Chai Management, Inc. v. Leibowitz

• Decision Date: 11 January 1982
• Docket Number: No. 510,510
• Citation: 50 Md.App. 504,439 A.2d 34
• Parties: CHAI MANAGEMENT, INC. v. George LEIBOWITZ.
• Court: Court of Special Appeals of Maryland

Page 504

50 Md.App. 504

439 A.2d 34

CHAI MANAGEMENT, INC. v. George LEIBOWITZ.

No. 510.

Court of Special Appeals of Maryland.

Jan. 11, 1982.

Leo Howard Lubow, Baltimore, with whom were Thomas C. Swiss and Freishtat, Schwartz & Sandler, Baltimore, on the brief, for appellant.

Kenneth P. Niman, Baltimore, with whom were Kaplan, Heyman, Greenberg, Engelman & Belgrad, P.A., Baltimore, on the brief, for appellee.

Argued before MOORE, WILNER and COUCH, JJ.

COUCH, Judge.

George Leibowitz, the appellee, was summarily discharged by his employer, Chai Management, Inc., the appellant, and brought suit against the employer claiming that he was entitled to a written 60-day notice of termination, which was not given. He thus claims that he should be paid his wages for that period. The Superior Court for Baltimore City, agreeing with appellee's argument, granted his motion for a directed verdict and awarded him $3,495.89. It is from the resulting judgment entered in appellee's favor that this appeal is taken, wherein a narrow question is presented:

Whether an employer who fires an employee for cause (upon a material breach of contract) must be required to pay the employee for the notice period designated by the employment contract?

The Facts

The facts pertinent to this appeal are gleaned from the parties' agreed Statement of Facts. ¹ In January, 1978, the appellee, a licensed nursing administrator, entered into an employment contract with Chai Management, Inc., a company that contracts to provide housekeeping and dietary services to nursing homes. In pertinent part the employment contract provided:

"I, the undersigned accept the appointment as a Licensed Nursing Administrator of Chai Management, Inc. to be effective this date and to continue until terminated. This contract can be terminated by either party with a written 60-day notice."

The appellee was thereafter appointed as administrator of the Federal Hill Nursing Home and had the responsibility for assuring that all services were properly performed and for the resolution of all housekeeping emergencies that arose at the facility.

Sonya Gershowitz, the owner and president of appellant corporation, testified at trial that in June of 1978, near the end of the month, she learned that the facility was out of toilet tissue. She then instructed the appellee to secure some and told him that "he was under no circumstances to leave the facility until there was toilet paper there." Contradicting his employer's testimony, the employee testified that she merely told him that "you had better get some toilet paper," and that based on past experience he believed that only the storeroom was out of toilet paper, not that the whole facility was out. He stated that he left the nursing home, intending to call the purchasing agent the following morning to secure an afternoon delivery, and went to the Downtown Racquet Club.

When the facility was that day visited by members of the Health Department, the lack of toilet paper was discovered and Ms. Gershowitz herself secured a supply thereof for the nursing home. The following day appellee was fired "because of his gross negligence, insubordination and his breach of contract." Appellee demanded payment for the balance of the 60-day notice period; this was refused by appellant and suit ensued.

Because this appeal is from the trial court's direction of a verdict in the employee's favor, "the evidence and all logical inferences deducible therefrom must be considered in the light most favorable to the (non-moving party's) cause of action." Campbell v. Patton, 227 Md. 125, 134, 175 A.2d 761, 766 (1961). For the purposes of this appeal, we must accept as true the employer's evidence that the employee wilfully disobeyed his employer's explicit command to obtain immediately more toilet paper.

The Contentions

In essence, the employer argues that the employee breached the contract and thus forfeited any right he had to the 60-day termination notice or cash equivalent. The employee contends that, under the clear language of the contract, he was entitled to notice of termination or to be paid for that period. In support of his argument the employee relies primarily on Van Horn Drug v. Noland, Okla., 323 P.2d 366 (1958), and Leick v. Missouri Plating Co., 240 Mo.App. 565, 211 S.W.2d 77 (1948). The parties appear to agree, and our own research confirms, that there is no Maryland authority squarely on point.

In our view, neither of these cases is dispositive of the narrow issue here. Both involve factual situations where the employee did not breach the contract and the employer failed to give the proper notice. In Leick, the employment contract was for a five year term but provided that it may be "cancelled by either party upon 90 days written notice, during which time said agreement shall remain in full force and effect." 211 S.W.2d at 79. The employer there, charging that the employee "did not perform his duties, but conducted himself in an unsatisfactory manner," id., fired the employee without regard to the notice provision. The employee sued to recover, inter alia, wages due him for the 90-day notice period. The jury heard the evidence and found for the employee. The employer then appealed the denial of its motion for a directed verdict. It thus asked the appellate court to find the termination justified as a matter of law. The jury had clearly been presented with a factual question of whether the employee had materially breached the contract. By finding for the employee, it must have answered that question in the negative. In reaching its decision, we assume that the appellate court viewed the evidence and all reasonable inferences deducible therefrom in the light most favorable to the non-moving party, the employee, and concluded that the employee had not breached the contract. It held that when there is no material breach, only a subjective dissatisfaction of one party, the notice provisions of the contract must be fulfilled: "mere dissatisfaction with plaintiff's services did not alter the cancellation provision .... There being no showing that further performance of the contract was impossible by reason of death, insanity, illness, or other such happening, the cancellation clause requires strict compliance." 211 S.W.2d at 80. Thus, Leick involved a situation where the employee did not materially breach the contract and the employer fired him without giving him the notice required by the contract. In the case sub judice, we must accept as true the reasonable inference that the employee materially breached the contract by refusing to obey the employer's reasonable instruction to obtain toilet paper. The facts here are different than in Leick. Here, the case was not ripe for a directed verdict and the jury must determine whether the employee has materially breached the contract.

Van Horn Drug v. Noland, Okla., 323 P.2d 366 (1958), relied, in part, on Leick. The employment contract in Van Horn provided for the termination of the contract by either party at any time "with or without just cause," by giving 30 days notice. 323 P.2d at 369. The employer argued that it fired the employee because of its "dissatisfaction with (the employee's) services by reason of his conduct, disloyalty, negligence, and inefficient management of the business." Id. at 368. The employee denied these allegations and contended the real reason was so that the employer could "effect a lucrative lease on its premises to a third party." Id. The court instructed the jury that it

"should return a verdict for plaintiff (employee) if it found plaintiff had complied substantially with the terms of the contract, and that the defendant (employer) failed to give the thirty days notice, and further instructed that if the jury did not so find, but found that defendant was in good faith dissatisfied with plaintiff's services, then their verdict should be for defendant." Id. at 370.

The jury apparently believed the employee because it found in his favor. The appellant employer argued on appeal that the trial court erred in not granting its motion for a directed verdict. The court held that the motion for a directed verdict was properly denied because "under the facts and circumstances shown by the record, the contract of employment could not be terminated by the (employer) without giving the thirty days written notice ...." Id. at 370. I.e., if the jury believed the employee, then it would have found that he had not breached the contract and was thus entitled to hold the employer to the provisions of the contract. Here again the court was faced with a non-breaching employee and an employer who had failed to perform his contractual obligations regarding notice.

Thus, neither Leick nor Van Horn contemplated the situation which exists in the present case. Here, because we must accept as true the inference that the employee had breached the contract, we are faced with a situation where a breaching employee is subsequently seeking the benefit of one of the provisions of the contract. It is as if the employee has breached the provision that requires him to go to work and then sues under the provision which specifies his salary. Once an employee has breached the contract, he cannot subsequently force the employer to perform except in unusual circumstances, e.g., if the employee has a vested right in commissions which accrue at a date subsequent to his breach. "There must be compliance with a provision in a contract of employment ... for a stipulated notice of the termination of the employment, and a discharge or abandonment without the required notice is unlawful except where valid grounds authorizing the termination of the employment exist.... A party claiming the benefit of a notice under the contract of employment must show compliance on his part with the terms of the contract." 56 C.J.S. Master & Servant § 32 (c) (emphasis added) (footnotes omitted). "Accordingly, an...