Burton v. Atomic Workers Federal Credit Union

• Decision Date: 14 December 1990
• Docket Number: No. 17940,17940
• Parties: , 119 Lab.Cas. P 56,688, 6 IER Cases 1708 Lila BURTON, Plaintiff-Respondent, v. ATOMIC WORKERS FEDERAL CREDIT UNION, Defendant-Appellant. Twin Falls, March 1990 Term
• Court: Idaho Supreme Court

Page 518

803 P.2d 518

119 Idaho 17, 119 Lab.Cas. P 56,688, 6 IER Cases 1708

Lila BURTON, Plaintiff-Respondent, v. ATOMIC WORKERS FEDERAL CREDIT UNION, Defendant-Appellant.

No. 17940.

Supreme Court of Idaho,

Twin Falls, March 1990 Term.

Dec. 14, 1990.

Racine, Olson, Nye, Cooper & Budge, Pocatello, for defendant-appellant. William D. Olson, argued.

E. Lee Schlender, Hailey, for plaintiff-respondent.

BAKES, Chief Justice.

This is a wrongful termination of employment case in which the jury awarded damages to a discharged employee, plaintiff-respondent Lila Burton, from her former employer, defendant-appellant Atomic Workers Federal Credit Union (the Credit Union), for (1) breach of an employment contract ($68,000) and (2) breach of an implied covenant of good faith and fair dealing ($40,000).

I

Lila Burton worked for the Credit Union from May 1, 1966, until she was discharged on July 11, 1985. Prior to her discharge, Burton served the last approximately ten years as executive secretary to the Credit Union's manager, Daryl Tanner. On June 11, 1985, one month before her discharge Burton was demoted by Ron Johnson, Tanner's successor, from executive secretary to the manager to receptionist. On July 11, 1985, her employment was terminated.

Burton alleges the July 11, 1985, discharge violated an employment contract, express or implied, with the Credit Union because it was against seniority practices and contrary to representations made to her that she would not be terminated without "just cause" before she reached the age of retirement, age 65. Burton also alleges she was terminated due to bad faith personally directed at her by the chairman of the Credit Union's board of directors, which was also a violation of an implied covenant of good faith and fair dealing.

The Credit Union denied that Burton was anything other than an at-will employee. Furthermore, the Credit Union denied that the chairman had fired Burton because of personal animosity; rather, Burton was validly discharged along with three other employees in a reduction in force caused by an economic recession. The Credit Union also cited Burton's alleged poor work performance. Prior to trial, the district court denied the Credit Union's motion for summary judgment. The trial court also denied the Credit Union's motion for a directed verdict on the evidence presented at trial.

In its special verdict the jury found (1) that an express or implied employment contract existed between the parties which specified the duration of Burton's employment or limited the reasons for which she could be terminated, (2) that the Credit Union was estopped from asserting a contract of at-will employment, (3) that the Credit Union breached the employment contract causing damages of $68,000, and (4) that the Credit Union breached an implied covenant of good faith and fair dealing causing damages of $40,000. Subsequently, this judgment was reduced by the amount of unemployment compensation received by Burton and an amended judgment was entered for a total of $104,952.06. The trial court denied the Credit Union's motions for j.n.o.v. and new trial and awarded costs to Burton.

The Credit Union appeals asserting that the trial court committed several instructional and evidentiary errors in the course of the trial. Further, based upon this Court's recent decision in Metcalf v. Intermountain Gas Co., 116 Idaho 622, 778 P.2d 744 (1989), the appellant alleges that the trial court erroneously submitted to the jury both a tort theory and a contract theory for breach of an implied covenant of good faith and fair dealing. Appellant also raised certain other evidentiary issues. Since we agree that there were several errors committed in this trial, we reverse and remand for further proceedings as hereinafter set forth.

II

Appellant contends that the trial court committed reversible error in its instructions and special verdict by failing to submit the defendant's statute of frauds defense theory to the jury, and by improperly submitting certain of plaintiff's issues and theories which should not have been submitted to the jury. Further, the appellant contends that the trial court committed error by permitting the plaintiff to read an affidavit containing hearsay to the jury, by refusing to permit a defense witness to testify, and by denying the defendant's change of venue claim.

Our analysis of the alleged errors committed at trial begins with a review of plaintiff's claims in this case. Burton alleged at trial that an express or implied contract between the parties existed based on oral representations, the employee personnel manual, and the actual course of conduct of the Credit Union. It was alleged that the employment contract modified Burton's status from an at-will employment, i.e., one which could be terminated without cause at any time, to a contract of employment from which Burton could not be dismissed prior to the age of retirement, age 65, unless she was terminated for just cause. Burton presented testimony consisting of oral representations, the practices and procedures of the Credit Union, and an employment manual prepared by the employer. From this evidence Burton asserts that there was a contract that she could not be terminated until the age of retirement, age 65, without just cause. ¹ The Credit Union allegedly breached this contract by terminating Burton without cause before she reached the age of retirement. Burton alleged that the measure of damages stemming from this breach was $107,417.98 in lost wages which she would have earned between the time she was fired and the time she would have retired at age 65.

The Credit Union disputed each of these allegations and presented evidence at trial that Burton was an at-will employee, and that she was discharged for cause (economic necessity and poor work performance), and that in any event Burton was not damaged to the extent that she alleged. Burton presented evidence at trial tending to contradict the Credit Union's assertion that there was just cause for her dismissal.

In its special verdict regarding the breach of contract claim, the jury found that the Credit Union was estopped to assert that the employment was at-will and that an express or implied employment contract existed between Burton and the Credit Union which specified the duration of Burton's employment or limited the reasons for which she could be terminated. On appeal, the Credit Union asserts, with regard to Burton's breach of contract claim, that the trial court committed various errors in (1) giving the jury instructions and special verdict on the contract, (2) denying its motions for directed verdict and j.n.o.v. based on its statute of frauds defense, (3) failing to give numerous defense instructions, (4) denying its motion for new trial, and (5) ruling on several evidentiary issues and the change of venue issue.

A.

At trial, the Credit Union argued that the claimed oral contract for employment until age 65 violated the statute of frauds, and it requested instructions on the statute of frauds. The trial court rejected these instructions, based upon an erroneous interpretation of the statute. I.C. § 9-505 reads in pertinent part:

9-505. Certain agreements to be in writing. In the following cases the agreement is invalid, unless the same or some note or memorandum thereof, be in writing and subscribed by the party to be charged, or by his agent. Evidence, therefore, of the agreement cannot be received without the writing or secondary evidence of its contents:

1. An agreement that by its terms is not to be performed within a year from the making thereof.

....

The trial court rejected the Credit Union's statute of frauds theory because:

This Court believes that a--if, in fact, an oral contract was reached between the parties here, the statute of frauds does not apply due to the simple fact that an employment contract is not capable of being completed within one year. It wouldn't make any sense to me to have the statute of frauds apply to that because most employment contracts, they're not completed within one year. So I don't believe the statute of frauds, you know, the code section, the intent of the legislature would have been to have that apply to employment contracts, which, by their very nature, would be in excess of one year.....

However, an agreement, which by its terms cannot be performed within one year, is invalid under I.C. § 9-505 unless "some note or memorandum thereof, be in writing and subscribed by the party to be charged...." Id. Here the alleged oral contract to employ Burton until she was age 65 could not by its terms have been performed within one year. Allen v. Moyle, 84 Idaho 18, 23, 367 P.2d 579, 582 (1961) ("The rule is firmly established by the great weight of authority that a contract for personal services which by its terms are to be rendered for a period in excess of one year is within the meaning of the statutory provision requiring contracts not to be performed within a year to be in writing."). Cf. Whitlock v. Haney Seed Co., 110 Idaho 347, 715 P.2d 1017 (Ct.App.1986). Accordingly, the trial court should have instructed the jury on the Credit Union's statute of frauds defense. Garrett Freightlines v. Bannock Paving Co., 112 Idaho 722, 730-731, 735 P.2d 1033, 1041-1042 (1987) ("Litigants have a right to have the jury instructed on every reasonable theory presenting a basis of a claim or relief, or defense thereto, where such theory finds support in the pleadings and evidence."); Messmer v. Ker, 96 Idaho 75, 524 P.2d 536 (1974); Rosenberg v. Toetly, 94 Idaho 413, 489 P.2d 446 (1971); Hodge v. Borden, 91 Idaho 125, 417 P.2d 75 (1966); Domingo v. Phillips, 87 Idaho 55, 390 P.2d 297 (1964); Jones v. Mikesh, 60 Idaho 680, 95 P.2d 575 (1939). The trial court erred in failing to instruct the jury on the Credit Union's theory of the statute of frauds as reflected in Defendant's Requested Instructions 21 and 22. ...