Reynolds v. Gentry Fin. Corp.

• Decision Date: 19 February 2016
• Docket Number: No. 20140574–CA.,20140574–CA.
• Citation: 368 P.3d 96
• Parties: Lucinda D. REYNOLDS, Appellant, v. GENTRY FINANCE CORPORATION AND ROYAL MANAGEMENT, Appellees.
• Court: Utah Court of Appeals

368 P.3d 96

Lucinda D. REYNOLDS, Appellant,

v.GENTRY FINANCE CORPORATION AND ROYAL MANAGEMENT, Appellees.

No. 20140574–CA.

Court of Appeals of Utah.

Feb. 19, 2016.

William F. Rummler and Christopher A. Lund, St. George, for Appellant.

Steven R. Bangerter and Daniel P. Wilde, St. George, for Appellee Gentry Finance Corporation.

Judge J. FREDERIC VOROS JR. authored this Opinion, in which Judges GREGORY K. ORME and MICHELE M. CHRISTIANSEN concurred.

Opinion

VOROS, Judge:

¶ 1 After being reassured repeatedly and prominently in writing that her employer would take no adverse action against any employee for bringing a complaint to the home office—and in fact that the employer viewed not reporting violations of company policy as misconduct—appellant Lucinda D. Reynolds reported that her immediate supervisor had directed her to act in violation of company policy and applicable law. She was fired two weeks later. The district court ruled on summary judgment that the discharge violated no law because Reynolds was an at-will employee. Reynolds appeals from that order. We affirm in part and reverse in part and remand for further proceedings consistent with this opinion.

BACKGROUND¹

¶ 2 Reynolds began working for Gentry Finance Corporation and Royal Management (collectively Gentry) in June 2009. She received two employee manuals intended to provide employees with an "understanding of our personnel policies" as part of her orientation.

¶ 3 The manuals required managers to report wrongdoing. The manuals stated in "numerous places" that "managers are told to report wrongdoing ... and are repeatedly assured that ‘NO EMPLOYEE WILL BE TERMINATED OR HAVE ANY ADVERSE ACTION TAKEN AGAINST THEM FOR BRINGING A COMPLAINT TO THE ATTENTION OF THE HOME OFFICE. ’ " (Capitalization, boldface, and italics in original.) Such assurances appear throughout the manuals, often bolded, italicized, and set apart in text boxes; written in all capital letters; punctuated with exclamation points; and prominently displayed at the top of a page or on a separate page entirely. The manuals also state that not reporting wrongdoing constitutes "violating Company Policy." But page 5 of the Gentry manual also includes a disclaimer, buried in the body of the manual's text, stating that "[this handbook] is not an employment contract and is not intended to create contractual obligations of any kind. Neither the employee nor the company is bound to continue the employment relationship if either chooses, at its will, to end the relationship at any time."

¶ 4 In February 2010, Gentry promoted Reynolds to manager of its St. George office. That same month she signed an employment agreement, containing an integration clause, stating that she was "deemed to be an employee at will." This agreement contained no mention of a duty to report wrongdoing.

¶ 5 From the time she was hired until December 17, 2010, Reynolds received at least 17 performance evaluations containing a mix of positive and negative appraisals of her job performance. In early January 2011, Reynolds's supervisor prepared a memo detailing a lack of year-over-year loan growth in Reynolds's office and describing her slow-file (delinquent loan) rate as "too high for the lack of growth the office has had." This memo also stated that Reynolds displayed "a negative attitude" when discussing these issues. Shortly thereafter her supervisor directed Reynolds to call former borrowers, including those whose accounts had been closed for more than 14 months. Reynolds refused, on the ground that the calls would violate Gentry's policy. According to Reynolds, her supervisor also instructed her to call former borrowers whose accounts had been closed for more than 18 months. Reynolds again refused, this time on the ground that the calls would violate state and federal law.

¶ 6 Reynolds reported this incident to an executive at Gentry on January 12, 2011. The executive confirmed to Reynolds's supervisor that company policy prohibited contact with former borrowers after 14 months, but also instructed Reynolds to be "more subtle in the way she relates disagreement with directives to her supervisor." One week later, Gentry suspended Reynolds pending an investigation of her account activity by her supervisor. Her supervisor's investigation reported "slow file is high," "no growth," "poor collection practices," and "overall attitude is poor" as reasons justifying termination. Gentry terminated Reynolds's employment on January 25, 2011, less than two weeks after she reported her supervisor.

¶ 7 Reynolds contends that the district court erred as a matter of law in granting summary judgment against her. First, she contends that her termination breached the employee manuals, which created an implied-in-fact contract that modified her at-will employment status. Second, she contends that her termination violates clear and substantial public policy. Finally, she contends that genuine issues of fact preclude summary judgment.

¶ 8 "The court shall grant summary judgment if the moving party shows that there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law." Utah R. Civ. P. 56(a). "Since the trial court has no comparative advantage over the appellate court in resolving these questions, the appellate court reviews a summary judgment for correctness, giving no deference to the trial court's decision." Bahr v. Imus, 2011 UT 19, ¶ 15, 250 P.3d 56. We view "the facts and all reasonable inferences drawn therefrom in the light most favorable to the nonmoving party." Orvis v. Johnson, 2008 UT 2, ¶ 6, 177 P.3d 600 (citation and internal quotation marks omitted). However, "the mere existence of genuine issues of fact ... does not preclude the entry of summary judgment if those issues are immaterial to the resolution of the case." Doyle v. Lehi City, 2012 UT App 342, ¶ 19, 291 P.3d 853 (omission in original) (citation and internal quotation marks omitted).

ANALYSIS

I. Implied–in–Fact Contract

¶ 9 Reynolds contends that the employee manuals created an implied-in-fact contract that modified her at-will employment status.

¶ 10 An employee manual may create a unilateral contract. Johnson v. Morton Thiokol, Inc., 818 P.2d 997, 1001 (Utah 1991). "Under a unilateral contract analysis, an employer's promise of employment under certain terms and for an indefinite period constitutes both the terms of the employment contract and the employer's consideration for the employment contract." Id. at 1001–02. "The employee's performance of service pursuant to the employer's offer constitutes both the employee's acceptance of the offer and the employee's consideration for the contract." Id. at 1002. "The employee's retention of employment constitutes acceptance of the offer of a unilateral contract; by continuing to stay on the job, although free to leave, the employment supplies the necessary consideration for the offer." Id. (citation and internal quotation marks omitted).

¶ 11 "At-will employment is a bundle of different privileges, any or all of which an employer can surrender through an oral agreement." Sanderson v. First Sec. Leasing Co., 844 P.2d 303, 307 (Utah 1992). The modification need not be oral. But the employer must communicate a manifestation of intent to the employee that is sufficiently definite that the "employee can reasonably believe that the employer is making an offer of employment other than employment at will." Johnson, 818 P.2d at 1002. "[I]t is not clear what type of evidence is sufficient to raise a triable issue concerning the intentions of the parties and therefore the existence of an implied-in-fact contract term." Id. But an employee handbook distributed to an at-will employee may modify the at-will employment relationship. Id. at 1003. "[E]mployee manuals and bulletins containing policies for employee termination are legitimate sources for determining the apparent intentions of the parties and for fixing the terms of the employment relationship." Id. at 1002. However, a manual that "contains clear and conspicuous language disclaiming any contractual liability and stating [the employer's] intent to maintain an at-will relationship with its employees" will not raise a triable issue. Id. at 1003.

¶ 12 This is so because "Utah law allows employers to disclaim any contractual relationship that might otherwise arise from employee manuals." Tomlinson v. NCR Corp., 2014 UT 55, ¶ 25, 345 P.3d 523. Thus, "when an employee handbook contains a clear and conspicuous disclaimer of contractual liability, any other agreement terms must be construed in the light of the disclaimer." Hodgson v. Bunzl Utah, Inc., 844 P.2d 331, 334 (Utah 1992). "The prominence of the text, the placement of the disclaimer, and the language of the disclaimer are all relevant factors in determining whether a disclaimer is clear and conspicuous." Tomlinson, 2014 UT 55, ¶ 26, 345 P.3d 523. For example, in Tomlinson, a disclaimer "conspicuously located at the top of the relevant policy" and "prominently bolded and set apart by a text box" was "sufficiently prominent to put employees on notice of its terms." Id. ¶ 28.

¶ 13 Here, both Reynolds's employment agreement and Gentry's employee manuals describe her employment as at-will. Altogether the portions of the employee manuals included in the record contain four references to at-will employment. One of these references also contains a disclaimer of contractual liability. The disclaimer reads, "[This] is not an employment contract and is not intended to create contractual obligations of any kind. Neither the employee nor the company is bound to continue the employment relationship if either chooses, at its will, to end the relationship at any time." The text of this disclaimer closely tracks the text of the disclaimer in Johnson, which our supreme court held was sufficiently clear to convey the intent of Johnson's employer to maintain an at-will relationship. Johnson, 818 P.2d at...