Opinion
No. 64628-1-I.
Filed: January 31, 2011.
Appeal from a judgment of the Superior Court for King County, No. 08-2-21993-3, Laura C. Inveen, J., entered November 23, 2009.
Affirmed by unpublished opinion per Appelwick, J., concurred in by Becker and Spearman, JJ.
Professional Network had a contract to provide services supervising parent-child visitations when referred by social workers. The contract expired and was not renewed. Professional Network sued, claiming tortious interference with a business expectancy, breach of contract, and tortious termination of the contract in violation of public policy. The trial court dismissed all claims on summary judgment. We affirm.
FACTS
Professional Network, Inc., provides the service of supervising parent-child visitations. It entered into a client service contract with the Department of Social and Health Services (DSHS) Division of Children and Family Services (DCFS), Region 4. This agreement enabled Professional Network to provide such supervision, as well as transportation, to DSHS clients when referred by social workers. DCFS then compensated Professional Network for the supervision and transportation at fixed hourly rates. Client services contracts were non-competitive, defined as a direct award to a contractor when multiple firms are available to provide the same or similar type of service and multiple contacts may be awarded. Professional Network in fact obtained several of such contracts from 1996 to 2005, with each contract being repeatedly renewed. The first contract at issue in this case began on July 1, 2004 and expired on November 30, 2004. The parties then renewed that contract, with the period for the second contract beginning on December 1, 2004 and expiring on June 30, 2005.
In 2004 and 2005, Region 4 began to scrutinize Professional Network's contract as part of an overall analysis of the budget and became concerned about billing and performance issues. In fall of 2004, Region 4 notified Professional Network of an overpayment for client services. Professional Network disputed the claim. On January 4, Region 4 submitted a formal overpayment notice. Professional Network exercised its right to obtain review of the notice through administrative procedures.
Professional Network and DSHS eventually settled on the overpayment claim on December 29, 2005.
The existing contract expired by its own terms on June 30, 2005. Paula Williams, Regional Contract Manager, advised Professional Network that it must have a renewed contract in place before providing service starting on July 1, 2005. After several requests to obtain a contract, Williams and Professional Network negotiated a contract. DCFS Region 4 negotiated a contract for July 1, 2005, through September 30, 2005, with a maximum contract amount of $10,000. Professional Network signed and returned the contract on June 29, 2005. On June 30, 2005, Williams informed Professional Network that DSHS refused to sign the contract. Professional Network was forced to cancel all scheduled visitations and has not been a provider since that time.
DSHS also canceled other contracts involving the same business owners. Professional Network provided security services to four Region 4 offices. On December 23, 2004, DSHS canceled the security services contract for three of the offices. Another company owned by the same principals as Professional Network, Community Support Solutions, had a contract to provide Medicaid personal care services, and respite care and foster care support case aid services. That contract was also canceled in December 2004.
Professional Network sued DSHS, alleging that it tortiously interfered with a business expectancy, breached its contract with Professional Network, and committed a tort against public policy. The trial court granted summary judgment dismissing all claims. Professional Network appeals.
Professional Network also raised claims relating to a separate contract it had to provide security for DSHS. The parties settled all claims relating to the security contract.
DISCUSSION
I. Standard of Review
A motion for summary judgment presents a question of law reviewed de novo. Osborn v. Mason Cnty., 157 Wn.2d 18, 22, 134 P.3d 197 (2006). A trial court grants summary judgment if there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law. CR 56(c). We construe the evidence in the light most favorable to the nonmoving party. Folsom v. Burger King, 135 Wn.2d 658, 663, 958 P.2d 301 (1998). We review a ruling on a motion for summary judgment based solely on the record before the trial court at the time of the motion for summary judgment. RAP 9.12; Wash. Fed'n of State Emps., Council 28 v. Office of Fin. Mgmt., 121 Wn.2d 152, 163, 849 P.2d 1201 (1993). An adverse party may not rest upon mere allegations or denials, but must instead set forth specific facts showing the existence of a genuine issue for trial. McBride v. Walla Walla Cnty., 95 Wn. App. 33, 36, 975 P.2d 1029, 990 P.2d 967 (1999); CR 56(e).
II. Tortious Interference with a Business Expectancy
Professional Network first challenges the trial court's summary judgment dismissal of its claim of tortious interference with a business expectancy. To establish tortious interference with a business expectancy, a plaintiff must prove each of the following elements:
(1) the existence of a valid contractual relationship or business expectancy; (2) that defendants had knowledge of that relationship; (3) an intentional interference inducing or causing a breach or termination of the relationship or expectancy; (4) that defendants interfered for an improper purpose or used improper means; and (5) resultant damage.
Leingang v. Pierce Cnty. Med. Bureau, Inc., 131 Wn.2d 133, 157, 930 P.2d 288 (1997).
DSHS contends that it could not have tortiously interfered with its contract with Professional Network. We agree. A party cannot tortiously interfere with its own contract. Reninger v. Dept. of Corr., 134 Wn.2d 437, 448, 951 P.2d 782 (1998); Houser v. City of Redmond, 91 Wn.2d 36, 39, 586 P.2d 482 (1978). The remedy for a party to a contract lies in contract. See Reninger, 134 Wn.2d at 448; Houser, 91 Wn.2d at 39.
Professional Network claims that DSHS intentionally interfered with the business expectancy between Professional Network and the clients it served. The key question here is whether the first element of tortious interference, a valid contractual relationship or business expectancy, existed between Professional Network and the DSHS-referred clients. Professional Network claims that a business expectancy existed because it had the same duties and potential liabilities to the clients as if the clients were paying it directly for the services. DSHS contends that no contractual relationship existed between Professional Network and the clients, because the clients did not choose the service provider, the clients did not pay for the services but rather received services paid for by DSHS, and DSHS had the sole authority to authorize services.
In its complaint, Professional Network claimed that DSHS had intentionally interfered with Professional Network's relationships with its own employees and referral sources (presumably DSHS social workers). Professional Network did not allege in its complaint that it had a business expectancy from the clients it served. But, at summary judgment and on appeal, Professional Network did not argue that DSHS interfered with its contractual relationship with its employees. Instead, it argued, both here and at the trial court level, that DSHS tortiously interfered with its relationship with the clients.
No economic benefit arose from Professional Network's relationship with the clients it served other than the payments made by DSHS. Quoting Scymanski v. Dufault, 80 Wn.2d 77, 84-85, 491 P.2d 1050 (1971), Professional Network argues that it need not prove a contract with the clients but merely "'a relationship between parties contemplating a contract, with at least a reasonable expectancy of fruition.'" But, here, there was no expectation of a contract because the clients had not made any promise to Professional Network. Therefore, the only contract or business expectancy at issue in this case was between Professional Network and DSHS. DSHS could not be liable for tortious interference and the trial court correctly dismissed the claim.
III. Breach of Contract
Professional Network next claims that DSHS breached its contract in the following ways: by failing to follow the termination procedures outlined in the contract; by breaching the obligation of good faith and fair dealing; and by failing to renew as required by the contract.
Professional Network argues if, under Reninger and Houser, a claim for tortious interference with a business expectancy fails for lack of a business expectancy with a third party, the party has a remedy in an action for breach of contract. But, this remedy is not automatic. Reninger and Houser simply state that if a person is a party to the contract, its remedy, if any, is in breach of contract rather than tort. Reninger, 134 Wn.2d at 448; Houser, 91 Wn.2d at 39.
In the summary judgment proceedings, Professional Network argued only that DSHS breached the contract by attempting to terminate the contract without following the prescribed termination procedures and in violation of the best interests of DSHS. Any attempt to terminate the contract was withdrawn. The contract was honored for its stated duration and merely expired on its own terms. DSHS did not breach the contract by failing to follow the prescribed termination procedures, because no termination occurred.
Professional Network's additional arguments were not raised below. Arguments not raised below will not be considered on appeal unless they concern a manifest error affecting a constitutional right. RAP 2.5(a)(3); State v. Sengxay, 80 Wn. App. 11, 15, 906 P.2d 368 (1995). Professional Network does not allege that its argument affects a constitutional right, but merely asserts that because it alleged breach of contract in its complaint and relies on evidence from the record below, the argument is fairly raised on appeal. This is insufficient to comply with the requirements of RAP 2.5(a)(3) and we need not address these arguments.
Even if we did address Professional Network's untimely arguments, there would be no grounds for Professional Network's breach of contract claim. To recover for breach of contract, Professional Network must establish that they suffered damages which were (1) within the contemplation of the parties at the time the contract was made, (2) the proximate result of DSHS's breach, and (3) proven with reasonable certainty. Larsen v. Walton Plywood Co., 65 Wn.2d 1, 15, 390 P.2d 677, 396 P.2d 879 (1964). Professional Network alleges facts relating to the DSHS employees' understanding that the contracts would be continually renewed and relating to the historical renewal of its own contract. Professional Network does not allege an understanding it had with DSHS, nor a general expectation within the trade of which both parties were aware, that would give rise to a contractual obligation. Additionally, the contract was fully integrated in that the terms of the contract limited it to the written materials and any materials incorporated by reference. Even if the contract was renewed, it expressly provides that DSHS is not required to make any referral for services. Professional Network cannot prove that it suffered any damages. Failure to prove harm prevents a cognizable claim for breach of contract and summary judgment was proper.
We hold that the trial court did not err in dismissing Professional Network's breach of contract claim.
IV. Wrongful Termination in Violation of Public Policy
Professional Network finally claims that DSHS wrongfully terminated its contract in violation of public policy. Employees in Washington are generally terminable at-will, meaning they can quit or be fired for any reason. Gardner v. Loomis Armored, Inc., 128 Wn.2d 931, 935, 913 P.2d 377 (1996). A narrow exception to this rule allows an employee to bring a tort action if his or her termination contravenes public policy. Id. This exception is "applied cautiously to avoid allowing the exception to swallow the general rule." Anica v. Wal-Mart Stores, Inc., 120 Wn. App. 481, 495, 84 P.3d 1231 (2004). To establish a claim under the exception, a plaintiff must prove that (1) a clear public policy exists, (2) discouraging the employee's conduct would jeopardize the public policy, (3) and the public-policy-linked conduct caused the dismissal. Id. Also, (4) the employer must be unable "to offer an overriding justification for the dismissal." Id. The wrongful termination in violation of public policy claim has only previously been applied in the employment context. See, e.g., Hubbard v. Spokane Cnty., 146 Wn.2d 699, 703, 50 P.3d 602 (2002); Thompson v. St. Regis Paper Co., 102 Wn.2d 219, 221, 685 P.2d 1081 (1984).
Courts have found public policy violations when employees are fired for refusing to commit an illegal act, performing a public duty or obligation, exercising a legal right or privilege, or engaging in whistle-blowing activity. Korslund v. DynCorp Tri-Cities Servs., Inc., 156 Wn.2d 168, 178, 125 P.3d 119 (2005).
Professional Network argues that DSHS wrongfully terminated its contract in violation of public policy as retaliation for Professional Network exercising its legal right to challenge an overpayment claim. Professional Network does not claim that it was an employee of DSHS. Instead, it seeks to extend the tort to the contractor context. Professional Network argues that its contractual relationship with DSHS is sufficiently similar to at-will employment that the same type of policy considerations are at play and therefore the tort should be extended.
This case does not merit the extension of this doctrine to contractual relationships. In Awana v. Port of Seattle, several employees of a subcontractor performing asbestos abatement work refused to perform a project which they felt was unsafe and instead assisted the Department of Labor and Industries in their investigation of the job site. 121 Wn. App. 429, 431-32, 89 P.3d 291 (2004). The Port impounded their security badges, effectively ending their employment on that job. Id. at 432. Several weeks later, the subcontractor terminated each employee who had refused to work. Id. The employees sued their employer and the Port, alleging wrongful discharge in violation of public policy prohibiting retaliation against whistleblowers. Id. at 433. The trial court granted summary judgment and dismissed all claims against the Port. Id. at 432. This court declined to impose liability for wrongful discharge on the Port, who was neither a direct nor a de facto employer. Id. at 435-37. We noted that existing case law did not support the claim that "the relationship between employer and employee might be dispensed with altogether." Id. at 435. We emphasized that the workers were not independent contractors and that other remedies were available, including a wrongful discharge claim against the subcontractor and a tortious interference claim against the Port. Id. at 435-37. We concluded by emphasizing the narrow nature of the tort:
The wrongful discharge doctrine must be extended with caution. Perhaps a case can be made for its application outside the traditional employment context. But the doctrine is a narrow and specialized craft, and should not be sent adventuring when no rescue appears to be called for.
Id. at 437.
We decline to extend the tort of wrongful termination in violation of public policy to this contractual relationship. We leave open the question of whether the doctrine might extend to another context, as we did in Awana. We hold that the doctrine does not apply here and the trial court properly dismissed Professional Network's claim for wrongful termination in violation of public policy.
We affirm.