Hunter v. Board of Trustees of Broadlawns Medical Center

• Decision Date: 22 January 1992
• Docket Number: No. 90-1078,90-1078
• Citation: 481 N.W.2d 510
• Parties: 125 Lab.Cas. P 57,435 Quentin H. HUNTER, Appellee, v. The BOARD OF TRUSTEES OF BROADLAWNS MEDICAL CENTER and Jeanne F. Miller, Margaret A. Stout, John D. Ahern, William L. Jacobs, Katheryn Freilinger, Mary Fuller, William E. Tabor, Doug Hart, William Dyar, Carol Romine, and William L. Meyer, Appellants.
• Court: Iowa Supreme Court

Page 510

481 N.W.2d 510

125 Lab.Cas. P 57,435

Quentin H. HUNTER, Appellee, v. The BOARD OF TRUSTEES OF BROADLAWNS MEDICAL CENTER and Jeanne F. Miller, Margaret A. Stout, John D. Ahern, William L. Jacobs, Katheryn Freilinger, Mary Fuller, William E. Tabor, Doug Hart, William Dyar, Carol Romine, and William L. Meyer, Appellants.

No. 90-1078.

Supreme Court of Iowa.

Jan. 22, 1992.

Rehearing Denied Feb. 19, 1992.

As Amended March 20, 1992.

James L. Sayre of Sayre & Gribble, P.C., and David L. Brown of Hansen, McClintock & Riley, Des Moines, for appellants.

John G. Black of Black, Goldman & Powell, P.C., Des Moines, for appellee.

Considered by McGIVERIN, C.J., and HARRIS, LARSON, LAVORATO, and SNELL, JJ.

SNELL, Justice.

The appellants, the Board of Trustees of Broadlawns Medical Center (BMC), and William L. Meyer, the former executive director of BMC, appeal an adverse judgment rendered in favor of a former BMC employee, Quentin H. Hunter, the appellee herein. Hunter alleged that the termination of his employment was in violation of his employment contract with BMC. He further alleged that Meyer tortiously interfered with that contract and directly brought about its wrongful termination. After a jury verdict in favor of Hunter, the district court entered judgment in the amount of $521,462 against the trustees and in the amount of $173,821 against Meyer. Additional counsel for appellants, David L. Brown, joined for post trial and appellate proceedings. We now affirm the trial court's decision in all respects.

Hunter was hired by BMC in 1974 by the then-current Executive Director, Charles Ingersoll. From that date until 1977, he served as the Director of the Alcoholism Department. In 1977, he was appointed to the position of Broadlawns Director and Associate Executive Director. As Broadlawns Director, he reported directly to the Executive Director of the hospital. The position of Associate Executive Director required Hunter to serve as acting Executive Director whenever that need should arise. Except for his first year with BMC, Hunter had no individualized contract of employment.

In 1984, BMC approved and circulated a manual of personnel policies (MPP). Although the manual addresses a variety of personnel matters, the only sections relevant to the instant dispute are sections XIII and XVIII. Section XIII reads, in pertinent part, as follows:

XIII. SEPARATION OF EMPLOYMENT

A. POLICY: BROADLAWNS MEDICAL CENTER STRIVES TO PROVIDE AN ORDERLY EXIT PROCESS FOR EMPLOYEES WHO ARE SEPARATED FROM EMPLOYMENT THROUGH RESIGNATION, RETIREMENT OR WHO ARE DISCHARGED FOR

CAUSE. THE EMPLOYEE'S LAST DAY WORKED IS THE EFFECTIVE DATE OF SEPARATION. BROADLAWNS MEDICAL CENTER REGRETS THE LOSS OF SERVICES OF AN EMPLOYEE, BUT IT IS UNDERSTANDABLE THAT SEPARATIONS OF EMPLOYEES OCCUR. THE TYPES OF SEPARATIONS ARE:

1. VOLUNTARY RESIGNATION: EMPLOYEE-INITIATED SEPARATION WITH PROPER NOTICE.

2. VOLUNTARY QUIT: EMPLOYEE-INITIATED SEPARATION WITHOUT PROPER NOTICE.

3. RETIRED: AT EMPLOYEE'S OR BROADLAWNS MEDICAL CENTER'S REQUEST.

4. THREE (3) DAY QUIT: EMPLOYEE FAILED TO REPORT TO WORK FOR THREE CONSECUTIVE DAYS WITHOUT NOTIFYING IMMEDIATE SUPERVISOR, THEREFORE, EMPLOYEE IS CONSIDERED TO HAVE ABANDONED POSITION.

5. EXPIRED LEAVE: FAILURE OF EMPLOYEE TO REPORT TO WORK AT THE END OF AN AUTHORIZED UNPAID LEAVE OF ABSENCE.

6. DISCHARGED: BROADLAWNS MEDICAL CENTER INITIATES SEPARATION FOR CAUSE.

7. STAFF REDUCTION: BROADLAWNS MEDICAL CENTER INITIATES EMPLOYEE LAY OFF TO REDUCE STAFF WHEN DEEMED NECESSARY.

....

B. PROCEDURES:

....

7. STAFF REDUCTION: BROADLAWNS MEDICAL CENTER MAY AT ITS SOLE DISCRETION LAYOFF AN EMPLOYEE WHENEVER IT IS DEEMED NECESSARY. SEPARATION BY REDUCTION IN FORCE WILL BE ACCOMPLISHED IN A SYSTEMATIC MANNER. (SEE SECTION XVIII. STAFF REDUCTION ).

Section XVIII, which is entitled "Staff Reduction--General Policy Statement," outlines a detailed procedure for determining which employees will be subject to separation as a result of any given staff reduction. The section XVIII procedures include a ranking system, based on performance evaluations and years of service, as well as an in-house appeals process for contesting separation decisions.

The next event of significance was the retirement of Charles Ingersoll in 1987. BMC filled the vacant post of executive director by hiring William L. Meyer, one of the appellants, on January 1, 1987. One month after assuming the position of executive director, Meyer terminated Hunter's employment, purportedly pursuant to a "staff reduction" as described in section XIII A.7 of the MPP. Approximately two months after Hunter's termination, Meyer created a new position styled "Director of Professional and Support Services" and filled this position with a former coworker from Kansas, Orlin "Chick" Cunningham.

Hunter challenged his discharge of employment by filing suit for breach of contract by BMC and tortious interference with a contractual relationship on the part of Meyer. Prior to trial, both parties moved for summary judgment. The trial judge ruled as a matter of law that the MPP constituted a binding employment contract between BMC and Hunter. The court concluded that the contract limited BMC's right to terminate an employee to one of the seven events described in section XIII A. of the MPP. The remaining issues--whether BMC breached that contract in terminating Hunter's employment and whether Meyer tortiously interfered with the contract--were tried before a jury.

In support of his position that BMC breached the employment contract, Hunter offered the testimony of Professor Ira Dolich, Ph.D, former dean of the College of Business and Public Administration at Drake University. Professor Dolich opined that Hunter's former position as Broadlawn's Director was not truly eliminated as would be the case with a true "staff reduction." Instead, Professor Dolich concluded that Hunter's former position was merely retitled from "Broadlawn's Director" to "Director of the Division of Professional and Support Services," a position then held by Meyer's former coworker from Kansas, Orlin "Chick" Cunningham.

The jury apparently accepted Professor Dolich's characterization of the facts and, accordingly, rendered a verdict charging BMC with breach of contract. As noted above, a verdict in favor of Hunter was also returned on the tortious interference with a contractual relationship claim.

BMC and Meyer seek reversal of the judgments entered against them on the basis of four asserted errors. First, they argue that the question as to whether the MPP constitutes a contract should not have been decided as a matter of law. In a related contention, appellants maintain that, even if the decision was properly decided as a matter of law, the conclusion that the MPP constitutes a contract is erroneous. Second, appellants assert that, if the MPP does give rise to a contract between Hunter and BMC, damages for future wages were not appropriate. In appellants' third asserted error, they argue that Hunter's claim for tortious interference with a contractual relationship should fail given that the alleged tortfeasor was an agent of the party in breach; it is also claimed that Hunter's recovery in the tort action is duplicative of the award given in the breach-of-contract action. Finally, appellants challenge the admissibility of the testimony given by Hunter's expert witness, Professor Dolich.

Our review of these complaints is for correction of errors at law. Iowa R.App.P. 4. The trial court's summary judgment ruling that found the MPP to be a contract as a matter of law will be affirmed "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Iowa R. Civ.P. 237(c).

I. Employment Contract.

The central issue presented by this dispute is whether BMC's issuance of the MPP transformed Hunter's employment relationship from one that was terminable at will to one that was terminable only for one of the reasons enumerated under section XIII A. of the MPP. That is, was Hunter's position with BMC secured by contractual obligations and duties as memorialized in the MPP, or did he serve at the pleasure of his employer? To the extent that Hunter's continued employment at BMC was subject to BMC's discretion, there would, by definition, be no contractual relationship. See A. Corbin, Contracts § 96, at 417-18 (1950) (where parties agree that performance is terminable at will by either party, the agreement is not a contract at all).

Although the common-law doctrine of employment at will is firmly rooted in Iowa, we have carved out two narrow exceptions. Fogel v. Trustees of Iowa College, 446 N.W.2d 451, 455 (Iowa 1989). The exception relevant here is the one that arises when "an employer's handbook or policy manual guarantees an employee that discharge will occur only for cause or certain conditions." Id. More specifically, we have recognized that an employee policy manual distributed to employees may constitute an offer by the employer that is then accepted by performance on the part of the employee. Fogel, 446 N.W.2d at 456; McBride v. City of Sioux City, 444 N.W.2d 85, 90 (Iowa 1989); Cannon v. Nat'l By-Prods., Inc., 422 N.W.2d 638, 640-41 (Iowa 1988); Pine River State Bank v. Mettille, 333 N.W.2d 622, 626-27 (Minn.1983); see also Young v. Cedar County Work Activity Ctr., 418 N.W.2d 844, 848 (Iowa 1987). The result of this bargaining process is a unilateral contract. Fogel, 446 N.W.2d at 456; E. Farnsworth, Contracts § 312, at 223 (1990) (when an offeror seeks performance and not a return promise as the desired mode of assent, the result is a unilateral contract). In exchange for the employer's guarantee not to discharge in the absence of cause or certain specified conditions, the employer reaps the benefits of a more secure...