Doyle v. Holy Cross Hospital
State: Illinois
Court: 1st District Appellate
Docket No: 1-95-3243
Case Date: 03/26/1997
THIRD DIVISION
March 26, 1997
No. 1-95-3243
MARY DOYLE, LENI SERRA, SUSAN ) Appeal from the
VALDERRAMA and VALERIE ZOREK, ) Circuit Court of
) Cook County
Plaintiffs-Appellants, )
)
v. ) No. 92 L 13992
)
HOLY CROSS HOSPITAL, an Illinois )
not-for-profit corporation, ) Honorable
) Julia M. Nowicki
Defendant-Appellee. ) Judge Presiding.
JUSTICE CAHILL delivered the opinion of the court:
Plaintiffs appeal a trial court dismissal of their complaint
under section 2-619(9) of the Code of Civil Procedure. 735 ILCS
5/2-619(9) (West 1994). They allege defendant terminated their
employment in violation of the terms of defendant's employee
handbook. The trial court relied on the second district decision
in Condon v. American Telephone & Telegraph Co., 210 Ill. App. 3d
701, 569 N.E.2d 518 (1991), which held that an employer could
unilaterally modify an existing contract to claim a contract no
longer exists. We reverse.
Plaintiffs are nurses and former employees of Holy Cross
Hospital. Mary Doyle and Leni Serra were hired in 1960 and 1968,
respectively. Susan Valderrama and Valerie Zorek were hired in
1972. In 1971 Doyle and Serra received employee handbooks which
set out certain policies of the hospital. These policies were in
effect when the handbooks were given to Valderrama and Zorek in
1972. Plaintiffs' complaint relies upon policy number 7-G titled
"Economic Separation," which reads in part:
"Holy Cross Hospital is committed to providing a
working environment where employees feel secure in
their job. We understand that job security is
important to an employee and to that employee's family.
There are instances, though, that for economic or other
reasons it becomes apparent that the permanent
elimination of departments, job classifications and/or
jobs must be made, and there is no reasonable
expectation that employees affected could be placed in
other positions in the hospital or be recalled for work
in one year or less. To ensure that the economic
separation is handled in an objective, structured and
consistent way, the following policies will be followed
in determining which employees will be affected.
1. Job Classification
2. Length of Continuous Hospital Service
3. Ability and Fitness to Perform the Required Work
***
Because of the special needs of our patients, the
following factors will be used in an economic
separation affecting R.N.'s:
1. Nursing Areas of Expertise
2. Length of Service Within Each Area of Expertise
3. Ability and Fitness to Perform the Required Work
***
Employees affected by an economic separation will be
placed on a priority rehire list and will be contacted
by the Human Resources Department if a position becomes
available for which the separated employees may be
eligible through experience, training, education and/or
other qualifications. Priority rehire consideration
shall be for a period of one year."
In 1983 Holy Cross added policy 5-I. That policy, titled
"Employment Relationship," reads:
"The Personnel Policies and other various Hospital
employee and applicant communications are subject to
change from time to time and are not intended to
constitute nor do they constitute an implied or express
contract or guarantee of employment for any period of
time. The employment relationship between the Hospital
and any employee may be terminated at any time by the
Hospital or the employee with or without notice."
In November 1991 Holy Cross terminated the plaintiffs.
Plaintiffs filed a complaint for wrongful discharge, alleging
breach of contract and promissory estoppel. They allege in their
complaint that Holy Cross violated policy 7-G because: a) "there
was in fact no permanent elimination of any departments, job
classifications or jobs; b) there were other positions available
on November 1, 1991, which plaintiffs could fill, but Holy Cross
failed and refused to employ them in these positions; c) other
employees with less continuous hospital service were retained;
and d) more than one year has passed since plaintiffs were
terminated, and subsequent to November 1, 1991, Holy Cross has
had positions for which they were eligible through experience,
training, education and qualifications, but Holy Cross has failed
and refused to offer them any such positions."
Holy Cross filed a motion to dismiss the complaint under
section 2-619(9) of the Code of Civil Procedure. 735 ILCS 5/2-
619(9) (West 1994). Holy Cross argued that plaintiffs were at
will employees and that economic separation policy 7-G no longer
constituted an enforceable contractual right because the hospital
amended its handbook.
The trial court followed the decision in Condon v. American
Telephone & Telegraph Co., 210 Ill. App. 3d 701, 569 N.E.2d 518
(1991), and granted defendant's motion to dismiss.
The plaintiff in Condon argued that his employer breached an
employment contract when it demoted him without following the
procedures set out in personnel and management training manuals.
After the plaintiff was hired, the employer inserted disclaimers
in the manuals. The plaintiff argued that the disclaimers were
invalid because they were not contained in the original manuals
he received when hired. The second district court rejected the
plaintiff's argument and held "an employer may unilaterally alter
existing policies to disclaim those policies in order to prevent
contractual obligations from arising under Duldulao." Condon,
210 Ill. App. 3d at 705, 569 N.E.2d 518. The Condon court
reasoned that, because the plaintiff continued to work after the
disclaimers were inserted in the handbook, he was bound by them.
Explicit in the court's holding is that the plaintiff's continued
performance constituted consideration for the contract
modification. The court reached this conclusion based upon a
reading of Duldulao in which it found implicit support. The
Condon court wrote:
"The implied contract which arises under the
Duldulao doctrine is unilateral in nature. In setting
out its test for contract formation, the Duldulao court
states in part three of the test that the employee
accepts the offer by working or continuing to work.
[Citation.] The only way an employee could accept an
offer by continuing to work is if the employee was
already employed and the employer altered an existing
policy. Implicit in this requirement is that the
employer may unilaterally change its own policies."
Condon, 210 Ill. App. 3d at 708, 569 N.E.2d 518.
We respectfully disagree with this analysis of Duldulao. In
that case, our supreme court applied traditional requirements for
contract formation to determine whether an employee handbook
creates an enforceable contract--offer, acceptance, and
consideration. Duldulao v. St. Mary of Nazareth Hospital Center,
115 Ill. 2d 482, 505 N.E.2d 314 (1987). The court held "an
employee handbook or other policy statement creates enforceable
contractual rights if the traditional requirements for contract
formation are present." Duldulao, 115 Ill. 2d at 490, 505 N.E.2d
314. Three requirements must be met for an employee handbook or
policy statement to form a contract. First, the language of the
policy statement must contain a promise clear enough that an
employee would reasonably believe an offer has been made.
Second, the statement must be disseminated to the employee in
such a manner that the employee is aware of its contents and
reasonably believes it to be an offer. Third, the employee must
accept the offer by: "commencing or continuing to work after
learning of the policy statement." (Emphasis added.) The
Duldulao court then held: "When these conditions are present,
then the employee's continued work constitutes consideration for
the promises contained in the statement, and under traditional
principles a valid contract is formed." Duldulao, 115 Ill. 2d at
490, 505 N.E.2d 314.
The Condon court read the emphasized language above to
implicitly include a subsequent disclaimer of the policy
statement, followed by the employee remaining on the job. There
was no reason for the supreme court in Duldulao to so infer or
hold. The issue of a subsequent disclaimer was not an issue in
the case.
We turn now to whether the language of the employee handbook
in this case contains a promise which is sufficiently clear and
definite to constitute a contractual offer. It is a question of
law. Harrell v. Montgomery Ward & Co., 189 Ill. App. 3d 516,
521, 545 N.E.2d 373 (1989).
We find that policy 7-G of the employee handbook set out
above, as a matter of law, meets the test in Duldulao for
contract formation. Policy 7-G can be understood to convey a
clear offer by Holy Cross to relinquish the right to terminate at
will. The requirements for contract formation were met for
plaintiffs Doyle and Serra in 1971 and plaintiffs Valderrama and
Zorek in 1972. Under Duldulao their work constituted their
acceptance and the consideration to form the contracts. The
defendant does not dispute this.
The issue before us is whether the disclaimer, added in
1983, which stated that Holy Cross could terminate "any employee
*** at any time," is a legally binding change which altered
plaintiffs' employment status and returned them to the status of
employees at will. Plaintiffs argue that defendant's unilateral
modification of the contract is unenforceable because the
requisite consideration is lacking. Defendant, citing Condon,
argues that plaintiffs' continued work after the unilateral
modification of the contract in 1983 constitutes the
consideration to make the disclaimer binding.
When an employment agreement is terminable at will, it may
be modified by the employer as a condition of its continuance.
Ohlemeier v. Community Consolidated School District, 151 Ill.
App. 3d 710, 717, 502 N.E.2d 1312 (1987). This principle is the
foundation of the reasoning in Duldulao that an employee's
continuation of work constitutes consideration for the employer's
offer to modify the employment contract. But, in this case,
plaintiffs' employment contracts were not terminable at will.
When they were given their handbooks, the hospital gave up the
right to terminate plaintiffs at will and promised to follow
handbook policy in job termination. That promise became a
contractual obligation as we read Duldulao.
The 1983 disclaimer, which stated that Holy Cross employees
were once again terminable at will, was an attempt to modify an
existing contract between Holy Cross and plaintiffs. Traditional
contract principles allow parties to modify their contract, if
there is consideration to support the modification. De Fontaine
v. Passalino, 222 Ill. App. 3d 1018, 584 N.E.2d 933 (1991).
Consideration consists of some right, interest, profit or benefit
accruing to one party, or some forbearance, detriment, loss or
responsibility given, suffered or undertaken by the other.
Russell v. Jim Russell Supply, Inc., 200 Ill. App. 3d 855, 558
N.E.2d 115 (1990). If parties to a contract agree to a
modification, consideration is usually found to exist where the
obligations of both parties are varied. A modification solely
for the benefit of one of the parties is unenforceable. See De
Fontaine, 222 Ill. App. 3d 1018, 584 N.E.2d 933.
We do not reach the conclusion of the court in Condon. The
court never explains how it is possible, under traditional
contract principles, for an employee to revert to at will status
through the unilateral act of the employer. We are not the first
court to question Condon's reasoning. See Robinson v. McKinley
Community Services, Inc., 19 F. 3d 359 (7th Cir. 1994). The
court in Robinson stated:
"The Condon court relied on Duldulao. But
Duldulao did not alter basic rules of contract
modification. Duldulao merely held that if an employer
embodies a clear and definite promise in its employee
handbook, then an offer has been made. Condon also
relied on Bartinikas v. Clarklift of Chicago North,
Inc., 508 F. Supp. 959 (N.D. Ill. 1981). However,
Bartinikas recognized that in Illinois, 'an employer
acting ex parte, without the consent of the employee,
cannot modify the terms of the employment contract.'
Bartinikas, 508 F. Supp. at 961." Robinson, 19 F. 3d
at 364.
We will not infer, as suggested in Condon, acceptance and
consideration because the plaintiffs continued to work.
Plaintiffs were not then employees at will. If, as Holy Cross
argues, plaintiffs' continued work amounts to acceptance and
consideration for the "loss" of their right under the Economic
Separation policy, then the only way plaintiffs could preserve
and enforce their contractual rights would have been to quit
working after Holy Cross unilaterally issued the disclaimer.
This would make the promise by Holy Cross not to terminate,
except under the terms of the Economic Separation policy,
illusory. The illusion (and the irony) is apparent: to preserve
their right under the Economic Separation policy the plaintiffs
would be forced to quit.
We believe this analysis avoids an illogical result: by
continuing to work, plaintiffs continued to perform their duties
and assert their rights under the existing contract, which
promised that Holy Cross would follow specific procedures for job
termination. Plaintiffs received no benefit and Holy Cross
suffered no detriment when Holy Cross modified the employee
contract to attempt to make plaintiffs terminable at will. There
was no bargained for exchange to support plaintiffs' purported
relinquishment of the protections they were entitled to under the
existing contract. The modification by Holy Cross was solely for
the benefit of Holy Cross and is unenforceable as to plaintiffs.
Reversed and remanded.
THEIS and S.M. O'BRIEN, JJ., concur.
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