NO. 91-485
IN THE SUPREME COURT OF THE STATE O F MONTANA
1992
REV0 SOMMERSILLE,
Plaintiff and Appellant,
-.
COLUMBIA FALLS ALUMINUM COMPANY, a Montana
corporation, JEROME BROUSSARD and BRACK DUKER,
#0V 4 -
APPEAL FROM: District Court of the Eleventh Judicial District,
In and for the County of Flathead,
The Honorable Michael Keedy, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Allan M. McGarvey; McGarvey, Heberling, Sullivan &
McGarvey, ~ a l i s p e l l ,Montana
For Respondent:
Donald C. Robinson; Poore, Roth & Robinson,
Butte, Montana-
Submitted on ~ r i e f s : March 12, 1992
Decided: November 4, 1992
Filed:
Justice Fred J. Weber delivered the Opinion of the Court.
Plaintiff, Rev0 Somersille, appeals from an order by the
District Court of the Eleventh Judicial District, Flathead County,
granting summary judgment to defendants, Columbia Falls Aluminum
Company (CFAC). We affirm in part and reverse in part.
We state the issues as follows:
1. Was the "Termination Agreement" between plaintiff and
CFAC a valid enforceable agreement?
2. Was the plaintiff barred under the ~erminationAgreement
from claiming any additional share of profits for distribution
after his termination from employment?
This case arose as a wrongful discharge action brought under
the provisions of the Montana Wrongful Discharge from Employment
Act, 5 5 39-2-901, et seq., MCA. Plaintiff is a certified public
accountant, and was the chief financial officer for CFAC. In
September 1989, one year prior to the filing of the present action,
CFAC furnished a proposed "Termination Agreement" to plaintiff for
his consideration. During the next four weeks plaintiff reviewed
such Agreement with his attorney and with his wife. He also
negotiated several changes in the agreement. On September 29,
1989, he executed the revised Termination Agreement. The
Termination Agreement included the following provisions:
1. Termination. Somersille's employment with the
Company will be terminated effective September 30, 1989.
2. Com~ensation. Somersille shall be entitled to
receive as severance pay
(I) his present salary through June 39, 1990; such
salary to be paid in three equal installments on November
15, 1989; February 15, 1990, and May 15, 1990, and
(2) an amount equal to the profit sharing
distribution to which Somersille normally would be
entitled under the Company's profit sharing plan based on
his employment from January 27, 1989 to September 30,
1989. This profit sharing distribution will be made to
Somersille at the time profit sharing distributions for
1989 are made to all employees, currently contemplated
for January 1990.
3. Medical Insurance. For the eighteen months ended
March 31, 1991, Somersille will be provided medical
insurance under the Company's medical insurance policy in
force at the time. The cost of this insurance will be
reimbursed to Somersille within two weeks of his paying
the monthly premium due for such insurance. In the event
Somersille obtains medical insurance under another
insurance plan, the Company's obligation to provide the
aforesaid insurance will terminate upon the effective
date of Somersille's new insurance.
4. Medical Insurance for Wife. At the end of the above
eighteen-month period (March 31, 1991) and without
limitation as to time, the Company will provide medical
insurance to Somersille's current wife, Carmen, under the
Company's medical insurance policy in force at the time.
The Company will reimburse Somersille within two weeks of
his paying the monthly premiums due for each insurance up
to the cost of Plan 1, High Option Major Medical $500
deductible as provided for in the medical plan in effect
at the time. The Company's obligation to provide this
insurance will terminate at the time of either his wife's
death or at the effective date of new medical insurance
coverage for Carmen Somersille.
7. Waiver of Claims. Both parties hereby waive and
relinquish any and all claims, known and unknown, and do
hereby mutually release and forever discharge one
another, including all stockholders, directors and
officers of the Company, from any and all actions, suits,
debts, agreements, obligations, costs, expenses and other
liabilities relating to Somersille's employment
relationship with the Company. The foregoing shall
include, but not be limited to, any claim for past
salary, wrongful termination or profit sharing.
Each party represents that it has had the
opportunity to consult with an attorney, and has
carefully read and understands the scope and effect of
the provisions of this Agreement. Neither party has
relied upon any representations or statements made by the
Agreement. The parties agree that this Agreement is the
result of a compromise ...
In accordance with the Termination Agreement, plaintiff's
employment terminated September 30, 1989. CFAC paid plaintiff in
excess of $48,000 as his present salary through June 30, 1990,
under paragraph 2(1). In addition, on January 3, 1990, CFAC paid
plaintiff $49,710 as the profit sharing distribution provided for
under paragraph 2 (2) . Plaintiff also was reimbursed $4,320 for the
cost of medical insurance under paragraph 3. As a result,
plaintiff received over $102,000 under the terms of the Termination
Agreement, and $15,000 relocation allowance remained available if
he chose to relocate by June 30, 1991.
Approximately one year after his termination in September
1989, the plaintiff filed the present action. After CFAC filed a
motion for summary judgment, plaintiff filed an amended complaint,
alleging wrongful discharge, fraud, breach of contract, and other
common law tort and contract claims. He also alleged that CFAC had
breached its obligations under the profit sharing plan with its
employees, and sought losses of profit sharing to which he was
entitled both before and after his termination from employment
date. With regard to the waiver of all claims set forth in
paragraph 7 of the Termination Agreement, plaintiff contends the
waiver should be set aside because it was fraudulently induced, in
violation of public policy, and unconscionable. On August 13,
1991, the District Court granted defendantst motion for summary
judgment. Plaintiff appeals.
Was the "Termination AgreementM between plaintiff and CFAC a
valid enforceable agreement?
plaintiff maintains that the release provision in the
termination agreement was procured through fraudulent
misrepresentation, undue influence and is unconscionable. He
maintains that defendants falsely promised and misled him so as to
cause him to believe that he had previously received his proper
share of profit sharing with the intent to induce him to release
them from any claims. Plaintiff further maintains that defendants
used the fact that his wife was seriously ill as leverage in
inducing him to sign the Termination Agreement. In his affidavit,
plaintiff averred:
30. Defendants took advantage of my confidence and
revelation of my wife's illness and the emotional and
economic stresses of such illness by offering to continue
my wife on the company health insurance coverage as
described in the "Termination Agreement" if I would agree
to sign such purported "Termination Agreement".
The District Court concluded there was no evidence of mistake,
undue influence, menace or fraud in the record. It stated:
Plaintiff Somersille consulted with an attorney and had
discussed the agreement thoroughly with his wife before
he signed it. Plaintiff had the agreement in his
possession for review for almost a month. After he
consulted with an attorney, he met and discussed the
agreement again with company officials. He made specific
proposals for inclusion in the agreement, some of which
were agreed to by the company. Plaintiff insisted that
the principal owner of the company sign the agreement,
for additional security for himself. He discussed with
his wife the consequences of signing the agreement. He
was not under any other incapacity (drugs, physical
duress, etc.) when he signed the agreement. He
thoroughly read it and understood its terms. He was
aware that in sisninq the asreement he was makinq a firm
aqreement to not brinq the suit which he now seeks to
maintain. (Emphasis added.)
With specific regard to the element of fraud, the District Court
further stated:
The plaintiff in his affidavit has recited various facts
which, he claims, give rise to an issue of fact over his
claim that the Defendants engaged in fraud to induce him
to sign the release agreement. However, it appears from
his own deposition and affidavit that he was fully aware
of the various incidents and occurrences, upon which he
now relies to claim fraud, before he executed the release
document . . . There is no evidence before the court
which suggests that there was fraud on Defendants1 part
in inducing the Plaintiff to sign the termination
agreement. Any lldiscrepanciesll irregularities of
or
either party were known to the Plaintiff and waived by
him when he signed the termination agreement containing
the release of all claims.
The District Court then concluded that the execution of the release
agreement was knowing and voluntary and fully ratified by him,
stating:
Again, to the extent that Plaintiff suggests that
Defendants engaged in a violation of public policy in its
pre-release conduct, those facts predated the signing of
the release and were fully known to the Plaintiff when he
consulted with legal counsel before signing the release.
The Plaintiff's execution of the release document
was knowing and voluntary, and was subsequently fully
ratified by him when he accepted all of the monetary
benefits of the Termination Agreement that were still
being paid to him when he brought his suit. See Constant
v. continental Tel. Co., 745 F.Supp. 1374 (D. Ill. 1990).
He should not be now allowed to engage in litigation to
fully explore and develop the f u l l dimensions of the
potential claims which he was releasing when he executed
the termination agreement.
Defendants maintain that plaintiff's voluntary relinquishment
of all potential claims against CFAC precluded him from pursuing
this action. Defendants maintain that plaintiff read and
understood the terms of the Termination Agreement; thus, it is a
valid and enforceable contract entered into with the free and
mutual consent of the parties. Defendants contend that the Utah
Supreme Court case of Horgan v. Indus. Design Corp. (Utah 1982) ,
657 P.2d 751, is persuasive authority here.
In Horqan, a former employee brought an action against his
former employer seeking to recover additional compensation
following his termination and after he had signed an agreement by
which he was paid stock redemptions, profit sharing, three months'
termination pay, vacation pay, medical and health benefits, and
other miscellaneous payments. The parties also signed a release
precluding either party from ever asserting any employment-related
claim against the other. Horgan claimed that the release was
invalid because he signed it under duress as a result of the
unexpected loss of his employment, thus negating the mutual assent
necessary for a valid contract.
The Utah Court defined duress as "any wrongful act or threat
which actually puts the victim in such fear as to compel him to act
against his willu. Horaan, 657 P.2d at 753. The Court went on to
state that to constitute legal duress, the defendant must have
acted against his will and have had no other viable alternative.
Horqan, 657 P.2d at 754. The Court further stated that the "mere
fact of an improvident or bad bargain or a feeling of latent
discontent is not a sufficient basis to avoid the effect of an
otherwise valid release." Horqan, 657 P.2d at 754. Thus, the
Horsan Court concluded that the plaintiff did not sign the release
under duress, but rather that he was someone who after signing, and
upon subsequent reflection, concluded he could have received more
out of the agreement. Significantly, the Horsan Court also stated
that tlemotionaldistress is not the equivalent of duress and is
inadequate to invalidate the release". Horqan, 657 P.2d at 753.
In arguing that he was unduly influenced, the plaintiff in
this case contends that his wifefs illness created emotional
distress and increased financial demands, enhanced his need to
remain in the same community, increased his dependence on the CFAC
group health insurance plan, and enhanced the need to avoid further
stress upon his family.
Plaintiff's arguments in support of undue influence parallel
those made in the case of Horqan discussed above. undue
H ~ S
influence claim necessarily includes an argument of economic duress
in this case. Thus, we will discuss the elements of both undue
influence and economic duress.
Section 28-2-407, MCA, provides that undue influence consists
of:
(1) the use by one in whom a confidence is reposed
by another or who holds a real or apparent authority over
him of such confidence or authority for the purpose of
obtaining an unfair advantage over him;
(2) taking an unfair advantage of another's weakness
of mind; or
(3f taking a grossly oppressive and unfair advantage
of anotherfs necessities or distress.
Plaintiff has failed to present facts sufficient to demonstrate
undue influence under the foregoing statute.
This Court has recently addressed economic duress in Hoven v .
First Bank (N.A. )-Billings (lggO), 244 Mont. 229, 234, 797 P . 2d
915, 919, where we stated that the three elements of economic
duress are (1) a wrongful act that: (2) overcomes the will of a
person; (3) who has no adequate legal remedy to protect his
interests. Plaintiff has failed to present facts demonstrating
economic duress either under the Horqan test or the Hoven test.
In order to prove he was defrauded, plaintiff must prove all
of the nine elements of fraud, including that he was ignorant of
the falsity of any misrepresentations. See Batten v. Watts Cycle
& Marine, Inc. (1989), 240 Mont. 113, 117, 783 P.2d 378, 380-81.
As the District Court stated, the facts plaintiff relies on for his
claims of fraud predated the signing of the release and were fully
known to him when he consulted with his legal counsel before
signing the release. We agree with the conclusion of the District
Court that the plaintiff has failed to provide evidence of fraud
sufficient to warrant a setting aside of the Termination Agreement.
Summary judgment is only proper when there are no genuine
issues of material fact and the moving party is entitled to
judgment as a matter of law. Rule 56(c), M.R.Civ.P. Any
inferences to be drawn from the factual record must be resolved in
favor of the party opposing summary judgment. Summary judgment is
never a substitute for a trial on the merits. Boylan v. Van Dyke
(1991), 247 Mont. 259, 266, 806 P.2d 1024, 1028. In granting
summary judgment, the District Court held that by signing the
Termination Agreement, plaintiff voluntarily relinquished all
potential claims against CFAC and was precluded from bringing this
action.
Plaintiff has failed to raise any issues of material fact with
regard to his execution of the Termination Agreement. The ~istrict
Court set forth its reasons for determining that the Termination
Agreement was valid and enforceable. We agree with the District
Court.
We hold that the Termination Agreement executed by plaintiff
and CFAC was a valid enforceable agreement.
I1
Was the plaintiff barred under the Termination Agreement from
claiming any additional share of profits for distribution after his
termination from employment?
Plaintiff claims an additional share of profits is due to him
for distributions made prior to his termination from employment.
As more fully appears in this part, we have concluded that
plaintiff has failed to raise any issue of material fact with
regard to such prior profit distributions, and that his claim in
connection with such prior profit distributions is barred under his
waiver of claims. As a result, this issue will be limited to
consideration of the claimed share of profits which were to be
distributed to the plaintiff after his termination from employment.
Such profits were distributed during January 1990.
The record before us demonstrates that the Profit Sharing Plan
covering all employees of CFAC in part provided:
- The Board of Directors of the Columbia Falls Aluminum
Company will determine each year the amount of profits
available for distribution. Fifty percent of the
distributable profits as determined by the parent company
will be distributed to employees.
- The profit sharing pool will be divided among the
salaried and hourly groups based on the ratio of each
group's pay to total pay.
- The resultant salaried profit sharing will be further
divided among all salaried employees who were employed on
the last day of the fiscal year, using a ratio of the
individual's fiscal year-to-date pay tothe total covered
salaried payroll for the fiscal period.
- The salaried employees will be given a choice of cash
or deferral (in 25% increments). If cash, it will be
taxed as ordinary income. If deferred, tax is delayed
until money is received. The deferral amounts will be
held in a separate account within the new savings plan.
It will be a 40l(k)-type contribution: unavailable for
withdrawal,100% (sic) vested, and subject to the
discrimination tests of 401(k).
- The resultant hourly profit sharing pool will be
further divided among all hourly employees, in a manner
to be determined by the company and the union.
Plaintiff maintains that in January 1990, he was to have
received the profit sharing to which he was entitled under the
promises of the employment contract, Profit Sharing Plan and
Termination Agreement. He maintains that instead, he received a
profit sharing distribution payment which reflected a profit
sharing declaration which was disproportionately small. He further
maintains that he did not become aware that the profit sharing
distribution was disproportionate to the profit sharing expected
until the post-termination distribution in January 1990. In his
affidavit filed in support of his opposition to summary judgment,
plaintiff averred the following:
20. Contemporaneous with the calculation declaration and
distribution in January and February of 1989, very large
sums of money were transferred to Los Angeles, out of the
control or record of my office such that I was unable to
determine whether profits distributable and/or actually
distributed were equally divided between employees and
employers.
21. Subsequent declarations and distributions of profit
sharing do not appear to be proportionate to the vast
sums of money, prof its and cash transferred from Columbia
Falls to the Los Angeles office.
23. The only way to actually determine whether the
profit sharing paid to CFAC employees is equal to the
profit sharing promised would be to examine financial
documents of the company that demonstrate actual profits,
actual distributions (in any form) to owners, actual
profit sharing payments, actual loans and interest on
loans to owners or their interests and actual FICA and
other tax payments, agreements and withholdings. Without
such documents and evidence it would be impossible for me
to give or secure an affidavit establishing the degree of
discrepancy between profit sharing promised and profit
sharing paid.
In considering the execution ofthe Termination Agreement with
the release contained in paragraph 7, the District Court in its
Order stated:
Plaintiff's signature on the Termination Agreement
represents his consent and agreement to enter into a
valid and enforceable contract. For the valuable and
considerable consideration of over $100,000 in
compensation and benefits plaintiff agreed that he would
"waive and relinquish any and .
claims . ." (Emphasis
supplied) that he had against the defendant. He further
agreed to "release and forever discharge" the defendant
"from any and all actions, suits . . . and other
liabilities relating to his employment relationship" with
the company. Specifically, it was agreed that such
release included a release of all claims arising from
"wrongful termination" as well as past salary and
specifically including "profit sharing."
Plaintiff's voluntary relinquishment of all
potential claims against Defendant precludes him from
pursuing this action. Because there are now no factual
disputes before this Court as to any material issue, and
the release affirmatively discharges any potential
liability the defendant may have incurred because of
Plaintiff's termination, as a matter of law summary
judgment should be granted in favor of Defendant.
We conclude that the District Court's analysis is appropriate with
regard to profit sharing to be paid for years prior to the
termination of plaintiff's employment. However, there are
additional elements which the District Court did not consider with
regard to the profit sharing distribution made in January 1990 to
the plaintiff.
The District Court properly referred to paragraph 7 of the
Termination Agreement which in pertinent part provided:
7. Waiver of claims. Both parties hereby waive and
relinquish any and all claims, known and unknown, and do
hereby mutually release and forever discharge one another
. . . from all actions, suits, debts, agreements,
obligations, costs, expenses and other liabilities
relating to Somersille's employment relationship with the
Company. The foregoing shall include, but not limited
to, any claim for past salary, wrongful termination or
profit sharing.
The District Court then relied upon the foregoing waiver of claims
and concluded that plaintiff's claim for additional profit sharing
to be distributed in January 1990 was clearly relinquished. In
reaching that conclusion, the court did not consider the following
pertinent portion of the Termination Agreement:
2. Compensation. Somersille shall be entitled to
receive as severance pay
(2) an amount equal to the profit sharing
distribution to which Somersille normally would be
entitled under the Company's profit sharing plan based on
his employment from January 27, 1 9 8 9 to September 3 0 ,
1989. This profit sharing distribution will be made to
Somersille at the time profit sharing distributions for
1 9 8 9 are made to all employees, currently contemplated
for January 1 9 9 0 .
While it is true that the waiver of all claims contained in
paragraph 7 clearly applied to all profit sharing which had been
made by the defendant prior to the termination of plaintiff's
employment, a different approach is required for the January 1990
distribution. In connection with that distribution, we conclude
that both of the foregoing paragraphs 2 and 7 of the Termination
Agreement must be considered. While it is true that the waiver is
broad enough to cover all prof it sharing in general terminology, we
have the companion agreement, by the defendant to pay Sommersille an
amount equal to the profit sharing distribution he normally would
have been entitled to for his employment from January 27, 1989 to
September 30, 1989, the date of his termination. The paragraph on
waiver of claims should not be construed to include the
consideration specifically provided for him under paragraph 2. By
signing the Termination Agreement plaintiff should not be
considered to have foreclosed his right to sue for the
consideration he claims was to be furnished to him under paragraph
2.
The amount to be paid under paragraph 2 of the Termination
Agreement was unknown to both the plaintiff and the defendant on
the date of employment termination. Clearly the intent of the
parties was that by January 1990, several months after plaintiff's
termination of employment, the defendant would calculate and pay
the profit sharing payment to the plaintiff. In substance the
Profit Sharing Plan required that 50 percent of the distributable
profits as determined by the parent company, be distributed to the
employees, with the division to be made among the various groups
based upon the ratios of each group's pay to the total pay. By his
affidavits plaintiff has raised an issue of fact as to whether the
profit sharing distribution actually made was incorrectly
calculated and therefore disproportionately small. Plaintiff has
also raised an issue of fact as to his contention that he did not
become aware of the disproportionate nature of the profit sharing
distribution until the actual distribution in January of 1990.
We conclude that plaintiff has raised issues of material fact
with regard to the January 1990 profit distribution to the
plaintiff. We therefore reverse the judgment insofar as it
precluded the claim for profit sharing distribution contemplated
for January 1990, and covering the period of plaintiff's employment
in 1989.
We therefore affirm on Issue I holding that the Termination
Agreement was a valid enforceable agreement, and reverse and remand
on Issue I1 for further proceedings consistent with this opinion.
We Concur: A
,
November 4, 1992
CERTIFICATE OF SERVICE
f hereby certify that the following order was sent by United States mail, prepaid, to the foIlowing
named:
La Rue Smith
Attorney at Law
606-5th Ave. No,
Great Falls, MT 59401
Gorharn E. Swmberg
Swanberg, Koby & Swanberg
P.O. Box 2567
Great Falls, MT 59403
ED SMITH
CLERK OF THE SUPREME COURT
STATE OF MONTANA
BY:
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