Osterman-Levitt v. MedQuest, Inc., OSTERMAN-LEVIT

• Decision Date: 08 March 1994
• Docket Number: P,No. 930235,OSTERMAN-LEVIT,930235
• Citation: 513 N.W.2d 70
• Parties: 127 Lab.Cas. P 57,659, 9 IER Cases 498 Carollaintiff and Appellant, v. MEDQUEST, INC., a North Dakota corporation, and Mercy Medical Center, a North Dakota non-profit corporation, Defendants and Appellees. Civ.
• Court: North Dakota Supreme Court

Page 70

513 N.W.2d 70

127 Lab.Cas. P 57,659, 9 IER Cases 498

Carol OSTERMAN-LEVITT, Plaintiff and Appellant, v. MEDQUEST, INC., a North Dakota corporation, and Mercy

Medical Center, a North Dakota non-profit

corporation, Defendants and Appellees.

Civ. No. 930235.

Supreme Court of North Dakota.

March 8, 1994.

Patrick Leier, Williston, for plaintiff and appellant. Submitted on brief.

David E. Reich of Pearce & Durick, Bismarck, for defendants and appellees.

SANDSTROM, Justice.

Carol Osterman-Levitt appeals from a summary judgment dismissing her claims for wrongful termination of an employment contract against MedQuest, Inc., and its parent corporation, Mercy Medical Center (Mercy). The trial court ruled as a matter of law the defendants' personnel policies did not create a contract for continuing employment of Osterman-Levitt and, even if they did, the defendants did not violate those policies and wrongfully terminate or fail to rehire her. Because genuine issues of material fact exist as to both issues, summary judgment was inappropriate and we therefore reverse dismissal of Osterman-Levitt's breach of contract claim. Because Osterman-Levitt failed to challenge on appeal dismissal of her claims for breach of an implied covenant of good faith and fair dealing and for damage to her reputation caused by the termination, we affirm dismissal of those claims.

I

MedQuest provides management and personnel services to Mercy, a health care provider in Williston. Osterman-Levitt was first employed by Mercy in December 1978. During the ensuing years, she was employed as education director and eldercare coordinator. In May 1988, she was hired by MedQuest to serve as its director of marketing. On February 28, 1989, MedQuest's president and chief executive officer, Robert Fale, told Osterman-Levitt that her position of director of marketing would be terminated, not because of her job performance, but because those duties would be shifted to the various department managers. Fale told her there were no other unfilled employment positions for which she would be qualified.

After elimination of the director of marketing position, Lynn Borud, director of Mercy, assumed some of the responsibilities of the director of marketing position in addition to his normal duties. No new director of marketing was hired. But Fale hired Laurel Boustad, who had been manager of another clinic, for a new staff position of administrative assistant for special projects at Mercy. Boustad began working in May 1989. This new position was not offered to Osterman-Levitt.

Osterman-Levitt brought this action asserting the defendants' personnel policies created a contract for continuing employment which was breached by her termination and the defendants wrongfully failed to rehire her for the position of administrative assistant for special projects in violation of those personnel policies. The trial court granted the defendants' motion for summary judgment, finding "no evidence ... that there was a contract of employment for a specific term or that [Osterman-Levitt] could only be terminated for cause." Osterman-Levitt appealed.

II

Summary judgment allows disposal of a controversy if either party is entitled to judgment as a matter of law, if no dispute exists as to either the material facts or the inferences to be drawn from undisputed facts, or if resolving disputed facts would not alter the result. Ebach v. Ralston, 469 N.W.2d 801, 803 (N.D.1991).

A

Employment without a definite term is presumed to be at will. Rykowsky v. Dickinson Public School Dist. No. 1, 508 N.W.2d 348, 349 (N.D.1993). The employment at will doctrine is codified at N.D.C.C. Sec. 34-03-01, which provides "[a]n employment having no specified term may be terminated at the will of either party on notice to the other, except when otherwise provided by this title." Under the statute, if there is no fixed duration of employment, there is generally no employment contract. Aaland v. Lake Region Grain Cooperative, 511 N.W.2d 244, 246 (N.D.1994). However, the parties, by contract, can overcome the presumption of at will employment and create in the employee enforceable employment rights. Bykonen v. United Hospital, 479 N.W.2d 140, 141 (N.D.1992). A promise of employment on particular terms of unspecified duration, if in the form of an offer and if accepted, may create a binding contract. Pratt v. Heartview Foundation, 512 N.W.2d 675, 677 (N.D.1994).

Generally, whether a contract exists is a question of fact. Hirschkorn v. Severson, 319 N.W.2d 475, 478 (N.D.1982). But if the intent of the parties can be ascertained from the agreement alone, interpretation of the contract is a question of law. Madler v. McKenzie County, 467 N.W.2d 709, 712 (N.D.1991). If the terms of a contract are ambiguous, extrinsic evidence of the parties' intent may be considered, and the terms of the contract and the parties' intent become questions of fact. Madler. "If 'an employer promulgates a manual of personnel policies, the entire manual will be examined to determine whether it discloses an intent to overcome the presumption in Section 34-03-01, N.D.C.C.' " Rykowsky [quoting Schmidt v. Ramsey County, 488 N.W.2d 411, 413 (N.D.Ct.App.1992) ]. Promises, express or implied, in personnel policies with respect to job security and termination procedures must be sufficiently definite or specific and must be communicated to the employee to be enforceable. Pratt, 512 N.W.2d at 677.

Osterman-Levitt relies on written policies, which were distributed to all employees in staff positions, and written procedures which were distributed along with the policies to all employees in management or supervisory positions. Osterman-Levitt was provided a policy and procedure book and, while employed as education director from 1983 through 1986, was responsible for developing the policy and procedure program and for coordinating changes to the policy manual. Osterman-Levitt stated in an affidavit "[t]he policy manual that we operated under and my contacts with ... Fale definitely provided an atmosphere of job security and fair treatment promises throughout which caused myself and others to remain on the job...."

An introductory letter to the personnel policies states in part:

"This booklet has been prepared to help us reach our desired goals in health care. It serves to tell you what your responsibilities are to the hospital, patient and fellow employee. It also tells what the hospital's responsibilities are to you as an employee."

One policy, entitled "Employment Status," states there is a 90-day probationary period for new employees during which the employee may "be terminated involuntarily without notice." "Permanent employees" were entitled to a "Pension Plan." A separate "Wage and Salary Program" existed for "General Staff" and "Supervisory/Managerial Staff." The program for general staff included a step salary system. A policy on "Job Posting" says the personnel director "will post on the official bulletin board" job vacancies for a period of seven days. A policy on "Promotion and Transfer" states "[i]n situations where the qualifications of applicants are equal, seniority is utilized as the only determining factor for hiring. Inhouse applicants would have precedence over the applicants from the outside." Another policy states "[f]ormer employees are eligible for re-employment."

A policy entitled "Terminations" states "[r]esignation, quitting, lay off and dismissal are various methods of termination." The policy defines resignation as "a voluntary action by an employee to sever the employment relationship;" quitting as "a voluntary action by the employee to sever the employment relationship without following proper procedures;" lay off as "an action by the hospital to reduce the size of the work force;" and dismissal as "the severance of the employment relationship by the hospital due to serious deficiencies on the part of the employee." There is also a "Reduction in Work Force" procedure which states "[r]eduction will be made by department/unit on the basis of job classification and length of continuous service." The procedure further says the personnel department will maintain a list of employees separated because of staff reductions and contact them if job openings occur.

There is no express disclaimer stating the policies and procedures are not to be construed as forming part of an employment contract. The defendants, however, argue no enforceable contract rights exist because the "Termin...