Fry v. Mount

554 N.W.2d 263, 12 I.E.R. Cas. (BNA) 137, 1996 Iowa Sup. LEXIS 397, 1996 WL 526795
CourtSupreme Court of Iowa
DecidedSeptember 18, 1996
Docket95-366
StatusPublished
Cited by34 cases

This text of 554 N.W.2d 263 (Fry v. Mount) is published on Counsel Stack Legal Research, covering Supreme Court of Iowa primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Fry v. Mount, 554 N.W.2d 263, 12 I.E.R. Cas. (BNA) 137, 1996 Iowa Sup. LEXIS 397, 1996 WL 526795 (iowa 1996).

Opinion

NEUMAN, Justice.

The question on this appeal is whether plaintiff Michael Fry can prevail, as a matter of law, on a claim of negligent misrepresentation where the damages he seeks stem from termination of his at-will employment with the defendants. We conclude that recognizing such a cause of action in this context would permit a discharged employee to attack, on tort law principles, the very circumstance the employee would be prevented from challenging for breach of implied contract. We therefore vacate a court of appeals decision to the contrary, and affirm the judgment of the district court.

Plaintiff Michael Fry applied for a job as a blow mold operator/trainer for defendant corporations Reel-Core and Iowa Roto-Cast. His experience for the job rested on his nine years of employment with Central Can Company in Muscatine. In a preemployment interview with the corporations’ owners, defendants Floyd Mount and Greg Whalen, Fry mentioned that Central Can had a policy of never rehiring an employee who has once quit. So the stability of any future employment was important to him. He and his wife, plaintiff Lisa Fry, also had a handicapped child for whom continuity of health insurance was a concern.

Reel-Core offered Fry the job at an annual salary of $35,000, and he went to work for them. Fry had no written employment agreement with the corporation, nor were any employment manuals or regulations discussed with him. Fry relocated his family from Muscatine to Waukon. The corporation paid $1500 toward moving expenses, and also furnished a trailer to assist in the move.

At the time Fry was hired, Reel-Core had been operational for less than a month. The record reveals that he was the only employee with blow molding experience, and helped train other employees — including the plant manager — in that operation. But within four months the company terminated his employment. According to Fry, Greg Whalen told him that he believed Fry had misrepresented his skills and, furthermore, the fledgling corporation could not afford his salary. 1

Fry, joined by his wife, sued the defendants for breach of implied contract, negligent misrepresentation, fraudulent misrepresentation, and intentional infliction of emotional distress. Following discovery, the defendants moved for summary judgment, asserting that neither Fry’s contract claim nor his tort claims could be sustained as a matter of law. Fry resisted defendants’ motion, advancing the following factual allegations to support his claim of misrepresentation related to the preemployment interview:

a. [The defendants] represented that I had the knowledge and skill that would make me an integral part of the new operation;
b. They represented to me that my skills would make me indispensable to their operation; and
c. They represented to me that I would have long-term employment situation [sic] with their organization.

The district court granted defendants’ motion for summary judgment, concluding Fry was an at-will employee terminable at any time, and for any reason. The Frys appealed the ruling with respect to the two misrepresentation counts. 2 We transferred the case to the court of appeals.

The court of appeals sustained the district court’s ruling on the fraudulent misrepresentation claim, but reversed on the negligent misrepresentation count. Relying on the elements of negligent misrepresentation outlined in section 552 of the Restatement (Second) of Torts, the court found a fact question existed concerning Fry’s justifiable reliance on defendants’ alleged representation that the employment would be long *265 term. We granted defendants’ application for further review to consider their assertion that the court’s application of section 552 created an unprecedented exception to at-will employment and a new legal duty for prospective employers.

I. A grant of summary judgment is entitled to affirmance on appeal

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 the moving party is entitled to a judgment as a matter of law.

Iowa R. Civ. P. 237(c); Hoffnagle v. McDonald’s Corp., 522 N.W.2d 808, 811 (Iowa 1994). Our review focuses on whether the movant has met this burden when the record is viewed in the light most favorable to the party opposing the motion. Hoffnagle, 522 N.W.2d at 811.

Although we have frequently observed that negligence eases are seldom capable of summary adjudication, “the threshold question in any tort case is whether the defendant owed the plaintiff a duty of care.” Sankey v. Richenberger, 456 N.W.2d 206, 207 (Iowa 1990). Whether such a duty exists is always a question of law for the court. Hoffnagle, 522 N.W.2d at 811.

II. The common law doctrine of employment at will is firmly rooted in Iowa law. Fogel v. Trustees of Iowa College, 446 N.W.2d 451, 455 (Iowa 1989). An at-will employee can be discharged from employment at any time, for any lawful reason. Id. Our cases have carved out only two narrow exceptions to this doctrine:

(1) when the discharge is in clear violation of a “well-recognized and defined public policy of this State,” and (2) when a contract created by an employer’s handbook or policy manual guarantees an employee that discharge will occur only for cause or under certain conditions.

French v. Foods, Inc., 495 N.W.2d 768, 770 (Iowa 1993) (citations and quoted authority omitted).

Fry does not seriously contend that his employment with Reel-Core was other than at will. Nor does he claim that either of the recognized exceptions to the doctrine apply. Rather he asserts that his at-will status does not prevent him from maintaining an action for negligent misrepresentation based on statements made to him by Mount and Whalen in his preemployment interview.

Fry’s negligent misrepresentation claim rests on section 552 of the Restatement (Second) of Torts. That section states in pertinent part:

One who, in the course of his business, profession or employment, or in any other transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information.

Restatement (Second) of Torts § 552(1) (1977).

We first recognized the applicability of section 552 in Ryan v. Kanne,

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Bluebook (online)
554 N.W.2d 263, 12 I.E.R. Cas. (BNA) 137, 1996 Iowa Sup. LEXIS 397, 1996 WL 526795, Counsel Stack Legal Research, https://law.counselstack.com/opinion/fry-v-mount-iowa-1996.