Employer and Employee--employment contract--termination provision--constructive
discharge
The trial court erred in a breach of contract action by allowing recovery for plaintiff
doctor for constructive discharge from employment based on the termination provision of
plaintiff's employment contract, because: (1) the jury found that neither party breached the
employment contract, and the evidence does not show that defendant employer deliberately made
plaintiff's working conditions intolerable; (2) plaintiff does not allege in her complaint that she
was constructively terminated based on intolerable working conditions, nor does she set forth any
instances that would support stating that she was terminated based on intolerable working
conditions; and (3) there is no evidence that the alleged conditions were deliberately created in an
attempt to force plaintiff to terminate her employment.
Adams Hendon Carson Crow & Saenger, P.A., by George W. Saenger
and Joy Gragg, for plaintiff-appellee.
McGuire, Wood & Bissette, P.A., by Joseph P. McGuire, for
defendant-appellant.
WYNN, Judge.
In this appeal Asheville Orthopaedic Associates, P.A., argues
that the trial court erred in submitting issues to the jury and
allowing recovery to Dr. Lorraine K. Doyle for constructive
discharge from employment. Asheville Orthopaedics correctly points
out that North Carolina has not explicitly recognized constructive
discharge in the context of employment as an independent basis for
recovery. Indeed, in Wagoner v. Elkin City Schools' Board of
Education this Court held:
Assuming that plaintiff was wrongfully constructively
discharged, she is nonetheless not entitled to assert thetort of wrongful discharge because the tort of wrongful
discharge arises only in the context of employees at
will. See Coman v. Thomas Mfg. Co., 325 N.C. 172, 381
S.E.2d 445 (1989); Sides, 74 N.C. App. 331, 328 S.E.2d
818. Breach of contract is the proper claim for a
wrongful discharged employee who is employed for a
definite term or an employee subject to discharge only
for “just cause.”
113 N.C. App. 579, 588, 440 S.E.2d 119, 125, disc. review denied,
336 N.C. 615, 447 S.E.2d 414 (1994).
However, Dr. Doyle responds that she did not claim damages
arising under the independent action of constructive discharge
based on a violation of public policy which applies to employees at
will. Rather, Dr. Doyle asserts that her claim arises under her
employment contract with Asheville Orthopaedic. She points out
that her employment contract provided for damages to be paid to her
in the event that Asheville Orthopaedic terminated her
involuntarily. She alleges that despite the fact that she resigned
from her employment, her resignation was procured by Asheville
Orthopaedic's conduct which amounted to constructive discharge.
Dr. Doyle is a board certified orthopedic surgeon, who after
signing an employment contract with Asheville Orthopaedics started
working on 3 October 1988. The employment contract provided that
Dr. Doyle would receive basic compensation in the amount of $80,000
during her first contract year, the same basic compensation of
$80,000 plus one-half of her productivity during her second
contract year, and compensation based on her productivity during
her third and subsequent contract years, with her compensation
based on productivity to “be calculated in the same manner as is
applicable to all other physician employees of the Employer.” Regarding termination, the employment contract u
nder paragraph
12 a. provided that:
The Employee may terminate this Contract only
after having given a preliminary written
notice to terminate twelve (12) months before
the effective termination date, followed by a
final written resignation six (6) months
before said termination date. Subject to
paragraph 12 c., the Employer may terminate
this Contract only after having given written
notice at least six (6) months before the
effective termination date. The Employer will
not terminate this Agreement unless such
action has been approved by a majority vote of
all members of the Board of Directors who are
then actively practicing medicine for the
Employer.
The Contract of Employment further provided that:
Upon termination pursuant to paragraph 12 a.,
Employee shall be paid only: (i) the Basic
Benefits set forth herein, reduced by 1/25 for
each year of service with the Employer less
than twenty-five (25) years; and (ii) his
Basic Compensation without any further
Productivity Compensation.
At a meeting on 11 October 1995, the Board of Directors for
Asheville Orthopaedics considered Dr. Doyle's deficit, how she
could repay that deficit and the viability of her continuing in the
practice. After the meeting, Linda Stein Murphy, the business
manager, informed Dr. Doyle that the Board of Directors had decided
that it could not go on paying someone who was not producing.
Later that same day, Ms. Murphy met with two of the partner
doctors, who decided that Dr. Doyle would not receive a paycheck or
disability payment; Medical Mutual would be called about the cost
of tail coverage for Dr. Doyle, which is the amount required to be
paid to cover a doctor who leaves a practice in the event that any
claims arise subsequent to the doctor's departure; Dr. Doyle shouldcancel some of her vacation and not attend a professional meeting
in February; and the credit card limit for all of the physicians
would be reduced from $5,000 to $500.
The next day, Ms. Murphy met with Dr. Doyle and told her that
she would not receive any pay. After discussing with Ms. Murphy
whether there would be a problem if she left at the end of
December, Dr. Doyle sent a letter dated 30 November 1995 stating
that she intended to withdraw from the partnership and her last day
would be 31 December 1995.
Following a trial, the jury considered and decided on the
following issues:
1. Did the defendant breach the employment
agreement?
ANSWER: NO
2. What answer of damages is the plaintiff
entitled to recover from the defendant?
ANSWER: ___
3. Did the defendant constructively terminate
the employment of the plaintiff?
ANSWER: YES
4. What amount of damages, if any is the
plaintiff entitled to recover from the
defendant?
ANSWER: $14,752
5. Did the plaintiff breach the employment
contract?
ANSWER: NO
6. What amount of damages is the defendant
entitled to recover from the plaintiff?
ANSWER: ____
Accordingly, the trial court entered judgment on the jury's
finding of constructive discharge in the amount of $14,447.30, plus
pre-judgment interest from 1 January 1996 and court costs.
On appeal, Dr. Doyle disavows that she seeks relief under aclaim of constructive discharge in violation of public p
olicy which
arises only in the context of employees at will. She asserts
instead that her claim of constructive discharge arose in the
context of deciding whether she was entitled to termination
payments under the contract. We recognize the viability of her
claim in the context of interpreting whether constructive
termination by her employer triggered the termination payment
provision of the employment contract.
In general, evidence establishing constructive discharge “must
demonstrate that the employer deliberately made working conditions
intolerable and thereby forced [the plaintiff ] to quit.” Graham
v. Hardee's Food System, Inc., 121 N.C. App. 382, 385, 465 S.E.2d
558 (1996) (citing E.E.O.C. v. Clay Printing Co., 955 F.2d 936, 944
(4th Cir. 1992)). “Deliberateness exists only if the actions
complained of 'were intended by the employer as an effort to force
the employee to quit.'” Id. (Citations omitted).
In this case, the jury found that neither Asheville
Orthopaedics nor Dr. Doyle breached the employment contract. Thus,
to show that her employer constructively discharged her and thereby
triggered the payment provision of the employment contract, Dr.
Doyle must point to evidence, other than that showing a breach of
contract, which demonstrates that Asheville Orthopaedics
deliberately made her working conditions intolerable.
The record shows that Dr. Doyle's evidence of constructive
discharge consisted of her allegations that she received limited
referrals of hand patients from Asheville Orthopaedics' otherphysicians. However, the record also shows that Dr. Doyle did
receive some hand patient referrals and was offered to serve as
back-up on call. Dr. Doyle also points to Asheville Orthopaedics'
adoption of a different compensation formula in November 1994 which
allocated overhead in a detrimental impact on her income. However,
this change occurred during a period when Asheville Orthopaedics
experienced a financial crunch and considered ways to hold costs
down and encourage production. Additionally, Dr. Doyle, a board
member, voted on the modified compensation formula. Also, the
record shows that Asheville Orthopaedics approved Dr. Doyle as a
shareholder and in later years elected her to serve in various
offices including secretary, treasurer and vice-president. This
evidence falls short of showing that Asheville Orthopaedics
deliberately made Dr. Doyle's working conditions intolerable.
Moreover, we note that in her Complaint, Dr. Doyle does not
allege that she was constructively terminated because of
intolerable working conditions nor does she set forth any instances
that would support stating that she was terminated because of
intolerable working conditions.
After a careful review of the record, we can find no evidence
that the alleged conditions were deliberately created in an attempt
to force Dr. Doyle to terminate her employment. In the absence of
facts, other than those showing a breach of contract, to support
Dr. Doyle's claim for payment under the termination provision of
her employment contract that she was constructively discharged, we
must reverse the judgment.
Reversed. Judges WALKER and THOMAS concur.
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