*1 BUCK, JAMES Appellant, Plaintiff and v. CHEVROLET, INC.,
BILLINGS MONTANA corp.; a Delaware CO., a Montana FRONTIER CHEVROLET corp.; INC., ENTERPRISES, F. S. Corp.; STINSON; and FRANK
a South Dakota
MENHOLT,
DENNIS
Respondents.
Defendants
No. 90-250.
21, 1991.
Submitted Mar.
May
1991.
Decided
Kenneth D. Tolliver Tolliver & plaintiff appellant. Thomas, Moulton, Sheehy argued, Bellingham, Sidney R. Martha Mather, argued, Longo Stanley, Peter Bill McNamer McNamer & T. Brown, Anderson, Gerbase, argued, & Thompson, Rockwood Brown Fulton, Ross, Cebull, Billings, & for defendants and Harman respondents. Opinion delivered the of the Court.
JUSTICE McDONOUGH summary an Plaintiff, Buck, granting S. from order appeals James Chevrolet, judgment Billings Fron- in favor defendants Montana Inc., and Dennis Enterprises, tier F. S. Frank Stinson District, Thе District of the Thirteenth Judicial Menholt. Court County, held reasons defendants for Yellowstone that the asserted legitimate business reason under discharge Buck’s constituted a Act, 39-2-701 Sections summary judgment and dismissed seq., granted et It therefore MCA. part part. Buck’s affirm in and reverse lawsuit. We are: presented for our review issues (controlling and new 1. a new shareholder Whether owner officers) long term employee terminate a may properly of a business general manager of the before the control of the who was owner; sold to the new business was new summаry properly granted 2. the District Court Whether fraud; judgment on the issue of employee’s discharge
3. an issue of fact Whether exists as to Chevrolet; violating personnel policies Billings written properly 4. Whether The District Court dismissed Frontier Enterprises, F. S. Frank Stinson and Dennis Menholt from the lawsuit. (Buck) employee, corporation
James was an since of a (Frontier Chevrolet) which was named Frontier Company Chevrolet Chevrolet, Inc., Billings, is now named Montana. The controlling shareholder of Frontier Chevrolet was Andy Anderson, who president was Buck’s father-in-law and company. By accounts, all competent, Buck was a faithful employee through who had risen general manager ranks to become expertise business. His recognized throughout the automobile industry. Mr. Buck was elected President of the Automobile Association, non-dealer to position ever hold the and was preapproved by General Apparently, Motors to be a dealer. Mr. Buck purchasing dreams of the dealership, but he did not have suffi- cient resources.
Frank Stinson is a controlling shareholder of F. S. Inc., which owns and dealerships. cоntrols number of automobile began In 1986he looking dealership for another on automobile behalf and, of F. Enterprises, S. as a result became in purchasing interested the Frontier Chevrolet Company. Apparently, through Mr. Stinson F. Enterprises buying dealerships having had a tradition of long loyal employees placed position management his term in a at newly purchased eventually business. These employees would purchase Enterprises. arrangement from F. S. This by Stinson, was a method companies, utilized to reward his faithful employees.
After negotiatiоns, purchase several months of a contract for the During of the stock of Frontier these agreed Chevrolet was to. negotiations Andy Anderson Buck and his wife died. Mr. negotiate purchase. required continued to The final contract the resign. officers and directors The contract did ofFrontier Chevrolet to not, however, require any employee resign. Although Mr. Buck was or general manager dealership, of the he was not an officer director. completed of Frontier on
Sale stock Chevrolet was August Consistent with Frank and F. 1987. Stinson’s Chevrolet, аcting Enterprise’s policy management, of Frontier officers, its new filled of of position executive long-term employees, one of with Stinson’s day, up Menholt. The next Mr. Buck for and was told showed work no be longer general manager that he was because Menholt would business, running the and it work out both of them would not with After of Fleet negotiations, position there. some he was offered Manager, and Lease which he refused. company
Mr. Buck’s with was his father-in-law’s specified a without contract or term.
I. Following purchase F.S. the stock Chev- Enterprises’ оf ofFrontier rolet, officers, The change and the Buck was terminated. Jim with compliance defendants maintain that was terminated Stinson, long standing policy F. S. and Frank which Enterprises a long dealership. the new placed charge term money, arrangement also that save defendants maintain would the two Buck and his father-in- positions formerly because held law, into one held Dennis Menholt. position consolidated any He brought Buck has not forth facts to contest these reasons. does, however, reason, primary that the maintain first justification discharge, adequate is the under Montana’s his not 39-2-901, MCA, et Wrongful Employment Act. See Discharge from §§ Act, a According seq. pertinent parts of the cause and discharge wrongful discharge good if the probationary period completed employer’s 39-2-904(2), employment. See MCA. § Therefore, in order to Buck was not probationary employee. 39-2-904(2), MCA, wrongful under discharge establish claim for good not for cause. Good prove he must that his termination was is defined cause as: a failure reasonable for dismissal based on
“... related satisfactorily job duties, disruption employer’s perform 39-2-903(5).” or business reason. Section operation other part to there no failure on Buck’s parties agree All that allegation satisfactorily perform job any is there duties. Nor operation. Instead the defendants disrupted employer’s *5 justified by job “reasonable related maintain that his dismissal upon legitimate [a] ... based business reason.” We must grounds under these facts F. S. therefore determine whether uncontested (which policy) to Enterprise’s policy became Frontier Chevrolet’s legitimate man replace Buck with its own constituted Act. reason under the legislative history
A review of the of the from Initially Act good is of little assistance. cause was However, legitimate changes defined as a business reason. further good this term and defined cause as: eliminated job upon “reasonable related for dismissal a failure based satisfactorily perform job disruption duties or operations.” wording appears
This to have been set forth to include some specificity charges to misconduct protection employee. for the language majоr this limited had a omission because there discharge upon legitimate was no allowance for based economic job. remedy reasons such as a lack of work or ehmination To situation, legitimate this the term business reason was added to the thought definition. It enough that this term was broad to cover all ofthe various kinds of employment. termination of The term would employee’s advance the interest in security by requiring that the employer in legitimate fact have a reason discharge. At the same time, in employer’s management interest discretion would be protected allowing to make employment businesses decisions for business reasons.
Perhaps this term in because was added an effort to broaden the cause, good legislature provided any definition of has not concrete guidance judiciary have, interpreting meaning. to aid the its We therefore, thoroughly prior jurisdiction, reviewed case law from this jurisdictions, our sister arbitration cases from the National Labor Board, foreign jurisdictions Relations law an effort to precise meaning “legitimate arrive at a of thе term business reason.” attempts specifi- This review has been oflittle assistance. All to more cally define this term like or terms have resulted definitions that general are as as the term itself. are therefore fill in the We forced to gap legislature apply left and to define and the term in an equitable nearly fashion that most effectuates intent legislature. false,
A legitimate business reason is a reason that is neither whimsical, arbitrary logical and it some capricious, or must have
relationship to the needs of the In applying definition, business. this onе must take right into account the employer of an to exercise discretion over employ who will keep employment. equal Of importance right, however, to this is the interests of the employment. to secure
We apply this definition to the presented by issue this case. As earlier, stated Jim Buck exemplary was an employee who worked in his father-in-law’s business for years. almost fifteen During that period of time he rose the ranks to become general manager of the dealership. holding While position, responsible *6 managing in business his father-in-lаw’s absence. 1987, the business was sold to Enterprises. Stinson, F. S. Frank shareholder, controlling a long term policy which was executed F. S. buying dealerships placing and long term employees faithful position of manager. The employee would given then be buy chance to the business. According deposition to testimony, preferred Stinson arrangement because he found the dealerships were run efficiently most competently when the manager had a vested financial interest. In accordance with this system, placed Dennis Menholt was in charge Billings Chevrоlet. past,
In the we have noted that it is inappropriate for courts to become involved in the day-to-day employment decisions of business. e.g. See Hobbs v. (1989), Hide and Fur 503, 771 236 Mont. P.2d Pacific 125. In one, cases such as this particularly it is important that this philosophy is followed. F. S. Enterprises made a large investment purchased when it from Buck’sfather-in-law. Because Louisiana, Stinson, he lived in Enterprises F. S. and ul timately through the Frontier Chevrolet Company, desired place to long employee, term great trust, whom he held manage to investment. As a matter of pоlicy, corporate policy and the company controlled, such an arrangement preferred because placement it allowed the person conceivably of a who held the same business philosophies himself, values and as in charge newly acquired gave business. It also him an opportunity long to reward employees. term against
It would be common sense and rationality for this Court to hold that such reasons or do not a legitimate constitute business reason and are not related to the involved. The net result of such a holding would be to force a new owner of a business to retain
283 large manage even perhaps someone who it did know or trust dollar investment. case, him replacing
In this has not these argued Buck reasons Instead, steadfastly false. he has that these maintained motiva- justified tions were not any showing
Act. Because Buck has not forward with evidence come falsehood, summary faith or we judgment properly bad hold awarded. caution, however, holding
We that this is confined those occupy managerial employees positions. who sensitive or confidential An owner these may right under circumstances not hold the terminate require who hold duties which do not company’s exercise of broad discretion. A its protecting interest running strong investment and in its as it fit is sees not as applied employees, may when to lower echelon be therefore outweighed by continued, their interest employment. secure See Pugh (1981), e.g. v. See’s Candies Inc. Cal.App.3d Cal.Rptr. 917, 928. case, Under the uncontested material facts of this company’s replace decision to Jim Buck as with Dennis Menholt executive Comрany Frontier Chevrolet was for false, whimsical, arbitrary business reasons. The decision was not capricious logical nor had a relationship to the needs of business.
II. conclusory maintains in a fashion that the defendants *7 in engaged by actual fraud at of discharge justifying the time argues with false He initially reasons. that he was told was he reasons, job terminated for general economic because his former of argues was ehminated. He further that later another reason given discharged was when the defendants Buck stated in order to make room Dеnnis He argues original Menholt. reasons argu false and According therefore constituted fraud. to his ment, this “fraud” entitles him punitive damages to recover under 39-2-905(2), MCA. §
This section states: may
“The employee punitive damages recover otherwise allowed convincing law if it is established clear evidence that in employer engaged discharge actual or actual fraud malice 39-2-904(1).” employee in violation of 39-2-904(1) Section states: if discharge wrongful only
“A is ... it in violation a violation public policy reporting refusal to violate or for employee’s public policy.” Buck interpretation provisions, of these Through constrained him they together proceed read to allow argues that should be that the damages. Buck maintains jury punitive on the issue of given discharge constituted a violation alleged false reasons for his under 39-2- and are therefore actionable public policy § 905(2), disagree. MCA. We true, says provide this section does not everything
Even if is language provisions The clear of these Buck with a claim. engages if damages employer are allowed an punitive states discharging emplоyee malice in an who actual fraud or actual There is no public policy. reports engage or refuses to violations public policy and he is reported evidence Buck or refused to violate Act. damages under the precluded obtaining punitive therefore on this issue is affirmed. Summary judgment
III. 39-2-904(3), MCA, wrongful if discharge states that a is Section express provisions of its own written employer “the violated the employment governed Buck maintains that his personnel policy.” as- company employment manual which by provisions of a written and economic employment performance if his sured his continued satisfactory. Because neither ofthese condi- remained circumstances maintains the discharge, the time of his present tions were at cause of and that he has valid employment policies were violated 2-904(3), under 39- MCA. action Franks Stinson
Defendants District Menholt, presented was not at the argue this issue Wyman v. appeal. therefore should not be heard on Court level and (1988), 196. Realty 231 Mont. 752 P.2d DuBray Land record, prejudg was raised reviewing the we note issue after is sufficient refer therefore hold there ment motions and orders. We this Court level to allow argument at the District Court ence to this to review its merits. to a references contained numerous handbook security. par provide job part dealership
policy on ticular, section stated: one steady are thus assured growing. still You
“Our each of expect for us. We you producing as are long as doing part always their producers, maximum our to be *8 objectives.” accomplishing our business failed to Buck maintains that because there is no evidence he trouble, financial for the not in produce because was the employee he was dismissed violation of the terms of handbook. note, however, position that Dennis Menholt offered Buck a We dealership changed fleet after the hands. accept position
Buck maintains that he did not this because he did genuine actually not think it was a offer and would result in a later him position dismissal. He felt Menholt offered in an effort to appease true, him that a If so lawsuit could be avoided. these facts are possible may it is have a cause of action under 39-2- 904(3), MCA. specifically granting
The issue was not addressed in the order summary judgment. because the completely case was dis- missed, grant summary we reverse the judgment applied as it this issue and remand for further proceedings to determine the effect language of the handbook and then whether the offer made in good faith.
IV. fully order to understand appeal, the final issue of this it is necessary fully comprehend relationships between the dif- original corporation ferent defendants. The which was owned (Fron- Buck’s father-in-law was named Company Frontier Chevrolet tier-Delaware). It corporation was Delaware and its stock sold to F. S. operated by which is controlled and Frank Stinson, August 7, 8, 1987, on August 1987. On Frontier-Delaware terminated James Buck.
In December of changed Frontier-Delaware its name to Chevrolet, Inc., Montana corporation. a Delaware Later in month, this same the duties and of Billings assets Montana Chevrolet (Frontier-Montana). split corporation between itself and a new performed Frontier- Montana operating functions of the dealer- ship. Billings hand, on the other retained the majority inventory, property of all It principal assets. is also the shareholder of Frontier-Montana. corporate
This scheme developed so that Dennis Menholt could approved guidelines. Apparently, become an dealer under GM before dealer, percentage one can become a one must retain a certain ownership By splitting dealership. assets of was able to afford the costs of Menholt required operating dealership. interest purchasing Frontier-Montana, The Distriсt Court dismissed Frank Stinson *9 and Dennis Menholt by from the lawsuit summary order of judgment February 6,1990. on F. Enterprises previously been dismissed through stipulation parties. 1, 1990, On March Billings Mon- Frontier-Delaware) tana (formerly Chevrolet granted summary judgment on the that Buck’s justified dismissal was by a legitimate business reason. Buck has contested the dismissal of Stinson, Frank Menholt, Frontier-Montana and F. S. appeal. Inc. on portion of the opinion we address propriety of the dismissal the District Court of these four defendants.
Buck maintains that the District Court improperly dismissed argues Frontier-Montana. He that Frontier-Montana is a mere suc corporation cessor Billings Chevrolet, Montana and as such is any obligations liable for by Billings owed arose split before the A corporation assets. successor can be liable for the predecessor, debts of its merely if it is a continuation or reincarnation corporation. first Corpora 19 Am.Jur.2d Generally, however, tions 2711. § a corporation before can be deemed successor, certain showings must be made. For example, it is generally required that the plaintiff establish that insufficient con sideration rаn company from the new to the old and that one corporation existed at the completion of the transfer. 19 Am.Jur.2d Corporations 2711.
The facts here do support the conclusion that Frontier Montana is a corporation successor to Billings Montana Chevrolet. According to the Billings record Montana Chevrolet sold some assets Billings Frontier-Montana. Montana Chevrolet ac has tively remained in equipment business and holds property and real received from the sale ofFrontier-Delaware. There is no that evidence there was fraud in corporate the sale of the assets from Montana Chevrolet to Frontier Montana or lack of consideration that justify would a finding that it was a corporation. successor District Court properly dismissed Frontier Montana from the law suit. argues
Buck next that it was inconsistent for the lower court to dismiss Stinson and Menholt from the lawsuit and at the same time take their interests into determining consideration in that he was dismissed for a argument business reason. This First, suffers from several inherent weaknesses. corporation, itself, being object, an inanimаte incapable formulating its policies. own interests and Rather its interests are formulated officers, employees carry corporate directors and who out business. persons With limited exceptions, generally these are from immune arising lawsuits of corporate out affairs.
Second, Act provides remedy the exclusive wrongful termination. Meech v. West, (1989), 21, 776 Hillhaven Inc. 238 Mont. P.2d 488. All remedies provided by the against Act run the employer. The Act does not envision lawsuits against corporate employees, officers or shareholders. In this cаse there is no question employer that Buck’s Montana Chevrolet. It was not or corporation. Therefore, shareholders as mere shareholders or of Billings officers Stinson and Menholt were properly dismissed from the lawsuit.
Despite the agreed fact that he to dismissal at record level, District Court attempts argue now that F. S. *10 Enterprises was improperly argument dismissed. His on this issue closely parallels that set forth above relative to and Stinson Menholt. However, we need not consider the of merits this contention because appeаl Buck’s by of this issue is barred acquiescence to the dismissal of F. S. Enterprises in the District Court.
Counsel for F.
however,
S.
has moved this Court
to award
against
sanctions
Buck to
attorney
reimburse it
costs and
fees associated with the appeal. Given the fact that in the record Buck
previously conceded the propriety of the dismissal which
then
was
granted by the
Court,
District
we hold that the motion well
is
taken.
Upon remand the District Court shall determine the costs and attor
ney fees associated with
appeal
and
F.
Enterprises
award
S.
appropriate
e.g.
reimbursement. See
Rookhuizen v. Blains Mobile
(1989),
7,
Home Court
236 Mont.
Conclusion This case is reversed and proceedings remanded further accordance opinion with this concerning the issues of Buck’s dismiss- al in personnel contravention of the written manual of Montana Chevrolet. Summary judgment dismissing Frontier Chev- Company, rolet a Corporation, Frank Stinson and Menholt is affirmed. The appeal of F. Enterprises’ dismissal dismissed upon attorney and remand appropriate fees and costs shall against be assessed attorneys. Buck and his CHIEF JUSTICE TURNAGE and JUSTICES HARRISON and concur. WEBER BARZ in this pаrticipate
HONORABLE DIANE G. did decision. in part. dissents part
JUSTICE TRIEWEILER concurs majority opinion of affirm parts I concur with those the fraud; summary judgment for the defendants on the issue of affirm defendants, than the dismissal of other Inc.; the District Court for further considera- and remand this case to of discharged claim that he in violation plaintiff’s tion of was personnel policies. employer’s written majority which holds that part opinion I dissent from that job related plaintiff’s employer a matter of law has “reasonable as upon for dismissal ... business reasons.” based Employ constitutionаlity From West, v. challenged ment Act in this Court Meech Hillhaven (1989). Inc., case, an 776 P.2d In that 238 Mont. Equal Protection Clauses contended that Act violated by discriminating against a class Montana and Federal Constitutions basis, prior Act violated a rational and that the claimants without a providing by abrogating causes of action without case law reasonable substitute. Act, constitutionality finding that
In upholding the lost, rights for those that were adequate provided substitutes were though limited damages this Court concluded even “good Act, security provided employees greatеr job Act for termination of requirement that exists under the cause” now balancing rights employers employee. an Act, this Court for the determine there was rational basis whether significant Act “good protection ofthe concluded that the cause” stated: factor. We *11 liability potential their Act, the benefit because employers
“Under
manner
Meanwhile,
control over the
employees’
is made more certain.
remains,
of the Act’s
discharged
part,
in
as a result
they
in which
are
trade,
Act, making this
requirement. The
in
employees’ causе’
‘good
satisfy
Therefore,
Act
classifications
the
irrational.
is
no sense
test.”
of the rational basis
requirements
the
Meech,
With decision found previously which was “good requirement cause” of that same away taken have been quid pro quo rights to be the the Act. employees under cause, case,
Good as it 39-2- pertains defined MCA, 903(5), job-related grounds as "... reasonable for dismissal based on It is ... business reason.” not sufficient that a “legitimate termination of be for a business reason” reasonably unless that reason is related to that the performs.
If “legitimate by reason” business and itself is sufficient to cause, good good establish requirement Wrong- then the cause in the ful meaningless Termination Act has been rendered and nothing rights they State of Montana receive in return for the gave up Act, the Wrongful Discharge under From 39-§ 2-901, seq., et MCA. majority
The discusses the business interests of Frank Stinson at length, but fails to plaintiff’s establish that replacement as general manager Billings Inc., in anyway was job related. plaintiff
The was Billings dealership hired auto in 1973 as He salesman. advanced ranks of employment and eventually manager, served as the new truck the new car sales manager, general manager. general and manager He was for nine years prior discharge. to his During dealership operated that time the successfully profitably. pointed
As out majority, he was the ever nondealer president elected Automobile Dealers Association. He frequently dealership ran the during the absence of owner. its
There no plaintiff’s evidence in this record to indicate that replacement general manager as of thе auto was in any way related his performance job. of that
Furthermore, there was no indication in this that it record was the employer’s “legitimate business reason” for which plaintiff terminated. employer Plaintiff’s apparently operated
Inc. It successfully plaintiff’s under manage- ment.
James Buck was terminated because of business interests of Frank Stinson. Inc.,
Mr. corporation, Stinson F. S. owned and operated a number of dealerships country. auto around the person whom replaced plaintiff with he awas successful sales Dakota, dealerships of one his other in South and cоnsis- tent with his practice dealerships, those other promised person opportunity an take operation over *12 purchased. the he eventually acquire ownership dealership of next the general make Dennis Menholt The decision Stinson to ever at his next was made before he looked he ever met James S. Buck. It was Frontier and before prior corporation to the time that he and the that he owned made Therefore, Billings dealership. the purchased the shares of nothing company with reasons ofthe which to do employed plaintiff. the and cor-
It is to dismiss Frank Stinson logically inconsistent purchased the shares of poration which Inc., they technically plaintiff’s employer, but because justification to Frank Stinson’s business interests as then consider plaintiff. for termination facts, and based on the laws set forth undisputed
Under the made to Act, strong argument plaintiff could be that was entitled summary judgment undisputed because the facts established reason, any related or not terminated Stinson for plaintiff was for any legitimate company business reason of the which for plaintiff jury wаs at least entitled to a trial to worked. facts, statutory according under these determine whether “good plaintiff properly terminated. definition of cause” proceeds premise from the that the role majority opinion contrary, that juries. from I believe on the protect people courts is to exist, provided for both federal and state juries are constitutions, arbitrary decisions of courts. protect people reason, I would remand this case the District Court
For that plaintiff was terminated from his to determine whether jury trial majority opinion I from the “good cause” and dissent judgment to defendant on that issue. grants summary joins foregoing concurrence dissent HUNT JUSTICE Trieweiler. Justice