Remes v. Nordic Group, Inc.

Remes v. Nordic Group, Inc.  (96-329); 169 Vt. 37; 726 A.2d 77

[Filed 29-Jan-1999]


  NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal  revision before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter  of Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any  errors in order that corrections may be made before this opinion goes
  to press.


                                 No. 96-329


Constance Remes	                                 Supreme Court

                                                 On Appeal from
     v.		                                 Windsor Superior Court

Nordic Group, Inc.	                         February Term, 1998
and Tri-Nordic, Inc.


Shireen Avis Fisher, J.

       Allan R. Keyes of Ryan, Smith & Carbine, Ltd., Rutland, for
  Plaintiff-Appellee.

       Peter F. Young of Miller, Eggleston & Cramer, Ltd., Burlington, for
  Defendants-Appellants.


PRESENT:  Amestoy, C.J., Dooley, Morse, Johnson and Skoglund, JJ.

       SKOGLUND, J.  Defendants Nordic Group, Inc. and Tri-Nordic, Inc.
  appeal the superior  court's decision granting plaintiff Constance Remes
  prejudgment interest on the jury award based  on promissory estoppel. 
  Defendants claim the court erred in applying prejudgment interest as of 
  right to the back pay award because the amount of back pay was neither
  liquidated nor capable  of ready ascertainment at the time of plaintiff's
  termination.  Additionally, defendants maintain  that, even if an award of
  prejudgment interest were proper, the court abused its discretion by 
  calculating the prejudgment interest from the date of termination to the
  date of judgment on the  lump sum awarded by the jury.  We affirm the grant
  of prejudgment interest, but remand for  further elaboration or
  recalculation of the amount of interest awarded.


       In 1989, defendants hired plaintiff on an at-will basis as an office
  manager responsible for  performing accounting and bookkeeping services. 
  In 1992, she took a three-month medical leave.  Prior to going on leave,
  one of the corporate directors assured her that her job was safe and that 
  she could take all the time she needed.  During her absence, an audit
  disclosed accounting errors. 
 
 

  Upon plaintiff's return to work, defendants informed her that she could not
  have the same  job back.  Instead, they offered her another job for
  considerably less money, but she declined the  offer.  

       Plaintiff filed suit against defendants, alleging wrongful discharge
  under a promissory  estoppel theory, and later amending the complaint to
  include breach of contract.  She claimed that  she had reasonably relied on
  the promise that she could return to her job upon return from medical 
  leave and that the promise altered her at-will employment contract.  The
  alternative theories of  promissory estoppel and breach of contract were
  submitted to the jury, which returned a verdict  on the basis of promissory
  estoppel finding defendants liable to plaintiff for $38,344.57. During 
  trial, defendants objected to plaintiff's exhibit related to calculation of
  interest.  The parties then  agreed that the court, not the jury, would
  determine the issue of prejudgment interest and the  exhibit was withdrawn.  

       After the trial concluded, plaintiff argued to the court that
  prejudgment interest should be  awarded either as of right, pursuant to
  Rule 54(a), or under the court's discretion.  In response,  defendants
  contended that this case did not warrant prejudgment interest and,
  alternatively, that  it should be assessed only as and when the lost wage
  payments were due, not from the date her  employment ended.  The court
  granted plaintiff prejudgment interest at Vermont's statutory rate  of
  twelve percent, see 9 V.S.A. § 41a(a), or $12.61 per day, from the date of
  plaintiff's  termination until the date of entry of judgment on the entire
  jury award, without indicating  whether it did so by discretion or as a
  matter of right.   This appeal followed.

                                     I.


       Pursuant to Rule 54, prejudgment interest may be "awarded as damages
  for detention of  money due for breach or default."  See Reporter's Notes
  to 1981 Amendment, V.R.C.P. 54.   Such interest on a wrongfully-detained
  principal sum is awarded as of right where it is "liquidated  or capable of
  ready ascertainment," or "in the court's discretion for other forms of
  damage."  Id.  Defendants' argument against assessment of prejudgment
  interest in this case focuses exclusively 

 

  on whether the back pay award was liquidated or readily ascertainable. 
  They fail to address,  however, the court's well-recognized discretion to
  award prejudgment interest.  See id.  (prejudgment interest may be awarded
  in court's discretion for unliquidated forms of damages);  Fleming v.
  Nicholson, 9 Vt. L.W. 315, 317 (1998) (stating that d'Arc Turcotte v.
  Estate of  LaRose, 153 Vt. 196, 569 A.2d 1086 (1989) did not eliminate
  traditional discretionary capacity  to award prejudgment interest); Smith
  v. Osmun, 165 Vt. 545, 547, 676 A.2d 781, 785 (1996)  (mem.) (where damages
  are not liquidated or reasonably ascertainable, decision to award 
  prejudgment interest lies within discretion of trial court);  Winey v.
  William E. Dailey, Inc., 161  Vt. 129, 141, 636 A.2d 744, 752 (1993)
  (upholding trial court's discretionary denial of  prejudgment interest). 
  Since prejudgment interest may be awarded either as a matter of right or 
  by discretion of the trial court, we first review whether the award of
  prejudgment interest here  represents an abuse of discretion.  For us to
  conclude the court abused its discretion, it must  appear that the court
  entirely withheld its discretion or that it exercised discretion for
  "clearly  untenable reasons or to a clearly untenable extent."  Vermont
  Nat'l Bank v. Clark, 156 Vt. 143,  145, 588 A.2d 621, 622 (1991).

       Our analysis turns initially to whether prejudgment interest is
  available in a promissory  estoppel case.  In Foote v. Simmonds Precision
  Products Co., Inc., we held that promissory  estoppel could be used
  affirmatively, that is, as an independent cause of action.  See 158 Vt.
  566,  571, 613 A.2d 1277, 1280 (1992).  We did not then have an opportunity
  to consider what type  of damages may be recovered on the basis of
  promissory estoppel.  Here, by contrast, to  determine whether the trial
  court properly awarded prejudgment interest, we first must answer the  more
  fundamental question of what remedy is afforded a successful plaintiff in a
  promissory  estoppel case.  Although the parties have not explicitly raised
  the question, we nonetheless take  up the matter because we cannot decide
  the prejudgment interest issue without ruling on whether  prejudgment
  interest constitutes an appropriate element of promissory estoppel damages. 

       Vermont courts have in the past allowed compensatory or reliance
  damages in promissory 

 

  estoppel cases.  See Foote, 158 Vt. 566, 613 A.2d 1277; Stacy v. Merchants
  Bank, 144 Vt. 515,  521-22, 482 A.2d 61, 64-65 (1984).  We have never
  suggested, however, that promissory  estoppel damages are coextensive with
  full contractual remedies.  See 3 E. Holmes, Corbin on  Contracts § 8.11
  (1996) (promissory estoppel remedy is not necessarily co-extensive with
  damages  for breach of contract).  The nature of damages afforded must
  correlate to the nature of the action  brought.  

       Promissory estoppel, as the term itself suggests, does not derive
  exclusively from legal  origins; it has equitable as well as legal aspects.   

     [T]he protean doctrine of "promissory estoppel" eludes 
     classification as either entirely legal or entirely equitable, and the 
     historical evidence is equivocal.  It is clear, however, that both law 
     and equity exert gravitational pulls on the doctrine, and its 
     application in any particular case depends on the context in which 
     it appears.

  Merex A.G. v. Fairchild Weston Sys., Inc., 29 F.3d 821, 825 (2d Cir. 1994)
  (comparing  promissory estoppel under Restatement (Second) of Contracts §§
  90, 139 (1981)).  The mixed  nature of promissory estoppel has led courts
  to treat the corresponding damages flexibly.  See,  e.g., id. at 826 (court
  retains discretion to award relief to avoid injustice); 3 Holmes, supra §§ 
  8.8, 8.11 (doctrine of promissory estoppel may justify either equitable
  remedy or judgment for  damages; promissory estoppel remedy is equitably
  molded ad hoc for each case according to  dictates of good faith,
  conscience and justice).  A remedial order in a promissory estoppel case 
  must be fashioned carefully to achieve fairness to all parties according to
  the circumstances of  a particular case.  See Kiely v. St. Germain, 670 P.2d 764, 767 (Colo. 1983).  While a full range  of legal damages may be
  available, promissory estoppel plaintiffs are not necessarily entitled to 
  them as of right.  See id. (interests of justice sometimes best served by
  partial, rather than total,  enforcement of promise); Restatement (Second)
  of Contracts § 90 cmt. d (full-scale enforcement  by normal contractual
  remedies often appropriate for promise binding under this section, but
  relief  may be limited).

 

  An award of prejudgment interest in a wrongful termination case serves to
  compensate  plaintiff for the lost use of money that plaintiff otherwise
  would have earned.  See Chandler v.  Bombardier Capital, Inc., 44 F.3d 80,
  83 (2d Cir. 1994).  Since prejudgment interest constitutes  a part of the
  normal remedy in such cases, see Restatement (Second) of Contracts § 354(1)
  cmt.  c, illus. 7 (1981) (providing for prejudgment interest for damages in
  wrongful discharge suit), it  is likewise available, under the court's
  discretion, in molding the relief that justice requires in a  promissory
  estoppel case, Merex, 29 F.3d  at 826.  We now adopt this approach and hold
  that  promissory estoppel damages should be discretely designed as
  corrective relief to rectify the  wrong committed in a particular case. 
  See Holmes, supra § 8.8.  We conclude that in this case  it was within the
  trial court's discretion to award prejudgment interest.  Our conclusion
  obviates  the need to address whether prejudgment interest should have been
  awarded here as a matter of  right.  We nevertheless note that in a
  promissory estoppel case the question of interest may be  more properly
  committed to the sound discretion of the trial court than awarded as of
  right given  the mixed legal and equitable nature of the claim. 

                                     II.

       Next, we turn to defendant's contention that the method used to
  calculate the prejudgment  interest amounted to error.  Reversal of the
  court's prejudgment interest award is warranted only  if the method of
  calculation chosen was so "irrational as to amount to an abuse of
  discretion."  Grievance of Merrill, 157 Vt. 150, 154, 596 A.2d 345, 348
  (1991).  


       At trial, plaintiff requested $40,572.55 in damages.  Her estimation
  of damages included  her annual salary and benefits broken down to a daily
  amount and then multiplied by the number  of days between termination and
  trial that she had not worked at other jobs but also had not been  too ill
  to work.  The jury awarded plaintiff $38,344.57.  Although the record
  before us shows that  plaintiff's annual salary and benefits totaled
  $35,175.93, it fails to indicate what type of pay  period defendants
  utilized.  That is, we do not know if plaintiff was paid weekly, bi-weekly,
  or  monthly.  In a one-sentence order, the trial court calculated the
  prejudgment interest on the full

 

  amount of the jury award at twelve percent per annum, or $12.61 per day,
  from the date of  plaintiff's termination until the date of entry of
  judgment -- nearly three years. 

       Plaintiff depends on Winey v. William E. Dailey, Inc. to support the
  court's method of  calculation.  161 Vt. at 141, 636 A.2d  at 752.  Granted,
  Winey does state that, "[i]n breach of  contract cases, damages are to be
  measured at the time of breach with interest to the date of  judgment." 
  Id.  The statement is accurate in the context of a faulty home construction
  case such  as Winey; however, the same analysis does not necessarily
  control when one party pays the other  for performance periodically.  In
  the employment context, prejudgment interest should generally  be assessed
  upon damages only as they become due.  See Restatement (Second) of Contract
  § 354  cmt. b (1981) (interest not payable as damages for non-performance
  until performance is due);  Restatement (Second) of Contracts § 354(1) cmt.
  c, illus. 7 (1981) (calculating interest on back  pay award for employee
  who is paid weekly).  Consequently, plaintiff's reliance on Winey is 
  misplaced.

       Defendants also misperceive the applicability of the cases upon which
  they rely.  For  instance, they cite Chandler v. Bombardier Capital, Inc.,
  44 F.3d 80, 84 (2d Cir. 1994), for the  proposition that prejudgment
  interest must be computed on the lost payments only from the time  they
  come due.  It is true that, in both contract and tort actions, courts
  generally calculate  prejudgment interest on back pay awards separately
  from the date of each missed salary payment,  rather than from the date of
  termination.  See, e.g., id. at 84 (tortious interference with  contractual
  relations); Restatement (Second) of Contract § 354(1) (1981) (interest
  recoverable  from time of performance on amount due, minus all deductions
  to which party in breach is  entitled).  Nonetheless, the Chandler court
  itself upheld the prejudgment interest awarded despite  the fact the
  district court did not calculate interest on the missed wage payments as
  and when due.  See 44 F.3d  at 84.  The Chandler court ultimately concluded
  that the district court had not abused  its discretion because a fair
  figure for the interest had been achieved.  See id.

       Just as courts have discretion in awarding prejudgment interest,
  courts likewise have some

 

  discretion to vary the method of calculating such interest.  As we stated
  in Fleming, there is no  abuse of discretion where the trial court uses a
  reasonable and established method to calculate  prejudgment interest.  See
  9 Vt. L.W. at 318.  Further, "there may be several equally valid  methods
  of computation, each yielding a somewhat different result." Merrill, 157
  Vt. at 155, 596 A.2d  at 348 (internal citations omitted).  This is
  particularly so in a case such as the one at bar  where prejudgment
  interest is awarded on an undifferentiated, lump-sum verdict for a
  promissory  estoppel claim.  For example, where prejudgment interest is
  awarded on a lump-sum jury award  for back pay, a court may choose to
  divide the back pay into annual amounts and assume each  installment should
  have been paid on the last day of each year.  See Marfia v. T.C. Ziraat 
  Bankasi, N.Y. Branch, 903 F. Supp. 463, 474 (S.D.N.Y. 1995). (awarding
  prejudgment interest  on lump-sum jury award of back pay by dividing into
  annual amounts and assuming each  installment should have been paid on last
  day of each year); see also Shannon v. Colorado Sch.  of Mines, 847 P.2d 210, 213-14 (Colo. Ct. App. 1993) (discussing several methods to calculate 
  prejudgment interest on award for back pay in wrongful termination suit).

       On the record before us, however, it is not readily apparent why the
  trial court chose the  method that it did.  As we noted above, the court
  must fashion promissory estoppel relief carefully  to achieve fairness
  between the parties.  While we would not necessarily overturn an award of 
  prejudgment interest that avoids separate calculations for each lost wage
  payment, the interest  must represent a fair figure that serves to rectify
  the wrong committed. Therefore, we remand the  interest award for either
  further elucidation or recalculation.  

       Affirmed in part and remanded for further proceedings consistent with
  this opinion.

                               FOR THE COURT:

                               _______________________________________
                               Associate Justice