Kloss v. Honeywell, Inc.

Citations: 890 P.2d 480; 77 Wash. App. 294Docket: 33091-8-I

Court: Court of Appeals of Washington; January 30, 1995; Washington; State Appellate Court

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Honeywell, Inc. appealed a judgment favoring Charles W. Kloss, who sued for breach of contract after Honeywell failed to assign him to a nursing position following his completion of a nursing program. The trial court ruled that Honeywell breached the contract, awarding Kloss $130,084.50 in damages and $29,467.75 in costs and attorney's fees. Kloss, employed by Honeywell since 1967, was encouraged by management to pursue nursing education with the promise that his tuition would be reimbursed. Although he enrolled in a practical nursing program, Honeywell later indicated the medical position would require a registered nurse, leading Kloss to focus on becoming an RN. After graduating in June 1986, Honeywell did not assign him to any medical role, and he returned to maintenance work before taking a voluntary layoff in February 1987. Kloss filed his complaint nearly five years post-graduation. The court affirmed its findings, rejecting Honeywell's claims regarding the existence of a written contract, the statute of limitations, and Kloss's duty to mitigate damages.

Kloss's lawsuit is challenged by Honeywell on the grounds of timeliness, asserting that the contract fails to meet the 6-year statute of limitations due to the absence of a compensation term in the memoranda. Ex parte writings can qualify as contracts under this statute if they include all essential contract elements. If parol evidence is needed to define a material element, the contract is considered partly oral, invoking a shorter 3-year statute of limitations. Honeywell argues that a valid employment contract requires an explicit compensation agreement, which Kloss contests. Employment contracts follow the same principles as other contracts, including unilateral contracts, where the offeror's promise and the offeree's performance constitute the agreement. Essential contract elements include subject matter, parties, promises, terms, and sometimes price or consideration. In scenarios lacking explicit wage statements, courts may apply a standard of reasonableness to determine recoverable value. Even if a promise regarding compensation is vague, it can be enforced if it can be clarified through objective standards. Washington law (RCW 4.16.040(1)) provides a 6-year limit for actions based on written contracts, encompassing both express and implied liabilities. This broad language suggests that implicit obligations do not render a contract partly oral for statute of limitations purposes. Moreover, the inability to agree on a precise compensation amount does not negate the existence of a contract; once compensation is acknowledged, the performing party is entitled to reasonable payment. Honeywell concedes that the writing specifies the contract's subject matter, parties, and employment promise.

The agreement to employ Kloss as a nurse inherently includes an obligation for Honeywell to compensate him fairly for his work. Kloss fulfilled the contract's consideration by obtaining his nursing degree, and Honeywell’s investment in his training indicates a binding commitment to hire him. The absence of a specified compensation amount does not render the contract unenforceable, as the writing sufficiently establishes that compensation was intended, thus falling within the 6-year statute of limitations. The trial court holds the discretion to determine a reasonable salary. 

Honeywell argues that Kloss failed to mitigate his damages due to his voluntary layoff. The doctrine of mitigation requires the injured party to take reasonable steps to avoid damages post-wrongdoing. The burden of proof for showing failure to mitigate lies with the employer, which must demonstrate the availability of suitable positions and that the employee did not act with reasonable diligence in seeking them. Factors such as self-employment and the characteristics of the job market are considered in assessing diligence. 

Case law establishes that an employee unlawfully discharged must reasonably seek comparable new employment but is not obligated to accept lesser positions or change career paths. Once a comparable job is accepted, the employee must make good faith efforts to maintain it. However, voluntary termination of interim employment does not necessarily toll the back pay period if prompted by unreasonable conditions or a genuine search for better opportunities. Honeywell provided insufficient evidence to support its claim of Kloss's failure to mitigate damages, conceding that the position from which he voluntarily laid off was not substantially equivalent to the nursing job or his previous role as a plant engineer.

Kloss's potential failure to mitigate damages by not seeking comparable employment after being placed in a custodial position is noted, though Honeywell claims his voluntary layoff request was motivated by altruism to help others. However, Kloss testified that his post-graduation work involved menial tasks, leading to feelings of humiliation compared to his former role as plant engineer. After graduation, he worked as a custodian without support to regain his previous position or transition to a health care role. Honeywell acknowledges that Kloss would likely have been terminated regardless of his custodial status. The principle of limiting back pay recovery due to voluntary termination applies; back pay serves as a "make whole" remedy rather than requiring unreasonable actions, such as accepting non-comparable positions. Kloss's efforts to mitigate damages through various job searches, including self-employment, are deemed reasonable and not breached by leaving the custodial role. Kloss seeks attorney's fees under RCW 49.48.030, which entitles successful claimants for owed wages to recover those fees. The court affirms the entitlement to attorney’s fees, with concurrence from BAKER, A.C.J. and BECKER, J. The trial court established an oral agreement between Kloss and Honeywell regarding his nursing education and subsequent hiring, which Honeywell contested but did not dispute on appeal. Additional notes reference the relevance of statute of frauds and express or implied liability based on written instruments.

An obligation or liability arising from a written instrument must be immediate and not merely remote, or it must be based on facts acknowledged in the instrument from which the obligation is implied. To prove a willful loss of earnings, an employee must demonstrate that they rejected a job that is substantially equivalent to the one they were denied. Case law cited does not alter this principle. For instance, in Wisconsin Ave. Nursing Home, the court ruled that the principle of voluntary termination does not apply in instances of layoff. Furthermore, in cases where an employee voluntarily terminates their position, back pay awards may be reduced by such losses, but this does not apply if the employee was fired due to an error. A similar situation occurred in Department of Corrections v. Finley, where a wrongfully discharged employee took a comparable position elsewhere but was subsequently terminated again.