Allum v. Valley Bank of Nevada

• Decision Date: 30 December 1998
• Docket Number: No. 24604,24604
• Citation: 114 Nev. 1313,970 P.2d 1062
• Parties: , 14 IER Cases 1244 Robert L. ALLUM, Appellant, v. VALLEY BANK OF NEVADA, a Nevada State Chartered Banking Association; Nevada First Development Corporation, a Banking Holding Company and a Nevada Corporation; Valley Mortgage Company, a Mortgage Company and wholly owned subsidiary of Valley Bank of Nevada; Kenneth Callahan and Arthur Daniel Ryssman, Respondents.
• Court: Nevada Supreme Court

Page 1062

970 P.2d 1062

114 Nev. 1313, 14 IER Cases 1244

Robert L. ALLUM, Appellant, v. VALLEY BANK OF NEVADA, a Nevada State Chartered Banking Association; Nevada First Development Corporation, a Banking Holding Company and a Nevada Corporation; Valley Mortgage Company, a Mortgage Company and wholly owned subsidiary of Valley Bank of Nevada; Kenneth Callahan and Arthur Daniel Ryssman, Respondents.

No. 24604.

Supreme Court of Nevada.

Dec. 30, 1998.

Kenneth J. McKenna, Reno, for Appellant.

Beasley, Holden & Kern, Reno; Ryley, Carlock & Appelwhite and Charles Lee Chester and William August Richards, Phoenix, Arizona, for Respondents.

OPINION

SHEARING, J.

Robert L. Allum was a loan officer for Valley Mortgage Company ("VMC"). He alleges that Valley Bank of Nevada ("Valley") created VMC,

for the purpose of transferring funds from the regulated bank to the unsupervised exempted mortgage company to enable the Defendant, Valley Mortgage Company, to make loans to selected persons without adhering to the ordinary underwriting criteria, banking regulations and loan loss reserve requirements for loans made by the Defendant, Valley Bank of Nevada.

In early 1989, Allum claims to have discovered that a number of VMC loans violated rules and regulations of the Federal Housing Administration ("FHA"). He contends that his supervisors threatened to discharge employees who refused to become involved in these loans. Allum reported his findings to the management of VMC, who promptly prohibited him from participating in certain transactions.

Allum alleges that he disapproved other loans he believed to be in violation of FHA rules, only to have his decisions overturned by Daniel Ryssman, VMC's vice-president. Allum claims Ryssman would fabricate necessary information to make it appear that the loans met FHA requirements.

In July of 1989, Allum reported specific rule violations directly to the FHA. He claims that, as a result, the FHA audited VMC's Reno office and issued a report ordering termination and rescission of one loan agreement. Employees of Valley investigated Allum's contentions during the first week of April 1990. On April 19, 1990, Allum was terminated.

Respondents claim that Allum was discharged because he was disruptive, failed to follow directions, failed to comply with company policies, and was abusive to other employees.

Allum sued Valley, VMC, Nevada First Development Corporation, Valley Capitol Corporation, Kenneth Callahan (VMC's president), and Ryssman (hereinafter collectively referred to as "Valley") for wrongful discharge.

The jury returned a general verdict in favor of Valley, and judgment was entered in accordance with the jury's verdict on February 16, 1993. Thereafter, Allum unsuccessfully moved for a judgment notwithstanding the jury's verdict, as well as for a new trial. Although the district court found one of the contested jury instructions to be improper, it denied Allum's motion on the ground that the error was harmless. Allum appeals from the district court's order denying his motion for a new trial. ¹

DISCUSSION

Standard of Review

NRCP 59 provides:

(a) A new trial may be granted to all or any of the parties and on all or part of the issues for any of the following causes or grounds materially affecting the substantial rights of the parties:

....

(7) Error in law occurring at the trial and objected to by the party making the motion; ....

"The decision to grant or deny a motion for a new trial rests within the sound discretion of the trial court and will not be disturbed on appeal absent palpable abuse." Pappas v. State, Dep't Transp., 104 Nev. 572, 574, 763 P.2d 348, 349 (1988). Having considered the parties' briefs and having had the benefit of oral argument of counsel, we conclude that the district court abused its discretion in denying Allum's motion for a new trial.

Introduction

An employer commits a tortious discharge by terminating an employee for reasons that violate public policy. Western States Minerals Corp. v. Jones, 107 Nev. 704, 712, 819 P.2d 206, 212 (1991). The district court in this case noted that

this state has a strong public policy in ensuring that banks within this state comply with FHA mortgage-related regulations. Bank employees and officers should be encouraged to report such illegal activity in this area, and the retaliatory termination of an employee or officer who does so, or who refuses to engage in such illegal activity, is in violation of the public policy of this state.

Generally stated, the jury below was instructed that Allum could recover for tortious discharge if he proved that he was discharged in retaliation for (1) whistleblowing, or (2) refusing to participate in illegal conduct. Allum takes issue with the trial court's tortious discharge instructions, the characterization of his employment contract, and the manner in which the jury was polled after it rendered the verdict.

At-Will Employment Contract

This court has held that the type of employment--either at-will or by contract--is immaterial to a tortious discharge action. See D'Angelo v. Gardner, 107 Nev. 704, 718, 819 P.2d 206, 216 (1991) (holding that a claim for tortious discharge "stands by itself" and is not dependent on a contract of continued employment between the parties). In this case, both parties agree that whether the employment contract was at-will is irrelevant. Thus, because the type of employment contract does not affect our analysis and because there is no actual controversy between the parties on this issue, we will not comment further. See Applebaum v. Applebaum, 97 Nev. 11, 12, 621 P.2d 1110, 1110 (1981) (this court will not render advisory opinions on abstract questions); see also Nev. Const., art. 6 § 4.

Tortious Discharge

Allum pressed two separate claims for retaliatory discharge. First, that he was fired for "whistle-blowing"; second, that he was fired for refusing to participate in "suspected" illegal conduct. The court gave separate instructions on these two theories (nos. 25 ² and 26 ³, discussed below). Instruction 25 conditioned recovery on proof that Allum was discharged because of whistle-blowing activities regarding conduct that was, in fact, illegal; instruction 26 conditioned recovery on proof that Allum was discharged because of his refusal to participate in illegal activities.

Mixed Motives

At trial, Allum asked the court to instruct the jury that, to establish the claim of retaliatory discharge, he must prove that he was discharged, in part, because he made the report. The court rejected Allum's proposal and instructed the jury that Allum must prove that he was fired "because he made the report," implying that the sole reason for discharge was his whistleblowing activities. On appeal, Allum contends that he was entitled to recovery if he was fired, "at least in part," for "whistle-blowing" and/or refusal to participate in his employer's illegal activities. Thus, Allum argues that the case should be remanded because a "mixed motives" analysis, one occasionally invoked by federal district courts in discrimination cases brought under Title VII of the Civil Rights Act of 1964, should apply generally to retaliatory discharge cases brought under state law.

In a Title VII mixed motives case, the plaintiff can recover upon a showing that the adverse employment decision resulted from a mixture of legitimate reasons and prohibited discriminatory motives. See Price Waterhouse v. Hopkins, 490 U.S. 228, 258, 109 S.Ct. 1775, 104 L.Ed.2d 268 (1989); see also Luciano v. Olsten Corp., 110 F.3d 210, 217-18 (2d Cir.1997); Sischo-Nownejad v. Merced Community College Dist., 934 F.2d 1104, 1110 (9th Cir.1991). To succeed on a mixed-motives theory, the plaintiff must demonstrate that "it is more likely than not that a protected characteristic 'played a motivating part in [the] employment decision.' " Sischo-Nownejad v. Merced Community College Dist., 934 F.2d 1104, 1110 (9th Cir.1991) (citing Price Waterhouse v. Hopkins, at 244, 247 n. 12, 109 S.Ct. 1775). The burden then shifts to the defendant employer to show that it would have made the same decision absent the unlawful motive. Id.

There is no Nevada authority addressing whether, outside the realm of Title VII, employees may recover if retaliation was merely one factor in the employer's decision to terminate. Thus, we examine case law from other jurisdictions.

In Rozier v. St. Mary's Hospital, 88 Ill.App.3d 994, 44 Ill.Dec. 144, 411 N.E.2d 50, 51 (Ill.Ct.App.1980), plaintiff alleged that she was fired for reporting "various abuses and improper conduct." The court granted the defendant's motion for summary judgment, in part, because it was

of the opinion that the discharged employee's action should not be allowed where, as here, plaintiff's own discovery deposition reveals a legitimate reason for her discharge.... We believe plaintiff's employer was justified in concluding that plaintiff had lied with respect to job-related matters and in terminating her employment on that basis.

Id. 44 Ill.Dec. 144, 411 N.E.2d at 54.

In Thompson v. Abbott Laboratories, 193 Ill.App.3d 188, 140 Ill.Dec. 423, 549 N.E.2d 1295 (Ill.Ct.App.1990), plaintiff argued that she was entitled to a "mixed motives" instruction, pursuant to which she need only prove that her pursuit of worker's compensation benefits was a motivating factor in her discharge. Id. 140 Ill.Dec. 423, 549 N.E.2d at 1303, 1307. The appellate court affirmed the trial court's refusal to grant such an instruction. Id. In a concurring opinion, Judge Reinhard explained that

giving a mixed motive instruction, ... would effectively expand the tort by allowing plaintiff to prove retaliatory discharge even though an employer terminated the plaintiff for a legitimate reason.... [I]nstructing on mixed motive would have a devastating impact on the at-will doctrine. Rather, I believe the current law requiring the plaintiff to establish causality strikes the appropriate...