Portlance v. Golden Valley State Bank

• Citation: 405 N.W.2d 240
• Decision Date: 08 May 1987
• Docket Number: No. CX-86-1315,CX-86-1315
• Parties: 107 Lab.Cas. P 55,784, 2 Indiv.Empl.Rts.Cas. (BNA) 475 Jack C. PORTLANCE, Respondent, v. GOLDEN VALLEY STATE BANK, Appellant.
• Court: Supreme Court of Minnesota (US)

Page 240

405 N.W.2d 240

107 Lab.Cas. P 55,784, 2 Indiv.Empl.Rts.Cas.

(BNA) 475

Jack C. PORTLANCE, Respondent, v. GOLDEN VALLEY STATE BANK, Appellant.

No. CX-86-1315.

Supreme Court of Minnesota.

May 8, 1987.

Syllabus by the Court

An action for wrongful discharge based on an oral contract of employment allegedly modified by an employees' manual or handbook is subject to the two-year limitation period of Minn.Stat. Sec. 541.07(5) (1986).

Roy A. Ginsberg and William B. Dawson, Minneapolis, for appellant.

Thomas B. Hatch, Minneapolis, for respondent.

Heard, considered, and decided by the Court en banc.

COYNE, Justice.

Golden Valley State Bank appeals from the order denying its motion for summary judgment and certifying the following question as important and doubtful:

Does the two-year limitations period of Minn.Stat. 541.07(5) or the six-year limitations period of Minn.Stat. 541.05, subd. 1(1) govern in a Pine River wrongful discharge case?

On March 26, 1981, Jack Portlance, an assistant vice president and loan officer, was summarily discharged after almost 10 years of service with the bank. Almost three years later, on or about February 10, 1984, Portlance instituted this action alleging breach of his employment contract as modified by certain terms and conditions set out in an employee manual dated January 1, 1980. His claim, based on Pine River State Bank v. Mettille, 333 N.W.2d 622 (Minn.1983), is that the bank breached the employment contract contained in the employee handbook by discharging him without proper cause and without giving him an opportunity to improve his performance.

The bank moved for summary judgment pursuant to Rule 56.02 of the Minnesota Rules of Civil Procedure, contending that the action is barred by the two-year statute of limitations of Minn.Stat. Sec. 541.07(5) (1986). ¹ The district court denied the motion but certified the question of the applicable limitation period as important and doubtful.

Minn.Stat. Sec. 541.05, subd. 1 (1986), the general statute of limitations applicable to contract actions, provides in pertinent part as follows:

Except where the uniform commercial code otherwise prescribes, the following actions shall be commenced within six years:

(1) Upon a contract or other obligation, express or implied, as to which no other limitation is expressly prescribed;

Minn.Stat. Sec. 541.07(5) (1986), however, sets a two-year limitation applicable only to wages and related damages:

Except where the uniform commercial code or this section otherwise prescribes, the following actions shall be commenced within two years:

* * *

* * * (5) For the recovery of wages or overtime or damages, fees or penalties accruing under any federal or state law respecting the payment of wages or overtime or damages, fees or penalties except, that if the employer fails to submit payroll records by a specified date upon request of the department of labor and industry or if the nonpayment is willful and not the result of mistake or inadvertence, the limitation is three years. (The term "wages" means all remuneration for services or employment, including commissions and bonuses and the cash value of all remuneration in any medium other than cash, where the relationship of master and servant exists and the term "damages," means single, double, or treble damages, accorded by any statutory cause of action whatsoever and whether or not the relationship of master and servant exists);

Early federal court decisions in cases arising under the Fair Labor Standards Act of 1938, 29 U.S.C.A. Sec. 201 et seq., suggested that the scope of section 541.07(5) might be confined to statutory wage claims. Peterson v. Parsons, 73 F.Supp. 840, 843 (D.Minn.1947); Smith v. Cudahy Packing Co., 73 F.Supp. 141, 143 (D.Minn.1947). Subsequent to its 1953 amendment, however, this court afforded section 541.07(5) considerably broader application. Declaring that it could discern no rational basis for treating common law wage claims differently from those arising under statute, this court, in Kohout v. Shakopee Foundry Co., 281 Minn. 401, 162 N.W.2d 237 (1968) (an action to recover vacation pay under a collective bargaining agreement), held that both are governed by the two-year limitation prescribed by Minn.Stat. Sec. 541.07(5).

In Roaderick v. Lull Engineering Company, Inc., 296 Minn. 385, 387-88, 208 N.W.2d 761, 763 (1973), an action based on quantum meruit for the recovery of the reasonable value of services performed under an unenforceable oral contract, the portion of the claim which had accrued more than two years before the commencement of the action was held barred by the limitation prescribed by section 541.07(5).

Then in Worwa v. Solz Enterprises, Inc., 307 Minn. 490, 238 N.W.2d 628 (1976), this court once again ruled that an action for breach of an oral contract of employment was essentially an action for wages and was subject to the two-year limitation period set by section 541.07(5).

Respondent Portlance contends, however, that this unbroken line of cases recognizes a statute limiting only those actions based on an employer's failure to pay wages due and owing. Apart from the absence of any statutory requirement that the wage claim must be for uncompensated services previously rendered, the contention ignores the factual setting of the Worwa decision. There, after paying a portion of the annual salary allegedly agreed upon, the defendant refused plaintiff's services. That the contract was for a definite period rather than one of indefinite duration does not alter the practical effect of the refusal to accept plaintiff's services: it terminated plaintiff's employment. Nevertheless, although the plaintiff's employment had been terminated and his...