Walker v. Westinghouse Elec. Corp.

Decision Date15 October 1985
Docket NumberNo. 8521SC95,8521SC95
Citation77 N.C.App. 253,335 S.E.2d 79
CourtNorth Carolina Court of Appeals

Badgett, Calaway, Phillips, Davis, Stephens, Peed & Brown by Herman L. Stephens, Winston-Salem, for plaintiff-appellant.

Womble Carlyle Sandridge & Rice by Charles F. Vance, Jr., Guy F. Driver, Jr. and M. Ann Anderson, Winston-Salem, for defendant-appellee.

EAGLES, Judge.

Plaintiff has abandoned his unfair and deceptive trade practices claim before this court. The crucial questions remaining before us are (1) did defendant discharge plaintiff in violation of its contract of employment with plaintiff and (2) did defendant wrongfully discharge plaintiff in violation of public policy? We answer both questions in the negative.


A party moving for summary judgment must establish that there is no genuine issue of material fact or that it has a complete defense as a matter of law. See Thomas v. Ray, 69 N.C.App. 412, 317 S.E.2d 53 (1984). The record must be viewed in the light most favorable to the non-movant, with all reasonable inferences therefrom. Sharpe v. Quality Education, Inc., 59 N.C.App. 304, 296 S.E.2d 661 (1982). The movant's papers are scrutinized with care, while the non-movant's are treated indulgently. Vassey v. Burch, 301 N.C. 68, 269 S.E.2d 137 (1980). We have examined the record in light of these principles.


In order to resolve the contract questions in this case, we first must determine what constituted the contract. Plaintiff contends that the contract included the Handbook; defendant contends in essence that the contract consisted merely of its agreement to pay plaintiff certain compensation for a certain amount of work, and that the Handbook did not become part of the contract. We are aware that a growing number of jurisdictions recognize that employee manuals purporting to set forth causes for termination may become part of the employment contract even in the absence of an express agreement. See Annot., 33 A.L.R. 4th 120, Section 4[a] (1984). Courts have reached this result on various grounds, including that the employer, by issuing the manual (as opposed to requiring employees to acknowledge that they may be terminated at any time) has assumed an obligation to terminate only for cause, see Toussaint v. Blue Cross & Blue Shield, 408 Mich. 579, 292 N.W.2d 880 (1980); that the employee, by not looking for other work in reliance on the corporate manual, gave consideration to make the manual part of the contract, see Wagner v. Sperry Univac, 458 F.Supp. 505 (E.D.Pa.1978), aff'd, 624 F.2d 1092 (3d Cir.1980) (mem.); or that the manual, having been promulgated after consultation with an employee committee, represented a contractual negotiating and bargaining process. See Wernham v. Moore, 77 A.D.2d 262, 432 N.Y.S.2d 711 (1980). We are also aware that there are strong equitable and social policy reasons militating against allowing employers to promulgate for their employees potentially misleading personnel manuals while reserving the right to deviate from them at their own caprice.

Nevertheless, the law of North Carolina is clear that unilaterally promulgated employment manuals or policies do not become part of the employment contract unless expressly included in it. Smith v. Monsanto Co., 71 N.C.App. 632, 322 S.E.2d 611 (1984); Griffin v. Housing Authority, 62 N.C.App. 556, 303 S.E.2d 200 (1983); Williams v. Biscuitville, Inc., 40 N.C.App. 405, 253 S.E.2d 18, disc. rev. denied, 297 N.C. 457, 256 S.E.2d 810 (1979); Cote v. Burroughs Wellcome Co., 558 F.Supp. 883 (E.D.Pa.1982) (applying North Carolina law). The contract did not, under our law, include the Handbook. Despite its apparent promise to "... become more than a handbook ... it will become an understanding ...," the Handbook did not become an understanding binding on the employer.


Even if we were to assume arguendo that the Handbook had been part of plaintiff's contract of employment, it appears sufficiently well drafted that plaintiff nevertheless would be entitled to no relief. Though the Handbook does promise to "become more than a handbook ... it will become an understanding," and acknowledges "the responsibility of each management employee to fairly and consistently apply" the policies in it, supervisory personnel retain final discretionary authority in disciplinary matters. The Handbook says: "In disciplinary situations, the supervisor will exercise discretionary judgment in administering discipline, to take whatever action is necessary...." The Rules of Conduct expressly provide that they are not all-inclusive, and the described conduct simply "may result" in the various described disciplinary actions. While the Handbook appears to promise much, it contains little of substance to aid an employee being terminated. Accordingly we must reject plaintiff's claim that he is entitled to relief under the contract including the Handbook.


A contract of employment which does not contain a specified term or fixed duration is ordinarily not enforceable. Still v. Lance, 279 N.C. 254, 182 S.E.2d 403 (1971). Since the Handbook was not a part of the contract, and the contract otherwise contained no specified term or duration, plaintiff worked as an employee at will. The contract could legally be terminated at any time at the will of either party. Id.; Nantz v. Employment Security Comm., 290 N.C. 473, 226 S.E.2d 340 (1976). There are certain limited exceptions to this rule.


If an employee gives some additional consideration in addition to the usual obligation of service, a contract for an indefinite term may become a contract for as long as the services are satisfactorily performed. Sides v. Duke Hospital, 74 N.C.App. 331, 328 S.E.2d 818, disc. rev. denied, 314 N.C. 331, 335 S.E.2d 13 (1985). In Sides, we recognized a claim for breach of an indefinite-term contract where the plaintiff alleged that she had moved from Michigan to Durham in reliance on promises that she would only be discharged for incompetence. See also Fisher v. John L. Roper Lumber Co., 183 N.C. 485, 111 S.E. 857 (1922) (employee settled bona fide personal injury claim in exchange for employment "for the balance of his life"). But see Malever v. Kay Jewelry Co., 223 N.C. 148, 25 S.E.2d 436 (1943) (employee moved to Charlotte from Fayetteville on promise of permanent employment; no permanent obligation to employ). No additional consideration appears from this record. Plaintiff testified that he occasionally looked for other jobs, but never stated that he passed up other employment in reliance on defendant's promises. The basic contract was a contract terminable at will.


A basic contract of employment at will may also be supplemented by additional agreements, which themselves, if enforceable according to the law of contracts, may include terms restricting the employer's right to terminate at will. In Roberts v. May Mills, 184 N.C. 406, 114 S.E. 530 (1922), the employer offered in January 1920 to pay an additional 10% bonus at Christmas 1920 for employees employed continuously since January. Plaintiff was discharged without bonus pay in September. He sued, alleging that he had intended to quit in January but was induced to stay on by the bonus offer. The Supreme Court held that he was entitled to the bonus up to the time of discharge, although it did not hold that plaintiff was protected from the discharge itself. See also Tuttle v. Kernersville Lumber Co., 263 N.C. 216, 139 S.E.2d 249 (1964) (rejecting employee's contention that contract was for life). We again find no consideration from plaintiff to defendant which would make the Handbook a supplemental agreement or otherwise restrict defendant's right to terminate.


Plaintiff contends that even a general hiring for an indefinite term may only be terminated "in good faith," relying on language in Malever v. Kay Jewelry Co., supra. We note that the Malever court, although it could have grounded the concept of "good faith" in business necessity (closing of store), did not do so. Rather, it relied simply on the general law regarding employment at will, suggesting a limited conception of "good faith." See G.S. 25-1-201(19) ("good faith" means honesty in fact). Even if we were to apply a more broad definition of "good faith," see Jaudon v. Swink, 51 N.C.App. 433, 276 S.E.2d 511 (1981), we must conclude that defendant did not unconscionably take advantage of plaintiff. In Jaudon "good faith" prevented defendants from using the services, if proven, of plaintiff without paying the contract price. Here there is no allegation that plaintiff did not receive full pay for his services. Plaintiff contends simply that defendant did not fairly apply the Handbook Rules of Conduct even though the Rules' application was left to defendant's discretion.


Plaintiff cites dicta in Elmore v. Atlantic Coast Line R. Co., 191 N.C. 182, 131 S.E. 633 (1926), for the proposition that an employer may not feign dissatisfaction and dismiss an otherwise satisfactory employee at will. In Elmore, however, there was an employment contract which specifically stated that employees could not be discharged "without cause." The plaintiff there nevertheless proceeded on a tort theory.

We recognize the disparity of power in this type of situation and the potential for unfair results. However, we do not write on a clean slate. Applying the settled law of North Carolina, we must hold that plaintiff has shown no right to relief on his contract theory.


In Sides v. Duke Hospital, supra, we recognized a major exception to the general rule...

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