Smuck v. National Management Corp.

• Decision Date: 22 September 1995
• Docket Number: No. 5-349,5-349
• Citation: 540 N.W.2d 669
• Parties: 11 IER Cases 33 Scott Lynn SMUCK, Appellant, v. NATIONAL MANAGEMENT CORP., An Iowa Corporation; and, Robert Burns & Associates, Appellees.
• Court: Iowa Court of Appeals

Page 669

540 N.W.2d 669

11 IER Cases 33

Scott Lynn SMUCK, Appellant, v. NATIONAL MANAGEMENT CORP., An Iowa Corporation; and, Robert Burns & Associates, Appellees.

No. 5-349.

Court of Appeals of Iowa.

Sept. 22, 1995.

John P. Whitesell and Bruce Smith of the Whitesell Law Office, Iowa Falls, for appellant.

Helen C. Adams and Rebecca Boyd Parrott of Dickinson, Mackaman, Tyler & Hagen, A.P.C., Des Moines, for appellee.

Heard by SACKETT, P.J., and HABHAB and HUITINK, JJ.

HUITINK, Judge.

Scott Lynn Smuck appeals the district court's grant of summary judgment in favor of defendant. We affirm in part and reverse in part.

Scott Smuck is the former manager of a low-income apartment complex owned by National Management Corp (NMC). The low-income apartments were subsidized by the Farmers Home Administration (FmHA) based upon the difference between the market value of the apartments and the tenants' ability to pay. The tenants' ability to pay was determined by income, the number of occupants, and the consideration of other expenses, such as child care. NMC received no money from the FmHA if a tenant was not shown to have resided in a particular apartment for a required period of time.

NMC terminated Smuck's employment, allegedly because of complaints received by tenants and his inability to communicate with the tenants concerning their problems. Smuck claims the evidence shows he discovered a scheme to defraud the FmHA. He asserts he discovered NMC was misrepresenting the number of days tenants resided in a particular apartment and allowing tenants to misrepresent expenses in order to receive a larger subsidization. He claims that as a result of his refusal to participate in this activity NMC terminated his employment. NMC asserts Smuck's discovery of fraud is limited to his belief a resident was over representing child-care expenses.

Smuck brought this wrongful termination suit against NMC. He alleged his employment was terminated in violation of public policy. He also claimed NMC breached a written contract of employment. Both Smuck and NMC filed motions for summary judgment. The court denied Smuck's motion but granted NMC's motion in its entirety. It held the documents presented by Smuck, including an employee termination report and termination check list, were not sufficiently definite to create a contract of employment. The court also held that because Smuck's discharge claim was grounded in federal rather than state law it did not contravene a clearly expressed public policy of the State of Iowa. Smuck appeals.

On a motion for summary judgment our review is for correction of errors at law. Iowa R.App.P. 4. Summary judgment is appropriate only if there exists no genuine issue of material fact. Farm Bureau Mut. Ins. Co. v. Milne, 424 N.W.2d 422, 423 (Iowa 1988). The moving party has the burden to show the nonexistence of a material fact. Id. The evidence must be viewed in the light most favorable to the nonmoving party. Thorp Credit, Inc. v. Gott, 387 N.W.2d 342, 343 (Iowa 1986). This procedure is functionally akin to a directed verdict, and every legitimate inference that reasonably can be deduced from the evidence should be afforded the nonmoving party. Id. A fact issue is generated if reasonable minds can differ on how the issue should be resolved. Id. If the conflict in the record consists only of legal consequences flowing from undisputed facts, entry of summary judgment is proper. Milne, 424 N.W.2d at 423.

In asserting his claim Smuck relies on two legal theories, breach of contract and wrongful termination. We consider each issue separately.

I. Breach of Contract.

Smuck first asserts that the termination of his employment constitutes a breach of his employment contract with NMC. He bases his claim on the warning procedures specified in his written policy manual and his written employment contract. He contends that these documents clearly specify that he was entitled to written warnings prior to his termination and that he relied on NMC's guarantees of such warning before termination.

Iowa recognizes that as a general rule the relationship between employers and employees is one that is at-will. French v. Foods, Inc., 495 N.W.2d 768, 769 (Iowa 1993). Iowa courts have, however, allowed exception to this rule where a contract created by an employer's written handbook or manual guarantees an employee that discharge will occur only for cause. Id. at 770. For this exception to apply, the handbook or manual must be sufficiently definite in its terms to constitute an offer, must be communicated to and accepted by the employee, and the employee must have continued working so as to provide consideration. Id.

We agree with the district court that the documents at issue do not guarantee an employee any number of warnings before termination of his or her employment. Although these documents suggest that warnings may be given in some cases, they do not state such warnings will be given in all instances. Thus, they do not clearly alter the presumed at-will relationship between NMC and its employees. Moreover, NMC's policy manual contains an explicit statement that NMC is an at-will employer. When viewed in their entirety these documents are not sufficiently definite to create a unilateral contract of employment under which an employee may be discharged only for cause. We affirm the district court on the breach of contract issue.

II. Wrongful Termination.

Smuck also contends that his refusal to violate federal law was the sole reason for his discharge and that, as a result, NMC terminated his employment in violation of public policy. He asserts that NMC was falsifying tenant records in an effort to defraud the federal government in violation of 18 U.S.C. § 1001 and that his objection to this activity was the basis for his termination.

We first note that this is not a whistle-blower claim. Iowa's whistle-blower statute, Iowa Code section 70A.29, applies only to public employees who report violations of law to law enforcement officials. NMC is a private employer, and Smuck never reported NMC's alleged illegal activities. He only refused to participate in what he asserts was a scheme to defraud the federal government. His claim, then, is not within the reach of Iowa's whistle-blower statute.

Smuck, instead, asserts that the termination of his employment violates public policy because it was allegedly grounded in his refusal to break federal law. NMC argues in response, and the district court so held, that Iowa only recognizes a cause of action for such tortious wrongful discharge when the employer's alleged wrong doing is grounded in a state statute. In short, NMC asserts that because Smuck has not identified a public policy violation grounded in Iowa law he has failed to state a claim for which relief can be granted.

Iowa courts recognize an exception to the employment at-will doctrine where discharge violates well-recognized and defined public...