K Mart Corp. v. Ponsock
| Decision Date | 24 February 1987 |
| Docket Number | No. 16736,16736 |
| Parties | , 55 USLW 2552, 106 Lab.Cas. P 55,683, 2 IER Cases 56 8 Employee Benefits Cas. 1548 K MART CORPORATION, a Michigan corporation, Appellant, v. George J. PONSOCK and Barbara Ponsock, Respondents. |
| Court | Nevada Supreme Court |
McDonald, Carano, Wilson, Bergin, Frankovich & Hicks, Reno, for appellant.
Woodburn, Wedge, Blakey & Jeppson, and Chris Wicker, Reno, for respondent.
Marquis & Haney, Las Vegas, for amicus curiae Nevada Trial Lawyers Ass'n.
Ponsock was a tenured employee of K Mart. Evidence supports a jury finding that K Mart dismissed Ponsock in order to save having to pay him retirement benefits provided for in the employment contract. The question is whether such conduct is tortious. We find that it is and approve a jury award for compensatory and punitive damages for the tort of breach of the covenant of good faith and fair dealing.
Although for some inexplicable reason K Mart insists on referring to the employer-employee relationship with Ponsock as being "at-will", 1 it is not. In contrast to our case of Southwest Gas Corp. v. Ahmad, 99 Nev. 594, 668 P.2d 261 (1983), wherein we held that a factfinder could find from the evidence that an employee handbook was part of an employment contract, here we have K Mart stipulating that the written provisions of its employee handbook are part of the contract of the parties. Ponsock is a tenured employee; K Mart hired him "until retirement" and for "as long as economically possible." K Mart agreed in its contract with Ponsock that if there were any deficiencies in Ponsock's performance, the company would provide "assistance" and would "release" Ponsock only after giving him a series of "correction notices." Ponsock could be released only on a determination that his performance "remain[ed] unacceptable."
K Mart breached its contract; it released Ponsock without notifying him of any employment deficiencies, failed to give assistance to him as promised, and certainly, therefore, could not possibly have based Ponsock's dismissal on a conclusion that the employee's conduct had remained unacceptable.
In stating these facts we must assume that the jury believed all the evidence favorable to the prevailing party, Ponsock, and give Ponsock the benefit of inferences that might reasonably be drawn from such evidence. Paullin v. Sutton, 102 Nev. 421, 724 P.2d 749 (1986); Novack v. Hoppin, 77 Nev. 33, 359 P.2d 390 (1961).
In 1972 Ponsock, 43 years of age, was hired as a fork lift driver at K Mart's Distribution Center in Sparks, Nevada. Ponsock left his former job as a coin counter at a casino in order to take advantage of the increased job security and enhanced benefits offered by K Mart. The starting wages at K Mart were virtually the same as those he had been making at the casino ($3.75 per hour). At K Mart Ponsock was categorized as an excellent employee by his immediate supervisor and was considered to be a good employee by the higher management at the distribution center. After nine and one half years at K Mart, Ponsock was earning $9.40 per hour and was approximately six months away from 100 percent vesting of his retirement benefits, which are paid in full by K Mart.
On March 30, 1982, Ponsock was fired for applying gray primer spray paint to the battery cover of the forklift which he operated. Ponsock testified that on this day he noticed that an area on the battery cover where he placed his hand while backing the forklift had become "sticky and gunky." After an unsuccessful attempt to have the maintenance department clean the forklift, and after Ponsock had unsuccessfully attempted to clean the cover himself, he decided to spray gray primer paint on the battery cover to correct the condition.
Earlier in the day, Ponsock had found a damaged can of gray primer spray paint, retail value eighty-nine cents, and had taken it to the salvage area. The forklift drivers are authorized to remove damaged merchandise to the salvage area; but, according to company rules, any employee wanting to retrieve damaged goods from salvage must gain approval from management. After unsuccessful attempts at cleaning the sticky area, Ponsock returned to the salvage area, retrieved the damaged can of paint and sprayed the battery cover. This was done without Ponsock's having secured permission to do so.
When a Mr. Williamson of the maintenance department saw that Ponsock had painted the battery cover, he told Ponsock to clean it off. Ponsock complied. While in the process of cleaning off the primer the operations manager at the center, mentioned to Ponsock that he should not have done what he did. After the center manager, the personnel manager and the operations manager conferred about the matter, they decided to terminate Ponsock. Ponsock was then called to the personnel office, whereupon the personnel manager presented him with his final paycheck and told him he was fired. Ponsock was stunned by this statement, and was puzzled as to why he was being terminated. When the personnel manager mentioned the painting incident, Ponsock attempted to defend his actions; but he was given no opportunity to explain the incident. In the days that followed, Ponsock attempted to see the higher management at the center, but the security guard refused to allow Ponsock on the property.
The company's separation report listed as the reason for termination: "defacing company property, forklift, with misappropriated merchandise, paint, on company time." When the State Department of Unemployment inquired of K Mart management regarding the reason for Ponsock's termination, K Mart, in referring to Ponsock's retrieval and use of the spray paint, characterized Ponsock as a thief.
At trial K Mart claimed that its decision to fire Ponsock was based, to a large extent, on a prior painting incident involving Ponsock. Regarding the claimed prior painting incident, the evidence is in sharp conflict. Ponsock testified that during the time he was assigned to a painting detail, some red paint spilled on his forklift and that while he was attempting to wipe it off, the operations manager had merely commented: "Make sure you clean it up before you leave." Other witnesses for K Mart testified that the paint was green and appeared to have been purposely brushed on the forklift rather than spilled and claimed that Ponsock was warned by the operations manager that he would be fired if caught painting the forklift again. Ponsock flatly denied these allegations, and Ponsock's immediate supervisor, a Mr. Britt, testified that he knew nothing of a prior painting incident even though Ponsock had been under his supervision at the time of the alleged incident. None of K Mart's witnesses could state that they actually observed Ponsock paint the forklift. Much contradictory testimony appears in the record concerning this incident.
Testimony revealed that approximately ten percent of the forklifts at the distribution center have unauthorized paint on them and that no other employee has ever been fired, either before or after Ponsock, for applying paint to the vehicles without permission. Also, importantly, during a tour of the distribution center by Ponsock and his counsel, K Mart attempted to hide a forklift that had unauthorized green paint applied to it in a fashion similar to the manner in which K Mart alleges that Ponsock had done in the first painting incident in January of 1982. One of K Mart's maintenance employees admitted that he placed the forklift in the out-of-the-way place in order to hide it from Ponsock's lawyers.
After being fired, Ponsock went through a long period of unemployment. Ponsock was unable to obtain any employment comparable to his position at K Mart. After several short term or part time jobs, he finally gained full time employment in a manual labor position at $4.20 per hour with no benefits. After Ponsock lost his job, the family house went into foreclosure only to be saved from the foreclosure sale by his nephew who purchased the home for $11,000 less than the claimed market value.
Under the stated circumstances it cannot be honestly argued that Ponsock was an at-will employee. He had definite rights of employment tenure and was contractually entitled to be retained until dismissal for cause was properly carried out in the manner provided for in the employment contract. The employment contract was violated by K Mart, and Ponsock is entitled to damages for breach of contract.
An economist was called to testify as to the damages resulting from the breach. The sum of $382,120.00 was offered as the expert's opinion on the amount of damages suffered by Ponsock. The award of $382,120.00 as compensatory damages for breach of contract is supported by substantial evidence and will be affirmed.
A total of $393,120.00 in compensatory damages was awarded by the jury. The difference between this amount and the above-mentioned $382,120.00 in contract damages is $11,000.00, an amount awarded as a result of a claimed $11,000.00 lost by Ponsock when he was forced to sell his home after being fired.
It cannot be seriously argued that this $11,000.00 is properly claimable as contract damages. See Las Vegas Oriental, Inc. v. Sabella's of Nev., Inc., 97 Nev. 311, 630 P.2d 255 (1981); Hadley v. Baxendale, 9 Ex. 341, 156 Eng.Rep. 145 (1854). The $11,000.00 award can be affirmed only if tort liability was correctly determined by the jury to exist in this case. Indeed, the only jury instruction allowing for an award based on the loss of Ponsock's home required a jury finding that K Mart tortiously failed to act in good faith; so we now pass to a consideration of whether or not K Mart may be subject to tort liability under the circumstances of this case.
Mr. Blackstone tells us: "[C]ourts of justice are instituted in...
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