Greaves v. Medical Imaging Systems, Inc.

• Citation: 879 P.2d 276,124 Wn.2d 389
• Decision Date: 25 August 1994
• Docket Number: No. 61233-1,61233-1
• Court: Washington Supreme Court
• Parties: Robert GREAVES, Respondent, v. MEDICAL IMAGING SYSTEMS, INC., and James Kirker, et ux., Petitioners.

Page 389

124 Wn.2d 389

879 P.2d 276

Robert GREAVES, Respondent, v. MEDICAL IMAGING SYSTEMS, INC., and James Kirker, et ux., Petitioners.

No. 61233-1.

Supreme Court of Washington,

En Banc.

Aug. 25, 1994.

Cozen & O'Connor, Craig H. Bennion, Seattle, for petitioners.

Cullen Law Offices, William E. Cullen, Jr., Olympia, Lewicki Law Offices, Peter S. Lewicki, Seattle, for respondent.

SMITH, Justice.

Petitioners Medical Imaging Systems, Inc., and James Kirker (MIS) seek review of a decision of the Court of Appeals, Division Two, reversing and remanding to the Lewis County Superior Court for trial a summary judgment in favor of MIS which dismissed with prejudice Respondent Robert Greaves' claim for breach of an oral employment contract, 71 Wash.App. 894, 862 P.2d 643. We reverse the Court of Appeals.

STATEMENT OF FACTS

From January 1985 to April 1988, Respondent Robert Greaves (Respondent) was employed as manager of the diagnostic imaging department at Centralia General Hospital. In April 1988, Centralia General Hospital was purchased by the Sisters of Providence Hospital and became Providence Hospital-Centralia. Providence Hospital-Centralia and Respondent In July 1988, Petitioner James Kirker, president of MIS, approached Respondent Greaves about employment with MIS. Respondent told Mr. Kirker he was concerned that if he accepted employment with MIS he would lose his position or be displaced if MIS lost its contract with Saint Joseph's Hospital in Aberdeen. Respondent was primarily concerned about being displaced by MIS employee Gary Fisher, who worked in the same medical field as he, but at Saint Joseph's Hospital. Petitioner Kirker assured Respondent Greaves this would not happen and offered him employment with MIS for 5 years at the same annual salary of $36,000. Although there was no written contract, Respondent Greaves accepted the offer and became a MIS employee on September 15, 1988. The only evidence of the oral employment contract between MIS and Respondent Greaves was two letters Petitioner Kirker sent him concerning his salary. However, no terms of employment were specified. ¹ MIS subsequently lost its contract with Saint Joseph's Hospital, and in April 1989, Respondent Greaves was terminated from his position with MIS at Providence Hospital-Centralia and replaced by Gary Fisher, a MIS employee with more seniority who was displaced from his position at Saint Joseph's Hospital.

Greaves entered into an employment contract under which both parties agreed that Mr. Greaves would be employed by the hospital as a nuclear medical technologist for 3 years at an annual salary of $36,000. During the summer of 1988, MIS moved its equipment to Providence Hospital-Centralia and began billing the hospital for services rendered. Respondent Greaves was an employee of the hospital, but the hospital subsequently billed MIS in the amount of its payments for his services.

On July 20, 1990, the Lewis County Superior Court, the Honorable David R. Draper, granted summary judgment in favor of MIS and dismissed Respondent Greaves' claims with prejudice. The trial court determined there was a contract of employment for 5 years between MIS and Respondent Respondent appealed to the Court of Appeals, Division Two. On December 8, 1993, the Court of Appeals reversed the summary judgment decision of the trial court and remanded with directions to make factual determinations on each of the factors enumerated in the Restatement (Second) of Contracts § 139 (1981). MIS sought review. We granted review on March 9, 1994.

Greaves which impliedly was subject to termination for cause. But the court held the contract void under the statute of frauds because it did not satisfy the requirement of a writing for contracts not performable within 1 year. The trial court also ruled that the statute of frauds could not be overcome by a claim of equitable estoppel nor by a claim of promissory estoppel.

QUESTIONS PRESENTED

The principal question in this case is whether this court should adopt Restatement (Second) of Contracts § 139. A collateral question is whether the Court of Appeals erred in reversing the summary judgment based upon Restatement (Second) of Contracts § 139.

DISCUSSION

"When reviewing an order granting summary judgment, the appellate court engages in the same inquiry as the trial court." ² An appellate court will affirm summary judgment if "there is no genuine issue as to any material fact", and "the moving party is entitled to a judgment as a matter of law". ³ "In summary judgment, all facts and reasonable inferences are to be considered in the light most favorable to the non-moving party, ⁴ and all questions of law are reviewed de novo." ⁵Implied Contract

"In Washington an employer has the right to discharge an employee, with or without cause, in the absence of a contract for a specified period of time." ⁶ In some circumstances, the courts will find an implied agreement between the employer and the employee if employment was intended to be permanent or for a certain duration. ⁷ In cases where an employee sues for damages because termination was without just cause, "[t]he courts will look at the alleged 'understanding,' the intent of the parties, business custom and usage, the nature of the employment, the situation of the parties, and the circumstance of the case to ascertain the terms of the claimed agreement". ⁸

Respondent Greaves claims he provided the "additional consideration" necessary for his oral employment contract to be construed as an implied contract. He asserts he could thus only be terminated by Petitioner MIS for cause.

In Roberts v. ARCO, ⁹ the plaintiff claimed he could only be discharged for cause because the circumstances surrounding his agreement created an implied contract between the parties. ¹⁰ The court in that case concluded that a contract for " 'permanent' or 'steady' employment (as opposed to either 'temporary' or 'lifetime' employment) is terminable by the employer only for just cause if: (1) there is an implied agreement to that effect, or (2) the employee gives consideration in addition to the contemplated services." ¹¹ The court observed that neither an assurance of "steady employment" nor the plaintiff's understanding that he would be employed as long as he performed his work in a satisfactory manner could reasonably establish evidence of an implied agreement. ¹² The court indicated it would look to "the alleged 'understanding', the intent of the parties, business custom and usage, the nature of the employment, the situation of the parties, and the circumstance of the case ...". ¹³ Since the plaintiff in Roberts only provided evidence of his "own personal understanding that he would be employed as long as he did his job in a satisfactory manner", the court found no evidence of an implied agreement. ¹⁴

Another factor in determining an implied agreement is whether there is "consideration in addition to required services which results in a detriment to the employee and a benefit to the employer." ¹⁵ The plaintiff in Roberts contended that his length of service and his foregoing other job opportunities was sufficient consideration to "establish a contractual relationship between the parties". ¹⁶ The court disagreed and held that merely foregoing other job opportunities was not sufficient independent consideration to defeat an employer's right to terminate employment at will. ¹⁷

In this case, Respondent Greaves contends he could have been terminated only for cause because the circumstances surrounding his employment by MIS gave rise to an implied contract. Under Roberts v. ARCO, supra, Respondent Greaves' agreement merely to transfer his employment from Providence Hospital-Centralia to MIS is not sufficient independent consideration to support an implied contract. Thus, the employment contract between Respondent Greaves and Petitioner MIS was terminable by MIS without cause.

Respondent Greaves relies upon Thompson v. St. Regis Paper Co. ¹⁸ to support his claim that because of his 5-year agreement with MIS, he justifiably relied upon MIS' promise of employment. In Thompson, this court concluded that an employer would be held to promises in an employment manual if the employer creates "an atmosphere of job security and fair treatment with promises of specific treatment in specific situations", thereby inducing an employee to remain on the job and not actively seek other employment. ¹⁹ However, Thompson, and the other cases cited by Respondent Greaves, can be distinguished from the case now before this court because those cases involved employee manuals characterizing company policy which would "lead to obligations that govern the employment relationship." ²⁰ In this case, Petitioner MIS did not provide Respondent Greaves with an employee manual. It merely offered him employment at the same salary and benefits as his previous job with Providence Hospital-Centralia, but for 2 years longer than his contract with Providence. It cannot be concluded that this offer, without more, created an atmosphere of job security.

Statute of Frauds

Petitioner contends the oral employment contract is unenforceable under the statute of frauds. The Washington statute of frauds, RCW 19.36.010, provides:

In the following cases, specified in this section, any agreement, contract and promise shall be void, unless such agreement contract or promise, or some note or memorandum thereof, be in writing, and signed by the party to be charged therewith, or by some person thereunto by him lawfully authorized, that is to say: (1) Every agreement that by its terms is not to be performed in one year from the making thereof; (2) every special promise to answer for the debt, default, or misdoings of another person; (3) every agreement, promise or undertaking made upon consideration of marriage, except mutual promises to marry; (4) every special promise made by an executor or administrator to answer damages out of...