Stowman v. Carlson Companies, Inc.
| Decision Date | 25 October 1988 |
| Docket Number | No. C3-88-916,C3-88-916 |
| Citation | 430 N.W.2d 490 |
| Parties | 122 Lab.Cas. P 56,952, 4 Indiv.Empl.Rts.Cas. (BNA) 404 Ronald L. STOWMAN, Appellant, v. CARLSON COMPANIES, INC., Respondent. |
| Court | Minnesota Court of Appeals |
Syllabus by the Court
1. A cause of action will not lie for fraudulent inducement where a job applicant bases his claim of reliance on the reputation of a company or the company's owner and a failure to disclose to the applicant the possible sale of the company.
2. An employer has no duty to disclose to a job applicant otherwise confidential current or future plans to sell a company that are contingent or indefinite.
3. Discharge from employment is actionable, if at all, because it constitutes a breach of the employment contract, and all damages arising out of the employment relationship are subject to the two-year statute of limitations in Minn.Stat. Sec. 541.07(5) (1986).
4. Under the facts and circumstances here, there was no implied covenant of good faith and fair dealing created through the parties' employment negotiations.
John E. Thomas, St. Paul, for appellant.
R. Scott Davies, Gregory J. Stenmoe, Michael Thomas Miller, Briggs and Morgan, Minneapolis, for respondent.
Heard, considered and decided by FOLEY, P.J., and RANDALL and LESLIE, * JJ.
This appeal is from a summary judgment dismissing appellant Ronald L. Stowman's claim against respondent Carlson Companies, Inc. for fraudulently inducing his employment, negligently hiring him away from his previous employment and breach of an implied covenant of good faith and fair dealing. We affirm.
On appeal, it is the responsibility of the parties to secure a transcript in order for us to conduct a thorough examination of the proceedings. Without one, our review is limited to only those matters which appear undisputed in the record. Here, it is difficult to examine the accuracy of the facts without a transcript of the depositions. See Noltimier v. Noltimier, 280 Minn. 28, 157 N.W.2d 530 (1968); Minn.R.Civ.App.P. 110.02, subd. 1(a).
We see the facts as follows. Stowman had been employed by Canteen Company for approximately 25 years as vice-president of operations. While at Canteen, Stowman heard of a job opportunity with the A. Weisman Co., a wholly owned subsidiary of Carlson Companies, and arranged an interview. Paul Weisman then informed Stowman that Carlson Companies wanted to interview him.
Stowman met with Dee Kemnitz who was personnel director for the Carlson Companies. The parties' versions of Kemnitz' remarks are contrary. Without testimony or depositions to review, we cannot ascertain the veracity of the allegations which each party makes with reference to Kemnitz' statements.
Stowman began work at Weisman on January 29, 1981. On May 18, 1981, Carlson Companies management told its employees that Weisman had been sold to Minter Brothers effective May 30, 1981. Stowman then began work for Minter Brothers. On June 30, 1981, Minter Brothers sold the company to William Weisman, and at that time Stowman was terminated. Stowman began a lawsuit against Carlson Companies four years later.
The trial court found that the facts had clearly established that the job that was advertised, interviewed for, and subsequently accepted was a position with Weisman. The trial court further found that there was no written employment contract, that Stowman was an at-will employee, that the position was not guaranteed for any specific length of time, and that the position was with Weisman, and not with Carlson Companies. Accordingly, the trial court granted summary judgment and concluded that Stowman's claims were without merit and barred by the statute of limitations.
1. Did the trial court err in concluding that there was no fraudulent inducement in the hiring of Stowman?
2. Did the trial court err in concluding that Stowman's claims were barred by the two-year statute of limitations in Minn.Stat. Sec. 541.07(5)?
3. Did the trial court err in concluding that Stowman's claims were based on contract and not tort?
4. Did the trial court err in concluding that Stowman failed to establish a covenant of good faith and fair dealing when he was relying on general policy statements?
A motion for summary judgment will be granted under Minn.R.Civ.P. 56.03 if:
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 any material fact and that either party is entitled to judgment as a matter of law.
On appeal from summary judgment, it is the function of the appellate court to determine whether genuine issues of material fact exist and whether the trial court erred in its application of the law. Hunt v. IBM Mid America Employees Federal Credit Union, 384 N.W.2d 853, 855 (Minn.1986).
1. Stowman alleges two instances of fraudulent inducement. First, he claims that he justifiably relied on Curt Carlson's reputation in assuming that his employment was guaranteed. Second, he claims that Carlson Companies breached a duty of disclosure by failing to reveal its intentions to sell Weisman.
To establish fraudulent inducement, Stowman must establish that Carlson Companies falsely represented or omitted a material fact that was susceptible of knowledge with the intent of inducing him to act. Davis v. Re-Trac Manufacturing Corp., 276 Minn. 116, 149 N.W.2d 37 (1967). Further, Stowman must have justifiably relied on the representation or omission and suffered damages as a proximate result of that reliance. Id. at 117, 149 N.W.2d at 38-39.
Stowman claims that he was induced to accept employment with Weisman based on the favorable reputation of Carlson Companies and Curt Carlson. Stowman cites no authority that raises the reliance he placed on Curt Carlson's reputation to the level of a fraudulent inducement. These facts, standing alone, do not give Stowman a basis to claim fraudulent inducement.
Stowman also claims justifiable reliance on statements in the employee handbook. The statement he claims reliance upon is:
By so doing we create increasing thousands of exciting and rewarding career opportunitites for all of you who have chosen to be part of our dynamic future.
This statement is only a general policy statement upon which Carlson Companies cannot be held liable. See Pine River State Bank v. Mettille, 333 N.W.2d 622 (Minn.1983).
Stowman next claims that he would not have accepted employment if he had known that Carlson Companies was going to sell Weisman. For nondisclosure to constitute fraud, there must exist a legal or equitable duty to communicate the information. Richfield Bank & Trust Co. v. Sjogren, 309 Minn. 362, 365, 244 N.W.2d 648, 650 (1976).
Minnesota has not placed a duty upon a potential employer to disclose to a job applicant confidential negotiations to sell its company. In the field of securities law, it has been determined that there is no duty to disclose current or future plans to sell a company that are contingent or indefinite. See Warner Communications, Inc. v. Murdoch, 581 F.Supp. 1482, 1491 (D.Del.1984) ( . We hold that confidentiality must be maintained in the uncompleted negotiations for the sale of a subsidiary company which will undoubtedly involve matters of federal regulations. Carlson Companies did not have a duty to disclose the possible sale of the company or the negotiations of the sale to Stowman.
Kurt Retzler, Vice President of Acquisitions and Development of Carlson Companies, stated in his affidavit that it is the policy of Carlson Companies not to disclose negotiations to buy and sell companies and that
any negotiations that we enter into are highly confidential and any disclosure to a third party would have a chilling effect on our ability to conduct such transactions.
Retzler also commented that there had been a number of discussions regarding the sale and that most of them were unproductive and discontinued. He said that at the time Stowman was hired, no decision to sell the company had been made.
Accordingly, there was no fraudulent inducement in Stowman's hiring, and the law does not provide relief to an employee who expected job security based on the reputation of the company or on the personal reputation of the company's owner.
2. The Minnesota Supreme Court has held that "discharge from employment is actionable, if at all, because it constitutes a breach of the employment contract," and all damages arising out of the employment relationship are subject to the two-year statute of limitations set forth in Minn.Stat. Sec. 541.07(5) ...
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