Opinion
No. C2-02-865.
Filed December 3, 2002.
Appeal from the District Court, Hennepin County, File No. CT012155.
David Bradley Olsen, Timothy Mulrooney, Henson Efron, P.A., (for appellant)
Wayne J. Rice, The Law Office of Wayne J. Rice, P.A., (for respondent)
Considered and decided by Hudson, Presiding Judge, Peterson, Judge, and Anderson, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2002).
UNPUBLISHED OPINION
In this employment law dispute, appellant Hysitron, Inc. appeals from summary judgment dismissing its claims for breach of contract and equitable damages against a former employee. Because the record supports the district court's finding that respondent employee was entitled to terminate her employment at will, we affirm. We also deny the parties' motions for attorney fees.
FACTS
Appellant Hysitron, Inc. hired respondent Nikki J. Frederickson as Director of Marketing and Sales, a position created by and for Frederickson. Through numerous e-mail messages, Hysitron president Thomas Wyrobeck and Frederickson extensively negotiated the terms and conditions of her employment, including salary, vacation, bonus and benefits. On September 16, 2000, Hysitron sent Frederickson a letter containing a formal offer of employment. The letter briefly described Frederickson's at-will employment arrangement, including her benefits package. In order to work at Hysitron, the parties understood that Frederickson would forfeit bonus and profit-sharing payments from her previous employer. The letter indicated that in lieu of a hiring bonus, Hysitron would pay Frederickson's student loans as an "incentive for employment." Specifically, the offer provided that: "[a]s an incentive for employment Hysitron agrees to cover education expenses currently in the form of student loans, and will be paid either as an income expense or directly to the institution sufficient to cover the loan of $10,500 net." On September 26, 2000, at Wyrobeck's direction, Frederickson submitted a letter of acceptance, copying Wyrobeck's letter with respect to the student loan payoff. The parties did not sign any other contract, and there is no evidence in any of the parties' e-mail messages or offer and acceptance letters that the loan payoff was tied to any performance goals or length of employment.
Frederickson began her employment with Hysitron on October 23, 2000, and immediately sought payment of her student loans. Hysitron paid off Frederickson's student loans on November 10, 2000. Frederickson found Wyrobeck difficult to work for, and she resigned on December 15, 2000. Hysitron brought this action to recover the $16,535 student loan payment, alleging contract claims of failure of performance and breach of an implied covenant of good faith and fair dealing. Hysitron alternatively raised equitable claims of quantum meruit, unjust enrichment, promissory estoppel, and fraudulent misrepresentation.
Frederickson owed $10,500 on her student loans, but Hysitron paid $16,535, in order to provide her with sufficient after-tax funds to pay the outstanding debt.
The district court granted Frederickson's motion for summary judgment, concluding that because Frederickson was employed at-will, she could terminate her employment without consequence, at any time and for any reason. The district court found that Frederickson's employment contract did not legally bind her to perform her job in any particular manner, but merely listed broad goals and objectives, rather than terms specific enough to meet the requirements of a contract. Further, the district court found that the contract terms were unambiguous and rejected Hysitron's attempts to submit parol evidence. The district court found that the "incentive for employment" benefit was the functional equivalent of a hiring bonus. Finally, the district court concluded that Frederickson did not breach an implied covenant of good faith and fair dealing because such covenants do not apply to employment contracts, and that the existence of a valid at-will contract precluded Hysitron's claims for equitable relief.
This appeal followed.
DECISION I.
When reviewing a summary judgment ruling, this court examines the record to determine if genuine issues of material fact remain for trial and if the district court properly applied the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990). We consider evidence in a light most favorable to the responding party, and resolve any factual doubts in its favor. Funchess v. Cecil Newman Corp., 632 N.W.2d 666, 672 (Minn. 2001). But we are "not required to save the non-moving party by drawing unreasonable inferences." City of Savage v. Varey, 358 N.W.2d 102, 105 (Minn.App. 1984), review denied (Minn. Feb. 27, 1985).
Breach of Contract Claims
Hysitron argues that the district court erred by granting summary judgment on its breach-of-contract claims because the record contained several disputed issues of material fact. First, Hysitron maintains that the parties' "incentive for employment" agreement relating to the payoff of Frederickson's student loans constitutes a separate contract, distinct from Frederickson's at-will employment agreement. Hysitron contends that the terms of this separate student-loan contract were sufficiently definite and therefore enforceable. Hysitron further argues that the student-loan contract created a condition precedent requiring that Frederickson perform specific duties in a specific manner for a specific length of time before she was entitled to the payoff of her student loans. According to Hysitron, because she did not perform as required, she breached that contract. Hysitron also contends that Frederickson breached an implied covenant of good faith and fair dealing by the timing and manner of her resignation. Hysitron also argues that since the student-loan contract is not an employment contract, the district court erred in applying the rule excluding employment contracts from implied covenants of good faith and fair dealing. In the alternative, Hysitron argues that the contract term "incentive for employment" is ambiguous and creates a factual question, precluding summary judgment.
As a threshold matter, Hysitron concedes that Frederickson was an at-will employee, and therefore, she could terminate her employment at any time for any reason. Cederstrand v. Lutheran Bhd, 263 Minn. 520, 532, 117 N.W.2d 213, 221 (Minn. 1962) (holding that usual employer-employee relationship is terminable at the will of either; the employer can summarily dismiss the employee, and the employee is under no obligation to remain at the job). The terms of the Hysitron Employee Manual, which Frederickson received when she began work, also confirm her status as an at-will employee.
Hysitron maintains, however, that the "incentive for employment" clause constitutes a separate, student-loan contract, and that Frederickson was only entitled to payment of the student loans if she met certain performance goals and remained with Hysitron for at least one year. Frederickson disputes this claim on the merits, and also asserts that Hysitron cannot raise the separate contract claim for the first time on appeal.
While Hysitron did not expressly raise this issue before the district court, it has consistently maintained that the parties had a separate "student loan contract" and that Frederickson was obligated to perform certain conditions before becoming entitled to payment of her student loans. Although the trial court did not directly address this argument in its order, it implicitly rejected it by finding that Frederickson was entitled to the student loan payoff because she was an at-will employee and thus entitled to terminate her employment at any time, for any reason or no reason. We conclude that Hysitron sufficiently articulated the separate contract issue before the trial court, thereby preserving it for appellate review. Thiele v. Stich, 425 N.W.2d 580, 582-83 (Minn. 1988) (holding appellate court cannot consider issues not raised before district court).
Count one of Hysitron's Complaint, for example, is entitled "Breach of Contract (Failure of Performance)," and alleges that Frederickson's neglect and refusal to devote her best efforts to the performance of her job duties and responsibilities constitutes a material breach of contract that excuses Hysitron's obligation to pay the education expenses.
The issue then becomes whether the "incentive for employment" clause forms, in fact, a separate agreement. We conclude that it does not. Contract interpretation is a question of law reviewed de novo. Veerkamp v. Farmers Coop. Creamery, 573 N.W.2d 715, 717 (Minn.App. 1998). Where terms are not defined, this court reads them according to their "plain, ordinary, or popular meaning." Minn. Mining Mfg. Co. v. Travelers Indem. Co., 457 N.W.2d 175, 179 (Minn. 1990). We read terms in the context of a contract's entirety. Porch v. Gen. Motors Acceptance Corp., 642 N.W.2d 473, 477 (Minn.App. 2002), review denied (Minn. June 26, 2002). "[C]ourts cannot remake contracts * * *." Brodsky v. Brodsky, 639 N.W.2d 386, 393 (Minn.App. 2002) (quotation omitted), review denied (Minn. Apr. 23, 2002). This court will not "go beyond the actual language" of a clearly worded contract. Kauffman Stewart, Inc. v. Weinbrenner Shoe Co., 589 N.W.2d 499, 502 (Minn.App. 1999) (citation omitted).
Here, the term "incentive for employment" appears in Hysitron's offer letter and is referenced in Frederickson's acceptance. The term does not appear in a separate document. The letters exchanged between the parties do not provide for — or even suggest — a separate "incentive-for-employment," "student loan" agreement. Indeed, in the offer and acceptance letters, the incentive-for-employment clause is sandwiched between other employee benefits the parties negotiated. Significantly, nothing in Hysitron's offer letter or Frederickson's letter of acceptance states that Frederickson would be required to meet any goals or objectives or to stay for any defined length of time in order to earn the "incentive." Frederickson also testified that she never discussed any such requirements with Wyrobeck. Similarly, Wyrobeck testified that he never told Frederickson that she would have to repay the money if she did not remain with the company for at least one year. In sum, the record contains no evidence to support Hysitron's claim that there was a separate "incentive-for-employment" contract.
Hysitron's contention that the "incentive-for-employment" clause created a condition precedent is similarly flawed. A condition precedent refers to "any fact or event, subsequent to the making of a contract, which must exist or occur before a duty of immediate performance arises under the contract." Nat'l City Bank of Minneapolis v. St. Paul Fire Marine Ins. Co., 447 N.W.2d 171, 176 (Minn. 1989) (citations omitted).
Here, the "incentive-for-employment" term did not create a condition precedent. As noted above, the contract is silent with respect to conditions Frederickson was required to meet before she could receive the student loan payoff. Hysitron argues, however, that Frederickson made a promise to stay on at least through 2001 when she stated in her acceptance letter: "I look forward to contributing to the bottom line and am confident that together we will be able to realize Hysitron's sales goals for 2001 and beyond." But as the trial court correctly noted, this language is mere "business puffery," and too indefinite to constitute a contract term. If anything, this language suggests an indefinite term of employment, which Minnesota law recognizes to be a contract terminable at will. Cederstrand, 263 Minn. at 532, 117 N.W.2d at 221.
The record reflects Hysitron's understanding that Frederickson considered this benefit the equivalent of a hiring bonus. Frederickson testified that Wyrobeck was uncomfortable calling the student-loan payoff a sign-on bonus, so they changed the terminology to "incentive for employment." In other words, the payoff provided Frederickson an incentive to leave her former job, to come to work for Hysitron. Hysitron asserts that substantial evidence exists to show that the parties intended Frederickson's promised performance to be a condition precedent to her entitlement to the student loan payment. But the purported "substantial evidence" does not appear in the record. Moreover, Hysitron's argument is particularly unpersuasive in light of its payment of the student loans so soon after Frederickson began her employment.
Further, even if there had been a condition precedent, this claim would still fail because the fact of payment waived all conditions.
[W]aiver may be found where a party continues to exercise rights under a contract even though he knows a condition has not occurred or cannot be performed.
Appollo v. Reynolds, 364 N.W.2d 422, 424 (Minn.App. 1985). Thus, even if there had been a performance condition attached to the payment of the student loans, Hysitron forfeited the benefit of such an arrangement by paying the student loans without any express or implied reservation of rights.
Despite its contention that the "incentive-for-employment" term was sufficiently definite to permit enforcement and create a condition precedent, Hysitron alternatively argues that the term is ambiguous. Under this theory, Hysitron maintains that, contrary to the trial court's conclusion that the term was the functional equivalent of a hiring bonus, an equally reasonable interpretation of the "incentive for employment" term is that it created a condition precedent based on Frederickson's performance. We disagree. Whether a contract term is ambiguous presents a legal question. Blattner v. Forster, 322 N.W.2d 319, 321 (Minn. 1982). If a court concludes that a term is ambiguous, that is, susceptible to more than one reasonable interpretation, courts may examine extrinsic evidence to construe the contract. Id. But unambiguous contract language must be read according to its plain meaning and enforced "even if the result is harsh." Minneapolis Pub. Hous. Auth. v. Lor, 591 N.W.2d 700, 704 (Minn. 1999).
Here, Hysitron's offer of employment stated directly:
[A]s an incentive for employment Hysitron agrees to cover education expenses currently in the form of student loans, and will be paid either as an income expense or directly to the institution sufficient to cover the loan of $10,500 net.
This language is clear and unambiguous. When assigned its plain meaning, the phrase "incentive for employment" means simply a hiring bonus. We cannot "go beyond" the language of a contract. Kauffman Stewart, Inc., 589 N.W.2d at 502. Even though the result may appear harsh, the clear language of the contract controls. Minneapolis Pub. Hous. Auth., 591 N.W.2d at 704. The unambiguous contract provision provides for payment of Frederickson's student loans as an alternative to a hiring bonus.
Finally, Hysitron contends that Frederickson breached an implied covenant of good faith and fair dealing because of the timing and nature of her resignation. Minnesota courts generally "have not read an implied covenant of good faith and fair dealing into employment contracts." Hunt v. Mid Am. Employees Fed. Credit Union, 384 N.W.2d 853, 858 (Minn.App. 1986).
Hysitron cannot avoid application of this principle simply by characterizing the agreement as unrelated to employment. The district court found the agreement to be an at-will employment contract. The "incentive-for-employment" clause was necessarily part of that agreement. Hysitron criticizes this finding because it allowed Frederickson to terminate her employment at will and still reap the benefit of the student-loan payoff. That may be true; but the record amply demonstrates that the student-loan payoff formed an integral part of Frederickson's original employment agreement. Hysitron provided no credible evidence to the contrary.
The district court properly granted summary judgment on each of Hysitron's breach-of-contract claims.
II. Equitable Claims
Hysitron argues that several material issues of fact exist with respect to its alternative claims for equitable relief under theories of quantum meruit, unjust enrichment, and promissory estoppel. But it is well-established that a valid contract precludes equitable relief. U.S. Fire Ins. Co. v. Minnesota State Zoological Bd., 307 N.W.2d 490, 497 (Minn. 1981). Here, the trial court correctly found that the parties' at-will contract precluded Hysitron from recovering under any of its equitable claims.
Hysitron first contends that the district court erred in dismissing its quantum meruit claim because it is unclear whether the "incentive for employment" benefit was covered by a valid contract. Hysitron argues that, in the absence of a valid contract, the issue of reasonable compensation is a disputed question of material fact. Hysitron's claim is unpersuasive.
A party may recover under quantum meruit where he or she has conferred a benefit to another and has not received reasonable compensation for this act. See, e.g., Frankson v. Design Space Int'l, 394 N.W.2d 140, 145 (Minn. 1986) (holding that recovery in quantum meruit was proper when a compensation agreement was confusing and incomplete). Here, however, the "incentive-for-employment" benefit was clearly understood by the parties when they entered into the contract. Frederickson's employment agreement directly explained the compensation terms, including the student loan payoff. Hysitron spelled out the compensation terms in its offer of employment and Frederickson reiterated these terms in her letter of acceptance. Thus, Hysitron's reliance on Frankson is misplaced.
In addition, the trial court found that Hysitron was reasonably compensated for the benefit it conferred on Frederickson. Obtaining Frederickson as an employee was the compensation, rather than the length or quality of her employment. Because the parties' employment relationship was governed by a contract at-will and Hysitron received reasonable compensation as contemplated by the parties, the trial court properly granted summary judgment on this claim.
Next, Hysitron argues that by not returning the $16,535 student loan payment after she resigned, Frederickson was unjustly enriched because she knew she was not entitled to retain the money. "The right of recovery for unjust enrichment is equitable." Southtown Plumbing v. Har-Ned Lumber Co., 493 N.W.2d 137, 140 (Minn.App. 1992). As stated above, the employment relationship between Frederickson and Hysitron was governed by a valid contract, whose terms were itemized in Hysitron's offer letter to Frederickson and Frederickson's acceptance letter. Moreover,
[a]n action for unjust enrichment does not lie simply because one party benefits from the efforts of others; instead, "it must be shown that a party was unjustly enriched in the sense that the term `unjustly' could mean illegally or unlawfully."
Schumacher v. Schumacher, 627 N.W.2d 725, 729 (Minn.App. 2001) (citations omitted). Under the terms of Frederickson's at-will employment, she was entitled to the "incentive-for-employment" benefit by the simple fact of her employment. The record does not suggest otherwise. Hysitron has not shown disputed facts concerning unjust enrichment, and the trial court properly granted summary judgment on this claim.
Finally, Hysitron argues that material issues of fact exist as to whether: (1) Frederickson's promises were sufficiently definite; (2) Frederickson's promises were made to, and did, in fact, induce Hysitron to pay her student loans; and (3) Hysitron detrimentally relied on these promises. Because Hysitron and Frederickson had a valid, at-will employment agreement, the equitable remedy of promissory estoppel is not available. See U.S. Fire Ins. Co., 307 N.W.2d at 497. But even if it were, one requesting relief under promissory estoppel must show a promise that reasonably induces reliance, and that injustice would result if the promise is not enforced. Schumacher v. Schumacher, 627 N.W.2d 725, 728 (citation omitted). Here, Frederickson promised only to exert her "best efforts." The trial court properly found this to be an indefinite promise, insufficient to form the basis of a contractual obligation. Furthermore, the record fails to demonstrate that Frederickson did not intend to put forth her best efforts during her employment. Thus, the record simply does not support Hysitron's promissory estoppel claim, and the district court properly granted summary judgment on this issue.
Because Hysitron has failed to demonstrate any disputed issues of material fact, and because the district court properly applied the law, the district court properly granted summary judgment on Hysitron's contract and equitable claims.
III. Attorneys' Fees
Frederickson moves for attorney fees. Hysitron opposes the motion and moves for fees incurred in responding to the motion. Both parties erroneously rely on Minn.R.Civ.P. 11, which is inapplicable to proceedings in this court. Neither party complied with the procedural requirements of Minn. Stat. § 549.211, subd. 4(a) (2002), by serving a motion at least 21 days in advance of filing with the court, to afford the opposing party an opportunity to withdraw offensive pleadings or arguments. And neither party established that the other proceeded in bad faith in this court or that an award of appellate fees is appropriate.