Minn. Stat. § 480A.08, subd. 3 (1996).
STATE OF MINNESOTA
IN COURT OF APPEALS
Filed June 23, 1998
File No. C997504
Robert M. Gleason, Two Appletree Square, Suite 325, Bloomington, MN 55425 (for respondent)
Gregory J. Collins, Mulligan & Bjornnes, PLLP, 401 Groveland Avenue, Minneapolis, MN 55403 (for appellant)
Considered and decided by Huspeni, Presiding Judge, Willis, Judge, and Holtan, Judge*.
*Retired judge of the district court, serving as judge of the Minnesota Court of Appeals by appointment pursuant to Minn. Const. art. VI, § 10.
In an action for recovery of payment for unused vacation time, Grangers, Inc., appeals the district court's grant of summary judgment in favor of its former employee, Joseph Berglund. We affirm.
Joseph Berglund was hired on September 8, 1987, as a full-time employee at Grangers, Inc., which operates an auto repair shop and an auto parts supply store in Hugo. Berglund normally worked Monday through Friday and only worked weekends during certain special promotions.
Pursuant to the employee handbook in effect when Berglund was hired, employees earned paid vacation time in an amount that increased with length of employment, to a maximum of fifteen days for an employee with nine years or more of service. In 1994, Grangers revised its handbook to provide, in relevant part:
101 NATURE OF EMPLOYMENT
* * * *
Policies set forth in this handbook are not intended to create a contract, nor are they to be construed to constitute contractual obligations of any kind or a contract of employment between Granger's [sic] and any of its employees. * * *
* * * *
303 VACATION BENEFITS
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The amount of paid vacation time employees receive each year increases with the length of their employment as shown in the following schedule. [Substantively unchanged from the previous handbook.]
The length of eligible service is calculated on the basis of a "benefit year." This is the 12-month period that begins when the employee starts to earn vacation time. * * *
Once employees enter an eligible employment classification, they begin to earn paid vacation time according to the schedule.
Earned vacation time is available for use in the year following its accrual.
* * * *
Upon termination of employment, employees will be paid for unused vacation time that has been earned through the last day of work.
* * * *
405 EMPLOYMENT TERMINATION
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* * * All accrued, vested benefits that are due and payable at termination will be paid.
Included with the handbook was an "employee acknowledgement form," which Berglund signed in April 1994 and which included a statement that the handbook "is neither a contract of employment nor a legal document." The parties agree that no relevant portion of the handbook was amended before Berglund's resignation in September 1996.
In August 1996, Berglund submitted a letter of resignation, giving September 4, 1996, as the effective date. Apparently at the request of Grangers, Berglund actually worked through September 6, a Friday. Berglund alleges that Grangers' office manager initially informed him that he could collect vacation benefits accrued during 1995-96, but that Mark Granger, a vice-president, told him at 4:30 p.m. on Friday, September 6, that the year's benefits did not accrue until the anniversary of his hire date, which would have been the following Sunday, and that Berglund was therefore entitled to no vacation pay.
Berglund brought an action in conciliation court, seeking $2,400 in vacation pay and an additional $2,400 in statutory penalties. The conciliation court ruled for Berglund, but the judgment was vacated by Grangers' removal to district court. Mark Granger submitted an affidavit stating that the company's policy, as stated in the handbook, was that an employee accrued vacation time annually on the anniversary of his hire and, upon termination of employment, was paid only for unused vacation days earned as of his most recent anniversary date. Berglund stated in his deposition that he was not aware of how the issue had been handled when other employees had resigned.
Berglund moved for summary judgment. The district court granted his motion, determining that there were no factual issues in dispute because the case centered on interpretation of the employee handbook, which the court found to be unambiguous. The district court concluded, with no further explanation, that
Plaintiff met the eligibility requirements for securing vacation pay. Plaintiff was not required to terminate his employment after September 8, 1997, in order to receive these benefits.
Grangers appeals, and we affirm.
This court reviews a grant of summary judgment de novo to determine whether (1) there are material facts in dispute and (2) the district court correctly applied the law. Zip Sort, Inc. v. Commissioner of Revenue, 567 N.W.2d 34, 37 (Minn. 1997). A reviewing court views the evidence in the light most favorable to the party against whom summary judgment was granted. Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993). Courts should resolve any doubt as to the existence of a genuine issue of fact in favor of determining that a fact issue exists. Harvet v. Unity Med. Ctr., Inc., 428 N.W.2d 574, 578 (Minn. App. 1988). But this court will affirm a grant of summary judgment if it can be sustained on any ground. Winkler v. Magnuson, 539 N.W.2d 821, 828 (Minn. App. 1995), review denied (Minn. Feb. 13, 1996).
Provisions in an employee handbook may, but do not always, give rise to a contractual agreement. Pine River State Bank v. Mettille, 333 N.W.2d 622, 626-27 (Minn. 1983). "Except where the language of a contract is ambiguous or its construction depends on extrinsic evidence, the construction and effect of a contract are questions of law for the court." Affiliated Banc Group, Ltd. v. Zehringer, 527 N.W.2d 585, 587-88 (Minn. App. 1985). But if a contract is ambiguous, its interpretation is a question of fact. See Trondson v. Janikula, 458 N.W.2d 679, 681-82 (Minn. 1990) (analyzing interpretation of ambiguous contract as fact question in absence of parol evidence). "A writing is ambiguous if, judged by its language alone and without resort to parol evidence, it is reasonably susceptible of more than one meaning." Landwehr v. Landwehr, 380 N.W.2d 136, 138 (Minn. App. 1985). Whether a writing is ambiguous is a question of law. Untiedt v. Grand Laboratories, Inc., 552 N.W.2d 571, 574 (Minn. App. 1996), review denied (Minn. Oct. 15, 1996). An ambiguous contract will be construed against the drafting party absent a clear indication the parties intended a contrary result. Id.
Because the question of whether an employee handbook is a contract is one of intent, this court has held that where a handbook contains an unambiguous statement that it is not intended as a contract, an employer may terminate an at-will employee without following a discipline policy described in the handbook. Audette v. Northeast State Bank of Minneapolis, 436 N.W.2d 125, 127 (Minn. App. 1989). Grangers argues that because its handbook unambiguously states that it is not a contract, a court may not grant summary judgment based on an interpretation of its language but rather must consider the language as merely evidence of its policy and must consider extrinsic evidence to determine the policy's actual operation.
On the facts of this case, we decline to adopt Grangers' analysis. Audette and its progeny deal with the question of whether a handbook modifies the underlying employment relationship by providing an employee with contractual safeguards before termination where an employee would otherwise be terminable at will. But case law has established that where an employer offers vacation benefits, such benefits are "wholly contractual" because they are "`a form of compensation.'" Brown v. Tonka Corp., 519 N.W.2d 474, 477 (Minn. App. 1994) (quoting Tynan v. KSTP, Inc., 247 Minn. 168, 177, 77 N.W.2d 200, 206 (1956)). Vacation benefits, as a matter of law, are part of the consideration for employment, whereas in some cases an employee discipline policy may be nonbinding. Compare Tynan, 247 Minn. at 177, 77 N.W.2d at 206, with Audette, 436 N.W.2d at 127. Thus, while the question in Audette was whether the discipline policy in the employee handbook altered the employment relationship, the handbook provisions at issue here detail benefits that, as consideration for employment, are already part of the underlying employment agreement.
Under the analysis proposed by Grangers, attachment of a disclaimer to a written vacation policy would mean that an employee could never enforce the policy's plain language on summary judgment but rather would always have the burden of proving the parties' intent through extrinsic evidence. But if an employee is not entitled to rely on the language of an employer's written description of the consideration for his employment, the employer effectively is free to modify the contract retroactively by inserting compensation terms under which the employee might not have agreed to work. Cf. Pine River, 333 N.W.2d at 627 (stating that where employee handbook language is sufficiently specific to constitute offer for unilateral contract, current employee accepts offer and supplies consideration by continuing employment). We therefore apply contract interpretation principles to Grangers' written description of its vacation benefits.
Grangers argues that for purposes of calculating vacation benefits, a "benefit year" as used in the handbook runs for 12 months from the date of hire as a regular, full-time employee. Berglund argues that a benefit year is based on the month, rather than the date, that an employee begins to earn vacation time. But the only support Berglund provides for this interpretation is the handbook statement that a benefit year is "the 12-month period that begins when an employee starts to earn vacation time." At oral argument, Berglund's counsel admitted that under his construction, an employee could be hired on September 30 and obtain the right to take vacation the following September 1. We see nothing in the handbook language that reasonably supports this interpretation, and we therefore conclude that the handbook unambiguously defines a benefit year as a period of 12 full months beginning with the date of hire. Berglund's benefit year began on September 8 and therefore was completed on September 7 each year.
The handbook states that an employee is entitled to payment for "accrued, vested" benefits and for "unused vacation time that has been earned through the last day of work" but does not define "accrued," "earned," or "vested." In Brown, this court addressed the issue of when vacation benefits are "earned" and become "vested" under state common law. 519 N.W.2d at 477. Brown also involved a vacation policy in which time accrued during one year became available for use the next. Id. The benefit year ran from January 1 to December 31 for all employees. Id. at 475. The employer was purchased by another corporation, which elected to close the business and terminate most of the workers effective December 31, 1991. Id. The employer then claimed that the employees had accrued no entitlement to vacation pay during 1991 because they did not work into 1992. Id. at 477. This court rejected the employer's argument, reasoning:
This policy did not require employment on a specific date as a condition precedent to earning vacation time. * * * Respondents had already provided consideration for these vacation benefits by working the entire year from January 1 through December 31, 1991. Having received the benefit of respondents' work product, appellant is obligated to pay respondents for the accrued vacation time they accumulated during that period.
Although the policy in Brown specifically provided that employees terminated other than for cause could receive pay in lieu of vacation time accrued during the year of termination, we construe the case to hold, as a matter of contract law, that absent an additional condition precedent, the right to vacation benefits attaches as soon as an employee has performed the work for which the benefits constitute consideration. Brown also establishes that a requirement that an employee work beyond the last day of the benefit accrual year is an additional condition precedent. This court will not infer a condition precedent to performance of an obligation absent unequivocal contract language; because ambiguous contract language is construed against the drafting party and by definition cannot be unequivocal, any claim by a drafting party of an implied condition precedent is resolved against that party without the need to consider extrinsic evidence. Mrozik Constr., Inc. v. Lovering Assocs., Inc., 461 N.W.2d 49, 52 (Minn. App. 1990).
In this case, the right to vacation benefits vests upon completion of the benefit year. The employee handbook does not unambiguously state that an employee must work on or past his anniversary date as a condition precedent to claiming benefits, and to the extent that ambiguous language in the handbook might support that conclusion, we construe it against Grangers and conclude that no such condition exists. Berglund's benefit year would have been completed on September 7, 1996. But September 7, 1996, was a Saturday; Grangers concedes that Berglund generally did not work Saturdays and provided no evidence that he would have been expected to work on September 7, 1996, absent his resignation. See Kletschka v. Abbott-Northwestern Hosp., Inc.,417 N.W.2d 752, 754 (Minn. App. 1988) (stating that party opposing motion for summary judgment has burden of producing evidence of dispute of material fact), review denied (Minn. Mar. 30, 1988). Thus, at the end of his shift on September 6, Berglund had completed all the work he was expected to perform during the 1995-96 benefit year. Under Brown,therefore, the vacation benefits Berglund accrued during 1995-96, although not available for use until September 8, 1996, vested when he completed his work on September 6 because Berglund had tendered all necessary consideration.
We note that the language of the employment handbook does not explicitly provide for any partial accrual of benefits. Grangers may be correct that the right to annual vacation time vests all at once each year and, therefore, if Berglund had resigned effective September 4 as he originally planned, he would have no vested vacation time. But we need not decide that issue here because Berglund in fact worked through the last day that he would have been expected to work before completion of the benefit year, and therefore, under the handbook and applicable case law, he is entitled to full payment for vacation time accrued during 1995-96. Grangers does not dispute the applicability of the statutory penalties that Berglund claims.
[ 1] The district court held that an employee handbook is always analyzed in the same manner as a contract, citing Brown, 519 N.W.2d at 477. But the court in Brown established no such rule of interpretation; it merely noted that the handbook provision at issue in that case was a contract under precedent. Id. at n.1.