Life Care Centers of America v. Dexter

• Decision Date: 17 March 2003
• Docket Number: No. 02-42.,02-42.
• Citation: 2003 WY 38,65 P.3d 385
• Parties: LIFE CARE CENTERS OF AMERICA, INC., d/b/a Westview Health Care Center, Appellant (Defendant), v. Margo DEXTER, Appellee (Plaintiff).
• Court: Wyoming Supreme Court

65 P.3d 385

2003 WY 38

LIFE CARE CENTERS OF AMERICA, INC., d/b/a Westview Health Care Center, Appellant (Defendant), v. Margo DEXTER, Appellee (Plaintiff).

No. 02-42.

Supreme Court of Wyoming.

March 17, 2003.

Kate M. Fox and Kathleen G. Healy of Davis & Cannon, Cheyenne, Wyoming, Representing Appellant.

Barbara A. Baker, Sheridan, Wyoming, Representing Appellee.

Before HILL, C.J., and GOLDEN, LEHMAN,¹ KITE, and VOIGT, JJ.

KITE, Justice.

[¶ 1] Life Care Centers of America, Inc. d/b/a Westview Health Care Center (Life Care) appeals from a judgment entered in favor of Margo Dexter after a trial to the court on her claims for breach of employment contract and breach of the implied covenant of good faith and fair dealing. We hold the trial court incorrectly applied Sanchez v. Life Care Centers of America, Inc., 855 P.2d 1256 (Wyo.1993), to find the employee handbook created an implied contract as a matter of law. However, under the circumstances of this particular case and for purposes of deciding the other issues presented, we will assume the trial court made a factual finding that the employee handbook was an implied contract.

[¶ 2] We further hold the trial court's findings were insufficient to support its determination that Life Care breached the employment contract. The judgment contains no finding on the issue of whether cause existed to terminate Ms. Dexter's employment without following the progressive discipline procedures. Under the terms of the implied contract, that finding was essential for a determination on the breach of contract claim. Therefore, we remand for additional findings on that issue. Finally, we hold there was insufficient evidence of a special relationship of trust and reliance to support judgment for Ms. Dexter on the breach of implied covenant claim and reverse that portion of the trial court's judgment.

ISSUES

[¶ 3] Life Care presents the following issues:

(1) Applying correct principles of interpretation of an ambiguous contract to an employee handbook with an inconspicuous disclaimer, is the contract of employment at-will?

(2) Was the trial court's finding that cause for termination did not exist clearly erroneous?

(3) Was there any basis for finding a breach of the covenant of good faith and fair dealing when (a) there was no special relationship and (b) the plaintiff was not deprived of any benefits to which she was entitled?

Ms. Dexter restates the issues as follows:

1. Whether a contract for employment existed.

2. Whether sufficient evidence was presented for the fact finder to determine that the contract for employment had been breached by the employer.

3. Whether sufficient evidence was presented for the fact finder to determine that the employer breached the implied covenant of good faith and fair dealing.

FACTS

[¶ 4] Life Care employed Ms. Dexter as the activities director in its nursing center in Sheridan for nearly six years. When Ms. Dexter was hired, Life Care gave her a copy of its employee handbook containing personnel policies, practices, and procedures for the nursing center. The handbook was identical to the one considered in Sanchez, 855 P.2d 1256. On June 30, 2000, Life Care terminated Ms. Dexter's employment.

[¶ 5] Ms. Dexter filed a complaint against Life Care alleging claims for breach of contract and breach of the implied covenant of good faith and fair dealing. She claimed the handbook created a contract, giving her the right to continuing employment unless her employment was terminated for cause and in accordance with the progressive discipline procedures. She claimed Life Care breached the contract and the implied covenant of good faith and fair dealing by terminating her employment without cause and in violation of the progressive discipline procedures.

[¶ 6] Life Care answered the complaint and, after conducting discovery, moved for summary judgment claiming Ms. Dexter was an at-will employee; there was no contract because Ms. Dexter did not read or rely on the handbook; and, even if there was a contract, there was no breach of contract and no breach of the implied covenant of good faith and fair dealing. After a hearing, the trial court denied Life Care's motion finding issues of fact existed on both the breach of contract claim and the claim for breach of the implied covenant. The case proceeded to trial on October 18 and 19, 2001, and, on November 7, 2001, the trial court issued a decision letter finding Life Care had breached Ms. Dexter's employment contract and the implied covenant of good faith and fair dealing and awarding $24,276 in damages to Ms. Dexter. The trial court entered judgment on November 26, 2001, in accordance with its decision letter.

STANDARD OF REVIEW

[¶ 7] We review the trial court's conclusions of law de novo. Principal Life Insurance Company v. Summit Well Service, Inc., 2002 WY 172, ¶ 20, 57 P.3d 1257,

¶ 20 (Wyo.2002); Polo Ranch Company v. City of Cheyenne, 969 P.2d 132, 136 (Wyo. 1998). The trial court's findings of fact are subject to the clearly erroneous standard:

The factual findings of a judge are not entitled to the limited review afforded a jury verdict. While the findings are presumptively correct, the appellate court may examine all of the properly admissible evidence in the record. Due regard is given to the opportunity of the trial judge to assess the credibility of the witnesses, and our review does not entail re-weighing disputed evidence. Findings of fact will not be set aside unless they are clearly erroneous. A finding is clearly erroneous when, although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.

Fremont Homes, Inc. v. Elmer, 974 P.2d 952, 958 (Wyo.1999) (citations omitted); see also Jessen v. Jessen, 2002 WY 33, ¶ 7, 41 P.3d 543,

¶ 7 (Wyo.2002). Also, in reviewing a trial court's findings of fact,

we assume that the evidence of the prevailing party below is true and give that party every reasonable inference that can fairly and reasonably be drawn from it. We do not substitute ourselves for the trial court as a finder of facts; instead, we defer to those findings unless they are unsupported by the record or erroneous as a matter of law.

Kendrick v. Barker, 2001 WY 2, ¶ 12, 15 P.3d 734, ¶ 12 (Wyo.2001). We affirm the trial court's findings if there is any evidence to support them. Capshaw v. Schieck, 2002 WY 54, ¶ 27, 44 P.3d 47, ¶ 27 (Wyo.2002).

DISCUSSION

A. Breach of Contract

1. Existence of a contract

[¶ 8] Life Care alleges error in the trial court's application of Sanchez. In Sanchez, the employee appealed from an order granting summary judgment for the employer based on the finding that the disclaimer contained in the same handbook at issue here was conspicuous. Reversing the summary judgment, this court said: "[W]e determine that the disclaimer was not physically conspicuous and its contents were ambiguous in that there was language that inferred that Life Care intended to modify the at-will employment to an employment which could only be terminated for cause." 855 P.2d at 1259. We said further:

The meaning and effect of the employment relationship in this case, a mixed question of law and fact, remains unresolved. Therefore, we must reverse summary judgment. The case is remanded to the trial court for determination of whether the employee handbook modified the employment relationship from one terminable at will to one terminable only for cause.

Id. at 1259-60. Despite this court's holding that the handbook was ambiguous, making it subject to an interpretation allowing termination only for cause and in accordance with specified procedures, Life Care made no changes to the handbook after Sanchez was decided.² Thus, under Sanchez and subsequent cases,³ the question of whether the handbook at issue in this case created an implied contract was factual and was to be resolved by the trier of fact. The trial court's initial task in the present case was, therefore, to make a factual finding as to whether, given the ambiguity created by the inconspicuous disclaimer, the handbook created an implied in fact employment contract providing employees could be discharged only for cause and in accordance with the progressive discipline procedure.

[¶ 9] Life Care asserts that, contrary to this court's directive that interpretation of the handbook was a question of fact, the trial court in this case interpreted Sanchez as holding the handbook was an implied contract as a matter of law. Thus, Life Care contends the trial court's conclusion that the handbook was a contract was reached without the independent analysis or fact-finding required by Sanchez. Life Care's contentions are borne out by the trial court's findings of facts pertaining to Sanchez and the implied contract issue:

5. [The] Wyoming Supreme Court has had the occasion to rule on the sufficiency of this same Defendant's "disclaimer" language in the handbook given to Plaintiff in Sanchez v. Life Care Centers, 855 P.2d 1256 (Wyo.1993). The case held the Employee Handbook (same as the language herein) "... disclaimer was not physically conspicuous and its contents were ambiguous in that there was language that inferred that Life Care intended to modify the at-will employment to an employment which could only be terminated for cause." (p. 1259).

6. Plaintiff's Employee Handbook herein (Ex. I) thus created an expectation that employment will not be terminated except for cause and resulted in an implied contract of employment that overcame the at-will employment presumption of this state.

From these findings, it appears the trial court incorrectly read Sanchez as holding the handbook created an implied contract as a matter of law. That was not the holding in Sanchez, and the trial court's finding to that effect was in error. However, under the particular circumstances of this case and for purposes of deciding the...