Raytheon E. Systems, Inc., formerly known as Chrysler Technologies Airborne systems, Inc. v. George Grant Thompson--Appeal from 19th District Court of McLennan County

IN THE

TENTH COURT OF APPEALS

No. 10-97-313-CV

RAYTHEON E. SYSTEMS, INC., FORMERLY

KNOWN AS CHRYSLER TECHNOLOGIES

AIRBORNE SYSTEMS, INC.,

Appellant

v.

GEORGE GRANT THOMPSON,

Appellee

From the 19th District Court

McLennan County, Texas

Trial Court # 92-1179-1

O P I N I O N

Raytheon E-Systems, Inc., the successor in interest to Chrysler Technologies Airborne Systems, Inc. ( CTAS ), appeals a jury award of $172,500 in favor of George Thompson as compensation for the wrongful termination of his employment. In four issues presented, CTAS challenges (1) the legal and factual sufficiency of the evidence supporting the jury s promissory estoppel finding, (2) the trial court s failure to apply the statute of frauds, (3) the amount of damages found by the jury, and (4) the award of prejudgment interest on costs of court.

I. Factual and Procedural Background

A. Summary of the Facts

In 1990, George Thompson was employed by CTAS as the Production Department Head in charge of aircraft modification at CTAS Waco facility. However, from May through December 1990, Thompson suffered from health problems which caused him to be in and out of the hospital. When Thompson returned to light duty work in the middle of December 1990, Thompson s superiors // evaluated his work performance as being unacceptable. Thompson was then informed that he would no longer be the Production Department Head for CTAS, but he was being transferred into a staff position.

Upon receiving this evaluation and transfer to a staff position, Thompson testified that he felt like quitting, but he decided to stay for financial reasons because he would continue to draw the same salary even in his new staff position. Thompson stated that, after he was placed in his new position, he was moved into a small office and given no work to do.

During this time-frame, CTAS was working on a commercial aircraft modification project for Boeing to modify two airplanes for use by the Prime Minister of Japan. This project was behind schedule, and at the request of the program manager for the Japanese aircraft project, Thompson was assigned to oversee the modifications on these two airplanes in order to get the project back on schedule. From February 1991 through August 1991, Thompson put in many long days planning and completing the modification of the first airplane, as well as beginning the modification process on the second aircraft. However, on August 9, 1991, the day the first aircraft was accepted by Boeing, Thompson s employment at CTAS was terminated.

Thompson subsequently filed suit against CTAS claiming that his employment was wrongfully terminated. Thompson alleged at trial that CTAS promised him employment until retirement without termination except for good cause, that the parties had agreed on this term of employment, and that CTAS committed fraud against Thompson. CTAS denied that it made this promise, denied that there was any contractual agreement modifying Thompson s at-will employment, and denied that it committed fraud. At trial CTAS maintained that Thompson s termination was the result of a reduction in force which was necessary to cut costs as the defense industry declined. Thompson responded that he had no knowledge of any reduction in force which occurred the day he was terminated and claimed that CTAS had plenty of aircraft modification work available for him to work on at the time of his termination.

B. Jury Findings

In the court s charge, the judge instructed the jury on three causes of action: breach of contract, promissory estoppel, and fraud. In a 10-2 verdict, the jury found against Thompson on his breach of contract claim by deciding that there was no agreement between the parties that Thompson would be employed by CTAS until retirement unless there was good cause to terminate his employment. However, the jurors concluded that Thompson had proved his promissory estoppel cause of action. The jury found by their verdict that CTAS promised Thompson employment until retirement with termination only for good cause, that Thompson substantially relied on this promise to his detriment, and that Thompson s reliance on this promise was foreseeable by CTAS. As compensation for the damages Thompson suffered from his reliance on CTAS promise, the jury awarded Thompson $172,500. The jury also found that CTAS committed fraud, but the jurors awarded zero damages for this cause of action. Finally, the jury found that CTAS did not act with the intent to harm Thompson or with conscious indifference.

II. Issues Presented

CTAS first issue challenges the sufficiency of the evidence supporting the jury s promissory estoppel finding. The elements of a promissory estoppel claim are (1) a promise, (2) foreseeability of reliance thereon by the promisor, and (3) substantial reliance by the promisee to his detriment. English v. Fischer, 660 S.W.2d 521, 524 (Tex. 1983); Central Texas Micrographics v. Leal, 908 S.W.2d 292, 298 (Tex. App. San Antonio 1995, no writ). As the Supreme Court recently stated in Trammel Crow Co. No. 60 v. Harkinson, promissory estoppel may apply when there is a promise that the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee, and does induce such action or forbearance, if injustice can be avoided only by enforcement of the promise. 944 S.W.2d 631, 636 (Tex 1997) (citing Moore Burger, Inc. v. Phillips Petroleum Co., 492 S.W.2d 934, 937 (Tex. 1972)). While promissory estoppel is generally a defensive issue, it may also be alleged by the plaintiff as a cause of action. See Wheeler v. White, 398 S.W.2d 93, 94-95 (Tex. 1965); El Paso Healthcare Sys., Ltd. v. Piping Rock Corp., 939 S.W.2d 695, 698 (Tex. App. El Paso 1997, writ denied); Gold Kist, Inc. v. Carr, 886 S.W.2d 425, 431 (Tex. App. Eastland 1994, writ denied); Traco, Inc. v. Arrow Glass Co., 814 S.W.2d 186, 188-89 (Tex. App. San Antonio 1991, writ denied).

In reviewing a legal sufficiency claim on appeal, we must view the evidence produced at trial and the reasonable inferences from that evidence in the light most favorable to the verdict to determine if more than a scintilla of evidence supports the jury finding. See Texarkana Mem l Hosp., Inc. v. Murdock, 946 S.W.2d 836, 838 (Tex. 1997); Texas Dep t of Transp. v. Abilez, 962 S.W.2d 246, 249 (Tex. App. Waco 1998, no pet.); see also Merrell Dow Pharm., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex. 1997). If more than a scintilla of evidence supports a jury finding, the appellant s legal sufficiency complaint will be overruled. Id. More than a scintilla of evidence exists when the evidence supporting the finding, as a whole, rises to a level that would enable reasonable and fair-minded people to differ in their conclusions. Merrell Dow Pharm., Inc., 953 S.W.2d at 711 (quoting Burroughs Wellcome Co. v. Crye, 907 S.W.2d 497, 499 (Tex. 1995)).

The general rule in Texas is that employment for an indefinite term may be terminated at will by either the employee or the employer without cause. See Montgomery County Hosp. Dist. v. Brown, 965 S.W.2d 501, 502 (Tex. 1998); Federal Express Corp. v. Dutschmann, 846 S.W.2d 282, 283 (Tex. 1993); Sabine Pilot Serv., Inc. v. Hauck, 687 S.W.2d 733, 734 (Tex. 1985). This at-will relationship, which allows the termination of employment without cause, may be modified by express agreement or through certain statutory and judicially created exceptions. See Montgomery County Hosp. Dist., 965 S.W.2d at 502 (modification by agreement); Sabine Pilot Serv., Inc., 687 S.W.2d at 735 (judicially created exception to the employment at will doctrine for refusal to perform an illegal act); see also Austin v. Healthtrust, Inc. The Hosp. Co., 967 S.W.2d 400, 402-03 (Tex. 1998) (discussing whistleblower statutes which protect an employee from retaliation). However, the Supreme Court has never addressed the application of promissory estoppel in the employment context, and the intermediate appellate courts have struggled with this issue.

For example, in Roberts v. Geosource Drilling Services, Inc., the Houston First Court of Appeals reversed a summary judgment granted to the employer because the court found there was a fact issue on the employee s promissory estoppel claim. 757 S.W.2d 48, 50-51 (Tex. App. Houston [1st Dist.] 1988, no writ). In Roberts, the employee quit his old job in reliance on the employer s promise of a new position, but the employee was informed several days later that a more qualified individual had been hired to fill the position. Id. at 49-50. In analyzing the employee s promissory estoppel claim, the Houston First Court stated that the employer s

undisputed oral promise clearly imposed a duty on Geosource to employ Roberts but not for a fixed duration and that duty was breached by Geosource. It is no answer that the parties written contract was for an employment-at-will, where the employer foreseeably and intentionally induces the prospective employee to materially change his position to his expense and detriment, and then repudiates its obligations before the written contract begins to operate.

Id. at 50. Similarly, the El Paso Court in 1994 also reversed a summary judgment granted in favor of the employer because a fact issue existed on whether the employee relied on a promise of non-retaliation for using the company s internal grievance procedure when she was fired shortly after filing a grievance. See Vida v. El Paso Employees Fed. Credit Union, 885 S.W.2d 177, 181-82 (Tex. App. El Paso 1994, no writ) (also finding fact issues on the employee s breach of contract and fraud causes of action).

However, other courts have not followed the Roberts decision. See Collins v. Allied Pharmacy Management, Inc., 871 S.W.2d 929, 937 (Tex. App. Houston [14th Dist.] 1994, no writ) (criticizing Roberts as wrongly decided). In Robert J. Patterson, P.C. v. Leal, the Corpus Christi Court held that a prospective employee s cause of action for promissory estoppel was barred by the employment at will doctrine when the alleged promise consisted only of purely oral representations as to employment for an indefinite period. 942 S.W.2d 692, 695 (Tex. App. Corpus Christi 1997, writ denied).

In the instant case, we need not resolve whether or not we believe the employment at will doctrine always prevents an employee from bringing a promissory estoppel claim asserting that the employee was wrongfully terminated because, after reviewing the record in this case, we conclude that no evidence supports the jury s promissory estoppel finding. As the Supreme Court discussed in Montgomery County Hospital District v. Brown, a promise is a manifestation of intention to act or refrain from acting in a specified way, so made as to justify a promisee in understanding that a commitment has been made. See Montgomery County Hosp. Dist., 965 S.W.2d at 502 (quoting Restatement (Second) of Contracts 2(1) (1981)). While Montgomery County Hospital District is a breach of contract case, the Supreme Court s reasoning is helpful to analyze the issues in the instant case. The Court concluded in Montgomery County Hospital District that [g]eneral comments that an employee will not be discharged as long as his work is satisfactory do not limit an employer s right to terminate the employee. See Montgomery County Hosp. Dist., 965 S.W.2d at 502. The court explained that an employee without a formal agreement with his employer cannot construct a contract out of indefinite comments, encouragements, or assurances. Id.

Similarly, in the instant case, in an attempt to circumvent the employment at will doctrine, Thompson has attempted to construct a promise of employment until retirement without termination except for good cause from a variety of statements which were made to him between his initial hiring and termination. For example, when Thompson was hired he testified that he understood from the policies and procedures of the company // that an individual could only be fired for cause. // Thompson s testimony also discussed his statement made at the time of his hiring that he would give the company 10 good years but then he wanted out in order to retire, and the individual who hired Thompson said that sounded like a winner. Additionally, Thompson and other employees testified that employees of CTAS were always terminated for good cause pursuant to the company s written termination policy through a set internal procedure. //

Moreover, Thompson considers his December 1990 evaluation to contain a promise of employment until retirement. On Thompson s evaluation, his supervisor wrote, Medical condition of employee will determine future position at CTAS until retirement. Furthermore, while Thompson was meeting with his supervisor about his evaluation, Thompson saw that on the Potential and Replacements Staff Planning Information form, which was not supposed to be shown to the employee, his supervisor had listed [c]onsultant until retirement under the section entitled, Positions for which the individual should be qualified and considered during the next five years. // During his testimony, Thompson also referred to be being promised work at CTAS until the Japanese aircraft project was complete because he had been assigned to supervise the modification process on both airplanes. //

After reviewing this evidence, we conclude that there is less than a scintilla of evidence in the record that Thompson was promised employment until retirement with termination only for good cause. Despite the fact that Thompson may have believed that CTAS employees could only be terminated for cause based on his understanding of the company s termination policy and from the procedures typically used in terminations, there is no evidence in the record that CTAS ever manifested the intent to change Thompson s status from that of an at-will employee to an employee who could only be terminated for cause. Similarly, after considering the statements on Thompson s evaluation regarding his position until retirement, Thompson s statement when hired that he wanted out in ten years, or his supervisor s statements that he was to oversee the Japanese aircraft modification project, we do not believe these indefinite comments support a finding that Thompson was promised employment until retirement with termination only for cause.

Finally, we must consider Thompson s argument that CTAS failure to call Dave Frank, the vice president who assigned Thompson to a staff position following the December 1990 employee evaluation, raises a presumption that Dave Frank s testimony would have been adverse to CTAS, and thus, constitutes sufficient evidence to support the jury s verdict. See, e.g., John Deere Co. v. May, 773 S.W.2d 369, 377 (Tex. App. Waco 1989, writ denied) (discussing a party s failure to produce witnesses with whom it has a special relationship). In the instant case, we will not presume on appeal that Dave Frank made a promise to Thompson that he could work at CTAS in a staff position until his retirement with termination only for cause, when this fact is unsupported by the record. Contrary to Thompson s argument on appeal that Frank made this promise in order to ensure that Thompson would remain with the company even though he was being demoted, Thompson did not testify to this scenario at trial. // At one point Thompson testified,

[Q:] What was the only thing that . . . Dave told you at the time you saw those papers and he talked with you on December 19th?

[A:] That I was stepping down as department - - being relieved of my department. Mr. Billy Bason was being assigned, and I would be a consultant to him, and my health would determine positions at CTAS.

[Q:] But . . . Dave did not say that, George, you will be a consultant until retirement[?]

[A:] He did not.

Furthermore, following Thompson s demotion, Thompson testified that he was not given any work until the program manager for the Japanese aircraft project sought to have Thompson assigned to the project, and even at the request of program manager, management at CTAS was reluctant to assign Thompson to the project. // Thus, we will not presume Frank made promises Thompson did not testify about nor presume Frank made these promises to keep Thompson at CTAS to work on the aircraft modification project when the evidence adduced at trial does not support this inference. We therefore conclude that CTAS failure to call Dave Frank as a witness does not provide more than a scintilla of evidence that Thompson was promised employment until retirement with termination only for cause.

III. Conclusion

Because we have concluded there is not legally-sufficient evidence in the record supporting the jury s promissory estoppel finding, CTAS first issue presented is sustained, the trial court s judgment awarding Thompson $172,500 is reversed, and we render judgment that Thompson take nothing.

BOBBY L. CUMMINGS

Justice

Before Chief Justice Davis,

Justice Cummings, and

Justice Vance

Reversed and rendered

Opinion delivered and filed October 28, 1998

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