NO. 96-03a
IN THE SUPREMECOURT OF THE STATE OF MONTANA
1996
MARTIN "DOC" BASTA,
Plaintiff and Appellant,
vs.
CRAGO, INC., d/b/a PRINTING
CENTER, a Montana corporation,
Defendant and Respondent.
APPEAL FROM: District Court of the Eighth Judicial District,
In and for the County of Cascade,
The Honorable Marge Johnson, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
John F. Lynch, Lynch & Chisholm, Great Falls,
Montana
For Respondent:
Lon T. Holden, Jardine, Stephenson, Blewett &
Weaver, Great Falls, Montana
Submitted on Briefs: July 18, 1996
Decided: December 31, 1996
Filed:
Cl&k
Justice James C. Nelson delivered the Opinion of the Court.
This is an appeal from the Eighth Judicial District Court,
Cascade County. Following a hearing, the District Court granted
Defendant Crago's motion for summary judgment. From this judgment,
Plaintiff Basta appeals. We affirm.
The sole issue raised on appeal is whether the District Court
erred when it concluded that Basta and Crago did not enter into a
written contract of employment for a specific term for the purposes
of § 39-2-912(2), MCA (1991).
FACTUAL AND PROCEDURAL BACKGROUND
Defendant Crago, Inc. (Crago) operates a locally-ownedgeneral
printing business known as the Printing Center located in Great
Falls, Montana. Craig Barber (Barber) is the president, chief
executive officer and the only shareholder of the business.
Therefore, Barber is Crago's agent. Plaintiff Martin "Dot" Basta
(Basta) worked at a different local printing shop in Great Falls
from 1971 until Barber hired him to work as shop foreman at the
Printing Center in March 1992.
In December 1991, Barber contacted Basta about hiring him to
work for the Printing Center. Over the next two months, Barber
sent Basta two letters and a memorandum concerning their employment
negotiations. The memorandum, dated January 23, 1992, referred to
"Terms of employment" and was signed by Barber. The memorandum set
forth several items including medical insurance coverage, vacation
time, a salary and bonus figure for the first year of employment,
a salary and undetermined bonus system for the second year of
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employment, and a description of the employment position and
responsibilities. Barber sent the memorandum to Basta with a
letter explaining that the memorandum'was a "written copy of what
we had talked about previously" and requesting that Basta contact
Barber so that they could discuss Basta's starting date. On March
1, 1992, Basta began working at the Printing Center.
Barber had hired Basta to perform the shop foreman duties that
Barber had performed previously. Barber planned for Basta to take
over Barber's old duties so that Barber could attend to matters
concerning expansion of the business. However, Barber's plans were
not realized and the economic conditions of the business declined.
In response to this economic decline, Barber determined that the
payroll must be reduced. Consequently, he discharged Basta on
February 26, 1993, and one other employee.
On February 23, 1994, Basta filed his complaint, alleging that
he had been wrongfully discharged without good cause pursuant to §
39-2-904(2), MCA (1991). Crago answered and denied the allegations
of Basta's complaint. Crago then moved for summary judgment,
alleging that Basta's discharge was for good cause. To support the
motion, Crago submitted an affidavit indicating that Basta was
terminated from employment due to financial stresses within the
corporation, a legitimate business reason. The District Court
initially denied Crago's summary judgment motion. However, Crago
filed a motion for reconsideration. Initially, Basta opposed
Crago's motion for reconsideration. However, Basta ultimately
conceded that Crago's motion should be granted and requested leave
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to file an amended complaint. On September 6, 1995, the District
Court granted both Crago's motion for reconsideration and Basta's
motion for leave to file an amended complaint.
Basta's amended complaint set forth two claims: 1) breach of
contract and 2) breach of the implied covenant of good faith and
fair dealing. Crag0 answered and denied the allegations.
Thereafter, Crago filed a Motion for 'Summary Judgment Concerning
the Amended Complaint. Crago alleged that the parties never
entered into a written contract for a specific term, and,
therefore, Basta's claims were barred by Montana's Wrongful
Discharge From Employment Act, § 39-2-901, et seq., MCA (1991).
After reviewing the briefs and considering the testimony of Basta
and the arguments of counsel at the hearing on the motion, the
District Court granted Crago's motion for summary judgment on
December 12, 1995. It is from this judgment that Basta appeals.
STANDARDOF REVIEW
Our standard of review for an appeal from an order granting
summary judgment is de nova. Motarie v. Northern Montana Joint
Refuse Disposal Dist. (1995), 274 Mont. 239, 242, 907 P.2d 154,
156. We review the order granting summary judgment using the same
evaluation as did the district court, based on Rule 56, M.R.Civ.P.
Motarie, 907 P.2d at 156. Our inquiry is set out as follows:
The movant must demonstrate that no genuine issues
of material fact exist. Once this has been accomplished,
the burden then shifts to the non-moving party to prove,
by more than mere denial and speculation, that a genuine
issue does exist. Having determined that genuine issues
of fact do not exist, the court must then determine
whether the moving party is entitled to judgment as a
4
matter of law. We review the legal determinations made
by a district court as to whether the court erred.
Bruner v. Yellowstone County (19951, 272 Mont. 261, 264-65, 900
P.2d 901, 903 (citations omitted).
In the case before us, Basta has not raised an issue
concerning any genuine issues of material fact. Instead, Basta
only raises the legal issue whether Basta and Crago entered into a
written contract of employment for a specific term. Accordingly,
we review the District Court's conclusion that Montana's Wrongful
Discharge From Employment Act (the Act) bars Basta's breach of
contract and breach of covenant claims under § 39-2-913, MCA
(1991), because the parties did not enter into a written contract
of employment for a specific term as required by § 39-2-912(2), MCA
(1991) I to determine if the court was legally correct.
DISCUSSION
Did the District Court err when it concluded that Basta and
Crago did not enter into a written contract of employment for a
specific term for the purposes of § 39-2-912(2), MCA (1991)?
Basta contends that he and Barber entered into a written
contract of employment for a specific term, and, therefore, the Act
does not bar his claims for breach of contract and breach of
implied covenant of good faith and fair dealing. Crago responds
that Barber and Basta did not enter into a written contract of
employment for a specific term, and, therefore, the Act does bar
Basta's claims. We conclude that the District Court correctly
determined that the parties did not enter into a written contract
5
of employment for a specific term, and that the court properly
granted Crago's motion for summary judgment.
The Act provides that "no claim for discharge may arise from
tort or express or implied contract." Section 39-2-913, MCA
(1991). We have determined that the plain meaning of "claim for
discharge" is simply "those claims for damages caused by an
asserted wrongful discharge." Beasley v. Semitool, Inc. (1993),
258 Mont. 258, 261, 853 P.2d 84, 86. Therefore, not all tort or
contract claims are barred by § 39-2-913, MCA (19911, merely
because they arise from employment. Beaslev, 853 P.2d at 86.
Rather, only those tort or contract claims which are "for
discharge" will be barred by 5 39-2-913, MCA (1991). Beaslev, 853
P.2d at 86.
In the present case, Basta bases both his breach of contract
and breach of covenant claims on his discharge. First, Basta
alleges that Crago violated the contract with Basta "by virtue of
terminating [Basta] on February 26, 1993. . . .'I Second, Basta
alleges that Crago violated its obligation to act in good faith
with Basta "in that termination was false and dishonest in fact."
By virtue of this language contained in Basta's amended complaint,
we conclude that both claims are "completely and inextricably
intertwined with and based upon" Basta's discharge. See Beasley,
853 P.2d at 87. Consequently, Basta's claims are "claims for
discharge" and will be barred under s 39-2-913, MCA (1991), unless
one of the exemptions to the Act applies.
The exemptions to the Act are set forth as follows:
6
39-2-912. Exemptions. This part does not apply to a
discharge:
(1) that is subject to any other state or federal
statute that provides a procedure or remedy for
contesting the dispute. Such statutes include those that
prohibit discharge for filing complaints, charges, or
claims with administrative bodies or that prohibit
unlawful discrimination based on race, national origin,
sex, age, handicap, creed, religion, political belief,
color, marital status, and other similar grounds.
(2) of an employee covered by a written collective
bargaining agreement or a written contract of emolovment
for a specific term. [Emphasis added.1
The issue raised on appeal is whether the parties entered into a
written contract of employment for a specific term. If they did,
Basta's claims are exempted from the Act pursuant to 5 39-2-912(2),
MCA (1991), and will not be barred under § 39-2-913, MCA (1991).
If not, Basta's “claims for discharge" are preempted by the Act
pursuant to 5 39-2-913, MCA (1991), and will be barred
In order for the exemption under § 39-2-912(2), MCA (1991), at
issue here, to apply, there must be (a) a written contract and (b)
this contract must be for a specified term. Under the plain
language of the statute, if either the contract is not in writing
or it is not for a specified term, then the exemption does not
apply, and Basta's claims will be barred. Without so deciding, we
will simply assume for purposes of this appeal that Crago's
memorandum to Basta was a written contract and that Basta's
employment was therefore governed by a written contract. We make
this assumption because our determination that, regardless, the
contract was not for a specified term, is dispositive.
At best, the memorandum simply states Basta's proposed salary
for the first two years of his employment. In fact, nothing in the
memorandum sets out a specific term, whether for two years or more.
The memorandum not only fails to specify a termination date; it
does not even designate a hiring date. Indeed, at the time Basta
received the memorandum, the parties were still negotiating Basta's
starting date. This is evidenced by the letter Barber sent with
the memorandum wherein Barber asked Basta to call him to discuss
Basta's starting date.
Moreover, Basta's testimony at the summary judgment hearing
held on November 6, 1995, shows that he was unclear as to what the
parties had actually agreed would be the "specific term" of Basta's
employment:
Q: [Mr. Lynch, Basta's attorney] Now, does that
agreement [referring to the memorandum]--it--what
are the terms of that agreement? Without reading
it, I mean, you know, how long was your employment
with him to be?
A: [Bastal When we first talked about this and came
out with this, he said I would be with him for at
least five years. . . . And he told it in front of
me and my wife, hell, I would be there for five
years. He had no plans of me going anywhere, that
he was going to keep me employed. So, then he came
up with this "I'll start you at this, and after a
year I'll start you at this figure, and if my
business progresses, you'll progress."
. . .
Q: And let me ask you this. That agreement doesn't
say anything--how many years does that agreement
cover?
A: Two years.
Q: Okay. Was there--when you got that agreement, was
there any discussion about the five years?
A: Yes, there was. Like I say, he said it's good for
five years. Or longer. He just said, "I'm not
going to let you go." I just took the man for his
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word. I didn't think I'd have to get a written
contract or anything else. He says, "I'm going to
do this for you the first year and second year.
And you're going to be with me." I trusted him.
And I thought, you know, this is a good way for me
to go. It's what I like to do is to get shops
going. So I didn't say, "Well, okay, you've got to
write up a five-year agreement or a two-year
agreement" or anything. What he wrote down here I
took to be a good agreement, that he would face up
to it as a man.
Q: But what did you understand that agreement to be,
as far as how long? That written agreement?
A: Two years.
Q: And why is that?
A: Because that's all he did. He told me if--because
it has down the first year I'll get so much and the
second year 1'11 get so much. And he signed it. I
didn't know I'd have to have it notarized or
anything else. Or that I'd have to sign it.
Q: Did he say in the cover letter or that agreement
that if there was any disagreement with it on your
part, that you would work it out?
A: Yes. That's what it says.
Q: And did you disagree with it?
A: No, I did not. I accepted what he had written down
here and gave to me.
Q: And did you feel that that was your agreement, what
was written down?
A: Yes, I did.
After reviewing Basta's testimony, it is apparent that while
Basta regarded the memorandum as covering the first two years of
his employment, he anticipated that his employment with Crago would
last for "at least five years." However, nothing in the evidence
supports the conclusion that the parties agreed to either a two-
year or a five-year employment term. Rather, the evidence supports
9
the conclusion that the parties failed to agree to any specific
term of employment at all; there was simply no meeting of the minds
on the term of Basta's employment--whether it was two years, five
years or longer. Therefore, based on the uncertain nature of both
Basta's testimony and the memorandum, we conclude that the parties
did not enter into a contract of employment "for a specific term."
Basta also alleges that Crago violated the implied covenant of
good faith and fair dealing and Basta seeks damages for emotional
distress. As we stated above, Basta's claims are not exempted from
the Act under 5 39-Z-912(2), MCA (1991), because the parties did
not enter into a written contract of employment for a specific
term. Therefore, § 39-2-913, MCA (lPPl), controls and Basta's tort
claim for breach of implied covenant of good faith is barred.
Furthermore, under the Act, Basta cannot seek damages for emotional
distress. Section 39-2-905(3), MCA (1991). See also Dagelv. City
of Great Falls (1991), 250 Mont. 224, 238, 819 P.2d 186, 194.
In sum, we conclude that Basta and Crago did not enter into a
written contract of employment "for a specific term." Therefore,
Basta's contract and covenant claims are not exempted from the Act
pursuant to 5 39-2-912(2), MCA (1991). Accordingly, we affirm the
District Court's conclusion that Basta's breach of contract and
breach of implied covenant of good faith and fair dealing are
barred by the Act pursuant to § 39-2-913, MCA (1991).
Affirmed.
We Concur:
Justices
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Justice Terry N. Trieweiler dissenting.
I conclude that the parties did enter into a written contract
of employment for a specific term within the meaning of
§ 39-Z-912(2), MCA (1991), and therefore, dissent from the majority
opinion.
Martin "Dot" Basta worked for Advanced Litho Printing Shop in
Great Falls for twenty-one years until he was induced to leave that
employment with a written promise from Craig Barber, owner and
operator of the Printing Center, that he would be employed on more
favorable terms at that business for at least two years. However,
less than one year after he began work for Barber, he was told that
the Printing Center could not afford him and his employment was
terminated.
Section 3%2-912(2), MCA (1991), provides that the Wrongful
Discharge from Employment Act found at §§ 39-2-901 to -915, MCA,
does not preclude a person covered by a written contract of
employment for a specific term from enforcing the terms of the
employment contract.
Section 28-Z-102, MCA, sets forth the necessary elements of a
contract. It provides as follows:
It is essential to the existence of a contract that there
be:
(1) identifiable parties capable of contracting;
(2) their consent;
(3) a lawful object; and
(4) a sufficient cause or consideration.
The document which was submitted to Basta after being prepared
and signed by Craig Barber, and which is relied on by Basta as a
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"written contract of employment for a specific term" provided as
follows :
January 23, 1992
TO: Dot Basta
FROM: Craig Barber
RE: Terms of employment
INSURANCE The Printing Center will pay medical
insurance for you and your wife.
VACATION & 3 weeks paid vacation
DAYS OFF plus 5 days off as needed
1ST YEAR $35,000 a year salary plus a bonus,
not to exceed $1000 if predetermined
goals are met.
2ND YEAR $36,000 a year salary with a bonus
system.
(to be determined)
POSITION & Position: Working Foreman
RESPONSIBILITIES
Camera
Shooting
Stripping
Training
Route & schedule jobs
Quality control
Employee supervision and training
Involvement in customer relations as
needed
Assisting with the transition from
conventional camera work to computer
Other duties as need arises
I hope that you find this agreeable and as we had
discussed.
Sincerely,
/s/ Craig Barber
Craig Barber
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The document obviously included identification of the parties,
the consent of Craig Barber, a lawful object, and sufficient
consideration. There is no question presented regarding the
capacity of either party to contract; Barber simply contends, and
the District Court agreed, that because Basta had not signed the
agreement, his consent had not been provided, and therefore, the
agreement was incomplete. The District Court gave the following
rationale for its decision:
The Court found quite credible the Plaintiff's
testimony, that he left a good job in reliance upon the
Defendant's offer of employment for a term of at least
two years, but that offer had to be finalized into a
"written contract of employment for a specific term," if
it is to take the Plaintiff's case outside the parameters
of the Wrongful Discharge Act. Testimony presented by
the Plaintiff established that the Plaintiff accepted the
Defendant's offer by leaving his prior employment and
beginning work with the Defendant, but his acceptance was
not in writing as presented to the Court, but an
acceptance based on performance. Unless both the offer
and acceptance is finalized in the form of written
contract, it does not appear to be exempted from the
requirements of the Wrongful Discharge Act. Section
39-2-912, MCA (1991).
I disagree. When Basta actually went to work for Barber and
fully performed, according to the terms of the contract, from
March 1, 1992, until he was terminated on February 26, 1993, he
accepted the terms proposed by Barber by performing his
responsibilities set forth in the contract. Section 28-2-503, MCA,
provides for acceptance in the following manner:
(1) Performance of the conditions of a proposal or the
acceptance of the consideration offered with a proposal
is an acceptance of the proposal.
(2) A voluntary acceptance of the benefit of a
transaction is equivalent to a consent to all the
14
obligations arising from it, so far as the facts are
known or ought to be known to the person accepting.
Based on Basta's acceptance by performance of the contract
terms proposed by Barber, I conclude that there was a completed
contract of employment for a specific term and that all essential
terms of the contract were in writing. I would conclude that, when
the employer has set forth the conditions of employment in a
written document which includes the term of employment and is
signed by the employer, the requirements of 5 39-Z-912, MCA (1991),
have been satisfied. The purpose, after all, of that section's
requirement that there be a written contract is to protect the
employer by limiting his employee's remedies to the provisions of
the Wrongful Discharge From Employment Act, unless it can be
documented that the employer offered him or her something greater
than the Act's protections. Here, there is no question about the
terms of employment which were offered by the employer.
Therefore, the requirements of § 39-2-912(Z), MCA (19911, have been
satisfied.
However, based on Basta's testimony to the effect that he felt
Barber had committed to a term greater than two years during their
conversations, the majority concludes that the contract in question
does not provide for a specific term. I disagree again.
The written contract, which is set forth in this opinion,
provides for a first year and a second year. It provides for the
salary to be paid during each year, and a bonus to be determined at
15
a later date. Based on the plain language in the contract, it
provided for a minimum term of two years employment.
At most, the term of employment in defendant's proposed
written contract is unartfully drawn and leaves some question about
whether the term was to extend beyond two years. However, as we
have repeatedly held, the author of a written agreement should not
be able to avoid liability for performance of that agreement based
on ambiguities which are his or her own creation. Those
ambiguities are to be construed in favor of the party who did not
draft the agreement. See, e.g., Topco, Inc. V. state (1996) , 275 Mont. 352,
360, 912 P.2d 805, 810 ; Mueske v. Piper, Ja&zy & Hopwood, Inc. (1993 ) , 260
Mont. 207, 216, 859 P.2d 444, 449 -50 ; St. Paul Fire & Marine Ins. Co. v.
Cumiskey (1983), 204 Mont. 350, 363, 665 P.2d 223, 229.
For these reasons, I would reverse the order of the District
Court and remand to that court for further evidence regarding any
defenses Barber might have to Basta's contract claim.
Justices William E. Hunt, Sr., and W. William Leaphart join in the
foregoing dissenting opinion.
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