De Petris v. Union Settlement Ass'n, Inc.

• Decision Date: 24 October 1995
• Citation: 633 N.Y.S.2d 274,657 N.E.2d 269,86 N.Y.2d 406
• Parties: , 657 N.E.2d 269, 11 IER Cases 119 In the Matter of Pasquale DE PETRIS, Appellant, v. UNION SETTLEMENT ASSOCIATION, INC., Respondent.
• Court: New York Court of Appeals Court of Appeals

Page 274

633 N.Y.S.2d 274

86 N.Y.2d 406, 657 N.E.2d 269, 11 IER

Cases 119

In the Matter of Pasquale DE PETRIS, Appellant, v. UNION SETTLEMENT ASSOCIATION, INC., Respondent.

Court of Appeals of New York.

Oct. 24, 1995.

Karen Wohlforth, New York City, for appellant.

Sullivan & Cromwell, New York City (Stephanie G. Wheeler, D. Stuart Meiklejohn and Theodore O. Rogers, Jr., of counsel), for respondent.

OPINION OF THE COURT

KAYE, Chief Judge.

At issue on this appeal is whether a discharged employee's CPLR article 78 petition, claiming wrongful termination for failure to comply with procedures set out in an employee manual, was correctly dismissed. We conclude, as did the Appellate Division, that it was.

In 1972, petitioner, Dr. Pasquale De Petris, joined the James Weldon Johnson Counseling Center, a provider of outpatient mental health services in East Harlem, as a staff psychologist. He continued to hold that position when in 1982 respondent, Union Settlement Association, a private nonprofit corporation, assumed responsibility for the Center. Petitioner was made assistant administrative director of the Center in 1986 and two years later became its administrative director.

Among petitioner's duties as administrative director was overseeing the Center's finances which, beginning in 1990, became a source of friction between petitioner and respondent. According to respondent, the Center under petitioner's direction operated at a deficit and the overspending continued. Between December 1991 and April 1992, respondent's executive director, Eugene Sklar, and its associate executive director, Gina Rusch, several times in writing and in meetings expressed concern to petitioner regarding his oversight of the Center's finances. In response to these communications, petitioner proposed various measures for reducing expenditures and increasing revenues but on April 2, 1992 Rusch wrote him that she saw no indication that corrective measures were actually being implemented.

At a meeting on April 14, 1992, respondent's Board of Directors discussed the Center's financial straits and when petitioner thereafter failed to act to remedy the situation, on April 20 respondent terminated his employment effective that day. The next day, petitioner wrote Rusch that the termination letter did not comply with respondent's personnel manual in that it gave no reason for the firing and afforded none of the warnings that must precede termination, and he threatened legal action. Sklar offered to meet with petitioner to discuss the matter but petitioner insisted on written reasons for his termination, which Sklar did not provide.

The procedures to which petitioner referred were set forth in a "Personnel Policies and Practices Manual" first distributed by respondent to its employees in 1978. The stated purpose of the Manual was "to acquaint each employee with the personnel policies and practices of the Settlement so that you may know what to realistically expect." The Manual set out respondent's hiring practices, including that each employee at the time of hiring would receive a letter of employment specifying salary, work hours, duties, supervision and any special conditions of employment. Petitioner never received such a letter and has no written employment contract with respondent.

As explained in the introductory section of the Manual: "We fully expect that the provisions and information in this Manual will change from time to time due to revision and/or change of policy of Union Settlement or changes which are mandated by legislation. It may not be possible at times to inform staff of such changes, however, every effort will be made to keep the Manual current. At all times, precedence will be given to the most current information over that which may be in the Manual and out of date."

Respondent claims it stopped distributing the Manual in December 1991 and told employees, including petitioner, that the handbook was being revised.

In asserting his claim, petitioner pointed particularly to a section of the Manual entitled "Termination of Employment," which provided that "[e]mployees may be discharged for just cause" and would be "informed in writing of the problems in job performance and given a period of time to improve. * * * Upon completion of this period, the employee shall be notified whether he passed or failed the trial, and if failed, the reason thereof." Employees dismissed for gross misconduct, according to the Manual, could be terminated immediately but would then be entitled to a hearing.

Petitioner brought an article 78 proceeding seeking reinstatement and back pay, charging that respondent acted arbitrarily and capriciously by failing to follow its stated procedures for terminating his employment. The trial court held that article 78 relief was available in a proceeding brought against a private corporation for violation of its internal rules but dismissed the petition on the ground that mere existence of the Manual did not limit the employer's right to terminate an at-will employee and that petitioner had failed to establish the elements necessary to bind his employer. The Appellate Division affirmed, concluding that article 78 was the appropriate vehicle to challenge respondent's actions but that there was "no indication that the manual procedure has been violated." (209 A.D.2d 180, 181, 618 N.Y.S.2d 276.) We now affirm the Appellate Division order, but on different grounds.

Absent an agreement establishing a fixed duration, an employment relationship is presumed to be a hiring at will, terminable at any time by either party (Sabetay v. Sterling Drug, 69 N.Y.2d 329, 333, 514 N.Y.S.2d 209, 506 N.E.2d 919). This State neither recognizes a tort of wrongful discharge nor requires good faith in an at-will employment relationship (Murphy v. American Home Prods. Corp., 58 N.Y.2d 293, 297, 461 N.Y.S.2d 232, 448 N.E.2d 86; Ingle v. Glamore Motor Sales, 73 N.Y.2d 183, 188, 538 N.Y.S.2d 771, 535 N.E.2d 1311). An employee may recover, however, by establishing that the employer made the employee aware of its express written policy limiting its right of discharge and that the employee detrimentally relied on that policy in accepting the employment (see, Weiner v. McGraw-Hill, Inc., 57 N.Y.2d 458, 465-466, 457 N.Y.S.2d 193, 443 N.E.2d 441). Where these elements are proved, the employee in effect has...