Carlozzi v. Perkins Law Group, No. 2006-CA-002102-MR (Ky. App. 10/5/2007), 2006-CA-002102-MR.

Decision Date05 October 2007
Docket NumberNo. 2006-CA-002102-MR.,2006-CA-002102-MR.
PartiesCarlo CARLOZZI, Appellant v. THE PERKINS LAW GROUP, Appellee.
CourtCourt of Appeals of Kentucky

James M. Morris, Sharon K. Morris, Lexington, Kentucky, Briefs for Appellant.

James M. Morris, Lexington, Kentucky, Oral Argument for Appellant.

Richard P. Johnson, Lexington, Kentucky, Brief and Oral Argument for Appellee.

Before: LAMBERT, TAYLOR, and WINE, Judges.

OPINION

WINE, Judge.

Carlo Carlozzi appeals from a summary judgment entered by the Fayette Circuit Court dismissing his claims against his former employer, Perkins, Johnson & Repasky, d/b/a The Perkins Law Group (PLG). He argues that he properly stated claims against PLG for breach of contract, breach of implied covenant of good faith and fair dealing, malicious prosecution, wrongful use of civil proceedings, abuse of process and fraud. We agree with Carlozzi that the failure of the contract to specify a duration does not preclude a finding that the parties intended to create an indefinite employment relationship. Given the other evidence supporting this conclusion, we agree with Carlozzi that summary judgment on the contract and good-faith claims was not appropriate. We also find that summary judgment was not appropriate on Carlozzi's claim of wrongful use of civil proceedings. However, we conclude that PLG was entitled to summary judgment on Carlozzi's remaining claims. We further find that the trial judge was not required to recuse herself. Hence, we affirm in part, reverse in part, and remand for further proceedings on the remaining claims.

On September 13, 1999, PLG sent a letter containing an offer of employment to Carlozzi as a Client Relations Manager, with an annual salary of $40,000.00, plus a contingent monthly bonus of 1% of the first $75,000.00 of collected fees and 3% of collected fees in excess of $75,000.00. In addition to the salary and bonus, the letter offered health care benefits, paid parking, vacation time, and other benefits and options which would vest upon completion of various periods of employment. However, the letter did not set out any specific duration for the employment.

Carlozzi accepted the offer of employment and relocated from Connecticut to Kentucky. He began work for PLG on December 1, 1999.

PLG terminated Carlozzi's employment on December 17, 2001. At the time of the termination, PLG paid Carlozzi the sum of $5,000.00. PLG claims that this amount was in full settlement of all claims arising from Carlozzi's employment. However, the parties agree that there was no written severance agreement.

In March 2003, Carlozzi filed a claim with the Labor Cabinet against PLG, seeking compensation for a bonus earned before his termination and accrued vacation time. In response to the administrative claim, PLG filed this action against Carlozzi, alleging breach of an oral severance agreement, fraud and unjust enrichment. Carlozzi answered the complaint and asserted counterclaims against PLG for breach of contract, breach of implied covenant of good faith, retaliation and fraud.

Thereafter, the Labor Cabinet dismissed Carlozzi's administrative claims, and PLG moved to dismiss its complaint as moot. On February 8, 2005, the trial court entered an order dismissing PLG's complaint. However, the parties stipulated that this dismissal was with prejudice and would not affect any claims which Carlozzi may have against PLG. Subsequently, Carlozzi filed an amended counterclaim asserting additional causes of action against PLG for malicious prosecution, abuse of process and wrongful use of civil proceedings.

Following a period of discovery, PLG moved for summary judgment on all of Carlozzi's claims. In an opinion and order entered on September 14, 2006, the trial court granted the motion. The trial court concluded that, since the employment offer did not specify any duration for employment, no contract was created and Carlozzi was merely an at-will employee. For this reason, the court dismissed Carlozzi's claims for breach of contract, breach of good faith, and retaliation. The court also found that Carlozzi had failed to produce evidence supporting his claims for malicious prosecution abuse of process and wrongful use of civil proceedings, and fraud. Consequently, the court also dismissed these claims. Carlozzi now appeals.

In reviewing a motion for summary judgment, a trial court must consider all stipulations and admissions on file. CR 56.03. Summary judgment is only proper where the movant shows that the adverse party could not prevail under any circumstances. Steelvest, Inc. v. Scansteel Service Center, Inc., 807 S.W.2d 476, 480 (Ky. 1991), citing Paintsville Hospital Co. v. Rose, 683 S.W.2d 255 (Ky. 1985). "The standard of review on appeal of a summary judgment is whether the trial court correctly found that there were no genuine issues as to any material fact and that the moving party was entitled to judgment as a matter of law." Scifres v. Kraft, 916 S.W.2d 779 (Ky.App. 1996), citing CR 56.03. There is no requirement that the appellate court defer to the trial court since factual findings are not at issue. Goldsmith v. Allied Building Components, Inc., 833 S.W.2d 378, 381 (Ky. 1992).

The primary issue in this case concerns the existence of an enforceable employment contract. Carlozzi argues that the September 19, 1999, letter constitutes an express written contract. While Carlozzi concedes that the contract does not set out a specific duration for the employment, he contends that the provisions providing for vesting of certain rights after specific periods of time indicate that the parties intended a long-term employment. He further argues that the letter's ambiguity as to the intended duration of employment may be supplemented by the oral representations made by PLG's representatives during the employment negotiations.

In the absence of a specific employment contract, all employees are considered "at will." See Firestone Textile Co. Division, Firestone Tire and Rubber Co. v. Meadows, 666 S.W.2d 730 (Ky. 1983). "[O]rdinarily, an employer may discharge an at-will employee for good cause, for no cause, or for a cause that some might view as morally indefensible." Id. at 731. See also Nork v. Fetter Printing Co., 738 S.W.2d 824 (Ky.App. 1987); Grzyb v. Evans, 700 S.W.2d 399 (Ky. 1985); and Shah v. American Synthetic Rubber Corp., 655 S.W.2d 489 (Ky. 1983). Contrary to Carlozzi's argument, the trial court did not find that there was no contract between him and PLG. Rather, the trial court found that the contract between the parties was terminable at the will of either of the parties in accord with the general rule.

In reaching this conclusion, the trial court relied heavily on Gambrel v. United Mine Workers of America, 249 S.W.2d 158 (Ky. 1952). In that case, a discharged miner brought an action alleging breach of an employment contract. The former Court of Appeals concluded that the miner's failure to allege a specific duration of employment was likewise fatal to his claim, stating that

in a suit for breach of contract for labor, "it should be shown that such contract was entered into for a definite period of time; and likewise should show obligation on the part of the employee to render service for a fixed period and reciprocal obligation on the employer's part to retain the employee's services." Clark v. Cincinnati N. O. & T. P. R. Co., 258 Ky. 197, 79 S.W.2d 704, 706. When the term of service is left to the discretion of either party or when not for a definite period "either party has the right to terminate it at any time," and no cause therefor need be alleged or proven.

Id. at 159-60.

Carlozzi notes that other cases have allowed the duration of an employment contract to be proven by extrinsic evidence. In Shah, supra, our Supreme Court held that:

The duration of an employment contract must be determined by the circumstances of each particular case, depending upon the understanding of the parties as ascertained by inference from their written or oral negotiations and agreements, the usage of business, the situation and objectives of the parties, the nature of the employment, and all circumstances surrounding the transaction.

Id. at 490, citing Putnam v. Producers' Live Stock Marketing Association, 256 Ky. 196, 75 S.W.2d 1075, 1076 (1934). Similarly, in Hammond v. Heritage Communications, Inc., 756 S.W.2d 152 (Ky.App. 1988), this Court held that an at-will employment relationship may be modified by oral representations of the employer where there is evidence that the employee relied on those representations.

At first blush, the reasoning under Gambrel and Shah does appear contradictory. But upon closer examination, the cases set out a consistent rule. The Shah Court reiterated the common-law rule that "a contract for `permanent employment,' without consideration in addition to services to be performed by the employee and wages to be paid by the employer, permits either party to terminate the employment at will." Id. at 491, citing Edwards v. Kentucky Utilities Co., 286 Ky. 341, 150 S.W.2d 916 (1941). The Court concluded that a contract for an indefinite term of employment will be found only when the parties clearly state their intention to do so. Id. at 492.

In Shah, the employee sought enforcement of the employer's promises that if he survived the 90-day probationary period, he could be fired only for work-connected cause in accordance with the policies and procedures of the company. After considering the circumstances surrounding the employment relationship, the Shah Court determined that such promises were sufficient to establish a contract for an indefinite term of employment terminable only for cause. Based on this evidence, the Court concluded that the employee had submitted sufficient evidence on his contract claim to survive a motion for summary judgment. Id.

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