Park Nicollet Clinic v. Hamann
808 N.W.2d 828, 33 I.E.R. Cas. (BNA) 285, 2011 Minn. LEXIS 762 (2011)
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Rule of Law:
A cause of action for breach of an employment contract accrues, and the statute of limitations begins to run, at the time of the employer's single, discrete breach, which is the unequivocal refusal to perform a present contractual obligation, not when the employee later experiences the financial consequences of that breach.
Facts:
- In 1974, Dr. Arlyn Hamann began working as a physician for Park Nicollet Clinic.
- In 1995, Park Nicollet adopted a policy allowing physicians who were at least 60 years old with 15 years of 'night call' duty to be exempt from night call without a salary reduction.
- In early 2004, Hamann informed his Department Chair that he planned to exercise his rights under the policy later that year upon turning 60.
- The Department Chair confirmed Hamann's eligibility but requested he postpone exercising his rights until April 2005 due to staffing shortages, to which Hamann agreed.
- In April 2005, when Hamann again informed the Department Chair he wished to exercise his rights, the Chair told him the policy no longer existed, would not be honored, and his salary would be cut if he refused night call.
- Based on this conversation, Hamann continued taking night call to avoid a pay cut.
- In February 2008, Hamann withdrew from taking night call for health reasons.
- Upon his withdrawal from night call, Park Nicollet reduced Hamann's salary.
Procedural Posture:
- Dr. Hamann filed a complaint against Park Nicollet Clinic in a Minnesota district court (trial court) for breach of contract and promissory estoppel.
- In lieu of an answer, Park Nicollet filed a motion to dismiss for failure to state a claim, arguing the statute of limitations had expired.
- The district court granted Park Nicollet's motion to dismiss.
- Hamann, as appellant, appealed to the Minnesota Court of Appeals.
- The Court of Appeals reversed the district court's dismissal, holding that a new cause of action accrued with each reduced paycheck.
- Park Nicollet, as petitioner, was granted review by the Minnesota Supreme Court.
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Issue:
Does the statute of limitations for a breach of an employment contract claim begin to run when an employer unequivocally informs an employee it will no longer honor a policy, or does it begin to run when the employer later takes an action, such as reducing the employee's salary, that results from the earlier refusal to honor the policy?
Opinions:
Majority - Gildea, Chief Justice
Yes, the statute of limitations begins to run when the employer unequivocally refuses to honor the policy. A cause of action accrues when all elements of the claim exist, such that it could survive a motion to dismiss. Here, the breach of contract occurred in April 2005 when Park Nicollet, upon Hamann's demand for performance, refused to honor the policy. This was a single, discrete wrongful act. The subsequent salary reduction in 2008 was merely a consequence or damage resulting from the 2005 breach, not a new breach giving rise to a new cause of action. The court distinguished this from cases involving continuing obligations, like installment payments, where each missed payment is a new breach. The court also rejected the argument that the 2005 refusal was an anticipatory repudiation, because performance was due immediately upon Hamann's demand, not at some future date.
Analysis:
This decision solidifies the 'single breach' rule in the context of employment contracts, emphasizing that the statute of limitations is triggered by the wrongful act itself, not by the subsequent manifestation of damages. It places a clear burden on employees to file suit promptly after an employer definitively repudiates a vested contractual right. The ruling clarifies the distinction between a one-time breach with continuing financial consequences and a series of separate, ongoing breaches, thereby limiting the applicability of the 'continuing violation' doctrine in similar employment disputes. Future litigants must now pinpoint the precise moment a present obligation was refused, as that moment starts the clock, regardless of when financial harm is ultimately felt.
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