Salt v. Applied Analytical, Inc.

Decision Date17 December 1991
Docket NumberNo. 915SC336,915SC336
Citation104 N.C.App. 652,412 S.E.2d 97
CourtNorth Carolina Court of Appeals
Parties, 121 Lab.Cas. P 56,855, 7 IER Cases 598 Sylvia Adaire Fogl SALT v. APPLIED ANALYTICAL, INC.

Patterson, Harkavy, Lawrence, Van Noppen & Okun by Martha A. Geer, Raleigh, for plaintiff-appellant.

Stevens, McGhee, Morgan, Lennon & O'Quinn by Robert A. O'Quinn, Wilmington, for defendant-appellee.

COZORT, Judge.

Plaintiff employee brought an action for breach of employment contract and for wrongful discharge allegedly based on breach of implied covenant of good faith and fair dealing. The trial court granted summary judgment for defendant employer. We affirm.

The depositions and other materials in the record demonstrate that, in 1985, plaintiff was employed at Burroughs Wellcome Company in Greenville, North Carolina, as a chemist testing pharmaceutical products. She held 11 1/2 years of seniority, earned $22,000 a year, and received many company benefits. An employee of the defendant, Applied Analytical, Inc. ("AAI"), approached plaintiff about taking a chemist's position with AAI at a salary of $17,500-$18,500 per year. She declined the initial offers, but following negotiations, plaintiff accepted a position with defendant. One of the main topics discussed during the negotiations was plaintiff's need for job security. She informed defendant that if the job with AAI turned out to be unsatisfactory for either party, she would be unable to return to her job at Burroughs Wellcome, or any other pharmaceutical company, because she did not hold a four-year degree in chemistry. In response, the general manager at AAI discussed career growth with plaintiff and talked of plaintiff's future with the company in general terms. The letter from AAI's general manager confirming defendant's offer of employment stated:

This letter is to confirm in writing my verbal offer to you of a Chemist position at Applied Analytical Industries, with an initial annual salary of $17,500.00.

All of us at AAI are impressed with your qualifications and believe you can make significant contributions to our company. We hope you will accept our offer and believe you will find the position challenging and rewarding. As I indicated today during our telephone conversation, I believe the position which we are offering you will allow opportunities for your continued career growth in new areas involving method development for pharmaceutical dosage forms and bioanalytical assays for drugs in biological fluids.

We would appreciate a response to our offer by April 8, 1985.

Plaintiff accepted defendant's offer and moved to Wilmington, North Carolina, where she began working for defendant in August 1985. In January, 1986, defendant granted plaintiff early tenure in the company, increased her salary by $2,000.00, and made her eligible for profit-sharing and a bonus. Plaintiff received positive evaluations from AAI supervisors after six months of employment, and again after one year with the company. On 14 November 1986, AAI's president, Frederick Sancilio, called plaintiff into his office and presented her with a letter of termination. The letter stated plaintiff was being discharged for low productivity and for bothering other employees. Plaintiff adamantly protested the grounds for termination, reluctantly signed the letter, packed her personal belongings, and left the same day.

Plaintiff filed a complaint against defendant on 9 November 1988, alleging a claim for breach of contract. On 26 July 1989, the North Carolina Supreme Court handed down its decision in Coman v. Thomas Mfg. Co., Inc., 325 N.C. 172, 381 S.E.2d 445 (1989). Based on the Coman decision, plaintiff moved to amend her complaint on 7 September 1989 to include a tort claim for breach of implied covenant of good faith and fair dealing. Defendant's responsive pleadings included a motion for summary judgment. The trial court granted summary judgment for defendant on 18 January 1991, and plaintiff filed timely notice of appeal.

The question before the Court when reviewing a summary judgment motion is whether the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to a material fact and that a party is entitled to judgment as a matter of law. N.C.Gen.Stat. § 1A-1, Rule 56(c) (1990); Meadows v. Cigar Supply Co., 91 N.C.App. 404, 371 S.E.2d 765 (1988). We consider first whether the trial court properly granted summary judgment on plaintiff's breach of contract claim.

It is clear in North Carolina that, in the absence of an employment contract for a definite period, both employer and employee are generally free to terminate their association at any time and without any reason. Still v. Lance, 279 N.C. 254, 182 S.E.2d 403 (1971). This Court has held, however, that in some circumstances employee manuals setting forth reasons and procedures for termination may become part of the employment contract even where an express contract is nonexistent. Walker v. Westinghouse Electric Corp., 77 N.C.App. 253, 335 S.E.2d 79 (1985), disc. review denied, 315 N.C. 597, 341 S.E.2d 39 (1986).

Plaintiff argues initially that defendant's personnel manual constituted part of her employment contract. She contends the contract was breached because defendant failed to follow the disciplinary procedure outlined in the manual. In her deposition, plaintiff testified she was given a copy of AAI's personnel manual on or about her first day of work at the company. Each employee, including plaintiff, was required to sign a statement verifying the receipt of the manual. Employees were also required to sign periodic verifications acknowledging they had read revisions to the manual. According to the defendant's manual, employees were classified as either "probationary" or "tenured." An employee would be classified as probationary for the first six months of satisfactory performance. The employee then is classified as a tenured employee.

The manual made no specific reference to "employment at-will." The section of the manual describing disciplinary procedures provided: "[T]he Company reserves the right, with or without guideline notification to: Terminate an employee at any time. Suspend from work any employee ... [or] [r]eturn to probationary status from tenured status any employee...." These rights were reserved for a "severe violation" of standards or rules by a "permanent" or "tenured" employee. The handbook's illustrations of "severe violations" included, but were not limited to: "blatant safety rule violations which endanger the health and safety of the employee and/or his fellow workers, falsification of Company records or data, misappropriation or misuse of Corporate assets, soliciting or engaging in outside activities of any kind or for any purposes on Company property at any time." For non-severe violations committed by a "tenured" employee, the manual provided for a verbal warning upon the first violation and written notices for the second and third violations. A tenured employee would be terminated after a fourth non-severe violation. Plaintiff contends she never received a verbal or written notice prior to termination, in violation of the prescribed disciplinary procedure.

It is clear that "unilaterally promulgated employment manuals or policies do not become part of the employment contract unless expressly included in it." Walker, 77 N.C.App. at 259, 335 S.E.2d at 83-84. In Rosby v. General Baptist State Convention, 91 N.C.App. 77, 370 S.E.2d 605, disc. review denied, 323 N.C. 626, 374 S.E.2d 590 (1988), this Court found no breach of contract by an employer when the employer's personnel policies were not incorporated into the oral contract for employment. The plaintiff received the employment manual when he was hired, and was told it would be his "work bible." The manual included a salary scale, conditions of employment, expected conduct of employer and the employee, and procedures to be followed for disciplinary actions. Id. 91 N.C.App. at 81, 370 S.E.2d at 608. The Rosby court stated:

While we are sensitive to the "strong equitable and social policy reasons militating against allowing employers to promulgate for their employees potentially misleading personnel manuals while reserving the right to deviate from them at their own caprice" as enunciated in Westinghouse, supra, [77 N.C.App.] at 259, 335 S.E.2d at 83 (1985), we find that in the case sub judice, the material contained within the manual was neither inflexible nor all-inclusive on the issue of termination procedures. The manual, although presented as plaintiff's "work bible" when he was hired, was not expressly included within his terminable-at-will contract.

Id.

In contrast, in Trought v. Richardson, 78 N.C.App. 758, 338 S.E.2d 617, disc. review denied, 316 N.C. 557, 344 S.E.2d 18 (1986), this Court held that plaintiff stated a claim for breach of contract based on her allegation that the employer's policy manual was part of her employment contract. There the plaintiff was required to sign a statement indicating she had read the defendant's policy manual which provided she could be discharged "for cause" only and which stated that certain procedures must be followed in order for her to be discharged. Id. 78 N.C.App. at 760, 338 S.E.2d at 618. The plaintiff alleged she was discharged without cause and without the benefit of the personnel manual procedures. Id. The Court concluded that "on hearing on a Rule 12(b)(6) motion the plaintiff has sufficiently alleged that the policy manual was a part of her employment contract which was breached by her discharge to survive her motion." Id. at 762, 338 S.E.2d at 620.

In Harris v. Duke Power Co., 319 N.C. 627, 356 S.E.2d 357 (1987), the North Carolina Supreme Court limited the rule in Trought to those specific facts. The plaintiff in Harris contended that his employment manual was part of his...

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