Kass v. Brown Boveri Corp.

• Citation: 488 A.2d 242,199 N.J.Super. 42
• Parties: Ryszard KASS, Plaintiff-Appellant, v. BROWN BOVERI CORPORATION, a New York Corporation, a/k/a Brown Boveri Power Delivery Inc., a Delaware Corporation, and Peter Giller, Defendants-Respondents.
• Decision Date: 25 February 1985
• Court: New Jersey Superior Court – Appellate Division

Page 42

199 N.J.Super. 42

488 A.2d 242

Ryszard KASS, Plaintiff-Appellant, v. BROWN BOVERI CORPORATION, a New York Corporation, a/k/a

Brown Boveri Power Delivery Inc., a Delaware

Corporation, and Peter Giller,

Defendants-Respondents.

Superior Court of New Jersey,

Appellate Division.

Argued Jan. 7, 1985.

Decided Feb. 25, 1985.

Bruce L. Atkins, Hackensack, for plaintiff-appellant (Contant, Contant, Schuber, Scherby & Atkins, attorneys; Andrew T. Fede, Hackensack, on the brief).

David M. Foley, for defendants-respondents (Borrus, Goldin & Foley, North Brunswick, attorneys).

Before Judges McELROY and SHEBELL.

The opinion of the court was delivered by

SHEBELL, J.A.D.

Plaintiff Ryszard Kass sued for compensatory and punitive damages arising out of an alleged breach of his employment agreement with defendant Brown Boveri Corporation. A bench trial resulted in a verdict in his favor for certain reimbursement and moneys due under a purported "novation" which the court found he entered into by mutual consent with the defendant. The trial court denied damages for breach of contract stating:

... I am satisfied that although Brown Boveri was in the position on September 3rd, if necessary, to have breached the contract, that is not what happened. The parties reached a mutual accord through this innovation [sic] with the terms and new conditions.

This determination of the trial judge fails to accord with his specific findings of fact on the issue of the breach of the original contract. We conclude that the facts as well as the court's findings support a breach of the original contract by the employer.

Kass, an electrical engineer, received his education and training in Poland. He came to this country in 1974 unable to speak English and toiled as a ditch digger. He worked his way up and in 1978 obtained employment with Bechtel Power in Marquette, Michigan. Eventually he became a group supervisor with Bechtel earning $40,000 per year. While working there in 1979 he met Peter Giller of Brown Boveri Corporation and during a period of over a year they discussed the possibility of plaintiff being employed by Brown Boveri. Giller desired to have plaintiff work in a sales position but plaintiff did not want to work as a salesman; he wanted management responsibilities. In early 1981 Kass and Brown Boveri entered into a written employment agreement, the terms of which are not in dispute. Kass was to be employed as manager of Control and Automation and was to receive $40,000 per year together with an automatic bonus of $5,000 to be paid quarterly. The contract, to run for two years commencing March 1, 1981, gave either party the right to terminate without cause by giving 90 days written notice but in no event could notice be given before November 30, 1982 except by "mutual consent." It permitted termination by the employer for "cause" upon 30 days written notice provided prior notice to the employee of any performance deficiencies and set a time for correction of such deficiencies. The contract could only be changed by a writing signed by the party against whom the change was sought and was to be governed by New York law.

It was brought to Kass's attention that another management employee of Brown Boveri, Bruce Reinmann, had management responsibilities on a particular project that would conflict with those to be accorded Kass under the contract. There was for this reason a "gentlemen's agreement" entered into, referred to as a "six-month grace period," during which Kass would not exercise his management authority over Reinmann or his project. At the expiration of this grace period, Brown Boveri attempted to reclassify plaintiff to the lesser position of sales engineer. Plaintiff ultimately submitted a letter of resignation. The trial judge found Giller's

ultimate determination, as he candidly admits, was that he could not allow, for whatever his reasons, Mr. Kass to function as the then manager of the department. He determined that, for whatever reasons he came to that judgment, Mr. Kass did not have sufficient managerial experience and in effect would not give him responsibility for Mr. Reinmann or indeed, apparently for anybody else, in that apt [sic]--so, he determined that at that point he would materially terminate that part of the contract or breach that part of the contract. [ (emphasis added) ]

Our review satisfies us that the proofs are clear and will only support a finding that Brown Boveri breached the employment contract.

The court went on to find that when the subject was discussed between Giller and Kass

... that Mr. Kass had, in effect, three options; to get fired, because it was, I think, made pretty clear that he was not going to be allowed to continue on as the manager and despite Brown Boveri's taking the position that they would have allowed him to just fill out the contract and remain as the manager and would have gotten fully paid for being the manager and allowed him to function, I just can't accept that that would have occurred, particularly when Mr. Giller candidly says that he had already made the determination he wasn't then manager quantity [sic], so, in effect, he had the choice of getting fired. He would have gotten paid for having been fired, but he would also have lost the title and as somebody had indicated, there is a certain stigma to getting fired.... The second option available to him was to take [the] lesser job of sales engineer. He didn't want that because he had said in the very beginning that is what he was getting out from under at Bactil [sic] and that he had discussed with Mr. Giller that he didn't want a sales job. He wanted his manager's job, so he had that opportunity of taking the lesser job as a sales engineer for relatively the same pay except that a bonus would not be guaranteed, and perhaps he hopes that someday he would be able to re-acquire the managerial position. The third option was to create an evasion of the original contract by mutual consent of the parties. I don't think it makes much difference to determine whether or not he agreed to take the sales job and then changed his mind or not. I think everybody is clear that as a bottom line principle, he didn't want the sales job.

The Court then mused:

What then is the effect of what has been received into evidence as P-10? [Letter of Resignation] I have asked myself the question several times what is the significance of P-10, and I have tried to raise the question in the argument of Counsel, what does P-10 mean. What did Mr. Kass have to gain by resigning? Frankly, I have not been able to come up with any type of a satisfa[c]tory answer to that question.

The court nonetheless went on to find that a novation had taken place by the employee submitting a letter of resignation from his position as manager because

... [h]e wanted to reserve his job title and his ability to go out and solicit further employment holding himself out as a manager and having had [a] managerial position which he simply resigned.

The court found Kass fully understood what mutual consent meant when he indicated in his letter of resignation that he was terminating the employment by mutual consent. The court stated:

... I don't find any duress of somebody dictating a letter for [sic] handing it to him to sign or anything of that nature which would suggest the actual language to be used other than this concept of perhaps somebody suggested mutual consent, to which he concurred.

The court found plaintiff had something to gain from the novation in that

[o]n the record the file became listed as a resignation. He had that to gain from and I don't see that he had anything else, particularly, to gain from it.

The facts presented lead us unequivocally to the conclusion that defendant Brown Boveri breached the employment contract. There is an emerging pattern of persuasive out-of-state case law supporting the propositions that Brown Boveri's attempt to reclassify plaintiff to a lesser job status constructively discharged him in violation of his employment contract, see, e.g., Knee v. School District No. 139, In Canyon County, 106 Idaho 152, 153-55, 676 P.2d 727, 728-30 (App.1984) (recognizing the principle that where "sufficient words or actions by the employer would lead a prudent man to believe his tenure [has] been terminated" a constructive discharge is present); Sanders v. May Broadcasting Co., 214 Neb. 755, 758-762, 336 N.W.2d 92, 95-96 (1983) (constructive discharge and breach of contract occur where employee contracts to fill a particular position and subsequently unjustifiably suffers "any material change in duties or significant reduction in rank"); Miller v. Winshall, 9 Mass.App. 312, 318, 400 N.E.2d 1306, 1310 (1980) ("[i]f an employee, especially an executive employee, is engaged to fill a particular position, any material reduction in rank constitutes a breach of the employment agreement and is tantamount to a discharge"); 3A A. Corbin, Contracts (1960 ed. & Supp.1984), § 683 at 223; Annotation, "Reduction in Rank or Authority or Change of Duties as Breach of Employment Contract," 63 A.L.R.3d 539 (1975 & Supp.1984), and his letter of resignation should be no bar to a cause of action for breach of contract. See, e.g., Beye v. Bureau of National Affairs, 59 Md.App. 642, 651, 477 A.2d 1197, 1201 (1984) ("constructive discharge occurs ... when an employer deliberately causes or allows the employee's working conditions to become 'so intolerable' that the employee is forced into an involuntary resignation"), cert. den. 301 Md. 639, 484 A.2d 274 (1984); LeGalley v. Bronson Community Schools, 127 Mich.App. 482, 486, 339 N.W.2d 223, 225 (1983) (same); Continental Can Co., Inc. v. State, 297 N.W.2d 241, 251 (Minn.1980) ("constructive discharge occurs when an employee resigns in order to escape intolerable working conditions"); Breen v. Central Iowa Power & Light Co., 207 Iowa 1161, 1166, 224 N.W. 562, 564 (1929) (whether employee was...