Sarvis v. Vermont State Colleges

• Decision Date: 02 March 2001
• Docket Number: No. 99-390.,99-390.
• Citation: 772 A.2d 494
• Parties: Robert H. SARVIS v. VERMONT STATE COLLEGES.
• Court: Vermont Supreme Court

772 A.2d 494

Robert H. SARVIS v. VERMONT STATE COLLEGES.

No. 99-390.

Supreme Court of Vermont.

March 2, 2001.

Robert H. Sarvis, Pro Se, Brattleboro, Plaintiff-Appellant.

Michael J. Harris of Sutherland, Collins, McMahon & Harris, Inc., Burlington, for Defendant-Appellee.

Present AMESTOY, C.J., DOOLEY, MORSE, JOHNSON and SKOGLUND, JJ.

SKOGLUND, J.

Plaintiff Robert Sarvis appeals the grant of summary judgment in favor of defendant Vermont State Colleges. Plaintiff contends: (1) the court erred when it found defendant had just cause to terminate his employment contracts; and (2) he is entitled to Title VII protection because defendant terminated him for his criminal history. We affirm.

The material facts in this case are not in dispute. On March 13, 1995, plaintiff was convicted of five counts of bank fraud and sentenced to serve forty-six months in prison. He was ordered to pay over $12 million in restitution to five banks in order of priority, including two million dollars to the Proctor Bank, a Vermont bank, which was given top payment priority. He was incarcerated from April 4, 1995 to August 17, 1998, at the Allenwood prison in Lewisburg, Pennsylvania, where he worked in the prison's electric department. In August of 1998, two weeks after he was released from prison, plaintiff applied for an adjunct professor position at Community College of Vermont (CCV), a division of defendant. Plaintiff provided defendant with a resume, in which he indicated that from 1984-1998 he was "President and Chairman of the Board" of "CMI International Inc., Boston, Massachusetts." In describing his duties, plaintiff indicated he was "[r]esponsible for all operations and financial matters." He ended his summary with the following: "[f]rom 1995-1998 this company was sold off by various divisions and I have retired." Defendant replied, and asked plaintiff to fill out an "Instructor Information" form. On September 30, 1998, plaintiff submitted this form and, in the space provided to list applicant's "Most Recent Previous Employment," plaintiff referred his reader to the resume he submitted with his August letter.

Plaintiff also applied for a position as CCV's Coordinator of Academic Services, and submitted a second resume in connection with this application. The second resume was similar to the first, except he changed the last line of his description of duties at CMI to read: "From 1995-1998 this company was sold off by various divisions. I have since been semi-retired." Under the "Business Experience" heading, he also added a line, "1998-present" "Semi-retired. Adjunct Instructor of Business at Colby-Sawyer College and Franklin Pierce College." In a memorandum to a CCV administrator, plaintiff also advised that "I have not `worked' for almost four years," and discouraged defendant from contacting management at Franklin Pierce for additional references.

Plaintiff provided defendant with additional application materials, attempting to secure a teaching position. Plaintiff listed for defendant the classes he believed defendant would find him "well equipped to teach." He highlighted business law and business ethics as courses in which he had "the highest level of capability and interest." He alerted defendant that he had "a great interest and knowledge of business law" and that he believed he would do "an excellent job" teaching a business ethics class because this subject was "of particular concern" to him.

In response to the information plaintiff provided, defendant entered into three employment contracts with plaintiff, covering plaintiff's duties as academic coordinator, teacher, and independent studies instructor. After plaintiff commenced performance on the coordinator and independent study contracts, his probation officer alerted defendant to plaintiff's criminal history. Defendant terminated plaintiff before the expiration of his contracts of employment,¹ citing,

[t]he nature of the federal offenses (involving dishonesty), the gravity of the offenses (multiple counts of bank fraud, over $12 million dollars in restitution) the presence of local victims (Proctor Bank and any other Vermont victims) and the potential harm to CCV's reputation, [as] substantial factors contributing to the termination decision.

Plaintiff filed a complaint alleging that defendant was liable for breach of all three contracts and wrongful termination. Plaintiff later amended the complaint to add a demand for punitive damages based on defendant's alleged Title VII violation. Plaintiff moved for summary judgment contending there were no disputed facts, and that he was entitled to judgment as a matter of law on all counts of the complaint. Defendant opposed the motion, and also moved for summary judgment on all claims. Defendant's summary judgment motion asserted that plaintiff was fired during the probationary period during which he was subject to termination for any reason, and plaintiff's breach of contract claims are barred due to his resume fraud and criminal background history, and fraud in the inducement permitted CCV to rescind the contracts. The court granted defendant's motion, concluding that it was reasonable for defendant to discharge plaintiff because of his material misrepresentations about his criminal record, and that plaintiff had notice that dishonesty and fraud were just cause for dismissal. See In re Towle, 164 Vt. 145, 150, 665 A.2d 55, 60 (1995).

In reviewing a grant of summary judgment, this Court shall apply the same standard as the trial court. City of St. Albans v. Northwest Reg'l Planning Comm'n, 167 Vt. 466, 469, 708 A.2d 194, 196 (1998). Summary judgment will be granted where there are no genuine issues of material fact and the movant is entitled to judgment as a matter of law. Viles v. Vermont State Colleges, 168 Vt. 459, 461, 724 A.2d 448, 450 (1998). The party opposing the motion will be granted the benefit of all reasonable doubts and inferences. City of Burlington v. National Union Fire Ins. Co., 163 Vt. 124, 127, 655 A.2d 719, 721 (1994).

I.

On appeal, plaintiff first contends that defendant had no cause to dismiss him. Plaintiff claims that because his criminal history predated his employment, he did not engage in misconduct while employed with defendant that would justify termination. Plaintiff also claims that he did not make any misrepresentations during the pre-employment process that could support a just cause dismissal.

An employment contract for a definite term may not be terminated by the employer before the expiration of that term except for just cause. See Lambert v. Equinox House, Inc., 126 Vt. 229, 231, 227 A.2d 403, 404-05 (1967) (employer must show just cause for discharge of an employee before expiration of contract for hire term). The test for a just cause dismissal is whether "the employee's conduct was egregious enough that the discharge was reasonable, and second, that the employee had fair notice, express or implied, that such conduct could result in discharge." Nadeau v. Imtec, Inc., 164 Vt. 471, 475, 670 A.2d 841, 844 (1995). We have held that dishonesty can provide reasonable grounds for a just cause termination. In re Graves, 147 Vt. 519, 524, 520 A.2d 999, 1002 (1986). We have not, however, had occasion to decide whether resume fraud or misrepresentation during the hiring process constitutes just cause for dismissal. See Genier v. Department of Employment Sec., 140 Vt. 453, 455, 438 A.2d 1116, 1117 (1981) (Reversing on other grounds, we "need not decide whether misrepresentation can, as a matter of law, constitute misconduct."). Because plaintiff's suit includes breach of employment contracts, we will look to contract law to inform our decision whether fraudulent inducement during pre-employment negotiations may constitute just cause for termination.

It is well established that a party induced into a contract by fraud or misrepresentation can rescind the contract and avoid liability for any breach thereon. See Negyessy v. Strong, 136 Vt. 193, 194, 388 A.2d 383, 384-85 (1978) (Where a party was induced to enter into a contract by fraud or misrepresentation, "the deceived party may seek the remedy of being excused from the contract through rescission, or seeking the damages occasioned by the fraud."). A misrepresentation is fraudulent when made with knowledge of its falsity. See Smith v. DeMetre, 119 Vt. 73, 79, 118 A.2d 346, 351 (1955). Where the procurer of a statement knew it was false, materiality is not required. New York Life Ins. Co. v. McLaughlin, 112 Vt. 402, 408, 26 A.2d 108, 111 (1942). Materiality is required where the mistake or false statement was not intentionally made, see id., and may be proved where the statement is "likely to induce a reasonable person to manifest his assent, or if the maker knows that it would be likely to induce" such assent. Restatement (Second) of Contracts § 162(2) (1981). Unlike a fraud action seeking damages in tort, a party seeking to rescind a fraudulently induced contract is not required to prove its case by clear and convincing evidence. Union Bank v. Jones, 138 Vt. 115, 121, 411 A.2d 1338, 1342 (1980) (noting distinction between the elements for an action in fraud and deceit, and fraudulent misrepresentation, providing grounds for rescission of a contract).

We have applied this well-established principle to a variety of contractual relationships. See, e.g., Winey v. William E. Dailey, Inc., 161 Vt. 129, 132-34, 636 A.2d 744, 747-48 (1993) (discussing fraudulent inducement in a contract for professional services); Larochelle v. Komery, 128 Vt. 262, 267-69, 261 A.2d 29, 33-34 (1969) (discussing misrepresentation of value of consideration offered in sale of stock in hotel); Collier v. Nolan, 125 Vt. 82, 84-87, 211 A.2d 265, 268-70 (1965) (finding misrepresentation of milk production of farm herd offered in sale of dairy farm); Gramatan Nat'l Bank & Trust Co. v. Beecher, 121 Vt. 39, 48-49, 146 A.2d 246, 252 (1958) (discussing...