Metcalf v. Intermountain Gas Co., 17369

• Citation: 116 Idaho 622,778 P.2d 744
• Decision Date: 08 August 1989
• Docket Number: No. 17369,17369
• Parties: , 58 USLW 2124, 113 Lab.Cas. P 56,136, 4 IER Cases 961 Armida METCALF, Plaintiff-appellant, v. INTERMOUNTAIN GAS COMPANY, Defendant-respondent.
• Court: United States State Supreme Court of Idaho

Page 744

778 P.2d 744

116 Idaho 622, 58 USLW 2124, 113 Lab.Cas. P 56,136,

4 IER Cases 961

Armida METCALF, Plaintiff-appellant, v. INTERMOUNTAIN GAS COMPANY, Defendant-respondent.

No. 17369.

Supreme Court of Idaho.

Aug. 8, 1989.

Skinner, Fawcett & Mauk, Boise, Idaho, for plaintiff-appellant. William L. Mauk argued.

Moffatt, Thomas, Barrett & Blanton, Boise, Idaho, for defendant-respondent. Phillip S. Oberrecht argued.

BAKES, Justice.

Plaintiff, Armida Metcalf, appeals the district court's decision granting partial summary judgment for her former employer, defendant Intermountain Gas Company (Intermountain), on two of her five causes of action: i.e., breach of the employment contract, and breach of a covenant of good faith and fair dealing. The trial court denied Intermountain's motion for summary judgment on the three other causes of action: sex discrimination, age discrimination and breach of public policy, each of which is still pending and awaiting trial. On appeal we consider only the dismissal of the claims for (1) breach of employment contract and (2) breach of an implied covenant of good faith and fair dealing. ¹ We reverse.

I

Metcalf began working for Intermountain in 1979. She performed clerical duties in Intermountain's Hailey, Idaho, office which consisted of seven employees. While on full time status, Metcalf incurred some illness which required her to take sick leave. Under the Intermountain policy an employee could accrue sick leave at a rate of one day per month. Although her illnesses did not exhaust all of her accrued sick leave, Metcalf was absent for eight weeks in 1984 and 1985. During this time, Metcalf underwent a hysterectomy and a thyroidectomy. However, the amount of sick leave which Metcalf took did exceed the company average for that time, as it did for fellow Hailey full time office clerk Betty Munster. According to the manager of the Hailey office, the absences of Metcalf and Munster, the only office clerks, created serious work problems for that office.

In June, 1986, Intermountain hired a part time clerk to replace Munster who retired. This clerk was elevated to full time status in August; in September Metcalf's status was changed from full to part time, in part allegedly because of her sick leave history.

In January, 1986, Metcalf filed discrimination charges against Intermountain with the Idaho Human Rights Commission, alleging age and sex discrimination. Shortly thereafter, her hours were further reduced to two hours per day. In September, 1986, Metcalf voluntarily resigned to pursue other full time employment. The issue on appeal is whether the trial court properly granted summary judgment against Metcalf on the two counts in Metcalf's complaint alleging (1) breach of employment contract, and (2) breach of covenant of good faith and fair dealing.

II

Regarding the breach of employment contract claim, Metcalf argues that the em We agree with the district court that there is no substantial evidence of an express contract provision precluding the employer from dismissing Metcalf "at will." However, viewing the entire record, including the Personnel Manual and Employee Handbook, we conclude that there is a triable issue of fact regarding whether there was an implied-in-fact contractual agreement that Metcalf's employment would not be terminated or reduced because of her using the accumulated sick leave which both parties agree was part of the oral employment contract.

[116 Idaho 624] ployment-at-will-at-will doctrine, which Metcalf acknowledges has been adopted and approved by this Court in innumerable decisions, has been modified in this case either by an express agreement or by an implied-in-fact agreement. As a result, Metcalf alleges that she could not be discharged, nor could her full time employment status be withdrawn, merely because she used a substantial portion of the sick leave she had accumulated pursuant to the employment contract. Intermountain, on the other hand, disputes this contention and asserts that there is no evidence in the record, and, particularly, nothing in the Personnel Manual and Employee Handbook which expressly or even impliedly limits Intermountain's right to discharge Metcalf or to reduce her working hours. The district court agreed with Intermountain and found that "the sick leave policy of the defendant [did] not reach that level of specificity required to constitute an offer for contract, limiting the reason for which the plaintiff could be discharged." ²

As the result of numerous decisions of this Court in recent years, it is now settled law in this state that:

Unless an employee is hired pursuant to a contract which specifies the duration of the employment or limits the reasons for which an employee may be discharged, the employment is at the will of either party and the employer may terminate the relationship at any time for any reason without incurring liability. MacNeil v. Minidoka Memorial Hospital, 108 Idaho 588, 701 P.2d 208 (1985); Jackson v. Minidoka Irrigation Dist., 98 Idaho 330, 563 P.2d 54 (1977).

Spero v. Lockwood, Inc., 111 Idaho at 75, 721 P.2d at 175 (1986). Thus, in the absence of an agreement between the employer and the employee limiting the employer's (or the employee's) right to terminate the contract at will, either party to the employment agreement may terminate the relationship at any time or for any reason without incurring liability. MacNeil v. Minidoka Memorial Hospital, 108 Idaho 588, 701 P.2d 208 (1985). However, such a limitation on the right of the employer (or the employee) to terminate the employment relationship "can be express or implied." Harkness v. City of Burley, 110 Idaho 353, 356, 715 P.2d 1283, 1286 (1986). A limitation may be implied if, from all the circumstances surrounding the employment relationship, a reasonable person could conclude that both parties intended that the employer's (or the employee's) right to terminate the employment relationship-at-will had been limited by the implied-in-fact agreement of the parties. See, e.g., Spero v. Lockwood, Inc., 111 Idaho 74, 721 P.2d 174 (1986); Wagenseller v. Scottsdale Mem. Hospital, 147 Ariz. 370, 710 P.2d 1025, 1036 (Ariz.1985) (en banc ) ("An implied-in-fact contract term ... is one that is inferred from the statements or conduct of the parties."); 1 A.Corbin, § 17, at 38 (1960).

This Court has recognized that "[a]n employee's handbook can constitute an element of the contract." Harkness v. City of Burley, 110 Idaho 353, 356, 715 P.2d 1283, 1286 (1986); Johnson v. Allied Stores Corp., 106 Idaho 363, 679 P.2d 640 (1984). Unless an employee handbook specifically negates any intention on the part of the employer to have it become a part of the employment contract, a court may conclude from a review of the employee handbook that a question of fact is created regarding whether the handbook was intended by the parties to impliedly express a term of the employment agreement. Spero v. Lockwood, supra; Harkness v. City of Burley, supra; Johnson v. Allied Stores Corp., supra; Wagenseller v. Scottsdale Mem. Hospital, supra.

In the present case the employee handbook was silent on the question of whether the terms and employee benefits set out in the handbook affected or otherwise modified the employer's right to terminate the employment relationship at will. ³ Accordingly, we conclude, after considering all the circumstances of this case, that a material issue of fact exists regarding whether, by providing for accumulated sick leave benefits, the employer impliedly agreed with the employee that the employment relationship would not be terminated or the employee penalized for using the sick leave benefits which the employee had accrued. "The trier of fact must determine whether 'a contract existed between the parties by virtue of the ... policy manual.' " Harkness v. City of Burley, 110 Idaho at 356, 715 P.2d at 1286.

Accordingly, the partial summary judgment on Metcalf's breach of contract cause of action is reversed, and that cause remanded for trial.

III

Metcalf also appeals from the trial court's granting of partial summary judgment on her cause of action which alleges that "[i]mplicit in [the parties' employment contract] was a covenant of good faith and fair dealing which governed the circumstances and manner of terminating [her] full time employment." Metcalf asserts essentially that there is an implied-in-law (as distinguished from an implied-in-fact) covenant of good faith and fair dealing in every employment contract. Metcalf makes no specific factual allegations which would support a finding that the parties' agreement contained such a covenant of good faith and fair dealing. Rather, she asserts that the law should imply such a covenant in all employment contracts, or at least in this employment contract.

Until today, this Court has not recognized an implied-in-law covenant of good faith and fair dealing in employment contracts. In MacNeil v. Minidoka Memorial Hospital, 108 Idaho 588, 701 P.2d 208 (1985), this Court unanimously stated:

The rule in Idaho, as in most states, is that unless an employee is hired pursuant to a contract which specifies the duration of the employment, or limits the reasons for which the employee may be discharged, the employment is at the will of either party, and the employer may terminate the relationship at any time for any reason without incurring liability. See Jackson v. Minidoka Irrigation Dist., 98 Idaho 330, 563 P.2d 54 (1977) and the cases cited therein. The only general exception to the above rule is that an employer may be liable for wrongful discharge when the motivation for discharge contravenes public policy. Jackson, supra.

108 Idaho at 589, 701 P.2d at 209 (emphasis added). In Anderson v. Farm Bureau Mutual Ins. Co. of Idaho, 112 Idaho 461, 732 P.2d 699 (Ct.App.1987), the Court of Appeals, quoting from our earlier decision in MacNeil v. Minidoka Memorial Hospital The only...