Sorensen v. Saint al's

• Decision Date: 16 August 2005
• Docket Number: No. 30476.,30476.
• Parties: Patricia SORENSEN, Plaintiff-Respondent, v. SAINT ALPHONSUS REGIONAL MEDICAL CENTER, INC., an Idaho nonprofit corporation, and Trinity Health Corporation, an Indiana nonprofit corporation, Defendants-Appellants.
• Court: Idaho Supreme Court

118 P.3d 86

141 Idaho 754

Patricia SORENSEN, Plaintiff-Respondent, v. SAINT ALPHONSUS REGIONAL MEDICAL CENTER, INC., an Idaho nonprofit corporation, and Trinity Health Corporation, an Indiana nonprofit corporation, Defendants-Appellants.

No. 30476.

Supreme Court of Idaho, Boise, February 2005 Term.

June 24, 2005.

Rehearing Denied August 16, 2005.

COPYRIGHT MATERIAL OMITTED

Givens Pursley, LLP, Boise and Paul Hastings Janofsky & Walker, LLP, Los Angeles, California, for appellants Saint Alphonsus Regional Medical Center and Trinity Health Corporation. Robert F. Walker argued.

Rossman Law Group, PLLC, Boise, for respondent. Eric S. Rossman argued.

SCHROEDER, Chief Justice.

This case involves claims by Patricia Sorensen (Sorensen) that Saint Alphonsus Regional Medical Center, Inc. (St.Al's) and Trinity Health Corporation (Trinity) breached contractual, fiduciary and certain tort duties to her in providing her the early retirement benefits to which she was entitled as an employee of St. Al's. The district court granted summary judgment in favor of Sorensen on her contract, fiduciary duty and negligence claims. After a trial, the jury returned a verdict in favor of Sorensen in the amount of $83,750.72, $50,000 of which was attributable to emotional distress damages. The district court denied St. Al's and Trinity's post-trial motions and granted Sorensen's motion for costs and attorney fees. St. Al's and Trinity appeal.

I. FACTUAL AND PROCEDURAL BACKGROUND

Sorensen worked as a registered nurse for St. Al's from 1977 until March of 2002. In December of 1999, she met with the Human Resource Benefits Specialist for St. Al's to discuss retirement options. Sorensen participated in a retirement benefit plan (the Holy Cross Retirement Program) offered by St. Al's, through St. Al's then parent corporation, Holy Cross Health Systems. In 2000, Holy Cross Health Systems merged with Mercy Health Systems to create Trinity. Trinity developed a new retirement plan in 2002. However, Sorensen's rights with respect to her retirement benefits continued to be governed by the language of the Holy Cross Retirement Plan. The actual Plan document was kept in Trinity's home offices in Indiana. The document available for review locally was entitled "The Holy Cross Retirement Plan, Eligibility, Service, Distributions, Participation, Vesting, Benefits, Retirement" (Summary Plan). Relying on the language of the Summary Plan, the Benefits Specialist informed Sorensen that she would be eligible to receive early retirement benefits if she reduced her work schedule to less than 960 hours per year. Sorensen was an employee at will.

In May of 2000 Sorensen elected to receive her early retirement benefits and reduced her work schedule to less than 960 hours per year. She received the benefits and worked part-time until March of 2002. Early in 2002 Sorensen's supervisor told her that she needed to meet with the Benefits Specialist to discuss possible changes to her early retirement benefits. Sorensen met with the Benefits Specialist in February and was given a letter from Trinity. The letter informed Sorensen that she could not work part-time and continue receiving early retirement benefits based on Trinity's belief that Sorensen's arrangement and similar arrangements threatened the tax-exempt status of the retirement plan. Trinity required Sorensen to elect one of two options: 1) suspend the monthly early retirement benefits and continue working; or 2) terminate employment for four months with St. Al's and continue receiving the early retirement benefits. According to an agreement with the IRS, Sorensen could return to the part-time employment after the four months. Sorensen was required to make her election by March 31 or she would be deemed to have elected option one. Sorensen terminated her employment with St. Al's on March 31, 2002.

In May of 2002 Sorensen filed suit against St. Al's and Trinity (collectively referred to as Trinity unless otherwise noted) for breach of contract, breach of the implied covenant of good faith and fair dealing, breach of fiduciary duties, negligence, negligent and/or intentional infliction of emotional distress, bad faith and fraud. The parties filed cross motions for summary judgment. The district court determined that: (1) St. Al's was a party to the contract and a proper party in this case; (2) Indiana law governed the interpretation of the Plan, but the tort claims were governed by Idaho law; (3) the Summary Plan governed as the document relied upon by Sorensen when she made her decision to accept early retirement benefits; (4) the Summary Plan language unambiguously enabled Sorensen to continue working part-time and still receive early retirement benefits; and (5) Trinity was estopped from unilaterally changing the agreement Sorensen had with it based on the Summary Plan language.

The district court granted summary judgment in favor of Sorensen on her breach of contract claim, making the following determinations: (1) Trinity failed to take reasonable measures to ensure that Sorensen obtained the benefit of the agreement she had with Trinity under the Summary Plan. Consequently, Trinity breached the implied covenant of good faith and fair dealing; (2) the Benefits Specialist failed to provide complete and accurate information to Sorensen, a Plan beneficiary, thus establishing a claim for breach of fiduciary duties; (3) concerning the fraud claim, genuine issues of material fact existed as to whether Trinity deliberately knew the falsity of the information provided to Sorensen; (4) Trinity had a duty to provide Sorensen with accurate information that was separate from the duties it had to her under the contract, and the economic loss rule was not applicable in this case since there was a special relationship between Sorensen and Trinity. The district court granted summary judgment in favor of Sorensen on her negligence claim; (5) there was no ruling on the intentional infliction of emotional distress claim, but Sorensen did not raise the issue again at trial or on appeal; (6) neither party was granted summary judgment on the claim for negligent infliction of emotional distress; (7) Trinity's motion to dismiss Sorensen's bad faith claim was granted; and (8) whether or not Sorensen failed to mitigate her damages was a question of fact for the jury.

After trial on the damages issue, the jury returned a verdict in favor of Sorensen for $83,750.72, $50,000 of which was attributable to emotional distress damages. Trinity filed a motion for judgment notwithstanding the verdict and a motion for a new trial. The district court ruled that a causal connection had been established between Trinity's conduct and Sorensen's lost wages. Further, Idaho's Workers' Compensation Law did not apply in this case, and Sorensen was not required to put on medical testimony to support her emotional distress claim where she was able to testify that she suffered from headaches, gastric problems, insomnia and panic attacks.

The district court refused to grant the motion for judgment notwithstanding the verdict and the motion for a new trial. The district court awarded costs and attorney fees to Sorensen under Idaho Code (I.C.) §§ 12-120(3) and (1). An Amended Judgment was entered, awarding Sorensen damages in the amount of $83,750.72, $1,210.27 in costs as a matter of right, $1,792.00 in discretionary costs and $40,383.00 in attorney fees for a total judgment of $127,135.99. Trinity appealed.

II. TRINITY'S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT SHOULD HAVE BEEN GRANTED

Trinity's motion for judgment notwithstanding the verdict involved determinations by the district court prior to trial in motions for summary judgment which bound the jury in its determinations and decisions made during the trial itself. It is necessary to determine the propriety of the pre-trial rulings as well as the evidence at trial.

A. Standard of Review

The standard of review on appeal from an order granting summary judgment is the same standard as that used by the district court in ruling on the motion for summary judgment. Tolley v. THI Co., 140 Idaho 253, 259, 92 P.3d 503, 509 (2004). Summary judgment is proper where there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Id.; I.R.C.P. 56(c). The facts will be liberally construed and all inferences will be drawn in favor of the non-moving party. Id. The fact that parties have filed cross-motions for summary judgment does not change the standard employed by the court in reviewing whether or not issues of material fact exist. Intermountain Forest Management, Inc. v. Louisiana Pacific Corp., 136 Idaho 233, 235, 31 P.3d 921, 923 (2001). Each party's motion must be evaluated on its own merits. Id.

B. Trinity, not Sorensen, was entitled to summary judgment on Sorensen's breach of contract and breach of the implied covenant of good faith and fair dealing claims.

The district court determined that the Summary Plan controlled the resolution of this case and that the Summary Plan conflicted with the Plan. Further, Trinity was estopped from unilaterally changing the pension benefits after Sorensen had vested in those benefits. Based on this analysis, the district court granted summary judgment in favor of Sorensen on her breach of contract and breach of the implied covenant of good faith and fair dealing claims.

1) The Breach of Contract claim.

The first issue to be resolved in any breach of contract claim is defining what the contract is between the parties. The Plan was the contract between Sorensen and Trinity, not the Summary Plan. The Summary Plan states in several places that the Plan has the final say on any issue relating to an employee's retirement benefits. The Summary Plan states, "The descriptions in this booklet are based on the plan's legal document which has the final word on any question about how the plan works." Further, "Your...