No. 91-249
IN THE SUPREME COURT OF THE STATE OF MONTANA
1992
DAVID HOFFMAN,
Plaintiff and Appellant,
-VS-
TOWN PUMP, INC.,
a Montana corporation,
Defendant and Respondent.
APPEAL FROM: District Court of the Sixteenth Judicial District,
In and for the County of Rosebud,
The Honorable Joe L. Hegel, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
John Houtz, Attorney at Law, Forsyth, Montana
For Respondent:
Brent R. Cromley, Moulton, Bellingham, Long0 &
Mather, Billings, Montana
Submitted on Briefs: August 13, 1992
Decided: December 10, 1992
Clerk
Justice William E. Hunt, Sr., delivered the opinion of the Court.
Appellant David Hoffman appeals from an amended order of the
Sixteenth Judicial District, Rosebud County, granting respondent
Town Pump, Inc.'s, motion for a directed verdict because appellant
failed to exhaust available internal procedures for wrongful
discharge prior to filing an action against respondent, as required
by 5 39-2-911(2), MCA.
We affirm in part and reverse in part.
Two issues are presented to this Court for review:
1. Did the District Court err in granting respondent's
motion for a directed verdict?
2. Did the District Court err in awarding respondent $25,000
in attorney fees?
In July 1985, appellant David Hoffman was hired by Town Pump,
Inc., as a manager-trainee. Within a short period of time, he was
made manager of a Town Pump located in East Helena. He worked
there for approximately three years, and was then transferred to a
Town Pump located in Helena. Appellant earned a monthly salary of
approximately $1500 as manager of the store. In addition to a
monthly salary, Town Pump store managers had the opportunity to
earn bonuses based upon a variety of factors. In June 1989, a
dispute arose between appellant and his field representative, Bob
Enke, when Enke hired his stepdaughter to work in the same store as
appellant. This dispute led appellant to file a grievance with
Town Pump. A meeting was held between appellant and Town Pump
management. Appellant was offered and accepted a position as a
2
manager of Town Pump in Hardin. Soon thereafter, a manager
resigned from the Colstrip store. Appellant was then offered the
Colstrip position, which he accepted.
On July 11, 1989, appellant was transferred to Colstrip.
During this period, Colstrip was experiencing a severe housing
shortage. In order to offset higher housing costs, appellant
requested and received a $150 per month wage increase. Apparently
Town Pump indicated that it would pay for appellant's motel costs
for seven to ten days. Appellant had insufficient funds to
relocate to a rental and stayed in the motel for approximately 24
days. Town Pump notified appellant that they would not pay for the
entire motel bill which at this point amounted to $840. Appellant
moved out of the motel and lived in his car with his son for
approximately two weeks. Appellant alleges that Town Pump knew of
his situation but failed to assist even after repeated requests by
appellant. Appellant contends that the situation became so
intolerable that he was forced to resign. On August 19, 1989,
appellant sent a letter of resignation indicating that he was
resigning effective August 24, 1989.
On August 24, 1989, appellant filed a complaint in District
Court alleging that he had been constructively discharged by Town
Pump in violation of Montana's Wrongful Discharge From Employment
Act. A jury trial commenced on June 26, 1990. At the close of
appellant's case in chief, respondent moved for a directed verdict.
The District Court granted the motion but denied respondent's
request for attorney fees. Respondent filed a motion to clarify
3
the District Court order, and on March 28, 1991, the court amended
its order, awarding respondent $25,000 in attorney fees.
1.
Did the District Court err in granting respondent's motion for
a directed verdict?
Appellant argues that the District Court erred in granting a
directed verdict because 5 39-2-911(3), MCA, requires that an
employer must provide any discharged employee notice of any
wrongful termination grievance procedures and supply the discharged
employee with a copy of those procedures within seven days.
Because respondent failed to notify him of the existence of the
internal grievance procedures, appellant was not required to comply
with 5 39-2-911(2), MCA.
Respondent maintains that appellant was intimately aware of
the grievance procedure. On July 29, 1987, appellant had received
and read a copy of the handbook for Town Pump employees which
contained a section on employee grievance procedure, and had
utilized the procedure during his dispute with Mr. Enke.
Respondent concludes that appellant had constructive notice of the
procedures and was required to comply with 5 39-2-911(2), MCA.
These arguments are moot because the District Court ruled on
different grounds.
Our standard of review for directed verdicts is whether the
District Court's interpretation of the law is correct. Foster v.
Albertsons, Inc. (Mont. 1992), 835 P.2d 720, 49 St. Rep. 638.
4
Section 39-2-911(2) and (3), MCA, requires the employer and
employee to do the following:
(2) If an employer maintains written internal
procedures, other than those specified in 39-2-912, under
which an employee may appeal a discharge within the
organizational structure of the employer, the employee
shall first exhaust those procedures prior to filing an
action under this part. The employee's failure to
initiate or exhaust available internal procedures is a
defense to an action brought under this part. If the
employer's internal procedures are not completed within
9 0 days from the date the employee initiates the internal
procedures, the employee may file an action under this
part and for purposes of this subsection the employer's
internal procedures are considered exhausted. The
limitation period in subsection (1) is tolled until the
procedures are exhausted. In no case may the provisions
of the employer's internal procedures extend the
limitation period in subsection (1) more than 120 days.
(3) If the employer maintains written internal
procedures under which an employee may appeal a discharge
within the organizational structure of the employer, the
employer shall within 7 days of the date of the discharge
notify the discharged employee of the existence of such
procedures and shall supply the discharged employee with
a copy of them. If the employer fails to comply with this
subsection, the discharged employee need not comply with
subsection (2).
The court determined that it was undisputed that appellant had
a copy of the written internal procedures, had knowledge of those
procedures, and did not avail himself of those procedures.
Appellant terminated his employment on August 2 4 , 1989, the same
day that he filed his complaint in District Court alleging wrongful
discharge. By filing the complaint before exhausting respondent's
procedures, appellant effectively precluded respondent from
complying with 5 39-2-911(2), MCA. It would have been impossible
for respondent to notify appellant of the written procedures within
seven days of the discharge prior to the commencement of the
5
action. In this instance, the date of discharge would be the date
that appellant's resignation became effective because that was
when, under these facts, there was a complete severance of the
employer/employee relationship. See Allison v. Jumping Horse
Ranch, Inc., Montana Supreme Court Cause No. 92-083, decided
December 8, 1992. Appellant failed to exhaust respondent's
internal procedures before filing his complaint in District Court
and is not excused from complying with 5 39-2-911(2), MCA, because
of respondent's inability to comply with the statute.
In its original order, the District Court granted appellant
the right to refile his claim after exhausting respondent's
internal grievance procedure because the statute of limitations for
wrongful discharge is tolled pending completion of the grievance
procedure. In its amended order, the court did not make a
determination on whether appellant could refile his claim in
District Court once he completedthe grievance procedure. The issu@
was not briefed by the parties on appeal, and therefore, appellant
is allowed to refile his claim in District Court upon completion o f
respondent's grievance procedure. We hold that the District Court
did not err in granting respondent's directed verdict.
11.
Did the district court err in awarding respondent $25,000 in
attorney fees?
Section 39-2-914, MCA, provides that the parties may submit
their dispute to arbitration if they agree in writing to
arbitration. Section 39-2-914, MCA, states:
6
.
(1) Under a written agreement of the parties, a
dispute that otherwise could be adjudicated under this
part may be resolved by final and binding arbitration as
provided in this section.
(2) A n offer to arbitrate must be in writing and
contain the following provisions:
(a) A neutral arbitrator must be selected by mutual
agreement or, in the absence of agreement, as provided in
27-5-211.
(b) The arbitration must be governed by the Uniform
Arbitration Act, Title 27, chapter 5. If there is a
conflict between the Uniform Arbitration Act and this
part, this part applies.
(c) The arbitrator is bound by this part.
(3) If a complaint is filed under this part, the
offer to arbitrate must be made within 60 days after
service of the complaint and must be accepted in writing
within 30 days after the date the offer is made.
(4) A party who makes a valid offer to arbitrate
that is not accepted by the other party and who prevails
in an action under this part is entitled as an element of
costs to reasonable attorney fees incurred subsequent to
the date of the offer.
(5) A discharged employee who makes a valid offer
to arbitrate that is accepted by the employer and who
prevails in such arbitration is entitled to have the
arbitrator's fee and all costs of arbitration paid by the
employer.
(6) If a valid offer to arbitrate is made and
accepted, arbitration is the exclusive remedy for the
wrongful discharge dispute and there is no right to bring
or continue a lawsuit under this part. The arbitrator's
award is final and binding, subject to review of the
arbitrator's decision under the provisions of the Uniform
Arbitration Act.
Respondent sent a written offer to appellant to have the
matter settled by arbitration, which appellant rejected. No
agreement to arbitrate existed between the parties as required by
7
statute. The award of attorney fees was in error, and therefore,
is reversed.
We affirm in part and reverse in part.
We concur:
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December 10, 1992
CERTIFICATE OF SERVICE
I hereby certify that the following order was sent by United States mail, prepaid, to the
following named:
John Houtz
Attorney at Law
P.O. Box 1230
Forsyth, MT 59327
Brent R. Cromley
Moulton, Bellingham, Longo & Mather
P.O. Box 2559
Billings, MT 59103
ED SMITH
CLERK OF THE SUPREME COURT
STATE OF MONTANA-
BY:
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