Kulkay v. Allied Central Stores, Inc.

398 N.W.2d 573, 1 I.E.R. Cas. (BNA) 1333, 1986 Minn. App. LEXIS 5048
CourtCourt of Appeals of Minnesota
DecidedDecember 16, 1986
DocketCX-86-1220
StatusPublished
Cited by16 cases

This text of 398 N.W.2d 573 (Kulkay v. Allied Central Stores, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of Minnesota primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kulkay v. Allied Central Stores, Inc., 398 N.W.2d 573, 1 I.E.R. Cas. (BNA) 1333, 1986 Minn. App. LEXIS 5048 (Mich. Ct. App. 1986).

Opinion

OPINION

HUSPENI, Judge.

Appellant Allied Central Stores, Inc., doing business as Donaldson’s, appeals from an order denying a motion for a new trial. Appellant had terminated the employment of respondent James P. Kulkay, who appellant alleged was an at-will employee. The trial court concluded that appellant’s personnel policy on termination constituted a unilateral employment contract, altering the status of respondent as an at-will employee, and allowed the matter to go to the jury on a breach of contract theory. The jury found that appellant had breached the contract.

Appellant argues that the court erred in concluding that the policy constituted a contract and in awarding and calculating prejudgment interest. Respondent has filed a notice of review and argues that the court abused its discretion in allowing appellant to amend its answer to assert a privilege defense to a defamation cause of action. Respondent also contends that the court erred in directing verdicts in favor of appellant on defamation and violation of the Minnesota Human Rights Act 1 causes of action. We affirm.

FACTS

Appellant employed respondent as a personnel/operations manager, a supervisory position, beginning on September 8, 1981. Respondent’s employment was terminated on January 24, 1983, for working employees under his supervision “off the clock.” Under this practice, employees work overtime without recording the hours on their time cards. The employees are later given time off with pay at a straight time rate, but do not receive compensation at a time- and-a-half rate as would be required for working overtime. Following the termination, respondent commenced this action, alleging breach of contract, defamation, violation of the Minnesota Human Rights Act, estoppel and intentional infliction of emotional distress. Respondent offered to settle for $73,000.00 in early 1984, but appellant did not accept the offer or make a counter-offer.

On the first day of the trial, the court allowed appellant to amend its answer to assert a defense of privilege to the defamation cause of action. After respondent presented his case, the trial court directed verdicts in favor ,of appellant on all causes of action except breach of contract.

The trial court determined, as a matter of law, that appellant’s written personnel policy on termination constituted a contract, which in this instance would allow termination only if respondent’s action in working employees “off the clock” was a major breach of company policy. The jury was allowed to consider the breach of contract action and answered a special interrogatory that respondent had not breached a major company policy. Consequently, his *576 termination was a breach of the contract resulting from the written personnel policy. The jury calculated respondent’s damages at $86,816.00, and the court allowed prejudgment interest on that amount commencing June 1,1984, the date the prejudgment interest statute became effective.

ISSUES

1. Did the trial court err in determining that the written personnel policy on termination constitutes a unilateral contract?

2. Did the trial court err in awarding or calculating prejudgment interest?

3. Did the trial court abuse its discretion in allowing appellant to amend its answer to include the defense of privilege to the defamation cause of action?

4. Did the trial court err in directing a verdict against respondent on the defamation charge?

ANALYSIS

I.

A personnel policy handbook may become enforceable as an employment contract if it meets the requirements for formation of a unilateral contract. Pine River State Bank v. Mettille, 333 N.W.2d 622, 627 (Minn.1983). An employee hired for an indefinite term may maintain an action for breach of contract if the personnel policy provisions are not followed. Id. The offer must be sufficiently definite in form and must be more than an employer’s general statement of policy in order to constitute a contract. Id. at 626. The policy must provide reasonably definite terms for a fact-finder to interpret and apply in determining whether there has been a breach of the contract arising from the policy. Hunt v. IBM Mid America Employees Federal Credit Union, 384 N.W.2d 853, 857 (Minn.1986). The policy need not address every possible question regarding dismissals, but must permit a conclusion that respondent received certain contractual rights. Lewis v. Equitable Life Assurance Society, 389 N.W.2d 876, 883 (Minn.1986). Where the precise nature of those rights is unclear, it is for the jury to determine the intent of the parties. Id.

Appellant argues that the provision on termination in its personnel policy handbook is not sufficiently definite to constitute an offer for a unilateral contract. Appellant views the provision as nearly identical to the one at issue in Hunt, which was found to be too indefinite to be considered a contract. Respondent argues that the policy is sufficiently definite and is more definite than the policy determined to constitute a contract in Lewis.

Appellant’s personnel policy provides:

III. Reasons for termination
A. Poor performance
Before any Regular or part-time Regular Employee can be terminated for inferior or unsatisfactory performance, the following steps must be taken:
1. Counselling by the Department Manager and/or the Personnel Office regarding errors or deficiencies. A record of this counselling is to be written by the counselling party and signed if possible by the employee before being filed in the employee’s personnel folder.
2. If after a reasonable interval, improvement does not follow the warning, termination may be recommended.
B. Cause
In terminating an employee for cause, the following violations can result in immediate dismissal:
1. Chronic tardiness or absenteeism
2. Dishonesty
3. Insobriety or immorality
4. Willful destruction or defacing of Company property
5. Failure to carry out reasonable request from a duly authorized superior
6. Any other major breach of policy. Dismissal for cause automatically cancels all separation allowances which might have accrued to an individual.

In Hunt, the policy provided:

DISCIPLINARY ACTION

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Bluebook (online)
398 N.W.2d 573, 1 I.E.R. Cas. (BNA) 1333, 1986 Minn. App. LEXIS 5048, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kulkay-v-allied-central-stores-inc-minnctapp-1986.