NO. 94-133
IN THE SUPREME COURT OF THE STATE OF MONTANA
1994
GORDON SULLIVAN,
Plaintiff, Respondent, and yfg
Cross-Appellant,
1 i<,d
".
SISTERS OF CHARITY OF PROVIDENCE
OF MONTANA, a nonprofit corporation,
d/b/a COLUMBUS HOSPITAL,
Defendant, Appellant, and
Cross-Respondent.
APPEAL FROM: District Court of the Eighth Judicial District,
In and for the County of Cascade,
The Honorable John Warner, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
James R. Walsh and Dennis P. Clarke,
Smith, Walsh, Clarke & Gregoire,
Great Falls, Montana
For Respondent:
Antonia P. Marra and Barbara E. Bell,
Bell & Marra, Great Falls, Montana
Submitted on Briefs: August 11, 1994
Decided: November 22, 1994
Filed:
Justice Terry N. Trieweiler delivered the opinion of the Court.
Plaintiff Gordon Sullivan commenced this action in the
District Court for the Eighth Judicial District in Cascade County
to recover damages from his employer, the Sisters of Charity, based
on his discharge from employment at the Columbus Hospital.
Sullivan's wrongful discharge claim was tried before a jury, which
returned a verdict in his favor in the amount of $70,000. After
Columbus filed its notice of appeal, Sullivan received an anonymous
file containing information related to his termination. Sullivan
moved to reopen discovery and for sanctions. The District Court
found that Columbus should have disclosed the information during
discovery, granted Sullivan's motion for sanctions, and ordered a
new trial on damages. Both parties appeal from the order of the
District Court. We affirm the District Court.
The issues raised by Columbus are:
1. Did the District Court err when it granted Sullivan's
motion for a new trial limited to the issue of damages?
2. Did the District Court err when it imposed sanctions
against Columbus in the amount of $5500?
3. Was Sullivan's notice of cross-appeal timely?
The issues raised by Sullivan's cross-appeal are:
4. Did the District Court err when it bifurcated Sullivan's
discrimination claim from his wrongful discharge claim, and
disallowed Sullivan's demand for a jury trial of the discrimination
claim?
5. Did the District Court err when it held that Sullivan's
remedies are limited to those provided in the Wrongful Discharge
From Employment Act?
6. Were the sanctions imposed by the District Court
adequate?
FACTUAL BACKGROUND
In November 1982, Sullivan began working as director of the
public relations department at Columbus. In 1983, Sullivan hired
Laura James (now Laura James Goldhahn, but referred to in this
opinion as James) as an assistant. James and Sullivan apparently
did not get along well. Eventually, Sullivan's job duties were
divided between Sullivan and James. Sullivan became director of
marketing and James became director of public relations. Sullivan
was not given a job description which explained his new duties and
he was removed from his committee positions: however, his salary
remained the same.
In 1985, and again in 1986, Sullivan injured his back at work.
After the second accident, Sullivan was hospitalized and informed
that he needed back surgery. While implementing some new programs
he had started, Sullivan informed his supervisor, Joel Lankford,
that he required surgery and had scheduled it for April 1987.
Lankford told Sullivan that he must return to work or his job would
be in jeopardy. A few days later Sullivan returned to work without
a physician's permission. Shortly thereafter, Sullivan received a
negative job performance evaluation from Lankford. columbus's
rules provided that if an employee received a negative evaluation,
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he has four months to improve negative ratings if he is to retain
employment. Therefore, Sullivan postponed the surgery because he
felt he had to respond to the negative job evaluation or lose his
job. Four months later, on July 21, 1987, Sullivan received a
superior rating. Thereafter, Sullivan's back worsened, so he
rescheduled surgery and commenced his leave of absence on
November 15, 1987.
Before surgery, in January 1988, Sullivan met with his new
supervisor, Sister Eileen Croghan, who informed him that several
people at Columbus questioned the legitimacy of his workers'
compensation claim. Sullivan testified that at the January meeting
Croghan told him that when he returned from surgery she would
request that he resign, and that if he did not resign., he would be
fired. Croghan recalled this meeting, but denied this
conversation. Sullivan took leave, based on his disability, and
had back surgery in Minneapolis on February 1, 1988.
At this time, Sullivan was earning $42,182 per year, not
including benefits. After surgery on April 6, 1988, Sullivan
arranged to meet Croghan to inform her that he had a release from
his physician and would be able to work part-time. At this
meeting, Croghan advised Sullivan that his position was eliminated
because of financial demands. Sullivan was offered a job in the
public relations department as an assistant to James at less than
half of his previous salary. He did not accept the offer.
As of December 1993, Sullivan had not obtained new employment.
At trial, Sullivan's expert testified that during four years of
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unemployment as marketing director, Sullivan lost compensation
worth $237,000.
Sullivan based his claim against Columbus for wrongful
discharge on the common law, and the 1987 Wrongful Discharge From
Employment Act that became effective on July 1, 1987, and
superseded common law remedies. He also moved to amend his
complaint to include a claim based on discrimination.
In several written interrogatories submitted prior to trial,
Sullivan asked for all information in Columbus's possession which
was related to the contemplated elimination of his position.
Columbus did not produce those documents now known as the anonymous
file, nor the Laura James file, which included many of the same
documents.
On March 23-26, 1992, the wrongful discharge claim was tried
before a jury. The jury found that Columbus wrongfully discharged
Sullivan and awarded him $70,000 as compensatory damages. Sullivan
moved for a new trial based on insufficient damages. The District
Court granted the motion and ordered a new trial on damages because
it concluded that the jury misunderstood the court's instructions.
The District Court denied columbus's motion for judgment
notwithstanding the verdict on the issue of liability.
Columbus appealed. While the appeal was pending, on or about
August 20, 1992, Sullivan received the anonymous file. The file
indicates that unbeknownst to Sullivan, and for some time before he
was terminated, James prepared documents or proposals, pursuant to
Lankford's request, to consolidate Sullivan's department with
5
James's department, and allegedly to terminate Sullivan. Sullivan
was not aware of these documents and the alleged plan until after
the trial.
In September 1992, Sullivan moved the District Court to reopen
discovery and requested sanctions. Since the matter was on appeal,
the District Court decided it did not have jurisdiction.
Therefore, Sullivan filed a similar motion with this Court.
Columbus produced further materials, including the Laura James
file, and provided affidavits from its employees denying knowledge
of the anonymous file and its contents. This Court then dismissed
the first appeal without prejudice, and remanded the case to the
District Court to determine whether discovery should be reopened
and whether or not sanctions were appropriate.
The District Court held a hearing on July 7, 1993, and found
that Columbus willfully withheld documents relating to damages and
should be sanctioned. Sullivan and the Court agreed that reopening
discovery would be useless. District Court Judge John McCarvel
then recused himself from the case.
On September 7, 1993, District Court Judge John Warner
accepted jurisdiction. After hearing evidence on December 21
and 22, 1993, regarding the anonymous file, and hearing testimony
from several witnesses, including Sullivan's counsel, the court
issued its findings of fact, conclusions of law, and order on
December 30, 1993.
The Court found, among other things, that:
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1. The documents produced after trial relate to arguments
made at trial and may have weakened Columbus's case relating to
liability and affected the case regarding damages.
2. The documents were relevant, would have changed the trial
strategy, and indicate a plan, at least to some extent, concerning
Sullivan's employment.
The court ordered a new trial on damages and imposed sanctions
against Columbus in the amount of $5500 to cover attorney fees
related to summary judgment and post-trial motions. The court
apparently awarded nothing for the costs of trial.
In summary, two District Court Judges, at different times,
ordered a new trial on damages alone. Columbus appeals from the
District Court's order, and Sullivan cross-appeals.
ISSUE 1
Did the District Court err when it granted Sullivan's motion
for a new trial limited to the issue of damages?
Columbus argues that the District Court erred when it granted
a new trial limited to the issue of damages. When we consider
whether a district court imposed proper sanctions for a discovery
abuse, we determine whether the district court abused its
discretion. Eisenmengerv.E~lzicort,Inc. (1994), 264 Mont. 393, 402, 871
P.2d 1313, 1319. In this case, Sullivan moved for sanctions
pursuant to Rules 11 and 37(d), M.R.Civ.P. Sanctions were imposed
pursuant to Rule 37(d). However, we will affirm their imposition,
if appropriate, under either of the above rules. Jerome v. Pardk
7
(1989), 240 Mont. 187, 783 P.2d 919. This Court defers to the
trial court because it is in the best position to know whether the
party in question has disregarded the other's rights, and is in the
best position to determine which sanction is most appropriate.
Ekenmenger , 871 P.2d at 1319 (citing Dassori v. Roy Stanky Chevrolet Co.
(1986), 244 Mont. 178, 179-80, 728 P.2d 430, 431). In Eisenmenger ,
871 P.2d at 1320-21, we concluded that if one party does not
properly respond to discovery and the other party suffers
prejudice, a district court's decision to impose a default judgment
as a sanction was proper.
Columbus argues that ordering a new trial on the damages issue
alone, and not ordering a retrial on liability, is the equivalent
of a default judgment. While, according to our decision in
Eisenmenger , the entry of default may be appropriate as a sanction
for failure to candidly respond to discovery, we disagree that a
default was entered in this case.
Here, the jury rendered a verdict for Sullivan on the issue of
liability. The District Court concluded that there was substantial
evidence to support that verdict when it denied Columbus's motion
for judgment notwithstanding the verdict. Columbus does not
contest that conclusion on appeal.
The sanction actually imposed was a new trial on the issue of
damages which, for the reasons discussed in Eisenmenger, we conclude
did not result from an abuse of discretion.
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Further, the District Court's order regarding a new trial was
justified without regard to the issue of sanctions. Montana has
long recognized that district courts are empowered to order a new
trial on damages alone. Bohrerv. Clark (1978), 180 Mont. 233, 590
P.2d 117. In Bohrer, the district court found the jury's damage
award insufficient and after plaintiffs moved to alter or amend the
judgment or for a new trial, the court increased the jury's damage
award. Both parties appealed and we held that Rule 59(a),
M.R.Civ.P., provides for instances when a new trial on damages is
appropriate. Bohrer , 590 P.2d at 122-23. We recognized that
although infrequently necessary, "the power of both trial and
appellate courts to order such a limited trial is well recognized."
Bohrer , 590 P.2d at 123. We relied partly on 58 Am. Jur. 2d New
Trial 5 27, stating that when there is an error in the determination
of damages, and the court is satisfied that the jury properly
settled the liability issues based on sufficient evidence, and an
error in damages requires setting aside the verdict, a new trial on
damages may be proper. Bohrer, 590 P.2d at 123. We also recognized
that it is generally within the district court's discretion to
allow or refuse to allow a new trial on the grounds of inadequate
damages. Bohrer, 590 P.2d at 122.
In Bohrer, the district court concluded that the jury's award
was inadequate. We stated, "[u]nder these circumstances, an order
granting a new trial limited to the issue of damages would have
9
been within the court's discretion." Bohrer, 590 P.2d at 123. We
indicated a preference for a new trial on the issue of damages,
rather than an assessment of damages by the district court.
After the newly discovered evidence appeared, Judge McCarvel
and Judge Warner both found that the undisclosed information would
have affected the damage award. We conclude that ordering a new
trial limited to the issue of damages based on these findings was
not an abuse of discretion. The District Court did not substitute
its judgment for the jurors' decision regarding damages. Rather,
the court properly ordered a new trial on damages so the jury could
hear all evidence relevant to damages. There was substantial
evidence to support the jury's verdict on the issue of liability.
Therefore, the District Court did not err when it declined to order
a new trial on that issue. The order of the District Court
granting a new trial limited to the issue of damages is affirmed.
ISSUE 2
Did the District Court err when it ordered sanctions against
Columbus in the amount of $5500?
As mentioned above, in determining whether a district court
imposes proper sanctions for discovery abuse, we examine whether
the district court abused its discretion. Eisenmenger , 871 P.2d at
1319. Judge Warner ordered Columbus to pay Sullivan $5500 for
attorney fees as a sanction for discovery abuse. The District
Court heard testimony regarding Sullivan's attorney fees. After a
hearing, Judge Warner found that $2500 for amounts expended for
10
work on summary judgment and $3000 for work required after the
verdict was a sufficient sanction. Judge Warner did not award
attorney fees for amounts expended trying the case.
The District Court Judge is better situated to decide the
appropriate sanctions in this case. He heard evidence regarding
the missing files and attorney fees, and concluded that $5500 was
a reasonable amount. We conclude that the District Court did not
abuse its discretion when it imposed monetary sanctions in the
amount of $5500. This analysis is also dispositive of the issue
raised by Sullivan's cross-appeal challenging the sufficiency of
sanctions.
ISSUE 3
Was Sullivan's notice of cross-appeal timely?
Columbus claims that Sullivan did not file a notice of appeal
after the District Court's March 19, 1992, order, and that pursuant
to Rule 5(a)(3), M.R.App.P., notice of cross-appeal must be filed
within 14 days from the notice of appeal. Since Columbus's first
notice of appeal was filed on June 1, 1992, and no notice of
cross-appeal was filed within 14 days, Columbus argues that
Sullivan's cross-appeal is untimely, and therefore, barred.
However, Columbus's original appeal was dismissed without prejudice
on February 18, 1993, and this case was remanded for further
proceedings in the District Court.
Those proceedings were concluded by the findings, conclusions,
and order filed on December 30, 1993. Notice of entry of judgment
was served on January 7, 1994, and Columbus filed a new notice of
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appeal on February 1, 1994. Sullivan filed his notice of
cross-appeal on February 3, 1994, well within the time provided for
by Rule 5(a)(3). We conclude that Sullivan's cross-appeal was
timely.
ISSUE 4
Did the District Court err when it bifurcated Sullivan's
discrimination claim from his wrongful discharge claim, and
disallowed Sullivan's demand for a jury trial of the discrimination
claim?
We will uphold a district court's decision to bifurcate issues
absent a clear abuse of discretion. See In re Marriage of Geertz ( 1988) ,
232 Mont. 141, 144, 755 P.2d 34, 36. We have recognized that a
party who pleads legal and equitable claims is entitled to have
legal claims heard by a jury. Gray v. City of Billings ( 198 4 ) , 2 13
Mont. 6, 689 P.2d 268. In Gray, we stated that liberal rules of
civil procedure permit joinder of claims and recognized that the
same rules permit severance of claims and issues. Gray, 689 P.2d
at 272.
Sullivan argues that the claims should not have been
bifurcated and that he is entitled to a jury trial of the
discrimination claim. At the time the initial bifurcation order
was entered, and when Judge Warner reaffirmed it on December 30,
1993, Montana case law held that there is no right to a jury trial
of discrimination claims based on the Montana Human Rights Act. See
vaini v.Brookshire (1993), 258 Mont. 273, 277, 852 P.2d 596, 599;
12
Romerov.J&JTire (1989), 238 Mont. 146, 151-52, 777 P.2d 292, 295-96.
Since Montanan law allows district courts broad discretion to
segregate claims, and Montana law does not guarantee the right to
a jury trial in discrimination claims, we conclude that the
District Court did not abuse its discretion by severing the claims
in this case.
ISSUE 5
Did the District Court err when it held that Sullivan's
remedies are limited to those provided in the Wrongful Discharge
From Employment Act?
Sullivan argues that the undisclosed documents indicate a plan
to terminate him in 1987 before the new law was enacted on July 1.
He claims that the file constitutes evidence of constructive
discharge. Sullivan incorrectly interprets Montana's law of
constructive discharge. Prior to the Act's adoption, Montana case
law defined constructive discharge similar to the current
definition in 5 39-2-903(l) MCA:
[T]he voluntary termination of employment by an employee
because of a situation created by an act or omission of
the employer which an objective, reasonable person would
find so intolerable that voluntary termination is the
only reasonable alternative.
SeeKestellv. HeritageHealth Care Cop. (1993), 259 Mont. 518, 524, 858 P.2d
3, 6. In Kestell, we recognized that prior case law defined
constructive discharge essentially the same as the current statute,
relying on Snellv.Montana-Dakota Utilities Co. (1982), 198 Mont. 56, 643
P.2d 841, and Nilesv.BigSkyEyewear (1989), 236 Mont. 455, 771 P.2d
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114. Under those cases, and under the Act, to find constructive
discharge "the fact finder must decide whether the employer has
rendered working conditions so intolerable that resignation is the
only reasonable alternative." Kestell, a58 P.2d at 7 (citing Niles,
771 P.2d at 118). The intolerable situation about which Sullivan
complains occurred after the Act became effective. Sullivan was
not informed that his position was eliminated until April 1988, and
he was not forced to quit before the new law was enacted. We hold,
based on the facts in this case, that a constructive discharge did
not occur prior to the effective date of the Wrongful Discharge
From Employment Act.
For similar reasons, we must reject Sullivan's claim that the
implied covenant of good faith and fair dealing, as it existed
before the Act, applies in this case. Pursuant to § 27-2-
10.2 (1) (a), MCA, a cause of action accrues when all elements of the
cause exist. In Martin v. Special Resource Management, Inc. ( 199 0) , 2 4 6 Mont.
181, 185, SO3 P.2d 1086, 1089, we held that all of the elements to
establish a breach of the implied covenant, if present at all, were
present when the employee received notice of termination. Sullivan
received notice after the Act's effective date, and was terminated
after that date. Therefore, the Act applies to his claim.
We hold that the District Court did not err when it concluded
that the Wrongful Discharge From Employment Act is Sullivan's
exclusive remedy.
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We affirm in all respects the orders and judgment of the
District Court.
J tice
We concur:
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