French v. Dell Rapids Community Hosp., Inc.

• Decision Date: 04 January 1989
• Docket Number: No. 15901,15901
• Citation: 432 N.W.2d 285
• Parties: Roger FRENCH and Margie French, Plaintiffs and Appellants, v. DELL RAPIDS COMMUNITY HOSPITAL, INC. and Donald J. Olson, Administrator, Defendants and Appellees.
• Court: South Dakota Supreme Court

Page 285

432 N.W.2d 285

Roger FRENCH and Margie French, Plaintiffs and Appellants, v. DELL RAPIDS COMMUNITY HOSPITAL, INC. and Donald J. Olson Administrator, Defendants and Appellees.

No. 15901.

Supreme Court of South Dakota.

Argued March 24, 1988.

Reassigned Aug. 23, 1988.

Decided Nov. 30, 1988.

Rehearing Denied Jan. 4, 1989.

N. Dean Nasser, Jr., Nasser Law Office, P.C., and Scott N. Peters, Schiager & Peters Law Office, Sioux Falls, for plaintiffs and appellants.

Timothy M. Gebhart of Davenport, Evans, Hurwitz & Smith, Sioux Falls, for defendants and appellees.

MILLER, Justice (on reassignment).

Appellants, Roger French (French) and his wife Margie, appeal an order of partial summary judgment in favor of Dell Rapids Community Hospital (Hospital), Dell Rapids, South Dakota, and its administrator, Donald J. Olson (Olson). French, a former laboratory supervisor at Hospital, sued Hospital and Olson after he was fired from his position. The trial court granted summary judgment for Hospital and Olson on claims of (1) intentional infliction of emotional distress, (2) breach of contract, (3) fraud and deceit, (4) "detrimental reliance," (5) breach of fiduciary duty, and denied French's motion to amend the complaint to include a cause of action for breach of a covenant of good faith and fair dealing. ¹ We affirm in part, reverse in part and remand.

FACTS

In April of 1983, the lab supervisor position at Hospital became open. French, at the urging of Olson, ² applied for the job but was not hired because he lacked the four-year degree required for the position. In July 1983, the position again became open and Olson recommended that French be given the position. Although some members of the medical staff and the assistant administrator still preferred hiring a person with a four-year degree, Hospital agreed to hire French, who had sixteen years' experience. French received Hospital's personnel manual which set forth a ninety-day probation period. After French was hired, but prior to the completion of his probationary period, the job description for lab supervisor was rewritten to specifically allow a person with a two-year degree to hold the position.

Shortly after French began work, doctors and other medical staff began to complain about his performance. The complaints alleged mistakes with X-rays and lab tests, lack of contribution to the lab's work load, and poor relations with other employees. Meetings were held and Hospital's administration decided to terminate French at the expiration of his probationary period. He was offered a nonsupervisory position in the lab, but declined it. Subsequently, he was given ninety days to find another job and $2,000 severance pay.

Frenchs then brought suit against Hospital and Olson on the grounds stated above. The trial court granted summary judgment on all issues except for fraud stemming from French's purchase of a home. Frenchs appeal from that order.

DECISION

FRAUD AND DECEIT

We first consider the claim of fraud and deceit in inducing French to accept employment at Hospital. Liability for deceit is defined as follows: "One who willfully deceives another, with intent to induce him to alter his position to his injury or risk, is liable for any damage which he thereby suffers." SDCL 20-10-1. Under SDCL 20-10-2, deceit is either:

(1) The suggestion, as a fact, of that which is not true, by one who does not believe it to be true;

(2) The assertion, as a fact, of that which is not true, by one who has no reasonable ground for believing it to be true;

(3) The suppression of a fact by one who is bound to disclose it, or who gives information of other facts which are likely to mislead for want of communication of that fact; or

(4) A promise made without any intention of performing.

The fraud claimed by French is that Olson contacted him, urged him to apply for the position and ultimately hired him for the job knowing that he was not academically qualified. French claims his hiring caused "dissatisfaction" with those at Hospital who would have preferred someone with a four-year degree. French further claims that Olson withheld the news of this dissatisfaction from him and that he was induced to accept employment in Dell Rapids upon the intentional misrepresentations and material omissions by Olson that his academic credentials had been accepted. French further asserts the dissatisfaction stemming from his academic credentials eventually led to his dismissal.

Hospital claims that the complaints about French came only after he had started work and that the complaints stemmed from French's failure to carry his share of the work load, his lack of necessary lab expertise, and his inability to answer the questions of his lab technicians.

Because there is a factual discrepancy surrounding whether dissatisfaction with French accrued before he began working for Hospital (as French asserts) or afterward (as Hospital asserts), a genuine question of fact exists upon which the trial court erroneously granted summary judgment. Wilson v. Great Northern Railway Co., 83 S.D. 207, 157 N.W.2d 19 (1968). We reverse that portion of the trial court's decision and remand it for further factual development.

DETRIMENTAL RELIANCE

French also pleads a cause of action denominated as "detrimental reliance." French claims he relied on "verbal assurances" of permanent employment before leaving the hospital at Lake Preston and moving to Dell Rapids. Hospital and Olson deny that they made any assurances of permanent employment to French.

We believe that French's theory sounds in tort and is thereby subsumed in his cause of action for fraud and deceit. This belief is further buttressed by French's prayer for punitive damages (which infers a tort-based claim) and by our reading of SDCL 20-10-1, which provides liability for anyone who willfully deceives another with the intent to induce him to alter his position to his injury or risk. Given our reading of SDCL 20-10-1 and our prior reading case authority, see Aschoff v. Mobil Oil Corp., 261 N.W.2d 120 (S.D.1977); Culver v. Burnside, 43 S.D. 398, 179 N.W. 490 (1920); McAlpin v. Baird, 40 S.D. 180, 166 N.W. 639 (1918), we affirm the circuit court's grant of summary judgment to Hospital.

BREACH OF CONTRACT

French contends that he had a contract with Hospital for permanent employment, with job security, and that he could be terminated only for cause or for some reason beyond the control of Hospital. French claims that Hospital breached that agreement by terminating him because he was not academically qualified to be laboratory supervisor, especially when it knew those academic qualifications before he was hired.

French did not enter into a written employment contract with Hospital, nor was there a specified term of employment. Since there is no written contract or definite period of employment, we must examine Hospital's personnel manual, which was furnished to French, to determine whether it rises to the level of a contract. To do so, the manual must outline causes and procedures for termination. Osterkamp v. Alkota Mfg., Inc., 332 N.W.2d 275 (S.D.1983).

Hospital's personnel manual contained the following provisions:

EMPLOYMENT

....

It is the policy of the hospital to provide steady employment with job security. However, if because of circumstances beyond the control of the hospital or in the interest of efficient operation, lay-offs become necessary, they shall be made on the basis of the individual's qualifications for a specific job, his efficiency and seniority, in the order named.

PROBATION

The first three months of employment shall be considered by the hospital as a 'probationary period'. This is a period for the employee to adjust to the hospital procedures and schedules. It also allows the department head sufficient time to evaluate the employee. At the end of the probationary period, the department head decides if the employee's performance is satisfactory and if employment will be continued.

....

WAGE AND HOUR ADMINISTRATION

Salaries: All employees will be paid on an hourly basis, with the exception of the administrator.... At the end of the probationary period the employee will be evaluated by the department head and administration, to determine if the employment will be continued....

....

TERMINATION OF EMPLOYMENT

....

The hospital will give the employee at least two weeks notice of discharge. The authority to terminate or suspend an employee shall rest with the administrator and the department head.

French contends that the personnel manual created a contract under Osterkamp, supra. However, he claims that as a "department head" he is not subject to the probation section. Hospital contends that French was an employee who was subject to the ninety-day probationary period or, alternatively, that he was an at-will employee who could be terminated for any reason at any time. Hopes v. Black Hills Power & Light Co., 386 N.W.2d 490 (S.D.1986).

The legal positions of the parties settle French's status in this matter. French contends that the personnel manual constituted a contract under Osterkamp. Hospital, without agreeing that the manual created a contract, asserts that French was terminated under the probation provisions of the manual. Given the state of the record, the admissions of the parties, and the provisions of the personnel manual, we find that the personnel manual applied to French and that French was subject to its probationary provisions.

The Hospital Board minutes of November 15, 1983, reveal that French's employment would not be continued beyond the probationary period because "his errors [and] academic preparation [have] planted doubts in his ability as lab head." Since the administration decided that French's performance was not satisfactory, they were not obligated to continue his employment beyond the probationary period. Because French is bound by the terms and conditions of the personnel manual, we affirm the...