, Brock argues that even if Mutual's actions were justified, he is entitled to recover fees for his emergency on-the-air newscasts and, further, to obtain a share of the "reciprocal trade allowance" promised in the contract, prorated to the date of his discharge.

Although we conclude that Mutual did constructively discharge Brock, we further conclude that such discharge was justified. We therefore agree with the trial court's conclusion that Mutual's actions did not amount to a breach of the contract with Brock. We also conclude, however, that Brock had a right to a pro rata share of the reciprocal trade allowance (compensation in products rather than cash). We therefore must reverse the judgment insofar as it denies that claim and remand to the trial court for a determination of damages.

I.

On March 18, 1976, Brock entered into a written employment contract with Mutual for one year, April 1, 1976-March 31, 1977, as Vice President of News and Information. His duties were

to direct the News Operations of the Mutual Black Network News (Mutual Reports), including the responsibility for programming, directing, managing and such other duties consistent with the foregoing as may be determined by the President and the Board of Directors of Mutual Reports.

As a result, Brock received responsibility to oversee the day-to-day operation of the network, including determination of the content of the news reports and supervision of eight newscasters and three tape editors. For his services Brock was to receive a $30,000 annual salary, a $5,000 "reciprocal trade allowance" (later determined to be a 1977 Buick), a 1% "cash bonus" on cash receipts in excess of those in 1975, a company automobile, hospitalization benefits, and a four-week vacation.

On or about September 10, 1976, Mutual reassigned Brock to a regular news shift and relieved him of his responsibilities as news director. Mutual claimed it had become clear that Brock was incapable of serving in a managerial position. Although Mutual also advised Brock at the time that the change in duties would not affect his salary, he refused to accept the reassignment and, as a result, considered himself discharged on or about October 14, 1976. He then filed suit claiming lost salary totaling $13,750, as well as the $5,000 reciprocal trade allowance, the reasonable value of the use of an automobile (pursuant to the "company automobile" provision) for the balance of the contract period, unreimbursed expenses totaling $2,600, and any cash bonus to which he might be entitled. Brock also claimed $4,200 for on-the-air newscasts to be compensated pursuant to a union agreement.

On November 15, 1977, the trial court entered judgment for Mutual based upon oral findings and conclusions. Noting that Mutual had not reduced Brock's compensation when it changed his duties, the court found that the reassignment did not constitute a constructive discharge. In reaching its ultimate conclusion that Mutual had not committed a breach of contract, the court also considered the quality of Brock's services to the company and found that they had been unsatisfactory. In addition, the court found that Brock's actions in charging an airplane ticket for a personal friend to the company account was a flagrant violation of his responsibilities, constituting a breach of the contract by Brock himself. Finally, the court concluded that appellant had not borne the burden of proving that he was entitled to his claimed business expenditures, compensation for emergency broadcasts, or damages representing an accrued portion of the reciprocal trade allowance.¹

II.

Brock argues, first, that his demotion to a regular news shift amounted to a constructive discharge. The law is well established: when an employee contracts to fill a particular position any material change in duties or significant reduction in rank will constitute a constructive discharge which, if unjustified, is a breach of contract. Hayes v. Resource Control, Inc., 170 Conn. 102, 105, 365 A.2d 399, 400 (1976); Rudman v. Cowles Communications, Inc., 30 N.Y.2d 1, 10, 330 N.Y.S.2d 33, 40, 280 N.E.2d 867, 872 (1972); see 3A A. Corbin, Contracts § 683 (1960); Annot., 63 A.L.R.3d 539 (1975). The employee has the burden of demonstrating that the employer's actions constituted such a discharge. 63 A.L.R.3d, supra at 544. Brock has satisfied that burden.

The contract clearly stated that Mutual hired Brock in an executive capacity as Vice President of News and Information. Mutual gave him the responsibility for programming, directing, managing, and "other duties consistent with the foregoing." The evidence is undisputed that, in practice, Brock's duties included giving day-to-day guidance to eight newscasters and three tape editors, critiquing the staff, approving the content of news stories, and administering the work of the news office. His reassignment to a regular news shift stripped him of all his managerial functions and left him with no more responsibility than that of the eight newscasters he had previously supervised. Although his salary remained the same, his duties changed substantially. His new position was a significant demotion.

Other courts, dealing with similar situations, have recognized that such demotions constituted constructive discharges.² The fact that the employee receives the same salary is immaterial, see Sigmon v. Goldstone, 116 App.Div. 490, 493, 101 N.Y.S. 984, 986 (1906); 63 A.L.R.3d, supra at 544, because the status associated with the original position may well have been the primary inducement for making the contract. Cooper v. Stronge & Warner Co., 111 Minn. 177, 179, 126 N.W. 541, 541 (1910); Rudman v. Cowles Communications, Inc., supra 30 N.Y.2d at 11, 330 N.Y.S.2d at 41, 280 N.E.2d at 872; 3A A. Corbin, supra § 683. In light of these considerations and the uncontroverted evidence that Brock's duties and rank were materially changed by Mutual, we conclude that the trial court erred in determining that Brock's demotion did not constitute a constructive discharge.

III.

This is not to say, however, that the discharge here was unjustified, amounting to a breach of contract. See Cooper v. Stronge & Warner Co., supra, 111 Minn. at 179, 126 N.W. at 541-42. To the contrary, we conclude that Mutual had a justifiable basis for discharging Brock.

In every employment contract, the employee promises either expressly or by implication that he or she will perform the work in a diligent and reasonably skillful manner. See 3A A. Corbin, supra § 682; 9 S. Williston, Contracts, § 1012C (3d ed. 1967). An employer, therefore, may discharge an employee who fails to perform his or her duties accordingly. See Davies v. Mansbach, 338 S.W.2d 210, 212 (Ky.1960); Brown v. Chris Nelsen & Sons, Inc., 10 Mich.App. 95, 99, 158 N.W.2d 818, 820 (1968); Rudman v. Cowles Communications, Inc., supra at 12, 330 N.Y.S.2d at 41, 280 N.E.2d at 873; Wilson v. McClenny, 262 N.C. 121, 131, 136 S.E.2d 569, 577 (1964); 9 S. Williston, supra § 1012C. This rule is based on the practical consideration that an employer cannot be expected to retain an employee who is inefficient and cannot competently perform the job for which he or she was hired. See Georesearch, Inc. v. Morriss, 193 F.Supp. 163, 178 (W.D.La. 1961), aff'd per curiam, 298 F.2d 442 (5th Cir. 1962); Wilson v. McClenny, supra, 262 N.C. at 131, 136 S.E.2d at 577. Slight or occasional omissions do not constitute incompetent conduct justifying dismissal; thus, the proper test for determining whether an employer can be held liable for terminating an employee's contract is whether the conduct is so inconsistent with the employer-employee relationship that it prejudices a valid business interest of the employer. See La Fontaine v. Developers & Builders, Inc., 261 Iowa 1177, 1187-88, 156 N.W.2d 651, 658 (1968); Brown v. Chris Nelsen & Son, Inc., supra, 10 Mich.App. at 99, 158 N.W.2d at 820; Dixie Glass Co. v. Pollak, 341 S.W.2d 530, 543 (Tex.Civ.App. 1960) aff'd, 347 S.W.2d 596 (Tex.1961). This determination is ordinarily a question of fact, with the burden on the employer to justify the discharge. Davies v. Mansbach, supra at 212; see Lucas v. Whittaker Corp., 470 F.2d 326, 328 (10th Cir. 1972).

In the present case, Mutual introduced considerable evidence that Brock was not satisfactorily performing his job. On August 26, 1976, Mr. Yates, President of Mutual, sent Brock a memorandum advising him that his administrative work flow was "disastrous"; that reports, time sheets, and notification of personnel changes were "not done correctly, completely, and in time"; and that Brock had demonstrated little understanding of "cost control and operating budgets." Evidence of these failings was reiterated at trial. In addition, witnesses for Mutual testified that Brock ignored or took offense...