Ferrett v. General Motors Corp.

• Decision Date: 27 August 1991
• Docket Number: Docket No. 88489
• Citation: 475 N.W.2d 243,438 Mich. 235
• Parties: Darwin FERRETT, Plaintiff-Appellant, v. GENERAL MOTORS CORPORATION, Defendant-Appellee. 438 Mich. 235, 475 N.W.2d 243, 121 Lab.Cas. P 56,816, 6 Indiv.Empl.Rts.Cas. (BNA) 1285
• Court: Michigan Supreme Court

Page 243

475 N.W.2d 243

Darwin FERRETT, Plaintiff-Appellant, v. GENERAL MOTORS CORPORATION, Defendant-Appellee.

Docket No. 88489.

438 Mich. 235, 475 N.W.2d 243, 121 Lab.Cas. P 56,816,

6 Indiv.Empl.Rts.Cas. (BNA) 1285

Supreme Court of Michigan.

Argued May 8, 1991.

Decided Aug. 27, 1991.

[438 MICH 236] William W. Webb, Birmingham, for plaintiff-appellant.

Stuart R. Cohen, Office of the Gen. Counsel, General Motors Corp., Detroit, Richard M. Tuyn, Birmingham, for defendant-appellee General Motors Corp.

Bodman, Longley & Dahling, Lloyd C. Fell, Kathleen A. Lieder, Cheyboygan, for amicus curiae Motor Vehicle Mfrs. Ass'n of the United States, Inc.; William H. Crabtree, V. Mark Slywynsky, Motor Vehicle Mfrs. Ass'n of the United States, Inc., Detroit, of counsel.

Mark Granzotto, Detroit, Monica Farris Linkner, Berkley, Charles P. Burbach, Southfield, amicus curiae, for Michigan Trial Lawyers Ass'n.

OPINION

LEVIN, Justice.

This Court granted leave to appeal, limited to the issue whether the circuit court erred in granting General Motors Corporation summary disposition dismissing Darwin Ferrett's claim of negligent evaluation. ¹ We agree with the Court of Appeals that the circuit court did not err in dismissing Ferrett's claim of negligent evaluation.

I

Ferrett was a test driver for General Motors Corporation at its proving grounds in Milford from November, 1973, until the termination of his employment in August, 1986. Although otherwise a good employee, Ferrett's thirteen years with GM included problems with absenteeism. From early 1983 until the termination of his employment in August, 1986, he was made aware that unless he maintained consistently good attendance, his position with GM would be in jeopardy.

As a salaried worker for GM, Ferrett's employment relationship was the subject of a handbook entitled "Working with General Motors." The handbook advised workers that their performance would be assessed at least twice annually by their supervisor, and that the assessment program consisted of four main parts: performance planning, informal discussions, written appraisal, and appraisal interview. Performance Improvement Plans, though not specifically discussed in the handbook, were a part of the appraisal and evaluation program.

The employee handbook also contained the following statements, the first, under the heading "Employment Status":

--"As a regular employee your employment is on a calendar month-to-month basis.

* * * * * *

--"[T]he policies and procedures in the booklet do not constitute a legal contract, and do not modify the month-to-month employment relationship...."

Beginning in 1983, Ferrett received a number of oral and written warnings from his supervisor that his deteriorating attendance was becoming a significant problem for management. By January, 1984, Ferrett's attendance problems caused his overall performance rating to drop from "[g]ood [c]ompetent" to "[n]eeds [s]light [i]mprovement because of excessive absenteeism...."

Ferrett was placed on a Performance Improvement Plan for ninety days, during which time he maintained an acceptable attendance record. After the Performance Improvement Plan was successfully completed, however, Ferrett's attendance slackened. In 1985, a memorandum was placed in Ferrett's file documenting the recurring attendance problems.

In 1986, Ferrett was placed on a second ninety-day Performance Improvement Plan that specified strict performance standards and stated that if Ferrett did not reach an acceptable attendance level by the end of the ninety days, his performance rating would be reappraised and management would recommend termination of his employment.

During this ninety-day period, Ferrett's performance again improved. At the end of the ninety days, Ferrett's supervisor noted that Ferrett had successfully completed the Performance Improvement Plan, and he was reevaluated to "[g]ood [c]ompetent." The supervisor also noted that he had advised Ferrett that "his performance improvement must be sustained in the future or management will recommend termination." In an appraisal five days later, the supervisor noted that he had told Ferrett "it is very important that he maintain a good attendance record and schedule his time off in the future or management will [recommend] termination."

Between April 22, 1986, the date of the appraisal following the conclusion of the second Performance Improvement Plan, and August 21, 1986, Ferrett missed ten days' work. He submitted a note for the last of the ten absences, on August 20, 1986, explaining that his mother had been in an accident, and that he had gone to the hospital to visit her. According to a report to the file written by Ferrett's supervisor, the supervisorreminded Ferrett that under the terms of the last Performance Improvement Plan, he was to maintain perfect attendance and notify the supervisor when he would not be at work, and Ferrett promised to do so. The supervisor did not, however, tell Ferrett that his employment was about to be terminated due to excessive absenteeism.

One week later, on August 29, 1986, Ferrett was discharged from further employment with GM.

II

Ferrett commenced this action alleging breach of contract and negligent evaluation. The circuit court granted GM's motion for summary disposition on both the contract and the negligent-evaluation counts. On the breach-of-contract count, the court held that there was no genuine issue of material fact concerning the "at will" status of Ferrett's employment. On the negligent-evaluation count, the court held that Ferrett's claim was not based on a legal duty independent of the employment relationship.

The Court of Appeals affirmed.

III

The Court of Appeals, and the federal courts in the Sixth Circuit applying Michigan law, have, with two exceptions, ² held that an employee maynot maintain a tort action for negligent evaluation . Those cases, relying on this Court's decision in Hart v. Ludwig, 347 Mich. 559, 79 N.W.2d 895 (1956), generally reason that an employee may not maintain such an action because he does not seek to recover for breach of a duty separate and distinct from any breach of contract.

Loftis v. G.T. Products, Inc., 167 Mich.App. 787, 796, 423 N.W.2d 358 (1988), typifies Court of Appeals cases holding that an employee may not maintain an action for negligent evaluation on the basis of an asserted breach of an employment contract. The employee claimed that his employer was required under the terms of the employee handbook to evaluate its employees and to use reasonable care in performing an evaluation.

The Court held that the employee could not maintain an action because his complaint "did not allege a breach of duty ... distinct from the breach of contract, an essential element of a cause of action for negligent evaluation...." The Court read this Court's holding in Hart to mean that "[a] tort action will lie if a relationship or situation of peril exists that would give rise to a legal duty without the need to enforce the contract promise itself." ³ Id. at 797, 423 N.W.2d 358.

A number of panels of the Court of Appeals ⁴ and of the United States Court of Appeals for the Sixth Circuit ⁵ have reached the same result.

IV

We decline to recognize an action in tort for negligent evaluation. An action may be maintained, if at all, only for breach of a contractual obligation to evaluate.

In Hart v. Ludwig, this Court held that the plaintiff could not maintain an action in tort for nonperformance of a contract. That was the holding. Everything else that was said was obiter dictum. The effort to extract from that obiter dictum a rationale for evolving a tort action for negligent evaluation is not persuasive.

A duty in tort may arise out of a relationship. ⁶ The asserted relationship here is a contract that was terminable at the will of either Ferrett or GM. Whether the contract was express or implied, even if it included implied obligations arising out of policies set forth in the employee handbook, the circuit court found that the employment contract did not give rise to enforceable obligations. The Court of Appeals affirmed. The correctness of that determination is not before us because this Court's order granting leave to appeal was limited to the question whether Ferrett's claim of negligent evaluation was correctly dismissed.

V

Ferrett complains essentially that GM failed to perform an asserted obligation, arising out of the procedures set forth in the employee handbook, to undertake a third Performance Improvement Plan when he failed to maintain an acceptable attendance record following the completion of the second ninety-day Performance Improvement Plan. In Hart, supra, 347 Mich. pp. 565-566, 79 N.W.2d 895, this Court held that an action in tort may not be maintained for failure to perform a contract:

"We have simply the violation of a promise to perform the agreement. The only duty, other than that voluntarily assumed in the contract to which the defendant was subject, was his duty to perform his promise in a careful and skillful manner without risk of harm to others, the violation of which is not alleged. What we are left with is defendant's failure to complete his contracted-for performance. This is not a duty imposed by the law upon all, the violation of which gives rise to a tort action, but a duty arising out of the intentions of the parties themselves and owed only to those specific individuals to whom the promise runs. A tort action will not lie." (Emphasis added.)

In Hart, the defendant worked the plaintiff's orchard during the spring of 1952, but "refused to go on" shortly after beginning work for the 1953 season. "He thereafter failed to remove the shoots, to prune, to fertilize, or to protect it against destructive animal life." ⁷

In the instant case, as in Hart, "[w]hat we are left with is defendant's [alleged] failure to complete his contracted-for performance." ⁸ Here, as there, the...