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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Charles v. Interior Regional Housing Authority (9/20/2002) sp-5631

Charles v. Interior Regional Housing Authority (9/20/2002) sp-5631

     Notice:   This opinion is subject to correction  before
     publication  in  the  Pacific  Reporter.   Readers  are
     requested to bring errors to the attention of the Clerk
     of  the  Appellate  Courts, 303  K  Street,  Anchorage,
     Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,
     e-mail corrections@appellate.courts.state.ak.us.


            THE SUPREME COURT OF THE STATE OF ALASKA

TED CHARLES,                  )
                              )    Supreme Court No. S-10170
               Appellant,          )
                              )    Superior Court No.
          v.                  )    4FA-99-2342 CI
                              )
INTERIOR REGIONAL HOUSING     )
AUTHORITY,                    )    O P I N I O N
                              )
               Appellee.      )         [No. 5631 - September 20,
2002]
                                                                )


          Appeal  from the Superior Court of the  State
          of    Alaska,   Fourth   Judicial   District,
          Fairbanks, Mary E. Greene, Judge.

          Appearances:  Michael J. Walleri, Law Offices
          of   Michael   J.  Walleri,  Fairbanks,   for
          Appellant.   Tracey  L.  Knutson,  Sisson   &
          Knutson, P.C., Anchorage, for Appellee.

          Before:   Fabe,   Chief  Justice,   Eastaugh,
          Bryner,  and Carpeneti, Justices.  [Matthews,
          Justice, not participating.]

          BRYNER, Justice.


I.   INTRODUCTION

          Ted Charles sued his former employer, Interior Regional

Housing Authority, alleging constructive discharge and  breach of

the  implied  covenant  of  good faith  and  fair  dealing.   The

superior  court granted summary judgment in favor of the  housing

authority,   reasoning  that,  although  Charles  had   presented

sufficient   evidence  to  create  a  genuine   factual   dispute

concerning  whether  his resignation resulted  from  a  sustained

campaign  of harassment directed at him by a coworker, there  was

no  evidence  to  support imputing the coworkers conduct  to  the

housing authority.  But because the evidence submitted by Charles

could  lead  a  reasonable  juror to conclude  that  the  housing

authoritys   executive  director  participated  in  the   alleged

campaign of harassment, or at least knew about the harassment and

allowed it to continue, we reverse the summary judgment order.

II.  FACTS AND PROCEEDINGS

          Interior   Regional  Housing  Authority  is  a   public

corporation  organized  under  AS 18.55.995  to  provide  housing

assistance  to  low income Alaska Natives and their  families  in

interior  Alaska.   Charles became the housing authoritys  tribal

planning director in November 1998.  As tribal planning director,

Charles   supervised   tribal   housing   officers   and   tribal

construction  projects.  At all times, Charless  employment  with

the housing authority was on an at-will basis.

          Charles  tendered his letter of resignation  in  August

1999.   According  to Charles, his resignation resulted  from  an

eight-month campaign of harassment directed at him by the housing

authority.   Charles claims that this campaign of harassment  was

instigated by his coworker Al Woods, the director of the  housing

authoritys  capital improvement projects, after Charles  publicly

corrected Woods on two separate occasions in January 1999.

          In  October  Charles  sued the  housing  authority  for

wrongful termination, alleging constructive discharge and  breach

of  the  implied  covenant of good faith and fair  dealing.   The

housing authority moved for summary judgment.  After holding oral

arguments, the superior court granted summary judgment  in  favor

of  the housing authority.  The court found that although Charles

had  presented sufficient evidence to create a triable  issue  of

fact concerning whether his resignation resulted from a sustained

campaign  of  harassment directed against  him  by  his  coworker

Woods,  there was no evidence to support imputing Woodss  conduct

to the housing authority.  Charles appeals.

III. GENUINE ISSUES OF MATERIAL FACT EXIST CONCERNING WHETHER THE

     HOUSING  AUTHORITY  CONSTRUCTIVELY  DISCHARGED  CHARLES  AND

     BREACHED THE COVENANT OF GOOD FAITH AND FAIR DEALING.

          To  prevail on a wrongful termination claim an employee

must  prove: (1) that the employee was discharged by its employer

and (2) that the employer breached a contract or committed a tort

in connection with the employees termination.1  Charles attempted

to  satisfy these elements by alleging that he was constructively

discharged by the housing authority and, in connection  with  his

constructive  discharge,   the  housing  authority  breached  the

implied covenant of good faith and fair dealing.

          In  granting the housing authoritys motion for  summary

judgment,  the  trial court found that the housing authority  had

established  as  a  matter of law that it had not  constructively

discharged  Charles,  and  therefore,  that  Charless  claim  for

wrongful  termination failed because he could not  establish  the

discharge   element.   Charles  claims  that  this   ruling   was

erroneous.

          We  review a trial courts grant of summary judgment  de

novo, applying our independent judgment,2 and will affirm only if

the  record  presents no genuine issue of material fact  and  the

moving  party is entitled to judgment as a matter  of  law.3   We

must  draw  all reasonable inferences in favor of the  non-moving

party.4

          The  moving party has the burden of proving the absence

of  issues of material fact.5  If the movant makes a prima  facie

showing that he or she is entitled to judgment on the established

facts  as  a  matter of law, the opposing party must  demonstrate

that  a  genuine issue of fact exists to be litigated by  showing

that  it  can produce admissible evidence reasonably  tending  to

dispute   the  movants  evidence.6   To  determine  whether   the

nonmoving  party  can  produce  admissible  evidence  creating  a

genuine   factual  dispute,  we  will  consider  the  affidavits,

depositions, admissions, answers to interrogatories  and  similar

material.7

     A.   Charles  Presented Sufficient Evidence of  Constructive

          Discharge To Overcome Summary Judgment.

          Constructive discharge satisfies the discharge  element

in  a wrongful discharge claim.8  A constructive discharge occurs

when an employer makes working conditions so intolerable that the

employee   is  forced  into  an  involuntary  resignation.9    To

establish  constructive discharge it is not  necessary  that  the

employee actually prove that the employer acted with the specific

intent of causing the employee to resign.10  Rather, the employee

has  the  burden  of  showing that a  reasonable  person  in  the

employees position would have felt compelled to resign.11

          Charless constructive discharge claim alleged that  his

resignation  was  the direct result of a campaign  of  harassment

initiated  by  Al Woods.  Woods was the director of  the  housing

authoritys  capital improvement projects and was responsible  for

overseeing various housing construction projects conducted by the

housing authority. Both Charles and Woods were supervised by  Joe

Wilson, the executive director of the housing authority.

          In  response  to  the  housing  authoritys  motion  for

summary  judgment, Charles presented evidence of eight  incidents

to  support his assertion that the housing authority had  engaged

in  a  sustained campaign of harassment against him: (1)  on  two

occasions  in  January,  after  meetings  during  which   Charles

publicly corrected Woods, Woods told Charles that if he continued

to  correct Woods in public he would make sure that things became

difficult for [Charles]; (2) following these threats, Woods began

subjecting  Charles to unwarranted criticism; (3) as  part  of  a

series of reorganizations in January, Charless responsibility for

tribal  construction  crews was reassigned  to  Woods  at  Woodss

request;  (4)  beginning  in  March, Charles  was  excluded  from

morning  management  meetings between Woods and  Wilson;  (5)  in

July,  the  housing  authority began canceling  Charless  planned

travel,  giving the excuse that he was behind schedule on various

projects,  when [i]n fact, planning activities at this time  were

          on schedule; (6) in August, several of Charless relatives

including  his  daughter, son-in-law, and  three  or  four  other

relatives  of  his  estranged wife were fired  because  of  their

relation to him; (7) Woods and Wilson falsely accused Charles  of

nepotism in arranging to have these relatives hired; (8) although

on  August 19 Charles gave Wilson verbal notice that he would  be

resigning  in  thirty days, six days later Wilson called  him  at

home and directed him to clean out his desk by Friday, August 27.

          Contrary  to  the  housing  authoritys  assertion,  the

record  offers  admissible  evidence  addressing  each  of  these

alleged incidents.  Each incident finds support in one or more of

the  following  sources:  Charless affidavit, Wilsons  affidavit,

Charless   deposition,  Wilsons  deposition,   or   the   housing

authoritys answer to Charless complaint.12

          We  have  previously  recognized  that  a  constructive

discharge  may  result  from a sustained campaign  of  harassment

against an employee.13  In Cameron v. Beard, a former employee for

the  state department of transportation alleged that he had  been

constructively discharged as a result of a sustained campaign  of

harassment  by  his  supervisors.14   At  trial,  the   plaintiff

presented  evidence  of  a campaign to  vote  him  out  as  union

representative, unjustified negative job performance evaluations,

statements  by his supervisors that he would never  be  promoted,

and  a  supervisors  warning that he should  do  something  quick

because  he was about to be fired.15  We upheld the jurys finding

of  constructive discharge, reasoning that there  was  sufficient

evidence in the record to support the jury verdict on this issue.16

          Similarly,  in  Finch  v.  Greatland  Foods,  Inc.   we

addressed  a  former  employees appeal from the  superior  courts

entry  of  summary  judgment  against  him  on  his  constructive

discharge  claim.17  The plaintiff had specified  four  incidents

supporting  his  assertion that his employer  had  engaged  in  a

sustained  campaign  of  harassment  against  him.   These   four

incidents  included (1) repeatedly criticizing the plaintiff  for

          taking family leave, (2) reassigning the plaintiffs lucrative

distribution route to a junior employee and forcing the plaintiff

to  take  a  less  profitable  route,  (3)  after  switching  the

plaintiffs  route,  changing  the  pay  system  in  a  way   that

negatively  affected only the plaintiffs income,  and  (4)  after

switching the plaintiff to commission pay, failing to support his

customer service efforts.18  We reversed the superior courts grant

of summary judgment in favor of the employer, reasoning that

          [a]lthough  any  one  of these  events  alone
          would  not  support a claim for  constructive
          discharge, when viewed in the totality and in
          the  light most favorable to [the plaintiff],
          .  . . they could lead a reasonable person in
          [the  plaintiffs] position to  conclude  that
          [his   employer]  had  pursued  a   sustained
          campaign   of   harassment  that   ultimately
          compelled him to resign.[19]
          
          Here,  the  superior  court  found  that  Charles   had

presented sufficient evidence to raise a triable issue of fact as

to  whether there was a campaign of harassment directed at him by

his  coworker Woods; but, the superior court granted the  housing

authoritys  motion  for summary judgment because  it  found  that

there  was  no evidence to support holding the housing  authority

liable  for  Woodss  conduct.  The superior court  reasoned  that

because  Woods had no supervisory power over Charles, his actions

could  not  be  imputed  to  the housing  authority  absent  some

evidence  that  Woods  was  doing the  bidding  of  [the  housing

authority].

          But  Charles  did  not need to prove that  the  housing

authority,  or  its  executive  director,  Wilson,  directed  the

harassment  against  him.  Rather, the question  is  whether  the

housing  authority (or Wilson) either knew or should  have  known

about  the  harassment  and failed to take  reasonable  steps  to

prevent  it.   We have previously acknowledged that an  employers

lack  of  care can subject them to direct liability  without  the

necessity of involving respondeat superior.20  Other courts  have

also acknowledged this rule that [a]n employer . . . as an entity

          may also be held directly liable for its own conduct if the

employer knows or has reason to know that unlawful harassment  is

occurring  or is likely to occur and fails to prevent or  correct

the behavior.21  So Charles did not need to show that the housing

authority  (or Wilson) intended or directed Charless  harassment;

he  needed  only to show that the housing authority  (or  Wilson)

either knew or should have known about the harassment.

          Viewing  the  evidence in the light most  favorable  to

Charles, we find that the evidence could lead a reasonable  juror

to  conclude that the housing authoritys executive director,  Joe

Wilson, directly participated in a campaign of harassment against

Charles,  or  at least knew about it and allowed it to  continue.

The  record  indicates  that  it was Wilson  who  actually  fired

Charless relatives and it was Wilson who called Charles  at  home

and  told  him to clean out his desk by Friday, August 27   about

three  weeks  before  the effective date  of  Charless  announced

resignation.  Furthermore, the exclusion of Charles from  morning

management  meetings between Woods and Wilson,  the  shifting  of

responsibility  for  tribal construction crews  from  Charles  to

Woods, and the cancellation of Charless planned travel could  not

have occurred without Wilsons authorization.

          Because  this evidence, when viewed in the  light  most

favorable  to Charles, raises a triable issue of fact  concerning

whether Wilson directly participated in, or at least knew of  and

failed to prevent or correct, the campaign of harassment directed

against Charles, we find that the superior court erred by holding

as   a  matter  of  law  that  the  housing  authority  did   not

constructively discharge Charles.

     B.   Charles   Presented  Sufficient  Evidence  To  Overcome

          Summary  Judgment  on  His  Claim  for  Breach  of  the

          Covenant of Good Faith and Fair Dealing.

          The   record  also  indicates  that  Charles  presented

sufficient  evidence to raise a triable issue  of  material  fact

concerning whether the housing authority breached the covenant of

good faith and fair dealing.  The covenant of good faith and fair

dealing is implied in all at-will employment contracts.22  We have

held  that  [t]his  covenant  does not  lend  itself  to  precise

definition,  but  it requires at a minimum that an  employer  not

impair  the right of an employee to receive the benefits  of  the

employment agreement23 and that the employer treat like employees

alike.24

          An   employer   can  commit  either  an  objective   or

subjective  breach  of the covenant.25  The  employer  commits  a

subjective breach  when it discharges an employee for the purpose

of depriving him or her of one of the benefits of the contract. 26

The  objective aspect of the covenant requires that the  employer

act  in a manner that a reasonable person would regard as fair.27

We  have previously explained that examples of objective breaches

of  the  covenant  would  include disparate  employee  treatment,

terminations on grounds that were unconstitutional,  and  firings

that violated public policy.28

          Charless  claim focuses on the objective  component  of

the  covenant.  Specifically, Charles contends that  the  housing

authority failed to treat similarly situated employees alike with

regards  to  the enforcement of its own nepotism  policy.29   The

housing authoritys nepotism policy provided in part:

          No  person shall be hired if a member of that
          persons  immediate family is  employed  in  a
          supervisory  capacity or  as  the  Department
          Head  in  the [housing authority]  department
          being  applied to.  The term immediate family
          includes father, mother, husband, wife, sons,
          daughters,  brothers, sisters,  grandparents,
          grandchildren,  mother-in-law, father-in-law,
          aunts  or  uncles.  The term persons employed
          in  a supervisory capacity or as a Department
          Head  includes those persons who have overall
          administrative    responsibility    for     a
          department[.]
          
Charles  argues  that his relatives were fired  based  on  untrue

allegations  of nepotism while Woods was allowed to  violate  the

companys nepotism policy with impunity.

          Viewing  the  evidence in the light most  favorable  to

Charles, we find that a reasonable juror could conclude that  the

housing  authority  applied a double standard  in  enforcing  its

nepotism  policy.   In  its  answer to  Charless  complaint,  the

housing  authority  admits  that  the  employment  of  [Charless]

relatives  did  not  violate [the housing  authoritys]  Personnel

Policy  provision regarding nepotism since he was  neither  their

supervisor nor the head of the department within which they  were

employed.   Charless  allegation that Woodss  son,  brother,  and

stepson  were  improperly employed within Woodss  department  was

also  supported by the admissions of the housing authority.   The

housing  authority  admitted that these relatives  were  employed

under  the direct supervision of Charles Huntington.  The housing

authoritys   organizational  chart  makes  clear   that   Charles

Huntington,  and  therefore Woodss relatives,  were  employed  in

Woodss  department.   This evidence, viewed  in  the  light  most

favorable  to Charles, could lead a reasonable jury  to  conclude

that  the  housing  authority had violated the  covenant  in  its

unequal enforcement of the nepotism policy.

          Moreover,  as  we  have previously  discussed,  Charles

presented  admissible evidence to support his broader claim  that

he  was  subjected to a sustained campaign of harassment  at  the

housing  authority.  As we have explained, the covenant  of  good

faith  and  fair  dealing  requires  that  employers  treat  like

employees  alike.30   Subjecting an  employee  to  a  pattern  of

harassing  conduct could itself amount to disparate treatment  in

breach  of  the  covenant of good faith and fair  dealing.31   We

therefore conclude that Charles presented sufficient evidence  to

withstand  summary  judgment  on  his  claim  that  the   housing

authority  breached the implied covenant of good faith  and  fair

dealing.32

IV.  CONCLUSION

          Because  a  reasonable juror could  conclude  that  the

housing authoritys executive director either participated in,  or

knew  about, the alleged campaign of harassment against  Charles,

we conclude that Charles presented sufficient evidence to raise a

genuine  issue  of  material  fact  concerning  whether  he   was

constructively  discharged  by the housing  authority.   We  also

conclude  that Charles presented sufficient evidence to create  a

triable  issue  of material fact concerning whether  the  housing

authority  breached the implied covenant of good faith  and  fair

dealing.   Therefore,  we REVERSE the superior  courts  entry  of

summary judgment in favor of the housing authority and REMAND for

further proceedings.  Because the housing authority is no  longer

the prevailing party, the award of attorneys fees is VACATED.

_______________________________
     1     See, e.g., Starzynski v. Capital Pub. Radio, Inc., 105
Cal. Rptr. 2d 525, 530 (Cal. App. 2001) ( [A]fter establishing  .
.  . discharge, an employee must independently prove a breach  of
contract or tort in connection with the employment termination in
order to obtain damages for wrongful discharge. ) (quoting Turner
v. Anheuser-Busch, Inc., 876 P.2d 1022, 1030 (Cal. 1994)); Balmer
v. Hawkeye Steel, 604 N.W.2d 639, 642 (Iowa 2000) (quoting same).

     2     See, e.g., Christensen v. NCH Corp., 956 P.2d 468, 474
(Alaska 1998).

     3    See, e.g., id.

     4     Lincoln v. Interior Regl Hous. Auth., 30 P.3d 582, 586
(Alaska 2001).

     5    Id.

     6    French v. Jadon, Inc., 911 P.2d 20, 23 (Alaska 1996).

     7     See Broderick v. Kings Way Assembly of God Church, 808
P.2d 1211, 1215 (Alaska 1991).

     8     City  of  Fairbanks v. Rice, 20 P.3d  1097,  1102  n.7
(Alaska 2000).

     9    Cameron v. Beard, 864 P.2d 538, 547 (Alaska 1993).

     10    Id.

     11    Id.

     12     See  French v. Jadon, Inc., 911 P.2d 20,  24  (Alaska
1996)  ([T]he  court  will consider the affidavits,  depositions,
admissions,  answers to interrogatories and similar  material  to
determine  .  .  .  whether  any of  the  [evidentiary]  material
suggests  the  existence of any . . . triable  genuine  issue  of
material fact. ) (quoting Broderick, 808 P.2d at 1215).

     13    See Ford v. Alfaro, 785 F.2d 835, 841 (9th Cir. 1986);
Finch v. Greatland Foods, Inc., 21 P.3d 1282, 1286 (Alaska 2001);
Cameron,  864  P.2d  at 547; Sterling Drug Inc.  v.  Oxford,  743
S.W.2d  380,  386  (Ark. 1988); Thompson v. Tracor  Flight  Sys.,
Inc., 104 Cal. Rptr. 2d 95, 104 (Cal. App. 2001).

     14    864 P.2d at 540-41.

     15    Id. at 548.

     16    Id.

     17    21 P.3d at 1286.

     18    Id.

     19    Id.

     20     Fruit  v. Schreiner, 502 P.2d 133, 140 (Alaska  1972)
(Lack  of care on the employers part would subject [the employer]
to direct liability without the necessity of involving respondeat
superior.).

     21    Wille v. Hunker Labs., Inc., 724 N.E.2d 492 (Ohio App.
1998);  see  also Erdmann v. Tranquility Inc., 155  F.  Supp.  2d
1152,  1163  (N.D.  Cal. 2001) ([C]onstructive  discharge  occurs
where  the  employer  either intentionally created  or  knowingly
permitted   working  conditions  that  are  so   intolerable   or
aggravated  at  the  time  of the employees  resignation  that  a
reasonable employer would realize that a reasonable person in the
employees  position  would  be compelled  to  resign.)  (emphasis
added).

     22    See, e.g., Holland v. Union Oil Co. of Cal., Inc., 993
P.2d  1026, 1032 (Alaska 1999); French v. Jadon, Inc.,  911  P.2d
20,  24  (Alaska  1996); Revelle v. Marston, 898  P.2d  917,  926
(Alaska 1995).

     23    Jones v. Cent. Peninsula Gen. Hosp., 779 P.2d 783, 789
(Alaska 1989).

     24    Id. at 789 n.6.

     25     See, e.g., Revelle, 898 P.2d at 927 (An employer  may
not  only  breach  the covenant of good faith  and  fair  dealing
through  improper  motive  or  intent  but  may  also  commit  an
objective breach of the covenant, by failing to act in  a  manner
which  a  reasonable  person would regard  as  fair.  )  (quoting
Luedtke  v. Nabors Alaska Drilling, Inc. (Luedtke II),  834  P.2d
1220, 1224 (Alaska 1992)).

     26     Finch v. Greatland Foods, Inc., 21 P.3d 1282, 1286-87
(Alaska  2001)  (quoting Ramsey v. City of Sand Point,  936  P.2d
126, 133 (Alaska 1997)).

     27    Id. at 1286-87; Holland, 993 P.2d at 1032; Ramsey, 936
P.2d at 133.

     28    See ERA Aviation, Inc. v. Seekins, 973 P.2d 1137, 1139
(Alaska 1999); Luedtke II, 834 P.2d at 1224.

     29     On  several occasions we have noted that an employers
failure to treat like employees alike may constitute a breach  of
the  implied  covenant  of  good faith  and  fair  dealing.   See
Holland,  993 P.2d at 1033; Belluomini v. Fred Meyer  of  Alaska,
Inc.,  993 P.2d 1009, 1012-13 (Alaska 1999); Alaska Marine Pilots
v. Hendsch, 950 P.2d 98, 109 (Alaska 1997).

     30    Jones, 779 P.2d at 789 n.6.

     31     See Luedtke II, 834 P.2d at 1224 (noting that failure
to  treat like employees alike and firings in violation of public
policy both constitute objective violations of the covenant).

     32     Charles also contends that the court erred by placing
the  burden  on him, the nonmoving party, to make a  prima  facie
showing  of  breach  of [the] covenant of  good  faith  and  fair
dealing.   Our  decision makes it unnecessary  to  consider  this
argument.