Trendwest Resorts, Inc. v. Ford

• Decision Date: 05 September 2000
• Docket Number: No. 44662-2-I.,44662-2-I.
• Court: Washington Court of Appeals
• Parties: TRENDWEST RESORTS, INC. a corporation, Appellant, v. Bobby FORD, Respondent.

12 P.3d 613

103 Wash.App. 380

TRENDWEST RESORTS, INC. a corporation, Appellant, v. Bobby FORD, Respondent.

No. 44662-2-I.

Court of Appeals of Washington, Division 1.

September 5, 2000.

Reconsideration Denied November 8, 2000.

Publication Ordered November 9, 2000.

J. Tate London, Rosemary Daszkiewcz, Cairncross & Hempelmann, PS, Seattle, WA, for appellants.

Kimberly Konat, Sidney Strong, Strong & Konat, Seattle, WA, for respondents.

ELLINGTON, J.

Trendwest Resorts, Inc. terminated Bobby Ford from his sales position for coming to work smelling of alcohol. Trendwest later offered to reinstate Ford if he signed the company's Employee Assistance Agreement, which provided that if he agreed to undergo treatment for alcohol abuse, the company would hold his position open, except where disciplinary action provided otherwise. Ford took the steps required of him by the agreement. When Ford asked to be reinstated, Trendwest declined to return him to his former position, and instead offered him a lesser position in a different department. Ford refused the offer, was terminated, and sued Trendwest for breach of contract. We hold that the trial court did not err in declining Trendwest's proposed instruction on mutual assent, because the dispute between Ford and his employer was one of contract interpretation, not formation. We also hold that Ford's status as an at-will employee did not preclude the court from permitting the jury to determine whether Ford was entitled to front pay damages. We therefore affirm.

Facts

Trendwest Resorts, Inc. (Trendwest) manages vacation properties which are available to member-owners who purchase credits redeemable for vacation intervals. Trendwest's sales employees work in one of three positions. Those who sell "on the line" give presentations to individuals interested in becoming member-owners. Those in the "Discovery Program" work to convert trial members to full membership.¹ Finally, those who work in "Upgrades" encourage existing members to purchase additional credits. The "Upgrades" job tends to be the most financially rewarding.

Bobby Ford was a six-year employee of Trendwest who worked in the Upgrades program. On April 30, 1997, Ford's supervisor, Erin Miller, terminated Ford for reporting to work smelling of alcohol. Ford had received a warning approximately one year earlier under similar circumstances.

Upset by his termination, Ford began contacting individuals to see if there was any way he could get his Upgrades job back. Ford contacted Ron Buzard, Director of Sales, who promised to look into the matter. Ford also called Mike Jashinski, Miller's supervisor, who informed him that returning to Upgrades was not possible. Finally, Ford arranged a meeting with Trendwest President Bill Peare. Prior to the meeting, Ford received a letter from Trendwest's Director of Staff Services, Karla Sperber, who offered to reinstate Ford if he participated in an Employee Assistance Program (EAP). The letter, dated May 8, stated in part:

The reason for this letter is to officially extend ... the use of the Employee Assistance Program to you. Please be advised that this is a mandatory referral process. Upon successful completion of the EAP, you will be allowed to return to a position equal to that which you held.

Ford testified that he was heartened by the letter because he thought it meant he could return to his Upgrades job.

On May 12, 1997, Ford and his wife met with Peare, Jashinski, and Sperber. Jashinski reiterated his position that Ford not be permitted to return to Upgrades, but suggested that Ford return to a sales position "on the line." Ford maintained his stance that he wanted to return to Upgrades. Unlike Jashinski, Peare did not express any opinion on the Upgrades issue.

At the meeting, Ford agreed to enter the EAP. Ford's termination was changed to an approved leave of absence.

The following day, Sperber mailed Ford the Employee Assistance Agreement (EAA), a form contract used by Trendwest. Sperber, who was in charge of administering Trendwest's EAP program, had been responsible for approximately 27 other mandatory referrals that used the EAA. The agreement provided in pertinent part:

The EMPLOYEE agrees that the above referenced circumstances² may require the COMPANY to institute disciplinary action independent of the outcome of rehabilitation.... [After] five days, if the EAP recommended treatment is on an outpatient basis, ... the EMPLOYEE will be allowed to return to work.

.... The COMPANY agrees to hold the EMPLOYEE'S job or position open during the EAP and return the EMPLOYEE to work upon successful completion of the program, except where the aforementioned disciplinary action provides otherwise.

Sperber attached a cover letter to the EAA, asking Ford to sign and return the agreement to Trendwest. Ford signed the agreement on May 28.

The day after meeting with Peare, Ford contacted the EAP counselor, who referred him to Gaaren Anderson for an alcohol assessment. Ford met with Anderson on three occasions, and then met with Kristin Rupert for a full evaluation on May 28 and 30, at which time he admitted he may have an alcohol problem. Rupert recommended intensive outpatient treatment.

When Ford called Trendwest to arrange his work schedule, Buzard and Jashinski informed him that he could not return to Upgrades, but that arrangements had been made for him to work in the Discovery Program. Because Discovery Program salespersons earned considerably less than those in Upgrades, Ford rejected the job. Trendwest terminated Ford on July 23, 1997.

Ford sued Trendwest, asserting that Trendwest breached the EAA by not returning him to his Upgrades position. A jury returned a $235,000 special verdict in favor of Ford. The court entered judgment on the verdict and denied Trendwest's motion for a new trial. On appeal, Trendwest argues that the court erred in declining to give mutual assent instructions and in permitting the jury to award Ford future earnings damages.

Discussion

The refusal to give a requested instruction is reviewed for abuse of discretion, Stiley v. Block, 130 Wash.2d 486, 498, 925 P.2d 194 (1996), and warrants reversal only if a party cannot argue its theory of the case or if the instructions, when read as a whole, are misleading or do not inform the jury of the applicable law. Reninger v. Department of Corrections, 79 Wash.App. 623, 639, 901 P.2d 325 (1995). A trial court is required to instruct the jury on a theory only where there is substantial evidence to support it. Stiley, 130 Wash.2d at 498,925 P.2d 194.

At trial, Trendwest proposed instructions requiring that the jury determine whether Ford and Trendwest mutually assented to the contract.³ The trial court declined to give the instructions, finding that the issue at trial was not one of contract formation, but interpretation.

Trendwest contends that the trial court abused its discretion by refusing to instruct the jury on mutual assent,⁴ because the jury could have found that Ford and Trendwest did not share a common understanding of whether the company's prior termination of Ford was a "disciplinary action" that precluded him from returning to Upgrades, and consequently, no contract was formed.

Mutual assent, the modern expression for the concept of a "meeting of the minds," is required for the formation of a valid contract. Yakima County (West Valley) Fire Protection Dist. v. City of Yakima, 122 Wash.2d 371, 388, 858 P.2d 245 (1993). Mutual assent generally takes the form of an offer and acceptance. Yakima County, 122 Wash.2d at 388, 858 P.2d 245. The existence of mutual assent is a question of fact. Sea-Van Inv. Assocs. v. Hamilton, 125 Wash.2d 120, 126, 881 P.2d 1035 (1994).

When determining the mutual intentions of the contracting parties, Washington courts follow the objective manifestation theory. Therefore, the unexpressed subjective intention of the parties is irrelevant; the mutual assent of the parties must be determined by their objective acts or outward manifestations. Multicare Med. Ctr. v. Department of Soc. & Health Servs., 114 Wash.2d 572, 587, 790 P.2d 124 (1990).

In asserting its mutual assent claim, Trendwest looks to Section 20 of the RESTATEMENT (SECOND) OF CONTRACTS for support. Section 20(1) provides:

20. Effect of Misunderstanding

(1) There is no manifestation of mutual assent to an exchange if the parties attach materially different meanings to their manifestations and

(a) neither party knows or has reason to know the meaning attached by the other; or

(b) each party knows or each party has reason to know the meaning attached by the other.

Comment (c) to section 20 explains: "Even though the parties manifest mutual assent to the same words of agreement, there may be no contract because of a material difference of understanding as to the terms of the exchange."

But comment (b) is equally important:

Almost never are all the connotations of a bargain exactly identical for both parties; it is enough that there is a core of common meaning sufficient to determine their performances with reasonable certainty or to give a reasonably certain basis for an appropriate legal remedy. But material differences of meaning are a standard cause of contract disputes, and the decision of such disputes necessarily requires interpretation of the language and other conduct of the parties in light of the circumstances.

RESTATEMENT (SECOND) CONTRACTS, § 20 cmt. b (1979) (emphasis added). Williston adds:

It is often stated broadly that if the parties do not understand the same thing there is no contract. But ... it is clear that so broad a statement cannot be justified. Indeed, it is theoretically possible that a contract may be formed which is in accordance with the intention of neither party. If a written contract is entered into, the meaning and effect of the contract depends on the interpretation given the written language by the court.

Richard A. Lord, 2 WILLISTON ON CONTRACTS, §...