Fair v. Red Lion Inn, 95SC753

CourtSupreme Court of Colorado
Citation943 P.2d 431
Docket NumberNo. 95SC753,95SC753
Parties12 IER Cases 1761, 21 Colorado Journal 922 Patricia FAIR, Petitioner, v. RED LION INN, operating as L.P., Respondent.
Decision Date30 June 1997

Page 431

943 P.2d 431
12 IER Cases 1761, 21 Colorado Journal 922
Patricia FAIR, Petitioner,
RED LION INN, operating as L.P., Respondent.
No. 95SC753.
Supreme Court of Colorado,
En Banc.
June 30, 1997.
Rehearing Denied Sept. 15, 1997.

Page 433

Jones, Waters, Bennett, Hessel & Cross, L.L.C., Keith Cross, Colorado Springs, for Petitioner.

Holland & Hart, Elaine H. Turner, Colorado Springs, John M. Husband, Denver, for Respondent.

Arckey & Reha, L.L.C., Thomas J. Arckey, Littleton, Jeffrey Menter, Englewood, for Amicus Curiae Plaintiff Employment Lawyers Association.

Holme Roberts & Owen LLP, John R. Webb, Elizabeth M. Flores, Denver, for Amicus Curiae Colorado Association of Commerce and Industry.

Justice SCOTT delivered the Opinion of the Court.

In Fair v. Red Lion Inn, 920 P.2d 820 (Colo.App.1995), we granted certiorari to address a single question: whether as a matter of law, the refusal of an employee to accept her former employer's unconditional offer of reinstatement, after a breach of contract by the employer, constitutes a failure to mitigate damages on the part of the employee. 1 Because we conclude that a discharged employee has a duty to mitigate damages by accepting an unconditional offer of reinstatement in the absence of special circumstances, we affirm the judgment of the court of appeals.

Page 434



In June 1987, the respondent, Red Lion Inn (Red Lion), a hotel operator, hired petitioner, Patricia Fair (Fair), as a server in its Colorado Springs restaurant, Maxi's Dining Room. When hired, Fair signed the "Red Lion Inns Employment Agreement Condition of Employment" (Employment Agreement). Among other matters, the Employment Agreement provided that Fair's employment with Red Lion was at will, and that she could be discharged with or without cause. At the same time, Red Lion gave Fair a copy of its employee manual.

The employee manual included a section entitled "Employee Relations Philosophy." In that section, the following language appears:

The policies, practices and procedures set forth in this Employees' Manual are guidelines for supervision. They are not intended to confer contractual rights of any kind upon any employee or to create contractual obligations of any kind for the Company. The Company may revise, delete or supplement any policy, practice or procedure in this Employees' Manual at any time in its sole discretion.

Also important here, the employee manual set forth certain policies regarding medical leaves of absence: employees were not eligible for a medical leave of absence until after successfully completing a probationary period and working more than three months with Red Lion and, once eligible, an employee was permitted to request a medical leave of absence for a period not to exceed three months. The manual included the following provision:

During a medical leave of absence, every effort will be made to keep a position available for the employee's return. If it is not possible to keep the position open because of business necessity, preference will be given for a similar position of equal to or lesser pay. Preference will be based upon job openings and qualifications.


Failure to advise the company of availability to return to work, failure to return to work upon doctor's release or continued absence from work beyond the time approved by the company will be deemed a voluntary termination of employment with Red Lion Inns.

On April 14, 1990, Fair was injured in a non-work related traffic accident. As a result of injuries from the accident, Fair applied for and was granted a medical leave. The term of her approved leave of absence was from May 25, 1990, 2 to June 20, 1990. At the time of her leave of absence, Fair's position of employment with Red Lion was that of coffee break attendant in the room service department. Her duties included lifting, moving, and setting up a heavy banquet table, as well as walking back and forth from the table to the bar several times a day while carrying trays and coffee urns to refill the urns with coffee kept behind the bar. The injury she sustained in the accident made it difficult for Fair to perform her duties. In addition, on or about May 31, Fair learned that she was pregnant.

On June 20, 1990, the date her medical leave was to expire, Fair asked Neal Gustafson (Gustafson), the director of Human Resources, if she could bring in her doctor's release on June 22. Gustafson told her that was "not a problem." Fair submitted a partial release dated June 22, 1990, which permitted her to return to work, but only under certain conditions. The partial release limited Fair's work activities to those that did not involve heavy lifting (more than fifty pounds), prolonged standing or sitting, or abnormal postures (bending, kneeling, etc.). When told that the conditions of the partial release were not acceptable, Fair asked to be allowed to submit a full release by June 29, 1990, and she was again told that to do so would not be a problem. Shortly thereafter, Fair submitted a full release. The second release, dated June 27, 1990, stated that Fair

Page 435

was "capable of returning to work with no restrictions applied as of July 2, 1990."

In early July 1990, however, Fair learned that her employment with Red Lion had been terminated. The termination notice dated June 20, 1990, 3 set forth the following explanation for her termination:

Patricia's Medical Leave of Absence expired June 20, 1990. Her doctor did not give her a full release until July 2, 1990. The Red Lion is unfortunately unable to hold her position available past the expiration date of June 20, 1990.

On or about July 10, 1990, Fair asked Gustafson whether she was fired or released and he replied that Red Lion could no longer hold the position open.

Believing she was wrongfully discharged, Fair asked her legal counsel, retained due to the accident, to investigate the circumstances of her termination. After requesting and receiving information concerning the termination, Fair's attorney sent Red Lion a letter dated September 17, 1990, stating Fair's position that she had "complied with the Red Lion's policies regarding medical leaves of absence, but that the Red Lion failed to so comply." Citing Fair's "extreme emotional and financial losses as a result of the hotel's actions," her attorney further stated that the purpose of the letter was to "reiterate the facts, as supported by the written documentation, and to see if there is any possibility of reaching some amicable resolution, short of suit." In a September 20 response, Red Lion, through Gustafson, offered Fair "the opportunity to return to her position in Room Service at the Red Lion Hotel, Colorado Springs." The offer (Reinstatement Offer), by its terms, would be held open until October 3, 1990, and if not accepted, would be considered rejected.

Responding to the Reinstatement Offer, by letter dated October 1, Fair's attorney wrote back:

If all of the monetary damages incurred by Ms. Fair as a result of her wrongful termination could be reimbursed to her, she would be willing to accept a position with the hotel. However, due to the apprehension she feels regarding her security in such a position, she would need to have certain special conditions met:

1. She would return to a position at the front desk for the Monday through Friday, 8:00 a.m. to 3:00 p.m. shift.

2. All her employee benefits must be restored without penalty for their interruption.

3. Certain restrictions must be placed on the Red Lion's termination of employment rights.

4. She must be able to transfer to another Red Lion Hotel with the same contract of employment.

On October 9, 1990, Gustafson sent a letter to Fair's attorney clarifying the terms of the Reinstatement Offer. The letter stated in part:

Please be aware that our offer of reinstatement includes restoration of the appropriate benefits with coverage bridged as Ms. Fair would maintain her original hire date.

We have offered to return Ms. Fair to her former position in Room Service as that is the position she is qualified to fill. Your first request to return in a position for which she is not trained and, in essence does not exist due to the hours and days stipulation you have made, cannot be considered.

As an active Red Lion employee, Ms. Fair would have the rights [sic] to transfer based on company policy just as any other employee would. For scheduling purposes, please have Ms. Fair contact me no later than October 15, 1990 or we will consider she has declined our offer of reinstatement and voluntarily resigned her position.

Neither Fair nor her attorney contacted Gustafson before October 15, nor did they otherwise affirmatively respond to the Reinstatement Offer to further clarify, to accept, or to reject the offer.

Page 436

At trial, Fair testified that she did not accept the Reinstatement Offer because: (1) she believed that she would be terminated again as a form of retaliation; (2) she was concerned about her physical condition due to her pregnancy; and (3) she was uncertain of the meaning of the term "appropriate benefits" in the Reinstatement Offer. Fair did not, however, convey any of her concerns or otherwise discuss the terms of the Reinstatement Offer with her immediate supervisor, or any other person at Red Lion. Instead, by not responding by October 15, Red Lion assumed that Fair "declined" the Reinstatement Offer. Fair did, however, call the insurance company that provided medical benefits for Red Lion employees to ask whether Red Lion had the ability to bridge benefits. An employee of the insurance company told Fair that the determination to bridge benefits did not belong to Red Lion; rather, the insurance company itself made decisions regarding who was covered.

For reasons not reflected in the record, Fair did not share this information with Red Lion. In addition, Fair did not communicate with Red Lion to express any concerns, about her physical...

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