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Charles v. Interior Regional Housing Authority (9/20/2002) sp-5631
Charles v. Interior Regional Housing Authority (9/20/2002) sp-5631
Notice: This opinion is subject to correction before
publication in the Pacific Reporter. Readers are
requested to bring errors to the attention of the Clerk
of the Appellate Courts, 303 K Street, Anchorage,
Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,
e-mail corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
TED CHARLES, )
) Supreme Court No. S-10170
Appellant, )
) Superior Court No.
v. ) 4FA-99-2342 CI
)
INTERIOR REGIONAL HOUSING )
AUTHORITY, ) O P I N I O N
)
Appellee. ) [No. 5631 - September 20,
2002]
)
Appeal from the Superior Court of the State
of Alaska, Fourth Judicial District,
Fairbanks, Mary E. Greene, Judge.
Appearances: Michael J. Walleri, Law Offices
of Michael J. Walleri, Fairbanks, for
Appellant. Tracey L. Knutson, Sisson &
Knutson, P.C., Anchorage, for Appellee.
Before: Fabe, Chief Justice, Eastaugh,
Bryner, and Carpeneti, Justices. [Matthews,
Justice, not participating.]
BRYNER, Justice.
I. INTRODUCTION
Ted Charles sued his former employer, Interior Regional
Housing Authority, alleging constructive discharge and breach of
the implied covenant of good faith and fair dealing. The
superior court granted summary judgment in favor of the housing
authority, reasoning that, although Charles had presented
sufficient evidence to create a genuine factual dispute
concerning whether his resignation resulted from a sustained
campaign of harassment directed at him by a coworker, there was
no evidence to support imputing the coworkers conduct to the
housing authority. But because the evidence submitted by Charles
could lead a reasonable juror to conclude that the housing
authoritys executive director participated in the alleged
campaign of harassment, or at least knew about the harassment and
allowed it to continue, we reverse the summary judgment order.
II. FACTS AND PROCEEDINGS
Interior Regional Housing Authority is a public
corporation organized under AS 18.55.995 to provide housing
assistance to low income Alaska Natives and their families in
interior Alaska. Charles became the housing authoritys tribal
planning director in November 1998. As tribal planning director,
Charles supervised tribal housing officers and tribal
construction projects. At all times, Charless employment with
the housing authority was on an at-will basis.
Charles tendered his letter of resignation in August
1999. According to Charles, his resignation resulted from an
eight-month campaign of harassment directed at him by the housing
authority. Charles claims that this campaign of harassment was
instigated by his coworker Al Woods, the director of the housing
authoritys capital improvement projects, after Charles publicly
corrected Woods on two separate occasions in January 1999.
In October Charles sued the housing authority for
wrongful termination, alleging constructive discharge and breach
of the implied covenant of good faith and fair dealing. The
housing authority moved for summary judgment. After holding oral
arguments, the superior court granted summary judgment in favor
of the housing authority. The court found that although Charles
had presented sufficient evidence to create a triable issue of
fact concerning whether his resignation resulted from a sustained
campaign of harassment directed against him by his coworker
Woods, there was no evidence to support imputing Woodss conduct
to the housing authority. Charles appeals.
III. GENUINE ISSUES OF MATERIAL FACT EXIST CONCERNING WHETHER THE
HOUSING AUTHORITY CONSTRUCTIVELY DISCHARGED CHARLES AND
BREACHED THE COVENANT OF GOOD FAITH AND FAIR DEALING.
To prevail on a wrongful termination claim an employee
must prove: (1) that the employee was discharged by its employer
and (2) that the employer breached a contract or committed a tort
in connection with the employees termination.1 Charles attempted
to satisfy these elements by alleging that he was constructively
discharged by the housing authority and, in connection with his
constructive discharge, the housing authority breached the
implied covenant of good faith and fair dealing.
In granting the housing authoritys motion for summary
judgment, the trial court found that the housing authority had
established as a matter of law that it had not constructively
discharged Charles, and therefore, that Charless claim for
wrongful termination failed because he could not establish the
discharge element. Charles claims that this ruling was
erroneous.
We review a trial courts grant of summary judgment de
novo, applying our independent judgment,2 and will affirm only if
the record presents no genuine issue of material fact and the
moving party is entitled to judgment as a matter of law.3 We
must draw all reasonable inferences in favor of the non-moving
party.4
The moving party has the burden of proving the absence
of issues of material fact.5 If the movant makes a prima facie
showing that he or she is entitled to judgment on the established
facts as a matter of law, the opposing party must demonstrate
that a genuine issue of fact exists to be litigated by showing
that it can produce admissible evidence reasonably tending to
dispute the movants evidence.6 To determine whether the
nonmoving party can produce admissible evidence creating a
genuine factual dispute, we will consider the affidavits,
depositions, admissions, answers to interrogatories and similar
material.7
A. Charles Presented Sufficient Evidence of Constructive
Discharge To Overcome Summary Judgment.
Constructive discharge satisfies the discharge element
in a wrongful discharge claim.8 A constructive discharge occurs
when an employer makes working conditions so intolerable that the
employee is forced into an involuntary resignation.9 To
establish constructive discharge it is not necessary that the
employee actually prove that the employer acted with the specific
intent of causing the employee to resign.10 Rather, the employee
has the burden of showing that a reasonable person in the
employees position would have felt compelled to resign.11
Charless constructive discharge claim alleged that his
resignation was the direct result of a campaign of harassment
initiated by Al Woods. Woods was the director of the housing
authoritys capital improvement projects and was responsible for
overseeing various housing construction projects conducted by the
housing authority. Both Charles and Woods were supervised by Joe
Wilson, the executive director of the housing authority.
In response to the housing authoritys motion for
summary judgment, Charles presented evidence of eight incidents
to support his assertion that the housing authority had engaged
in a sustained campaign of harassment against him: (1) on two
occasions in January, after meetings during which Charles
publicly corrected Woods, Woods told Charles that if he continued
to correct Woods in public he would make sure that things became
difficult for [Charles]; (2) following these threats, Woods began
subjecting Charles to unwarranted criticism; (3) as part of a
series of reorganizations in January, Charless responsibility for
tribal construction crews was reassigned to Woods at Woodss
request; (4) beginning in March, Charles was excluded from
morning management meetings between Woods and Wilson; (5) in
July, the housing authority began canceling Charless planned
travel, giving the excuse that he was behind schedule on various
projects, when [i]n fact, planning activities at this time were
on schedule; (6) in August, several of Charless relatives
including his daughter, son-in-law, and three or four other
relatives of his estranged wife were fired because of their
relation to him; (7) Woods and Wilson falsely accused Charles of
nepotism in arranging to have these relatives hired; (8) although
on August 19 Charles gave Wilson verbal notice that he would be
resigning in thirty days, six days later Wilson called him at
home and directed him to clean out his desk by Friday, August 27.
Contrary to the housing authoritys assertion, the
record offers admissible evidence addressing each of these
alleged incidents. Each incident finds support in one or more of
the following sources: Charless affidavit, Wilsons affidavit,
Charless deposition, Wilsons deposition, or the housing
authoritys answer to Charless complaint.12
We have previously recognized that a constructive
discharge may result from a sustained campaign of harassment
against an employee.13 In Cameron v. Beard, a former employee for
the state department of transportation alleged that he had been
constructively discharged as a result of a sustained campaign of
harassment by his supervisors.14 At trial, the plaintiff
presented evidence of a campaign to vote him out as union
representative, unjustified negative job performance evaluations,
statements by his supervisors that he would never be promoted,
and a supervisors warning that he should do something quick
because he was about to be fired.15 We upheld the jurys finding
of constructive discharge, reasoning that there was sufficient
evidence in the record to support the jury verdict on this issue.16
Similarly, in Finch v. Greatland Foods, Inc. we
addressed a former employees appeal from the superior courts
entry of summary judgment against him on his constructive
discharge claim.17 The plaintiff had specified four incidents
supporting his assertion that his employer had engaged in a
sustained campaign of harassment against him. These four
incidents included (1) repeatedly criticizing the plaintiff for
taking family leave, (2) reassigning the plaintiffs lucrative
distribution route to a junior employee and forcing the plaintiff
to take a less profitable route, (3) after switching the
plaintiffs route, changing the pay system in a way that
negatively affected only the plaintiffs income, and (4) after
switching the plaintiff to commission pay, failing to support his
customer service efforts.18 We reversed the superior courts grant
of summary judgment in favor of the employer, reasoning that
[a]lthough any one of these events alone
would not support a claim for constructive
discharge, when viewed in the totality and in
the light most favorable to [the plaintiff],
. . . they could lead a reasonable person in
[the plaintiffs] position to conclude that
[his employer] had pursued a sustained
campaign of harassment that ultimately
compelled him to resign.[19]
Here, the superior court found that Charles had
presented sufficient evidence to raise a triable issue of fact as
to whether there was a campaign of harassment directed at him by
his coworker Woods; but, the superior court granted the housing
authoritys motion for summary judgment because it found that
there was no evidence to support holding the housing authority
liable for Woodss conduct. The superior court reasoned that
because Woods had no supervisory power over Charles, his actions
could not be imputed to the housing authority absent some
evidence that Woods was doing the bidding of [the housing
authority].
But Charles did not need to prove that the housing
authority, or its executive director, Wilson, directed the
harassment against him. Rather, the question is whether the
housing authority (or Wilson) either knew or should have known
about the harassment and failed to take reasonable steps to
prevent it. We have previously acknowledged that an employers
lack of care can subject them to direct liability without the
necessity of involving respondeat superior.20 Other courts have
also acknowledged this rule that [a]n employer . . . as an entity
may also be held directly liable for its own conduct if the
employer knows or has reason to know that unlawful harassment is
occurring or is likely to occur and fails to prevent or correct
the behavior.21 So Charles did not need to show that the housing
authority (or Wilson) intended or directed Charless harassment;
he needed only to show that the housing authority (or Wilson)
either knew or should have known about the harassment.
Viewing the evidence in the light most favorable to
Charles, we find that the evidence could lead a reasonable juror
to conclude that the housing authoritys executive director, Joe
Wilson, directly participated in a campaign of harassment against
Charles, or at least knew about it and allowed it to continue.
The record indicates that it was Wilson who actually fired
Charless relatives and it was Wilson who called Charles at home
and told him to clean out his desk by Friday, August 27 about
three weeks before the effective date of Charless announced
resignation. Furthermore, the exclusion of Charles from morning
management meetings between Woods and Wilson, the shifting of
responsibility for tribal construction crews from Charles to
Woods, and the cancellation of Charless planned travel could not
have occurred without Wilsons authorization.
Because this evidence, when viewed in the light most
favorable to Charles, raises a triable issue of fact concerning
whether Wilson directly participated in, or at least knew of and
failed to prevent or correct, the campaign of harassment directed
against Charles, we find that the superior court erred by holding
as a matter of law that the housing authority did not
constructively discharge Charles.
B. Charles Presented Sufficient Evidence To Overcome
Summary Judgment on His Claim for Breach of the
Covenant of Good Faith and Fair Dealing.
The record also indicates that Charles presented
sufficient evidence to raise a triable issue of material fact
concerning whether the housing authority breached the covenant of
good faith and fair dealing. The covenant of good faith and fair
dealing is implied in all at-will employment contracts.22 We have
held that [t]his covenant does not lend itself to precise
definition, but it requires at a minimum that an employer not
impair the right of an employee to receive the benefits of the
employment agreement23 and that the employer treat like employees
alike.24
An employer can commit either an objective or
subjective breach of the covenant.25 The employer commits a
subjective breach when it discharges an employee for the purpose
of depriving him or her of one of the benefits of the contract. 26
The objective aspect of the covenant requires that the employer
act in a manner that a reasonable person would regard as fair.27
We have previously explained that examples of objective breaches
of the covenant would include disparate employee treatment,
terminations on grounds that were unconstitutional, and firings
that violated public policy.28
Charless claim focuses on the objective component of
the covenant. Specifically, Charles contends that the housing
authority failed to treat similarly situated employees alike with
regards to the enforcement of its own nepotism policy.29 The
housing authoritys nepotism policy provided in part:
No person shall be hired if a member of that
persons immediate family is employed in a
supervisory capacity or as the Department
Head in the [housing authority] department
being applied to. The term immediate family
includes father, mother, husband, wife, sons,
daughters, brothers, sisters, grandparents,
grandchildren, mother-in-law, father-in-law,
aunts or uncles. The term persons employed
in a supervisory capacity or as a Department
Head includes those persons who have overall
administrative responsibility for a
department[.]
Charles argues that his relatives were fired based on untrue
allegations of nepotism while Woods was allowed to violate the
companys nepotism policy with impunity.
Viewing the evidence in the light most favorable to
Charles, we find that a reasonable juror could conclude that the
housing authority applied a double standard in enforcing its
nepotism policy. In its answer to Charless complaint, the
housing authority admits that the employment of [Charless]
relatives did not violate [the housing authoritys] Personnel
Policy provision regarding nepotism since he was neither their
supervisor nor the head of the department within which they were
employed. Charless allegation that Woodss son, brother, and
stepson were improperly employed within Woodss department was
also supported by the admissions of the housing authority. The
housing authority admitted that these relatives were employed
under the direct supervision of Charles Huntington. The housing
authoritys organizational chart makes clear that Charles
Huntington, and therefore Woodss relatives, were employed in
Woodss department. This evidence, viewed in the light most
favorable to Charles, could lead a reasonable jury to conclude
that the housing authority had violated the covenant in its
unequal enforcement of the nepotism policy.
Moreover, as we have previously discussed, Charles
presented admissible evidence to support his broader claim that
he was subjected to a sustained campaign of harassment at the
housing authority. As we have explained, the covenant of good
faith and fair dealing requires that employers treat like
employees alike.30 Subjecting an employee to a pattern of
harassing conduct could itself amount to disparate treatment in
breach of the covenant of good faith and fair dealing.31 We
therefore conclude that Charles presented sufficient evidence to
withstand summary judgment on his claim that the housing
authority breached the implied covenant of good faith and fair
dealing.32
IV. CONCLUSION
Because a reasonable juror could conclude that the
housing authoritys executive director either participated in, or
knew about, the alleged campaign of harassment against Charles,
we conclude that Charles presented sufficient evidence to raise a
genuine issue of material fact concerning whether he was
constructively discharged by the housing authority. We also
conclude that Charles presented sufficient evidence to create a
triable issue of material fact concerning whether the housing
authority breached the implied covenant of good faith and fair
dealing. Therefore, we REVERSE the superior courts entry of
summary judgment in favor of the housing authority and REMAND for
further proceedings. Because the housing authority is no longer
the prevailing party, the award of attorneys fees is VACATED.
_______________________________
1 See, e.g., Starzynski v. Capital Pub. Radio, Inc., 105
Cal. Rptr. 2d 525, 530 (Cal. App. 2001) ( [A]fter establishing .
. . discharge, an employee must independently prove a breach of
contract or tort in connection with the employment termination in
order to obtain damages for wrongful discharge. ) (quoting Turner
v. Anheuser-Busch, Inc., 876 P.2d 1022, 1030 (Cal. 1994)); Balmer
v. Hawkeye Steel, 604 N.W.2d 639, 642 (Iowa 2000) (quoting same).
2 See, e.g., Christensen v. NCH Corp., 956 P.2d 468, 474
(Alaska 1998).
3 See, e.g., id.
4 Lincoln v. Interior Regl Hous. Auth., 30 P.3d 582, 586
(Alaska 2001).
5 Id.
6 French v. Jadon, Inc., 911 P.2d 20, 23 (Alaska 1996).
7 See Broderick v. Kings Way Assembly of God Church, 808
P.2d 1211, 1215 (Alaska 1991).
8 City of Fairbanks v. Rice, 20 P.3d 1097, 1102 n.7
(Alaska 2000).
9 Cameron v. Beard, 864 P.2d 538, 547 (Alaska 1993).
10 Id.
11 Id.
12 See French v. Jadon, Inc., 911 P.2d 20, 24 (Alaska
1996) ([T]he court will consider the affidavits, depositions,
admissions, answers to interrogatories and similar material to
determine . . . whether any of the [evidentiary] material
suggests the existence of any . . . triable genuine issue of
material fact. ) (quoting Broderick, 808 P.2d at 1215).
13 See Ford v. Alfaro, 785 F.2d 835, 841 (9th Cir. 1986);
Finch v. Greatland Foods, Inc., 21 P.3d 1282, 1286 (Alaska 2001);
Cameron, 864 P.2d at 547; Sterling Drug Inc. v. Oxford, 743
S.W.2d 380, 386 (Ark. 1988); Thompson v. Tracor Flight Sys.,
Inc., 104 Cal. Rptr. 2d 95, 104 (Cal. App. 2001).
14 864 P.2d at 540-41.
15 Id. at 548.
16 Id.
17 21 P.3d at 1286.
18 Id.
19 Id.
20 Fruit v. Schreiner, 502 P.2d 133, 140 (Alaska 1972)
(Lack of care on the employers part would subject [the employer]
to direct liability without the necessity of involving respondeat
superior.).
21 Wille v. Hunker Labs., Inc., 724 N.E.2d 492 (Ohio App.
1998); see also Erdmann v. Tranquility Inc., 155 F. Supp. 2d
1152, 1163 (N.D. Cal. 2001) ([C]onstructive discharge occurs
where the employer either intentionally created or knowingly
permitted working conditions that are so intolerable or
aggravated at the time of the employees resignation that a
reasonable employer would realize that a reasonable person in the
employees position would be compelled to resign.) (emphasis
added).
22 See, e.g., Holland v. Union Oil Co. of Cal., Inc., 993
P.2d 1026, 1032 (Alaska 1999); French v. Jadon, Inc., 911 P.2d
20, 24 (Alaska 1996); Revelle v. Marston, 898 P.2d 917, 926
(Alaska 1995).
23 Jones v. Cent. Peninsula Gen. Hosp., 779 P.2d 783, 789
(Alaska 1989).
24 Id. at 789 n.6.
25 See, e.g., Revelle, 898 P.2d at 927 (An employer may
not only breach the covenant of good faith and fair dealing
through improper motive or intent but may also commit an
objective breach of the covenant, by failing to act in a manner
which a reasonable person would regard as fair. ) (quoting
Luedtke v. Nabors Alaska Drilling, Inc. (Luedtke II), 834 P.2d
1220, 1224 (Alaska 1992)).
26 Finch v. Greatland Foods, Inc., 21 P.3d 1282, 1286-87
(Alaska 2001) (quoting Ramsey v. City of Sand Point, 936 P.2d
126, 133 (Alaska 1997)).
27 Id. at 1286-87; Holland, 993 P.2d at 1032; Ramsey, 936
P.2d at 133.
28 See ERA Aviation, Inc. v. Seekins, 973 P.2d 1137, 1139
(Alaska 1999); Luedtke II, 834 P.2d at 1224.
29 On several occasions we have noted that an employers
failure to treat like employees alike may constitute a breach of
the implied covenant of good faith and fair dealing. See
Holland, 993 P.2d at 1033; Belluomini v. Fred Meyer of Alaska,
Inc., 993 P.2d 1009, 1012-13 (Alaska 1999); Alaska Marine Pilots
v. Hendsch, 950 P.2d 98, 109 (Alaska 1997).
30 Jones, 779 P.2d at 789 n.6.
31 See Luedtke II, 834 P.2d at 1224 (noting that failure
to treat like employees alike and firings in violation of public
policy both constitute objective violations of the covenant).
32 Charles also contends that the court erred by placing
the burden on him, the nonmoving party, to make a prima facie
showing of breach of [the] covenant of good faith and fair
dealing. Our decision makes it unnecessary to consider this
argument.
