Dare v. Montana Petroleum Marketing Co.

NO. 83-542

I N THE SUPREME COURT O F THE STATE OF MONTANA

1984

JACQUELINE DARE,

P l a i n t i f f and A p p e l l a n t ,

-VS-

MONTANA PETROLEUM MARKETING C O . ,

D e f e n d a n t and R e s p o n d e n t .

APPEAL FROM: D i s t r i c t C o u r t of t h e T h i r t e e n t h J u d i c i a l D i s t r i c t ,

I n and f o r t h e C o u n t y of Y e l l o w s t o n e ,

T h e H o n o r a b l e C h a r l e s L u e d k e , Judge p r e s i d i n g .

COUNSEL O F RECORD:

For Appellant:

N y e and M e y e r , B i l l i n g s , Montana

For Respondent:

H e r n d o n , H a r p e r and M u n r o , B i l l i n g s , M o n t a n a

S u b m i t t e d on B r i e f s : March 15, 1 9 8 4

Decided: S e p t e m b e r 1 0 , 1984

SEF v Y Q ~ ~

Filed: L i ~ ~ l

Clerk

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

Jacqueline Dare appeals from summary judgment granted by

the Thirteenth Judicial District Court, Yellowstone County,

in favor of Montana Petroleum Marketing Company on her claims

for relief arising from termination of her employment. We

reverse.

The sole issue on appeal is whether the District Court

erred in granting summary judgment to defendant employer.

Jacqueline Dare worked as a cashier and station

attendant at defendant's Husky service station in Billings

from July 14, 1982 to January 23, 1983. She was hired by

oral agreement by manager Dick Bertrand, who was also her

supervisor.

Employee responsibilities were specified in instructions

the company furnished to station managers. These

instructions began with the admonition:

"Managers: Following are some items that must be

covered and understood by all new employees during

their training period."

The parties dispute whether manager Dick Bertrand reviewed

these instructions with Dare or whether she in fact knew of

the policies listed in these instructions. The instructions

defined employee duties, conduct and appearance. They did

not include any disciplinary or termination procedures. The

instructions contained a paragraph stating:

"We draw from our existing employees to fill most

of our open manager positions. An employee who

continually requires little or no supervision and

shows some personal initiative in wanting to learn

the ins/outs and do/don1ts of the petroleum

retailing field will most likely have a station of

his own in the not too d.istant future.''

Dare began working for defendant in July at $3.35 per

hour. Her pay was raised to $3.65 per hour in October and

she received health insurance benefits. She stated in her

deposition that she was promised another raise in three

months, but never received it. She also said Bertrand told

her he wanted her to learn to do the station's bookkeeping.

Dare stated in her deposition that on January 22, 1983

she fell in her front yard when coming home from work. She

went to the hospital and was given a neck brace to wear. As

a result of the fall, she was ill before she went to work on

Sunday, January 23, 1983. Dare called a co-worker to ask if

she would work in Dare's place, but she could not. Dare went

...

to work at 2 p.m. and worked until around 5 p.m., when she

called Bertrand and told him she wasn't sure she could

complete her shift. Bertrand told her to try. She took some

pain pills and threw up in the garbage can. A customer

called Bertrand to inform him of Dare's condition. Bertrand

called Dare back and told her, "I am coming in to work for

you, and when I get there you're fired."

Dare and Bertrand give contradictory versions of why

Dare was fired.

Bertrand claimed Dare refused to clean designated areas

despite verbal warnings on two occasions. He claimed he had

warned her about having men hang around the station while she

worked, but that on numerous occasions he had entered the

station and found men and women standing at the counter

eating hamburgers and french fries while Dare was trying to

wait on customers. Bertrand claimed Dare closed the station

5 minutes early on one occasion and that he told her closing

early was grounds for immediate dismissal. He claimed that

even though she promised it would not happen again, he later

twice witnessed her closing early. Bertrand states that on

December 3, 1982 he placed Dare on probation for 30 days,

telling her she would be dismissed if her work performance

did not improve. He stated tha.t her "constant" calls

complaining of being too sick to work, coming in late and

lack of responsibility were "getting to he too much."

Dare stated in deposition that although Bertrand had

warned her and all station employees about cleaning duties,

she never refused to clean anything. She stated that one

warning resulted from her failure fully to clean up the men's

restroom after the toilet overflowed. She stated that

management had not provided gloves or other equipment for

cleanup and that she "did not want to touch it." She stated

she was never warned about friends hanging around the station

because there were no friends hanging around the station.

She said Bertrand warned - employees against allowing men

all

to hang around.

Dare admitted closing 5 minutes early on Christmas Eve

after no customers came in for 2 1/2 hours. She claimed

Bertrand did not tell her closing early was grounds for

dismissal, but simply told her not to let the owner catch her

or she would be "in trouble." She denied closing early on

any occasion other than Christmas Eve. Moreover, she stated

she missed work for illness only once during her 6 months of

employment. Finally, she stated she was never told she was

being placed "on probation," although she admitted Bertrand

had told her that unless her work performance improved she

would be terminated. However, she states that she was later

told on several occasions that she was doing an excellent

job.

Dare filed suit claiming she had been wrongfully

discharged for becoming too ill to work, even though she had

no prior history of illness. She also claimed her employer

breached the covenant of good faith and fair dealing implied

in the employment relationship. She demanded reinstatement,

lost earnings, damages for mental, emotional and financial

distress, punitive damages and costs.

Defendant moved for summary judgmen.t alleging there was

no genuine issue as to any material fact and that defendant

was entitled to judgment as a matter of law. The motion was

briefed a.nd the parties stipulated to submission on briefs

without oral argument.

Dare argued that Gates v. Life of Montana Insurance

Company (Mont. 1982), 638 P.2d 1063, 39 St.Rep. 16,

"modified" section 39-2-503, MCA. That section states:

"An employment having no specified term may be

terminated. at the will of either party on notice to

the other . . .."

Dare argued that under Gates and Mye v. Department of

Livestock (Mont. 1982), 639 P.2d 498, 39 St.Rep. 49, the

employer cannot as a matter of law rely upon the concept of

at will employment to justify indiscriminate termination of

employment. She contended that the duty of good faith and

fair dealing and the tort of wrongful discharge override the

at will employment concept. She contended that summary

judgment was improper because there were genuine issues of

material fact as to whether her employer breached these

duties or violated public policy in her termination.

The District Court granted summary judgment to

defendant. The court reasoned that the plaintiff had failed

to show any public policy violation, as required to sustain

an action for wrongful discharge, because no rules or

regulations were ignored or misapplied here as was the case

in Nye. Further, the court reasoned that no covenant of good

faith and fair dealing could be implied in Dare's employment

relationship because there was no employment handbook

covering employee discharge as in Gates. Finally, the court

granted summary judgment on Dare's claim for emotional,

mental and financial distress because the court had granted

summary judgment on Dare's underlying claims and because the

court con.cluded plaintiff had presented no evidence

supporting the claim. Dare appeals from the summary judgment

granted by the District Court.

The rules regarding summary judgment are well settled.

The purpose of summary judgment is to encourage judicial

economy by eliminating unnecessary trials. Summary judgment

will be upheld in cases where the complaining party fails to

demonstrate the existence of material and substantial facts

that would alter the decision made below. However, summary

iudgment is not a substitute for trial where a factual

controversy exists. The appellate standard for review of a

grant or denial of a summary judgment motion is the same as

that used by the trial court initially under Rule 56(c),

M.R.Civ.P.: a summary judgment is properly granted when it

appears "that there is no genuine issue as to any material

fact and that the moving party is entitled to judgment as a

matter of law." If there is any doubt as to the propriety of

a motion for summary judgment, it should be denied. Reagan

v. Union Oil Co. (Mont. 1984), 675 P.2d 953, 956, 41 St.Rep.

131, 134. Here, we find genuine issues of material fact

which require reversal of the summary judgment granted by the

District Court.

Dare alleges that she was wrongfully discharged by

defendant. This Court addressed the tort of wrongful

discharge in Nye v. Department of Livestock (Mont. 1982), 639

P.2d 498, 39 St.Rep. 49. In Nye, we stated:

" ... [Tlhe tort of wrongful discharge may apply

to an at will employment situation. In fact, the

theory of wrongful discharge has developed in

response to the harshness of the application of the

at will doctrine, under which an employment may be

terminated without cause . . ..

The determination

of whether the cause of action arises rests upon

whether an unfair or unjustified termination was in

violation of public policy. Keneally v. Orgain

(1980), Mont., 606 P.2d 127, 37 St.Rep. 157." Nye,

639 P.2d at 502, 39 St.Rep. at 53.

In Nye, we found that administrative rules may be the source

of a public policy which would support a claim of wrongful

discharge. We held that the Department of Livestock had

violated public policy by failing to apply to plaintiff, a

department employee, its own regulations regarding employee

discipline and termination. Nye, 639 P.2d at 502, 39 St.Rep.

at 53-54.

However, in Keneally v. Orgain (1980), 186 Mont. 1, 606

P.2d 127, we found that the plaintiff-employee had failed to

show a violation of public policy necessary to support a

wrongful discharge action. Plaintiff alleged that he had

been unjustly terminated by his employer for complaining that

the company sold its business machines based upon promises of

adequate maintenance and service, but then failed to provide

the promised maintenance and service. This Court emphasized

the employer's legitimate interest in protecting its normal

operational procedures from disruption. Keneally, 186 Mont.

at 6, 606 P.2d at 129-30, citing Geary v. United States Steel

Corp. (Pa. 1974), 319 A.2d 174, 178-79.

Dare alleges facts tending to show that her firing was

unjustified and contends that she was fired because she was

too ill to work, even though she had no history of missing

work due to illness. In granting defendant's summary

judgment motion on Dare's wrongful discharge claim, the

District Court stated that no administrative rules had been

ignored or misapplied to Dare, as they had been in Nye.

However, it is not essential that Dare rely upon or establish

precisely the same facts and theory set forth in Nye. Public

policy violations may conceivably arise on other facts or

theories.

The record discloses remaining genuine issues of

material fact regarding Dare's wrongful discharge claim. The

parties relate widely divergent versions of Dare's work

performance and reasons for her termination. It therefore

remains for the trier of fact to resolve these issues,

including the reason for Dare's termination and whether she

was fired for cause. Further, Dare is entitled to an

opportunity to present a.uthorities in support of her public

policy arguments as supported by the facts developed at

trial.

Dare also contends that her employer breached the

covenant of good faith and fair dealing implied in the at

will employment relationship. The District Court ruled that

this covenant could not be implied in this case because there

was no employment handbook promulgated by the employer, as in

Gates. The court found this to be a critical distinction a.nd

ruled that without such a handbook, Dare's claim must fail.

We conclude that the District Court construed Gates too

narrowly.

Whether a covenant of good faith and fair dealing is

implied in a particular case depends upon objective

manifestations by the employer giving rise to the employee's

reasonable belief that he or she has job security and will be

treated fairly. Gates, 638 P.2d at 1067, 39 St.Rep. at 20.

The presence of such facts indicates that the term of

employment has gone beyond the indefinite period contemplated

in the at will employment statute, section 39-2-503, MCA, and

is founded upon some more secure and objective basis. In

such cases, the implied covenant protects the investment of

the employee who in good faith accepts and maintains

employment reasonably believing their job is secure so long

as they perform their duties satisfactorily. Such an

employee is protected from bad faith or unfair treatment by

the employer to which the employee may be subject due to the

inherent inequality of bargaining power present in many

employment relationships. The implied covenant seeks to

strike a balance between the interests of the employer in

controlling the work force and the interests of the employee

in job security. Gates, 638 P.2d at 1066-67, 39 St.Rep. at

We hold that an employment handbook as promulgated by

the employer in Gates is not essential to a cause of action

for breach of the implied covenant of good faith and fair

dealing. Implication of the covenant depends upon existence

of objective manifestations by the employer giving rise to

the employee's reasonable belief that he or she has job

security and will be treated fairly.

Contrary to the employer's contentions, there are

remaining genuine issues of fact material to Dare's claim for

breach of the implied covenant of good faith and fair

dealing. Dare has alleged that she was given a pay raise

after 3 months and promised another pay raise in an

additional 3 months. She has also alleged that Bertrand told

her he wanted her to learn to do the station's bookkeeping.

Dare claims that she was told she was doing a good job and

was not, as Bertrand contends, placed on probation. She

contends that her employer had a written policy that existing

employees who demonstrated independence and initiative were

most likely to become station managers for the company. The

employer denies that Dare had any basis to believe she had

job security.

The existence of this issue of material fact precludes

summary judgment. Further, if the covenant is implied in

this case, there remain material fact issues regarding

whether Dare's employer breached the covenant in the context

of this case.

Finally, Dare contends that the District Court erred in

granting defendant's motion for summary judgment as to her

claim for emotional, mental and financial distress. We

agree. It appears the court granted summary judgment on this

claim because it granted summary judgment on Dare's

underlying claims for relief. In light of our reversal of

summary judgment on Dare's wrongful discharge and implied

covenant of good faith and fair dealing claims, summary

judgment on this claim must also be reversed. Dare is

entitled to present evidence at trial of the alleged damages

resulting from wrongful discharge or breach of the implied

covenant, including evidence of emotional, mental or

financial distress.

The summary judgment gra-nted by the District Court is

reversed and the cause is remanded for trial.

We concur:

Chief ~usticfe --

-

Justices

Mr. Justice L. C. Gulbrandson specially concurring.

I concur in the result but not in all that is said in

the majority opinion. /'

Y?,

Justice

/

,

i

Mr. Justice Frank B. Morrison, Jr. specially concurs as

follows:

I applaud the majority's effort to define the parameters

of those principles that control the employment relationship.

I concur in the result but not in all that is said in the

majority opinion.

First, it should be made clear that this Court has not

modified the "at will" statute. Courts cannot amend

statutes. At times it seems as though judicial opinions

ignore applicable statutes. That is not the case here.

In my opinion, section 39-2-503, MCA provides for "at

will" employment where no specific term is specified. The

statute refers to the term of employment but has nothing to

do with obligations owed by either party to the other. In

other words, even though employment may be terminated at

will, if a legal obligation is breached, that breach may give

rise to a separate tort action.

The majority refers to the District Court holding that a

public policy violation is required in order to sustain a

wrongful discharge action. Following our decisions in Gates

v. Life of Montana Insurance Co. (1982), 196 Mont. 178, 638

P. 2d 1063 and Gates v. Life of Montana Insurance Co. (Mont.

1.983), 668 p.2d 213, 40 St-Rep. 1287 the law had broader

application. We there held that there is an implied covenant

of good faith and fair dealing, the breach of which gives

rise to an action in tort. The old wrongful discharge action

premised upon a public policy violation was subsumed in this

new tort recognized for the first time in the second Gates

appeal. All public policy violations would undoubtedly

involve a breach of covenant of good faith and fair dealing.

The obligation owed under that covenant is broader and

encompasses more employer-related conduct.

The majority states that:

"Whether a covenant of good faith and fair dealing

is implied in a particular case depends upon

objective manifestations by the employer giving

rise to the employee's reasonable belief that he or

she has job security and will be treated fairly."

I disagree. The covenant of good faith and fair dealing is

implicit in every employment contract irrespective of a

reasonable belief regarding job security. The law imposes an

absolute obligation upon employers to deal fairly and in good

faith with their employees from the commencement of the

employment relationship. Facts that give rise to an

inference of job security in the future might help determine

whether there was a breach of the covenant to deal fairly and

in good faith, but are not necessary to the existence of the

covenant itself.

There seems to be much confusion surrounding "at will"

employment and under what circumstances employees thus

situated can be terminated. For clarification, and since

this is a specially concurring opinion entitling me to take

some license, I volunteer my thoughts on this subject. All

contracts of employment without a specified term are "at

will." Section 39-2-503, MCA. This statute, which becomes

part of every contract, is subject to the higher authority of

the Montana State Constitution. Art. 11, Sec. 3 , 1972 Mont.

Const., provides that all persons have as an inalienable

right the opportunity of pursuing life's basic necessities.

Art. 11, § 4 , 1972 Mont. Const., provides that no person shall

discriminate against any person exercising his civil or

political rights on account of race, color, sex, culture,

social origin or condition, or political or religious ideas.

Clearly the "at will" statute is subject to this higher

constitutional authority and. as such exists subservient to

it. Although this case does not involve conduct proscribed

by the Constitution, I do want to note that the right to

terminate is not absolute but subject to exercise in

accordance with constitutional principles.

This Court has held that employment contracts are

subject to an implied covenant of good faith and fair

dealing. This obligation is not rooted in statute and cannot

repeal or amend the provisions of section 39-2-503, MCA.

Rather, the obligation recognized by this Court must be

reconciled with the "at will" statute. I think this can

easily be done. An employer, under the "at will" statute,

has the right to terminate. However, if the employer

violates the legal obligation to treat the employee fairly

and in good faith, then a separate and independent tort

action can be instituted by the injured employee against the

offending employer. Damages, not reinstatement, is the

remedy.

We are treading on thin ice as we attempt to construct

new protections for employees. There is an indication in the

majority opinion that the plaintiff can only be terminated

"for cause." Such a determination certainly conflicts with

the "at wil.1." statute. We must not confuse the "term of

employment" with the right of the employee to be dealt with

fairly and in good faith. The breach of the obligation owed

by the employer may give rise to a tort action on the part of

the employee, but does not convert "at will" employment to

employment for a specific term.

I concur in reversing and remanding for trial, but do

not envy the trial court the task of developing instructions

from what we have said.