5 Written Contracts 5 Written Contracts

Written contracts were long the exception in private-sector employment, but that may be changing. Employers are increasingly asking employees to sign contracts that govern only part of the employment relationship, such as arbitration agreements. But contracts for just-cause termination remain rare and tend to exist only when the employee has sufficient bargaining power. These include the collective bargaining context where unionized employees (through their union representatives) negotiate a written “collective bargaining agreement." CBA, which we will briefly study later in this course, cover the relevant “bargaining unit” and are often very detailed. High-level employees, including executives and upper-level managers, may be able to navigate a for-cause contract. Sales employees and other workers whose compensation fluctuates based on performance may also have written contracts.

In this unit, we will consider how to identify when a written contract is for cause and how courts deal with contractual ambiguities.

5.1 Hinkel v. Sataria Distribution & Packaging, Inc. 5.1 Hinkel v. Sataria Distribution & Packaging, Inc.

Mark HINKEL, Appellant-Plaintiff, v. SATARIA DISTRIBUTION & PACKAGING, INC., Appellee-Defendant.

No. 49A04-0908-CV-473.

Court of Appeals of Indiana.

Feb. 1, 2010.

*767Geoffrey S. Lohman, Fillenwarth Den-nerline Groth & Towe, LLP, Indianapolis, IN, Attorney for Appellant.

Brian G. Nuedling, Constangy Brooks & Smith, LLP, Milwaukee, WI, Attorney for Appellee.

OPINION

VAIDIK, Judge.

Case Summary

The appellant, Mark Hinkel, was hired to work for the appellee, Sataria Distribution and Packaging, Inc. ("Sataria"). Hinkel was allegedly promised a year's worth of salary and insurance coverage if he were ever terminated involuntarily, but his written employment contract did not provide for severance pay or post-employment benefits. Hinkel was soon terminated, and he did not receive the severance package he says he was promised. Hinkel sued for breach of contract and/or promissory estoppel. The trial court entered summary judgment in favor of Sataria. We hold that (1) Hinkel's written employment contract is a completely integrated agreement which precludes consideration of any prior or contemporaneous oral promises, (2) to the extent the severance agreements were made after the execution of the written contract, they were not supported by additional consideration, and (3) Hinkel is unable to sustain his claim of promissory estoppel. We affirm.

Facts and Procedural History

Hinkel was employed by Refractory Engineers, Inc. and Ceramic Technology, Inc. John Jacobs was the owner of Sataria. In late August or September 2005, Hinkel *768and Jacobs met to discuss working together. Jacobs offered Hinkel a job at Sataria. Hinkel had reservations. Jacobs told him, "Mark, are you worried that Pll f* * * you? If so, and things don't work, I'll pay you one (1) year's salary and cover your insurance for the one (1) year as well. But let me make it clear, should you decide this is not for you, and you terminate your own employment, then the agreement is off." Appellant's App. p. 12-18. Jacobs later sent Hinkel the following written job offer:

Dear Mark,
This is written as an offer of employment. The terms are as described below:
. Annual Compensation: $120,000 >
. Work Location: Belmont Facility po
Initial Position: Supervisor Receiving Team go
. Start Date: . Paid Vacation: 08/19/2005 To be determined guge
. Health Insurance: Coverage begins 09/01/2005 pending proper Enrollment submission g

Please sign and return.

Id. at Ti. Hinkel signed the offer and resigned from his other employers. He began working at Sataria in September 2005. According to Hinkel, Jacobs reiterated the severance promise again in November 2005 and December 2005.

Sataria terminated Hinkel's employment involuntarily on January 23, 2006. Sataria paid Hinkel six weeks of severance thereafter. Hinkel brought this action for breach of contract and/or promissory es-toppel against Sataria. He claimed that Sataria owed him the severance package that Jacobs promised. Sataria moved for summary judgment. The trial court granted Sataria's motion. Hinkel now appeals.1

Discussion and Decision

The law of summary judgment is well established. The purpose of summary judgment under Indiana Trial Rule 56 is to terminate litigation about which there can be no factual dispute and which may be determined as a matter of law. Bushong v. Williamson, 790 N.E.24 467, 474 (Ind.2003). On appeal, our standard of review is the same as that of the trial court: summary judgment is appropriate only where the evidence shows there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Williams v. Riverside Cmty. Corrs. Corp., 846 N.E.2d 738, 743 (Ind.Ct.App. 2006), tran. denied. We construe all facts and reasonable inferences drawn from those facts in favor of the nonmoving party. Id. On appeal, the trial court's order granting or denying a motion for summary judgment is cloaked with a presumption of validity. Sizemore v. Erie Ins. Exch., 789 N.E.2d 1037, 1038 (Ind.Ct.App.2008). A party appealing from an order granting summary judgment has the burden of persuading the appellate tribunal that the decision was erroneous. Id. at 1038-39. However, where the facts are undisputed and the issue presented is a pure question of law, we review the matter de novo. Crum v. City of Terre Haute ex rel. Dep't of Redev., 812 N.E2d 164, 166 (Ind.Ct. App.2004).

I. Breach of Contract Claim

According to Hinkel, Jacobs orally promised him a year's salary and insurance coverage if he were ever involuntarily terminated. Sataria argues that any alleged oral promises are barred from consideration by the parol evidence rule.

The parol evidence rule provides that "[wlhen two parties have made a contract and have expressed it in a writing to which they have both assented as the complete and accurate integration of that contract, evidence ... of antecedent understandings and negotiations will not be admitted for the purpose of varying or contradicting the writing." Dicen v. New Sesco, Inc., 839 N.E.2d 684, 688 (Ind.2005) (quoting 6 Ar*769thur Linton Corbin, Corbin on Contracts § 573 (2002 reprint)) (emphasis removed). This rule "effectuates a presumption that a subsequent written contract is of a higher nature than earlier statements, negotiations, or oral agreements by deeming those earlier expressions to be merged in to or superseded by the written document." 11 Richard A. Lord, Williston on Contracts § 38:1 (4th ed.1999) (footnote omitted).

The first step when applying the parol evidence rule is determining whether the parties' written contract represents a complete or partial integration of their agreement. See Restatement (Second) of Contracts §§ 209, 210 (1981). If the contract is completely integrated, constituting a final and complete expression of all the parties' agreements, then evidence of prior or contemporaneous written or oral statements and negotiations cannot operate to either add to or contradict the written contract. Franklin v. White, 498 N.E.2d 161, 167 (Ind.1986). The preliminary question of integration, either complete or partial, requires the court to hear all relevant evidence, parol or written. Id. "Whether a writing has been adopted as an integrated agreement is a question of fact to be determined in accordance with all relevant evidence." Restatement (See-ond) of Contracts §§ 209 emt. c. Nevertheless, what is ordinarily a question of fact may become a question of law "where the facts are undisputed and only a single inference can be drawn from those facts." Jones v. Ind. Bell Tel. Co., 864 N.E.2d 1125, 1127 (Ind.Ct.App.2007) (breach of duty); see also Hamilton v. Ashton, 846 N.E.2d 309, 316 (Ind.Ct.App.2006) (proximate cause), clarified on reh'g, 850 N.E.2d 466, trans. denied. "[The absence of an integration clause is not conclusive as to whether parties intend a writing to be completely integrated." Sees v. Bank One, Ind., N.A., 839 N.E.2d 154, 163 n. 7 (Ind.2005) (Boehm, J., concurring and dissenting) (citing Restatement (Second) of Contracts § 209 emt. b).

In addition,

The test of [parol evidence] admissibility is much affected by the inherent likelihood that parties who contract under the cireumstances in question would simultaneously make both the agreement in writing which is before the court, and also the alleged parol agreement. The point is not merely whether the court is convinced that the parties before it did in fact do this, but whether reasonable parties so situated naturally would or might obviously or normally do so.... The vast majority of courts assessing the admissibility of parol evidence at common law apply this test. This test is commonly known by the adverbs used by the courts which apply it, and might be variously called the "naturally" test, the "naturally and normally" test, the "ordinarily" test, or any of a host of words used by the courts to indicate that parties similarly situated might reasonably have believed it appropriate to keep the two agreements separate. Moreover the test can be stated in the affirmative or the negative; either way the key question is the same. Thus, one way to ask the question is whether the nature of the collateral agreement was such that, if the parties had agreed to it, they would naturally have included it in their writing. Asked in this way, if the answer is that they would have, and they did not, they engaged in "unnatural" behavior, and evidence of the alleged agreement is inadmissible.

11 Williston on Contracts § 38:25 (footnotes omitted); see also Steinke v. Sungard Fin. Sys., Inc., 121 F.3d 768, 770 (1st Cir.1997) ("In determining whether an agreement is integrated, a court must *770compare both the alleged oral and written agreements and must determine whether the parties, situated as were the ones to the contract, would naturally and normally include the one in the other if it were made. If the alleged oral and written agreements relate to the same subject matter and are so interrelated that both would be executed at the same time and in the same contract, the seope of the subsidiary agreement must be taken to be covered by the writing. In such case, parol evidence to vary, modify or supersede the written contract is inadmissible in evidence." (citations and quotations omitted)).

Here, Jacobs and Hinkel negotiated the terms of Hinkel's employment before completing their written contract. Jacobs allegedly promised Hinkel that he would receive one year of salary and benefits if he were ever terminated involuntarily. The parties then executed their written agreement. The written employment offer specified Hinkel's compensation, work location, title, start date, and the date on which his insurance coverage would begin. It did not provide that Hinkel would receive severance pay or benefits following termination. Hinkel signed the letter and began working at Sataria. In light of all the relevant evidence, we find as a matter of law that Hinkel's contract represented a complete integration of the parties employment agreement. Jacobs allegedly promised Hinkel a severance package, but the written contract enumerates both compensation and insurance coverage while saying nothing of post-employment salary and/or benefits. The offer leaves one term to be decided-paid vacation-but the contract imports on its face to be a complete expression with respect to salary and insurance. And since a lucrative severance provision would "naturally and normally" be included in an employment contract, its glaring omission here further supports the conclusion that Hinkel's written contract superseded any alleged prior oral promises. We hold that the written contract constituted a final representation of the parties' agreement, and any contemporaneous oral agreements that the parties made as to severance are not subject to interpretation.

To the extent Jacobs may have promised Hinkel a severance package after their written contract was executed, an additional question is whether Jacobs's promise could have constituted a valid contract modification. "The modification of a contract, since it is also a contract, requires all the requisite elements of a contract." Hamlin v. Steward, 622 N.E.2d 535, 539 (Ind.Ct.App.1993). "A written agreement may be changed by a subsequent one orally made, upon a sufficient consideration." Id. Consideration consists of either a benefit to the promisor or a detriment to the promisee. Id. In other words, consideration requires a bargained-for exchange. Id. A promise is also valuable consideration, and an exchange of mutual promises is consideration which supports modification of a contract. Id.

Here, if Jacobs promised Hinkel a severance package after the written employment contract was executed, there is no evidence that Hinkel provided additional consideration in exchange for the promise. Hinkel argues that he had to agree "to continue working for Sataria" and "to not voluntarily resign his employment." Appellant's Br. p. 15. But Hinkel had assumed those duties and employment obligations as consideration for the original agreement. See Buschman v. ADS Corp., 782 N.E.2d 423, 480 (Ind.Ct.App.2008) ("Busehman's work at ADS was the consideration for ADS's offer embodied in the Second Offer Letter and is not new consideration."). Any subsequent promise by Jacobs respecting severance was not sup*771ported by an independent, bargained-for exchange. Accordingly, Jacobs's alleged oral promises could not have constituted valid modifications of Hinkel's employment contract.

For the foregoing reasons, Hinkel has failed to raise a genuine issue of material fact on his breach of contract claim, and the trial court properly granted summary judgment in favor of Sataria.

II. Promissory Estoppel Claim

Hinkel has also alleged promissory estoppel as a basis for recovery in this case. The doctrine of promissory es-toppel provides that a "promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by the enforcement of the promise." Restatement (Second) of Contracts § 90(1); accord Jarboe v. Landmark Cmty. Newspapers of Ind., Inc., 644 N.E.2d 118, 121 (Ind.1994). Promissory estoppel permits recovery where no contract in fact exists. Ind. Bureau of Motor Vehicles v. Ash, Inc., 895 N.E.2d 359, 367 (Ind.Ct.App.2008), reh'g denied. The elements of promissory estoppel are: (1) a promise by the promissor; (2) made with the expectation that the promisee will rely thereon; (3) which induces reasonable reliance by the promisee; (4) of a definite and substantial nature; and (5) injustice can be avoided only by enforcement of the promise. Brown v. Branch, 758 N.E.2d 48, 52 (Ind.2001). An employee may invoke the doctrine of promissory estoppel in certain instances. Coutee v. Lafayette Neighborhood Hous. Servs., Inc., 792 N.E.2d 907, 911 (Ind.Ct.App.2003). To do so, the employee must assert and demonstrate that the employer made a promise to the employee, that the employee relied on that promise to his detriment, and that the promise otherwise fits within the Restatement test for promissory estoppel. Id.

Hinkel claims that Jacobs's severance promise induced him to leave his previous employers and "give] up the security associated therewith." Appellant's Br. p. 17. But Hinkel was provided with a period of employment at Sataria, a substantial salary, and six weeks of severance. Hinkel has not shown an injury so independent and severe that injustice could only be avoided by enforcement of Jacobs's alleged promise. See Whiteco Indus., Inc. v. Kopani, 514 N.E.2d 840, 845 (Ind.Ct.App.1987). He has therefore failed to establish a genuine issue of material fact on his promissory estoppel theory, and the trial court properly entered summary judgment in favor of Sataria on this claim as well.

Affirmed.

RILEY, J., concurs.

CRONE, J., dissents with separate opinion.

CRONE, Judge,

dissenting.

I respectfully dissent because I disagree with the majority's conclusion that Jacobs's oral promise to Hinkel regarding a severance package is "barred from consideration by the parol evidence rule." Op. at 768. I do so for two reasons.

First, I believe that a genuine issue of material fact exists regarding whether the parties intended for Jacobs's written job offer to Hinkel to be completely integrated, i.e., a "final and complete expression of all the parties' agreements[.]1 Id. at 769 (emphasis added) Although not conclu*772sive, the offer-a one-page document with six bullet points for a position paying $120,000 per year-does not contain an integration clause. More persuasive is its statement that Hinkel's vacation terms were yet to be determined, which indicates to me that the parties had not yet reached agreement on that issue. Based on the foregoing, a factfinder reasonably could conclude that the offer is more akin to a memorandum of understanding and represents only a partial integration of the parties' agreements, and that therefore the parol evidence rule would not apply to bar consideration of Jacobs's oral promise regarding the severance package.

Second, the terms of the severance package do not vary from or contradict the terms of the written offer, but merely cover that which was not covered in the offer.2 As such, even assuming that the offer is completely integrated, the terms of the severance package would not be barred by the parol evidence rule. See Malo v. Gilman, 177 Ind.App. 365, 368, 379 N.E.2d 554, 557 and n. 5 (1978) ("[P larol evidence may be admitted to supply an omission in the terms of the contract.... Using parol evidence to supply an omission will not modify the written agreement, but merely adds to it."). Therefore, I would reverse the trial court's grant of summary judgment in favor of Sataria and remand for further proceedings.

5.2 Benson v. AJR, Inc. 5.2 Benson v. AJR, Inc.

599 S.E.2d 747

Danny L. BENSON, Plaintiff Below, Appellant v. AJR, INC., a West Virginia Corporation, and John M. Rhodes, Defendants Below, Appellees.

No. 31542.

Supreme Court of Appeals of . West Virginia.

Submitted Feb. 25, 2004.

Decided April 16, 2004.

Opinion of Chief Justice Maynard July 6, 2004.

Opinion of Justice Starcher July 8, 2004.

Starcher, J., filed a separate concurring opinion.

Maynard, C.J., filed an opinion concurring in part and dissenting in part.

*325Walt Auvil, Employment Law Center, Par-kersburg, for the Appellant.

Niall A. Paul, Erie E. Kinder, Spilman Thomas & Battle, P.L.L.C., Charleston, for the Appellees.

PER CURIAM:

Danny L. Benson appeals from the July 23, 2002, order of the Circuit Court of Wood County granting summary judgment to the Appellees, AJR, Inc. (“AJR”) and John M. Rhodes, in connection with the breach of employment contract and invasion of privacy claims Appellant asserted against Appellees. Upon our full review of this matter, we determine that there is a genuine issue of material fact concerning the basis for Mr. Rhodes’ decision to terminate Mr. Benson’s employment with AJR. Accordingly, the grant of summary judgment was improper and the decision of the lower court must be reversed to permit this factual issue to be resolved by a jury. With regard to the lower court’s decision to grant summary judgment on Appellant’s false light invasion of privacy claim, we find no error and accordingly, affirm.

I. Factual and Procedural Background

AJR is a small heavy manufacturing business engaged in the manufacture and welding of truck beds. At the time when Appellant was first employed by AJR as a general welder in 1990, the company was owned by three individuals: Jackie L. Benson; Robert W. Benson; and Patricia Benson. Appellant is the son of Jackie Benson. On May 1,1997, Appellant was promoted to supervisor and was assigned primary responsibility over three aspects of the company’s operations, one of which was safety. In his supervisory position, Appellant was charged with the responsibility for directing and leading the company’s safety programs and ensuring that AJR’s safety rules were both observed and enforced.

During the summer of 1997, the three AJR shareholders decided to sell the company to an employee, Appellee John M. Rhodes.1 As part of the sales transaction, Mr. Rhodes agreed to enter into an employment agreement with Appellant whereby Mr. Benson would be guaranteed employment for a period of eight years beginning on August 29, 1997.2 While AJR had the right to ter-*326mínate Appellant with only one day’s written notice under this agreement, it was required to continue paying Mr. Benson his salary for the balance of the eight-year term of employment in the absence of three specified conditions. Those conditions were: (a) dishonesty; (b) conviction of a felony; and (e) voluntary termination of the agreement by Appellant.3

Within less than a month after the execution of the employment agreement, Appellant acknowledged in writing his receipt of an employee manual which specified certain acts that were grounds for termination. Those grounds included the sale, possession, or use of controlled substances while on the job, during working hours, or while on company business. At the end of September 1997, concurrent with his receipt of the employee manual, Appellant signed a consent form permitting his employer to conduct random controlled substance tests.

On March 2, 1998, a drug test was administered to the employees of AJR. The results of the drug testing revealed that Appellant had more than three times the limit utilized by the United States Department of Transportation (“DOT”)4 to establish drug use and impairment. Between the time when the drug test was administered and the results were made available, Mr. Rhodes conducted meetings with various AJR personnel during which he inquired of those in attendance whether anyone was aware of an employee who was using illegal drugs or who was arriving at work with illegal drugs or alcohol in their system. Appellant attended one of those meetings and admits that he did not respond to this question despite personal knowledge5 that his drug test would come back positive.6

Along with eleven other employees who also tested positive for drug use, Appellant was terminated from the employ of AJR on March 6, 1998. AJR prepared two different termination forms in connection with Appellant’s dismissal from the company. The first of the two forms indicated that Mr. Benson had resigned from his employment.7 The second of the two termination forms lists a different reason for termination — “controlled substance testing” and “tested positive for cocaine.” 8

On March 4, 1999, Appellant filed a complaint in the circuit court in which he alleged two causes of action: breach of contract and false light invasion of privacy. After hearing argument on cross motions for summary judgment, the lower court ruled in favor of Appellees by order entered on July 23, 2002. It is from this order awarding summary *327judgment to AJR and Mr. Rhodes that Appellant seeks relief.

II. Standard of Review

It is well-established that our review involving orders granting summary judgment is de novo. See Syl. Pt. 1, Painter v. Peavy, 192 W.Va. 189, 451 S.E.2d 755 (1994). “Summary judgment is appropriate where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, such as where the nonmoving party has failed to make a sufficient showing on an essential element of the ease that it has the burden to prove.” Id. at 190, 451 S.E.2d at 756, syl. pt. 4. As we recognized in syllabus point six of Aetna Casualty & Surety Co. v. Federal Insurance Co., 148 W.Va. 160, 133 S.E.2d 770 (1963), “[a] party who moves for summary judgment has the burden of showing that there is no genuine issue of fact and any doubt as to the existence of such issue is resolved against the movant for such judgment.” With these standards in mind, we proceed to determine whether the lower court was in error in granting summary judgment to Appellees AJR and Mr. Rhodes.

III. Discussion

A. Breach of Employment Contract

At the center of this dispute is whether AJR is required to comply with the salary payment obligation contained in the employment agreement. Under the terms of the agreement, in the event AJR decided to terminate Mr. Benson, the company was required to pay Appellant the salary that was in effect on August 29, 1997, absent a dismissal that was based on dishonesty, conviction of a felony, or if Mr. Benson voluntarily terminated the employment agreement. Appellant contends that the lower court erred in its determination that the basis for AJR’s termination of Mr. Benson was dishonesty. Arguing that the circuit court wrongly adopted an overly broad definition of dishonesty, Appellant maintains that drug use and dishonesty are not synonymous and that he was not terminated on grounds of dishonesty.

To resolve the critical question of whether Appellant’s positive drug test fell within the parameters of “dishonest” conduct, the trial court defined the term “dishonesty” by referring to entries in Webster’s Dictionary and Black’s Law Dictionary.9 Relying on these generalized definitions, the lower court concluded that Appellant’s “actions in failing a drug test and arriving at work with drugs in his system demonstrates a lack of integrity, probity, or adherence to a code of moral values.” Rather than limiting its analysis to just the definition of “dishonesty,” however, the circuit court included a listing of various definitions of “integrity” and found that “[a]etions which lack integrity are, by definition, dishonest.” After weighing these two definitions in essentially pari materia, the trial court ruled that “[plaintiff’s positive drug test, in light of all the facts and circumstances of the case, demonstrates dishonesty and a lack of integrity.”10

In marked contrast to the trial court’s willingness to define the term “dishonesty” within the meaning of the employment contract at issue, we recognize the futility of attempting to fashion a “one size fits all” definition for such term. Dishonesty, like any term that has significance in a given contract, must be defined based on the subject matter of the contract and the intent of the document’s drafters. See Oresta v. Romano Bros., 137 W.Va. 633, 644, 73 S.E.2d 622, 628 (1952) (recognizing “general rule” *328that “words in a contract will be given their usual and primary meaning at the time of the execution of the contract”) (citing 12 Am. Jur., Contracts § 236). We note, however, that it has been observed that “[dishonesty, unlike embezzlement or larceny, is not a term of art.” Gitelson v. Du Pont, 17 N.Y.2d 46, 268 N.Y.S.2d 11, 215 N.E.2d 336, 338-39 (1966). More often than not, the issue of whether conduct qualifies as dishonest is determined to be a question best resolved by a jury. See Wilson v. Neuhoff Bros. Packers, 442 S.W.2d 470, 474 (Tex.Civ.App.1969) (discussing Fidelity & Dep. Co. v. Bates, 76 F.2d 160, 167 (8th Cir.1935)); accord Jacobs & Co. v. Fidelity & Dep. Co., 202 F.2d 794, 798 (7th Cir.1953).

In this ease, the record evidences Mr. Benson’s admission that he was dishonest in connection with his failure to truthfully answer the question posed by Mr. Rhodes with regard to his awareness of drug use by any AJR employees. Given Appellant’s clear admission of dishonesty, we proceed to determine what impact, if any, this admission of dishonesty has on the case at hand.

The lower court appears to have assumed that upon finding conduct that qualified as dishonest, this case could be resolved solely on legal grounds without requiring the assistance of a jury. The trial court reasoned that “[n]o reasonable jury could find that Plaintiffs failing of the drug test, under all the circumstances present herein, was not dishonest behavior.” Critically, however, a factual issue that must be determined for purposes of ascertaining whether AJR was required under the terms of the contract to pay Appellant his salary for the remainder of the eight-year contractual period is the reason upon which AJR relied in terminating Mr. Benson’s employment. Under the employment contract at issue, the determining factor that controls the issue of continued ■ salary payment is whether the basis for the termination was “dishonesty” or “conviction of a felony,” or, alternatively, whether there was a “voluntary termination of ... [the] agreement.”

The record in this case is unclear as to whether AJR dismissed Mr. Benson from its employ for drug use or for dishonesty. As Appellant emphasizes in his argument, nowhere on either of the two termination forms that were introduced below is there any indication that he was dismissed for dishonesty. We are unwilling to make the leap that the trial court did to broadly encompass testing positive for drug use within the meaning of the term “dishonesty.” Consequently, we conclude that Appellant is entitled to have a jury determine the basis for AJR’s decision to terminate Mr. Benson from its employ. If the jury determines that drug use, rather than dishonesty, was the basis for the dismissal, then the provisions of the employment contract with regard to continued payment of Appellant’s salary for the duration of the contractual term are applicable.11 If, however, the jury determines that Mr. Benson was in fact terminated for being dishonest, then AJR is not required to pay his salary under the terms of the employment contract.

B. False Light Invasion of Privacy

As the basis for this claim, Appellant averred that AJR wrongly published and disseminated his drug test results to certain persons. According to the factual findings of the lower court, “Mr. Rhodes informed, at most, three (3) individuals of Plaintiffs drug test result: Robert Benson, a former owner and creditor of AJR; Mr. Rhodes’ wife, AJR’s corporate Secretary; and Brenda Benson,12 an employee of AJR who served in the capacity of administrative assistant secretary and who assisted Mr. Rhodes in managing AJR’s business office.”

In Cramp v. Beckley Newspapers, Inc., 173 W.Va. 699, 320 S.E.2d 70 (1983), we *329discussed the tort of invasion of privacy. In syllabus point eight of Crump, we held that “[a]n ‘invasion of privacy’ includes (1) an unreasonable intrusion upon the seclusion of another; (2) an appropriation of another’s name or likeness; (3) unreasonable publicity given to another’s private life; and (4) publicity that unreasonably places another in a false light before the public.” Id. at 703, 320 S.E.2d at 74. The lower court relied upon both Crump and the adoption of the Restatement of Torts definition of an invasion of privacy claim by the federal district court in Davis v. Monsanto Co., 627 F.Supp. 418 (S.D.W.Va.1986), in delineating the following as the elements of a false light invasion of privacy claim:

(1)that there was a public disclosure by the Defendant of facts regarding the Plaintiff; (2) that the facts disclosed were private facts; (3) that the disclosure of such facts is highly offensive and objectionable to a reasonable person of reasonable sensibilities; and (4) that the public has no legitimate interest in the facts disclosed.

Id. at 421 (quoting Restatement (Second) of Torts § 652D (1977)).

In ruling that Appellant had failed to prove a claim for false light invasion of privacy, the trial court held:

“It is not an invasion of privacy to communicate the private fact to a single person or a small group of persons. The tort of invasion of privacy requires widespread publicity.” See Davis, 627 F.Supp. at 421; see also Crump, 173 W.Va. at 716, [320 S.E.2d at 88] (holding “false light” privacy action requires “wide spread publicity”).

Applying this holding to the facts in the case at bar, the circuit court held that the “minimal communication” to three individuals, “all of whom are AJR employees, officers, or creditors” “does not amount to widespread publicity.” We agree. Accordingly, we uphold the grant of summary judgment to Ap-pellees on Appellant’s claim of false light invasion of privacy.

Having found no error with regard to the grant of summary judgment to Appellees on the false light invasion of privacy claim, we affirm the July 23, 2002, order of the Circuit Court of Wood County on this issue. Given our separate determination that a genuine issue of material fact requires jury resolution on the breach of employment claim, we hereby reverse and remand this matter to permit proceedings consistent with the rulings herein stated.

Affirmed in part, Reversed in part, and Remanded.

Chief Justice MAYNARD concurs in part and dissents in part and files a separate opinion.

Justice STARCHER concurs and files a concurring opinion.

MAYNARD, Chief Justice,

concurring, in part, and dissenting, in part.

(Filed July 6, 2004)

What a terrible message this case sends to small West Virginia employers and businesses! This Court tells this company that it should not have fired an employee who:

(1) admitted that he used cocaine;
(2) reported to work with cocaine in his system;
(3) failed a drug test in which he tested positive for cocaine;
(4) misrepresented his drug use by failing to truthfully answer management’s inquiries about drug use;
(5) worked in a plant where steel fabrication involving constant welding occurs;
(6) continually worked around large quantities of explosives and highly volatile gases and liquids including acetylene, oxygen tanks, thinner paint, and other explosive substances; and, here is the icing on the cake;
(7) was the SAFETY DIRECTOR of the company!! Appalling!

This Court now says that AJR was wrong to fire a deceitful, coke-head safety director in a plant where tanks of acetylene, oxygen, and other explosives are everywhere! The irony is that if there had been some explosion or other accident which killed or seriously injured another employee, the victim of that accident could have successfully sued under our workers’ compensation deliberate intent statute and obtained a large verdict. This *330Court doubtless would have upheld the large verdict based on the fact that the company allowed a cocaine user to be its safety director.

In distinguishing between dishonesty and drug use under the specific facts of this case, the majority opinion does one of the finest jobs of legalistic hairsplitting in the history of American jurisprudence. The undisputed facts show that if Appellant was terminated for dishonesty, AJR was not obligated to pay Appellant his salary for the balance of the employment agreement. Appellant was responsible for safety at AJR’s facility including enforcing AJR’s drug-free workplace policy. Appellant received a copy of AJR’s employee manual which states, in part, that employees may be terminated for the sale, possession, or use of controlled substances while on the job, during work hours, or while on company business. After Appellant failed a drug test, he admitted that he used cocaine the Saturday immediately prior to the Monday drug test. Finally, he also admitted that he was dishonest with management when he failed to answer management’s questions regarding possible drug use in the workplace because he knew to an absolute certainty that he had used illegal drugs and had them in his system when asked the question.

Given these facts, I must disagree with the majority that a jury could determine that drug use rather than dishonesty was the basis for Appellant’s dismissal. This is a distinction without a difference. Appellant’s drug use, established by the positive drug test, demonstrates dishonesty. Specifically, Appellant, who was responsible for enforcing a drug-free workplace, knowingly violated his employer’s drug-free workplace policy by coming to work with cocaine in his system. This is dishonest conduct. Actually testing positive for the drug use is evidence of this dishonest conduct. Therefore, it is irrelevant whether the official reason for Appellant’s dismissal was dishonesty or drug use.

Finally, troubling also is the majority opinion’s failure to address AJR’s argument that Appellant’s decision to appear for work under the influence of cocaine was tantamount to a willful quit; substantial public policy against rewarding a person for his or her dishonesty; and the impact of Appellant’s admission of dishonesty. The plain fact is that any of these matters would have been sufficient for this Court to affirm the summary judgment on behalf of AJR.

In sum, I concur with affirming the circuit court’s grant of summary judgment on the false light invasion of privacy claim, but I dissent to the majority’s reversal of the circuit court’s grant of summary judgment on the breach of contract claim.

STARCHER, J.,

concurring.

(Filed July 8, 2004)

I write separately to emphasize what the majority’s opinion really says, and what it does not say.

This case is all about the power of a contract. The defendant-employer, AJR, Inc., entered into a written contract in 1997 with plaintiff-employee Danny L. Benson that guaranteed Mr. Benson employment until August 2005. Nobody disputes the clarity of this part of the agreement.

However, nowhere does the contract say that Mr. Benson cannot be fired. The contract did allow the defendant-employer to show Mr. Benson the door with pink slip in hand any time it chose to do so. But the contract also contained a clear, black-and-white penalty clause which said that if the defendant-employer let Mr. Benson go, then the defendant-employer would still be required to pay Mr. Benson his remaining wages through August 2005. Again, none of the parties disputes the clarity of this penalty clause built into the agreement.

The fuzzy area in this case is a loophole for the defendant-employer that was built into the contract which allowed the defendant-employer to escape the penalty clause if Mr. Benson was fired because of “dishonesty.” The contract does not define “dishonesty.” So, when Mr. Benson’s drug use was discovered, and the defendant-employer fired him, the question was raised whether Mr. Benson’s firing was motivated by Mr. Benson’s dishonesty, or for some other reason.

The defendant-employer vigorously asserts that it fired Mr. Benson because the owner of the company conducted meetings with com*331pany employees that included Mr. Benson, at which time the owner asked if anyone was aware of an employee who was using illegal drugs or was arriving for work with illegal drugs in his or her system; Mr. Benson said nothing when asked the question. The defendant-employer now asserts that Mr. Benson was fired when the cocaine test results were returned because his dishonesty — in the form of not responding to the question— was revealed. The defendant-employer therefore asserts that it does not have to pay Mr. Benson his remaining wages in compliance with the penalty clause.

The problem with the employer’s argument is the written documentation surrounding Mr. Benson’s firing. When Mr. Benson was fired, the employer completed a form indicating he was fired in accordance with the employees’ manual (which mandated automatic termination for drug usage) for “controlled substance testing” and “tested positive for cocaine.” This position was reiterated in writing several times by the company’s owner and the company’s counsel. The contractual “dishonesty” loophole was not raised by the employer until sometime later, when Mr. Benson asserted his contractual right to his remaining years of wages.

The competing positions taken by the employer raise, beyond a doubt, is a question of fact for jury resolution as to the true motivating factor behind Mr. Benson’s termination. The circuit court was wrong to substitute its judgment on this factual question for that of the jury. A jury should hear the witnesses to Mr. Benson’s firing testify, should review the documentation surrounding that firing, and should decide for themselves if Mr. Benson’s firing was motivated by (a) dishonesty or (b) drug use. If the jury’s answer is the former, Mr. Benson gets nothing; if the jury’s answer is the latter, the defendant-employer must comply with the written employment contract and pay Mr. Benson his wages under the contract’s penalty clause.

That said, let’s get straight what this case is not about. This case is not — as my dissenting colleague suggests — a case that says a small employer cannot fire an employee who uses drugs. The employer in this case was fully within its rights to fire Mr. Benson — but it had to be willing to pay the price if that firing breached the employment contract. A contract is a promise, and a breach of that promise carries consequences. I disagree with my dissenting colleague’s implicit suggestion that because of bad facts, this Court should make bad law, throw hundreds of years of contract law to the wind, and find that because Mr. Benson’s actions are less-than-palatable, the contract should be ignored.

If anything, this ease says that small employers should not give their employees open-ended contracts guaranteeing them employment. The defendant-employer in this case could have easily put in the contract a clause allowing Mr. Benson to be fired, without penalty to the defendant-employer, for using illicit substances on the job. Luckily, the majority opinion makes clear that the defendant-employer might still be able to hang its hat on the vague term “dishonesty,” and prevail before a jury by showing that a lack of veracity on Mr. Benson’s part was the motivating factor behind his termination.

I therefore respectfully concur with the majority opinion.

5.3 Balles v. Babcock Power Inc. 5.3 Balles v. Babcock Power Inc.

Eric N. Balles vs. Babcock Power Inc.

Middlesex.

November 8, 2016.

March 6, 2017.

Present: Gants, C.J., Botsford, Lenk, Hines, Gaziano, Lowy, & Budd, JJ.

Mark C. Fleming (Jonathan A. Cox also present) for the defendant.

Thomas J. Carey, Jr. (Jody L. Newman also present) for the plaintiff.

Ben Robbins & Martin J. Newhouse, for New England Legal Foundation, amicus curiae, submitted a brief.

*566Lenk, J.

The dispute before us chiefly concerns the meaning and application of the stockholders’ agreement between a company, Babcock Power Inc. (Babcock or company), and its former executive, Eric N. Balles. To a lesser extent, it also concerns the separate employment agreement between the two.

Babcock terminated Balles’s employment when it discovered that he was engaged in an ongoing extramarital affair with a young female subordinate. Babcock’s board of directors (board) subsequently concluded that Balles had been terminated “for cause” under the terms of his stockholders’ agreement with the company, thereby allowing the board to repurchase his stock at a minimal price. The board withheld subsequent dividends, amounting to approximately $900,000 in total, and refused to pay Balles any severance.

Years of litigation followed, with Balles seeking declaratory relief to the effect that the stock be returned to him, along with the withheld dividends. Babcock responded with counterclaims on various grounds. Following a bifurcated trial, a Superior Court jury rejected Babcock’s counterclaims, and although Balles prevailed at a jury-waived trial on his claim for declaratory relief, a portion of his prior salary was subjected to equitable forfeiture and he was unsuccessful in his bid to receive severance pay. Babcock appealed from the judgment at the jury-waived trial, and we allowed its application for direct appellate review. We affirm.1

1. Background. We recite the facts found by the trial judge, which the parties acknowledged at oral argument they do not challenge. We have supplemented those findings by reference to facts in the record that the parties do not dispute.

a. Stockholders’ agreement and employment agreement. When his employment at Babcock began in 2002,2 Balles entered into two agreements: a stockholders’ agreement and an employment agreement.3 Under the terms of the stockholders’ agreement, Balles, one of seventeen “management investors” in Babcock,4 received 100,000 shares of common stock in the company at a *567price of $0.001 per share.

Section 5 of the stockholders’ agreement sets forth the rights of management investors in the event of their termination. Section 5(d) states that, if a management investor’s employment is terminated without cause, the stockholders’ agreement continues to apply to his or her stock. By contrast, section 5(e) provides that if a management investor’s employment is terminated “for cause,” as defined in the stockholders’ agreement, Babcock’s board of directors must repurchase his or her stock at the nominal price of $0.001 per share.

“Cause,” in turn, is defined under section 1 of the stockholder’s agreement as follows:

“(a) fraud, embezzlement or gross insubordination on the part of the Management Investor; (b) the Management Investor’s conviction of or plea of nolo contendere to any felony; (c) the Management Investor’s willful and material breach of or willful failure or refusal to perform and discharge, his duties, responsibilities or obligations to the Company (other than by reason of disability or death) that is not corrected within thirty (30) days following written notice thereof to the Management Investor by the Company, such notice to state with specificity the nature of the breach, failure or refusal; provided, that if such breach, failure or refusal cannot reasonably be corrected within thirty (30) days of written notice thereof, such thirty (30) day period shall be extended for so long as may be reasonably necessary to correct the same; or (d) any act of willful misconduct by the Management Investor which (i) is intended to result in substantial personal enrichment of the Management Investor at the expense of the Company or any of its subsidiaries or affiliates or (ii) is intended to and does have a material adverse impact on the business or reputation of the Company or any of its subsidiaries or affiliates. For purposes of this Agreement, a determination of ‘Cause’ may only be made by the Board of Directors of the Company.”

The stockholders’ agreement also provides for a jury-waived trial to adjudicate any claims arising under it, stating in relevant part that “each party acknowledges and agrees that any controversy which may arise under [the stockholders’ agreement] is likely to involve complicated and difficult issues,” and that the parties “waive [ ] any right such party may have to a trial by jury in respect of any litigation directly or indirectly arising out of or relating to the [stockholders’ agreement].”

*568The employment agreement between Balles and Babcock provided that he would serve as an employee “at will” and could be terminated at any time for any reason. The employment agreement also stated that, in the event of Babes’s termination, he would be entitled to severance pay unless he was terminated for cause, “as defined in [the] [stockholders’ [agreement.”

b. Relationship with female subordinate. The female subordinate began working at Babcock as an intern when she was still an undergraduate student. She eventually obtained a full-time position at the company as an “Engineering Management Assistant/ Engineering Coordinator.” After receiving two raises while serving in this role, she eventually was promoted to the position of “Operations Associate/Engineering.” Balles was her supervisor at all relevant times.

In the summer of 2008, Balles began an intimate extramarital relationship with the female subordinate, which continued through his termination in 2010. The pair pursued their relationship on business trips funded by Babcock, and exchanged sexually explicit text messages on their personal cellular telephones. Balles uploaded, downloaded, and saved photographs of the female subordinate, some depicting sexual content, on his Bab-cock-issued laptop computer.5 To conceal his relationship with the female subordinate from Babcock, Balles falsified the details of at least one travel reimbursement request, but did not intentionally claim any fiscal reimbursement from Babcock to which he was not entitled under company policy.6

On August 30, 2010, Michael LeClair, the president and chief executive officer of Babcock, learned of the relationship between Balles and the female subordinate. Soon thereafter, Jim Dougherty, president and chief executive officer of a subsidiary of Babcock, hand-delivered a memorandum to Balles stating that his employment was suspended “pending an investigation into allegations of misconduct and improper workplace behavior relating to [his] relationship with a female subordinate employee.” Babcock’s investigation included an in-depth review of Bailes’s documents, *569text messages, and electronic mail messages, all of which were stored on his company-issued computer. The investigation disclosed more than one hundred photographs and thousands of text messages between Balles and the female subordinate. Several of the messages described executives, as well as Balles’s “negative feelings about working for [Babcock] and about his superiors.” LeClair came to the conclusion that “Balles failed to perform his job from the moment” that he began his affair with the female subordinate.

During the investigation, Balles repeatedly requested a face-to-face meeting with the board, which Babcock declined to provide. He received a letter on September 15, 2010, informing him that his employment had been terminated effective September 1, 2010, and that the board would be meeting shortly to determine whether his conduct met the definition of “[clause” under the stockholders’ agreement. Babcock’s attorney sent notice separately that it would not be necessary for Balles to provide information relating to the allegations of misconduct against him. The parties engaged in settlement negotiations but were unable to come to an agreement.7

At the subsequent board meeting to determine whether Balles’s conduct constituted “cause” within the meaning of the stockholders’ agreement, LeClair summarized the investigation and recommended that the board terminate Balles “for cause” pursuant to clauses (a), (c), and (d) of the definition of “[clause” in section 1 of the stockholders’ agreement. The board, after discussion, unanimously agreed, as noted in its minutes, that Balles’s conduct constituted “cause” under the stockholders’ agreement. The minutes reflected the board’s determination that there was “overwhelming and irrefutable evidence that . . . Balles engaged in serious misconduct during his employment and [that] such misconduct was a breach of fiduciary duty to the [c]ompany, including a breach of his duty of loyalty.” Because the board terminated Balles for cause, it went on to “repurchase” all of Balles’s shares pursuant to section 5(e) of the stockholders’ agreement, “amounting to 100,000 shares of capital stock of [Babcock] for a repurchase price of $0.001 per share.”

c. Prior proceedings. Shortly after the board voted to terminate him “for cause,” Balles commenced this action against Babcock *570in the Superior Court. He sought a declaratory judgment invalidating the board’s repurchase of his shares under the stockholders’ agreement and alleged that the board had committed a breach of the agreement by denying him subsequent dividend payments. He also asserted that the company had committed a breach of his employment agreement by declining to pay him severance upon his termination. The company denied the allegations and asserted seven counterclaims.8 The proceedings in the Superior Court were bifurcated into a jury trial to adjudicate the majority of Bab-cock’s counterclaims, and a jury-waived trial to resolve Balles’s declaratory judgment and contract claims, along with Babcock’s counterclaim asserting a breach of fiduciary duty and the duties of loyalty and good faith.9

The jury found for Bailes on Babcock’s counterclaims. The trial judge, moreover, ruled in favor of Balles on the declaratory judgment and breach of contract claims, concluding that Babes “was not fired ‘for cause’ as defined in the [sjtockholders’ [ajgreement” and that he was therefore “entitled to the return of his stock and payment of all dividends and other benefits provided by Babcock ... as if he had own[ed] the stock continuously.” The judge found in favor of Babcock on its remaining counterclaim, concluding that Babes had committed a breach of his fiduciary duty of loyalty to the company, owed pursuant to his status as an employee. On this basis, the judge assessed Babes $412,000 in equitable forfeiture of his past salary. The judge also rejected Balles’s claim for severance pay under the employment agreement, on the ground that Babes had committed a material breach of the agreement through his disloyal actions.

Babcock appealed from the judgment, raising issues arising only from the jury-waived trial, and we allowed its application for direct appellate review.10

*5712. Discussion. Babcock advances three arguments on appeal. First, it contends that the trial judge should have accorded deference to the board’s decision and reviewed it only to ascertain whether it was arbitrary, capricious, or made in bad faith.11 Second, it argues that the judge erred in determining that B alies’s conduct did not constitute “cause” under clauses (a) and (c) of the definition of that term in section 1 of the stockholders’ agreement. Third, it maintains that Bailes committed a material breach of the stockholders’ agreement and therefore cannot recover under it. We address each argument in turn.

a. Appropriate standard of review. Babcock argues that the trial judge improperly reviewed on a de novo basis the board’s determinations of “cause.” The company relies in this regard on the last sentence of the “[cjause” definition in section 1 of the stockholders’ agreement, which provides that “[fjor purposes of this [ajgreement, a determination of ‘[cjause’ may only be made by the [board].” Babcock contends that this language demonstrates the parties’ intent that the board’s determinations under the “cause” provision receive deference upon any judicial review. We agree with the trial judge that the language of the stockholders’ agreement does not support Babcock’s suggested interpretation.

We review a court’s “interpretation of the meaning of a term in a contract,” a question of law, de novo.12 EventMonitor, Inc. v. Leness, 473 Mass. 540, 549 (2016). In so doing, we are mindful that when the language of a contract is clear, it alone determines the contract’s meaning, but that a court may consider extrinsic evidence if the language is ambiguous. Id. The determination of ambiguity in a contract is also a question of law. Eigerman v. Putnam Invs., Inc., 450 Mass. 281, 287 (2007). Contractual language is ambiguous when it “can support a reasonable difference of opinion as to the meaning of the words employed and the obligations undertaken” (citation omitted). Bank v. Thermo Elemental Inc., 451 Mass. 638, 648 (2008). When contract language is unambiguous, it must be construed according to its plain mean*572ing. General Convention of the New Jerusalem in the U.S. of Am., Inc. v. MacKenzie, 449 Mass. 832, 835 (2007).

To determine whether the language at issue is ambiguous, we look both to the contested language and to the text of the contract as a whole. Assuming without deciding that parties to a private agreement may contract for a specific standard of judicial review in this situation,13 we conclude that the language at issue is not ambiguous and that it does not provide for a deferential standard of judicial review.

On its face, the contract language that Babcock highlights speaks to which persons in the company are to determine “cause” for purposes of the stockholders’ agreement. Standing alone, the sentence is silent as to an appropriate standard of judicial review for disputes relating to that determination. The language does not, by itself, contain an ambiguity that could support Babcock’s suggested interpretation. The language also does not convey any ambiguity when read in conjunction with the remainder of clause (c) of the definition of “[cjause” or the stockholders’ agreement as a whole. The only provision dealing with a somewhat related matter is section 9(e)(iii), which provides that “any controversy which may arise under [the stockholders’ agreement] is likely to involve complicated and difficult issues, and therefore each . . . party . . . unconditionally waives any right such party may have to a trial by jury in respect of any litigation directly or indirectly arising [out] of or relating to [the stockholders’ agreement] If anything, this recognition of the innate complexity of disputes arising under the contract and of the need for resolution by judges rather than juries is consistent with the application by judges of the usual de novo standard of review.14

Concluding, as we do, that the contractual language on which *573Babcock relies does not provide for judicial deference to the board’s determination of “cause,” de novo review by the trial judge thus was appropriate.15

b. Board ’s decision to terminate Bailes for cause under stockholders’ agreement. Babcock argues that the trial judge erred in determining that Balles’s conduct did not meet clauses (a) and (c) of the definition of “[cjause” in section 1 of the stockholders’ agreement.

i. Clause (a). Babcock argues that Balles’s conduct constituted “fraud” and “gross insubordination” under clause (a) for three reasons: (i) his intentional submission of false expense reports for the purpose of concealing his affair with the female subordinate was fraudulent; (ii) his outspoken support for the female subordinate constituted fraud because she lacked fitness for employment; (iii) his over-all conduct during his relationship with the female subordinate constituted gross insubordination. We discern no error in the judge’s determination that Balles’s conduct did not constitute fraud or gross insubordination.

A. Fraud. The elements of fraud consist of “[1] a false representation [2] of a matter of material fact [3] with knowledge of its falsity [4] for the purpose of inducing [action] thereon, and [5] that the plaintiff relied upon the representation as true and acted upon it to his [or her] damage.” Danca v. Taunton Sav. Bank, 385 Mass. 1, 8 (1982), quoting Barrett Assocs. v. Aronson, 346 Mass. *574150, 152 (1963).16

I. False reimbursement requests. The trial judge found that Balles’s false reimbursement requests had not resulted in damage to Babcock, and that Bailes lacked fraudulent intent, both necessary elements of fraud. Because Babcock has failed to show that the judge’s findings, amply supported by the evidence, were clearly erroneous, it cannot establish that Balles’s submission of false reimbursement requests gave rise to fraud that would constitute cause under clause (a) of the definition of “[cjause” in the stockholders’ agreement.

II. Advocacy for the female subordinate. Babcock similarly maintains, again without merit, that in view of the female subordinate’s inadequate qualifications and poor job performance, it was fraudulent conduct on Balles’s part to advocate — as her supervisor and without disclosing their personal ties — on her behalf professionally. The judge, however, determined that ‘“[t]he jury, the court, or both, have rejected the factual claim that Balles was engaged in any ruse when he made decisions about [the female subordinate’s] employment, [and] her salary and benefits,” and that “[a]ll of those decisions had a sound business justification.” He found in this regard that given “the actual work [the female subordinate] did, in combination with her obvious verbal and managerial skills, intelligence, maturity and motivation, . . . [the female subordinate] fully earned her salary, benefits, and tuition reimbursement during the period she was employed at [Babcock].”

To demonstrate that the female subordinate’s qualifications and performance were inadequate, the company points to a statement from a coworker suggesting that she had received preferential treatment and a statement from a manager that she lacked an engineering degree. These two statements, however, do not suffice to establish that the trial judge’s findings of fact to the contrary, supported by other evidence, were clearly erroneous. See Weiler v. PortfolioScope, Inc., 469 Mass. 75, 81 (2014). Given this, Balles’s advocacy on the female subordinate’s behalf neither constituted a “false” representation nor resulted in damages to Babcock, and accordingly was not fraudulent.

B. Gross insubordination. Babcock maintains that Balles’s conduct also constituted “gross insubordination” under clause (a) *575because he violated various company policies during his affair with the female subordinate. The trial judge, however, interpreted the term “gross insubordination” to mean “more than just breaking generally applicable rules.” He instead took it to mean the defiance of authority “such as [the violation of] a direct order . .. or disrespect directed to a supervisor personally.” The judge found that Bailes’s conduct did not fall within this definition, noting that “there is no credible evidence of a direct order to Bailes to do anything he failed to do,” and that he did not “act disrespectfully to his superiors in person.”

We defer to the judge’s factual findings, but review de novo his interpretation of “gross insubordination” under the stockholders’ agreement. Because the stockholders’ agreement does not define “gross insubordination,” it is appropriate to look to other sources to determine the meaning of the term. See Meehan v. Shaughnessy, 404 Mass. 419, 445 n.22 (1989) (professional norms can supply meaningful definition of contractual term); Zeo v. Loomis, 246 Mass. 366, 368 (1923) (“[Contract term] must be determined from all the circumstances according to the reasonable inferences presumably entertained by normal business [people]”).

Babcock relies chiefly on Oehme v. Whittemore-Wright Co., 279 Mass. 558, 563 (1932), which defines “insubordination” as “a wilful disregard of express or implied directions and refusal to obey reasonable orders.” The company emphasizes the “implied directions” portion of the definition, presumably to suggest that Bailes’s violations of company policy constituted gross insubordination. It is “gross insubordination,” and not “insubordination,” that gives rise to “[c]ause” under clause (a), however, and Oehme does not speak to the more egregious misconduct required to establish gross insubordination.17 A review of relevant case law indicates, as the judge concluded, that gross insubordination is generally defined as wilful disregard of a direct order. See Hawkins v. Director of the Div. of Employment Sec., 392 Mass. *576305, 306-307 (1984) (affirming review examiner’s finding that twice refusing to comply with reasonable and legitimate requests by supervisor constituted “gross insubordination”); Stone v. Omaha, 229 Neb. 10, 13-14 (1988) (employee’s refusal to follow orders constituted gross insubordination). Given the judge’s uncontested factual finding that Bailes never disobeyed a direct order, his conduct did not constitute gross insubordination.

ii. Clause (c). Babcock also maintains that Balles’s conduct fell within clause (c), which defines “[clause” as follows:

“the . . . willful and material breach of, or willful failure or refusal to perform and discharge, his duties, responsibilities or obligations to the [cjompany . . . that is not corrected within thirty (30) days following written notice thereof to the [mjanagement [ijnvestor by the [cjompany, such notice to state with specificity the nature of the breach, failure or refusal; provided, that if such breach, failure or refusal cannot reasonably be corrected within thirty (30) days of written notice thereof, such thirty (30) day period shall be extended for so long as may be reasonably necessary to correct the same.”

Babcock argues that Balles’s relationship with the female subordinate and his attempts to conceal it constituted a wilful and material breach of his obligation of loyalty to the company. Bailes concedes that his conduct constituted a breach of loyalty under clause (c), but argues that Babcock failed to provide him with an opportunity to correct his breach, as required by clause (c). The company counters that, because Balles’s breach could not be corrected, it was excused from the requirement of offering him an opportunity to correct the breach, as to do so would have been futile.

The trial judge concluded that Babcock had failed to provide Bailes with an opportunity to correct his breach in violation of clause (c) and that Balles’s conduct was correctable. On appeal, Babcock argues that three particular components of Balles’s breach were uncorrectable:18 (1) the effect of Balles’s divided loyalty on his job performance during his affair with the female subordinate; (2) the harmful effects of Balles’s example on company culture; *577and (3) the risk of a sexual harassment lawsuit caused by B alies’s conduct.

We begin by noting that the futility exception upon which Babcock relies is not expressly mentioned in the stockholders’ agreement. Both parties nonetheless seem to accept the contention that truly futile gestures under the agreement are unnecessary, an assumption that accords with our common law. To excuse nonperformance in that respect, parties in breach of a contract may establish that compliance with the contract would have been futile. See Shawmut-Canton LLC v. Great Spring Waters of Am., Inc., 62 Mass. App. Ct. 330, 340 (2004). The exception, notably, is quite narrow, see Jefferson Ins. Co. of N.Y. v. National Union Fire Ins. Co. of Pittsburgh, Pa., 42 Mass. App. Ct. 94, 103 (1997) (rejecting interpretation of contract that “would have the exclu sion swallow the policy” [citation omitted]), and the party in breach bears the burden of proving that its performance under the contract would have been futile. See, e.g., 7-Eleven, Inc. v. Khan, 977 F. Supp. 2d 214, 230-231 (2013) (party claiming that incurable breach relieved obligation to provide notice and opportunity to cure bore burden of prooí). Ordinarily, futility is shown where performance under the contract would be impossible, see, e.g., L.K. Comstock & Co. v. United Engineers & Constructors Inc., 880 F.2d 219, 231-232 (9th Cir. 1989) (finding contractually guaranteed opportunity to cure would have been futile where party could not have cured its breaches in allotted time period), or where the other party had first repudiated performance under the contract, see, e.g., Wolff & Munier, Inc. v. Whiting-Turner Contracting Co., 946 F.2d 1003, 1009 (1991) (burden on party claiming incurable breach), neither of which took place here.

We nonetheless turn to Babcock’s contention that, because Bailes’s breach cannot be corrected, its failure to provide him with an opportunity to do so falls within the narrow futility exception. Babcock first contends that Balles’s breach of loyalty throughout his affair with the female subordinate could not be corrected because the correction provision “contemplates correction of the ‘breach’ itself — not its future consequences.” In the company’s view, “ ‘[c]orrection’ presumes that the wrong has been righted, as though no breach happened,” and a “ ‘correctable’ offense would have been one where, following a ‘correction,’ Babcock and Babes could have continued their association as before.” We are unpersuaded by this argument, both because it relies on an implausible interpretation of the contract and because *578Babcock has not shown that Balles’s breach was intrinsically incapable of correction.

By asserting that correction requires actually undoing the breach, rather than remedying its effects, Babcock would in effect read the correction provision out of clause (c). See J.A. Sullivan Corp. v. Commonwealth, 397 Mass. 789, 795 (1986) (“A contract is to be construed to give reasonable effect to each of its provisions”). As a practical matter, bells cannot be unrung, nor the past undone. Clause (c) contemplates that, in the event of a management investor’s ‘“willful and material breach of... duties, responsibilities or obligations to the [cjompany,” the management investor will be given thirty days following written notice to ‘“correct” that ‘“breach, failure or refusal [to perform].” No exception is made for breaches of loyalty. The correction envisioned, reasonably construed within the context of that clause and the contract as a whole, can only be to remedy the adverse effects from the breach or nonperformance when performance will not itself be adequate or possible. See Downer & Co. v. STI Holding, Inc., 76 Mass. App. Ct. 786, 792 (2010) (objective in interpreting contract ‘“is to construe the contract as a whole, in a reasonable and practical way, consistent with its language, background, and purpose” [citation omitted]).

Given the foregoing, Babcock has not met its burden of showing that the adverse effects of the breach were uncorrectable if Bailes were given the opportunity to do so. Indeed, Babcock prevailed on its counterclaim when the judge deducted over $400,000 from the amount of Balles’s salary because of his breach of the duty of loyalty during his relationship with the female subordinate, thereby in essence compensating Babcock for the lost value of Balles’s services in that period.

Babcock’s contention that Balles’s harm to company culture was uncorrectable meets a similar fate. While the trial judge did not address this argument directly,19 Babcock does not establish why any such harms would not be remedied by the termination of Bailes. The company’s abrupt termination of Bailes, a senior executive, surely made clear to other employees that his impermissible conduct would not be tolerated. The company’s lone argument why this would not suffice is its insistence that only terminating Bailes for cause could correct the harms he visited *579upon company values. This argument is at best circular, for if only terminating a management investor for cause adequately can correct his or her harm to company culture, the correction provision itself would be for naught. See Jefferson Ins. Co. of N.Y., 42 Mass. App. Ct. at 103.

Babcock’s final argument — that the risk of a sexual harassment lawsuit brought by the female subordinate constituted uncorrectable harm to the corporation — also lacks merit. The trial judge summarily dismissed this argument, determining that the stockholders’ agreement pertains to “actual harm, not potential harm that never materialized.” Even if the judge were incorrect in this and we were to assume that Balles’s conduct in fact created a risk to the company that would not otherwise have existed, Babcock has not shown that the harm was uncorrectable. Risks are routinely adjusted and reallocated by various means such as indemnification agreements providing for the costs of defense, and such measures could presumably have been employed here.20 We accordingly reject Babcock’s view that the risk of a sexual harassment claim brought by the female subordinate was uncorrectable.21

There was thus no error in the judge’s determination that Babcock’s failure to provide Balles with an opportunity to correct his breach prevents a finding of cause under clause (c).

c. Whether Balles committed a material breach of the stockholders’ agreement. Babcock argues further that Balles committed a material breach of the stockholders’ agreement, thereby precluding the recovery he seeks under it. The company maintains that Balles owed a fiduciary duty of loyalty to it as an officer and shareholder of a closely held corporation,22 and that, by committing a breach of this duty, he committed a material breach of the stockholders’ agreement.

Even if Balles had committed a breach of a fiduciary duty owed to Babcock arising out of the stockholders’ agreement, Babcock’s *580argument nonetheless fails as a matter of law. The rights of stockholders arising under a contract, as here, are governed solely by the contract. See Chokel v. Genzyme Corp., 449 Mass. 272, 278 (2007) (“When rights of stockholders arise under a contract . . . the obligations of the parties are determined by reference to contract law, and not by the fiduciary principles that would otherwise govern”); Blank v. Chelmsford Ob/Gyn, P.C., 420 Mass. 404, 408 (1995) (“questions of good faith and loyalty with respect to rights on termination or stock purchase do not arise when all the stockholders in advance enter into agreements concerning termination of employment”); Donahue v. Rodd Electrotype Co. of New England, Inc., 367 Mass. 578, 598 n.24 (1975) (shareholders of close corporation may contract for “stock purchase arrangements” that would otherwise violate duties of loyalty and good faith to other shareholders if “stockholders give advance consent . . . through ... a stockholders’ agreement.”). Contrast Prozinski v. Northeast Real Estate Servs., LLC, 59 Mass. App. Ct. 599, 608-610 (2003) (employee’s breach of fiduciary duties to employer could constitute material breach barring recovery under employment agreement).

Sections 1 and 5 of the stockholders’ agreement clearly address the rights of management investors as to their company stock holdings in the event of their termination. Section 5(e) provides that a management investor may only be divested of his or her stock if terminated for “cause.” Section 1, in turn, sets forth a detailed, carefully crafted definition of “cause.” Clause (c) of that definition specifically speaks to a management investor’s rights in the event of termination for a material breach, including a breach of the duty of loyalty. Insofar as the stockholders’ agreement speaks directly to the rights of a management investor in the event of the material breach alleged here, Bailes is not precluded from seeking relief pursuant to its terms.

Judgment affirmed.

5.4 Uintah Basin Medical Center v. Hardy 5.4 Uintah Basin Medical Center v. Hardy

2005 UT App 92

UINTAH BASIN MEDICAL CENTER, Plaintiff and Appellee, v. Leo W. HARDY, M.D., Defendant and Appellant. Leo W. Hardy, M.D., Counterclaimant and Third-party Plaintiff, v. Uintah Basin Medical Center and Thomas J. Allred, M.D., Counterclaim Defendants and Third-party Defendants.

No. 20030632-CA.

Court of Appeals of Utah.

March 3, 2005.

*170Jennifer L. Lange, John P. Harrington, Holland & Hart, Salt Lake City, for Appellant.

Blaine J. Benard, E. Blaine Rawson, Christine T. Greenwood, Holme Roberts & Owen, LLP, Salt Lake City, for Appellee.

Before Judges DAVIS, JACKSON, and THORNE.

OPINION

JACKSON, Judge:

¶ 1 Dr. Leo W. Hardy appeals the trial court’s order granting summary judgment in favor of Uintah Basin Medical Center (UBMC) in a suit regarding UBMC’s termination of his employment agreement. We reverse and remand.

BACKGROUND

¶ 2 Dr. Hardy is a board-certified pathologist. On November 29,1994, he executed an employment agreement (the Agreement) to provide pathology services for UBMC, which is owned by Duchesne County and operated by the UBMC Board of Trustees (Board). Under the Agreement, which consists of only two pages taken almost verbatim from that of Dr. Hardy’s predecessor, UBMC was to refer certain types of laboratory work to Dr. Hardy and pay a $400 monthly laboratory director’s fee. In return, Dr., Hardy would work as the director of UBMC’s laboratory and provide related services, which included weekly visits to the hospital. The Agreement does not include a fixed termination date; rather, it would “continue to bind parties ... until terminated after ninety (90) days written notice for just cause of termination by either party or by mutual consent of the parties to a shorter notice period.” The Agreement does not define “just cause” or otherwise clarify what grounds would justify termination.

If 3 On July 29, 1996, UBMC sent Dr. Hardy notice of teirnination and later hired Dr. Thomas Allred in his place. On October 28,1996, UBMC brought a suit for declaratory judgment to establish that its termination of the Agreement with Dr. Hardy was for *171“just cause.” Dr. Hardy filed a counterclaim alleging that the termination was without “just cause” and a breach of contract. Following discovery, the trial court granted UBMC’s motion for summary judgment. The court determined that .the Board in place at the time Dr. Hardy was hired had, during the course of Dr. Hardy’s employment, been replaced by a successor Board and that the successor Board was no longer bound by the Agreement.

¶ 4 Dr. Hardy appealed the order to the Utah Supreme Court, which reversed. The court explained, in essence, that a contract is ■ binding upon a successor governmental board as long the contract (1) involves a non governmental “proprietary power or func-, tion” and (2) is for “a reasonable duration.” Uintah Basin Med. Ctr. v. Hardy, 2002 UT 92,¶ 11, 54 P.3d 1165. The court determined that the Agreement involved a proprietary function and not a government power, see id. at ¶ 16, but remanded “to allow further development of the record” with respect to the reasonableness of the Agreement’s duration, id. at ¶ 18. In gauging the reasonableness of the Agreement, the court instructed the trial court to consider how the “just cause” provision was understood by the parties. Specifically, the court suggested that the trial court should consider: (a) whether “the ‘just cause’ provision gives successor boards broad discretion to terminate Dr. Hardy,” in which case the duration would likely be reasonable, or whether “the ‘just cause’ provision permitted termination only for deficient job performance,” in which case the duration would likely be unreasonable; and (b) “[t]he extent to which the durational limitations in Dr. Hardy’s contract conform to UBMC’s usual practices in similar situations.” Id.

¶ 5 On remand, UBMC again moved for summary judgment, arguing that there were no factual disputes and that the duration of Dr. Hardy’s agreement was unreasonable as a matter of law. UBMC relied on statements in Dr. Hardy’s deposition testimony that the Agreement could not be terminated except for deficient job performance or physical incapacity. UBMC also emphasized that it had only rarely used the “just cause” provision in its employment contracts with physicians. In response, Dr. Hardy submitted a post-remand affidavit explaining that he understood that “just cause” permitted UBMC boards to terminate the Agreement under a variety of circumstances, which included deficient performance, physical incapacity, and fundamental changes in the hospital’s need for pathology services. Dr. Hardy also argued that although UBMC’s use of the “just cause” provision had been erratic, UBMC had included the same clause in its 1992 contract with Dr. Joseph J. Sannella, the pathology physician immediately preceding him.

¶ 6 The trial court agreed with UBMC and granted its motion for summary judgment. In its June 19, 2003 ruling, the court explained that Dr. Hardy’s understanding of the “just cause” provision as described in his original deposition was too limiting because “he could only be terminated for a few specific reasons, including death, physical incapacity, or if the hospital no longer required pathology services.” The. court went on to conclude that Dr. Hardy’s post-remand affidavit clarifying his position was invalid under the “sham affidavit” rule because it contradicted his deposition testimony and served as an “attempt!] to re-draft his interpretation of the just cause clause to more similarly mirror the higher Court’s opinion.” Finally, the court also noted that the majority of UBMC’s contracts contained a specific time limitation or a clause to terminate with proper notice. Thus, in the court’s opinion, Dr. Hardy’s contract indicated a significant departure from UBMC’s normal practices.

¶ 7 Dr. Hardy appeals the trial court’s order.

ISSUES AND STANDARDS OF REVIEW

¶ 8 On appeal, we must decide whether summary judgment was proper in this ease. Specifically, we must determine (a) whether the trial court properly interpreted the “just cause” provision, (b) whether the Agreement is for a reasonable duration as a matter of law, and (c) whether any questions of fact justify remand to a finder of fact. We review a trial court’s grant of summary judgment for correctness. See Speros v. Fricke, 2004 UT 69,¶ 20, 98 P.3d 28. “In reviewing sum*172mary judgments, we view the facts and all reasonable inferences drawn from them in the light most favorable to the non-moving party,” id., and affirm if we conclude that “there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law,” Utah R. Civ. P. 56(c).

¶ 9 Similarly, “questions of contract interpretation not requiring resort to extrinsic evidence are matters of law, which we review for correctness.” Fairbourn Commercial, Inc. v. American Hous. Partners, Inc., 2004 UT 54,¶ 6, 94 P.3d 292 (quotations and citation omitted).

ANALYSIS

I. Interpretation of the “Just Cause” Provision

¶ 10 The key question in this case is what the “just cause” provision in the Agreement means. Once this question is answered, we may gauge whether the Agreement was for a reasonable duration and also determine whether UBMC had just cause to terminate Dr. Hardy.

¶ 11 To interpret the “just cause” provision, the trial court relied primarily on extrinsic evidence, namely Dr. Hardy’s deposition testimony regarding his understanding of the term. Although this use of extrinsic evidence was urged by our supreme court, see Uintah Basin Med. Ctr. v. Hardy, 2002 UT 92,¶ 18, 54 P.3d 1165, we note that such evidence must be considered only in the proper context and in accordance with well-settled principles of contract interpretation.

¶ 12 When parties to a contract disagree about the meaning of a provision, principles of contract interpretation require us to give effect to the meaning intended by the parties at the time they entered into the agreement. See Central Fla. Invs., Inc. v. Parkwest Assocs., 2002 UT 3,¶ 12, 40 P.3d 599 (“In interpreting a contract, the intentions of the parties are controlling.”). A court may rely on extrinsic evidence of the parties’ intent to interpret a provision, but it may do so only after it has determined that the provision is ambiguous. See, e.g., Nielsen v. Gold’s Gym, 2003 UT 37,¶ 6, 78 P.3d 600. Otherwise, when the agreement is unambiguous, the court must “determine[ ] the parties’ intentions from the plain meaning of the contractual language as a matter of law.” Fairbourn, 2004 UT 54 at ¶ 10, 94 P.3d 292 (quotations and citations omitted).

¶ 13 The question of whether a contract is ambiguous is decided by the court as a matter of law. See Wagner v. Clifton, 2002 UT 109,¶ 12, 62 P.3d 440. The court must first make a preliminary determination of ambiguity, and in doing so, may consider “[r]elevant, extrinsic evidence ‘of the facts known to the parties at the time they entered the [contract].’ ” Nielsen, 2003 UT 37 at ¶ 7, 78 P.3d 600 (quoting Yeargin, Inc. v. Auditing Div. of Utah State Tax Comm’n, 2001 UT 11,¶ 39, 20 P.3d 287) (second alteration in original). Generally, “[a] contract provision is ambiguous if it is capable of more than one reasonable interpretation because of ‘uncertain meanings of terms, missing terms, or other facial deficiencies.’ ” Fairbourn, 2004 UT 54 at ¶ 10, 94 P.3d 292 (citation omitted). However, “ ‘[a] contract provision is not necessarily ambiguous just because one party gives that provision a different meaning than another party does. To demonstrate ambiguity, the contrary positions of the parties must each be tenable.’ ” Novell, Inc. v. Canopy Group, Inc., 2004 UT App 162,¶ 24, 92 P.3d 768 (quoting R & R Energies v. Mother Earth Indus., Inc., 936 P.2d 1068, 1074 (Utah 1997)). Thus, a contract term may be imprecise, but it is not ambiguous if persons of competent skill and knowledge are capable of understanding its plain meaning. See R & R Energies, 936 P.2d at 1074.

¶ 14 Although both parties here have ascribed different meanings to the “just cause” provision, we cannot conclude that the term is ambiguous. UBMC has taken the position that it has “just cause” to terminate Dr. Hardy’s employment when the business exigencies of the hospital and the interests of the patients warrant a change in personnel. In contrast, Dr. Hardy testified in his post-remand affidavit1 that he understood the *173“just cause” provision to allow UBMC to terminate the Agreement only under specific circumstances:

In essence, UBMC would have just cause to terminate my Agreement if I failed to perform or something substantial changed as to the need of UBMC for pathology services (e.g., hospital closure) which may' be caused by financial concerns. Those financial concerns, however, could not include merely getting a lower price for the pathology services or histology lab supervision.

Hardy also asserts that he understood “just cause” to imply that

[i]f UBMC perceived a need for changes in scope or manner of the provided pathology services, I expected them to approach me regarding such a need, and if jointly agreed upon, I would have adjusted accordingly. If I could not accommodate these changes, then UBMC would be free to terminate the Agreement.

¶ 15 Dr. Hardy’s interpretation is ultimate-' ly untenable for two reasons. First, 'the' evidence on record does not indicate that the parties understood the “just cause” provision to have a unique meaning particular to the Agreement, much less the detailed meaning understood by Dr. Hardy. The parties have stipulated that the Agreement is, for all practical purposes, identical to that of Dr. Hardy’s predecessor, Dr. Joseph Sannella. The “just cause” termination provision was copied from the Sannella contract and included in the Agreement without any substantial negotiation. The parties did not incorporate other documents, such as the UBMC bylaws, to define when either party would have cause to terminate the Agreement. Thus, we must conclude that any particular meaning of “just cause” as understood or intended by Dr. Hardy is unique to himself and is, as he concedes in his brief, irrelevant to its interpretation.2

¶ 16 Second, Dr. Hardy’s interpretation of “just cause” is at odds with the ordinary meaning of the term. Unlike an at-will employment agreement, which allows an employer to discharge an employee for any, or no, reason, see Hansen v. America Online, Inc., 2004 UT 62,¶ 7, 96 P.3d 950, termination for just cause is widely understood to permit discharge'only for “a fair and honest cause or reason, regulated by good faith ... as opposed to one that is trivial, capricious, unrelated to' business needs or goals, or pretextual.” Guz v. Bechtel Nat’l, Inc., 24 Cal.4th 317, 100 Cal.Rptr.2d 352, 8 P.3d 1089, 1100 (2000) (quotations and citation omitted).3 *174This broad definition of just cause allows an employer to discharge an employee not only for misconduct or poor performance but also for other legitimate economic reasons.4 Courts have recognized that “ ‘[i]n deciding whether [just] cause exists, there must be a balance between the employer’s interest in operating its business efficiently and profitably and the employee’s interest in continued employment.... Care must be exercised so as not to interfere with the employer’s legitimate exercise of managerial discretion.’” Cotran v. Rollins Hudig Hall Int'l, Inc., 17 Cal.4th 93, 69 Cal.Rptr.2d 900, 948 P.2d 412, 417 (1998) (citations omitted); see also 82 Am.Jur.2d Wrongful Discharge § 181 (“What constitutes good cause for dismissal of an employee is generally a matter for an employer’s good business judgment_”).

¶ 17 In sum, absent evidence that the parties intended a meaning of “just cause” unique to this particular agreement, we must conclude that the parties intended the term to have its ordinary meaning. Accordingly, we hold that the “just cause” provision is unambiguous and is ordinarily understood to provide employers with power to terminate an employee for legitimate business reasons and in the interest of improving client services as long as the justification is not a mere pretext for a capricious, bad faith, or illegal termination.

II. Reasonable Duration

¶ 18 The trial court determined that the Agreement was void as a matter of law because its duration imposed an unreasonable restraint on the Board as a governmental body. However, having determined that the “just cause” permits termination for legitimate business reasons, we must also conclude that the Agreement was for a reasonable duration. As the supreme court indicated, “the reasonableness of the contract’s duration depends in large part on the amount of discretion this provision gives to successor boards.” Uintah Basin Med. Ctr. v. Hardy, 2002 UT 92,¶ 18, 54 P.3d 1165. We also note that with regard to the reasonableness of a government contract, the supreme court in the past has adopted a relatively low threshold:

If it be made to appear that at the time the contract was entered into, it was fair and just and reasonable, and prompted by the necessities of the situation, or was in its nature advantageous to the [governing body], then such contract will not be construed as an unreasonable restraint upon the powers of succeeding boards.

Bair v. Layton City Corp., 6 Utah 2d 138, 307 P.2d 895, 902-03 (Utah 1957) (quotations and citation omitted); see also Eugene McQuillin, The Law of Municipal Corporations § 29.101 (3d ed. 1999) (“[T]he general rule seems to be that a contract of employment extending beyond the term of the office of the [governing body], is, if made in good faith, ordinarily a valid contract.”).

¶ 19 Here, the contract with Dr. Hardy did not impose a significant restraint on the Board. The “just cause” term provided the board with discretion to terminate Dr. Hardy for good faith business reasons and was, therefore, not binding in perpetuity. Moreover, although “just cause” term appeared in only a few of UBMC contracts, it was fair and beneficial to both parties at the time they entered into the Agreement because, on one hand, it provided the Board with considerable freedom to change the employment decisions of the predecessor boards, and, on the other hand, it guaranteed Dr. Hardy good faith employment. We cannot, therefore, conclude the Agreement imposed an unreasonable duration on the Board.

*175III. UBMC’s Just Cause to Terminate

¶20 The only remaining issue is whether the Board discharged Dr. Hardy for just cause. Because the trial court did not reach this issue in its summary judgment ruling, we remand for the trial court to determine whether the Board terminated Dr. Hardy for legitimate business reasons or whether the termination was capricious, in bad faith, or illegal.5

¶ 21. However, we address here the question of what an employer must show to prove it terminated an • employee for just cause, a matter of first impression for Utah courts. There appear to be three different approaches to this question. Some courts seem to give deference to the justifications stated by the employer. See e.g., Gaudio v. Griffin Health Servs. Corp., 249 Conn. 523, 733 A.2d 197, 208 (1999) (“[A]n employer who wishes to terminate an employee for cause must do nothing more rigorous than ‘proffer a proper reason for dismissal.’ ”) (citation omitted). A few other courts have taken the opposite approach and required the employer to prove that the conditions necessitating termination actually existed. See, e.g., Toussaint v. Blue Cross & Blue Shield of Mich., 408 Mich. 579, 292 N.W.2d 880, 895 (1980) (“[W]here an employer has agreed to discharge an employee for cause only, its declaration that the employee was discharged for unsatisfactory work is subject to judicial review. The jury as trier. of fact decides whether the employee was, in fact, discharged for unsatisfactory work.”).

¶ 22 A far greater number of states have adopted a more balanced approach that requires an employer to justify termination with an objective good faith reason supported by facts reasonably believed to be true by the employer. See, e.g., Towson Univ. v. Conte, 384 Md. 68, 862 A.2d 941, 950-51, 954 (2004) (“[I]n the just cause employment context, a jury’s role is to determine the objective reasonableness of the employer’s decision to discharge, which means that the employer act in objective good faith and base its decision on a reasoned conclusion and facts reasonably believed to be true by the employer.” (emphasis omitted)). These courts recognize that an employer’s justification for discharging an employee should not be taken at face value but also recognize that a judge or jury should not be called upon to second-guess .-an employer’s business decisions. See e.g., Cotran v. Rollins Hudig Hall Int’l, Inc., 17 Cal.4th 93, 69 Cal.Rptr.2d 900, 948 P.2d 412, 417 (1998) (“ ‘Although the jury must assess the legitimacy of the employer’s decision to discharge, it should not be thrust into a managerial role.’ ” (citation and emphasis omitted)).

¶ 23 We agree with the majority of courts and adopt the objective reasonableness approach. Accordingly, in order to establish just cause on remand, UBMC need not prove that the Board’s assumptions in terminating Dr. Hardy were true or that the benefits it expected were actually realized. Rather, UBMC need only show that the Board acted in good faith by adequately considering the facts it reasonably believed to be true at the time it made the decision.

CONCLUSION

¶ 24 We reverse the trial court’s order granting summary judgement to UBMC and remand for further proceedings consistent with this opinion.

¶ 25 WE CONCUR: JAMES Z. DAVIS and WILLIAM A. THORNE JR., Judges.