Miller v. Catholic Diocese of Great Falls

No. 86-095
IN THF SUPREME COURT OF THE STATE OF MONTANA
1986

MARY PAT MILLER,
Plaintiff and Appellant,

CATHOLIC DIOCESE OF GREAT FALLS,
BILLINGS AND ROMAN CATHOLIC BISHOP
OF GREAT FALLS, jointly and severally,
Defendants and Respondents.

APPEAL FROM: District Court of the Thirteenth Judicial District,
In and for the County of Yellowstone,
The Honorable Charles Luedke, Judge presiding.

COUNSEL OF RECORD:

For Appellant:
Nye & Meyer; Victoria Francis argued, Billings,
Montana

For Respondent:
Cure, Borer & Davis; Maxon R. Davis a r g u e d , ~ ~ ~ ~ t
Falls,
Montana
Crowley Law Firm; Peter F. Habein, Billings, Montana

Submitted: October 21, 1986
Decided: November 20, 1 9 8 6

Filed:
Mr. Justice Fred J. Weber delivered the Opinion of the Court.

Mary Pat Miller (now Mrs. Mullner) appeals the summary
judgment dismissing her wrongful discharge complaint against
defendants. The District Court for Yellowstone County con-
cluded that applying the tort of bad faith in this case would
infringe upon the free exercise of religion. We affirm.
The issue is whether the free exercise of religion
clauses of the United States and Montana Constitutions bar
consideration of the tort of breach of the covenants of good
faith and fair dealing in the discharge of Mrs. Mullner for
her failure to maintain discipline in the classroom.
The defendants also raise the issue of whether summary
j u d ~ e n t can be upheld because no breach of the implied
covenant of good faith and fair dealing is established in the
record.
Little Flower School in Billings is part of the Catholic
school system administered by the Catholic Diocese of Great
Falls-Billings. Mrs. Mullner taught fifth and sixth grade
students there during the school year 1983-84. Her immediate
supervisor evaluated her as "outstanding" in every category.
Her contract was renewed and she received a $1,000 raise for
the 1984-85 school year.
During the 1984-85 school year, Mrs. Mullner had a new
supervisor (the head teacher). The new head teacher did not
approve of Mrs. Mullnerls teaching methods. The district
court file contains a copy of the head teacher's dated notes
documenting her concerns and the concerns of parents, other
teachers, and the school administrator about a lack of disci-
pline in Mrs. Mullnerls classroom. Mrs. Mullner admits that
the head teacher spoke with her "on more than one occasion"
about problems in her classroom. In November 1 9 8 4 Father
Wagner, the school administrator, told Mrs. Mullner that the
next day would be her last day of teaching at the school,
because she was not properly disciplining the children in her
class. She was paid for the following fifteen days, pursuant
to the termination clause in her teaching contract.
Mrs. Mullner filed this suit alleging breach of the
covenant of good faith and fair dealing in employment.
Discovery was conducted, including depositions of Mrs.
Mullner, the head teacher, and Father Wagner. Defendants
produced various documents, including copies of Mrs.
Mullner's employment contract, her evaluation, and the
1984-85 Little Flower School handbook and code of conduct
booklet. The defense moved for summary judgment that appli-
cation of the tort of bad faith would impermissibly interfere
with freedom of religion. The District Court granted that
motion.
Since an affirmative answer to the issue raised by
defendants would eliminate the necessity of reaching the
constitutional issue, we will discuss defendants' issue
first.

Can summary judgment be upheld because no breach of the
implied covenant of good faith and fair dealing is estab-
lished in the record?
The defendants argue that nothing in the record estab-
lishes any breach of an implied covenant of good faith and
fair dealing. They maintain that there were no objective
manifestations of job security to Mrs. Mullner, and that
there were indications to her that she was not performing
satisfactorily. They also maintain that there has been no
evidence of lack of good faith on the part of Father Wagner.
The defendants' brief to the District Court in support
of their motion for summary judgment did not raise this
argument. It discussed only the constitutional issue.
Issues not raised before the district court are generally not
considered on appeal. Mont. Ass'n of Underwriters v. State,
etc. (1977), 172 Mont. 211, 218, 563 P.2d 577, 581. However,
this Court has the power to grant summary judgment even when
no motion has been made. Treasure State Industries Inc. v.
Welch (1977), 173 Mont. 403, 410, 567 P. 2d 947, 951. Even
so, the complaint's allegation of defendants' bad faith is
supported by Mrs. Mullner's deposition. She further contends
that she would have submitted additional evidence on this
point, had it been raised in the lower court. Her position
is that she reasonably believed her employment would contin-
ue. We conclude the record does not support summary judgment
on this basis.

Do the free exercise of religion clauses of the United.
States and Montana Constitutions bar consideration of the
tort of breach of the covenants of good faith and fair deal-
ing in the discharge of Mrs. Mullner for her failure to
maintain discipline in the classroom?
The relevant constitutional provisions are U. S. Const.
Amend. I:

Congress shall make no law respecting an estab-
lishment of religion, or prohibiting the free
exercise thereof; ...
and Art. 11, § 5, Mont. Const.:
 Freedom of religion. The state shall make no law
respecting an establishment of religion or prohib-
iting the free exercise thereof.
Former Chief Justice Burger has acknowledged for the United
States Supreme Court, in regard to the federal provision,
that "[clandor compels acknowledgement . . . that we can only
dimly perceive the lines of demarcation in this extraordinar-
ily sensitive area of constitutional law." Lemon v. Kurtzman
(1971), 403 U.S. 602, 612, 91 S.Ct. 2105, 2111, 29 L.Ed.2d
745, 755. The Court provided more guidance on application of
the free exercise clause in Wisconsin v. Yoder (1972), 406
U.S. 205, 92 S.Ct. 1526, 32 L.Ed.2d 15. In that case, the
Court held that a Wisconsin requirement that all children
attend school until the age of 16 was unconstitutional when
applied to the Amish respondents, because compelling public
school attendance beyond the eighth grade unconstitutionally
interfered with their religious beliefs. The Court stated:

The essence of all that has been said and written
on the subject is that only those interests of the
highest order and those not otherwise served can
overbalance legitimate claims to the free exercise
of religion.
Yoder, 406 U.S. at 215. We use that standard as our guide.
The parties do not dispute that Little Flower School
played an important role in the religious mission of the
Roman Catholic Church--that is, teaching the students the
elements of the Catholic faith. Defendants point out that
all aspects of parochial school education, including disci-
pline, are permeated with the religious mission of the
school. We agree with the conclusion of the District Court
in Lemon that parochial schools constitute an integral part
of the religious mission of the Catholic Church, and with the
statement that " [i]n short, parochial schools involve
substantial religious activity and purpose." Lemon, 403 U.S.
at 616.
This case must be distinguished from the cases cited by
Mrs. Mullner involving such issues as wage rates in parochial
schools or the application of neutral principles of law to
division of property claimed by various members of a church
group. - e.g.,
See, Donovan v. Shenandoah Baptist Church
(D.C.Va. 1983), 573 F.Supp. 320; Jones v. Wolf (1979), 443
U.S. 595, 99 S.Ct. 3020, 61 L.Ed.2d 775. In order to consid-
er Mrs. Mullner's contentions, this case requires an analysis
of the discipline methods used in teaching various school
subjects, including religion itself. The suggestion is made
that consideration can be given to the methods of discipline
without becoming involved with claims which are rooted in a
religious belief. Father Wagner's deposition testimony
demonstrates why this division of discipline from religious
instruction cannot easily be made. He testified that he was
not able to successfully teach religion to the students in
Mrs. Mullner's classroom because of the absence of proper
discipline. This example demonstrates how the failure to
discipline in an acceptable manner directly interfered with
the teaching of religion, which is one of the aspects of the
free exercise of religion. Further, defendants point out
that discipline itself is an essential element of the reli-
gious faith taught at Little Flower School.
A judicial determination of the presence or absence of
good faith on the part of Father Wagner would require the
court to examine the school's discipline policy as applied to
classroom instruction covering both religious and nonrelig-
ious subjects, and to evaluate Father Wagner's interpretation
and application of that discipline policy. Such an
examination of necessity would impinge upon elements of the
teaching of religion, or the free exercise of religion. We
conclude that discipline in the classroom is so intertwined
with teaching which in turn is intertwined with religious
principles that a court cannot properly make the determina-
tion requested here without interfering with a legitimate
claim to the free exercise of religion.
The breach of the covenant of good faith and fair deal-
ing in employment is a common-law tort which has been recent-
ly recognized in Montana but is not universally recognized.
Gates v. Life of Montana Ins. Co. (Mont. 1982), 638 P.2d
1063, 39 St.Rep. 16. We apply the Yoder standard as our
guide and conclude that Mrs. Mullner's tort claim is not a
right "of the highest order and not otherwise served" so as
to overbalance defendants' claim to the free exercise of
religion. We hold that this suit is barred by the free
exercise of religion clauses of the United States and Montana
Constitutions.
Mrs. Mullner argues that resolution of this issue in
defendants' favor will result in excessive government entan-
glement ~rith religion, in violation of the Establishment
Clause of the United States Constitution. A three-factor
balancing test has been developed for evaluating Establish-
ment Clause claims. The factors are: (1) the character and

purpose of the institution involved; (2) the nature of the
law's intrusion into church affairs; and (3) the resulting
relationship between the government and the religious author-
ity. Lemon, 403 U.S. at 615. The religious character and
purpose of Little Flower School is not disputed. Denying
application of the tort of bad faith in this case does not
result in an intrusion into church affairs. The resulting
relationship between government and the religious authority
is negligible, at best, because our holding applies only to
this particular situation, and not to all applications of the
tort of bad faith to religious organizations. We conclude
after examining the three factors set forth in Lemon that
prohibiting Mrs. Mullner's lawsuit does not violate the
Establishment Clause.
Because allowing Mrs. Mullner's lawsuit to go forward
would impermissibly interfere with the free exercise of
religion, we affirm the summary judgment of the District
Court.

We Concur:

Justices
Mr. Justice Frank B. Morrison, Jr. dissents as follows:
The issue in this case is - whether the Catholic
not
school officials have a right to set conditions of employment
for teachers respecting the discipline of students. Of

course they do. To deny the churches the right to afford a
complete religious instruction, and the means to assure that
the student receives the instruction, would be an
unconstitutional infringement upon free exercise of religion.
Plaintiff's case here does not involve the teaching of
religion. Plaintiff's case is premised upon the fact that
she was denied due process in connection with her
termination. She was not afforded an opportunity to change.
She was not given a hearing in which she could explain her
position. Although the church is entitled to set whatever
standards it wants respecting and imparting religious
education to its students, the law does require that certain
fair procedures are necessary in order to accord due process.
The dismissed teacher here takes the position that she
was an excellent teacher, disciplined the students, and the
complaints lodged against her are false. She only asks for a
hearing to explain her position. The denial of this
opportunity does not promote free exercise of religion;
rather it denies due process rights and the legal protection
of the covenant of good faith and fair deal-inq to the
plaintiff.
This case represents another example of this Court
engaging in "bottom line" decision making without careful
legal analysis of the issues. I sense an attitude on the
part of the majority that says, "The courts have no business
interfering in the churches' business". Although that may be
true when dealing with religious instruction the principle
has no application to a claim that a teacher was denied

procedural due process and therefore the covenant to deal
fairly and in good faith was breached.
I would reverse and remand for trial.
Mr. Justice William E. Hunt, Sr., dissenting:

I agree with the majority opinion that summary judgment
cannot be upheld because of any absence of breach of the
implied covenant of good faith and fair dealing.
I dissent on the second issue and would hold that the

application of the implied covenant of good faith and fair
dealing to the facts of this case would not
unconstitutionally inhibit the free exercise of religion nor
violate the free exercise of religion clauses of the United
States and Montana Constitutions. Summary judgment was not
proper on these grounds and I would reverse and remand this
case for trial on the merits.
Defendant contends Little Flower School played an
important role in the religious mission of the Roman Catholic
Church and that all aspects of their education are permeated
with religious mission. The majority has stated that this
case involves the process of discipline and instruction
itself within a religious school setting.
I have no quarrel with these statements as far as they
go but they do not fully address the facts and issue before
this Court. Plaintiff herself acknowledges that she was told
she was dismissed because of problems with discipline in her
classroom. She does not question that improper discipline
can be used as a reason to terminate an employee under the
terms of the school's contract.
Rather her claim addresses whether she had notice of the
shortcomings that displeased her employer so she could
correct them and whether the discipl-ine used by her met the
disciplinary standards set out by her employer, Little Flower
School. Nowhere does plaintiff challenge the validity of
that disciplinary standard.
The First Amendment protects against government
establishment of religion and prohibition of the free
exercise thereof. Art. 11, § 5 of the Montana Constitutj.on
provides these same protections.
I find Cantwell v. State of Connecticut (1940), 310 U.S.
296, 60 S.Ct. 900, 84 L.Ed. 1213 instructive for direction on
the issue of free exercise of religion. In its discussion on
the First Amendment, the U.S. Supreme Court found that:
... the Amendment embraces two concepts,--freedom
to believe and freedom to act. The first is
absolute but, in the nature of things the second
cannot be. Conduct remains subject to regulation
for the protection of society.. ..
- at 303-304, 60 S.Ct. at 903, 84 L.Ed. at 1218.
Id.
... Nothing we have said is intended even
remotely to imply that, under the cloak of
religion, persons may, with impunity, commit frauds
upon the public ...
Even the exercise of religion may be at some slight
inconvenience in order that the State may protect
its citizens from injury.

- at 306, 60 S.Ct.
Id. 60 S.Ct. at 904, 84 L.Ed. at 1219.
The case before us involves a private citizen seeking to
enforce a common law tort through the courts of this state
against her employer, a church-operated school. The cases
relied on by the majority regarding excessive entanglement
between church and state are not fully applicable here.
Rather, a wealth of case law indicates that although federal
and state courts have no jurisdiction over solely internal
ecclesiastical affairs or the validity of religious beliefs,
they may exercise jurisdiction over torts incurred by
religious institutions and in church controversy which
impinges on property or civil rights. Lund v. Caple (Wash.
1984), 675 P.2d 226; Turner v. Unification Church (D. R.I.
1978), 473 F.Supp. 367 aff'd (1979) 602 F.2d 458; Saul v .
Roman Catholic Church of Arch. of Sante Fe (N.M. 1965), 402
P.2d 48. Federal courts have directly addressed the issue of
whether the free exercise clause immunizes defendant churches
from tort claims.
In Turner, the court stated that:
.. . . the "operational activities" of a religion,
those activities that are not solely in the
ideological or intellectual realm, are subject to
judicial review and may be regulated to achieve a
sufficiently important state objective.

- at 371-372.
Id.
In a similar case Van Schaick v. Church of Scientology
of Cal., Inc. (D. Mass. 1 9 8 2 ) , 535 F.Supp. 1125, the court
observed that:
Whether or not such i~munity exists depends, in
art. on whether the adjudication of the claim
hould require a judiciai determination - -
of the
validity - -a religious belief. . .
of .
Causes of action based upon some proscribed conduct
may, thus, withstand a motion to dismiss even if
the alleged wrongdoer acts upon a reliqious belief
or is organized. for a reli.gicus purpose. (Emphasis
added. )

- at 1135.
Id.
In the present case the application of the tort of good
faith and fair dealing to the church-operated school does not
require a determination of the validity of a religious
belief. A clergy administra.torl religious role, in itself,
s
does not bar application of the tort of good faith or any
other common law tort. Religious leaders and organizations
are responsible for breach of duty under common law. This
Court has jurisdiction to apply the common law to this
situation because such a review of a dismissal for the
failure to use proper discipline jn a classroom, whether a.
public or religious classroom, does not involve a judicial
determination of the validity of a religious belief.
Further, a series of case law decisions have indicated
that neutral application of common law has been
constitutionally applied to some circumscribed situations
involving internal church disputes. For example, in Konkel
v. Metropolitan Baptist Church, Inc. (~riz.App. 1977) , 572
P.2d 99, the court found that where the issue is whether the
expelling organization had acted in accordance with its own
regulations the court had jurisd.iction to determine whether
the expulsion was proper. Id. at 100. Other jurisdictions
follow a similar view. Ogden Street Church, Etc. v. Gospel
Temple Church, Etc. (Colo. App. 19741, 522 P.2d 757; Gospel
Tab Body of Christ Church v. Peace Pub. & Co. a an. 1973) ,
506 P.2d 1135; Mount Zion Baptist Church v. Second Baptist
Church (Nev. 1967) , 432 P. 2d 328; Wolozyn v. Regarek (0kla.

The Supreme Court in Jones v. Wolf (1979), 443 U.S. 595,
99 S.Ct. 3020, 61 L.Ed.2d 775 stated:
The neutral-principles approach cannot be said to
"inhibit" the free exercise of religion, any more
than do other neutral provisions of state law
governing the manner in which churches own
property, hire employees, or purchase goods.

- at 606, 99 S.Ct. at 3027, 61 L.Ed.2d at 786.
Id.
Thus since courts have been found to have jurisdiction
to settle certain internal church disputes, I believe there
is abundant authority for this Court to allow application of
neutral tort law to respondent's external dispute.
The majority opinion also relies on Wisconsin v. Yoder
(1972), 406 U.S. 205, 92 S.Ct. 1526, 32 L.Ed.2d 15 for the
authority that only values of the "highest nature" can be
grounds for inhibiting First Amendment rights.
 They do not appear to consider the fact that the Yoder
court found that only certain claims would invoke the
protection of the First Amendment. The Supreme Court hel-d
that :
...
to have the protection of the Religion
Clauses, the claims must be rooted in religious
- -
belief. Although a determination o f w h a t is a
"religious" belief or practice
- entitled to
constitutional protection may present a most
delicate question, the very concept of ordered
liberty precludes allowing every person to make his
own standards on matters of conduct in which
society as a whole has important interests.
(Emphasis added.)

- at 215-216, 92 S.Ct. at 1533, 32 L.Ed.2d at 25.
Id.
While maintenance of discipline is important to any
school, whether public or private, I would argue that it is
not the correct factor in the equation to apply to the above
standard.
More accurately this Court should ask whether
plaintiff's claim that she was terminated unfairly or in bad
faith is a claim that impinges on the defendant's religious
belief. I would argue that application of the tort of bad
faith in these circumstances does not do so.
Employers owe a duty to deal fairly and in good faith in
employment relationships. This Court has found that a breach
of this duty is a tort. Gates v. Life of Montana Ins. Co.
(Mont. 1983), 668 P.2d 213, 40 St.Rep. 1287.
Employees have an investment in their employment which
is protected. Their very livelihood is dependent on their
employment. Loss of employment often jeopardizes the family
home and structure. The State of Montana has a compelling
interest in maintaining that structure and stability for the
citizens of this state. The duty of an employer to treat an
employee fairly and terminate employment in good faith was
recognized because it struck an important balance between the
inherent unequality of bargaining power present in many
employment relationships. Dare v. Montana Petroleum
Marketing Co. (Mont. 1984), 687 P.2d 1015, 41 St.Rep. 1735.
The State of Montana has an important state objective in
applying the obligation of good faith to employment
relationships including lay teachers at church-operated
schools. This common law tort as applied to Little Flower
School is not a violation of the First Amendment and I would
reverse the grant of summary judgment and allow plaintiff to
bring her action to a jury for trial on the merits of her
case.

Mr. Justice John Conway Harrison, dissentinq.

I dissent. I would have this case go to trial and not be
decided by summary judgment.
/