NO. 89-563
IN THE SUPREME COURT OF THE STATE OF MONTANA
1990
DOUG MAJERUS,
Plaintiff and Appellant,
SKAGGS ALPHA BETA, INC., a Delaware
corporation; WAYNE JACOBSON; JUDY
FUGLESTAD and DWIGHT KROHMER,
Defendants and Respondents.
APPEAL FROM: District Court of the Fourth Judicial District,
In and for the County of Missoula,
The Honorable Jack L. Green, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
H. L. McChesney, McChesney, Grenfell & Ogg,
Missoula, Montana
Michael G. Majerus, ~illings,Montana
For Respondent:
J. David Slovak, Ugrin, Alexander, Zadick & Slovak,
P.C., Great Falls, Montana
Submitted on Briefs: July 13, 1990
a Decided: September 11, 1990
Filed:
'Clerk
Chief Justice J. A. Turnage delivered the Opinion of the Court.
Doug Majerus appeals the summary judgment of the Fourth
Judicial District Court, Missoula County, which dismissed his
action against Skaggs Alpha Beta, Inc. (Skaggs), Wayne Jacobson,
Judy Fuglestad, and Dwight Krohmer, for wrongful discharge, breach
of the implied covenant of good faith and fair dealing, negligent
infliction of emotional distress, and negligence. The court
granted summary judgment: 1) based on the doctrine of res
judicata, 2) because Majerus failed to establish, as a matter of
law, a breach of the implied covenant of good faith and fair
dealing, and 3) because no genuine issue of material fact existed.
We affirm.
Majerus raises the following issues:
1. Did the District Court err in granting summary judgment
based on the doctrine of res judicata?
2. Did the District Court err in granting summary judgment
on the basis that Majerus failed to establish, as a matter of law,
a breach of the implied covenant of good faith and fair dealing?
3. Did the District Court err in granting summary judgment
on the basis that no genuine issue of material fact existed?
On August 15, 1986, Doug Majerus was discharged from his
position as manager of the Buttrey Food Store located in Tremper
Shopping Center in Missoula, Montana, following fifteen years of
employment by Buttrey Food, Inc. (Buttrey) and its 1984 successor,
Skaggs Alpha Beta, Inc. (Skaggs) . Skaggs discharged Majerus
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because he violated company policy when he took $350.00 from a
checkstand till on June 21, 1986, and on the following day, used
these company funds for his personal use on a gambling vacation in
Jackpot, Nevada. Majerus returned these funds some sixteen days
later.
Following his discharge, Majerus applied for unemployment
benefits through the Montana Department of Labor & Industry. On
October 1, 1986, by a deputy's determination, Majerus was found to
be eligible for unemployment benefits. Skaggs, however, appealed
the deputy's determination asserting that Majerus was not entitled
to unemployment benefits because he was properly discharged from
his employment for misuse of company funds.
A hearing was held before the Montana Department of Labor &
Industry on October 29, 1986--both parties attended and were
represented by counsel. On October 31, 1986, the appeals referee
held that Majerus was properly discharged from his employment for
work-related misconduct, and thereby not entitled to unemployment
benefits under 1 39-51-2303, MCA.
Majerus appealed this decision to the Montana Department of
Labor & .
Industry Board of Labor Appeals (BLA) The BLA affirmed
the decision, after determining that no substantial evidence
existed to modify or reverse the prior findings and decision of the
appeals referee. The BLA's decision stated that Majerus had the
right to further appeal to district court.
Majerus, however, did not pursue a further appeal regarding
his ineligible status to unemployment benefits. Instead, on
December 9, 1989, Majerus filed a district court action against
Skaggs, and three Skaggs' employees, Wayne Jacobson, Judy Fugle-
stad, and Dwight Krohmer, for wrongful discharge, breach of the
implied covenant of good faith and fair dealing, negligent
infliction of emotional distress, and negligence.
Prior to the filing of the district court action, Majerus, in
a November 2, 1987, deposition, conceded that he acted improperly
when he took the company funds. He also conceded that no company
policy allowed or authorized the removal of company funds for
personal use. Additionally, affidavits of Skaggsf employees Ben
Flaig and Dwight Krohmer dated June 13, 1989, established that it
was the company policy of Skaggs, as well as Buttrey, that
employees could not, under any circumstances, take, borrow, or use
company funds, regardless of any intent to repay the funds. The
affidavits further stated that this policy was well known by
Skaggsf employees, including Majerus, and that it was common
knowledge to the employees that a violator of this policy would be
subject to discharge from employment. Majerus never refuted these
affidavits.
On June 16, 1989, the defendants moved the District Court for
summary judgment. The District Court granted summary judgment on
August 30, 1989: 1) based on the doctrine of res judicata, 2)
because Majerus failed to establish, as a matter of law, a breach
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of the implied covenant of good faith and fair dealing, and 3)
because no material issue of fact existed. From this decision,
Majerus appeals.
1. Did the District Court err in granting summary judgment
based on the doctrine of res judicata?
The District Court granted summary judgment on three indepen-
dent grounds, one of them being the doctrine of res judicata:
The basic proposition embraced by the doctrine
of res judicata has always remained the same:
a party should not be able to relitigate a
matter he or she has already had an oppor-
tunity to litigate. This policy reflects the
notion that a lawsuit should not only bring
justice to the aggrieved parties but provide
a final resolution of the controversy.
Brault v. Smith (1984), 209 Mont. 21, 25, 679 P.2d 236, 238. In
determining whether res judicata applied, the District Court relied
upon Nasi v. State Dep't of Highways (1988), 231 Mont. 395, 753
P.2d 327, for the proposition that an employee, who unsuccessfully
pursues a grievance at an administrative proceeding, is then
precluded from pursuing a wrongful discharge action when: (1) the
parties are the same; (2) the subject matter is the same; (3) the
issues are the same; and (4) the relationship between the parties,
the subject matter, and the issues is the same. Nasi, 753 P.2d at
329 (citations omitted). The District Court found that the
present facts satisfied the Nasi criteria and thereby held that
res judicata applied.
This Court, however, recently distinguished Nasi in Niles v.
Weissman & Sons, Inc., (Mont. 1990), 786 P.2d 662, 47 St.Rep. 240:
we determine that a final decision from an
administrative agency that an employee is not
entitled to unemployment compensation is not
res judicata as to the employee's separate
action in District Court for wrongful dis-
charge and breach of the covenant of good
faith and fair dealing.
Niles, 786 P.2d at 663. Because the present facts are on point
with Niles, we hold that Niles, and not Nasi, is controlling to
this case. Therefore, the District Court erred when it granted
summary judgment based on the doctrine of res judicata. However,
this does not necessarily mean that summary judgment was improper
in this case--the District Court granted summary judgment based on
two other grounds as well. A discussion of these two grounds
follows.
2. Did the District Court err in granting summary judgment on
the basis that Majerus failed to establish, as a matter of law, a
breach of the implied covenant of good faith and fair dealing?
This Court established the implied covenant of good faith and
fair dealing in employment relationships in Gates v. Life of
Montana Insurance Co. (1982), 196 Mont. 178, 638 P.2d 1063. See
Schramm, Montana Employment Law and the 1987 Wrongful Discharge
From Employment Act: A New Order Begins, 51 Mont. L. Rev. 94
(1990). However, even when the implied covenant of good faith and
fair dealing applies to an employment relationship, an employer may
still terminate an employee without breaching the covenant if the
employer has a Itfair and honest reasonu for the termination.
Flanigan v. prudential Federal Savings & Loan (1986), 221 Mont.
419, 428, 720 P.2d 257, 262.
Here, the defendants did not breach the implied covenant of
good faith and fair dealing because they had a fair and honest
reason to terminate Majerus--Majerus violated company policy when
he admittedly took company funds and used them for his personal
use of financing a gambling trip to Jackpot, Nevada. Moreover,
the affidavits of Ben Flaig and Dwight Krohmer established that
Skaggsl employees, including Majerus, knew that it was against
company policy to take company funds and use them for personal use,
and a violator of this policy would be subject to discharge from
employment. Therefore, Majerus had no basis for a claim of breach
of the covenant of good faith and fair dealing and we uphold the
District Court's summary judgment based on the finding that Majerus
failed to establish a breach of the implied covenant of good faith
and fair dealing.
Majerus, however, argues that even though it was wrong to take
the company funds and use them for his personal use, his infraction
did not justify the harsh result of discharge from employment in
light of his fifteen years of service to Buttrey and its successor,
Skaggs, and his reasonable expectation of employment security.
Majerusl argument is without merit. We agree with the District
Court when it found that Majerusl infraction was I1more than a
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simple transgre~sion.~~ seriousness of his infraction coupled
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with the unrefuted affidavits of Ben Flaig and Dwight Krohmer
establish that discharge from employment is justified when an
employee takes company funds and converts them for personal use.
Majerus further argues that the issue of whether the implied
covenant of good faith and fair dealing has been breached is a jury
determination, thereby summary judgment is inappropriate. This
argument lacks merit because, as previously discussed, the record
reflects that Majerus had no basis for a claim based on a breach
of the implied covenant of good faith and fair dealing.
3. Did the ~istrictCourt err in granting summary judgment
on the basis that no genuine issue of material fact existed, and
therefore, the defendants were entitled to judgment as a matter of
law?
Rule 56(c) of the Montana Rules of Civil Procedure provides,
in part:
The judgment sought shall be rendered forth-
with if the pleadings, depositions, answers to
interrogatories, and admissions on file,
together with the affidavits, if any, show
that there is no genuine issue as to any
material fact and that the moving party is
entitled to a judgment as a matter of law.
Here, no genuine issue of material fact exists, because the record
reflects an admitted and serious breach of store policy arising
from the misuse of employer's funds. Majerus admittedly took
$350.00 from a Skaggsl checkstand till and used these funds on a
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gambling vacation to Jackpot, Nevada. The affidavits of Ben Flaig
and Dwight Krohmer establish that it was against store policy to
take company funds and use them for personal use. Additionally,
the affidavits establish that this policy was well-known to Skaggs'
employees, including Majerus, and the employees further knew that
a violator of the policy would be subject to discharge from
employment. Majerus never refuted these affidavits, and further-
more, admitted that there was no company policy that allowed for
his misconduct. Based on these uncontroverted facts, we affirm
the District Court's summary judgment on the basis that no genuine
issue of material fact existed, and the defendants were entitled
to judgment as a matter of law.
Affirmed.
We concur:
Justices