Madson v. Or. Conf. of Seventh-Day Advent.

• Decision Date: 06 December 2006
• Docket Number: A124779.,0211-11700.
• Citation: 209 Or. App. 380,149 P.3d 217
• Parties: Gregory J. MADSON and Kevin L. Brusett, Appellants, v. WESTERN OREGON CONFERENCE ASSOCIATION OF SEVENTH-DAY ADVENTISTS, an Oregon nonprofit corporation, dba Oregon Conference of Seventh-Day Adventists, dba Portland Adventist Academy, Respondent.
• Court: Oregon Court of Appeals

Page 217

149 P.3d 217

209 Or. App. 380

Gregory J. MADSON and Kevin L. Brusett, Appellants, v. WESTERN OREGON CONFERENCE ASSOCIATION OF SEVENTH-DAY ADVENTISTS, an Oregon nonprofit corporation, dba Oregon Conference of Seventh-Day Adventists, dba Portland Adventist Academy, Respondent.

0211-11700.

A124779.

Court of Appeals of Oregon.

Argued and Submitted September 1, 2005.

Decided December 6, 2006.

Barbee B. Lyon, Portland, argued the cause for appellants. With him on the briefs were Vicki A. Ballou, Amy Joseph Pedersen, and Tonkon Torp LLP.

Bradley F. Tellam, Portland, argued the cause for respondent. With him on the brief were Allyson S. Krueger and Barran Liebman LLP.

Before SCHUMAN, Presiding Judge, and BREWER, Chief Judge,^* and ORTEGA, Judge.

BREWER, C.J.

Plaintiffs Brusett and Madson appeal from a judgment denying their motion for summary judgment, granting the summary judgment motion of defendant Western Oregon Conference Association of Seventh-Day Adventists, and dismissing their statutory claims for unpaid wages. The issues on appeal are whether, on termination of their employment with defendant, both plaintiffs were entitled to payment for unused sick leave and whether plaintiff Madson was entitled to termination pay. We affirm in part, reverse in part, and remand.

The facts are largely undisputed. Plaintiffs Brusett and Madson were teachers at a high school owned and operated by defendant, and they worked for defendant for 17 and 18 years, respectively. In May 2002, defendant notified Brusett that it would not renew his contract for the following school year. In June 2002, defendant offered Madson a 10-month contract for the 2002-03 school year, rather than a 12-month contract as in previous years. Madson did not accept the offered contract. Thus, neither Brusett nor Madson returned to work for defendant in the 2002-03 school year.

Defendant paid Brusett a termination settlement and paid both plaintiffs for their unused accrued vacation. However, defendant rejected Brusett and Madson's requests for payment of unused sick leave and also declined to pay Madson a termination settlement. Brusett and Madson filed a complaint under ORS 652.140(1),¹ seeking unpaid wages, statutory penalties, and attorney fees.

In cross-motions for summary judgment, the parties agreed that the proper resolution of their dispute hinged on their divergent interpretations of the provisions of defendant's employment policy manual, which was expressly incorporated into plaintiffs' employment contracts. Both plaintiffs asserted that the policy manual's provisions unambiguously entitled them to be paid for earned, but unused, sick leave. Plaintiff Madson further asserted that, under the terms of the manual, he was entitled to termination pay. The trial court determined that the policy manual's provisions are unambiguous and do not provide for the contested sick leave pay or termination pay. Accordingly, the court granted defendant's motion for summary judgment and denied plaintiffs' corresponding motion.

On appeal, plaintiffs assign error to the denial of their motion for summary judgment and to the entry of summary judgment for defendant and renew their arguments that the provisions of the policy manual unambiguously require payment of the disputed compensation. When, as here, the pertinent facts are not in dispute, we review rulings on cross-motions for summary judgment to determine whether either party is entitled to judgment as a matter of law, viewing the evidence and all reasonable inferences that may be drawn from the evidence in the light most favorable to the party opposing the motion. ORCP 47 C; Jones v. General Motors Corp., 325 Or. 404, 420, 939 P.2d 608 (1997); Cochran v. Connell, 53 Or.App. 933, 939, 632 P.2d 1385, rev. den., 292 Or. 109, 642 P.2d 311 (1981).

Plaintiffs' arguments on appeal focus on the provisions of defendant's policy manual, which, as noted, is a part of plaintiffs' employment contracts. In construing the relevant provisions, we apply the test set out in Yogman v. Parrott, 325 Or. 358, 937 P.2d 1019 (1997). First, we examine the text of the disputed provisions in the context of the document as a whole. Id. at 361, 937 P.2d 1019. If, based on that examination and a review of the circumstances of the contract's formation, the meaning of the provisions is clear, we construe the terms as a matter of law. Id. If the text, context, and circumstances of the contract's formation show that the agreement is ambiguous, a trier of fact, in attempting to resolve that ambiguity, is to consider "extrinsic evidence of the contracting parties' intent." Id. at 363, 937 P.2d 1019. If those inquiries fail to establish the parties' intent, the ambiguity is resolved by resort to other relevant maxims of construction. Id. at 364, 937 P.2d 1019.

Whether a contract is ambiguous is a question of law. Id. at 361, 937 P.2d 1019. A contract is ambiguous if it is susceptible to more than one reasonable interpretation. Batzer Construction, Inc. v. Boyer, 204 Or.App. 309, 313, 129 P.3d 773, rev. den., 341 Or. 366, 143 P.3d 239 (2006). If a contract's provisions are mutually inconsistent regarding a subject, the contract is ambiguous as to that subject, Alpine Mountain Homes v. Bear Creek Homes, 202 Or.App. 390, 398, 122 P.3d 111 (2005); Portland Fire Fighters' Assn. v. City of Portland, 181 Or.App. 85, 91, 45 P.3d 162, rev. den., 334 Or. 491, 52 P.3d 1056 (2002), unless the provisions can be reconciled in reading the contract as whole. See Yogman, 325 Or. at 361, 937 P.2d 1019. Generally, when the terms of a contract are ambiguous, summary judgment regarding their meaning is not appropriate. Brown v. American Property Management, 167 Or. App. 53, 61, 1 P.3d 1051, rev. dismissed, 331 Or. 334, 19 P.3d 354 (2000).

Plaintiffs' first two assignments of error relate to the trial court's summary judgment rulings on the claims for payment of unused sick leave. We turn to the pertinent provisions of the policy manual. Section 4214:98.2 of the policy manual describes various types of "leave" that defendant provided for "Certificated/Professional Personnel," including leaves for bereavement, illness, personal reasons, jury duty, pregnancy/maternity, paternity, adoption, and professional growth. With regard to sick leave, the provision states:

"a. When employees are sick or impaired to the extent of being unable to reasonably perform all regular duties or would expose others to illness or injury, they are not expected to report for work.

"* * * * *

"d. Sick leave is intended only in the case of personal illness or injury of the employee. A maximum of three days of personal sick leave may be used to care for illness/injury of immediate family members.

"* * * * *

"f. During the contract year certified employees are eligible for up to a maximum of 20 sick leave working days.

"g. The employing organization will consider unusual cases on an individual basis.

"h. In the case of an industrial accident which is covered by Worker's Compensation insurance, full pay less compensation pay will be granted for a period equal to unused sick leave time."

The sick leave provision does not expressly address whether the full 20 days of sick leave is available to the employee when the contract year begins or as it progresses. Nor does it address whether unused sick leave carries over into a subsequent contract year or whether an employee is entitled to be paid for unused sick leave on termination. In defendant's view, the absence of provisions specifically addressing those issues reveals its unambiguous intention not to provide for the carry-over of, or payment for, unused sick leave. As defendant understands the sick leave provision, an employee's entitlement to a "maximum of 20 sick leave working days" suggests that the employee may be entitled to fewer than 20 days of sick leave if he or she is not sick for 20 days. Finally, because the sick leave provision states that sick leave is intended "only in the case of personal illness or injury of the employee," defendant contends—and the trial court agreed—that sick leave is earned and paid only when the employee is sick. We agree with defendant that the sick leave provision itself plausibly supports defendant's position that sick leave does not accrue pro rata during the year, that it is not "banked," and that it must be taken during the contract year or it is lost.² However, the matter does not end there.

Plaintiffs point to two other provisions of the policy manual that, they contend, require a different conclusion. Section 4118:00.4 addresses a terminated employee's entitlement to a "settlement" on termination. It provides, in part:

"The settlement shall be a payment equal to 25 percent of one month's salary excluding area travel and all other allowances for the years of denominational service credit. No more than 20 years of full-time service shall be counted. (* * * Any unpaid benefits earned by the employee, including but not limited to unpaid vacation time and unpaid sick time, are not part of this settlement and shall be paid separately to the employee.)"

(Emphasis added.) According to plaintiffs, the emphasized text requires that an employee who has been terminated "shall be paid" for unused sick leave as an "unpaid benefit earned." Defendant asserts that the termination settlement provision does not plausibly have any bearing on payment for unused sick leave, on three principal grounds. First, defendant reasons that plaintiff's interpretation is inconsistent with the sick leave provision itself, which provides that "[s]ick leave is intended only in the case of personal illness or injury * * *." Second, defendant asserts that sick leave is "earned" only when an employee is sick and takes sick leave. It follows, defendant reasons, that there can be no "earned" but unused sick leave. Third, defendant contends that, as used in the termination settlement provision, "unpaid sick...