Facts
- Karl Bjorkman worked for Arctic Cat, Inc. at its Thief River Falls, Minnesota facility, beginning in 1991 and serving as an international sales manager for a number of years before resigning in January 2009.
- In May 2007, Arctic Cat announced plans to relocate many managerial positions from Thief River Falls to a facility in Plymouth, Minnesota, although the move did not occur as soon as anticipated.
- In July 2008, Arctic Cat’s CEO, Chris Twomey, and vice president of human resources, Terry Blount, met with Bjorkman and presented three options: (1) move to Plymouth with a $10,000 salary increase, (2) seek another position in Thief River Falls, or (3) resign and receive severance equal to one week’s pay for each year of service.
- At Bjorkman’s request, Arctic Cat confirmed the options in a July 30, 2008 letter and asked Bjorkman to respond by August 8, 2008.
- On August 8, 2008, Bjorkman did not accept any option; instead, he asked Arctic Cat to increase the Plymouth salary offer based on his market research.
- Blount responded that Arctic Cat would not increase compensation and asked Bjorkman to respond as soon as possible, but Bjorkman still did not accept an option.
- On January 8, 2009, Twomey met with Bjorkman again and presented two options: (1) relocate to Plymouth at a $90,000 salary, or (2) stay in Thief River Falls in his current position and salary with a 3% raise retroactive to July 2008; severance was not mentioned.
- On January 9, 2009, Bjorkman spoke with an HR manager about resigning and severance; she told him he was probably not eligible for severance and that he should confirm any severance arrangement with Blount.
- Bjorkman did not contact Blount. On January 12, 2009, he submitted a resignation letter stating he was accepting the severance package discussed earlier.
- On January 16, 2009, Blount informed Bjorkman that no severance option was available.
- Bjorkman sued Arctic Cat for breach of contract and promissory estoppel. After a bench trial, the district court entered judgment for Arctic Cat, finding the severance offer had been modified or revoked before Bjorkman attempted to accept it. Bjorkman appealed.
Issues
- After a bench trial, did the district court clearly err in finding that Arctic Cat’s July 2008 severance option had been revoked or changed before Bjorkman’s January 2009 resignation, so that no severance contract was formed?
- Did the district court clearly err in rejecting promissory estoppel because Bjorkman failed to show a clear, continuing promise of severance and reasonable reliance when he resigned?
Decision
- The Minnesota Court of Appeals affirmed the judgment for Arctic Cat.
- The court held the record supported the district court’s finding that Bjorkman did not accept the July 2008 severance option by the stated deadline and that later communications and the January 2009 meeting showed the severance option was no longer available.
- The court also affirmed the rejection of promissory estoppel because Bjorkman did not prove a clear and definite promise of severance at the time of resignation or objectively reasonable reliance, particularly after being told he was probably not eligible and advised to confirm with the HR vice president.
Legal Principles
- A contract forms only when an offer is accepted before it is revoked, withdrawn, or otherwise no longer open.
- A reply that seeks different terms or continues negotiation, rather than giving unconditional assent, is not an acceptance.
- When an offer includes a response deadline, failure to accept by that date supports a finding that the offer lapsed or was not left open for later acceptance.
- Promissory estoppel requires (1) a clear and definite promise, (2) intent to induce reliance and actual reliance, and (3) a need to enforce the promise to prevent injustice; reliance is not reasonable when later events and communications signal the promise is not available and the claimant fails to confirm.
- On appeal from a bench trial, an appellate court reviews factual findings for clear error and will affirm when the record supports the findings and the findings support the judgment.
Conclusion
The court affirmed judgment for Arctic Cat because Bjorkman did not accept the July 2008 severance option within the time requested, subsequent communications and the January 2009 meeting reflected different options that did not include severance, and Bjorkman’s decision to resign expecting severance—after being told he was probably not eligible and without confirming with the decisionmaker—did not establish either an enforceable severance contract or reasonable reliance for promissory estoppel.