Nicholas v. Allstate Ins. Co.

• Decision Date: 28 May 1999
• Docket Number: No. 30,735-CA.,30,735-CA.
• Parties: Rodney NICHOLAS, et ux., Plaintiffs-Appellees, v. ALLSTATE INSURANCE COMPANY, et al., Defendants-Appellants.
• Court: Court of Appeal of Louisiana — District of US

739 So.2d 830

Rodney NICHOLAS, et ux., Plaintiffs-Appellees, v. ALLSTATE INSURANCE COMPANY, et al., Defendants-Appellants.

No. 30,735-CA.

Court of Appeal of Louisiana, Second Circuit.

May 28, 1999.

Rehearing Denied July 23, 1999.

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Wiener, Weiss & Madison by John M. Madison, Jr., Shreveport, for Appellants.

Cook, Yancey, King & Galloway by Jerald R. Harper, Shreveport, for Appellees.

Before NORRIS, WILLIAMS, GASKINS, CARAWAY and DREW, JJ.

GASKINS, Judge.

In this wrongful termination of employment action, the defendants, Allstate Insurance Company ("Allstate"), Larry Rhodes and William Monie, Jr., appeal the trial court judgment in favor of the plaintiffs, Rodney and Neva Nicholas. The jury found that Rodney Nicholas ("Nicholas") and Allstate had entered into an agreement which modified his at-will employee status, and that the defendants had breached the employment agreement and intentionally subjected Nicholas to emotional distress. For the following reasons, we affirm in part and reverse in part.

FACTS

In April 1971, Nicholas began working as an Allstate insurance agent in Shreveport, Louisiana. Prior to hiring Nicholas, Allstate gave him written materials and showed him a filmstrip, which explained the advantages of working with Allstate, and the potential to develop a substantial income from renewal commissions, relieving the pressure to generate new business in later years. Nicholas signed the Allstate R-830 "Agent Compensation Agreement," which described the agent's commission rates for new policies and renewals. The agreement also stated that either Nicholas or Allstate could terminate the contract upon giving written notice.

In 1981, after working as an Allstate agent for 10 years, Nicholas signed an amended agreement. Part 4, paragraph XI, provides in pertinent part:

Either you or Allstate have the right to terminate this agreement upon mailing to the other, at his or its last known address, written notice of termination.... The Company will not terminate your employment because of unsatisfactory work unless you have been notified that your work is unsatisfactory and that your job is in jeopardy and unless you have been given a reasonable opportunity to bring your performance up to satisfactory standards.

The agreement does not define "unsatisfactory work" or "reasonable opportunity." During his time at Allstate, Nicholas received periodic performance reviews. Several of these evaluations noted that Nicholas needed to produce more insurance business.

In Allstate's Jackson, Mississippi region, which included Shreveport, there were three steps of review leading to an agent's termination. The first level was called Corrective Review, the second was Unsatisfactory Review, and the third was Personal, or "Job in Jeopardy," Review. If the agent failed to meet the goals of one level, he was placed at the next level and was eventually terminated.

In August 1984, Richard Ebbs, the Shreveport district sales manager, placed Nicholas on Corrective Review for poor performance, at the direction of William Monie, Jr. Monie was Allstate's Louisiana territorial sales manager, and at the time, Ebb's supervisor. Nicholas failed to meet all of the goals set for the first and second levels of review. In February 1985, he was placed on Personal Review and informed in writing that his job was in jeopardy. In April 1985, Monie moved to another region and Larry Rhodes became territorial sales manager. Nicholas achieved only one of the assigned insurance production goals, but this review period was extended an additional 30 days, with a new set of goals, because Ebbs had failed to meet regularly with Nicholas.

Following this review period, Nicholas had not achieved all of the assigned goals, but because he had improved his ranking among agents in his peer group, Ebbs initially suggested to Rhodes that Nicholas be removed from Personal Review. However, in a June 27, 1985 letter, Rhodes recommended the termination of Nicholas to the regional office, which gave its approval. Nicholas requested a hearing before the Agent Review Board to appeal this recommendation. He selected two members of the board, which voted unanimously to uphold the termination recommendation. Nicholas was terminated on October 14, 1985.

In November 1992, the plaintiffs, Rodney and Neva Nicholas, filed a petition for damages against the defendants, alleging breach of contract, fraud, intentional infliction of emotional distress, and detrimental reliance. Prior to trial, the defendants filed a motion for summary judgment on the issue of liability, and a motion to dismiss the punitive damages claim. The defendants also filed three motions in limine to exclude certain testimony and evidence. All of the motions were denied.

After a 17—day trial, the jury returned a verdict in favor of the plaintiffs, finding that Nicholas and Allstate modified their at-will status by agreement, that Allstate breached this agreement, and that Allstate's breach was committed in bad faith. Further, the jury found that the defendants intentionally inflicted emotional distress on Nicholas, which was a substantial factor in causing him damages. The jury also found the defendants breached a duty to Nicholas by intentionally and fraudulently misrepresenting the truth. Finally, the jury found that Nicholas detrimentally relied on promises made by Allstate.

The issue of prescription was also presented to the jury, which found the plaintiffs were unaware of the facts forming the basis of this claim until November 3, 1991, concluding that the claim had not prescribed. The jury awarded damages in favor of the plaintiffs and against Allstate, Monie, and Rhodes in the designations of $440,000 for loss of salary or commissions, $159,000 for loss of retirement benefits and $850,000 for emotional distress and loss of enjoyment of life. The jury also awarded Neva Nicholas $15,000 for loss of consortium. The defendants appeal the judgment.

EMPLOYMENT CONTRACT

In two assignments of error, the defendants contend that the trial court erred in instructing the jury concerning the "at-will" employment issue, and that the jury was clearly wrong in finding that the parties' employment contract modified Allstate's right to terminate Nicholas. The defendants argue that Allstate is not liable for wrongful discharge because Nicholas was an at-will employee.

Ordinarily, the meaning and intent of the parties to a written instrument should be determined within the four corners of the document, and its terms cannot be explained or contradicted by extrinsic evidence. Brown v. Drillers, Inc., 93-1019 (La.1/14/94), 630 So.2d 741; NAB Natural Resources v. Willamette Industries, Inc., 28,555 (La.App.2d Cir.8/21/96), 679 So.2d 477. When a contract may be construed from the four corners of the instrument, that interpretation is a matter of law for the court to determine. NAB Natural Resources, supra; Wilson v. Cost Plus of Vivian, Inc., 375 So.2d 683 (La.App. 2d Cir.1979).

In the present case, the parties stipulated that Nicholas was an at-will employee and the validity of the employment contract is not disputed. Thus, the issue before the trial court was the interpretation of the contractual provision regarding pre-termination procedures and whether it affected the relationship between the parties. The trial judge submitted this question to the jury by giving an instruction, which stated in pertinent part:

Reasons for termination of an "at-will" employee need not be accurate, fair or reasonable, unless the parties have contracted to limit their at-will relationship. Under Louisiana law, Rodney Nicholas was an "at-will" employee of Allstate Insurance Company. An issue for you to determine is whether Rodney Nicholas and Allstate contractually limited the "at-will" relationship.

However, as noted above, the inquiry regarding the nature of the parties' relationship is a matter of law to be determined by the trial court, which erred in allowing the jury to construe the contract's meaning. Consequently, on review, we must interpret the contractual terms as a matter of law.

Under Louisiana law, a contract is an agreement by two or more parties whereby obligations are created, modified or extinguished. La. C.C. art.1906. Four elements are required for a valid contract: (1) the parties must possess capacity; (2) their mutual consent must be freely given; (3) the contract must have a certain object; and (4) a lawful purpose. La. C.C. arts.1918, 1927, 1966, 1971; Keller v. Sisters of Charity of Incarnate Word, 597 So.2d 1113 (La.App. 2d Cir.1992).

In addition to these general contract principles, the Civil Code provisions concerning the hiring of laborers are contained in La. C.C. arts. 2746-2750. One may hire out his services only for a certain limited time, or for the performance of a particular enterprise. La. C.C. art. 2746. A person or business is free to dismiss a worker without assigning any reason and the worker is also free to leave without giving any reason or cause. La. C.C. art. 2747.

Thus, the two types of contracts for hire are the limited duration contract and the terminable at-will contract. Williams v. Touro Infirmary, 578 So.2d 1006 (La.App. 4th Cir.1991); Deus v. Allstate Insurance Co., 15 F.3d 506 (5th Cir. 1994), cert. denied, 513 U.S. 1014, 115 S.Ct 573, 130 L.Ed.2d 490 (1994). Where an employee's job is for an indefinite term, the employment is terminable at the will of either the employer or the employee. Absent a specific contract or agreement establishing a fixed term of employment, an employer is at liberty to dismiss an employee at any time for any reason without incurring liability for the discharge. Deus, supra; Williams v. Delta Haven, Inc., 416 So.2d 637 (La.App. 2d Cir.1982).

Here, the employment agreement does not establish a definite term and thus may be terminated at the will of either...