BARKER v. CTC SALES CORPORATION

Citation Codes

Equivalent Citations

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Docket Number

A91A0463.

Attorney(S)

Van C. Wilks, for appellant. Joe C. Ashworth, Collette R. Jones, for appellees.

Judges

SOGNIER, Chief Judge.

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Smart Summary

Factual and Procedural Background

Wayne Barker brought suit against his former employer, CTC Sales Corporation, alleging breach of an employment contract. Barker was hired in 1987 as vice president in charge of production. During 1987-1989, the employer experienced significant net losses. In 1989, Barker informed the employer’s president, Don Mahaffey, that he had received a job offer with a substantial salary increase but chose to remain with CTC Sales Corporation based on Mahaffey's promise of continued employment until the company became insolvent. Barker was discharged in November 1989. The employer moved to dismiss the complaint for failure to state a claim, and the trial court granted the motion. Barker appealed this dismissal.

Legal Issues Presented

Whether Mahaffey’s promise of employment "until insolvency" constitutes a contract for an indefinite term and thus is terminable at will.
Whether detrimental reliance on a promise of indefinite employment creates an exception to the at-will employment rule and supports a cause of action for breach of contract.

Arguments of the Parties

Appellant's Arguments

The trial court erred in finding that Mahaffey’s promise was for an indefinite term rather than a definite term.
Even if the promise was for an indefinite term, Barker’s detrimental reliance on the promise (refusing another job offer and relocating his family) constitutes sufficient consideration to prevent termination at will and entitles him to recovery.

Appellee's Arguments

The promise of employment "until insolvency" is indefinite and thus terminable at will under Georgia law.
The doctrine of promissory estoppel or detrimental reliance does not apply to promises of indefinite employment in Georgia, and therefore no exception to at-will termination exists.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Land v. Delta Air Lines, 130 Ga. App. 231 (203 S.E.2d 316) (1973)	Employment promises for indefinite terms are terminable at will.	Supported the court’s conclusion that "until insolvency" is an indefinite term and thus terminable at will.
Milton v. Bank of Newborn, 30 Ga. App. 55 (116 S.E. 861) (1923)	Contracts of employment for a definite term are enforceable and breach actionable.	Distinguished by the court because the present case involves an indefinite term, unlike the definite term in Milton.
Georgia Power Co. v. Busbin, 242 Ga. 612, 613 (250 S.E.2d 442) (1978)	Interpretation of contract terms is a question for the court.	Used to affirm that the meaning of "until insolvency" is a judicial question.
Ely v. Stratoflex, Inc., 132 Ga. App. 569, 570 (208 S.E.2d 583) (1974)	Promises of employment "for the rest of working life" are indefinite and terminable at will.	Reinforced the court's agreement that "until insolvency" is similarly indefinite.
Loy's Office Supplies v. Steelcase, Inc., 174 Ga. App. 701, 702 (331 S.E.2d 75) (1985)	Promissory estoppel does not apply to promises of indefinite employment.	Supported the rejection of appellant’s argument that detrimental reliance creates an exception to at-will employment.
Marshall v. W. E. Marshall Co., 189 Ga. App. 510, 511 (376 S.E.2d 393) (1988)	General reinforcement of the principle that promissory estoppel is not applicable to indefinite employment promises.	Referenced to bolster the court’s refusal to recognize an exception based on detrimental reliance.

Court's Reasoning and Analysis

The court began by examining the statutory framework under OCGA § 34-7-1, which establishes that employment for an indefinite term is terminable at will by either party. The court analyzed the promise "until insolvency" and determined it to be an indefinite term, akin to promises "until retirement" or "for the rest of working life," which Georgia courts have held are terminable at will. The court distinguished the case from Milton, which involved a definite term contract, noting that the present case’s indefinite term did not create a binding contract for a fixed duration.

Regarding appellant’s argument that detrimental reliance should create an exception to the at-will rule, the court found no support in Georgia law for this proposition. Although promissory estoppel can sometimes render a promise enforceable based on reliance, this principle does not apply to promises of indefinite employment, as established in Loy's Office Supplies. The court thus rejected the appellant’s contention that his detrimental reliance barred termination before a "reasonable time."

Holding and Implications

Judgment affirmed.

The court held that a promise of employment "until insolvency" constitutes an indefinite term of employment, which under Georgia law is terminable at will. Furthermore, detrimental reliance on such a promise does not create an exception to the at-will employment doctrine. The direct effect of this decision is the dismissal of Barker’s breach of contract claim. The opinion does not establish new precedent beyond reaffirming existing principles regarding indefinite employment contracts and the limits of promissory estoppel in this context.

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BARKER v. CTC SALES CORPORATION.

SOGNIER, Chief Judge.

Wayne Barker brought suit against his former employer, CTC Sales Corporation d/b/a C.T.C. Corp and Fireside Log Homes, alleging breach of an employment contract. The employer moved to dismiss the complaint for failure to state a claim, and the trial court granted the motion. Barker appeals.

The record reveals that appellant was hired by appellee in 1987 as vice president in charge of production. In the complaint, appellant alleged that in the years 1987-1989, appellee experienced net losses ranging from $200,000 to $300,000 per year. Despite appellant's knowledge of that fact, in 1989, after informing Don Mahaffey, appellee's president, that he had been offered a position with another company at a substantial increase in salary, appellant chose to remain with appellee. In his complaint, appellant alleged that he refused the other job offer and relocated his family at appellee's expense in reliance upon Mahaffey's promise that appellant would remain employed until appellee became insolvent. Appellant was discharged in November 1989.

Appellant's 11 enumerations of error are based on two main contentions: that the trial court erred by finding that Mahaffey's promise of employment was for an indefinite term; and that even if the promise was for an indefinite term, appellant is entitled to recover because of his detrimental reliance on the promise.

1. OCGA § 34-7-1 provides, inter alia, that "[a]n indefinite hiring may be terminated at will by either party," and consequently Georgia courts have repeatedly held that a promise of employment for an indefinite term is insufficient to support a cause of action for breach of an employment contract. See, e.g., Land v. Delta Air Lines, 130 Ga. App. 231 ( 203 S.E.2d 316) (1973). Relying in part on Milton v. Bank of Newborn, 30 Ga. App. 55 ( 116 S.E. 861) (1923), appellant contends the trial court erred by finding that a promise to employ appellant until appellee became insolvent is the offer of employment for an indefinite term. We do not agree.

Appellant's reliance on Milton, supra, is misplaced because, unlike the situation sub judice, Milton involved a contract of employment for a specific and definite term, and thus in Milton the employee's discharge because of the employer's insolvency prior to the expiration of that term was actionable. In this case, the question of the meaning of the term "until insolvency" in appellant's employment contract was a question for the court. Georgia Power Co. v. Busbin, 242 Ga. 612, 613 (1) ( 250 S.E.2d 442) (1978).

In Land, supra at 232, this court held that the allegations of an employee that he had been induced by his employer to leave the armed services and had been offered "lifetime" employment, which meant "until death or retirement," were "insufficient as a matter of law to overcome the statutory presumption that his indefinite hiring was terminable at the will of either party." Accord Ely v. Stratoflex, Inc., 132 Ga. App. 569, 570 (1) ( 208 S.E.2d 583) (1974) (promise to retain employee "for the rest of [his] working life" was indefinite). We agree with the trial court that "[c]ertainly `until insolvency' is as indefinite a period of time as `until retirement' [or `for the rest of his working life.' Appellee] might not become insolvent for many years to come or it might become insolvent tomorrow. Since the alleged contract was for an indefinite period of time, then it was terminable at the will of either party."

2. We find no merit in appellant's argument that even if the terms of his hiring were indefinite, his detrimental reliance on Mahaffey's promise constitutes consideration in addition to normal employment services, and is thus sufficient to except this situation from the general rule of terminability at the will of either party and prohibits termination until after a "reasonable time." Contrary to appellant's assertion, that is not the law in this state. Appellant cites only foreign authority in support of this proposition, and we have found no Georgia cases so holding. Rather, this court has held that while the principle of promissory estoppel, codified in OCGA § 13-3-44 (a), "provides that, in certain circumstances, the reliance by the promisee or third party upon the promise of another is sufficient consideration, in and of itself, to render the executory promise enforceable against the promisor[, cit., t]his principle has no application in the instant case [where the promise relied on was for employment for an indefinite period]." Loy's Office Supplies v. Steelcase, Inc., 174 Ga. App. 701, 702 ( 331 S.E.2d 75) (1985). Accordingly, as the promise relied on by appellant was for employment for an indefinite period, the trial court did not err by refusing to recognize this "exception" to the general rule, as urged by appellant. See generally Marshall v. W. E. Marshall Co., 189 Ga. App. 510, 511 (1) ( 376 S.E.2d 393) (1988).

Judgment affirmed. McMurray, P. J., and Andrews, J., concur.

DECIDED MAY 1, 1991 — REHEARING DENIED MAY 22, 1991 — CERT. APPLIED FOR.