Helle v. Landmark, Inc.

CourtUnited States Court of Appeals (Ohio)
Writing for the CourtHANDWORK; DOUGLAS; WILEY; WILEY; DOUGLAS
Citation15 Ohio App.3d 1,472 N.E.2d 765,15 OBR 22
Parties, 118 L.R.R.M. (BNA) 2325, 15 O.B.R. 22 HELLE et al., Appellants, v. LANDMARK, INC., Appellee.
Decision Date30 March 1984

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15 Ohio App.3d 1
472 N.E.2d 765, 118 L.R.R.M. (BNA) 2325, 15 O.B.R. 22
HELLE et al., Appellants,
v.
LANDMARK, INC., Appellee.
Court of Appeals of Ohio, Sixth District, Lucas County.
March 30, 1984.

Syllabus by the Court

1. The employment-at-will concept is only a description of the parties' prima facie employment relationship. It intimates nothing about subsidiary contractual arrangements (express or implied) to which an employer may legally obligate himself by adding to that relationship new terms and conditions.

2. An employer's promulgation of employment manuals, employee handbooks or other writings styled "personnel policies and practices" can create contractual rights which the employer may not abridge without incurring liability.

3. When oral or written modifications of the original employment contract satisfy the paradigm elements essential to contract formation--i.e., offer, acceptance, and consideration--binding obligations arise.

4. Oral assurances of severance pay may constitute an offer capable of acceptance if the putative promisee is justified in believing that a commitment has been made.

5. To the extent that oral assurances of severance pay conflict with an employment manual's disclaimers, or induce an employee to disregard their significance, such representations will negate the effect of disclaimers which are intended to absolve the employer from liability for unilateral alterations of or deviations from policies presented in the written manual or similar employer writings.

6. A unilateral contract contemplates an offer which is accepted by performance of the stated terms or conditions therein, rather than by a return promise to perform. An offer of severance pay, to be paid to the employee if he remains with the employer-company until it closes, is an offer for a unilateral contract.

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7. Acceptance of an employer's offer of severance pay is effective when the employee performs, that is, when he retains his employment after learning of the offered severance pay.

8. For purposes of consideration, the employee's retention and continued performance of his work suffices to render the new condition of severance pay enforceable. (1 Restatement of the Law 2d, Contracts 204, Section 80, applied.)

9. The mutuality of obligation doctrine requires only that there be a quid pro quo. In the case of a unilateral contract, such a contract lacks "mutuality" only when there is a failure of consideration. However, when the promisee's performance is executed, enforceable obligations arise without the need for "mutuality." (1 Restatement of the Law 2d, Contracts 200, Section 79, applied.)

Gerald B. Lackey and Mark C. Abramson, Toledo, for appellants.

Richard S. Walinski and Stephen M. Dane, Toledo, for appellee.

HANDWORK, Judge.

This case is before the court on appeal from a judgment of the Lucas County Court of Common Pleas, which granted summary judgment in favor of defendant-appellee, Landmark, Inc.

Appellants, Virginia Helle, Winfred Jacobs and William Phillips (hereinafter Helle, Jacobs and Phillips or appellants), initiated this litigation against appellee, Landmark, Inc. (hereinafter Landmark), on September 13, 1982. Their complaint alleged that Landmark, as their employer, breached an oral contract to pay them severance benefits after it closed its business in August 1982. The complaint further alleged that the benefits were to be paid [472 N.E.2d 768] according to years worked with Landmark and on the condition that appellants remain with the company until closing. After filing its answer, Landmark moved to dismiss the complaint under Civ.R. 12(B)(6). Appellants responded with an amended complaint, alleging, in essence, breach of an oral contract and promissory estoppel. They also moved for summary judgment.

The trial court, treating Landmark's motion to dismiss as one for summary judgment, see Civ.R. 12(B)(6), granted the same on September 19, 1983. The trial court found that no material facts were disputed and that Landmark was entitled to judgment as a matter of law. This appeal followed.

The material before the trial court consisted of the pleadings, the interrogatories and answers thereto, the depositions of Helle, Jacobs, Phillips, and Loyal Rupp, a former area representative for Landmark. 1 Having independently reviewed these materials, we agree with the trial court's general conclusion, in which all the parties concur, that the pertinent facts are uncontroverted.

Phillips, Jacobs and Helle became employees of Lucas County Landmark (hereinafter LCLM) in 1954, 1963 and 1968, respectively. LCLM, before March 1979, was a countywide agricultural association having local offices in Maumee, Curtice and Berkey, Ohio.

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LCLM marketed its various products and services through the county branches. Appellants worked at the Curtice office.

Under a management agreement with Landmark, LCLM received the services of a local manager to run the Curtice facility. While responsible to the local board of directors for day-to-day business, the LCLM manager was generally supervised by Landmark's area representative, Loyal Rupp. (The record indicates that an area representative, such as Rupp, was an intermediate liaison between county associations and Landmark's Columbus headquarters.)

As their depositions indicate, throughout their entire employment with LCLM, Helle, Jacobs and Phillips (and, apparently, other employees) believed that Rupp had the authority to make representations on behalf of Landmark about employment issues, and that his statements or directions were to be understood as those made in a supervisory capacity. Appellants viewed his authority as superior to that of the county manager, a point Landmark does not contest.

With the economic downturn in the late 1970's, LCLM began experiencing financial problems. Specifically, the record discloses that the association had difficulty repaying certain bank loans. Thus, in late 1978 and early 1979, the local board of directors of LCLM initiated take-over negotiations with Landmark. In April 1979, Landmark formally acquired LCLM as a corporate subsidiary (a "retail" outlet of Landmark), and LCLM thereafter became known as Curtice Landmark, Inc.

In March 1979, an employees' meeting was held at the Curtice facility to discuss the consequences of the takeover. The depositions indicate that Rupp told the employees (including appellants) about LCLM's change from a local association to a corporate subsidiary of Landmark. During this meeting, he also told the employees that "everything would remain the same" as far as their employment was concerned. The depositions of Helle, Jacobs and Phillips all indicate that specific questions were asked regarding vacation, health insurance and sick leave benefits, and that Rupp assured appellants that nothing regarding those benefits would be changed. 2 However,[472 N.E.2d 769] severance benefits were not discussed at this meeting.

After Landmark's take-over in 1979, nothing changed in the employees' jobs or the management of day-to-day operations at the Curtice facility. Rupp continued as area representative, but he apparently acquired a more enhanced supervisory role after the acquisition. In the summer of 1981, Landmark decided to begin "phasing out" operations at its Curtice office, with the ultimate goal of closing it completely. Although appellants had heard rumors that the Curtice facility would be shut down, it was not until September 1981 that Paul Schumacher, then the Curtice manager, actually informed the employees, and, in particular, Phillips, that the company would be closing its doors.

Landmark maintained a Personnel Policies and Practices Manual which described benefits and conditions of

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employment for retail employees and which was distributed to and kept by all Landmark retail managers. In August 1981, Landmark had established for the first time a severance plan for its employees and promulgated the same in the manual. According to Landmark, the purpose of the severance policy was to provide monetary benefits to nonunion employees (such as appellants) whose employment with Landmark might suddenly end if its work force were reduced or its retail facilities shut down.

In October, Rupp was apparently transferred elsewhere. Before leaving, however, Rupp assured the employees that they would receive substantial severance benefits when Curtice Landmark closed. In late October or early November, an individual from Landmark's Columbus headquarters, Chuck Hiegle, came to the Curtice office and informed the employees that the facility would continue operating for another year. At about this time, Jacobs and Phillips were told by Hiegle and Schumacher that the maximum paid vacation allowed to Landmark employees was three weeks, not four weeks, as had been the case with LCLM.

Although Rupp told appellants about the severance policy in September 1981, the record also indicates that appellants did not actually see copies of the manual's severance provisions until later. Phillips first saw copies of the severance provisions in December 1981. Jacobs first saw the manual in February 1982 in Schumacher's office after a conversation with Hiegle. Helle did not see copies of the manual until March 1982.

The relevant portion of the manual relating to severance benefits is as follows:

"Completed Years Weeks of Separation
                 of Service Allowance
                180 days but less 1 week
                than 1 year
                1 to 3 years 2 weeks
                3 to 5 years 3 weeks
                5 to 10 years 5 weeks
                10 to 15 years 5 weeks plus 1 1/2
                 weeks for each completed
                 year of service over
                 10 years
                15 years and over 5 weeks plus 2 weeks
                 for each completed
                 year of service over
                 10 years
                

In August 1981, the manual's definition of the phrase "completed years of service" included an employee's previous years of employment with a local association, such as LCLM. 3 Landmark's manual also contained[472 N.E.2d 770] a reservation clause,...

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