Michaelson v. Minnesota Min. & Mfg. Co.

• Decision Date: 30 July 1991
• Docket Number: No. C6-91-113,C6-91-113
• Citation: 474 N.W.2d 174
• Parties: 122 Lab.Cas. P 57,028, 6 IER Cases 1146 Victor John MICHAELSON, Jr., Appellant, v. MINNESOTA MINING & MANUFACTURING COMPANY, Respondent, Allen F. Jacobson, et al., Defendants.
• Court: Minnesota Court of Appeals

Page 174

474 N.W.2d 174

122 Lab.Cas. P 57,028, 6 IER Cases 1146

Victor John MICHAELSON, Jr., Appellant, v. MINNESOTA MINING & MANUFACTURING COMPANY, Respondent Allen F. Jacobson, et al., Defendants.

No. C6-91-113.

Court of Appeals of Minnesota.

July 30, 1991.

Review Granted Sept. 25, 1991.

Syllabus by the Court

In-house counsel, displeased with the modification of his duties, may not raise tort and contract claims against his client-employer.

Robert J. Brenner, Christopher R. Walsh, Robert Brenner & Associates, Minneapolis, for appellant.

Eric J. Magnuson, William T. Egan, Jeffrey D. Carpenter, Rider, Bennett, Egan & Arundel, Minneapolis, for respondent.

Considered and decided by PARKER, P.J., PETERSON and SCHULTZ, ^* JJ.

OPINION

HAROLD W. SCHULTZ, Judge.

Appellant challenges summary judgment for respondent and alleges that the trial court erred when it found no genuine issues of material fact in any of appellant's common law claims arising out of their employment relationship. We affirm.

FACTS

In 1974, respondent Minnesota Mining and Manufacturing Company hired appellant Victor Michaelson, an attorney specializing in labor issues, to work in their office of general counsel. Appellant alleges respondent made assurances to him that if he did good work he could work until retirement. In addition, appellant points to three documents which respondent distributed to its employees as making promises which created a unilateral employment contract. Those documents were the 3M Guide to Conduct, the 3M Office Operating Manual and the Corrective Action guide.

In his early years with respondent, appellant experienced serious financial problems, a fact which is uncontested here. Respondent helped appellant solve those problems. In addition, the Minnesota Lawyers Professional Responsibility Board twice limited appellant's license to practice due to disciplinary problems. As a result, respondent's practice is limited to his representation of respondent. Although respondent had supported appellant through these difficult times, it began to feel that appellant's problems "reflected adversely" on respondent.

Appellant worked primarily with the respondent's Human Resources department as an employment lawyer dealing with equal employment opportunity (EEO) issues. On several occasions, respondent sought appellant's evaluation and advice on employment problems and situations. Appellant counseled respondent on the law and gave his opinion as to the appropriate measures that respondent should have taken. On several of those occasions, respondent chose not to follow appellant's advice.

Annual performance reviews show that respondent found appellant's work to be consistently above average. These favorable reviews continued until September 1987 when an interim performance review reported a decline due to appellant's lack of proper time management, attention to cases and special projects, and a lack of communication with management. Respondent reviewed appellant early in order to give him the opportunity to correct the situation before the next formal performance review came due. That report, followed by a meeting between appellant and his supervisors, modified appellant's job responsibilities.

Respondent reassigned appellant to develop an educational and training program for the Human Resources department on issues regarding EEO and employment law. This reassignment of duties did not change appellant's status as respondent's legal advisor on EEO and employment law matters, but rather transferred the burden of litigation from appellant to another attorney in the department. Appellant maintained the same status, title, salary and benefits as he had before the reassignment. Respondent never terminated the employment relationship; it merely reassigned appellant's duties.

Appellant sent respondent a letter on October 19, 1987 which announced that appellant found the transition into his new assignment to be difficult and met with resistance from respondent. Appellant took a two-week vacation after which he never returned to work. Currently, appellant remains on long-term disability leave and receives disability compensation from respondent.

Appellant brought this action in Ramsey County District Court, charging respondent with breach of contract, breach of an implied covenant of good faith and fair dealing, retaliation in violation of public policy, defamation, tortious interference with contract and prospective relations, and intentional infliction of emotional distress. The trial court granted respondent summary judgment on all claims and awarded respondent costs and disbursements.

Appellant alleges the trial court erred in its grant of summary judgment. Respondent filed a notice of review on the issue of the rights and status of in-house counsel in an employment dispute, an issue presented below, but which the trial court did not address.

ISSUES

1. Does appellant's employment as in-house counsel for respondent bar all of his claims summarily?

2. Do genuine issues of fact exist regarding the nature of employment contract between appellant and respondent?

3. Did the trial court err as a matter of law in concluding that appellant failed to state a claim under Minn.Stat. § 181.932?

4. Did the trial court err as a matter of law in concluding that appellant's "at-will" employment was not subject to an implied covenant of good faith and fair dealing or tortious interference?

5. Did the trial court err as a matter of law in concluding that appellant's claims failed to support a cause of action for defamation?

ANALYSIS

1. A well-settled principle of Minnesota law establishes that a client may discharge an attorney at any time, with or without cause. Lawler v. Dunn, 145 Minn. 281, 284, 176 N.W. 989, 990 (1920). Based on this principle, the discharge of an attorney does not constitute a breach of contract. Id. Further, the attorney cannot hold the client liable for damages due to the breach but rather is entitled only to the reasonable value of services rendered (quantum meruit). Id.

The Minnesota Rules of Professional Conduct, which incorporate the rule allowing a client to discharge an attorney, provide in part:

[A] lawyer shall not represent a client or, where representation has commenced, shall withdraw from the representation of a client if * * * the lawyer is discharged.

Minn.R.Prof.Conduct 1.16(a)(3).

This court has recently discussed this issue in the context of in-house counsel in Nordling v. Northern States Power, 465 N.W.2d 81 (Minn.App.1991), pet. for rev. granted (Minn. Mar. 18, 1991). In Nordling, a breakdown of mutual trust between NSP and in-house counsel caused NSP to terminate the employment relationship. Id. at 86. Relying on Herbster v. North American Co. for Life & Health Ins., 150 Ill.App.3d 21, 103 Ill.Dec. 322, 501 N.E.2d 343 (1986), appeal denied 114 Ill.2d 545, 108 Ill.Dec. 417, 508 N.E.2d 728, cert. denied 484 U.S. 850, 108 S.Ct. 150, 98 L.Ed.2d 105 (1987), the Nordling court stated, "the client must have absolute authority to fire the attorney, especially when a breakdown of trust occurs." Nordling, 465 N.W.2d at 86.

Respondent here argues that appellant was respondent's attorney and as such may not raise claims against respondent for events which arose during their attorney-client relationship. We agree. An attorney cannot properly bring a lawsuit against his client and transform confidential data generated in the course of representation into evidence against his client. Such conduct subverts the attorney-client privilege as well as the well-established principle that, as between an attorney and client, the power to terminate or modify the relationship must remain with the client.

We note that even as we review this file, respondent has not yet terminated appellant but still maintains him on the payroll. Respondent hired appellant as legal counsel in 1974. The record shows that appellant has served respondent quite well, and that respondent, in turn, has been faithful and patient with appellant, and has assisted him financially and professionally through his various crises over the years. When appellant's job performance began declining, respondent reassigned appellant away from litigation and into administration in an attempt to alleviate his problems with time management and case management. Respondent met with appellant to discuss his performance and these new assignments.

Considering that respondent could have terminated appellant lawfully, we find respondent's conduct well within the client's scope of authority. However, because of the trial court's ruling, we move on to consider appellant's contention that the trial court abused its discretion when it granted summary judgment for respondent.

2. A trial court may grant summary judgment if the pleadings and documents submitted to the court "show that there is no genuine issue as to any material fact and that either party is entitled to a judgment as a matter of law." Minn.R.Civ.P. 56.03. Summary judgment is proper when the nonmoving party fails to oppose the motion by presenting specific facts which create a genuine issue of fact. Hunt v. IBM Mid America Employees Federal Credit Union, 384 N.W.2d 853 855 (Minn.1986). "A material fact is one of such a nature as will affect the result or outcome of the case depending on its resolution." Zappa v. Fahey, 310 Minn. 555, 556, 245 N.W.2d 258, 259-60 (1976).

On review of a grant of summary judgment, this court must determine whether genuine issues of material fact exist and whether the trial court erred in its application of the law. Hunt, 384 N.W.2d at 855.

Appellant argues that respondent's statements and publications changed the nature of appellant's employment from an at-will employee to a party to a unilateral contract. We disagree. The parties here set no term of employment for appellant. When an employee is hired for an indefinite amount of time, employment is considered "at-w...