EDWARDS v. CENTRAL GEORGIA HHS, INC

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Docket Number

A01A1918.

Attorney(S)

Webb Webb, Michael S. Webb, for appellant. Pursley, Howell, Lowery Meeks, Roy H. Meeks, Jr., for appellee.

Judges

MIKELL, Judge.

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Smart Summary

Factual and Procedural Background

Donald S. Edwards, Jr. sued his former employer, Central Georgia HHS, Inc. ("HHS"), seeking $15,000 in "incentive bonuses" for breach of contract and general damages for fraud. Edwards accepted employment by signing an offer letter from Mike Sullivan on October 7, 1997, which stated an annual salary of $65,000 and that "CareSouth offers . . . an incentive bonus plan for this position that is expected to provide between 15% and 25% of your base salary as additional compensation." Edwards' acceptance acknowledged that "the exact specifics of the incentive plan are still under consideration." Edwards was an at-will employee and resigned in April 1999 after receiving no bonuses. The trial court granted summary judgment to HHS. Edwards appealed.

Legal Issues Presented

Whether genuine issues of material fact existed as to whether HHS fraudulently misrepresented that Edwards would be paid incentive bonuses (i.e., whether the promise was made with present intent not to perform).
Whether the alleged employment agreement set forth a readily determinable formula or otherwise definite terms making a promise of future bonus enforceable such that a breach of contract claim could survive summary judgment.

Arguments of the Parties

Appellant's Arguments

Edwards contended HHS (through its agent) fraudulently misrepresented that incentive bonuses would be paid and did not intend to perform at the time the promise was made.
Edwards argued that the employment agreement either set forth or was rendered definite by subsequent words and conduct so as to provide a readily determinable formula for calculating his bonus.

Appellee's Arguments

The opinion does not contain a detailed account of the appellee's legal arguments beyond HHS' motion for summary judgment and the court's consideration of whether the record contained evidence supporting essential elements of Edwards' claims.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Lau's Corp. v. Haskins, 261 Ga. 491 (405 S.E.2d 474) (1991)	Summary judgment: defendant need not produce evidence but may point to absence of evidence supporting an essential element.	Cited for the standard that a movant can obtain summary judgment by showing absence of evidence for an essential element.
Supchak v. Pruitt, 232 Ga. App. 680, 682 (503 S.E.2d 581) (1998)	Standard of review on summary judgment — de novo; view evidence in light most favorable to nonmovant.	Applied to frame appellate review of the grant of summary judgment.
Ely v. Stratoflex, Inc., 132 Ga. App. 569, 571 (208 S.E.2d 583) (1974)	Actionable fraud generally cannot be based on promises as to future events; mere failure to perform does not constitute fraud.	Used to reject fraud claim grounded solely on a future promise.
Kirkland v. Pioneer Machinery, Inc., 243 Ga. App. 694, 695 (534 S.E.2d 435) (2000)	Exception: fraud may be predicated on a promise made with present intention not to perform.	Distinguished/applicable only where promise otherwise enforceable; court held exception inapplicable because the underlying at-will employment promise was unenforceable.
Wheeling v. Ring Radio Co., 213 Ga. App. 210, 211 (444 S.E.2d 144) (1994)	"An employment contract containing no definite term of employment is terminable at the will of either party."	Applied to determine Edwards' employment was terminable at will and thus the bonus promise was unenforceable.
Stover v. Candle Corp. of Am., 238 Ga. App. 657, 659 (520 S.E.2d 7) (1999)	Promise to pay a bonus in the future is not enforceable under a terminable-at-will contract.	Cited to support that Edwards had no enforceable entitlement to the bonus under an at-will relationship.
Arby's Inc. v. Cooper, 265 Ga. 240 (454 S.E.2d 488) (1995)	A promise of future compensation is enforceable only if made at the start of employment and is for an exact amount or based on a formula/method for determining the exact amount.	Applied to hold the offer letter did not make an enforceable promise because it lacked an exact amount or formula and the promise was not sufficiently definite at the outset.
Christensen v. Roberds of Atlanta, Inc., 189 Ga. App. 289, 291-292 (375 S.E.2d 267) (1988)	Illustration that a stated bonus range (e.g., $7,000 to $8,000) is not enforceable absent definiteness or formula.	Cited with Arby's to show the lack of enforceability where bonus terms are indefinite.

Court's Reasoning and Analysis

The court first stated the summary judgment standard and its de novo review obligation. It analyzed Edwards' fraud claim by applying the general rule from Ely that promises about future events do not constitute actionable fraud and noting the limited exception from Kirkland that fraud may be based on a promise made with present intent not to perform. The court concluded the exception did not apply because the underlying promise was unenforceable: Edwards was an at-will employee (Wheeling), and promises of future bonuses under an at-will contract are unenforceable (Stover, Ely). The court also noted the statute-of-frauds principle that oral employment contracts for terms beyond one year are unenforceable as relevant to definiteness.

On the breach claim, the court relied on Arby's (and Christensen) to explain that an enforceable promise of future compensation must be made at the start of employment and must specify an exact amount or a formula/method to determine the exact amount. Sullivan's offer letter did not specify exact terms or a formula and expressly stated specifics were "still under consideration." Edwards' subsequent efforts (drafting proposed plans, spreadsheet, a CEO's statement that a commission plan would be in place in 1998) could not cure the initial indefiniteness because Arby's requires that the promise be made at the beginning of employment. The undisputed record showed no definite formula; therefore the promise was too indefinite to be enforced and summary judgment was proper.

Holding and Implications

Judgment affirmed.

Direct effect: The trial court's grant of summary judgment for HHS was affirmed, dismissing Edwards' fraud and breach of contract claims. The opinion does not announce a new legal rule; it applies existing precedent to find the bonus promise unenforceable and the fraud claim untenable under those circumstances.

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EDWARDS v. CENTRAL GEORGIA HHS, INC.

MIKELL, Judge.

Donald S. Edwards, Jr. appeals from the trial court's grant of summary judgment to Central Georgia HHS, Inc. ("HHS"). Edwards claims the trial court erred because jury questions remained as to whether HHS fraudulently misrepresented that Edwards would be paid "incentive bonuses" in addition to his salary and whether the alleged employment agreement provided a clear formula for calculating such bonus payments. Because the promise upon which Edwards claims he relied was unenforceable, we affirm.

Summary judgment is proper when there is no genuine issue of material fact, and the movant is entitled to judgment as a matter of law. O.C.G.A. § 9-11-56 (c). To obtain summary judgment, a defendant need not produce any evidence but must only point to an absence of evidence supporting at least one essential element of the plaintiff's claim. Lau's Corp. v. Haskins, 261 Ga. 491 ( 405 S.E.2d 474) (1991). Our review of a grant of summary judgment is de novo, and we view the evidence and all reasonable inferences drawn from it in the light most favorable to the nonmovant. Supchak v. Pruitt, 232 Ga. App. 680, 682(1) ( 503 S.E.2d 581) (1998).

Edwards brought this action against his former employer, HHS, seeking to recover $15,000 in "incentive bonuses" under a breach of contract theory and to recover general damages for fraud. The record shows that Edwards accepted a job with HHS on October 7, 1997, by signing an offer letter from Mike Sullivan, Director of Marketing for CareSouth Homecare Professionals, which was the trade name of HHS. Sullivan's letter provided that Edwards would be paid an annual salary of $65,000 and stated that "CareSouth offers . . . an incentive bonus plan for this position that is expected to provide between 15% and 25% of your base salary as additional compensation." Edwards sent a separate letter to Sullivan on October 7, in which he accepted the job offer under the terms of Sullivan's October 3 letter and acknowledged that he understood that "the exact specifics of the incentive plan are still under consideration." It is undisputed that Edwards was an at-will employee. He resigned in April 1999 after not receiving any bonus payments.

1. First, Edwards argues that the trial court erred in granting HHS' motion for summary judgment because genuine issues of material fact remain as to whether his employer made fraudulent misrepresentations that it would pay him incentive bonuses. Edwards argues that the agent of HHS did not intend to honor his promise of a bonus at the time it was made, thereby committing actionable fraud. We conclude that Edwards' theory of fraud is not viable.

As a general rule, actionable fraud cannot be based on statements and promises as to future events. Ely v. Stratoflex, Inc., 132 Ga. App. 569, 571(2) ( 208 S.E.2d 583) (1974). "There is no question that the promises made by [Sullivan, acting on behalf of HHS,] to [Edwards] were prospective in nature and therefore fall within the ambit of this rule. Nor does actionable fraud result from a mere failure to perform promises made." Id.

We have previously acknowledged the exception to this rule that Edwards now asserts: "Although actionable fraud cannot be based on statements and promises as to future events, there is an exception to this proposition, which is that fraud may be predicated on a promise made with a present intention not to perform." Kirkland v. Pioneer Machinery, Inc., 243 Ga. App. 694, 695 ( 534 S.E.2d 435) (2000). See also Wheeling v. Ring Radio Co., 213 Ga. App. 210, 211 ( 444 S.E.2d 144) (1994). However, here, as in Kirkland v. Pioneer Machinery, Inc., supra, we conclude that the exception on which Edwards bases his claim does not apply "because the promises upon which [Edwards] claims he relied were unenforceable even absent any fraud at the time of their utterance because the underlying employment contract, being terminable at will, is unenforceable." See also Ely, supra at 572. See generally Stover v. Candle Corp. of Am., 238 Ga. App. 657, 659(2) ( 520 S.E.2d 7) (1999) ("a promise to pay a bonus in the future is not enforceable under a terminable-at-will contract").

In Kirkland, supra, we affirmed the trial court's grant of summary judgment to the defendant after the plaintiff claimed that he justifiably relied on his former employer's fraudulent misrepresentations that he would not be fired.

"An employment contract containing no definite term of employment is terminable at the will of either party." Wheeling, supra at 211. It is clear that the letters between Sullivan and Edwards did not establish a definite term of employment. See id. Further, "an employee has no entitlement to a certain term of employment unless a contract exists therefor. An oral contract of employment for a term beyond one year is unenforceable under the statute of frauds. [Cits.]" Id. Accordingly, the trial court properly found that Edwards could not maintain a fraud claim based on the undisputed facts in the record, and that HHS was entitled to judgment as a matter of law.

2. Next, Edwards argues that the trial court erred in granting summary judgment to HHS on his breach of contract claim because genuine issues of fact remain as to whether the alleged employment agreement set forth a readily determinable formula for calculating his bonus. We disagree and conclude that the trial court properly entered summary judgment.

The Supreme Court considered what constitutes an enforceable promise of future compensation in Arby's Inc. v. Cooper, 265 Ga. 240 ( 454 S.E.2d 488) (1995). There, the plaintiff filed suit to recover unpaid annual bonuses from his former employer. In holding that the employer's promise to pay the bonuses was unenforceable, the Supreme Court reasoned that

[t]o be enforceable, a promise of future compensation must be made at the beginning of the employment. [Cits.] However, the promise of future compensation must also be for an exact amount or based upon a "formula or method for determining the exact amount of the bonus. (Cit.)" Christensen v. Roberds of Atlanta, Inc., 189 Ga. App. 289, 291-292(2) ( 375 S.E.2d 267) (1988) (promise to pay a bonus of $7,000 to $8,000 per year not enforceable).

(Emphasis omitted.) Id. at 241. Sullivan's offer letter did not expressly state the terms under which Edwards would receive a bonus, nor did it specify the exact amount or a set formula for determining the exact amount of the bonus. Thus, it was not enforceable. Arby's, Inc., supra; Christensen, supra.

In an affidavit filed in response to HHS's motion for summary judgment, Edwards swore that during the course of his employment, he was asked by his supervisors to draft a proposed incentive plan, which he did on four occasions; that he provided HHS with a spreadsheet documenting the contracts and the approximate revenue he generated; and that Dr. Ron Conner, the company's CEO, told him during a December 7, 1997, meeting that a commission plan would be in place in 1998. Edwards argues that even if the parties' agreement was indefinite at the time of formation, "the subsequent words and conduct of the parties made the bonus provisions of the employment contract definite."

Contrary to Edwards' argument, the Supreme Court clearly held in Arby's, Inc., supra, that a promise of future compensation must have been made at the beginning of the employment in order to be enforceable. Thus, the subsequent actions of Edwards' superiors did not render the promise enforceable.

Furthermore, the undisputed evidence demonstrates that a definite formula for calculating Edwards' bonus was never established. "Permitting a bonus to be only partially tied to a formula is not consistent with the rationale for requiring a formula. That rationale . . . is that the sum of money to be paid for performance of services under a contract should be definitely and objectively ascertainable from that contract." Id. When Sullivan offered Edwards the job, his October 3, 1997, letter referred to "[a]n incentive bonus plan for this position that is expected to provide between 15% and 25% of your base salary as additional compensation." In accepting the offer, Edwards acknowledged that "the exact specifics of the incentive plan are still under consideration." In fact, he further stated that he understood that the bonus would be based "on either dollar sales or specific achievements." The promise of future compensation was too indefinite to be enforceable. See Stover, supra at 659(2) , Christensen, supra. Accordingly, the trial court correctly entered summary judgment on the breach of contract claim.

Judgment affirmed. Blackburn, C. J., and Pope, P.J., concur.