In Goldman v. White Plains Center for Nursing Care, LLC, the New York Court of Appeals recently declined to extend the plaintiff’s written employment contract for a successive term, even though she continued to work after the contract’s stated expiration date. In 1990, the plaintiff, Lorraine Goldman, entered into a two-year written employment agreement to become the administrative director of two skilled nursing facilities. The employment agreement provided that negotiations for renewal were to be made within nine months before the contract term expired and that expiration of the contract released the employer of all obligations and responsibilities in connection therewith. The contract also contained a clause acknowledging that the contract encompassed the entire understanding of the parties and could only be modified in a writing signed by the parties. Ms. Goldman’s two-year contract term expired without modification of the original contract and without negotiations for renewal. She continued to be employed in the same position for over 12 years after the expiration of her original contract term. In 2004, the skilled nursing facilities were sold and Ms. Goldman’s employment was terminated.
Ms. Goldman sued the company for breach of contract, claiming that her continued employment after the expiration of the original contract term demonstrated that “the parties intended to renew the contract for successive one-year terms.” In support of her argument, Ms. Goldman relied on a 19th Century common law theory supporting an inference of an intent to renew for a successive one-year term when an employee continues working past the expiration of the original contract term. Ms. Goldman prevailed at trial and the company appealed. Applying basic contract law principles, the Appellate Division concluded that the express language of the employment contract was controlling and that it would be inconsistent with those terms to imply any arrangement after the two-year period.
The New York Court of Appeals agreed, stating, “A fundamental tenet of contract law is that agreements are construed in accordance with the intent of the parties and the best evidence of the parties’ intent is what they express in their written contract.” Because the employment contract was clear and unambiguous as to (1) a contract term of two years; (2) the process for negotiating successive terms; and (3) the contract encompassing the entire understanding of the parties, the Court concluded it had no reason to look “outside the four corners of the document.” The Court also noted that implying additional terms would be inconsistent with the longstanding employment-at-will doctrine, which allows either employer or employee to terminate an employment relationship at any time, absent an agreement for a specified term.