NO. 83-542
I N THE SUPREME COURT O F THE STATE OF MONTANA
1984
JACQUELINE DARE,
P l a i n t i f f and A p p e l l a n t ,
-VS-
MONTANA PETROLEUM MARKETING C O . ,
D e f e n d a n t and R e s p o n d e n t .
APPEAL FROM: D i s t r i c t C o u r t of t h e T h i r t e e n t h J u d i c i a l D i s t r i c t ,
I n and f o r t h e C o u n t y of Y e l l o w s t o n e ,
T h e H o n o r a b l e C h a r l e s L u e d k e , Judge p r e s i d i n g .
COUNSEL O F RECORD:
For Appellant:
N y e and M e y e r , B i l l i n g s , Montana
For Respondent:
H e r n d o n , H a r p e r and M u n r o , B i l l i n g s , M o n t a n a
S u b m i t t e d on B r i e f s : March 15, 1 9 8 4
Decided: S e p t e m b e r 1 0 , 1984
SEF v Y Q ~ ~
Filed: L i ~ ~ l
Clerk
Mr. Justice Fred J. Weber delivered the Opinion of the Court.
Jacqueline Dare appeals from summary judgment granted by
the Thirteenth Judicial District Court, Yellowstone County,
in favor of Montana Petroleum Marketing Company on her claims
for relief arising from termination of her employment. We
reverse.
The sole issue on appeal is whether the District Court
erred in granting summary judgment to defendant employer.
Jacqueline Dare worked as a cashier and station
attendant at defendant's Husky service station in Billings
from July 14, 1982 to January 23, 1983. She was hired by
oral agreement by manager Dick Bertrand, who was also her
supervisor.
Employee responsibilities were specified in instructions
the company furnished to station managers. These
instructions began with the admonition:
"Managers: Following are some items that must be
covered and understood by all new employees during
their training period."
The parties dispute whether manager Dick Bertrand reviewed
these instructions with Dare or whether she in fact knew of
the policies listed in these instructions. The instructions
defined employee duties, conduct and appearance. They did
not include any disciplinary or termination procedures. The
instructions contained a paragraph stating:
"We draw from our existing employees to fill most
of our open manager positions. An employee who
continually requires little or no supervision and
shows some personal initiative in wanting to learn
the ins/outs and do/don1ts of the petroleum
retailing field will most likely have a station of
his own in the not too d.istant future.''
Dare began working for defendant in July at $3.35 per
hour. Her pay was raised to $3.65 per hour in October and
she received health insurance benefits. She stated in her
deposition that she was promised another raise in three
months, but never received it. She also said Bertrand told
her he wanted her to learn to do the station's bookkeeping.
Dare stated in her deposition that on January 22, 1983
she fell in her front yard when coming home from work. She
went to the hospital and was given a neck brace to wear. As
a result of the fall, she was ill before she went to work on
Sunday, January 23, 1983. Dare called a co-worker to ask if
she would work in Dare's place, but she could not. Dare went
...
to work at 2 p.m. and worked until around 5 p.m., when she
called Bertrand and told him she wasn't sure she could
complete her shift. Bertrand told her to try. She took some
pain pills and threw up in the garbage can. A customer
called Bertrand to inform him of Dare's condition. Bertrand
called Dare back and told her, "I am coming in to work for
you, and when I get there you're fired."
Dare and Bertrand give contradictory versions of why
Dare was fired.
Bertrand claimed Dare refused to clean designated areas
despite verbal warnings on two occasions. He claimed he had
warned her about having men hang around the station while she
worked, but that on numerous occasions he had entered the
station and found men and women standing at the counter
eating hamburgers and french fries while Dare was trying to
wait on customers. Bertrand claimed Dare closed the station
5 minutes early on one occasion and that he told her closing
early was grounds for immediate dismissal. He claimed that
even though she promised it would not happen again, he later
twice witnessed her closing early. Bertrand states that on
December 3, 1982 he placed Dare on probation for 30 days,
telling her she would be dismissed if her work performance
did not improve. He stated tha.t her "constant" calls
complaining of being too sick to work, coming in late and
lack of responsibility were "getting to he too much."
Dare stated in deposition that although Bertrand had
warned her and all station employees about cleaning duties,
she never refused to clean anything. She stated that one
warning resulted from her failure fully to clean up the men's
restroom after the toilet overflowed. She stated that
management had not provided gloves or other equipment for
cleanup and that she "did not want to touch it." She stated
she was never warned about friends hanging around the station
because there were no friends hanging around the station.
She said Bertrand warned - employees against allowing men
all
to hang around.
Dare admitted closing 5 minutes early on Christmas Eve
after no customers came in for 2 1/2 hours. She claimed
Bertrand did not tell her closing early was grounds for
dismissal, but simply told her not to let the owner catch her
or she would be "in trouble." She denied closing early on
any occasion other than Christmas Eve. Moreover, she stated
she missed work for illness only once during her 6 months of
employment. Finally, she stated she was never told she was
being placed "on probation," although she admitted Bertrand
had told her that unless her work performance improved she
would be terminated. However, she states that she was later
told on several occasions that she was doing an excellent
job.
Dare filed suit claiming she had been wrongfully
discharged for becoming too ill to work, even though she had
no prior history of illness. She also claimed her employer
breached the covenant of good faith and fair dealing implied
in the employment relationship. She demanded reinstatement,
lost earnings, damages for mental, emotional and financial
distress, punitive damages and costs.
Defendant moved for summary judgmen.t alleging there was
no genuine issue as to any material fact and that defendant
was entitled to judgment as a matter of law. The motion was
briefed a.nd the parties stipulated to submission on briefs
without oral argument.
Dare argued that Gates v. Life of Montana Insurance
Company (Mont. 1982), 638 P.2d 1063, 39 St.Rep. 16,
"modified" section 39-2-503, MCA. That section states:
"An employment having no specified term may be
terminated. at the will of either party on notice to
the other . . .."
Dare argued that under Gates and Mye v. Department of
Livestock (Mont. 1982), 639 P.2d 498, 39 St.Rep. 49, the
employer cannot as a matter of law rely upon the concept of
at will employment to justify indiscriminate termination of
employment. She contended that the duty of good faith and
fair dealing and the tort of wrongful discharge override the
at will employment concept. She contended that summary
judgment was improper because there were genuine issues of
material fact as to whether her employer breached these
duties or violated public policy in her termination.
The District Court granted summary judgment to
defendant. The court reasoned that the plaintiff had failed
to show any public policy violation, as required to sustain
an action for wrongful discharge, because no rules or
regulations were ignored or misapplied here as was the case
in Nye. Further, the court reasoned that no covenant of good
faith and fair dealing could be implied in Dare's employment
relationship because there was no employment handbook
covering employee discharge as in Gates. Finally, the court
granted summary judgment on Dare's claim for emotional,
mental and financial distress because the court had granted
summary judgment on Dare's underlying claims and because the
court con.cluded plaintiff had presented no evidence
supporting the claim. Dare appeals from the summary judgment
granted by the District Court.
The rules regarding summary judgment are well settled.
The purpose of summary judgment is to encourage judicial
economy by eliminating unnecessary trials. Summary judgment
will be upheld in cases where the complaining party fails to
demonstrate the existence of material and substantial facts
that would alter the decision made below. However, summary
iudgment is not a substitute for trial where a factual
controversy exists. The appellate standard for review of a
grant or denial of a summary judgment motion is the same as
that used by the trial court initially under Rule 56(c),
M.R.Civ.P.: a summary judgment is properly granted when it
appears "that there is no genuine issue as to any material
fact and that the moving party is entitled to judgment as a
matter of law." If there is any doubt as to the propriety of
a motion for summary judgment, it should be denied. Reagan
v. Union Oil Co. (Mont. 1984), 675 P.2d 953, 956, 41 St.Rep.
131, 134. Here, we find genuine issues of material fact
which require reversal of the summary judgment granted by the
District Court.
Dare alleges that she was wrongfully discharged by
defendant. This Court addressed the tort of wrongful
discharge in Nye v. Department of Livestock (Mont. 1982), 639
P.2d 498, 39 St.Rep. 49. In Nye, we stated:
" ... [Tlhe tort of wrongful discharge may apply
to an at will employment situation. In fact, the
theory of wrongful discharge has developed in
response to the harshness of the application of the
at will doctrine, under which an employment may be
terminated without cause . . ..
The determination
of whether the cause of action arises rests upon
whether an unfair or unjustified termination was in
violation of public policy. Keneally v. Orgain
(1980), Mont., 606 P.2d 127, 37 St.Rep. 157." Nye,
639 P.2d at 502, 39 St.Rep. at 53.
In Nye, we found that administrative rules may be the source
of a public policy which would support a claim of wrongful
discharge. We held that the Department of Livestock had
violated public policy by failing to apply to plaintiff, a
department employee, its own regulations regarding employee
discipline and termination. Nye, 639 P.2d at 502, 39 St.Rep.
at 53-54.
However, in Keneally v. Orgain (1980), 186 Mont. 1, 606
P.2d 127, we found that the plaintiff-employee had failed to
show a violation of public policy necessary to support a
wrongful discharge action. Plaintiff alleged that he had
been unjustly terminated by his employer for complaining that
the company sold its business machines based upon promises of
adequate maintenance and service, but then failed to provide
the promised maintenance and service. This Court emphasized
the employer's legitimate interest in protecting its normal
operational procedures from disruption. Keneally, 186 Mont.
at 6, 606 P.2d at 129-30, citing Geary v. United States Steel
Corp. (Pa. 1974), 319 A.2d 174, 178-79.
Dare alleges facts tending to show that her firing was
unjustified and contends that she was fired because she was
too ill to work, even though she had no history of missing
work due to illness. In granting defendant's summary
judgment motion on Dare's wrongful discharge claim, the
District Court stated that no administrative rules had been
ignored or misapplied to Dare, as they had been in Nye.
However, it is not essential that Dare rely upon or establish
precisely the same facts and theory set forth in Nye. Public
policy violations may conceivably arise on other facts or
theories.
The record discloses remaining genuine issues of
material fact regarding Dare's wrongful discharge claim. The
parties relate widely divergent versions of Dare's work
performance and reasons for her termination. It therefore
remains for the trier of fact to resolve these issues,
including the reason for Dare's termination and whether she
was fired for cause. Further, Dare is entitled to an
opportunity to present a.uthorities in support of her public
policy arguments as supported by the facts developed at
trial.
Dare also contends that her employer breached the
covenant of good faith and fair dealing implied in the at
will employment relationship. The District Court ruled that
this covenant could not be implied in this case because there
was no employment handbook promulgated by the employer, as in
Gates. The court found this to be a critical distinction a.nd
ruled that without such a handbook, Dare's claim must fail.
We conclude that the District Court construed Gates too
narrowly.
Whether a covenant of good faith and fair dealing is
implied in a particular case depends upon objective
manifestations by the employer giving rise to the employee's
reasonable belief that he or she has job security and will be
treated fairly. Gates, 638 P.2d at 1067, 39 St.Rep. at 20.
The presence of such facts indicates that the term of
employment has gone beyond the indefinite period contemplated
in the at will employment statute, section 39-2-503, MCA, and
is founded upon some more secure and objective basis. In
such cases, the implied covenant protects the investment of
the employee who in good faith accepts and maintains
employment reasonably believing their job is secure so long
as they perform their duties satisfactorily. Such an
employee is protected from bad faith or unfair treatment by
the employer to which the employee may be subject due to the
inherent inequality of bargaining power present in many
employment relationships. The implied covenant seeks to
strike a balance between the interests of the employer in
controlling the work force and the interests of the employee
in job security. Gates, 638 P.2d at 1066-67, 39 St.Rep. at
We hold that an employment handbook as promulgated by
the employer in Gates is not essential to a cause of action
for breach of the implied covenant of good faith and fair
dealing. Implication of the covenant depends upon existence
of objective manifestations by the employer giving rise to
the employee's reasonable belief that he or she has job
security and will be treated fairly.
Contrary to the employer's contentions, there are
remaining genuine issues of fact material to Dare's claim for
breach of the implied covenant of good faith and fair
dealing. Dare has alleged that she was given a pay raise
after 3 months and promised another pay raise in an
additional 3 months. She has also alleged that Bertrand told
her he wanted her to learn to do the station's bookkeeping.
Dare claims that she was told she was doing a good job and
was not, as Bertrand contends, placed on probation. She
contends that her employer had a written policy that existing
employees who demonstrated independence and initiative were
most likely to become station managers for the company. The
employer denies that Dare had any basis to believe she had
job security.
The existence of this issue of material fact precludes
summary judgment. Further, if the covenant is implied in
this case, there remain material fact issues regarding
whether Dare's employer breached the covenant in the context
of this case.
Finally, Dare contends that the District Court erred in
granting defendant's motion for summary judgment as to her
claim for emotional, mental and financial distress. We
agree. It appears the court granted summary judgment on this
claim because it granted summary judgment on Dare's
underlying claims for relief. In light of our reversal of
summary judgment on Dare's wrongful discharge and implied
covenant of good faith and fair dealing claims, summary
judgment on this claim must also be reversed. Dare is
entitled to present evidence at trial of the alleged damages
resulting from wrongful discharge or breach of the implied
covenant, including evidence of emotional, mental or
financial distress.
The summary judgment gra-nted by the District Court is
reversed and the cause is remanded for trial.
We concur:
Chief ~usticfe --
-
Justices
Mr. Justice L. C. Gulbrandson specially concurring.
I concur in the result but not in all that is said in
the majority opinion. /'
Y?,
Justice
/
,
i
Mr. Justice Frank B. Morrison, Jr. specially concurs as
follows:
I applaud the majority's effort to define the parameters
of those principles that control the employment relationship.
I concur in the result but not in all that is said in the
majority opinion.
First, it should be made clear that this Court has not
modified the "at will" statute. Courts cannot amend
statutes. At times it seems as though judicial opinions
ignore applicable statutes. That is not the case here.
In my opinion, section 39-2-503, MCA provides for "at
will" employment where no specific term is specified. The
statute refers to the term of employment but has nothing to
do with obligations owed by either party to the other. In
other words, even though employment may be terminated at
will, if a legal obligation is breached, that breach may give
rise to a separate tort action.
The majority refers to the District Court holding that a
public policy violation is required in order to sustain a
wrongful discharge action. Following our decisions in Gates
v. Life of Montana Insurance Co. (1982), 196 Mont. 178, 638
P. 2d 1063 and Gates v. Life of Montana Insurance Co. (Mont.
1.983), 668 p.2d 213, 40 St-Rep. 1287 the law had broader
application. We there held that there is an implied covenant
of good faith and fair dealing, the breach of which gives
rise to an action in tort. The old wrongful discharge action
premised upon a public policy violation was subsumed in this
new tort recognized for the first time in the second Gates
appeal. All public policy violations would undoubtedly
involve a breach of covenant of good faith and fair dealing.
The obligation owed under that covenant is broader and
encompasses more employer-related conduct.
The majority states that:
"Whether a covenant of good faith and fair dealing
is implied in a particular case depends upon
objective manifestations by the employer giving
rise to the employee's reasonable belief that he or
she has job security and will be treated fairly."
I disagree. The covenant of good faith and fair dealing is
implicit in every employment contract irrespective of a
reasonable belief regarding job security. The law imposes an
absolute obligation upon employers to deal fairly and in good
faith with their employees from the commencement of the
employment relationship. Facts that give rise to an
inference of job security in the future might help determine
whether there was a breach of the covenant to deal fairly and
in good faith, but are not necessary to the existence of the
covenant itself.
There seems to be much confusion surrounding "at will"
employment and under what circumstances employees thus
situated can be terminated. For clarification, and since
this is a specially concurring opinion entitling me to take
some license, I volunteer my thoughts on this subject. All
contracts of employment without a specified term are "at
will." Section 39-2-503, MCA. This statute, which becomes
part of every contract, is subject to the higher authority of
the Montana State Constitution. Art. 11, Sec. 3 , 1972 Mont.
Const., provides that all persons have as an inalienable
right the opportunity of pursuing life's basic necessities.
Art. 11, § 4 , 1972 Mont. Const., provides that no person shall
discriminate against any person exercising his civil or
political rights on account of race, color, sex, culture,
social origin or condition, or political or religious ideas.
Clearly the "at will" statute is subject to this higher
constitutional authority and. as such exists subservient to
it. Although this case does not involve conduct proscribed
by the Constitution, I do want to note that the right to
terminate is not absolute but subject to exercise in
accordance with constitutional principles.
This Court has held that employment contracts are
subject to an implied covenant of good faith and fair
dealing. This obligation is not rooted in statute and cannot
repeal or amend the provisions of section 39-2-503, MCA.
Rather, the obligation recognized by this Court must be
reconciled with the "at will" statute. I think this can
easily be done. An employer, under the "at will" statute,
has the right to terminate. However, if the employer
violates the legal obligation to treat the employee fairly
and in good faith, then a separate and independent tort
action can be instituted by the injured employee against the
offending employer. Damages, not reinstatement, is the
remedy.
We are treading on thin ice as we attempt to construct
new protections for employees. There is an indication in the
majority opinion that the plaintiff can only be terminated
"for cause." Such a determination certainly conflicts with
the "at wil.1." statute. We must not confuse the "term of
employment" with the right of the employee to be dealt with
fairly and in good faith. The breach of the obligation owed
by the employer may give rise to a tort action on the part of
the employee, but does not convert "at will" employment to
employment for a specific term.
I concur in reversing and remanding for trial, but do
not envy the trial court the task of developing instructions
from what we have said.