Walter B. Duncan v. The Greater Brownsburg Chamber of Commerce, Inc.

FOR PUBLICATION
ATTORNEY FOR APPELLANT: ATTORNEYS FOR APPELLEE:
EDWARD R. HANNON CHARLES E. HOSTETTER
Steuerwald Hannon Zielinski & Witham MATTHEW E. DUMAS
Danville, Indiana Hostetter & O’Hara
FILED
Brownsburg, Indiana
Apr 30 2012, 9:40 am
IN THE
COURT OF APPEALS OF INDIANA CLERK
of the supreme court,
court of appeals and
tax court
WALTER B. DUNCAN, )
)
Appellant–Cross-Appellee–Plaintiff, )
)
vs. ) No. 32A01-1109-CC-429
)
THE GREATER BROWNSBURG )
CHAMBER OF COMMERCE, INC., )
)
Appellee–Cross-Appellant–Defendant. )
APPEAL FROM THE HENDRICKS SUPERIOR COURT
The Honorable Mary Lee Comer, Special Judge
Cause No. 32D04-1109-CC-239
April 30, 2012
OPINION - FOR PUBLICATION
BRADFORD, Judge
Appellant–Cross-Appellee–Plaintiff Walter B. Duncan appeals from the trial
court’s judgment, following a bench trial, in favor of Appellee–Cross-Appellant–
Defendant The Greater Brownsburg Chamber of Commerce, Inc. (“the Chamber”).
Duncan contends that the trial court’s judgment was clearly erroneous and that it also
erred in denying his summary judgment motion. The Chamber cross-appeals, contending
that the trial court erred in denying its summary judgment motion. Concluding that the
trial court should have entered summary judgment in favor of the Chamber, we reverse
and remand with instructions.
FACTS AND PROCEDURAL HISTORY
On March 5, 2009, Duncan entered into an employment agreement with the
Chamber for the position of Executive Director, which provided, in part, that “[e]ither
party may cancel this agreement for cause or convenience with 30-day written notice to
the other party.” Plaintiff’s S.J. Ex. 1 at 2. Duncan’s yearly salary was $50,400.00.
Plaintiff’s S.J. Ex. 1 at 1. During a meeting of the Chamber’s Board of Directors on
March 18, 2010, the Board voted “to terminate for convenience the Employment
Agreement of the Executive Director, subject to the terms of the agreement, effective
immediately.” Plaintiff’s S.J. Ex. 2 at 3.
Later on March 18, 2010, Duncan met with two members of the Board at a
McDonald’s restaurant who informed him that he was to be terminated for convenience
but that his resignation would be accepted in lieu of termination. That same day, Duncan
executed and delivered a “Formal Notice of Resignation” to the Chamber president,
which indicated that he would work with the Chamber for one additional week and then
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take a three-week paid vacation. Appellee’s App. p. 72. Duncan’s daily salary for 2010
was $138.09 per day, meaning that he would have been due $14,775.63 salary for
working through April 18, 2010. Pursuant to the contact, Duncan was also reimbursed
for his mobile telephone and, as of November 19, 2010, was paying $46.62 per month for
the service. Defendant’s S.J. Ex. C at 2. Duncan was paid a total of $15,507.69 by the
Chamber in 2010. Defendant’s S.J. Ex. C at 2.
On September 29, 2010, Duncan filed a breach-of-contract claim against the
Chamber. On January 31, 2011, the Chamber and Duncan filed summary judgment
motions. On April 29, 2011, the trial court denied both parties’ summary judgment
motions. On July 19, 2011, the trial court conducted a bench trial. On September 2,
2011, the trial court entered judgment in favor of the Chamber, finding, inter alia, that
Duncan suffered no damages as a result of the Chamber’s alleged breach.
DISCUSSION AND DECISION
Duncan contends that the trial court’s judgment in favor of the Chamber was
clearly erroneous and that it erred in denying his summary judgment motion. The
Chamber contends that that trial court erroneously denied its summary judgment motion.
We agree with the Chamber, finding its argument to be dispositive.
A. Summary Judgment Standard of Review
When reviewing the grant or denial of a summary judgment motion, we apply the
same standard as the trial court. Merchs. Nat’l Bank v. Simrell’s Sports Bar & Grill, Inc.,
741 N.E.2d 383, 386 (Ind. Ct. App. 2000). Summary judgment is appropriate only where
the evidence shows there is no genuine issue of material fact and the moving party is
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entitled to a judgment as a matter of law. Id.; Ind. Trial Rule 56(C). All facts and
reasonable inferences drawn from those facts are construed in favor of the nonmoving
party. Id. To prevail on a motion for summary judgment, a party must demonstrate that
the undisputed material facts negate at least one element of the other party’s claim. Id.
Once the moving party has met this burden with a prima facie showing, the burden shifts
to the nonmoving party to establish that a genuine issue does in fact exist. Id. The party
appealing the summary judgment bears the burden of persuading us that the trial court
erred. Id.
B. Damages in Breach of Contract Claims
It is well-settled that “[t]o recover for a breach of contract, a plaintiff must prove
that: (1) a contract existed, (2) the defendant breached the contract, and (3) the plaintiff
suffered damage as a result of the defendant’s breach.” Collins v. McKinney, 871 N.E.2d
363, 370 (Ind. Ct. App. 2007). The Chamber contends, inter alia, that Duncan failed to
designate any evidence of damages because the evidence shows that he was ultimately
paid in excess of what he was owed for the thirty days following the decision to terminate
him. Duncan, however, contends that the proper measure of damages should include
salary, expenses, and reimbursement for medical insurance pursuant to the contract from
the date of the alleged breach and continuing for the term of the contract.
Essentially, the Chamber is asking us to adopt the general proposition that
damages for breach of a notice requirement are limited to compensation for the notice
period, which proposition was implicitly adopted by the Indiana Supreme Court in City of
Indianapolis v. Bly, 39 Ind. 373, 375 (1872). In Bly, the plaintiff contracted with
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Indianapolis to be a lamplighter, which contract contained a provision that Indianapolis
could terminate the contract with one month’s notice. Id. at 373. Bly brought suit on the
contract, presumably after the contract was terminated without the required one month’s
notice. Id. The trial court instructed the jury regarding damages, in part, as follows:
‘It is of the contract between plaintiff and defendant that the
defendant should have the right to declare the contract at an end after giving
the plaintiff one month’s notice in writing of such fact; and it is for you to
find from the evidence whether such notice was given, then, after one
month from the time when such notice was given, the defendant was no
longer liable to plaintiff.’
Id. at 374. The Indiana Supreme Court rejected Indianapolis’s challenge to the
instruction, implicitly adopting the proposition that damages for breach of notice
provisions are limited to compensation for the notice period. Id. at 375. We have little
hesitation in explicitly adopting the proposition, and therefore do not accept Duncan’s
argument, which, if adopted, would entitle him to what could only be called the windfall
of being compensated for the remainder of the contract term–for services he did not
provide–as though he had never been terminated.
Our position on this question is consistent with the weight of authority nationwide.
In general, where a contract of ordinary employment stipulates for, or
where usage requires, a certain period of notice, the employment may be
cancelled on shorter notice or with none at all upon payment of wages or
salary for the period of notice. And it seems that if a shorter notice is
given, it becomes effective at the expiration of the requisite period
thereafter.
Raynor v. Burroughs Corp., 294 F. Supp. 238, 242 (E.D. Va. 1968) (citing 9 Williston on
Contracts § 1017 (3rd Ed. 1957)). See also, e.g., Farias v. Bexar Cnty. Bd. of Trs. for
Mental Health Retardation Servs., 925 F.2d 866, 877 (5th Cir. 1991) (concluding that
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allowing plaintiff to work for thirty days and paying ninety days’ severance pay satisfied
120-day notice requirement); Nolan v. Lantz Sanitary Laundry Co., 274 P. 931, 931
(Colo. 1929) (concluding that employee who accepted two weeks’ pay upon termination
waived reliance on contractual provision providing for two weeks’ notice); Bryant &
Stratton Bus. Coll. v. Walker, 160 S.W. 241, 242 (Ky. 1913) (“Where by its terms a
contract of employment may be terminated at any time upon giving a specified notice, the
damages for a wrongful discharge can be no more than the wages which would have
accrued under the contract after the notice, had one been given.”); but see Leslie v. Robie,
84 N.Y.S. 289, 289 (N.Y. App. Term 1903) (concluding that had actress not been given
two weeks’ notice as stipulated in contract, she would have been entitled to stipulated
salary for entire remaining term of contract). So, today we adopt the majority rule that
“[t]he summary discharge of an employee entitled under the employment contract to a
specified period of notice ordinarily[1] permits him to recover his compensation for the
notice period only and not for the entire balance of the contract period.” W.C. Crais III,
Annotation, Effect of attempt to terminate employment or agency contract upon shorter
notice than that stipulated in contract, 96 A.L.R. 2d 272 (1964).
Here, then, the most Duncan was entitled to in the event of a breach by the
Chamber of the notice requirement was thirty days’ compensation, whether salary or in
1
There are two recognized exceptions to the general rule: (1) where breach of a notice
requirement would result in the forfeiture of an already existing right over and above normal
compensation, or (2) where the breach denied the party a contractually provided right to negate the other
party’s termination. W.C. Crais III, Annotation, Effect of attempt to terminate employment or agency
contract upon shorter notice than that stipulated in contract, 96 A.L.R. 2d 272 (1964). Duncan does not
contend that either one of these exceptions applies in this case, and there is no indication in the record to
that effect.
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some other form. Even assuming, arguendo, that the Chamber did breach the contract,
the designated evidence does not create a genuine question regarding damages. The
undisputed designated evidence indicates that Duncan was entitled to be paid $14,775.63
salary for 2010 had he worked through April 18, and we shall assume that his mobile
telephone bill for his last month, for which he was to be reimbursed, was $46.62. This
comes to $14,882.25, which is still $685.44 less than the $15,507.69 he was actually paid
for 2010.2 In short, Duncan was paid more that he was entitled to receive had the notice
requirement been breached and so failed to generate a genuine question of material fact
regarding damages. As such, we need not address the question of whether the Chamber
actually breached the notice requirement. We note that the trial court reached the same
result following bench trial but nonetheless should have entered summary judgment in
favor of the Chamber. Therefore, we reverse and remand with instructions to enter
summary judgment in favor of the Chamber.
VAIDIK, J., and CRONE, J., concur.
2
The employment agreement also provided that “Medical insurance will be obtained by the
Executive Director through the plan of his choice. It shall be the Executive Director’s responsibility to
pay the premiums for said insurance. The Chamber shall reimburse the premiums for said insurance up to
a maximum annual reimbursement of $4,500.00.” Plaintiff’s S.J. Exhibit 1 at 2. Although there is
designated evidence that Duncan paid $3831.03 in insurance premiums during 2010, there is no evidence
that he made any payments between March 18 and April 18. Defendant’s S.J. Ex. C at 2. In any event,
even if we assume that the $3831.03 was paid in twelve monthly, equal premiums, Duncan’s monthly
outlay for 2010 would have been $319.25. This figure added to the salary he was due and the mobile
telephone bill for which he was entitled to be reimbursed comes to $15,201.50, which is still over 300
dollars less than he was actually paid for 2010.
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