NO. 90-396
IN THE SUPREME COURT OF THE STATE OF MONTANA
1990
BARBARA J. MARTIN,
Plaintiff and Appellant,
SPECIAL RESOURCE MANAGEMENT, INC.,
ENTECH, INC., and THE MONTANA POWER COMPANY,
Defendants and Respondents.
APPEAL FROM: District Court of the Second Judicial District,
In and for the County of Silver Bow,
The Honorable Mark P. Sullivan, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Stephen C. Pohl, Bozeman, Montana
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- Charles P. Bowen, Bozeman, Montana
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o For Respondents:
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Montana Power Company, Butte, Montana
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Submitted: November 11, 1990
Decided: December 31, 1990
Justice John C. Sheehy delivered the Opinion of the Court.
Barbara J. Martin appeals the decision of the District Court,
Second Judicial District, Silver Bow County, granting partial
summary judgment to Special Resource Management, Inc., Entech, Inc.
and the Montana Power Company. We reverse the District Court.
The sole issue for review is whether the District Court erred
in dismissing Martin's claim for breach of the implied covenant of
good faith and fair dealing, ruling her claim exempted under the
Montana Wrongful Discharge From Employment Act.
Martin was hired by the Montana Power Company, as a
clerk/typist in 1976. In May, 1986, she applied for and received
a job as a secretary with Special Resource Management, Inc. , a
wholly-owned subsidiary of Entech, Inc., which is in turn owned by
MPC .
On June 16, 1987, SFW's new president, Jim Murphy, informed
Martin by letter that her position was to be terminated as of July
17, 1987, due to a general reduction in force. After receiving
notice, Martin became aware that her position had not been
eliminated, but was to be filled by Murphy's personal secretary
from his former job with Western Energy Company, a subsidiary of
Entech, Inc., with a reshuffling of remaining SRM employees to
assume other responsibilities.
Martin instituted suit on June 28, 1988, alleging: Count I,
wrongful discharge; Count 11, breach of the implied covenant of
good faith and fair dealing; and Count 111, negligence. SRM
thereafter moved for partial summary judgment on Counts I1 and 111,
which the court granted. The court ruled that the newly-enacted
Wrongful Discharge From Employment Act, which became effective July
1, 1987, preempted Counts I1 and 111, as Martin's claim had not
fully accrued until the date of her termination, July 17, 1987.
From that decision Martin appeals.
It should be noted that Martin does not contest the dismissal
of Count I11 in light of this Court's decision in Heltborg v.
Modern Machinery (1990), Mont . , 795 P.2d 954, which holds
no duty exists in employers to use reasonable care in decisions to
discharge based upon a theory of negligence.
Martin takes issue with the District Court's finding that a
claim for wrongful discharge ''cannot arise until such time as the
employer-employee relationship has ceased to exist.'' By that
finding, the court concluded that Martin had no cause of action
upon notice of termination on June 16, 1987. The court found that
Martin's cause accrued on July 17, her termination date, and was
therefore subject to the newly-enacted Montana Wrongful Discharge
From Employment Act (§ 39-2-901, et seq., MCA (effective July 1,
1987), which exempts claims under a breach of implied covenant of
good faith and fair dealing theory.
The issue for review thus becomes: At what point did an
actionable cause for termination arise in this case--upon notice
of the termination or when the termination became effective?
Montana case law is slim, as the issue has been addressed
peripherally at best. Martin asserts the recent case of Kitchen
Krafters v. Eastside Bank (1990), Mont . I 789 P.2d 567, is
determinative of the issue. Martin cites the premise that ''it has
long been recognized that the statute of limitations runs from the
time of breach and not from the time of injury1' as controlling.
Martin states that a cause of action likewise begins at time of
breach, and that the breach in the instant case occurred upon
receipt of the notice of termination. Martin argues that all
decisions made leading to her discharge occurred prior to
notification on June 16, 1987, and that it was that decision that
constituted the wrongful conduct of SRM.
SRM, et al. counter that two recent Montana cases, Finstad v.
Montana Power Co. (1990), 241 Mont. 10, 785 P.2d 1372, and Frigon
v. Morrison-Maierle (1988), 233 Mont. 113, 760 P.2d 57, are
controlling in this case. However, a review of those cases reveals
only that breach of the covenant of good faith and fair dealing is
applicable only where an employee termination exists. In both
Finstad and Friqon, this Court determined that no actionable cause
existed for such a breach as the employees had voluntarily
resigned. No express or constructive discharge was found in either
case. The issue of when an action accrues was never touched upon.
We look, therefore, to cases from other jurisdictions to
resolve the issue.
In an Illinois decision, Aetna Life and Casualty Co. v. Sal
E. Lobianco & Son Co., Inc. (Ill. App. 1976), 357 N.E. 2d 621, cited
in Kitchen Krafters, supra, the court stated:
A plaintiff's cause of action in tort ordinarily accrues
at the time his interest is invaded--where the
defendant's alleged breach of duty causes the plaintiff
to suffer pain the invasion of his interest is manifest
as soon as it occurs and he has a ripe cause of action
then--and the mere fact the extent of his damage is not
immediately manifest does not postpone the accrual of the
action. (Citing cases.) Thus, the rule was early
established in Illinois that where the negligent act
results in personal injury, the action accrues on the day
of the injury. (Citing case.)
However, a different rule evolved for actions in tort
which arose from contractual obligations. In torts
arising from contract the statute of limitations has been
held to begin to run at the time of the breach of duty
constituting the tort and not when damages ensue.
In Johnston v. Farmers Alliance Mutual Insurance Co. (Kan.
1976), 545 P.2d 312, the Court stated:
According to plaintiff's deposition he was called into
Mr. Skupa1s office on March 3 , 1972, and terminated.
Although plaintiff drew his pay by check until May 31,
1972, he did not work for and was not associated with
Alliance after March 3, and was in fact employed by
another company on May 26, 1972. By his own testimony
plaintiff knew he was being terminated by Alliance on
March 3, 1972. He further admitted that all of the
alleged acts of Mr. Skupa occurred prior to that date.
Obviously, substantial damages for mental suffering and
damage to reputation were caused and began to accrue upon
plaintiff's receipt of notice that he was being
terminated. Any punitive or exemplary damages would have
accrued upon notice of termination and would have been
recoverable during this extended leave of absence. The
acts causing plaintiff Is injury occurred on or before
March 3, 1972, and any cause of action plaintiff had
against Alliance or Skupa could have been brought after
that date.
Concerning the accrual of a cause of action, we held in
Yeaqer v. National Cooperative Refinery Assln, 205 Kan.
504, 470 P.2d 797:
"In general, a cause of action accrues, so as to start
the running of the statute of limitations, as soon as the
right to maintain a legal action arises, the true test
being at what point in time the plaintiff could first
have filed and prosecuted his action to a successful
conclusion.
Although some damages to the plaintiff may not have
accrued under the accounting principles until
installments of salary had ceased, plaintiff sustained
substantial injury upon receipt of official notice of
termination on March 3, 1972, and his cause of action
accrued on that date.
Although Johnston's factual scenario is not "nearly identical"
with the instant case as Martin urges, it carries persuasive
weight. So, too, do the federal cases cited by Martin, although
they are primarily based upon employment discrimination claims
barred by statutes of limitation. In Delaware State College v.
Ricks (1980), 449 U.S. 250, the United States Supreme Court stated
that !!the only alleged discrimination occurred--and the filing
limitations periods therefore commenced--at the time the tenure
decision was made and communicated to Ricks. That is so even
though one of the effects of the denial of tenure--the eventual
loss of a teaching position--did not occur until later." 449 U.S.
at 258. The court added that the proper focus, for statute of
limitations purposes, was when the act occurred, not when the final
consequences came about. The court reaffirmed the Ricks decision
in Chardon v. Fernandez (1981), 454 U.S. 6, where it held:
We think Ricks is indistinguishable. When Ricks was
denied tenure, he was given a one-year llterminalll
contract. Thus, in each case, the operative decision was
made--and notice given--in advance of a designated date
on which employment terminated.
454 U.S. at 8.
We will not list the multitude of similar cases advanced by
Martin. It is sufficient to say their holdings are similar to
Ricks and Chardon.
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We concur with Martin that her cause of action accrued upon
notice of her termination. All the elements needed for a claim of
breach of the implied covenant of good faith and fair dealing, if
present at all, were present then. It is from the decision to
terminate itself which Martin seeks redress. Her cause is
analogous to being pushed from a precipice--the assailant cannot
contend he is not culpable until the victim impacts with the
ground. It was the decision and the act thereupon which caused the
end result, and it is at that point where legal redress may first
be sought. We find that Martin's claim for breach of the implied
covenant of good faith and fair dealing accrued upon her receiving
notice of termination. Accordingly, we reverse and remand the
cause to the District Court.
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Justice hl