Niehaus v. Delaware Valley Medical Center

631 A.2d 1314, 429 Pa. Super. 119, 8 I.E.R. Cas. (BNA) 1318, 1993 Pa. Super. LEXIS 2753

• Court: Superior Court of Pennsylvania
• Decided: August 27, 1993
• Docket: 4063
• Status: Published

Opinions

WIEAND, Judge:

After an approved nine months’ leave of absence without pay; Patricia Niehaus sought to resume her employment at the Delaware Valley Medical Center. The employer refused to rehire her, and Niehaus sued. In an amended complaint she alleged that the medical center had breached an express or implied contract to rehire her. The trial court, in response to preliminary objections, dismissed the amended complaint with prejudice. Niehaus appealed.¹

In reviewing an appeal from an order sustaining preliminary objections in the nature of a demurrer to a complaint, we accept as true all material facts alleged in the complaint and all reasonable inferences which can be drawn therefrom. Hornung v. Schauseil Insurance Associates, Inc., 422 Pa.Super. 472, 478, 619 A.2d 775, 778 (1993). The amended complaint in this case alleged that Niehaus, an employee of Delaware Valley Medical Center, had made a written request for a leave of absence of nine months duration and had obtained her employer’s approval therefor. This was in agreement with a provision in an employee handbook which stated that if an employee were granted an approved leave of absence, that employee, at the end thereof, would be guaranteed the same or similar position to that occupied prior to the leave of absence. The handbook also' stated, however, that the provisions in the handbook were not to be interpreted as a contract of employment and that either party could terminate the employment relationship at any time. At the conclusion of Niehaus’s leave of absence, the medical center refused to rehire her for any position. Niehaus sued. She contended that she had either an express contract, or an implied contract based on promissory estoppel, that she would be rehired following an approved leave of absence.

The presumption under Pennsylvania law is that all employment is at will and, therefore, an employee may be discharged for any reason or no reason. Scott v. Extracorporeal, Inc., 376 Pa.Super. 90, 94, 545 A.2d 334, 386 (1988). “[A]s a general rule, there is no common law cause of action against an employer for termination of an at-will employment relationship.” Clay v. Advanced Computer Applications, Inc., 522 Pa. 86, 89, 559 A.2d 917, 918 (1989). “The sine qua 'non of the presumption is that except in rare instances, discharges will not be reviewed in a judicial forum.” Scott v. Extracorporeal, Inc., supra 376 Pa.Super. at 95, 545 A.2d at 336. The burden of overcoming the presumption and proving that one is not employed at-will “rests squarely” with the employee. Rutherfoord v. Presbyterian-University Hospital, 417 Pa.Super. 316, 323, 612 A.2d 500, 503 (1992). In order to rebut the presumption of at will employment, a party must establish the existence of: (1) an agreement for a definite duration; (2) an agreement specifying that the employee will be discharged only for just cause; (3) sufficient additional consideration; or (4) an applicable recognized public policy exception. Robertson v. Atlantic Richfield Petroleum, 371 Pa.Super. 49, 58, 537 A.2d 814, 819 (1987), allocatur denied, 520 Pa. 590, 551 A.2d 216 (1988).²

In Richardson v. Charles Cole Memorial, 320 Pa.Super. 106, 466 A.2d 1084 (1983), an employee handbook issued to the plaintiff contained a statement that the employer’s policy was to offer “continuous’employment to all employees whose work proves satisfactory.” The plaintiff, who had been hired under a contract of indefinite duration, alleged in her complaint for wrongful discharge that the provisions of the employee handbook had created an employment contract which had been breached by the employer. The Superior Court rejected this argument, explaining that the “[employer’s] unilateral act of publishing its policies did not amount to the ‘meeting of the minds’ required for a contract.” Id. at 108, 466 A.2d at 1085. See also: Darlington v. General Electric, 350 Pa.Super. 183, 204, 504 A.2d 306, 316 (1986) (court questioned binding nature of employee handbooks on employers). Similarly, in Martin v. Capital Cities Media, Inc., 354 Pa.Super. 199, 511 A.2d 830 (1986), allocatur denied, 514 Pa. 643, 523 A.2d 1132 (1987), the plaintiff had been hired as an at will employee. She was given an employee handbook which contained a provision listing various acts deemed violative of the employer’s standard of conduct and which represented cause for disciplinary action. The handbook provided, however, that it could be modified by the employer at any time. When the plaintiff was terminated for reasons other than those listed in the handbook, she sued her employer, alleging a breach of contract. She contended that the provisions of the handbook had transformed her status from an at will employee to one who could only be terminated for cause. The Court disagreed explaining:

This would be a modification of immense proportions. For such an extreme modification of a preexisting contract, we would require a clear statement of an intent to so modify. We do not believe a reasonable person in the [plaintiffs] position would have read this handbook provision as converting her from an at-will employee to an employee with an indefinite contract who could never be discharged without objective just cause____ The vagueness and the generalities [of the handbook’s language] coupled with the employer’s reservation of power to unilaterally alter the handbook’s terms would lead a reasonable at-will employee to interpret its distribution as an informational guideline, and not as the exclusive enumeration of the entire panoply of rights and duties existing between employer and employee which served to displace the at-will contract that already existed between employee and employer.

Id. 354 Pa.Super. at 215-216, 511 A.2d at 838-839. See also: Reilly v. Stroehmann Bros. Co., 367 Pa.Super. 411, 416, 532 A.2d 1212, 1214 (1987), allocatur granted, 520 Pa. 577, 549 A.2d 137 (1988) (contract formed between employer and employee via employee handbook only if it “contain[s] unequivocal provisions that the employer intended to be bound by it and, in fact, renounced the principle of at-will employment.”).

In a slightly different context, in Morosetti v. Louisiana Land and Exploration Company, 522 Pa. 492, 564 A.2d 151 (1989), the plaintiffs argued that they were entitled to severance pay from their employer because there existed a policy in a manual used by the employer’s personnel manager. The trial court directed a verdict in favor of the employees on the basis that the employer had made a handbook offer for severance pay which had been accepted by the employees. The Supreme Court reversed, holding that a definitive offer for the severance pay was never made. The Court stated:

It is not sufficient to show they had a policy. It must be shown they offered it as binding terms of employment. A company may indeed have a policy upon which they intend to act, given certain circumstances or events, but unless they communicate that policy as part of a definite offer of employment they are free to change as events may require.

Id. at 496, 564 A.2d at 153. See also: Rutherfoord v. Presbyterian-University Hospital, supra; Vincent v. Fuller Co., 400 Pa.Super. 108, 582 A.2d 1367 (1990), reversed on other grounds, 532 Pa. 547, 616 A.2d 969 (1992).

The appellee-medical center contends in this case that because appellant was an employee at will, she could be terminated for any reason or for no reason, and that it would be absurd to require a rehiring of appellant when she could thereafter be discharged immediately. Because she could be discharged at any time and for any reason, the argument goes, her employer could refuse to reinstate her even following an approved leave of absence. Any contrary provision in the employee handbook, it is suggested, was not a definite part of appellant’s contract of employment but merely an informal guideline which could be changed at will by the employer. Moreover and in any event, suggests the employer, there was no consideration for an agreement to rehire appellant following an approved leave of absence. It is argued, therefore, that the provision in the handbook is unenforceable.

After careful review, we reject appellee’s arguments. Although they have superficial appeal, they do not withstand the light of closer examination. If appellant was initially an employee at will, she nevertheless took a leave of absence only with her employer’s approval and upon its promised guarantee that she would be reinstated at the end thereof in the same or a similar position. This, if the averments of her complaint are correct, created a contract. To hold otherwise would be to condone blatant deception.

Courts have found “additional consideration” to support employment contracts for a definite duration “when an employee affords his [or her] employer a substantial benefit other than the services which the employee is hired to perform, or when the employee undergoes a substantial hardship other than the services which he [or she] is hired to perform.” Darlington v. General Electric, supra 350 Pa.Super. at 201, 504 A.2d at 315. In Scullion v. EMECO Industries, Inc., 398 Pa.Super. 294, 580 A.2d 1356 (1990), allocatur denied, 527 Pa. 625, 592 A.2d 45 (1991), the employee had been discharged after three months of employment. He had been promised by his employer that “[this] was the last job he would ever have” and he had turned down an incentive to remain with his former employer, had sold his home in California, had moved his family to Pennsylvania and had purchased real estate in Pennsylvania. Under these circumstances, the Court held, there was a jury question regarding the sufficiency of the additional consideration to overcome the presumption of an employment at will and render the promise enforceable. Similarly, in Greene v. Oliver Realty, Inc., 363 Pa.Super. 534, 526 A.2d 1192 (1987), a jury question existed where plaintiff allegedly had been promised lifetime employment in exchange for his acceptance of a rate of pay below union wages and where he, in fact, had worked for twenty-four (24) years at sub-union rates. Compare: Scott v. Extracorporeal, Inc., supra 376 Pa.Super. at 101, 545 A.2d at 339 (at will presumption not rebutted where there was no evidence that “[employee] brought any abilities to the job, aside from the services for which she was compensated, which were beneficial to her employer or that she sacrificed anything tangible pursuant to the agreement beyond that for which she was paid.”); Martin v. Capital Cities Media, Inc., supra 354 Pa.Super. at 217, 511 A.2d at 839 (where employee handbook was given to plaintiff gratuitously, there was no evidence of either an additional consideration rendered by plaintiff or an intent by employer to change plaintiffs at will status); Darlington v. General Electric, supra 350 Pa.Super. at 202, 504 A.2d at 315 (court did not find additional consideration where employer terminated plaintiffs employment after fifteen years of service and plaintiff’s decision to leave his former company “was simply a reasoned choice of a new career goal.”).

In the instant case, whether or not there was consideration, the employer’s promise is enforceable under principles of promissory estoppel.³ “A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise.” Restatement (Second) of Contracts, § 90(1). Where an employer expects, if not demands, that its employees abide by a policy expressed with particularity in an employee handbook, an employee may justifiably rely thereon and expect justifiably that the employer will do the same. Thus, when an employer announces a specific practice or policy, especially in light of the fact that it expects employees to abide by the same, the employer may not treat its promises as being illusory. Thompson v. St. Regis Paper Co., 102 Wash.2d 219, 230, 685 P.2d 1081, 1088 (1984).

Here, the medical center, by its handbook, had guaranteed its employees that if a leave of absence were requested and approved by the employer, then the employee could return at the end of the leave of absence and would be restored to the same or similar position as that occupied by the employee prior to the leave of absence. Under this policy, the employer had a right to expect a stable work force, where employees would take leave of absence only with the employer’s consent and approval. An employee who was granted an approved leave of absence, however, could also rely upon the employer’s promise that the employee would be rehired. The employer’s promise was not illusory. When the appellant employee was induced in fact to seek and obtain an approved leave of absence without pay on the assurance that she could return to the same or similar employment at the expiration of her leave, enforcement of the promise was essential to avoid injustice.

The appellee-medical center argues, however, that a cause of action for breach of a contract of employment cannot be based on the provisions of a handbook where other language disclaims an intent to form a contract. In this case, appellant was initially employed at will, and nothing in the employee handbook was sufficient to change the employee’s status by conferring contractual rights. See: Rutherfoord v. Presbyterian-University Hospital, supra; Ruzicki v. Catholic Cemeteries Ass’n, 416 Pa.Super. 37, 610 A.2d 495 (1992). When the employee requested a leave of absence without pay, the employer could have refused to approve it or, indeed, could have revoked its promise of renewed employment at the end of the leave of absence. This it did not do. Instead, it approved the leave of absence pursuant to and in accordance with its handbook promise to restore the employee to the same or a similar position as that occupied by the employee before the leave of absence. It is this approval which thereupon gave rise to an implied contract and not the mere language of the handbook. The promise of rehiring was a part of the approved leave of absence to which both parties had agreed.⁴

It must be conceded, as appellee argues, that the agreement did not provide that appellant would continue to be employed for any specific period. On the other hand, appellant was not unknown to the medical center. She was an experienced employee, whose leave of absence had been approved, and whose capabilities or lack thereof were known to the medical center. By approving her leave of absence in accordance with the guarantee contained in the employee handbook, the employer impliedly agreed to rehire her at the end of her leave of absence for at least a reasonable period of time unless she was then unable to perform satisfactorily the duties of such employment.

When there is no express provision in a contract as to its duration, the intention of the parties regarding the duration and the termination of the contract is to be determined from the nature and the subject-matter of the contract, from the circumstances under which it was executed, and by an application of a reasonable construction to the agreement as a whole. Contracts which do not fix a definite time for the duration of the relationship which they create are sometimes construed as providing for a reasonable time or some particular period inferred from the nature and the circumstances of the undertaking.

8 P.L.E., Contracts § 245 (footnotes omitted). See: Price v. Confair, 366 Pa. 538, 79 A.2d 224 (1951). See also: Scullion v. EMECO Industries, Inc., supra 398 Pa.Super. at 299, 580 A.2d at 1359 (“When the exact period for which the parties intended to contract is unable to be determined, an agreement for a ‘reasonable time’ will be inferred.”); Straup v. Times Herald, 283 Pa.Super. 58, 64-65, 423 A.2d 713, 716-717 (1980) (“It is the settled law of agency that if the agent or employee furnishes a consideration in addition to his mere services, he is deemed to have purchased the employment for at least a reasonable period where the duration of the employment is not otherwise defined.”).

For these reasons we conclude that the trial court erred when it summarily dismissed appellant’s amended complaint. The complaint is sufficient to allege a cause of action for breach of a contract to rehire.

Reversed and remanded for further proceedings. Jurisdiction is not retained.

CAVANAUGH, J., files a dissenting opinion.

1 . Niehaus had filed an original complaint asserting in three counts: breach of contract, estoppel, and violations of the Wage Payment and Collection Law. Preliminary objections were sustained by the trial court and Niehaus was given permission to file an amended complaint. In her amended complaint, Niehaus asserted only counts sounding in breach of contract and estoppel. Preliminary objections were again sustained by the trial court. Because only the amended complaint is before us for review, we do not consider a claim under the Wage Payment and Collection Law.

2 . Other cases have defined these elements in slightly different terms. See, e.g.: Scott v. Extracorporeal, Inc., supra (presumption may be overcome by [1] express contract, [2] implied in-fact contract, [3] additional consideration passing from the employee to the employer and [4] discharge [of at-will employee] would contravene a clear public policy or if it is effected with the specific intent to harm the employee).

3 . Promissory estoppel under Section 90 of the Restatement (Second) of Contracts is not the same as equitable estoppel, although the two principles are related. See: Paul v. Lankenau Hospital, 524 Pa. 90, 569 A.2d 346 (1990); Ruzicki v. Catholic Cemeteries Association, 416 Pa.Super. 37, 610 A.2d 495 (1992).

4 . The dissent’s lament that the decision in this case will have far-reaching repercussions and will revise and confuse the law applicable to at-will employment is without foundation. The facts of this case are entirely different from and more compelling than those of prior appellate court decisions permitting the discharge of at-will employees for any reason or no reason. Our decision is limited to the facts of this case. It has application only where an employee takes a leave of absence with the employer’s express approval and upon his promise of re-employment at the end of such approved leave of absence.