Farnum v. Brattleboro Retreat, Inc., No. 94-102

• Docket Nº: No. 94-102
• Citation: 671 A.2d 1249, 164 Vt. 488
• Case Date: November 22, 1995
• Court: United States State Supreme Court of Vermont

Page 1249

671 A.2d 1249 164 Vt. 488, 131 Lab.Cas. P 58,047,
11 IER Cases 713 Richard R. FARNUM, Jr.
v.
BRATTLEBORO RETREAT, INC. No. 94-102. Supreme Court of Vermont. Nov. 22, 1995.
Motion for Reargument Denied
Dec. 22, 1995.

Page 1251

[164 Vt. 489] On Appeal from Windham Superior Court; Richard W. Norton, Judge.

[164 Vt. 490] Herbert G. Ogden, Jr., of Harlow Liccardi & Crawford, P.C., Rutland, for plaintiff-appellee.

David A. Gibson, Brattleboro, June K. Mills, Guilford (on the brief) and Richard T.

Page 1252

Cassidy of Hoff, Curtis, Pacht, Cassidy and Frame, P.C., Burlington, for defendant-appellant.

Before ALLEN, C.J., DOOLEY, MORSE and JOHNSON, JJ., and SKOGLUND, District Judge, Specially Assigned.

ALLEN, Chief Justice.

Defendant Brattleboro Retreat, Inc. appeals a jury verdict awarding plaintiff Richard Farnum, Jr. damages for wrongful discharge, intentional infliction of emotional distress, and quantum meruit. The Retreat argues that (1) as a matter of law, the Retreat's employee handbooks did not create an implied employment contract obliging the Retreat either to follow certain progressive disciplinary steps or to fire plaintiff only for serious misconduct; (2) the court erred in permitting the jury to substitute its judgment for that of the Retreat as to whether plaintiff had committed serious misconduct; (3) there was insufficient evidence to support the jury's determination that plaintiff was not fired for cause; (4) as a matter of law, plaintiff failed to show that the Retreat's conduct in firing him was extreme and outrageous; (5) the jury failed to follow the court's instructions regarding plaintiff's quantum meruit claim; (6) the verdict should be reversed because of juror misconduct; and (7) the trial court erred in awarding interest on the damages from the date of the filing of plaintiff's complaint. We reverse the jury award for intentional infliction of emotional distress; in all other respects, we affirm the verdict.

I.

Plaintiff began part-time work at the Retreat in 1972 when he was seventeen years old. In 1980, he transferred from the engineering department to the boiler room to become Lead Power Technician, a position he held until he was discharged in 1988. Sometime in 1984, at the suggestion of his supervisor, plaintiff bought a small dump truck, which he leased to the Retreat for various jobs. Over the ensuing years, this sideline became a lucrative business for plaintiff, involving an ever-growing number of trucks and other equipment. While plaintiff continued to receive a salary at the Retreat and to obtain private jobs involving his trucking company, the Retreat paid him over one-half million dollars between 1984 and 1988 for the use and rental of his equipment.

In October 1987, an upper-level manager at the Retreat, Richard Sarle, observed plaintiff supervising a Retreat employee, who was [164 Vt. 491] operating Retreat equipment to dig a foundation for the new home of the Retreat's Chief Executive Officer (CEO), Dr. William Beach, Jr. Sarle immediately called plaintiff's direct supervisor, Ralph Pecorrelli, who then went to the work-site and told plaintiff and the other Retreat employee to cease what they were doing. Shortly after the incident, Sarle sent plaintiff the following memorandum:

On Tuesday I was very disappointed to observe a hospital employee and hospital bucket loader being utilized on Upper Dummerston Road to dig a portion of the foundation hole for Dr. Beach's new home.

....

It is very important that employees know that there is a separation between hospital projects and private personal projects.

I informed Ralph of this problem and he has assured me that you were informed to stop and use your own equipment and own employee.

Such confusion cannot continue as it should be perfectly clear that Retreat employees are not to do private work while being paid by the Retreat. If this continues it would be grounds for disciplinary action.

The next day, plaintiff wrote Sarle a letter stating that the Retreat employee was on his lunch hour and that plaintiff had never charged the Retreat for its use of his bucket loader, which at the time of the incident was being operated at the Retreat gravel pit. Sarle then checked the Retreat records and noted that plaintiff had billed the Retreat for a full day's use of the equipment he had seen at the site of Dr. Beach's new home. Confronted with this information, plaintiff's wife wrote Sarle a letter stating that she had erred in billing the Retreat rather than Dr.

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Beach; accordingly, she refunded $575 to the Retreat.

In November 1987, Sarle wrote a memorandum to Dr. Beach detailing the above facts and recommending that plaintiff be placed on probation for six to nine months, and that the Retreat terminate its relationship with plaintiff's trucking company. As Sarle testified at trial, Dr. Beach decided not to follow through on Sarle's recommendation. The following year, Dr. Beach's ties to the Retreat were severed, and Sarle took over as the Retreat's CEO in August 1988.

[164 Vt. 492] In February 1988, a new employee, Frank Johnson, was hired to work directly under plaintiff at the Retreat. According to his trial testimony, Johnson became very uncomfortable working for plaintiff because, on a number of occasions, plaintiff had Johnson do plaintiff's private work on Retreat time. Johnson eventually reported these incidents, and in November 1988, three months after Sarle took over as CEO, plaintiff was fired for misuse of Retreat resources.

In April 1991, plaintiff sued the Retreat, claiming damages for wrongful discharge, intentional infliction of emotional distress, and quantum meruit for the loan of a tank truck. Following a six-day trial, the jury awarded plaintiff $90,000 on the wrongful discharge claim, $50,000 on the intentional-infliction-of-emotional-distress claim, and $5850 on the quantum meruit claim. Defendant now appeals the judgment order entered upon the jury's verdict and the court's refusal to grant his motions for judgment notwithstanding the verdict and for new trial.

II.

The Retreat first challenges the jury's award on plaintiff's wrongful discharge claim. In response to the court's special interrogatories, the jury found that (1) an employment contract arose between plaintiff and the Retreat; (2) the employment was on an at-will basis; (3) the employment was modified so that the Retreat was not permitted to discharge plaintiff without good cause; (4) the Retreat did not fire plaintiff for good cause; and (5) as a result of his termination, plaintiff suffered damages in the amount of $90,000.

A.

The Retreat argues that the court erred in permitting the jury to find that the Retreat's handbook provisions, which included disclaimers in the two most recent handbooks, created an employment contract that required the Retreat either to fire plaintiff only for serious misconduct or to issue a series of warnings before firing him for lesser misconduct or for poor performance.

Three handbooks were admitted into evidence at trial. Under the heading, "Performance Problems," the 1982 handbook states as follows:

If after a reasonable time your performance does not improve, or if you have violated a Retreat rule or regulation, in most cases you are given a verbal warning. Continuing [164 Vt. 493] failure to improve, or subsequent violations, result in written warnings. Three written warnings are considered cause for dismissal. Cases of serious misconduct may call for immediate action, including the possibility of termination, without the above process of counseling and warnings.

Under the same heading, the 1986 handbook states as follows:

In most cases, a system of progressive warnings is used. You will usually receive an oral warning. Continuing failure to improve, or subsequent violations, result in written warnings. Three written warnings will result in dismissal.

In some cases, you may be placed on probation with or without previous warnings. Probation is for a specified length of time during which you'll have the opportunity to improve your performance. An employee on probation may be terminated without warning.

Cases of serious misconduct or poor performance call for immediate action, including the possibility of termination, without the above warning process.

This handbook then provides "examples of some, but not all, conduct which may subject [an employee] to disciplinary action, including suspension with or without pay, or immediate discharge." One of the examples

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provided is the misappropriation, misuse, or destruction of Retreat supplies, material, or equipment. In the same section, the handbook states: "All judgments about termination are made at the Retreat's discretion."

In another section entitled "Employment," under a subheading entitled "Employment At Will," the 1986 handbook states that "[a]ll employment is at will," and that "termination may occur by either party at any time." The 1988 handbook includes essentially the same relevant provisions as those contained in the 1986 handbook. Plaintiff signed acknowledgments for both the 1986 and 1988 handbooks stating that (1) he had received a copy of the handbook, (2) he understood that he was responsible for becoming familiar with its contents, and (3) he understood "that the Handbook does not constitute a contract of employment."

Plaintiff surmises that the jury probably relied on the 1982 handbook in finding that his at-will employment had been modified...