Williams v. Riedman

• Decision Date: 28 February 2000
• Docket Number: No. 3127.,3127.
• Citation: 339 S.C. 251,529 S.E.2d 28
• Parties: Karen J. WILLIAMS, Respondent, v. James R. RIEDMAN, Riedman Corporation, and Rhoda Ryan, of whom Riedman Corporation, is Appellant.
• Court: South Carolina Court of Appeals

339 S.C. 251

529 S.E.2d 28

Karen J. WILLIAMS, Respondent, v. James R. RIEDMAN, Riedman Corporation, and Rhoda Ryan, of whom Riedman Corporation, is Appellant.

No. 3127.

Court of Appeals of South Carolina.

Heard September 10, 1999.

Decided February 28, 2000.

Rehearing Denied May 13, 2000.

Cherie W. Blackburn, Steven M. Wynkoop and Elizabeth M. McMillan, all of Nelson, Mullins, Riley & Scarborough, of Charleston, for appellant.

A. Arthur Rosenblum and Benjamin Goldberg, both of Charleston, for respondent.

CONNOR, Judge:

Karen J. Williams claimed an employee manual changed her status as an at-will employee. She sued the Riedman Corporation for breach of contract, breach of the covenant of good faith and fair dealing, unfair trade practices, conspiracy, fraud, and negligent misrepresentation. She also filed claims of conspiracy, fraud, and negligent misrepresentation against James R. Riedman. Additionally, Williams sued Rhoda Ryan, Riedman's branch manager, for conspiracy and tortious interference with a contract. She sought a declaratory judgment concerning the restrictive covenants in Riedman's Non-Piracy Agreement. Riedman answered, denying the employee manual created a contract with Williams, and counterclaimed for breach of the Non-Piracy Agreement, tortious interference with prospective contractual relations, breach of contract accompanied by fraudulent act, and violation of the Uniform Trade Secrets Act. The jury found for Williams on the breach of contract and breach of covenant of good faith and fair dealing causes of action. It found for the defendants on Williams's claims for negligent misrepresentation, fraud, and conspiracy, but found for Williams on Riedman's counterclaim. Riedman appeals. We affirm in part, reverse in part, and remand.

FACTS

Beginning in 1982, Williams worked for the Kay Insurance Agency. She held several different positions there, including producer, sales representative, office manager, and vice president. While employed with Kay, Williams acquired and serviced 148 accounts. In March 1994, Riedman purchased Kay. Riedman operates insurance agencies in fourteen states, including South Carolina, where it has four offices.

Riedman hired Williams to work in its North Charleston office. As a condition of employment, Riedman required Williams to sign a Non-Piracy Agreement, which contained a restrictive covenant and a covenant not to disclose confidential information about clients. Williams was given an employee manual at the outset of her employment.

Riedman alleged Williams was excessively absent and tardy, and that she began missing work on a regular basis in January 1995. Rhoda Ryan kept handwritten notes of Williams's tardies and absences. She sent these, along with the calendars that she kept, to Tracy Borrosh, Riedman's assistant vice-president and personnel manager. Williams alleged the recording of absences and late days was part of a concerted effort to have her terminated. This tracking was without the knowledge of Williams's supervisor. Williams said no one confronted her with alleged absenteeism or tardiness problems.

On April 21, 1995, James Riedman terminated Williams. At the time of her termination, Williams was earning $45,000.00 per year.

Williams suffered stress, depression, and financial hardship as a result of her termination. In August 1995, she accepted a lower paying position with Web-Kor, a local insurance agency.

In September 1995, Riedman alleged Williams was soliciting its clients. Riedman notified Williams that she was violating her Non-Piracy Agreement. Williams did not respond to this letter.

Approximately one month later, Williams filed this lawsuit. After a three-day trial, the jury returned a verdict for Williams on the breach of contract and breach of covenant of good faith and fair dealing claims. The trial judge instructed the jury that if it entered a verdict in favor of Williams, it must also find for Williams on Riedman's counterclaim for breach of the Non-Piracy Agreement.

The jury awarded Williams $88,448.00 in actual damages for breach of contract, and $179,440.00 in actual damages and $26,789.00 in punitive damages for breach of covenant of good faith and fair dealing. The jury found in favor of the defendants on Williams's causes of action for negligent misrepresentation, fraud, and conspiracy. The judge granted Williams's directed verdict motion on the violation of the Uniform Trade Secrets Act.¹ Riedman appeals.

DISCUSSION

I. Employee Manual as a Contract

Riedman argues the trial judge erred by not granting a directed verdict for the claims of breach of contract and breach of the covenant of good faith and fair dealing. Specifically, Riedman contends the employee manual did not constitute a binding contract that altered Williams's at-will status.

When reviewing the denial of a motion for directed verdict or judgment notwithstanding the verdict, we must consider the evidence in the light most favorable to the non-moving party. Brady Dev. Co. v. Town of Hilton Head Island, 312 S.C. 73, 439 S.E.2d 266 (1993). A directed verdict or judgment notwithstanding the verdict should not be granted unless only one reasonable inference can be drawn from the evidence. Id.

Because this was an action for breach of a contract, it is an action at law. Leahy v. Starflo Corp., 314 S.C. 546, 431 S.E.2d 567 (1993). Our review of an action at law tried by a jury extends merely to correcting errors of law. We will not disturb the facts determined by the jury unless there is no evidence which reasonably supports the jury's findings. Townes Assocs., Ltd. v. City of Greenville, 266 S.C. 81, 221 S.E.2d 773 (1976); Brown v. Smalls, 325 S.C. 547, 481 S.E.2d 444 (Ct.App.1997).

An individual working for an employer under a contract of employment for an indefinite period can be terminated at will. Shealy v. Fowler, 182 S.C. 81, 188 S.E. 499 (1936). Termination of an at-will employee does not normally give rise to a cause of action for breach of contract. Hudson v. Zenith Engraving Co., 273 S.C. 766, 259 S.E.2d 812 (1979). However, when the at-will status of the employee is altered by the terms of an employee handbook, thereby creating a contractual employment relationship, a cause of action for wrongful discharge may arise. Small v. Springs Indus., Inc., 292 S.C. 481, 357 S.E.2d 452 (1987) (Small I).

The existence of a contract for employment should be submitted to the jury when (1) its existence is questioned, and (2) the evidence is conflicting or admits of more than one inference. Small I, 292 S.C. at 483,357 S.E.2d at 454; Jones v. General Elec. Co., 331 S.C. 351, 503 S.E.2d 173 (Ct.App. 1998),cert. denied, (May 14, 1999). The relevant issues for determining if the handbook forms a contract are whether (1) the handbook sets out procedures binding on the employer. (2) those procedures applied to the employee, and (3) the employer violated those procedures. Miller v. Schmid Labs., Inc., 307 S.C. 140, 414 S.E.2d 126 (1992); Jones, 331 S.C. at 358,503 S.E.2d at 177.

A.

Riedman asserts Williams failed to establish the employee manual constituted a contract that altered her at-will status either because of mandatory language in the manual or because of oral statements made by her supervisors.

Williams argues the employee manual contained language which was binding on Riedman, specifically that she be treated fairly and that a progressive disciplinary process be followed. She asserts that combining the language of the employee manual, the disciplinary procedures detailed on the back of the absentee calendar, and the employee disciplinary report form created a progressive disciplinary process that Riedman was bound to follow prior to termination. She contends she was wrongfully terminated for excessive absences when she was not given any warning prior to her termination. Williams argues the jury should determine whether a contract existed and, if so, whether Riedman breached that contract.

The employee manual contained the following relevant language:

Observance of work rules is essential to the orderly conduct of business, and benefits both you and the company. Failure to observe these rules, or any other policies listed in this manual, can result in disciplinary action. Disciplinary action is normally progressive, starting with a verbal warning, and ending with dismissal if appropriate corrective action is not taken.

Immediate dismissal can follow the use of rude, discourteous or profane language to clients or other employees; theft or dishonesty; damaging or willfully misusing company property; falsifying or willfully omitting company records or reports; failure to adhere to established accounting or bookkeeping procedures; or possessing or reporting to work under the influence of alcohol or any illegal drug.

The manual also contains a subsection entitled "Tardiness and Absenteeism." That section states: Prevention of tardiness and absenteeism is vital to the efficient operation of the business. Repeated lateness and absence can be cause for dismissal. Please report to your supervisor as early as possible if you anticipate being late or absent for any reason.

Additionally, the manual contained a pledge by Riedman to, among other things, "Assure equal treatment of all who work for the company by applying policies and procedures fairly throughout all company offices."

Viewing the evidence in the light most favorable to Williams, a jury issue exists concerning whether the employee manual, related documents, and any oral representations created a binding employment contract which altered Williams's at-will status. The employee manual contained several sections relating to disciplinary procedure. The manual stated disciplinary action was normally progressive. The offenses which warranted immediate dismissal did not include excessive absenteeism or tardiness.

Riedman's employee disciplinary reports and absentee calendars also give rise to an...