Appeal from the Circuit Court of Marion County
Submitted: 21 September 1993
Charles M. Surber, Jr., Esq.
Jackson & Kelly
Charleston, West Virginia
Attorney for the Appellee
William C. Garrett, Esq.
Gassaway, West Virginia
Attorney for the Appellants Mack W. Bailey, et al.
Linda Nelson Garrett, Esq.
Summersville, West Virginia
Attorney for the Appellant George Williams
William W. Talbott, Esq.
Webster, Springs, West Virginia
Attorney for the Appellants George Hickman, et al.
JUSTICE NEELY delivered the Opinion of the Court.
1. Before one can be held to have extended an offer to
another, whether such offer is made by word or act, there must have
been some form of communication of the offer; otherwise there can
be no contract binding on the alleged offeror.
2. "Where an employee seeks to establish a permanent
employment contract or other substantial employment right, either
through an express promise by the employer or by implication from
the employer's personnel manual, policies, or custom and practice,
such claim must be established by clear and convincing evidence."
Syllabus Point 3, Adkins v. Inco Alloys Intern., Inc., 187 W.Va.
219, 417 S.E.2d 910 (1992).
3. "In order to establish an implied contract right by custom and usage or practice, it must be shown by clear and convincing evidence that the practice occurred a sufficient number of times to indicate a regular course of business and under conditions that were substantially the same as the circumstances in the case at issue. Such a showing is necessary to demonstrate the parties' implied knowledge of and reliance on the custom or practice, an essential element of the contract." Syllabus Point 4, Adkins v. Inco Alloys Intern., Inc., 187 W.Va. 219, 417 S.E.2d 910 (1992).
This is an appeal by the plaintiffs below (hereinafter
"the plaintiffs"), former salaried employees of Sewell Coal
Company, from a judgment entered on 25 August 1992 by the Circuit
Court of Marion County that affirmed a jury verdict in favor of the
defendants below, Sewell Coal Company (hereinafter "Sewell"), in an
action to recover unpaid severance pay.
Sewell, a subsidiary of the Pittson Coal Group located in
Lebanon, Virginia, operates a coal mining facility in Nicholas
County, West Virginia. In early 1982, a severe downturn in the
coal market forced Sewell to shut down some of its facilities and
to lay off certain of its supervisory and clerical employees.
Through March and April 1982, Sewell paid such laid off employees
two weeks severance in conformity with their normal severance plan.
When, in May 1982, it became apparent that the layoffs
would be permanent, Gene Matthis, president of the Pittson Coal
Group, sent a letter to all laid-off salaried personnel informing
them that a special severance procedure would be used for that
layoff and would apply retroactively to salaried employees laid off
since 1 January 1982. A memorandum attached to the letter
explained the special procedure: the laid-off employee would
receive one week's severance pay for each year of service, with a
minimum of two weeks, not to exceed twenty weeks' severance pay.
The letter and accompanying memorandum went only to those salaried employees who were laid off. They were not distributed to the work force in general, nor were they posted or circulated among the remaining work force.
Further layoffs occurred in August and October 1982. On
each occasion, the laid-off employee received a letter similar to
that of May 1982 setting forth the special severance procedure. On
each occasion the letter and accompanying memorandum were sent only
to those salaried employees who were being laid off.
In November 1982, Sewell temporarily shut down one of its
mines. Believing that the layoff resulting from the shutdown would
be only temporary, Mr. Matthis instructed Sewell to pay the
temporarily laid off employees the regular two weeks' severance
pay. When, in April 1983, it became apparent that most of those
temporarily laid off in November 1982 would not be recalled, Mr.
Matthis implemented the "Guidelines to Effect Permanent Severance."
Pursuant to these guidelines, once the employees laid off in
November 1982 were informed that they would be permanently severed
and paid under the special severance procedure, the special
severance procedure would be discontinued and would not be used in
any future layoff. The Guidelines were distributed only to those
managers who were to implement them. They were not provided to the
general work force to whom they had no application.
Layoffs continued through 1987. Those employees laid off
after the special severance procedure was discontinued were paid
the regular two weeks severance pay. The plaintiffs are salaried
employees who were laid off after the completion of the special
severance procedure. They filed two lawsuits claiming entitlement
to the special severance. The jury found that Sewell had not
established and did not maintain a plan, fund or program for the
purpose of providing severance benefits to its salaried employees
and thus returned a verdict in favor of Sewell.
The principal issue on appeal is whether an employee's
right to severance pay can be implied solely from an employer's
past practices in the absence of affirmative acts, promises or
written representations by that employer. The plaintiffs maintain
that the written severance pay policy appended to the letters sent
to laid-off employees in May, August and October 1982 and April
1983 became a term and condition of their employment as well as an
expressed and implied part of their employment contract which
entitles them to severance pay. We conclude such is not the case
and affirm the judgment of the Circuit Court.
It is elementary that mutuality of assent is an essential element of all contracts. Wheeling Downs Racing Ass'n v. West Virginia Sportservice, Inc., 158 W.Va. 935, 216 S.E.2d 234 (1975).
In order for this mutuality to exist, it is necessary that there be
a proposal or offer on the part of one party and an acceptance on
the part of the other. Both the offer and acceptance may be by
word, act or conduct that evince the intention of the parties to
contract. That their minds have met may be shown by direct
evidence of an actual agreement or by indirect evidence through
facts from which an agreement may be implied. See Lacey v.
Cardwell, 216 Va. 212, 217 S.E.2d 835 (1975); Charbonnages de
France v. Smith, 597 F.2d 406, 415-416 (4th Cir. 1979).
The plaintiffs contend that Sewell's adoption of the
special severance plan constituted an offer that was accepted by
the plaintiffs when they continued working for the company, and
therefore, as a consequence, they were entitled to severance pay on
termination of employment. However, before one can be held to have
extended an offer to another, whether such offer is made by word or
act, there must have been some form of communication of the offer;
otherwise there can be no contract binding on the alleged offeror.
See Cook v. Heck's Inc., 176 W.Va. 368, 342 S.E.2d 453 (1986). As
we stated in Cook, 176 W.Va. at 374, 342 S.E.2d at 459 (1986), "the
offer must be definite in form and must be communicated to the
In the case before us, the plaintiffs never received
anything in writing nor even saw the letters by which laid off
employees were made aware of the temporary severance policy. They
were never orally promised the special severance. Moreover, the
special severance procedure was identified neither in the employee
benefits manual provided to all salaried employees nor in the
company's policy manual. Instead, it was applied on a layoff by
layoff basis from May 1982 through April 1983. Thus, there was no
offer and no mutuality of assent between Sewell and the appellants
as to the special severance plan. And, in this case we decline to
apply the ancient maxim of politics, law and human affairs that no
good deed will go unpunished. See Committee on Legal Ethics v.
Morton, 186 W.Va. 43, 45 n.2, 410 S.E.2d 279, 281 n.2 (1991).
The plaintiffs alternatively contend that the letters and
memoranda sent to laid off employees during the pendency of the
special severance procedure established by implication their right
to severance pay in the event of their termination.
Although West Virginia law presumes employment to be
terminable at will, we have also recognized that contractual
provisions relating to discharge or job security may alter the at
will status of a particular employee. Cook v. Heck's, Inc., 176
W.Va. at 373, 342 S.E.2d at 458 (1986). Thus, representations
contained in an employee handbook or policy manual and intended to
be used by employers can meet the normal requirements for formation
of an implied contract. Adkins v. Inco Alloys International, Inc.,
187 W.Va. at 227, 417 S.E.2d at 918 (1992).
Because West Virginia operates on the presumption that
every employment relationship is terminable at will, however, any
promises alleged to alter that presumptive relationship must be
very definite to be enforceable. Suter v. Harsco Corp., 184 W.Va.
734, 403 S.E.2d 751 (1991) (emphasis in original). The burden is on
the party contending that the relationship was other than
terminable at will to rebut the presumption of employment
terminable at will. Id. Where, as here, employees seek to
establish a substantial employment right, either through an express
promise by the employer or by implication from the employer's
personnel manual or policies, such claim must be established by
clear and convincing evidence. Adkins v. Inco Alloys
International, Inc., 187 W.Va. at 225, 417 S.E.2d at 916 (1992).
In this case, the plaintiffs have failed to prove by
clear and convincing evidence that a promise containing definitive
and ascertainable terms was made to each of them. Sewell
distributed an employee benefits manual to salaried employees that
explained all of the employment benefits available. The manual,
however, contained no reference to severance pay. Sewell also
maintained a policy manual that was provided to those managers
responsible for implementing and enforcing company policy. Again,
there was no reference in that manual to severance pay. The only
writing pertaining to the special severance procedure was sent to
the employees who were laid off during the pendency of the special
severance plan; no writing went to the plaintiffs and no promises
were made to them. We find no implied contract obligating Sewell
to pay the plaintiffs severance pay.
The plaintiffs maintain that Sewell's practice of
awarding laid off employees the special severance pay during the
pendency of the temporary severance procedure constituted an
implied promise that they too would receive the special severance
pay should they be terminated.
In order to establish an implied contract by custom and
usage, it must be shown by clear and convincing evidence that the
practice occurred a sufficient number of times to indicate a
regular course of business. Such a showing is necessary to
demonstrate the parties' implied knowledge of and reliance on the
custom or usage, an essential element of such a contract. Adkins
v. Inco Alloys Intern., Inc., 187 W.Va. at 227, 417 S.E.2d at 918
The case of Shipley v. Pittsburgh & L.E.R.R. Co.,
D.C.W.D.Pa.1949, 83 F.Supp. 722, 749, quoted in Adkins, aptly
summarizes the law in this area:
A practice to rise to the dignity of a custom
so as to enter into and form a part of a
contract must possess those elements of
certainty, generality, fixedness, and unifor
mity, as are recognized by the law as essen
tial to constitute a custom. A loose,
variable custom or discretionary practice does
not rise to the dignity of a custom so as to
control the rights of the parties to a
contract. If the usage leaves some material
element to the right of exercising an option,
or discretion, of one of the parties, it does
not constitute a custom.
In this case, the appellants have failed to establish by
clear and convincing evidence that Sewell had, by custom and
practice, established a severance policy for employees permanently
laid off. The evidence indicates that application of the plan was
loose and variable; it was implemented on a layoff by layoff basis
in response to the vicissitudes of the coal industry. There is no
evidence, other than the plaintiffs' subjective interpretation of
events, to suggest that Sewell intended the special severance pay
plan to be available generally and uniformly. Without affirmative
acts, promises or written representations by an employer, an
employee's right to severance pay cannot be implied solely from an
employer's past generous acts.
For the foregoing reasons, the decision of the Circuit
Court of Marion County is affirmed.