Handicapped Children's Education Board v. Lukaszewski

332 N.W.2d 774, 112 Wis. 2d 197, 1983 Wisc. LEXIS 2875

• Court: Wisconsin Supreme Court
• Decided: April 26, 1983
• Docket: 81-1141
• Status: Published

Opinions

WILLIAM G. CALLOW, J.

This review arises out of an unpublished decision of the court of appeals which affirmed in part and reversed in part a judgment of the Ozaukee county circuit court, Judge Warren A. Grady.

In January of 1978 the Handicapped Children’s Education Board (the Board) hired Elaine Lukaszewski to serve as a speech and language therapist for the spring term. Lukaszewski was assigned to the Lightfoot School in Sheboygan Falls which was approximately 45 miles from her home in Mequon. Rather than move, she commuted to work each day. During the 1978 spring term, the Board offered Lukaszewski a contract to continue in her present position at Lightfoot School for the 1978-79 school year. The contract called for an annual salary of $10,760. Lukaszewski accepted.

In August of 1978, prior to the beginning of the school year, Lukaszewski was offered a position by the Wee Care Day Care Center which was located not far from her home in Mequon. The job paid an annual salary of $13,000. After deciding to accept this offer, Lukaszew-ski notified Thomas Morrelle, the Board’s director of special education, that she intended to resign from her position at the Lightfoot School. Morrelle told her to submit a letter of resignation for consideration by the Board. She did so, and the matter was discussed at a meeting of the Board on August 21, 1978. The Board refused to release Lukaszewski from her contract. On August 24, 1978, the Board’s attorney sent a letter to Lukaszewski directing her to return to work. The attorney sent a second letter to the Wee Care Day Center stating that the Board would take legal action if the Center interfered with Lukaszewski’s performance of her contractual obligations at the Lightfoot School. A copy of this letter was sent to the Department of Public Instruction.

Lukaszewski left the Wee Care Day Care Center and returned to Lightfoot School for the 1978 fall term. She resented the actions of the Board, however, and retained misgivings about her job. On September 8, 1978, she discussed her feelings with Morrelle. After this meeting Lukaszewski felt quite upset about the situation. She called her doctor to make an appointment for that afternoon and subsequently left the school.

Dr. Ashok Chatter jee examined Lukaszewski and found her blood pressure to be high. Lukaszewski asked Dr. Chatter jee to write a letter explaining his medical findings and the advice he had given her. In a letter dated September 11, 1978, Dr. Chatterjee indicated that Lukaszewski had a hypertension problem dating back to 1976. He reported that on the day he examined Lukas-zewski she appeared agitated, nervous, and had blood pressure readings up to 180/100. It was his opinion that, although she took hypotensive drugs, her medical condition would not improve unless the situation which caused the problem was removed. He further opined that it would be dangerous for her to drive long distances in her agitated state.

Lukaszewski did not return to work after leaving on September 8, 1978. She submitted a letter of resignation dated September 13, 1978, in which she wrote:

“I enclose a copy of the doctor’s statement concerning my health. On the basis of it, I must resign. I am unwilling to jeopardize my health and I am also unwilling to become involved in an accident. For these reasons, I tender my resignation.”

A short time later Lukaszewski reapplied for and obtained employment at the Wee Care Day Care Center.

After Lukaszewski left, the Board immediately began looking for a replacement. Only one qualified person applied for the position. Although this applicant had less of an educational background than Lukaszewski, she had more teaching experience. Under the salary schedule agreed upon by the Board and the teachers’ union, this applicant would have to be paid $1,026.64 more per year than Lukaszewski. Having no alternative, the Board hired the applicant at the higher salary.

In December of 1978 the Board initiated an action against Lukaszewski for breach of contract. The Board alleged that, as a result of the breach, it suffered damage in the amount of the additional compensation it was required to pay Lukaszewski’s replacement for the 1978-79 school year ($1,026.64). A trial was held before the court. The trial court ruled that Lukaszewski had breached her contract and awarded the Board $1,249.14 in damages ($1,026.64 for breach of contract and $222.50 for costs).

Lukaszewski appealed. The court of appeals affirmed the circuit court’s determination that Lukaszewski breached her contract. However, the appellate court reversed the circuit court’s damage award, reasoning that, although the Board had to pay more for Lukaszewski’s replacement, by its own standards it obtained a proportionately more valuable teacher. Therefore, the court of appeals held that the Board suffered no damage from the breach. We granted the Board’s petition for review.

There are two issues presented on this review: (1) whether Lukaszewski breached her employment contract with the Board; and (2) if she did breach her contract, whether the Board suffered recoverable damages therefrom.

í — I

It is undisputed that Lukaszewski resigned before her contract with the Board expired. The only question is whether her resignation was somehow justified. Lukas-zewski argues that, because she resigned for health reasons, the trial court erred in finding a breach of contract. According to Lukaszewski, the uncontroverted evidence at trial established that her employment with the Board endangered her health. Therefore, her failure to fulfill her obligation under the employment contract was excused.

We recognize that under certain conditions illness or health dangers may excuse nonperformance of a contract. This court held long ago that “where the act to be performed is one which the promisor alone is competent to do, the obligation is discharged if he is prevented by sickness or death from performing it.” Jennings v. Lyons, 39 Wis. 553, 557 (1876). See also Restatement (Second) of Contracts sec. 262 (1981) ; 18 S. Williston, A Treatise on the Law of Contracts sec. 1940 (3d ed. 1978). Even assuming this rule applies to Lukaszewski’s failure to perform, we are not convinced that the trial court erred in finding a breach of contract.¹

A health danger will not excuse nonperformance of a contractual obligation when the danger is caused by the nonperforming party. See Jennings v. Lyons, 39 Wis. at 557-58. Nor will a health condition or danger which was foreseeable when the contract was entered into justify its breach. Id. It would be fundamentally unfair to allow a breaching party to escape liability because of a health danger which by his or her own fault has precluded performance.

In the instant case the trial court expressly found that the danger to Lukaszewski's health was self-induced. Lukaszewski testified that it was stressful for her to return to the Lightfoot School in the fall of 1978 because she did not want to work there and because she resented the Board’s actions to compel her to do so. Citing this testimony, the court concluded: “The Court finds that the defendant’s medical excuse was a result of the stress condition she had created by an attempted repudiation of her contract, and was not the product of any unsubstantiated, so-called, harrassment [sic] by the plaintiff’s board.” Lukaszewski further complained about the hazard of driving 45 miles to and from Sheboygan Falls each day. She alone, however, caused this commute by choosing to live in Mequon. The trial court pointed out in its decision from the bench that she could have eliminated this problem by simply moving to Sheboygan Falls. Thus the court clearly found that any health danger associated with performance of the employment contract was the fault of Lukaszewski, not the Board. This factual finding alone is enough to invalidate the medical excuse for Lukaszewski’s breach.

The medical excuse is defective for a second reason. In order to excuse Lukaszewski’s nonperformance, the trial court would had to have made a factual finding that she resigned for health reasons. The oral decision and supplemental written decision of the trial court indicate that it found otherwise. In its written decision the court stated:

. “[Lukaszewski’s] reasons for resignation were succinctly stated in her testimony, upon cross-examination . . . as follows: ‘. . . I had found a job that was closer in proximity to my home and it offered a different type of challenge, . . . also that the pay was, was more, and I asked them if I could be released from my contract.’ ”

The trial court did not include the health danger. Indeed, the court appeared to doubt that Lukaszewski resigned for health reasons. The trial judge observed that Lukaszewski had a history of hypertension dating back at least five or six years. Her blood pressure would fluctuate at the slightest provocation. He further noted that she was able to commute between Sheboygan Falls and Mequon from January, 1978, through the middle of the following summer. In short, the decisions indicate that the court believed Lukaszewski resigned for reasons other than her health.

These factual findings by the trial court invalidate Lukaszewski’s medical excuse and thereby establish a breach. The standard of review applicable to this issue is well settled.

“Findings of fact by the trial court will not be upset on appeal unless they are against the great weight and clear preponderance of the evidence. The evidence supporting the findings of the trial court need not in itself constitute the great weight or clear preponderance of the evidence; nor is reversal required if there is evidence to support a contrary finding. Rather, to command a reversal, such evidence in support of a contrary finding must itself constitute the great weight and clear preponderance of the evidence. In re Estate of Jones, 74 Wis. 2d 607, 611, 247 N.W.2d 168 (1976). In addition, when the trial judge acts as the finder of fact, and where there is conflicting testimony, the trial judge is the ultimate arbiter of the credibility of the witnesses. Gehr v. Sheboygan, 81 Wis. 2d 117, 122, 260 N.W.2d 30 (1977). When more than one reasonable inference can be drawn from the credible evidence, the reviewing court must accept the inference drawn by the trier of fact. Id.” Cogswell v. Robertshaw Controls Co., 87 Wis. 2d 243, 249-50, 274 N.W.2d 647 (1979).

We conclude that the trial court’s findings of fact are not against the great weight and clear preponderance of the evidence and, therefore, must be upheld. Accordingly, we affirm that portion of the court of appeals’ decision which affirmed the circuit court’s determination that Lukaszewski breached her employment contract.

II.

This court has long held that an employer may recover damages from an employee who has failed to perform an employment contract. Walsh v. Fisher, 102 Wis. 172, 179, 78 N.W. 437 (1899). Damages in breach of contract cases are ordinarily measured by the expectations of the parties. The nonbreaching party is entitled to full compensation for the loss of his or her bargain — that is, losses necessarily following from the breach which are proven to a reasonable certainty and were within contemplation of the parties when the contract was made. Lommen v. Danaher, 165 Wis. 15, 19, 161 N.W. 14 (1917) ; Pleasure Time, Inc. v. Kuss, 78 Wis. 2d 373, 385, 254 N.W.2d 463 (1977). Thus damages for breach of an employment contract include the cost of obtaining other services equivalent to that promised but not performed, plus any foreseeable consequential damages. Roth v. Speck, 126 A.2d 153, 155 (D.C. 1956) ; Annot., 61 A.L.R. 2d 1008 (1958).

In the instant case it is undisputed that, as a result of the breach, the Board hired a replacement at a salary exceeding what it had agreed to pay Lukaszewski. There is no question that this additional cost ($1,026.64) necessarily flowed from the breach and was within the contemplation of the parties when the contract was made. Lukaszewski argues and the court of appeals held, however, that the Board was not damaged by this expense. The amount a teacher is' paid is determined by a salary schedule agreed upon by the teachers’ union and the Board. The more education and experience a teacher has the greater her salary will be. Presumably, then, the amount of compensation a teacher receives reflects her value to the Board. Lukaszewski argues that the Board suffered no net loss because, while it had to pay more for the replacement, it received the services of a proportionately more valuable teacher. Accordingly, she maintains that the Board is not entitled to damages because an award would place it in a better position than if the contract had been performed.²

We disagree. Lukaszewski and the court of appeals improperly focus on the objective value of the services the Board received rather than that for which it had bargained. Damages for breach of contract are measured by the expectations of the parties. The Board expected to receive the services of a speech therapist with Lukas-zewski’s education and experience at the salary agreed upon. It neither expected nor wanted a more experienced therapist who had to be paid an additional $1,026.64 per year. Lukaszewski’s breach forced the Board to hire the replacement and, in turn, to pay a higher salary. Therefore, the Board lost the benefit of its bargain. Any additional value the Board may have received from the replacement’s greater experience was imposed upon it and thus cannot be characterized as a benefit. We conclude that the Board suffered damages for the loss of its bargain in the amount of additional compensation it was required to pay Lukaszewski’s replacement.

This is not to say that an employer who is injured by an employee’s breach of contract is free to hire the most qualified and expensive replacement and then recover the difference between the salary paid and the contract salary. An injured party must take all reasonable steps to mitigate damages. Kuhlman, Inc. v. G. Heileman Brewing Co., 83 Wis. 2d 749, 752, 266 N.W.2d 382 (1978). Therefore, the employer must attempt to obtain equivalent services at the lowest possible cost. In the instant case the Board acted reasonably in hiring Lukas-zewski’s replacement even though she commanded a higher salary. Upon Lukaszewski’s breach, the Board immediately took steps to locate a replacement. Only one qualified person applied for the position. Having no alternative, the Board hired this applicant. Thus the Board properly mitigiated its damages by hiring the least expensive, qualified replacement available.

We hold that the Board is entitled to have the benefit of its bargain restored. Therefore, we reverse that portion of the court of appeals’ decision which reversed the trial court’s damage award.

By the Court. — The decision of the court of appeals is affirmed in part and reversed in part.

1 It must be noted that we do not decide whether this rule extends to the facts of the instant case.

2 We have held that an injured party is not entitled to be placed in a better position because of a breach of contract. Dehnart v. Waukesha Brewing Co., 21 Wis. 2d 583, 595-96, 124 N.W.2d 664 (1963); Pleasure Time, Inc. v. Kuss, 78 Wis. 2d 373, 385, 254 N.W.2d 463 (1977). However, because we find that the Board was damaged by Lukaszewski’s breach, this problem does not arise.