Peters v. Deseret Cattle Feeders, LLC

IN THE SUPREME COURT OF THE STATE OF KANSAS
No. 113,563
DOUGLAS R. PETERS,
Appellant,
v.
DESERET CATTLE FEEDERS, LLC,
Appellee.
SYLLABUS BY THE COURT
1.
The law in Kansas generally favors employment at will, but it also recognizes
implied-in-fact employment contracts in certain circumstances. For under Kansas law,
parties may become contractually obligated by their conduct as well as by their use of
oral or written words.
2.
Evidence of an implied-in-fact contract shows a mutual intent to contract. So an
implied contract cannot be established solely by the employee's subjective understanding
or expectation of his or her continued employment.
3.
The intent of contracting parties is normally a question of fact for the jury, and the
determination of whether there is an implied-in-fact employment contract requires a
factual inquiry.
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4.
In deciding whether summary judgment is appropriate, a court must determine
whether the evidence presents a sufficient disagreement to require submission to a jury or
whether it is so one-sided that one party must prevail as a matter of law.
5.
Promissory estoppel is an equitable doctrine designed to promote some measure of
basic fairness when one party makes a representation or promise in a manner reasonably
inducing another party to undertake some obligation or to incur some detriment as a
result.
Review of the judgment of the Court of Appeals in an unpublished opinion filed August 26, 2016.
Appeal from Haskell District Court; BRADLEY E. AMBROSIER, judge. Opinion filed March 29, 2019.
Judgment of the Court of Appeals reversing the district court is affirmed. Judgment of the district court is
reversed, and the case is remanded with directions.
John M. Lindner, of Lindner, Marquez & Koksal, of Garden City, argued the cause and was on
the briefs for appellant.
Alan L. Rupe, of Lewis Brisbois Bisgaard & Smith LLP, of Wichita, argued the cause, and
Jeremy K. Schrag, of the same firm, was with him on the briefs for appellee.
The opinion of the court was delivered by
NUSS, C.J.: This is an employment case arising out of the sale of a cattle feedlot.
The district court held that Douglas R. Peters, who moved his employment from the old
owner to the new—Deseret Cattle Feeders, LLC (Deseret)—was Deseret's employee at
will. In short, Deseret could terminate Peters' employment at any time without cause. So
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the court granted summary judgment to Deseret on Peters' claims of breach of implied-in-
fact employment contract and promissory estoppel.
The Court of Appeals panel reversed, holding that whether Peters' employment
was at will—or protected by an implied-in-fact contract—was a disputed question of fact
precluding summary judgment.
Where, as here, no definite term of employment is expressed, the duration of
employment depends on the intention of the parties as determined by the circumstances
of each particular case. Johnson v. National Beef Packing Co., 220 Kan. 52, 54-55, 551
P.2d 779 (1976). Under the circumstances of this particular case, we agree with the panel.
As required by caselaw, Peters' implied-in-fact employment contract claim is supported
by more than his own subjective understanding or expectation. And whether a meeting of
the minds existed between Peters and Deseret on such a contract presents a genuine issue
of material fact preventing summary judgment.
As a result, we affirm the panel's decision reversing summary judgment on this
claim and the one for promissory estoppel. We remand to the district court for further
proceedings.
FACTS AND PROCEDURAL HISTORY
Hitch Enterprises, Incorporated (Hitch) owned and operated a Haskell County
feedlot licensed to feed more than 47,000 head of cattle. As Hitch's shop manager, Peters
was responsible for supervising two to three individuals in the shop and for keeping all of
the equipment running. When Peters began working for Hitch in 2006, he signed a
statement acknowledging he was an employee at will.
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In 2010, Hitch sold the enterprise to Deseret. While Hitch custom fed cattle for a
variety of different owners, Deseret exclusively feeds cattle coming from the 10 ranches
operated by its parent company AgReserves, Inc.
In May or early June 2010, Hitch called a company meeting and told its
employees it was selling its feedlot to Deseret. No Deseret representatives attended the
meeting. There, Hitch representatives told their employees they were welcome to look
into transferring to other Hitch locations—two feedlots near Guymon, Oklahoma—if
they were unable to work for Deseret.
According to the later deposition testimony of Hitch employee Lew Branscum,
Hitch also told its employees the sales agreement provided there would be no layoffs and
if the former Hitch employees did their jobs after Deseret took over, Deseret would keep
them. Any reduction in workforce would be through attrition from retirements and
voluntary resignations.
Two Hitch managers, Ronnie Pruitt and Dale Nicodemus, were not retained.
During their depositions, they testified that Deseret warned them against enticing any
current Hitch employees to go with them. In sum, Deseret needed the employees to keep
operating the feedlot.
In June 2010, Deseret representatives held meetings to introduce themselves to the
Hitch employees. David Secrist, Vice President of Cattle for AgReserves, Inc., and
Michael Archibald, General Manager for Deseret (who eventually replaced Pruitt), met
with groups of Hitch employees from each of the departments, i.e., shop and yard, feed
and mill, and animal health. At the time of these meetings, Deseret was unfamiliar with
Hitch's individual employees and their experience levels, work history, disciplinary
history, attendance, or productivity levels. Secrist and Archibald gave each of the
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departmental groups a brief background of their experience and explained Deseret's
philosophy, organization, and history.
According to Hitch manager Pruitt's deposition testimony, at these departmental
meetings, Deseret representatives—presumably Secrist—specifically, said, "[W]e hope
the employees stay. You know, we value your tenure with the company. We want you to
stay with us." Pruitt further testified that a Deseret representative said,
"They weren't going to get rid of anybody. . . . By any means of releasing them, firing
them. If they left on their own they would not hire people back. As far as their employee
numbers would be smaller than what Hitch had, so they did not need a manager. They
didn't—well, they did bring their own in. They did not need an assistant manager. As
people left, they were going to get their employees down through attrition as they left,
rather than to let them go." (Emphasis added.)
Similarly, in the deposition of Hitch manager Nicodemus, he testified "it was
indicated" that Deseret was "not planning to lay off anybody" and was "going to continue
to operate at full strength." Peters essentially testified to the same effect. According to
Peters, Deseret representatives told Hitch employees that—there would be no layoffs,
employment would be secure, current employees would continue to be employed as long
as they did their jobs, and any reduction in workforce would be limited to attrition from
retirements or voluntary resignations.
In July 2010, Deseret's Archibald and Secrist met with the Hitch employees
individually, including Peters. Archibald took notes of the interview on Peters'
mechanical experience and experience with fleet management software.
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After the individual meetings, Deseret held a large group meeting with the Hitch
employees at the Clarion Hotel in Garden City. There, Deseret explained its insurance
and profit sharing plan and discussed its vacation and pay practices.
With the exception of Hitch's management team of Pruitt and Nicodemus, Deseret
hired every Hitch employee who wanted a job. The employees were hired at the same or
similar pay and experience level as they had held with Hitch. Peters began his Deseret
employment on November 1, 2010, in the same position and title as at Hitch: shop
manager.
The sale closed the next day. Later that month, Hitch hosted a final cookout for its
former employees. There, Chris and Jason Hitch thanked their employees for their many
years of service. Deseret representatives, including Archibald and Secrist, did not make
any announcements there. Of the 40 to 50 total Hitch employees, 13 left at the time
Deseret took over the enterprise. Another eight employees would eventually quit after
initially deciding to continue with Deseret.
Upon starting his Deseret employment, Peters carried over his unused vacation
time from Hitch. He also signed several personnel-related acknowledgments for Deseret.
One was a "Consent to Test for Alcohol or Drugs" acknowledgement that stated "refusal
by me to sign this consent will be cause for termination or ineligibility for employment."
A second document Peters signed related to alcohol and drug screening and provided he
would be required to meet all established standards of conduct and job performance. His
failure to meet any of the requirements would result in immediate termination. The form
further provided: "Nothing contained herein shall be construed as a waiver of
[AgReserve's] right to take normal employment disciplinary actions against me under
existing policies and procedures for unsatisfactory work performance or misconduct." A
third document, signed later, was a Wrangler Jeans Purchase Agreement. It stated if
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Peters' employment ended with Deseret "for any reason," his unpaid Wrangler purchase
would be deducted from his last check. But in contrast to the start of Peters' employment
with Hitch four years earlier, he did not sign an acknowledgment of at-will employment
with Deseret.
In the spring of 2011, Deseret made operational changes to its use and repair of
feedlot machinery and equipment. Instead of relying on full-time employees, Deseret
started using contract labor for specialized work such as assisting with rebuilding pens
and repairing heavy equipment. And Deseret started replacing Hitch's aging equipment
and machinery with newer equipment operated under factory warranty programs, which
included factory scheduled maintenance. Deseret also reduced the equipment necessary
for its operation. While Hitch had used seven feed trucks, Deseret only uses four. And
although Hitch had 20 pickups, Deseret only has about 11.
In June 2011, because of the operational changes, and despite being satisfied with
Peters' job performance, Deseret terminated his employment. Deseret offered Peters a
severance package as part of his termination. Peters refused without explanation.
Approximately two years later, Peters filed suit against Deseret alleging breach of
an employment contract, or in the alternative detrimental reliance and estoppel. For
damages, he claimed $49,440 in lost severance pay he did not receive from Hitch when
he decided instead to accept employment with Deseret. He also claimed $21,963.11 in
lost wages for 10 months following his termination and lost benefits of $3,323 for health
insurance and a vehicle and cell phone that he had received through his employment.
Deseret ultimately moved for summary judgment. It argued the undisputed facts
showed that Peters was an at-will employee who could be terminated at any time without
cause.
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In response, Peters identified four controverted facts he alleged were material and
precluded summary judgment: (1) in Deseret's offer of employment, it assured Peters
that if he chose to work for Deseret, his employment would be secure, there would be no
layoffs, he would continue to be employed for as long as he continued to perform his job,
and any reduction in workforce would be limited to reduction by attrition resulting from
retirements and voluntary resignations; (2) Hitch made a severance offer applicable to
employees who did not want to work for Deseret and the terms of that offer; (3) Deseret
knew of any severance offers made by Hitch; and (4) Peters reasonably relied on the
Deseret offer to his detriment.
In support, Peters cited declarations from four Hitch employees—Pruitt,
Nicodemus, Branscum, and Lawrence Guerrero. They each signed identical declarations
in June or July 2013—though each later retracted the declarations to varying extents
during their depositions. All of the declarations contained only the same three
paragraphs:
"1. On or about November 2, 2010 when Deseret Cattle Feeders, LLC took over Hitch
Feeders, I was an employee of Hitch Feeders.
"2. The employees were given the option of going to work for the new company, Deseret
Cattle Feeders, LLC or, if the employees did not want to work for the new company,
Hitch Feeders was offering 1 year salary.
"3. At this meeting, Deseret Cattle Feeders, LLC representatives promised that if we went
to work for the new company, Deseret, that our employment would be secure. They
promised that there would be no layoffs, present employees would continue to be
employed as long as they did their jobs, and that any reduction in workforce would be
limited to reduction by attrition from retirements or voluntary resignations."
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The declarations were signed, "I declare, verify and certify under penalty of perjury that
the foregoing is true and correct."
Per Guerrero's later deposition, he may not have read the declaration before
signing it. He went on to testify, however, that Deseret held a meeting after it had taken
over the business and "fired five guys in one day . . . . [T]here was a meeting that same
evening that they fired them, and they said everybody present at this meeting does not
have to worry about their job. [T]heir jobs was secure, that there wouldn't be no more
layoffs."
Deseret replied by arguing Peters' claim was only supported by self-serving
statements. It contended Peters presented no corroborating evidence to show an implied-
in-fact contract or the elements of promissory estoppel.
The district court granted summary judgment to Deseret. It ruled that none of the
material facts were controverted and that Peters' employment with Deseret was at will,
i.e., there was no evidence for finding an implied-in-fact contract. The court further held
that on Peters' claim of promissory estoppel, Deseret had not induced him to
detrimentally move laterally from one at-will position at Hitch to another one at Deseret.
The Court of Appeals panel reversed on both Peters' claims. Viewing the evidence
in the light most favorable to Peters as the opponent of the summary judgment motion,
the panel held—among other things—that his expectations about the purported
employment contract were not unilateral. So whether he was an employee-at-will could
not be determined by the court as a matter of law, but only by the jury as a matter of fact.
Peters v. Deseret Cattle Feeders, LLC, No. 113,563, 2016 WL 4499965 (Kan. App.
2016) (unpublished opinion).
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This court granted Deseret's petition for review under K.S.A. 20-3018(b),
obtaining jurisdiction under K.S.A. 60-2101(b).
ANALYSIS
The parties continue to argue about whether genuine issues of material fact exist
on Peters' claims that (1) he had an implied-in-fact employment contract; and (2) Deseret
had induced him to detrimentally rely on its statements about continuing employment
without the possibility of layoffs.
Standard of review
Because this case was decided under K.S.A. 60-256, summary judgment standards
are applied on appellate review. An appellate court reviews summary judgment de novo.
South Central Kansas Health Ins. Group v. Harden & Co. Ins. Services, Inc., 278 Kan.
347, 350, 97 P.3d 1031 (2004) (citing Associated Wholesale Grocers, Inc. v. Americold
Corp., 261 Kan. 806, 820, 934 P.2d 65 [1997]).
Our summary judgment standard is well-known:
"'Summary judgment is appropriate when the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, show that there is no
genuine issue as to any material fact and that the moving party is entitled to judgment as
a matter of law. The trial court is required to resolve all facts and inferences which may
reasonably be drawn from the evidence in favor of the party against whom the ruling is
sought. When opposing a motion for summary judgment, an adverse party must come
forward with evidence to establish a dispute as to a material fact. In order to preclude
summary judgment, the facts subject to the dispute must be material to the conclusive
issues in the case. On appeal, we apply the same rules and where we find reasonable
minds could differ as to the conclusions drawn from the evidence, summary judgment
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must be denied. [Citations omitted]. Shamberg, Johnson & Bergman, Chtd. v. Oliver, 289
Kan. 891, 900, 220 P.3d 333 (2009).'" (Emphasis added.) Fawcett v. Oil Producers, Inc.
of Kansas, 302 Kan. 350, 358-59, 352 P.3d 1032 (2015).
As summarized by the United States Supreme Court in Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 251-52, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986), in this case we
must determine "whether the evidence presents a sufficient disagreement to require
submission to a jury or whether it is so one-sided that one party must prevail as a matter
of law."
Issue 1: Summary judgment should not have been granted for Deseret on Peters'
implied-in-fact employment contract claim.
The law in Kansas generally favors at-will employment. The employment-at-will
doctrine holds that employees and employers may terminate an employment relationship
at any time for any reason, unless there is an express or implied contract governing the
terms of employment. Lumry v. State, 305 Kan. 545, 562, 385 P.3d 479 (2016); see
Johnson, 220 Kan. 52, Syl. ¶ 1 ("In the absence of a contract, express or implied, between
an employee and his employer covering the duration of employment, the employment is
terminable at the will of either party, and the employee states no cause of action for
breach of contract by alleging that he has been discharged.").
We have recognized implied-in-fact employment contracts in certain
circumstances. For under Kansas law, parties may become contractually obligated by
their conduct as well as by their use of oral or written words. Hall v. Kansas Farm
Bureau, 274 Kan. 263, 273, 50 P.3d 495 (2002) (citing Atchison County Farmers Union
Co-op Ass'n v. Turnbull, 241 Kan. 357, 363-64, 736 P.2d 917 [1987]).
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"A contract implied in fact arises from facts and circumstances showing mutual
intent to contract." Mai v. Youtsey, 231 Kan. 419, 422, 646 P.2d 475 (1982). Because the
intent must be mutual, an implied contract cannot be established solely by the employee's
subjective understanding or expectation of his or her employment. Hall, 274 Kan. at 273
(citing Brown v. United Methodist Homes for the Aged, 249 Kan. 124, 133, 815 P.2d 72[1991]); see also Allsup v. Mount Carmel Med. Center, 22 Kan. App. 2d 613, 617-18, 922
P.2d 1097, rev. denied 260 Kan. 991 (1996) (discussing the implied contract theory
exception).
This court has held that the "intent of the contracting parties is normally a question
of fact for the jury and . . . the determination of whether there is an implied contract in
employment requires a factual inquiry." Morriss v. Coleman Co., 241 Kan. 501, 512, 738
P.2d 841 (1987). In making that particular determination, the understanding and intent of
the parties should be ascertained from consideration of several factors: (1) written or oral
negotiations, (2) the parties' conduct from the beginning of the employment relationship,
(3) the usages of the business, (4) the situation and objective of the parties giving rise to
the relationship, (5) the nature of the employment, and (6) any other circumstances
surrounding the employment relationship that tend to explain or clarify the parties'
intentions at the time employment began. Hall, 274 Kan. at 273 (quoting Allegri v.
Providence-St. Margaret Health Center, 9 Kan. App. 2d 659, 684 P.2d 1031 [1984]).
Intent is obviously a state of mind, and "[a] court should be cautious in granting a motion
for summary judgment when resolution of the dispositive issue necessitates a
determination of the state of mind of one or both of the parties." Henrickson v. Drotts,
219 Kan. 435, 438, 548 P.2d 465 (1976).
The panel correctly observed in reviewing a summary judgment it was required to
view the evidence in the light most favorable to Peters. See Osterhaus v. Toth, 291 Kan.
759, 768, 249 P.3d 888 (2011) (courts required to resolve all facts and inferences which
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may reasonably be drawn from evidence in favor of party against whom ruling is sought).
After doing so, it found several Hall factors supported his claim that his employment was
more than at will and that Deseret could have intended an implied-in-fact contract of
employment.
Specifically, Deseret wanted to retain Hitch employees, who would be crucial for
continued operation of the 47,000 head feedlot during the transition and beyond. Deseret
warned departing managers Pruitt and Nicodemus against poaching Hitch employees.
Additionally, Hitch managers were under the impression that as part of the sales contract,
there would be no layoffs of Hitch employees. They relayed this view to the Hitch
employees. While Hitch's comments to employees are not binding on Deseret, these
representations provide at least some support for Peters' understanding of the nature of
the new employment relationship.
More important, Pruitt, Branscum, Nicodemus, Guerrero, and Peters all confirmed
that Deseret representatives told employees there would be no layoffs and any reductions
in staffing would be through attrition rather than firing. Additionally, Peters testified that
Deseret assured the Hitch employees continued employment as long as they did their
jobs. This is all consistent with Deseret's need to obtain and retain experienced
employees to run the feedlot. And further supports Peters' understanding of Deseret's
intentions toward his employment status.
At oral arguments before this court, counsel for Deseret acknowledged that its
representatives probably made statements that Deseret would not lay off employees once
it took over the feedlot. But counsel dismissed the statements as mere "fluff." He argued
such "fluff" was not enough to form an implied-in-fact employment contract. According
to counsel, under the employment-at-will doctrine, Deseret can make general statements
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of intent about long-term employment for its new employees without apparent
consequence.
We disagree with Deseret and agree with the Court of Appeals panel. The enticing
oral statements from the new employer cannot be dismissed as fluff because they help in
determining whether a meeting of the minds existed between Deseret and Peters to form
an implied-in-fact contract. In fact, they tend to support Peters' assertion that one existed.
More specifically, they help demonstrate the parties' intent from the beginning of the
employment relationship as well as the situation and objective of the parties giving rise to
that relationship. Hall, 274 Kan. at 273; see Henrickson, 219 Kan. at 438 (court should be
cautious in granting motion for summary judgment when resolution of dispositive issue
requires determination of state of mind of one or both parties).
We also observe other facts regarding the parties' state of mind, i.e., intent, that
caution against granting summary judgment. First, documents Peters was required to sign
as he began Deseret's employment, e.g., relating to testing for drugs and alcohol, could be
reasonably interpreted to suggest he would be disciplined only for violations of company
policy—and not for "no cause." Discipline would include "immediate termination" for
failing "to meet all established standards of conduct and job performance."
Second, a document Peters was not required to sign as he began Deseret
employment—i.e., an acknowledgment that he was an employee at will—coupled with
Peters' knowledge that he was required to sign such an acknowledgment for Hitch when
he began work there, could suggest to him that he was not such an employee for Deseret.
This combination of Deseret (1) requiring Peters to sign documents identifying discipline
for unsatisfactory work performance or misconduct and (2) not requiring him to sign any
documents establishing his employment was at will—could lead Peters to reasonably
infer from Deseret that he had an implied-in-fact contract terminable only for cause.
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As we said in Morriss, 241 Kan. at 514:
"There has been no trial in this case, and we only hold that the evidence presented in the
record at the time summary judgment was granted was insufficient to require summary
judgment in favor of defendants as a matter of law. The ultimate decision of whether
there was an implied contract not to terminate the plaintiffs without just cause must be
determined from all the evidence presented by the parties on that issue. We thus hold that
the trial court erred in sustaining the defendants' motion for summary judgment as to that
implied contract claim."
Considering the Hall factors, we conclude that the particular circumstances of this
case present a genuine issue of material fact as to the intent of the parties entering this
employment relationship, i.e., was there a meeting of the minds in order to create an
implied-in-fact contract? In short, the evidence is not so one-sided that Deseret must
prevail as a matter of law. See Anderson, 477 U.S. at 251-52. So we affirm the decision
of the panel reversing summary judgment and remand for further proceedings.
Issue 2: Summary judgment should not have been granted for Deseret on Peters'
promissory estoppel claim.
Deseret argues the panel erred in holding Deseret was not entitled to summary
judgment on Peters' promissory estoppel claim. It contends that because Peters failed to
come forward with any evidence that Deseret had knowledge of Hitch offering severance
packages, he cannot show Deseret reasonably foresaw that its offer of at-will
employment would result in Peters declining a severance offer from Hitch. Osterhaus,
291 Kan. 759, Syl. ¶ 2 (defendant entitled to summary judgment if can establish absence
of evidence necessary to support essential element of plaintiff's case). And showing
Deseret's reasonable expectation of Peters' acting in reliance on its promise is required for
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promissory estoppel. Mohr v. State Bank of Stanley, 244 Kan. 555, 574, 770 P.2d 466(1989).
Peters responds that the district court did not reach this issue; its ruling entirely
focused on the at-will employment contract issue. Because the district court did not go on
to consider whether a severance package was available to Peters from Hitch, Peters
argues this court should affirm the panel's decision reversing summary judgment and
remanding this issue to the district court for consideration as well.
Before beginning our analysis, we note that promissory estoppel is "an equitable
doctrine designed to promote some measure of basic fairness when one party makes a
representation or promise in a manner reasonably inducing another party to undertake
some obligation or to incur some detriment as a result." Bouton v. Byers, 50 Kan. App. 2d
34, 41, 321 P.3d 780 (2014), rev. denied 301 Kan. 1045 (2015).
In granting Deseret summary judgment on this issue, the district court held that
Peters was an at-will employee and cited Chrisman v. Philips Industries, Inc., 242 Kan.
772, 780-81, 751 P.2d 140 (1988). There, we held no detrimental reliance existed to
support promissory estoppel when the plaintiff simply moved from one at-will
employment position to another. We reasoned such a move did not harm the employee.
So for Peters, the district court concluded he could not rely on any inducement by Deseret
for a lateral change in position from Hitch's at-will shop manager to Deseret's at-will
shop manager.
The district court did not analyze the remaining elements of promissory estoppel,
holding that regardless of whether a severance package existed, Peters did not rely on
Deseret's inducement for a lateral change in position. See Osterhaus, 291 Kan. 759, Syl.
¶ 2.
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The panel distinguished Chrisman, holding that whether Peters merely traded one
at-will position for another is disputed. As we concluded above, while Peters signed a
written acknowledgment in 2006 that he was an employee at will for Hitch, he signed no
such acknowledgment for Deseret. And genuine issues of material fact remain on the
question of his employment status with Deseret. Like the panel, we hold that because the
question remains about whether Peters' employment with Deseret was at will or through
an implied-in-fact contract, Chrisman is not controlling.
We affirm the judgment of the Court of Appeals, reverse the district court's order
granting summary judgment, and remand for further proceedings in accordance with our
decision.
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